8-K

UNITED STATES

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): March 29, 2010

Commission File Number: 333-150388

Granto, Inc.

 (Exact name of registrant as specified in its charter)

Nevada	98-0655634
(State or other jurisdiction of incorporation)	(IRS Employer Identification Number)

Dongdu Room 321, No. 475 Huanshidong Road, Guangzhou City, PRC 510075

(Address of principal executive offices)

011-86-20-8762-1778

(Registrant’s telephone number, including area code)

16 Monarch Way, Kinnelon, New Jersey 07405

(Former name or former address if changed since the last report)

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:

o Written communication 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))

EXPLANATORY NOTE

This Current Report on Form 8-K is being filed by Granto, Inc.  We are reporting the acquisition of a new business and providing a description of this business and its audited financials below. In addition, on March 29, 2010 we consummated a private placement to 18 investors for an aggregate gross purchase price of $7,700,000 of our Series A Preferred Stock, par value $.0001 per share (“Series A Stock”), five-year warrants to purchase shares of our Common Stock for $3.47 per share and five-year warrants to purchase shares of our Common Stock for $4.17 per share pursuant to a Series A Preferred Stock Purchase Agreement (the “Purchase Agreement”) with such investors (the “Private Placement”). Each share of Series A Stock will automatically convert into one share of our Common Stock, par value $.001 per share (“Common Stock”). The conversion ratio is subject to adjustment to protect the holder of the Series A Stock from dilution in certain circumstances immediately upon the happening of certain events described herein.

USE OF DEFINED TERMS

Except as otherwise indicated by the context, references in this Report to:

· "Granto," "the Company," "we," "us," or "our," are references to the combined business of Granto, Inc, and its subsidiary, Rongfu Aquaculture, Inc., and Rongfu Aquaculture, Inc.’s direct and indirect subsidiaries.

· "Rongfu" refers to Rongfu Aquaculture, Inc., a Delaware corporation and our direct, wholly owned subsidiary, and/or its direct and indirect subsidiaries, as the case may be;

· "China," "Chinese" and "PRC," refer to the People’s Republic of China;

· "RMB" refers to Renminbi, the legal currency of China;

· "U.S. dollar," "$" and "US$" refer to the legal currency of the United States;

· "Securities Act" refers to the Securities Act of 1933, as amended; and

· "Exchange Act" refers to the Securities Exchange Act of 1934, as amended.

Certain references to ownership and other rights of the Company in this Current Report include the rights of Foshan Nanhai Ke Da Heng Sheng Aquatic Co., Ltd. and Hainan Ke Da Heng Sheng,and and Hainan Ke Da Heng Sheng Aquit Germchit Co., Ltd. which we are attributing to the Company by virtue of the Contractual Agreements described below.

All of the financial information for Rongfu for the fiscal year ended December 31, 2009 in this Current Report is unaudited.

ITEM 1.01   ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

Share Exchange Agreement

On March 29, 2010, we entered into a Share Exchange Agreement with Rongfu, certain stockholders and warrantholders of Rongfu (the “Rongfu Stockholders”) and a stockholder of Granto (the “Share Exchange Agreement”).  Pursuant to the Share Exchange Agreement, on March 29, 2010, 9 Rongfu Stockholders transferred 100% of the outstanding shares of common stock and 100% of the warrants to purchase common stock of Rongfu held by them, in exchange for an aggregate of 18,623,889 newly issued shares of our Common Stock and warrants to purchase an aggregate of 666,666 shares of our Common Stock. The shares of our Common Stock acquired by the Rongfu Stockholders in such transactions constitute approximately 77.4% of our issued and outstanding Common Stock on a fully-diluted basis giving effect to the share exchange and the sale of our Series A Stock pursuant to the Purchase Agreement discussed below, but not including any outstanding purchase warrants to purchase shares of our common stock, including the warrants issued pursuant to the Purchase Agreement. In connection with the closing of the Share Exchange Agreement, the former principal stockholder agreed to and did cancel 1,150,000 of the 1,200,000 shares of Granto, Inc. Common Stock held by her.

The Share Exchange Agreement contains representations and warranties by us, our former principal stockholder, Rongfu and the Rongfu Stockholders which are customary for transactions of this type such as, with respect to Granto, Inc.: organization, good standing and qualification to do business; capitalization; subsidiaries, authorization and enforceability of the transaction and transaction documents; financial condition; valid issuance of stock, consents being obtained or not required to consummate the transaction; litigation; compliance with securities laws; the filing of required tax returns; and no brokers used, and with respect to Rongfu:  authorization, capitalization, and title to Rongfu securities being exchanged. The former principal stockholder has agreed to indemnify Granto, Inc., Rongfu and the Rongfu Stockholders and their affiliates against actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith arising out of or based on misrepresentations by Granto, Inc. or such stockholder made in the Share Exchange Agreement and breaches by Granto, Inc. or such stockholder of covenants in the Share Exchange Agreement.

The foregoing description of the terms of the Share Exchange Agreement is qualified in its entirety by reference to the provisions of the Share Exchange Agreement which is included as Exhibit 2.1 of this Current Report and is incorporated by reference herein.

Series A Preferred Stock Purchase Agreement

On March 29, 2010 we entered into and consummated a Series A Preferred Stock Purchase Agreement (the “Purchase Agreement”) with 18 investors pursuant to which the investors agreed to and did purchase for an aggregate of $7.7 million an aggregate of (a) 2,768,721 shares of our Series A Stock, (b) five year warrants (“Series A Warrants”) to purchase an aggregate of 1,730,451 shares of our Common Stock for $3.47 per share and (c) five year warrants (“Series B Warrants”) to purchase an aggregate of 1,730,451shares of our Common Stock for $4.17 per share. Each share of Series A Stock will automatically convert into one share of our Common Stock (subject to adjustment in certain circumstances to protect the holder against dilution) immediately upon all of the following being satisfied:

· a registration statement covering the resale of the shares of Common Stock to be issued upon conversion shall have been filed by the Company and declared effective by the Securities and Exchange Commission (the “SEC” or the “Commission”), and such registration statement continues to be effective up through and including the date of the conversion;

· our shares of Common Stock are eligible for trading on one of the following exchanges: the Nasdaq SmallCap Market, the American Stock Exchange, the New York Stock Exchange, the Nasdaq National Market or the OTC Bulletin Board;

· the daily volume weighted average price of the Common Stock for ten consecutive trading days immediately preceding the conversion is greater than or equal to $5.56 per share (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares) on the primary trading market on which the Common Stock is then listed or quoted; and

· the average daily dollar volume of the Common Stock on the primary trading market on which the Common Stock is then listed or quoted is greater than or equal to $100,000 for ten consecutive trading days at any time before the conversion.

Representations and Warranties; Indemnification: The Purchase Agreement contains representations and warranties by us and the investors which are customary for transactions of this type such as, with respect to the Company: organization, good standing and qualification to do business; capitalization and voting rights; subsidiaries, authorization and enforceability of the transaction and transaction documents; financial statements; valid issuance of stock, governmental and third party consents being obtained or not required to consummate the transaction; litigation; intellectual property; employee benefits, employment matters; filing of tax returns; full disclosure; related party transactions; title to property and assets; and no brokers used, and with respect to the investors:  authorization, investment intent and accredited investor status. The Company has agreed to indemnify the investors and their affiliates against claims, costs, losses, damages, expenses and obligations arising out of or based on material misrepresentations by the Company made in the Purchase Agreement and breaches by the Company of material covenants in the Purchase Agreement.

Covenants: The Purchase Agreement contains certain covenants on our part, including the following:

Registration: we must file a registration statement covering the resale by the investors of 100% of our shares of Common Stock issuable to the investors upon the conversion of all of the Series A Stock and exercise of the Series A Warrants and the Series B Warrants (the “Resale Registration Statement”). The Resale Registration Statement must be filed with the SEC by May 13, 2010 (within 45 days after the March 29, 2010 closing date of the Purchase Agreement) and cause the registration statement to be declared effective by August 26, 2010  (within 150 days after the closing date) or October 25, 2010 (210 days after the closing date), if the SEC determines to give the registration statement a full review. The Purchase Agreement provides for liquidated damages of 1% per month of the purchase price of the securities purchased by the investors (with a cap of 6% of the purchase price in the aggregate)  if the filing or effectiveness of the registration is delayed beyond the required deadlines or if after effectiveness is declared by the SEC, effectiveness of the Resale Registration Statement is not maintained.

Listing: we have agreed to use our best efforts to list our Common Stock on the American Stock Exchange, Nasdaq Capital Market, Nasdaq Global Market, Nasdaq Global Select Market or New York Stock Exchange by March 29, 2011 (within one year after the closing) If we do not do so by such deadline we are obligated to pay the investors liquidated damages of .5% of the purchase price per month until the Common Stock is listed, subject to a cap of 6% of the purchase price in the aggregate).

Right of first refusal: Until the second anniversary of the date that the Resale Registration Statement is declared effective, the investors shall have a right of first refusal in connection with any offer by the Company of its debt or equity securities, except in certain limited situations  

Appointment of investor designee to the Company’s Board and approval of CFO: The Company has agreed to appoint one person designated by certain of the investors as a director of the Company. The Company has also agreed that such investors shall have the right to approve the hiring of an English speaking Chief Financial Officer after the closing.

Delivery of up to 2,768,721 shares of Granto, Inc. Common Stock from Escrow Based on Net Income and Net Income Per Share: At the closing, Kelvin Chan, our President and Chief Executive Officer, delivered to an escrow agent 2,768,721 shares of Granto, Inc. Common Stock (the “Make Good Escrow Stock”). If our consolidated net income and net income per share for the year ended December 31, 2009 is less than $13.0 million and $.54 per share, respectively (the “Fiscal 2009 Performance Threshold”), or our consolidated net income and net income per share for the fiscal year ending December 31, 2010 is less than $14.8 million and $.62 per share, respectively (the “Fiscal 2010 Performance Threshold”), then:

· If the Company does not achieve at least 50% of either amount set forth in the Fiscal Year 2009 Performance Threshold, the escrow agent shall transfer 100% of the escrowed shares to the investors pro rata based on the number of shares of Series A Stock purchased by the investors under the Purchase Agreement and still beneficially owned by such investor at such date;

· If the Company achieves at least 50%, but less than 100% of either amount set forth in the Fiscal Year 2009 Performance Threshold, the escrow agent shall transfer an amount of the escrowed shares to the investors equal to the product obtained by multiplying (i) two times the shortfall by (ii) the total number of escrowed shares.  Such shares will be transferred pro rata based on the number of shares of Series A Stock purchased under the Purchase Agreement by the investors and still beneficially owned by such investors at such date.

· If the Company does not achieve at least 50% of either amount set forth in the Fiscal Year 2010 Performance Threshold,  the escrow agent shall transfer 100% of the escrowed shares to the investors pro rata based on the number of shares of Series A Stock purchased by the investors under the Purchase Agreement and still beneficially owned by such investor at such date;

· If the Company achieves at least 50%, but less than 100% of either amount set forth in the Fiscal Year 2010 Performance Threshold, then the escrow agent shall transfer an amount of the escrowed shares to the investors equal to the product obtained by multiplying (i) two times the shortfall by (ii) the total number of escrowed shares.. Such shares will be transferred pro rata based on the number of shares of Series A Stock purchased under the Purchase Agreement by the investors and still beneficially owned by such investors at such date.

For purposes of the agreement, net income for any period means the consolidated net income of the Company and its subsidiaries calculated in accordance with United States generally accepted accounting principles consistently applied, plus, to the extent such amounts were deducted in the calculation of consolidated net income, the amount of any non-cash extraordinary charges relating solely to (a) the release of the shares from escrow or (b) the value of the beneficial conversion feature of the Series A Stock of the Company issued pursuant to the Purchase Agreement.  Net income for any period shall also not include any charges or additions to net income of the Company in any period as a result of any fluctuation in the value of the Company’s Common Stock.

ITEM 2.01   COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS

On March 29, 2010, we completed the acquisition of Rongfu pursuant to the Share Exchange Agreement. The acquisition was accounted for as a recapitalization effected by a share exchange. Rongfu is considered the acquirer for accounting and financial reporting purposes.  The assets and liabilities of the acquired entity have been brought forward at their book value and no goodwill has been recognized.

As a result of this transaction, the Company ceased being a “shell company” as that term is defined in Rule 12b-2 under the Securities and Exchange Act of 1934 (the “Exchange Act”).

Our Corporate Structure

As set forth in the following diagram, following our acquisition of Rongfu, Rongfu became and currently is our direct, wholly-owned subsidiary.

Organizational History of Rongfu Aquaculture, Inc. and Subsidiaries

Rongfu Aquaculture, Inc. was incorporated in Delaware on January 13, 2009. Pursuant to a Share Exchange Agreement, dated as of December 29, 2009 (the “December 2009 Agreement”), all of the shareholders of Flourishing Blessing (Hong Kong) Co., Ltd., a Hong Kong corporation (“Flourishing HK”), exchanged all of the outstanding shares of Flourishing HK for shares of common stock of Rongfu and Rongfu became the owner of 100% of the outstanding capital stock of Flourishing HK.

Flourishing HK owns 100% of the capital stock of Guangzhou Flourishing Blessing Heng Seng Agriculture Technology Limited (“Guangzhou Flourishing”). Guangzhou Flourishing is a wholly foreign-owned enterprise, or “WFOE,” under the laws of the PRC by virtue of its status as a wholly-owned subsidiary of a non-PRC company, Flourishing HK.  In connection with the closing of the December 2009 Agreement, Guangzhou Flourishing  entered into and consummated a series of agreements (the “Contractual Agreements”), with Chen Zhisheng and Foshan Nanhai Ke Da Heng Sheng Aquatic Co., Ltd. (“Nanhai Ke Da Heng Sheng”).  Under the Contractual Agreements, Guangzhou Flourishing agreed to assume control of the operations and management of Nanhai Ke Da Heng Sheng in exchange for a management fee equal to Nanhai Ke Da Heng Sheng’s earnings before taxes. As a result, the business of Nanhai Ke Da Heng Sheng  and Hainan Ke Da Heng Sheng Aquit Germchit Co., Ltd., a PRC corporation (“Hainan Ke Da Heng Sheng”) , 70% of the outstanding stock of which is owned by Nanhai Ke Da Heng Sheng,  will be conducted by Guangzhou Flourishing. We anticipate that Nanhai Ke Da Heng Sheng and Hainan Ke Da Heng Sheng will continue to be the contracting parties under their customer contracts, bank loans and certain other assets until such time as those may be transferred to Guangzhou Flourishing.

Nanhai Ke Da Heng Sheng was formed in the PRC on April 30, 2003 as a limited liability company (a company solely owned by a natural person). Hainan Ke Da Heng Sheng was formed in the PRC on August 6, 2007 as a limited liability company. Guangzhou Flourishing was incorporated in the PRC on January 9, 2009 as a wholly owned foreign enterprise.

The following is a summary of the material terms of each of the Contractual Agreements, the English translation of each of which is annexed hereto as an exhibit. All references to the Contractual Agreements and other agreements in this Current Report are qualified, in their entirety, by the text of those agreements. Certain references to ownership and other rights of the Company in this Current Report include the rights of Nanhai Ke Da Heng Sheng and Hainan Ke Da Heng Sheng, which we are attributing to the Company by virtue of the Contractual Agreements.

Entrusted Management Agreement. Pursuant to the entrusted management agreement among Nanhai Ke Da Heng Sheng, Chen Zhisheng, a director of the Company and the owner of 100% of the outstanding stock of Nanhai Ke Da Heng Sheng, and Guangzhou Flourishing  (the "Entrusted Management Agreement"), Nanhai Ke Da Heng Sheng and Chen Zhisheng agreed to entrust the operations and management of Nanhai Ke Da Heng Sheng to Guangzhou Flourishing  Under the Entrusted Management Agreement, Guangzhou Flourishing  will manage Nanhai Ke Da Heng Sheng ‘s operations and assets, control all of Nanhai Ke Da Heng Sheng ‘s cash flow through an entrusted bank account, will be entitled to Nanhai Ke Da Heng Sheng ‘s earnings before taxes as a management fee, and will be obligated to pay all Nanhai Ke Da Heng Sheng’s payables and expenses, operating expenses, payment of employee salaries and the purchase price for assets. The Entrusted Management Agreement will remain in effect until Guangzhou Flourishing  acquires all of the assets or equity of Nanhai Ke Da Heng Sheng (as more fully described below under “Exclusive Option Agreement”). We anticipate that Nanhai Ke Da Heng Sheng and Hainan Ke Da Heng Sheng will continue to be the contracting parties under their customer contracts, bank loans and certain other assets until such time as those may be transferred to Guangzhou Flourishing.

Shareholders’ Voting Proxy Agreement. Under the shareholders' voting proxy agreement among Chen Zhisheng and Guangzhou Flourishing, Chen Zhisheng irrevocably and exclusively appointed the members of Guangzhou Flourishing’s board of directors as his proxies to vote on all matters that require approval by the shareholders of Nanhai Ke Da Heng Sheng.

Exclusive Option Agreement. Under the exclusive option agreement among Chen Zhisheng, Guangzhou Flourishing and Nanhai Ke Da Heng Sheng (the “Exclusive Option Agreement”), Chen Zhisheng has granted Guangzhou Flourishing an irrevocable and exclusive purchase option (the “Option”) to acquire Nanhai Ke Da Heng Sheng’s equity and Nanhai Ke Da Heng Sheng  has granted Guangzhou Flourishing an Option to purchase Nanhai Ke Da Heng Sheng’s assets and business, but only to the extent that the acquisition does not violate limitations imposed by PRC law on such transactions. The consideration for the exercise of the Option is to be determined by the parties and memorialized in future, definitive agreements setting forth the kind and value of such consideration. To the extent that Chen Zhisheng receives any of such consideration, the Option requires him to transfer (and not retain) the same to Guangzhou Flourishing.

Shares Pledge Agreement. Under the shares pledge agreement among Chen Zhisheng, Guangzhou Flourishing and Nanhai Ke Da Heng Sheng (the "Share Pledge Agreement"), Chen Zhisheng has pledged to Guangzhou Flourishing all of the equity interests in Nanhai Ke Da Heng Sheng, including the proceeds thereof, to guarantee all of Nanhai Ke Da Heng Sheng ‘s rights and benefits under the other Contractual Agreements. Prior to termination of the Share Pledge Agreement, the pledged equity interests cannot be transferred without Guangzhou Flourishing’s prior written consent.

DESCRIPTION OF BUSINESS

Overview

Through its subsidiaries and the Contractual Agreements, Rongfu Aquaculture, Inc. (the “Company”) is engaged in commercial freshwater aquaculture in the PRC. Aquaculture is the cultivation (“farming”) of fish under controlled conditions (as contrasted with the harvesting of fish in the wild). The Company cultivates its fish in fresh water (not marine (salt water) or brackish environments), sells fish and fish fry (juvenile fish) and also acts as a dealer of freshwater fish (generating trading profits from the purchase of fish from third party farmers and the immediate re-sale of such fish to wholesalers and processors).

During the fiscal year ended December 31, 2009 (“fiscal 2009”) the Company sold more than 27,000 tons of adult fish to frozen fish processors and wholesalers in Guangdong Province and Hainan Province, People’s Republic of China (“PRC”) and the Company sold approximately 360 million fry to distributors, which in turn sold such fry to other farmers to cultivate.

Based on unaudited information, approximately 74.0% of the Company’s revenues for fiscal 2009 were from the sale of adult fish farmed by the Company, approximately 13.7% of the Company’s 2009 revenues were from the re-sale of fish purchased by the Company from farmers and approximately 12.3% of the Company’s 2009 revenues were generated from the sale of fish fry. Approximately 67.9% of the Company’s net income for fiscal 2009 was from the cultivation and sale of adult fish, approximately 30.3% of the Company’s 2009 net income were from the breeding, incubation and sale of fish fry and approximately 1.8% of the Company’s 2009 net income was profit from the Company’s trading of freshwater adult fish. According to China Agriculture Magazine, the Company is currently the largest seller of tilapia fry in the PRC and the Company believes that it is also one of the three largest sellers of adult tilapia in the PRC.

The Company operates 13 adult fish breeding farms, covering a total area of 8,249 mu (a mu is a measure of land area used in China equivalent to approximately 1/6 of an acre). Three of the Company’s farms are located in Hainan Province, two in the town of Wenchang and one in Nanling. The other 10 farms are located in Guangdong Province in the towns or villages of Nanhai, Qinyuan, Taishan, Yangdong  and Gaoyao. 9 of the farms consist of a series of man-made ponds dug to a depth of approximately 2 meters with a surface area of 10-20 mu. A pond can be dug in two days and is filled with fresh filtered water from local sources. Each pond is outfitted with one or more oxygen aeration machines which float on the surface and one or more feeding machines which provide food to the fish twice per day. The aeration machines provide oxygen to the fish and enable the natural removal of fish wastes so that the water does not become toxic for the fish.

4 of the Company’s farms are each comprised of a single lake created by damming a river. Oxygen aeration equipment is not needed since the lakes have a much larger area than the ponds dug by the Company. The land on which the farms are located is leased by the Company from the village under leases for terms of 4 to 30 years.

For additional information concerning the location and area of each of the Company’s fish farms and the terms under which the real estate for each farm is leased, see “Description of Property” herein.

In addition to its adult fish breeding farms, the Company operates a breeding farm in Wenchang, Hainan Province in which tilapia fry are produced from brood stock. (The warm climate in Hainan is more conducive to the breeding of tilapia fry than the climate in Guangdong Province.) The tilapia fry breeding farm in Wenchang covers an area of approximately 1,800 mu. The Company breeds snakehead and crucian carp fry at its facility in Nanhai.

At its facility in Nanhai (at which the Company also maintains a fish clinic), the Company also has constructed and maintains concrete tanks with a surface area of approximately 8,000 square meters containing approximately 40 compartments where the Company incubates tilapia, snakehead and crucian carp fry for approximately 10-25 days after such fry is initially produced or purchased by the Company. Most of the tilapia fry breeded by the Company in Wenchang is promptly flown by commercial air carrier to Guangzhou (which is approximately 300 miles from Nanhai) and thereafter transported by automobile to Nanhai. The Company also maintains an approximately 4,500 square meter incubation tank in Wenchang for tilapia fry that it will incubate and sell in Hainan Province.

The incubation tanks in Nanhai and Wenchang are lined with concrete as compared to the Company’s adult fish breeding ponds and lakes, which are not. The concrete lining of the incubation tank enables the Company to maintain better water quality for the fry in the tank and also makes it easier for the small fry to be seen and caught when it is time to harvest them. After the incubation period the Company sells approximately 95% of the fry to distributors.

Based on unaudited information, approximately 46.2% of the Company’s revenues from the sale of Company grown adult fish in fiscal 2009 were from the sale of tilapia, approximately 20.2% was from the sale of grass carp, approximately 9.5% was from the sale of snakehead, approximately 8.8% was from the sale of bighead and the balance of the Company’s revenues from the sale of Company grown adult fish during fiscal 2009 were from sales of other varieties of freshwater fish, including catfish, bream, black carp and crucian carp.

Based on unaudited information, approximately 69.1%, 18.8% and 12.1% of the Company’s revenues during fiscal 2009 from sales of fish fry were from the sale of tilapia, snakehead and crucian carp fry, respectively. The Company does not breed or incubate fry of the other adult fish that it cultivates. Rather, it purchases the fry for such fish from distributors.

In conjunction with Professor Sifa Li and his team from Shanghai Fisheries University, during the period from 2006 to 2009 the Company developed a strain of Nile tilapia called “New Jifu” which has received the approval and recommendation the PRC Ministry of Agriculture. New Jifu tilapia is fatty and fleshy, relatively fast growing (taking 4 to 5 months to grow to a saleable size), disease resistant and suitable to be raised in a warm climate such as that of Hainan Province. The Company currently sells approximately 17,000 tons of tilapia per year, approximately 60% of which is of the New Jifu variety and 40% of which is oreochromis tilapia. Oreochromis tilapia are more tolerant of lower temperatures, which enables the fish to be cultivated in northern climates. However, such tilapia are slower to grow to a saleable size, limiting production to at most three crops in two years.

The Company sells approximately 90% of its tilapia to the owners of 28 processing plants in Guangdong and Hainan Provinces. The processors generally require that the tilapia be of a standard weight of .75 kilograms. (Because of such weight requirement, the Company generally sells most of its tilapia in the fourth quarter since the growing season of approximately 6 months commences in March of each year.) The processors freeze the tilapia and sell the frozen product for distribution domestically in China and internationally. The balance of the Company’s tilapia, as well as all of the other fish the Company sells, is sold under the Company’s Hengshen brand name to fish brokers located in wholesale markets in Guangdong, Hainan, Fujian and Xinjiang Provinces  which brokers in turn market the fresh fish nationwide in China though other wholesalers or at retail. In 2009 the top ten customers (including processors and wholesalers) for the Company’s adult fish accounted for approximately 80% of the Company’s total sales of adult fish. Hainan Ahe Food, Yangshi Frozen Fish Processing Factory and Jiahong Frozen Fish Processing Factory accounted for 21%, 12% and 10%, respectively, of total purchases from the Company of adult fish in 2009.

The Company is developing technology to breed new strains of yellow catfish and California perch and anticipates making sales of the fry of such fish strains in 2010. The Company is constructing a facility in Nanhai, to breed fry. The Company anticipates that the total cost of the facility will be approximately $500,000 and it anticipates completing the facility in May 2010. This facility consists of a one-floor building with a floor area of approximately  6,000 square meters, for the breeding of new type of fry. The Company also intends to use some of the proceeds from the March 2010 sale of its Series A Stock and Warrants described in Item 1.01 of this Current Report to increase both the production capacity of and productivity at its breeding farms, to develop new breeds of fry and to change its business model in certain respects.

For example, instead of selling most of its snakehead fry to distributors which in turn sell the fry to local third party farmers, the Company intends to retain such third party farmers as subcontractors to grow adult snakehead from fry supplied directly to them by the Company. In such new business model the farmers will receive a fixed payment from the Company for their service and, the Company will supply at its own cost or reimburse the farmer for fish food and medicines. The Company anticipates that this business model will generate greater profits to the Company than would be the case if the Company merely sold snakehead fry to distributors because the model will substantially increase the ability of farmers to cultivate high quality fish and therefore substantially increase the Company’s capacity to produce adult fish. The Company may also use this cooperative farmer business model grow and sell other fish in addition to snakehead.

Farming Operations

The various steps in the process of producing adult fish for sale are described below:

Brood stock production

The Company currently owns approximately 400 to 600 male-female pairs of  tilapia brood stock (“grandparent fish”), of which 200-300 pair are of the  “New Jifu” strain and 200-300 pair are oreochromis tilapia. Grandparent fish are either purchased by the Company or developed from ancestors by the Company in conjunction with breeding experts such as personnel in academic institutions. The grandparent fish are held at the Company’s headquarters in Nanhai.  Grandparent fish generally produce offspring (“parent fish”) for a period of 5 to 8 years and each pair of grandparent fish generally will produce approximately 600 pair of parent fish per year.

Parent fish production

The parent tilapia are maintained at the Company’s facility in Wenchang, Hainan Province. The warm climate in Hainan Province is conducive to the production of tilapia fry. (The parent generation of the other fish that the Company cultivates are maintained at the Company’s facility in Nanhai.) The Company owns approximately 80,000 parent fish (one male fish for each three female fish) of the New Jifu strain. The New Jifu parent fish generally produce approximately 6,000-8,000 offspring (fry) per year for a period of three years. The Company has a capacity to produce approximately 500 million “New Jifu” fry per year. The Company has a capacity to produce approximately 300 million oreochromis tilapia fry per year.

Within 3 days after the tilapia fry is first produced, using commercial air carrier transportation, the Company transports the fry produced in Hainan to the Company’s facility in Nanhai, Guangdong Province where the tilapia fry are incubated for up to 20 days before being sold to distributors of moved by the Company to one of its adult breeding farms. The Company also purchases fry for the growing of the other fish (except tilapia) it grows. The Company also incubates snakehead and crucian carp fry at its Nanhai facility.

Adult fish production

Approximately 95% of the fry produced by the Company are sold to distributors and 5% of the fry are raised to adults by the Company. The Company cultivates the fry it does not sell at one of the 13 adult fish breeding farms the Company maintains. The fry are transported to such farms from the Nanhai incubation facility by Company trucks. The Company generally sells its tilapia when the tilapia has grown to a weight of 0.75 kg as that is the size desired by the Company’s frozen fish processor customers. For New Jifu , it takes 5 to 6 months to reach 0.75 kilograms (‘kg”) and for oreochromis tilapia it takes about 7 to 8 months to reach 0.75kg.  The Company generally raises its grass carp and snakehead to weights of .50kg or more (up to as much as 5 kg) before sale of such fish to wholesalers. The larger the weight the longer the fish takes to grow. The Company may therefore cultivate fish for a year or more before sale.

Approximately 80-85% of the variable costs of producing adult fish is the cost of fish food. The other variable costs include medicine and the cost of fry for those fish for which the Company does not breed its own fry. The other significant costs borne by the Company in its operations are of the rental of farmland, salaries of production personnel and utilities and transportation costs.

Fish clinic and educational services

At its Nanhai facility, the Company maintains a clinic supported by the Agriculture Bureau of Guangdong Province. Farmers may bring diseased fish to the clinic where Company personnel as well as experts from the Agriculture Bureau (who are periodically present at the clinic or available for consultation by telephone or internet) can diagnose problems and determine courses of treatment.

At such facility the Company also offers free classes to train farmers in the cultivation of fish. Classes are generally given for three days twice a month. The Company’s cost for providing such training is approximately $7,500 per year.

By offering such clinical services and free training, the Company has been able to build a database of approximately 100,000 farmers who are or may become interested in purchasing fry, who may become subcontractors for the Company in growing fry to adult fish or who may sell fish to the Company for immediate resale by the Company to tilapia processors or wholesalers.

Trading Operations

The Company acts as an intermediary in the sale of fish to tilapia processors and fish wholesalers. Such entities place orders with the Company which the Company fills by dealing with farmers in the Company’s data base. The processors and wholesalers rely on the Company, rather than dealing directly with farmers, due to the Company’s reputation for quality and the Company’s contacts with numerous sources of supply, which serve to reduce the administrative costs of the processor or wholesaler. The Company generally arranges for transactions, pays the farmer, assists the processor, wholesaler and farmer in delivery operations (the cost of transportation is generally borne by the processor of wholesaler) and receives payment from the processor or wholesaler at a mark up over the Company’s purchase cost (approximately 10% of the sales price).

Industry Background

Aquaculture is the science, art, or practice of cultivating and harvesting aquatic organisms, including fish, mollusks, crustaceans, aquatic plants, and algae such as seaweed. Operating in marine, brackish, and freshwater environments, aquaculture provides food for people and in smaller amounts supplies fish for stocking lakes, bait for fishing, and live specimens for home aquariums. According to a recent study by the World Food and Agriculture Organization (“FAO”) published on March 2, 2009, world fisheries production reached a new high of 143.6 million metric tons in 2006, including farmed and ocean caught product. The contribution of aquaculture to the world fisheries production in 2006 was 51.7 million tons of fish, which was 36 percent of world fisheries production in 2006, up from 3.6 percent in 1970. Global aquaculture accounted for 6 percent of the fish available for human consumption in 1970. In 2006 global aquaculture accounted for 47 percent of the fish available for human consumption according to the FAO. The FAO report also describes that over half of the global aquaculture in 2006 was freshwater finfish. Based on the FAO’s projections, it is estimated that in order to maintain the current level of per capita consumption, global aquaculture production will need to reach in excess of 80 million tons of fish by 2050.

Also according to the FAO, in 2006 China contributed approximately 67% of the total quantity and 49% of the total value of worldwide aquaculture production. In China, approximately 90% of fish production comes from aquaculture.

China has a long history of aquaculture. However, large-scale production only began after the founding of the PRC in 1949. More recently, after China opened up to the outside world in the 1980's, the sector has been growing dramatically, becoming one of the fastest growing sectors among the agriculture industries in China. In 2003 China registered a total amount of 30.28 million tons of farmed fish, accounting for 64.34% of national fishery production . China’s total aquaculture production is dominated by carp raised in inland ponds for local consumption. The four major carp species — silver carp, grass carp, common carp, and bighead carp — account for more than one third of world aquaculture production — nearly all of it in China

China’s aquatic production for 2009 is forecast to have reached 49.5 metric tons (“MMT”), an increase of approximately  two percent from the estimated 48.6 MMT of production in 2008. China remains the world’s largest aquaculture producer. The rise in aquatic production is attributed to the country’s rapid economic growth, rising disposable incomes and greater consumption of aquatic products, together with strong growth of aquatic exports. While official statistics are not yet available, the 2008 aquatic production is estimated to have increased by approximately two percent over the 47.5 MMT of production in 2007. According to China’s Ministry of Agriculture (“MOA”), aquatic production for the first five months of 2008 reached 15.6 MMT, up more than four percent over the previous year to date figure. MOA expected a normal production growth for the remainder of 2008. Industry sources also showed that total aquatic production in the first eight months of 2008 reached 26.5 MMT, up three percent over the previous year. The production growth is mainly attributable to freshwater production at 12.5 MMT, up seven percent over the same period in 2007, while sea catch production stood at 6.9 MMT, down more than two percent. Another official media source reported that total aquatic production for 2008 is expected to have reached 48.9 MMT and the total freshwater aquatic production reached 17.4 MMT as of the end of October 2008. The devastating winter storms that hit south China from January through February of 2008 had some impact on aquaculture production. However, official data on damage is not available. Some industry sources reported losses of more than 4,000 MT of tilapia and 48 million tilapia fingerlings in Guangdong and Hainan provinces. MOA reported that the industry quickly recovered.

Inland aquaculture is very important part of China fishery industry. Freshwater aquaculture is carried out in fish ponds, lakes, reservoirs, canals, pens, cages, and paddy fields. Freshwater aquaculture production is dominated by finfish, particularly silver, grass and other carps. Pond culture is the most important source of inland aquaculture, with an estimated share of 73.9% in 1996.More than 4.5 million Chinese farmers are engaged in aquaculture, more than the rest of the world combined.

In 2005, according to the American Tilapia Association (“ATA”), tilapia production worldwide was second in volume to carp, and it is projected by the ATA that tilapia will become the most important aquaculture crop in the 21st century. Commercial production of tilapia has become popular in many countries around the world. Touted as the “new white fish” to replace the depleted ocean stocks of cod, pollock, and hake, world tilapia production continues to rise and at least 100 countries currently raise tilapia, with the PRC being the largest producer. The American Tilapia Association further reports that world production of tilapia products reached approximately 2.5 million metric tons in 2007, of which China produced the dominant share of 45.0 percent.

The species of tilapia most commonly grown as food fish in aquacultures are Nile tilapia, blue tilapia and Mozambique tilapia). Today, hybrids of these species – sometimes with genetic material from other species as well – are popular as well. Over 95 percent of the global tilapia supply is imported to the United States where tilapia is an appreciated food fish. The United States has its own domestic production as well, but it is much too small to satisfy consumer demands. The rising standard of living and fast-changing lifestyle in China have resulted in dramatically increasing domestic demand for processed frozen Tilapia products.

Tilapias are also among the easiest and most profitable fish to farm. This is due to their omnivorous diet, mode of reproduction (the fry do not pass through a planktonic phase), tolerance of high stocking density, and rapid growth.

The simplest system for raising fish is in ponds or irrigation ditches. Fry are put into a pond and fed until they reach market size. The fish are caught, either by draining the pond or by using large nets. Food can be from natural sources—commonly zooplankton feeding on pelagic algae, or benthic animals, such crustaceans and mollusks. Tilapia species feed directly on phytoplankton, making higher production possible.

There are a number of factors that determine the amount of fish that any given pond can produce. The first is the size of the pond, which determines the amount of water available for the fish, which in turn determines the amount of oxygen available for the fish. If there are too many fish in the pond, there will not be enough oxygen, and the fish will become stressed and begin to die. Another factor is the capacity of the pond to digest waste from the fish and the uneaten feed. The waste that is toxic to fish is mostly in the form of ammonia, nitrites, and nitrates.

The pond environment provides natural ways to eliminate waste. For example, in one waste processing cascade, the initiating bacteria convert available ammonia to available nitrites, which a second bacteria converts to the available nitrates that plants and algae consume as a growth nutrient. The viable density of fish in a pond is determined by the balance between the amount of waste generated and natural processes for waste elimination. If the fish release too much waste into the pond, the natural processes cannot keep up and the fish will become stressed.

Fish density can be increased if fresh water can be introduced to the pond to flush out wastes or if the pond can be aerated, either with compressed air or mechanically by using paddle wheels. Adding oxygen to the water not only increases the amount of oxygen in the water available for the fish, it also improves the processes involved in removing the wastes.

Advantages of pond culture include its simplicity, and relatively low labor requirements (apart from the harvesting of the fish). It also has low energy requirements. A major disadvantage is that the farm operation is more dependent on weather and other natural factors that are beyond the farmer’s control. Another disadvantage concerns the marketing of the fish. Generally, ponds are only harvested when most of the fish are at market size. This means the farmer has many fish to market at the same time, requiring a market that can absorb large quantities of fish at a time and still give a good price to the farmer. Usually this means there is a need for some kind of processing and large-scale marketing, with several fish farms in the same area to provide the processing plant with a constant supply of fish. If this kind of marketing infrastructure is not available, then it is difficult for the fish farmer.

Raw Materials and Suppliers

Approximately 80-85% of the cost of sales of fish is for fish food. The balance is for fish medicine and the cost of fry for fish for which the Company does not breed its own fry. The Company purchases over 90% of its food for the feeding of adult fish from Ke Da Heng Sheng Fish Food Factory, a company which is wholly owned by the sister of the Company’s Chairman, Zhisheng Chen. The Company also purchases over 60% of its food for the feeding of fry from Ke Da Heng Sheng Fish Food Factory. In 2009 the Company spent approximately $11.9 million and $334,000 for the purchase of adult and fry food, respectively.

Marketing, Sales, and Distribution

The Company has a staff of 13 employees who take orders and provide customer service to processors and wholesalers in assigned geographical areas. The Company sells fry to approximately 110 distributors, sells tilapia to 28 frozen tilapia processors and sells fish to approximately 50-60 fish brokers in wholesale markets.

The Company promotes its Hengshen brand to farmers by advertisements in newspapers and magazines. The purpose of such promotion is to attract potential purchasers of fry, as well as potential subcontractors for the Company in growing snakehead and also potential sources for the Company’s fish trading operations. The Company also conducts free training sessions for farmers to build a database for the same purposes.

Employees

As of March 19, 2010 Rongfu had 155 full-time employees, including 39 management and supervisory personnel, 84 production workers, 13 sales and marketing personnel and 19 technological support, training and operations personnel.  Over 100 of the Company’s employees hold at least a junior college degree. The Company also had 65 part-time employees, of which 53 were interns from various colleges. Interns are not paid but Rongfu gives interns a subsidy in a nominal amount and provides food and housing for such interns without charge.

Seasonality

Approximately 50% of the Company’s sales of fry are made in the second quarter as fish produce most of the fry in March of each year. The Company’s sale of fry are lowest in the fourth quarter . The Company’ s sales of adult fish are greatest in the fourth quarter. The first quarter is the next busiest. Sales of grown fish follow the pattern of fry production in the spring and then a six month growing season to maturity and sale.

Competition

There are more than 2 million fish farmers in the PRC. Most farmers grow fish on a small scale. The Company believes its sales place it in the top 10 producers in the PRC. The Company competes against the small fish farmers, but believes it has advantages over most of its competition by virtue of its capital, technology and research and development. The Company competes against smaller scale breeding farms in the sale of fry.

Research and Development

The Company has its own technicians to research fish growing technologies, including methods to grow fish faster,and to maintain water quality and use appropriate fish foods. The Company maintains a big database for fish diseases and cures for the most commonly raised fishes.

Intellectual Property

The Company does not own any patents.

In conjunction with Professor Sifa Li and his team from Shanghai Fisheries University, from 2006 the Company developed a new strain of  tilapia called “New Jifu” which has received the approval and recommendation the PRC Ministry of Agriculture. Based on the agreement between Professor Li and Nanhai Ke Da Heng Sheng Heng Sheng, Nanhai Ke Da Heng Sheng may exclusively use the technology of “New Jifu” in Hainan Province and use the technology on a non-exclusive basis elsewhere.

Nanhai Ke Da Heng Sheng has a trademark “Ke Da Heng Sheng” registered with the PRC Trademark bureau. The term of the trademark is from October 28, 2004 to October 27, 2014.

Regulation

According to the Law of the PRC on the Prevention and Control of Water Pollution, effective on June 1, 2008, to engage in the aquaculture industry, a business owner shall be responsible for protecting the waters and the ecological environment. As a food processing business , the Company must be in compliance with the Food Safety Law of the PRC, effective on June 1, 2009, which lists several enforceable mandatory standards as food safety standards. Based on the law, an aquaculture business should have suitable production and management facility to protect aquatic food from being harmfully affected.

According to Regulations of Quality and Safety of Aquaculture of the Ministry of Agriculture, effective on September 1, 2003, water used in aquaculture should be consistent with requested standards of Ministry of Agriculture. Aquaculture can not violate relevant national or local specifications of cultivation, which include equipment placement, sales of farmed aquatic products, as well as the use of feed materials and aquaculture drugs.

Additionally, the aquaculture industry is also subject to the control and management of the Fishery Law of the PRC, the Management Methods of Pollution-Free Agriculture Products, and the Aquatic Germchit Managing Regulations.

DESCRIPTION OF PROPERTY

Set forth below is a table containing certain information concerning the location and are of each of the Company’s fish farms and the terms under which such properties are leased.

Name of Farm	Area (Mu)/(Square Meters)	Location	Landlord	Tenant	Lease Commencement Date	Lease Expiration Date	Rent per Year ($)
Lugang Pond	251.99/167,994.17	Eastern Xianlu Road, Nanhai, Guangdong	Lu’er Villager Group of Lugang Village	Nanhai Keda Hengsheng Aquiculture Co., Ltd.	1/1/2006	12/31/2010	$	25,940.15
Lugang Pond	85.00/56,666.95	Hengling, Shagang village, Nanhai, Guangdong	Xuehao Tu	Nanhai Keda Hengsheng Aquiculture Co., Ltd.	1/1/2006	12/31/2012	$	16,750
Lugang Pond	98.00/65,333.66	Xianliao Village, Nanhai, Guangdong	Santuan Villager Group of Xianliao Village of Heshun Town	Nanhai Keda Hengsheng Aquiculture Co.,Ltd.	1/1/2002	12/31/2011	$	11,529.41
Nanzhou Pond	71.33/47,553.57	Jianshui,Tantou, Nanhai, Guangdong	Sanhong Village Economic Cooperative of Xianliao Village of Heshun Town	Nanhai Keda Hengsheng Aquiculture Co., Ltd.	1/1/2005	12/31/2014	$	13,426.82
Nanzhou Pond	803.04/535,362.68	Dapu, Nanhai, Guangdong	Xianliao Village of Heshun Town	Nanhai Keda Hengsheng Aquiculture Co., Ltd.	1/1/2005	12/312014	$	101,560.94
Wan Qing Yang	734.65/489,769.12	Eastern Gongyong, Wanqingyang, Heshun Town, Nanhai	Tangcun Group Co., Ltd. of Nanhai District	Nanhai Keda Hengsheng Aquiculture Co., Ltd.	2/11/2004	2/10/2015	$	71,304.26
Qingyuan Artificial Lake	500.00/333,335	Laohuchong Artificial Lake, Qingyuan, Guangdong	Zhishen Luo	Nanhai Keda Hengsheng Aquiculture Co., Ltd.	3/1/2006	12/31/2013	$	33,823.53
Taishan Artificial Lake	1,000.00/666,670	Guanchong Artificial Lake, Shenjing Town, Taishan, Guangdong	Weiqiang Fan, Weiqiang Hu	Nanhai Keda Hengsheng Aquiculture Co., Ltd.	10/20/2005	12/31/2016		1,691.18
Yangdong Artificial Lake	2,500.00/1,666,675	Shawan Artificial Lake, Yangdong County, Guangdong	Huazhan Zhuo	Nanhai Keda Hengsheng Aquiculture Co., Ltd.	1/13/2007	12/31/2014	$	5,698.53
Gaoyao Artificial Lake	30.00/20,000.1	Shangdong Village, Baizhu Town, Gaoyao City, Guangdong	Xinlong Villager Group of Shangdong village committee of  Baizhu Town in  Gaoyao City	Nanhai Keda Hengsheng Aquiculture Co., Ltd.	1/10/2007	1/10/2013	$	5,264.71
Hainan Adult Fish Pond	375.00/250,001.25	Fupo Village, Baoluo Town, Wenchang City, Hainan	Jianzhong Fan	Nanhai Keda Hengsheng Aquiculture Co., Ltd.	2/28/2005	2/28/2015	$	24,816.18
Hainan Adult Fish Pond	200.00/133,334	Nanling Artificial Lake, Hainan	Maoshan Village Economic Cooperative of  Wengtian Town in Wenchang City	Nanhai Keda Hengsheng Aquiculture Co., Ltd.	1/12/2005	1/11/2020	$	514.71
Hainan Adult Fish Pond	1,600.00/1,066,672	Wenglong Artificial Lake, Wenchang, Hainan	People’s Government of Wengtian Town of Wenchang City	Nanhai Keda Hengsheng Aquiculture Co., Ltd.	1/1/2005	12/31/2035	$	5,882.35
Wenchang Fish Fry Pond	1,800.00/1,200,006	Wenchang, Hainan	Kuangshan Group of Shandong Province	Nanhai Keda Hengsheng Aquiculture Co., Ltd.	10/13/2006	12/15/2018	$	44,117.65
	10,049.01/6699373.50							2,463,778.80/362,320.41

The Company leases from Guangzhou Chuangshi Trading Co., Ltd approximately 50 square meters of administrative office space at No.329 Qingnian Road 301-17, Economic Development District, Guangzhou City, PRC for a monthly rental of 3,000 RMB for a three year term expiring in January 2012. The rental includes water, electricity and administrative fees. The Company also leases from Guangzhou Dongdu Big World Co., Ltd. approximately 240 square meters of office space at Dongdu Room 321, No.475 Huanshidong Road, Guangzhou City, PRC for a monthly rental of 16,500 RMB for a three year term expiring on December 15, 2012. The rental includes water, electricity and administrative fees. Nanhai Ke Da Heng Sheng leases from Tangcun Group Co., Ltd. approximately 11,307 square meters of office space used for its headquarters for an annual rental of 484,869 RMB for a ten year term expiring February 10, 2015. Hainan Ke Da Heng Sheng leases from Shandong Kuangshan Group approximately 720,000 square meters of land (including a building located on the land which covers an area of 8,170 square meters) for an annual rental of 50,000 RMB for a 15  year term expiring December 31,2018.

The Company believes that the foregoing properties are adequate for its present needs.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATION ANF

FINANCIAL CONDITION

The following discussion and analysis of the consolidated financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes of Rongfu Aquaculture,, Inc. appearing elsewhere in this report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Actual results may differ materially from those anticipated in these forward-looking statements.

Overview

The Company is engaged in commercial freshwater aquaculture in the PRC. It sells fish and fish fry and also acts as a freshwater fish dealer (generating trading profits from the purchase of fish from third party farmers and the immediate sale of such fish to wholesalers).

During the fiscal year ended December 31, 2009 (“fiscal 2009”)  the Company sold more than 27,000 tons of adult fish to frozen fish processors and wholesalers in Guangdong Province and Hainan Province, PRC and sold approximately 360 million fry to distributors, which in turn sold such fry to other farmers to cultivate.

Approximately 74.0% of the Company’s revenues for fiscal 2009 were from the sale of adult fish farmed by the Company, approximately 13.7% of the Company’s 2009 revenues were from the re-sale of fish purchased by the Company from farmers and approximately 12.3% of the Company’s 2009 revenues were generated from the sale of fish fry. Approximately 67.9% of the Company’s net income for fiscal 2009 was from the cultivation and sale of adult fish, approximately 30.3% of the Company’s 2009 net income were from the breeding, incubation and sale of fish fry and approximately 1.8% of the Company’s 2009 net income was profit from the Company’s trading of freshwater adult fish. According to China Agriculture Magazine, the Company is currently the largest seller of tilapia fry in the PRC and the Company believes that it is also one of the three largest sellers of adult tilapia in the PRC.

The Company operates 13 adult fish breeding farms, covering a total area of 8,249 mu Three of the Company’s farms are located in Hainan Province, two in the town of Wenchang and one in Nanling. The other 10 farms are located in Guangdong Province in the towns or villages of Nanhai, Qinyuan, Taishan, Yangdong  and Gaoyao. 9 of the farms consist of a series of man-made ponds. Each pond is outfitted with one or more oxygen aeration machines which float on the surface and one or more feeding machines which provide food to the fish twice per day. The aeration machines provide oxygen to the fish and enable the natural removal of fish wastes so that the water does not become toxic for the fish.

4 of the Company’s farms are each comprised of a single lake created by damming a river. Oxygen aeration equipment is not needed since the lakes have a much larger area than the ponds dug by the Company. The land on which the farms are located is leased by the Company from the village under leases for terms of 4 to 30 years.

In addition to its adult fish breeding farms, the Company operates a breeding farm in Wenchang, Hainan Province in which tilapia fry are produced from brood stock.

At its facilities in Nanhai (at which the Company’s fish clinic is also located) and Wenchang, the Company also has constructed and maintains concrete tanks where the Company incubates tilapia. The Company also incubates snakehead and crucian carp fry in its tank in Nanhai. After the incubation period the Company sells approximately 95% of the fry to distributors.

Based on unaudited information, approximately 45.9% of the Company’s revenues from the sale of Company grown adult fish in fiscal 2009 were from the sale of tilapia, approximately 21.2% was from the sale of grass carp, approximately 9.6% was from the sale of snakehead, approximately 8.3% was from the sale of bighead and the balance of the Company’s revenues from the sale of adult fish during fiscal 2009 were from sales of other varieties of freshwater fish, including catfish, bream, black carp and crucian carp.

Based on unaudited information, approximately 77.6%, 15.9% and 6.5% of the Company’s revenues during fiscal 2009 from sales of fish fry were from the sale of tilapia, snakehead and crucian carp fry, respectively. The Company does not incubate fry of the other adult fish that it cultivates. Rather it purchases the fry for such fish from distributors.

In conjunction with Professor Sifa Li and his team from Shanghai Fisheries University, during the period from 1994 to 2006 the Company developed a strain of Nile tilapia called “New Jifu” which has received the approval and recommendation the PRC Ministry of Agriculture. The Company currently produces approximately 17,000 tons of tilapia per year, approximately 60% of which is of the New Jifu variety and 40% of which is oreochromis tilapia.

The Company sells approximately 90% of its tilapia to the owners of 28 processing plants in Guangdong and Hainan Provinces. The processors generally require that the tilapia be of a standard weight of .75 kiligrams. (Because of such weight requirement, the Company generally sells most of its tilapia in the fourth quarter since the growing season of approximately 6 months commences in March of each year.) The processors freeze the tilapia and sell the frozen product for distribution domestically in China and internationally. The balance of the Company’s tilapia, as well as all of the other fish the Company sells, is sold under the Company’s Hengshen brand name to fish brokers located in wholesale markets in Guangdong Province, Hainan Province, Fujian, Xinjiang Province etc. which in turn market the fresh fish nationwide in China though other wholesalers or at retail.

Comparison of three and nine months ended September 30, 2009 and September 30, 2008

Results of Operations and Business Outlook

The Company’s consolidated financial information for the three and nine months ended September 30, 2009 and September 30, 2008 should be read in conjunction with its consolidated financial statements and the notes thereto.

The following table presents the Company’s consolidated net sales for its lines of business for the three and nine months ended September 30, 2009 and 2008, respectively:

Three Months Ended September 30,								Nine Months Ended September 30,
	2009		2008		% Change			2009		2008		% Change
Farm growing		2,230,948		1,205,637		85.0	%		13,407,185		9,494,466	41.2	%
Breeding		837,051		1,136,934		-26.4	%		4,369,794		6,032,124	-27.6	%
Trading		1,695,651		1,836,352		-7.7	%		3,954,948		3,727,727	6.1	%
Consolidated	$	4,763,650	$	4,178,923		14.0	%	$	21,731,927	$	19,254,317	12.9	%

Three Months Ended September 30, 2009 as Compared to three Months Ended September 30, 2008

Net sales for the three months ended September 30, 2009 were $4,763,650, an increase of $584,728 or 14%, when compared to the same period in 2008. Such increase is mainly attributed to the increase in sales of adult fish, which increased $1,025,311 while the sales of fish fry decreased $299,883 compared to the same period of 2008, when the cold weather caused the death rate of adult fish increased significantly and stimulated the sales of fish fry on consequence. Cost of goods sold for the three months ended September 30, 2009 were $3,135,757, an increase of $746,998 or 31.3%, when compared to the same sales period of the prior year. This was primarily due to the increase of cost of adult fish farming.  Gross profit for the three months ended September 30, 2009 was $1,627,893, a decrease of $162,271or -9.1%, when compared to the same period in 2008. The main reason that the Company’s gross profit decreased was because the sales of fish fry, which contributed higher gross margin, decreased compared to the same period of the prior year, while the cost of farming adult fish increased compared to the same period of the prior year. Therefore the increase of gross profit generated by the adult fish farming business did not cover the decrease in gross profit from the fish fry business.

Selling, general and administrative expenses for the three months ended September 30, 2009 were $529,896, an increase of $64,398 or 13.8%, when compared to the same period in 2008, mainly due to an increase in selling expense for the adult fish growing business and the increased general and administrative expenses of the Company

Income from operations for the three months ended September 30, 2009 was $1,097,997, a decrease of $226,669 or 17.1%, when compared to the same period in 2008, primarily due to the decrease of gross profit and increased general and administrative expenses of  the Company

Interest income for the three months ended September 30, 2009 was $14,670, a decrease of $4,977 or 25.3%, when compared to the same period in 2008. Interest expense for the three months ended September 30, 2009 was $86,652, an increase of $72,631or 518.0%, when compared to the same period in 2008. This is primarily because the Company increased its bank loans in the first three months of 2009. Other expense for the three months ended September 30, 2009 was $334 as compared to other expense of $13,537 for same period in 2008.

The provision for income taxes for the three months ended September 30, 2009 was $67,667, an increase of 32,893 or 94.6%, as compared to a provision for income taxes of $34,774 for the three months ended September 30, 2008, which was due to the increase of profit before tax in adult fish farming business. Because the Company’s fish fry breeding business enjoys the income tax free policy, the decrease of profit before tax generated from fish fry business did not affect the Company’s provision for income tax for the three months ended September 30, 2009.

Net income for the three months ended September 30, 2009 was $958,014, a decrease of $323,967 or 25.3%, when compared to the same period in 2008, primarily due to  increases in cost of sales, interest expense and provision for income tax.

Nine Months Ended September 30, 2009 as Compared to Nine Months Ended September 30, 2008

Net sales for the nine months ended September 30, 2009 were $21,731,927, an increase of $2,477,610 or 12.9%, when compared to the same period in 2008. Such increase was mainly attributed to the increase in sales of adult fish, which increased $3,912,718, due to the enhancement of breeding capacity. For the nine months ended September 30, 2009, the sales of fish fry decreased $1,662,329 compared to the same period of the prior year.  Sale of fry was high in 2008 because the cold winter in Southern China killed some grown fish and farmers needed to re-grow their fish and as a result purchased more fry in the later months of 2008. .In 2009, the sale of fry was back to normal levels. Cost of goods sold for the nine months ended September 30, 2009 were $13,323,764, an increase of $3,117,785 or 30.5%, when compared to the same sales period of the prior year, which consisted of an increase of $2,903,482 for breeding adult fish, an increase of $240,969 for trading business, and a decrease of $26,666 for breeding fish fry.   Gross profit for the nine months ended September 30, 2009 was $8,408,163, a decrease of $640,175 or 7.1%, when compared to the same period in 2008. The main reason for the decrease of gross profit for the nine months ended September 30, 2009 was a decrease of $1,635,664 in gross profit from sales of fish fry, while the gross profit from sales of adult fish increased $1,009,236 compared to the same period of last year. The gross margin of fish fry is much higher than the gross margin of adult fish, therefore the decrease of sales of fish fry significantly effect the Company’s gross margin for the nine months ended September 30, 2009

Selling, general and administrative expenses for the nine months ended September 30, 2009 were $1,836,400, a decrease of $188,344 or 9.3%, when compared to the same period in 2008, mainly attributed to the decrease of selling expense of $387,069 for fish fry breeding business, which caused the decrease of selling expense of $359,030 totally.

Income from operations for the nine months ended September 30, 2009 was $6,571,763, a decrease of $451,831 or 6.4%, when compared to the same period in 2008. The mainly reason for decrease of income from operation was the income from operation generated by the fish fry business has decreased $1,344,996, while the income from operation generated by adult fish business increased $992,472.

Interest income for the nine months ended September 30, 2009 was $35,510, a decrease of $17,556 or 33.1%, when compared to the same period in 2008, primarily because the Company used a part of its interest earning funds to pay dividends, which decreased the Company’s interest income as a consequence.  Interest expense for the nine months ended September 30, 2009 was $86,652, an increase of $72,631 or 518.0% due to the increase in the Company’s short term bank loans, when compared to the same period in 2008.  Other expense for the nine months ended September 30, 2009 was $784 as compared to other expense of $0 for the same period in 2008.

Provision for income taxes for the nine months ended September 30, 2009 was $446,572, an increase of $174,136, or 63.9% when compared to the same period in 2008. In 2009 less fry was sold and fry was tax exempt while farmed fish was subject to a 12.5% income tax. Trading revenue from grown fish was taxed at a rate of 25%. In 2009, more revenue was contributed by farming and trading and therefore the provision for income taxes was higher than that of 2008. Income for the nine months ended September 30, 2009 was $6,073,265, a decrease of $717,075 or 10.6%, when compared to the same period in 2008 because of the lower gross margin recorded and higher interest expenses incurred.

During the nine months ended September 30, 2009, total assets decreased by $12,364,992, or 41.5%, from $29,745,548 at December 31, 2008 to $17,407,726 at September 30, 2009.  The majority of the decrease was in cash and accounts receivable, which decreases were partially offset by an increase in inventories.

During the nine months ended September 30, 2009, cash decreased by $13,234,660, or 89.3%, to $1,589,086 as compared to $14,823,746 as of December 31, 2008. This is mainly attributed to the payment of dividends to shareholders.

At September 30, 2009, the accounts receivable balance decreased by $4,318,769, or 97.9%, from the balance at December 31, 2008. Generally, accounts receivable are higher at the end of the fourth quarter, which is the Company’s highest sales quarter

The Company’s inventory as of September 30, 2009 was $14,514,394, an increase of $5,621,483, or 63.2%, compared to inventory at December 31, 2008. Inventory mainly consists of adult tilapia, snakehead, crucian carp and other varieties of freshwater fish. The main reason of the increase of inventory is the Company increased its breeding capacity in the nine months ended September 30, 2009.

At September 30, 2009 fixed assets was $420,978, mainly consisting of aerators, feeding machine and other equipments used in fish farms, representing a decrease of $24,887, or 5.6%, compared to fixed assets as of December 31, 2008.

At September 30, 2009 biological assets was $535,022, a decrease of $306,603, or 36.4%, compared to fixed as of December 31, 2008. The decrease of biological assets was due to the annual amortization of biological assets, and Biological assets consist of tilapia, snakehead, crucian carp.

At September 30, 2009 accounts payable were $2,165,778, an increase of $1,084,133, or 100.2%, compared to accounts payable as of December 31, 2008.The increase of accounts payable was due to the fish food used in fish farm and fish fry breeding, which amount to $1,334,601.

At September 30, 2009 other payable were $0 as compared to an other payable of $873,401  as of December 31, 2008 because the only item included in other payable is personal income tax payable, and as of September 30, 2009 there is no personal income tax unpaid.

At September 30, 2009 due to shareholder  was $1,308,164, a decrease of $7,210,982, or 84.6%, compared to due to shareholder as of December 31, 2008. This is attributed to the repayment to shareholders in the nine months ended September 30, 2009.

At September 30, 2009 advance from clients was $508,016 as compared to no advance from clients as of December 31, 2008. This increase came from several clients in fish farming segment.

At September 30, 2009 current portion of bank loan was $643,501 as compared to no current portion of bank loan as of December 31, 2008 since there was no bank loans as of December 31, 2008.

At September 30, 2009 dividend payable was $0 as compared to a dividend payable of $3,493,603 as of December 31, 2008 since the dividend was paid in the nine months ended September 30, 2009 and there was no dividend payable as of September 30, 2009.

At September 30, 2009 income tax payable was $191,435, a decrease of $588,617, or 75.5%, compared to income tax payable as of December 31, 2008. This is mainly because the fourth season is the peak season of sales normally, and therefore the income tax for the nine months ended September 30, 2009 is lower than the income tax for the whole 2008 fiscal year.

At September 30, 2009 long-term bank loan was $1,170,001, as compared to no long term bank loan as of December 31, 2008, because the Company successfully got a long term bank loan in the nine months ended September 2009.

Fiscal Year Ended December 31, 2008 as Compared to Fiscal Year Ended December 31, 2007

The following table presents the Company’s consolidated net sales for its lines of business for the fiscal years ended December 31, 2008 and 2007, respectively:

Fiscal Year Ended December 31,
	2008		2007		% Change
Farm growing		23,577,694		18,509,803	27.4	%
Breeding		6,928,674		—	—
Trading		5,086,201		4,484,126	13.4	%
Consolidated	$	35,592,569	$	22,993,929	54.8	%

Net sales for the fiscal year ended December 31, 2008 (“fiscal 2008”) were $35,592,569, an increase of $12,598,640 or 54.8%, when compared to net sales for the fiscal year ended December 31, 2007 (“fiscal 2007”). This increase was the result of the $6,928,674 increase of sales of fish fry, a $5,067,890 increase of sales of adult fish, and a $602,075 increase in trading.   Cost of goods sold for fiscal 2008 were $20,043,897, an increase of $3,566,878 or 21.6%, when compared to the same sales period of the prior year. The cost of goods did not increase in line with sales mainly because the  fish fry business, which contributed most to the increase in sales, did not require corresponding increases in cost of goods sold.  Gross profit for fiscal 2008 was $15,548,672, an increase of $9,031,762 or 138.6%, when compared to fiscal 2007, mainly due to the higher than average gross margin of fish fry

Selling, general and administrative expenses for fiscal 2008 were $2,217,796, an increase of $1,079,101 or 65.9%, when compared to fiscal 2007 due to the expansion of the Company’s business.

Income from operations for fiscal 2008 was $12,830,876, an increase of $7,952,661 or 163.0%, when compared to fiscal 2007 as a result of increase of sales of fish fry and sales of adult fish simultaneously.

Interest income for fiscal 2008 was $71,087, an increase of $29,824 or 72.3%, when compared to fiscal 2007 as a result of increase of cash and deposits in  banks.  Interest expense for fiscal 2008 was $12,733, and there was no interest expense in fiscal 2007; Other expense, which is bank charge, for fiscal 2008 was $1,954, a decrease of $1,216 as compared to other expense in fiscal 2007.

Provision for income taxes for fiscal 2008 was $1,027,781, an increase of $958,255, or 1378.3% when compared to fiscal 2007. The Corporate Income Tax Law of the People’s Republic of China (the “new CIT law”) went into effect on January 1, 2008. In accordance with the relevant tax laws and regulations of the PRC, the applicable income tax for fish farming increased. The Company was entitled income tax free for fish farming for fiscal 2007, and a 50% income tax holiday for fiscal 2008.

Net income for fiscal 2008 was $11,859,495, an increase of $7,012,712 or 144.7%, when compared to fiscal 2007.

During fiscal 2008, total assets increased by $12,230,000, or 69.8%, from $17,515,548 at December 31, 2007 to $29,745,548 at December 31, 2008.  The majority of the increase was in cash, accounts receivable, with additional increases in inventories, fixed assets and biological assets.

During fiscal 2008, cash increased by $9,020,117, or 155.4%, to $14,823,746 as compared to $5,803,629 as of December 31, 2007, which is mainly attributed to the development of our business.

At December 31, 2008, the accounts receivable balance increased by $1,735,697, or 64.8%, from the balance at December 31, 2007 due to the increase of sales.

The Company’s inventory as of December 31, 2008 was $8,892,911, an increase of $401,280, or 4.7%, compared to inventory at December 31, 2007. Inventory consists of tilapia, bream, crucian carp, grass carp and other varieties of freshwater fish. The main reason of the increase of inventory is to meet the needs of expanding of business.

At December 31, 2008 fixed assets was $434,927, an increase of $298,817, or 219.5%, compared to fixed assets as of December 31, 2007, primarily due to the new equipments the Company purchased for fish fry business . Fixed assets consist of aerators, feeding machine, variety of equipments used in fish farms and office equipments.

At December 31, 2008 biological assets was $841,625. There were no biological assets as of December 31, 2007  Biological assets, consisting of the parent fish of tilapia, snakehead and crucian carp fry,  are used in the Company’s fish fry business.

At December 31, 2008 accounts payable were $1,081,645, an increase of $380,939, or 54.4% as a result of business expansion, compared to accounts payable as of December 31, 2007.

At December 31, 2008 other payable was $873,401, consisting of the personal income tax payable. There was no other payable  as of December 31, 2007.

At December 31, 2008 due to shareholders  was $8,519,146 , a decrease of $1,883,047, or 18.1%, compared to due to shareholders as of December 31, 2007, this was attributed to the repayment to shareholders.

At December 31, 2008 dividends payable was $3,493,603 as compared to no dividends payable  as of December 31, 2007, since the Company believed it was appropriate to pay dividends to shareholders for fiscal 2008.

At December 31, 2008 income tax payable was $780,052, an increase of $708,086, or 983.9% as compared to income tax payable as of December 31, 2007. The Company was entitled to a income tax free policy for its fish farming business for fiscal 2007, while it was entitled to 50% income tax rate tax holiday for fiscal 2008.

Fiscal Year Ended December 31, 2007 as Compared to Fiscal Year Ended December 31, 2006

The following table presents the Company’s consolidated net sales for its line of business for the fiscal years ended December 31, 2007 and 2006, respectively:

Fiscal Year Ended December 31,
	2007		2006		% Change
Farm growing	$	18,509,803	$	9,471,818	95.4	%
Breeding		0		0	N/A
Trading		4,484,126		0	N/A
Consolidated	$	22,993,929	$	9,471,818	142.8	%

Net sales for fiscal 2007 were $22,993,929, an increase of $13,522,111 or 142.8%, when compared to net sales for the fiscal year ended December 31, 2006 (“fiscal 2006”) This is mainly attributed to the  increase of trading business, which has an increase in sales of $4,484,126, as well as an increase in sales of adult fish, of $9,037,985. Cost of goods sold for fiscal 2007 were $16,477,019, an increase of $8,416,306 or 104.4%, when compared to the same sales period of the prior year, consisting of the increase of cost of trading of $3,972,092, and the increase of cost of adult fish of $4,444,214.  Gross profit for fiscal 2007 was $6,516,910, an increase of $5,105,805 or 361.8%, when compared to fiscal 2006, as a result that the gross profit of trading increased $512,034, and the gross profit of sales of adult fish increased $4,593,771.

Selling, general and administrative expenses for fiscal 2007 were $1,638,696, an increase of $1,012,046 or 161.5%, when compared to fiscal 2006. This is primarily due to the increase of expense related to trading, which increased $296, 671, and the increase of expenses for the expansion of our adult fish business, which increased $255,150.

Income from operations for fiscal 2007 was $4,878,215, an increase of $4,093,759 or 521.9%, when compared to fiscal 2006 as a result of expansion of adult fish farming business and the introduction of trading business.

Interest income for fiscal 2007 was $41,264, an increase of $29,005 or 236.6%, when compared to fiscal 2006 as a result of increased cash and deposit in banks generated by expansion of business.  Other expense, which only includes bank charges, for fiscal 2007 was $3,170, an increase of $2,935 or 1,248.9% over fiscal 2006

Provision for  income taxes for fiscal 2007 was $69,526. There was no provision for income taxes in fiscal 2006 because the Company was entitled income tax free policy for fiscal 2006.

Net income for fiscal 2007 was $4,846,783, an increase of $4,050,303 or 508.5%, when compared to fiscal 2006.

During fiscal 2007, total assets increased by $6,566,022, or 60.0%, from $10,949,526 at December 31, 2006 to $17,515,548 at December 31, 2007.  The majority of the increase was in cash, accounts receivable, with additional increases in inventories, fixed assets and construction in progress.

Liquidity and Capital Resources

The Company has typically financed its operations and expansion from cash flows from operations and loans from our shareholders and banks. We consummated the reverse merger transaction and raise approximately $7.7 million in gross proceeds in a private placement financing on March 29, 2010.

Nanhai Ke Da Heng Sheng has entered into two credit line agreements with Foshan Nanhai Allied Rural Credit Union Danzhao Credit Association, one with a credit line of RMB 5,000,000 and the other with a credit line of RMB 14,800,000. The credit lines are secured by  real estate owned by the sister-in-law of Chen Zhishen, our Chairman of the Board.. As of March 29, 2010, an aggregate principal amount of RMB 9,400,000 of loans were outstanding under the two credit lines. The outstanding loans are all due in January 2011. Outstanding loans under the credit lines bear interest at a rate of  0.45% per month. Interest is payable monthly

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding beneficial ownership of Granto, Inc. common stock as of  March 31, 2010 (i) by each person who is known by us to beneficially own more than 5% of our Common Stock; (ii) by each of the officers and directors of Granto, Inc.; and (iii) by all of officers and directors of Granto, Inc. as a group.

Address of Beneficial Owner (1)	Positions with the Company	Title of Class	Amount and Nature of Beneficial  Ownership (2)			Percent of Class (2)
Officers and Directors
Kelvin Chan (3)(4)	Director, CEO, and President	Common stock, $0.001 par value		17,400,556			81.7	%
Chen Zhisheng (3)	Director and Chairman of the Board	Common stock, $0.001 par value		0			0
Fong Heung Sang	Director	Common Stock,$.001 par value		0
All officers and directors as a group (3 persons named above)		Common stock, $0.001 par value		17,400,556		81.7		%
5% Securities Holders
Hua-Mei 21st Century Partners, L.P. 237 Park Avenue, 9th Floor New York, New York 10017		Common stock, $0.001 par value		2,025,519	(5)		8.7	%
Guerilla Partners, L.P. 237 Park Avenue, 9th Floor New York, New York 10017		Common stock, $.001 par value		1,267,410	(6)		5.6	%

(1)  Unless otherwise provided, the address of each person is Dongdu Room 321, No. 475 Huanshidong Road, Guangzhou City, PRC 510075.

(2)   Beneficial Ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. The percent of class has also been determined in accordance with rules of the SEC. For purposes of computing such percentage, as of March 31, 2010, there were 21,286,789 shares of Granto, Inc. Common Stock outstanding.

(3) Pursuant to certain Call Option Agreements between Mr. Chan and the following persons, each of the following persons has been granted an option, subject to the satisfaction of certain conditions, to purchase from Mr. Chan over the course of approximately three years for $.001 per share, the total number of shares of our Common Stock held by Mr. Chan set forth after the name of the person: Chen Zhi Sheng - 9,000,000; Pan Haicheng – 2,700,000; Zhao Ping – 1,800,000; and Zheng Songkui – 900,000. The conditions and the percentage of the total number of shares subject to the option that would vest upon satisfaction of the condition are as follows:

· entry by the person and the Company into a binding employment agreement for a term of not less than five years for the person to serve as an officer of  the Company – 50%

· the Company and its subsidiaries achieving not less than $1,000,000 in after-tax net income, as determined under United States Generally Accepted Accounting Principles consistently applied (“US GAAP”) for the fiscal year ending December 31, 2010;

· the Company and its subsidiaries achieving not less than $1,500,000 in after-tax profits, as determined under US GAAP, for the fiscal year ending December 31, 2011;

· the Company and its subsidiaries achieving not less than $2,000,000 in after-tax profits, as determined under US GAAP, for the fiscal year ending December 31, 2012.

(4)  Mr. Chan has deposited 2,768,721 shares of Granto, Inc. common stock in escrow with The Crone Law Group, as escrow agent under an Escrow Agreement dated as of March 29, 2010 between Mr. Chan and The Crone Law Group. The terms of the escrow agreement are described in the subsection entitled “Delivery of up to 2,768,721 shares of Granto, Inc. Common Stock from Escrow Based on Net Income and Net Income Per Share” in Item 1.01 herein.

(5)  Includes 855,786 shares of Common Stock which may be issued upon conversion of Series A Stock, 534,867 shares of Common Stock which may be issued upon exercise of Class A Warrants, 534,867 shares of Common Stock which may be issued upon exercise of Class B Warrants, 33,333 shares of Common Stock which may be issued upon exercise of Class C Warrants and 33,333 shares of Common Stock which may be issued upon exercise of Class D Warrants held by Hua-Mei 21st Century Partners, L.P.

(6)  Includes 539,361 shares of Common Stock which may be issued upon conversion of Series A Stock, 337,101 shares of Common Stock which may be issued upon exercise of Class A Warrants, 337,101 shares of Common Stock which may be issued upon exercise of Class B Warrants, 17,949 shares of Common Stock which may be issued upon exercise of Class C Warrants and 17,949 shares of Common Stock which may be issued upon exercise of Class D Warrants held by Guerilla Partners, L.P.

Changes in Control

Except as described herein, there are currently no arrangements which may result in a change in control of the Company.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

Directors and Executive Officers

The following table sets forth the name and position of each of our current executive officers and directors.

Name	Age		Position
Chen Zhisheng		47	Chairman of the Board and Director
Kelvin Chan		36	Chief Executive Officer, President and Director
Fong Heung Sang		51	Director

Chen Zhisheng, became our Chairman and director on March 29, 2010. Mr. Chen is the CEO of Hainan Keda Hengsheng Aquaculture Germchit Co., Ltd. since August, 2007.  He is also the Chairman and CEO of Foshan Nanhai Keda Hengsheng Aquaculture Co., Ltd. since April, 2003. Mr. Chen is an expert in the aquaculture industry, who has been engaged in this area for almost 30 years. Due to his achievements and contributions to the aquaculture industry, he is in charge of the Foshan Nanhai Aquaculture Association as the Chairman. Mr. Chen got his MBA in Agriculture Administration from the Continue Education School of Qinghua University on July, 2006.

Ying Shan (Kelvin) Chan became our director, President and CEO on March 29, 2010. Mr. Chan is the Chairman of Flourishing Blessing (Hong Kong) Co., Ltd. since August, 2008.  He is also a consultant to Nanhai Ke Da Heng Sheng since September 2005. Mr. Chan was a managing director of SUPERBRAND Company from September, 2002 to August, 2005, where he was responsible for the company’s strategic development and operational management. From July, 1998 to August, 2002, Mr. Chan was the manager of the Greater China District of Applied Biosystem, a NASDAQ listed company. Mr. Chan got his bachelor’s degree in biology from the Biology Department of Hong Kong University of Science and Technology in June 1998.

Fong Heung Sang (Dexter) became our director on March 26, 2010. Mr. Fong was CFO of Apollo Solar Energy, Inc (OTC: ASOE) from February 2009 to March 2010. Between December 2006 to January 2009, he was the Executive Vice President of Corporate Development of Fuqi International Inc (Nasdaq: FUQI). He helped guide the company in its IPO in October 2007 and raise $72M. From January 2004 to November 2006, Mr. Fong served as the managing partner of Iceberg Financial Consultants, a financial advisory firm based in China that advises Chinese clients in capital raising activities in the United States. From December 2001 to December 2003, Mr. Fong was the Chief Executive Officer of Holley Communications, a Chinese company that engaged in CDMA chip and cell phone design. Mr. Fong is a U.S. CPA and has held various positions in such capacity with accounting firms in the United States and Hong Kong, including Deloitte and Touche, Ernst and Young, and KPMG Peat Marwick. Mr. Fong also currently serves as director of China Electric Motor, Inc (Nasdaq: CELM), and an independent director and audit committee member of a Hong Kong public company, Universal Technology Inc. (HK:8091). Mr. Fong also serves as a director and audit committee chairman, for each of Diguang International Development Co., Ltd. (OTCBB: DGNG) and Kandi Technology Corp. (NASDAQ-CM: KNDI), both U.S. publicly-traded companies. Mr. Fong graduated from the Hong Kong Baptist College with a diploma in History in 1982. He also received an MBA from the University of Nevada at Reno in 1989 and a Masters degree in Accounting from the University of Illinois at Urbana Champaign in 1993.

Employment Agreements

The Company has not entered into employment agreements with any of its officers or other key employees.

Compensation of Officers and Directors

Since 2004 Chen Zhisheng has received a salary of 5,000 RMB (approximately $732 based on the exchange rate as of March 29, 2010) per month from Nanhai Ke Da Heng Sheng

The Company does not currently pay any compensation to its non-officer directors.

TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CONTROL PERSONS;

CORPORATE GOVERNANCE

Transactions with related persons

During the fourth quarter of 2009, Nanhai Ke Da Heng Sheng loaned an aggregate of RMB 21,900,000 (approximately $3,220,588) to Mr. Zhisheng Chen, the Company’s Chairman of the Board.  Mr. Chen invested the entire proceeds of the loan in the construction of Foshan Nanhai Guanyao Processing Industrial Park, which has a total area of 108,000 square meters with the construction area of 85,000 square meters. The loan proceeds constitute only a portion of the construction costs, which will total RMB 120,000,000 (approximately $17,647,058). Out of the total construction cost, about RMB 25,000,000 (approximately $3,676,470) has not yet been funded.  The loan made to Mr. Chen not bear any interest and may be paid off by deducting Zhisheng Chen’s allocation of shareholders’ dividends or other means. After the construction has been completed, Nanhai Ke Da Heng Sheng has a first option to rent Foshan Nanhai Guanyao Processing Industrial Park on terms to be determined.

Nanhai Ke Da Heng Sheng has entered into two credit line agreements with Foshan Nanhai Allied Rural Credit Union Danzhao Credit Association, one with a credit line of RMB 5,000,000 and the other with a credit line of RMB14,800,000. The credit lines are secured by  real estate owned by the sister-in-law of Chen Zhishen, our Chairman of the Board.. As of March 29, 2010, an aggregate principal amount of RMB 9,400,000 of loans were outstanding under the two credit lines. The outstanding loans are all due in January 2011. Outstanding loans under the credit lines bear interest at a rate of  0.45% per month. Interest is payable monthly

The Company purchases over 90% of its food for the feeding of adult fish from Ke Da Heng Sheng Fish Food Factory, a company which is wholly owned by the sister of the Company’s Chairman, Zhisheng Chen. The Company also purchases over 60% of its food for the feeding of fry from Ke Da Heng Sheng Fish Food Factory. During the year ended December 31, 2009 the Company purchased from  Ke Da Heng Sheng Fish Food Factory adult fish food for an aggregate purchase price of $10,848,894 and fish fry food for an aggregate purchase price of $204,048. The Company’s purchases from Ke Da Heng Sheng Fish Food Factory accounted for 91.2% and 61.1%, respectively, of the Company’s total adult and fish fry food purchases during the year ended December 31, 2009. The Company believes that the amounts paid to Ke Da Heng Sheng Fish Food Factory for the purchases of fish food are equal to or better than the amounts that would have been charged for the same sales by persons not affiliated with the Company.

Director Independence

We currently do not have any independent directors, as the term “independent” is defined by the rules of the Nasdaq Stock Market.

Board Composition and Committees

The Company’s board of directors is currently composed of three members, Chen Zhisheng, Kelvin Chan and Fong Heung Sang.

We currently do not have standing audit, nominating or compensation committees.  Currently, our entire board of directors is responsible for the functions that would otherwise be handled by these committees.  We intend, however, to establish an audit committee, a nominating committee and a compensation committee of the board of directors as soon as practicable.  We envision that the audit committee will be primarily responsible for reviewing the services performed by our independent auditors, evaluating our accounting policies and our system of internal controls.  The nominating committee would be primarily responsible for nominating directors and setting policies and procedures for the nomination of directors.  The nominating committee would also be responsible for overseeing the creation and implementation of our corporate governance policies and procedures.  The compensation committee will be primarily responsible for reviewing and approving our salary and benefit policies (including stock options), including compensation of executive officers.

Our board of directors has not made a determination as to whether any member of our board of directors is an audit committee financial expert.  Upon the establishment of an audit committee, the board will determine whether any of the directors qualify as an audit committee financial expert.

Code of Ethics

Our board of directors will adopt a new code of ethics that applies to all of our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer. The new code will address, among other things, honesty and ethical conduct, conflicts of interest, compliance with laws, regulations and policies, including disclosure requirements under the federal securities laws, confidentiality, trading on inside information, and reporting of violations of the code.

LEGAL PROCEEDINGS

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

MARKET PRICE OF AND DIVIDENDS ON OUR COMMON

EQUITY AND RELATED STOCKHOLDER MATTERS

Prior to the share exchange transaction described above, Rongfu was a privately held company and there was no trading in its common stock. Rongfu has become a wholly owned subsidiary of the Company as a result of the share exchange transaction.

RECENT SALES OF UNREGISTERED SECURITIES;

USE OF PROCEEDS FROM REGISTERED SECURITIES

Reference is made to the disclosure set forth under Item 3.02 of this report, which disclosure is incorporated herein by reference.

DESCRIPTION OF SECURITIES

Rongfu is authorized to issue up to 50,000,000 shares of common stock, par value $.001 per share and has no preferred stock authorized. Each outstanding share of common stock entitles the holder thereof to one vote per share on all matters.  Rongfu’s bylaws provide that elections for directors shall be by a majority of votes.  Stockholders do not have preemptive rights to purchase shares in any future issuance of our common stock.  Upon its liquidation, dissolution or winding up, and after payment of creditors the assets of Rongfu will be divided pro-rata on a share-for-share basis among the holders of the shares of its common stock.

The holders of shares of Rongfu common stock are entitled to dividends out of funds legally available when and as declared by our board of directors.  The board of directors of Rongfu has never declared a dividend and does not anticipate declaring a dividend in the foreseeable future. However, certain subsidiaries of Rongfu declared and paid dividends to their shareholders prior to such subsidiaries’ acquisitions by Rongfu.  Should Rongfu decide in the future to pay dividends, as a holding company, its ability to do so and meet other obligations depends upon the receipt of dividends or other payments from its operating subsidiaries and other holdings and investments, and such payments may be restricted under the laws of the PRC.  In addition, Rongfu’s operating subsidiaries, from time to time, may be subject to restrictions on their ability to make distributions to Rongfu, including as a result of restrictive covenants in loan agreements, restrictions on the conversion of local currency into U.S. dollars or other hard currency and other regulatory restrictions.  In the event of Rongfu’s liquidation, dissolution or winding up, holders of its common stock are entitled to receive, ratably, the net assets available to stockholders after payment of all creditors.

All of the issued and outstanding shares of Rongfu’s common stock are duly authorized, validly issued, fully paid and non-assessable.  To the extent that additional shares of Rongfu’s common stock are issued, the relative interests of existing stockholders will be diluted.

Rongfu is a privately held company and has no transfer agent.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Rongfu’s Articles of Incorporation do not provide for the indemnification of its directors, officer or agents. Article V, Section 1 of Ronfu’s By-laws provide that Rongfu may indemnify 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 (other than an action by or in the right of Rongfu) by reason of the fact that he or she is or was a director, officer, employee or agent of Rongfu, or is or was serving at the request of Rongfu as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of Rongfu, and, with respect to any criminal action or proceedings, had no reasonable cause to believe his or her conduct was unlawful.

Reference is made to Section 145 of the Delaware general Corporation Law, which provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement in connection with specified actions, suits or proceedings, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation (a “derivative action”)), if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interest of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe their conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses (including attorneys’ fees) incurred in connection with the defense or settlement of such action, and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation’s charter, bylaws, disinterested director vote, stockholder vote, agreement or otherwise.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore unenforceable.

At the present time, there is no pending litigation or proceeding involving a director, officer, employee or other agent of ours in which indemnification would be required or permitted.  We are not aware of any threatened litigation or proceeding which may result in a claim for such indemnification.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Please see Item 9.01 - “Financial Statements and Exhibits” of this Current Report.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Commission , located on 100 F Street NE, Washington, D.C. 20549, Current Reports on Form 8-K, Quarterly Reports on Form 10-QSB, Annual Reports on Form 10-KSB, and other reports, statements and information as required under the Securities Exchange Act of 1934, as amended.

The reports, statements and other information that we have filed with the Commission  may be read and copied at the Commission's Public Reference Room at 100 F Street NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330.

The Commission maintains a web site (http://www.sec.gov.) that contains the registration statements, reports, proxy and information statements and other information regarding registrants that file electronically with the Commission such as us. You may access our Commission filings electronically at this Commission website. These Commission filings are also available to the public from commercial document retrieval services.

ITEM 3.02    UNREGISTERED SALES OF EQUITY SECURITIES

On March 29, 2010, we consummated a Share Exchange Agreement with Rongfu and 9 stockholders and warrantholders of Rongfu (the “Rongfu Stockholders”) (the “Share Exchange Agreement”).  Pursuant to the Share Exchange Agreement, the Rongfu Stockholders transferred 100% of the outstanding shares of common stock and 100% of the warrants to purchase shares of common stock of Rongfu held by them, in exchange for an aggregate of  18,623,889 and warrants to purchase an aggregate of 666,666 shares of our Common Stock. The shares of our Common Stock issued to the Rongfu Stockholders constitute approximately 77.4% of our issued and outstanding Common Stock on a fully-diluted basis giving effect to the share exchange and the sale of our Series A Stock pursuant to the Purchase Agreement discussed above, but not including any outstanding purchase warrants to purchase shares of our common stock, including the warrants issued pursuant to the Purchase Agreement or the warrants issued pursuant to the Share Exchange Agreement. The shares of our Common Stock and warrants to purchase our Common Stock were issued in accordance with a safe harbor from the registration requirements of the Securities Act under Regulation S thereunder or an exemption from the registration requirements of the Securities Act under Section 4(2) by virtue of compliance with the provisions of Regulation D under the Securities Act.

On March 29, 2010 we consummated the sale to 18 investors of an aggregate of (a) 2,768,721 shares of our Series A Stock, (b) five year Series A Warrants to purchase an aggregate of 1,730,451 shares of our Common Stock for $3.47 per share and (c) five year Series B Warrants to purchase an aggregate of 1,730,451 shares of our Common Stock for $4.17 per share, for an aggregate purchase price of $7.7 million. Each share of Series A Stock will automatically convert into one share of our Common Stock (subject to adjustment in certain circumstances to protect the holder against dilution) immediately all of the following being satisfied:

· a registration statement covering the resale of the shares of Common Stock to be issued upon conversion shall have been filed by the Company and declared effective by the SEC, and such registration statement continues to be effective up through and including the date of the conversion;

· our shares of Common Stock are eligible for trading on one of the following exchanges: the Nasdaq SmallCap Market, the American Stock Exchange, the New York Stock Exchange, the Nasdaq National Market or the OTC Bulletin Board;

· the daily volume weighted average price of the Common Stock for ten consecutive trading days immediately preceding the conversion is greater than or equal to $5.56 per share (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares) on the primary trading market on which the Common Stock is then listed or quoted; and

· the average daily dollar volume of the Common Stock on the primary trading market on which the Common Stock is then listed or quoted is greater than or equal to $100,000 for ten consecutive trading days at any time before the conversion.

The issuances of the shares of Series A Stock, Series A Warrants and Series B Warrants were exempt from registration under the Securities Act by virtue of compliance with Section 4(2) of the Securities Act and Regulation D thereunder and Regulation S.

ITEM 5.01    CHANGES IN CONTROL OF REGISTRANT

Reference is made to the disclosure set forth under Item 2.01 of this report, which disclosure is incorporated herein by reference.

As a result of the closing of the share exchange with the Rongfu Stockholders, the Rongfu Stockholders now own approximately 77.4% of the total outstanding shares of our Common Stock on a fully-diluted basis giving effect to the share exchange and the sale of our Series A Stock, but not including any outstanding purchase warrants to purchase shares of our common stock, including the warrants issued pursuant to the Purchase Agreement or the warrants issued pursuant to the Share Exchange Agreement

ITEM 5.02    DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS

In connection with the closing of the Share Exchange Agreement on March 29, 2010, Janet Gargiulo resigned as President and Director of Granto, Inc. Such person resigned voluntarily with no disagreement regarding Granto, Inc.

Also on March 29, 2010, in connection with the closing of the Share Exchange Agreement and the reverse acquisition, Chen Zhisheng, Kelvin Chan and Fong Heung Sang were appointed as directors of Grantio, Inc., Kelvin Chan was elected by the board of directors to be President and Chief Financial Officer of Granto, Inc. and Chen Zhisheng was elected as Chairman of the Board of Granto, Inc.

For certain biographical and other information regarding the newly appointed officers and directors, see the disclosure under Item 2.01 of this Current Report, which disclosure is incorporated herein by reference.

ITEM 5.03 AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL YEAR

Pursuant to the Company’s Articles of Incorporation, our Board of Directors is authorized to fix the voting powers, designations, preferences, and relative, participating, optional, or other special rights, and the qualifications, limitations, or restrictions relating to any wholly unissued series of Preferred Stock and the number of shares constituting any series and the designation thereof. On March 26, 2010, pursuant to the written consent of the sole director of the Board of Directors of the Company, the Company filed with the Secretary of State of the state of Nevada, a Certificate of Designations, Preferences and Rights of Series A Preferred Stock to designate out of the 10,000,000 authorized shares of the Company’s Preferred Stock, par value $0.001 per share, a series of 3,000,000 shares of Series A Preferred Stock.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(a)  Financial Statements

The financial statements of Rongfu are appended to this Current Report beginning on page F-1.

(d)    Exhibits

EXHIBIT INDEX

Exhibit Number	Description
2.1	Share Exchange Agreement by and among Granto, Inc., Rongfu, the Rongfu Stockholders and Janet Gargiulo,  dated March 29, 2010
3.1	Certificate of Designations, Preferences and Rights of Series A Preferred Stock of Granto, Inc.
4.1	Series A Preferred Stock Purchase Agreement between Granto, Inc. and certain investors, dated March 29, 2010.
4.2	Form of Class A Warrant of Granto, Inc. issued on March 29, 2010 pursuant to Series A Preferred Stock Purchase Agreement
4.3	Form of Class B Warrant of Granto, Inc. issued on March 29, 2010 pursuant to Series A Preferred Stock Purchase Agreement
4.4	Escrow Agreement between Granto, Inc., certain officers of Granto, Inc. and The Crone Law Group, dated March 29, 2010.
4.5	Form of Class C Warrant issued on March 29, 2010 pursuant to Share Exchange Agreement.
4.6	Form of Class D Warrant issued on March 29, 2010 pursuant to Share Exchange Agreement.
10.1	Form of Call Option Agreement between Kelvin Chan and various call optionees, dated as December 29, 2009 and Amendment No. 1 thereto dated March 29, 2010.
10.2	Memorandum between Zhisheng Chen and Nanhai Ke Da Heng Sheng dated December 2009
10.3	Technological Cooperation Agreement Regarding the Propogation of Fish Fry of Nile Tilapia between Nanhai Ke Da Heng Sheng and Sifa Li dated December 18, 2009.
10.4	Entrusted Management Agreement dated December 26, 2009 among Chen Zhisheng, Nanhai Ke Da Heng Sheng and Guangzhou Flourishing.
10.5	Exclusive Option Agreement dated December 26, 2009 among Chen Zhisheng, Nanhai Ke Da Heng Sheng and Guangzhou Flourishing.
10.6	Shareholder’s Voting Proxy Agreement between Chen Zhisheng and Guangzhou Flourishing.
10.7	Shares Pledge Agreement between Chen Zhisheng, Nanhai Ke Da Heng Sheng and Guangzhou Flourishing.

RONGFU AQUACULTURE, INC

CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

TABLE OF CONTENTS

Report of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets	F-2
Consolidated Statements of Income	F-3
Consolidated Statements of Cash Flows	F-4
Consolidated Statements of Stockholders’  Equity	F-5
Notes to  consolidated Financial Statements	F-6 - F-15

ACSBAcquavella, Chiarelli, Shuster, Berkower & Co., LLP

517 Route one	1 Penn Plaza
Iselin, New Jersey, 08830	36the Floor
732.855.9600	New York, NY 10119

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders of

Rongfu Aquaculture, Inc.

We have reviewed the accompanying consolidated balance sheets of Rongfu Aquaculture, Inc. as of September 30, 2009 and 2008 and the consolidated statements of operations for the nine months ended September 30, 2009 and 2008 and consolidated statements of cash flows for the nine months then ended.  These financial statements are the responsibility of the Company's management.

We conducted our review in accordance with standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with auditing standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Rongfu Aquaculture, Inc. as of December 31, 2008 and the related consolidated statements of income, retained earnings and comprehensive income, and  consolidated statement of cash flows for the year then ended; and in our report dated January 29, 2010 we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheets as of December 31, 2008, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Acquavella, Chiarelli, Shuster, Berkower & Co., LLP

Certified Public Accountants

New York, N.Y.

January 29, 2010

F-1

RONGFU AQUACULTURE, INC

CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2009 AND DECEMBER 31, 2008

	9/30/2009			12/31/2008
	(Unaudited)			(Audited)
ASSETS
Current Assets
Cash	$	1,589,086		$	14,823,746
Accounts receivable, net		94,187			4,412,956
Inventories		14,514,394			8,892,911
Other receivable		21,206			21,193
Prepaid expenses		232,853			307,252
Total Current Assets		16,451,726			28,458,058
Fixed assets		420,978			445,865
Biological assets		535,022			841,625
Total Assets	$	17,407,726		$	29,745,548
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable	$	2,165,778		$	1,081,645
Other payable		-			873,401
Due to shareholder		1,308,164			8,519,146
Advance from clients		508,016			-
Short-term bank loan		643,501			-
Dividend payable		-			3,493,603
Income tax payable		191,435			780,052
Total Current Liabilities	$	4,816,894		$	14,747,847
Long-term Liabilities
Long-term bank loan		1,170,001			-
Total liabilities		5,986,895			14,747,847
Stockholders' Equity
Common stock, par value, $0.001 per share, 22,373,434 shares authorized, 1,118,672 and 1,118,672 shares issued and outstanding		1,119			1,119
Additional paid in capital		817,432			817,432
Subscription receivables		(1,119	)		(1,119	)
Statutory reserve		665,852			665,852
Other comprehensive income		879,258			861,166
Retained earnings		9,058,289			12,653,251
Total Stockholders' Equity		11,420,831			14,997,701
Total Liabilities and Stockholders' Equity	$	17,407,726		$	29,745,548

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

F-2

RONGFU AQUACULTURE, INC

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2009			2008			2009			2008
Sales, net	$	4,763,650		$	4,178,923		$	21,731,927		$	19,254,317
Cost of sales		3,135,757			2,388,759			13,323,764			10,205,979
Gross profit		1,627,893			1,790,164			8,408,163			9,048,338
Selling, general and administrative expenses		529,896			465,498			1,836,400			2,024,744
Income from operations		1,097,997			1,324,666			6,571,763			7,023,594
Other Income (Expense)
Interest income		14,670			19,647			35,510			53,066
Interest expense		(86,652	)		(14,021	)		(86,652	)		(14,021	)
Other expense		(334	)		(13,537	)		(784	)		-
Total other Income (Expense)		(72,316	)		(7,911	)		(51,926	)		39,045
Income before income taxes		1,025,681			1,316,755			6,519,837			7,062,639
Provision for income taxes		67,667			34,774			446,572			272,436
Net income	$	958,014		$	1,281,981		$	6,073,265		$	6,790,203
Net income per common share
Basic	$	0.86		$	1,15		$	5.43		$	6.07
Weighted average common shares outstanding
Basic		1,118,672			1,118,672			1,118,672			1,118,672

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

F-3

RONGFU AQUACULTURE, INC

CONSOLDIATED STATEMENTS OF CASH FLOWS

FOR NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008

(Unaudited)

	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	6,073,265		$	6,790,203
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation		74,168			35,340
Amortization of biological assets		306,603			222,662
(Increase) / decrease in assets:
Accounts receivables		4,319,397			2,113,258
Inventories		(5,612,888	)		(3,954,712	)
Prepaid expense		74,559			72,084
Increase / (decrease) in current liabilities:
Accounts payable		1,082,883			1,816,021
Other payable		(706,103	)
Advances from clients		507,756
Income taxes payable		(588,817	)		(74,193	)
Net cash provided by operating activities		5,530,823			7,020,663
CASH FLOWS FROM INVESTING ACTIVITIES
Purchased fixed assets		(60,219	)		(170,306	)
Biological assets		-			(1,010,458	)
Construction in progress		-			(8,493	)
Net cash used by investing activities		(60,219	)		(1,189,257	)
CASH FLOWS FROM FINANCING ACTIVITIES
Due to shareholder		(7,380,100	)		(1,963,821	)
Borrowings (payment) of short-term loan, net		643,171
Borrowings from long-term bank loan		1,754,104
Payment of long-term bank loan		(584,701	)
Dividend paid		(13,162,289	)
Capital contribution		-			423,968
Net cash used by financing activities		(18,729,815	)		(1,539,853	)
Effect of exchange rate changes on cash and cash equivalents		24,551			393,969
Net change in cash and cash equivalents		(13,234,660	)		4,685,522
Cash and cash equivalents, beginning balance		14,823,746			5,803,629
Cash and cash equivalents, ending balance	$	1,589,086		$	10,489,151
SUPPLEMENTAL DISCLOSURES:
Cash paid during the year for:
Income tax payments	$	1,035,528		$	346,029
Interest payments	$	86,652		$	14,021

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

F-4

RONGFU AQUACULTURE, INC

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

FOR NINE MONTHS ENDED SEPTEMBER 30, 2009

(Unaudited)

						Additional		Other							Total
	Common Stock		Subscription			Paid-in		Comprehensive		Statutory		Retained			Stockholders
	Amount		Receivables			Capital		Income		Reserves		Earnings			Equity
Balance December 31, 2008		1,119		(1,119	)		817,432		861,166		665,852		12,653,251			14,997,701
Foreign currency translation adjustments									18,092							18,092
Dividend paid or declared													(9,668,227	)		(9,668,227	)
Income for the nine months ended September 30, 2009													6,073,265			6,073,265
Balance September 30, 2009	$	1,119	$	(1,119	)	$	817,432	$	879,258	$	665,852	$	9,058,289		$	11,420,831

The accompanying notes are an integral part of these financial statements

F-5

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

(Unaudited)

Note 1 - ORGANIZATION

Rongfu Aquaculture, Inc., (the “Company” or “Rongfu”) was incorporated in the United States in Delaware on January 8, 2009.  The Company formed Flourishing Blessing (Hongkong) Co., Ltd. (“Hongkong Rongfu”) on November 11, 2008. The Company formed Guangzhou Flouring Blessing Heng Seng Agriculture Technology Ltd. (“Guangzhou Rongfu”) on January 9, 2009.  Guangzhou Rongfu is a wholly-owned subsidiary of Rongfu Aquaculture, Inc. organized under the laws of the People’s Republic of China(PRC). Foshan Nanhai Keda Heng Send Aquatic Co., Ltd. (“Foshan”) was incorporated in Foshan, Guangdong Province on April 30, 2003.  Foshan formed Hainan keda hengsheng Aquatic fry Co., LTD. in Hainan province on August 6, 2007.

On December 26, 2009, Guangzhou Rongfu entered into a series of agreements including a Management Entrustment Agreement, a Shareholders’ Voting Proxy Agreement, an Exclusive Option Agreement and a Share Pledge Agreement (the “Agreements”) with Foshan and its shareholders (the “Transaction”). Foshan Nanhai Keda Heng Seng Aquatic Co. Ltd. is a corporation formed under the laws of the PRC. According to these Agreements, Guangzhou Rongfu acquired management control of Foshan whereby Guangzhou Rongfu is entitled to all of the earnings before tax of Jiali, as a management fee, and is obligated to fund Foshan operations and pay all of the debts.

The contractual arrangements completed on December 26, 2009 provide that Guangzhou Rongfu has controlling interest in Foshan under FASB Accounting Standards Codification “Consolidation of Variable Interest Entities”, an Interpretation of an Accounting Research Bulletin, which requires Guangzhou Rongfu to consolidate the financial statements of Foshan and ultimately consolidate with its parent company, Rongfu Aquaculture, Inc.

The Company, through its subsidiary, and exclusive contractual arrangement with Foshan Nanhai Keda Heng Seng Aquatic Co. Ltd. is engaged in integrated business of aquaculture including Tilapia brood stock, Tilapia fry, Tilapia farming, and marketing for Tilapia. It is specializing in the production of the Hengsheng Brand Nile Tilapia and the new licensed New Jifu Tilapia.

In the opinion of the management of Rongfu, the accompanying consolidated interim financial statements contain all material adjustments (consisting only of normal recurring adjustments) necessary to present fairly the consolidated financial position of Rongfu at September 30, 2009 and the results of its operations for the three and nine month periods ended September 30, 2009 and 2008 and its cash flows for the nine month periods September 30, 2009 and 2008. Actual results may differ from these estimates as a result of different assumptions or conditions.

 Consolidated financial statements present as if the Company and its subsidiaries have been together since January 1, 2006.

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and represent the pro forma historical results of the consolidated group. The Company adopted the new accounting guidance (“Codification”) on July 1, 2009. For the year ended December 31, 2009, all reference for periods subsequent to July 1, 2009 are based on the codification. The Company's functional currency is the Chinese Renminbi, however the accompanying consolidated financial statements have been translated and presented in United States Dollars.

F-6

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

(Unaudited)

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, its subsidiary and variable interest entity (“VIE”) for which the Company is the primary beneficiary.  All inter-company accounts and transactions have been eliminated in consolidation.  The Company has adopted the Consolidation Topic of the FASB Accounting Standards Codification which requires 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.

.

Translation Adjustment

As of September 30, 2009 and December 31, 2008, the accounts of the Company were maintained, and its financial statements were expressed, in Chinese Yuan Renminbi (“CNY”).  Such financial statements were translated into U.S. Dollars (“USD”) in accordance with the Foreign Currency Matters Topic of the Codification, with the CNY as the functional currency.  According to the Codification, all assets and liabilities were translated at the current exchange rate, stockholders’ equity are translated at the historical rates and income statement items are translated at the average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with the Comprehensive Income Topic of the Codification, as a component of shareholders’ equity.  Transaction gains and losses are reflected in the income statement.

Statement of Cash Flows

In accordance with the Statement of Cash Flows Topic of the Codification, cash flows from the Company’s operations are based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet.

Use of Estimates

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

Comprehensive Income

The Company follows the Comprehensive Income Topic of the Codification. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income.

Risks and Uncertainties

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 environments in the PRC, by the general state of the PRC’s economy.  The Company’s business may be influenced 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-7

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

(Unaudited)

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The Company is subject to substantial risks from, among other things, intense competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history, foreign currency exchange rates and the volatility of public markets.

Contingencies

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought. There were no contingencies of this type on September 30, 2009.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed.

There were no contingencies of this type on September 30, 2009.

Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.

Accounts Receivable

The Company maintains reserves for potential credit losses on accounts receivable.   Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves.  Reserves are recorded primarily on a specific identification basis.  There were no allowances for doubtful accounts as of September 30, 2009 and December 31, 2008, respectively.

Inventories

Inventories are valued at the lower of cost (determined on a weighted average basis) or market. The Management compares the cost of inventories with the market value and allowance is made for writing down their inventories to market value, if lower. As of September 30, 2009 and December 31, 2008, inventories consist of the following:

	9/302009		12/312008
Raw materials	$	3,184,155	$	27,725
Work in process and finished goods		11,330,239		8,865,186
Total	$	14,514,394	$	8,892,911

F-8

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

(Unaudited)

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Property, Plant & Equipment

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

Buildings	10-20 years
Fishing gear	5-10years
Transportation equipment	5-10 years
Office equipment	3-5 years

As of September 30, 2009 and December 31, 2008, Property, Plant & Equipment consist of the following:

	9/30/2009			12/31/2008
Buildings	$	73,630		$	60,230
Fishing gear		424,937			408,197
Transportation equipment		37,330			37,155
Office equipment		31,091			1,187
Construction in progress		-			10,938
Total		566,988			517,707
Accumulated depreciation		(146,010	)		(71,842	)
	$	420,978		$	445,865

Depreciation expense for the nine months ended September 30, 2009 and 2008 was $74,168 and $17,820, respectively.

Long-Lived Assets

Since April 30, 2003, the Company adopted the Property, Plant and Equipment Topic of the Codification, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes previous accounting guidance, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” and “Reporting the Results of Operations for a Disposal of a Segment of a Business.” The Company periodically evaluates the carrying value of long-lived assets to be held and used, which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal. Based on its review, the Company believes that, as of September 30, 2009, there were no impairments of its long-lived assets.

F-9

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

 (Unaudited)

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fair Value of Financial Instruments

The Financial Instrument Topic of the Codification requires that the Company disclose estimated fair values of financial instruments. The carrying amounts reported in the statements of financial position for current assets and current liabilities qualifying as financial instruments are a reasonable estimate of fair value.

.

Revenue Recognition

The Company’s revenue recognition policies are in compliance with the Revenue Recognition Topic of the Codification. Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

Advertising

Advertising expenses consist primarily of costs of promotion for corporate image and product marketing and costs of direct advertising. The Company expenses all advertising costs as incurred. Advertising expense for the nine months ended September 30, 2009 and 2008 were $18,867 and $ 7,925, respectively.

Income Taxes

The Company utilizes the accounting guidance, “Accounting for Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

It is the Company’s intention to permanently reinvest earnings from activity with china. And thereby indefinitely postpone repatriation of these funds to the US. Accordingly, no domestic deferred income tax provision has been made fro US income tax which could result from paying dividend to the Company.

There were no deferred tax difference in 2009 and 2008

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company has a diversified customer base, all are in China. The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited.

F-10

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

(Unaudited)

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Subsequent Events

The Company evaluated subsequent events through the time of filing this year-end report for items effecting three-year ended 2008, 2007 and 2006 through January 29, 2010. No significant events occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on our consolidated financial statements.

Recent Accounting Pronouncements

In May 2009, the FASB issued accounting guidance for “Subsequent Events”, which is included in ASC Topic 855, Subsequent Events. ASC Topic 855 established principles and requirements for evaluating and reporting subsequent events and distinguishes which subsequent events should be recognized in the financial statements versus which subsequent events should be disclosed in the financial statements. ASC Topic 855 also required disclosure of the date through which subsequent events are evaluated by management. ASC Topic 855 was effective for interim periods ending after June 15, 2009 and applies prospectively. Because ASC Topic 855 impacted the disclosure requirements, and not the accounting treatment for subsequent events, the adoption of ASC Topic 855 did not impact our results of operations or financial condition.

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

In August 2009, the FASB issued, Measuring Liabilities at Fair Value, which provides additional guidance on how companies should measure liabilities at fair value under ASC 820. The ASU clarifies that the quoted price for an identical liability should be used. However, if such information is not available, an entity may use, the quoted price of an identical liability when traded as an asset, quoted prices for similar liabilities or similar liabilities traded as assets, or another valuation technique (such as the market or income approach). The ASU also indicates that the fair value of a liability is not adjusted to reflect the impact of contractual restrictions that prevent its transfer and indicates circumstances in which quoted prices for an identical liability or quoted price for an identical liability traded as an asset may be considered level 1 fair value measurements. This ASU is effective October 1, 2009. The Company is currently evaluating the impact of this standard, but would not expect it to have an impact on the Company’s consolidated results of operations or financial condition.

F-11

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

(Unaudited)

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

In September 2009, the FASB issued, Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), that amends ASC 820 to provide guidance on measuring the fair value of certain alternative investments such as hedge funds, private equity funds and venture capital funds. The ASU indicates that, under certain circumstance, the fair value of such investments may be determined using net asset value (NAV) as a practical expedient, unless it is probable the investment will be sold at something other than NAV. In those situations, the practical expedient cannot be used and disclosure of the remaining actions necessary to complete the sale is required. The ASU also requires additional disclosures of the attributes of all investments within the scope of the new guidance, regardless of whether an entity used the practical expedient to measure the fair value of any of its investments. This ASU is effective October 1, 2009. The Company is currently evaluating the impact of this standard, but would not expect it to have an impact on the Company’s consolidated results of operations or financial condition.

In October 2009, the FASB issued, Multiple-Deliverable Revenue Arrangements—a consensus of the FASB Emerging Issues Task Force, that provides amendments to the criteria for separating consideration in multiple-deliverable arrangements. As a result of these amendments, multiple-deliverable revenue arrangements will be separated in more circumstances than under existing U.S. GAAP. The ASU does this by establishing a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable will be based on vendor-specific objective evidence if available, third-party evidence if vendor-specific objective evidence is not available, or estimated selling price if neither vendor-specific objective evidence nor third-party evidence is available. A vendor will be required to determine its best estimate of selling price in a manner that is consistent with that used to determine the price to sell the deliverable on a standalone basis. This ASU also eliminates the residual method of allocation and will require that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method, which allocates any discount in the overall arrangement proportionally to each deliverable based on its relative selling price. Expanded disclosures of qualitative and quantitative information regarding application of the multiple-deliverable revenue arrangement guidance are also required under the ASU. The ASU does not apply to arrangements for which industry specific allocation and measurement guidance exists, such as long-term construction contracts and software transactions. This is effective beginning January 1, 2011. The Company is currently evaluating the impact of this standard on its consolidated results of operations and financial condition.

In October 2009, the FASB issued, Certain Revenue Arrangements That Include Software Elements—a consensus of the FASB Emerging Issues Task Force, that reduces the types of transactions that fall within the current scope of software revenue recognition guidance. Existing software revenue recognition guidance requires that its provisions be applied to an entire arrangement when the sale of any products or services containing or utilizing software when the software is considered more than incidental to the product or service. As a result of the amendments, many tangible products and services that rely on software will be accounted for under the multiple-element arrangements revenue recognition guidance rather than under the software revenue recognition guidance. Under the amendments, the following components would be excluded from the scope of software revenue recognition guidance:  the tangible element of the product, software products bundled with tangible products where the software components and non-software components function together to deliver the product’s essential functionality, and undelivered components that relate to software that is essential to the tangible product’s functionality. The ASU also provides guidance on how to allocate transaction consideration when an arrangement contains both deliverables within the scope of software revenue guidance (software deliverables) and deliverables not within the scope of that guidance (non-software deliverables). This amendment is effective beginning January 1, 2011. The Company is currently evaluating the impact of this standard on its consolidated results of operations and financial condition.

F-12

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

(Unaudited)

Note 3 –OTHER RECEIVABLES

Other receivables mainly consist of cash advances to rent deposit. As of September 30, 2009 and December 31, 2008, the other receivables were $21,206 and $21,193, respectively.

 Note 4 –BIOLOGICAL ASSETS

As of September 30, 2009, December 31, 2008, Biological assets consist of the following:

	9/30/2009				12/312008
Carp	$	20,562		$	20,562
Tilapia		959,561			959,561
Snakeheads		178,204			178,204
Total		1,158,327			1,158,327
Accumulated depreciation		(623,305	)		(316,702	)
	$	535,022		$	841,625

Note 5 – RELATED PARTY

The Company buys fish feed from a related party supplier. The Company also borrowed money from a shareholder of the Company.

Note 6 – DUE TO SHAREHOLDER

The Company has a payable due to a shareholder.  As of September 30, 2009 and December 31, 2008, due to a shareholder were $ 1,308,164 and $ 8,519,146, respectively. Amounts due are payable upon demand with no stated interest.

Note 7 – CONCENTRATIONS

At September 30 2009, 87% of account payable due to one related party vendor. For the nine months ended September 30, 2009, the Company had one related party vendor who accounted for 89% of total purchases.

Note 8 – COMPENSATED ABSENCES

Regulation 45 of the local labor law of the People’s Republic of China (“PRC”) entitles employees to annual vacation leave after 1 year of service.  In general, all leave must be utilized annually, with proper notification.  Any unutilized leave is cancelled.

Note 9- DEBT

As of September 30, 2009, the Company had debt as follows:

	Amount		Interest rate			Due
Short tem bank loan	$	643,501		4.425	%	Feb 13,2010
Long term bank loan	$	1,170,001		4.50	%	Feb 13 and 14, 2011

The Company is using these loans for working capital purposes and secured by certain real estate and property insurance.

F-13

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

(Unaudited)

Note 10 - INCOME TAXES

The Company operates in more them one jurisdiction with complex regulatory environments subject to different interpretations by the taxpayer and the respective governmental taxing authorities, we evaluate our tax positions and establish liabilities, if required. For uncertain tax position which may be challenged by local tax authorities and may not be fully sustained despite our belief that the underlying tax positions maybe be fully supportable. At this time the Company is not able to make a reasonable estimate of the impact on the effective tax rate related these items which could be challenged.

Pursuant to the PRC Income Tax Laws, the Enterprise Income Tax (“EIT”) through December 31, 2007 is at a statutory rate of 33%, which is comprised of 30% national income tax and 3% local income tax.  As of January 1, 2008, the EIT is at a statutory rate of 25%.  The Company is an agriculture enterprise and under PRC Income Tax Laws, it is entitled to an exemption for 2006.  Starting from January 1, 2008, it is entitled to have new PRC tax policy for the agriculture enterprise.

The Company’s income come from three parts including fish breeding, fish cultivation and selling adult fish. For income from fish breeding, it is entitled to an exemption. For income from fish cultivation, EIT is a discount rate of 12.5%. For income from selling adult fish, EIT is a rate of 25%.

The following is a reconciliation of income tax expense:
9/30/2009	International		Total
Current	$	446,572	$	446,572
Deferred		-		-
Total	$	446,572	$	446,572
9/30/2008	International		Total
Current	$	272,436	$	272,436
Deferred		-		-
Total	$	272,436	$	272,436

Note 11– COMMITMENTS & CONTINGENCIES

The Company leases facilities under operating leases, which expire on different dates. It pays for on an annual basis and accrues for throughout the year.   For nine months ended September 30, 2009, rent expense was $ 315,903.  Future payments under these leases are as follows:  2010 - $75,280; 2011 - $65,925; 2012 - $65,925; 2013 - $46,979.

Note 12 – STATUTORY RESERVE

In accordance with the laws and regulations of the PRC, a wholly-owned Foreign Invested Enterprises income, after the payment of the PRC income taxes, shall be allocated to the statutory surplus reserves and statutory public welfare fund. Prior to January 1, 2006 the proportion of allocation for reserve was 10 percent of the profit after tax to the surplus reserve fund and additional 5-10 percent to the public affair fund. The public welfare fund reserve was limited to 50 percent of the registered capital.  Effective January 1, 2006, there is now only one fund requirement. The reserve is 10 percent of income after tax, not to exceed 50 percent of registered capital. Statutory Reserve funds are restricted for set off against losses, expansion of production and operation or increase in register capital of the respective company. Statutory public welfare fund is restricted to the capital expenditures for the collective welfare of employees. These reserves are not transferable to the Company in the form of cash dividends, loans or advances. These reserves are therefore not available for distribution except in liquidation. As of September 30, 2009 and December 31, 2008, the Company had allocated $ 665,852, to these non-distributable reserve funds.

F-14

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2009

(Unaudited)

Note 13- OTHER COMPREHENSIVE INCOME

Balances of related after-tax components comprising accumulated other comprehensive income, included in stockholders’ equity, at September 30, 2009 and December 31, 2008, are as follows:

	Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Income
Balance at December 31, 2008	$	861,166	$	861,166
Change for 2009		18,092		18,092
Balance at September 30, 2009	$	879,258	$	879,258

Note 14- SUBSEQUENT EVERNTS

On December, 2009, a shareholder borrowed RMB 21,900,000 ($ 3,203,019 translated at $1=RMB 6.8373) from the Company. The shareholder invested this amount of money in construction of Foshan Nanhai Guanyao Processing Industrial Park that has a total area of 108,000 square meters with the construction area of 84,000 square meters. The loan is  no stated interest. The company has priority right to use it once its construction has been completed. The rent incurred from using this property will be agreed on by the shareholder and the Company.

On January 5, 2010, the Company entered  into A Security Purchase Agreement to make available to investors: (1)124,113 shares of common stock; (2) Series A common stock purchase warrants to purchase 124,113 shares common stock with exercise of $3.53;(3) Series B common stock purchase warrants and together with Series A warrants to purchase 124,113 shares common stock, exercise price of $4.23.  The Company had equity financing of $ 350,000 from this agreement.

On January 12, 2010, the Company entered  into A Security Purchase Agreement to make available to investors: (1)70,922 shares of common stock; (2) Series A common stock purchase warrants to purchase 70,922 shares common stock with exercise of $3.53;(3) Series B common stock purchase warrants and together with Series A warrants to purchase 70,922 shares common stock, exercise price of $4.23. The company had equity financing of $ 200,000 from this agreement.

On January 21, 2010, the Company entered  into A Security Purchase Agreement to make available to investors: (1)35,461 shares of common stock; (2) Series A common stock purchase warrants to purchase 35,461 shares common stock with exercise of $3.53;(3) Series B common stock purchase warrants and together with Series A warrants to purchase 35,461 shares common stock, exercise price of $4.23.  The Company had equity financing of $ 100,000 from this agreement.

F-15

RONGFU AQUACULTURE, INC

 CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008

TABLE OF CONTENTS

Report of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets	F-2
Consolidated Statements of Income	F-3
Consolidated Statements of Cash Flows	F-4
Consolidated Statements of Stockholders’  Equity	F-5
Notes to  consolidated Financial Statements	F-6 - F-15

ACSBAcquavella, Chiarelli, Shuster, Berkower & Co., LLP

517 Route one	1 Penn Plaza
Iselin, New Jersey, 08830	36the Floor
732.855.9600	New York, NY 10119

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders of

Rongfu Aquaculture, Inc.

We have audited the accompanying consolidated balance sheets of Rongfu Aquaculture, Inc. as of December 31, 2008 and 2007, and the related consolidated statements of income, stockholders’ equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2008.  Rongfu Aquaculture, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that out audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Rongfu Aquaculture Inc. as of December 31, 2008 and 2007, and the consolidated results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America.

Acquavella, Chiarelli, Shuster, Berkower & Co., LLP

Certified Public Accountants

New York, N.Y.

January 29, 2010

F-1

RONGFU AQUACULTURE, INC

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2008 AND DECEMBER 31,2007

	12/31/2008			12/31/2007
ASSETS
Current Assets
Cash	$	14,823,746		$	5,803,629
Accounts receivable, net		4,412,956			2,677,259
Inventories		8,892,911			8,491,631
Other receivable		21,193			19,877
Prepaid expenses		307,252			360,547
Total Current Assets		28,458,058			17,352,943
Fixed assets		445,865			162,605
Biological assets		841,625			-
Total Assets	$	29,745,548		$	17,515,548
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable	$	1,081,645		$	700,706
Other payable		873,401			-
Due to shareholders		8,519,146			10,402,193
Dividends payable		3,493,603			-
Income tax payable		780,052			71,966
Total Current Liabilities	$	14,747,847		$	11,174,865
Stockholders' Equity
Common stock, par value, $0.001 per share, 22,373,434 shares authorized, 1,118,672 and 1,118,672 shares issued and outstanding		1,119			1,119
Additional paid in capital		817,432			393,014
Subscription receivables		(1,119	)		(1,119	)
Statutory reserve		665,852			200,666
Other comprehensive income		861,166			260,992
Retained earnings		12,653,251			5,486,011
Total Stockholders' Equity		14,997,701			6,340,683
Total Liabilities and Stockholders' Equity	$	29,745,548		$	17,515,548

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

F-2

RONGFU AQUACULTURE, INC

CONSOLIDATED STATEMENTS OF INCOME

FOR YEARS ENDED DECEMBER  31, 2008, 2007 AND 2006

	2008			2007			2006
Sales, net	$	35,592,569		$	22,993,929		$	947,1818
Cost of sales		20,043,897			16,477,019			8,060,713
Gross profit		15,548,672			6,516,910			1,411,105
Selling, general and administrative expense		2,717,796			1,638,695			626,649
Income from operations		12,830,876			4,878,215			784,456
Interest income		71,087			41,264			12,259
Interest expenses		(12,733	)		-			-
Other expense		(1,954	)		(3,170	)		(235	)
Total Other Income (Expense)		56,400			38,094			12,024
Income before income taxes		12,887,276			4,916,309			796,480
Provision for income taxes		1,027,781			69,526			-
Net income	$	11,859,495		$	4,846,783		$	796,480
Net income for common share
Basic	$	10.60		$	4.33		$	0.71
Weighted average common shares outstanding
Basic		1,118,672			1,118,672			1,118,672

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

F-3

RONGFU AQUACULTURE, INC

CONSOLDIATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006

	2008			2007			2006
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	11,859,495		$	4,846,783		$	796,480
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation		52,572			17,520			1,750
Amortization of biological assets		316,702			-			-
Obsolescence reserve
(Increase) / decrease in assets:
Accounts receivables		(1,508,501	)		(1,901,991	)		(511,615	)
Inventory		155,782			1,146,196			(7,274,630	)
Prepaid expense		74,694			(76,605	)		(173,017	)
Other receivable		-			-			(5,806	)
Increase / (decrease) in current liabilities:
Accounts payable		323,825			(92,011	)		289,083
Other payable		845,414			-			-
Income taxes payable		680,784			69,526			-
Net cash provided by operating activities		12,800,767			4,009,418			(6,877,755	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchased fixed assets		(351,389	)		(125,561	)		(29,819	)
Biological assets		(1,158,327	)		-			-
Construction in progress		(8,493	)		(28,884	)		(5,910	)
Net cash used by investing activities		(1,518,209	)		(154,445	)		(35,729	)
CASH FLOWS FROM FINANCING ACTIVITIES
Due to shareholder		(2,489,354	)		448,153			7,704,942
Capital contribution		424,418			331,082			-
Net cash provided by financing activities		(2,064,936	)		779,235			7,704,942
Effect of exchange rate changes on cash and cash equivalents		(197,505	)		227,240			44,920
Net change in cash and cash equivalents		9,020,117			4,861,448			836,378
Cash and cash equivalents, beginning balance		5,803,629			942,181			105,803
Cash and cash equivalents, ending balance	$	14,823,746		$	5,803,629		$	942,181
SUPPLEMENTAL DISCLOSURES:
Cash paid during the year for:
Dividend payments	$	845,414		$	-		$	-
Income tax payments	$	346,997		$	-		$	-
Interest payments	$	12,733		$	-		$	-

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

F-4

RONGFU AQUACULTURE, INC

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2008, 2007AND 2006

						Additional		Other							Total
	Common Stock		Subscription			Paid-in		Comprehensive		Statutory		Retained			Stockholders
	Amount		Receivables			Capital		Income		Reserves		Earnings			Equity
Balance December 31, 2005	$	1,119	$	(1,119	)	$	61,932	$	-	$	-	$	43,414		$	105,346
Foreign currency translation adjustments									30,887							30,887
Transferred to Statutory reserve											80,695		(80,695	)		-
Income for the year ended December  31, 2006													796,480			796,480
Balance December 31, 2006		1,119		(1,119	)		61,932		30,887		80,695		759,199			932,713
Foreign currency translation adjustments									230,105							230,105
Capital contribution							331,082									331,082
Transferred to Statutory reserve											119,971		(119,971	)
Income for the year ended December  31, 2007													4,846,783			4,846,783
Balance December 31, 2007		1,119		(1,119	)		393,014		260,992		200,666		5,486,011			6,340,683
Foreign currency translation adjustments									600,174							600,174
Capital contribution							424,418									424,418
Transferred to Statutory reserve											465,186		(465,186	)		-
Dividend paid or declared													(4,227,069	)		(4,227,069	)
Income for the year ended December 31, 2008													11,859,495			11,859,495
Balance December 31, 2008	$	1,119	$	(1,119	)	$	817,432	$	861,166	$	665,852	$	12,653,251		$	14,997,701

The accompanying notes are an integral part of these financial statements

F-5

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008

Note 1 - ORGANIZATION

Rongfu Aquaculture, Inc., (the “Company” or “Rongfu”) was incorporated in the United States in Delaware on January 8, 2009.  The Company formed Flourishing Blessing (Hongkong) Co., Ltd. (“Hongkong Rongfu”) on November 11, 2008. The Company formed Guangzhou Flouring Blessing Heng Seng Agriculture Technology Ltd. (“Guangzhou Rongfu”) on January 9, 2009.  Guangzhou Rongfu is a wholly-owned subsidiary of Rongfu Aquaculture, Inc. organized under the laws of the People’s Republic of China (PRC). Foshan Nanhai Keda Heng Send Aquatic Co., Ltd. was incorporated in Foshan, Guangdong Province on April 30, 2003. Foshan formed Hainan keda hengsheng Aquatic fry Co., LTD. in Hainan province on August 6, 2007.

On December 26, 2009, Guangzhou Rongfu entered into a series of agreements including a Management Entrustment Agreement, a Shareholders’ Voting Proxy Agreement, an Exclusive Option Agreement and a Share Pledge Agreement (the “Agreements”) with Foshan Nanhai Keda Heng Seng Aquatic Co. Ltd. . (“Foshan") and its shareholders (the “Transaction”). Foshan Nanhai Keda Heng Seng Aquatic Co. Ltd. is a corporation formed under the laws of the PRC. According to these Agreements, Guangzhou Rongfu acquired management control of Foshan whereby Guangzhou Rongfu is entitled to all of the earnings before tax of Jiali, as a management fee, and is obligated to fund Foshan operations and pay all of the debts.

The contractual arrangements completed on December 26, 2009 provide that Guangzhou Rongfu has controlling interest in Foshan as defined by FASB Interpretation No. 46R, “Consolidation of Variable Interest Entities” (“FIN 46R”), an Interpretation of Accounting Research Bulletin No. 51, which requires Guangzhou Rongfu to consolidate the financial statements of Foshan and ultimately consolidate with its parent company, Rongfu Aquaculture, Inc.

The Company, through its subsidiary, and exclusive contractual arrangement with Foshan Nanhai Keda Heng Seng Aquatic Co. Ltd. is engaged in integrated business of aquaculture including Tilapia brood stock, Tilapia fry, Tilapia farming, and marketing for Tilapia. It is specializing in the production of the Hengsheng Brand Nile Tilapia and the new licensed New Jifu Tilapia.

 Consolidated financial statements present as if the Company and its subsidiaries have been together since January 1, 2006.

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and represent the pro forma historical results of the consolidated group. The Company adopted the new accounting guidance (“Codification”) on July 1, 2009. For the year ended December 31, 2009, all reference for periods subsequent to July 1, 2009 are based on the codification. The Company's functional currency is the Chinese Renminbi; however the accompanying consolidated financial statements have been translated and presented in United States Dollars.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, its subsidiary and variable interest entity (“VIE”) for which the Company is the primary beneficiary.  All inter-company accounts and transactions have been eliminated in consolidation.  The Company has adopted FIN 46R which requires 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.

F-6

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Translation Adjustment

As of December 31, 2008, 2007 and 2006, the accounts of the Company were maintained, and its financial statements were expressed, in Chinese Yuan Renminbi (“CNY”).  Such financial statements were translated into U.S. Dollars (“USD”) in accordance with Statement of Financial Accounting Standards No. 52, “Foreign Currency Translation” (“SFAS No. 52”), with the CNY as the functional currency.  According to SFAS No. 52, all assets and liabilities were translated at the current exchange rate, stockholders’ equity are translated at the historical rates and income statement items are translated at the average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with SFAS No. 130, “Reporting Comprehensive Income,” as a component of shareholders’ equity.  Transaction gains and losses are reflected in the income statement.

Statement of Cash Flows

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

Use of Estimates

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

Comprehensive Income

The Company follows the Statement of Financial Accounting Standards No. 130, “Reporting Comprehensive Income.”  Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income.

Risks and Uncertainties

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 environments in the PRC, by the general state of the PRC’s economy.  The Company’s business may be influenced 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.

The Company is subject to substantial risks from, among other things, intense competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history, foreign currency exchange rates and the volatility of public markets.

F-7

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Contingencies

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed.

Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.

There were no contingencies of this type at December 31, 2008 and 2007.

Accounts Receivable

The Company maintains reserves for potential credit losses on accounts receivable.   Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves.  Reserves are recorded primarily on a specific identification basis.  There were no allowances for doubtful accounts as of December 31, 2008 and 2007, respectively.

Inventories

Inventories are valued at the lower of cost (determined on a weighted average basis) or market. The Management compares the cost of inventories with the market value and allowance is made for writing down their inventories to market value, if lower. As of December 31, 2008 and December 31, 2007, inventories consist of the following:

	2008		2007
Raw materials	$	27,725	$	6,784
Work in process and finished goods		8,865,186		8,484,847
Total	$	8,892,911	$	8,491,631

F-8

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Property, Plant & Equipment

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

Buildings	10-20 years
Fishing gear	5-10years
Transportation equipment	5-10 years
Office equipment	3-5 years

As of December 31, 2008 and 2007 Property, Plant & Equipment consist of the following:

	2008			2007
Buildings	$	60,230		$	36,180
Fishing gear		408,197			107,097
Transportation equipment		37,155			12,103
Office equipment		1,187			-
Construction in progress		10,938			26,495
Total		517,707			155,380
Accumulated depreciation		(71,842	)		(19,270	)
	$	445,865		$	162,605

Depreciation expense for the years ending December 31, 2008, 2007, and 2006 was $52,572, $17,520, and $1,750, respectively

Long-Lived Assets

Since April 30, 2003, Foshan adopted Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” and the accounting and reporting provisions of Accounting Principles Board Opinion No. 30, “Reporting the Results of Operations for a Disposal of a Segment of a Business.” The Company’ management periodically evaluates the carrying value of long-lived assets to be held and used in accordance with SFAS 144. SFAS 144 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal. Based on its review, the Company believes that, as of December 31, 2008 and 2007, there were no impairments of its long-lived assets.

F-9

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fair Value of Financial Instruments

Statement of Financial Accounting Standard No. 107, “Disclosures about Fair Value of Financial Instruments,” requires that the Company disclose estimated fair values of financial instruments. The carrying amounts reported in the statements of financial position for current assets and current liabilities qualifying as financial instruments are a reasonable estimate of fair value.

Revenue Recognition

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

Advertising

Advertising expenses consist primarily of costs of promotion for corporate image and product marketing and costs of direct advertising. The Company expenses all advertising costs as incurred. Advertising expense for the year ended 2008, 2007 and 2006 were $28,801, $ 0 and $ 0, respectively.

Income Taxes

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

It is the Company’s intention to permanently reinvest earnings from activity with china. And thereby indefinitely postpone repatriation of these funds to the US. Accordingly, no domestic deferred income tax provision has been made fro US income tax which could result from paying dividend to the Company.

There were no deferred taxes difference in 2008, 2007 and 2006.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company has a diversified customer base, all are in China. The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited.

F-10

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Subsequent Events

The Company evaluated subsequent events through the time of filing this year-end report for items effecting three-year ended 2008, 2007 and 2006 through January 29, 2010.  No significant events occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on our consolidated financial statements.

Recent Accounting Pronouncements

On February 16, 2006, FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments.” SFAS No. 155 amends SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” and SFAF No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” SFAS No. 155 permits fair value re-measurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS No. 133, establishes a requirement to evaluate interest in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation, clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives, and amends SFAS No. 140 to eliminate the prohibition on the qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. This statement is effective for all financial instruments acquired or issued after the beginning of the Company’s first fiscal year that begins after September 15, 2006. As of December 31, 2008, the Company has not incurred any hybrid financial instruments.

In March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial Assets – an amendment to FASB Statement No. 140.” SFAS No. 156 requires that an entity recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a service contract under certain situations. The new standard is effective for fiscal years beginning after September 15, 2006. The adoption of this new standard did not have an impact on the Company’s financial position, results of operations or cash flows.

In July 2006, the FASB released FASB interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of SFAS No. 109,” (FIN No. 48).  FIN No. 48 clarifies the accounting and reporting for uncertainties in income tax law.  This interpretation prescribes a comprehensive model for the financial statement recognition, measurement, presentation, and disclosure of uncertain tax positions taken or expected to be taken in income tax returns.  This Statement is effective for fiscal years beginning after December 15, 2006.  As a result of implementing FIN No. 48, there has been no adjustments to the Company’s financial statements.

In September, 2006, FASB issued SFAS No. 157, “Fair Value Measurements.”  This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (“GAAP”), and expands disclosures about fair value measurements.  This Statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute.  Accordingly, this Statement does not require any new fair value measurements.  However, for some entities, the application of this Statement will change current practice.  This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.  The adoption of this new standard did not have an impact on the Company’s financial position, results of operations or cash flows.

F-11

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108 (“SAB 108”).  SAB 108 was issued to provide interpretive guidance on how the effects of the carryover reversal of prior year misstatements should be considered in quantifying a current year misstatement. The provisions of SAB 108 are effective for the Company for its December 31, 2006 year-end.  The adoption of SAB 108 had no impact on the Company’s consolidated financial statements.

In February, 2007, FASB issued SFAS 159, ‘The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement No. 115.”  This Statement permits entities to choose to measure many financial instruments and certain other items at fair value. This Statement is expected to expand the use of fair value measurement, which is consistent with the Board’s long-term measurement objectives for accounting for financial instruments.  This Statement is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007.  The adoption of this new standard did not have a material impact on the Company’s financial position, results of operations or cash flows.

In December 2007, FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141R”).  SFAS 141R establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired.  SFAS 141R also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination.  This statement is effective for the Company beginning January 1, 2009.  The adoption of this standard had no impact on the Company’s  consolidated financial statement.

In December 2007, the FASB issued SFAS No. 160, “Non-Controlling Interests in consolidated Financial Statements.”  This Statement amends ARB 51 to establish accounting and reporting standards for the non-controlling (minority) interest in a subsidiary and for the deconsolidation of a subsidiary.  It clarifies that a non-controlling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements.  SFAS No. 160 is effective for the Company’s fiscal year beginning October 1, 2009.  Adoption of this standard is not expected to have an impact on the consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities.”  The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows.  It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged.  The new standard also improves transparency about the location and amounts of derivative instruments in an entity’s financial statements; how derivative instruments and related hedged items are accounted for under Statement 133: and how derivative instruments and related hedged items affect its financial position, financial performance, and cash flows.  The Company does not expect the impact of this adoption to be material.

In April 2008, the FASB issued FASB Staff Position (FSP) FAS 142-3, “Determination of the Useful Life of Intangible Assets,” which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, “Goodwill and Other Intangible Assets.”  This Staff Position is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years.  Early adoption is prohibited.  Application of this FSP is not expected to have a significant impact on the financial statements.

F-12

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles.”  This Statement will provide a framework for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles (GAAP) for nongovernmental entities.  With the issuance of SFAS No. 162, the GAAP hierarchy for nongovernmental entities will move from auditing literature to accounting literature.  The Company is currently assessing the impact of SFAS No. 162 on its financial position and results of operations.

In June 2008, the FASB ratified the consensus reached on Emerging Issues Task Force (“EITF”) Issue No. 07-05, Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock (“EITF No. 07-05”). EITF No. 07-05 clarifies the determination of whether an instrument (or an embedded feature) is indexed to an entity’s own stock, which would qualify as a scope exception under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. EITF No. 07-05 is effective for financial statements issued for fiscal years beginning after December 15, 2008. The Company is in the process of review this consensus and has not reached a conclusion as to the impact if any at this time.

Note 3 –OTHER RECEIVABLES

Other receivables mainly consist of cash advances to rent deposit. As of December 31, 2008 and December 31, 2007, the other receivables were $21,193 and $19,877, respectively.

 Note 4 –BIOLOGICAL ASSETS

As of December 31, 2008, Biological assets consist of the following:

		2008
Carp	$	20,562
Tilapia		959,561
Snakeheads		178,204
Total		1,158,327
Accumulated depreciation		(316,702	)
	$	841,625

Note 5 – RELATED PARTY

The Company buys fish feed from a related party. The Company also borrowed money from a shareholder of the Company.

Note 6 – DUE TO SHAREHOLDER

The Company has a payable due to a shareholder.  As of December 31, 2008 and December 31, 2007, due to a shareholder were $ 8,519,146 and $ 10,402,193, respectively. Amounts due are payable upon demand with no stated interest.

Note 7 – CONCENTRATIONS

At December 31, 2008 and 2007, 78%  and 100% of accounts payable were due to one related party vendor. For the year ended December 31, 2008 and 2007, the Company had one related party vendor who accounted for 93% and 100% of total purchases.

F-13

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008

Note 8 – COMPENSATED ABSENCES

Regulation 45 of the local labor law of the People’s Republic of China (“PRC”) entitles employees to annual vacation leave after 1 year of service.  In general, all leave must be utilized annually, with proper notification.  Any unutilized leave is cancelled.

Note 9 - INCOME TAXES

The Company operates in more them one jurisdiction with complex regulatory environments subject to different interpretations by the taxpayer and the respective governmental taxing authorities, we evaluate our tax positions and establish liabilities, if required. For uncertain tax position which may be challenged by local tax authorities and may not be fully sustained despite our belief that the underlying tax positions maybe be fully supportable.

Pursuant to the PRC Income Tax Laws, the Enterprise Income Tax (“EIT”) through December 31, 2007 is at a statutory rate of 33%, which is comprised of 30% national income tax and 3% local income tax.  As of January 1, 2008, the EIT is at a statutory rate of 25%.  The Company is an agriculture enterprise and under PRC Income Tax Laws, it is entitled to an exemption for 2006.  Starting from January 1, 2008, it is entitled to have new PRC tax policy for the agriculture enterprise.

The Company’s income come from three parts including fish breeding, fish cultivation and selling adult fish. For income from fish breeding, it is entitled to an exemption. For income from fish cultivation, EIT is a discount rate of 12.5%. For income from selling adult fish, EIT is a rate of 25%.

The following is a reconciliation of income tax expense:
12/31/2008	International		Total
Current	$	1,027,781	$	1,027,781
Deferred		-		-
Total	$	1,027,781	$	1,027,781
12/31/2007	International		Total
Current	$	69,526	$	69,526
Deferred		-		-
Total	$	69,526	$	69,526

12/31/2006	International		Total
Current	$	-	$	-
Deferred		-		-
Total	$	-	$	-

Note 10– COMMITMENTS & CONTINGENCIES

The Company leases facilities under operating leases, which expire on different dates. It pays for on an annual basis and accrues for throughout the year.   For the years ended December 31, 2008 and 2007, rent expense was $334,705, and $357,552, respectively.  Future payments under these lease is as follows: 2009-63,804; 2010- 63,804; 2011- 63,804; 2012- 63,804; 2013- 55,401.

F-14

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008

Note 11 – STATUTORY RESERVE

In accordance with the laws and regulations of the PRC, a wholly-owned Foreign Invested Enterprises income, after the payment of the PRC income taxes, shall be allocated to the statutory surplus reserves and statutory public welfare fund. Prior to January 1, 2006 the proportion of allocation for reserve was 10 percent of the profit after tax to the surplus reserve fund and additional 5-10 percent to the public affair fund. The public welfare fund reserve was limited to 50 percent of the registered capital.  Effective January 1, 2006, there is now only one fund requirement. The reserve is 10 percent of income after tax, not to exceed 50 percent of registered capital. Statutory Reserve funds are restricted for set off against losses, expansion of production and operation or increase in register capital of the respective company. Statutory public welfare fund is restricted to the capital expenditures for the collective welfare of employees. These reserves are not transferable to the Company in the form of cash dividends, loans or advances. These reserves are therefore not available for distribution except in liquidation. As of December 31, 2008 and December 31, 2007, the Company had allocated $ 665,852 and $200,666, respectively, to these non-distributable reserve funds.

Note 12- OTHER COMPREHENSIVE INCOME

Balances of related after-tax components comprising accumulated other comprehensive income, included in stockholders’ equity, at December 31, 2008, 2007, and 2006, are as follows:

	Foreign Currency Translation Adjustment		Accumulated Other Comprehensive Income
Balance at December 31, 2005	$	-	$	-
Change for 2006		30,887		30,887
Balance at December 31, 2006		30,887		30,887
Change for 2007		230,105		230,105
Balance at December 31, 2007		260,992		260,992
Change for 2008		600,174		600,174
Balance at December 31, 2008	$	861,166	$	861,166

F-15

SIGNATURES

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

	GRANTO, INC.
Date: March 31, 2010
	/s/   Kelvin Chan
	President

EXHIBIT INDEX

Exhibit Number	Description
2.1	Share Exchange Agreement by and among Granto, Inc., Rongfu, the Rongfu Stockholders and Janet Gargiulo,  dated March 29, 2010
3.1	Certificate of Designations, Preferences and Rights of Series A Preferred Stock of Granto, Inc.
4.1	Series A Preferred Stock Purchase Agreement between Granto, Inc. and certain investors, dated March 29, 2010.
4.2	Form of Class A Warrant of Granto, Inc. issued on March 29, 2010 pursuant to Series A Preferred Stock Purchase Agreement
4.3	Form of Class B Warrant of Granto, Inc. issued on March 29, 2010 pursuant to Series A Preferred Stock Purchase Agreement
4.4	Escrow Agreement between Granto, Inc., certain officers of Granto, Inc. and The Crone Law Group, dated March 29, 2010.
4.5	Form of Class C Warrant issued on March 29, 2010 pursuant to Share Exchange Agreement.
4.6	Form of Class D Warrant issued on March 29, 2010 pursuant to Share Exchange Agreement.
10.1	Form of Call Option Agreement between Kelvin Chan and various call optionees, dated as December 29, 2009 and Amendment No. 1 thereto dated March 29, 2010.
10.2	Memorandum between Zhisheng Chen and Nanhai Ke Da Heng Sheng dated December 2009
10.3	Technological Cooperation Agreement Regarding the Propogation of Fish Fry of Nile Tilapia between Nanhai Ke Da Heng Sheng and Sifa Li dated December 18, 2009.
10.4	Entrusted Management Agreement dated December 26, 2009 among Chen Zhisheng, Nanhai Ke Da Heng Sheng and Guangzhou Flourishing.
10.5	Exclusive Option Agreement dated December 26, 2009 among Chen Zhisheng, Nanhai Ke Da Heng Sheng and Guangzhou Flourishing.
10.6	Shareholder’s Voting Proxy Agreement between Chen Zhisheng and Guangzhou Flourishing.
10.7	Shares Pledge Agreement between Chen Zhisheng, Nanhai Ke Da Heng Sheng and Guangzhou Flourishing.

EX-2.1

SHARE EXCHANGE AGREEMENT

This SHARE EXCHANGE AGREEMENT, dated as of March 29, 2010 (the “Agreement”) by and among GRANTO, INC, a Nevada corporation (“Granto”), RONGFU AQUACULTURE, INC., a Delaware corporation (“Rongfu”), all of the shareholders of Rongfu whose names are set forth on Exhibit A attached hereto (the “Rongfu Holders”) and the shareholder of Granto whose name is set forth on Exhibit B attached hereto (the “Granto Holder”).

WHEREAS, the authorized capital of Granto consists of 90,000,000 shares of common stock, par value $.001 per share (the "Common Stock"), and 10,000,000 shares of preferred stock, par value $.001 per share (the "Preferred Stock"). Of such authorized capital, 1,000,000 shares of Common Stock and no shares of Preferred Stock are issued and outstanding;

WHEREAS, the Rongfu Holders own the number of shares of Common Stock, par value $.001 per share of Rongfu (“Rongfu Common Stock”) and warrants to purchase Rongfu Stock (the “Rongfu Warrants” and collectively with the Rongfu Common Stock, the “Rongfu Securities”) set forth opposite their name of Exhibit A;

WHEREAS, the Granto Holder is the largest shareholder of Granto and the sole officer and director of Granto;

WHEREAS, the Granto Holder will receive significant benefits in connection with or as a result of the consummation of the transactions contemplated by this Agreement and has agreed to enter into this Agreement in order to induce the other parties to enter into this Agreement;

WHEREAS, each of the Rongfu Holders believes it is in such person’s best interest to exchange with Granto all of the Rongfu Securities such person holds for the shares of Granto Common Stock and warrants to purchase shares of Granto Common Stock  set forth opposite such person’s name on Exhibit A attached hereto (the “New Securities”); and

WHEREAS, it the intention of the parties that:  (i) said exchange of shares shall qualify as a tax-free reorganization under Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the“Code”); and (ii) said exchange shall qualify as a transaction in securities exempt from registration or qualification under the Securities Act of 1933, as amended and in effect on the date of this Agreement (the “1933 Act”).

NOW, THEREFORE, in consideration of the mutual terms, conditions and other agreements set forth herein, the parties hereto hereby agree as follows:

ARTICLE I

EXCHANGE OF RONGFU SECURITIES FOR NEW SECURITIES

Section 1.1     Agreement of Rongfu Holders and Granto to Exchange Rongfu Securities for New Securities.  On the Closing Date (as hereinafter defined) and upon the terms and subject to the conditions set forth in this Agreement, the Rongfu Holders shall sell, assign, transfer, convey and deliver all of the Rongfu Securities to Granto, and Granto shall accept the Rongfu Securities from the Rongfu Holders in exchange for the issuance to the Rongfu Holders of the type and number of New Securities set forth opposite the names of the Rongfu Holders on Exhibit A hereto.

Section 1.2  Capitalization.  On the Closing Date, immediately before the transactions to be consummated pursuant to this Agreement, Granto shall have authorized capital consisting of 90,000,000 shares of Common Stock and 10,000,000 shares of Preferred Stock. Of such authorized capital, 1,000,000 shares of Common Stock shall be issued and outstanding and no shares of Preferred Stock shall be issued or outstanding.

Section 1.3     Closing.  The closing of the exchange to be made pursuant to this Agreement (the "Closing") shall take place at 10:00 a.m. E.S.T. on the second business day after the conditions to closing set forth in Articles V and VI have been satisfied or waived, or at such other time and date as the parties hereto shall agree in writing (the "Closing Date"), at the offices of Guzov Ofsink, LLC, 600 Madison Avenue, 14th Floor, New York, New York 10022. At the Closing, the Rongfu Holders shall deliver to Granto the certificates representing 100% of the Rongfu Securities, duly endorsed for transfer or accompanied by appropriate stock powers or warrant assignments duly executed in blank.  In full consideration and exchange for the Rongfu Securities, Granto shall issue and exchange to each Rongfu Holder the New Securities set forth opposite the name of the Rongfu Holder on Exhibit A.

Section 1.4     Tax Treatment. The exchange described herein is intended to comply with Section 368(a)(1)(B) of the Code, and all applicable regulations thereunder.  In order to ensure compliance with said provisions, the parties agree to take whatever steps may be necessary, including, but not limited to, the amendment of this Agreement.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF GRANTO AND THE GRANTO HOLDERS

Each of Granto and the Granto Holders hereby severally represents, warrants and agrees as follows:

Section 2.1     Corporate Organization

a.      Granto 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 own its properties and assets and to conduct its business as now conducted and is duly qualified to do business in good standing in each jurisdiction in which the nature of the business conducted by Granto or the ownership or leasing of its properties makes such qualification and being in good standing necessary, except where the failure to be so qualified and in good standing will not have a material adverse effect on the business, operations, properties, assets, condition or results of operation of Granto (a "Granto Material Adverse Effect");

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b.      Copies of the Articles of Incorporation and Bylaws of Granto are attached hereto as Schedule 2.1(b). Such copies are accurate and complete as of the date hereof and neither of the foregoing documents have been amended.  The minute books of Granto are current as required by law, contain the minutes of all meetings of the Board of Directors and shareholders of Granto from its date of incorporation to the date of this Agreement, and adequately reflect all material actions taken by the Board of Directors and shareholders of Granto.

Section 2.2   Capitalization of Granto.  The authorized capital stock of Granto consists of 90,000,000 shares of Common Stock and 10,000,000 shares of Preferred Stock. Of such authorized capital, 1,000,000 shares of Common Stock are issued and outstanding as of the date hereof and no Preferred Shares are issued or outstanding as of the date hereof. All of the New Securities to be issued pursuant to this Agreement have been duly authorized and will be validly issued, fully paid and non-assessable and no personal liability will attach to the ownership thereof.  As of the date of this Agreement there are and as of the Closing Date, there will be, no outstanding options, warrants, agreements, commitments, conversion rights, preemptive rights or other rights to subscribe for, purchase or otherwise acquire any shares of capital stock or any un-issued or treasury shares of capital stock of Granto, except for the New Securities to be issued pursuant to this Agreement.

Section 2.3     Subsidiaries and Equity Investments.  Granto has no subsidiaries or equity interest in any corporation, partnership or joint venture.

Section 2.4    Authorization and Validity of Agreements.  Granto has all corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby.  The execution and delivery of this Agreement by Granto and the consummation by Granto of the transactions contemplated hereby have been duly authorized by all necessary corporate action of Granto, and no other corporate proceedings on the part of Granto are necessary to authorize this Agreement or to consummate the transactions contemplated hereby.

Section 2.5     No Conflict or Violation.  The execution, delivery and performance of this Agreement by Granto does not and will not violate or conflict with any provision of its Articles of Incorporation or By-laws, and does not and will not violate any provision of law, or any order, judgment or decree of any court or other governmental or regulatory authority, nor violate or result in a breach of or constitute (with due notice or lapse of time or both) a default under, or give to any other entity any right of termination, amendment, acceleration or cancellation of, any contract, lease, loan agreement, mortgage, security agreement, trust indenture or other agreement or instrument to which Granto is a party or by which it is bound or to which any of their respective  properties or assets is subject, nor will it result in the creation or imposition of any lien, charge or encumbrance of any kind whatsoever upon any of the properties or assets of Granto, nor will it result in the cancellation, modification, revocation or suspension of any of the licenses, franchises, permits to which Granto is bound.

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Section 2.6     Consents and Approvals.  No consent, waiver, authorization or approval of any governmental or regulatory authority, domestic or foreign, or of any other person, firm or corporation, is required in connection with the execution and delivery of this Agreement by Granto or performance by Granto of its obligations hereunder.

Section 2.7     Absence of Certain Changes or Events.  Since its inception:

(a) Granto is not currently engaged in any business. Granto was in the business of developing, manufacturing, and selling mechanical chalkboard erasers with built-in micro vacuums specifically for office and school supply retailers and teachers in the Philippines and other Asian countries as end users. However, such business has been terminated and no assets or liabilities relating thereto, including any contingent obligations, contractual obligations or pending, threatened or potential claims exist as of the date hereof. As of the date of this Agreement, there is no, and as of the Closing Date there shall not be any, event, condition, circumstance or prospective development which threatens or may threaten to have a material adverse effect on the assets, properties, operations, prospects, net income or financial condition of Granto; and

(b) there has not been, and as of the Closing Date there shall not be, any declaration, setting aside or payment of dividends or distributions with respect to shares of capital stock of Granto or any redemption, purchase or other acquisition of any capital stock of Granto or any other of Granto’s securities.

Section 2.8     Survival.  Each of the representations and warranties set forth in this Article II shall be deemed represented and made by Granto and the Granto Holders at the Closing as if made at such time and shall survive the Closing for a period terminating on the first anniversary of the date of this Agreement.

Section 2.9.    Litigation. Granto is not a party to any suit, action, arbitration or legal, administrative or other proceeding, nor is there any governmental investigation which is pending or threatened against or affecting Granto or its, business, assets or financial condition. Granto is not in default with respect to any order, writ, injunction or decree of any federal, state, local or foreign court, department, agency or instrumentality applicable to it.

Section 2.10  Disclosure.  This Agreement, the schedules hereto and any certificate attached hereto or delivered in accordance with the terms hereby by or on behalf of Granto in connection with the transactions contemplated by this Agreement, when taken together, do not contain any untrue statement of a material fact or omit any material fact necessary in order to make the statements contained herein and/or therein not misleading.

Section 2.11  Brokers’ Fees.Neither Granto nor any Granto Holder nor Rongfu nor any Rongfu Holder has any liability to pay any fees or commissions or other consideration to any broker, finder, or agent with respect to the transactions contemplated by this Agreement.

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Section 2.12  No Assets or Liabilities as of Closing Date.  As of the Closing Date, except for its corporate records, Granto will have no assets or liabilities, including without limitation, contract rights or liabilities or contingent liabilities.

Section 2.13  Financial Statements.  Granto’s financial statements (the “Financial Statements”)contained in its filings with the Securities and Exchange Commission (“SEC”) have been prepared in accordance with U.S. GAAP applied on a consistent basis throughout the periods indicated and with each other, except that the unaudited Financial Statements do not contain all footnotes required by U.S. GAAP.  The Financial Statements fairly present the financial condition and operating results of the Company as of the dates, and for the periods, indicated therein, subject to normal year-end audit adjustments.  Except as set forth in the Financial Statements, Granto has no material liabilities (contingent or otherwise).  Granto is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation.  Granto maintains and will continue to maintain a standard system of accounting established and administered in accordance with U.S. GAAP until Closing.

Section 2.14  Securities Laws. Granto has complied in all respects with applicable federal and state securities laws, rules and regulations, including the Sarbanes Oxley Act of 2002, as such laws, rules and regulations apply to Granto and its securities; and all shares of capital stock of Granto have been issued in accordance with applicable federal and state securities laws, rules and regulations.  There are no stop orders in effect with respect to any of Granto’s securities.

Section 2.15  Tax Returns, Payments and Elections. Granto has timely filed all Tax (as defined below) returns, statements, reports, declarations and other forms and documents (including, without limitation, estimated Tax returns and reports and material information returns and reports) (“Tax Returns”) required pursuant to applicable law to be filed with any Tax Authority (as defined below), all such Tax Returns are accurate, complete and correct in all material respects, and Granto has timely paid all Taxes due.  For purposes of this Agreement, the following terms have the following meanings:  “Tax” (and, with correlative meaning, “Taxes” and “Taxable”) means any and all taxes including, without limitation, (i) any net income, alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, value added, net worth, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental or windfall profit tax, custom, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or any penalty, addition to tax or additional amount imposed by any United States, local or foreign governmental authority or regulatory body responsible for the imposition of any such tax (domestic or foreign) (a “Tax Authority”), (ii) any liability for the payment of any amounts of the type described in (i) as a result of being a member of an affiliated, consolidated, combined or unitary group for any taxable period or as the result of being a transferee or successor thereof and (iii) any liability for the payment of any amounts of the type described in (i) or (ii) as a result of any express or implied obligation to indemnify any other person.

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ARTICLE III

REPRESENTATIONS AND WARRANTIES OF RONGFU

Rongfu represents, warrants and agrees as follows:

Section 3.1     Corporate Organization.

(a)     Rongfu is duly organized, validly existing and in good standing under the laws of Delaware and has all requisite corporate power and authority to own its properties and assets and to conduct its business as now conducted and is duly qualified to do business in good standing in each jurisdiction in where the nature of the business conducted by Rongfu or the ownership or leasing of its properties makes such qualification and being in good standing necessary, except where the failure to be so qualified and in good standing will not have a material adverse effect on the business, operations, properties, assets, condition or results of operation of Rongfu (a "Rongfu Material Adverse Effect").

(b)    Copies of the Certificate of Incorporation of Rongfu, with all amendments thereto to the date hereof, have been furnished to Granto, and such copies are accurate and complete as of the date hereof.  The minute books of Rongfu are current as required by law, contain the minutes of all meetings of the Board of Directors and shareholders of Rongfu, and committees of the Board of Directors of Rongfu from the date of incorporation to the date of this Agreement, and adequately reflect all material actions taken by the Board of Directors, shareholders and committees of the Board of Directors of Rongfu.

Section 3.2     Capitalization of Rongfu; Title to the Rongfu Securities.  On the Closing Date, immediately before the transactions to be consummated pursuant to this Agreement, Rongfu shall have authorized 50,000,000 shares of common stock, par value $.001 per share, of which 20,286,789 will be issued and outstanding. The foregoing shares are the sole authorized and outstanding shares of capital stock of Rongfu, and except for the Rongfu Warrants set forth on Schedule 3.2 attached hereto, which pursuant to the terms hereof will be assigned to Granto (and thereafter cancelled by Granto) in exchange for the issuance to the holders of such Rongfu Warrants of warrants to purchase the same number of shares of Granto Common Stock having an exercise price which is adjusted upon the terms set forth in the Rongfu Warrants and the Securities Purchase Agreement pursuant to which the Rongfu Warrants were issued, but otherwise having the other terms and conditions which were contained in the Rongfu Warrants, there are no outstanding options, warrants, agreements, commitments, conversion rights, preemptive rights or other rights to subscribe for, purchase or otherwise acquire any shares of capital stock or any un-issued or treasury shares of capital stock of Rongfu, other than the Rongfu Securities.

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Section 3.3    Disclosure.  This Agreement, the schedules hereto and any certificate attached hereto or delivered in accordance with the terms hereby by or on behalf of Rongfu in connection with the transactions contemplated by this Agreement, when taken together, do not contain any untrue statement of a material fact or omit any material fact necessary in order to make the statements contained herein and/or therein not misleading.

Section 3.4     Survival.  Each of the representations and warranties set forth in this Article III shall be deemed represented and made by Rongfu at the Closing as if made at such time and shall survive the Closing for a period terminating on the first anniversary of the date of this Agreement.

Section 3.5     Tax Returns. Rongfu acknowledges that Granto has informed Rongfu that Granto has not filed any Tax Returns; provided, however, that this acknowledgment shall not constitute a waiver by Riongfu or the Rongfu Holders of claims for recovery of penalties or other damages incurred by Granto for failure to file Tax returns as per Section 2.15 of this Agreement.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF RONGFU HOLDERS

Each of the Rongfu Holders severally represents, warrants and agrees as follows:

Section 4.1     Authorization and Validity of Agreements.  If such Rongfu Holder is a corporation, such Rongfu Holder has all corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby.  The execution and delivery of this Agreement by the Rongfu Holder and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action and no other corporate proceedings on the part of the Rongfu Holder are necessary to authorize this Agreement or to consummate the transactions contemplated hereby.  No approvals by the shareholders of the Rongfu are required for the Rongfu Holder to consummate the transactions contemplated hereby.

Section 4.2    No Conflict or Violation.  The execution, delivery and performance of this Agreement by such Rongfu Holder does not and will not violate or conflict with any provision of the constituent documents of the Rongfu Holder, and does not and will not violate any provision of law, or any order, judgment or decree of any court or other governmental or regulatory authority.

Section 4.3     Investment Representations.  (a) All of the New Securities  to be acquired by the Rongfu Holder pursuant to this Agreement will be acquired hereunder solely for the account of such Rongfu Holder, for investment, and not with a view to the resale or distribution thereof. Each Rongfu Holder understands and is able to bear any economic risks associated with such Rongfu Holder’s investment in the New Securities. Each Rongfu Holder has had full access to all the information such Rongfu Holder considers necessary or appropriate to make an informed investment decision with respect to the New Securities to be acquired under this Agreement.

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Section 4.4     Rongfu Holder Status. The Rongfu Holder is either (i) an “accredited investor” (as such term is defined in Rule 501(a) of Regulation D promulgated under the 1933 Act), or (ii) not a “U.S. person” (as such term is defined in Regulation S promulgated under the 1933 Act) and is not acquiring the New Securities for the benefit of any U.S. person.

Section 4.5     Reliance on Exemptions.  Such Rongfu Holder understands that the New Securities are being offered and issued to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that Granto is relying upon, among other things, the truth and accuracy of, and such Rongfu Holder’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Rongfu Holder set forth herein in order to determine the availability of such exemptions and the eligibility of such Rongfu Holder to acquire the New Securities.

Section 4.6     Information.  Such Rongfu Holder and its advisors, if any, have been furnished with all materials relating to the offer and sale of the New Securities which have been requested by such Rongfu Holder. Such Rongfu Holder and its advisors, if any, have been afforded the opportunity to ask questions of Granto.  Neither such inquiries nor any other due diligence investigations conducted by such Rongfu Holder or its advisors, if any, or its representatives shall modify, amend or affect such Rongfu Holder’s right to rely on the representations and warranties contained herein. Such Rongfu Holder understands that its investment in the New Securities involves a high degree of risk and is able to afford a complete loss of such investment.  Such Rongfu Holder has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision in respect of its acquisition of the New Securities.

Section 4.7    No Governmental Review.  Such Rongfu Holder understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the New Securities or the fairness or suitability of the investment in the New Securities nor have such authorities passed upon or endorsed the merits of the offering of the New Securities.

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Section 4.8     Transfer or Resale.  Such Rongfu Holder understands:  (i) the New Securities have not been and are not being registered under the 1933 Actor any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Rongfu Holder shall have delivered to Granto an opinion of counsel, in a form reasonably acceptable to Granto, to the effect that such New Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) such Rongfu Holder provides Granto with assurance reasonably acceptable to Granto that such New Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act, as amended, (or a successor rule thereto) (collectively, “Rule 144”); (ii) any sale of the New Securities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the New Securities under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) none of Granto or any other person is under any obligation to register the New Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.  Notwithstanding the foregoing, and subject to compliance with applicable securities laws, the New Securities may be pledged in connection with a bona fide margin account or other loan or financing arrangement secured by the New Securities and such pledge of New Securities shall not be deemed to be a transfer, sale or assignment of the New Securities hereunder, unless required by law, and no Rongfu Holder effecting a pledge of New Securities shall be required to provide Granto with any notice thereof or otherwise make any delivery to Granto pursuant to this Agreement.

Section 4.9     Survival.  Each of the representations and warranties set forth in this Article IV shall be deemed represented and made by the Rongfu Holder at the Closing as if made at such time and shall survive the Closing for a period terminating on the second anniversary of the date of this Agreement.

ARTICLE V

COVENANTS

Section 5.1     Certain Changes and Conduct of Business.

(a)     From and after the date of this Agreement and until the Closing Date, Granto shall not, and the Granto Holders shall cause Granto not to, carry out any business other than maintaining its corporate existence and making any governmental filings necessary and in a manner consistent with all representations, warranties or covenants of Granto and the Granto Holders and shall not and shall cause Granto to not:

i. make any change in its Articles of Incorporation or Bylaws; issue any additional shares of capital stock or equity securities or grant any option, warrant or right to acquire any capital stock or equity securities or issue any security convertible into or exchangeable for its capital stock or alter in any material term of any of its outstanding securities or make any change in its outstanding shares of capital stock or its capitalization, whether by reason of a reclassification, recapitalization, stock split or combination, exchange or readjustment of shares, stock dividend or otherwise;

ii. A. incur, assume or guarantee any indebtedness for borrowed money, issue any notes, bonds, debentures or other corporate securities or grant any option, warrant or right to purchase any thereof; or

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B. issue any securities convertible or exchangeable for debt or equity securities of Granto;

iii. make any sale, assignment, transfer, abandonment or other conveyance of any of its assets or any part thereof;

iv. subject any of its assets, or any part thereof, to any lien or suffer such to be imposed t;

v. acquire any assets, raw materials or properties, or enter into any other transaction;

vi. enter into any new (or amend any existing) employee benefit plan, program or arrangement or any new (or amend any existing) employment, severance or consulting agreement, grant any general increase in the compensation of officers or employees (including any such increase pursuant to any bonus, pension, profit-sharing or other plan or commitment) or grant any increase in the compensation payable or to become payable to any employee;

vii. make or commit to make any material capital expenditures;

viii. pay, loan or advance any amount to, or sell, transfer or lease any properties or assets to, or enter into any agreement or arrangement with, any of its affiliates;

ix. guarantee any indebtedness for borrowed money or any other obligation of any other person;

x. fail to keep in full force and effect insurance comparable in amount and scope to coverage maintained by it (or on behalf of it) on the date hereof;

xi. take any other action that would cause any of the representations and warranties made by it in this Agreement not to remain true and correct in all material aspect;

xii. make any loan, advance or capital contribution to or investment in any person;

xiii. make any change in any method of accounting or accounting principle, method, estimate or practice;

xiv. settle, release or forgive any claim or litigation or waive any right;

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xv. commit itself to do any of the foregoing.

(b)           From and after the date of this Agreement and until the Closing Date Rongfu shall:

1. continue to maintain, in all material respects, its properties in accordance with present practices in a condition suitable for its current use;

2. conduct no business other than maintaining its corporate existence and making necessary governmental filings; and

3. keep its books of account, records and files in the ordinary course and in accordance with existing practices.

Section 5.2     Access to Properties and Records.  Rongfu shall afford Granto’s accountants, counsel and authorized representatives, and Granto shall afford to Rongfu’s accountants, counsel and authorized representatives full access during normal business hours throughout the period prior to the Closing Date (or the earlier termination of this Agreement) to all of such parties’ properties, books, contracts, commitments and records and, during such period, shall furnish promptly to the requesting party all other information concerning the other party's business, properties and personnel as the requesting party may reasonably request, provided that no investigation or receipt of information pursuant to this Section 5.2 shall affect any representation or warranty of or the conditions to the obligations of any party.

Section 5.4     Consents and Approvals.  The parties shall:

(a)     use their reasonable commercial efforts to obtain all necessary consents, waivers, authorizations and approvals of all governmental and regulatory authorities, domestic and foreign, and of all other persons, firms or corporations required in connection with the execution, delivery and performance by them of this Agreement; and

(b)    diligently assist and cooperate with each party in preparing and filing all documents required to be submitted by a party to any governmental or regulatory authority, domestic or foreign, in connection with such transactions and in obtaining any governmental consents, waivers, authorizations or approvals which may be required to be obtained connection in with such transactions.

Section 5.5     Public Announcement.  Unless otherwise required by applicable law, the parties hereto shall consult with each other before issuing any press release or otherwise making any public statements with respect to this Agreement and shall not issue any such press release or make any such public statement prior to such consultation.

Section 5.6     Stock Issuance.  From and after the date of this Agreement until the Closing Date, neither Granto nor Rongfu shall issue any additional shares of its capital stock or other securities.

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ARTICLE VI

CONDITIONS TO OBLIGATIONS OF RONGFU HOLDERS

The obligations of the Rongfu Holders to consummate the transactions contemplated by this Agreement are subject to the fulfillment, at or before the Closing Date, of the following conditions, any one or more of which may be waived by the Rongfu Holders in their sole discretion:

Section 6.1     Representations and Warranties of Granto and the Granto Holder. All representations and warranties concerning Granto made in this Agreement shall be true and correct on and as of the Closing Date as if again made by Granto and the Granto Holder as of such date.

Section 6.2     Agreements and Covenants.  Granto shall have performed and complied in all material respects to all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Closing Date.

Section 6.3    Consents and Approvals.  Consents, waivers, authorizations and approvals of any governmental or regulatory authority, domestic or foreign, and of any other person, firm or corporation, required in connection with the execution, delivery and performance of this Agreement shall be in full force and effect on the Closing Date.

Section 6.4    No Violation of Orders.  No preliminary or permanent injunction or other order issued by any court or governmental or regulatory authority, domestic or foreign, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any government or governmental or regulatory authority, which declares this Agreement invalid in any respect or prevents the consummation of the transactions contemplated hereby, or which materially and adversely affects the assets, properties, operations, prospects, net income or financial condition of Granto shall be in effect; and no action or proceeding before any court or governmental or regulatory authority, domestic or foreign, shall have been instituted or threatened by any government or governmental or regulatory authority, domestic or foreign, or by any other person, or entity which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement or which challenges the validity or enforceability of this Agreement.

Section 6.5    Other Closing Documents.  The Rongfu Holders shall have received such other certificates, instruments and documents in confirmation of the representations and warranties of Granto or in furtherance of the transactions contemplated by this Agreement as they or their counsel may reasonably request.

Section 6.6    Absence of Litigation. No action, suit or proceeding before any court or any governmental body or authority, pertaining to the transactions contemplated by this Agreement or to its consummation, shall have been instituted or threatened.

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Section 6.7     Resignation and Replacement of Directors and Officers.  All of the current directors and officers of Granto shall have resigned and the designees of Rongfu and no other persons shall have been elected as directors of Granto.

Section 6.8     Disposition of Granto’s Existing Business, Assets and Liabilities. As of the Closing Date, except for its corporate records, Granto shall have no assets or liabilities, including without limitation, contract rights or liabilities or contingent liabilities.

Section 6.9     Call Option Agreements. Kelvin Chan (“Chan”), the holder of 18,000,000 shares of Rongfu Common Stock and one of the Rongfu Holders, is a party to four different Call Option Agreements, dated December 29, 2009 with four persons pursuant to which Chan has granted to such persons the option to purchase a portion of the Rongfu Common Stock held by Chan, subject to the satisfaction of certain conditions (the “Call Option Agreements”). The Call Option Agreements shall have been amended to provide that immediately upon the consummation of this Agreement, in lieu of Rongfu Common Stock, the options granted under the Call Option Agreements shall be for the purchase of Granto Common Stock and all references in the Call Option Agreements to “the Shell Company” or “the Company” shall mean Granto, but except for such changes, all of the other terms and conditions set forth in the Call Option Agreements shall remain in full force and effect.

Section 6.10  Cancellation of Certain Shares. An aggregate of 1,150,000 shares of Granto Common Stock formerly held by the Granto Holder shall have been cancelled without the payment to the Granto Holder of any consideration so that as of the Closing only 1,000,000 shares of Granto Common Stock shall be outstanding.

Section 6.11  Waiver of Notice of Rongfu Covenants under Bridge Financing Agreement.. Each of the Rongfu Holders who purchased Rongfu Securities pursuant to Securities Purchase Agreements in January 2010 (the “January 2010 SPAs”) hereby waives the performance by Rongfu of all covenants and agreements of Rongfu under the January 2010 SPA to which it is a party, including, without limitation, the giving to such Rongfu Holder of the notice specified in Section 6.4 of such January 2010 SPA.

ARTICLE VII

CONDITIONS TO OBLIGATIONS OF GRANTO

The obligations of Granto to consummate the transactions contemplated by this Agreement are subject to the fulfillment, at or before the Closing Date, of the following conditions, any one or more of which may be waived by Granto in its sole discretion:

Section 7.1     Representations and Warranties of Rongfu and Rongfu Holders.  All representations and warranties made by Rongfu and the Rongfu Holders in this Agreement shall be true and correct on and as of the Closing Date as if again made by Rongfu and the Rongfu Holders on and as of such date.

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Section 7.2    Agreements and Covenants.  The Rongfu Holders shall have performed and complied in all material respects to all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Closing Date.

Section 7.3    Consents and Approvals.  All consents, waivers, authorizations and approvals of any governmental or regulatory authority, domestic or foreign, and of any other person, firm or corporation, required in connection with the execution, delivery and performance of this Agreement, shall have been duly obtained and shall be in full force and effect on the Closing Date.

Section 7.4    No Violation of Orders.  No preliminary or permanent injunction or other order issued by any court or other governmental or regulatory authority, domestic or foreign, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any government or governmental or regulatory authority, domestic or foreign, that declares this Agreement invalid or unenforceable in any respect or which prevents the consummation of the transactions contemplated hereby, or which materially and adversely affects the assets, properties, operations, prospects, net income or financial condition of Rongfu, taken as a whole, shall be in effect; and no action or proceeding before any court or government or regulatory authority, domestic or foreign, shall have been instituted or threatened by any government or governmental or regulatory authority, domestic or foreign, or by any other person, or entity which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement or which challenges the validity or enforceability of this Agreement.

Section 7.5.   Other Closing Documents.  Granto shall have received such other certificates, instruments and documents in confirmation of the representations and warranties of the Rongfu Holders or in furtherance of the transactions contemplated by this Agreement as Granto or its counsel may reasonably request.

Section 7.6    Absence of Litigation. No action, suit or proceeding before any court or any governmental body or authority, pertaining to the transactions contemplated by this Agreement or to its consummation, shall have been instituted or threatened against Granto, Rongfu or any Rongfu Holder.

ARTICLE VIII

TERMINATION AND ABANDONMENT

SECTION 8.1          Methods of Termination.  This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time before the Closing:

(a)      By the mutual written consent of the parties;

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(b)      By Granto upon a material breach of any representation, warranty, covenant or agreement on the part of the Rongfu Holders set  forth in this Agreement, or if any representation or warranty of Rongfu or the Rongfu Holders shall become untrue, in either case such that any of the conditions set forth in Article VII hereof would not be satisfied, and such breach shall, if capable of cure, has not been cured within ten (10) days after receipt by the party in breach of a notice from the non-breaching party setting forth in detail the nature of such breach;

(c)      By the Rongfu Holders, upon a material breach of any representation, warranty, covenant or agreement on the part of Granto set forth in this Agreement, or, if any representation or warranty of Granto and the Granto Holders shall become untrue, in either case such that any of the conditions set forth in Article VI hereof would not be satisfied, and such breach shall, if capable of cure, not have been cured within ten (10) days after receipt by the party in breach of a written notice from the non-breaching party setting forth in detail the nature of such breach;

(d)      By any party, if the Closing shall not have consummated on or before March 31, 2010;

(e)      By any party if a court of competent jurisdiction or governmental, regulatory or administrative agency or commission shall have issued an order, decree or ruling or taken any other action (which order, decree or ruling the parties hereto shall use its best efforts to lift), which permanently restrains, enjoins or otherwise prohibits the transactions contemplated by this Agreement.

Section 8.2      Procedure Upon Termination.  In the event of termination and abandonment of this Agreement by a party pursuant to Section 8.1, written notice thereof shall forthwith be given by the terminating party to the other parties and this Agreement shall terminate and the transactions contemplated hereby shall be abandoned, without further action.  If this Agreement is terminated as provided herein, no party to this Agreement shall have any liability or further obligation to any other party to this Agreement; provided, however, that no termination of this Agreement pursuant to this Article VIII shall relieve any party of liability for a breach of any provision of this Agreement occurring before such termination.

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ARTICLE IX

MISCELLANEOUS PROVISIONS

Section 9.1      Survival of Provisions.  The respective representations, warranties, covenants and agreements of each of the parties to this Agreement (except covenants and agreements which are expressly required to be performed and are performed in full on or before the Closing Date) shall survive the Closing Date and the consummation of the transactions contemplated by this Agreement for a period of one year. In the event of a breach of any of such representations, warranties or covenants, the party to whom such representations, warranties or covenants have been made shall have all rights and remedies for such breach available to it under the provisions of this Agreement or otherwise, whether at law or in equity, regardless of any disclosure to, or investigation made by or on behalf of such party on or before the Closing Date.

Section 9.2      Publicity.  No party shall cause the publication of any press release or other announcement with respect to this Agreement or the transactions contemplated hereby without the consent of the other parties, unless a press release or announcement is required by law.  If any such announcement or other disclosure is required by law, the disclosing party agrees to give the non-disclosing parties prior notice and an opportunity to comment on the proposed disclosure.

Section 9.3      Successors and Assigns.  This Agreement shall inure to the benefit of, and be binding upon, the parties hereto and their respective successors and assigns; provided, however, that no party shall assign or delegate any of the obligations created under this Agreement without the prior written consent of the other parties.

Section 9.4      Fees and Expenses.  Except as otherwise expressly provided in this Agreement, all legal and other fees, costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such fees, costs or expenses.

Section 9.5      Notices.  All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been given or made if in writing and delivered personally or sent by registered or certified mail (postage prepaid, return receipt requested) to the parties at the following addresses:

If to Rongfu to:

Rongfu Aquaculture, Inc.

Dongdu Room 321

No. 475 Huanshidong Road

Guangzhou City,

People’s Republic of China 510075

Attn: Mr. Kelvin Chan, Chief Executive Officer

Fax: 011-86-020-8762-2136

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with a copy to:

Guzov Ofsink, LLC

600 Madison Avenue, 14th Floor

New York, New York 10022

Attn: Darren Ofsink, Esq.

Fax: 212-688-7273

If to Granto, to:

Granto, Inc.

16 Monarch Way

Kinnelon, New Jersey

Attn.: Janet Gargiulo, President

e-mail:janetgargiulo@msn

If to the Rongfu Holders, to the names and addresses as set forth on Exhibit A hereto;

If to the Granto Holder, to the person whose name and address is set forth on Exhibit B hereto;

or to such other persons or at such other addresses as shall be furnished by any party by like notice to the others, and such notice or communication shall be deemed to have been given or made as of the date so delivered or mailed. No change in any of such addresses shall be effective insofar as notices under this Section 9.5 are concerned unless such changed address is located in the United States of America and notice of such change shall have been given to such other party hereto as provided in this Section 9.5

Section 9.6      Entire Agreement.  This Agreement, together with the exhibits hereto, represents the entire agreement and understanding of the parties with reference to the transactions set forth herein and no representations or warranties have been made in connection with this Agreement other than those expressly set forth herein or in the exhibits, certificates and other documents delivered in accordance herewith.  This Agreement supersedes all prior negotiations, discussions, correspondence, communications, understandings and agreements between the parties relating to the subject matter of this Agreement and all prior drafts of this Agreement, all of which are merged into this Agreement.  No prior drafts of this Agreement and no words or phrases from any such prior drafts shall be admissible into evidence in any action or suit involving this Agreement.

Section 9.7      Severability.  This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof.  Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible so as to be valid and enforceable.

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Section 9.8      Titles and Headings.  The Article and Section headings contained in this Agreement are solely for convenience of reference and shall not affect the meaning or interpretation of this Agreement or of any term or provision hereof.

Section 9.9       Counterparts.    This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall be considered one and the same agreement.

Section 9.10    Convenience of Forum; Consent to Jurisdiction.  The parties to this Agreement, acting for themselves and for their respective successors and assigns, without regard to domicile, citizenship or residence, hereby expressly and irrevocably elect as the sole judicial forum for the adjudication of any matters arising under or in connection with this Agreement, and consent and subject themselves to the jurisdiction of, the courts of the State of New York located in County of New York, and/or the United States District Court for the Southern District of New York, in respect of any matter arising under this Agreement. Service of process, notices and demands of such courts may be made upon any party to this Agreement by personal service at any place where it may be found or giving notice to such party as provided in Section 9.5.

Section 9.11    Enforcement of the Agreement.  The parties hereto agree that irreparable damage would occur if any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached.  It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereto, this being in addition to any other remedy to which they are entitled at law or in equity.

Section 9.12    Governing Law.  This Agreement shall be governed by and interpreted and enforced in accordance with the laws of the State of New York without giving effect to the choice of law provisions thereof.

Section 9.13    Amendments and Waivers.No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by all of the parties hereto.  No waiver by any party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

Section 9.14    Indemnification.

(a)           Unless this Agreement is terminated under Article VIII hereof, the Granto Holder shall defend, protect, indemnify and hold harmless Granto, Rongfu and each of the Rongfu Holders and all of their respective stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing persons’ agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (i) any misrepresentation or breach of any representation or warranty made by Granto or the Granto Holder in this Agreement or any other certificate, instrument or document contemplated hereby or thereby, (ii) any breach of any covenant, agreement or obligation of Granto or the Granto Holder contained in this Agreement or any other certificate, instrument or document contemplated hereby or thereby or (iii) any cause of action, suit or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of Granto or Rongfu) and arising out of or resulting from the execution, delivery, performance or enforcement of this Agreement or any other certificate, instrument or document contemplated hereby or thereby.

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(b)           Promptly after receipt by Indemnitee under this Section 9.14 of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving an Indemnified Liability, such Indemnitee shall, if a claim in respect thereof is to be made against any indemnifying party under this Section 9.14, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnitee, as the case may be; provided, however, that an Indemnitee shall have the right to retain its own counsel with the fees and expenses of not more than one counsel for such Indemnitee to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnitee and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnitee and any other party represented by such counsel in such proceeding.  The Indemnitee shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnitee which relates to such action or claim.  The indemnifying party shall keep the Indemnitee reasonably apprised at all times as to the status of the defense or any settlement negotiations in respect thereof. No indemnifying party shall be liable for any settlement of any action, claim or proceeding effected without its prior written consent; provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent.  No indemnifying party shall, without the prior written consent of the Indemnitee, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnitee of a release from all liability in respect to such claim or litigation, and such settlement shall not include any admission as to fault on the part of the Indemnitee. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnitee in respect of all third parties, firms or corporations relating to the matter for which indemnification has been made.  The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnitee under this Section 9.14, except to the extent that the indemnifying party is materially prejudiced in its ability to defend such action.

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(c)           The indemnification required by this Section 9.14 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Liabilities are incurred.

(d) The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnitee against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

GRANTO, INC.
By: /s/ Janet Gargiulo
Name:	Janet Gargiulo
Title:	President
RONGFU AQUACULTURE, INC.
By: /s/ Kelvin Chan
Name:	Kelvin Chan
Title:	President
RONGFU HOLDERS:
/s/ Kelvin Chan
Kelvin Chan
/s/ Yongming Yan
Yongming Yan
CHINA FINANCIAL SERVICES
By:	/s/ Sherry Li
	Name: Sherry Li
	Title: President

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SILVER ROCK II LIMITED
By:	/s/ Rima Salam
	Name: Rima Salam
	Title: Director
THE BOSPHOROUS GROUP, INC.
By:	/s/ Daniel J. McClory
	Name: Daniel J. McClory
	Title: President
JAYHAWK PRIVATE EQUITY FUND II, L.P.
By:	/s/ Michael Schmitz
	Name: Michael Schmitz
	Title: CFO
HUA-MEI 21st CENTURY PARTNERS, L.P.
By:	/s/ Leigh Curry
	Name: Leigh Curry
	Title: Managing Director
GUERRILLA PARTNERS, L.P.
By:	/s/ Leigh Curry
	Name: Leigh Curry
	Title: Managing Director
THE BURKE FAMILY TRUST.
By:	/s/ Peter Burke
	Name: Peter Burke
	Title: Trustee
As to Article II, Section 5.1 and Article IX only:
GRANTO HOLDER:
/s/ Janet Gargiulo
Janet Gargiulo

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EXHIBIT A

RONGFU HOLDERS

Name and Address of Rongfu Holder	Rongfu  Common Stock Being  Exchanged		Granto  Common Stock Being Issued in  Exchange		Rongfu Series  A Warrants  Being  Exchanged/  Granto Series C  Warrants Being  Issued in  Exchange		Rongfu Series  B Warrants  Being  Exchanged/  Granto Series D  Warrants Being  Issued in  Exchange
Ying Shan Chan Dongdu Room 321, No.475 Huanshidong Road, Guangzhou City, P.R.China 510075		17,400,556		17,400,556	–		–
Yan Yongming 87 Dennis Street Garden City Park, NY 11040		413,924		413,924	–		–
China Financial Services 87 Dennis Street Garden City Park, NY 11040		476,076		476,076	–		–
Hua-Mei 21st Century Partners, 237 Park Avenue, 9th Fl. New York, NY 10017		23,050		33,333		23,050/33,333		23,050/33,333
Guerrilla Partners, LP 237 Park Avenue, 9th Fl. New York, NY 10017		12,411		17,949		12,411/17,949		12,411/17,949
Jayhawk Private Equity Fund II, LP 930 Tahow Blvd 802-281 Incline Village, NV 89451		70,922		102,564		70,922/102,564		70,922/102,564
Burke Family Trust 2102 A Alton Pkwy Irvine CA 92606		17,730		25,641		17,730/25,641		17,730/25,641
Silver Rock II, Ltd. Silver Rock II Ltd. Sable Trust Liited 4th Floor, Rodus Building, Road Reef, Road Town, Tortola VA, BVI		88,652		128,205		88,652/128,205		88,652/128,205
The Bosphorous Group, Inc. 318 N. Carson St., Ste 208 Carson City, NV 89701		17,730		25,641		17,730/25,641		17,730/25,641

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EXHIBIT B

GRANTO HOLDER

Name and Address

Janet Gargiulo

16 Monarch Way

Kinnelon, New Jersey 07405

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SCHEDULE 3.2

OUTSTANDING WARRANTS TO PURCHASE RONGFU COMMON STOCK

Series A Warrants: Exercise Price $3.53 per Share; Expiration Date: January 7, 2015

Name of Holder	Number of Shares
The Burke Family Trust		17,730
Silver Rock II Limited		88,652
The Bosphorous Group, Inc.		17,730

Series B Warrants: Exercise Price $4.23 per Share; Expiration Date: January 7, 2015

Name of Holder	Number of Shares
The Burke Family Trust		17,730
Silver Rock II Limited		88,652
The Bosphorous Group, Inc.		17,730

Name of Holder	Number of Shares
Jayhawk Private Equity Fund II, L.P.		70,922

Series B Warrants: Exercise Price $4.23 per Share; Expiration Date: January 13, 2015

Name of Holder	Number of Shares
Jayhawk Private Equity Fund II, L.P.		70,922

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Series A Warrants: Exercise Price $3.53 per Share; Expiration Date: January 21, 2015

Name of Holder	Number of Shares
Guerilla Partners, L.P.		12,411
Hua-Mei 21st Century Partners, LP		23,050

Series B Warrants: Exercise Price $4.23 per Share; Expiration Date: January 21, 2015

Name of Holder	Number of Shares
Guerilla Partners, L.P.		12,411
Hua-Mei 21st Century Partners, LP		23,050

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EX-3.1

	STATE OF NEVADA
ROSS MILLER Secretary of State		SCOTT W. ANDERSON Deputy Secretary for Commercial recordings
	OFFICE OF THE SECRETARY OF STATE

Certified Copy

March 26, 2010

Job Number: C20100326-2493

Reference Number:

Expedite:

Through Date:

The undersigned filing officer hereby certifies that the attached copies are true and exact copies of all requested statements and related subsequent documentation filed with the Secretary of State’s Office, Commercial Recordings Division listed on the attached report.

Document Number(s) Description	Number of Pages
20100192292-08                                       Certificate of Designation	15 Pages/1 Copies

	Respectfully, ROSS MILLER Secretary of State
Certified By: Robert Sandberg Certificate Number: C201 00326-2493 You may verify this certificate online at http://www.nvsos.gov/

Commercial Recording Division

202 N. Carson Street

Carson City, Nevada 89701-4069

Telephone (775) 684-5708

Fax (775) 684-7138

ROSS MILLER Secretary of State 204 North Carson Street, Suitel Carson City, Nevada 89701-4520 (775) 684 5708 Website: www.nvsos.gov

Certificate of Designation

(PURSUANT TO NRS 78.1955)

USE BLACK INK ONLY - DO NOT HIGHLIGHT  ABOVE SPACE IS FOR OFFICE USE ONLY

Certificate of Designation For

Nevada Profit Corporations

(Pursuant to NRS 78.1955)

1.Name of corporation:

Granto, Inc.

2.By resolution of the board of directors pursuant to a provision in the articles of incorporation this certificate establishes the following regarding the voting powers, designations, preferences, limitations, restrictions and relative rights of the following class or series of stock.

A series of 3,000,000 shares of Preferred Stock which shall be issued in and constitute a single series to be known as Series A Preferred Stock, par value $0.001 per share (hereinafter called the "Series A Preferred"). The shares of Series A Preferred shall have the voting powers, designations, preferences and other special rights, and qualifications, limitations and restrictions thereof set forth in Exhibit A attached hereto.

3.Effective date of filing: (optional)

(must not be later than 90 days after the certificate is filed)

4.Signature: (required)

/s/ Janet Gargiulo                                          

Signature of Officer

Filing Fee: $175.00

IMPORTANT: Failure to include any of the above information and submit with the proper fees may cause this filing to be rejected.

EXHIBIT A

CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS

OF SERIES A PREFERRED STOCK

OF

GRANTO, INC.

GRANTO, INC. (the "Company"), a corporation organized and existing under and by virtue of the Revised Statutes of the State of Nevada (the "NRS"), in accordance with Section 78.1955 of the NRS, DOES HEREBY CERTIFY that:

The Articles of Incorporation of the Company provide that the Company is authorized to issue 10,000,000 shares of preferred stock with a par value of $.001 per share. The Articles of Incorporation provide, further, that the Board of Directors is authorized, to provide for the issuance of the shares of preferred stock in or more series, and by filing a certificate pursuant to the NRS, to establish from time to time the number of shares to be included in each series and to fix the designation, powers, preferences and rights and the qualifications, limitations or restrictions thereof. Pursuant to the authority conferred upon the Board of Directors by the Articles of Incorporation, the Board of Directors, by Unanimous Written Consent dated March 25, 2010, adopted a resolution providing for the designation, rights, powers and preferences and the qualifications, limitations and restrictions of 3,000,000 shares of Series A Preferred Stock, and that a copy of such resolution is as follows:

RESOLVED, that pursuant to the authority vested in the Board of Directors of the Company, the provisions of its Articles of Incorporation, as amended, and in accordance with the Revised Statutes of the State of Nevada, the Board of Directors hereby authorizes the filing of a Certificate of Designations, Preferences and Rights of Series A Preferred Stock of Granto, Inc.  Accordingly, the Company is authorized to issue Series A Preferred Stock with par value of $.001 per share, which shall have the powers, preferences and rights and the qualifications, limitations and restrictions thereof, as follows:

1.Definitions.  For the purposes hereof, the following definitions shall apply:

1.1“Additional Shares of Common Stock” means all shares of Common Stock issued or issuable by the Company (including, without limitation, shares issuable pursuant to any Convertible Securities, Rights or Options), or deemed issued pursuant to Section 5.6(c), after the Original Issue Date, other than shares of Common Stock (or options, warrants or rights therefor) issued or issuable (a) upon the conversion of Series A Preferred or upon the exercise of any Rights or Options which are outstanding on the Original Issue Date, including warrants to purchase Common Stock (i) to be issued pursuant to a holders of Class A Warrants and Class B Warrants to purchase common stock of Rongfu Aquaculture, Inc. in exchange therefor pursuant to a Share Exchange Agreement between the Company and such holders and (ii) Class A Warrants and Class B Warrants to purchase Common Stock which may be issued pursuant to a Series A Preferred Stock Purchase Agreement between the Company and certain investors after the filing of this Certificate, (b) to employees, officers or directors of, or contractors, consultants or advisers to, the Company pursuant to the any stock option plan, stock purchase right or arrangement approved by the Board that do not exceed in the aggregate 10% of the Company’s Common Stock at the time of issuance, (c) in connection with the acquisition of another unrelated corporation or entity with an enterprise value of at least $1,000,000 by the Company by consolidation, merger, purchase of all or substantially all of the assets, or other reorganization approved unanimously by the Board, and (d) to non-affiliated parties in connection with services rendered or to be rendered to the Company that do not exceed in the aggregate in any period of 24 months 2% of the Company’s Common Stock at the time of the Original Issue Date.

1.2“Aggregate Consideration Received” has the meaning set forth in Section 5.6(b) hereof.

1.3 “Available Funds and Assets” has the meaning set forth in Section 3 hereof.

1.4“Board” means the Board of Directors of the Company.

1.5“Certificate” means this Certificate of Designations, Preferences and Rights of Series A Preferred Stock.

1.6“Commission” means the Securities and Exchange Commission.

1.7“Common Stock" means the Company's common stock, par value $0.001 per share, and stock of any other class into which such shares may hereafter have been reclassified or changed.

1.8“Common Stock Equivalents Outstanding” means the number of shares of Common Stock that is equal to the sum of (a) all shares of Common Stock that are outstanding at the time in question, plus (b) all shares of Common Stock that are issuable upon conversion of all shares of Series A Preferred or other Convertible Securities and Rights or Options that are outstanding at the time in question.

1.9“Conversion Price” means $2.78107 and shall be subject to adjustment as described in Article X.

1.10 “Convertible Securities” means debt or equity securities convertible into, or exchangeable or exercisable for, shares of Common Stock or include the right to receive Additional Shares of Common Stock.

1.11“Effective Price” with respect to a particular issuance of Additional Shares of Common Stock means the quotient determined by dividing (a) the Aggregate Consideration Received (or deemed to have been received) by the Company for such issuance by (b) the total number of Additional Shares of Common Stock issued or sold (or deemed to have been issued or sold) by the Company in such issuance.

1.12“Exchange Act” means the Securities Exchange Act of 1934, as amended.

1.13 “Original Issue Date” means the date on which the first share of Series A Preferred is issued by the Company.

1.14“Original Series A Issue Price” means $2.78107 per share of Series A Preferred, as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares.

1.15“Rights or Options” means warrants, options or other rights to purchase or acquire shares of Common Stock or Convertible Securities.

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

1.17“Series A Preferred” means the Series A Preferred Stock of the Company.

1.18“Trading Day” means a day on which the Common Stock is traded on a Trading Market.

1.19“Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the Nasdaq SmallCap Market, the American Stock Exchange, the New York Stock Exchange, the Nasdaq National Market or the OTC Bulletin Board.

2.Dividend Rights.

2.1Series A Preferred.  (a)  The Series A Preferred, in preference to the holders of Common Stock, shall be entitled to receive, when and as declared by the Board of Directors out of funds that are legally available therefor, cumulative dividends at the rate of six percent (6%) per annum of the Original Series A Issue Price on each outstanding share of Series A Preferred (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares) payable semi-annually on each February 28 and August 31 on which any shares of Series A Preferred are outstanding.  No dividend or distribution shall be paid or declared on the Common Stock unless and until the full amount of any dividend on the Series A Preferred shall have been paid or declared in full and a sum sufficient for the payment thereof shall have been set aside for payment.

(b) Payment of dividends on the Series A Preferred shall be made at the Company’s election in (i) cash, or (ii) shares of Common Stock.

(c)  The number of shares Common Stock issuable under Section 2.1 (b) shall be determined as follows:

(i)           if

(A) a registration statement covering the shares of Common Stock to be issued as a dividend shall have been filed by the Company and declared effective by the United States Securities and Exchange Commission, and such registration statement continues to be effective up through and including the date of the declaration of the Dividend, and

(B) the shares of Common Stock are eligible for trading on a Trading Market;

then the value of the shares of Common Stock will be determined by the daily volume weighted average price of the Common Stock for ten trading days immediately preceding the declaration of the Dividend on the primary Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg Financial L.P. (based on a Trading Day from 9:30 a.m. EST to 4:02 p.m. Eastern Time) using the VAP function; and

(ii)           if all of the requirements in Section 2.1(c)(i) are not present, then the then value of the shares of Common Stock will be the Original Series A Issue Price on each outstanding share of Series A Preferred.

2.2Payment of Declared, But Unpaid Dividends Upon Conversion.  If the Company shall have declared, but not paid dividends with respect to the Series A Preferred prior to the conversion thereof, as provided in Section 5, then all the declared, but unpaid dividends on the Series A Preferred as of the date of conversion shall be paid within 30 days after the date of the conversion.

3.Liquidation Rights.  In the event of any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, the funds and assets of the Company that may be legally distributed to the Company’s stockholders (the “Available Funds and Assets”) shall be distributed to the Company’s stockholders in the following manner:

3.1Series A Preferred.  First, the holders of Series A Preferred shall be entitled to receive, prior and in preference to the holders of Common Stock, an amount per share of Series A Preferred equal to the sum of (a) the Original Series A Issue Price, plus (b) any declared and unpaid dividends per share on such shares of Series A Preferred held by such holders, which notwithstanding Section 2.1(b) shall be paid in cash (the sum of clauses (a) and (b), the “Series A Liquidation Preference”).  If the Available Funds and Assets distributed to the holders of the Series A Preferred are insufficient to permit the payment to such holders of the full Series A Liquidation Preference, then the remaining Available Funds and Assets shall be distributed to the holders of the Series A Preferred pro rata based upon the number of shares of Series A Preferred held by each holder.

3.2Common Stock.  Finally, the Available Funds and Assets, if any, remaining after the payment or distribution (or the setting aside for payment or distribution) to the holders of the Series A Preferred of their full preferential amounts, in accordance with Section 3.1, shall be distributed among the holders of Common Stock on a per share basis.

3.3Deemed Liquidations.  The sale, conveyance, exclusive license or other disposition of all or substantially all of the assets of the Company, shall each be deemed to be a liquidation, dissolution or winding-up of the Company as those terms are used in this Section 3.  Holders of shares of Series A Preferred shall be given notice of any of the transactions set forth in this Section 3.3 no later than the earlier of (x) twenty (20) calendar days prior to the stockholders’ meeting called to approve the transaction and (y) twenty (20) calendar days prior to the closing of the transaction.

3.4Non-Cash Consideration.  If any assets of the Company distributed to stockholders in connection with any liquidation, dissolution or winding-up of the Company are other than cash, then the value of the non-cash assets shall be deemed to be the fair market value of such assets as determined by an investment banking firm selected by the Company and reasonably acceptable to the holders of a majority of the outstanding shares of Series A Preferred (the “Majority Holders”), with the costs of such appraisal to be borne by the Company, except that any securities to be distributed to stockholders in a liquidation, dissolution or winding-up of the Company shall be valued as follows:

(a)if the securities are then traded on a national securities exchange or the Nasdaq National Market (or a similar national quotation system), then the value shall be deemed to be the average of the closing prices of the securities on the exchange or system during the thirty (30) calendar day period ending three (3) days prior to the distribution;

(b)if the average trading volume of such securities traded over-the-counter exceeds 10,000 shares per day for the immediately preceding 30 Trading Days, then the value shall be deemed to be the average of the closing bid prices during the thirty (30) calendar day period ending three (3) days prior to the distribution; and

(c)if there is no active public market, then the value shall be the fair market value thereof, as determined by an investment banking firm selected by the Company and reasonably acceptable to the Majority Holders, with the costs of such appraisal to be borne by the Company.

Notwithstanding the foregoing, securities subject to investment letter or other restrictions on free marketability shall be appropriately discounted from the market value determined in accordance with clauses (a), (b) and (c) above to reflect the approximate fair market value thereof, as determined by an investment banking firm selected by the Company and reasonably acceptable to the Majority Holders, with the costs of such appraisal to be borne by the Company.

4.Voting Rights.

4.1Common Stock.  Except as otherwise provided herein or by applicable law, the holders of shares of Common Stock shall at all times vote together as one class on all matters (including the election of directors) submitted to a vote or for the consent of the stockholders of the Company.  Each holder of shares of Common Stock shall be entitled to one (1) vote for each whole share of Common Stock held as of the applicable date on any matter that is submitted to a vote or for the consent of the stockholders of the Company.

4.2Series A Preferred.  Each holder of shares of Series A Preferred shall be entitled to one (1) vote for each whole share of Common Stock into which such shares of Series A Preferred could be converted pursuant to the provisions of Section 5.1(a) on the record date for the determination of stockholders entitled to vote on such matters or, if no such record date is established, on the date such vote is taken or any written consent of the stockholders is solicited.

4.3General.  Subject to the other provisions of this Certificate, each holder of Series A Preferred shall have full voting rights and powers equal to the voting rights and powers of the holders of Common Stock, and shall be entitled to notice of any stockholders’ meeting in accordance with the Bylaws of the Company (as in effect at the time in question) and applicable law, and shall be entitled to vote, together with the holders of Common Stock, with respect to any question upon which holders of Common Stock have the right to vote, except as may be otherwise provided by applicable law.  Except as otherwise provided in this Certificate and applicable law, the holders of Series A Preferred and the holders of Common Stock shall vote together and not as separate classes.

5.Conversion Rights.  The outstanding shares of Series A Preferred shall be convertible as follows:

5.1Optional Conversion.

(a)Series A Preferred.  At the option of the holder thereof, each share of Series A Preferred shall be convertible into a number of fully-paid and nonassessable shares of Common Stock at any time, or from time to time (prior to redemption or automatic conversion of the Series A Preferred into Common Stock) (as the same may be adjusted from time to time, the “Conversion Ratio”) as follows: the number of shares of Common Stock which results from dividing the Original Series A Issue Price by the Conversion Price that is in effect at the time of conversion ((i.e., determined in accordance with the following formula):

Original Series A Issue Price

Conversion Price

(b)Procedures.  Each holder of shares who elects to convert such shares pursuant to Section 5.1(a) above shall surrender its certificate(s) for such shares, duly endorsed, at the office of the Company, or any transfer agent for the Series A Preferred and shall give written notice to the Company at that office that the holder elects to convert the same and shall state therein the number of shares of Series A Preferred being converted (a “Notice of Conversion”).  Upon receipt of a Notice of Conversion, the Company shall promptly issue and deliver at that office to the holder a certificate(s) for the number of shares of Common Stock which the holder is entitled to receive upon the conversion.  The conversion shall be deemed to have been made immediately prior to the close of business on the date of the surrender of the certificate(s) representing the shares of Series A Preferred to be converted, and the person entitled to receive the shares of Common Stock issuable upon the conversion shall be treated for all purposes as the record holder of the shares of Common Stock on that date.

(c)           Beneficial Ownership Limitation.  The Company shall not effect any conversion of the Series A Preferred Stock, and the holder shall not have the right to convert any portion of the Series A Preferred Stock to the extent that after giving effect to such conversion, the holder (together with the holder’s affiliates) would beneficially own in excess of 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to such conversion.  For purposes of this Section 5.1(c), in determining the number of outstanding shares of Common Stock, the holder may rely on the number of outstanding shares of Common Stock as reflected in the most recent of the following: (A) the Company’s most recent Form 10-Q or Annual Report or Form 10-K,  as the case may be, as filed with the Commission under the Exchange Act (B) a more recent public announcement by the Company or (C) any other written notice by the Company or the Company’s transfer agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of the holder, the Company shall within two Trading Days confirm orally and in writing to the holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including the Series A Preferred Stock, by the holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was publicly reported by the Company.  This Section 5.1(c) may be waived or amended with respect to any holder of Series A Preferred Stock upon the holder providing the Company with sixty-one (61) days notice (the “Waiver Notice”) that the holder would like to waive this Section 5.1(c) with regard to any or all shares of Common Stock issuable upon conversion of the Series A Preferred Stock held by the holder and upon the giving of such Waiver Notice, this Section 5.1(c) shall be of no force or effect with regard to those shares of Common Stock referenced in the Waiver Notice. For purposes of this Section 5.1(c), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and Rule 13d-3 promulgated thereunder.

5.2Automatic Conversion.

(a)Requirements.  Each outstanding share of Series A Preferred automatically shall be converted into fully-paid and nonassessable shares of Common Stock pursuant to Conversion Ratio then in effect as set forth in Section 5.1(a) if:

(i)a registration statement covering the resale of the shares of Common Stock to be issued upon conversion shall have been filed by the Company and declared effective by the Commission, and such registration statement continues to be effective up through and including the date of the conversion;

(ii)the shares of Common Stock are eligible for trading on a Trading Market;

(iii)the daily volume weighted average price of the Common Stock for ten consecutive trading days immediately preceding the conversion is greater than or equal to $5.56 per share (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares) on the primary Trading Market on which the Common Stock is then listed or quoted;

(iv)average daily dollar volume of the Common Stock on the primary Trading Market on which the Common Stock is then listed or quoted is greater than or equal to $100,000 for ten consecutive trading days immediately preceding the conversion; and

(v)after giving effect to such conversion, the holder (together with the holder’s affiliates) would beneficially own less than 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to such conversion, unless such holder has waived such limitation.

(b)Procedures.  Upon the occurrence of any event specified in Section 5.2(a) above, the outstanding shares of Series A Preferred shall be converted into Common Stock automatically without the need for any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Company or its transfer agent; provided, however, that the Company shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon the conversion unless the certificates evidencing the shares of Series A Preferred are either delivered to the Company or its transfer agent as provided below, or the holder notifies the Company or its transfer agent that the certificates have been lost, stolen or destroyed, and executes an agreement reasonably satisfactory to the Company to indemnify the Company from any loss incurred by it in connection with the certificates.  Upon the occurrence of the automatic conversion of the Series A Preferred, the holders of Series A Preferred shall surrender the certificates representing the shares at the office of the Company or any transfer agent for the Series A Preferred.  Thereupon, there shall be issued and delivered to the holder promptly at the office and in its name as shown on the surrendered certificates, a certificate for the number of shares of Common Stock into which the shares of Series A Preferred surrendered were convertible on the date on which the automatic conversion occurred.

5.3Adjustments for Subdivisions, Combinations or Consolidations of Common Stock.  If at any time or from time to time the outstanding shares of Common Stock shall be (i) subdivided by stock split, stock dividend or otherwise into a greater number of shares of Common Stock, or (ii) combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, then the rate of conversion of Series A Preferred for Common Stock shall simultaneously be proportionately increased or decreased, as the case may be, such that the holders of the Series A Preferred shall thereafter receive upon conversion thereof, the number of shares of Common Stock they would have received had their Series A Preferred been converted into Common Stock immediately prior to the taking of the actions described in subsections (i) and (ii) of this Section 5.3.

5.4Adjustments for Stock Dividends and Other Distributions.  If at any time or from time to time after the Original Issue Date the Company pays a dividend or makes another distribution to the holders of the Common Stock payable in securities of the Company other than shares of Common Stock, and other than as otherwise adjusted in this Section 5 or as provided in Section 2.1, then, in each such event, provision shall be made so that the holders of the Series A Preferred shall receive upon conversion thereof, in addition to the number of shares of Common Stock receivable upon conversion thereof, the amount of securities of the Company that they would have received had their Series A Preferred been converted into Common Stock on the date for determining the holders of Common Stock entitled to receive the dividend or distribution.

5.5Adjustment for Merger, Sale, Reclassification, Exchange and Substitution.

(a)In case the Company after the Original Issue Date shall do any of the following (each, a “Triggering Event”): (a) consolidate or merge with or into any other Person and the Company shall not be the continuing or surviving corporation of such consolidation or merger, or (b) permit any other Person to consolidate with or merge into the Company and the Company shall be the continuing or surviving Person but, in connection with such consolidation or merger, any Capital Stock of the Company shall be changed into or exchanged for securities of any other Person or cash or any other property, or (c) transfer all or substantially all of its properties or assets to any other Person, or (d) effect a capital reorganization or reclassification of its Capital Stock, then, and in the case of each such Triggering Event, proper provision shall be made to the Conversion Price and the number of shares of Common Stock into which the Series A Preferred is convertible so that, upon the basis and the terms and in the manner provided in this Certificate, the holder of Series A Preferred shall be entitled upon the conversion hereof at any time after the consummation of such Triggering Event, to the extent the Series A Preferred has not been converted or redeemed prior to such Triggering Event, to receive at the Conversion Price in effect at the time immediately prior to the consummation of such Triggering Event, in lieu of the Common Stock issuable upon such conversion prior to such Triggering Event, the securities, cash and property to which such holder would have been entitled upon the consummation of such Triggering Event if such holder had converted immediately prior thereto (including the right of a shareholder to elect the type of consideration it will receive upon a Triggering Event), subject to adjustments (subsequent to such corporate action) as nearly equivalent as possible to the adjustments provided for elsewhere in this Section 5.  Immediately upon the occurrence of a Triggering Event, the Company shall notify the holder in writing of such Triggering Event and provide the calculations in determining the number of shares of Common Stock issuable upon conversion and the adjusted Conversion Price.

(b)The surviving entity and/or each Person (other than the Company) which may be required to deliver any securities, cash or property upon the conversion of the Series A Preferred as provided herein shall assume, by written instrument delivered to, and reasonably satisfactory to, the holder of Series A Preferred, (A) the obligations of the Company under the Series A Preferred (and if the Company shall survive the consummation of such Triggering Event, such assumption shall be in addition to, and shall not release the Company from, any continuing obligations of the Company under the Series A Preferred) and (B) the obligation to deliver to such holder such securities, cash or property as, in accordance with the foregoing provisions of this subsection (a).

(c)Except as provided in Section 3, upon any liquidation, dissolution or winding up of the Company, if at any time or from time to time after the Original Issue Date, the Common Stock issuable upon the conversion of the Series A Preferred is changed into the same or a different number of shares of any class of stock, whether by recapitalization, reclassification or otherwise (other than a subdivision or combination of shares provided for above), then, in any such event, each holder of Series A Preferred shall have the right thereafter to convert the Series A Preferred into the kind and amount of stock and other securities and property receivable upon the recapitalization, reclassification or other change by a holder of the number of shares of Common Stock into which the shares of Series A Preferred could have been converted immediately prior to the recapitalization, reclassification or change.

5.6Sale of Shares Below Conversion Price.

(a)Adjustment Formula.  If for a period of twenty-four (24) months after the Original Issue Date, the Company issues or sells, or is deemed by the provisions of this Section 5.6 to have issued or sold, Additional Shares of Common Stock, other than as provided in Sections 5.3 through 5.5 above, for an Effective Price which is less than the respective Conversion Price for the Series A Preferred as in effect immediately prior to the issue or sale (or deemed issuance or sale), then, and in each such case, the Conversion Price for the Series A Preferred shall be adjusted (calculated to the nearest cent), as of the close of business on the date of the issuance or sale, to the amount obtained by multiplying the Conversion Price by a fraction, (1) the numerator of which shall be the sum of (A) the number of Common Stock Equivalents Outstanding immediately prior to the issuance or sale of Additional Shares of Common Stock, plus (B) the quotient obtained by dividing the Aggregate Consideration Received by the Company for the total number of Additional Shares of Common Stock so issued and/or sold (and/or deemed so issued and sold) by the Conversion Price for the Series A Preferred in effect immediately prior to the issuance or sale, and (2) the denominator of which shall be the sum of (A) the number of Common Stock Equivalents Outstanding immediately prior to the issuance or sale (or deemed issuance or sale), plus (B) the number of Additional Shares of Common Stock so issued or sold (and/or deemed so issued and sold).

(b)The “Aggregate Consideration Received” by the Company for any issuance or sale (or deemed issuance or sale) of securities shall (i) to the extent it consists of cash, be computed at the gross amount of cash received by the Company (before deduction of any underwriting or similar commission, compensation or concessions paid or allowed by the Company in connection with the issuance or sale and without deduction of any expenses payable by the Company), (ii) to the extent it consists of property other than cash, be computed at the fair market value of that property as determined by an investment banking firm selected by the Company and reasonably acceptable to the Majority Holders, with the costs of such appraisal to be borne by the Company, and (c) if Additional Shares of Common Stock, Convertible Securities or Rights or Options to purchase either Additional Shares of Common Stock or Convertible Securities are issued or sold together with other stock or securities or other assets of the Company for a consideration which covers both, be computed as the portion of the consideration so received that may be reasonably determined by an investment banking firm selected by the Company and reasonably acceptable to the Majority Holders, with the costs of such appraisal to be borne by the Company to be allocable to such Additional Shares of Common Stock, Convertible Securities or Rights or Options, respectively.

(c)Deemed Issuances.  For the purpose of making any adjustment to the Conversion Price of the Series A Preferred required under this Section 5.6, if the Company issues or sells any Rights or Options or Convertible Securities after the Original Issue Date and if the Effective Price of the shares of Common Stock issuable upon exercise of the Rights or Options and/or the conversion or exchange of Convertible Securities (computed without reference to any additional or similar protective or antidilution clauses and assuming the satisfaction of any conditions to convertibility or exchangeability including, without limitation, the passage of time) is less than the respective Conversion Price then in effect for the Series A Preferred, then the Company shall be deemed to have issued, at the time of the issuance of the Rights or Options or Convertible Securities, that number of Additional Shares of Common Stock that is equal to the maximum number of shares of Common Stock issuable upon exercise or conversion of the Rights or Options or Convertible Securities upon their issuance and to have received, as the Aggregate Consideration Received for the issuance of the shares, an amount equal to the total amount of the consideration, if any, received by the Company for the issuance of the Rights or Options or Convertible Securities, plus, in the case of the Rights or Options, the minimum amounts of consideration, if any, payable to the Company upon the exercise in full of the Rights or Options, plus, in the case of Convertible Securities, the minimum amounts of consideration, if any, payable to the Company (other than by cancellation of liabilities or obligations evidenced by the Convertible Securities) upon the conversion or exchange thereof; provided, however, that:

(i)no further adjustment of the Conversion Price, as adjusted upon the issuance of the Rights or Options or Convertible Securities, shall be made as a result of the actual issuance of shares of Common Stock upon the exercise of any such Rights or Options or the conversion or exchange of any such Convertible Securities;

(ii)if the minimum amount of consideration payable to the Company upon the exercise of Rights or Options or the conversion or exchange of Convertible Securities is reduced over time or upon the occurrence or non-occurrence of specified events, other than by reason of antidilution or similar protective adjustments, then the Effective Price shall be recalculated using the figure to which the minimum amount of consideration is reduced;

(iii)if the minimum amount of consideration payable to the Company upon the exercise of the Rights or Options or the conversion or exchange of Convertible Securities is subsequently increased, then the Effective Price shall again be recalculated using the increased minimum amount of consideration payable to the Company upon the exercise of the Rights or Options or the conversion or exchange of the Convertible Securities;

(iv)if any such Rights or Options or the conversion rights represented by any such Convertible Securities shall expire without having been fully exercised, then the Conversion Price, as adjusted upon the issuance of the Rights or Options or Convertible Securities, shall be readjusted to the Conversion Price which would have been in effect had an adjustment been made on the basis that the only shares of Common Stock so issued were the shares of Common Stock, if any, that actually were issued or sold on the exercise of the Rights or Options or rights of conversion or exchange of the Convertible Securities, and the shares of Common Stock, if any, were issued or sold for the consideration actually received by the Company upon the exercise, plus the consideration, if any, actually received by the Company for the granting of all such Rights or Options, whether or not exercised, plus the consideration received for issuing or selling all such Convertible Securities actually converted or exchanged, plus the consideration, if any, actually received by the Company (other than by cancellation of liabilities or obligations evidenced by the Convertible Securities) upon the conversion or exchange of the Convertible Securities;

(v)no readjustment pursuant to (ii), (iii) or (iv) above shall have the effect of increasing the Conversion Price to an amount which exceeds the lower of (A) the Conversion Price on the original adjustment date, or (B) the Conversion Price that would have resulted from any issuance of Additional Shares of Common Stock between the original adjustment date and such readjustment date; and

(vi)in the case of any Options which expire by their terms not more than thirty (30) calendar days after the date of issue thereof, no adjustment of the Conversion Price shall be made until the expiration or exercise of all such Options.

5.7Certificate of Adjustment.  In each case of an adjustment or readjustment of the Conversion Price for Series A Preferred, the Company, at its expense, shall compute the adjustment or readjustment in accordance with the provisions hereof and prepare a certificate showing the adjustment or readjustment, and shall mail the certificate, by first class mail, postage prepaid, to each affected registered holder of the Series A Preferred at the holder’s address as shown on the Company’s books.

5.8Fractional Shares.  No fractional shares of Common Stock or other securities shall be issued upon any conversion of Series A Preferred.   In determining the number of fractional shares of Common Stock or other securities that would otherwise have been issuable upon such conversion of Series A Preferred, all shares of Common Stock or other securities issuable upon all shares of Series A Preferred being converted by a single holder of such Series A Preferred (whether by optional or automatic conversion) shall be aggregated.  In lieu of any fractional share of Common Stock or other securities to which the holder otherwise would be entitled, the Company shall pay the holder cash equal to the product of such fraction multiplied by the fair market value of the Common Stock (or other security) as of the date of conversion.

5.9Status of Converted Stock.  In case any shares of Series A Preferred shall be converted pursuant to this Section 5, the shares so converted shall be cancelled and shall not be issued by the Company.

5.10Reservation of Common Stock Issuable Upon Conversion.  The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of Series A Preferred, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Series A Preferred.  If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of Series A Preferred, the Company will take the corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.

5.11Notices.  Any notice required by the provisions of this Section 5 to be given to the holders of shares of the Series A Preferred shall be deemed given upon the earlier of actual receipt thereof or deposit thereof in the United States mail, by certified or registered mail, return receipt requested, postage prepaid, addressed to each holder of record at the address of that holder appearing on the books of the Company.

5.12No Impairment.  The Company shall not avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but shall at all times in good faith assist in carrying out all the action as may be reasonably necessary or appropriate in order to protect the conversion rights of the holders of the Series A Preferred against impairment.

5.13           Conversion Defaults.  If, at any time, (i) a holder of shares of Series A Preferred Stock submits a Notice of Conversion and the Company fails for any reason (other than because such issuance would exceed such holder’s ownership limit set forth in Section 5.1(c)) to deliver, on or prior to the fifth business day following the receipt of a Notice of Conversion and surrendered Preferred Stock certificates for such conversion (the “Delivery Period”), such number of shares of Common Stock, which shares shall be subject to an effective registration statement, to which such holder is entitled upon such conversion, or (ii) the Company provides written notice to any holder of Series A Preferred Stock (or makes a public announcement via press release) at any time of its intention not to issue shares of Common Stock, which shares shall be subject to an effective registration statement, upon exercise by any holder of its conversion rights in accordance with the terms of this Certificate (each of (i) and (ii) being a “Conversion Default”), then the holder may elect, at any time and from time to time prior to the cure date for such Conversion Default, by delivery of a notice to the Company, to have all or any portion of such holder’s outstanding shares of Series A Preferred Stock redeemed by the Company for cash, at an amount per share equal to the Series A Liquidation Preference (as defined in Section 3.1).  If the Company fails to redeem any of such shares within five business days after its receipt of such redemption notice, then such holder shall be entitled to the remedies provided in Section 6.

5.14.                      Buy-In Cure.  Unless the Company has notified the applicable holder in writing prior to the delivery by such holder of a Notice of Conversion that the Company is unable to honor conversions, if (i) the Company fails to promptly deliver during the Delivery Period shares of Common Stock free of restrictive legends to a holder upon a conversion of shares of Series A Preferred Stock and (ii) thereafter, such holder purchases (in an open market transaction or otherwise) shares of Common Stock to make delivery in satisfaction of a sale by such holder of the unlegended shares of Common Stock (the “Sold Shares”) which such holder anticipated receiving upon such conversion (a “Buy-In”), the Company shall pay such holder, in addition to any other remedies available to the holder, the amount by which (x) such holder’s total purchase price (including brokerage commissions, if any) for the unlegended shares of Common Stock so purchased exceeds (y) the net proceeds received by such holder from the sale of the Sold Shares.  For example, if a holder purchases unlegended shares of Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to shares of Common Stock it sold for $10,000, the Company will be required to pay the holder $1,000.  A holder shall provide the Company written notification and supporting documentation indicating any amounts payable to such holder pursuant to this Section 5.14.

6.Redemption.  On the fifth anniversary of the Issuance Date (the “Mandatory Redemption Date”), the Company shall redeem any shares of Series A Preferred Stock then outstanding for cash at a price per share of Series A Preferred Stock equal to the Series A Liquidation Preference (as defined in Section 3.1).  If the Company fails to pay any holder the Series A Liquidation Preference with respect to any share of Series A Preferred Stock within five business days after (a) the Mandatory Redemption Date, or (b) its receipt of a redemption notice, then the holder of Series A Preferred Stock entitled to redemption shall be entitled to interest on the Series A Liquidation Preference at a per annum rate equal to the lower of twelve percent (12%) and the highest interest rate permitted by applicable law from the Mandatory Redemption Date, or date on which the Company receives the Redemption Notice, as the case may be, until the date of payment of the Series A Liquidation Preference hereunder.  If the Company is not able to redeem all of the shares of Series A Preferred Stock required to be redeemed, the Company shall redeem shares of Series A Preferred Stock from each affected holder pro rata, based on the total number of shares of Series A Preferred Stock required to be redeemed. 

7.Restrictions and Limitations.  In addition to any vote required by law, the Company shall not, without the approval, by vote or written consent, of the holders of not less than 66.67% of the shares of Series A Preferred voting together as a single class:

7.1Amend this Certificate or the Bylaws of the Company or otherwise alter or change the rights, preferences or privileges of the Series A Preferred so as to materially and adversely affect the same;

7.2Create or reclassify any class or series of stock having rights, preferences, or privileges senior to, or being on a parity with, any outstanding series of Series A Preferred;

7.3Authorize or issue any other equity security, including any other security convertible into, or exchangeable for, any equity security having rights, preferences, or privileges senior to, or being on parity with, the Series A Preferred as to dividend rights or liquidation, redemption, or voting preferences; or

7.4Increase or decrease (other than by redemption or conversion) the authorized number of shares of Series A Preferred or Common Stock.

8.Miscellaneous.

8.1No Reissuance of Series A Preferred.  No share or shares of Series A Preferred acquired by the Company by reason of a redemption, purchase, conversion, or otherwise shall be reissued, and all such shares shall be cancelled, retired, and eliminated from the shares which the Company shall be authorized to issue.

8.2Preemptive Rights.  No stockholder of the Company shall have the right to repurchase shares of capital stock of the Company sold or issued by the Company, except to the extent that such right may from time to time be set forth in a written agreement between the Company and such stockholder.

EX-4.1

GRANTO, INC.

SERIES A PREFERRED STOCK PURCHASE AGREEMENT

This SERIES A PREFERRED STOCK PURCHASE AGREEMENT (this “Agreement”) is made as of the 29th day of March, 2010, among Granto, Inc., a Nevada corporation (the “Company”), and the investors listed on the signature page to this Agreement (each an “Investor”).

Recitals

WHEREAS, the Company desires to sell and issue to each Investor, and each Investor desires to purchase from the Company, shares of the Company’s Series A Preferred Stock (the “Series A Preferred”) convertible into shares of the Company’s common stock, par value $0.001 per share (“Common Stock”).

WHEREAS, in connection with the sale of Series A Preferred, the Company shall issue to the Investors Series A share purchase warrants (the “Series A Warrants”) in the form attached hereto as Exhibit A and Series B share purchase warrants (the “Series B Warrants”) in the form attached hereto as Exhibit B (collectively, the “Warrants”), with the Series A Warrants entitling the Investors to purchase one (1) share of the Company’s Common Stock (the “A Warrant Shares”) for every Four Dollars and forty four and eight tenth Cents ($4.448) paid by the Investor for Series A Preferred, and with the Series B Warrants entitling the Investors to purchase one (1) share of the Company’s Common Stock (the “B Warrant Shares” and together with the A Warrant Shares, the “Warrant Shares”) for every Four Dollars and forty four and eight tenth Cents ($4.448) paid by the Investor for Series A Preferred (collectively the  Series A Preferred and Warrants are  referred to as the “Purchased Securities”).

NOW, THEREFORE, in consideration of the mutual covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

Terms of Agreement

1.           Defined Terms.  The terms defined in this Section 1 shall have such defined meaning throughout this Agreement.

1.1           “Affiliate” of a Person means any Person that directly or indirectly, Controls, is Controlled by, or is under common Control with, the Person in question.

1.2           “Certificate” means the Certificate of Designations, Preferences and Rights of Series A Preferred Stock of the Company attached to this Agreement as Exhibit C, as the same may be amended from time to time.

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1.3            “Control” or “Controlled” means the power to direct the management and policies of a Person, directly or indirectly, whether through the ownership of voting securities, by contract, or otherwise.

1.4           “Lien” shall mean, with respect to any property or asset (whether tangible or intangible), any mortgage, lien, pledge, charge, security interest, encumbrance, or other adverse claim of any kind in respect of such property or asset.

1.5           “Material Adverse Effect” means any material adverse change in, or material adverse effect on, the business, assets, prospects, results of operations, value, financial or other condition of the Company and its Subsidiaries taken as a whole, or any event or circumstance that could reasonably be expected to have any such effect or that could reasonably be expected to prevent, hinder or delay the consummation of any of the transactions contemplated by this Agreement or any of the other documents, instruments or agreements contemplated hereby and thereby.

1.6           “Person” means an individual, corporation, partnership, limited liability company, association, trust, or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

1.7           “Subsidiary” means, with respect to any entity at any date, any corporation, limited or general partnership, limited liability company, trust, estate, association, joint venture or other business entity of which more than 30% of (i) the outstanding capital stock having (in the absence of contingencies) ordinary voting power to elect a majority of the board of directors or other managing body of such entity, (ii) in the case of a partnership or limited liability company, the interest in the capital or profits of such partnership or limited liability company or (iii) in the case of a trust, estate, association, joint venture or other entity, the beneficial interest in such trust, estate, association or other entity business is, at the time of determination, owned or controlled directly or indirectly through one or more intermediaries, by such entity.

1.8           “Taxes” means any federal, state, local, or foreign income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, registration, value added, excise, severance, stamp, occupation, premium, windfall profit, customs, duties, real property, personal property, capital stock, intangibles, social security, unemployment, disability, payroll, license, employee, or other tax or levy, of any kind whatsoever, including any interest, penalties, or additions to tax in respect of the foregoing.

1.9            “Trading Day” means a day on which the Common Stock is traded on a Trading Market.

1.10          “Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the Nasdaq SmallCap Market, the American Stock Exchange, the New York Stock Exchange, the Nasdaq National Market or the OTC Bulletin Board.

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2.           Purchase and Sale of Stock.

2.1           Authorization.  On or prior to the Closing Date, the Company shall have (i)  authorized the sale and issuance to the Investors of up to 3,000,000shares of Series A Preferred,  (ii) reserved 3,000,000 shares of the Company’s Common Stock to be issued upon conversion of the Series A Preferred (the “Conversion Shares”) and (iii) reserved 4,000,000 shares of the Company’s Common Stock to be issued upon exercise of the Warrants.  The Series A Preferred Stock shall have the rights, preferences, privileges and restrictions set forth in the Certificate of in the form attached hereto as Exhibit C.

2.2           Sale and Issuance.  Subject to the terms and conditions set forth in this Agreement, each Investor agrees, severally and not jointly, to purchase at the Closing, and the Company agrees to sell and issue to each Investor at the Closing, that number of shares (the “Purchased Shares”) of the Company’s Series A Preferred Stock set forth opposite such Investor’s name on the signature page to this Agreement, for the purchase price of $2.78107 per share (the “Purchase Price”).  Upon the following terms and conditions and for no additional consideration, each of the Investors shall be issued Series A Warrants in the form attached hereto as Exhibit Aand Series B Warrants in the form attached hereto as Exhibit B with the Series A Warrants entitling the Investors to purchase one (1) share of the Company’s Common Stock for every for every Four Dollars and forty four and eight tenth  Cents ($4.448) paid by the Investor for Purchased Shares, and with the Series B Warrants entitling the Investors to purchase one (1) share of the Company’s Common Stock for every Four Dollars and forty four and eight tenth Cents ($4.448) paid by the Investor for Purchased Shares as set forth on the signature pages hereto. The Warrants shall expire five (5) years following the Closing Date, and the Series A Warrants and Series B Warrants shall have an initial exercise price of $3.47 and $4.17, respectively.

2.3           Closing; Delivery of Certificates.

(a)           Closing.  The purchase and sale of the Series A Preferred and Warrants (the “Closing”) shall take place on March 26, 2010(the “Closing Date”) at the offices of The Crone Law Group, 101 Montgomery Street, Suite 1950, San Francisco, CA 94104, or at such other time and place mutually agreeable to the Company and Investors acquiring a majority of the Purchased Shares to be issued and sold at the Closing.

(b)           Delivery.  At each Closing, the Company shall deliver to each Investor participating therein a certificate or certificates, registered in the name or names directed by each such Investor, representing the number of Purchased Shares to be purchased by such Investor together with Warrants to purchase such number of shares of Common Stock as set forth in Section 2.2, against payment of the Purchase Price, by check, wire transfer or any combination thereof.  The Company and the Investors shall, upon request, on or after the Closing Date, cooperate with each other (specifically, the Company shall cooperate with the Investors, and the Investors shall cooperate with the Company) by furnishing any additional information, executing and delivering any additional documents and/or other instruments and doing any and all such things as may be reasonably required by the parties or their counsel to consummate or otherwise implement the transactions contemplated by this Agreement.

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3.           Representations and Warranties of the Company.  Except as set forth on the Schedule of Exceptions attached hereto as Schedule 1 (the “Schedule of Exceptions”), which exceptions shall be deemed to be representations and warranties as if made under this Section 3, the Company hereby makes the following representations and warranties to each Investor as of the Closing Date.  The Schedule of Exceptions will be arranged in paragraphs corresponding to the numbered and lettered paragraphs in this Section 3.

3.1           Organization, Good Standing and Qualification.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and has all requisite corporate power and authority to own and operate its properties and to carry on its business as now conducted and as proposed to be conducted.  The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify, individually or in the aggregate, would have a Material Adverse Effect.  The Company has delivered to the Investors true and complete copies of its Articles of Incorporation and Bylaws, as amended through the date hereof.

3.2           Capitalization and Voting Rights.  The authorized capital stock of the Company consists of the following:

(a)           Preferred Stock.  The rights, privileges and preferences of the Preferred Stock will be as stated in the Certificate.  No shares of preferred stock are issued and outstanding.

(b)           Common Stock. 90,000,000 shares of common stock, par value $0.001 per share (“Common Stock”), of which 21,286,789 shares are issued and outstanding.

    (c)           Other Rights.  Except for the conversion privileges of the Series A Preferred, the Class A Warrants and Class B Warrants being issued pursuant to this Agreement,  Class C Warrants to purchase an aggregate of 333,333shares of Common Stock of the Company at $2.44 per share and Class D Warrants to purchase an aggregate of 333,333 shares of Common Stock of the Company at $2.93 per share, there are no outstanding options, warrants, rights (including purchase, conversion or preemptive rights), calls, commitments, subscription rights, exchange rights, profit participation, or other agreements for the purchase or acquisition from the Company, or similar rights to acquire from the Company or similar obligations of the Company to issue, any shares of its capital stock.  The Company is not a party or subject to any agreement or understanding, and, to the Company’s knowledge, there is no agreement or understanding between any Persons that affects or relates to the voting or giving of written consents with respect to any security of the Company or by a director of the Company.

(d)           Valid Issuance.  The outstanding shares of Common Stock and Series A Preferred, and all warrants and options to purchase the capital stock of the Company were duly and validly authorized and issued, fully paid and nonassessable, and were issued in accordance with the registration or qualification provisions of the Securities Act of 1933, as amended (the “1933 Act”) and any relevant state securities laws or pursuant to valid exemptions therefrom.

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3.3           Subsidiaries.   Except as set forth in Schedule 1, the Company does not presently own or control, directly or indirectly, any interest in any other corporation, association, or other business entity, and is not a participant in any joint venture, partnership, or similar arrangement.

3.4           Authorization.  The Company has all requisite power and authority to execute, deliver and perform this Agreement, the transactions contemplated by this Agreement, the Certificate, the Escrow Agreement dated as of the date of this Agreement among the Company, certain officers of the Company and the escrow agent named therein in the form attached hereto as Exhibit E (the “Escrow Agreement”) and the Warrants (collectively the “Transaction Agreements”).  All corporate action on the part of the Company and its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement and the performance of all obligations of the Company hereunder and the authorization, issuance, sale and delivery of the Purchased Securities being sold at the Closing and the Common Stock issuable upon conversion of such Series A Preferred and exercise of the Warrants has been taken or will be taken prior to the Closing.  The Transaction Agreements have been duly executed and delivered by the Company, and constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, and (b) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

3.5           Valid Issuance of Preferred and Common Stock.  The Purchased Shares, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration set forth herein, will be duly and validly issued, fully paid, and nonassessable, and will be free of all Liens and restrictions on transfer other than the restrictions on transfer contained in this Agreement and under applicable state and federal securities laws.  The Conversion Shares have been duly and validly reserved for issuance and, upon issuance in accordance with the terms of the Certificate, will be duly and validly issued, fully paid, and nonassessable and will be free of all Liens and restrictions on transfer other than the restrictions on transfer contained in this Agreement and under applicable state and federal securities laws. The Warrant Shares have been duly and validly reserved for issuance and, upon issuance in accordance with the terms of the Warrants, will be duly and validly issued, fully paid, and nonassessable and will be free of all Liens and restrictions on transfer other than the restrictions on transfer contained in this Agreement and under applicable state and federal securities laws.

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3.6           Governmental and Third Party Consents; Compliance with Laws and Court Orders.  No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority or any third party on the part of the Company is required in connection with the consummation of the transactions contemplated by this Agreement, except qualification or filings under applicable securities laws as may be required in connection with the transactions contemplated by this Agreement.  The Company is not in violation of any provisions of any laws, statutes, ordinances, regulations, administrative interpretations, judgements, injunctions, orders, policies or decrees of any court or governmental or administrative authority that are applicable to the Company or its assets, except for violations that have not had and could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

3.7           Offering.  Subject in part to the truth and accuracy of each Investor’s representations set forth in Section 4 of this Agreement, the offer, sale and issuance of the Purchased Securities are exempt from the registration requirements of any applicable state and federal securities laws.

3.8           Litigation.  There is no action, suit, proceeding, arbitration, complaint, charge or investigation pending or, to the Company’s knowledge, currently threatened against the Company or any of its Affiliates that questions the validity of this Agreement or the right of the Company to enter into such agreement, or to consummate the transactions contemplated hereby, or that might result, either individually or in the aggregate, in a Material Adverse Effect.  Neither the Company, nor to the Company’s knowledge, any of its Affiliates, is a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality.  There is no action, suit, proceeding or investigation by the Company or its Affiliates currently pending.

3.9           Intellectual Property. There is no trademark, copyright, service mark, trade name, patent (including any registrations or applications for registration of any of the foregoing), or trade secret, including, but not limited to, any such legal rights included in any schematics, technology, know-how, computer software programs or applications (in both source code and object code form) and in other tangible or intangible information or material not currently owned or licensed to the Company that are necessary for the operation of the business of the Company or its Subsidiaries as presently conducted and as presently contemplated to be conducted, and none of the Company’s owned or licensed trademarks, copyrights, service marks, trade names, patents or trade secrets conflict with or infringe the rights of others.  There are no outstanding options, licenses, or agreements of any kind relating to the foregoing, nor is the Company bound by or a party to any options, licenses, encumbrances, claims or agreements of any kind with respect to the patents, trademarks, service marks, trade names, domain names, copyrights, trade secrets, licenses, information, proprietary rights and processes of any other Person.  The Company has not received any communications alleging that the Company has violated or, by conducting its business as proposed, would violate any of the patents, trademarks, service marks, trade names, domain names, copyrights, trade secrets or other proprietary rights or processes of any other Person.  The Company is not aware that any of its employees is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with the use of such employee’s best efforts to promote the interest of the Company or that would conflict with the Company’s business.  The Company’s registered copyrights, unregistered and registered trademarks, patents and patent applications owned, or under license to, the Company (“Company IP Rights”) will be owned or available for use by the Company on identical terms and conditions immediately subsequent to the Closing.  The Company has taken all actions reasonably necessary to protect the Company IP Rights.  The Company does not believe it is or will be necessary to use any inventions of any of its employees made prior to or outside the scope of their employment by the Company.

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3.10           Compliance with Other Instruments.  The Company is not in violation or default of any provision of its Articles of Incorporation or its Bylaws, or, in any material respect, of any instrument, judgment, order, writ, decree or contract to which it is a party or by which it is bound, or of any provision of any federal or state statute, rule or regulation applicable to it.  The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not result in any such violation or be in conflict with or constitute, with or without the passage of time and giving of notice, either a material default under any such instrument, judgment, order, writ, decree or contract, or an event that results in the creation of any Lien upon any material assets of the Company, or the suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to the Company, its business, operations, assets or properties.

3.11           Permits.  The Company has all franchises, permits, licenses and any similar authority necessary for the conduct of its business, the lack of which could have a Material Adverse Effect.  The Company is not in default in any material respect under any of such franchises, permits, licenses or other similar authority.

3.12           Employee Benefit Plans.  All pension, profit-sharing, deferred compensation, bonus, stock option, share appreciation right, severance, group or individual health, dental, medical, life insurance, survivor benefit, and similar plans, policies and arrangements, whether formal or informal, established or maintained by the Company for the benefit of any director, officer, consultant, or employee of the Company  (collectively, “Employee Benefit Plans”) is, and has been, maintained and operated in compliance in all material respects with the terms of such plan and with the requirements prescribed (whether as a matter of substantive law or as necessary to secure favorable tax treatment) by any and all statutes, governmental or court orders, or governmental rules or regulations in effect from time to time, including but not limited to ERISA, except where the failure would not cause a Material Adverse Effect.

3.13           Tax Returns, Payments and Elections.  The Company has timely filed, or timely filed for an extension which extension has not lapsed, all Tax Returns required to be filed by it, each such Tax Return has been prepared in compliance with all applicable laws and regulations, and all such Tax Returns are true and accurate in all respects.  All Taxes due and payable by the Company and each of its Subsidiaries have been paid.  No claim has ever been made by a taxing authority in a jurisdiction where the Company does not pay Taxes or file Tax Returns that the Company is, or may be subject to, Taxes assessed by such jurisdiction.  There are no Liens for Taxes (other than current Taxes not yet due and payable) on the assets of the Company.  The Company has withheld and paid all Taxes required to have been withheld and paid by it in connection with amounts paid or owing to any employee, creditor, independent contractor, or other Person, except where the failure would not cause a Material Adverse Effect.

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3.14           Full Disclosure.  No representation or warranty of the Company made in this Agreement, including any schedules or exhibits hereto or thereto, nor any written statement furnished by the Company to the Investors pursuant hereto, or in connection with the transactions contemplated hereby, contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements or facts contained herein or therein not misleading.  There is no fact or information known to the Company which the Company has not disclosed to the Investors in writing which the Company presently believes has or could have a Material Adverse Effect other than any changes in the prospects of the Company which result from developments affecting general economic or industry conditions.

3.15      Agreements; Actions.

(a)           Other than (i) standard employee benefits generally made available to all employees, (ii) standard director and officer indemnification agreements approved by the Board of Directors, (iii) the purchase of shares of the Company’s capital stock and the issuance of options to purchase shares of the Company’s Common Stock, in each instance, approved by the Board of Directors (all of which purchases and issuances are reflected in the capitalization representations set forth in Section 3.2) and (iv) the transactions contemplated by the Transaction Agreements, there are no agreements, understandings or proposed transactions between the Company and any of its Affiliates.

(b)           Except for the Transaction Agreements, there are no agreements, understandings,  instruments, contracts or proposed transactions to which the Company or any of its Subsidiaries is a party or by which it is bound that involve (i) obligations (contingent or otherwise) of, or payments to, the Company or any of its Subsidiaries in excess of, $15,000, (ii) the license of any patent, copyright, trade secret or other proprietary right to or from the Company or any of its Subsidiaries other than the license to the Company of standard, generally commercially available “off-the-shelf” third-party products that are not and will not to any extent be a part of or influence the development of any product or service or intellectual property of the Company or any of its Subsidiaries, or (iii) the grant of rights to manufacture, produce, assemble, license, market, or sell its products to any other Person or affect the Company’s or any of its Subsidiaries’ exclusive right to develop, manufacture, assemble, distribute, market or sell its products.

(c)           The Company has not (i) declared or paid any dividends, or authorized or made any distribution upon or with respect to any class or series of its capital stock, (ii) incurred any indebtedness for money borrowed or incurred any other liabilities individually in excess of $15,000 or in excess of $50,000 in the aggregate, (iii) made any loans or advances to any Person, other than ordinary advances for travel expenses, or (iv) sold, exchanged or otherwise disposed of any of its assets or rights, other than the sale of its inventory in the ordinary course of business.

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(d)           For the purposes of subsections (b) and (c) above, all indebtedness, liabilities, agreements, understandings, instruments, contracts and proposed transactions involving the same Person (including Persons the Company has reason to believe are Affiliated with that Person) shall be aggregated for the purposes of meeting the individual minimum dollar amounts of each such subsection.

3.16        Related-Party Transactions.  No employee, officer or director of the Company (a “Related Party”) or member of such Related Party's immediate family, or any corporation, partnership or other entity in which such Related Party is an officer, director or partner, or in which such Related Party has an ownership interest or otherwise controls, is indebted to the Company or any of its Subsidiaries, nor is the Company or any of its Subsidiaries indebted (or committed to make loans or extend or guarantee credit) to any of them.  To the Company’s knowledge, no Related Party or member of their immediate families is directly or indirectly interested in any material contract with the Company or any of its Subsidiaries.  The Company is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation.

3.17        Rights of Registration and Voting Rights.  Except as provided in Section 7.1, the Company is not under any obligation to register under the 1933 Act any of its currently outstanding securities or any securities issuable upon exercise or conversion of its currently outstanding securities.  To the Company’s knowledge, no stockholder of the Company has entered into any agreements with respect to the voting of capital shares of the Company.

3.18        Title to Property and Assets.  The Company and each of its Subsidiaries owns its property and assets free and clear of all mortgages, deeds of trust, liens, loans and encumbrances, except for statutory liens for the payment of current taxes that are not yet delinquent and encumbrances and liens that arise in the ordinary course of business and do not materially impair the Company’s ownership or use of such property or assets.  With respect to the property and assets it leases, the Company and each of its Subsidiaries is in material compliance with such leases and, to its knowledge, holds a valid leasehold interest free of any liens, claims or encumbrances.

3.19    Financial Statements.  Except as set forth on the (a) Company’s balance sheet as of December 31, 2009, and (b) the consolidated balance sheet of Rongfu Aquaculture, Inc. (“Rongfu”) and its subsidiaries as of September 30, 2009, neither the Company nor any of its Subsidiaries has any material liabilities, contingent or otherwise, other than (i) in the case of the Company, liabilities incurred after December 31, 2009 in the ordinary course of business that are not material, individually or in the aggregate, , (ii) in the case of Rongfu, liabilities incurred after September 30, 2009 in the ordinary course of its business and (iii) obligations under contracts and commitments incurred in the ordinary course of business which would not be required under generally accepted accounting principles to be reflected in financial statements of the Company prepared in accordance with generally accepted accounting principles, if such financial statements had been prepared as of the date hereof.

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3.20        Changes.  Since September 30, 2009 there has not been:

(a)           any change in the assets, liabilities, financial condition or operating results of the Company or any of its Subsidiaries, except changes in the ordinary course of business that have not been, in the aggregate, materially adverse;

(b)           any damage, destruction or loss, whether or not covered by insurance, that constitutes a Material Adverse Effect;

(c)           any waiver or compromise by the Company or any of its Subsidiaries of a valuable right or of a material debt owed to it;

(d)           any satisfaction or discharge of any lien, claim, or encumbrance or payment of any obligation by the Company or any of its Subsidiaries, except in the ordinary course of business and the satisfaction or discharge of which would not have a Material Adverse Effect;

(e)           any material change to a material contract or agreement by which the Company, any of its Subsidiaries or any of their assets are bound or subject;

(f)           any material change in any compensation arrangement or agreement with any employee, officer, director or stockholder;

(g)           any sale, assignment, license or transfer by the Company or any of its Subsidiaries of any patents, trademarks, copyrights, trade secrets or other intangible assets;

(h)           any resignation or termination of employment of any officer or key employee of the Company and the Company is not aware of any impending resignation or termination of employment of any such officer or key employee;

(i)           any material change, except in the ordinary course of business, in a contingent obligation of the Company or any of its Subsidiaries by way of guaranty, endorsement, indemnity, warranty or otherwise;

(j)           any mortgage, pledge, transfer of a security interest in, or Lien, created by the Company or any of its Subsidiaries, with respect to any of its material properties or assets, except Liens for taxes not yet due or payable and liens that arise in the ordinary course of business and do not materially impair the Company’s or any of its Subsidiaries’ ownership or use of such property or assets (owned or leased);

(k)           any loans or guarantees made by the Company or any of its Subsidiaries to or for the benefit of its employees, officers or directors, or any members of their immediate families, other than travel advances and other advances made in the ordinary course of its business;

(l)           any declaration, setting aside or payment or other distribution in respect to any of the Company’s capital stock, or any direct or indirect redemption, purchase, or other acquisition of any of such stock by the Company;

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(m)           to the Company’s knowledge, any other event or condition of any character, other than events affecting the economy or the Company’s industry generally, that could reasonably be expected to result in a Material Adverse Effect; or

(n)           any arrangement or commitment by the Company or any of its Subsidiaries to do any of the things described in this Section 3.20.

3.21        Employee Benefit Plans.  The Schedule of Exceptions sets forth all employee benefit plans maintained, established or sponsored by the Company, or in or to which the Company participates or contributes, which is subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

3.22        Employment Matters.  The Company is not aware that any officer or key employee intends to terminate his or her employment with the Company, nor does the Company have any present intention to terminate the employment of any officer or key employee.  The employment of each officer and employee of the Company is terminable at the will of the Company.  To its knowledge, the Company has complied in all material respects with all applicable state and federal equal employment opportunity laws and with other laws related to employment.  The Company is not a party to or bound by any currently effective employment contract, deferred compensation agreement, bonus plan, incentive plan, profit sharing plan, severance, retirement agreement, or other employee compensation agreement not described in Section 3.21.

3.23        Confidential Information and Invention Assignment Agreements.  Each current and former employee, consultant and officer of the Company has executed an agreement with the Company regarding confidentiality and proprietary information substantially in the form or forms delivered to the counsel for the Investors.  The Company is not aware that any of its employees or consultants is in violation thereof, and the Company will use its best efforts to prevent any such violation.

3.24        [Reserved]

3.25        Corporate Documents.  The Articles of Incorporation and Bylaws of the Company are in the forms provided to counsel for the Investors.  The copy of the minute books of the Company provided to the Investors’ counsel contains minutes of all meetings of directors and stockholders and all actions by written consent without a meeting by the directors and stockholders since the date of incorporation and reflects all actions by the directors (and any committee of directors) and stockholders with respect to all transactions referred to in such minutes accurately in all material respects.

3.26        No Brokers.  Neither the Company nor any Subsidiary has taken any action which would give rise to any claim by any person for brokerage commissions, finder’s fees or similar payments relating to this Agreement or the transactions contemplated hereby.

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4.           Representations and Warranties of the Investors.  Each Investor, severally but not jointly, hereby represents and warrants that:

4.1           Authorization.  It has the full power and authority to enter into this Agreement and (assuming due execution by the Company and the other parties hereto) this Agreement constitutes its valid and legally binding obligation, enforceable against it in accordance with its terms.

4.2           Purchase Entirely for Own Account.   The Purchased Shares are being acquired for investment for such Investor’s own account, not as a nominee or agent and not with a view to the resale or distribution of any part thereof.

4.3           Disclosure of Information.   It has received all the information it considers necessary or appropriate for deciding whether to purchase the Purchased Shares and that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of this offering and the business, properties, prospects and financial condition of the Company.  The foregoing, however, does not limit or modify the representations and warranties of the Company in Section 3 of this Agreement or the right of the Investor to rely thereon.

4.4           Investment Experience.  Such Investor understands that the purchase of the Purchased Shares involves substantial risk.  It is an investor in securities of companies in the developmental stage and acknowledges that it can bear the economic risk of its investment and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of its investment in the Purchased Shares.  If other than an individual, such Investor also represents it has not been organized for the purpose of acquiring the Purchased Shares.

4.5           Accredited Investor.  It is an “accredited investor” within the meaning of Securities Exchange Commission (“SEC”) Rule 501 of Regulation D, as presently in effect.

4.6           Restricted Securities.  It understands that the Purchased Shares are characterized as “restricted securities” under the 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 Act only in certain limited circumstances.  In this connection, such Investor represents that it is familiar with SEC Rule 144, as presently in effect, and understands the resale limitations imposed thereby, including Rule 144(i).

4.7           Legends.  It understands that the certificates evidencing the Purchased Shares may bear a legend substantially similar to the following:

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.  THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.”

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5.           Conditions of Investors’ Obligations at the Closing.  The obligations of each Investor participating in the Closing are subject to the fulfillment, on or before the Closing, of each of the following conditions, the waiver of which shall not be effective against any Investor who does not consent thereto:

5.1           Authorization.  The Company shall have authorized (a) the sale and issuance to the Investors of up to 3,000,000 shares of the Series A Preferred and (ii) the issuance of the Warrants and the Conversion Shares.

5.2           Representations and Warranties.  The representations and warranties of the Company contained in Section 3 shall be true and correct as of the Closing Date.

5.3           Performance.  The Company shall have performed and complied with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on, or prior to, the Closing Date.

5.4           Compliance Certificate.  The President of the Company shall deliver to the Investors at the Closing a certificate certifying that the conditions specified in Sections 5.2 and 5.3 have been fulfilled.

5.5           Opinion of Company Counsel.  The Investors shall have received from counsel for the Company an opinion, dated as of the Closing, in substantially the form ofExhibit D.

5.6           Share Exchange.  The Company and the stockholders of Rongfu shall have entered into and consummated a Share Exchange Agreement in the form attached hereto as Exhibit F pursuant to which all of the outstanding shares of common stock shall have been transferred to the Company in exchange for the issuance of shares of the Company’s Common Stock.

5.7           Transaction Agreements.  The Company shall have filed the Certificate with the Secretary of State of Nevada, the Company shall have executed the Warrants and Company, and each Investor and certain other parties shall have executed and delivered the Escrow Agreement in substantially the form attached as Exhibit E.

5.8           [Reserved]

5.9           Secretary’s Certificate.  The Secretary of the Company shall deliver to the Investors at the Closing a certificate certifying (i) the Articles of Incorporation, (ii) the Bylaws of the Company, and (iii) resolutions of the Board of Directors of Company approving the Transaction Agreements and the transactions contemplated hereby and thereby.

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5.10           Qualifications.  All authorizations, approvals, consents or permits, if any, of any Person that are required in connection with the lawful issuance and sale of the Purchased Shares pursuant to this Agreement shall be duly obtained and effective as of the Closing Date.

5.11           No Material Adverse Change.  Nothing shall have occurred or be threatened that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

5.12           Delivery of Certificates.  The Company shall have delivered to each Investor a certificate representing the number of Purchased Shares to be purchased by such Investor at the Closing together with Warrant certificates in the amounts set forth in Section 2.2.

6.           Conditions of the Company’s Obligations at Closing.  The obligations of the Company to each Investor participating in the Closing are subject to the fulfillment on or prior to the Closing of each of the following conditions by that Investor:

6.1           Representations and Warranties.   The representations and warranties of the Investor contained in Section 4 shall be true and correct as of the Closing.

6.2           Payment of Purchase Price.   The Investor shall have delivered the Purchase Price for the number of shares listed opposite such Investor’s name on the signature page hereof.

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7.           Covenants of the Company.  The Company covenants and agrees with the Investors as follows:

7.1       Registration Rights.

(a)     Registration Statement Requirements.  Subject to the next sentence, the Company will register for resale not less than 100% of the Conversion Shares and the Warrant Shares (the “Registrable Shares”). The Company shall file with the SEC a Form S-1 registration statement (the “Registration Statement”) (or such other form that it is eligible to use) in order to register all or such portion of the Registrable Shares as permitted by the SEC (provided that the Company shall use reasonable efforts to advocate with the SEC for the registration of all of the Registrable Shares) pursuant to Rule 415 for resale and distribution under the 1933 Act on or before the date (the “Required Filing Date”) which is forty five (45) calendar days after the Closing Date, and use its best efforts to cause the Registration Statement to be declared effective by the date (the “Required Effective Date”) which is not later than (x) one hundred fifty (150) calendar days after the Closing Date, or (y) if the SEC performs a “full review” of the Registration Statement, two hundred and ten (210) calendar days after the Closing Date.  In the event that the Company is required by the SEC to cut back the number of shares being registered in the Registration Statement pursuant to Rule 415, then the Company shall reduce each Investor’s Registrable Shares on a pro rata basis based on the total Registrable Shares of all Investors.  The Registration Statement shall also state that, in accordance with Rules 416 and 457 under the 1933 Act, it also covers such indeterminate number of additional shares of common stock as may become issuable with respect to the Registrable Shares to prevent dilution resulting from stock splits, stock dividends or similar transactions. Notwithstanding anything to the contrary contained in this Section 7.1, if the Company receives comments on the Registration Statement from the SEC (“SEC Comments”), and following discussions with and responses to the SEC in which the Company uses its reasonable best efforts and time to cause as many Registrable Shares for as many Investors as possible to be included in the Registration Statement filed pursuant to Section 7.1(a) without characterizing any Investor as an underwriter, the Company is unable to cause the inclusion of all Registrable Shares in such Registration Statement, then the Company may, following not less than three (3) Trading Days prior written notice to the Investors, (x) remove from the Registration Statement such Registrable Shares (the “Cut Back Shares”) and/or (y) agree to such restrictions and limitations on the registration and resale of the Registrable Shares, in each case as the SEC may require in order for the SEC to allow such Registration Statement to become effective (collectively, the “SEC Restrictions”); provided, that in no event may the Company name any Investor as an underwriter without such Investor’s prior written consent and provided, further, that unless the SEC Restrictions shall otherwise require, any cut-back imposed by the SEC shall first consist of Registrable Shares consisting of Conversion Shares, then, if all Conversion Shares have been removed from the Registration Statement, any additional cut-back shall be of B Warrant Shares and finally, if all Conversion Shares and B Warrant Shares have been removed from the Registration Statement, any additional cut-back shall be of the A Warrant Shares.  Unless the SEC Restrictions otherwise require, any cut-back imposed pursuant to this Section 7.1(a) shall be allocated among the Registrable Shares of the Investors on a pro rata basis. No liquidated damages under Section 7.1(d) shall accrue on or as to any Cut Back Shares, and the required SEC Effectiveness Date for such additional Registration Statement including the Cutback Shares will be tolled, until such time as the Company is able to effect the registration of the Cut Back Shares in accordance with any SEC Restrictions (such date, the “Restriction Termination Date”). From and after the Restriction Termination Date, all provisions of this Section 7.1 (including, without limitation, the liquidated damages provisions, subject to tolling as provided above) shall again be applicable to the Cut Back Shares (which, for avoidance of doubt, retain their character as “Registrable Shares”) so that the Company will be required to file with and cause to be declared effective by the SEC such additional Registration Statements in the time frames set forth herein as necessary to ultimately cause to be covered by effective Registration Statements all Registrable Shares (if such Registrable Shares cannot at such time be resold by the Investors thereof pursuant to Rule 144). The Company will offer to a single firm of counsel designated by the Investors ( “Investor’s Counsel”) an opportunity to review and comment on the Registration Statement and all amendments and supplements thereto between three and five business days prior to the proposed filing date thereof, and not file any document in a form to which such counsel reasonably objects. Upon the initial filing of the Registration Statement, the Company shall pay to Investor’s Counsel a fee of $5,000 as reimbursement for services rendered to the Investors in connection with the Registration Statement and all amendments and supplements thereto.

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(b)           Registration Procedures. If and whenever the Company is required by the provisions of Section 7.1(a) to effect the registration of any Registrable Shares under the 1933 Act, the Company will, as expeditiously as possible:

(i)           subject to the timelines provided in this Agreement, prepare and file with the SEC a registration statement required by Section 7.1(a), with respect to such securities and use its best commercially reasonable efforts to cause such registration statement to become and remain effective for the period of the distribution contemplated thereby (determined as herein provided), and promptly provide to Investor’s Counsel copies of all filings and SEC letters of comment and notify the Investors (by telecopier and by e-mail addresses provided by the Investors) and Investor’s Counsel (by telecopier and by email) on or before the second  business day thereafter that the Company receives notice that (i) the SEC has no comments or no further comments on the registration statement, and (ii) the registration statement has been declared effective;

(ii)           prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective until such registration statement has been effective for the later of (a) a period of two (2) years, or (b) until the Purchased Securities can been sold by the Investors pursuant to Rule 144 without volume restrictions (the “Effectiveness Period”);

(iii) furnish to the Investors, at the Company’s expense, such number of copies of the registration statement and the prospectus included therein (including each preliminary prospectus) as such Investors reasonably may request in order to facilitate the public sale or their disposition of the securities covered by such registration statement or make them electronically available;

(iv)         use its reasonable best efforts to register or qualify the Registrable Shares covered by such registration statement under the securities or “blue sky” laws of such jurisdictions as the Investors shall request in writing, provided, however, that the Company shall not for any such purpose be required to qualify to transact business as a foreign corporation in any jurisdiction where it is not so qualified or to consent to service of process in any such jurisdiction;

(v)          list the Registrable Shares covered by such registration statement with any securities exchange on which the common stock of the Company is then listed;

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(vi)         notify the Investors within twenty-four hours of the Company’s becoming aware that a prospectus relating thereto is required to be delivered under the 1933 Act, of the happening of any event of which the Company has knowledge as a result of which the prospectus contained in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing or which becomes subject to a SEC, state or other governmental order suspending the effectiveness of the registration statement covering any of the Registrable Shares. Each Investor hereby covenants that it will not sell any Registrable Shares pursuant to such prospectus during the period commencing at the time at which the Company gives such Investor notice of the suspension of the use of such prospectus in accordance with this Section 7.1(b)(vi) and ending at the time the Company gives such Investor notice that such Investor may thereafter effect sales pursuant to the prospectus, or until the Company delivers to such Investor or files with the SEC an amended or supplemented prospectus;

(vii) provided same would not be in violation of the provision of Regulation FD under the Securities Exchange Act of 1934, make available for inspection by the Investors during reasonable business hours,  and any attorney, accountant or other agent retained by the Investors or underwriter, all publicly available, non-confidential financial and other records, pertinent corporate documents and properties of the Company, and cause the Company's officers, directors and employees to supply all publicly available, non-confidential information reasonably requested by the Investors, or their attorneys, accountants or agents in connection with such registration statement at such requesting Investor’s expense; and

(viii)  provide to the Investors copies of the Registration Statement and amendments thereto five business days prior to the filing thereof with the SEC.  Any Investor’s failure to comment on any registration statement or other document provided to an Investor or its counsel shall not be construed to constitute approval thereof nor the accuracy thereof.

(c)           Provision of Documents.  It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Shares of a particular Investor that such Investor shall furnish to the Company in writing such information and representation letters, with respect to itself and the proposed distribution by it as the Company may reasonably request to assure compliance with federal and applicable state securities laws.

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(d)           Non-Registration Events.  The Company and the Investors agree that the Investors will suffer damages if the Registration Statement is not filed by the Required Filing Date and not declared effective by the SEC by the Required Effective Date or if, after it is declared effective, its effectiveness is not maintained in the manner and within the time periods contemplated by Section 7.1(a), and it would not be feasible to ascertain the extent of such damages with precision.  Accordingly, if (A) the Registration Statement is not filed on or before the Required Filing Date, (B) the Registration Statement is not declared effective on or before the Required Effective Date, (C) the Registration Statement is not declared effective within five (5)  Trading Days after receipt by the Company or its attorneys of a written or oral communication from the SEC that the Registration Statement will not be reviewed or that the SEC has no further comments, (D) any registration statement described in Section 7.1(a) is declared effective, but shall thereafter cease to be effective during the Effectiveness Period for a period of time which shall exceed 20 days in the aggregate per year (defined as a period of 365 days commencing on the date the Registration Statement is declared effective) (each such event referred to in clauses A through D of this Section 7.1(d), a “Non-Registration Event”), then the Company shall deliver to the Investors, as liquidated damages (“Liquidated Damages”), an amount equal to one percent (1.0%) of the Purchase Price of the Purchased Shares owned of record by such holder on the first business day after the Non-Registration Event and for each subsequent thirty (30) day period (pro rata for any period less than thirty days) which are subject to such Non-Registration Event.  The maximum aggregate Liquidated Damages payable to the Investors under this Agreement shall be six percent (6.0%) of the aggregate Purchase Price paid by the Investor pursuant to this Agreement. The Company must pay the Liquidated Damages in cash. In the event a Registration Statement is filed by the Required Filing Date, but is withdrawn prior to being declared effective by the SEC without the consent of Investors holding a majority of the Registrable Shares, then such Registration Statement will be deemed to have not been filed.

(e)           Expenses.  All expenses incurred by the Company in complying with Section 7.1, including, without limitation, all registration and filing fees, printing expenses (if required), fees and disbursements of counsel and independent public accountants for the Company, fees and expenses (including reasonable counsel fees) incurred in connection with complying with state securities or “blue sky” laws, fees of the FINRA, transfer taxes, and fees of transfer agents and registrars, are called “Registration Expenses.” The Company will pay all Registration Expenses in connection with any registration statement described in Section 7.1.

(f)           Indemnification and Contribution.

(i)   In the event of a registration of any Registrable Shares under the 1933 Act pursuant to Section 7.1, the Company will, to the extent permitted by law, indemnify and hold harmless the Investor, each of the officers, directors, agents, Affiliates, members, managers, control persons, and principal shareholders of the Investor, each underwriter of such Registrable Shares thereunder and each other person, if any, who controls such Investor or underwriter within the meaning of the 1933 Act, against any losses, claims, damages or liabilities, joint or several, to which the Investor, or such underwriter or controlling person may become subject under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such Registrable Shares was registered under the 1933 Act pursuant to Section 7.1, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances when made, and will, subject to the provisions of Section 7.1(f)(iii), reimburse the Investor, each such underwriter and each such controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company shall not be liable to the Investor solely to the extent that any such damages arise out of or are based upon an untrue statement or omission made in any preliminary prospectus if (i) (A) the Investor failed to send or deliver a copy of the final prospectus delivered by the Company to the Investor with or prior to the delivery of written confirmation of the sale by the Investor to the person asserting the claim from which such damages arise and (B) the final prospectus would have corrected such untrue statement or alleged untrue statement or such omission or alleged omission, or (ii) any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by any such Investor in writing specifically for use in such registration statement or prospectus.

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(ii)  In the event of a registration of any of the Registrable Shares under the 1933 Act pursuant to Section 7.1, each Investor, severally but not jointly, will, to the extent permitted by law, indemnify and hold harmless the Company, and each person, if any, who controls the Company within the meaning of the 1933 Act, each officer of the Company who signs the registration statement, each director of the Company, each underwriter and each person who controls any underwriter within the meaning of the 1933 Act, against all losses, claims, damages or liabilities, joint or several, to which the Company or such officer, director, underwriter or controlling person may become subject under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement under which such Registrable Shares were registered under the 1933 Act pursuant to Section 7.1, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company and each such officer, director, underwriter and controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action, provided, however, that the Investor will be liable hereunder in any such case if and only to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with information pertaining to such Investor, as such, furnished in writing to the Company by such Investor specifically for use in such registration statement or prospectus, and provided, further, however, that the liability of the Investor hereunder shall be limited to the net proceeds actually received by the Investor from the sale of Registrable Shares pursuant to such registration statement.

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(iii) Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to such indemnified party other than under this Section 7.1(f)(iii) and shall only relieve it from any liability which it may have to such indemnified party under this Section 7.1(f)(iii), except and only if and to the extent the indemnifying party is prejudiced by such omission. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this Section 7.1(f)(iii) for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected, provided, however, that, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnifying party shall have reasonably concluded that there may be reasonable defenses available to indemnified party which are different from or additional to those available to the indemnifying party or if the interests of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party, the indemnified parties, as a group, shall have the right to select one separate counsel, reasonably satisfactory to the indemnified and indemnifying party, and to assume such legal defenses and otherwise to participate in the defense of such action, with the reasonable expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the indemnifying party as incurred.

(iv) In order to provide for just and equitable contribution in the event of joint liability under the 1933 Act in any case in which either (i) a Investor, or any controlling person of a Investor, makes a claim for indemnification pursuant to this Section 7.1(f) but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Section 7.1(f) provides for indemnification in such case, or (ii) contribution under the 1933 Act may be required on the part of the Investor or controlling person of the Investor in circumstances for which indemnification is not provided under this Section 7.1(f); then, and in each such case, the Company and the Investor will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in such proportion so that the Investor is responsible only for the portion represented by the percentage that the public offering price of its securities offered by the registration statement bears to the public offering price of all securities offered by such registration statement, provided, however, that, in any such case, (y) the Investor will not be required to contribute any amount in excess of the public offering price of all such securities sold by it pursuant to such registration statement; and (z) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 10(f) of the 1933 Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation and provided, further, however, that the liability of the Investor hereunder shall be limited to the net proceeds actually received by the Investor from the sale of Registrable Shares pursuant to such registration statement.

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7.2     Listing.  The Company will use its best efforts to achieve the quotation or listing of its common stock (the “Uplisting”) on the American Stock Exchange, Nasdaq Capital Market, Nasdaq Global Market, Nasdaq Global Select Market or New York Stock Exchange (the “Uplisted Market”), by the one year anniversary of the Closing Date (the “Uplisting Date”).  If the Company does not achieve Uplisting on an Uplisted Market by the Uplisting Date, the Company shall pay to each Investor, an amount in cash, as partial liquidated damages and not as a penalty, equal to 0.5% of the Purchase Price paid by such Investor pursuant to this Agreement on the Uplisting Date and an additional 0.5% of the aggregate Purchase Price paid for each thirty (30) day period that this Section is not complied with until the Uplisting is completed; provided, however, in no event shall the penalty payable under this Section 7.2 together with the penalty paid under Section 7.1 exceed 6% of the Purchase Price.

7.3    Right of First Refusal.   During the period from the Closing Date through and including the second anniversary of the effective date of the Registration Statement, the Investors shall be given not less than ten business days prior written notice (the “Notice of Sale”) of any proposed sale by the Company of its common stock or other securities or debt obligations, except in connection with (i) full or partial consideration in connection with a strategic merger, acquisition, consolidation or purchase of substantially all of the securities or assets of corporation or other entity which holders of such securities or debt are not at any time granted registration rights, (ii) the Company’s issuance of securities in connection with strategic license agreements and other partnering arrangements so long as such issuances are not for the purpose of raising capital and which holders of such securities or debt are not at any time granted registration rights, (iii) the Company’s issuance of common stock or the issuances or grants of options to purchase common stock to employees, directors, and consultants, and (iv) securities upon the exercise or exchange of or conversion of any securities exercisable or exchangeable for or convertible into shares of common stock issued and outstanding on the date of this Agreement and described on Schedule 1 (collectively the foregoing are “Excepted Issuances”).  The Investors shall have the right during the ten business days following receipt of the Notice of Sale (the “Notice Period”) to purchase in the aggregate such offered common stock, debt or other securities strictly in accordance with the terms and conditions set forth in the Notice of Sale in the same proportion as that of the Investor’s Purchase Shares in the Offering.  In the event such terms and conditions are modified during the Notice Period, the Investors shall be given prompt notice (the “Notice of Modification”) of such modification and shall have the right during the ten business days following the Notice of Modification to exercise such purchase right strictly in accordance with the terms and conditions set forth in the Notice of Modification in the same proportion as that of the Investor’s Purchase Shares in the Offering.

7.4     Termination Fee.  The Investors shall be entitled to a fee in the amount of $500,000 as liquidated damages and not as a penalty if (i) prior to the Closing Date, the Company or any of its Affiliates accepts or approves any proposal (other than that of the Investors) that provides equity of debt financing to the Company (an “Alternative Transaction”) or (ii) the Company fails to meet any of the Closing conditions set out in Section 5 within 30 days after the Investors are ready, willing and able to consummate this Agreement in accordance with the terms hereof.  The fee payable under this Section 7.4(i) shall be payable on the date of acceptance or approval of the Alternate Transaction and the fee payable under this Section 7.4(ii) shall be payable 30 days after the Investors are ready, willing and able to consummate this Agreement in accordance with the terms hereof.  Notwithstanding the foregoing provisions of this Section 7.4, no fee will be payable to Investors under this Section 7.4 if the Investors terminate this Agreement prior to the Closing Date for any reason other than (a) due to the Company’s willful failure to meet any of the Closing conditions set out in Section 5, which, in the opinion of the Investors is for the purpose of delaying or preventing the Closing or (b) the Company’s failure to adhere to the Closing Date.

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7.5     Indemnification.    Each Investor understands that the Purchased Securities are being offered and sold in reliance on a transactional exemption from the registration requirement of Federal and state securities laws and the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Investor set forth herein in order to determine the applicability of such exemptions and the suitability of the Investor to acquire the Purchased Securities. The Company agrees to indemnify, hold harmless, reimburse and defend the Investors, the Investors’ officers, directors, agents, Affiliates, members, managers, control persons, and principal shareholders, against any claim, cost, expense, liability, obligation, loss or damage (including reasonable legal fees) of any nature, incurred by or imposed upon the Investors or any such person which results, arises out of or is based upon (i) any material misrepresentation by the Company or breach of any representation or warranty by the Company in this Agreement or in any Exhibits or Schedules attached hereto in any Transaction Agreements, or (ii) after any applicable notice and/or cure periods, any breach or default in performance by the Company of any material covenant or undertaking to be performed by the Company hereunder, or any other material agreement entered into by the Company and Investors relating hereto.

7.6    Publicity.     The Company undertakes to file a Form 8-K describing the Offering on the fourth business day after the Closing Date.  Such Form 8-K will be provided to Investors for their review and approval (which shall not be unreasonably withheld or delayed) at least one Trading Day before filing thereof.  The Company agrees to timely file a Form D with respect to the Purchased Securities if required under Regulation D and to provide a copy thereof to each Investor promptly after such filing.

7.7    Board of Director and CFO.  The Company shall promptly appoint an independent director to its board as designated by the Investors Guerrilla Partners, LP (“Guerrilla”) and Hua-Mei 21st Century Partners, LP (“Hua-Mei”) and such Investors shall have the right to approve (such approval not to be unreasonably withheld or delayed) the hiring of an English speaking CFO after the Closing.

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8.           Miscellaneous.

8.1           Survival of Warranties.  The warranties, representations and covenants of the Company and the Investors contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing for a period of three years.

8.2           Successors and Assigns.  Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of, and be binding upon, the respective 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.

8.3           Governing Law.  This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of New York, without giving effect to principles of conflicts of law.  Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of New York or in the federal courts located in the state and county of New York.  The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens.  The parties executing this Agreement and other agreements referred to herein or delivered in connection herewith on behalf of the Company agree to submit to the in personam jurisdiction of such courts and hereby irrevocably waive trial by jury.  If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, or the Certificate, the substantially prevailing party shall be entitled to reasonable attorney’s fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.   In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform to such statute or rule of law.  Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement.  Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Agreements by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.  To the maximum extent permitted by law, in no event will the Investors be liable for punitive damages arising out of this Agreement or any of the Transaction Agreements.

8.4           Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which, together, shall constitute one and the same instrument.

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8.5           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.

8.6           Notices.  Except as otherwise provided herein, all notices, requests, waivers and other communications made pursuant to this Agreement shall be in writing and shall be conclusively deemed to have been duly given (a) when hand delivered to the other party, (b) when received by facsimile at the address and number for such party set forth on the signature page hereto, (c) three (3) business days after deposit in the U.S. mail with first class or certified mail receipt requested, postage prepaid, and addressed to the other party as set on the signature page hereto, or (d) the next business day after deposit with a national overnight delivery service, postage prepaid, addressed to the parties as set forth on the signature page below, with next business day delivery guaranteed.  A party may change or supplement its addresses for the purposes of receiving notice pursuant to this Section 8.6 by giving the other parties written notice of the new address in the manner set forth above.

8.7           Finder’s Fee.  Each party represents that it neither is nor will be obligated for any finders’ fee or commission in connection with this transaction.  Each Investor agrees to indemnify and hold harmless the Company from any liability for any commission or compensation in the nature of a finders’ fee (and the costs and expenses of defending against such liability or asserted liability) for which such Investor or any of its officers, partners, employees or representatives is responsible, and the Company agrees to indemnify and hold harmless each Investor from any liability for any commission or compensation in the nature of a finder’s fee (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible.

8.8           Expenses.  The Company and the Investors shall each bear their own expenses and legal fees incurred on the behalf of each with respect to this Agreement and the transactions contemplated hereby; provided, however, that the Company shall pay Guerrilla and Hua-Mei an aggregate of $40,000 on or before the Closing Date to cover reasonable fees and actual out-of-pocket expenses incurred by the Investors for due diligence and investment documentation, including legal expenses.

8.9           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 holders of a majority of the shares of Series A Preferred then outstanding.  Any amendment or waiver effected in accordance with this Section 8.9 shall be binding upon each holder of outstanding shares of Series A Preferred.

8.10           Severability.  If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

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8.11           Further Assurances.  The Company and the Investors shall take all further actions and execute and deliver all further documents that are reasonably be required to effect the transactions contemplated by this Agreement.

8.12           Entire Agreement.  This Agreement and the documents referred to herein constitute the entire agreement and understanding among the parties hereto and supercede all prior negotiations and agreements, whether oral or written.

*           *           *

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

GRANTO, INC.		INVESTORS:
By:	/s/ Kelvin Chan	Guerrilla Partners, LP
	Name: Kelvin Chan	By:	/s/ Leigh S. Curry
	Title: President
		Name: Managing Director
Address:
Dongdu Room 321,		Number of Shares:
No.475 Huanshidong Road
Guangzhou City		Total Purchase Price:
People’s Republic of China 510075
		Address:
Phone: 011-86-20-8762-1778			237 Park Avenue 9th Floor
			New York, NY 10017
Fax: 011-86-20-8762-2136
		Hua-Mei 21st Century Partners, LP
		By:	/s/ Leigh S. Curry
		Name: Managing Director
		Number of Shares:
		Total Purchase Price:
		Address:
			237 Park Avenue 9th Floor
			New York, NY 10017
		[          ]
		By:
		Name:
		Number of Shares:
		Total Purchase Price:
		Address:

Exhibit A	Series A Warrant
Exhibit B	Series B Warrant
Exhibit C	Certificate of Designations, Preferences and Rights of Series A preferred Stock the Company
Exhibit D	Form of Legal Opinion
Exhibit E	Escrow Agreement
Exhibit F	Share Exchange Agreement

SCHEDULE 1

Schedule of Exceptions

GRANTO, INC.

PREFERRED STOCK PURCHASE AGREEMENT

March __, 2010

EX-4.2

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.

SERIES A WARRANT TO PURCHASE

SHARES OF COMMON STOCK

OF

GRANTO, INC.

Expires March 29, 2015

No.: A	Number of Shares:
Date of Issuance: March 29, 2010

FOR VALUE RECEIVED, the undersigned, Granto, Inc., a Nevada corporation (together with its successors and assigns, the “Issuer”), hereby certifies that ____________________________________ (the “Holder”) or its registered assigns is entitled to subscribe for and purchase, during the Term (as hereinafter defined), ___________________________________ 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 9 hereof.

1.   Term. The term of this Warrant shall commence on March 29, 2010 and shall expire at 6:00 p.m., Eastern Time, on March 29, 2015 (such period being the “Term” and such date, the “Termination Date”).

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 for such number of shares of Common Stock set forth above.

(b)   Method of Exercise. The Holder hereof may exercise this Warrant, in whole or in part, by the surrender of this Warrant (with the exercise form attached hereto duly executed (“Notice of Exercise”)) at the principal office of the Issuer, and by the payment to the Issuer 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 respect to which this Warrant is then being exercised, payable at such Holder’s election (i) by certified or official bank check or by wire transfer to an account designated by the Issuer, (ii) by “cashless exercise” in accordance with the provisions of subsection (c) of this Section 2, or (iii) by a combination of the foregoing methods of payment selected by the Holder of this Warrant.

(c)   Cashless Exercise. Notwithstanding any provision herein to the contrary, if (i) the Per Share Market Value of one share of Common Stock is greater than the Warrant Price (at the date of calculation as set forth below) and (ii) subject to the three sentences following the formula set forth below in this Section 2(c), a registration statement under the Securities Act providing for the resale of the Warrant Stock (a “Registration Statement”) is not then in effect by the one year anniversary date  Original Issue Date or not effective at any time during the Effectiveness Period (as defined in the Stock Purchase Agreement) after such one year anniversary in accordance with the terms of the Stock Purchase Agreement, in lieu of exercising this Warrant by payment of cash, the Holder may elect to exercise this Warrant by a cashless exercise and shall receive the number of shares of Common Stock equal to an amount (as determined below) by surrender of this Warrant at the principal office of the Issuer together with the properly endorsed Notice of Exercise in which event the Issuer shall issue to the Holder a number of shares of Common Stock computed using the following formula:

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	X = Y - (A)(Y)
	B
Where	X =	the number of shares of Common Stock to be issued to the Holder.
	Y =	the number of shares of Warrant Stock issuable upon exercise of this Warrant in accordance with the terms of this Warrant by means of a cash exercise rather than a cashless exercise.
	A =	the Warrant Price.
	B =	the Per Share Market Value of one share of Common Stock on the Trading Day immediately preceding the date of such election.

 If a Registration Statement covering the resale of all of the Warrant Stock is not in effect by the one year anniversary of the Original Issue Date or not effective at any time during the Effectiveness Period solely because of the Issuer’s cut-back of shares included in the Registration Statement due to SEC Restrictions (as such term is defined in the Stock Purchase Agreement), then the Holder may not exercise this Warrant by a cashless exercise; provided that within six months after the effective date of the Registration Statement or such shorter or longer period as may be permitted or required under SEC staff interpretations the Issuer shall have filed an additional registration statement covering the resale of all Warrant Stock not included in the Registration Statement (the “Excluded Shares”) and have used its reasonable best efforts to cause such registration statement to be declared effective by the SEC. If due to additional SEC Restrictions relating to the subsequent registration statement some or all of the Excluded Shares are not included in such registration statement or the effectiveness of such registration statement is not maintained, then every six months (or such shorter or longer period as may be permitted or required under SEC staff interpretations) after an  additional registration statement is declared effective the Issuer shall file a further registration covering the resale of the Excluded Shares not or no longer covered by an effective registration statement and use its reasonable best efforts to cause such registration statement to be declared effective by the SEC. If the Issuer does not comply with the foregoing, then the Holder may exercise this Warrant by cashless exercise.

(d)   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 hereof 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 the resale of all 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 a sale or other exemption from registration by which the shares may be issued without a restrictive legend. The Holder shall deliver this original Warrant, or an indemnification undertaking with respect to such Warrant in the case of its loss, theft or destruction, at such time that this Warrant is fully exercised. With respect to partial exercises of this Warrant, the Issuer shall keep written records for the Holder of the number of shares of Warrant Stock exercised as of each date of exercise.

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(e)   Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. In addition to any other rights available to the Holder, if the Issuer fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Stock pursuant to an exercise on or before the Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Stock which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Issuer shall: (1) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of shares of Warrant Stock that the Issuer was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of shares of Warrant Stock for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Issuer timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Issuer shall be required to pay the Holder $1,000. The Holder shall provide the Issuer written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Issuer. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Issuer’s failure to timely deliver certificates representing shares of Common Stock upon exercise of this Warrant as required pursuant to the terms hereof.

(f)   Transferability of Warrant. Subject to Section 2(h) hereof, this Warrant may be transferred by a Holder, in whole or in part, to an “accredited investor” as defined in Regulation D under the Securities Act 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 hereof in person or by duly authorized attorney, upon surrender of this Warrant at the principal office of the Issuer, 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 at the principal office of the Issuer for Warrants to purchase the same aggregate 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.

(g)   Continuing Rights of Holder. The Issuer will, 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.

(h)   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. Such proposed transfer will not be effected until: (a) either (i) the Issuer has received an unqualified 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, (ii) a registration statement under the Securities Act covering such proposed disposition has been filed by the Issuer with the United States Securities and Exchange Commission and has become effective under the Securities Act, or (iii) the Issuer has received other evidence reasonably satisfactory to the Issuer that such registration and qualification under the Securities Act and state securities laws are not required; and (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 will respond to any such notice from a holder within five (5) Trading Days. In the case of any proposed transfer under this Section 2(h), the Issuer will 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 any 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. The restrictions on transfer contained in this Section 2(h) shall be in addition to, and not by way of limitation of, any other restrictions on transfer contained in any other section of this Warrant. 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 or the Stock Purchase Agreement).

(i)   Accredited Investor Status. In no event may the Holder exercise this Warrant in whole or in part unless the Holder is an “accredited investor” as defined in Regulation D under the Securities Act.

3.   Stock Fully Paid; Reservation and Listing of Shares; Covenants.

(a)   Stock Fully Paid. The Issuer represents, warrants, covenants and agrees that all shares of Warrant Stock which may be issued upon the exercise of this Warrant or otherwise hereunder will, when issued in accordance with the terms of this Warrant, be duly authorized, validly issued, fully paid and non-assessable and free from all taxes, liens and charges created by or through the Issuer. The Issuer further covenants and agrees that during the period within which this Warrant may be exercised, the Issuer will at all times have authorized and reserved for the purpose of the issuance upon exercise of this Warrant a number of authorized but unissued shares of Common Stock equal to at least the number of shares of Common Stock issuable upon exercise of this Warrant without regard to any limitations on exercise.

(b)   Reservation. If any shares of Common Stock required to be reserved for issuance upon exercise of this Warrant or as otherwise provided hereunder require registration or qualification with any Governmental Authority under any federal or state law before such shares may be so issued, the Issuer will in good faith use its best efforts as expeditiously as possible at its expense to cause such shares to be duly registered or qualified, in accordance with the terms and provisions of the Stock Purchase Agreement. If the Issuer shall list any shares of Common Stock on any securities exchange or market it will, at its expense, list thereon, and maintain and increase when necessary such listing, of, all shares of Warrant Stock from time to time issued upon exercise of this Warrant or as otherwise provided hereunder (provided that such Warrant Stock has been registered pursuant to a registration statement under the Securities Act then in effect), and, to the extent permissible under the applicable securities exchange rules, all unissued shares of Warrant Stock which are at any time issuable hereunder, so long as any shares of Common Stock shall be so listed. The Issuer will also so list on each securities exchange or market, and will maintain such listing of, any other securities which the Holder of this Warrant shall be entitled to receive upon the exercise of this Warrant if at the time any securities of the same class shall be listed on such securities exchange or market by the Issuer.

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(c)   Covenants. The Issuer shall not by any action including, without limitation, amending the Certificate of Incorporation or the by-laws of the Issuer, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of the Holder hereof against dilution (to the extent specifically provided herein) or impairment. Without limiting the generality of the foregoing, the Issuer will (i) not permit the par value, if any, of its Common Stock to exceed the then effective Warrant Price, (ii) not amend or modify any provision of the Certificate of Incorporation or by-laws of the Issuer in any manner that would adversely affect the rights of the Holders of the Warrants, (iii) take all such action as may be reasonably necessary in order that the Issuer may validly and legally issue fully paid and nonassessable shares of Common Stock, free and clear of any liens, claims, encumbrances and restrictions (other than as provided herein) upon the exercise of this Warrant, and (iv) use its best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be reasonably necessary to enable the Issuer to perform its obligations under this Warrant.

(d)   Loss, Theft, Destruction of Warrants. Upon receipt of evidence satisfactory to the Issuer of the ownership of and the loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction, upon receipt of indemnity or security satisfactory to the Issuer or, in the case of any such mutilation, upon surrender and cancellation of such Warrant, the Issuer will make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and representing the right to purchase the same number of shares of Common Stock.

(e)   Payment of Taxes. The Issuer will pay any documentary stamp taxes attributable to the initial issuance of the Warrant Stock issuable upon exercise of this Warrant; provided, however, that the Issuer shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issuance or delivery of any certificates representing Warrant Stock in a name other than that of the Holder in respect to which such shares are issued.

4.   Adjustment of Warrant Price. The price at which such shares of Warrant Stock may be purchased upon exercise of this Warrant shall be subject to adjustment from time to time as set forth in this Section 4. The Issuer shall give the Holder notice of any event described below which requires an adjustment pursuant to this Section 4 in accordance with the notice provisions set forth in Section 5.

(a)   Recapitalization, Reorganization, Reclassification, Consolidation, Merger or Sale.

(i)   In case the Issuer after the Original Issue Date shall do any of the following (each, a “Triggering Event”): (a) consolidate or merge with or into any other Person and the Issuer shall not be the continuing or surviving corporation of such consolidation or merger, or (b) permit any other Person to consolidate with or merge into the Issuer and the Issuer shall be the continuing or surviving Person but, in connection with such consolidation or merger, any Capital Stock of the Issuer shall be changed into or exchanged for Securities of any other Person or cash or any other property, or (c) transfer all or substantially all of its properties or assets to any other Person, or (d) effect a capital reorganization or reclassification of its Capital Stock, then, and in the case of each such Triggering Event, proper provision shall be made to the Warrant Price and the number of shares of Warrant Stock that may be purchased upon exercise of this Warrant so that, upon the basis and the terms and in the manner provided in this Warrant, the Holder of this Warrant shall be entitled upon the exercise hereof at any time after the consummation of such Triggering Event, to the extent this Warrant is not exercised prior to such Triggering Event, to receive at the Warrant Price in effect at the time immediately prior to the consummation of such Triggering Event, in lieu of the Common Stock issuable upon such exercise of this Warrant prior to such Triggering Event, the Securities, cash and property to which such Holder would have been entitled upon the consummation of such Triggering Event if such Holder had exercised the rights represented by this Warrant immediately prior thereto (including the right of a shareholder to elect the type of consideration it will receive upon a Triggering Event), subject to adjustments (subsequent to such corporate action) as nearly equivalent as possible to the adjustments provided for elsewhere in this Section 4.  Immediately upon the occurrence of a Triggering Event, the Issuer shall notify the Holder in writing of such Triggering Event and provide the calculations in determining the number of shares of Warrant Stock issuable upon exercise of the new warrant and the adjusted Warrant Price. Upon the Holder’s request, the continuing or surviving corporation as a result of such Triggering Event shall issue to the Holder a new warrant of like tenor evidencing the right to purchase the adjusted number of shares of Warrant Stock and the adjusted Warrant Price pursuant to the terms and provisions of this Section 4(a)(i).

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(ii)   In the event that the Holder has elected not to exercise this Warrant prior to the consummation of a Triggering Event, so long as the surviving entity pursuant to any Triggering Event is a company that has a class of equity securities registered pursuant to the Exchange Act and its common stock is listed or quoted on a national securities exchange, national automated quotation system or the OTC Bulletin Board, the surviving entity and/or each Person (other than the Issuer) which may be required to deliver any Securities, cash or property upon the exercise of this Warrant as provided herein shall assume, by written instrument delivered to, and reasonably satisfactory to, the Holder of this Warrant, (A) the obligations of the Issuer under this Warrant (and if the Issuer shall survive the consummation of such Triggering Event, such assumption shall be in addition to, and shall not release the Issuer from, any continuing obligations of the Issuer under this Warrant) and (B) the obligation to deliver to such Holder such Securities, cash or property as, in accordance with the foregoing provisions of this subsection (a), such Holder shall be entitled to receive, and the surviving entity and/or each such Person shall have similarly delivered to such Holder an opinion of counsel for the surviving entity and/or each such Person, which counsel shall be reasonably satisfactory to such Holder, or in the alternative, a written acknowledgement executed by the President or Chief Financial Officer of the Issuer, stating that this Warrant shall thereafter continue in full force and effect and the terms hereof (including, without limitation, all of the provisions of this subsection (a)) shall be applicable to the Securities, cash or property which the surviving entity and/or each such Person may be required to deliver upon any exercise of this Warrant or the exercise of any rights pursuant hereto.

(b)   Stock Dividends, Subdivisions and Combinations. If at any time the Issuer shall:

(i)     make or issue or set a record date for the holders of the Common Stock for the purpose of entitling them to receive a dividend payable in, or other distribution of, shares of Common Stock,

(ii)    subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock, or

(iii)   combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock,

then (1) the number of shares of Common Stock for which this Warrant is exercisable immediately after the occurrence of any such event shall be adjusted to equal the number of shares of Common Stock which 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 (2) 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.

(c)   Certain Other Distributions. If at any time the Issuer shall make or issue or set a record date for the holders of the Common Stock for the purpose of entitling them to receive any dividend or other distribution of:

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(i)   cash,

(ii)   any evidences of its indebtedness, any shares of stock of any class or any other securities or property of any nature whatsoever (other than cash, Common Stock Equivalents or Additional Shares of Common Stock), or

(iii)   any warrants or other rights to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property of any nature whatsoever (other than cash, Common Stock Equivalents or Additional Shares of Common Stock),

then (1) the number of shares of Common Stock for which this Warrant is exercisable shall be adjusted to equal the product of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such adjustment multiplied by a fraction (A) the numerator of which shall be the Per Share Market Value of Common Stock at the date of taking such record and (B) the denominator of which shall be such Per Share Market Value minus the amount allocable to one share of Common Stock of any such cash so distributable and of the fair value (as determined in good faith by the Board of Directors of the Issuer and supported by an opinion from an investment banking firm mutually agreed upon by the Issuer and the Holder) of any and all such evidences of indebtedness, shares of stock, other securities or property or warrants or other subscription or purchase rights so distributable, and (2) 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. A reclassification of the Common Stock (other than a change in par value, or from par value to no par value or from no par value to par value) into shares of Common Stock and shares of any other class of stock shall be deemed a distribution by the Issuer to the holders of its Common Stock of such shares of such other class of stock within the meaning of this Section 4(c) and, if the outstanding shares of Common Stock shall be changed into a larger or smaller number of shares of Common Stock as a part of such reclassification, such change shall be deemed a subdivision or combination, as the case may be, of the outstanding shares of Common Stock within the meaning of Section 4(b).

(d)   Issuance of Additional Shares of Common Stock.

(i)      During the Term, in the event the Issuer shall issue any Additional Shares of Common Stock (otherwise than as provided in the foregoing subsections (a) through (c) of this Section 4), at a price per share less than the Warrant Price then in effect or without consideration, then the Warrant Price upon each such issuance shall be reduced (calculated to the nearest cent), as of the close of business on the date of the issuance or sale, to the amount obtained by multiplying the Warrant Price by a fraction, (1) the numerator of which shall be the sum of (A) the number of Common Stock Equivalents Outstanding immediately prior to the issuance or sale of Additional Shares of Common Stock, plus (B) the quotient obtained by dividing the Aggregate Consideration Received (as defined in Section 4(d)(ii)) by the Issuer for the total number of Additional Shares of Common Stock so issued and/or sold (and/or deemed so issued and sold) by the Warrant Price in effect immediately prior to the issuance or sale, and (2) the denominator of which shall be the sum of (A) the number of Common Stock Equivalents Outstanding immediately prior to the issuance or sale (or deemed issuance or sale), plus (B) the number of Additional Shares of Common Stock so issued or sold (and/or deemed so issued and sold).

(ii)   The “Aggregate Consideration Received” by the Issuer for any issuance or sale (or deemed issuance or sale) of securities shall (i) to the extent it consists of cash, be computed at the gross amount of cash received by the Issuer (before deduction of any underwriting or similar commission, compensation or concessions paid or allowed by the Issuer in connection with the issuance or sale and without deduction of any expenses payable by the Issuer), (ii) to the extent it consists of property other than cash, be computed at the fair market value of that property as determined in good faith by the Board, and (c) if Additional Shares of Common Stock, Convertible Securities or Rights or Options to purchase either Additional Shares of Common Stock or Convertible Securities are issued or sold together with other stock or securities or other assets of the Issuer for a consideration which covers both, be computed as the portion of the consideration so received that may be reasonably determined in good faith by the Board to be allocable to such Additional Shares of Common Stock, Convertible Securities or Rights or Options, respectively.

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No adjustment of the number of shares of Common Stock for which this Warrant shall be exercisable shall be made pursuant to this Section 4(d) upon the issuance of any Additional Shares of Common Stock which are issued pursuant to the exercise of any Common Stock Equivalents, if any such adjustment shall previously have been made upon the issuance of such Common Stock Equivalents (or upon the issuance of any warrant or other rights therefor) pursuant to Section 4(e).

(e)   Issuance of Common Stock Equivalents. In the event the Issuer shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a distribution of, or shall in any manner (whether directly or by assumption in a merger in which the Issuer is the surviving corporation) issue or sell, any Common Stock Equivalents, whether or not the rights to exchange or convert thereunder are immediately exercisable, and the price per share for which Common Stock is issuable upon such conversion or exchange shall be less than the Warrant Price in effect immediately prior to the time of such issue or sale, or if, after any such issuance of Common Stock Equivalents, the price per share for which Additional Shares of Common Stock may be issuable thereafter is amended or adjusted, and such price as so amended shall be less than the Warrant Price in effect at the time of such amendment or adjustment, then the Warrant Price then in effect shall be adjusted as provided in Section 4(d). No further adjustments of the number of shares of Common Stock for which this Warrant is exercisable and the Warrant Price then in effect shall be made upon the actual issue of such Common Stock upon conversion or exchange of such Common Stock Equivalents.

(f)   Superseding Adjustment. If, at any time after any adjustment of the Warrant Price then in effect shall have been made pursuant to Section 4(e) as the result of any issuance of Common Stock Equivalents, and such Common Stock Equivalents, or the right of conversion or exchange in such Common Stock Equivalents, shall expire, and all of such or the right of conversion or exchange with respect to all of such Common Stock Equivalents shall not have been converted or exercised, then, on the date that such right of conversion or exchange of the Common Stock Equivalents shall be set to expire, such previous adjustment shall be rescinded and annulled and the Warrant Price then in effect shall be adjusted to the Warrant Price in effect immediately prior to the issuance of such Common Stock Equivalents, subject to any further adjustments pursuant to this Section 4.

(g)   Other Provisions Applicable to Adjustments under this Section. The following provisions shall be applicable to the making of adjustments of the number of shares of Common Stock for which this Warrant is exercisable and the Warrant Price then in effect provided for in this Section 4:

(i)   When Adjustments to Be Made. The adjustments required by this Section 4 shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that any adjustment of the number of shares of Common Stock for which this Warrant is exercisable that would otherwise be required may be postponed (except in the case of a subdivision or combination of shares of the Common Stock, as provided for in Section 4(b)) up to, but not beyond the date of exercise if such adjustment either by itself or with other adjustments not previously made adds or subtracts less than one percent (1%) of the shares of Common Stock for which this Warrant is exercisable immediately prior to the making of such adjustment. Any adjustment representing a change of less than such minimum amount (except as aforesaid) which is postponed shall be carried forward and made as soon as such adjustment, together with other adjustments required by this Section 4 and not previously made, would result in a minimum adjustment or on the date of exercise. For the purpose of any adjustment, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence.

(ii)   Fractional Interests. In computing adjustments under this Section 4, fractional interests in Common Stock shall be taken into account to the nearest one one-hundredth (1/100th) of a share.

(iii)   When Adjustment Not Required. If the Issuer shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or distribution or subscription or purchase rights and shall, thereafter and before the distribution to stockholders thereof, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights, then thereafter no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled.

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(h)   Form of Warrant after Adjustments. The form of this Warrant need not be changed because of any adjustments in the Warrant Price or the number and kind of Securities purchasable upon the exercise of this Warrant.

5.   Notice of Adjustments. Whenever the Warrant Price or Warrant Share Number shall be adjusted pursuant to Section 4 hereof (for purposes of this Section 5, each an “adjustment”), the Issuer shall cause its Chief Financial Officer or other authorized officer, as the case may be, to prepare and execute a certificate setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated (including a description of the basis on which the Board made any determination hereunder), and the Warrant Price and Warrant Share Number after giving effect to such adjustment, and shall cause copies of such certificate to be delivered to the Holder of this Warrant promptly after each adjustment. Any dispute between the Issuer and the Holder of this Warrant with respect to the matters set forth in such certificate may at the option of the Holder of this Warrant be submitted to an Independent Appraiser, provided that the Issuer shall have ten (10) days after receipt of notice from such Holder of its selection of such firm to object thereto, in which case such Holder shall select another such firm and the Issuer shall have no such right of objection. The Independent Appraiser selected by the Holder of this Warrant as provided in the preceding sentence shall be instructed to deliver a written opinion as to such matters to the Issuer and such Holder within thirty (30) days after submission to it of such dispute. Such opinion shall be final and binding on the parties hereto. The reasonable costs and expenses of the Independent Appraiser in making such determination shall be paid by the Issuer, in the event the Holder's calculation was correct, or by the Holder, in the event the Issuer’s calculation was correct, or equally by the Issuer and the Holder in the event that neither the Issuer's or the Holder's calculation was correct.

6.   Fractional Shares. No fractional shares of Warrant Stock will be issued in connection with any exercise hereof, but in lieu of such fractional shares, the Issuer shall, at its option, (a) pay an amount in cash equal to the Warrant Price multiplied by such fraction or (b) round the number of shares to be issued upon exercise up to the nearest whole number of shares.

7.   Ownership Cap and Exercise Restriction. Notwithstanding anything to the contrary set forth in this Warrant, at no time may the Holder exercise this Warrant 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 at such time to exceed, when aggregated with all other shares of Common Stock owned by the Holder and its affiliates at such time, the number of shares of Common Stock which would result in the Holder, its affiliates, any investment manager having discretionary investment authority over the accounts or assets of the Holder and its affiliates, or any other persons whose beneficial ownership of Common Stock would be aggregated for purposes of Section 13(d) and Section 16 of the Exchange Act, beneficially owning (as determined in accordance with Section 13(d) of the Exchange Act and the rules thereunder) in excess of 9.9% of the then issued and outstanding shares of Common Stock; provided, however, that upon the Holder providing the Issuer with sixty-one (61) days notice (pursuant to this certificate) (the “Waiver Notice”) that the Holder would like to waive this Section 7 with regard to any or all shares of Common Stock issuable upon exercise of this Warrant, this Section 7 shall be of no force or effect with regard to those shares of Common Stock referenced in the Waiver Notice; provided, further, that during the sixty-one (61) day period prior to the Termination Date, the Holder may waive this Section 7 by providing a Waiver Notice at any time during such sixty-one (61) day period; provided, further, that any Waiver Notice provided during the sixty-one (61) day period prior to the Termination Date will not be effective until the Termination Date.

            8.   Registration Rights. The Holder of this Warrant is entitled to the benefit of certain registration rights with respect to the shares of Warrant Stock issuable upon the exercise of this Warrant pursuant to that certain Series A Preferred Stock Purchase Agreement, of even date herewith, by and among the Issuer and the investors listed on the signature page thereto (the “Stock Purchase Agreement”) and the registration rights with respect to the shares of Warrant Stock issuable upon the exercise of this Warrant by any subsequent Holder may only be assigned in accordance with the terms and provisions therein.

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

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“Additional Shares of Common Stock” means all shares of Common Stock issued by the Issuer after the Original Issue Date, and all shares of Other Common, if any, issued by the Issuer after the Original Issue Date, except: (i) Common Stock issued upon conversion of, or payable as a dividend on, the Issuer’s Series A Preferred Stock, (ii) securities issued pursuant to the conversion or exercise of convertible or exercisable securities issued or outstanding on or prior to the date of the Stock Purchase Agreement or issued pursuant to the Stock Purchase Agreement (so long as the conversion or exercise price in such securities are not amended to lower such price and/or adversely affect the Holders) which have previously been disclosed to the Holder, (iii) the Warrant Stock, (iv) securities issued to employees, officers or directors of, or contractors, consultants or advisers to, the Issuer pursuant to the any stock option plan, stock purchase right or arrangement approved by the Board that do not exceed in the aggregate 10% of the Issuer’s Common Stock at the time of issuance, (v) securities issued in connection with the acquisition of another unrelated corporation or entity with an enterprise value of at least $1,000,000 by the Issuer by consolidation, merger, purchase of all or substantially all of the assets, or other reorganization approved unanimously by the Board, and (vi) securities issued to non-affiliated parties in connection with services rendered or to be rendered to the Issuer that do not exceed in the aggregate in any period of 24 months 2% of the Issuer’s Common Stock at the time of the Original Issue Date.

“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.

“Certificate of Incorporation” means the Articles of Incorporation of the Issuer 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.

“Common Stock Equivalent” means any means the number of shares of Common Stock that is equal to the sum of (a) all shares of Common Stock that are outstanding at the time in question, plus (b) all shares of Common Stock that are issuable upon conversion of all shares of Series A Preferred or other Convertible Securities and Rights or Options that are outstanding at the time in question.

“Convertible Securities” means evidences of Indebtedness, shares of Capital Stock or other Securities which are or may be at any time convertible into or exchangeable for Additional Shares of Common Stock. The term “Convertible Security” means one of the Convertible Securities.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar federal statute then in effect.

“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.

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“Issuer” means Granto, Inc., a Nevada corporation, and its successors.

“Majority Holders” means at any time the Holders of Warrants exercisable for a majority of the shares of Warrant Stock issuable under the Warrants at the time outstanding.

“Original Issue Date” means March 29, 2010.

“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 options, warrants and other Securities which are convertible into or exercisable or exchangeable for, and any right to subscribe for, shares of Common Stock that are outstanding at such time.

“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.

“Per Share Market Value” means on any particular date (a) the last closing price per share of the Common Stock on such date on the Trading Market or another registered national stock exchange on which the Common Stock is then listed, or if there is no closing price on such date, then the closing bid price on such date, or if there is no closing bid price on such date, then the closing price on such exchange or quotation system on the date nearest preceding such date, or (b) if the Common Stock is not listed then on a Trading Market or any registered national stock exchange, the last closing price for a share of Common Stock in the over-the-counter market, as reported by the Trading Market or any registered national stock exchange or in the National Quotation Bureau Incorporated or similar organization or agency succeeding to its functions of reporting prices) at the close of business on such date, or if there is no closing price on such date, then the closing bid price on such date, or (c) if the Common Stock is not then reported by the Trading Market or any registered national stock exchange or in the National Quotation Bureau Incorporated (or similar organization or agency succeeding to its functions of reporting prices), then the average of the “Pink Sheet” quotes for the five (5) Trading Days preceding such date of determination, or (d) if the Common Stock is not then publicly traded the fair market value of a share of Common Stock as determined by an Independent Appraiser selected in good faith by the Majority Holders; provided, however , that the Issuer, after receipt of the determination by such Independent Appraiser, shall have the right to select an additional Independent Appraiser, in which case, the fair market value shall be equal to the average of the determinations by each such Independent Appraiser; and provided, further, that all determinations of the Per Share Market Value shall be appropriately adjusted for any stock dividends, stock splits or other similar transactions during such period. The determination of fair market value by an Independent Appraiser shall be based upon the fair market value of the Issuer determined on a going concern basis as between a willing buyer and a willing seller and taking into account all relevant factors determinative of value, and shall be final and binding on all parties. In determining the fair market value of any shares of Common Stock, no consideration shall be given to any restrictions on transfer of the Common Stock imposed by agreement or by federal or state securities laws, or to the existence or absence of, or any limitations on, voting rights.

“Rights or Options” means warrants, options or other rights to purchase or acquire shares of Common Stock or Convertible Securities.

“Stock Purchase Agreement” means the Series A Preferred Stock Purchase Agreement dated as of March 29, 2010, among the Issuer and the Investors.

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“Investors” means the purchasers of the Preferred Stock and Warrants (as defined in the Stock Purchase Agreement), issued by the Issuer pursuant to the Stock Purchase Agreement.

“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, or any similar federal statute then in effect.

“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 a Trading Market, or (b) if the Common Stock is not traded on a Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (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 mean 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.

“Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board.

“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 of Directors (or other governing body) of such corporation, other than Capital Stock having such power only by reason of the happening of a contingency.

 “Warrants” means the Warrants issued and sold pursuant to the Stock Purchase Agreement, including, without limitation, this Warrant, and any other warrants of like tenor issued in substitution or exchange for any thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e) hereof or of any of such other Warrants.

“Warrant Price” initially means $3.47 per share as such price may be adjusted from time to time as shall result from the adjustments specified in this Warrant, including Section 4 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 this Warrant, after giving effect to all prior adjustments and increases to such number made or required to be made under the terms hereof.

“Warrant Stock” means Common Stock issuable upon exercise of any Warrant or Warrants or otherwise issuable pursuant to any Warrant or Warrants.

10.   Other Notices. In case at any time:

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

(b)   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

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

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

(e)   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

(f)   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.

11.   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 the Issuer and the Majority Holders; 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 exercised or modify any provision of this Section 11 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.

           12.   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, and the parties irrevocably waive any right to raise forum non conveniens 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 via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agree that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 12 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 or the Stock Purchase Agreement, 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.

13.   Notices. Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) immediately upon hand delivery, telecopy or facsimile at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

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If to the Issuer:	Granto, Inc. Attn: President Dongdu Room 321, No.475 Huanshidong Road Guangzhou City People’s Republic of China 510075 Phone: 011-86-20-8762-1778 Fax: 011-86-20-8762-2136
with copies (which copies shall not constitute notice) to:	Guzov Ofsink, LLC 600 Madison Avenue, 14th Floor New York, New York 10022 Attn: Darren Ofsink, Esq. Facsimile: 212-688-7273 e-mail:dofsink@golawintl.com
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 with copies to:
with copies (which copies shall not constitute notice) to:

Any party hereto may from time to time change its address for notices by giving at least ten (10) days written notice of such changed address to the other party hereto.

14.   Warrant Agent. The Issuer may, by written notice to the 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 subsection (d) of Section 3 hereof, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent.

15.   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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16.   Remedies. The Issuer stipulates that the remedies at law of the Holder of this Warrant in the event of any default or threatened default by the Issuer in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate and that, to the fullest extent permitted by law, such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise.

17.   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.

18.   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.

19.    No Rights as Stockholders. Prior to the exercise of this Warrant, the Holder shall not have or exercise any rights as a stockholder of the Issuer by virtue of its ownership of this Warrant.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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

GRANTO, INC.
By:
	Name: Kelvin Chan
	Title: President

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EXERCISE FORM

SERIES A WARRANT

GRANTO, INC.

The undersigned _______________, pursuant to the provisions of the within Warrant, hereby elects to purchase _____ shares of Common Stock of ________________________________ covered by the within 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.

The undersigned intends that payment of the Warrant Price shall be made as (check one):

Cash Exercise_______

Cashless Exercise_______

If the Holder has elected 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.

If the Holder has elected a Cashless Exercise, a certificate shall be issued to the Holder for the number of shares equal to the whole number portion of the product of the calculation set forth below, which is ___________. The Issuer shall pay a cash adjustment in respect of the fractional portion of the product of the calculation set forth below in an amount equal to the product of the fractional portion of such product and the Per Share Market Value on the date of exercise, which product is ____________.

X = Y - (A)(Y)

B

Where:

The number of shares of Common Stock to be issued to the Holder __________________(“X”).

The number of shares of Common Stock purchasable upon exercise of all of the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised ___________________________ (“Y”).

The Warrant Price ______________ (“A”).

The Per Share Market Value of one share of Common Stock _______________________ (“B”).

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ASSIGNMENT

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto __________________ the within Warrant and all rights evidenced thereby and does irrevocably constitute and appoint _____________, attorney, to transfer the said Warrant on the books of the within named corporation.

Dated:	Signature
	Address

PARTIAL ASSIGNMENT

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto __________________ the right to purchase _________ shares of Warrant Stock evidenced by the within Warrant together with all rights therein, and does irrevocably constitute and appoint ___________________, attorney, to transfer that part of the said Warrant on the books of the within named corporation.

Dated:	Signature
	Address

FOR USE BY THE ISSUER ONLY:

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

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EX-4.3

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.

SERIES B WARRANT TO PURCHASE

SHARES OF COMMON STOCK

OF

GRANTO, INC.

Expires March 29, 2015

No.: B	Number of Shares:
Date of Issuance: March 29, 2010

FOR VALUE RECEIVED, the undersigned, Granto, Inc., a Nevada corporation (together with its successors and assigns, the “Issuer”), hereby certifies that ____________________________________ (the “Holder”) or its registered assigns is entitled to subscribe for and purchase, during the Term (as hereinafter defined), ___________________________________ 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 9 hereof.

1.   Term. The term of this Warrant shall commence on March 29, 2010 and shall expire at 6:00 p.m., Eastern Time, on March 29, 2015 (such period being the “Term” and such date, the “Termination Date”).

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 for such number of shares of Common Stock set forth above.

(b)   Method of Exercise. The Holder hereof may exercise this Warrant, in whole or in part, by the surrender of this Warrant (with the exercise form attached hereto duly executed (“Notice of Exercise”)) at the principal office of the Issuer, and by the payment to the Issuer 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 respect to which this Warrant is then being exercised, payable at such Holder’s election (i) by certified or official bank check or by wire transfer to an account designated by the Issuer, (ii) by “cashless exercise” in accordance with the provisions of subsection (c) of this Section 2, or (iii) by a combination of the foregoing methods of payment selected by the Holder of this Warrant.

(c)   Cashless Exercise. Notwithstanding any provision herein to the contrary, if (i) the Per Share Market Value of one share of Common Stock is greater than the Warrant Price (at the date of calculation as set forth below) and (ii) subject to the three sentences following the formula set forth below in this Section 2(c), a registration statement under the Securities Act providing for the resale of the Warrant Stock (a “Registration Statement”) is not then in effect by the one year anniversary date  Original Issue Date or not effective at any time during the Effectiveness Period (as defined in the Stock Purchase Agreement) after such one year anniversary in accordance with the terms of the Stock Purchase Agreement, in lieu of exercising this Warrant by payment of cash, the Holder may elect to exercise this Warrant by a cashless exercise and shall receive the number of shares of Common Stock equal to an amount (as determined below) by surrender of this Warrant at the principal office of the Issuer together with the properly endorsed Notice of Exercise in which event the Issuer shall issue to the Holder a number of shares of Common Stock computed using the following formula:

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	X = Y - (A)(Y)
	B
Where	X =	the number of shares of Common Stock to be issued to the Holder.
	Y =	the number of shares of Warrant Stock issuable upon exercise of this Warrant in accordance with the terms of this Warrant by means of a cash exercise rather than a cashless exercise.
	A =	the Warrant Price.
	B =	the Per Share Market Value of one share of Common Stock on the Trading Day immediately preceding the date of such election.

 If a Registration Statement covering the resale of all of the Warrant Stock is not in effect by the one year anniversary of the Original Issue Date or not effective at any time during the Effectiveness Period solely because of the Issuer’s cut-back of shares included in the Registration Statement due to SEC Restrictions (as such term is defined in the Stock Purchase Agreement), then the Holder may not exercise this Warrant by a cashless exercise; provided that within six months after the effective date of the Registration Statement or such shorter or longer period as may be permitted or required under SEC staff interpretations the Issuer shall have filed an additional registration statement covering the resale of all Warrant Stock not included in the Registration Statement (the “Excluded Shares”) and have used its reasonable best efforts to cause such registration statement to be declared effective by the SEC. If due to additional SEC Restrictions relating to the subsequent registration statement some or all of the Excluded Shares are not included in such registration statement or the effectiveness of such registration statement is not maintained, then every six months (or such shorter or longer period as may be permitted or required under SEC staff interpretations) after an  additional registration statement is declared effective the Issuer shall file a further registration covering the resale of the Excluded Shares not or no longer covered by an effective registration statement and use its reasonable best efforts to cause such registration statement to be declared effective by the SEC. If the Issuer does not comply with the foregoing, then the Holder may exercise this Warrant by cashless exercise.

(d)   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 hereof 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 the resale of 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 a sale or other exemption from registration by which the shares may be issued without a restrictive legend. The Holder shall deliver this original Warrant, or an indemnification undertaking with respect to such Warrant in the case of its loss, theft or destruction, at such time that this Warrant is fully exercised. With respect to partial exercises of this Warrant, the Issuer shall keep written records for the Holder of the number of shares of Warrant Stock exercised as of each date of exercise.

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(e)   Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. In addition to any other rights available to the Holder, if the Issuer fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Stock pursuant to an exercise on or before the Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Stock which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Issuer shall: (1) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of shares of Warrant Stock that the Issuer was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of shares of Warrant Stock for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Issuer timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Issuer shall be required to pay the Holder $1,000. The Holder shall provide the Issuer written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Issuer. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Issuer’s failure to timely deliver certificates representing shares of Common Stock upon exercise of this Warrant as required pursuant to the terms hereof.

(f)   Transferability of Warrant. Subject to Section 2(h) hereof, this Warrant may be transferred by a Holder, in whole or in part, to an “accredited investor” as defined in Regulation D under the Securities Act 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 hereof in person or by duly authorized attorney, upon surrender of this Warrant at the principal office of the Issuer, 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 at the principal office of the Issuer for Warrants to purchase the same aggregate 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.

(g)   Continuing Rights of Holder. The Issuer will, 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.

(h)   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. Such proposed transfer will not be effected until: (a) either (i) the Issuer has received an unqualified 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, (ii) a registration statement under the Securities Act covering such proposed disposition has been filed by the Issuer with the United States Securities and Exchange Commission and has become effective under the Securities Act, or (iii) the Issuer has received other evidence reasonably satisfactory to the Issuer that such registration and qualification under the Securities Act and state securities laws are not required; and (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 will respond to any such notice from a holder within five (5) Trading Days. In the case of any proposed transfer under this Section 2(h), the Issuer will 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 any 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. The restrictions on transfer contained in this Section 2(h) shall be in addition to, and not by way of limitation of, any other restrictions on transfer contained in any other section of this Warrant. 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 or the Stock Purchase Agreement).

(i)   Accredited Investor Status. In no event may the Holder exercise this Warrant in whole or in part unless the Holder is an “accredited investor” as defined in Regulation D under the Securities Act.

3.   Stock Fully Paid; Reservation and Listing of Shares; Covenants.

(a)   Stock Fully Paid. The Issuer represents, warrants, covenants and agrees that all shares of Warrant Stock which may be issued upon the exercise of this Warrant or otherwise hereunder will, when issued in accordance with the terms of this Warrant, be duly authorized, validly issued, fully paid and non-assessable and free from all taxes, liens and charges created by or through the Issuer. The Issuer further covenants and agrees that during the period within which this Warrant may be exercised, the Issuer will at all times have authorized and reserved for the purpose of the issuance upon exercise of this Warrant a number of authorized but unissued shares of Common Stock equal to at least the number of shares of Common Stock issuable upon exercise of this Warrant without regard to any limitations on exercise.

(b)   Reservation. If any shares of Common Stock required to be reserved for issuance upon exercise of this Warrant or as otherwise provided hereunder require registration or qualification with any Governmental Authority under any federal or state law before such shares may be so issued, the Issuer will in good faith use its best efforts as expeditiously as possible at its expense to cause such shares to be duly registered or qualified, in accordance with the terms and provisions of the Stock Purchase Agreement. If the Issuer shall list any shares of Common Stock on any securities exchange or market it will, at its expense, list thereon, and maintain and increase when necessary such listing, of, all shares of Warrant Stock from time to time issued upon exercise of this Warrant or as otherwise provided hereunder (provided that such Warrant Stock has been registered pursuant to a registration statement under the Securities Act then in effect), and, to the extent permissible under the applicable securities exchange rules, all unissued shares of Warrant Stock which are at any time issuable hereunder, so long as any shares of Common Stock shall be so listed. The Issuer will also so list on each securities exchange or market, and will maintain such listing of, any other securities which the Holder of this Warrant shall be entitled to receive upon the exercise of this Warrant if at the time any securities of the same class shall be listed on such securities exchange or market by the Issuer.

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(c)   Covenants. The Issuer shall not by any action including, without limitation, amending the Certificate of Incorporation or the by-laws of the Issuer, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of the Holder hereof against dilution (to the extent specifically provided herein) or impairment. Without limiting the generality of the foregoing, the Issuer will (i) not permit the par value, if any, of its Common Stock to exceed the then effective Warrant Price, (ii) not amend or modify any provision of the Certificate of Incorporation or by-laws of the Issuer in any manner that would adversely affect the rights of the Holders of the Warrants, (iii) take all such action as may be reasonably necessary in order that the Issuer may validly and legally issue fully paid and nonassessable shares of Common Stock, free and clear of any liens, claims, encumbrances and restrictions (other than as provided herein) upon the exercise of this Warrant, and (iv) use its best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be reasonably necessary to enable the Issuer to perform its obligations under this Warrant.

(d)   Loss, Theft, Destruction of Warrants. Upon receipt of evidence satisfactory to the Issuer of the ownership of and the loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction, upon receipt of indemnity or security satisfactory to the Issuer or, in the case of any such mutilation, upon surrender and cancellation of such Warrant, the Issuer will make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and representing the right to purchase the same number of shares of Common Stock.

(e)   Payment of Taxes. The Issuer will pay any documentary stamp taxes attributable to the initial issuance of the Warrant Stock issuable upon exercise of this Warrant; provided, however, that the Issuer shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issuance or delivery of any certificates representing Warrant Stock in a name other than that of the Holder in respect to which such shares are issued.

4.   Adjustment of Warrant Price. The price at which such shares of Warrant Stock may be purchased upon exercise of this Warrant shall be subject to adjustment from time to time as set forth in this Section 4. The Issuer shall give the Holder notice of any event described below which requires an adjustment pursuant to this Section 4 in accordance with the notice provisions set forth in Section 5.

(a)   Recapitalization, Reorganization, Reclassification, Consolidation, Merger or Sale.

(i)   In case the Issuer after the Original Issue Date shall do any of the following (each, a “Triggering Event”): (a) consolidate or merge with or into any other Person and the Issuer shall not be the continuing or surviving corporation of such consolidation or merger, or (b) permit any other Person to consolidate with or merge into the Issuer and the Issuer shall be the continuing or surviving Person but, in connection with such consolidation or merger, any Capital Stock of the Issuer shall be changed into or exchanged for Securities of any other Person or cash or any other property, or (c) transfer all or substantially all of its properties or assets to any other Person, or (d) effect a capital reorganization or reclassification of its Capital Stock, then, and in the case of each such Triggering Event, proper provision shall be made to the Warrant Price and the number of shares of Warrant Stock that may be purchased upon exercise of this Warrant so that, upon the basis and the terms and in the manner provided in this Warrant, the Holder of this Warrant shall be entitled upon the exercise hereof at any time after the consummation of such Triggering Event, to the extent this Warrant is not exercised prior to such Triggering Event, to receive at the Warrant Price in effect at the time immediately prior to the consummation of such Triggering Event, in lieu of the Common Stock issuable upon such exercise of this Warrant prior to such Triggering Event, the Securities, cash and property to which such Holder would have been entitled upon the consummation of such Triggering Event if such Holder had exercised the rights represented by this Warrant immediately prior thereto (including the right of a shareholder to elect the type of consideration it will receive upon a Triggering Event), subject to adjustments (subsequent to such corporate action) as nearly equivalent as possible to the adjustments provided for elsewhere in this Section 4.  Immediately upon the occurrence of a Triggering Event, the Issuer shall notify the Holder in writing of such Triggering Event and provide the calculations in determining the number of shares of Warrant Stock issuable upon exercise of the new warrant and the adjusted Warrant Price. Upon the Holder’s request, the continuing or surviving corporation as a result of such Triggering Event shall issue to the Holder a new warrant of like tenor evidencing the right to purchase the adjusted number of shares of Warrant Stock and the adjusted Warrant Price pursuant to the terms and provisions of this Section 4(a)(i).   

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(ii)   In the event that the Holder has elected not to exercise this Warrant prior to the consummation of a Triggering Event, so long as the surviving entity pursuant to any Triggering Event is a company that has a class of equity securities registered pursuant to the Exchange Act and its common stock is listed or quoted on a national securities exchange, national automated quotation system or the OTC Bulletin Board, the surviving entity and/or each Person (other than the Issuer) which may be required to deliver any Securities, cash or property upon the exercise of this Warrant as provided herein shall assume, by written instrument delivered to, and reasonably satisfactory to, the Holder of this Warrant, (A) the obligations of the Issuer under this Warrant (and if the Issuer shall survive the consummation of such Triggering Event, such assumption shall be in addition to, and shall not release the Issuer from, any continuing obligations of the Issuer under this Warrant) and (B) the obligation to deliver to such Holder such Securities, cash or property as, in accordance with the foregoing provisions of this subsection (a), such Holder shall be entitled to receive, and the surviving entity and/or each such Person shall have similarly delivered to such Holder an opinion of counsel for the surviving entity and/or each such Person, which counsel shall be reasonably satisfactory to such Holder, or in the alternative, a written acknowledgement executed by the President or Chief Financial Officer of the Issuer, stating that this Warrant shall thereafter continue in full force and effect and the terms hereof (including, without limitation, all of the provisions of this subsection (a)) shall be applicable to the Securities, cash or property which the surviving entity and/or each such Person may be required to deliver upon any exercise of this Warrant or the exercise of any rights pursuant hereto.

(b)   Stock Dividends, Subdivisions and Combinations. If at any time the Issuer shall:

(i)   make or issue or set a record date for the holders of the Common Stock for the purpose of entitling them to receive a dividend payable in, or other distribution of, shares of Common Stock,

(ii)   subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock, or

(iii)   combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock,

then (1) the number of shares of Common Stock for which this Warrant is exercisable immediately after the occurrence of any such event shall be adjusted to equal the number of shares of Common Stock which 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 (2) 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.

(c)   Certain Other Distributions. If at any time the Issuer shall make or issue or set a record date for the holders of the Common Stock for the purpose of entitling them to receive any dividend or other distribution of:

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(i)   cash,

(ii)   any evidences of its indebtedness, any shares of stock of any class or any other securities or property of any nature whatsoever (other than cash, Common Stock Equivalents or Additional Shares of Common Stock), or

(iii)   any warrants or other rights to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property of any nature whatsoever (other than cash, Common Stock Equivalents or Additional Shares of Common Stock),

then (1) the number of shares of Common Stock for which this Warrant is exercisable shall be adjusted to equal the product of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such adjustment multiplied by a fraction (A) the numerator of which shall be the Per Share Market Value of Common Stock at the date of taking such record and (B) the denominator of which shall be such Per Share Market Value minus the amount allocable to one share of Common Stock of any such cash so distributable and of the fair value (as determined in good faith by the Board of Directors of the Issuer and supported by an opinion from an investment banking firm mutually agreed upon by the Issuer and the Holder) of any and all such evidences of indebtedness, shares of stock, other securities or property or warrants or other subscription or purchase rights so distributable, and (2) 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. A reclassification of the Common Stock (other than a change in par value, or from par value to no par value or from no par value to par value) into shares of Common Stock and shares of any other class of stock shall be deemed a distribution by the Issuer to the holders of its Common Stock of such shares of such other class of stock within the meaning of this Section 4(c) and, if the outstanding shares of Common Stock shall be changed into a larger or smaller number of shares of Common Stock as a part of such reclassification, such change shall be deemed a subdivision or combination, as the case may be, of the outstanding shares of Common Stock within the meaning of Section 4(b).

(d)   Issuance of Additional Shares of Common Stock.

(i)      During the Term, in the event the Issuer shall issue any Additional Shares of Common Stock (otherwise than as provided in the foregoing subsections (a) through (c) of this Section 4), at a price per share less than the Warrant Price then in effect or without consideration, then the Warrant Price upon each such issuance shall be reduced (calculated to the nearest cent), as of the close of business on the date of the issuance or sale, to the amount obtained by multiplying the Warrant Price by a fraction, (1) the numerator of which shall be the sum of (A) the number of Common Stock Equivalents Outstanding immediately prior to the issuance or sale of Additional Shares of Common Stock, plus (B) the quotient obtained by dividing the Aggregate Consideration Received (as defined in Section 4(d)(ii)) by the Issuer for the total number of Additional Shares of Common Stock so issued and/or sold (and/or deemed so issued and sold) by the Warrant Price in effect immediately prior to the issuance or sale, and (2) the denominator of which shall be the sum of (A) the number of Common Stock Equivalents Outstanding immediately prior to the issuance or sale (or deemed issuance or sale), plus (B) the number of Additional Shares of Common Stock so issued or sold (and/or deemed so issued and sold).

(ii)   The “Aggregate Consideration Received” by the Issuer for any issuance or sale (or deemed issuance or sale) of securities shall (i) to the extent it consists of cash, be computed at the gross amount of cash received by the Issuer (before deduction of any underwriting or similar commission, compensation or concessions paid or allowed by the Issuer in connection with the issuance or sale and without deduction of any expenses payable by the Issuer), (ii) to the extent it consists of property other than cash, be computed at the fair market value of that property as determined in good faith by the Board, and (c) if Additional Shares of Common Stock, Convertible Securities or Rights or Options to purchase either Additional Shares of Common Stock or Convertible Securities are issued or sold together with other stock or securities or other assets of the Issuer for a consideration which covers both, be computed as the portion of the consideration so received that may be reasonably determined in good faith by the Board to be allocable to such Additional Shares of Common Stock, Convertible Securities or Rights or Options, respectively.

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No adjustment of the number of shares of Common Stock for which this Warrant shall be exercisable shall be made pursuant to this Section 4(d) upon the issuance of any Additional Shares of Common Stock which are issued pursuant to the exercise of any Common Stock Equivalents, if any such adjustment shall previously have been made upon the issuance of such Common Stock Equivalents (or upon the issuance of any warrant or other rights therefor) pursuant to Section 4(e).

(e)   Issuance of Common Stock Equivalents. In the event the Issuer shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a distribution of, or shall in any manner (whether directly or by assumption in a merger in which the Issuer is the surviving corporation) issue or sell, any Common Stock Equivalents, whether or not the rights to exchange or convert thereunder are immediately exercisable, and the price per share for which Common Stock is issuable upon such conversion or exchange shall be less than the Warrant Price in effect immediately prior to the time of such issue or sale, or if, after any such issuance of Common Stock Equivalents, the price per share for which Additional Shares of Common Stock may be issuable thereafter is amended or adjusted, and such price as so amended shall be less than the Warrant Price in effect at the time of such amendment or adjustment, then the Warrant Price then in effect shall be adjusted as provided in Section 4(d). No further adjustments of the number of shares of Common Stock for which this Warrant is exercisable and the Warrant Price then in effect shall be made upon the actual issue of such Common Stock upon conversion or exchange of such Common Stock Equivalents.

(f)   Superseding Adjustment. If, at any time after any adjustment of the Warrant Price then in effect shall have been made pursuant to Section 4(e) as the result of any issuance of Common Stock Equivalents, and such Common Stock Equivalents, or the right of conversion or exchange in such Common Stock Equivalents, shall expire, and all of such or the right of conversion or exchange with respect to all of such Common Stock Equivalents shall not have been converted or exercised, then, on the date that such right of conversion or exchange of the Common Stock Equivalents shall be set to expire, such previous adjustment shall be rescinded and annulled and the Warrant Price then in effect shall be adjusted to the Warrant Price in effect immediately prior to the issuance of such Common Stock Equivalents, subject to any further adjustments pursuant to this Section 4.

(g)   Other Provisions Applicable to Adjustments under this Section. The following provisions shall be applicable to the making of adjustments of the number of shares of Common Stock for which this Warrant is exercisable and the Warrant Price then in effect provided for in this Section 4:

(i)   When Adjustments to Be Made. The adjustments required by this Section 4 shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that any adjustment of the number of shares of Common Stock for which this Warrant is exercisable that would otherwise be required may be postponed (except in the case of a subdivision or combination of shares of the Common Stock, as provided for in Section 4(b)) up to, but not beyond the date of exercise if such adjustment either by itself or with other adjustments not previously made adds or subtracts less than one percent (1%) of the shares of Common Stock for which this Warrant is exercisable immediately prior to the making of such adjustment. Any adjustment representing a change of less than such minimum amount (except as aforesaid) which is postponed shall be carried forward and made as soon as such adjustment, together with other adjustments required by this Section 4 and not previously made, would result in a minimum adjustment or on the date of exercise. For the purpose of any adjustment, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence.

(ii)   Fractional Interests. In computing adjustments under this Section 4, fractional interests in Common Stock shall be taken into account to the nearest one one-hundredth (1/100th) of a share.

(iii)   When Adjustment Not Required. If the Issuer shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or distribution or subscription or purchase rights and shall, thereafter and before the distribution to stockholders thereof, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights, then thereafter no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled.

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(h)   Form of Warrant after Adjustments. The form of this Warrant need not be changed because of any adjustments in the Warrant Price or the number and kind of Securities purchasable upon the exercise of this Warrant.

5.   Notice of Adjustments. Whenever the Warrant Price or Warrant Share Number shall be adjusted pursuant to Section 4 hereof (for purposes of this Section 5, each an “adjustment”), the Issuer shall cause its Chief Financial Officer or other authorized officer, as the case may be, to prepare and execute a certificate setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated (including a description of the basis on which the Board made any determination hereunder), and the Warrant Price and Warrant Share Number after giving effect to such adjustment, and shall cause copies of such certificate to be delivered to the Holder of this Warrant promptly after each adjustment. Any dispute between the Issuer and the Holder of this Warrant with respect to the matters set forth in such certificate may at the option of the Holder of this Warrant be submitted to an Independent Appraiser, provided that the Issuer shall have ten (10) days after receipt of notice from such Holder of its selection of such firm to object thereto, in which case such Holder shall select another such firm and the Issuer shall have no such right of objection. The Independent Appraiser selected by the Holder of this Warrant as provided in the preceding sentence shall be instructed to deliver a written opinion as to such matters to the Issuer and such Holder within thirty (30) days after submission to it of such dispute. Such opinion shall be final and binding on the parties hereto. The reasonable costs and expenses of the Independent Appraiser in making such determination shall be paid by the Issuer, in the event the Holder's calculation was correct, or by the Holder, in the event the Issuer’s calculation was correct, or equally by the Issuer and the Holder in the event that neither the Issuer's or the Holder's calculation was correct.

6.   Fractional Shares. No fractional shares of Warrant Stock will be issued in connection with any exercise hereof, but in lieu of such fractional shares, the Issuer shall, at its option, (a) pay an amount in cash equal to the Warrant Price multiplied by such fraction or (b) round the number of shares to be issued upon exercise up to the nearest whole number of shares.

7.   Ownership Cap and Exercise Restriction. Notwithstanding anything to the contrary set forth in this Warrant, at no time may the Holder exercise this Warrant 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 at such time to exceed, when aggregated with all other shares of Common Stock owned by the Holder and its affiliates at such time, the number of shares of Common Stock which would result in the Holder, its affiliates, any investment manager having discretionary investment authority over the accounts or assets of the Holder and its affiliates, or any other persons whose beneficial ownership of Common Stock would be aggregated for purposes of Section 13(d) and Section 16 of the Exchange Act, beneficially owning (as determined in accordance with Section 13(d) of the Exchange Act and the rules thereunder) in excess of 9.9% of the then issued and outstanding shares of Common Stock; provided, however, that upon the Holder providing the Issuer with sixty-one (61) days notice (pursuant to this certificate) (the “Waiver Notice”) that the Holder would like to waive this Section 7 with regard to any or all shares of Common Stock issuable upon exercise of this Warrant, this Section 7 shall be of no force or effect with regard to those shares of Common Stock referenced in the Waiver Notice; provided, further, that during the sixty-one (61) day period prior to the Termination Date, the Holder may waive this Section 7 by providing a Waiver Notice at any time during such sixty-one (61) day period; provided, further, that any Waiver Notice provided during the sixty-one (61) day period prior to the Termination Date will not be effective until the Termination Date.

            8.   Registration Rights. The Holder of this Warrant is entitled to the benefit of certain registration rights with respect to the shares of Warrant Stock issuable upon the exercise of this Warrant pursuant to that certain Series A Preferred Stock Purchase Agreement, of even date herewith, by and among the Issuer and the investors listed on the signature page thereto (the “Stock Purchase Agreement”) and the registration rights with respect to the shares of Warrant Stock issuable upon the exercise of this Warrant by any subsequent Holder may only be assigned in accordance with the terms and provisions therein.

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

“Additional Shares of Common Stock” means all shares of Common Stock issued by the Issuer after the Original Issue Date, and all shares of Other Common, if any, issued by the Issuer after the Original Issue Date, except: (i) Common Stock issued upon conversion of, or payable as a dividend on, the Issuer’s Series A Preferred Stock, (ii) securities issued pursuant to the conversion or exercise of convertible or exercisable securities issued or outstanding on or prior to the date of the Stock Purchase Agreement or issued pursuant to the Stock Purchase Agreement (so long as the conversion or exercise price in such securities are not amended to lower such price and/or adversely affect the Holders) which have previously been disclosed to the Holder, (iii) the Warrant Stock, (iv) securities issued to employees, officers or directors of, or contractors, consultants or advisers to, the Issuer pursuant to the any stock option plan, stock purchase right or arrangement approved by the Board that do not exceed in the aggregate 10% of the Issuer’s Common Stock at the time of issuance, (v) securities issued in connection with the acquisition of another unrelated corporation or entity with an enterprise value of at least $1,000,000 by the Issuer by consolidation, merger, purchase of all or substantially all of the assets, or other reorganization approved unanimously by the Board, and (vi) securities issued to non-affiliated parties in connection with services rendered or to be rendered to the Issuer that do not exceed in the aggregate in any period of 24 months 2% of the Issuer’s Common Stock at the time of the Original Issue Date.

“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.

“Certificate of Incorporation” means the Articles of Incorporation of the Issuer 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.

“Common Stock Equivalent” means any means the number of shares of Common Stock that is equal to the sum of (a) all shares of Common Stock that are outstanding at the time in question, plus (b) all shares of Common Stock that are issuable upon conversion of all shares of Series A Preferred or other Convertible Securities and Rights or Options that are outstanding at the time in question.

“Convertible Securities” means evidences of Indebtedness, shares of Capital Stock or other Securities which are or may be at any time convertible into or exchangeable for Additional Shares of Common Stock. The term “Convertible Security” means one of the Convertible Securities.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar federal statute then in effect.

“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.

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“Issuer” means Granto, Inc., a Nevada corporation, and its successors.

“Majority Holders” means at any time the Holders of Warrants exercisable for a majority of the shares of Warrant Stock issuable under the Warrants at the time outstanding.

“Original Issue Date” means March 29, 2010.

“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 options, warrants and other Securities which are convertible into or exercisable or exchangeable for, and any right to subscribe for, shares of Common Stock that are outstanding at such time.

“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.

“Per Share Market Value” means on any particular date (a) the last closing price per share of the Common Stock on such date on the Trading Market or another registered national stock exchange on which the Common Stock is then listed, or if there is no closing price on such date, then the closing bid price on such date, or if there is no closing bid price on such date, then the closing price on such exchange or quotation system on the date nearest preceding such date, or (b) if the Common Stock is not listed then on a Trading Market or any registered national stock exchange, the last closing price for a share of Common Stock in the over-the-counter market, as reported by the Trading Market or any registered national stock exchange or in the National Quotation Bureau Incorporated or similar organization or agency succeeding to its functions of reporting prices) at the close of business on such date, or if there is no closing price on such date, then the closing bid price on such date, or (c) if the Common Stock is not then reported by the Trading Market or any registered national stock exchange or in the National Quotation Bureau Incorporated (or similar organization or agency succeeding to its functions of reporting prices), then the average of the “Pink Sheet” quotes for the five (5) Trading Days preceding such date of determination, or (d) if the Common Stock is not then publicly traded the fair market value of a share of Common Stock as determined by an Independent Appraiser selected in good faith by the Majority Holders; provided, however , that the Issuer, after receipt of the determination by such Independent Appraiser, shall have the right to select an additional Independent Appraiser, in which case, the fair market value shall be equal to the average of the determinations by each such Independent Appraiser; and provided, further, that all determinations of the Per Share Market Value shall be appropriately adjusted for any stock dividends, stock splits or other similar transactions during such period. The determination of fair market value by an Independent Appraiser shall be based upon the fair market value of the Issuer determined on a going concern basis as between a willing buyer and a willing seller and taking into account all relevant factors determinative of value, and shall be final and binding on all parties. In determining the fair market value of any shares of Common Stock, no consideration shall be given to any restrictions on transfer of the Common Stock imposed by agreement or by federal or state securities laws, or to the existence or absence of, or any limitations on, voting rights.

“Rights or Options” means warrants, options or other rights to purchase or acquire shares of Common Stock or Convertible Securities.

“Stock Purchase Agreement” means the Series A Preferred Stock Purchase Agreement dated as of March 29, 2010, among the Issuer and the Investors.

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“Investors” means the purchasers of the Preferred Stock and Warrants (as defined in the Stock Purchase Agreement), issued by the Issuer pursuant to the Stock Purchase Agreement.

“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, or any similar federal statute then in effect.

“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 a Trading Market, or (b) if the Common Stock is not traded on a Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (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 mean 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.

“Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board.

“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 of Directors (or other governing body) of such corporation, other than Capital Stock having such power only by reason of the happening of a contingency.

 “Warrants” means the Warrants issued and sold pursuant to the Stock Purchase Agreement, including, without limitation, this Warrant, and any other warrants of like tenor issued in substitution or exchange for any thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e) hereof or of any of such other Warrants.

“Warrant Price” initially means $4.17 per share as such price may be adjusted from time to time as shall result from the adjustments specified in this Warrant, including Section 4 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 this Warrant, after giving effect to all prior adjustments and increases to such number made or required to be made under the terms hereof.

“Warrant Stock” means Common Stock issuable upon exercise of any Warrant or Warrants or otherwise issuable pursuant to any Warrant or Warrants.

10.   Other Notices. In case at any time:

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

(b)   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

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

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

(e)   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

(f)   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.

11.   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 the Issuer and the Majority Holders; 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 exercised or modify any provision of this Section 11 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.

           12.   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, and the parties irrevocably waive any right to raise forum non conveniens 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 via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agree that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 12 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 or the Stock Purchase Agreement, 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.

13.   Notices. Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) immediately upon hand delivery, telecopy or facsimile at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

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If to the Issuer:	Granto, Inc. Attn: President Dongdu Room 321, No.475 Huanshidong Road Guangzhou City People’s Republic of China 510075 Phone: 011-86-20-8762-1778 Fax: 011-86-20-8762-2136
with copies (which copies shall not constitute notice) to:	Guzov Ofsink, LLC 600 Madison Avenue, 14th Floor New York, New York 10022 Attn: Darren Ofsink, Esq. Facsimile: 212-688-7273 e-mail:dofsink@golawintl.com
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 with copies to:
with copies (which copies shall not constitute notice) to:

Any party hereto may from time to time change its address for notices by giving at least ten (10) days written notice of such changed address to the other party hereto.

14.   Warrant Agent. The Issuer may, by written notice to the 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 subsection (d) of Section 3 hereof, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent.

15.   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.

16.   Remedies. The Issuer stipulates that the remedies at law of the Holder of this Warrant in the event of any default or threatened default by the Issuer in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate and that, to the fullest extent permitted by law, such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise.

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17.   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.

18.   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.

19.    No Rights as Stockholders. Prior to the exercise of this Warrant, the Holder shall not have or exercise any rights as a stockholder of the Issuer by virtue of its ownership of this Warrant.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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

GRANTO, INC.
By:
	Name: Kelvin Chan
	Title: President

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EXERCISE FORM

SERIES B WARRANT

GRANTO, INC.

The undersigned _______________, pursuant to the provisions of the within Warrant, hereby elects to purchase _____ shares of Common Stock of ________________________________ covered by the within 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.

The undersigned intends that payment of the Warrant Price shall be made as (check one):

Cash Exercise_______

Cashless Exercise_______

If the Holder has elected 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.

If the Holder has elected a Cashless Exercise, a certificate shall be issued to the Holder for the number of shares equal to the whole number portion of the product of the calculation set forth below, which is ___________. The Issuer shall pay a cash adjustment in respect of the fractional portion of the product of the calculation set forth below in an amount equal to the product of the fractional portion of such product and the Per Share Market Value on the date of exercise, which product is ____________.

X = Y - (A)(Y)

B

Where:

The number of shares of Common Stock to be issued to the Holder __________________(“X”).

The number of shares of Common Stock purchasable upon exercise of all of the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised ___________________________ (“Y”).

The Warrant Price ______________ (“A”).

The Per Share Market Value of one share of Common Stock _______________________ (“B”).

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ASSIGNMENT

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto __________________ the within Warrant and all rights evidenced thereby and does irrevocably constitute and appoint _____________, attorney, to transfer the said Warrant on the books of the within named corporation.

Dated:	Signature
	Address

PARTIAL ASSIGNMENT

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto __________________ the right to purchase _________ shares of Warrant Stock evidenced by the within Warrant together with all rights therein, and does irrevocably constitute and appoint ___________________, attorney, to transfer that part of the said Warrant on the books of the within named corporation.

Dated:	Signature
	Address

FOR USE BY THE ISSUER ONLY:

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

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EX-4.4

ESCROW AGREEMENT

This Escrow Agreement (this “Agreement”), entered into as of March 29, 2010, is by and among Granto, Inc., a Nevada corporation (the “Company”), certain officers of the Company who are a signatory hereto (“Management”) and The Crone Law Group (hereinafter referred to as the “Escrow Agent”).

BACKGROUND

This Agreement is made pursuant to the Series A Preferred Stock Purchase Agreement, dated as of the date hereof (the “Purchase Agreement”), between the Company and each Investor listed on the signature page thereto (the “Investors”).  All capitalized terms used, but not defined herein, shall have the meanings assigned them in the Purchase Agreement.

Pursuant to the Purchase Agreement, each Investor has agreed to purchase from the Company, and the Company has agreed to sell to each Investor, the Company’s Series A Preferred Stock and Warrants.  Under the terms of the Purchase Agreement, Management is required to deposit shares of Common Stock into escrow equal to the number of shares of Preferred Stock issued to the Investors.  The Company, Management and the Investors have agreed to establish an escrow on the terms and conditions set forth in this Agreement.  The Escrow Agent has agreed to act as escrow agent pursuant to the terms and conditions of this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the promises of the parties and the terms and conditions hereof, the parties hereby agree as follows:

1.      Appointment of Escrow Agent.  The Company and Management hereby appoint the Escrow Agent as escrow agent to act in accordance with the Purchase Agreement and the terms and conditions set forth in this Agreement, and the Escrow Agent hereby accepts such appointment and agrees to act in accordance with such terms and conditions.

2.      Establishment of Escrow.  On or before the date of this Agreement, Management shall deposit an aggregate of 2,768,721 shares of Common Stock (the “Shares”) with the Escrow Agent.  The certificates for the Shares will be registered in the name of Management and will be accompanied by duly endorsed and guaranteed stock power.  All certificates for Shares to be provided to the Escrow Agent shall be deposited with the Escrow Agent.  The Escrow Agent will be deemed the record holder of the Shares until disbursement and will be entitled to receive dividends and other distributions thereon and will be entitled to vote the Shares in accordance with the Investors’ instructions.  Escrow Agent is under no obligation to invest any such dividends or other distributions; provided, however, the Escrow Agent shall provide for the safekeeping of any money or property received by it as a distribution or dividend.

3.      Segregation.  The Shares shall be segregated from the assets of the Escrow Agent and held in trust for the benefit of Management and the Investors in accordance herewith.

4.      Receipt.  Subject to Sections 2 and 7(c) hereof, the Escrow Agent shall have no liability for any loss resulting from the deposit of the Shares.

5.      Transfer of the Shares.

(a)  Definitions.  In addition to the terms defined elsewhere in this Agreement the following terms have the meanings set forth in this Section 5(a):

 “Fiscal Year 2009 Performance Threshold” means the target amounts of (a) $13.0 million for the Company’s audited Net Income for the fiscal year ended December 31, 2009 and (b) $0.54 per share for the Company’s audited Net Income per share.

“Fiscal Year 2010 Performance Threshold” means the target amounts of (a) $14.8 million for the Company’s audited Net Income for the fiscal year ended December 31, 2010 and (b) $0.62 per share for the Company’s audited Net Income per share.

“Net Income” for any period means the consolidated net income of the Company and its subsidiaries calculated in accordance with United States generally accepted accounting principles consistently applied; plus, to the extent such amounts were deducted in the calculation of consolidated net income, the amount of any non-cash extraordinary charges relating solely to (a) the release of the Shares from Escrow or (b) the value of the beneficial conversion feature of the Series A Preferred Stock of the Company issued pursuant to the Purchase Agreement.  Net Income for any period shall also not include any charges or additions to net income of the Company in any period as a result of any fluctuation in the value of the Company’s Common Stock.

(b) Prior to April 15, 2010 with respect to the fiscal year ended December 31, 2009 and within 105 days after the end of the fiscal year ending December 31, 2010, respectively, the Company shall provide to the Investors a written report of its audited Net Income amount and per share Net Income amounts to the Investors and Escrow Agent.  If the Company does not achieve at least 100% of either amount set forth in the Fiscal Year 2009 Performance Threshold, or the Fiscal Year 2010 Performance Threshold, as the case may be, the written report for the applicable fiscal year shall be accompanied by a written notice from the Company which shall set forth the percentage amount by which the Company failed to achieve such amounts (the percentage amount of the deficit for such fiscal year is referred to as the “Shortfall”).

(c) If the Company does not achieve at least 50% of either amount set forth in the Fiscal Year 2009 Performance Threshold, then the Escrow Agent shall transfer 100% of the Shares to the Investors pro rata based on the number of shares of Preferred Stock purchased by Investor under the Purchase Agreement and still beneficially owned by such Investor at such date.

(d) If the Company achieves at least 50%, but less than 100% of either amount set forth in the Fiscal Year 2009 Performance Threshold, then the Escrow Agent shall transfer an amount of the Shares to the Investors equal to the product obtained by multiplying (i) two times the Shortfall by (ii) the total number of Shares held in escrow.  Such Shares will be transferred pro rata based on the number of shares of Preferred Stock purchased under the Purchase Agreement by the Investor and still beneficially owned by such Investor at such date.  For example, if the Company achieves 80% of one of the amounts set forth in the Fiscal Year 2009 Performance Threshold and thus reports a 20% Shortfall, then the Escrow Agent shall transfer 40% of the Shares then held in escrow to the Investors.

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(e)  If any escrow Shares are delivered to Investors pursuant to Sections 5 (c) or (d), Management shall within 5 business days of the Company’s report and notice delivered pursuant to Section 5(b), replenish the escrow account with an equal number of shares of Common Stock so that upon such replenishment the Escrow Agent shall again hold in escrow a number of shares of Common Stock equal to one hundred (100%) percent of the shares of Preferred Stock purchased by the Investors under the Purchase Agreement.  Such additional shares of Common Stock together with the original Shares, if any, remaining in the escrow will be deemed to be “Shares” for purposes of this Agreement.

(f) If the Company does not achieve at least 50% of either amount set forth in the Fiscal Year 2010 Performance Threshold, then the Escrow Agent shall transfer 100% of the Shares to the Investors pro rata based on the number of shares of Preferred Stock purchased under the Purchase Agreement and still beneficially owned by such Investor at such date.

(g) If the Company achieves at least 50%, but less than 100% of either amount set forth in the Fiscal Year 2010 Performance Threshold, then the Escrow Agent shall transfer an amount of the Shares to the Investors equal to the product obtained by multiplying (i) two times the Shortfall by (ii) the total number of Shares held in escrow (or which should be held in escrow pursuant to the replenishment provisions set forth in Section 5(e)). Such Shares will be transferred pro rata based on the number of shares of Preferred Stock purchased under the Purchase Agreement and still beneficially owned by such Investor at such date.  For example, if the Company achieves 80% of one of the amounts set forth in the Fiscal Year 2010 Performance Threshold and thus reports a 20% Shortfall, then the Escrow Agent shall disburse 40% of the Shares to the Investors.

(h) Escrow Agent shall transfer the Shares to Investors within 5 business days of the receipt of such Shares from the Company’s transfer agent following the receipt of written instructions from each Investor specifying the amount of Shares to be delivered to such Investor pursuant to the report and notice delivered pursuant to Section 5(b).  Any Shares remaining in the escrow after the distribution, if any, to the Investors following the delivery of the report and notice pursuant to Section 5(b) for Fiscal Year ending December 31, 2010, will be returned to Management (within 5 business days after the distribution to Investors if any, or within 5 business days after delivery of the report if there is no Shortfall) pro rata to amount delivered into escrow.  The Escrow Agent will not be responsible for calculating the number of Shares to be delivered to Investors and Management and will rely on the written instructions from the Investors and Management.

(i) This Escrow Agreement shall terminate and be of no further force or effect on the transfer of all Shares.

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6.      Registration Rights and Procedures.

(a) Registration on Request of Investors.

(i) Request. Investors may request in writing no earlier than 30 days prior to the delivery of Shares to Investors that the Company effect the registration for resale under the Securities Act of all or part of Investors' Shares on a resale registration statement on Form S-1. Any such request will specify (a) the number of Shares proposed to be sold and (b) the intended method of disposition thereof.  Subject to the other provisions of this Section 6(a), the Company shall promptly and as expeditiously as possible, use its reasonable best efforts to effect the registration under the Securities Act, of:

(1) the Shares that the Company has been so requested to register by Investors ("Investors Registrable Securities");

(2) all shares of the same class(es) or series as the Investors Registrable Securities that have been requested to be included by the Company in such registration ("Company Registrable Securities"); and

(3) all shares of the same class(es) or series as the Investors Registrable Securities which have been requested to be included by holders of Registrable Securities other than Investors ("Other Holder Registrable Securities").

(ii) Limited Registration Rights. The Company shall be required to effect up to two (2) requests by Investors for the registration of Registrable Securities on Form S-1 pursuant to this Section 6(a).

(iii) Expenses; Indemnification. The Company will pay all Registration Expenses in connection with registrations pursuant to this Section 6(a) and the indemnification provisions of Section 7.1(f) of the Purchase Agreement shall apply to all registrations pursuant to this Section 6(a).

(iv) Effective Registration Statement. A registration requested pursuant to this Section 6(a) will not be deemed to have been effected:

(1) unless a registration statement with respect thereto has become effective and remained effective in compliance with the provisions of the Securities Act with respect to the disposition of all Investors Registrable Securities covered by such registration statement until the earlier of (x) such time as all of such Investors Registrable Securities have been disposed of in accordance with the intended methods of disposition thereof set forth in such registration statement or (y) 180 days after the effective date of such registration statement; or

(2) if after it has become effective, the registration statement is interfered with by any stop order, injunction or other order or requirement of the SEC or other governmental agency or authority and is not thereafter effective.

 (v) Postponements in Requested Registrations.

(1) If upon receipt of a registration request, the Company shall furnish to Investors a certificate signed by the CEO or any other Senior Officer stating that the Company has pending or in process a material transaction (the "Transaction Delay Notice"), the disclosure of which would, in the good faith judgment of the Board, after consultation with its outside counsel, materially and adversely affect such transaction and that the filing of a registration statement would require disclosure of such material transaction within 48 hours of such receipt of such request, the Company shall not be required to comply with its obligations under Section 6(a)(i) until 60 days after Investors' receipt of such notice.

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(2) Notwithstanding the foregoing provisions of this Section 6(a)(v), the Company shall be entitled to serve only one Transaction Delay Notice within any period of 365 consecutive days.

 (b) Incidental Registrations.

(i) Right to Piggyback.  If the Company or any other person that has demand registration rights (a "Third Party Registrant") at any time after the delivery of any Shares to the Investors proposes to register equity securities under the Securities Act (other than a registration on Form S-4 or S-8, or any successor or other forms promulgated for similar purposes), whether or not for sale for its own account, in a manner which would permit registration of the Shares for sale to the public under the 1933 Act, the Company will, at each such time, give prompt written notice to Investors of its intention to do so and of Investors' rights under this Agreement.  Upon the written request of Investors made within 15 days after the receipt of any such notice (which request shall specify the Shares intended to be disposed of by Investors), the Company will use its reasonable best efforts to effect the registration under the 1933 Act of all Shares which the Company has been so requested to register by Investors; provided, however, that (a) if, at any time after giving written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, the Company or such Third Party Registrant shall determine for any reason not to proceed with the proposed registration of the securities to be sold by it, the Company may, at its election, give written notice of such determination to Investors and, thereupon, shall be relieved of its obligation to register any Shares in connection with such terminated registration (but not from its obligation to pay the Registration Expenses in connection therewith), and (b) if such registration involves an underwritten offering, Investors shall enter into an agreement with the underwriters to sell their Shares to the underwriters selected by the Company or such Third Party Registrant on substantially the same terms and conditions as apply to the Company or such Third Party Registrant, with such differences, including any with respect to indemnification and liability insurance, as may be customary or appropriate in combined primary and secondary offerings. Notwithstanding the foregoing, if a registration requested pursuant to this Section 6(b) involves an underwritten public offering, Investors may elect, in writing prior to the effective date of the registration statement filed in connection with such registration, not to register all or any part of their Shares in connection with such registration. The registrations provided for in this Section 6(b) are in addition to, and not in lieu of, registrations made in accordance with Section 6(a).

(ii) Expenses; Indemnification. The Company will pay all Registration Expenses in connection with each registration of Shares requested pursuant to this Section 6(b) and the indemnification provisions of Section 7.1(f) of the Purchase Agreement shall apply to all registrations pursuant to this Section 6(b).

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7.       Interpleader; Exculpation and Indemnification of Escrow Agent.

(a)             Should any controversy arise among the parties hereto with respect to this Agreement or with respect to the right to receive the Shares, the Escrow Agent shall have the right to consult counsel and/or to institute an appropriate interpleader action to determine the rights of the parties.  The Escrow Agent is also hereby authorized to institute an appropriate interpleader action upon receipt of a written letter of direction executed by the parties so directing the Escrow Agent.  If the Escrow Agent is directed to institute an appropriate interpleader action, it shall institute such action not prior to thirty (30) days after receipt of such letter of direction and not later than sixty (60) days after such date.  Any interpleader action instituted in accordance with this Section 6 shall be filed in any court of competent jurisdiction in New York, New York, and the portion of the Shares in dispute shall be deposited with the court and in such event the Escrow Agent shall be relieved of and discharged from any and all obligations and liabilities under and pursuant to this Agreement with respect to that portion of the Shares.

(b) The Escrow Agent is not a party to, and is not bound by or charged with notice of any agreement out of which this escrow may arise.  The Escrow Agent acts under this Agreement as a depositary only and is not responsible or liable in any manner whatsoever for the sufficiency, correctness, genuineness or validity of the subject matter of the escrow, or any part thereof, or for the form or execution of any notice given by any other party hereunder, or for the identity or authority of any person executing any such notice or depositing the Shares.  The Escrow Agent will have no duties or responsibilities other than those expressly set forth herein.  The Escrow Agent will be under no liability to anyone by reason of any failure on the part of any party hereto (other than the Escrow Agent) or any maker, endorser or other signatory of any document to perform such person’s or entity’s obligations hereunder or under any such document.  Except for this Agreement and instructions to the Escrow Agent pursuant to the terms of this Agreement, the Escrow Agent will not be obligated to recognize any agreement between or among any or all of the persons or entities referred to herein, notwithstanding its knowledge thereof.

(c) The Escrow Agent will not be liable for any action taken or omitted by it, or any action suffered by it to be taken or omitted, in good faith and in the exercise of its own best judgment, and may rely conclusively on, and will be protected in acting upon, any order, notice, demand, certificate, or opinion or advice of counsel (including counsel chosen by the Escrow Agent), statement, instrument, report or other paper or document (not only as to its due execution and the validity and effectiveness of its provisions, but also as to the truth and acceptability of any information therein contained) which is reasonably believed by the Escrow Agent to be genuine and to be signed or presented by the proper person or persons.  The duties and responsibilities of the Escrow Agent hereunder shall be determined solely by the express provisions of this Agreement and no other or further duties or responsibilities shall be implied, including, but not limited to, any obligation under or imposed by any laws of the State of New York upon fiduciaries.

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(d) The Escrow Agent will be indemnified and held harmless by the Company and Management jointly and severally from and against any expenses, including reasonable attorneys’ fees and disbursements, damages or losses suffered by the Escrow Agent in connection with any claim or demand, which, in any way, directly or indirectly, arises out of or relates to this Agreement or the services of the Escrow Agent hereunder; except, to the extent that the Escrow Agent is guilty of willful misconduct, fraud or gross negligence under this Agreement.  For this purpose, the term “attorneys' fees” includes fees payable to any counsel retained by the Escrow Agent in connection with its services under this Agreement and, with respect to any matter arising under this Agreement as to which the Escrow Agent performs legal services, its standard hourly rates and charges then in effect.  Promptly after the receipt by the Escrow Agent of notice of any such demand or claim or the commencement of any action, suit or proceeding relating to such demand or claim, the Escrow Agent will notify the other parties hereto in writing.  For the purposes hereof, the terms “expense” and “loss” will include all amounts paid or payable to satisfy any such claim or demand, or in settlement of any such claim, demand, action, suit or proceeding settled with the express written consent of the parties hereto, and all costs and expenses, including, but not limited to, reasonable attorneys’ fees and disbursements, paid or incurred in investigating or defending against any such claim, demand, action, suit or proceeding.  The provisions of this Section 7 shall survive the termination of this Agreement.

8.      Resignation of Escrow Agent.  At any time, upon ten (10) days’ written notice to the parties hereto, the Escrow Agent may resign and be discharged from its duties as Escrow Agent hereunder.  As soon as practicable after its resignation, the Escrow Agent will promptly turn over to a successor escrow agent appointed by the parties hereto all monies and property held hereunder upon presentation of a document appointing the new escrow agent and evidencing its acceptance thereof.  If, by the end of the 10-day period following the giving of notice of resignation by the Escrow Agent, the parties hereto shall have failed to appoint a successor escrow agent, the Escrow Agent may interplead the Shares into the registry of any court having jurisdiction.

9.      Records.  The Escrow Agent shall maintain accurate records of all transactions hereunder.  Promptly after the termination of this Agreement or as may reasonably be requested by the parties hereto from time to time before such termination, the Escrow Agent shall provide the parties hereto, as the case may be, with a complete copy of such records, certified by the Escrow Agent to be a complete and accurate account of all such transactions.  The authorized representatives of each of the parties hereto shall have access to such books and records at all reasonable times during normal business hours upon reasonable notice to the Escrow Agent.

10.   Escrow Agent Fees.  The Company agrees to pay the Escrow Agent a non-refundable fee of $2,500 per year for its services under this Agreement, which fee is payable in advance.  Any out-of-pocket fees will be payable by the Company upon invoice.

11.   Attorneys’ Fees.  If any action at law or in equity, including an action for declaratory relief, is brought to enforce or interpret the provisions of this Agreement, the prevailing party shall be entitled to recover reasonable attorneys’ fees from the other party (unless such other party is the Escrow Agent), which fees may be set by the court in the trial of such action or may be enforced in a separate action brought for that purpose, and which fees shall be in addition to any other relief that may be awarded.

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12.   Notice.  All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (a) on the date of service if served personally on the party to whom notice is to be given, (b) on the day of transmission if sent by facsimile/email transmission to the facsimile number/email address given below, and telephonic confirmation of receipt is obtained promptly after completion of transmission, (c) on the day after delivery to Federal Express or similar overnight courier or the Express Mail service maintained by the United States Postal Service or (d) on the fifth day after mailing, if mailed to the party to whom notice is to be given, by first class mail, registered or certified, postage prepaid, and properly addressed, return receipt requested, to the party as follows:

If to the Escrow Agent:	The Crone Law Group
	101 Montgomery Street, Suite 1950
	San Francisco, California 94104
	Attention:  Mark E. Crone, Esq.
	Facsimile:  (415) 955-8910

If to the Company:	Dongdu Room 321
	No. 475 Huanshidong Road
	Guangzhou City,
	People’s Republic of China 510075
	Attention: Kelvin Chan, President
	Fax: 011-86-20-8762-2136
If to Management:	Dongdu Room 321
	No. 475 Huanshidong Road
	Guangzhou City,
	People’s Republic of China 510075
	Attention: Kelvin Chan
	Fax: 011-86-20-8762-2136

or to such other address and to the attention of such other person as any of the above may have furnished to the other parties in writing and delivered in accordance with the provisions set forth above.

13.  Execution in Counterparts; Facsimile Execution.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  Facsimile execution and delivery of this Agreement is legal, valid and binding for all purposes.

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14.  Assignment and Modification.  This Agreement and the rights and obligations hereunder of any of the parties hereto may not be assigned without the prior written consent of the other parties hereto.  Subject to the foregoing, this Agreement will be binding upon and inure to the benefit of each of the parties hereto and their respective successors and permitted assigns.  No other person will acquire or have any rights under, or by virtue of, this Agreement.  No portion of the Shares shall be subject to interference or control by any creditor of any party hereto, or be subject to being taken or reached by any legal or equitable process in satisfaction of any debt or other liability of any such party hereto prior to the disbursement thereof to such party hereto in accordance with the provisions of this Agreement.  This Agreement may be changed or modified only in writing signed by all of the parties hereto.

15.  APPLICABLE LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, USA APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED THEREIN.  THE PARTIES EXPRESSLY WAIVE SUCH DUTIES AND LIABILITIES, IT BEING THEIR INTENT TO CREATE SOLELY AN AGENCY RELATIONSHIP AND HOLD THE ESCROW AGENT LIABLE ONLY IN THE EVENT OF ITS WILLFUL MISCONDUCT, FRAUD, OR GROSS NEGLIGENCE.  ANY LITIGATION CONCERNING THE SUBJECT MATTER OF THIS AGREEMENT SHALL BE EXCLUSIVELY PROSECUTED IN THE COURTS OF NEW YORK COUNTY, NEW YORK, USA, AND ALL PARTIES CONSENT TO THE EXCLUSIVE JURISDICTION AND VENUE OF THOSE COURTS.

16.   Headings.  The headings contained in this Agreement are for convenience of reference only and shall not affect the construction of this Agreement.

 [Signature Page Follows]

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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.

The Company:	GRANTO, Inc.
	By:	/s/ Kelvin Chana
	Name:	Kelvin Chan
	Title:	President
Management:
	/s/ Kelvin Chan
	Name: Kelvin Chan

Escrow Agent:	THE CRONE LAW GROUP
	By:	/s/  Mark Crone
	Name:	Mark Crone
	Title:	Partner

EX-4.5

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.

SERIES C WARRANT TO PURCHASE

SHARES OF COMMON STOCK

OF

GRANTO, INC.

Expires March 29, 2015

No.: C	Number of Shares:
Date of Issuance: March 29, 2010

FOR VALUE RECEIVED, the undersigned, Granto, Inc., a Nevada corporation (together with its successors and assigns, the “Issuer”), hereby certifies that ____________________________________ (the “Holder”) or its registered assigns is entitled to subscribe for and purchase, during the Term (as hereinafter defined), ___________________________________ 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 9 hereof. This Warrant has been issued in exchange for certain Series A Common Stock Purchase Warrants to purchase common stock of Rongfu Aquaculture, Inc. that were issued to the Holder in January 2010.

1.   Term. The term of this Warrant shall commence on March 29, 2010 and shall expire at 6:00 p.m., Eastern Time, on March 29, 2015 (such period being the “Term” and such date, the “Termination Date”).

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

EX-4.6

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.

SERIES D WARRANT TO PURCHASE

SHARES OF COMMON STOCK

OF

GRANTO, INC.

Expires March 29, 2015

No.: D	Number of Shares:
Date of Issuance: March 29, 2010

FOR VALUE RECEIVED, the undersigned, Granto, Inc., a Nevada corporation (together with its successors and assigns, the “Issuer”), hereby certifies that ____________________________________ (the “Holder”) or its registered assigns is entitled to subscribe for and purchase, during the Term (as hereinafter defined), ___________________________________ 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 9 hereof. This Warrant has been issued in exchange for certain Series B Common Stock Purchase Warrants to purchase common stock of Rongfu Aquaculture, Inc. that were issued to the Holder in January 2010.

1.   Term. The term of this Warrant shall commence on March 29, 2010 and shall expire at 6:00 p.m., Eastern Time, on March 29, 2015 (such period being the “Term” and such date, the “Termination Date”).

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 for such number of shares of Common Stock set forth above.

(b)   Method of Exercise. The Holder hereof may exercise this Warrant, in whole or in part, by the surrender of this Warrant (with the exercise form attached hereto duly executed (“Notice of Exercise”)) at the principal office of the Issuer, and by the payment to the Issuer 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 respect to which this Warrant is then being exercised, payable at such Holder’s election (i) by certified or official bank check or by wire transfer to an account designated by the Issuer, (ii) by “cashless exercise” in accordance with the provisions of subsection (c) of this Section 2, or (iii) by a combination of the foregoing methods of payment selected by the Holder of this Warrant.

(c)   Cashless Exercise. Notwithstanding any provision herein to the contrary, if (i) the Per Share Market Value of one share of Common Stock is greater than the Warrant Price (at the date of calculation as set forth below) and (ii) subject to the three sentences following the formula set forth below in this Section 2(c), a registration statement under the Securities Act providing for the resale of the Warrant Stock (a “Registration Statement”) is not then in effect by the one year anniversary date  Original Issue Date or not effective at any time during the Effectiveness Period (as defined in the Stock Purchase Agreement) after such one year anniversary in accordance with the terms of the Stock Purchase Agreement, in lieu of exercising this Warrant by payment of cash, the Holder may elect to exercise this Warrant by a cashless exercise and shall receive the number of shares of Common Stock equal to an amount (as determined below) by surrender of this Warrant at the principal office of the Issuer together with the properly endorsed Notice of Exercise in which event the Issuer shall issue to the Holder a number of shares of Common Stock computed using the following formula:

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	X = Y - (A)(Y)
	B
Where	X =	the number of shares of Common Stock to be issued to the Holder.
	Y =	the number of shares of Warrant Stock issuable upon exercise of this Warrant in accordance with the terms of this Warrant by means of a cash exercise rather than a cashless exercise.
	A =	the Warrant Price.
	B =	the Per Share Market Value of one share of Common Stock on the Trading Day immediately preceding the date of such election.

 If a Registration Statement covering the resale of all of the Warrant Stock is not in effect by the one year anniversary of the Original Issue Date or not effective at any time during the Effectiveness Period solely because of the Issuer’s cut-back of shares included in the Registration Statement due to SEC Restrictions (as such term is defined in the Stock Purchase Agreement), then the Holder may not exercise this Warrant by a cashless exercise; provided that within six months after the effective date of the Registration Statement or such shorter or longer period as may be permitted or required under SEC staff interpretations the Issuer shall have filed an additional registration statement covering the resale of all Warrant Stock not included in the Registration Statement (the “Excluded Shares”) and have used its reasonable best efforts to cause such registration statement to be declared effective by the SEC. If due to additional SEC Restrictions relating to the subsequent registration statement some or all of the Excluded Shares are not included in such registration statement or the effectiveness of such registration statement is not maintained, then every six months (or such shorter or longer period as may be permitted or required under SEC staff interpretations) after an  additional registration statement is declared effective the Issuer shall file a further registration covering the resale of the Excluded Shares not or no longer covered by an effective registration statement and use its reasonable best efforts to cause such registration statement to be declared effective by the SEC. If the Issuer does not comply with the foregoing, then the Holder may exercise this Warrant by cashless exercise.

(d)   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 hereof 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 the resale of 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 a sale or other exemption from registration by which the shares may be issued without a restrictive legend. The Holder shall deliver this original Warrant, or an indemnification undertaking with respect to such Warrant in the case of its loss, theft or destruction, at such time that this Warrant is fully exercised. With respect to partial exercises of this Warrant, the Issuer shall keep written records for the Holder of the number of shares of Warrant Stock exercised as of each date of exercise.

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(e)   Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. In addition to any other rights available to the Holder, if the Issuer fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Stock pursuant to an exercise on or before the Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Stock which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Issuer shall: (1) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of shares of Warrant Stock that the Issuer was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of shares of Warrant Stock for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Issuer timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Issuer shall be required to pay the Holder $1,000. The Holder shall provide the Issuer written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Issuer. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Issuer’s failure to timely deliver certificates representing shares of Common Stock upon exercise of this Warrant as required pursuant to the terms hereof.

(f)   Transferability of Warrant. Subject to Section 2(h) hereof, this Warrant may be transferred by a Holder, in whole or in part, to an “accredited investor” as defined in Regulation D under the Securities Act 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 hereof in person or by duly authorized attorney, upon surrender of this Warrant at the principal office of the Issuer, 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 at the principal office of the Issuer for Warrants to purchase the same aggregate 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.

(g)   Continuing Rights of Holder. The Issuer will, 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.

(h)   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:

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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.

(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. Such proposed transfer will not be effected until: (a) either (i) the Issuer has received an unqualified 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, (ii) a registration statement under the Securities Act covering such proposed disposition has been filed by the Issuer with the United States Securities and Exchange Commission and has become effective under the Securities Act, or (iii) the Issuer has received other evidence reasonably satisfactory to the Issuer that such registration and qualification under the Securities Act and state securities laws are not required; and (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 will respond to any such notice from a holder within five (5) Trading Days. In the case of any proposed transfer under this Section 2(h), the Issuer will 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 any 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. The restrictions on transfer contained in this Section 2(h) shall be in addition to, and not by way of limitation of, any other restrictions on transfer contained in any other section of this Warrant. 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 or the Stock Purchase Agreement).

(i)   Accredited Investor Status. In no event may the Holder exercise this Warrant in whole or in part unless the Holder is an “accredited investor” as defined in Regulation D under the Securities Act.

3.   Stock Fully Paid; Reservation and Listing of Shares; Covenants.

(a)   Stock Fully Paid. The Issuer represents, warrants, covenants and agrees that all shares of Warrant Stock which may be issued upon the exercise of this Warrant or otherwise hereunder will, when issued in accordance with the terms of this Warrant, be duly authorized, validly issued, fully paid and non-assessable and free from all taxes, liens and charges created by or through the Issuer. The Issuer further covenants and agrees that during the period within which this Warrant may be exercised, the Issuer will at all times have authorized and reserved for the purpose of the issuance upon exercise of this Warrant a number of authorized but unissued shares of Common Stock equal to at least the number of shares of Common Stock issuable upon exercise of this Warrant without regard to any limitations on exercise.

(b)   Reservation. If any shares of Common Stock required to be reserved for issuance upon exercise of this Warrant or as otherwise provided hereunder require registration or qualification with any Governmental Authority under any federal or state law before such shares may be so issued, the Issuer will in good faith use its best efforts as expeditiously as possible at its expense to cause such shares to be duly registered or qualified, in accordance with the terms and provisions of the Stock Purchase Agreement. If the Issuer shall list any shares of Common Stock on any securities exchange or market it will, at its expense, list thereon, and maintain and increase when necessary such listing, of, all shares of Warrant Stock from time to time issued upon exercise of this Warrant or as otherwise provided hereunder (provided that such Warrant Stock has been registered pursuant to a registration statement under the Securities Act then in effect), and, to the extent permissible under the applicable securities exchange rules, all unissued shares of Warrant Stock which are at any time issuable hereunder, so long as any shares of Common Stock shall be so listed. The Issuer will also so list on each securities exchange or market, and will maintain such listing of, any other securities which the Holder of this Warrant shall be entitled to receive upon the exercise of this Warrant if at the time any securities of the same class shall be listed on such securities exchange or market by the Issuer.

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(c)   Covenants. The Issuer shall not by any action including, without limitation, amending the Certificate of Incorporation or the by-laws of the Issuer, or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of the Holder hereof against dilution (to the extent specifically provided herein) or impairment. Without limiting the generality of the foregoing, the Issuer will (i) not permit the par value, if any, of its Common Stock to exceed the then effective Warrant Price, (ii) not amend or modify any provision of the Certificate of Incorporation or by-laws of the Issuer in any manner that would adversely affect the rights of the Holders of the Warrants, (iii) take all such action as may be reasonably necessary in order that the Issuer may validly and legally issue fully paid and nonassessable shares of Common Stock, free and clear of any liens, claims, encumbrances and restrictions (other than as provided herein) upon the exercise of this Warrant, and (iv) use its best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be reasonably necessary to enable the Issuer to perform its obligations under this Warrant.

(d)   Loss, Theft, Destruction of Warrants. Upon receipt of evidence satisfactory to the Issuer of the ownership of and the loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction, upon receipt of indemnity or security satisfactory to the Issuer or, in the case of any such mutilation, upon surrender and cancellation of such Warrant, the Issuer will make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and representing the right to purchase the same number of shares of Common Stock.

(e)   Payment of Taxes. The Issuer will pay any documentary stamp taxes attributable to the initial issuance of the Warrant Stock issuable upon exercise of this Warrant; provided, however, that the Issuer shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issuance or delivery of any certificates representing Warrant Stock in a name other than that of the Holder in respect to which such shares are issued.

4.   Adjustment of Warrant Price. The price at which such shares of Warrant Stock may be purchased upon exercise of this Warrant shall be subject to adjustment from time to time as set forth in this Section 4. The Issuer shall give the Holder notice of any event described below which requires an adjustment pursuant to this Section 4 in accordance with the notice provisions set forth in Section 5.

(a)   Recapitalization, Reorganization, Reclassification, Consolidation, Merger or Sale.

(i)   In case the Issuer after the Original Issue Date shall do any of the following (each, a “Triggering Event”): (a) consolidate or merge with or into any other Person and the Issuer shall not be the continuing or surviving corporation of such consolidation or merger, or (b) permit any other Person to consolidate with or merge into the Issuer and the Issuer shall be the continuing or surviving Person but, in connection with such consolidation or merger, any Capital Stock of the Issuer shall be changed into or exchanged for Securities of any other Person or cash or any other property, or (c) transfer all or substantially all of its properties or assets to any other Person, or (d) effect a capital reorganization or reclassification of its Capital Stock, then, and in the case of each such Triggering Event, proper provision shall be made to the Warrant Price and the number of shares of Warrant Stock that may be purchased upon exercise of this Warrant so that, upon the basis and the terms and in the manner provided in this Warrant, the Holder of this Warrant shall be entitled upon the exercise hereof at any time after the consummation of such Triggering Event, to the extent this Warrant is not exercised prior to such Triggering Event, to receive at the Warrant Price in effect at the time immediately prior to the consummation of such Triggering Event, in lieu of the Common Stock issuable upon such exercise of this Warrant prior to such Triggering Event, the Securities, cash and property to which such Holder would have been entitled upon the consummation of such Triggering Event if such Holder had exercised the rights represented by this Warrant immediately prior thereto (including the right of a shareholder to elect the type of consideration it will receive upon a Triggering Event), subject to adjustments (subsequent to such corporate action) as nearly equivalent as possible to the adjustments provided for elsewhere in this Section 4.  Immediately upon the occurrence of a Triggering Event, the Issuer shall notify the Holder in writing of such Triggering Event and provide the calculations in determining the number of shares of Warrant Stock issuable upon exercise of the new warrant and the adjusted Warrant Price. Upon the Holder’s request, the continuing or surviving corporation as a result of such Triggering Event shall issue to the Holder a new warrant of like tenor evidencing the right to purchase the adjusted number of shares of Warrant Stock and the adjusted Warrant Price pursuant to the terms and provisions of this Section 4(a)(i).   

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(ii)   In the event that the Holder has elected not to exercise this Warrant prior to the consummation of a Triggering Event, so long as the surviving entity pursuant to any Triggering Event is a company that has a class of equity securities registered pursuant to the Exchange Act and its common stock is listed or quoted on a national securities exchange, national automated quotation system or the OTC Bulletin Board, the surviving entity and/or each Person (other than the Issuer) which may be required to deliver any Securities, cash or property upon the exercise of this Warrant as provided herein shall assume, by written instrument delivered to, and reasonably satisfactory to, the Holder of this Warrant, (A) the obligations of the Issuer under this Warrant (and if the Issuer shall survive the consummation of such Triggering Event, such assumption shall be in addition to, and shall not release the Issuer from, any continuing obligations of the Issuer under this Warrant) and (B) the obligation to deliver to such Holder such Securities, cash or property as, in accordance with the foregoing provisions of this subsection (a), such Holder shall be entitled to receive, and the surviving entity and/or each such Person shall have similarly delivered to such Holder an opinion of counsel for the surviving entity and/or each such Person, which counsel shall be reasonably satisfactory to such Holder, or in the alternative, a written acknowledgement executed by the President or Chief Financial Officer of the Issuer, stating that this Warrant shall thereafter continue in full force and effect and the terms hereof (including, without limitation, all of the provisions of this subsection (a)) shall be applicable to the Securities, cash or property which the surviving entity and/or each such Person may be required to deliver upon any exercise of this Warrant or the exercise of any rights pursuant hereto.

(b)   Stock Dividends, Subdivisions and Combinations. If at any time the Issuer shall:

(i)     make or issue or set a record date for the holders of the Common Stock for the purpose of entitling them to receive a dividend payable in, or other distribution of, shares of Common Stock,

(ii)    subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock, or

(iii)   combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock,

then (1) the number of shares of Common Stock for which this Warrant is exercisable immediately after the occurrence of any such event shall be adjusted to equal the number of shares of Common Stock which 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 (2) 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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(c)   Certain Other Distributions. If at any time the Issuer shall make or issue or set a record date for the holders of the Common Stock for the purpose of entitling them to receive any dividend or other distribution of:

(i)   cash,

(ii)   any evidences of its indebtedness, any shares of stock of any class or any other securities or property of any nature whatsoever (other than cash, Common Stock Equivalents or Additional Shares of Common Stock), or

(iii)   any warrants or other rights to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property of any nature whatsoever (other than cash, Common Stock Equivalents or Additional Shares of Common Stock),

then (1) the number of shares of Common Stock for which this Warrant is exercisable shall be adjusted to equal the product of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such adjustment multiplied by a fraction (A) the numerator of which shall be the Per Share Market Value of Common Stock at the date of taking such record and (B) the denominator of which shall be such Per Share Market Value minus the amount allocable to one share of Common Stock of any such cash so distributable and of the fair value (as determined in good faith by the Board of Directors of the Issuer and supported by an opinion from an investment banking firm mutually agreed upon by the Issuer and the Holder) of any and all such evidences of indebtedness, shares of stock, other securities or property or warrants or other subscription or purchase rights so distributable, and (2) 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. A reclassification of the Common Stock (other than a change in par value, or from par value to no par value or from no par value to par value) into shares of Common Stock and shares of any other class of stock shall be deemed a distribution by the Issuer to the holders of its Common Stock of such shares of such other class of stock within the meaning of this Section 4(c) and, if the outstanding shares of Common Stock shall be changed into a larger or smaller number of shares of Common Stock as a part of such reclassification, such change shall be deemed a subdivision or combination, as the case may be, of the outstanding shares of Common Stock within the meaning of Section 4(b).

(d)   Issuance of Additional Shares of Common Stock.

(i)      During the Term, in the event the Issuer shall issue any Additional Shares of Common Stock (otherwise than as provided in the foregoing subsections (a) through (c) of this Section 4), at a price per share less than the Warrant Price then in effect or without consideration, then the Warrant Price upon each such issuance shall be reduced (calculated to the nearest cent), as of the close of business on the date of the issuance or sale, to the amount obtained by multiplying the Warrant Price by a fraction, (1) the numerator of which shall be the sum of (A) the number of Common Stock Equivalents Outstanding immediately prior to the issuance or sale of Additional Shares of Common Stock, plus (B) the quotient obtained by dividing the Aggregate Consideration Received (as defined in Section 4(d)(ii)) by the Issuer for the total number of Additional Shares of Common Stock so issued and/or sold (and/or deemed so issued and sold) by the Warrant Price in effect immediately prior to the issuance or sale, and (2) the denominator of which shall be the sum of (A) the number of Common Stock Equivalents Outstanding immediately prior to the issuance or sale (or deemed issuance or sale), plus (B) the number of Additional Shares of Common Stock so issued or sold (and/or deemed so issued and sold).

(ii)   The “Aggregate Consideration Received” by the Issuer for any issuance or sale (or deemed issuance or sale) of securities shall (i) to the extent it consists of cash, be computed at the gross amount of cash received by the Issuer (before deduction of any underwriting or similar commission, compensation or concessions paid or allowed by the Issuer in connection with the issuance or sale and without deduction of any expenses payable by the Issuer), (ii) to the extent it consists of property other than cash, be computed at the fair market value of that property as determined in good faith by the Board, and (c) if Additional Shares of Common Stock, Convertible Securities or Rights or Options to purchase either Additional Shares of Common Stock or Convertible Securities are issued or sold together with other stock or securities or other assets of the Issuer for a consideration which covers both, be computed as the portion of the consideration so received that may be reasonably determined in good faith by the Board to be allocable to such Additional Shares of Common Stock, Convertible Securities or Rights or Options, respectively.

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No adjustment of the number of shares of Common Stock for which this Warrant shall be exercisable shall be made pursuant to this Section 4(d) upon the issuance of any Additional Shares of Common Stock which are issued pursuant to the exercise of any Common Stock Equivalents, if any such adjustment shall previously have been made upon the issuance of such Common Stock Equivalents (or upon the issuance of any warrant or other rights therefor) pursuant to Section 4(e).

(e)   Issuance of Common Stock Equivalents. In the event the Issuer shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a distribution of, or shall in any manner (whether directly or by assumption in a merger in which the Issuer is the surviving corporation) issue or sell, any Common Stock Equivalents, whether or not the rights to exchange or convert thereunder are immediately exercisable, and the price per share for which Common Stock is issuable upon such conversion or exchange shall be less than the Warrant Price in effect immediately prior to the time of such issue or sale, or if, after any such issuance of Common Stock Equivalents, the price per share for which Additional Shares of Common Stock may be issuable thereafter is amended or adjusted, and such price as so amended shall be less than the Warrant Price in effect at the time of such amendment or adjustment, then the Warrant Price then in effect shall be adjusted as provided in Section 4(d). No further adjustments of the number of shares of Common Stock for which this Warrant is exercisable and the Warrant Price then in effect shall be made upon the actual issue of such Common Stock upon conversion or exchange of such Common Stock Equivalents.

(f)   Superseding Adjustment. If, at any time after any adjustment of the Warrant Price then in effect shall have been made pursuant to Section 4(e) as the result of any issuance of Common Stock Equivalents, and such Common Stock Equivalents, or the right of conversion or exchange in such Common Stock Equivalents, shall expire, and all of such or the right of conversion or exchange with respect to all of such Common Stock Equivalents shall not have been converted or exercised, then, on the date that such right of conversion or exchange of the Common Stock Equivalents shall be set to expire, such previous adjustment shall be rescinded and annulled and the Warrant Price then in effect shall be adjusted to the Warrant Price in effect immediately prior to the issuance of such Common Stock Equivalents, subject to any further adjustments pursuant to this Section 4.

(g)   Other Provisions Applicable to Adjustments under this Section. The following provisions shall be applicable to the making of adjustments of the number of shares of Common Stock for which this Warrant is exercisable and the Warrant Price then in effect provided for in this Section 4:

(i)   When Adjustments to Be Made. The adjustments required by this Section 4 shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that any adjustment of the number of shares of Common Stock for which this Warrant is exercisable that would otherwise be required may be postponed (except in the case of a subdivision or combination of shares of the Common Stock, as provided for in Section 4(b)) up to, but not beyond the date of exercise if such adjustment either by itself or with other adjustments not previously made adds or subtracts less than one percent (1%) of the shares of Common Stock for which this Warrant is exercisable immediately prior to the making of such adjustment. Any adjustment representing a change of less than such minimum amount (except as aforesaid) which is postponed shall be carried forward and made as soon as such adjustment, together with other adjustments required by this Section 4 and not previously made, would result in a minimum adjustment or on the date of exercise. For the purpose of any adjustment, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence.

(ii)   Fractional Interests. In computing adjustments under this Section 4, fractional interests in Common Stock shall be taken into account to the nearest one one-hundredth (1/100th) of a share.

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(iii)   When Adjustment Not Required. If the Issuer shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or distribution or subscription or purchase rights and shall, thereafter and before the distribution to stockholders thereof, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights, then thereafter no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled.

(h)   Form of Warrant after Adjustments. The form of this Warrant need not be changed because of any adjustments in the Warrant Price or the number and kind of Securities purchasable upon the exercise of this Warrant.

5.   Notice of Adjustments. Whenever the Warrant Price or Warrant Share Number shall be adjusted pursuant to Section 4 hereof (for purposes of this Section 5, each an “adjustment”), the Issuer shall cause its Chief Financial Officer or other authorized officer, as the case may be, to prepare and execute a certificate setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated (including a description of the basis on which the Board made any determination hereunder), and the Warrant Price and Warrant Share Number after giving effect to such adjustment, and shall cause copies of such certificate to be delivered to the Holder of this Warrant promptly after each adjustment. Any dispute between the Issuer and the Holder of this Warrant with respect to the matters set forth in such certificate may at the option of the Holder of this Warrant be submitted to an Independent Appraiser, provided that the Issuer shall have ten (10) days after receipt of notice from such Holder of its selection of such firm to object thereto, in which case such Holder shall select another such firm and the Issuer shall have no such right of objection. The Independent Appraiser selected by the Holder of this Warrant as provided in the preceding sentence shall be instructed to deliver a written opinion as to such matters to the Issuer and such Holder within thirty (30) days after submission to it of such dispute. Such opinion shall be final and binding on the parties hereto. The reasonable costs and expenses of the Independent Appraiser in making such determination shall be paid by the Issuer, in the event the Holder's calculation was correct, or by the Holder, in the event the Issuer’s calculation was correct, or equally by the Issuer and the Holder in the event that neither the Issuer's or the Holder's calculation was correct.

6.   Fractional Shares. No fractional shares of Warrant Stock will be issued in connection with any exercise hereof, but in lieu of such fractional shares, the Issuer shall, at its option, (a) pay an amount in cash equal to the Warrant Price multiplied by such fraction or (b) round the number of shares to be issued upon exercise up to the nearest whole number of shares.

7.   Ownership Cap and Exercise Restriction. Notwithstanding anything to the contrary set forth in this Warrant, at no time may the Holder exercise this Warrant 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 at such time to exceed, when aggregated with all other shares of Common Stock owned by the Holder and its affiliates at such time, the number of shares of Common Stock which would result in the Holder, its affiliates, any investment manager having discretionary investment authority over the accounts or assets of the Holder and its affiliates, or any other persons whose beneficial ownership of Common Stock would be aggregated for purposes of Section 13(d) and Section 16 of the Exchange Act, beneficially owning (as determined in accordance with Section 13(d) of the Exchange Act and the rules thereunder) in excess of 9.9% of the then issued and outstanding shares of Common Stock; provided, however, that upon the Holder providing the Issuer with sixty-one (61) days notice (pursuant to this certificate) (the “Waiver Notice”) that the Holder would like to waive this Section 7 with regard to any or all shares of Common Stock issuable upon exercise of this Warrant, this Section 7 shall be of no force or effect with regard to those shares of Common Stock referenced in the Waiver Notice; provided, further, that during the sixty-one (61) day period prior to the Termination Date, the Holder may waive this Section 7 by providing a Waiver Notice at any time during such sixty-one (61) day period; provided, further, that any Waiver Notice provided during the sixty-one (61) day period prior to the Termination Date will not be effective until the Termination Date.

            8.   Registration Rights. The Holder of this Warrant is entitled to the benefit of certain registration rights with respect to the shares of Warrant Stock issuable upon the exercise of this Warrant pursuant to that certain Series A Preferred Stock Purchase Agreement, of even date herewith, by and among the Issuer and the investors listed on the signature page thereto (the “Stock Purchase Agreement”) and the registration rights with respect to the shares of Warrant Stock issuable upon the exercise of this Warrant by any subsequent Holder may only be assigned in accordance with the terms and provisions therein.

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

“Additional Shares of Common Stock” means all shares of Common Stock issued by the Issuer after the Original Issue Date, and all shares of Other Common, if any, issued by the Issuer after the Original Issue Date, except: (i) Common Stock issued upon conversion of, or payable as a dividend on, the Issuer’s Series A Preferred Stock, (ii) securities issued pursuant to the conversion or exercise of convertible or exercisable securities issued or outstanding on or prior to the date of the Stock Purchase Agreement or issued pursuant to the Stock Purchase Agreement (so long as the conversion or exercise price in such securities are not amended to lower such price and/or adversely affect the Holders) which have previously been disclosed to the Holder, (iii) the Warrant Stock, (iv) securities issued to employees, officers or directors of, or contractors, consultants or advisers to, the Issuer pursuant to the any stock option plan, stock purchase right or arrangement approved by the Board that do not exceed in the aggregate 10% of the Issuer’s Common Stock at the time of issuance, (v) securities issued in connection with the acquisition of another unrelated corporation or entity with an enterprise value of at least $1,000,000 by the Issuer by consolidation, merger, purchase of all or substantially all of the assets, or other reorganization approved unanimously by the Board, and (vi) securities issued to non-affiliated parties in connection with services rendered or to be rendered to the Issuer that do not exceed in the aggregate in any period of 24 months 2% of the Issuer’s Common Stock at the time of the Original Issue Date.

“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.

“Certificate of Incorporation” means the Articles of Incorporation of the Issuer 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.

“Common Stock Equivalent” means any means the number of shares of Common Stock that is equal to the sum of (a) all shares of Common Stock that are outstanding at the time in question, plus (b) all shares of Common Stock that are issuable upon conversion of all shares of Series A Preferred or other Convertible Securities and Rights or Options that are outstanding at the time in question.

“Convertible Securities” means evidences of Indebtedness, shares of Capital Stock or other Securities which are or may be at any time convertible into or exchangeable for Additional Shares of Common Stock. The term “Convertible Security” means one of the Convertible Securities.

 “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar federal statute then in effect.

“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.

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“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 Granto, Inc., a Nevada corporation, and its successors.

“Majority Holders” means at any time the Holders of Warrants exercisable for a majority of the shares of Warrant Stock issuable under the Warrants at the time outstanding.

“Original Issue Date” means March 29, 2010.

“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 options, warrants and other Securities which are convertible into or exercisable or exchangeable for, and any right to subscribe for, shares of Common Stock that are outstanding at such time.

“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.

“Per Share Market Value” means on any particular date (a) the last closing price per share of the Common Stock on such date on the Trading Market or another registered national stock exchange on which the Common Stock is then listed, or if there is no closing price on such date, then the closing bid price on such date, or if there is no closing bid price on such date, then the closing price on such exchange or quotation system on the date nearest preceding such date, or (b) if the Common Stock is not listed then on a Trading Market or any registered national stock exchange, the last closing price for a share of Common Stock in the over-the-counter market, as reported by the Trading Market or any registered national stock exchange or in the National Quotation Bureau Incorporated or similar organization or agency succeeding to its functions of reporting prices) at the close of business on such date, or if there is no closing price on such date, then the closing bid price on such date, or (c) if the Common Stock is not then reported by the Trading Market or any registered national stock exchange or in the National Quotation Bureau Incorporated (or similar organization or agency succeeding to its functions of reporting prices), then the average of the “Pink Sheet” quotes for the five (5) Trading Days preceding such date of determination, or (d) if the Common Stock is not then publicly traded the fair market value of a share of Common Stock as determined by an Independent Appraiser selected in good faith by the Majority Holders; provided, however , that the Issuer, after receipt of the determination by such Independent Appraiser, shall have the right to select an additional Independent Appraiser, in which case, the fair market value shall be equal to the average of the determinations by each such Independent Appraiser; and provided, further, that all determinations of the Per Share Market Value shall be appropriately adjusted for any stock dividends, stock splits or other similar transactions during such period. The determination of fair market value by an Independent Appraiser shall be based upon the fair market value of the Issuer determined on a going concern basis as between a willing buyer and a willing seller and taking into account all relevant factors determinative of value, and shall be final and binding on all parties. In determining the fair market value of any shares of Common Stock, no consideration shall be given to any restrictions on transfer of the Common Stock imposed by agreement or by federal or state securities laws, or to the existence or absence of, or any limitations on, voting rights.

“Rights or Options” means warrants, options or other rights to purchase or acquire shares of Common Stock or Convertible Securities.

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“Stock Purchase Agreement” means the Series A Preferred Stock Purchase Agreement dated as of March 29, 2010, among the Issuer and the Investors.

“Investors” means the purchasers of the Preferred Stock and Warrants (as defined in the Stock Purchase Agreement), issued by the Issuer pursuant to the Stock Purchase Agreement.

“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, or any similar federal statute then in effect.

“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 a Trading Market, or (b) if the Common Stock is not traded on a Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (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 mean 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.

“Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board.

“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 of Directors (or other governing body) of such corporation, other than Capital Stock having such power only by reason of the happening of a contingency.

“Warrants” means the Warrants issued and sold pursuant to the Stock Purchase Agreement, theWarrants issued in exchange for certain Common Stock Purchase Warrants to purchase common stock ofRongfuAquaculture, Inc. that were issued to the Holder in January 2010, including, without limitation, this Warrant, and any other warrants of like tenor issued in substitution or exchange for any thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e) hereof or of any of such other Warrants.

“Warrant Price” initially means $2.93 per share as such price may be adjusted from time to time as shall result from the adjustments specified in this Warrant, including Section 4 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 this Warrant, after giving effect to all prior adjustments and increases to such number made or required to be made under the terms hereof.

“Warrant Stock” means Common Stock issuable upon exercise of any Warrant or Warrants or otherwise issuable pursuant to any Warrant or Warrants.

10.   Other Notices. In case at any time:

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

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(b)   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

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

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

(e)   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

(f)   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.

11.   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 the Issuer and the Majority Holders; 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 exercised or modify any provision of this Section 11 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.

           12.   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, and the parties irrevocably waive any right to raise forum non conveniens 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 via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agree that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 12 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 or the Stock Purchase Agreement, 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.

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13.   Notices. Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) immediately upon hand delivery, telecopy or facsimile at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be: 

If to the Issuer:	Granto, Inc. Attn: President Dongdu Room 321, No.475 Huanshidong Road Guangzhou City People’s Republic of China 510075 Phone: 011-86-20-8762-1778 Fax: 011-86-20-8762-2136
with copies (which copies shall not constitute notice) to:	Guzov Ofsink, LLC 600 Madison Avenue, 14th Floor New York, New York 10022 Attn: Darren Ofsink, Esq. Facsimile: 212-688-7273 e-mail:dofsink@golawintl.com
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 with copies to:
with copies (which copies shall not constitute notice) to:

Any party hereto may from time to time change its address for notices by giving at least ten (10) days written notice of such changed address to the other party hereto.

14.   Warrant Agent. The Issuer may, by written notice to the 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 subsection (d) of Section 3 hereof, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent.

15.   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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16.   Remedies. The Issuer stipulates that the remedies at law of the Holder of this Warrant in the event of any default or threatened default by the Issuer in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate and that, to the fullest extent permitted by law, such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise.

17.   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.

18.   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.

19.    No Rights as Stockholders. Prior to the exercise of this Warrant, the Holder shall not have or exercise any rights as a stockholder of the Issuer by virtue of its ownership of this Warrant.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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

GRANTO, INC.
By:
	Name: Kelvin Chan
	Title: President

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EXERCISE FORM

SERIES D WARRANT

GRANTO, INC.

The undersigned _______________, pursuant to the provisions of the within Warrant, hereby elects to purchase _____ shares of Common Stock of ________________________________ covered by the within 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.

The undersigned intends that payment of the Warrant Price shall be made as (check one):

Cash Exercise_______

Cashless Exercise_______

If the Holder has elected 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.

If the Holder has elected a Cashless Exercise, a certificate shall be issued to the Holder for the number of shares equal to the whole number portion of the product of the calculation set forth below, which is ___________. The Issuer shall pay a cash adjustment in respect of the fractional portion of the product of the calculation set forth below in an amount equal to the product of the fractional portion of such product and the Per Share Market Value on the date of exercise, which product is ____________.

X = Y - (A)(Y)

B

Where:

The number of shares of Common Stock to be issued to the Holder __________________(“X”).

The number of shares of Common Stock purchasable upon exercise of all of the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised ___________________________ (“Y”).

The Warrant Price ______________ (“A”).

The Per Share Market Value of one share of Common Stock _______________________ (“B”).

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ASSIGNMENT

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto __________________ the within Warrant and all rights evidenced thereby and does irrevocably constitute and appoint _____________, attorney, to transfer the said Warrant on the books of the within named corporation.

Dated:	Signature
	Address

PARTIAL ASSIGNMENT

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto __________________ the right to purchase _________ shares of Warrant Stock evidenced by the within Warrant together with all rights therein, and does irrevocably constitute and appoint ___________________, attorney, to transfer that part of the said Warrant on the books of the within named corporation.

Dated:	Signature
	Address

FOR USE BY THE ISSUER ONLY:

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

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EX-10.1

Amendment No. 1 to the Call Option Agreement

This Amendment No. 1, dated March ____, 2010 (the “Amendment”), to the Call Option  Agreement, dated December 29, 2009 (the “Original Agreement”), is made by and among _____________, a resident of the People’s Republic of China (the “Purchaser”) and Kelvin Chan, a resident of Hong Kong (the “Seller”). Capitalized terms used, but not defined herein, shall have the meanings ascribed to such terms in the Original Agreement.

RECITALS

WHEREAS, pursuant to the Original Agreement the Seller has granted the Purchaser an option during the Exercise Period to purchase from the Seller a portion of the Seller’s Shares, which term refers to shares of Common Stock, par value $.001 per share, of Rongfu Aquaculture, Inc. (Rongfu Common Stock”), a Delaware corporation (“Rongfu”);

WHEREAS, simultaneously with the execution of this Amendment, the Seller and certain other holders of Rongfu Common Stock are consummating a Share Exchange Agreement with Granto, Inc., a Nevada corporation (“Granto”) and certain other persons pursuant to which the Seller is transferring to Granto all of the Rongfu Common Stock held by the Seller in exchange for the issuance to the Seller of an equivalent number of shares of Common Stock, par value $.001 per share of Granto (“Granto Common Stock”); and

WHEREAS, the parties wish to amend the Original Agreement in all respects necessary to provide that the shares subject to the option shall be the same number of shares of Granto Common Stock rather than Rongfu Common Stock and in certain other respects.

NOW, THEREFORE, in consideration of the mutual promises herein, contained and intending to be legally bound, the parties hereby agree that the Original Agreement shall be amended as follows:

A. The Original Agreement is hereby amended in all respects so that that the shares subject to the option granted by the Seller to the Purchaser thereunder shall be the same number of shares of Granto Common Stock rather than Rongfu Common Stock.

B. All references in the operative sections of the Original Agreement to “the Shell Company” or “the Company” shall mean Granto rather than  Rongfu.

C. Except as amended hereby, the Original Agreement shall remain in full force and effect.

This Amendment shall be governed by, and construed in accordance with, the internal laws of the State of New York.

“Call Price” means, with respect to any exercise of the Call Right, US Dollar 0.1 per share of the Seller’s Shares subject to any Call Exercise Notice.

IN WITNESS WHEREOF, the parties have executed and delivered this Amendment on the day and year first above written.

PURCHASER

SELLER

Kevin Chan

CALL OPTION AGREEMENT

This CALL OPTION AGREEMENT (this “Agreement”) is made and entered into as of December 29, 2009 (the “Effective Date”), among ______________ with the ID number _______________, a resident of the People’s Republic of China (the “Purchaser”) and Kelvin Chan with the passport number H0062741, a resident of Hong Kong (the “Seller”). Purchaser and Seller are also referred to herein together as the “Parties” and individually as a “Party.”

RECITALS

WHEREAS, RONGFU AQUACULTURE, INC, a United States-domiciled shell company (the “Shell Company”), FLOURISHING BLESSING (HONG KONG) CO. LTD incorporated in the Hong Kong (the “HK Company”) and the sole shareholder of the HK Company Kelvin CHAN has entered into a Share Exchange Agreement (the “Exchange Agreement”) as of December 29, 2009. Pursuant to the Exchange Agreement, the Shell Company is expected to acquire 100% of the issued and outstanding capital stock of the FLOURISHING BLESSING (HONG KONG) CO. LTD;

WHEREAS, at the closing of the Exchange Agreement, the Seller will hold directly 18,000,000 shares of common stock of the Shell Company (the “Common Stock”);

WHEREAS, the Seller has agreed with the Purchaser to enter into this Agreement, as a condition to the Purchaser continuing to provide services to Guangzhou Flourishing Blessing Heng Seng Agricultural Technology Co., Ltd. (the “Company”), a PRC company, which is the wholly owned subsidiary of HK Company, as its deputy general manager;

WHEREAS, the Seller has determined that it is in her best interest to receive benefits from the Purchaser’s performance as the deputy general manager of the Company;

WHEREAS, the Seller desires to grant to Purchaser an option to acquire __________ of the shares of Common Stock to be issued to him pursuant to the Exchange Agreement (for purposes of this Agreement, including the Call Right described herein, the “Seller’s Shares”) pursuant to the terms and conditions set forth herein;

NOW, THEREFORE, the Parties, in consideration of the foregoing premises and the terms, covenants and conditions set forth below, and for other good and valuable consideration, receipt of which is acknowledged, hereby agree as follows:

AGREEMENT 1.

DEFINITIONS; INTERPRETATION

1.1. Terms Defined in this Agreement. The following terms when used in this Agreement shall have the following definitions:

“Bankruptcy Law” means any Law of any jurisdiction relating to bankruptcy, insolvency, corporate reorganization, company arrangement, civil rehabilitation, special liquidation, moratorium, readjustment of debt, appointment of a conservator, trustee or receiver, or similar debtor relief.

“Business Day” means any day on which commercial banks are required to be open in the United States.

“Conditions” means Conditions 1 through 4, as defined below, in the aggregate.

“Condition 1” means: the entry by the Purchaser and the Company into a binding employment agreement for a term of not less than five years for Purchaser to serve as the Company’s deputy general manager.

“Condition 2” means the Company achieving not less than 1 million US Dollar in after-tax net income, as determined under United States Generally Accepted Accounting Principles consistently applied (“US GAAP”) for the fiscal year ended December 31, 2010.

“Condition 3” means the Company achieving not less than 1.5 million US Dollar in after-tax profits, as determined under US GAAP, for the fiscal year ending December 31, 2011.

“Condition 4” means the Company achieving not less than 2 million US Dollar in after-tax profits, as determined under US GAAP, for the fiscal year ending December 31, 2012.

"Distributions" means any cash proceeds arising from or in respect of, or in exchange for, or accruing to or in consequence of the Seller’s Shares from the date hereof to the Expiration Date, including without limitation, the Dividends.

"Dividends" means the dividends declared by the Shell Company and accrued in respect of the Seller’s Shares (whether or not such dividends shall have been paid and received by the Purchaser or her Nominee(s)).

“Government Authority” means any: (a) nation, principality, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (b) federal, state, local, municipal, foreign or other government; (c) governmental or quasi governmental authority of any nature (including any governmental division, subdivision, department, agency, bureau, branch, office, commission, council, board, instrumentality, officer, official, representative, organization, unit, body or Person and any court or other tribunal); or (d) individual, Person or body exercising, or entitled to exercise, any executive, legislative, judicial, administrative, regulatory, police, military or taxing authority or power of any nature.

“Law” means any federal, state, local, municipal, foreign or other law, statute, legislation, constitution, principle of common law, resolution, ordinance, code, order, edict, decree, proclamation, treaty, convention, rule, regulation, permit, ruling, directive, pronouncement, requirement (licensing or otherwise), specification, determination, decision, opinion or interpretation that is, has been or may in the future be issued, enacted, adopted, passed, approved, promulgated, made, implemented or otherwise put into effect by or under the authority of any Government Authority.

"Nominee" means such person nominated by the Purchaser in the Transfer Notice to be the transferee of the Call Right or the Seller’s Shares;

“Person” means any individual, firm, company, corporation, limited liability company, unincorporated association, partnership, trust, joint venture, governmental authority or other entity, and shall include any successor (by merger or otherwise) of such entity.

“Transfer Notice” means the notice substantially in the form set out in Appendix B.

1.2.Interpretation.

(a) Certain Terms. The words “hereof,” “herein,” “hereunder” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement. The term “including” is not limited and means “including without limitation.”

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(b)            Section References; Titles and Subtitles. Unless otherwise noted, all references to Sections herein are to Sections of this Agreement. The titles, captions and headings of this Agreement are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

(c)            Reference to Entities, Agreements, Statutes. Unless otherwise expressly provided herein, (i) references to a Person include its successors and permitted assigns, (ii) references to agreements (including this Agreement) and other contractual instruments shall be deemed to include all subsequent amendments, restatements and other modifications thereto or supplements thereof and (iii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such statute or regulation.

2. CALL RIGHT

2.1. Call Right. The Purchaser shall have, during the Exercise Period (as defined below), and when a Condition is met, the right and option to purchase from the Seller, and upon the exercise of such right and option the Seller shall have the obligation to sell to the Purchaser or her Nominee(s), a portion of the Seller’s Shares identified in the Call Exercise Notice (the “Call Right”). Purchaser or Nominee(s) shall be permitted to purchase, and Seller shall be obligated to sell, the following number of Seller’s Shares upon the attainment of the following Conditions:

Condition	Number of Seller’s Shares as to which there is a Call Right
Condition 1		50	%
Condition 2		20	%
Condition 3		20	%
Condition 4		10	%

However, in case that the Company achieve not less than 2 million US Dollar in after-tax profits, as determined under US GAAP, for the fiscal year ending December 31, 201 1then the Purchaser or his Nominee(s) shall be permitted to purchase and the Seller shall be obligated to sell 30% of the Shares owned by the Seller and it shall be considered that both Condition 3 and Condition 4 have been met; for purpose of avoiding doubt, there will be no more call right to be granted to the Purchaser even if the Company achieves not less than 2 million US Dollar in after-tax profits, as determined under US GAAP, for the fiscal year ending December 31, 2012.

Notwithstanding anything in this Agreement, in case that the Seller violates any provisions of this Agreement, the Purchaser shall receive an irrevocable Call Right to any and all of the Seller’s Shares then held by the Seller, without any regard to the Conditions being met. The Purchaser shall be entitled to exercise such Call Right immediately and the Seller shall transfer to the Purchaser or her Nominee(s) all the Seller’s Shares immediately upon the Purchaser’s or her Nominee(s)’s exercise of such Call Right.

2.2. Call Period. The Call Right shall be exercisable by Purchaser, by delivering a Call Exercise Notice at any time during the period (the “Exercise Period”) commencing on the date hereof and ending at 6:30 p.m. (New York time) on the fifth anniversary date therefrom (such date or the earlier expiration of the Call Right is referred to herein as the “Expiration Date”).

2.3. Nominees: The Purchaser may, at any time during the Exercise Period, at her sole discretion, nominate one or more person(s) (each a “Nominee”) to be the transferee(s) of whole or part of her Call Right, who shall hold and/or exercise the transferred Call Right on behalf of the Purchaser.

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2.4. Exercise Process. In order to exercise the Call Right during the Exercise Period, the Purchaser or her Nominee(s) shall deliver to the Seller, a written notice of such exercise substantially in the form attached hereto as Appendix A (a “Call Exercise Notice”) to such address or facsimile number as set forth therein. The Call Exercise Notice shall indicate the number of the Seller’s Shares as to which the Purchaser or her Nominee(s) is/are then exercising her Call Right and the aggregate Call Price. Provided the Call Exercise Notice is delivered in accordance with Section 5.4 to the Seller on or before 6:30 p.m. (New York time) on a Business Day, the date of exercise (the “Exercise Date”) of the Call Right shall be the date of such delivery of such Call Exercise Notice. In the event the Call Exercise Notice is delivered after 6:30 p.m. (New York time) on a Business Day or on a day which is not a Business Day, the Exercise Date shall be deemed to be the first Business Day after the date of such delivery of such Call Exercise Notice. The delivery of a Call Exercise Notice in accordance herewith shall constitute a binding obligation (a) on the part of the Purchaser or her Nominee(s) to purchase, and (b) on the part of the Seller to sell, the Seller’s Shares subject to such Call Exercise Notice in accordance with the terms of this Agreement.

2.5. Call Price. If the Call Right is exercised pursuant to this Section 2, as payment for the Seller’s Shares being purchased by the Purchaser or Nominee(s) pursuant to the Call Right, such Purchaser or Nominee(s) shall pay the aggregate Call Price to the Seller within fifteen (15) Business Days of the Exercise Date.

2.6  Delivery of the Shares. Upon the receipt of a Call Exercise Notice, the Seller shall deliver, or take all steps necessary to cause to be delivered the Seller’s Shares being purchased pursuant to such Call Exercise Notice within three (3) Business Days of the date of a Call Exercise Notice.

2.7  Transfer Notice: In case that the Purchaser transfers any or all of her Call Right to one or more Nominees in accordance with Section 2.3 above, the Purchaser shall provide a Transfer Notice to the Seller.

2.8  Voting Trust: The Seller hereby agrees to irrevocably appoint the Purchaser with the exclusive right to exercise, on his behalf, all of his voting rights of the Seller’s Shares in accordance with the relevant laws and Articles of Association of the Shell Company; the Purchaser shall have right to vote on behalf of the Seller to vote for relevant issues including but not limited to selling or transferring all or any of his shares of the Shell Company, and to appoint and elect the directors of the Shell Company, the HK Company and the Company before all Seller’s Shares are transferred to the Purchaser. The Purchaser agrees to accept such authorization.

3.    ENCUMBRANCES; TRANSFERS, SET-OFF AND WITHHOLDINGS

3.1. Encumbrances. Upon exercise of the Call Right, the Seller’s Shares being purchased shall be sold, transferred and delivered to the Purchaser free and clear of any claim, pledge, charge, lien, preemptive rights, restrictions on transfers (except as required by securities laws of the United States), proxies, voting agreements and any other encumbrance whatsoever.

3.2 Transfers. Prior to the Expiration Date, the Seller shall continue to own, free and clear of any hypothecation, pledge, mortgage or other encumbrance, except pursuant to this Agreement and except in favor of the Collateral Agent (as defined below) for the benefit of the Purchaser, such amount of the Seller’s Shares as may be required from time to time in order for the Purchaser to exercise her Call Right in full.

3.3. Set-off. The Purchaser shall be entitled to receive all of the Seller’s Shares subject to the exercise of a Call Right, and for the purposes of this Agreement, Seller hereby waives, as against the Purchaser or her Nominee(s), all rights of set-off or counterclaim that would or might otherwise be available to the Seller.

3.4 Escrow of the Seller’s Shares.

 (a) Upon execution of this Agreement, the Seller shall deliver to Global Law Office, with an address at 15th Floor, Tower 1, China Central Place, No.81 Jianguo Road, Beijing, China 100025, as Collateral Agent (the “Collateral Agent”), stock certificates representing the Seller’s Shares. The stock certificates representing the Seller’s Shares (together with duly executed stock powers in blank) shall be held by the Collateral Agent.

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 (b) Upon receipt of a Call Exercise Notice, the Collateral Agent shall promptly deliver the Seller’s Shares being purchased pursuant to such Call Exercise Notice in accordance with the instructions set forth therein. In the event that the Collateral Agent shall receive notice from the Parties that the Conditions have not been met, the Seller’s Shares shall be distributed in accordance with their instructions.

4. REPRESENTATIONS,WARRANTIES AND COVENANTS.

4.1. Representations and Warranties by the Seller. The Seller represents and warrants to the Purchaser that:

(a)           Valid and Binding Obligations. This Agreement, and all agreements and documents executed and delivered pursuant to this Agreement, constitute valid and binding obligations of the Seller, enforceable against such Seller in accordance with its terms, subject to applicable Bankruptcy Laws and other laws or equitable principles of general application affecting the rights of creditors generally.

(b)           No Conflicts. Neither the execution or delivery of this Agreement by the Seller nor the fulfillment or compliance by the Seller with any of the terms hereof shall, with or without the giving of notice and/or the passage of time, (i) conflict with, or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract or any judgment, decree or order to which Seller is subject or by which the Seller is bound, or (ii) require any consent, license, permit, authorization, approval or other action by any Person or Government Authority which has not yet been obtained or received. The execution, delivery and performance of this Agreement by the Seller or compliance with the provisions hereof by the Seller do not, and shall not, violate any provision of any Law to which the Seller is subject or by which it is bound.

(c)           No Actions. There are no lawsuits, actions (or to the best knowledge of the Seller, investigations), claims or demands from any other third party, or other proceedings pending or, to the best of the knowledge of the Seller, threatened against the Seller which, if resolved in a manner adverse to the Seller, would adversely affect the right or ability of the Seller to carry out its obligations set forth in this Agreement (the “Actions”) as of the execution of this Agreement. The Seller further warrants and covenants that such actions will not occur after the execution of this Agreement.

(d)           Title. The Seller owns the Seller’s Shares free and clear of any claim, pledge, charge, lien, preemptive rights, restrictions on transfers, proxies, voting agreements and any other encumbrance whatsoever, except as contemplated by this Agreement. The Seller has not entered into or is a party to any agreement that would cause the Seller to not own such Seller’s Shares free and clear of any encumbrance, except as contemplated by this Agreement.

(e)           Exercise of Rights. Without first obtaining written instruction from the Purchaser, the Seller will not exercise any rights in connection with the Seller’s Shares to which the Seller is entitled as of the date of this Agreement, including but not limited to voting rights, share transfer right, dividends rights, preemptive right or any rights in connection with pledge, proxy, charge, lien. The Seller further warrants and covenants that it will, unconditionally and immediately, exercise any rights in connection with the Seller’s Shares in compliance with the Purchaser’s written instruction upon its receipt of such written instruction.

4.2 Representations and Warranties by Purchaser. The Purchaser represents and warrants to the Seller that:

(a)           Valid and Binding Obligations. This Agreement, and all agreements and documents executed and delivered pursuant to this Agreement, constitute valid and binding obligations of the Purchaser, enforceable against the Purchaser in accordance with its terms, subject to applicable Bankruptcy Laws and other laws or equitable principles of general application affecting the rights of creditors generally.

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(b)           No Conflicts. Neither the execution nor delivery of this Agreement by the Purchaser nor the fulfillment or compliance by the Purchaser with any of the terms hereof shall, with or without the giving of notice and/or the passage of time, (i) conflict with, or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract or any judgment, decree or order to which Purchaser is subject or by which Purchaser is bound, or (ii) require any consent, license, permit, authorization, approval or other action by any Person or Government Authority which has not yet been obtained or received. The execution, delivery and performance of this Agreement by the Purchaser or compliance with the provisions hereof by the Purchaser do not, and shall not, violate any provision of any Law to which Purchaser is subject or by which it is bound.

   (c) No Actions. There are no lawsuits, actions (or to the best knowledge of the Purchaser, investigations), claims or demands or other proceedings pending or, to the best of the knowledge of the Purchaser, threatened against the Purchaser which, if resolved in a manner adverse to the Purchaser, would adversely affect the right or ability of the Purchaser to carry out her obligations set forth in this Agreement.

4.3.          Covenants.

(a)           Without the prior written consent of the Purchaser, the Seller shall vote the Seller’s Shares such that the Shell Company shall not, (i) issue or create any new shares, equity, registered capital, ownership interest, 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 Shell Company or other similar equivalent arrangements, (ii) alter the shareholding structure of the Shell Company and (or) the HK Company, (iii) cancel or otherwise alter the Seller’s Shares, (iv) amend the charter or the by-laws of the Shell Company and (or) the HK Company, (v) liquidate or wind up the Shell Company and (or) the HK Company, (vi) sell, transfer, assign, hypothecate or otherwise reduce the value of any assets held by the Shell Company including but without limitation, any and all shares of the HK Company held by the Shell Company and the Company held by the HK Company or (vi) act or omit to act in such a way that would be detrimental to the interest of the Purchaser in the Seller’s Shares, (vii) transfer, assign, pledge, hypothecate or vest any option on his shares in the Shell Company to any third party. The Seller shall cause the Shell Company, the HK Company and the Company to disclose to the Purchaser true copies of all the financial, legal and commercial documents of the Shell Company, the HK Company and the Company and the resolutions of the shareholders and the board of directors.

(b)           The Seller agrees that the Purchaser or her Nominee(s) shall be entitled to all the Distributions in respect of the Seller’s Shares. In the event that any such Distributions have been received by the Seller for any reason, the Seller shall, at the request of the Purchaser, pay an amount equivalent to the Distributions received by him to the Purchaser or her Nominee(s) at the time of the exercise of the Call Right by the Purchaser or her Nominee(s).

(c)           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 foregoing 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.

8

(d)           If at any time: (i) the Seller fails to deliver the Seller’s Shares in accordance with this Agreement, if such failure is not remedied on or before the third Business Day after notice of such failure is given to the Seller by the Purchaser; (ii) the Seller fails to comply with or perform any agreement, covenant or obligation to be complied with or performed by the Seller in accordance with this Agreement if such failure is not remedied on or before the third Business Day after notice of such failure is given to the Seller by the Purchaser; or (iii) the Seller (1) becomes insolvent or is unable to pay his debts or fails or admits in writing his inability generally to pay his debts as they become due; (2) makes a general assignment, arrangement or composition with or for the benefit of his creditors; (3) institutes or has instituted against his a proceeding seeking a judgment of insolvency or bankruptcy or any relief under any Bankruptcy Law, (4) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for him or for all or substantially all his assets; (5) has a secured party that takes possession of all or substantially all his assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all his assets, (6) causes or is subject to any event with respect to him which, under the applicable Law, has an analogous effect to any of the events described in clauses (1) through (5); or (7) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts, then the Call Right shall become immediately exercisable in respect of all of the Seller’s Shares without further regard to the occurrence of any of the Conditions as per Section 2 of this Agreement.

5. MISCELLANEOUS.

5.1. Governing Law; Jurisdiction. This Agreement shall be construed according to, and the rights of the Parties shall be governed by, the laws of the State of [New York],, without reference to any conflict of laws principle that would cause the application of the laws of any jurisdiction other than [New York],. Each Party hereby irrevocably submits to the exclusive jurisdiction of the federal and state courts sitting in the City of [New York], for the adjudication of any dispute hereunder or in connection herewith, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that such, suit, action or proceeding is brought in an inconvenient forum, or that the venue of such suit, action or proceeding is improper.

5.2. Successors and Assigns. No Party may assign this Agreement or any rights or obligations hereunder without the prior written consent of the other Party. The provisions hereof shall inure to the benefit of, and be binding upon, the successors and permitted assigns of the Parties.

5.3. Entire Agreement; Amendment. This Agreement constitutes the full and entire understanding and agreement between and among the Parties with regard to the subject matter hereof. Any term of this Agreement may be amended only with the written consent of each Party.

5.4. Notices and Other Communications. Any and all notices, requests, demands and other communications required or otherwise contemplated to be made under this Agreement shall be in writing and shall be provided by one or more of the following means and shall be deemed to have been duly given (a) if delivered personally, when received, (b) if transmitted by facsimile, on the date of transmission with receipt of a transmittal confirmation, or (c) if by an internationally recognized overnight courier service, one Business Day after deposit with such courier service. All such notices, requests, demands and other communications shall be addressed to such address or facsimile number as a party may have specified to the other parties in writing delivered in accordance with this Section 5.4.

5.5. Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any Person hereunder, upon any breach or default under this Agreement, shall impair any such right, power or remedy nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any Person hereunder of any breach or default under this Agreement, or any waiver on the part of any Person of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing and signed by the waiving or consenting Person.

5.6. Severability. If any provision of this Agreement is found to be invalid or unenforceable, then such provision shall be construed, to the extent feasible, so as to render the provision enforceable and to provide for the consummation of the transactions contemplated hereby on substantially the same terms as originally set forth herein, and if no feasible interpretation would save such provision, it shall be severed from the remainder of this Agreement, which shall remain in full force and effect unless the severed provision is essential to the rights or benefits intended by the Parties. In such event, the Parties shall use best efforts to negotiate, in good faith, a substitute, valid and enforceable provision or agreement which most nearly affects the Parties’ intent in entering into this Agreement.

9

5.7            Construction. The language used in this Agreement will be deemed to be the language chosen by the Parties to express their mutual intent, and no rules of strict construction will be applied against any Party.

5.8.Further Assurances. The Parties shall perform such acts, execute and deliver such instruments and documents and do all other such things as may be reasonably necessary to effect the transactions contemplated hereby.

5.9.Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. Execution and delivery of this Agreement by exchange of facsimile copies bearing the facsimile signature of a Party shall constitute a valid and binding execution and delivery of this Agreement by such Party.

[Remainder of the Page Intentionally Left Blank]

10

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.

Purchaser:

Seller:

Kelvin CHAN

Acknowledged and agreed to:

Collateral Agent:

Global Law Office

By:

Name:

11

APPENDIX A

Form of Exercise Notice

[Date]

[________________] (the “Seller”)

[________________]

[________________]

Attention: [ ]

Re:   Call Option Agreement dated December 29, 2009 (the “Call Option Agreement”) among Pan Haicheng (“Purchaser”) and Kelvin CHAN (the “Seller”).

Dear Sir:

In accordance with Section 2.4 of the Call Option Agreement, Purchaser hereby provides this notice of exercise of the Call Right in the manner specified below:

(a) The Purchaser hereby exercises its Call Rights with respect to Seller’s Shares pursuant to the Call Option Agreement.

(b) The Purchaser intends to buy [ ] Seller’s Shares and shall pay the sum of US Dollar to the Seller.

Dated: , ______

  _____________________________________                                 

12

Form of Transfer Notice

To            :           [  ] (the “Seller”)

From :                  [  ] (the “Purchaser”)

I, the undersigned, refer to the Call Option Agreement (the "Call Option Agreement") dated December 29, 2009 made between Purchaser and Seller. Terms defined in the Call Option Agreement shall have the same meanings as used herein.

I hereby give you notice that I will transfer to [Nominees' names] the following portion of the Call Right, expressed in terms of the number of Seller’s Shares represented by the portion of the Call Right transferred in accordance with the terms and conditions of the Call Option Agreement,.

Nominees Option Shares to be Transferred

Dated [ ]

Yours faithfully

Name: [Purchaser]

EX-10.2

Memorandum

Zhisheng Chen, shareholder of Nanhai Keda Hengsheng Aquiculture Co., Ltd. (the “Company”), has borrowed from the Company an aggregate amount of RMB 21,900,000 as of December, 2009. Such loan has been used for Zhisheng Chen’s personal investment in the construction of Foshan Nanhai Guanyao Processing Industrial Park. (The total investment in the industrial park is RMB 120,000,000. It has a total area of 108,000 square meters with the construction area of 85,000 square meters. ) Without paying for interest on arrears, the above loan will be paid off by deducting Zhisheng Chen’s allocation of shareholders’ dividends or any other means. Meanwhile, the corporation has the priority right in using the Foshan Nanhai Guanyao Processing Industrial Park after its construction has been completed. The rent incurred from such priority use will be agreed upon by Zhisheng Chen and the Company afterwards.

Shareholder: Zhisheng Chen	Company:
	Nanhai Keda Hengsheng Aquiculture Co., Ltd.
Shareholder Signature:
/s/ Zhisheng Chen	Company’s Seal
	Date:  December 2009

EX-10.3

Technological Cooperation Agreement Regarding the Propagation of

Fish Fry of Nile Tilapia

Part A: Nanhai Keda Hengsheng Aquiculture Co., Ltd.

Part B: Sifa Li (the professor of Shanghai Fisheries University)

          In view of the rapid development of the propagation industry of Nile Tilapia in mainland China, and an active and increased demand for the premium fish fry within the propagation industry of Nile Tilapia, Part A and B agree to enter into a cooperation agreement (the “Agreement”). According to this Agreement, Part A proposes to establish the biggest propagation site for premium fish fry of Nile Tilapia by introducing a leading propagation technology of Nile Tilapia in mainland China. Part B is willing to provide technological support to Part A. Through bilateral negotiations, a technological cooperation agreement regarding the propagation of fish fry of Nile Tilapia is agreed upon by both parties. The detailed cooperation terms are set forth as below:

1. Part A engages Part B as an advanced technological instructor for Nanhai Keda Hengsheng Aquiculture Co., Ltd. This engagement will become immediately effective upon execution of this agreement on January 1, 2007. This is a long-term engagement with a period no less than 5 years.

2. Part B will provide Part A with 300 groups of relevant parent fish of New Jifu Nile Tilapia as well as 10 groups of grandparent fish. (This includes 2000 female parent fish and 700 male parent fish.) Part A will compensate Part B for the transfer of parent fish upon the acceptance of parent fish into the fish pond for a lump sum of 200,000(RMB). (Those parent fish will be accepted to the fish fry pond in Wenchang city Wengtian town of Hainan Province, which was set up by Part A.)

3. During the term of the engagement, Part B is responsible for the propagation of fish fry of Nile Tilapia in the following technological aspects: production of fish fry, preservation and strengthened purification of fish fry, and training of Part A’s related technical staff. (Not less than 2 staff technicians should be trained to do the propagation work independently within 3 years of training by Part B.)

4. There should be a 3-day on site working by Part B for each month during the term of his engagement with Part A. Part B should be available in answering Part A’s inquiries either through telephone or email in normal business hours. Part A has an exclusive right in accepting Part’s Yi’s technical services within the region of Hainan Province. Part B should refrain from providing related technical services of the propagation of Nile Tilapia and selling or donating parent fish of Nile Tilapia to any unit and individual regardless of such activity is with or without compensation.

5. During Part B’s engagement, Part A will pay for Part B’s services for a fixed salary of 100, 000(RMB) annually. At the same time, Part A is responsible for purchasing and constructing relevant equipments, tools and facilities according to Part B’s technical specifications.

6. Part A will be wholly responsible for the operation of the fish fry pond and the success of its own business. Part B has no stake in any and all credit or debt arising out of Part A’s business operations.

7. Miscellaneous.

a. Part A and Part B agree to negotiate other terms outside the range of this Agreement as the need arises.

b. There are two copies of the Agreement, both parties have its own copy.

Part A (Seal):  Nanhai Keda Hengsheng Aquiculture Co., Ltd.

Legal Representative (Signature):

Date of Signature: December 18, 2009

Part B  (Signature): /s/ Sifa Li

Date of signature: December 18, 2009

EX-10.4

ENTRUSTED MANAGEMENT AGREEMENT

BETWEEN

CHEN ZHISHENG

FOSHAN NANHAI KE DA HENG SHENG AQUATIC CO., LTD.

AND

GUANGZHOU FLOURISHING BLESSING HENG SENG

AGRICULTURAL TECHNOLOGY LIMITED

December 2009

GUANGZHOU, CHINA

 Entrusted Management Agreement

This Entrusted Management Agreement (the “Agreement”) is entered into on 26 December in Guangzhou, China by:

Party A:

1 CHEN Zhisheng, a citizen of PRC with ID Card number of 440622196305103634, owns 100 % shares of Foshan Nanhai Ke Da Heng Sheng Aquatic Co., Ltd. ;

2   Foshan Nanhai Ke Da Heng Sheng Aquatic Co., Ltd. is an enterprise incorporated and existing within the territory of China in accordance with the law of the People’s Republic of China, the registration number of its legal and valid Business License is 440682000015895 and the legal registered address is East of Gong Yong, Wan Qing Yang, Heshun Town, Nanhai District, Foshan City, Guangdong Province, China.

and

Party B:

Guangzhou Flourishing Blessing Heng Seng Agricultural Technology Limited is a wholly-foreign owned enterprise in PRC, and the registration number of its legal and valid Business License is Qi Du Yue Hui Zong Zi No. 011458 and its legal address is 17 of 301, No. 329, Qingnian Road, Economic and Technology Development District, Guangzhou City, Guangdong Province, China.

Whereas:

1 Party A constitutes Foshan Nanhai Ke Da Heng Sheng Aquatic Co., Ltd.  (hereinafter referred to as “Opco ”) and all of its shareholders holding all issued and outstanding shares of Opco . Under this Agreement, Opco and CHEN Zhisheng have acted collectively as one party to this Agreement;

2 Guangzhou Flourishing Blessing Heng Seng Agricultural Technology Limited (hereinafter referred to as “Party B”) is a wholly-foreign owned enterprise incorporated and existing within the territory of China in accordance with the law of the People’s Republic of China, the registration number of its legal and valid Business License is Qi Du Yue Hui Zong Zi No. 011458, and the legal registered address is 17 of 301, No. 329, Qingnian Road, Economic and Technology Development District, Guangzhou City, Guangdong Province, China.

3 Party A desires to entrust Party B to manage and operate Opco ;

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4 Party B agrees to accept such entrustment and to manage Opco on behalf of Party A.

Therefore, in accordance with laws and regulations of the People’s Republic of China, the Parties agree as follows after friendly consultation based on the principle of equality and mutual benefit.

Article 1     Entrusted Management

1.1 Party A agrees to entrust the management of Opco to Party B pursuant to the terms and conditions of this Agreement. Party B agrees to manage Opco in accordance with the terms and conditions of this Agreement.

1.2 The term of this Entrusted Management Agreement (the “Entrusted Period”) shall be from the effective date of this Agreement to the earlier of the following:

           (1)  the winding up of Opco, or

           (2)  the date on which Party B completes the acquisition of Opco.

1.3  During the Entrusted Period, Party B shall be fully and exclusively responsible for the management of Opco. The management service includes without limitation the following:

(1) Party B shall be fully and exclusively responsible for the operation of Opco, which includes the right to appoint and terminate members of Board of Directors and the right to hire managerial and administrative personnel etc. Party A or its voting proxy shall make a shareholder’s resolution and a Board of Directors’ resolution based on the decision of Party B.

(2) Party B has the full and exclusive right to manage and control all cash flow and assets of Party A. Opco shall open an entrusted account or designate an existing account as an entrusted account. Party B has the full and exclusive right to decide the use of the funds in the entrusted account. The authorized signature of the account shall be appointed or confirmed by Party B. All of the funds of Opco shall be kept in this account, including but not limited to its existing working capital and purchase price received from selling its production equipment, inventory, raw materials and accounts receivable to Party B (if any), all payments of funds shall be disbursed through this entrusted account, including but not limited to the payment of all existing accounts payable and operating expenses, payment of employees salaries and purchase of assets, and all revenues from its operation shall be kept in this account.

(3) Party B shall have the full and exclusive right to control and administrate the financial affairs and daily operation of Opco, such as entering into and performance of contracts, and payment of taxes etc.

- 2 - -

1.4 In consideration of the services provided by Party B hereunder, Party A shall pay an entrusted management fee to Party B which shall be equal to the earnings before tax (if any) of Opco. The entrusted management fee shall be as follows: during the term of this agreement, the entrusted management fee shall be equal to Opco’s estimated earnings before tax, being the monthly revenues after deduction of operating costs, expenses and taxes other than income tax. If the earnings before tax is zero, Opco is not required to pay the entrusted management fee; if Opco sustains losses, all such losses will be carried over to next month and deducted from next month’s entrusted management fee. Both Parties shall calculate, and Party A shall pay, the monthly entrusted management fee within 20 days of the following month. The above monthly payment shall be adjusted after the end of each quarter but before the filing of tax return for such quarter (the “Quarterly Adjustment”), so as to make the after-tax profit of Opco of that quarter is zero. In addition, the above monthly payment shall be adjusted after the end of each fiscal year but before the filing for the yearly tax return (the “Annual Adjustment”), so as to make the after-tax profit of Opco of that fiscal year is zero.

1.5 Party B shall assume all operation risks out of the entrusted management of Opco and bear all losses of Opco. If Opco has no sufficient funds to repay its debts, Party B is responsible for paying off these debts on behalf of Opco; if Opco’s net assets are lower than its registered capital, Party B is responsible for funding the deficit.

Article 2     Rights and Obligations of the Parties

2.1  During the term of this Agreement, Party A’s rights and obligations include:

(1) to hand over Opco to Party B for entrusted management as of the effectiveness date of this Agreement and to hand over all of business materials together with Business License and corporate seal of Opco to Party B;

(2) Party A has no right to make any decision regarding Opco’s operations without the prior written consent of Party B;

(3) to have the right to know the business conditions of Opco at any time and provide proposals;

(4) to assist Party B in carrying out the entrusted management in accordance with Party B’s requirement;

- 3 - -

(5) to perform its obligations pursuant to the Shareholders’ Voting Rights Proxy Agreement, signed by and between CHEN Zhisheng and Party B on 26 December in Guangzhou, and not to violate the said agreement;

(6) not to intervene Party B’s management over Opco in any form by making use of shareholder’s power;

(7) not to entrust or grant their shareholders’ rights in Opco to a third party other than Party B without Party B’s prior written consent;

(8) not to otherwise entrust other third party other than Party B to manage Opco in any form without Party B’s prior written consent;

(9) not to terminate this Agreement unilaterally with for any reason whatsoever; or

(10) to enjoy other rights and perform other obligations under the Agreement.

2.2  During the term of this Agreement, Party B’s rights and obligations include:

(1) to enjoy the full and exclusive right to manage Opco independently;

(2) to enjoy the full and exclusive right to dispose of all assets of Opco;

(3) to enjoy all profits and bear losses arising from Opco’s operations during the Entrusted Period;

(4) to appoint all directors of Opco;

(5) to appoint the legal representative, general manager, deputy general manager, financial manager and other senior managerial personnel of Opco;

(6) to convene shareholders’ meetings of Opco in accordance with the Shareholders’ Voting Rights Proxy Agreement and sign resolutions of shareholders’ meetings; and

(7) to enjoy other rights and perform other obligations under the Agreement.

Article 3     Representations and Warranties

The Parties hereto hereby make the following representations and warranties to each other as of the date of this Agreement that:

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(1) has the right to enter into the Agreement and the ability to perform the same;

(2) the execution and delivery of this Agreement by each party have been duly authorized by all necessary corporate action;

(3) the execution of this Agreement by the officer or representative of each party has been duly authorized；

(4) each party has no other reasons that will prevent this Agreement from becoming a binding and effective agreement between both parties after execution;

(5) the execution and performance of the obligations under this Agreement will not:

(a)     violate any provision of the business license, articles of association or other similar documents of its own;

(b)     violate any provision of the laws and regulations of PRC or other governmental or regulatory authority or approval;

(c)     violate or result in a breach of any contract or agreement to which the party is a party or by which it is bound.

Article 4 Effectiveness

This Agreement shall take effect after it is duly executed by the authorized representatives of the parties hereto with seals affixed.

Article 5 Liability for Breach of Agreement

During the term of this Agreement, any violation of any provisions herein by either party constitutes breach of contract and the breaching party shall compensate the non-breaching party for the loss incurred as a result of this breach.

Article 6 Force Majeure

The failure of either party to perform all or part of the obligations under the Agreement due to force majeure shall not be deemed as breach of contract. The affected party shall present promptly valid evidence of such force majeure, and the failure of performance shall be settled through consultations between the parties hereto.

- 5 - -

Article 7 Governing Law

The conclusion, validity, interpretation, and performance of this Agreement and the settlement of any disputes arising out of this Agreement shall be governed by the laws and regulations of the People’s Republic of China.

Article 8 Settlement of Dispute

Any disputes under the Agreement shall be settled at first through friendly consultation between the parties hereto. In case no settlement can be reached through consultation, each party shall have the right to submit such disputes to China International Economic and Trade Arbitration Commission in Beijing.  The Place of arbitration is Beijing. The arbitration award shall be final and binding on both parties.

Article 9 Confidentiality

9.1        The parties hereto agree to cause its employees or representatives who has access to and knowledge of the terms and conditions of this Agreement to keep strict confidentiality and not to disclose any of these terms and conditions to any third party without the expressive requirements under law or request from judicial authorities or governmental departments or the consent of the other party, otherwise such party or personnel shall assume corresponding legal liabilities.

9.2        The obligations of confidentiality under Section 1 of this Article shall survive after the termination of this Agreement.

Article 10 Severability

10.1      Any provision of this Agreement that is invalid or unenforceable due to the laws and regulations shall be ineffective without affecting in any way the remaining provisions hereof.

10.2.     In the event of the foregoing paragraph, the parties hereto shall prepare supplemental agreement as soon as possible to replace the invalid provision through friendly consultation.

Article 11 Non-waiver of Rights

11.1      Any failure or delay by any party in exercising its rights under this Agreement shall not constitute a waiver of such right.

11.2      Any failure of any party to demand the other party to perform its obligations under this Agreement shall not be deemed as a waiver of its right to demand the other party to perform such obligations later.

11.3 If a party excuses the non-performance by other party of certain provisions under this Agreement, such excuse shall not be deemed to excuse any future non-performance by the other party of the same provision.

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Article 12 Non-transferability

Unless otherwise specified under this Agreement, no party can assign or delegate any of the rights or obligations under this Agreement to any third party nor can it provide any guarantee to such third party or carry out other similar activities without the prior written consent from the other party.

Article 13 Miscellaneous

13.1 Any and all taxes arising from execution and performance of this Agreement and during the course of the entrusted management and operation shall be borne by the Parties respectively pursuant to the provisions of laws and regulations.

13.2 Any amendment entered into by the parties hereto after the effectiveness of this Agreement shall be an integral part of this Agreement and have the same legal effect as part of this Agreement. In case of any discrepancy between the amendment and this Agreement, the amendment shall prevail. In case of several amendments, the amendment with the latest date shall prevail.

13.3 This Agreement is executed by Chinese and English in duplicate and both the English version and Chinese version shall have the same effect. Each of the original Chinese and English versions of this Agreement shall be executed in three copies.

13.4 In witness hereof, the Agreement is duly executed by the parties hereto on the date first written above.

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

- 7 - -

(Page of signature only)

Party A: CHEN Zhisheng

(signature):

Foshan Nanhai Ke Da Heng Sheng Aquatic Co., Ltd.

(official seal)

Authorized representative:

(signature)

Party B:

Guangzhou Flourishing Blessing Heng Seng Agricultural Technology Limited

 (official seal)

Authorized representative:

(signature)

- 8 - -

EX-10.5

EXCLUSIVE OPTION AGREEMENT

BETWEEN

GUANGZHOU FLOURISHING BLESSING HENG SENG

AGRICULTURAL TECHNOLOGY LIMITED

AND

CHEN ZHISHENG

Foshan Nanhai Ke Da Heng Sheng Aquatic Co., Ltd.

December 2009

GUANGZHOU, CHINA

Exclusive Option Agreement

This Exclusive Option Agreement (the “Agreement”) is entered into as of 26 December 2009 between the following Parties in Guangzhou.

Party A: Guangzhou Flourishing Blessing Heng Seng Agricultural Technology Limited

Registered Address: 17 of 301, No. 329, Qingnian Road, Economic and Technology Development District, Guangzhou City, Guangdong Province, China

Legal Representative: Lin Jian

Party B: CHEN Zhisheng

A citizen of PRC, Identity Card Number: 440622196305103634

Party C:      Foshan Nanhai Ke Da Heng Sheng Aquatic Co., Ltd.

Registered Address: East of Gong Yong, Wan Qing Yang, Heshun Town, Nanhai District, Foshan City, Guangdong Province, China

Legal Representative: CHEN Zhisheng

In this Agreement, Party A, Party B, Party C are called collectively as the “Parties” and each of them is called as the “Party”.

WHEREAS:

1.           Party A is a wholly foreign-owned enterprise incorporated under the laws of the People’s Republic of China (the “PRC”);

2.           Party C is a limited liability company and with business license issued by the Foshan Administration for Industry and Commerce;

3.           As of the date of this Agreement Party B is the sole shareholder of Foshan Nanhai Ke Da Heng Sheng Aquatic Co., Ltd. (hereinafter referred to as “Opco”) and legally holds all of the shares interest of Opco.

NOW, THEREFORE, the Parties through mutual negotiations hereby enter into this Agreement according to the following terms and conditions:

1

1.  THE GRANT AND EXERCISE OF PURCHASE OPTION

1.1 Grant: Party B hereby grants Party A an irrevocable exclusive purchase option to purchase all or part of the shares of Opco, currently owned by any of Party B; Opco further hereby grants Party A an irrevocable exclusive purchase option to purchase all or part of the assets and business of Opco, in each case in accordance with Article 1.3 of this Agreement (the “Option”). The aforesaid purchase options are irrevocable and shall be exercised only by Party A (or the qualified persons appointed by Party A). The term “person” used herein shall include any entity, corporation, partnership, joint venture and non-corporate organizations.

1.2 Exercise Procedures:

1.2.1  Party A shall notify Party B in writing prior to exercising its option (the “Option Notice” hereinafter).

1.2.2  The next day upon receipt of the Option Notice, Party B and Opco, together with party A (or the qualified person appointed by Party A), shall promptly compile a whole set of documents (the “Transfer Documents”) to be submitted to the government bodies for approving the shares or assets and business transfer in connection with the Option exercise so that the shares or assets and business transfer can be transferred, in whole or in part.

1.2.3  Upon the completion of the compilation of all the Transfer Documents and the Transfer Documents being confirmed by Party A, Party B and Opco shall promptly and unconditionally obtain, together with Party A (or the qualified person appointed by Party A), all approvals, permissions, registrations, documents and other necessary approvals to effectuate the transfer of the shares and remaining assets and business of Opco in connection with the Option exercise.

1.3 Exercise Condition: Party A may immediately exercise the option of acquiring the shares or remaining assets and business of Opco whenever Party A considers it necessary to acquire Opco and it is doable in accordance with PRC laws and regulations.

2. PRICE OF ACQUISITION

2.1 Party A and Party B shall enter into relevant agreements regarding the price of acquisition based on the circumstances of the exercise of option, and the consideration shall be refunded to Party A or Opco at no consideration in an appropriate manner decided by Party A.

2.2 Party A has the discretion to decide the time and arrangement of the acquisition, provided that the acquisition will not violate any PRC laws or regulations then in effect.

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3.  REPRESENTATIONS AND WARRANTIES

3.1 Each party hereto represents to the other Parties that: (1) it has all the necessary rights, powers and authorizations to enter into this Agreement and perform its duties and obligations hereunder; (2) Party B warrant, represent and guarantee that this Agreement, the Restructuring Exercise or the Listing shall be in compliance with any and all applicable PRC laws and shall indemnify, defend and hold harmless Party A and Opco for all fines, penalties, damages or claims sustained by Party A or Opco arising out of Party B’s violation of this section; and (3) the execution or performance of this Agreement shall not violate any contract or agreement to which it is a party or by which it or its assets are bounded.

3.2 Party B and Opco hereto represent to Party A that: With respect to the shares interest held by Party B in Opco, (1) Party B are legally registered shareholders of Opco and have paid Opco the full amount of their respective portions of Opco's registered capital required under the PRC laws; (2) except Pledge of Shares Agreement, signed by and between Party B and Party A on 26 December 2009 in Guangzhou, none of Party B, has mortgaged or pledged his shares of Opco, nor has either of them granted any security interest or borrow against his shares of Opco in any form; and (3) none of Party B has sold or will sell to any third party its shares in Opco.

With respect to the assets of Opco which may be transferred to Party A at Party A’s option hereunder, (1) Opco owns all such assets and has not mortgaged or pledged or otherwise encumber such assets; and (2) Opco has not sold or will sell to any third party such assets.

3.3 Opco hereto represents to Party A that: (1) it is a limited liability company duly registered and validly existing under the PRC law; and (2) its business operations are in compliance with applicable laws of the PRC in all material aspects.

4.  COVENANTS

The Parties further agree as follows:

4.1 Before Party A has acquired all the shares/assets and business of Opco by exercising the purchase option provided hereunder, Opco shall not:

4.1.1    sell, assign, mortgage or otherwise dispose of, or create any encumbrance on, any of its assets, operations or any legal or beneficiary interests with respect to its revenues (unless such sale, assignment, mortgage, disposal or encumbrance is relating to its daily operation or has been disclosed to and agreed upon by Party A in writing);

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4.1.2    enter into any transaction which may materially affect its assets, liability, operation, shareholders’ shares or other legal rights (unless such transaction is relating to its daily operation or has been disclosed to and agreed upon by Party A in writing); and

4.1.3    distribute any dividend to its shareholders in any manner.

4.2 Before Party A has acquired all the shares/assets/business of Opco by exercising the purchase option provided hereunder, Party B and Party C shall not:

4.2.1    sell, assign, mortgage or otherwise dispose of, or create any encumbrance on, any of the shares held by them in Opco, except for the pledge of such shares made according to the Shares Pledge Agreement, signed by and between Party B and Party A on 26 December 2009 in Guangzhou.

4.3 Before Party A has acquired all the shares/assets/business of Opco by exercising the purchase option provided hereunder, Party B and/or Opco shall not individually or collectively:

4.3.1        supplement, alter or amend the articles of association of Opco in any manner to the extent that such supplement, alteration or amendment may have a material effect on Opco's assets, liability, operation, shareholders’ shares or other legal rights;

4.3.2        cause Opco to enter into any transaction to the extent such transaction may have a material effect on Opco's assets, liability, operation, shareholders’ shares or other legal rights (unless such transaction is relating to Opco's daily operation or has been disclosed to and agreed upon by Party A in writing); and

4.4 Party B shall entrust Party A to manage Opco in accordance with Entrusted Management Agreement, signed by and between Party B, Opco and Party A on 26 December 2009 in Guangzhou.

4.5 Non Competition:

When Party A exercises the Option, each of Party B and Opco irrevocably and unconditionally agree and undertake to Party A that it will not without the prior written consent of Party A:-

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a.    be directly or indirectly engaged or concerned (whether as an employee, agent, independent contractor, consultant, advisor or otherwise) in the conduct of any business competing with Party A’s Business (the “Business”);

b.    carry on for his/its own account either alone or in partnership or be concerned as a director or shareholder in any company engaged in any business competing with the Business;

c.     assist any person, firm or company with technical advice or assistance in relation to any business competing with the Business;

d.     solicit or entice away or attempt to solicit or entice away the custom of any person, firm, company or organization who shall at any time have been a customer, client, distributor or agent of Party A or in the habit of dealing with Party A;

e.     solicit or entice away or attempt to solicit or entice away from Party A any person who is an officer, manager or employee of Party A whether or not such person would commit a breach of his contract of employment by reason of leaving Party A;

f.      in relation to any trade, business or company, use any name in such a way as to be capable of or likely to be confused with the name of Party A and shall use all reasonable endeavors to procure that no such name shall be used by any other person, firm or company;

g.     otherwise be interested, directly or indirectly, in any business competing with the Business.

5.  ASSIGNMENT OF AGREEMENT

5.1 Party B and Opco shall not transfer their rights and obligations under this Agreement to any third party without the prior written consent of Party A.

5.2 Each of Party B and Opco hereby agrees that Party A shall have the right to transfer all of its rights and obligation under this Agreement to any third party whenever it desires. Any such transfer shall only be subject to a written notice sent to Party B and Opco by Party A, and no any further consent from Party B and Opco will be required.

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6.  CONFIDENTIALITY

The Parties acknowledge and confirm that any oral or written materials exchanged by the Parties in connection with this Agreement are confidential. The Parties shall maintain the secrecy and confidentiality of all such materials. Without the written approval by the other Parties, any Party shall not disclose to any third party any relevant materials, but the following circumstances shall be excluded:

6.1 The materials is known or will be known by the public (except for any materials disclosed to the public by the Party who receives such materials);

6.2 The materials are required to be disclosed under the applicable laws or the rules or provisions of stock exchange; or

6.3 The materials disclosed by each Party to its legal or financial consultant relate to the transaction contemplated under this Agreement, and such legal or financial consultant shall comply with the confidentiality set forth in this Section. The disclosure of the confidential materials by an employee of any Party shall be deemed disclosure of such materials by such Party, and such Party shall be liable for breaching the contract. This Article 6 shall survive this Agreement even if this Agreement is invalid, amended, revoked, terminated or unenforceable by any reason.

7.  BREACH OF CONTRACT

Any violation of any provision hereof, any incomplete or mistaken performance of any obligation provided hereunder, any misrepresentation made hereunder, any material nondisclosure or omission of any material fact, or any failure to perform any covenants provided hereunder by any Party shall constitute a breach of this Agreement. The breaching Party shall be liable for any such breach pursuant to the applicable laws.

8.  APPLICABLE LAW AND DISPUTE RESOLUTION

8.1 Applicable Law

The execution, validity, interpretation and performance of this Agreement and the disputes resolution under this Agreement shall be governed by the laws of PRC.

8.2 Dispute Resolution

The Parties shall strive to settle any dispute arising from the interpretation or performance of this Agreement through friendly consultation. In case no settlement can be reached through consultation within thirty (30) days after such dispute is raised, each party can submit such matter to China International Economic and Trade Arbitration Commission (the “CIETAC”) in Beijing in accordance with its rules. The arbitration shall take place in Beijing. The arbitration award shall be final, conclusive and binding upon both Parties.

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9.  EFFECTIVENESS AND TERMINATION

9.1 This Agreement shall be effective upon the execution hereof by all Parties hereto and shall remain effective thereafter.

9.2 This Agreement may not be terminated without the unanimous consent of all the Parties except that Party A may, by giving thirty days prior notice to the other Parties hereto, terminate this Agreement.

10.  MISCELLANEOUS

10.1 Amendment, Modification and Supplement

Any amendment and supplement to this Agreement shall be made by the Parties in writing. The amendment and supplement duly executed by each Party shall be deemed an integral part of this Agreement and shall have the same legal effect as this Agreement.

10.2 Entire Agreement

The Parties acknowledge that this Agreement constitutes the entire agreement of the Parties with respect to the subject matters therein and supersedes and replaces all prior or contemporaneous agreements and understandings in oral or written form.

10.3 Severability

If any provision of this Agreement is adjudicated to be invalid or non-enforceable according to relevant PRC laws of the PRC, such a provision shall be deemed invalid only to the extent the PRC laws are applicable in China, and the validity, legality and enforceability of the other provisions hereof shall not be affected or impaired in any way. The Parties shall, through consultation based on the principal of fairness, replace such invalid, illegal or non-enforceable provision with valid provision so that any substituted provision may bring the similar economic effects as those intended by the invalid, illegal or non-enforceable provision.

10.4 Headings

The headings contained in this Agreement are for the convenience of reference only and shall not in any other way affect the interpretation, explanation or the meaning of the provisions of this Agreement.

10.5 Language and Copies

This Agreement is written in Chinese and English and both the English version and Chinese version shall have the same effect. This Agreement is executed in 3 copies for each version; each Party holds one and each original copy has the same legal effect.

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10.6 Successor

This Agreement shall bind and benefit the successor or the transferee of each Party.

(The page is intentionally left blank)

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IN WITNESS HEREOF, the Parties hereof have caused this Agreement to be executed by their duly authorized representatives as of the date first written above.

PARTY A: Guangzhou Flourishing Blessing Heng Seng Agricultural Technology Limited

(seal)

Legal Representative/Authorized Representative (Signature):

PARTY B: CHEN Zhisheng

Signature:

PARTY C: Foshan Nanhai Ke Da Heng Sheng Aquatic Co., Ltd.

(seal)

Legal Representative/Authorized Representative (Signature):

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EX-10.6

SHAREHOLDER'S VOTING

PROXY AGREEMENT

BETWEEN

CHEN ZHISHENG

AND

GUANGZHOU FLOURISHING BLESSING HENG SENG

AGRICULTURAL TECHNOLOGY LIMITED

December 2009

GUANGZHOU, CHINA

Shareholders’ Voting Proxy Agreement

This Shareholders’ Voting Proxy Agreement (the “Agreement”) is entered into as of 26 December 2009 between the following parties in Guangzhou:

Party A:       CHEN Zhisheng

A citizen of PRC, Identity Card Number: 440622196305103634

and,

Party B: Guangzhou Flourishing Blessing Heng Seng Agricultural Technology Limited

Registered Address: 17 of 301, No. 329, Qingnian Road, Economic and Technology Development District, Guangzhou City, Guangdong Province, China

Legal Representative: Lin Jian

In this Agreement, Party A and Party B are called collectively as the “Parties,” and each of them is called as the “Party”. Party A is collectively called the “Grantors” and respectively called “Each of the Grantors”.

WHEREAS:

1 Party B is a wholly foreign-owned enterprise incorporated under the laws of the People’s Republic of China;

2 As of the date of this Agreement, the Grantors are shareholders of Foshan Nanhai Ke Da Heng Sheng Aquatic Co., Ltd.(the “Opco”) and collectively legally hold all of the shares of Opco;

3 Each of the Grantors desires to appoint the persons designated by Party B to exercise its shareholder’s voting rights at the shareholders’ meeting of Opco (“Voting Rights”) and Party B is willing to designate such persons.

NOW THEREFORE, the Parties hereby have reached the following agreement upon friendly consultations:

Article 1. Each of the Grantors hereby agrees to irrevocably appoint the persons designated by Party B with the exclusive right to exercise, on his behalf, all of his Voting Rights in accordance with the laws and Opco’s Articles of Association, including but not limited to the rights to sell or transfer all or any of his shares of Opco, and to appoint and elect the directors and Chairman as the authorized legal representative of Opco.

Article 2. The persons designated by Party B shall be the full board of Party B (the “Proxy Holders”). All Parties agree that all members of board of directors of Opco shall be nominated and appointed by the Proxy Holders according to the direction of Party B.

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Article 3. Party B agrees to designate such Proxy Holders pursuant to Section 1 of this Agreement, who shall represent each of the Grantors to exercise his Voting Rights pursuant to this Agreement.

Article 4. All Parties to this Agreement hereby acknowledge that, regardless of any change in the shares of Opco, Each of the Grantors shall appoint the person designated by Party B with all Voting Rights. All Parties to this Agreement agree, Party A, can not transfer his shares (the “Transferor”) of Opco to any individual or company other than Party B or the individuals or entities designated by Party B.

Article 5. Each of the Grantors hereby acknowledges that he/she will withdraw the appointment of the persons designated by Party B if Party B change such designated person and reappoint the substituted persons designated by Party B as the new Proxy Holders to exercise his/her Voting Rights at the shareholder’s meeting of Opco.

Article 6. All authorizations made under this Agreement shall be conclusive and binding upon the Grantors and each and every act and thing effected by the Proxy Holders pursuant hereto shall be as good, valid and effectual as if the same had been done by the Grantors. The Grantors hereby irrevocably and unconditionally undertake at all times hereafter to ratify and confirm whatsoever the Proxy Holders shall lawfully do or cause to be done by virtue of all such authorizations conferred by this Agreement.

Article 7. The Grantors hereby irrevocably and unconditionally undertake at all times to indemnify and keep indemnified each of the Proxy Holders against any and all actions, proceedings, claims, costs, expenses and liabilities whatsoever arising from the exercise or purported exercise of any of the powers conferred or purported to be conferred by this Agreement.

Article 8. This Agreement has been duly executed by the parties’ authorized representatives as of the date first set forth above and shall become effective upon execution.

Article 9. This Agreement shall not be terminated prior to the completion of acquisition of all of the shares in, or all assets or business of, Opco by Party B;

Article 10. Any amendment and termination of this Agreement shall be in written and agreed upon by the Parties.

Article 11. The conclusion, validity, interpretation, and performance of this Agreement and the settlement of any disputes arising out of this Agreement shall be governed by the laws and regulations of the People’s Republic of China.

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Article 12. The Parties shall strive to settle any dispute arising from the interpretation or performance of this Agreement through friendly consultation. In case no settlement can be reached through consultation within thirty (30) days after such dispute is raised, each party can submit such matter to China International Economic and Trade Arbitration Commission (the “CIETAC”) in Beijing in accordance with its rules then in effect. The arbitration shall take place in Beijing. The arbitration award shall be final, conclusive and binding upon both parties.

Article 13. This Agreement is executed in both Chinese and English in three copies; each Party holds one and each original copy which has the same legal effect. Both the English version and Chinese version shall have the same effect.

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)                                                                       

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IN WITNESS HEREOF, the Parties hereof have caused this Agreement to be executed by their duly authorized representatives as of the date first written above.

Party A: CHEN Zhisheng

(signature):

Party B:

Guangzhou Flourishing Blessing Heng Seng Agricultural Technology Limited

(seal)

Authorized representative:

(signature)

This Agreement is agreed and accepted by the Foshan Nanhai Ke Da Heng Sheng

Aquatic Co., Ltd.(seal):

Authorized representative:

(signature)

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EX-10.7

SHARES PLEDGE AGREEMENT

BETWEEN

GUANGZHOU FLOURISHING BLESSING HENG SENG

AGRICULTURAL TECHNOLOGY LIMITED

AND

CHEN ZHISHENG

FOSHAN NANHAI KE DA HENG SHENG AQUATIC CO., LTD.

December 2009

GUANGZHOU, CHINA

Shares Pledge Agreement

This Agreement is executed by on 26 December 2009 in Guangzhou, China.:

Pledgeors (hereinafter collectively referred to as “Party A”): CHEN Zhisheng, a citizen of PRC with ID Card number of 440622196305103634, owns 100% shares of Foshan Nanhai Ke Da Heng Sheng Aquatic Co., Ltd.;

and

Pledgee (hereinafter referred to as “Party B”): Guangzhou Flourishing Blessing Heng Seng Agricultural Technology Limited, a wholly foreign-owned enterprise registered in Guangdong, and the registration number of its legal and valid Business License is Qi Du Yue Hui Zong Zi No. 011458.

Party C: Foshan Nanhai Ke Da Heng Sheng Aquatic Co., Ltd., the registration number of its legal and valid Business License is 440682000015895 and the legal registered address is East of Gong Yong, Wan Qing Yang, Heshun Town, Nanhai District, Foshan City, Guangdong Province, China.

In this Agreement, Party A, Party B and Party C are called collectively as the “Parties” and each of them is called as the “Party”.

Whereas:

1. Party A consists of all of the shareholders of Foshan Nanhai Ke Da Heng Sheng Aquatic Co., Ltd. (hereinafter referred to as “Opco”), who legally hold all of the shares of Opco.

2. Party B is a wholly-foreign owned enterprise incorporated and existing within the territory of China in accordance with the law of the People’s Republic of China, the registration number of its legal and valid Business License is Qi Du Yue Hui Zong Zi No. 011458, and the legal registered address is17 of 301, No. 329, Qingnian Road, Economic and Technology Development District, Guangzhou City, Guangdong Province, China.

3. Foshan Nanhai Ke Da Heng Sheng Aquatic Co., Ltd. (the “Opco”) is an enterprise incorporated and existing within the territory of China in accordance with the law of the People’s Republic of China, the registration number of its legal and valid Business License is 440682000015895 and the legal registered address is East of Gong Yong, Wan Qing Yang, Heshun Town, Nanhai District, Foshan City, Guangdong Province, China.

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4. Party B intends to acquire all of the shares or assets of Opco. Prior to the completion of such acquisition, Party A agrees to entrust the management and operation of Opco to Party B and to sell part of operating assets of Opco to Party B. In order to protect the interests of Party B, Party A agrees to pledge the 100% of shares of Opco they own to Party B.

5. Party B accepts the pledge of the shares by Party A.

Therefore, in accordance with applicable laws and regulations of the People’s Republic of China, the Parties hereto reach the Agreement through friendly negotiation on the principle of equality and mutual benefit and abide by.

Article 1 Guaranteed Obligations

The shares are being pledged to guarantee all of the rights and interests Party B is entitled to under all of the following listed agreements by and among Party A, Party B and Party C:

(a) Entrusted Management Agreement, by and between Party A, Opco and Party B on 26 December 2009 in Guangzhou;

(b) Exclusive Option Agreement by and among Party A, Opco and Party B on 26 December 2009 in Guangzhou; and

(c) Shareholders’ Voting Proxy Agreement, by and between Party A and Party B on 26 December 2009 in Guangzhou.

Article 2 Pledged Properties

Party A pledges, by way of first priority pledge, all of its rights, title and interest, in, to and under all or any part of:

(a) 100% of the shares in Opco;

(b) 100% of the registered capital (“Registered Capital”) of Opco;

(c) all investment certificates and other documents in respect of the Registered Capital of Opco;

(d) all money, dividends, interest and benefits at any time arising in respect of all the share and Registered Capital of Opco; and

(e) all voting rights and all other rights and benefits attaching to or accruing to the share or the Registered Capital of Opco to Party B.

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Article 3 Scope of Guaranteed Obligations

The scope of the guaranteed obligations is all rights and interests Party B is entitled to in accordance with all the agreements signed by and among Party A and Party B.

Article 4 Pledge Procedure and Registration

Party A shall be responsible for, and Opco shall assist Party A in processing the registration procedures with Administration for Industry and Commerce concerning the pledged shares and shall ensure that all other approval(s) from or registration with relevant PRC authorities is granted or duly secured as soon as possible.

Article 5 Transfer of Pledged Shares

Party A shall not transfer any of the pledged shares without the prior written consent of Party B during the term of this agreement.

Article 6       Representations and Warranties

6.1   Pledgeors hereby represent and warrant to the Pledgee that:

(a)   have all the necessary rights, powers and authorizations to enter into this Agreement and perform its duties and obligations hereunder;

(b)   this Agreement constitutes its legal, valid and binding obligations which are enforceable pursuant to the terms of this Agreement;

(c)   Pledgeors are and will, at all times, during the term of this Agreement, be the lawful and beneficial owners of the Pledged Shares free from pledge or other encumbrances(other than the Pledge created by this Agreement);

(d)   Pledgeors are legally registered shareholders of Opco and have paid up all the amount of the registered capital of Opco.

6.2   Opco hereby represents and warrants to the Pledgee that:

(a)   it is duly incorporated and validly existing under the laws of the PRC;

(b)   it has and will at all times have the necessary power, and has obtained the necessary approvals and authorizations, to enable it to enter into and perform its obligations under this Agreement;

(c)   its entry into and performance of this Agreement do not and will not violate any applicable laws, its articles of association or any agreement or document binding it or its assets; and

(d)  this Agreement constitutes its legal, valid and binding obligations which are enforceable pursuant to the terms of this agreement.

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Article 7       Covenants

7.1   Pledgeors further undertake that they shall:

(a)   at no time during the term of this Agreement, except with the prior written consent of the Pledgee, transfer, sell, pledge(other than the pledge created under this Agreement), encumber or otherwise dispose of the Pledged Equity;

(b)   notify the Pledgee immediately of any event that may affect the title of the Pledgeor in relation to the whole or any part of the Pledged Equity under this Agreement;

7.2   Opco further undertakes that it shall:

(a)   assist the Pledgeor with the completion of this equity pledge and all subsequent process required by applicable laws and its articles and association;

(b)   enter into any transaction which may materially affect its assets, liability, operation, shareholders’ equity or other legal rights (unless such transaction is relating to its daily operation or has been disclosed to and agreed upon by Party B in writing).

Article 8 Effectiveness, Modification and Termination

8.1 This Agreement shall go into effect when it is signed by the authorized    representatives of the Parties with seals affixed;

8.2 Upon the effectiveness of this Agreement and unless otherwise agreed upon by the Parties hereto, neither Party may modify or terminate this Agreement.  Any modification or termination shall be in writing after both Parties’ consultations. The provisions of this Agreement remain binding on the Parties prior to any written agreement on modification or termination.

Article 9 Governing Law

The execution, validity, interpretation and performance of this Agreement and the disputes resolution under this Agreement shall be governed by the laws of PRC.

Article 10 Liability for Breach of Agreement

Upon the effectiveness of this Agreement, the Parties hereto shall perform their respective obligations under the Agreement. Any failure to perform the obligations stipulated in the Agreement, in part or in whole, shall be deemed as breach of contract and the breaching party shall compensate the non-breaching party for the loss incurred as a result of the breach.

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Article 11 Settlement of Dispute

The Parties shall strive to settle any dispute arising from the interpretation or performance of this Agreement through friendly consultation. In case no settlement can be reached through consultation within thirty (30) days after such dispute is raised, each party can submit such matter to China International Economic and Trade Arbitration Commission (the “CIETAC”) in Beijing in accordance with its rules then in effect. The arbitration shall take place in Beijing. The arbitration award shall be final, conclusive and binding upon both parties.

Article 12 Severability

12.1 Any provision of this Agreement that is invalid or unenforceable due to the laws and regulations shall be ineffective without affecting in any way the remaining provisions hereof.

12.2 In the event of the foregoing paragraph, the Parties hereto shall prepare supplemental agreement as soon as possible to replace the invalid provision through friendly consultation.

Article 13 Miscellaneous

13.1 The headings contained in this Agreement are for the convenience of reference only and shall not in any other way affect the interpretation of the provisions of this Agreement.

13.2 The Agreement shall be executed in four copies, both in Chinese and English. Each party holds one Chinese and one English original, and the remaining shall be kept for completing relevant procedures. Each copy shall have equal legal force, and both the English version and Chinese version shall have the same effect.

13.3 In Witness Hereof, the Parties hereto have executed this Agreement on the date described in the first page.

(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)                                                             

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(Page of signature only)

Party A: CHEN Zhisheng

 (signature) :

Party B: Guangzhou Flourishing Blessing Heng Seng Agricultural Technology Limited

(seal)

Authorized representative:

(signature):

Party C: Foshan Nanhai Ke Da Heng Sheng Aquatic Co., Ltd.

(seal)

Authorized representative:

(signature):

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