20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.   20549

FORM 20-F

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

 X  

ANNUAL REPORT PURSUANT TO SECTION 13 Or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2008

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE OF 1934

OR

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE OF 1934

Commission file number 0-20386

CHAI-NA-TA CORP.

(Exact name of Registrant as specified in its charter)

NOT APPLICABLE

(Translation of Registrant’s Name into English)

BRITISH COLUMBIA, CANADA

(Jurisdiction of incorporation or organization)

UNIT 100 – 12051 HORSESHOE WAY, RICHMOND, BRITISH COLUMBIA   V7A 4V4

(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

NONE

Securities registered or to be registered pursuant to Section 12(g) of the Act:

COMMON STOCK, WITHOUT PAR VALUE

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.  Common     34,698,157

Indicate by check mark if the registrant is a well-known seasonal issuer, as defined in Rule 405 of the Securities Act.

Yes__No xx

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934   Yes__No xx

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 12 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  Yes xx No__

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

Large accelerated filer ___

Accelerated filer ___

Non-accelerated filer _xx_

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ___

IFRS ___

Other _xx_

If “Other” has been checked, indicate by check mark which financial statement item the registrant has elected to follow:

Item 17 xx Item 18 __   

If this is an annual report, indicated by check mark whether the registrants is a shell company

Yes__No xx

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Chai-Na-Ta Corp.

FORM 20-F ANNUAL REPORT

FOR YEAR ENDED DECEMBER 31, 2008

TABLE OF CONTENTS

Part I	.	3
ITEM 1	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	3
ITEM 2	OFFER STATISTICS AND EXPECTED TIMETABLE	3
ITEM 3	KEY INFORMATION	3
ITEM 4	INFORMATION ON THE COMPANY	9
ITEM 5	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	16
ITEM 6	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	25
ITEM 7	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	29
ITEM 8	FINANCIAL INFORMATION	30
ITEM 9	THE OFFER AND LISTING	30
ITEM 10	ADDITIONAL INFORMATION	32
ITEM 11	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT	38
	MARKET RISK
ITEM 12	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	39
PART II		39
ITEM 13	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	39
ITEM 14	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY
	HOLDERS AND USE OF PROCEEDS	39
ITEM 15	CONTROLS AND PROCEDURES	39
ITEM 16	RESERVED	41
PART III		43
ITEM 17	FINANCIAL STATEMENTS	43
ITEM 18	FINANCIAL STATEMENTS	43
ITEM 19	EXHIBITS	43
SIGNATURE PAGE		45
CONSOLIDATED FINANCIAL STATEMENTS		46

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PART I

ITEM 1

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2

OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3

KEY INFORMATION

SELECTED FINANCIAL DATA

The selected financial data of the Company for the fiscal years ended December 31, 2008, 2007 and 2006 are derived from the consolidated financial statements of the Company which have been audited by Deloitte & Touche LLP, Independent Registered Chartered Accountants as indicated in their report which is included elsewhere in this Annual Report. The selected financial data set forth for the years ended December 31, 2008, 2007, 2006, 2005 and 2004 are derived from the Company's audited consolidated financial statements.

The selected financial data should be read in conjunction with the Company’s consolidated financial statements, related notes thereto and other financial information included elsewhere in this report.

Table No. 1 is derived from the audited consolidated financial statements of the Company, which have been prepared in accordance with Canadian Generally Accepted Accounting Principles (“GAAP”), the application of which, in the case of the Company, conforms in all material respects for the periods presented with United States GAAP, except as referred to in the footnotes to the audited consolidated financial statements. The value of the U.S. Dollar relative to the Canadian Dollar was approximately 1.22 as of December 31, 2008.

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	Table No. 1
	Selected Financial Data
	(CDN$ in 000, except Earnings/Loss per Share and Share Data)
	Year Ended		Year Ended		Year Ended		Year Ended		Year Ended
	12/31/2008		12/31/2007		12/31/2006		12/31/2005		12/31/2004
Canadian GAAP
Revenue	9,232		7,562		5,928		5,826		7,425
Gross Profit (Loss) (2)	(2,685	)	(2,567	)	(5,541	)	(9,641	)	1,971
Operating Profit (Loss) (5)	(4,224	)	(4,430	)	(7,462	)	(11,738	)	103
Net Income (Loss) (5)	(4,670	)	(3,329	)	(9,461	)	(8,131	)	80
Earnings (Loss) per Share – basic (5)	(0.13	)	(0.10	)	(0.27	)	(0.23	)	0.00
Earnings (Loss) per Share – diluted (5)	(0.13	)	(0.10	)	(0.27	)	(0.23	)	0.00
Weighted Average Number of Common
Shares (3)	34,698		34,698		34,698		34,698		34,690
Diluted Number of Common Shares (4)	34,698		34,698		34,698		34,698		34,789
Dividends declared per Share	0		0		0		0		0
Working Capital	5,456		7,424		7,525		4,917		11,437
Ginseng Crops (1)	7,486		11,395		14,519		19,349		20,869
Capital Assets	2,678		3,795		5,793		6,589		9,171
Total Assets	20,890		25,613		29,693		36,751		41,341
Net Assets	6,111		11,242		14,258		23,714		31,272
Term Debt – Non Current	8,619		6,973		8,366		2,450		279
Capital Stock	38,246		38,246		38,246		38,246		38,246
US GAAP
Revenue	9,232		7,562		5,928		5,826		7,425
Gross Profit (Loss) (2)	(2,675	)	(2,553	)	(5,496	)	(9,082	)	2,480
Operating Profit (Loss) (5)	(3,644	)	(3,621	)	(6,715	)	(10,751	)	723
Net Income (Loss)	(4,666	)	(3,317	)	(9,439	)	(7,770	)	318
Earnings (Loss) per Share- basic (5)	(0.13	)	(0.10	)	(0.27	)	(0.22	)	0.01
Earnings (Loss) per Share – diluted (5)	(0.13	)	(0.10	)	(0.27	)	(0.22	)	0.01
Dividends declared per Share	0		0		0		0		0
Working Capital	5,453		7,416		7,511		4,877		10,873
Ginseng Crops (2)	7,478		11,382		14,497		19,276		20,582
Capital Assets	2,678		3,795		5,793		6,589		9,171
Total Assets	20,882		25,600		29,669		36,706		40,709
Net Assets	6,104		11,229		14,235		23,668		30,866
Term Debt – Non Current	8,619		6,973		8,366		2,450		279
Capital Stock	38,226		38,226		38,226		38,226		38,226

1.

Ginseng plants reach maturity and can be harvested at the end of their third year of growth. Total acreage under cultivation is 392 acres at December 31, 2008 (629 acres at December 31, 2007, 966 acres at December 31, 2006, 1,240 acres at December 31, 2005 and 1,431 acres at December 31, 2004). The Company values these plants at the lower of cost or net realizable value.

2.

Under US GAAP, the interest capitalised into Ginseng Crops would not be eligible for capitalisation. These amounts would be expensed in the period incurred. On January 1, 2008, the Company adopted a new Canadian GAAP standard which requires the write-downs of inventory and ginseng crops to be included in cost of goods sold. Prior year gross profit (loss) figures under Canadian GAAP have been retroactively adjusted to reflect the change in accounting standards.

3.

Figures in thousands. In 2006, 10,399,149 preferred shares have been converted into common shares on a 1:1 basis. In 2004, 34,500 shares were issued for stock options exercised.

4.

Options to purchase NIL, 343,400, and 403,300 shares of common stock were outstanding in 2008, 2007 and 2006, respectively, but were not included in the computation of diluted number of common shares because their effect would have been anti-dilutive.

5.

During 2008, 2007 and 2006, the Company incurred write-downs of $2,998,000, $2,735,000 and $5,639,000, respectively, on inventory and crop costs which caused a significant decrease in net earnings (loss) in total and on a per share basis compared to prior years.

4

In this Annual Report, unless otherwise specified, all dollar amounts are expressed in Canadian Dollars (CDN$). The Government of Canada permits a floating exchange rate to determine the value of the Canadian Dollar against the U.S. Dollar (US$).

Table No. 2 sets forth the rate of exchange for the Canadian Dollar for the last five years and the most recent six months.

For purposes of this table, the rate of exchange means the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York. The table sets forth the number of Canadian Dollars required under that formula to buy one U.S. Dollar.

Table No. 2
U.S. Dollar/Canadian Dollar
Fiscal Year Ended	Average	High	Low	Close
12/31/2008	1.07	1.30	0.97	1.22
12/31/2007	1.07	1.19	0.92	0.99
12/31/2006	1.13	1.19	1.10	1.17
12/31/2005	1.21	1.27	1.14	1.16
12/31/2004	1.30	1.39	1.20	1.20
Month Ended		High	Low	Close
02/28/2009		1.29	1.22	1.27
01/31/2009		1.27	1.18	1.23
12/31/2008		1.30	1.20	1.22
11/30/2008		1.29	1.15	1.24
10/31/2008		1.30	1.06	1.22
09/30/2008		1.08	1.03	1.06

The closing rate of exchange was 1.27 on February 28, 2009.

RISK FACTORS

The Company may from time to time make written or oral forward-looking statements. Written forward-looking statements may appear in this document and other documents filed with the Securities and Exchange Commission, in press releases, in reports to shareholders, on the Company’s website, and other documents.  While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.

Such estimates, projections or other forward looking estimates involve various risks and uncertainties as outlined below. We caution the reader that important factors in some cases have affected and could materially affect actual results in the future, and cause actual results to differ materially from the results expressed in any estimates, projections or other forward-looking statements. Prospective investors should consider carefully the risk factors set out below.

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Chai-Na-Ta is subject to a number of business and financial risks including: agricultural risk such as weather and disease, commodity price risk for ginseng bulk root, exchange risk (predominantly United States and Hong Kong dollar related), the lengthy growing cycle for ginseng, interest rate risk, credit risk and the concentration of customers, and future need for financing.

Going Concern

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has experienced a loss of $4,670,000 for the year ended December 31, 2008 due to the low selling price of ginseng and has an accumulated deficit of $32,915,000 as at December 31, 2008. The Company is closely monitoring cash resources and has received significant financing from a Canadian chartered bank and a company formerly under common control. The term loan from the company formerly under common control in the amount of $8,587,000 is due on August 18, 2010. The Company is currently considering alternative sources of financing and requesting an extension of the loan maturity date. There can be no assurances that the Company will be able to refinance or repay the loan on its current due date. If the Company cannot make such arrangem ents, the Company may realize its assets and settle its liabilities at amounts different from the carrying values.

The Company's ability to continue as a going concern is dependant on achieving ongoing profitable operations, obtaining new sources of debt or restructuring existing debt and the continued financial support of its creditors. These consolidated financial statements do not include any adjustments to the amounts and reclassification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

Agricultural Risks

The Company’s primary business is the cultivation and marketing of North American ginseng. Ginseng farming is subject to agricultural risks such as weather and disease and risks of low yields, poor crop quality, and crop failure. Insurance is available to cover such risks but the relatively high costs have resulted in the Company electing to self-insure.

Although the Company believes that its Integrated Crop Management System and diversification of farming operations will help mitigate risks, there can be no assurance that such policies or procedures will be effective in reducing such risks and accordingly, the Company’s business, financial condition, operating results and cash flows may be materially affected.

Product Pricing

The marketing of bulk and graded North American ginseng in world markets is subject to pricing risks. The price of North American ginseng may be affected by factors such as the size, shape, color, taste, and quality of the harvest for the Company and the industry at large, as well as other factors in any given year. These are factors that the Company may not be able to control in the short term. The Company’s long-term strategy is to expand the level of vertical integration throughout its operations, potentially reducing the exposure to bulk North American ginseng price fluctuations as more bulk root is sold into the value-added consumer products market. In addition, the Company maintains economies of scale in its operations which are designed to give it a competitive advantage relative to other producers when prices decline.

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North American ginseng root prices continue to be at low levels and fell at the end of 2008 due to the global economic uncertainty which resulted in a reduction in the purchasing power of the Company’s customers. Although the Company believes that prices will improve modestly towards the end of 2009, significant changes in the supply of or demand for North American ginseng may adversely impact the price of ginseng roots and have a material adverse effect on the Company’s business, financial condition, operating results and cash flows.

Lengthy Growing Cycle for Ginseng

As the cycle for growing ginseng takes several years from the time of planting to the time of harvesting, our future profitability is also impacted by our ability to accurately predict demand for our products in future years. Unanticipated decreases in demand or excess supplies in world markets could adversely affect profitability due in part to the limitation in our inability to make adjustments to the size of our crops in reaction to short term swings in supply and demand. Consequently, if the expected yields and quality of future harvests are not realized, the Company may not be able to harvest additional ginseng in sufficient quantities or quality to compensate for the shortfall. Lower than expected yields and quality could have a material adverse effect on the Company’s business, financial condition, operating results and cash flows.

Availability of Suitable Land

The Company leases approximately 473 acres and owns 270 acres of farm land in Canada of which 392 acres are currently under ginseng cultivation. Generally, the Company uses farm land only for one ginseng crop as it is generally believed that ginseng depletes the soil of nutrients necessary for a second successful ginseng crop. In 2005 the Company announced that it will no longer plant in British Columbia and is closing its British Columbia operations in 2009 after completing the final harvest in 2008. Although the Company believes that the southern region of Ontario will continue to have available farm land that could be used for ginseng farming, there can be no assurances that the Company will be able to secure leases on terms similar to existing leases or acquire suitable farm land at reasonable prices. The inability to secure suitable farm land through leases or through acquisitions could have a material adverse effect on the Company's business, fi nancial condition, operating results and cash flows.

Credit Risk and the Concentration of Customers

The Company is exposed to credit risk on accounts receivable from customers. In order to manage its credit risk, the Company carefully monitors credit terms, and investigates credit history. Payments or deposits are usually received before shipments of inventory to the customer and credit is typically granted only to customers with established relationships or those customers which have been subject to a credit review and approval by management. When such relationships have not been established or credit reviews have not been acceptable, letters of credit may be used to secure such payment or revenues may not be recognized until collection.

The Company’s product is typically sold to major ginseng brokers in Hong Kong and a limited number of smaller customers. During the years ended December 31, 2008, 2007 and 2006, the Company had sales of approximately 87% to its top three customers, 83% to its top two customers and 90% to its top four customers in each year, respectively. The Company believes that a limited number of customers will continue to represent a significant portion of its total revenue. Although the Company does not consider itself economically dependent upon any single customer or combination of customers due to the existence of other potential brokers capable of purchasing the Company’s supply, there can be no assurance that the Company will be able to maintain its current significant customers or secure significant new customers on similar terms and this may have a material adverse effect on the Company’s business, financial condition, operating results and cash flows.

7

During the years ended December 31, 2008, 2007 and 2006, the Company had sales of approximately 87%, 89% and 79% to customers in the Far East, primarily China. The Company expects sales to markets in the Far East to continue to represent the majority of the Company’s sales. Any adverse change in the demand for ginseng from Far East markets may have a material adverse effect on the Company’s business, financial condition, operating results and cash flows.

Risks Associated with International Operations

The Company operates in international markets and conducts business in Canada (bulk root farming operations and certain bulk root sales) and Hong Kong (bulk root sales centre in Asia). There are a number of risks inherent in the Company’s international business activities, including changes in regulatory requirements, tariffs and other trade barriers, costs and risks associated with foreign markets, differing culture and business practices, potentially adverse tax consequences, the burdens of complying with a wide variety of foreign laws, war, insurrection, terrorism and other political risks and factors beyond the Company’s control. Exchange risks are also present as currencies may fluctuate at different rates depending on economic, political and other factors. There can be no assurance that adverse changes in the above noted factors will not materially affect the Company’s business, financial condition, operating results a nd cash flows.

Market for Common Shares; Potential Volatility of Stock Price

The trading prices of the Common Shares have been subject to wide fluctuations in recent years. There can be no assurance that the market price of the Common Shares will not significantly fluctuate from its current level. Furthermore, the low average trading volumes for the Company’s Common Shares may impact the liquidity of the shares or the ultimate price at which they can be sold.

Financing of Current Operations

The Company relies on the sale of inventory to fund the planting, maintenance and harvesting of ginseng crops that will be harvested in future years. To fund current operations the Company will first try and sell inventory but if the Company cannot reach acceptable selling terms the Company will attempt to fund current operations with additional financing. There can be no assurance that capital markets will be conducive to such financing at all or on acceptable terms. This could have a material adverse effect on the Company's business, financial condition, operating results and cash flows.

Long-Term Financing

The Company has historically used term debt financing to finance capital asset acquisitions and short-term borrowings and operating lines to finance crops and working capital needs. In 2006, the Company established a four year term loan facility to refinance existing loan facilities and to finance the general working capital requirements of the Company. Interest rate risk is managed by arranging most term debt financing with fixed rates for the life of the obligations.

The Company will continue to focus on its farming and marketing initiatives and will also move forward to explore other business opportunities as resources permit.

In order to fund the financial requirements of the Company, including capital for debt repayment and funding for expansion and other activities, additional external sources of financing may be required. The amount of such funding depends on the future profitability of the Company, as well as the pricing of its products in world markets and the scale of any future expansion. The ability of the Company to issue additional equity may be impacted by the limited liquidity in the stock due to low historical trading volumes and significant percentages held by a limited number of shareholders. Further, if the Company decides to and is able to issue

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additional funds through public or private debt or equity financings to fund operations, new equity securities may have priority rights over existing equity security holders and the percentage ownership of current stockholders may be reduced. Although future funding may require issues of additional debt or equity; there can be no assurance that capital markets will be conducive to such financing at all or on acceptable terms.

ITEM 4

INFORMATION ON THE COMPANY

HISTORY AND DEVELOPMENT OF THE COMPANY

The Company and Operations

Chai-Na-Ta Corp. (“Chai-Na-Ta” and the “Registrant” or the “Company”) was incorporated on August 12, 1981, under the Canada Business Corporations Act. The Company originally was named Chai-Na-Ta Ginseng Products Limited. During 1994, the name was changed to Chai-Na-Ta Corp. Chai-Na-Ta, together with its subsidiaries, is engaged in the growing, processing and marketing of North American ginseng. Ginseng, a woodland plant with species native to both China and North America, is prized for its root which has been the most valuable herb in Oriental medicine for over 2,000 years. The vast proportion of North American ginseng is farm grown. With 392 acres currently under cultivation it is one of the world’s largest producers of North American ginseng.

The corporate head office is located at: Unit 100 - 12051 Horseshoe Way, Richmond, British Columbia, V7A 4V4, the current contact person is Wilman Wong, C.E.O.; and the telephone number is (604) 272-4118. The head office operations include corporate administration, corporate finance, human resources, sales and marketing, and investor relations. The Company maintains farms near Otterville in Ontario.

The Company listed its common stock on the Toronto Stock Exchange ("TSX") in October 1989; the stock symbol was CC. On April 28, 2006, the Company shares were delisted by the Toronto Stock Exchange as the Company had not met the continued listing requirements of the Exchange. The Company listed its common stock on the North American Stock Dealers Automatic Quotation (“NASDAQ”) Stock Market in October 1992; the stock symbol is CCCFF. The Company’s stock was delisted from NASDAQ in April 1999 for not meeting the listing requirements. The Company commenced trading on the NASDAQ’s OTC Bulletin Board in April 1999.

The Company’s wholly-owned subsidiary, Chai-Na-Ta Farms Ltd. (“CNT Farms”) is headquartered in Richmond, British Columbia and carries out the planting, growing and harvesting of the Company’s ginseng crops. CNT Farms also handles the storage of the Company’s root inventory and manages the distribution of inventory directly to local customers or to customers in the Far East through CNT Trading (Hong Kong) Limited. CNT Farms also carries out crop research through its agricultural staff.

The Company also has a wholly-owned subsidiary, Unique Formulations Inc. (“Unique”) which previously operated out of Portland, Oregon as a wholesaler of ginseng and non-ginseng based herbal products to the U.S. market. As part of the Company’s efforts to reduce operating costs, the Portland office was closed in November 1999 and the operations were then administered from the head office in British Columbia, Canada. The company has been inactive since 2003.

The Company incorporated its wholly-owned subsidiary, CNT Trading (Hong Kong) Limited (“CNT HK”), on October 13, 1999 to carry out direct marketing, sales and distribution functions for North American ginseng in Hong Kong for distribution through Asia. CNT HK sells ginseng roots directly to brokers, distributors and certain customers in the Far East, primarily China, who use the bulk ginseng root for a variety of purposes.

9

The Company incorporated its wholly-owned subsidiary, CNT Nutraceuticals Ltd. (“CNTN”) on February 3, 2004 to operate a showroom in Richmond, British Columbia and carry out direct marketing and sales of graded roots and ginseng-based value-added products to customers in Canada. The direct marketing and operation of the showroom were scaled down in 2005 due to cash flow restraints. The operations of CNTN in the short-term will be limited to selling existing inventory and to creating custom-made ginseng products for wholesale distribution.

The Company’s principal capital expenditures incurred during 2008, 2007 and 2006 were $139,000, $61,000, and $232,000, respectively, which related to purchases of property, plant and equipment located in Canada.

Financing

On April 4, 2005, the Company established a revolving loan facility of HK$10,000,000 from a company formerly under common control. On October 13, 2005, the Company established another revolving loan facility of HK$13,200,000 from the same company formerly under common control. Both loans were refinanced on August 18, 2006 for a four year term loan facility as detailed below.

On August 18, 2006, the Company established a four year term loan facility of HK$54,700,000 (approximately $8,000,000 at the date of establishment) from the same company formerly under common control. The loan is unsecured and bears interest at 1.7% per annum over the HIBOR (Hong Kong Interbank Offered Rate) or LIBOR (London Interbank Offered Rate). The loan was used to refinance the above two existing shorter-term loan facilities and to finance the general working capital requirements of the Company.

On May 16, 2005, the Company secured a $1,500,000 non-revolving term loan bearing interest at prime plus 1.5% per annum for three years from a Canadian chartered bank. The loan was fully repaid with the last payment being made in April 2008.

As at December 31, 2008, subject to limitations based on the value of inventory, certain receivables and the estimated value of qualifying ginseng crops, the Company has available a $2,500,000 (2007 - $5,000,000) revolving demand operating loan with a Canadian chartered bank that bears interest at bank prime rate plus 1.625% per annum. The loan availability will reduce to $2,000,000 effective June 1, 2009. As at December 31, 2008, $1,060,000 (2007 - $3,510,000, 2006 - $4,310,000) had been drawn under the operating loan.

On September 4, 2008, the Company secured a $2,000,000 non-revolving term loan from a Canadian chartered bank with an interest rate of prime plus 1.875% per annum. The loan is due in full upon the earlier of receipt of the proceeds from the sale of the Company's property near Kamloops, British Columbia or May 31, 2009. The loan is secured by the same property near Kamloops, British Columbia.

BUSINESS OVERVIEW

Ginseng Farming

There are two main types of ginseng recognised in the world. Asian or Korean ginseng (Panax ginseng C.A. Meyer), is a herb indigenous to the mountainous forests of eastern Asia. North American ginseng (Panax quinquefolius) is a woodland plant native to North America. Wild woodland ginseng has been harvested nearly to extinction in both Asia and North America and this has stimulated the demand for farm grown ginseng.

Cultivated North American ginseng is grown under artificial shade with a heavy mulch of straw to replicate the conditions found on the forest floor in the hardwood forests of its native habitat. In the late summer and early fall,  the ginseng seeds  are  planted  in  raised  beds,  which  provide  the  necessary  drainage  and  solar

10

warming of the soil during the spring. After the straw mulch is applied to conserve moisture and to protect the plants from hard frosts, the shade structure is erected over the plants. The shade cloth is left off the gardens in the spring to allow the soil to warm in the sun. As the plants emerge and the sun gets stronger, the shade cloth is put in place to provide the optimum growing environment for a healthy crop. The shade cloth is removed in the winter months to allow snow cover so that the root remains dormant over the winter. This annual cycle is repeated until the third or fourth year when the root is harvested, typically using mechanical methods.

Historically, the Company has chosen to farm in two areas, British Columbia and Ontario. The arid interior of southern British Columbia is characterised by extremely dry air and frequent breezes that keep humidity in the gardens low and the leaves dry. This reduces the risk of leaf blights and root rots. Although southern Ontario has higher humidity and rainfall than southern British Columbia, the sandy tobacco land allows good drainage, resulting in exceptional growth rates and high quality root. Careful selection of farm sites and scrupulous attention to garden drainage and ventilation substantially reduces the Company's farming risks, while taking advantage of the excellent growing conditions. As described below, the Company’s ongoing problem in British Columbia with rusty roots, an aesthetic problem that decreases the perceived value of the root but does not affect its medicinal properties, led to the decision in 2005 to permanent ly discontinue planting in British Columbia The company is closing its British Columbia operations in 2009 after completing the final harvest in 2008.

The Company conducts an extensive battery of tests on each garden to determine water retention characteristics, pH and plant nutrient levels. The Company then adjusts soil fertility and pH to optimum levels for ginseng growth. Once the crop is seeded, the Company's "Integrated Crop Management" program operates seven days a week to monitor nutrients, soil moisture and temperature which are critical to optimum root growth. As the root crop is harvested, the condition and yield of each garden is measured to permit re-evaluation of the production system.

As at December 31, 2008, the Company has under lease 473 acres and owns 270 acres of farmland of which 392 are under ginseng cultivation in Ontario. The southern region of Ontario has abundant farm land that could be used for ginseng farming and lease costs are relatively low. This availability is important because farm land is usually used for only one ginseng crop, the growing of which is generally believed to deplete the soil of nutrients necessary for a second successful ginseng crop.

Due to the continued rusty root problem and the downward price pressure of ginseng grown in British Columbia, the Company decided in 2005 to stop planting in British Columbia and to close its British Columbia operations after the projected final harvest in 2008. The Company decided not to proceed with its 2007 planting due to temporary cash flow restraints but the Company did plant 109 acres in 2008. The Company does not anticipate significantly increasing its plantings in Ontario therefore the number of acres being harvested will decrease significantly now that the British Columbia operation has been closed.

Table No. 3
Ginseng Farming Operations
	New	Total		Harvest	Total
	Acreage	Acres Under	Acres	Yield in lbs	Harvest
Calendar	Planted	Cultivation	Harvested	Per Acre	in lbs
2008	109	392	350	2,824	988,456
2007	0	629	332	2,767	918,963
2006	40	966	311	2,576	801,662
2005	188	1,240	352	2,240	787,402
2004	460	1,431	240	2,116	506,626

11

2003	354	1,211	370	2,096	775,630
2002	304	1,284	359	2,666	956,996
2001	329	1,339	346	2,816	975,577
2000	289	1,356	366	2,612	957,431
1999	358	1,433	404	2,685	1,083,643

Medicinal Properties

Ginseng is sold in capsule, slice, tablet, tea, powder, extract, whole root form and as additives to various consumer products. The amount of active ingredients (ginsenosides) varies with each product and each brand. Though it is not a rule, extracts generally contain the highest concentration of active ingredients, followed by capsules, powders, tablets, slices, whole roots, and teas.

Western medicine does not recognise ginseng's medicinal properties; however scientific study of ginseng began in the early 19th century. The chemical component of ginseng is very complex and varies in different species and from the different processing methods used. Asian and North American ginseng are similar in chemical composition. They both contain ginsenosides, which are recognized as the main active ingredients in ginseng but the amount and quality of the ginsenosides varies between the two species. In addition to the more than 30 ginsenosides identified by scientists around the world, other elements such as fatty acids, amino acids, peptides, polysaccharides, vitamins and minerals have been discovered in different parts of the ginseng plant. Many of these non-ginsenoside components are believed to have immunity enhancing and hypoglycaemic activities.

While Western medicine remains unconvinced of ginseng's effectiveness, millions of users around the world believe in the plant's therapeutic powers. Ginseng has been regarded as an important health product in many Asian cultures for over 2,000 years. Some of the perceived benefits of North American ginseng include:

·

Reduced stress/relaxant;

·

Regulated blood sugar;

·

Strengthened immune function;

·

Antioxidant (anti-aging);

·

Hypotensive;

·

Enhanced mental activity; and

·

Synergized activity of anti-cancer drugs.

Competition

The Company produces North American ginseng, which is a distinctly different product from the consumer’s perspective from Asian ginseng grown in Korea and China. In world markets, North American ginseng represents about 20% of the total ginseng sold. Based on information obtained through discussion with customers, suppliers and review of available farming industry literature, management estimates that the Company currently produces approximately 15% of the total North American ginseng supply annually.

Competitors currently producing North American ginseng consist primarily of hundreds of small growers (less than one hundred acres) located in southern Ontario, central British Columbia and Wisconsin and one large publicly-traded company.

The Company competes through the production of high quality products (including larger four year old root), lower production costs achieved through economies of scale and an extensive marketing and distribution network serving customers in Hong Kong and the Far East.

12

Marketing and Customers

The Company’s product is typically sold to major ginseng brokers in Hong Kong and a limited number of smaller customers. The marketing efforts to customers in Hong Kong and the Far East, primarily mainland China, are conducted through the Company’s wholly-owned subsidiary CNT HK. During the years ended December 31, 2008, 2007 and 2006, the Company had sales of approximately 87%, 89% and 79%, respectively, to its major customers located in Hong Kong. Although the Company believes that a limited number of customers will continue to represent a significant portion of its total revenue, the Company does not consider itself economically dependent upon any single customer or combination of customers due to the existence of other potential brokers capable of purchasing the Company’s supply.

Transfer prices between all the companies in the group are determined based on estimated world market prices at the transaction dates. Market prices are established with reference to various ginseng brokers in Hong Kong and comparable sales to third parties.

Manufacturing/Processing

Canadian farming and processing operations, conducted through the Company’s wholly-owned subsidiary, CNT Farms., consist of farming, including cultivation, harvesting, washing and drying the root prior to export or sale to the local market. Substantially, all of the Company’s sales during 2008, 2007 and 2006 involved the sale of bulk root.

The industry as a whole has a limited supply of seed for new plantings. The supply of seeds comes from those picked each year from mature plants under cultivation. The seeds are living embryos that must be planted in the following year. Normal industry practice is to store the seed for only one year so its limited shelf life can cause some barriers for future planting.

Manufacturing and processing of value-added products in North America is contracted out to third party manufacturers through the Company’s wholly-owned subsidiary CNTN in Canada. Activities in recent years have consisted of a limited amount of sales of herbal health products to distributors in Canada

Canada and Foreign Sales/Assets

During 2008, the Company earned $1.2 million in sales in Canada, and $8.0 million in sales in the Far East.

During 2007, the Company earned $3.5 million in sales in Canada, and $4.1 million in sales in the Far East.

During 2006, the Company earned $1.3 million in sales in Canada, and $4.7 million in sales in the Far East.

As at December 31, 2008, 2007, and 2006, over 99% of the Company’s long lived assets were in Canada.

Research and Development

The Company has developed, and in 2000 trademarked, CNT 2000Ò, a standardized North American ginseng extract. Standardization enables the Company to conduct scientific studies on the efficacy of North American ginseng and makes all the studies comparable with each other. The standardization of North American ginseng enables the Company to proprietize its products and facilitate global product registration under different regulatory environments. Finally, standardization puts the Company in the strategic position to further diversify its markets.

13

Staffing

As at December 31, 2008, the Company employed approximately 17 salaried full-time people in its operations world-wide. The Company may hire up to 100 persons for seasonal work in the ginseng farms and for production work in its processing facilities.

Seasonality

The Company’s business is highly seasonal, with harvesting and planting activities typically occur during the last two quarters of each year. Historically, fall harvests were sold primarily during the first two quarters of the subsequent year leading to significant seasonal variations in the volume of sales, inventory and crop costs.

ORGANIZATIONAL STRUCTURE

As at December 31, 2005, Road King, through its subsidiary Herb King International Limited, held about 77% of the Company’s issued and outstanding common shares and 100% of the Company’s issued and outstanding preferred shares. On September 1, 2006, Herb King exercised its right to convert 10,399,149 preferred shares of the Company into an equivalent number of common shares, thereby raising its holdings of the Company’s common shares to 84%. On December 7, 2006, Road King distributed its entire holding of the common shares of the Company to its shareholders by way of a special interim dividend. As a result of the distribution, Wai Kee Holdings Limited (“Wai Kee”) became the largest single shareholder of the Company and holds about 38% of the Company’s issued and outstanding common shares as at December 31, 2008, December 31, 2007 and December 31, 2006. Wai Kee is a Hong Kong based publicly traded company, with its core business in investment holdings.

As of December 31, 2008 the Company has the following wholly-owned subsidiaries:

a)

Chai-Na-Ta Farms Ltd. (“CNT Farms”)
incorporated on February 28, 1994 in British Columbia, Canada

b)

Chai-Na-Ta International Ltd. ("CNTI") (Inactive)
incorporated on January 18, 1994 in Barbados

c)

Chai-Na-Ta (Asia) Ltd. (“CNTA”) (Inactive)
incorporated on October 26, 1992 in Barbados

d)

CNT Nominees Limited. (Inactive)
incorporated on August 6, 1999 in the British Virgin Islands

e)

CNT Trading (Asia) Limited. (Inactive)
incorporated on October 17, 2000 in the British Virgin Islands

f)

CNT Trading (Hong Kong) Limited (“CNT HK”)
incorporated on October 13, 1999 in Hong Kong

g)

Unique Formulations Inc. (“UF”) (Inactive)
incorporated on April 21, 1993 in Oregon, USA

h)

CNT Nutraceuticals Ltd. (“CNTN”)
Incorporated on February 3, 2004 in British Columbia, Canada

An organisation chart of the Company and its affiliates is included in the exhibit (8.1).

PROPERTY, PLANT AND EQUIPMENT

The Company's executive office is located in rented premises of approximately 3,000 square feet at Unit 100 - 12051 Horseshoe Way, Richmond, British Columbia V7A 4V4. Other office facilities include farm offices located on its farm sites in Cherry Creek, British Columbia, and Otterville, Ontario.

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The Company holds 473 gross acres of farmland under lease in British Columbia and Ontario (Table No. 4) and owns 220 acres of farm land near Kamloops, British Columbia and a 50 acre farm near Otterville, Ontario. The Kamloops farm cultivates ginseng and is the location of the British Columbia office of CNT Farms. The Kamloops farm has been made available for sale and has been reclassified as an asset held for sale on the consolidated balance sheet. Beginning in 2004, all Ontario harvested roots have been processed in the new facilities, thereby reducing transportation and handling costs. Currently, 392 acres of the agricultural land held by the Company is under cultivation for the production of ginseng.

The Company will continue to plant in the growing regions in Ontario. However, due to the continued rusty root problem and the downward price pressure of ginseng grown in British Columbia, the Company decided in the latter half of 2005 to stop planting in British Columbia and will close its British Columbia operations in 2009 after completing the final harvest in 2008. New seeding was 109 acres for 2008, 0 acres for 2007 and 40 acres for 2006. The Company does not anticipate planting additional acreage in Ontario to compensate for the discontinuation of planting in British Columbia. The Company believes that the current levels of leased and owned lands as well as the lands under cultivation are sufficient to meet the Company’s needs.

The Company cultivates ginseng primarily on leased land. Agricultural land is normally leased for a 5 year period and land rentals range from $300 - $400 per year per acre.

Table No. 4
Agricultural Land Leases
Name	Location	Gross Acreage	Expiration
Ash	Norwich, Ontario	44.5	12/31/2009
Ash	Norwich, Ontario	5.3	12/31/2010
Grim	Otterville, Ontario	77.5	12/31/2012
Maitz	Norwich, Ontario	38.0	12/31/2009
Maitz	Norwich, Ontario	40.0	12/31/2010
Pargauskas	Norwich, Ontario	48.7	12/31/2012
Pathy	Otterville, Ontario	67.0	12/31/2009
Pierssens	Norwich, Ontario	67.0	12/31/2008
River Ridge	Norwich, Ontario	85.0	12/31/2009
		473.0

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ITEM 5

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Forward-looking statements

The Statements contained in this report which are not historical facts, including, but not limited to, certain statements found under this section, are forward-looking statements that involve a number of risks and uncertainties. The actual results of the future events described in such forward-looking statements could differ materially from those stated in such forward-looking statements. Among the factors that could cause actual results to differ materially are the risks and uncertainties discussed in this report, and the uncertainties set forth from time to time in the Company’s filings with the Securities and Exchange Commission, and the other public statements. Such risks and uncertainties include, without limitation, seasonality, interest in the Company’s products, general economic conditions, consumer trends, competition, the effect of governmental regulation, prices, yields, availability of new working capital, quality of the Company’s harvest, and successful implementation of new products. This section should be read in conjunction with the Company’s Consolidated Financial Statements included as item 17 of this report. These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (Canadian GAAP), which in the case of these financial statements, conform in all material respects with those in the United States (US GAAP), except as disclosed in note 21 to the consolidated financial statements.

OPERATING RESULTS

Fiscal year ended 12/31/2008 compared with year ended 12/31/2007

Revenue increased 22% to $9,232,000 in 2008 from $7,561,000 in 2007. The Company’s average selling price increased to $9.50 per pound in 2008 compared to $8.20 per pound in 2007. The Company also saw an increase of 10% in the volume of sales in 2008 compared to 2007. In 2008, there was a greater percentage of higher quality roots sold compared to 2007 and sales prices improved slightly which resulted in a higher average selling price. Ginseng prices remained at low levels but maintained their stability during most of 2008; however there was a significant decrease at the end of 2008 as global economic conditions deteriorated. The Company expects that there will be an increase in the number of pounds of root sold in 2009 due to the larger harvest in 2008 but expects a corresponding decrease in the average sales price.

Cost of goods sold was 129% of sales revenue in 2008 compared to 134% in 2007 as ginseng root sales in both years were made after the inventory had been written down to its net realizable value in the previous yearresulting in a minimal margin on inventory sales. The impairment in the value of inventory and ginseng crops to their estimated net realizable value are accounted for as a part of cost of goods sold which has caused cost of goods sold to be in excess of revenue. The Company harvested 988,456 pounds of root in 2008, an increase of 8% from 918,963 pounds in 2007. The Company harvested 350 acres in British Columbia and Ontario, with an average yield of 2,824 pounds per acre. In 2007, the Company harvested 332 acres with an average yield of 2,767 pounds per acre. The Company achieved a higher yield for the fifth consecutive year in 2008 due to continual improvement in farming techniques and crop management. The Company harvested 14 acres of three-year-old root in 2008 compared to 56 acres in 2007. The Company’s production cost was $12 per pound in both 2008 and 2007.

The Company recorded a write-down on its 2008 harvest inventory of $2,498,000 for the year ended December 31, 2008 to reduce their carrying value to their net realizable value. The net realizable value of the inventory was estimated based on purchase commitments received for inventory on hand. This write-down includes $1,500,000 which was recorded in the third quarter of 2008 and a further $998,000 in the fourth quarter as the expected net realizable value of the 2008 harvest inventory decreased as global economic conditions deteriorated.  Because of the historic low prices in 2008, a $500,000 write-down  was  recorded  on

16

the expected 2009 harvest. The net realizable value of the ginseng crops was estimated based on the estimated yield and quality of the crops upon harvest, accumulated costs, estimated additional costs required to bring the crops to harvest and current and projected selling prices.

For the year ended December 31, 2007, the Company recorded a write-down of $1,450,000 on ginseng crops to reduce their carrying value to their net realizable value. The net realizable value of the ginseng crops was estimated based on the estimated yield and quality of the crops upon harvest, accumulated costs, estimated additional costs required to bring the crops to harvest and current and projected selling prices. During the three months ended June 30, 2007, the Company recorded a write-down on inventory of $1,285,000. This inventory was being held by the Company to fulfill a contract with a Canadian customer for a predetermined minimum quantity at a fixed price. The contract expired and the customer did not order the predetermined minimum quantity. Due to the uncertainty of the Company's ability to receive the contracted amount, a write-down was recorded to reduce the carrying value of the inventory to its estimated net realizable value instead of the predetermined contract price.

For the year ended December 31, 2006, the Company recorded a write-down on inventory of $2,901,000. The net realizable value of the inventory was estimated based on purchase commitments received for inventory on hand. The Company recorded a write-down of $2,700,000 on ginseng crops for the year ended December 31, 2006 to reduce their carrying value to their net realizable value. The net realizable value of the ginseng crops was estimated based on the estimated yield and quality of the crops upon harvest, accumulated costs, estimated additional costs required to bring the crops to harvest and current and projected selling prices. The Company also recorded a write-down of inventory, raw materials and supplies for its value-added products of $38,000 during the year ended December 31, 2006.

Gross loss was 29% of sales revenue in 2008 compared to 34% in 2007 due to the ginseng root sales in both years being made after the inventory had been written down to its net realizable value in the previous year and due to the write-downs on inventory and ginseng crops.

Selling, general and administrative expenses totalled $969,000, in 2008, a 9% decrease from the $1,068,000 in 2007. The decrease was primarily due to the overhead cost saving measures enacted by management.

Interest on short-term debt decreased to $144,000 in 2008 from $160,000 in 2007. The decrease in interest on short-term debt is primarily due to decreases in the Canadian lending rates during the last half of 2008.

Interest on long-term debt decreased to $426,000 in 2008 from $635,000 in 2007. The decrease in interest on long-term debt is primarily due to decreases in the HIBOR and LIBOR lending rates throughout 2008.

The Company had other non-operating losses of $446,000 for the year ended December 31, 2008 which included $769,000 in foreign exchanges losses, $256,000 in gains on the disposal of property, plant and equipment, $64,000 in government supplement payments net of participating fees and miscellaneous non-operating income of $3,000. For the year ended December 31, 2007, the Company had other non-operating income of $1,101,000 which included $638,000 in foreign exchanges gains, $474,000 in gains on the disposal of property, plant and equipment and miscellaneous non-operating losses of $11,000.

In 2008, the Company incurred a net loss of $4,670,000, or $0.13 basic and diluted loss per share, compared to the 2007 net loss of $3,329,000, or $0.10 basic and diluted loss per share. The net loss in 2008 was largely a result of the minimal gross margin achieved on the sale of ginseng, the write-downs on inventory and crop costs and foreign exchange losses.

In order to conform Canadian GAAP to U.S. GAAP, the net loss would be decreased by $4,000 for the year ended December 31, 2008 and net loss decreased by $12,000 for the year ended December 31, 2007 reflecting

17

the differences in the accounting for interest, financial instruments and write-downs of inventory. As a result of these adjustments, the net loss under U.S. GAAP would have been $4,666,000 for the year ended December 31, 2008and the net loss would have been $3,317,000 for the year ended December 31, 2007. Basic and diluted loss per share under U.S.GAAP would have been $0.13 for the year ended December 31, 2007 compared to basic and diluted loss per share of $0.10 for the year ended December 31, 2007.

Fiscal year ended 12/31/2007 compared with year ended 12/31/2006

Revenue increased 28% to $7,562,000 in 2007 from $5,928,000 in 2006. The Company’s average selling price increased to $8 per pound in 2007, compared to $6 per pound in 2006, which offset a 9% decrease in the volume of ginseng roots sold during the year. In 2007, there was a greater percentage of higher quality roots sold compared to 2006 and sales prices improved slightly which resulted in a higher average selling price. Ginseng prices remained at low levels but have maintained stability in 2007 despite the continued strengthening of the Canadian dollar compared to the Hong Kong and Chinese currencies. The Company expects that both the average selling price and the volume of sales will increase moderately in 2008.

Cost of goods sold was 134% of sales revenue in 2007 and 193% of sales revenue in 2006 as ginseng root sales in both years were made after the inventory had been written down to its net realizable value in the previous year. The impairment in the value of inventory and ginseng crops to their estimated net realizable value are accounted for as a part of cost of goods sold which has caused cost of goods sold to be in excess of revenue. The Company harvested 918,963 pounds of root in 2007, an increase of 15% from 801,662 pounds in 2006. The Company harvested 332 acres in British Columbia and Ontario, with an average yield of 2,767 pounds per acre. In 2006, the Company harvested 311 acres with an average yield of 2,576 pounds per acre. The higher yield in 2007 was due to an improvement in farming techniques and crop management. The Company harvested about the same number of acres of three-year-old root as was harvested in 2006. The Company 6;s production cost per pound decreased to $12 per pound in 2007 compared to $13 in 2006 as a result of both an increase in yield and a decrease in costs on a per acre basis in 2007 compared to 2006.

Gross loss was 34% of sales revenue in 2007 and 93% in 2006 due to the ginseng root sales in both years being made after the inventory had been written down to its net realizable value in the previous year year and due to the write-downs on inventory and ginseng crops..

The Company recorded a write-down of $1,450,000 on ginseng crops for the year ended December 31, 2007 to reduce their carrying value to their net realizable value. This write-down was made on the expected 2008 harvest of ginseng crops in British Columbia. The net realizable value of the ginseng crops was estimated based on the estimated yield and quality of the crops upon harvest, accumulated costs, estimated additional costs required to bring the crops to harvest and current and projected selling prices.

During the three months ended June 30, 2007, the Company recorded a write-down on inventory of $1,286,000. This inventory was being held by the Company to fulfill a contract with a Canadian customer for a predetermined minimum quantity at a fixed price. The contract has expired and the customer did not order the predetermined minimum quantity and the Company has been unable to negotiate an acceptable subsequent agreement. The Company intends to pursue all possible options, including legal action, to ensure receipt of the contracted amount for this inventory. However, due to the uncertainty of the Company's ability to receive the contracted amount, a write-down has been recorded to reduce the carrying value of the inventory to its estimated net realizable value instead of the predetermined contract price.

Due to the continued low selling price of low grade ginseng, the Company recorded a write-down of inventory of $2,901,000 for the year ended December 31, 2006 to reduce the carrying value of the inventory to its estimated net realizable value. This amount includes a $235,000 write-down of 2005 inventory realized in the second quarter of 2006 and a $2,666,000 write-down on 2006 inventory that was realized upon the completion

18

of the 2006 harvest. The net realizable value of the inventory was estimated based on purchase commitments received for inventory on hand.

The Company recorded a write-down of $2,700,000 on ginseng crops for the year ended December 31, 2006 to reduce their carrying value to their net realizable value. This amount includes a $2,050,000 write-down on the 2007 harvest and a write-down of $650,000 on the expected 2008 harvest. The net realizable value of the ginseng crops was estimated based on the estimated yield and quality of the crops upon harvest, accumulated costs, estimated additional costs required to bring the crops to harvest and current and projected selling prices.

The Company also recorded a write-down of inventory, raw materials and supplies for its value-added products of $38,000 during the year ended December 31, 2006.

Selling, general and administrative expenses totalled $1,068,000 in 2007, a 12% decrease from the $1,220,000 in expenses in 2006. The decrease was primarily due to a reduction in management, selling and administrative staff and the resulting savings in salaries and related employment costs.

Interest on short-term debt decreased to $160,000 in 2007 from $384,000 in 2006. The decrease in interest on short-term debt in 2007 is due to the Company receiving the proceeds from its sales earlier in 2007 compared to 2006 thus enabling the Company to reduce its operating loan balance earlier in the year.

Interest on long-term debt increased to $634,000 in 2007 from $317,000 in 2006. The increase in interest on long-term debt in 2007 is due to the HK$54,700,000 four year non-revolving term loan facility from More Growth Finance Limited (“More Growth”), a company formerly under common control, that was agreed to on August 18, 2006. This loan was outstanding for the all of 2007 while only outstanding for a portion of 2006.

The Company had other non-operating income of $1,101,000 for the year ended December 31, 2007 which included $638,000 in foreign exchanges gains, $474,000 in gains on the disposal of property, plant and equipment and other non-operating losses of $11,000. The Company recorded other losses of $144,000 for the year ended December 31, 2006. This amount included $154,000 in foreign exchange losses as well as $10,000 of interest and miscellaneous income.

In 2007, the Company incurred a net loss of $3,329,000, or $0.10 basic and diluted loss per share, compared to the 2006 net loss of $9,461,000, or $0.27 basic and diluted loss per share. The net loss in 2007 was largely a result of the minimal gross margin achieved on the sale of ginseng and the write-downs on inventory and crop costs.

In order to conform Canadian GAAP to U.S. GAAP, the net loss would be decreased by $11,000 for the year ended December 31, 2007 and net loss decreased by $22,000 for the year ended December 31, 2006 reflecting the differences in the accounting for interest, financial instruments and write-down of inventory and related future income taxes. As a result of these adjustments, the net loss under U.S. GAAP would have been $3,317,000 for the year ended December 31, 2007 and the net loss would have been $9,439,000 for the year ended December 31, 2006. Basic and diluted loss per share under U.S.GAAP would have been $0.10 for the year ended December 31, 2007 compared to basic and diluted loss per share of $0.27 for the year ended December 31, 2006.

LIQUIDITY AND CAPITAL RESOURCES

Fiscal year ended 12/31/2008 compared with year ended 12/31/2007

In 2008, the cash surplus from operations was $303,000 compared to $504,000 in 2007. The Company’s cash as at December 31, 2008 was $192,000 compared to a balance of $307,000 at December 31, 2007, a decrease of $115,000.  The decrease in cash from  operations  in  2008  was  due  to  the  Company  paying  interest  that  had

19

accrued since August 2006 on its term loan and due to having more sales near the end of the year thus resulting in a higher accounts receivable balance at December 31, 2008. Crop cost expenditures decreased slightly from $6,277,000 in 2007 to $6,094,000 in 2008 as savings from a reduced acreage in British Columbia were partially offset by the costs of planting new acres in Ontario.

The working capital position of the Company at December 31, 2008 was a surplus of $5,456,000 compared to a surplus of $7,423,000 at December 31, 2007. The decrease in working capital is primarily due the reduction in ginseng crops as the Company has harvested all of its crops in British Columbia.

The Company had drawn $1,060,000 of the available $2,500,000 revolving demand operating loan, with an interest rate of prime plus 1.625% per annum, with a Canadian chartered bank as of December 31, 2008. The loan availability will reduce to $2,000,000 effective June 1, 2009. The Company had also fully drawn a $2,000,000 term loan, with an interest rate of prime plus 1.875% per annum, with the same Canadian chartered bank as at December 31, 2008. The loan is due in full upon the earlier of receipt of the proceeds from the sale of the Company's property near Kamloops, British Columbia or May 31, 2009. The loan is secured by the same property near Kamloops, British Columbia. The Company incurred interest of $144,000 on these loans for the year which has been included in interest on short-term debt on the statement of operations.

As of December 31, 2008, the Company had received $2,454,000 in deposits from customers. These deposits are primarily on orders that should be fulfilled in the first half of 2009.

On August 18, 2006, the Company established a four year term loan facility of HKD54,700,000 (approximately $8.0 million) from More Growth Finance Limited (“More Growth”), a company formerly under common control. The loan is unsecured and bears interest at 1.7% per annum over the HIBOR (Hong Kong Interbank Offered Rate) or LIBOR (London Interbank Offered Rate). The loan was used to refinance already existing shorter-term loan facilities with More Growth and to finance the general working capital requirements of the Company. The Company has fully drawn the loan facility. For the year ended December 31, 2008, the Company incurred $425,000 of interest which has been included in interest on long-term debt on the statement of operations.

Capital expenditures of $94,000 during 2008 were mainly for the purchase of equipment and vehicles in Ontario. Proceeds from the disposition of excess farming equipment, vehicles, irrigation equipment and hardware used to shade the ginseng gardens totalled $300,000.

The Company believes that its existing cash resources, together with the cash generated from future sales of inventory, available bank borrowings and the current related party borrowings, will be sufficient to meet its working capital and operating requirements for the next twelve months. If the Company cannot generate sufficient cash from its existing resources, it will become necessary to secure additional financing; however there is no assurance that additional financing will be available on terms favourable to the Company. If the Company cannot generate sufficient cash and if it cannot secure additional financing, the Company's ability to continue as a going concern will be dependant on the continuing support of its principal shareholder and its creditors.

As at December 31, 2008, the Company had the contractual obligations and commercial commitments outlined in the chart below:

20

Table No. 5
Contractual Obligations
Contractual Obligations	Payments Due by Period
	Total		Less Than One Year		1-3 Years		4-5 Years		After 5 Years
Long-term Debt (1)	$	9,339,000	$	476,000	$	8,855,000	$	8,000	$	0
Bank Indebtedness (2)	$	2,000,000	$	2,000,000	$	0	$	0	$	0
Operating Leases (3)	$	224,000	$	96,000	$	117,000	$	11,000	$	0
Agricultural Land Leases (4)	$	339,000	$	163,000	$	117,000	$	59,000	$	0
Total Contractual Obligations	$	11,902,000	$	2,735,000	$	9,089,000	$	78,000	$	0

(1)

Long-term debt includes the term loan from More Growth at an interest rate of 1.7% per annum over the HIBOR (Hong Kong Interbank Offered Rate) or LIBOR (London Interbank Offered Rate) and various equipment purchase loans at interest rates up to 8.75% per annum. Long-term debt also includes accrued interest and estimated future interest payments on long-term debt.

(2)

Bank indebtedness includes the term loan from a Canadian chartered bank with an interest rate of prime plus 1.875% per annum, due May 31, 2009.

(3)

Operating leases comprise of the Company’s long-term leases of equipment, office facilities and vehicles.

(4)

Agricultural land leases comprise of the Company’s land rentals in Ontario for the cultivation of ginseng.

The following commitments are not included in the Contractual Obligations table above:

The Company is committed to maintaining its ginseng crops from the time of initial planting to the time of harvesting which usually takes three to four years. The cost to maintain these crops is financed through the sale of inventory and available bank borrowings.

The Company has become involved in a legal proceeding as a result of an automobile accident. The Company believes that existing insurance will be sufficient to cover any claim from this matter. While the outcome of this proceeding cannot be determined at this time, no provision has been recorded as the Company believes that the resolution of this proceeding will not have a material impact on the financial condition, earnings or cash flows of the Company.

The Company does not have any off balance sheet arrangements as defined in Item 5(e) of Form 20-F.

The Company has no significant purchase obligations as at December 31, 2008.

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Fiscal year ended 12/31/2007 compared with year ended 12/31/2006

In 2007, the cash surplus from operations was $504,000 compared to a cash deficit of $2,113,000 in 2006. The Company’s cash as at December 31, 2007 was $307,000 compared to a balance of $484,000 at December 31, 2006, a decrease of $177,000. The increase in cash from operations in 2007 was due to a decrease in the amount spent on current and long-term ginseng crops as a result of fewer acres being maintained and due to an increase in the amount of customer deposits received at year end.

The working capital position of the Company at December 31, 2007 was a surplus of $7,423,000 compared to a surplus of $7,526,000 at December 31, 2006.

Current and non-current crop cost expenditures before depreciation and interest totalled $6,280,000 for the year ended December 31, 2007 as compared to $7,079,000 in 2006. The decrease in expenditures was due to savings from reduced plantings in 2007 compared to 2006.

The Company had drawn $3,510,000 of the available $5,000,000 revolving demand operating loan with a Canadian chartered bank as of December 31, 2007. The Company incurred interest of $160,329 on the demand loan for the year which has been included in interest on short-term debt on the statement of operations.

On August 18, 2006, the Company established a four year term loan facility of HK$54,700,000 from More Growth. The loan is unsecured and bears interest at 1.7% per annum over the HIBOR (Hong Kong Interbank Offered Rate) or LIBOR (London Interbank Offered Rate). The loan was used to refinance already existing shorter-term loan facilities with More Growth and to finance the general working capital requirements of the Company. The Company has fully drawn the loan facility. For the year ended December 31, 2007, the Company incurred $626,000 of interest which has been included in interest on long-term debt on the statement of operations and which remains accrued as at December 31, 2007.

Capital expenditures of $61,000 during 2007 were mainly for the purchase of equipment in Ontario. Proceeds from the disposition of excess farming equipment, vehicles, irrigation equipment and hardware used to shade the ginseng gardens totalled $488,000.

CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES

The significant accounting policies are outlined within Note 3 to the consolidated financial statements. Some of those accounting policies require the Company to make estimates and assumptions that affect the amounts reported by the Company. The following items require the most significant judgement and involve complex estimation.

Inventory

The Company periodically reviews the carrying value of inventory to determine if write-downs are required to state the inventory at the lower of cost and net realizable value. The determination of net realizable value reflects management’s best estimate of the expected selling price of the roots as well as consideration of qualitative factors such as size, shape, colour and taste. The carrying value of inventory also reflects management’s expectation that the inventory will eventually be sold. Although management does not believe that additional provisions are required to align the carrying value of certain inventory with its net realizable values, future events may indicate that the inventory is not saleable or that such inventory is not saleable at prices above carrying value.

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Ginseng crops

The Company uses the full absorption costing method to value its ginseng crops and periodically reviews their carrying value for evidence of impairment. Included in the cost of crops are seed, labour, applicable overhead, interest and supplies required to bring them to harvest. The determination of impairment requires complex calculations and significant management estimation with respect to future costs to bring crops to harvest and expectations as to the yield and quality of ginseng roots harvested. The estimation process is further complicated by the relatively long growing cycle of three to four years and the fact that roots remain underground. The market price of harvested ginseng roots is also difficult to determine due to industry-wide factors such as the variable worldwide supply each harvest season and foreign exchange rate fluctuations, and due to specific qualitative factors to each grower such as the size, shape, color, taste, and quality of the roots harvest. There is no set price for harvested ginseng roots, the yield from each garden will vary and the perceived market value will vary along with it. Although the Company’s assumptions reflect management’s best estimates, future events may result in materially different outcomes with respect to the recoverability of ginseng crop costs and the time required bringing the crops to harvest.

Income Taxes

The Company estimates its income taxes in each of the jurisdictions that it operates. The process involves estimating the current income tax exposure, together with assessing temporary differences from different treatment of items for tax and accounting purposes. These differences result in future tax assets and liabilities that are included in the consolidated balance sheet to the extent that a net future income tax asset or liability exists. The valuation of any future income tax assets or liabilities is reviewed quarterly and adjusted, if necessary, by use of a valuation allowance to reflect the estimated realizable amount. The process of determining if a valuation allowance is necessary includes estimates of the recoverability of inventory and ginseng crops as detailed above and an estimate of future interest expense. Future events may result in a materially different outcomes than is estimated with respect to the recoverability of bot h inventory and ginseng crops.

RECENT ACCOUNTING PRONOUNCEMENTS

Pronouncements from the United States

Business Combinations

In December 2007, the FASB issued Statement No. 141 (Revised), “Business Combinations ” which replaces FASB Statement No. 141 “Business Combinations”. The Statement retains the fundamental requirements in Statement 141 that the acquisition method of accounting be used for all business combinations and for an acquirer to be identified for each business combination. The Statement defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves control. The Statement improves the comparability of the information about business combinations provided in financial reports.This Statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company does not expect the adoption of the revisions to Statement No. 141 to have a material impact on the Company’s consolidated financial statements.

Noncontrolling Interests in Consolidated Financial Statements

In December 2007, the FASB issued Statement No. 160, “Noncontrolling Interests in Consolidated Financial Statements”. The Statement amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest  in  a  subsidiary  and  for  the  deconsolidation  of  a  subsidiary.  It  clarifies that  a

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noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements.This Statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. This Statement applies prospectively as of the beginning of the fiscal year in which this Statement is initially applied, except for the presentation and disclosure requirements. The presentation and disclosure requirements shall be applied retrospectively for all periods presented. The Company does not expect the adoption of Statement No. 160 to have a material impact on the Company’s consolidated financial statements.

Disclosures about Derivative Instruments and Hedging Activities

In March 2008, the FASB issued Statement No. 161, “Disclosures about Derivative Instruments and Hedging Activities” which includes an amendment to FASB Statement No. 133. This Statement enhances the disclosure requirements of derivative instruments and hedging activities but and is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2008. The Company is already required to disclose information about all of its financial instruments, not just derivative instruments and hedging activities, in accordance with Canadian GAAP and as so the Company does not believe that the adoption of Statement No. 161 will have a significant impact on its consolidated financial statements.

The Hierarchy of Generally Accepted Accounting Principles

In May 2008, the FASB issued Statement No. 162, “The Hierarchy of Generally Accepted Accounting Principles”. This Statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States (the GAAP hierarchy). This Statement is effective 60 days following SEC approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles”. The Company does not expect the adoption of Statement No. 162 to have a material impact on the Company’s consolidated financial statements.

Pronouncements from Canada

Effective January 1, 2008, the Company adopted various accounting standards relating to financial statement presentation, capital disclosures, inventories and financial instruments that were issued by the Canadian Institute of Chartered Accountants (“CICA”). These changes are fully described in Note 3(m) of the consolidated financial statements.

Goodwill and Intangible Assets

On January 1, 2009, the Company will be required to adopt CICA Handbook Section 3064, “Goodwill and Intangible Assets”. This Section establishes standards for the recognition, measurement, presentation and disclosure of goodwill and intangible assets. The adoption of this standard is not expected to have a significant impact on the Company’s consolidated financial statements.

Future change in accounting policies

In April 2008, the Canadian Accounting Standards Board confirmed that on January 1, 2011 Canadian GAAP will be replaced by International Financial Reporting Standards (“IFRS”) for publicly accountable enterprises. Effective March 2008, the Securities and Exchange Commission ruled that it will accept financial statements prepared in accordance with IFRS without reconciliation to U.S. GAAP for financial years ending after November 15, 2007. As such, the Company does not expect that it will be reconciling to U.S. GAAP upon its conversion to IFRS on January 1, 2011. Changing from current Canadian GAAP to IFRS will be a significant undertaking that may materially affect the Company’s reported financial position and result of operations.

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ITEM 6

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

DIRECTORS AND SENIOR MANAGEMENT

Directors

Table No. 6 lists as of February 28, 2008, the names of all the Directors of the Company. The Directors have served in their respective capacities since their election and will serve until the next Annual General Meeting or until a successor is duly elected, unless the office is vacated in accordance with the Articles/By-laws of the Company.

	Table No. 6
	Directors
		Date First
Name	Age	Elected
Dr. Eric Littley (2)	54	June, 2001
Peter Leung (1) (2)	49	August, 2001
Steven Hsieh (1)	54	February, 2002
Wilman Wong (2)	53	November, 2005
Derek Zen	56	November, 2006
Brent Lau (1)	48	November, 2006

(1)

Member of the Audit Committee

(2)

Member of the Farm Review Committee

Dr. Eric Littley, Director of the Company, is a resident of British Columbia, Canada. Dr. Littley has a diverse background in the management of crops and plant diseases, and has extensive experience in the ginseng industry. He holds a Masters degree in Pest Management and a Ph.D. in Plant Pathology from the Centre for Pest Management at Simon Fraser University. His background includes 10 years leading the R&D efforts with Chai-Na-Ta Corp. and 7 years as a consultant to specialty crop growers in Canada and the U.S. He is currently Chair of the Department of Biological Sciences at Thompson Rivers University in Kamloops, British Columbia.

Mr. Peter Leung, Director and former Officer of the Company, is a resident of Ontario, Canada. Mr. Leung holds a Bachelor of Science degree in Pharmacy and was a former President of the Chinese Pharmaceutical Society in Ontario.

Mr. Steven Hsieh, Director of the Company, is a resident of British Columbia, Canada. Mr. Hsieh is a member of the Chartered Institute of Management Accountants, U.K., and of the Certified Financial Planners of Canada. He is in public practice as a Certified Management Accountant in Vancouver, British Columbia.

Mr. Wilman Wong, Director and Officer of the Company, is a resident of British Columbia, Canada. Mr. Wong is a fellow member of the Association of Chartered Certified Accountants and associate member of the Hong Kong Institute of Certified Public Accountants. Mr. Wong has over 20 years experience in auditing, taxation, secretarial and financial management

Mr. Derek Zen, Chairman of the Company, is a resident of Hong Kong. Mr. Zen is the executive director of Road King Infrastructure Limited since its establishment. He is also the Vice Chairman of Wai Kee Holdings Limited and the Chairman of Build King Holdings Limited – both companies listed in the Hong Kong Stock Exchange.  He holds a Bachelor of Science degree in Engineering and a Master of Business Administration

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degree. He is a Chartered Engineer and is a member of the Institution of Civil Engineer and is a fellow member of the Institute of Quarrying, UK. Mr. Zen has over 30 years of experience in civil engineering industry. He is the brother of Mr. William Zen.

Mr. Brent Lau, Director of the Company, is a resident of Hong Kong. Mr. Lau is an Executive Director of Greenfield Chemical Holdings Limited – a company listed in the Hong Kong Stock Exchange. He graduated from the University of Toronto with a Bachelor of Commerce degree and has over twenty years of experience in various senior corporate administration and operation management, money lending and securities trading business.

Officers

Table No. 7 lists as of February 28, 2009 the names of all of the Executive Officers of the Company. The Executive Officers are elected annually by the Directors following the Annual General Meeting and serve until the earlier of their resignation or termination with or without cause by the Directors. Each Executive Officer has continuously served in his respective position from the date indicated in Table No. 7 unless otherwise indicated in his resume data following Table No.7.

Table No. 7
Executive Officers
Name	Age	Title	Date First Affiliated
Wilman Wong	53	CEO & Corporate Secretary	June, 2000
Terry Luck	32	CFO	July, 2000

Mr. Wilman Wong, Chief Executive Officer/Corporate Secretary, and an Officer of the Company, is a resident of British Columbia, Canada. Mr. Wong is a fellow member of the Association of Chartered Certified Accountants and associate member of the Hong Kong Institute of Certified Public Accountants. Mr. Wong has over 20 years experience in auditing, taxation, secretarial and financial management. Mr. Wong was appointed to the position of Chief Executive Officer in May 2007.

Mr. Terry Luck, Chief Financial Officer, and an Officer of the Company, is a resident of British Columbia, Canada. Mr. Luck is a Certified General Accountant with over ten years of experience in accounting, treasury, financial management and taxation.

There are no arrangements or understanding between any two or more Directors or Executive Officers.

COMPENSATION

The Company has a standard arrangement for compensating its Directors for their service in their capacity as Directors. In addition, Directors may be granted stock options. Directors received compensation during the year ended December 31, 2008, for their services as a Director including committee participation and/or special assignments as described below.

The Company also grants stock options to Executive Officers and employees from time to time.

Table No. 8 lists the compensation during the year ended December 31, 2008, for Executive Officers and Directors.

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Table No. 8
Director/Officer Compensation
Year Ended December 31, 2008
		Base		Option Exercise		Total
Officer/Director		Salary		Net Market Value		Compensation
Wilman Wong	$	123,162	$	0	$	123,162
Terry Luck		87,330		0		87,330
Other Directors		26,750		0		26,750
Total	$	237,242	$	0	$	237,242

Option Exercise Net Market Value is computed by subtracting the cost of exercising the stock option from the market value of the respective shares of common stock on the date of exercise. There were no stock options granted to officers/directors as at December 31, 2008.

No funds were set aside or accrued by the Company during the year ended December 31, 2008 to provide pension, retirement or similar benefits for Directors or Executive Officers.

The Company has entered into contractual agreements with the Executive Officers that will provide specific compensation in the event that the executive is terminated without cause. The executive will be entitled to three months written notice or equivalent severance pay in lieu of notice plus one month’s salary per full or partial fiscal year of employment. These payments are contingent on the executive accepting a one-year non-competition agreement as well as a non-disclosure agreement. The Company has no plans or arrangements in respect of remuneration received or that may be received by Executive Officers of the Company in the year ended December 31, 2008 to compensate such officers in the event of termination of employment as a result of termination with cause, retirement, or a change of responsibilities following a change of control.

BOARD PRACTICES

All directors hold office until the next annual general meeting of shareholders, which generally is in May of each calendar year, or until their respective successors are duly elected and qualified or their positions are earlier vacated by resignation or otherwise. All executive officers are appointed by the Board and serve at the pleasure of the Board.

The Audit Committee of the board of directors reviews, acts on and reports to the board of directors with respect to various auditing and accounting matters, including the selection of our auditors, the scope of the annual audits, fees to be paid to the auditors, the performance of our independent auditors and our accounting practices. The Audit Committee consists of Mr. Steven Hsieh, Mr. Brent Lau and Mr. Peter Leung.

The Farm Review Committee of the board of directors reviews and reports to the board with respect to Ontario Farm operations, including land selection recommendation and site inspection, farm policy and plant science techniques recommendation; quarterly review of farm operations to ensure acceptable cultural maintenance practices are maintained. The Committee consists of Mr. Peter Leung, Mr. Eric Littley and Mr. Wilman Wong.

The Company does not currently have a remuneration or compensation committee.

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EMPLOYEES

During fiscal 2008, the Company employed 19 persons on a full time basis and 156 persons on an hourly basis.

During fiscal 2007, the Company employed 23 persons on a full time basis and 122 persons on an hourly basis.

During fiscal 2006, the Company employed 25 persons on a full time basis and 170 persons on an hourly basis.

The Company is not a party to any material labour contract or collective bargaining agreement.

SHARE OWNERSHIP

Table No. 9 lists the share ownership in the Company by the Executive Officers and Directors as at February 28, 2009.

Table No. 9
Share Ownership of Directors/Officers as at February 28, 2009
Officer/Director	Title	Approximate Number of Shares
Derek Zen	Director	(1)
Wilman Wong	CEO/Corporate Secretary	-
Terry Luck	CFO	-
Other Directors		2,000

(1) 10,047,236 and 3,168,000 common shares of the Company are owned by ZWP Investments Limited and Groove Trading Limited, respectively, of which Derek Zen is a Director. Derek Zen holds 253,728 common shares of the Company.

STOCK OPTIONS

The Company has a total of 785,000 shares reserved for issue under the Plan. As of February 28, 2009, no options to purchase shares were outstanding while 159,268 options remain available for issuance under the Plan.

In May 1997, the shareholders approved a stock option plan (“the Plan”), and all outstanding options to directors, officers and service providers were brought within the purview of the Plan. Shareholder approval will no longer be required for each grant, as has been the case in the past, but will continue to be required as regards to any amendment to the Plan.

The Plan has restrictions as follows:

1.

the number of shares reserved for issuance pursuant to stock options granted to insiders shall not exceed 10% of the outstanding issue;

2.

there shall not be issued to insiders, within a one-year period, a number of shares exceeding 10% of the outstanding issue; or

3.

there shall not be issued to any one insider and such insider’s associated parties, within a one year period, a number of shares exceeding 5% of the outstanding issue.

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ITEM 7

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

MAJOR SHAREHOLDERS

The Company is a publicly owned corporation, the shares of which are owned by Canadian residents, US residents, and residents of other countries. As of December 31, 2008 (latest record date), the following persons and/or companies held 5% or more beneficial interest in the Company's outstanding common stock.

ZWP Investments Limited (1)	10,047,236 (28.96%) common shares
Groove Trading Limited (1)	3,168,000 (9.13%) common shares
Hover Limited	7,011,318 (20.21%) common shares

(1) ZWP Investments Limited and Groove Trading Limited are subsidiaries of Wai Kee.

The authorized capital of the Company consists of an unlimited number of shares of common stock without par value of which 34,698,157 were issued/outstanding as of December 31, 2008 and 21 million Series 1 non-voting, non-cumulative preferred shares convertible into common shares on a 1:1 basis of which none were issued/outstanding at December 31, 2008.

All of the authorized shares of the Company's common stock are of the same class and, once issued, rank equally as to dividends, voting powers, and participation in assets. Holders of common stock are entitled to one vote for each share held of record on all matters to be acted upon by the shareholders. Holders of common stock are entitled to receive such dividends as may be declared from time to time by the Board of Directors, at its discretion, out of funds legally available therefore.

Upon liquidation, dissolution or winding up of the Company, holders of common stock are entitled to receive on a pro rata basis the assets of the Company, if any, remaining after payments of all debts and liabilities, including settlement of the preferred shares. No shares have been issued subject to call or assessment. There are no pre-emptive or conversion rights and no provisions for redemption or purchase for cancellation, surrender, or sinking or purchase funds.

Provisions as to the modification, amendment of variation of such shareholder rights or provisions are contained in the Canada Business Corporation Act. Unless the Canada Business Corporation Act, or the Company's By-Law’s otherwise provide, any action to be taken by a resolution of the members may be taken by an ordinary resolution or by a vote of a majority or more of the shares represented at the shareholders' meeting.

The Canada Business Corporation Act contains provisions, which require a "special resolution" for effecting certain corporate actions. Such a "special resolution" requires a two-thirds vote of shareholders rather than a simple majority for passage. Special resolutions are required to effect a "fundamental change" as provided in Section 173 of the Canada Business Corporation Act; in addition, special resolutions would be required on an amalgamation, on a continuation, and on a voluntary dissolution.

RELATED PARTY TRANSACTIONS

On August 18, 2006, the Company established a four year term loan facility of HK$54,700,000 from More Growth. The loan is unsecured and bears interest at 1.7% per annum over the HIBOR (Hong Kong Interbank Offered Rate) or LIBOR (London Interbank Offered Rate). The loan was used to refinance existing loan facilities and to finance the general working capital requirements of the Company.

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The Company pays management fees to Wai Kee Holdings Limited for performing sales, accounting and administrative services for CNT Trading (Hong Kong) Limited, a subsidiary of the Company. Wai Kee is a Hong Kong based publicly traded company which owns 38% of the shares of the Company and has a director in common with the Company. The Company paid management fees of $103,000 for the year ended December 31, 2008 (2007 - $102,000) of which $20,000 remains outstanding as at December 31, 2008 (2007 - $14,000) and is included in accounts payable and accrued liabilities on the consolidated balance sheet.

 ITEM 8

FINANCIAL INFORMATION

CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

Financial Statements

The Company's audited consolidated financial statements are set forth under Item 17.

Legal Proceedings

The Company has become involved in a legal proceeding as a result of an automobile accident. The Company believes that existing insurance will be sufficient to cover any claim from this matter. While the outcome of this proceeding cannot be determined at this time, no provision has been recorded as the Company believes that the resolution of this proceeding will not have a material impact on the financial condition, earnings or cash flows of the Company.

Export Sales

Information regarding our export sales is provided under ‘Segmented Reporting’ in the notes to the Consolidation Financial Statements under Item 17.

Dividend Policy

Holders of our common shares and preferred shares are entitled to receive such dividends as may be declared from time to time by our board of directors. There can be no assurance that any dividend will be declared, or if declared, what the amounts of dividend will be or whether such dividends, once declared, will continue for any future period.

ITEM 9

THE OFFER AND LISTING

On December 7, 2005, the Company was notified by the TSX that the eligibility of the Company’s continued listing on the TSX was being reviewed. The Company was granted 120 days to comply with the requirement for continued listing. On March 31, 2006, the Toronto Stock Exchange suspended the Company’s shares from trading and delisted the common shares on April 28, 2006 as the Company had not met the continued listing requirements of the Exchange.

The Company's common stock trades on the NASDAQ Stock Market in the United States, having the trading symbol "CCCFF" (formerly "CJGPF") and CUSIP #15745J-10-6. The Company's common stock commenced trading on the NASDAQ Stock Market in October 1992 and was delisted on April 14, 1999 for not meeting the listing requirements. The Company’s common stocks commenced trading on the NASDAQ OTC Bulletin Board in April 1999 retaining the trading symbol “CCCFF”.

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The following tables set forth the high/low prices on the Toronto Stock Exchange for shares of the Company's common stock for each of the last five years.

Toronto Stock Exchange Stock High/Low Prices
(CDN Dollars)
Year
Ended	High	Low
12/31/2008	N/A	N/A
12/31/2007	N/A	N/A
12/31/2006	N/A	N/A
12/31/2005	$0.68	$0.21
12/31/2004	1.43	0.50

The following tables set forth the high/low prices on NASDAQ OTC Bulletin Board for shares of the Company's common stock for each of the last five years, each of the quarters in the two most recently completed financial years and monthly for each of the most recent six months.

NASDAQ Stock High/Low Prices
(US Dollars)
Year
Ended	High	Low
NASDAQ OTCBB:
12/31/2008	$0.05	$0.01
12/31/2007	0.12	0.02
12/31/2006	0.20	0.03
12/31/2005	0.50	0.11
12/31/2004	1.24	0.38

Quarter
Ended	High	Low
NASDAQ OTCBB:
12/31/2008	0.03	0.01
09/30/2008	0.03	0.01
06/30/2008	0.04	0.02
03/31/2008	0.05	0.01
12/31/2007	0.08	0.02
09/30/2007	0.04	0.03
06/30/2007	0.05	0.03
03/31/2007	0.12	0.03

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Month
Ended	High	Low
02/28/2009	0.01	0.01
01/31/2009	0.02	0.01
12/31/2008	0.03	0.01
11/30/2008	0.01	0.01
10/31/2008	0.01	0.01
09/30/2008	0.03	0.01

The Company's common stock is issued in registered form and the following information is taken from the records of Computershare located in Vancouver, British Columbia, Canada, the registrar and transfer agent for the common stock.

On February 28, 2009, the shareholders' list for the Company's common stock showed 1,402 registered shareholders and depositories with 34,698,157 shares outstanding of which 5% are held in Canada, 31% in the United States and 64% are held internationally. Based upon the number of proxy statements and annual reports requested by shareholders and brokers for the Company's last annual shareholders' meeting and other research, the Company believes it has in excess of 3,000 beneficial owners of its common stock.

The Company's common stock is not registered to trade in the United States in the form of American Depository Receipts (ADR's) or similar certificates.

ITEM 10

ADDITIONAL INFORMATION

MEMORANDUM AND ARTICLES OF ASSOCIATION

Directors

(a)

A director who is, in any way, directly or indirectly interested in a proposed contract or transaction with the Company shall disclose the nature and extent of his interest at a meeting of the directors in accordance with the provisions of the Canada Business Corporations Act.  A director shall not vote in respect of any contract or transaction with the Company in which he is interested, and if he shall do so, his vote shall not be counted but he may be counted in the quorum present at the meeting at which such vote is taken.

(b)

Subject to any unanimous shareholder agreement, the directors shall be paid such remuneration for their services as the board may from time to time determine.

(c)

Without limiting the borrowing powers of the Company as set forth in the Canada Business Corporations Act, the board may from time to time in such amounts and on such terms as it deems expedient to borrow money upon the credit of the Company.

(d)

No person shall be qualified for election as a director if he is less than 18 years of age and there are no provisions with respect to the retirement of a director or the non-retirement of directors under an age limit requirement.

(e)

A director need not be a shareholder but a majority of the directors shall be resident Canadians.

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Common Shares and Preferred Shares

The share capital of the Company shall consist of an unlimited number of Common Shares and an unlimited number of Preferred Shares, of which 21,000,000 shares are designated Preferred Shares, Series 1, all without par value, having the rights, privileges, restrictions and conditions hereinafter described:

The Common Shares shall confer on the holders thereof and shall be subject to the following rights, privileges, conditions and restrictions:

(a)

Voting – The holders of the Common Shares shall be entitled to receive notice of and to attend all meetings of the shareholders of the Company and shall have one vote for each common share held at all meetings of the shareholders of the Company, except for meetings at which only holders of another specified class or series of shares of the Company are entitled to vote separately as a class or series;

(b)

Dividends – Subject to the rights, privileges, conditions and restrictions of the Preferred Shares and any of its series as designated by the directors from time to time, the holders of the Common Shares shall, in the absolute discretion of the directors, be entitled to receive and the Company shall pay out of monies of the Company properly applicable to the payment of dividends, those dividends as may be declared from time to time in respect of the Common Shares; and

(c)

Dissolution – Subject to the rights, privileges, conditions and restrictions of the Preferred Shares and any of its series as designated by the directors from time to time, the holders of the Common Shares shall be entitled to receive the remaining property of the Company on dissolution.

The Preferred Shares shall confer on the holders thereof and shall be subject to the following rights, privileges, conditions and restrictions:

(a)

Series – The directors may issue Preferred Shares in one or more series;

(b)

Designation – The directors may by resolution amend the articles of the Company to fix the number of shares in, and to determine the designation of the shares of, each series of Preferred Shares;

(c)

Directors to Attach Rights – The directors may by resolution amend the articles of the Company to determine the rights, privileges, restrictions and conditions attaching to the shares of each series of Preferred Shares;

(d)

Cumulative Dividends – Where shares of one or more series of Preferred Shares are entitled to cumulative dividends, and where any cumulative dividends in respect of a series of Preferred Shares are not paid in full, the shares of all series of Preferred Shares entitled to cumulative dividends shall participate rateably in respect of accumulated dividends in accordance with the amounts that would be payable on those shares if all the accumulated dividends were paid in full;

(e)

Rateable Participation – Where amounts payable are not paid in full on a winding-up, or on the occurrence of any other event as a result of which the holders of the shares of all series of Preferred Shares are then entitled to a return of capital, the shares of all series of Preferred Shares shall participate rateably in a return of capital in respect of the Preferred Shares in accordance with the amounts that would be payable on the return of capital if all amounts so payable were paid in full;

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(f) No Priority – No rights, privileges, restrictions or conditions attached to a series of Preferred Shares shall confer on the series priority over another series of Preferred Shares then outstanding respecting:

i.

dividends, or

ii.

a return of capital:

(1)

on a winding-up, or

(2)

on the occurrence of another event that would result in the holders of all series of Preferred Shares being entitled to a return of capital;

(g)

Additions, Changes and Removals – A directors’ resolution pursuant to paragraphs (a), (b) or (c) may only be passed prior to the issue of shares of the series to which the resolution relates, and after the issue of shares of that series, the number of shares in, the designation of and the rights, privileges, restrictions and conditions attached to, that series may be added to, changed or removed only pursuant to applicable provisions of the Canada Business Corporations Act;  

(h)

No Right to Vote – Except as expressly provided in the rights, privileges, restrictions or conditions which the directors may determine or attach to any series of Preferred Shares, shares of a series of Preferred Shares shall not confer on the holders thereof any right to notice of or to be present at or to vote, either in person or by proxy, at any meeting of the shareholders of the Company other than a separate meeting of the holders of the Preferred Shares, or of the holders of a series of the Preferred Shares, as the case may be.

In addition to the rights, privileges, restrictions and conditions attaching to the Preferred Shares of the Company as a class, the Preferred Shares, Series 1 of the Company shall have the following rights and be subject to the following restrictions, conditions and limitations:

(a)

Non-Voting – The holders of the Preferred Shares, Series 1 shall not, as such, be entitled to receive notice of or to attend meetings of the shareholders of the Company nor shall they have any voting rights for the election of directors or for any other purpose (except where the holders of a specified class are entitled to vote separately as a class as provided in the Canada Business Corporations Act).

(b)

Dividends – The holders of the Preferred Shares, Series 1 shall be entitled to receive, and the directors of the Company shall declare and the Company shall pay thereon, out of the moneys of the Company properly applicable to the payment of dividends, a non-cumulative dividend on each Preferred Share, Series 1 equal to any dividend the board of directors of the Company may from time to time declare and the Company pay on each Common Share, and such dividends on the Preferred Shares, Series 1 shall be declared and paid at the same time as the declaration and payment of such dividends on the Common Shares.

(c)

Conversion

(i)

A holder of Preferred Shares, Series 1 shall be entitled, at such holder’s option, at any time and from time to time, to have all or any of the Preferred Shares, Series 1 registered in the name of such holder on the books of the Company converted into Common Shares as the same shall be constituted at the time of conversion upon the basis of one Common Share for each Preferred Share, Series 1 so converted; provided that, on conversion of any Preferred Shares, Series 1, the holders thereof shall be entitled to receive any declared and unpaid dividends thereon which are payable to the holders of

34

Preferred Shares, Series 1 of record on a date prior to the date on which such conversion is effective pursuant to Section 3 (c)(ii) below;

(ii)

The conversion right provided for herein may be exercised by notice in writing given to the Company at its registered office accompanied by the certificate or certificates representing the Preferred Shares, Series 1 in respect of which the holder thereof desires to exercise such right of conversion and such notice shall be executed by the person registered on the books of the Company as the holder of the Preferred Shares, Series 1 in respect of which such right is being exercised or by such holder’s duly authorized attorney and shall specify the number of such shares which the holder desires to have converted.  The conversion shall be deemed to take effect upon the date which the said certificate or certificates shall be surrendered to the Company at its registered office accompanied by the said notice unless such date be a Saturday, Sunday or a holiday, in which event it shall take effect on the next business day.  If a part only of the Preferred Shares, Series 1 represented by any certificate is converted, a new certificate for the balance shall be issued without charge by the Company;

(iii)

Any Preferred Shares, Series 1 issued and outstanding as of 5:00 p.m. (Vancouver time) on that date which is 10 years following issuance shall, at such time, automatically be converted into Common Shares on the basis one Common Share for each Preferred Share, Series 1 then issued and outstanding, and after such time, a holder of such automatically converted Preferred Shares, Series 1 shall cease to have any rights as a shareholder in respect of such shares other than the right to receive any declared and unpaid dividends thereon which are payable to the holders of Preferred Shares, Series 1 of record as of a date prior to the date of such automatic conversion.  Such holder shall be entitled to receive from the Corporation, without charge, a certificate representing the Common Shares resulting from such automatic conversion of such Preferred Shares, Series 1;

(iv)

All Common Shares resulting from any conversion provided for herein shall be fully paid and non-assessable; and

(v)

In the event that the Preferred Shares, Series 1 or the Common Shares are at any time subdivided, consolidated or changed into a greater or lesser number of shares of the same or another class, an appropriate adjustment shall be made in the rights and conditions attached to the Preferred Shares, Series 1 so as to maintain the relative rights of the holders of those shares.

(d)

Liquidation, Dissolution and Winding-up – In the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of the Preferred Shares, Series 1 shall be entitled to receive, before any distribution of any part of the assets of the Corporation among the holders of the Common Shares or any other shares in the capital of the Corporation ranking junior to the Preferred Shares, Series 1, for each Preferred Share, Series 1, the amount of C$0.6804 and any dividends declared thereon and unpaid, and following such distribution, the holders of the Preferred Shares, Series 1 shall be entitled to share equally and rateably without preference or distinction on a per share basis with the holders of Common Shares or other shares in the capital of the Company in the distribution of the remaining property and assets of the Company.

Change Rights of Shareholders

The directors may by resolution to amend the articles of the Company to change the rights of shareholders. According to Canada Business Corporations Act, such amendment requires approval by a special resolution of shareholders.

35

Meetings of Shareholders

An Annual General Meeting must be held once every financial year for the purpose of considering the financial statements and reports, electing directors, appointing auditors and for the transaction of other business as may be brought before the meeting.  The board, the chairman of the board or the president shall have power to call a special meeting of shareholders at any time.

Notice of the time and place of each meeting of shareholders must be given no less than 21 days, nor more than 50 days, before the date of each meeting to each director, to the auditors and to each shareholder who at the close of business on the record date, if any, for notice is entered in the securities register as the holder of one or more shares carrying the right to vote at the meeting.

Rights to Own Securities

There are no limitations on the rights of non-resident or foreign shareholders to hold or exercise voting rights.

Except as provided in the Investment Canada Act, there are no limitations under the applicable laws of Canada or by our charter or other constituent documents of our Company on the right of foreigners to hold or vote Common Shares of other securities of our Company.

The Investment Canada Act will prohibit implementation, or if necessary, require divestiture of an investment deemed “reviewable” under the Investment Canada Act by an investor that is not a “Canadian” as defined in the Investment Canada Act (a “non-Canadian”), unless after review the Minister responsible for the Investment Canada Act (“the Minister”) is satisfied that the “reviewable” investment is likely to be of net benefit to Canada.  An investment in our Common Shares by a non-Canadian would be reviewable under the Investment Canada Act if it was an investment to acquire control of our Company and the value of our assets was $5 million or more. A non-Canadian would be deemed to acquire control of our company for the purposes of the Investment Canada Act if the non-Canadian acquired a majority of our outstanding Common Shares (or less than a majority but controlled our company in fact through the ownership of one-third or more of our outstanding common shares) unless it could be established that, on the acquisition, our Company was not controlled in fact by the acquirer through the ownership of such Common Shares.  Certain transactions in relation to our Common Shares would be exempt from review under the Investment Canada Act, including, among other, the following:

1.

Acquisition of Common Shares by a person in the ordinary course of that person’s business as a trader or dealer in securities;

2.

Acquisition of control of our Company in connection with the realization of security granted for a loan or other financial assistance and not for any purpose related to the provisions of the Investment Canada Act; and

3.

Acquisition of control of our Company by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control of our company, through the ownership of voting interests, remains unchanged.

The Investment Canada Act was amended with the World Trade Organization Agreement to provide for special review thresholds for “WTO Investors” of countries belonging to the World Trade Organization, among others, nationals and permanent residents (including “WTO Investor controlled entities” as defined in the Investment Canada Act).  Under the Investment Canada Act, as amended, an investment in our Common Shares by WTO Investors would be reviewable only if it was an investment to acquire control of our Company and the value of our assets was equal to or greater than a specified amount (the “Review Threshold), which is published by the Minister after its determination for any particular year.

36

Change in Control

There are no provisions in our Articles that would have the effect of delaying, deferring or preventing a change in control of our Company, and that would operate only with respect to a merger, acquisition or corporate restructuring involving the Company.

MATERIAL CONTRACTS

There is no material contract entered into for the two years immediately preceding publication of this document.

EXCHANGE CONTROL

There are no government laws, decrees or regulations in Canada which restrict the export or import of capital or which affect the remittance of dividend, interest or other payments to non-resident holders of our common shares. Any remittances of dividends to United States residents and to other non-residents are, however subject to withholding tax.  See “Taxation” below.

TAXATION

The following is a fair summary of the material Canadian federal income tax consequences generally applicable in respect of the common stock. The tax consequences to any particular holder of common stock will vary according to the status of that holder as an individual, trust, corporation or member of a partnership, the jurisdiction in which that holder is subject to taxation, the place where that holder is resident and, generally, according to that holder's particular circumstances. This summary is applicable only to holders who are resident in the United States, have never been resident in Canada, deal at arm's length with the Company, hold their common stock as capital property and who will not use or hold the common stock in carrying on business in Canada.

This summary is based upon the provisions of the Income Tax Act of Canada and the regulations thereunder (collectively, the "Tax Act") as at the date of the Annual Report, publicly-announced proposals to amend the Tax Act as at the date of this Annual Report and the current administrative practices of the Canada Revenue Agency . This summary does not take into account provincial income tax consequences.  The summary assumes that the publicly announced proposals will be enacted as proposed with the effective dates set out therein; otherwise, the summary assumes that there will be no other changes in law whether by judicial or legislative action.

This summary is of a general nature only and is not exhaustive of all possible income tax consequences. It is not intended as legal or tax advice to any particular holder of common stock and should not be so construed. Each holder is encouraged to consult their own tax advisor with respect to the income tax consequences applicable to him in his own particular circumstances.

Disposition of Common Stock.  Under the Tax Act, a gain from the sale of common stock by a non-resident will not be subject to Canadian tax, provided the shareholder (and/or persons who do not deal at arm's length with the shareholder) have not held 25% or more of the shares of any class of the Company's stock at any time in the five years preceding the disposition. Generally, the Canada-United States Tax Convention (the "Tax Convention") will exempt from Canadian taxation any capital gain realized by a resident of the United States unless:

·

their value is derived principally from real property in Canada;

37

·

the holder was resident in Canada for 120 months during any period of 20 consecutive years preceding the disposition and the common stocks were owned by him when he ceased to be a resident in Canada; or

·

they form part of the business property of a permanent establishment that the holder has or had in Canada within the 12 months preceding the disposition.

If a non-resident were to dispose of common stock of the Company to another Canadian corporation which deals or is deemed to deal on a non-arm's length basis with the non-resident and which, immediately after the disposition, is connected with the Company (i.e., which holds shares representing more than 10% of the voting power and more than 10% of the market value of all issued and outstanding shares of the Company), the excess of the proceeds over the paid-up capital of the common stock sold will be deemed to be taxable as a dividend either immediately or eventually by means of a deduction in computing the paid-up capital of any shares issued by the purchasing corporation.

Dividend.  In the case of any dividends paid to non-residents, the Canadian tax is withheld by the Company, which remits only the net amount to the shareholder.  By virtue of Article X of the Tax Convention, the rate of tax on dividends paid to residents of the United States is generally limited to 15% of the gross dividend (or 5% in the case of certain corporate shareholders owning at least 10% of the Company's voting shares). In the absence of the treaty provisions, the rate of Canadian withholding tax imposed on non-residents is 25% of the gross dividend.  Stock dividends received by non-residents from the Company are taxable by Canada as ordinary dividends at the amount by which the paid up capital of the Company is increased for the shares issued as dividends.

The Tax Convention generally exempts from Canadian withholding tax dividends paid to a religious, scientific, literary, educational or charitable organization exclusively administering a pension, retirement or employee benefit fund or plan, if the organization is resident in the United States and is exempt from income tax under the laws of the United States.

DOCUMENTS ON DISPLAY

The documents concerning our Company may be viewed at the offices of our corporate solicitor, Stikeman Elliott, at Suite 1700, Park Place, 666 Burrard Street, Vancouver, BC V6C 2X8, during normal office hours.

ITEM 11

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company’s revenue is derived principally from the sale of ginseng roots to a limited number of customers that are concentrated in Asian markets. In order to manage its credit risk, the Company carefully monitors credit terms, investigates credit history and grants credit to customers with established relationships or an acceptable credit rating. Payments or deposits are usually received before shipments of inventory. Letters of credit may be used, or inventory may be held as security until payment is received, when such relationships have not been established. The Company identifies Canada as the primary economic environment in which it operates and uses the Canadian dollar as its functional currency. A minor portion of the Company’s revenues and receivables are denominated in U.S. dollars and Hong Kong dollars as well as loans from a company under company control which are denominated in Hong Kong dollars. The Company monito rs its exposure to foreign exchange risk and balances its foreign currency holdings to reduce exposures to any one currency by repatriating any excess funds. The Company may also from time to time utilize foreign exchange contracts to hedge against exchange risks.

38

The Company’s revenues and earnings are also impacted by the world price of ginseng root which is determined by reference to a number of factors including the supply and demand for North American ginseng root, negotiations between buyer and seller, the quality and aesthetic characteristics of the root and the relative strength of the Canadian dollar to the currency used by the Company’s customers. A percentage change in the market price of ginseng root will tend to have a corresponding impact on the revenues reported by the Company. An increase in the selling price by $1 per pound will increase the Company’s net earnings by approximately $988,000 (based on the 2008 harvest of 988,456 pounds) and a decrease in the selling price by $1 per pound would have an equally negative impact on net earnings.

The interest income from cash and cash equivalents and the interest expense from borrowings under credit facilities are subject to interest rate changes and therefore interest income and interest expense will fluctuate directly with changes in interest rates and the amount of cash and cash equivalents and borrowing outstanding at any given time. A decrease in interest rates of 1% will increase the Company’s net earnings by approximately $116,000 (based on bank indebtedness and long-term debt of approximately $11.6 million as at December 31, 2008) and a decrease in interest rates of 1% would have an equally negative impact on net earnings.

ITEM 12

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

PART II

ITEM 13

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable.

ITEM 14

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Not applicable.

ITEM 15T

  CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report, being the year ended December 31, 2008. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective as of December 31, 2008 to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the United States Securities and Exchange Commission (“SEC”) rules and forms.

39

Management’s Report on Internal Control over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) or 15d-15(f)). This internal control system was designated to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Management,  with the participation of the Chief Executive Officer and Chief Financial Officer conducted an assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008 based on the criteria in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, the management has concluded that the Company’s internal control over financial reporting as of December 31, 2008 is effective.

Management notes that, while they believe the Company’s disclosure controls and procedures provide a reasonable level of assurance that they are effective, they do not expect that the Company’s disclosure controls and procedures or internal control over financial reporting will prevent all errors and fraud.  A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

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

Changes in Internal Control over Financial Reporting

During the reporting period, the Company enhanced its disclosure controls and procedures as a result of the deficiency identified in disclosing the Company’s internal control over financial reporting in the Form 20-F for the period ended December 31, 2007. These measures include among other matters adding certain review and analytical procedures and improving the information flow associated with changes to the disclosure requirements.

Other than the above mentioned item, there are no changes in the Company’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonable likely to material affect, the Company’s internal control over financial reporting.

40

ITEM 16    RESERVED

ITEM 16A AUDIT COMMITTEE FINANCIAL EXPERT

The Company’s Board of Directors has determined that Mr. Steven Hsieh, Chairman of the Audit Committee and independent director, qualifies as “audit committee financial expert” pursuant to this Item 16A of the Form 20-F.

ITEM 16B CODE OF ETHICS

On May 6, 2005, the Company has adopted a code of ethics that applies to its employees, including its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.

The Company undertake to provide to any person without charge, upon request, a copy of such code of ethics in either of the following ways:

By mail to:    Chai Na Ta Corp.

                    Unit 100 – 12051 Horseshoe Way,

                    Richmond, British Columbia V7A 4V4

By e-mail to:  info@chainata.com

41

ITEM 16C PRINCIPAL ACCOUNTANT FEES AND SERVICES

Deloitte & Touche LLP acts as the Company’s principal independent auditors for the years ended December 31, 2008 and 2007. The following table discloses the aggregate fees billed for professional services rendered by Deloitte & Touche LLP for the years ended December 31, 2008 and 2007.

	2008	2007
	CDN’000	CDN’000
Audit Fees (1)	101	126
Audit -related Fees	-	-
Tax Fees	-	-
All Other Fees	-	-
Total	101	126

(1)

Audit fees consist of fees billed for the annual audit of the Company’s consolidated financial statements and fees billed for reviews of interim financial statements as well as fees billed for services relating to the review of documents filed with the SEC up to February 28, 2009.

Audit Committee Pre-Approval Policies and Procedures

The Audit Committee is authorized by the Board of Directors to review the performance of the Company’s external auditors, approve in advance the provision of services other than auditing and to consider the independence of the external auditors, including the range of services provided in the context of all consulting services bought by the Company. The Audit Committee is authorized to approve any non-audit services or additional work with the Chairman of the Audit Committee deems as necessary and will notify other members of the Audit Committee of such non-audit work.

ITEM 16D

  EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable

ITEM 16E

  PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Not applicable

42

PART III

ITEM 17

FINANCIAL STATEMENTS

The Company's consolidated financial statements are stated in Canadian dollars (CDN$) and are prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP), the application of which, in the case of the Company, conforms in all material respects for the periods presented with United States GAAP, except as referred to in footnotes to the audited consolidated financial statements. The value of the U.S. dollar in relationship to the Canadian dollar was approximately 1.22 as of December 31, 2008.

Audited Consolidated Financial Statements and Financial Statement Schedules:

Report of Independent Registered Chartered Accountants, dated March 10, 2009

Consolidated Balance Sheets as at December 31, 2008 and December 31, 2007

Consolidated Statements of Operations and Deficit for the years ended December 31, 2008, December 31, 2007 and December 31, 2006.

Consolidated Statements of Comprehensive Loss for the years ended December 31, 2008, December 31, 2007 and December 31, 2006.

Consolidated Statements of Accumulated Other Comprehensive Loss for the years ended December 31, 2008, December 31, 2007 and December 31, 2006.

Consolidated Statements of Cash Flows for the years ended December 31, 2008, December 31, 2007 and December 31, 2006.

Consolidated Statements of Crop Costs for the years ended December 31, 2008, December 31, 2007 and December 31, 2006.

Notes to the Consolidated Financial Statements.

ITEM 18

FINANCIAL STATEMENTS

The Registrant has elected to provide financial statements pursuant to Item 17.

ITEM 19

EXHIBITS

1.1.	Articles of Incorporation, effective August 12, 1981 (incorporated by reference from our Form 20-F and Form 6K )
1.2.	Certificate of Name Change, dated September 7, 1994 (incorporated by reference from our Form 20-F and Form 6K)
2.1	Instruments defining the rights of holders of registered equity or debt securities – refer to Exhibit 1.1 above.

43

4.1	Private Placement Share Subscription Agreement, dated April 20, 2000, by the Company and Road King Infrastructure Limited (incorporated by reference from our Form 20-F Annual Report filed on May 30, 2001)
4.2	Employment Agreement, dated May 5, 2000, by the Company and Gerald A. Gill. (incorporated by reference from our Form 20-F Annual Report filed on May 30, 2001)
4.3	Conversion Agreement, dated May 8, 2000, by the Company, Chai-Na-Ta Farms Ltd., John Hancock Life Insurance Company and Herb King International Limited. (incorporated by reference from our Form 20-F Annual Report filed on May 30, 2001)
4.4	Partnership Agreement between Chai-Na-Ta Farms Ltd. and 499599 B.C. Ltd. (incorporated by reference from our Form 20-F Annual Report filed on May 31, 1996).
4.5	Joint Venture Agreement between Chai-Na-Ta Farms Ltd. and the Skeetchestn Indian Band (incorporated by reference from our Form 20-F Annual Report filed on May 31, 1996).
4.6	Share Purchase Agreement between the Company and LTRD Biotech Limited. (incorporated by reference from our Form 20-F Annual Report filed on May 26, 2003)
8.1	Organization chart of the Company and its affiliates.
12.1	Certification of the CEO under Section 302 of the Sarbanes-Oxley Act of 2002.
12.2	Certification of the CFO under Section 302 of the Sarbanes-Oxley Act of 2002.
13.1	Certification of CEO and CFO as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

44

SIGNATURE PAGE

The registrant hereby certifies that it meets all the requirements for filing on Form 20-F and that it has duly caused and authorised the undersigned to sign this registration statement (annual report) on its behalf.

Chai-Na-Ta Corp.

Registrant

“TERRY LUCK”

By:                                                          

 Terry Luck, Chief Financial Officer

Dated: March 27, 2009

45

Report of Independent Registered Chartered Accountants

and Consolidated Financial Statements

CHAI-NA-TA CORP.

(Stated in Canadian dollars)

DECEMBER 31, 2008, 2007 AND 2006

46

	Deloitte & Touche LLP 2800 - 1055 Dunsmuir Street 4 Bentall Centre P.O. Box 49279 Vancouver BC  V7X 1P4 Canada
	Tel: (604) 669-4466 Fax: (604) 685-0395 www.deloitte.ca

Report of Independent Registered Chartered Accountants

To the Board of Directors of Chai-Na-Ta Corp.

We have audited the consolidated balance sheets of Chai-Na-Ta Corp. as at December 31, 2008 and 2007 and the consolidated statements of operations and deficit, comprehensive loss and accumulated other comprehensive income, cash flows and crop costs for each of the years in the three year period ended December 31, 2008.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States).  These standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of Chai-Na-Ta Corp. as at December 31, 2008 and 2007 and the results of its operations, its cash flows and its crop costs for each of the years in the three year period ended December 31, 2008 in accordance with Canadian generally accepted accounting principles.

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.

On March 10, 2009, we reported separately to the shareholders of Chai-Na-Ta Corp. on our audits, conducted in accordance with Canadian generally accepted auditing standards, on financial statements for the same period, prepared in accordance with Canadian generally accepted accounting principles.

Independent Registered Chartered Accountants

March 10, 2009

47

Comments by Independent Registered Chartered Accountants on Canada-United States of America reporting differences

The standards of the Public Company Accounting Oversight Board (United States) require the addition of an explanatory paragraph when the financial statements are affected by conditions and events that cast substantial doubt on the Company’s ability to continue as a going concern, such as those described in Note 1 to the consolidated financial statements.  The standards of the Public Company Accounting Oversight Board (United States) also require the addition of an explanatory paragraph when there are changes in accounting principles that have a material effect on the comparability of the Company’s financial statements, such as the change described in Note 3 (m) to the financial statements relating to the adoption of Canadian Institute of Chartered Accountants Handbook Sections 3031, “Inventories”, 3862, “Financial Instruments - Disclosure”, 3863, “Financial Instruments - Presentation ”, 1400, “General Standards of Financial Statement Presentation”, and 1535 “Capital Disclosures”.  Although we conducted our audits in accordance with both Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States), our report to the Board of Directors dated March 10, 2009  is expressed in accordance with Canadian reporting standards which do not permit or require references to such conditions and events and to such changes in accounting principles in the auditors’ report when these are properly accounted for and adequately disclosed in the consolidated financial statements.

Independent Registered Chartered Accountants

Vancouver, Canada

March 10, 2009

48

CHAI-NA-TA CORP.

Consolidated Balance Sheets

(Stated in thousands of Canadian Dollars)

As at December 31		2008			2007
ASSETS
Current assets
Cash	$	192		$	307
Accounts receivable and other assets		710			56
Inventory (Note 12)		7,928			8,735
Ginseng crops (Notes 4 and 12)		2,722			5,678
Prepaid expenses		64			45
		11,616			14,821
Ginseng crops (Notes 4 and 12)		4,764			5,717
Prepaid expenses		49			-
Assets held for sale (Note 5)		1,783			1,280
Property, plant and equipment (Note 6)		2,678			3,795
	$	20,890		$	25,613
LIABILITIES
Current liabilities
Bank indebtedness (Note 7)	$	3,060		$	3,510
Accounts payable and accrued liabilities		604			1,348
Customer deposits (Note 8)		2,454			2,388
Current portion of long-term debt (Note 9)		42			152
		6,160			7,398
Long-term debt (Note 9)		8,619			6,973
Total liabilities		14,779			14,371
SHAREHOLDERS' EQUITY
Share capital (Note 10)		38,246			38,246
Contributed surplus (Note 10)		338			338
Accumulated other comprehensive income		442			903
Deficit		(32,915	)		(28,245	)
		(32,473	)		(27,342	)
Total equity		6,111			11,242
	$	20,890		$	25,613
Going concern (Note 1)
Commitments, contingencies and guarantees (Note 15)
See accompanying notes to the consolidated financial statements

APPROVED BY THE BOARD
“DEREK ZEN”	“WILMAN WONG”
Chairman	Chief Executive Officer

49

CHAI-NA-TA CORP.

Consolidated Statements of Operations and Deficit

(Stated in thousands of Canadian Dollars except per share amounts)

Years ended December 31		2008			2007			2006
Revenue	$	9,232		$	7,561		$	5,928
Cost of goods sold
Cost of inventory sold		8,826			7,323			5,785
Shipping and handling fees		93			70			45
Write-down of inventory and ginseng crops (Notes 3(m) & 12)		2,998			2,735			5,639
		11,917			10,128			11,469
Gross loss		(2,685	)		(2,567	)		(5,541	)
Selling, general and administrative expenses		969			1,068			1,220
Interest on short-term debt (Note 7)		144			160			384
Interest on long-term debt (Note 9)		426			635			317
		1,539			1,863			1,921
Operating loss		(4,224	)		(4,430	)		(7,462	)
Other income (loss) (Note 13)		(446	)		1,101			(144	)
Loss before income taxes		(4,670	)		(3,329	)		(7,606	)
Provision for income taxes (Note 14)		-			-			1,855
NET LOSS		(4,670	)		(3,329	)		(9,461	)
Deficit, beginning of year		(28,245	)		(24,916	)		(15,455	)
DEFICIT, END OF YEAR	$	(32,915	)	$	(28,245	)	$	(24,916	)
Basic and diluted loss per share (Note 3(i))	$	(0.13	)	$	(0.10	)	$	(0.27	)
Weighted average number of common shares used
to calculate basic and diluted loss per share (in thousands)		34,698			34,698			34,698
See accompanying notes to the consolidated financial statements

50

CHAI-NA-TA CORP.

Consolidated Statements of Comprehensive Loss

(Stated in thousands of Canadian Dollars)

Years ended December 31		2008			2007			2006
Net loss	$	(4,670	)	$	(3,329	)	$	(9,461	)
Other comprehensive (loss) income:
Adjustments as a result of foreign exchange translation
of self-sustaining subsidiaries		(460	)		312			5
Comprehensive loss	$	(5,130	)	$	(3,017	)	$	(9,456	)

CHAI-NA-TA CORP.

Consolidated Statements of Accumulated Other Comprehensive Income

(Stated in thousands of Canadian Dollars)

Years ended December 31		2008			2007		2006
Balance, beginning of year	$	902		$	590	$	585
Other comprehensive (loss) income		(460	)		312		5
Balance, end of year	$	442		$	902	$	590
See accompanying notes to the consolidated financial statements

51

CHAI-NA-TA CORP.

Consolidated Statements of Cash Flows

(Stated in thousands of Canadian Dollars)

Years ended December 31		2008			2007			2006
Net inflow (outflow) of cash related to the following activities:
Operating Activities
Net loss	$	(4,670	)	$	(3,329	)	$	(9,461	)
Items included in net loss not affecting cash (Note 18(a))		12,081			8,701			13,414
Changes in non-cash operating assets and liabilities (Note 18(b))		(1,014	)		1,409			976
Crop cost expenditures		(6,094	)		(6,277	)		(7,042	)
		303			504			(2,113	)
Financing Activities
Bank indebtedness		(450	)		(800	)		(2,090	)
Long-term borrowings		-			-			7,842
Repayment of long-term debt		(155	)		(299	)		(4,569	)
		(605	)		(1,099	)		1,183
Investing Activities
Purchase of property, plant and equipment		(94	)		(61	)		(212	)
Proceeds from disposition of property, plant and equipment		300			488			29
Cash outlays included in assets held for sale		(27	)		(5	)		-
Proceeds from disposition of assets held for sale		-			-			1,555
		179			422			1,372
Effect of exchange rate changes on cash		8			(4	)		-
Net increase (decrease) in cash		(115	)		(177	)		442
Cash, beginning of year		307			484			42
Cash, end of year	$	192		$	307		$	484
Supplemental information:
Other cash flows:
Interest paid	$	1,289		$	254		$	538
Non-cash investing and financing activities:
Property, plant and equipment purchases financed
through equipment purchase loan agreements	$	45		$	-		$	19
See accompanying notes to the consolidated financial statements

52

CHAI-NA-TA CORP.

Consolidated Statements of Crop Costs

(Stated in thousands of Canadian Dollars)

Years ended December 31		2008			2007		2006
Depreciation	$	592		$	888	$	981
Farm equipment operating costs		556			532		575
Interest on long-term debt		5			6		10
Land rental costs		368			548		702
Mulch and fertilizer		1,499			1,470		1,666
Office and insurance costs		166			168		172
Plant science		7			11		18
Salaries and wages		2,858			2,948		3,231
Seed		68			107		151
Small tools and supplies		36			45		42
Warehouse and dryer operations		534			452		522
		6,689			7,175		8,070
Balance, beginning of year		11,395			14,519		19,348
		18,084			21,694		27,418
Less:
Cost of crop harvested		10,233			8,603		10,199
Cost of seeds sold and available for sale		-			111		-
Crop costs reallocated to assets held for sale		(135	)		135		-
Write-down of ginseng crops (Note 12)		500			1,450		2,700
Balance, end of year		7,486			11,395		14,519
Less: current portion		2,722			5,678		5,214
	$	4,764		$	5,717	$	9,305
See accompanying notes to the consolidated financial statements

53

CHAI-NA-TA CORP.

Notes to the Consolidated Financial Statements

(Stated in Canadian Dollars except tabular amounts in thousands of Canadian dollars)

For the years ended December 31, 2008, 2007 and 2006

1.

GOING CONCERN

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has experienced a loss of $4,670,000 for the year ended December 31, 2008 due to the low selling price of ginseng and has an accumulated deficit of $32,915,000 as at December 31, 2008. The Company is closely monitoring cash resources and has received significant financing from a Canadian chartered bank and a company formerly under common control. The term loan from the company formerly under common control in the amount of $8,587,000 is due on August 18, 2010. The Company is currently considering alternative sources of financing and requesting an extension of the loan maturity date. There can be no assurances that the Company will be able to refinance or repay the loan on its current due date. If the Company cannot make such arrangements, the Company may realize its assets and settle its liabilities at amounts different from the carrying values.

The Company's ability to continue as a going concern is dependant on achieving ongoing profitable operations, obtaining new sources of debt or restructuring existing debt and the continued financial support of its creditors. These consolidated financial statements do not include any adjustments to the amounts and reclassification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

2.

NATURE OF OPERATIONS

The Company operates North American ginseng farms in Canada, on which ginseng root is planted, cultivated and harvested. The Company sells ginseng in its primary markets of Hong Kong and China, and to a lesser extent Canada and the United States of America, through its wholly-owned subsidiaries. The Company also sells ginseng-based value-added products in Canada although they do not represent a significant percentage of sales.

The Company is publicly traded with no single shareholder holding a majority of the Company’s common shares. The largest shareholder of the Company is Wai Kee Holdings Limited (“Wai Kee”), a publicly traded Hong Kong based company, which owns 38% of the shares of the Company.

3.

SIGNIFICANT ACCOUNTING POLICIES

These consolidated financial statements, expressed in thousands of Canadian dollars, have been prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”) and reflect the following significant accounting policies:

54

CHAI-NA-TA CORP.

Notes to the Consolidated Financial Statements

(Stated in Canadian Dollars except tabular amounts in thousands of Canadian dollars)

For the years ended December 31, 2008, 2007 and 2006

(a)

Basis of presentation

These consolidated financial statements include the accounts of the Company and those of its subsidiaries. All significant intercompany transactions and balances have been eliminated.

At December 31, 2008, the Company's effective ownership interests in these companies were as follows:

Subsidiaries

Chai-Na-Ta Farms Ltd.	100	%
Chai-Na-Ta International Ltd. (Inactive)	100	%
Chai-Na-Ta (Asia) Ltd. (Inactive)	100	%
CNT Nominees Limited (Inactive)	100	%
CNT Nutraceuticals Ltd.	100	%
CNT Trading (Asia) Limited (Inactive)	100	%
CNT Trading (Hong Kong) Limited	100	%
Unique Formulations, Inc. (Inactive)	100	%

(b)

Revenue recognition

Sales of goods are recognized when persuasive evidence of an arrangement exists, delivery has occurred, title and risk have passed to the customer, the sales price is fixed and determinable, and collectibility is reasonably assured.

The above conditions are generally satisfied when the goods are delivered to the end customers or to the wholesale distributor.  In instances when the above criteria are not satisfied, revenue is deferred until all conditions required for recognition of revenue are met.

(c)

Financial instruments

The Company has designated its cash, bank indebtedness and foreign exchange contracts as held-for-trading, which are measure at fair market value with changes in fair value recorded in earnings. Accounts receivable are classified as loans and receivable which are measured at amortized cost. Accounts payable, accrued liabilities and long-term debt are classified as other liabilities, which are measured at amortized cost.

(d)

Cash

Cash consists of cash on hand and deposits in banks.

(e)

Inventory

Inventory is valued at the lower of average cost and estimated net realizable value.

55

CHAI-NA-TA CORP.

Notes to the Consolidated Financial Statements

(Stated in Canadian Dollars except tabular amounts in thousands of Canadian dollars)

For the years ended December 31, 2008, 2007 and 2006

(f)

Ginseng crops

The Company uses the full absorption costing method to value its ginseng crops. Included in crop costs are seeds, labour, applicable overhead, interest and supplies as per the consolidated statement of crop costs. Common costs are allocated in each period based on the total number of acres under cultivation during the period.

The carrying value of ginseng crops is reviewed on a regular basis for any impairment in value, using management’s best estimate as to expected future market values, yields and costs to harvest.

Crop costs related to the acreage harvested and sold have been charged to cost of sales.

(g)

Property, plant and equipment and depreciation

Property, plant and equipment are recorded at cost less accumulated depreciation. Depreciation is provided on a straight-line basis over the following periods except as noted below:

Buildings	20 years
Dryers and related works	20 years
Computer equipment and software	4 years
Furniture and fixtures	10 years
Leasehold improvements	10 years
Machinery and equipment	10 years
Sunshade	10 years
Vehicles	8 years
Pavement	12.5 years

Property, plant and equipment are reviewed on a regular basis for impairment upon the occurrence of events or changes in circumstances which indicate that the net book value of the assets may not be recoverable based on estimated undiscounted future cash flows generated by their use. To the extent not recoverable, impaired assets are written down to their fair value.

56

CHAI-NA-TA CORP.

Notes to the Consolidated Financial Statements

(Stated in Canadian Dollars except tabular amounts in thousands of Canadian dollars)

For the years ended December 31, 2008, 2007 and 2006

(h)

Income taxes

The Company accounts for income taxes using the asset and liability method. Under this method, future income taxes are recorded for the temporary differences between the financial reporting basis and tax basis of the Company’s assets and liabilities, and for losses and other deductions carried forward. Future tax assets and liabilities are measured using substantively enacted tax rates expected to apply in the years in which such temporary differences or losses and other deductions carried forward are expected to be recovered or settled. A valuation allowance is recognized to the extent that the recoverability of future income tax assets is not considered likely.

(i)

Loss per common share

Basic loss per share is computed by dividing net loss attributable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted loss per share reflects the potential dilution of common shares by including other common share equivalents in the weighted average number of common shares outstanding for a period, if dilutive. Common share equivalents consist of convertible preferred shares and the incremental number of shares issuable upon the exercise of stock options.

A reconciliation of net loss per common share and the weighted average shares used in the earnings per share calculations for fiscal 2008, 2007 and 2006 is as follows:

				Thousands of
		Net Loss		Shares		Loss
		(numerator)		(denominator)		Per Share
2008
Basic and Diluted	$	(4,670	)	34,698	$	(0.13	)
2007
Basic and Diluted	$	(3,327	)	34,698	$	(0.10	)
2006
Basic and Diluted	$	(9,460	)	34,698	$	(0.27	)

Certain options to purchase NIL (2007 – 343,400, 2006 – 403,300) shares of common stock were outstanding as at December 31, 2008, but were not included in the computation of diluted loss per share because their effect would have been anti-dilutive.

57

CHAI-NA-TA CORP.

Notes to the Consolidated Financial Statements

(Stated in Canadian Dollars except tabular amounts in thousands of Canadian dollars)

For the years ended December 31, 2008, 2007 and 2006

(j)

Stock–based compensation plans

The Company has adopted the recommendations of the Canadian Institute of Chartered Accountants (“CICA”) with respect to stock-based compensation and other stock-based payments. This section establishes standards for recognition, measurement and disclosure of stock-based compensation and other stock-based payments made in exchange for goods and services. The standard requires that all stock-based awards made to employees and non-employees be measured and recognized using a fair value based method.

(k)

Foreign exchange forward contracts

The Company periodically enters into foreign exchange contracts to manage foreign exchange risk associated with future debt repayments denominated in foreign currencies. Realized and unrealized gains and losses resulting from changes in the market value of these contracts are recorded as other income unless they meet specified criteria to qualify as a hedging instrument under Canadian GAAP. The Company has unrealized gains of $395,000 on foreign exchange contracts as at December 31, 2008 (2007 – no unrealized gain or loss, 2006 unrealized gain of $39,000). The Company has not had any contracts that meet the criteria for hedging instruments during the three years ended December 31, 2008.

(l)

Use of estimates

The presentation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and other disclosures as at the end of or during the reporting periods. Significant estimates are used for, but not limited to, the accounting for doubtful accounts, net realizable value of inventory, crop costs, depreciation on property, plant and equipment, future income taxes and contingencies. Actual results may differ from these estimates.

(m) 

 Accounting changes

On January 1, 2008 the Company adopted the amendments to CICA Handbook Section 1400, “General Standards of Financial Statement Presentation”. The amendments to this section are based on the assessment of whether an entity is a going concern and related disclosures included in International Accounting Standard (“IAS”) 1, “Presentation of Financial Statements” of the International Financial Reporting Standards (“IFRS”). The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

On January 1, 2008 the Company adopted CICA Handbook Section 1535, “Capital Disclosures”. This Section establishes standards for disclosing information about the entity’s capital and how it is managed. The incremental disclosure of information about the Company's capital and how it is managed is included in Note 19 of these consolidated financial statements.

58

CHAI-NA-TA CORP.

Notes to the Consolidated Financial Statements

(Stated in Canadian Dollars except tabular amounts in thousands of Canadian dollars)

For the years ended December 31, 2008, 2007 and 2006

On January 1, 2008 the Company adopted CICA Handbook Section 3031, “Inventories” which is based on the IFRS accounting principles as described in IAS 2, “Inventory”. The objective of this Section is to prescribe the accounting treatment for inventories and to provide guidance on the determination of cost and its subsequent recognition as an expense, including any write-down to net realizable value. It also provides guidance on the cost formulas that are used to assign costs to inventories. Section 3031 requires the reversal of any write-down in a previous period, only to the extent of the original write-down, if the net realizable value of the inventory subsequently increases in value. As a result of the adoption of this standard, the Company now includes write-downs on inventory and ginseng crops as a part of cost of goods sold. This standard will also require the Company to reverse a write-down in a subsequent period if the net realizable value of the written-down inventory or ginseng crops increases in value in a future period.

On January 1, 2008 the Company adopted CICA Handbook Section 3862, “Financial Instruments - Disclosure” which is based on the IFRS 7, “Financial Instruments: Disclosures”. This Section requires entities to provide disclosures in their financial statements that enable users to evaluate the significance of financial instruments for the entity's financial position and performance and the nature and extent of risks arising from financial instruments to which the entity is exposed during the period and at the balance sheet date, and how the entity manages those risks. The incremental disclosure of information about the Company's financial instruments is included in Note 20 of these consolidated financial statements.

On January 1, 2008 the Company adopted CICA Handbook Section 3863, “Financial Instruments - Presentation”. This Section establishes standards for presentation of financial instruments and non-financial derivatives. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

(n)

 Future changes in accounting policies

On January 1, 2009, the Company will be required to adopt CICA Handbook Section 3064, “Goodwill and Intangible Assets”. This Section establishes standards for the recognition, measurement, presentation and disclosure of goodwill and intangible assets. The adoption of this standard is not expected to have a significant impact on the Company’s consolidated financial statements.

In April 2008, the Canadian Accounting Standards Board confirmed that on January 1, 2011 Canadian GAAP will be replaced by International Financial Reporting Standards (“IFRS”) for publicly accountable enterprises. Changing from current Canadian GAAP to IFRS will be a significant undertaking that may materially affect the Company’s reported financial position and result of operations.

59

CHAI-NA-TA CORP.

Notes to the Consolidated Financial Statements

(Stated in Canadian Dollars except tabular amounts in thousands of Canadian dollars)

For the years ended December 31, 2008, 2007 and 2006

4.

GINSENG CROPS

Ginseng plants reach maturity and can be harvested at the end of their third year of growth. However, the Company may allow crops to mature longer to allow for higher yields and additional seed harvests. Costs accumulated relating to the expected harvest in the next year have been classified as current assets. At December 31, 2008, total area under cultivation and management is 392 acres. A breakdown of acreage by year planted is as follows:

	Number
Year planted	of acres
2004	70
2005	174
2006	39
2008	109
	392

5.

ASSETS HELD FOR SALE

			2008		2007
Land, building and related assets	(a)	$	1,162	$	1,280
Machinery, equipment, sunshade and vehicles	(b)		621		-
		$	1,783	$	1,280

(a)

Land, building and related assets

Since March 2007, the Company has made available for sale its property located near Kamloops, British Columbia and has reclassified the net book value of the land, buildings, pavement, dryers and related production assets. This facility has been used as the head office for the farms operations in British Columbia. As at December 31, 2007, five acres of ginseng were included in assets held for sale as the Company had accepted an offer for the property which included the five acres of ginseng on the property. In 2008, the removal of subjects on that offer was not met and the Company subsequently reclassified those crops as ginseng crops and harvested them at the end of 2008. The estimated selling price of these assets less estimated selling costs exceeds the amount reclassified as an asset held for sale so no impairment provision is required.

(b)

Machinery, equipment, sunshade and vehicles

After the completion of the final harvest in British Columbia in December 2008, the Company made available for sale all of its remaining operating assets including machinery, equipment, sunshade, and vehicles. The estimated selling price of these assets less estimated selling costs exceeds the amount reclassified as an asset held for sale so no impairment provision is required. These assets had a cost of $12,984,000 and accumulated depreciation of $12,363,000.

60

CHAI-NA-TA CORP.

Notes to the Consolidated Financial Statements

(Stated in Canadian Dollars except tabular amounts in thousands of Canadian dollars)

For the years ended December 31, 2008, 2007 and 2006

6.

PROPERTY, PLANT AND EQUIPMENT

	2008
				Accumulated		Net Book
		Cost		Depreciation		Value
Land	$	171	$	-	$	171
Buildings		1,216		256		960
Dryers and related works		534		156		378
Computer equipment and software		109		105		4
Furniture and fixtures		203		184		19
Machinery and equipment		2,882		2,053		829
Sunshade		2,751		2,552		199
Vehicles		192		106		86
Pavement		47		15		32
	$	8,105	$	5,427	$	2,678
				2007
				Accumulated		Net Book
		Cost		Depreciation		Value
Land	$	171	$	-	$	171
Buildings		1,214		196		1,018
Dryers and related works		534		130		404
Computer equipment and software		182		173		9
Furniture and fixtures		225		202		23
Machinery and equipment		6,015		4,722		1,293
Sunshade		12,930		12,254		676
Vehicles		460		294		166
Pavement		47		12		35
	$	21,778	$	17,983	$	3,795

7.

BANK INDEBTEDNESS

			2008		2007
Bank operating loan	(a)	$	1,060	$	3,510
Bank term loan	(b)		2,000		-
		$	3,060	$	3,510

61

CHAI-NA-TA CORP.

Notes to the Consolidated Financial Statements

(Stated in Canadian Dollars except tabular amounts in thousands of Canadian dollars)

For the years ended December 31, 2008, 2007 and 2006

(a)

Bank operating loan

The Company has available, subject to limitations based on the value of inventory, certain receivables and the estimated value of qualifying ginseng crops, a $2,500,000 (2007 - $5,000,000) revolving demand operating loan with a Canadian chartered bank at a rate of prime plus 1.625% per annum. The loan availability will reduce to $2,000,000 effective June 1, 2009. During the year, the Company incurred $111,000 (2007 - $160,000) of interest on this debt which has been included in interest on short-term debt on the statements of operations and deficit.

(b)

Term loan

On September 4, 2008, the Company secured a $2,000,000 non-revolving term loan from a Canadian chartered bank with an interest rate of prime plus 1.875% per annum. The loan is due in full upon the earlier of receipt of the proceeds from the sale of the Company's property near Kamloops, British Columbia (see Note 5(a)) or May 31, 2009. The loan is secured by the same property near Kamloops, British Columbia. During the year, the Company incurred $33,000 of interest on this debt which has been included in interest on short-term debt on the statements of operations and deficit.

8.

CUSTOMER DEPOSITS

Customer deposits represent deposits received from customers to secure inventory purchase commitments prior to the actual delivery of inventory.

9.

LONG-TERM DEBT

			2008		2007
Bank term loan	(a)	$	-	$	40
Term loan	(b)		8,587		6,942
Equipment purchase loans	(c)		74		143
			8,661		7,125
Less: current portion			42		152
		$	8,619	$	6,973

(a)

Bank term loan

The Company secured a $1,500,000 non-revolving term loan which expired on May 15, 2008, from a Canadian chartered bank with an interest rate of prime plus 1.5% per annum. For the year ended December 31, 2008, the Company incurred $1,000 (2007 - $7,000, 2006 - $18,000) of interest which has been included in interest on long-term debt on the statements of operations and deficit.

62

CHAI-NA-TA CORP.

Notes to the Consolidated Financial Statements

(Stated in Canadian Dollars except tabular amounts in thousands of Canadian dollars)

For the years ended December 31, 2008, 2007 and 2006

(b)

Term loan

On August 18, 2006, the Company established a four year term loan facility of HK$54,700,000 from a company formerly under common control. The loan is unsecured and bears interest at 1.7% per annum over the HIBOR (Hong Kong Interbank Offered Rate) or LIBOR (London Interbank Offered Rate). For the year ended December 31, 2008, the Company incurred $425,000 (2007 - $626,000, 2006 -$220,000) of interest which has been included in interest on long-term debt on the statements of operations and deficit.

(c)

Equipment purchase loans

The Company entered into equipment purchase loan agreements at interest rates of up to 8.75% per annum. The loans are repayable in installments maturing in various amounts to July 10, 2012 and are secured by specific assets of the Company. For the year ended December 31, 2008, the Company incurred $5,000 (2007 - $6,000; 2006 - $9,000) of interest which has been included in interest on long-term debt on the statement of crop costs and $1,000 (2007 - $1,000, 2006 - $NIL) of interest which has been included in interest on long-term debt on the statements of crop costs.

The loans are scheduled to be repaid over the next four years as follows:

2009	$	42
2010		8,598
2011		13
2012		8
	$	8,661

10.

SHARE CAPITAL AND CONTRIBUTED SURPLUS

Authorized share capital consists of an unlimited number of common shares without nominal or par value and 21 million Series 1 non-voting, non-cumulative preferred shares, convertible into common shares on a 1:1 basis. Any issued and outstanding preferred shares will automatically be converted into common shares in 2010. There are currently no outstanding preferred shares.

Outstanding shares are as follows:

	Thousands of
	shares		Amount
Common shares
Balance at December 31, 2007 and 2008	34,698	$	38,246
Contributed Surplus
Balance at December 31, 2007 and 2008		$	338

63

CHAI-NA-TA CORP.

Notes to the Consolidated Financial Statements

(Stated in Canadian Dollars except tabular amounts in thousands of Canadian dollars)

For the years ended December 31, 2008, 2007 and 2006

11.

STOCK OPTIONS

The Company maintains a stock option plan and grants options to officers, directors and employees of the Company at market prices. A total of 785,000 shares were reserved for issue under the plan. The options vest at the date of grant and expire five years thereafter.

There are no options to purchase shares outstanding as at December 31, 2008.

Information regarding the Company's stock options for each of the periods is summarized as follows:

				Exercise
	Number of			price range
	shares			($/share)
Outstanding as at December 31, 2006	403,300		$	0.73
Expired	(59,900	)		0.73
Outstanding as at December 31, 2007	343,400			0.73
Expired	(343,400	)		0.73
Outstanding and exercisable as at December 31, 2008	-		$	0.73

There were no options granted or modified during the three years ended December 31, 2008.

12.

WRITE-DOWN OF INVENTORY AND GINSENG CROPS

		2008		2007		2006
Write-down of ginseng inventory	$	2,498	$	1,285	$	2,901
Write-down of ginseng crops		500		1,450		2,700
Write-down of value-added products		-		-		38
	$	2,998	$	2,735	$	5,639

For the year ended December 31, 2008, the Company recorded a write-down of inventory of $2,498,000 on its ginseng crops harvested in 2008 to reduce the carrying value of the inventory to its estimated net realizable value. This amount includes a $1,500,000 write-down in the third quarter of 2008 and an additional $998,000 write-down that was recognized upon the completion of the 2008 harvest. The Company also recorded a write-down of $500,000 on its current ginseng crops which it intends to harvest at the end of 2009. The net realizable value of the inventory was estimated based on purchase commitments received for inventory on hand.

64

CHAI-NA-TA CORP.

Notes to the Consolidated Financial Statements

(Stated in Canadian Dollars except tabular amounts in thousands of Canadian dollars)

For the years ended December 31, 2008, 2007 and 2006

For the year ended December 31, 2007, the Company recorded a write-down of $1,450,000 on ginseng crops to reduce their carrying value to their net realizable value. The net realizable value of the ginseng crops was estimated based on the estimated yield and quality of the crops upon harvest, accumulated costs, estimated additional costs required to bring the crops to harvest and current and projected selling prices. During the three months ended June 30, 2007, the Company recorded a write-down on inventory of $1,285,000. This inventory was being held by the Company to fulfill a contract with a Canadian customer for a predetermined minimum quantity at a fixed price. The contract expired and the customer did not order the predetermined minimum quantity. Due to the uncertainty of the Company's ability to receive the contracted amount, a write-down was recorded to reduce the carrying value of the inventory to its estimated n et realizable value instead of the predetermined contract price.

For the year ended December 31, 2006, the Company recorded a write-down on inventory of $2,901,000. The net realizable value of the inventory was estimated based on purchase commitments received for inventory on hand. The Company recorded a write-down of $2,700,000 on ginseng crops for the year ended December 31, 2006 to reduce their carrying value to their net realizable value. The net realizable value of the ginseng crops was estimated based on the estimated yield and quality of the crops upon harvest, accumulated costs, estimated additional costs required to bring the crops to harvest and current and projected selling prices. The Company also recorded a write-down of inventory, raw materials and supplies for its value-added products of $38,000 during the year ended December 31, 2006.

13.

OTHER INCOME (LOSS)

		2008			2007			2006
Foreign exchanges gain (loss)	$	(769	)	$	638		$	(155	)
Gain on disposal of property, plant and equipment		256			474			5
Government supplements		64			-			-
Other non-operating income (expenses)		3			(11	)		6
	$	(446	)	$	1,101		$	(144	)

Government supplements include funds received from Agriculture Canada as compensation for cost of production increases and reduced margins of the Company's farming operations in prior years, net of program participation fees and related costs.

14.

FUTURE INCOME TAXES

Temporary differences and carryforwards that give rise to future income tax assets and liabilities as at December 31, 2008 and 2007 are as follows:

65

CHAI-NA-TA CORP.

Notes to the Consolidated Financial Statements

(Stated in Canadian Dollars except tabular amounts in thousands of Canadian dollars)

For the years ended December 31, 2008, 2007 and 2006

		2008		2007
Future income tax assets
Property, plant and equipment	$	71	$	146
Tax loss carryforwards		6,639		5,080
		6,710		5,226
Less: valuation allowance		6,710		5,226
Future income tax assets	$	-	$	-

The majority of the above differences relate to the Company’s farming operations, which are taxable on a cash basis under Canadian tax law and allow for taxable adjustments of inventory and ginseng crops at the discretion of the Company.

The provision for (recovery of) income taxes has been calculated as follows:

		2008			2007			2006
Canadian statutory tax rate		33.00	%		33.50	%		35.12	%
Recovery of income taxes at
the Canadian statutory rates	$	(1,541	)	$	(1,065	)	$	(2,671	)
Adjustments:
Foreign tax rate differential		34			30			73
Change in income tax rates		80			200			-
Other		(57	)		163			(101	)
Valuation allowance		1,484			672			4,554
Provision for (recovery of) income taxes	$	-		$	-		$	1,855

The Company’s foreign subsidiaries have tax losses available for carry forward of approximately $1,428,000 to reduce future taxable income, subject to the approval of the tax authorities, which can be carried forward indefinitely. The Company and domestic subsidiaries have tax losses available for carry forward of approximately $19,262,000 which can be applied to reduce future taxable income and expire at various times over the next five to twenty years.

66

CHAI-NA-TA CORP.

Notes to the Consolidated Financial Statements

(Stated in Canadian Dollars except tabular amounts in thousands of Canadian dollars)

For the years ended December 31, 2008, 2007 and 2006

15.

COMMITMENTS, CONTINGENCIES AND GUARANTEES

(a)

Operating leases and land rentals

The Company has entered into operating leases for vehicles, farming equipment and offices expiring at various times to 2012. Total future minimum payments required under these leases are as follows:

2009	$	96
2010		66
2011		52
2012		11
	$	225

The Company is committed to agricultural land rentals for the next five years as follows:

2009	$	164
2010		67
2011		49
2012		49
2013		10
	$	339

The Company has incurred rental costs on operating leases and land rentals of $476,000, $635,000 and $822,000 for the years ended December 31, 2008 2007 and 2006, respectively, of which $441,000, $591,000 and, $767,000 was capitalized to crop costs for the respective years.

(b)

Other commitments, contingencies and guarantees

The Company has become involved in a legal proceeding as a result of an automobile accident. The Company believes that existing insurance will be sufficient to cover any claim from this matter. While the outcome of this proceeding cannot be determined at this time, no provision has been recorded as the Company believes that the resolution of these proceedings will not have a material impact on the financial condition, earnings or cash flows of the Company.

67

CHAI-NA-TA CORP.

Notes to the Consolidated Financial Statements

(Stated in Canadian Dollars except tabular amounts in thousands of Canadian dollars)

For the years ended December 31, 2008, 2007 and 2006

16.

FOREIGN EXCHANGE CONTRACTS

(a)

Term loan contracts

As at December 31, 2008, the Company has entered into a forward contract with a Canadian bank to purchase US$2,500,000 on March 19, 2009 to partially fix the rate of exchange on the term loan described in Note 9(b). If the spot Canadian/US dollar exchange rate is less than or equal to $1.0460 on the contract date, the exchange rate of the purchase will be $1.0460. If the exchange rate is greater than or equal to $1.0600 on the contract date, the exchange rate of the purchase will be $1.0600. If the exchange rate is between $1.0460 and $1.0600 on the contract date, the contract will expire and a purchase obligation will not take place. At December 31, 2008, the closing exchange rate of $1.2180 resulted in a fair market value of this contract of $395,000 which is included in accounts receivable and other assets on the balance sheet.

As at December 31, 2007, the Company entered into a forward contract with a Canadian bank to purchase US$2,500,000 on March 20, 2008 to partially fix the rate of exchange on the term loan described in Note 9(b). If the spot Canadian/US dollar exchange rate is less than or equal to $0.9830 on the contract date, the exchange rate of the purchase will be $0.9830. If the exchange rate is greater than or equal to $1.0050 on the contract date, the exchange rate of the purchase will be $1.0050. If the exchange rate is between $0.9830 and $1.0050 on the contract date, the contract will expire and a purchase obligation will not take place. At December 31, 2007, the closing exchange rate of $0.9913 resulted in a fair market value of this contract of $NIL.

(b)

Interest payment contracts

As at December 31, 2008, the Company has not entered into any foreign exchange contracts to fix the rate of exchange on interest payments.

As at December 31, 2007, the Company entered into a contract with a Canadian bank to purchase US$300,000 on February 28, 2008 to fix the exchange rate on an interest payment on the term loan established in 2006. If the spot Canadian/US dollar exchange rate is less than or equal to $0.9550 at any time during the contract, the exchange rate of the purchase will be $1.0050. If the exchange rate is greater than or equal to $1.0050 on the contract date, the exchange rate of the purchase will be $1.0050. If the exchange rate is between $0.9550 and $1.0050 on the contract date and the exchange rate was never equal to or less than $0.9550 during the contract period, the contract will expire and a purchase obligation will not take place. At December 31, 2007, the closing exchange rate of $0.9913 resulted in a fair market value of this contract of $NIL.

As at December 31, 2007, the Company entered into a contract with a Canadian bank to purchase US$150,000 on March 17, 2008 to fix the exchange rate on an interest payment on the term loan established in 2006. If the spot Canadian/US dollar exchange rate is less than or equal to $0.9700 at any time during the contract, the exchange rate of the purchase will be $1.0125. If the exchange rate is greater than or equal to $1.0125 on the contract date, the exchange rate of the purchase will be $1.0125. If the exchange rate is between $0.9700 and $1.0125 on the contract date and the exchange rate was never equal to or less than $0.9700 during the contract period, the contract will expire and a purchase obligation will not take place. At December 31, 2007, the closing exchange rate of $0.9913 resulted in a fair market value of this contract of $NIL.

68

CHAI-NA-TA CORP.

Notes to the Consolidated Financial Statements

(Stated in Canadian Dollars except tabular amounts in thousands of Canadian dollars)

For the years ended December 31, 2008, 2007 and 2006

17.

SEGMENTED REPORTING

The Company operates in one industry segment and two geographic regions. Long-lived assets consist of non-current ginseng crops and property, plant and equipment. Information by geographic region is summarized as follows:

Year ended
December 31, 2008		Canada			Far East			Consolidated
Revenue - external	$	1,196		$	8,036		$	9,232
Revenue - intercompany between regions		7,002			277
Total revenue	$	8,198		$	8,313
Net loss	$	(4,022	)	$	(648	)	$	(4,670	)
Long-lived assets	$	7,491		$	-		$	7,491

Major Customers

For the year ended December 31, 2008, consolidated revenue included sales to three customers, which accounted for $3,049,000, $2,825,000 and $2,192,000, respectively, from the Far East geographic region.

Year ended
December 31, 2007		Canada			Far East		Consolidated
Revenue - external	$	3,453		$	4,108	$	7,561
Revenue - intercompany between regions		5,283			-
Total revenue	$	8,736		$	4,108
Net earnings (loss)	$	(3,382	)	$	53	$	(3,329	)
Long-lived assets	$	9,512		$	-	$	9,512

Major Customers

For the year ended December 31, 2007, consolidated revenue included sales to two customers, which accounted for $1,819,000 from the Canadian geographic region and $3,633,000 from the Far East geographic region.

69

CHAI-NA-TA CORP.

Notes to the Consolidated Financial Statements

(Stated in Canadian Dollars except tabular amounts in thousands of Canadian dollars)

For the years ended December 31, 2008, 2007 and 2006

Year ended
December 31, 2006		Canada			Far East			Consolidated
Revenue - external	$	1,273		$	4,655		$	5,928
Revenue - intercompany between regions		4,996			-
Total revenue	$	6,269		$	4,655
Net loss	$	(9,329	)	$	(132	)	$	(9,461	)
Long-lived assets	$	15,097		$	1		$	15,098

Major Customers

For the year ended December 31, 2006, consolidated revenue included sales to four customers, which accounted for $716,000 from the Canadian geographic region and $3,040,000, $989,000 and $611,000, respectively, from the Far East geographic region.

18.

OTHER INFORMATION

(a)

Items included in net loss not affecting cash

		2008			2007			2006
Future income taxes	$	-		$	-		$	1,855
Depreciation and amortization		9			16			19
Cost of ginseng crops sold		8,548			7,309			5,752
Provision for write-down of inventory and crop costs		2,998			2,735			5,639
Non-cash realized foreign exchange (gains) losses		782			(885	)		154
Gain on disposal of property, plant and equipment		(256	)		(474	)		(5	)
	$	12,081		$	8,701		$	13,414

70

CHAI-NA-TA CORP.

Notes to the Consolidated Financial Statements

(Stated in Canadian Dollars except tabular amounts in thousands of Canadian dollars)

For the years ended December 31, 2008, 2007 and 2006

(b)

Changes in non-cash operating assets and liabilities

		2008			2007		2006
Accounts receivable and other assets	$	(259	)	$	123	$	(66	)
Inventory		(9	)		4		32
Prepaid expenses		(68	)		6		2
Accounts payable and accrued liabilities		(744	)		281		(381	)
Customer deposits		66			995		1,389
	$	(1,014	)	$	1,409	$	976

19.

CAPITAL DISCLOSURES

The Company's current objective in managing capital is to safeguard the entity's ability to continue as a going concern so that in the long-term the Company can provide maximum returns for shareholders and benefits for other stakeholders. The Company includes shareholders’ equity, lease financing, term loans, bank financing, and equipment loan purchases in its definition of capital.

The Company has an externally imposed capital requirement as governed through its financing facilities. This requirement is to ensure that the Company continues to operate within the normal course of business and to ensure that the Company has the ability to repay its financing facilities. The externally imposed capital requirements are to be measured at the end of each fiscal year due to the seasonality of the business. This capital requirement is congruent with the Company's management of capital.

The Company monitors capital on the basis of a fixed coverage charge which is a financial covenant of its lending agreement determined at the end of each fiscal year. The fixed coverage charge is calculated as the ratio of earnings before income taxes, depreciation and amortization plus payments under operating leases less cash income taxes and unfunded capital expenditures to fixed charges (the total of interest expense, scheduled principal payments in respect of funded debt, payments under operating leases and corporate distributions) and is to be maintained above 1.25:1. As at December 31, 2008, this ratio is 2.85:1 (December 31, 2007 - 2.74:1).

20.

FINANCIAL INSTRUMENTS

Financial instruments of the Company are represented by cash, accounts receivable and other assets, bank indebtedness, accounts payable and accrued liabilities, customer deposits, long-term debt and foreign exchange contracts. The carrying value of these instruments approximates their fair value due to the short-term maturity of such items or their bearing market related rates of interest. The fair values of the loans payable to More Growth Finance Limited, a company formerly under common control, are not readily determinable due to the related party nature of such loans.

71

CHAI-NA-TA CORP.

Notes to the Consolidated Financial Statements

(Stated in Canadian Dollars except tabular amounts in thousands of Canadian dollars)

For the years ended December 31, 2008, 2007 and 2006

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages liquidity risk through the management of its capital structure and financial leverage as outlined in Note 19. The Company’s financial obligations over the current period are due as follows:

				Upon		Within		Within 1
		Total		Demand		1 Month		to 12 Months
Bank indebtedness	$	3,060	$	1,060	$	-	$	2,000
Accounts payable		69		-		69		-
Accured liabilities		535		220		127		188
Customer deposits		2,454		2,354		-		100
Interest on non-demand loans		426		-		-		426
	$	6,544	$	3,634	$	196	$	2,714

The long-term debt obligations are due as described in Notes 1 and 9.

Interest rate risk

Interest on the Company's line of credit and term loans are based on variable rates as described in Notes 7 and 9, respectively. This exposes the Company to the risk of changing interest rates that may have an effect on its earnings in future periods. The Company does not use derivative instruments to mitigate this risk. Based on the variable interest rate debt outstanding at December 31, 2008, an increase of 1% in interest rates would result in an increase in interest expense of $116,000 per annum. A decrease of 1% in interest rates would have a corresponding decrease in interest expense.

Credit risk

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The Company is exposed to credit risk on accounts receivable from customers and on cash and foreign exchange contracts.

A majority of the Company's sales are made to a small number of customers that are concentrated in Asian markets. To manage its credit risk, the Company carefully monitors credit terms, investigates credit history and only grants credit to customers with established relationships or acceptable credit ratings. Letters of credit may be used, or inventory may be held as security until payment is received, when such relationships have not been established. As at December 31, 2008, there was $NIL in accounts receivable related to major customers (December 31, 2007 - $NIL related to major customers). As at December 31, 2008, the amount of non-current accounts receivable was $7,000. There was no impairment allowance recorded for possible non-collection of this amount as it was received during the first thirty days of 2009.

72

CHAI-NA-TA CORP.

Notes to the Consolidated Financial Statements

(Stated in Canadian Dollars except tabular amounts in thousands of Canadian dollars)

For the years ended December 31, 2008, 2007 and 2006

The credit risk on the Company's cash and foreign exchange contracts are substantially minimized as they are placed in, or contracted with, large financial institutions. While the Company is exposed to credit losses due to the financial collapse by those who are custodians to the Company's cash and those that are counter parties to the foreign exchange contracts, the Company considers this risk quite remote.

Currency Risk

The Company is exposed to currency exchange risk as a result of its international markets and operations and due to the term loan detailed in Note 9(b). The Company periodically enters into foreign exchange forward purchase contracts to manage foreign exchange risk associated with anticipated future debt and interest payments denominated in foreign currencies.

The Company is exposed to currency risk through the following assets and liabilities denominated in United States dollars (all assets and liabilities denominated in Hong Kong dollars have been translated to United States dollars at the rate of 7.80 to 1.00 which is a fixed rate determined by the Hong Kong Monetary Authority):

(in thousands of United States dollars)		2008			2007
Cash	$	28		$	32
Foreign exchange contracts		2,500			2,950
Accounts payable and accured liabilities		(50	)		(803	)
Long-term debt		(7,013	)		(7,013	)
Net exposure	$	(4,535	)	$	(4,834	)

Based on the above net exposure as at December 31, 2008, an increase in the spot Canadian/US dollar exchange rate of $0.10 would result in a foreign exchange loss of $454,000 while a decrease of $0.10 would result in a corresponding foreign exchange gain.

The Company also has foreign exchange exposure related to the foreign exchange adjustment of the deficit of self-sustaining foreign operations which included in accumulated other comprehensive income. As a result, an increase in the spot Canadian/US dollar exchange rate of $0.10 would result in other comprehensive income of $206,000 while a decrease of $0.10 would result in a corresponding other comprehensive loss. Cumulatively, an increase in the spot Canadian/US dollar exchange rate of $0.10 would result in a decrease to comprehensive income of $248,000 while a decrease of $0.10 would result in a corresponding increase to comprehensive income.

73

CHAI-NA-TA CORP.

Notes to the Consolidated Financial Statements

(Stated in Canadian Dollars except tabular amounts in thousands of Canadian dollars)

For the years ended December 31, 2008, 2007 and 2006

21.

RELATED PARTY TRANSACTIONS

In the normal course of business, the Company pays management fees to Wai Kee for performing sales, accounting and administrative services for CNT Trading (Hong Kong) Limited. Wai Kee is a Hong Kong based publicly traded company which owns 38% of the shares of the Company and has a director in common with the Company. The Company paid management fees of $103,000 for the year ended December 31, 2008 (2007 - $102,000) of which $20,000 remains outstanding as at December 31, 2008 (2007 - $14,000) and is included in accounts payable and accrued liabilities on the consolidated balance sheet.

In 2006, the Company established a term loan facility with a company formerly under common control as described in Note 9(b).

Both of these related party transactions are measured at the exchange value.

22.

COMPARATIVE FIGURES AND ROUNDING

Certain prior year figures have been adjusted to conform to the current presentation. This includes the rounding of all prior year figures to the thousands of Canadian dollars.

23.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED  ACCOUNTING  PRINCIPLES

These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (GAAP) which differ in some respects from U.S. GAAP.

The significant differences between Canadian and U.S. GAAP which affect the Company’s financial statements are summarized below:

a)

Accounting for Capitalization of Interest

Under Canadian GAAP, interest relating to expenditures on ginseng crop costs has been capitalized.  The interest is included in inventory when the ginseng crops are harvested and cost of goods sold when the inventory is sold.

Under U.S. GAAP, the portion of interest relating to expenditures on ginseng crop costs would not be eligible for capitalization to ginseng crop costs. The amount would be expensed as period costs and accordingly, the carrying value of crop costs and inventory under U.S. GAAP would be different. Similarly, interest that had been capitalized under Canadian GAAP and included in cost of sales would not have been reported as cost of sales for the period under U.S. GAAP since such costs would have previously have been expensed as period costs.

b) Interest and Finance Charges

Under Canadian GAAP, interest and finance charges are presented as operating expenses and are included in the calculation of operating income.

Under U.S. GAAP, interest and finance charges would be presented as non-operating expenses and would therefore be excluded from the calculation of operating income.

74

CHAI-NA-TA CORP.

Notes to the Consolidated Financial Statements

(Stated in Canadian Dollars except tabular amounts in thousands of Canadian dollars)

For the years ended December 31, 2008, 2007 and 2006

23.    DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED  ACCOUNTING  PRINCIPLES (continued)

c)

Comprehensive Income (Loss)

The FASB issued Statement No. 130, Reporting Comprehensive Income, which was required to be adopted on January 1, 1999. Statement 130 establishes standards for the reporting and display of comprehensive income and its components as follows:

		2008			2007			2006
Net loss under US GAAP	$	(4,666	)	$	(3,317	)	$	(9,439	)
Other comprehensive income:
Change in cumulative translation adjustment		(460	)		312			5
Comprehensive net loss under US GAAP	$	(5,126	)	$	(3,005	)	$	(9,434	)

d)    Liability for Uncertain Tax Positions

As provided by FASB Interpretation 48 – Accounting for Uncertainty in Income Taxes, under U.S. GAAP there is a requirement to evaluate any tax positions that are uncertain and, if necessary, calculate a liability for uncertain tax positions. An analysis of the tax positions taken by the Company was completed and it was determined that there are no material tax positions that could be challenged by taxing authorities that would result in a substantial income tax liability.

Under Canadian GAAP, there is no similar standard.

e)   Statement of Cash Flows

There is no difference in net cash flows from Operating, Financing, and Investing Activities between U.S. and Canadian GAAP.

f)

  Recent Accounting Pronouncements

Pronouncements from the United States

In December 2007, the FASB issued Statement No. 141 (Revised), “Business Combinations ” which replaces FASB Statement No. 141 “Business Combinations”. The Statement retains the fundamental requirements in Statement 141 that the acquisition method of accounting be used for all business combinations and for an acquirer to be identified for each business combination. The Statement defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves control. The Statement improves the comparability of the information about business combinations provided in financial reports. This Statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after Decemb er 15, 2008. The Company does not expect the adoption of the revisions to Statement No. 141 to have a material impact on the Company’s consolidated financial statements.

75

CHAI-NA-TA CORP.

Notes to the Consolidated Financial Statements

(Stated in Canadian Dollars except tabular amounts in thousands of Canadian dollars)

For the years ended December 31, 2008, 2007 and 2006

23.    DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (continued)

f)

  Recent Accounting Pronouncements (Continued)

In December 2007, the FASB issued Statement No. 160, “Noncontrolling Interests in Consolidated Financial Statements”. The Statement amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. This Statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. This Statement applies prospectively as of the beginning of the fiscal year in which this Statement is initially applied, except for the presentation and disclosure requirements. The presentation and disclosure requirements shall be applied retrospectively for all periods presented. The Company does not expect the adoption of Statement No. 160 to have a material impact on the Company’s consolidated financial statements.

In March 2008, the FASB issued Statement No. 161, “Disclosures about Derivative Instruments and Hedging Activities” which includes an amendment to FASB Statement No. 133. This Statement enhances the disclosure requirements of derivative instruments and hedging activities but and is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2008. The Company is already required to disclose information about all of its financial instruments, not just derivative instruments and hedging activities, in accordance with Canadian GAAP and as so the Company does not believe that the adoption of SFAS Statement No. 161 will have a significant impact on its consolidated financial statements.

In May 2008, the FASB issued Statement No. 162, “The Hierarchy of Generally Accepted Accounting Principles”. This Statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States (the GAAP hierarchy). This Statement is effective 60 days following SEC approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles”. The Company does not expect the adoption of Statement No. 162 to have a material impact on the Company’s consolidated financial statements.

Pronouncementsfrom Canada

Effective January 1, 2008, the Company adopted various accounting standards relating to financial statement presentation, capital disclosures, inventories and financial instruments that were issued by the Canadian Institute of Chartered Accountants (“CICA”). These changes are fully described in Note 3(m) of the consolidated financial statements. The recent pronouncements from the CICA that the Company will adopt on January 1, 2009 are fully described in Note 3(n) of the consolidated financial statements.

76

CHAI-NA-TA CORP.

Notes to the Consolidated Financial Statements

(Stated in Canadian Dollars except tabular amounts in thousands of Canadian dollars)

For the years ended December 31, 2008, 2007 and 2006

23.

  DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED  ACCOUNTING  PRINCIPLES (continued)

f)

  Recent Accounting Pronouncements (Continued)

Future change in accounting policies

In April 2008, the Canadian Accounting Standards Board confirmed that on January 1, 2011 Canadian GAAP will be replaced by International Financial Reporting Standards (“IFRS”) for publicly accountable enterprises. Effective March 2008, the Securities and Exchange Commission ruled that it will accept financial statements prepared in accordance with IFRS without reconciliation to U.S. GAAP for financial years ending after November 15, 2007. As such, the Company does not expect that it will be reconciling to U.S. GAAP upon its conversion to IFRS on January 1, 2011. Changing from current Canadian GAAP to IFRS will be a significant undertaking that may materially affect the Company’s reported financial position and result of operations.

The difference between Canadian and U.S. GAAP and their effect on the Company’s consolidated financial statements are summarized below. All amounts except per share amounts are in thousands of Canadian dollars:

STATEMENT OF OPERATIONS
		2008			2007			2006
Net loss as reportedunder Canadian GAAP	$	(4,670	)	$	(3,329	)	$	(9,461	)
Accountingfor interest (a)		13			119			292
Write-downof inventoryandcropcosts		(9	)		(111	)		(256	)
Deferredincome taxadjustment		-			-			(15	)
Other		-			4			1
Net loss under US GAAP		(4,666	)		(3,317	)		(9,439	)
Basic anddilutedloss per share	$	(0.13	)	$	(0.10	)	$	(0.27	)
Weightedaverage number of common
shares (inthousands)		34,698			34,698			34,698

77

CHAI-NA-TA CORP.

Notes to the Consolidated Financial Statements

(Stated in Canadian Dollars except tabular amounts in thousands of Canadian dollars)

For the years ended December 31, 2008, 2007 and 2006

23.

  DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED   ACCOUNTING PRINCIPLES (continued)

BALANCE SHEET
			2008			2007
Assets
Inventory	- Canadian GAAP	$	7,928		$	8,735
	- Interest capitalized (a)		(15	)		(24	)
	- Write-down of inventory		15			24
	- US GAAP	$	7,928		$	8,735
Ginseng crops current	- Canadian GAAP	$	2,722		$	5,678
	- Interest capitalized (a)		(3	)		(7	)
	- US GAAP	$	2,719		$	5,671
Ginseng crops	- Canadian GAAP	$	4,764		$	5,717
	- Interest capitalized (a)		(5	)		(5	)
	- US GAAP	$	4,759		$	5,712
Shareholders' Equity	- Canadian GAAP	$	6,111		$	11,242
	- Interest capitalized (a)		(23	)		(36	)
	- Write-down of inventory		15			24
	- US GAAP	$	6,103		$	11,230

78

EXHIBIT 8.1

Exhibit 12.1

CERTIFICATION

I, Wilman Wong, certify that:

1.

I have reviewed this annual report on Form 20-F of Chai-Na-Ta Corp.(the “Company”);

2.

Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.

Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this annual report;

4.

The Company's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have:

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with general accepted accounting principles;

c.

Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusion about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.

Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5.

The Company's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of Company's board of directors (or persons performing the equivalent function):

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

 /s/ “WILMAN WONG”

Wilman Wong, Chief Executive Officer

Date:  March 31, 2009

Exhibit 12.2

CERTIFICATION

I, Terry Luck, certify that:

1.

I have reviewed this annual report on Form 20-F of Chai-Na-Ta Corp.(the “Company”);

2.

Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.

Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this annual report;

4.

The Company's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have:

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with general accepted accounting principles;

c.

Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusion about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.

Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5.

The Company's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of Company's board of directors (or persons performing the equivalent function):

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

 /s/ “TERRY LUCK”

Terry Luck, Chief Financial Officer

Date:  March 31, 2009

Exhibit 13.1

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report on Form 20-F of Chai-Na-Ta Corp (the “Company”) for the year ended December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of such officer’s knowledge:

(1)

the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of the operations of the Company.

/s/  WILMAN WONG	/s/ TERRY LUCK
Name:  Wilman Wong	Name:  Terry Luck
Title:    Chief Executive Officer	Title:    Chief Financial Officer
Date:    March 31, 2009	Date:    March 31, 2009

EX-12.1

Exhibit 12.1

CERTIFICATION

I, Wilman Wong, certify that:

1.

I have reviewed this annual report on Form 20-F of Chai-Na-Ta Corp.(the “Company”);

2.

Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.

Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this annual report;

4.

The Company's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have:

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with general accepted accounting principles;

c.

Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusion about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.

Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5.

The Company's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of Company's board of directors (or persons performing the equivalent function):

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

 /s/ “WILMAN WONG”

Wilman Wong, Chief Executive Officer

Date:  March 31, 2009

EX-12.2

Exhibit 12.2

CERTIFICATION

I, Terry Luck, certify that:

1.

I have reviewed this annual report on Form 20-F of Chai-Na-Ta Corp.(the “Company”);

2.

Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.

Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this annual report;

4.

The Company's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have:

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with general accepted accounting principles;

c.

Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusion about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.

Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5.

The Company's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of Company's board of directors (or persons performing the equivalent function):

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.

 /s/ “TERRY LUCK”

Terry Luck, Chief Financial Officer

Date:  March 31, 2009

EX-13.1

Exhibit 13.1

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report on Form 20-F of Chai-Na-Ta Corp (the “Company”) for the year ended December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of such officer’s knowledge:

(1)

the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of the operations of the Company.

/s/  WILMAN WONG	/s/ TERRY LUCK
Name:  Wilman Wong	Name:  Terry Luck
Title:    Chief Executive Officer	Title:    Chief Financial Officer
Date:    March 31, 2009	Date:    March 31, 2009