China’s economy has grown rapidly in recent years. According to the National Bureau of Statistics of China, China’s gross domestic product in 2006 was RMB20.9 trillion ($2.7 trillion), which represented growth at a CAGR of 13.8% from 2001 to 2006, making China one of the fastest growing economies in the world.

China’s agricultural industry has also grown significantly, driven by the growth of the overall economy. According to the China Statistical Abstract, in 2006, China’s agricultural output totaled RMB2,155 billion ($283.1 billion), accounting for 10.3% of gross domestic product and representing growth at a CAGR of 8.3% from 2001 to 2006.

The increase in China’s agricultural production is the result of an increase in the consumption of food products such as crops and meat proteins for human and animal nutrition, as well as food products for industrial uses, such as fuels and materials. However, while domestic production has grown, it has not kept pace with consumption, resulting in imports of many agricultural products such as corn seed and sheep.

Despite its recent rapid growth, the agricultural industry in China remains at an early stage of modernization, with significant manual labor and less usage of advanced machinery and irrigation than that of developed economies. In an effort to modernize and promote development of the agricultural industry in China, the Chinese government has provided substantial financial support to agricultural and related businesses through low interest loans, preferential tax treatments, financial subsidies and other measures. In the meantime, Chinese farmers are increasingly using improved production techniques and products, including hybrid seeds and sheep breeding products.

In 2006, the Company sold approximately 31,100 tonnes of corn seed products. The Company currently produces four types of proprietary corn seed products: Primalights III — 591, Primalights III — 391, Primalights III — 891 and Primalights III — 28.

In addition to its proprietary products, the Company is the exclusive distributor in Shanxi for four varieties of corn seed produced by other seed companies outside Shanxi. The Company also produces and sells four popular generic corn seeds whose intellectual property rights have expired in China.

The Company’s sheep breeding business consists primarily of the production and sale of frozen semen, embryos, breeder sheep and its Primalights III hybrid sheep.

The Company owns approximately 6,100 breeder sheep including Poll Dorset, Suffolk, Texel, Merino and Dorper sheep, domestic Small-tailed Han sheep. The Company also has approximately 9,700 Primalights III hybrid sheep and approximately 900 breeder goats including foreign pure breed Boer goats and domestic goats.

The Company primarily produces and sells four types of seedlings, blackberries and raspberries, dates and white bark pine. The Company has four seedling propagation bases that occupy approximately 380 acres of land that it has leased or acquired the land use rights for between five and 46 years.

Total cost of revenues increased by 8.4% from RMB112.2 million in the six months ended June 30, 2006 to RMB121.6 million ($16.0 million) in the six months ended June 30, 2007.

Selling expenses increased by 5.3% from RMB7.5 million in the six months ended June 30, 2006 to RMB7.9 million ($1.0 million) in the six months ended June 30, 2007.

Research and development expenses decreased by 61.5% from RMB2.6 million in the six months ended June 30, 2006 to RMB1.0 million ($0.1 million) in the six months ended June 30, 2007.

Net income increased from RMB142.1 million in the six months ended June 30, 2006 to RMB143.4 million ($18.8 million) in the six months ended June 30, 2007.