UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

FORM 10 -K

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

For the fiscal year ended June 30, ~~2011~~2012

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

ACT OF 1934

For the transition period from ______________ to __________________

Commission file number: 000 - 51312

SHENGTAI PHARMACEUTICAL, INC.

(Exact name of registrant as specified in its charter )

Delaware

State or other jurisdiction of

incorporation or organization

54-2155579

(I.R.S. Employer

Identification No.)

Changda Road East, Development District, Changle County, Shandong, People’s Republic of China

Address of principal executive offices)

262400

(Zip Code)

Registrant’s telephone number, including; area code 011 - 86 - 536 -– 2188831

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

Title of each class

Name of each exchange on which registered

Securities registered pursuant to section 12(g) of the Act:

Common Stock par value $0.001

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ¨ Yes x No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ¨ Yes x No

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 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. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ~~o Yes x~~ xYes ¨ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨ Yes x No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting companies” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ¨ Yes x No

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.

Note.—If a determination as to whether a particular person or entity is an affiliate cannot be made without involving unreasonable effort and expense, the aggregate market value of the common stock held by non-affiliates may be calculated on the basis of assumptions reasonable under the circumstances, provided that the assumptions are set forth in this Form.

The aggregate market value of the voting and non-voting common equity held by non-affiliates* computed by reference to the price of $21.9004 per share of common stock at which the common equity was last sold on December 3130, ~~2010~~2011, the last day of our most recently completed second fiscal quarter, as reported on www.yahoo.com was: $144,~~794,~~753,734.96.

* Excludes 5,~~101~~014,~~693~~013 shares of common stock held by executive officers, directors and stockholders whose individual ownership exceeds 10% of common stock outstanding on ~~June~~ December 30, 2011.

Note. — If a determination as to whether a particular person or entity is an affiliate cannot be made without involving unreasonable effort and expense, the aggregate market value of the common stock held by non-affiliates may be calculated on the basis of assumptions reasonable under the circumstances, provided that the assumptions are set forth in this Form.

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ¨ Yes ¨ No

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

There were 9,584,912 shares of Common Stock, par value $0.001, issued and outstanding as of September 27, ~~2011~~2012.

DOCUMENTS INCORPORATED BY REFERENCE

None.

PART I

Item 1. Business.

This Annual Report on Form 10-K (including the section regarding Management’s Discussion and Analysis of Financial Condition and Results of Operations) contains forward-looking statements regarding our business, financial condition, results of operations and prospects. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not deemed to represent an all-inclusive means of identifying forward-looking statements as denoted in this Annual Report on Form 10-K. Additionally, statements concerning future matters are forward-looking statements.

Although forward-looking statements in this Annual Report on Form 10-K reflect our good faith judgment, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed in Item 1A—“Risks Factors” below, as well as those discussed elsewhere in this Annual Report on Form 10-K. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. We file reports with the SEC. We make available on our web site under “Investor Relations/SEC Filings,” free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports as soon as reasonably practicable after we electronically file such materials with or furnish them to the SEC. You can also read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site ( www.sec.gov ) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us.

We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Annual Report on Form 10-K. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this Annual Report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

All references to “us,” “we,” the “Company” and “Shengtai” refer to Shengtai Pharmaceutical, Inc., and its subsidiaries, Weifang Shengtai Pharmaceutical Co., Ltd., a wholly foreign-owned entity in the PRC (“Weifang Shengtai”), and Shengtai Holding Inc., a New Jersey corporation (“SHI”). All references to “China” or the “PRC” refer to the People’s Republic of China.

Overview

Shengtai Pharmaceutical, Inc. was incorporated in 2004 in the State of Delaware. The Company, through its direct and indirect subsidiaries in China, manufactures and distributes glucose and starch as pharmaceutical raw materials, other starch products and other glucose products such as corn meals, food and beverage glucose and dextrin. Most of the Company’s sales are made in the People’s Republic of China, the “PRC.”

2Dextrose, a form of glucose, is one of the most important carbohydrates and the chief source of energy in the human body. As such, dextrose monohydrate is used in a wide array of pharmaceutical products such as transfusions and intravenous drips for restorative and nutritional purposes.

Dextrose, a form of glucose, is one of the most important carbohydrates and the chief source of energy in the human body. As such, dextrose monohydrate is used in a wide array of pharmaceutical products such as transfusions and intravenous drips for restorative and nutritional purposes.2

Approximately 4043.8806% of our ~~sales~~ revenues for the fiscal year ended June 30, ~~2011~~2012 were attributable to sales of glucose products.

Approximately 3329.7319% of our sales revenues for the fiscal year ended June 30, ~~2011~~2012 were attributable to sales of starch products.

Approximately 2527.3975% of our sales revenue for the fiscal year ended June 30, ~~2011~~2012 were attributable to sales of other products which are mainly ~~byproducts~~by products of our cornstarch products. Other products include corn embryo, fibers, ~~protein powder~~ and other products.

On November 9, 2010, the Company effected a 1-for-2 reverse stock split of its issued and outstanding shares of common stock, and reduced the number of its authorized shares of common stock and preferred stock by the same reverse stock split ratio. The authorized number of shares of common stock is reduced from 100,000,000 to 50,000,000, and the authorized number of shares of preferred stock is reduced from 5,000,000 to 2,500,000. The number of common stock and relevant items affected by common stock referred to throughout this Annual Report reflects the post reverse split information.

Our Products

We manufacture products in three categories: (i) raw materials for pharmaceutical and medicinal companies or purposes, (ii) raw materials for the food and beverage industries and (iii) other products.

Raw materials for pharmaceutical and medicinal companies or purposes:

These products accounted for 2223.4674% of our sales for the fiscal year ended June 30, ~~2011~~2012. Set forth below is a list of our major pharmaceutical and medical grade products:

·¨ Dextrose Monohydrate (DMH)

·¨ Dextrose Anhydrous (DA)

·¨ Dextrin

·¨ Pharmaceutical Grade Cornstarch

·Raw ~~Hydroxyethyl~~Materials ~~Starch~~for the Food and Beverage and Processing Industries:

~~Raw~~These ~~Materials~~products accounted for 48.42% of our sales for the ~~Food~~fiscal year ended June 30, 2012. Set forth below is a list of our major raw materials for the food and ~~Beverage~~beverage and ~~Processing~~processing ~~Industries~~industries:

~~These products accounted for 45.79% of our sales for the fiscal year ended June 30, 2011. Set forth below is a list of our major raw materials for the food and beverage and processing industries~~:

·¨ Rough Glucose for Other Processing Purposes

3¨ Dextrose Monohydrate Oral

·¨ ~~Dextrose~~Food ~~Monohydrate~~and ~~Oral~~Beverage Grade Cornstarch

~~· Food and Beverage Grade Cornstarch~~3

Other Products

These products accounted for 3127.7584% of our sales for the fiscal year ended June 30, ~~2011~~2012. Set forth below is a list of our other products:

·¨ Fibers

·¨ Corn Embryo

·¨ Protein Powder

·¨ Mother Liquid

·¨ ~~Emulsion~~Dextrin

·¨ Abamectin ointment

Sales of Products by Types and Geographic Locations

Sales by Products	FY 06/30/~~2010~~2012				FY 06/30/2011
Dextrose Monohydrate (DMH)	$	2026,~~550~~524,~~972~~647	1714.7282	%	$	22,149,761	12.90	%
Dextrose Anhydrous (DA)		810,~~505~~249,~~783~~929	75.3473	%		10,367,039	6.04	%
Dextrose Monohydrate Oral		2236,~~530~~464,~~617~~040	1920.4337	%		33,257,162	19.37	%
Pharmaceutical Grade Cornstarch		2,~~463~~567,~~110~~5556	21.1243	%		2,852,928	1.66	%
Rough Glucose for Other Processing Purposes		53,~~323~~850,~~891~~734	42.5915	%		4,425,048	2.58	%
Food and Beverage Grade Cornstarch		2446,~~398~~372,~~245~~112	2125.0490	%		40,950,796	23.85	%
Emulsion		3,~~792~~315,~~297~~682	31.2785	%		14,108,365	8.22	%
Mother Liquid		~~535~~3,~~740~~464,371	01.4694	%		2,143,686	1.25	%
Dextrin		23,~~134~~167,~~177~~003	1.8477	%		3,183,756	1.85	%
Corn Embryo		1017,~~100~~543,~~453~~198	89.7180	%		16,178,100	9.42	%
Protein Powder		912,~~166~~148,~~708~~418	76.9179	%		12,773,163	7.44	%
Fibers		612,~~270~~280,~~504~~723	56.4186	%		9,259,245	5.39	%
Others		~~181~~1,~~451~~080,712	0.1660	%		68122,~~817~~690	0.0407	%
Total	$	~~115~~179,~~953~~029,~~948~~127			$	171,717,866

Approximately 7780.8394% of our revenues for the fiscal year ended June 30, ~~2011~~2012 were attributable to domestic sales made in the PRC.

Set forth below is a breakdown of the principal products we sold over the previous two fiscal years and the revenues from such sales.

Sales by Principal Products	FY 06/30/~~2010~~2012 (Revenue) $		% of Total Sales			FY 06/30/2011 (Revenue) $		% of Total Sales
Dextrose Monohydrate (DMH)
Domestic	$	1824,~~732~~180,~~404~~820		1613.1651	%	$	19,798,506		11.53	%
International		12,~~818~~343,~~568~~827		1.5731	%		2,351,255		1.37	%
Dextrose Anhydrous
Domestic		46,~~337~~598,~~312~~602		3.7469	%		5,669,757		3.30	%
International		43,~~168~~651,~~471~~328		32.5904	%		4,697,282		2.74	%
Dextrose Monohydrate Oral
Domestic		1327,~~710~~645,~~775~~128		1115.8244	%		16,789,599		9.78	%
International		8,~~819~~818,~~842~~912		74.6193	%		16,467,563		9.59	%
Pharmaceutical Grade Cornstarch
Domestic		2,~~432~~5671,~~190~~555		21.1043	%		2,837,103		1.65	%
International		~~30,921~~-		~~0.03~~-%	%		15,825		0.01	%
Food and Beverage Grade Cornstarch
Domestic		2446,~~149~~299,~~666~~899		2025.7986	%		39,846,558		23.2	%
International	$	~~286~~72,~~074~~213		0.2504	%	$	1,104,238		0.64	%

Sales and Marketing

Sales are carried out directly by our sales department at our headquarters in Weifang and we are not dependent on distributors or middlemen. As of June 30, ~~2011~~2012, all the provinces in the mainland PRC (except Tibet) have been covered by our domestic sales network. Historically, we have exported our products to customers in over seventy countries. We plan to increase our global sales. Our products currently are mainly exported to Asia and Southeast Asia, but we intend to apply for security certifications to certify that we are in compliance with international production standards which will help us to expand our sales into the United States and Europe.

Delivery Methods

Our products are delivered by ground transportation, including by rail. Products sold internationally are shipped by sea. We generally bear the costs of transportation. We absorb the shipping and handling cost into our pricing.

The Glucose Production Process

Our glucose is made from enzyme-converted cornstarch. The glucose that we produce is of low heat, endotoxin lower than 0.125Eu/ml, high purity, and meets the production standard lower than 0.06Eu/ml.

Glucose is produced from cornstarch in the following steps:

Cornstarch is converted into an emulsion;

Alpha-amylase glucoamylase is then added;

The emulsion from the chemical reaction made by Alpha-Amylase Glucoamylase is then filtered, discolored, ion-exchanged, inspissated, crystallized, separated and dried; and

The cleaned and dried end-product is glucose.

Under normal circumstances, the conversion ratio from cornstarch to glucose is close to 100%, with no waste products. In case of a power outage or equipment malfunction, sub-standard output, when it is detected by our quality control procedures, is re-processed.

5Major Suppliers

~~Major~~The ~~Suppliers~~three principal ingredients for glucose production are cornstarch, enzyme preparations, and active carbon. The major suppliers for these raw materials are as follows:

~~The~~Cornstarch ~~three~~Manufacturing ~~principal ingredients for glucose production are cornstarch, enzyme preparations, and active carbon. The major suppliers for these raw materials are as follows:~~Facility

~~Cornstarch~~The Company’s cornstarch production facility has a maximum capacity of 400,000 tons per year and for the past year, has produced more than the corn starch it requires. During the fiscal year ended June 30, 2012, the Company used internally 154,017 metric tons of corn starch, and sold 123,781 metric tons of corn starch.

~~Cornstarch Manufacturing Facility~~5

~~The~~Our ~~Company’s~~corn ~~cornstarch~~starch production complex ~~facility~~consists ~~has a maximum capacity~~ of ~~400,000 tons per year and for~~ the ~~past~~following year, has produced more than the corn starch it requires. During the fiscal year ended June 30, 2011, the Company used internally 153,886 metric tons of corn starch, and sold 150,704 metric tons of corn starch.areas:

~~Our~~· ~~corn~~Corn ~~starch production complex consists of the following areas:~~Storage

· Corn ~~Storage~~starch production line

· ~~Corn~~Warehouse ~~starch~~for ~~production~~finished ~~line~~product (cornstarch)

· ~~Warehouse~~Logistical ~~for~~and ~~finished~~delivery ~~product~~coordination ~~(cornstarch)~~center

· ~~Logistical~~Environmentally ~~and~~friendly ~~delivery~~treatment ~~coordination~~facilities ~~center~~for sewage

·Enzyme ~~Environmentally friendly treatment facilities for sewage~~Preparations

~~Enzyme~~We ~~Preparations~~purchased a total of 85.12 tons and 79.35 tons of enzyme preparations during the years ended June 30, 2012 and 2011, respectively.

WeActive ~~purchased a total of 79.35 tons and 81.69 tons of enzyme preparations during the years ended June 30, 2011 and 2010, respectively.~~Carbon

~~Active~~Fujian Sha County Qingshan Chemical Carbon Corporation is one of the major active carbon producers in the PRC. We purchased a total of 1,219.3 tons and 1,186.56 tons of active carbon from it during the years ended June 30, 2012 and 2011, respectively. There are a number of other suppliers of active carbon from whom we can make purchases, if necessary.

~~Fujian~~We ~~Sha~~are ~~County~~not ~~Qingshan~~dependent on ~~Chemical~~any ~~Carbon~~single supplier ~~Corporation~~for israw ~~one~~materials ~~of the major active carbon producers in the PRC. We purchased a total of 1,186.56 tons~~ and 1machinery,~~096.05~~ ~~tons~~nor ofhave ~~active~~we ~~carbon~~ever ~~from~~experienced ~~it during the years ended June 30, 2011 and 2010, respectively. There are~~ a ~~number~~shortage ofin ~~other~~the ~~suppliers~~supply of ~~active~~raw ~~carbon~~materials or ~~from whom we can make purchases, if necessary~~machinery.

WeGlucose ~~are~~Manufacturing ~~not dependent on any single supplier for raw materials and machinery, nor have we ever experienced a shortage in the supply of raw materials or machinery.~~Facility

~~Glucose~~Our ~~Manufacturing~~glucose ~~Facility~~production capacity is 215,000 tons per year as of June 30, 2012, an increase of 5,000 tons compared with 210,000 tons as of June 30, 2011. During the fiscal year ended June 30, 2012, the Company has sold 136,270 metric tons of glucose products.

~~Our~~Quality glucose production capacity is 210,000 tons per year as of June 30, 2011, an increase of 40,000 tons compared with 170,000 tons as of June 30, 2010. And due to the expansion of cornstarch production facility, our cornstarch annual production capacity increased from 300,000 metric tons per year as of June 30, 2010 to 400,000 metric tons per year as of June 30, 2011. During the fiscal year ended June 30, 2011, the Company has sold 134,282 metric tons of glucose products.Control

~~Quality~~Our ~~Control~~PRC production facilities are fully certified by applicable PRC regulations for GMP, ISO9001, ISO22000 and HACCP international quality standards.

~~Our~~We ~~PRC~~have implemented a three-tier quality control system: production ~~facilities~~team level, workshop level, and management accountability for quality. We combine this with strict quality-oriented procedures to ensure that all products are ~~fully~~produced ~~certified~~in bya ~~applicable~~pollution-free, ~~PRC~~contamination-free and ~~regulations~~efficient production environment. A team of workers on-duty is responsible for ~~GMP,~~the ~~ISO9001,ISO22000~~smooth operation of the production process by adhering to proper procedures. The intermediate output from each production step is sampled and ~~HACCP~~checked ~~international~~to ensure that the final output meets specified quality standards. Equipment is regularly checked and maintained to ensure proper operation. The quality of the water used in the production process and the level of airborne particles and microbes in the production sites are also regularly checked to eliminate contamination. The quality of all output is reviewed by the General Manager of the Quality Control Department, and ultimately approved by the CEO. A full set of written quality control records is maintained.

6The quality indices of our manufactured glucose are as follows:

We· ~~have~~Properties ~~implemented a three-tier quality control system~~: ~~production~~white ~~team level~~crystal, ~~workshop~~granular ~~level~~powder, ~~and~~odorless, ~~management~~sweet ~~accountability~~taste, ~~for~~easy ~~quality. We~~soluble ~~combine this with strict quality-oriented procedures to ensure that all products are produced~~ in ~~a pollution-free~~water, ~~contamination-free~~slightly ~~and~~soluble efficient production environment. A team of workers on-duty is responsible for the smooth operation of the production process by adhering to proper procedures. The intermediate output from each production step is sampled and checked to ensure that the final output meets specified quality standards. Equipment is regularly checked and maintained to ensure proper operation. The quality of the water used in the production process and the level of airborne particles and microbes in the production sites are also regularly checked to eliminate contamination. The quality of all output is reviewed by the General Manager of the Quality Control Department, and ultimately approved by the CEO. A full set of written quality control records is maintained.alcohol

~~The quality indices of our manufactured glucose are as follows:~~6

· ~~Properties~~Specific :rotatory ~~white~~power ~~crystal,~~: ~~granular~~+52.0 ~~powder,~~degrees— ~~odorless,~~+53.5 ~~sweet taste, easy soluble in water, slightly soluble in alcohol~~degrees

· ~~Specific~~Dry ~~rotatory~~loss ~~power~~ : ~~+52~~≤9.05% ~~degrees—~~Chloride: ~~+53~~<0.502% ~~degrees~~Sulfate: <0.02%

· ~~Dry~~Alcohol ~~loss~~- :insoluble ~~≤9.5% Chloride~~matter: ~~<0.02% Sulfate: <0.02%~~≤5mg

· ~~Alcohol~~Ferrous -salt: ~~insoluble~~<0.002% ~~matter~~Ignition residue: 0.08% Heavy metal: ≤~~5mg~~20ppm Arsenide: <2pp

· ~~Ferrous~~Sulfite ~~salt~~and soluble starch: ~~<0.002%~~appear ~~Ignition~~yellow ~~residue:~~when ~~0.08%~~added ~~Heavy~~to ~~metal:~~an ~~≤20ppm~~iodine ~~Arsenide:~~test ~~<2pp~~solution.

·The ~~Sulfite~~quality ~~and~~indices of ~~soluble~~our ~~starch:~~Dextrose ~~appear~~Monohydrate ~~yellow~~Transfusion ~~when~~(liquid ~~added~~glucose) toare anas ~~iodine test solution.~~follows:

~~The~~Perceptual ~~quality indices of our Dextrose Monohydrate Transfusion (liquid glucose) are as follows:~~index

~~Perceptual~~¨ ~~index~~Appearance: colorless without the impurity that can be seen by the naked eye. ¨ Odor: no unusual odor ¨ Taste: Clear sweet

·Physical ~~Appearance:~~and ~~colorless without the impurity that can be seen by the naked eye.~~chemical index

·¨ ~~Odor~~Solid substance: more than 84% ¨ DE: 38-42 ¨ PH: 4.6 -6.0 ¨ Maltose content: 8% - 20% Transmittance (426nm): more than 94 ¨ Coke Temperature: more than or equal to 125 ¨ Ash: no ~~unusual~~more ~~odor~~than 0.3%

·Hygienic ~~Taste: Clear sweet~~index

~~Physical~~¨ ~~and~~As: ~~chemical~~not ~~index~~more than 0.5mg/Kg ¨ Pb: not more than 0.5mg/Kg ¨ Bacterium total: not more than 1,000/g ¨ E. coli: not more than 30/100g ¨ Pathogen: No

·Market ~~Solid substance: more than 84%~~Analysis

·Industry ~~DE:~~Overview ~~38-42~~and Trends

·The ~~PH:~~process 4of pharmaceutical transfusion was first put to use in 1832.6 -6Since then clinical transfusion has grown from its rather limited choice of original physiological brine to more than 200 different kinds of transfusion media.0

·The ~~Maltose~~diverse ~~content:~~range 8%of transfusion -media ~~20%~~can ~~Transmittance~~be ~~(426nm):~~grouped ~~more~~into ~~than~~five 94categories:

·1. ~~Coke~~Body ~~Temperature:~~fluid ~~more~~balance ~~than or equal to 125~~(Isohydria)

·2. ~~Ash:~~Nutritional ~~no more than 0.3%~~transfusion

~~Hygienic~~3. ~~index~~Dialyzate

·4. ~~As:~~Plasma ~~not more than 0.5mg/Kg~~expander

·5. ~~Pb:~~Therapeutic ~~not~~transfusion ~~more~~(including ~~than~~herbal ~~0.5mg/Kg~~transfusion)

·Dextrose ~~Bacterium~~Monohydrate is ~~total:~~widely ~~not~~used ~~more~~medically ~~than~~and 1clinically for restorative and nutritional purposes. For example,~~000/g~~ a solution of pure glucose, Dextrose or D-glucose, has been recommended for use by subcutaneous injection as a restorative measure after major operations or as a nutritive measure in debilitating diseases.

·Dextrose E.Monohydrate is ~~coli:~~widely ~~not~~used ~~more~~in ~~than~~hospitals ~~30/100g~~and clinical institutions in the PRC and is covered by the PRC Government-subsidized Medical Insurance Scheme.

~~· Pathogen: No~~7

~~Market~~Glucose ~~Analysis~~exists in many forms in nature, including in plants, fruits, honey and animal products. In human bodies, every 100 ml of blood typically contains 80-120 mg glucose. Glucose is the ingredient for many saccharide compounds such as saccharose, maltose, starch, glycogen and vitamins. The properties of glucose are summarized as: white crystal with sweet taste, easily soluble in water, difficult to dissolve in alcohol, insoluble in organic solvents such as ether, chloroform and neutral reaction to litmus.

~~Industry~~Liquid ~~Overview~~glucose is a transparent and ~~Trends~~viscous liquid, and is produced by the action of enzymes on refined cornstarch. Glucose is formed by the hydrolysis of many carbohydrates, including sucrose, maltose, cellulose, starch and glycogen. Fermentation of glucose by yeast produces ethyl alcohol and carbon dioxide. Glucose is made industrially by the hydrolysis of starch under the influence of diluted aid, or more commonly, under that of enzymes.

~~The~~Glucose ~~process~~is ofused ~~pharmaceutical~~for many ~~transfusion~~different ~~was~~purposes, ~~first~~as ~~put~~a toraw ~~use~~material infor ~~1832~~many food and beverage products and as a substitute for sucrose. ~~Since~~With ~~then~~the ~~clinical~~technological advances ~~transfusion~~in ~~has~~food ~~grown~~and beverage production, and also in response to the demand from ~~its~~consumers ~~rather~~for ~~limited~~healthier ~~choice~~food ofand ~~original~~drinks, ~~physiological~~producers are ~~brine~~using tomore and more ~~than~~glucose ~~200~~as ~~different~~a ~~kinds~~raw material. Glucose is also used in veterinary medicine as a carrier of ~~transfusion~~animal ~~media~~medicines.

7Glucose is used by the pharmaceutical and chemical industries in a variety of ways. By different reaction mechanisms, different types of chemical compounds are produced, by the self-oxidation and combination mechanism to produce calcium gluconate, zinc gluconate, and glucorone; by the hydro-reduction mechanism to produce sorbic alcohol and manno-alcohol, or to produce Vitamin B2, glutamine, ribose, and other vitamins.

~~The~~Target ~~diverse range of transfusion media can be grouped into five categories:~~Market

1.Our ~~Body~~principal ~~fluid balance (Isohydria)~~customers are:

2.· ~~Nutritional~~Healthcare ~~transfusion~~Institutions

3.· ~~Dialyzate~~Medical supply companies

4.· ~~Plasma~~Pharmaceutical ~~expander~~companies

5.· ~~Therapeutic~~Medical ~~transfusion~~supply ~~(including herbal transfusion)~~exporters

~~Dextrose~~· ~~Monohydrate~~Food ~~is widely used medically~~ and ~~clinically~~beverage for restorative and nutritional purposes. For example, a solution of pure glucose, Dextrose or D-glucose, has been recommended for use by subcutaneous injection as a restorative measure after major operations or as a nutritive measure in debilitating diseases.companies

~~Dextrose~~We ~~Monohydrate~~market isour ~~widely~~products within ~~used~~the inPRC ~~hospitals~~ and ~~clinical~~plan ~~institutions~~to inexpand ~~the~~our ~~PRC~~export ~~and~~business isas ~~covered~~we byincrease ~~the~~our ~~PRC~~production ~~Government-subsidized Medical Insurance Scheme~~capabilities.

~~Glucose~~Our ~~exists~~competitiveness is inreflected ~~many forms~~ in ~~nature, including in plants, fruits, honey and animal products. In human bodies, every 100 ml of blood typically contains 80-120 mg glucose. Glucose is~~ the ~~ingredient for many saccharide compounds such as saccharose, maltose, starch, glycogen and vitamins. The properties of glucose are summarized as~~following: ~~white crystal with sweet taste, easily soluble in water, difficult to dissolve in alcohol, insoluble in organic solvents such as ether, chloroform and neutral reaction to litmus.~~

~~Liquid~~· ~~glucose~~High ~~is a transparent and viscous liquid~~quality, ~~and~~pharmaceutical isgrade produced by the action of enzymes on refined cornstarch. Glucose is formed by the hydrolysis of many carbohydrates, including sucrose, maltose, cellulose, starch and glycogen. Fermentation of glucose by yeast produces ethyl alcohol and carbon dioxide. Glucose is made industrially by the hydrolysis of starch under the influence of diluted aid, or more commonly, under that of enzymes.products

~~Glucose~~· isCertified ~~used~~product for many different purposes, as a raw material for many food and beverage products and as a substitute for sucrose. With the technological advances in food and beverage production, and also in response to the demand from consumers for healthier food and drinks, producers are using more and more glucose as a raw material. Glucose is also used in veterinary medicine as a carrier of animal medicines.reliability

~~Glucose~~· ~~is used by the pharmaceutical and chemical industries in a variety of ways. By different reaction mechanisms, different types of chemical compounds are produced, by the self~~On-~~oxidation~~time and combination mechanism to produce calcium gluconate, zinc gluconate, and glucorone; by the hydro-reduction mechanism to produce sorbic alcohol and manno-alcohol, or to produce Vitamin B2, glutamine, ribose, and other vitamins.deliveries

~~Target~~· ~~Market~~New and improved medicinal products and packaging

~~Our~~· ~~principal~~Excellent ~~customers~~service ~~are:~~and support

· ~~Healthcare~~Excellent ~~Institutions~~referrals

·Domestic ~~Medical~~and ~~supply~~International ~~companies~~Market

·We ~~Pharmaceutical~~mainly ~~companies~~exported glucose and cornstarch products overseas and we plan to continue to export more products to overseas markets. Our export revenues from major export markets are summarized as follows for the years ended June 30, 2012 and 2011:

~~· Medical supply exporters~~8

· Food and beverage companies

	Sales($) June 30,
Country		2012	2011
Korea		10,306,310	2,422,365
Netherlands		8,953,547	8,811,720
Indonesia		2,100,334	6,786,489
Thailand		2,003,783	2,411,870
Bangladesh		1,728,755	1,821,831
Philippines		1,105,563	1,959,187
Malaysia		1,081,688	2,806,438
Australia		956,528	1,143,065
Vietnam		809,812	1,871,522
Russia		713,320	1,399,755

8Competition

WeSome ~~market~~of our ~~products within the PRC~~ competitors and ~~plan~~their tomain ~~expand~~products ~~our~~are ~~export~~listed ~~business as we increase our production capabilities~~below.

~~Our~~¨ ~~competitiveness~~Shangdong isXiangrui ~~reflected~~Pharmaceutical inCo., ~~the~~Ltd ~~following:~~(trans) ¨ Hebei Shengxue Glucose Co., Ltd (andh) ¨ Shandong Xi Wang Pharmaceutical Co., Ltd (andh and trans) ¨ QinHuangDao Lihua Starch Co., Ltd (oral ) ¨ Shandong Luzhou Biotechnology Co., Ltd (oral) ¨ Jiliang Group(oral) ¨ Shandong Dongxiao Biotechnology Co., Ltd (oral) ¨ Henan Feitian Starch glucose Co. Ltd (oral)

·(trans ~~High~~– ~~quality,~~competitor ~~pharmaceutical~~in ~~grade~~Dextrose Monohydrate ~~products~~transfusion solution)

·(oral ~~Certified~~– ~~product~~competitor ~~reliability~~in oral Dextrose Monohydrate)

·(andh ~~On-time~~– ~~deliveries~~competitor in Dextrose Anhydrous)

·In ~~New~~the ~~and~~domestic ~~improved~~market, we ~~medicinal~~are ~~products~~the ~~and~~largest ~~packaging~~manufacturer of pharmaceutical grade glucose. Internationally, we have the following significant advantages.

·Competitive ~~Excellent service and support~~Advantages

·With ~~Excellent~~the ~~referrals~~PRC being a major corn-producing region of Asia, and Shandong being the major corn-producing province of the PRC, our operating subsidiary Weifang Shengtai, located in Shandong, has the advantage of receiving a steady supply of raw materials nearby with low transportation costs.

~~Domestic~~In ~~and~~Changle ~~International~~County ~~Market~~where we are located, there is plenty of land for us to expand.

We ~~mainly~~export ~~exported~~to ~~glucose~~markets such as South Korea, Russia, Australia and ~~cornstarch~~Singapore ~~products~~and ~~overseas~~fifty other countries. Taking into consideration the geographical proximity and cross-cultural similarities with the Northern and South-Eastern Asian markets, we ~~plan~~can tobe ~~continue~~competitive toin ~~export~~terms ~~more~~of ~~products~~product toprice, delivery ~~overseas~~lead-time ~~markets~~and customer service responsiveness. ~~Our~~The ~~export~~management ~~revenues~~believes ~~from~~that ~~top~~the ~~export~~Company ~~markets~~has ~~are~~lower ~~summarized~~cost asadvantage ~~follows:~~ over its international competitors because it has access to lower corn prices and lower labor cost.

Country	Sales($)
Netherlands		8,811,720
Indonesia		6,786,489
Malaysia		2,806,438
Korea		2,422,365
Thailand		2,411,870
Philippines		1,959,188
Vietnam		1,871,522
Bangladesh		1,821,831
Taiwan		1,595,855
India		1,511,340

We are one of the leading producers of pharmaceutical Dextrose Monohydrate products in the PRC, with an estimated greater than 30% of the overall PRC market. We have production lines for a full set of Dextrose Monohydrate products. Other suppliers of pharmaceutical Dextrose Monohydrate products do not have production lines for a full set of Dextrose Monohydrate products.

~~Competition~~9

~~Some of our competitors and their main products are listed below.~~Backlog

·Our ~~Shangdong~~orders ~~Xiangrui~~are ~~Pharmaceutical~~processed on ~~Co.,~~a ~~Ltd~~made ~~(trans)~~to order basis.

·Growth ~~Hebei Shengxue Glucose Co., Ltd (andh)~~Initiative

·We ~~Shandong~~plan ~~Xi Wang Pharmaceutical Co., Ltd (andh)~~to:

· ~~QingHuangDao~~Expand ~~Lihua~~our ~~Starch~~marketing ~~Co.,~~and ~~Ltd~~sales ~~(oral~~efforts to identify and ~~andh)~~secure additional domestic customers and increase our export sales

·We ~~Shandong~~(i) ~~Luzhou~~optimized ~~Biotechnology~~our web Cosite to describe and promote our business, (ii) reorganized sales department, (iii) bought advertisements for various search words and phrases (e.g., ~~Ltd~~the word, "glucose,” on Alibaba.com search engines, (~~oral~~iv) conducted seminars at various trade show events to promote our products, and (v) optimized our web site so that people doing ‘natural’ searches will see the web site link on the first page of the search by refining the Search Engine Optimization.

· ~~Roquette~~Lock ~~(trans)~~in lower raw material cost

·We ~~Zhucheng~~expanded ~~Dongxiao~~our ~~Biotechnology~~warehouse capacity Coto enable us to store more raw materials and thus lock in lower raw material cost while the corn prices increase continuously. We had 50,000 ~~Ltd~~tons ~~(oral)~~and 36,000 tons of raw material capacity as of June 30, 2012 and 2011, respectively.

·Major ~~Henan Feitian Starch glucose Co. Ltd (oral)~~Customers

~~(trans~~Our –customers ~~competitor~~are principally located in ~~Dextrose~~the ~~Monohydrate~~PRC. ~~transfusion~~Our ~~solution)~~principal customers are hospitals and pharmaceutical companies. Below is a list of our largest PRC customers:

~~(oral~~¨ –K.F.P ~~competitor~~¨ inH.K.W ~~oral~~¨ ~~Dextrose~~Weifang ~~Monohydrate~~Century-light Industry Co Ltd ¨ Shandong Kaiqiang Biological Chemical Co.,Ltd ¨ Qingdao Shizhan Science and Technology Co.,Ltd ¨ Qingdao Chenyu Biochemical Technology Co.,Ltd ¨ Shandong Samsung Corn Industry Science and Technology Co.,Ltd ¨ Qingdao Longli International Trading Co Ltd ¨ Toyota Commerce(Shanghai) Co.,Ltd ¨ Shandong Xinxinhai Grain and Oil Industry Co.,Ltd

9There was no customer that individually accounted for more than 10% of our sales for fiscal years ended June 30, 2012 and 2011.

~~(andh~~Intellectual ~~– competitor in Dextrose Anhydrous)~~Property

~~Among~~Ownership of the trademark, "Heng De Bao," was transferred to us at no charge from Changle Medical Starch Factory (our ~~domestic~~State-owned ~~competitors~~predecessor company) on or about July 28, we2000. ~~are~~The trademark was assigned by the ~~largest~~Chinese ~~manufacturer~~Trademark ofBureau and registered under classes 31 (for our pharmaceutical ~~grade~~starch and white dextrin products) and 5 (for our pharmaceutical glucose products). ~~Internationally~~The class 31 registration is valid through June 9, we2019. ~~have~~The ~~the~~class ~~following~~5 ~~significant~~registration ~~advantages~~is valid through May 9, 2021. International Class Code 5 covers pharmaceuticals, veterinary and sanitary preparations; dietetic substances adapted for medical use; food for babies; plasters, materials for dressings; material for stopping teeth, dental wax; disinfectants; preparations for destroying vermin; fungicides, herbicides. International Class Code 31 covers agricultural, horticultural, and forestry products and grains not included in other classes; live animals, fresh fruits and vegetables; seeds, natural plants, and flowers; and malt which is animal food.

~~Competitive Advantages~~10

With the PRC being a major corn-producing region of Asia, and Shandong being the major corn-producing province of the PRC, our operating subsidiary Weifang Shengtai, located in Shandong, has the advantage of receiving a steady supply of raw materials nearby with low transportation costs.Insurance

InWe ~~Changle~~purchased ~~County~~automobile insurance ~~where~~with wethird ~~are~~party ~~located~~liability coverage for our vehicles and liabilities insurance for our key personnel and Company. We do not have other insurance such as property insurance, ~~there~~business isliability ~~plenty~~or ofdisruption ~~land~~insurance coverage for usour tooperations in ~~expand~~the PRC. While a lawsuit against a company such as Weifang Shengtai in the PRC would be rare, we cannot make any assurance that we will not have exposure for liability in the event of a lawsuit.

WeGovernment export to markets such as South Korea, Russia, Australia and Singapore and seventy other countries. Taking into consideration the geographical proximity and cross-cultural similarities with the Northern and South-Eastern Asian markets, we can be competitive in terms of product price, delivery lead-time and customer service responsiveness. The management believes that the Company has lower cost advantage over its international competitors because it has access to lower corn prices and lower labor cost.Regulations

WeBecause ~~are~~we ~~one of the leading producers of~~ manufacture pharmaceutical ~~Dextrose Monohydrate~~ products ~~in the PRC~~, ~~with~~we anare ~~estimated~~subject ~~greater~~to ~~than~~the ~~30%~~laws ofgoverning the ~~overall~~Good ~~PRC~~Practice ~~market.~~in Wethe ~~have~~Manufacturing ~~production~~and ~~lines~~Quality ~~for~~Control ~~a full set~~ of ~~Dextrose~~Drugs (as ~~Monohydrate~~amended ~~products.~~in ~~Other~~1998) ~~suppliers~~as ofpromulgated ~~pharmaceutical~~by ~~Dextrose~~the ~~Monohydrate~~PRC ~~products~~State doFood ~~not~~and ~~have~~Drug ~~production~~Administration ~~lines~~on ~~for~~March a18, ~~full set of Dextrose Monohydrate products~~1999.

~~Backlog~~We are also subject to business license and approval regulations that are required for all corporations in the PRC.

~~Our~~We ~~orders~~have ~~are~~obtained ~~processed~~Certificates of onGood aManufacturing ~~made~~Practices tofor ~~order~~Pharmaceutical ~~basis~~Products, "GMP Certificates,” issued by the PRC State Food and Drug Administration. We doThe ~~not~~GMP Certificates certify that we have ~~any~~complied ~~backlog~~with the requirements of ~~orders~~Chinese Current Good Manufacturing Practices for Pharmaceutical Products in the manufacture of Dextrose Monohydrate oral glucose, Dextrose Monohydrate glucose, and Anhydrous glucose and the GMP Certificate is valid through November 10, 2013. Additionally, we have obtained Drug Registration Certificates for glucose and glucose pro oral from the State Food and Drug Administration in accordance with the PRC Medical Products Governance Law and its implementing regulations.

~~Growth~~Environmental ~~Initiative~~Compliance

We ~~plan~~are subject to: PRC environmental laws, rules and regulations that are standard to manufacturing facilities.

1.All ~~Expand~~of our ~~marketing~~production lines ~~and~~including ~~sales~~the ~~efforts~~new toglucose ~~identify~~production ~~and~~lines ~~secure~~have ~~additional~~passed ~~domestic~~inspection ~~customers~~by the Environmental Protection Bureau of the PRC and ~~increase~~were issued ~~our~~Certificates ~~export~~of ~~sales~~Qualification.

· In furtherance of this growth initiative we will optimize our website to describe and promote our business, we will reorganize our sales department, we will buy advertisements for various search words and phrases (e.g., the word, "glucose,” on Alibaba.com search engines), we will conduct seminars at various trade show events to promote our products, and (v) we will optimize our web site so that people doing ‘natural’ searches will see the web site link on the first page of the search by refining the Search Engine Optimization.Employees

2As of June 30, 2012, we employed approximately 733 full-time employees, excluding 7 directors of Weifang Shengtai and Shengtai. ~~Lock~~Of these employees, approximately 30 are sales personnel, approximately 166 perform operating and administrative functions and approximately 537 are in ~~lower~~production, ~~raw~~storage ~~material~~and ~~cost~~distribution.

·Item We1A. ~~expanded~~Risk ~~our warehouse capacity to now enable us to store more raw material and thus lock in lower raw material cost while the corn prices increase continuously~~Factors.

10Investment in our common stock involves risks. You should carefully consider the risks we describe below before deciding to invest. The market price of our common stock could decline due to any of these risks, in which case you could lose all or part of your investment. In assessing these risks, you should also refer to the other information included in this Annual Report, including our consolidated financial statements and the accompanying notes. You should pay particular attention to the fact that we are a holding company with substantial operations in China and are subject to legal and regulatory environments that in many respects differ from that of the United States. Our business, financial condition or results of operations could be affected materially and adversely by any of the risks discussed below and any others not foreseen. This discussion contains forward-looking statements.

~~Major Customers~~11

~~Our~~Risks ~~customers~~related ~~are~~to ~~principally~~doing ~~located~~business in the People’s ~~PRC.~~Republic ~~Our principal customers are hospitals and pharmaceutical companies. Below is a list~~ of ~~our largest PRC customers:~~China

·Our Kbusiness operations are conducted primarily in the PRC.F Because PRC laws, regulations and policies are continually changing, our PRC operations will face several risks summarized below.P

·Our ~~Weifang~~ability ~~Century-light~~to ~~Industry~~operate Coin ~~Ltd~~the PRC may be harmed by changes in its laws and regulations

·Our ~~PAIK~~offices ~~KWANG~~and manufacturing plants are located in the PRC and the production, sale and distribution of our products are subject to PRC rules and regulations. In particular, the manufacture and supply of pharmaceutical grade and medicinal products are subject to the PRC rules and regulations, such as the Good Practice in the Manufacturing and Quality Control of Drugs (as amended in 1998) as promulgated by the PRC State Food and Drug Administration on March 18, 1999 and the PRC Medical Products Governance Law. In addition, because we operate a cornstarch production facility which produces waste water, we are subject to the environmental rules and regulations such as the Integrated Wastewater Discharge Standard (GB8978-1996).

·The HPRC only recently has afforded provincial and local economic autonomy and permitted private economic activities.K The PRC government has exercised and continues to exercise substantial control over virtually every sector of the PRC economy through regulation and state ownership.W

·Our ~~Qingdao~~ability ~~Longli~~to ~~International~~operate in ~~Trading~~the CoPRC ~~Ltd~~may be harmed by changes in its laws and regulations, including those relating to manufacturing, taxation, import and export tariffs, environmental regulations, land use rights, property and other matters.

·Our ~~Shanghai~~production ~~Haocheng~~and ~~Food~~manufacturing facility Cois ~~Ltd~~subject to PRC regulation and environmental laws. The PRC government has been active in regulating the pharmaceutical and medicinal goods industry. Our business and products are subject to government regulations mandating the use of good manufacturing practices. Changes in these laws or regulations in the PRC, or other countries we sell into, that govern or apply to our operations could have a materially adverse effect on our business. For example, the law could change so as to prohibit the use of certain chemical agents in our products. If such chemical agents are found in our products, then such a change would reduce our productivity of that product.

·We ~~Yangzhou~~are ~~Chenhua~~a ~~Technology~~state-licensed corporation. ~~Group~~If Cowe ~~Ltd~~were to lose our state-licensed status, we would no longer be able to manufacture our products in the PRC.

·There ~~Suzhou~~is ~~Jiefang~~no ~~Trading~~assurance Cothat ~~Ltd~~PRC economic reforms will not adversely affect our operations in the future

·As ~~ZENITH~~a developing nation, the PRC's economy is more volatile than that of developed Western industrial economies. It differs significantly from that of the U.S. or a Western European country in such respects as structure, level of development, capital reinvestment, resource allocation and self-sufficiency. Only in recent years has the PRC economy moved from what had been a command economy through the 1970s to one that during the 1990s encouraged substantial private economic activity. Although the PRC government still owns the majority of productive assets in the PRC, in the past several years the government has implemented economic reform measures that emphasize decentralization and encourage private economic activity.

·In ~~Suzhou~~1993, ~~Gaofeng~~the ~~Starch~~Constitution of ~~Technology~~the CoPRC ~~Ltd~~was amended to reinforce such economic reforms. The trends of the 1990s indicate that future policies of the Chinese government will emphasize greater utilization of market forces. The PRC government has confirmed that economic development will follow the model of a market economy. For example, in 1999 the Government announced plans to amend the Chinese Constitution to recognize private property, although private business will officially remain subordinated to the state-owned companies, which are the mainstay of the Chinese economy. However, there can be no assurance that, under some circumstances, the government's pursuit of economic reforms will not be restrained or curtailed. Actions by the central government of the PRC could have a significant adverse effect on economic conditions in the country as a whole and on the economic prospects for our Chinese operations. Economic reforms could either benefit or damage our operations and profitability. Some of the things that could have this effect are: (i) level of government involvement in the economy; (ii) control of foreign exchange; (iii) methods of allocating resources; (iv) international trade restrictions; and (v) international conflict.

~~No customer accounted for more than 10% of our sales for fiscal years ended June 30, 2011 and 2010.~~12

~~Intellectual~~Under ~~Property~~the present direction, we believe that the PRC will continue to strengthen its economic and trading relationships with foreign countries and business development in the PRC will follow market forces. While we believe that this trend will continue, there can be no assurance that this will be the case. A change in policies by the PRC government could adversely affect our interests by, among other factors: changes in laws, regulations or the interpretation thereof, confiscatory taxation, restrictions on currency conversion, imports or sources of supplies, or the expropriation or nationalization of private enterprises and could require us to divest ourselves of any interest we then hold in Chinese properties or businesses. Although the PRC government has been pursuing economic reform policies for more than three decades, there is no assurance that the government will continue to pursue these policies or that these policies may not be significantly changed, especially in the event of a change in leadership, social or political disruption, or other circumstances affecting the PRC's political, economic and social life.

~~Ownership~~Because ofthese ~~the~~economic reform ~~trademark,~~measures ~~"Heng~~may Debe ~~Bao~~inconsistent," ~~was~~ineffectual ~~transferred to us at no charge from Changle Medical Starch Factory (our State-owned predecessor company) on~~ or ~~about July 28~~temporary, ~~2000.~~there The trademark was assigned by the Chinese Trademark Bureau and registered under classes 31 (for our pharmaceutical starch and white dextrin products) and 5 (for our pharmaceutical glucose products). The class 31 registration is valid through June 9, 2019. The class 5 registration expired May 9, 2011, but may be extended to November 9, 2011. We are inno ~~the~~assurances process of renewing our class 5 registration. International Class Code 5 covers pharmaceuticals, veterinary and sanitary preparations; dietetic substances adapted for medical use; food for babies; plasters, materials for dressings; material for stopping teeth, dental wax; disinfectants; preparations for destroying vermin; fungicides, herbicides. International Class Code 31 covers agricultural, horticultural, and forestry products and grains not included in other classes; live animals, fresh fruits and vegetables; seeds, natural plants, and flowers; and malt which is animal food.that:

~~Insurance~~· we will be able to capitalize on economic reforms;

We· purchased automobile insurance with third party liability coverage for our vehicles and liabilities insurance for our key personnel and Company. We do not have other insurance such as property insurance, business liability or disruption insurance coverage for our operations in the ~~PRC.~~Chinese ~~While~~government ~~a lawsuit against a company such as Weifang Shengtai in the PRC would be rare, we cannot make any assurance that we~~ will ~~not~~continue ~~have~~its ~~exposure~~pursuit ~~for liability in the event~~ of aeconomic ~~lawsuit.~~reform policies;

~~Government~~· ~~Regulations~~the economic policies, even if pursued, will be successful;

~~Because~~· weeconomic ~~manufacture~~policies ~~pharmaceutical~~will ~~products,~~not webe ~~are~~significantly ~~subject~~altered tofrom ~~the~~time ~~laws~~to ~~governing~~time; ~~the Good Practice in the Manufacturing~~ and ~~Quality Control of Drugs (as amended in 1998) as promulgated by the PRC State Food and Drug Administration on March 18, 1999.~~

11· business operations in the PRC will not become subject to the risk of nationalization.

WeAnti-inflation ~~are~~measures ~~also~~may ~~subject~~be toineffective or ~~business~~harm ~~license~~our ~~and~~ability ~~approval~~to ~~regulations~~do ~~that~~business ~~are required for all corporations~~ in the PRC.

WeSince ~~have~~1979, ~~obtained~~the ~~Certificates~~PRC government ofhas ~~Good~~continued ~~Manufacturing~~to ~~Practices~~reform ~~for~~its ~~Pharmaceutical~~economic ~~Products,~~system. ~~"GMP~~Because ~~Certificates”,~~many ~~issued~~reforms byare ~~the~~unprecedented ~~PRC~~or ~~State~~experimental, ~~Food~~they ~~and~~are ~~Drug~~expected to ~~Administration.~~be ~~The~~refined ~~GMP~~and ~~Certificates~~improved. ~~certify~~Other ~~that~~political, weeconomic ~~have~~and ~~complied~~social ~~with~~factors, ~~the~~such ~~requirements~~as ofpolitical ~~Chinese~~changes, ~~Current~~changes ~~Good Manufacturing Practices for Pharmaceutical Products~~ in the ~~manufacture~~rates of ~~Dextrose Monohydrate oral glucose~~economic growth, ~~Dextrose~~unemployment ~~Monohydrate~~or ~~glucose~~inflation, ~~and~~or ~~Anhydrous~~in ~~glucose~~the ~~and~~disparities ~~the~~in ~~GMP~~per ~~Certificate~~capita iswealth ~~valid~~between ~~through~~regions ~~November~~within ~~10,~~the ~~2013. Additionally~~PRC, wecould ~~have~~lead ~~obtained~~to ~~Drug~~further readjustment ~~Registration~~of ~~Certificates~~the ~~for~~reform ~~glucose~~measures. ~~and~~This ~~glucose~~refining ~~pro~~and ~~oral~~readjustment ~~from~~process ~~the~~may ~~State~~instead ~~Food~~negatively ~~and~~affect ~~Drug~~our ~~Administration~~operations inand ~~accordance~~there is ~~with~~no ~~the~~guarantee ~~PRC~~that ~~Medical~~it ~~Products~~will ~~Governance~~be ~~Law and its implementing regulations~~effective.

~~Environmental~~Over ~~Compliance~~the last few years, the PRC's economy has registered a high growth rate. During the past ten years, the rate of inflation in the PRC has been as high as 5.9% and as low as -0.7%. (Statistics Bulletin, National Bureau of Statistics, the People’s Republic of China, http://www.stats.gov.cn/tjgb/index.htm). Recently, there have been indications that rates of inflation have increased. In response, the PRC government recently has taken measures to curb this excessively expansive economy. These corrective measures were designed to restrict the availability of credit or regulate growth and contain inflation. These measures have included devaluations of the PRC currency, the Renminbi (RMB), restrictions on the availability of domestic credit, reducing the purchasing capability of certain customers, and limited re-centralization of the approval process for purchases of some foreign products. These austere measures alone may not succeed in slowing down the economy's excessive expansion or control inflation, and may result in severe dislocations in the PRC economy. The PRC government may adopt additional measures to further combat inflation, including the establishment of freezes or restraints on certain projects or markets. Such measures could harm the market for our products and inhibit our ability to conduct business in the PRC.

~~We are subject to PRC environmental laws, rules and regulations that are standard to manufacturing facilities.~~13

~~All~~The ofPRC’s ~~our~~legal ~~production~~and ~~lines~~judicial system ~~including~~may ~~the~~not ~~new~~adequately ~~glucose~~protect ~~production~~our ~~lines~~business ~~have~~and ~~passed~~operations ~~inspection~~and by the ~~Environmental~~rights ~~Protection Bureau~~ of ~~the~~foreign ~~PRC and were issued Certificates of Qualification.~~investors

~~Employees~~The PRC legal and judicial system may negatively impact foreign investors. In 1982, the National People's Congress amended the Constitution of China to authorize foreign investment and guarantee the "lawful rights and interests" of foreign investors in the PRC. However, the PRC's system of laws is not yet comprehensive. The legal and judicial systems in the PRC are still rudimentary, and enforcement of existing laws is inconsistent. Many judges in the PRC lack the depth of legal training and experience that would be expected of a judge in a more developed country. Because the PRC judiciary is relatively inexperienced in enforcing the laws that do exist, anticipation of judicial decision-making is more uncertain than would be expected in a more developed country. It may be impossible to obtain swift and equitable enforcement of laws that do exist, or to obtain enforcement of the judgment of one court by a court of another jurisdiction. The PRC's legal system is based on the civil law regime, that is, it is based on written statutes; a decision by one judge does not set a legal precedent that is required to be followed by judges in other cases. In addition, the interpretation of Chinese laws may be varied to reflect domestic political changes.

AsThe promulgation of new ~~June 30~~laws, ~~2011,~~changes weto ~~employed~~existing ~~approximately~~laws ~~728~~and ~~full~~the pre-~~time~~emption ~~employees~~of local regulations by national laws may adversely affect foreign investors. However, Ofthe ~~these~~trend of legislation over the last 20 years has significantly enhanced the protection of foreign investment and allowed for more control by foreign parties of their investments in PRC enterprises. There can be no assurance that a change in leadership, social ~~there~~or ~~are~~political 7disruption, ~~directors~~or unforeseen circumstances affecting the PRC's political, ~~approximately~~economic 23or insocial ~~sales~~life, ~~approximately~~will ~~166~~not ~~performing~~affect the ~~operating~~PRC ~~and~~government's ~~administrative~~ability ~~functions~~to continue to support and ~~approximately~~pursue ~~532~~these inreforms. ~~production,~~Such ~~storage~~a shift could have a material adverse effect on our business and ~~distribution~~our prospects.

~~Item~~The 1Apractical effect of the PRC legal system on our business operations in the PRC can be viewed from two separate but intertwined considerations. ~~Risk~~ ~~Factors~~First, as a matter of substantive law, the Foreign Invested Enterprise laws provide significant protection from government interference. In addition, these laws guarantee the full enjoyment of the benefits of corporate articles and contracts to Foreign Invested Enterprise participants. These laws, however, do impose standards concerning corporate formation and governance, which are qualitatively different from the general corporation laws of the United States. Similarly, the PRC accounting rules mandate accounting practices, which are not consistent with U.S. generally accepted accounting principles. PRC’s accounting rules require that an annual "statutory audit" be performed in accordance with PRC accounting standards and that the books of accounts of Foreign Invested Enterprises are maintained in accordance with Chinese accounting rules. Article 14 of the People's Republic of China Wholly Foreign-Owned Enterprise Law requires a wholly foreign-owned enterprise to submit certain periodic fiscal reports and statements to designated financial and tax authorities, at the risk of business license revocation. Weifang Shengtai is a wholly foreign-owned enterprise. Second, while the enforcement of substantive rights may appear less clear than United States procedures, the Foreign Invested Enterprises and Wholly Foreign-Owned Enterprises are Chinese registered companies, which enjoy the same status as other Chinese registered companies in business-to-business dispute resolution.

~~Investment~~Since ~~in our common stock involves risks. You should carefully consider~~ the ~~risks~~Articles ~~we describe below before deciding to invest. The market price~~ of Association ~~our common stock could decline due to any~~ of ~~these~~Weifang ~~risks,~~Shengtai indo ~~which~~not ~~case~~provide ~~you~~for ~~could~~the ~~lose~~resolution ~~all or part~~ of ~~your~~disputes ~~investment. In assessing these risks, you should also refer to~~ the ~~other~~parties ~~information~~are ~~included~~free ~~in this Annual Report, including our consolidated financial statements and the accompanying notes. You should pay particular attention~~ to ~~the~~proceed ~~fact that we are a holding company with substantial operations in China and are subject~~ to ~~legal~~either ~~and regulatory environments that in many respects differ from that of~~ the ~~United States. Our business~~Chinese courts, ~~financial condition~~ or ~~results~~if ofthey ~~operations~~are ~~could~~in beagreement, ~~affected~~to ~~materially and adversely by any of the risks discussed below and any others not foreseen~~arbitration. ~~This discussion contains forward-looking statements.~~

~~Risks~~Any ~~related~~award torendered ~~doing~~by an ~~business~~arbitration tribunal is enforceable in accordance with the ~~People’s~~United ~~Republic~~Nations Convention on the Recognition and Enforcement of ~~China~~Foreign Arbitral Awards (1958). Therefore, as a practical matter, although no assurances can be given, the Chinese legal infrastructure, while different in operation from its United States counterpart, should not present any significant impediment to the operation of Foreign Invested Enterprises.

~~Our~~In ~~business~~addition, ~~operations~~some ~~are~~of our ~~conducted~~present ~~primarily~~and infuture ~~the~~executive ~~PRC~~officers and our directors, most notably, Mr. ~~Because~~Qingtai ~~PRC~~Liu, ~~laws~~Mr. Yongqiang Wang, ~~regulations~~and Mr. Yaojun Liu, may be residents of the PRC and ~~policies~~not of the United States, and substantially all the assets of these persons are ~~continually~~located ~~changing~~outside the U.S. As a result, ~~our~~it ~~PRC~~could ~~operations~~be ~~will~~difficult ~~face~~for ~~several~~investors ~~risks~~to ~~summarized~~effect ~~below~~service of process in the United States, or to enforce a judgment obtained in the United States against us or any of these persons.

1214

~~Our~~The ~~ability~~PRC laws and regulations governing our current business operations are sometimes vague and uncertain. There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including but not limited to ~~operate~~the laws and regulations governing our business, or the enforcement and performance of our arrangements with customers in the event of the imposition of statutory liens, death, bankruptcy and criminal proceedings. We and any future subsidiaries are considered foreign persons or foreign funded enterprises under PRC laws, and as a result, we are required to comply with PRC laws and regulations. These laws and regulations are sometimes vague and may be ~~harmed~~subject byto future changes, and their official interpretation and enforcement may involve substantial uncertainty. The effectiveness of newly enacted laws, regulations or amendments may be delayed, resulting in ~~its~~detrimental reliance by foreign investors. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our business.

~~Our~~Governmental ~~offices~~control ~~and manufacturing plants are located in the PRC and the production, sale and distribution~~ of ~~our~~currency conversion ~~products~~may ~~are~~affect ~~subject to PRC rules and regulations. In particular,~~ the ~~manufacture~~value ~~and supply~~ of ~~pharmaceutical~~your grade and medicinal products are subject to the PRC rules and regulations, such as the Good Practice in the Manufacturing and Quality Control of Drugs (as amended in 1998) as promulgated by the PRC State Food and Drug Administration on March 18, 1999 and the PRC Medical Products Governance Lawinvestment. In addition, because we operate a cornstarch production facility which produces waste water, we are subject to the environmental rules and regulations such as the Integrated Wastewater Discharge Standard (GB8978-1996).

The ~~PRC~~majority ~~only~~of ~~recently~~our revenues ~~has~~will ~~afforded~~be ~~provincial~~settled ~~and~~in ~~local~~Renminbi ~~economic~~and ~~autonomy~~U.S. dollars, and ~~permitted~~any ~~private~~future ~~economic~~restrictions on currency exchanges may limit our ability to use revenues generated in Renminbi to fund any future business activities outside the PRC or to make dividend or other payments in U.S. ~~The~~dollars. Although the PRC government ~~has~~introduced ~~exercised~~regulations ~~and~~in ~~continues~~1996 to ~~exercise~~allow ~~substantial~~greater ~~control~~convertibility ~~over~~of ~~virtually~~the ~~every~~Renminbi ~~sector~~for current ofaccount transactions, significant restrictions still remain, including primarily the restriction that foreign-invested enterprises like us may only buy, sell or remit foreign currencies after providing valid commercial documents, at those banks in the PRC ~~economy~~authorized ~~through~~to ~~regulation~~conduct ~~and~~foreign ~~state~~exchange ~~ownership~~business.

~~Our~~In ~~ability~~addition, conversion of Renminbi for capital account items, including direct investment and loans, is subject to ~~operate~~governmental approval in the PRC, ~~may~~and companies beare ~~harmed~~required byto ~~changes~~open inand ~~its~~maintain ~~laws~~separate ~~and~~foreign ~~regulations,~~exchange ~~including~~accounts ~~those~~for ~~relating~~capital toaccount ~~manufacturing,~~items. ~~taxation,~~We ~~import~~cannot ~~and~~be ~~export~~certain that ~~tariffs,~~the ~~environmental~~PRC ~~regulations,~~regulatory ~~land~~authorities ~~use~~will ~~rights,~~not ~~property~~impose ~~and~~more ~~other~~stringent ~~matters~~restrictions on the convertibility of the Renminbi.

~~Our~~The ~~production~~value ~~and~~of ~~manufacturing~~our ~~facility~~securities isand ~~subject~~your ability to ~~PRC~~receive ~~regulation~~dividends ~~and~~may ~~environmental~~be ~~laws.~~affected ~~The~~by ~~PRC government has been active in regulating~~ the ~~pharmaceutical~~foreign ~~and~~exchange ~~medicinal~~rates ~~goods~~between ~~industry~~U.S. ~~Our~~dollars ~~business~~ and ~~products~~Renminbi ~~are~~and ~~subject to government regulations mandating~~ the ~~use of good manufacturing practices. Changes in these laws or regulations in the~~ PRC, orgovernment’s control ~~other~~over ~~countries we sell into, that govern or apply to our operations could have a materially adverse effect on our business. For example,~~ the ~~law could change so as to prohibit the use of certain chemical agents in our products~~Renminbi. ~~If such chemical agents are found in our products, then such a change would reduce our productivity of that product.~~

WeThe ~~are~~value aof ~~state-licensed~~our ~~corporation~~common stock will be affected by the foreign exchange rates between U.S. Ifdollars and Renminbi, and between those currencies and other currencies in which our sales may be denominated. For example, to the extent that we ~~were~~need to ~~lose~~convert U.S. dollars into Renminbi for our ~~state-licensed~~operational ~~status~~needs and should the Renminbi appreciate against the U.S. dollar at that time, weour ~~would~~financial noposition, ~~longer~~our business, and the price of our common stock may be ~~able~~harmed. Conversely, if we decide to ~~manufacture~~convert our ~~products~~Renminbi into U.S. dollars for the purpose of declaring dividends on our common stock or for other business purposes and the U.S. dollar appreciates against the Renminbi, the U.S. dollar equivalent of our earnings from our subsidiary in the PRC would be reduced.

~~There~~The isPRC nogovernment ~~assurance~~imposes controls ~~that~~on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of the PRC. ~~economic~~We ~~reforms~~receive ~~will~~substantially all of our revenues in Renminbi which is currently not ~~adversely~~a ~~affect~~freely convertible currency. Shortages in the availability of foreign currency may restrict our ~~operations~~ability to remit sufficient foreign currency to pay dividends, or otherwise satisfy foreign currency dominated obligations. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from the transaction, can be made in foreign currencies without prior approval from the ~~future~~PRC State Administration of Foreign Exchange by complying with certain procedural requirements. However, approval from appropriate governmental authorities is required where Renminbi is to be converted into foreign currency and remitted out of the PRC to pay capital expenses, such as the repayment of bank loans denominated in foreign currencies.

As a developing nation, the PRC's economy is more volatile than that of developed Western industrial economies. It differs significantly from that of the U.S. or a Western European country in such respects as structure, level of development, capital reinvestment, resource allocation and self-sufficiency. Only in recent years has the PRC economy moved from what had been a command economy through the 1970s to one that during the 1990s encouraged substantial private economic activity. Although the PRC government still owns the majority of productive assets in the PRC, in the past several years the government has implemented economic reform measures that emphasize decentralization and encourage private economic activity.15

~~In 1993, the Constitution of the PRC was amended to reinforce such economic reforms.~~ The ~~trends of the 1990s indicate that future policies of the Chinese government will emphasize greater utilization of market forces. The~~ PRC government ~~has~~may also ~~confirmed~~at ~~that~~its ~~economic~~discretion ~~development~~restrict ~~will~~access ~~follow the model of a market economy. For example,~~ in ~~1999~~ the ~~Government~~future ~~announced plans~~ to ~~amend~~foreign ~~the~~currencies ~~Chinese~~for ~~Constitution~~current toaccount ~~recognize~~transactions. ~~private~~If ~~property, although private business will officially remain subordinated to~~ the ~~state-owned~~foreign ~~companies,~~exchange control ~~which~~system ~~are~~prevents ~~the~~us ~~mainstay~~from ofobtaining ~~the~~sufficient ~~Chinese~~foreign ~~economy.~~currency ~~However,~~to ~~there~~satisfy ~~can~~our becurrency ~~no assurance that~~demands, ~~under~~we ~~some~~may ~~circumstances, the government's pursuit of economic reforms will~~ not be ~~restrained~~able orto ~~curtailed.~~pay certain ~~Actions~~expenses ~~by the central government of the PRC could have a significant adverse effect on economic conditions in the country~~ as athey ~~whole~~come ~~and on the economic prospects for our Chinese operations~~due. Economic reforms could either benefit or damage our operations and profitability. Some of the things that could have this effect are: (i) level of government involvement in the economy; (ii) control of foreign exchange; (iii) methods of allocating resources; (iv) international trade restrictions; and (v) international conflict.

13The fluctuation of the Renminbi may materially and adversely affect your investment.

~~Under~~The value of the ~~present~~Renminbi against ~~direction~~the U.S. Dollar and other currencies may fluctuate and is affected by, weamong ~~believe~~other ~~that~~things, changes in the PRC's ~~will~~political and ~~continue~~economic toconditions. ~~strengthen~~As ~~its~~we ~~economic~~rely ~~and~~almost ~~trading~~entirely ~~relationships~~on ~~with~~revenues ~~foreign~~earned ~~countries~~in ~~and~~the ~~business~~PRC—most ~~development~~of our sales occur in the PRC—any significant ~~will~~revaluation ~~follow~~of ~~market~~the ~~forces.~~Renminbi ~~While~~may wematerially ~~believe~~and ~~that~~adversely ~~this~~affect ~~trend~~our ~~will~~cash ~~continue~~flows, ~~there~~revenues ~~can~~and befinancial nocondition. ~~assurance~~For example, to the extent that ~~this~~we ~~will~~need beto ~~the~~convert ~~case~~U.S. ADollars ~~change~~we inreceive ~~policies~~from byan offering of our securities into Renminbi for our operations, appreciation of the ~~PRC~~Renminbi ~~government~~against the U.S. Dollar could ~~adversely~~have ~~affect~~a ~~our~~material ~~interests~~adverse byeffect on our business, ~~among~~financial condition ~~other~~and ~~factors:~~results ~~changes~~of inoperations. ~~laws~~Conversely, ~~regulations~~if orwe decide to convert our Renminbi into U.S. Dollars for the ~~interpretation~~purpose ~~thereof,~~of ~~confiscatory~~making payments ~~taxation,~~for ~~restrictions~~dividends on ~~currency~~our ~~conversion,~~common ~~imports~~shares or ~~sources~~for ofother ~~supplies~~business purposes and the U.S. Dollar appreciates against the Renminbi, the orU.S. Dollar equivalent of the ~~expropriation~~Renminbi orwe ~~nationalization~~convert would be reduced. In addition, the depreciation of ~~private~~significant ~~enterprises~~U.S. ~~and~~Dollar denominated assets could ~~require~~result usin toa ~~divest~~charge ~~ourselves~~to ofour ~~any~~income ~~interest~~statement weand ~~then~~a ~~hold~~reduction in ~~Chinese~~the ~~properties~~value orof ~~businesses~~these assets. ~~Although~~On July 21, 2005, the PRC government ~~has~~changed ~~been~~its ~~pursuing~~decade-old ~~economic~~policy ~~reform~~of ~~policies~~pegging ~~for~~the ~~more~~value ~~than~~of ~~three~~the ~~decades,~~Renminbi ~~there~~to isthe noU.S. ~~assurance~~Dollar. ~~that~~Under the ~~government~~new ~~will~~policy, the ~~continue~~Renminbi is permitted to ~~pursue~~fluctuate ~~these~~within ~~policies~~a ornarrow ~~that~~and ~~these~~managed ~~policies~~band ~~may~~against ~~not~~a bebasket ~~significantly~~of ~~changed,~~certain ~~especially~~foreign currencies. This change in ~~the~~policy ~~event~~has resulted in appreciation of athe ~~change~~Renminbi inagainst ~~leadership,~~the ~~social~~U.S. orDollar. ~~political~~While ~~disruption~~the international reaction to the Renminbi revaluation has generally been positive, orthere ~~other~~remains ~~circumstances~~significant ~~affecting~~international pressure on the PRC's ~~political~~government to adopt an even more flexible currency policy, ~~economic~~which could result in a further and ~~social~~more ~~life~~significant appreciation of the Renminbi against the U.S. Dollar.

~~Because~~Recent ~~these~~PRC ~~economic~~regulations relating ~~reform~~to ~~measures~~the establishment of offshore special purpose companies by PRC domestic residents and registration requirements for employee stock ownership plans or share option plans may besubject ~~inconsistent~~our PRC resident beneficial owners or the plan participants to personal liability, ~~ineffectual~~limit our ability to inject capital into our PRC subsidiaries, limit our subsidiaries’ ability to increase their registered capital or ~~temporary~~distribute profits to us, ~~there~~or ~~are~~may nootherwise ~~assurances~~adversely ~~that:~~affect us.

·The China State Administration of Foreign Exchange ("SAFE") issued a public notice in October 2005 requiring PRC domestic residents to register with the local SAFE branch before establishing or controlling any company outside of China for the purpose of capital financing with assets or equities of PRC companies, referred to in the notice as an "offshore special purpose company." PRC domestic residents who are shareholders of offshore special purpose companies and have completed round trip investments but did not make foreign exchange registrations for overseas investments before November 1, 2005 were retroactively required to register with the local SAFE branch before March 31, 2006. PRC resident shareholders are also required to amend their registrations with the local SAFE in certain circumstances. After consultation with China counsel, we do not believe that any of our PRC domestic resident shareholders are subject to the SAFE registration requirement, however, we cannot provide any assurances that all of our shareholders who are PRC residents will not be ~~able~~required to ~~capitalize~~make onor ~~economic~~obtain ~~reforms;~~any applicable registrations or approvals required by these SAFE regulations in the future. The failure or inability of our PRC resident shareholders to comply with the registration procedures set forth therein may subject us to fines and legal sanctions, restrict our cross-border investment activities, or limit our PRC subsidiaries’ ability to distribute dividends or obtain foreign-exchange-dominated loans to our Company.

·As it is uncertain how the ~~Chinese~~SAFE ~~government~~regulations will ~~continue~~be ~~its~~interpreted ~~pursuit~~or implemented, we cannot predict how these regulations will affect our business operations or future strategy. For example, we may be subject to more stringent review and approval process with respect to our foreign exchange activities, such as remittance of ~~economic~~dividends ~~reform~~and ~~policies;~~foreign-currency-denominated borrowings, which may adversely affect our results of operations and financial condition. In addition, if we decide to acquire a PRC domestic company, we cannot assure you that we or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete the necessary filings and registrations required by the SAFE regulations. This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects.

~~· the economic policies, even if pursued, will be successful;~~16

·In ~~economic~~December ~~policies~~2006, ~~will~~the People’s ~~not~~Bank of China promulgated the Implementation Rules of the Administrative Measures for Individual Foreign Exchange, or the Individual Foreign Exchange Rules, setting forth the respective requirements for foreign exchange transactions by PRC individuals under either the current account or the capital account. In January 2007, SAFE issued implementing rules for the Individual Foreign Exchange Rules, which, among other things, specified approval requirements for certain capital account transactions such as a PRC citizen’s participation in the employee stock ownership plans or stock option plans of an overseas publicly-listed company. On March 28, 2007, SAFE promulgated the Application Procedure of Foreign Exchange Administration for Domestic Individuals Participating in Employee Stock Holding Plan or Stock Option Plan of Overseas-Listed Company, or the Stock Option Rule. Under the Stock Option Rule, PRC citizens who are granted stock options by an overseas publicly-listed company are required, through a PRC agent or PRC subsidiary of such overseas publicly-listed company, to register with SAFE and complete certain other procedures. We and our PRC employees who may be ~~significantly~~granted ~~altered~~stock ~~from~~options ~~time~~are subject to ~~time;~~the Stock Option Rule. If we or our PRC optionees fail to comply with these regulations, we or our PRC optionees may be subject to fines and legal sanctions.

·Risks ~~business~~related ~~operations in the PRC will not become subject~~ to ~~the~~our ~~risk of nationalization.~~business

~~Anti-inflation~~We ~~measures~~cannot ~~may~~give beany ~~ineffective~~assurance orthat any ~~harm~~plans ~~our~~for ~~ability~~future toexpansion dowill ~~business~~be inimplemented ~~the~~or ~~PRC~~that they will be successful.

~~Since~~While ~~1979,~~we ~~the~~have ~~PRC~~expansion plans, ~~government~~which ~~has~~include ~~continued~~making tofull ~~reform~~use ~~its~~of ~~economic~~the ~~system.~~newly ~~Because~~built ~~many~~cornstarch ~~reforms~~manufacturing ~~are~~plant, ~~unprecedented~~partially orcompleted ~~experimental,~~and ~~they~~operational ~~are~~since January ~~expected~~2007, toupgrading beour ~~refined~~existing ~~and~~glucose ~~improved.~~manufacturing ~~Other political~~facility, ~~economic~~building ~~and~~a ~~social~~new ~~factors,~~glucose ~~such~~manufacturing asfacility ~~political~~and ~~changes~~expanding our sales overseas, ~~changes~~there inis ~~the~~no ~~rates~~guarantee ofthat ~~economic~~such ~~growth,~~plans ~~unemployment~~will orbe ~~inflation,~~implemented or inthat ~~the~~they ~~disparities~~will inbe ~~per~~successful. ~~capita~~These ~~wealth~~plans ~~between~~are subject ~~regions~~to, ~~within~~among ~~the~~other ~~PRC~~things, ~~could~~their ~~lead~~feasibility to ~~further~~meet ~~readjustment~~the ofchallenges ~~the~~we ~~reform~~face, ~~measures.~~our ~~This~~ability ~~refining~~to ~~and~~arrange ~~readjustment~~for ~~process~~sufficient ~~may~~funding and ~~instead~~the ~~negatively~~ability ~~affect~~to ~~our~~hire ~~operations~~qualified and ~~there~~capable isemployees noto ~~guarantee~~carry ~~that~~out itthese ~~will~~expansion ~~be effective~~plans.

~~Over~~We ~~the~~have ~~last~~ a ~~few~~limited ~~years,~~operating ~~the PRC's economy has registered a high growth rate. During the past ten years, the rate of inflation in the PRC has been as high as 5.9%~~ history and as low as -0.7%. (Statistics Bulletin, National Bureau of Statistics, the People’s Republic of China, http://www.stats.gov.cn/tjgb/index.htm). Recently, there have been indications that rates of inflation have increased. In response, the PRC government recently has taken measures to curb this excessively expansive economy. These corrective measures were designed to restrict the availability of credit or regulate growth and contain inflation. These measures have included devaluations of the PRC currency, the Renminbi (RMB), restrictions on the availability of domestic credit, reducing the purchasing capability of certain customers, and limited ~~re-centralization~~historical offinancial ~~the~~information ~~approval~~upon ~~process~~which ~~for~~you ~~purchases of some foreign products. These austere measures alone~~ may ~~not~~evaluate succeed in slowing down the economy's excessive expansion or control inflation, and may result in severe dislocations in the PRC economy. The PRC government may adopt additional measures to further combat inflation, including the establishment of freezes or restraints on certain projects or markets. Such measures could harm the market for our ~~products and inhibit our ability to conduct business in the PRC~~performance.

~~The~~Our ~~PRC’s~~operating ~~legal~~subsidiary, Weifang Shengtai, was incorporated in 1999 and ~~judicial~~our ~~system~~operations have been largely confined to the PRC. In addition, while we have had some experience in managing a cornstarch manufacturing facility, we may not be adequately ~~protect~~prepared ~~our~~to ~~business~~manage and ~~operations~~operate ~~and~~a larger, ~~the~~more ~~rights~~modern ~~of foreign investors~~facility.

~~The~~We ~~PRC~~are ~~legal~~in ~~and~~our ~~judicial~~early stages ~~system may negatively impact foreign investors. In 1982, the National People's Congress amended the Constitution~~ of ~~China~~development ~~to authorize foreign investment~~ and ~~guarantee~~face ~~the~~risks ~~"lawful~~associated ~~rights~~with ~~and~~a ~~interests"~~new ofcompany ~~foreign investors~~ in ~~the~~a ~~PRC~~growth industry. ~~However,~~We ~~the~~may ~~PRC's system of laws is~~ not ~~yet~~successfully ~~comprehensive.~~address ~~The~~these risks ~~legal~~ and ~~judicial~~uncertainties ~~systems~~or insuccessfully ~~the~~implement ~~PRC~~our ~~are~~operating ~~still rudimentary, and enforcement of existing laws is inconsistent~~strategies. ~~Many~~If ~~judges~~we infail ~~the~~to ~~PRC~~do ~~lack~~so, ~~the~~it ~~depth~~could ofmaterially ~~legal~~harm ~~training~~our ~~and~~business to ~~experience that would be expected of a judge in a more developed country. Because~~ the ~~PRC~~point ~~judiciary is relatively inexperienced in enforcing the laws that do exist, anticipation~~ of ~~judicial~~having ~~decision-making is more uncertain than would be expected in a more developed country. It may be impossible~~ to ~~obtain~~cease ~~swift~~operations and ~~equitable~~could ~~enforcement~~impair ofthe ~~laws~~value ~~that~~of doour ~~exist,~~common orstock to ~~obtain enforcement of~~ the ~~judgment~~point ofinvestors ~~one~~may ~~court~~lose bytheir entire ~~a court of another jurisdiction~~investment. ~~The~~Even ~~PRC's~~if ~~legal~~we ~~system~~accomplish isthese ~~based on the civil law regime~~objectives, ~~that~~we ~~is,~~may ~~it is based on written statutes; a decision by one judge does~~ not ~~set~~generate apositive ~~legal~~cash ~~precedent~~flows ~~that~~or isthe ~~required~~profits towe ~~be followed by judges~~ anticipate in ~~other cases. In addition,~~ the ~~interpretation of Chinese laws may be varied to reflect domestic political changes~~future.

14Although our revenues have grown rapidly since our inception from the growing demand for our glucose products, we cannot assure you that we will maintain our profitability or that we will not incur net losses in the future. We expect that our operating expenses will increase as we expand. Any significant failure to realize anticipated revenue growth could result in significant operating losses. We will continue to encounter risks and difficulties frequently experienced by companies at a similar stage of development, including our potential failure to:

~~The~~· ~~promulgation~~expand ofour ~~new~~product ~~laws,~~offerings ~~changes to existing laws~~ and ~~the~~maintain ~~pre-emption of local regulations by national laws may adversely affect foreign investors. However,~~ the ~~trend~~high ofquality ~~legislation over the last 20 years has significantly enhanced the protection~~ of foreign investment and allowed for more control by foreign parties of their investments in PRC enterprises. There can be no assurance that a change in leadership, social or political disruption, or unforeseen circumstances affecting the PRC's political, economic or social life, will not affect the PRC government's ability to continue to support and pursue these reforms. Such a shift could have a material adverse effect on our ~~business and our prospects.~~products;

~~The~~· ~~practical~~manage ~~effect of the PRC legal system on~~ our ~~business~~expanding operations ~~in the PRC can be viewed from two separate but intertwined considerations. First~~, asincluding ~~a matter of substantive law,~~ the ~~Foreign~~integration ~~Invested Enterprise laws provide significant protection from government interference. In addition, these laws guarantee the full enjoyment~~ of ~~the~~any ~~benefits~~future of corporate articles and contracts to Foreign Invested Enterprise participants. These laws, however, do impose standards concerning corporate formation and governance, which are qualitatively different from the general corporation laws of the United States. Similarly, the PRC accounting rules mandate accounting practices, which are not consistent with U.S. generally accepted accounting principles. PRC’s accounting rules require that an annual "statutory audit" be performed in accordance with PRC accounting standards and that the books of accounts of Foreign Invested Enterprises are maintained in accordance with Chinese accounting rules. Article 14 of the People's Republic of China Wholly Foreign-Owned Enterprise Law requires a wholly foreign-owned enterprise to submit certain periodic fiscal reports and statements to designated financial and tax authorities, at the risk of business license revocation. Weifang Shengtai is a wholly foreign-owned enterprise. Second, while the enforcement of substantive rights may appear less clear than United States procedures, the Foreign Invested Enterprises and Wholly Foreign-Owned Enterprises are Chinese registered companies, which enjoy the same status as other Chinese registered companies in business-to-business dispute resolution.acquisitions;

Since the Articles of Association of Weifang Shengtai do not provide for the resolution of disputes the parties are free to proceed to either the Chinese courts, or if they are in agreement, to arbitration.17

~~Any~~· ~~award~~obtain ~~rendered~~sufficient byworking ancapital ~~arbitration~~to ~~tribunal~~support isour ~~enforceable~~expansion ~~in accordance with the United Nations Convention on the Recognition~~ and ~~Enforcement~~to offill ~~Foreign~~customers' ~~Arbitral~~order ~~Awards (1958). Therefore, as a practical matter, although no assurances can be given, the Chinese legal infrastructure, while different~~ in ~~operation from its United States counterpart, should not present any significant impediment to the operation of Foreign Invested Enterprises.~~time;

In· ~~addition,~~maintain ~~some~~adequate control of our present and future executive officers and our directors, most notably, Mr. Qingtai Liu, Mr. Yongqiang Wang, and Mr. Yaojun Liu, may be residents of the PRC and not of the United States, and substantially all the assets of these persons are located outside the U.S. As a result, it could be difficult for investors to effect service of process in the United States, or to enforce a judgment obtained in the United States against us or any of these persons.expenses;

15· implement our product development, marketing, sales, and acquisition strategies and adapt and modify them as needed; and

~~The~~· ~~PRC~~anticipate ~~laws~~ and ~~regulations~~adapt ~~governing~~to ~~our~~changing ~~current~~conditions ~~business~~in ~~operations are sometimes vague and uncertain. There are substantial uncertainties regarding~~ the ~~interpretation~~dextrose ~~and~~monohydrate ~~application of PRC laws~~ and ~~regulations,~~glucose ~~including~~products ~~but~~markets ~~not~~in ~~limited~~which towe ~~the~~operate ~~laws~~as ~~and~~well ~~regulations~~as ~~governing our business, or~~ the ~~enforcement~~impact ~~and performance~~ of ~~our~~any ~~arrangements~~changes ~~with customers~~ in ~~the~~government ~~event of the imposition of statutory liens~~regulation, ~~death,~~mergers ~~bankruptcy~~ and ~~criminal~~acquisitions ~~proceedings.~~involving Weour ~~and any future subsidiaries are considered foreign persons or foreign funded enterprises under PRC laws~~competitors, ~~and~~technological asdevelopments ~~a result, we are required to comply with PRC laws~~ and ~~regulations.~~other ~~These~~significant ~~laws~~competitive and ~~regulations~~market ~~are sometimes vague and may be subject to future changes, and their official interpretation and enforcement may involve substantial uncertainty~~dynamics. The effectiveness of newly enacted laws, regulations or amendments may be delayed, resulting in detrimental reliance by foreign investors. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our business.

~~Governmental~~There ~~control~~are limitations to the effectiveness of ~~currency~~our ~~conversion~~internal ~~may~~controls ~~affect~~over financial reporting and only reasonable assurance can be placed on them. Stockholder confidence in our financial reporting and disclosures made in our public filings could be affected, which would harm our business and the ~~value~~trading price of ~~your~~our ~~investment~~stock.

The ~~majority~~PRC ofhistorically ~~our~~has ~~revenues~~not ~~will~~adopted bea ~~settled~~western instyle ~~Renminbi~~of management and ~~U.S.~~financial ~~dollars,~~reporting concepts and ~~any~~practices, ~~future~~or ~~restrictions~~a onmodern western ~~currency~~style ~~exchanges~~of ~~may~~banking, ~~limit~~computer ~~our~~and ~~ability~~other tocontrol ~~use~~systems. ~~revenues~~We ~~generated~~have had difficulty in ~~Renminbi~~hiring toand ~~fund~~retaining ~~any~~a ~~future~~qualified ~~business~~Chief Financial ~~activities~~Officer. Our ~~outside~~Chief Financial Officer’s resignations during the ~~PRC~~last ortwo years has led us to ~~make~~conclude ~~dividend~~that there orwas ~~other~~a ~~payments~~material weakness in ~~U.S.~~our ~~dollars.~~disclosure ~~Although~~controls ~~the~~and ~~PRC~~procedures ~~government~~in ~~introduced~~that ~~regulations~~they inwere ~~1996~~not effective and was not adequately designed to ~~allow~~ensure ~~greater~~that ~~convertibility~~the ofinformation required to be disclosed by the ~~Renminbi~~Company ~~for~~in ~~current~~the ~~account~~reports ~~transactions,~~the ~~significant~~Company ~~restrictions~~submits ~~still~~under ~~remain~~the Exchange Act is recorded, ~~including~~processed, ~~primarily~~summarized and reported within the ~~restriction~~time ~~that~~periods ~~foreign-invested~~specified ~~enterprises~~in ~~like~~the usapplicable ~~may~~rules ~~only~~and ~~buy,~~forms ~~sell~~and orthat such ~~remit~~information ~~foreign~~was ~~currencies~~accumulated ~~after~~and ~~providing~~communicated ~~valid~~to ~~commercial~~the ~~documents,~~Company’s atChief ~~those~~Executive ~~banks~~Officer and Chief Financial Officer in a ~~the~~manner ~~PRC~~that ~~authorized~~allowed tofor ~~conduct~~timely ~~foreign~~decisions ~~exchange~~regarding ~~business~~required disclosure.

In Although ~~addition,~~we ~~conversion~~have ofconcluded ~~Renminbi~~that ~~for~~our ~~capital~~internal ~~account~~control ~~items,~~over ~~including~~financial ~~direct~~reporting ~~investment~~ and ~~loans,~~disclosure iscontrols ~~subject~~and toprocedures ~~governmental~~are ~~approval~~not ~~in the PRC~~effective, we ~~and~~believe ~~companies~~that ~~are~~the ~~required~~financial tostatements ~~open~~included ~~and~~in ~~maintain~~our ~~separate~~past ~~foreign~~filings ~~exchange~~correctly ~~accounts~~present ~~for~~our ~~capital~~financial ~~account~~condition, ~~items.~~results Weof ~~cannot~~operations and becash ~~certain~~flows ~~that~~for the ~~PRC~~fiscal ~~regulatory~~years ~~authorities~~covered ~~will~~thereby ~~not~~in ~~impose~~all ~~more~~material ~~stringent restrictions on the convertibility of the Renminbi~~respects.

~~The~~A ~~value~~material ofweakness is ~~our~~a ~~securities~~deficiency, ~~and~~or ~~your~~a ~~ability~~combination toof ~~receive~~deficiencies, ~~dividends~~in ~~may~~internal becontrol ~~affected~~over byfinancial ~~the~~reporting, ~~foreign~~such ~~exchange~~that ~~rates~~there ~~between~~is ~~U.S.~~a ~~dollars~~reasonable possibility ~~and~~that ~~Renminbi~~a ~~and~~material ~~the~~misstatement ~~PRC~~of ~~government~~the Company’s ~~control~~annual ~~over~~or ~~the~~interim ~~Renminbi~~financial statements will not be prevented or detected on a timely basis.

~~The~~ As ~~value~~a result of ~~our~~these ~~common~~material ~~stock~~weaknesses ~~will be affected by the foreign exchange rates between U.S. dollars~~ and ~~Renminbi,~~deficiencies ~~and between those currencies and other currencies~~ in ~~which~~ our ~~sales~~disclosure ~~may~~controls beand ~~denominated. For example~~procedures, tocurrent ~~the extent that we need to convert U.S. dollars into Renminbi for our operational needs~~ and ~~should~~potential ~~the~~stockholders could ~~Renminbi~~lose ~~appreciate~~confidence ~~against~~in ~~the U.S. dollar at that time,~~ our financial ~~position,~~reporting ~~our business,~~ and ~~the~~disclosures ~~price~~made ofin our ~~common~~public ~~stock may be harmed. Conversely~~filings, ifwhich wewould ~~decide~~harm ~~to convert~~ our ~~Renminbi into U.S. dollars for the purpose of declaring dividends on our common stock or for other~~ business ~~purposes~~ and the ~~U.S.~~trading ~~dollar~~price ~~appreciates against the Renminbi, the U.S. dollar equivalent~~ of our ~~earnings from our subsidiary in the PRC would be reduced~~stock.

~~The~~We ~~PRC~~face ~~government~~stiff ~~imposes controls on the convertibility of Renminbi into foreign currencies and~~competition, insome ~~certain cases, the remittance~~ of ~~currency out of the PRC. We receive substantially all of our revenues in Renminbi~~ which ~~is currently not a freely convertible currency. Shortages in the availability of foreign currency~~ may restrict our ability to remit sufficient foreign currency to pay dividends, or otherwise satisfy foreign currency dominated obligations. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from the transaction, can be ~~made in foreign currencies without prior approval~~ from ~~the~~companies ~~PRC~~which ~~State~~may ~~Administration of Foreign Exchange by complying with certain procedural requirements. However, approval from appropriate governmental authorities is required where Renminbi is to~~ be ~~converted~~better ~~into~~capitalized ~~foreign currency~~ and ~~remitted~~more ~~out~~experienced ofthan ~~the PRC to pay capital expenses, such as the repayment of bank loans denominated in foreign currencies~~us.

16We face competition from other domestic and global manufacturers and suppliers of pharmaceutical grade glucose. Although we view ourselves in a favorable position vis-à-vis our competition, some of the other companies that sell into our markets may be more successful than us and/or have more experience and financial resources than we do. This additional experience and financial backing may enable our competitors to produce more cost-effective products and market their products with more success than we are able to, which would decrease our sales. We expect that we will be required to continue to invest in product development and productivity improvements to compete effectively in our markets. However, we cannot assure you that we can successfully remain competitive. If our competitors develop a more efficient product or undertake more aggressive and costly marketing campaigns than us, this could have a material adverse effect on our business, results of operations or financial condition.

The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be able to pay certain expenses as they come due.18

~~The~~ A ~~fluctuation~~slowdown ofin the ~~Renminbi~~PRC economy may ~~materially and~~ adversely affect ~~your~~our ~~investment~~operations.

~~The~~As ~~value~~all of ~~the~~our ~~Renminbi~~operations are ~~against~~conducted ~~the U.S. Dollar and other currencies may fluctuate and is affected by, among other things, changes~~ in the PRC's ~~political~~ and ~~economic~~most ~~conditions.~~of Asour werevenues ~~rely~~are ~~almost~~generated ~~entirely~~from onsales ~~revenues earned~~ in the PRC~~—most~~, ofa ~~our~~slowdown ~~sales~~or ~~occur~~other adverse developments in the PRC~~—any~~ ~~significant~~economy ~~revaluation~~could ~~of the Renminbi may~~ materially and adversely affect our ~~cash flows~~customers, ~~revenues~~demand ~~and financial condition. For example, to the extent that we need to convert U.S. Dollars we receive from an offering of our securities into Renminbi~~ for our ~~operations~~products, ~~appreciation~~and ofour ~~the Renminbi against the U~~business.S. ~~Dollar~~Recent ~~could~~economic slowdown ~~have~~since a2008 ~~material~~had ~~adverse~~affected ~~effect on~~ our business, ~~financial~~especially ~~condition~~our ~~and~~cornstarch ~~results~~related ~~of operations~~business. ~~Conversely,~~While if we ~~decide~~believe tothat ~~convert~~the ~~our~~economy ~~Renminbi~~is recovering, ~~into~~and ~~U.S.~~although ~~Dollars~~we ~~for~~believe that the ~~purpose~~demand ~~of making payments~~ for ~~dividends on~~ our ~~common~~products ~~shares~~is ornot ~~for~~totally ~~other~~dependent ~~business~~on ~~purposes and~~ the ~~U.S.~~health ~~Dollar~~of ~~appreciates against~~ the ~~Renminbi~~economy, ~~the~~we do ~~U.S.~~not ~~Dollar~~know ~~equivalent~~how ofsensitive ~~the Renminbi~~ we ~~convert~~are ~~would be reduced. In addition, the depreciation of significant U.S. Dollar denominated assets could result in a charge~~ to ~~our income statement and~~ a ~~reduction~~slowdown in ~~the~~economic ~~value~~growth ofor ~~these~~other ~~assets.~~adverse Onchanges ~~July~~in ~~21, 2005,~~ the PRC ~~government changed its decade-old policy of pegging the value of the Renminbi to the U~~economy.S. ~~Dollar.~~A ~~Under~~slowdown ~~the~~in ~~new~~overall economic ~~policy~~growth, ~~the~~an ~~Renminbi~~economic isdownturn ~~permitted~~or torecession ~~fluctuate~~or ~~within~~other aadverse ~~narrow~~economic ~~and~~developments ~~managed band against a basket of certain foreign currencies. This change~~ in ~~policy has resulted in appreciation of~~ the ~~Renminbi~~PRC ~~against~~may ~~the~~materially ~~U.S.~~reduce ~~Dollar. While~~ the demand ~~international~~for ~~reaction~~our toproducts ~~the~~and ~~Renminbi~~materially ~~revaluation has generally been positive, there remains significant international pressure on the PRC government to adopt an even more flexible currency policy, which could result in a further~~ and ~~more~~adversely ~~significant~~affect ~~appreciation~~our ~~of the Renminbi against the U~~business.~~S. Dollar.~~

~~Recent~~Our ~~PRC~~major ~~regulations~~competitors may ~~relating~~be tobetter ~~the~~able ~~establishment~~than ofus ~~offshore~~to ~~special~~successfully ~~purpose~~endure ~~companies~~downturns byin ~~PRC~~our ~~domestic~~sector. ~~residents~~In ~~and~~periods ~~registration~~of ~~requirements~~reduced demand for ~~employee~~our ~~stock~~products, ~~ownership~~we ~~plans~~can either orchoose ~~share~~to ~~option~~maintain ~~plans~~market ~~may~~share ~~subject~~by reducing our ~~PRC~~selling ~~resident~~prices ~~beneficial~~to ~~owners~~meet competition or ~~the~~maintain ~~plan~~selling ~~participants~~prices, towhich ~~personal~~would likely ~~liability,~~sacrifice ~~limit~~market ~~our~~share. ~~ability~~Sales toand ~~inject~~overall ~~capital~~profitability ~~into~~would ~~our~~be ~~PRC~~reduced ~~subsidiaries,~~under ~~limit~~either ~~our~~scenario. ~~subsidiaries’~~In ~~ability~~addition, towe ~~increase~~cannot ~~their~~assure you ~~registered~~that ~~capital~~additional orcompetitors ~~distribute~~will ~~profits~~not toenter usour existing markets, or ~~may~~that ~~otherwise~~we ~~adversely~~will ~~affect~~be usable to compete successfully against existing or new competition.

~~The~~Inflation ~~China State Administration of Foreign Exchange ("SAFE") issued a public notice~~ in ~~October 2005 requiring PRC domestic residents to register with~~ the ~~local SAFE branch before establishing or controlling any company outside of China for the purpose of capital financing with assets or equities of~~ PRC ~~companies,~~could ~~referred~~negatively affect to in the notice as an "offshore special purpose company." PRC domestic residents who are shareholders of offshore special purpose companies and have completed round trip investments but did not make foreign exchange registrations for overseas investments before November 1, 2005 were retroactively required to register with the local SAFE branch before March 31, 2006. PRC resident shareholders are also required to amend their registrations with the local SAFE in certain circumstances. After consultation with China counsel, we do not believe that any of our ~~PRC~~profitability domestic resident shareholders are subject to the SAFE registration requirement, however, we cannot provide any assurances that all of our shareholders who are PRC residents will not be required to make or obtain any applicable registrations or approvals required by these SAFE regulations in the future. The failure or inability of our PRC resident shareholders to comply with the registration procedures set forth therein may subject us to fines and ~~legal sanctions, restrict our cross-border investment activities, or limit our PRC subsidiaries’ ability to distribute dividends or obtain foreign-exchange-dominated loans to our Company~~growth.

17While the PRC economy has experienced rapid growth, such growth has been uneven among various sectors of the economy and in different geographical areas of the country. Rapid economic growth can lead to growth in the money supply and rising inflation. If prices for our products rise at a rate that is insufficient to compensate for the rise in the costs of supplies, it may have an adverse effect on profitability. In order to control inflation in the past, the PRC government has imposed controls on bank credits, limits on loans for fixed assets and restrictions on state bank lending. Such an austere policy can lead to a slowing of economic growth. In October 2004, the People's Bank of China, the PRC's central bank, raised interest rates for the first time in nearly a decade and indicated in a statement that the measure was prompted by inflationary concerns in the PRC economy. Repeated rises in interest rates by the central bank would likely slow economic activity in the PRC which could, in turn, materially increase our costs and also reduce demand for our products.

AsA itwidespread ishealth ~~uncertain~~problem ~~how~~in the SAFE regulations will be interpreted or implemented, we cannot predict how these regulations will affect our business operations or future strategy. For example, we may be subject to more stringent review and approval process with respect to our foreign exchange activities, such as remittance of dividends and foreign-currency-denominated borrowings, which may adversely affect our results of operations and financial condition. In addition, if we decide to acquire a PRC domestic company, we cannot assure you that we or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete the necessary filings and registrations required by the SAFE regulations. This may restrict our ability to implement our acquisition strategy and could ~~adversely~~negatively affect our ~~business and prospects.~~operations

InA ~~December~~potential ~~2006, the People’s Bank~~ outbreak of ~~China~~widespread ~~promulgated~~public ~~the~~health ~~Implementation~~problem ~~Rules~~in of the ~~Administrative Measures for Individual Foreign Exchange, or the Individual Foreign Exchange Rules, setting forth the respective requirements for foreign exchange transactions by~~ PRC ~~individuals under either the current account or the capital account. In January 2007~~, ~~SAFE issued implementing rules for the Individual Foreign Exchange Rules, which, among other things, specified approval requirements for certain capital account transactions~~ such as aH1N1 ~~PRC~~flu, ~~citizen’s~~could ~~participation~~force inus ~~the~~temporarily ~~employee~~to ~~stock~~stop ~~ownership~~our ~~plans~~operations, orand ~~stock~~thus ~~option plans of~~ have an ~~overseas~~adverse ~~publicly-listed~~effect ~~company.~~on Onour March 28, 2007, SAFE promulgated the Application Procedure of Foreign Exchange Administration for Domestic Individuals Participating in Employee Stock Holding Plan or Stock Option Plan of Overseas-Listed Company, or the Stock Option Ruleoperations. ~~Under~~Our ~~the~~operations ~~Stock~~may ~~Option~~be ~~Rule,~~impacted ~~PRC citizens who are granted stock options~~ by ~~an overseas publicly-listed company are required, through~~ a ~~PRC~~number ~~agent or PRC subsidiary~~ of ~~such overseas publicly~~health-~~listed~~related ~~company~~factors, toincluding ~~register~~quarantines or ~~with~~closures ~~SAFE~~of ~~and~~some ~~complete~~offices ~~certain~~that ~~other~~would ~~procedures.~~adversely Wedisrupt ~~and~~ our ~~PRC~~operations. ~~employees~~Any ~~who~~of ~~may be granted stock options are subject to~~ the ~~Stock~~foregoing ~~Option~~events ~~Rule. If we~~ or ~~our~~other ~~PRC~~unforeseen ~~optionees~~consequences of ~~fail~~public tohealth ~~comply~~problems ~~with~~could ~~these~~adversely ~~regulations,~~affect ~~we or~~ our ~~PRC optionees may be subject to fines and legal sanctions~~operations.

~~Risks~~Enforcement ~~related~~against tous or our ~~business~~directors and officers may be difficult

WeBecause ~~cannot~~our ~~give~~principal assets ~~any~~are ~~assurance~~located ~~that~~outside ~~any~~of ~~plans~~the ~~for~~U.S., ~~future~~and ~~expansion~~all ~~will~~of our five directors and all of our officers reside outside of the U.S., it may be ~~implemented~~difficult for you to enforce your rights based on U.S. Federal securities laws against us and our officers and some directors or ~~that~~to ~~they~~enforce ~~will~~a beU.S. ~~successful~~court judgment against us or them in the PRC.

~~While~~In weaddition, ~~have~~our ~~expansion~~operating subsidiary ~~plans,~~is ~~which~~located ~~include~~in ~~making~~the ~~full~~PRC ~~use~~and ofsubstantially ~~the~~all ~~newly~~of ~~built~~its ~~cornstarch~~assets ~~manufacturing~~are ~~plant,~~located ~~partially~~outside ~~completed~~of ~~and~~the ~~operational~~U.S. ~~since~~It ~~January~~may, ~~2007~~therefore, ~~upgrading~~be ~~our~~difficult for ~~existing~~investors ~~glucose~~in ~~manufacturing~~the ~~facility,~~U.S. ~~building~~to aenforce ~~new~~their ~~glucose~~legal ~~manufacturing~~rights ~~facility~~based ~~and~~on ~~expanding~~the ~~our~~civil ~~sales~~liability ~~overseas,~~provisions ~~there~~of isthe noU.S. ~~guarantee~~Federal ~~that~~securities laws ~~such~~against ~~plans~~us ~~will~~in bethe ~~implemented~~courts orof ~~that~~either ~~they~~the ~~will~~U.S. beor ~~successful.~~the ~~These~~PRC, ~~plans~~even ~~are~~if ~~subject~~civil ~~to,~~judgments ~~among~~are ~~other~~obtained ~~things,~~in ~~their~~U.S. ~~feasibility~~courts to ~~meet~~enforce ~~the~~such judgments ~~challenges~~in wePRC ~~face~~courts. Further, ~~our~~it ~~ability~~is tounclear ~~arrange~~if ~~for~~extradition ~~sufficient~~treaties ~~funding~~now in effect between the U.S. and the ~~ability~~PRC towould ~~hire~~permit effective ~~qualified~~enforcement against us or our officers and ~~capable~~directors ~~employees~~of tocriminal ~~carry~~penalties ~~out~~under ~~these~~the ~~expansion~~U.S. ~~plans~~Federal securities laws or otherwise.

~~We have a limited operating history and limited historical financial information upon which you may evaluate our performance.~~19

~~Our~~We ~~operating~~have ~~subsidiary,~~identified ~~Weifang~~significant ~~Shengtai, was incorporated~~ deficiencies in ~~1999 and~~ our ~~operations~~internal ~~have been largely confined to the PRC~~controls. ~~In addition, while we have had some experience in managing a cornstarch manufacturing facility, we may not be adequately prepared to manage and operate a larger, more modern facility.~~

WeAs ~~are~~set forth in ~~our~~Item 9A, ~~early~~below, ~~stages~~we ofhave ~~development~~identified ~~and~~significant ~~face~~deficiencies ~~risks associated with a new company~~ in ~~a growth industry. We may not successfully address these risks and uncertainties or successfully implement~~ our ~~operating~~internal ~~strategies~~controls. IfWhile we ~~fail~~are totaking dosteps ~~so, it could materially harm our business~~ to ~~the~~address ~~point~~these ofsignificant deficiencies, ~~having~~there tocan ~~cease~~be ~~operations~~no ~~and~~assurance ~~could~~that ~~impair~~such ~~the~~steps ~~value~~will ofbe ~~our~~adequate ~~common stock~~ to ~~the~~entirely ~~point~~cure ~~investors may lose their entire investment. Even if we accomplish these objectives, we may not generate positive cash flows or~~ the ~~profits we anticipate in the future~~deficiencies.

18Inadequate funding for our capital expenditures may affect our growth and profitability

~~Although~~Our ~~our~~sales revenues have increased ~~grown~~from ~~rapidly~~$19,999,826 ~~since~~for ~~our inception from~~ the ~~growing~~year ~~demand~~ended ~~for~~June ~~our~~30, ~~glucose products~~2004, weto ~~cannot~~$ ~~assure~~179,029,127 ~~you~~for ~~that~~the weyear ~~will~~ended ~~maintain~~June ~~our~~30, ~~profitability~~2012. orOur ~~that~~continued wegrowth is ~~will~~dependent ~~not~~upon ~~incur net losses in the future. We expect that~~ our ~~operating~~ability ~~expenses will increase as we expand. Any significant failure~~ to ~~realize~~raise ~~anticipated~~capital ~~revenue~~from ~~growth~~outside ~~could~~sources ~~result~~and inimprovement ~~significant~~of ~~operating losses~~profitability. WeOur ~~will~~ability ~~continue~~ to ~~encounter~~obtain ~~risks~~financing will ~~and~~depend ~~difficulties~~upon ~~frequently experienced by companies at~~ a ~~similar~~number ~~stage~~ of ~~development~~factors, including ~~our potential failure to~~:

· ~~expand~~ our ~~product~~financial ~~offerings~~condition and ~~maintain~~results ~~the high quality~~ of ~~our products~~operations;

· ~~manage~~the ~~our~~condition ~~expanding~~of ~~operations,~~the ~~including~~PRC economy and the ~~integration~~healthcare ofsector ~~any~~in ~~future~~the ~~acquisitions~~PRC;

· ~~obtain~~conditions ~~sufficient~~in ~~working~~relevant ~~capital~~financial tomarkets; ~~support our expansion~~ and ~~to fill customers' order in time;~~

· ~~maintain~~relevant ~~adequate~~PRC ~~control~~laws ofand ~~our expenses;~~regulations.

·If ~~implement~~we ~~our~~are ~~product~~unable ~~development,~~to obtain ~~marketing~~financing, ~~sales~~as needed, ~~and~~on ~~acquisition~~a ~~strategies~~timely basis and ~~adapt~~on ~~and~~acceptable ~~modify~~terms ~~them~~to asour ~~needed;~~investors or lenders, our financial position, competitive position, growth and profitability may be adversely affected.

·We ~~anticipate~~may ~~and~~not ~~adapt~~be able to ~~changing~~effectively control ~~conditions in the dextrose monohydrate~~ and ~~glucose~~manage ~~products markets in which we operate as well as the impact of any changes in government regulation, mergers and acquisitions involving~~ our ~~competitors, technological developments and other significant competitive and market dynamics~~growth.

~~There~~With ~~are~~our ~~limitations~~business and markets grow and develop, it will be necessary for us to ~~the~~finance ~~effectiveness~~and ofmanage ~~our~~expansion ~~internal~~in ~~controls~~an ~~over~~orderly ~~financial~~fashion. ~~reporting~~We may not have the requisite experience to manage and ~~only~~operate ~~reasonable~~a ~~assurance~~larger, ~~can~~more bemodern ~~placed~~cornstarch onmanufacturing ~~them~~plant and a bigger glucose production line. ~~Stockholder~~In ~~confidence~~addition, we may face challenges in ~~our~~managing ~~financial~~expanding ~~reporting~~product offerings and ~~disclosures~~in ~~made~~integrating inacquired businesses with our own. ~~public~~These ~~filings~~events ~~could~~would beincrease ~~affected~~demands on our existing management, ~~which~~workforce ~~would~~and ~~harm~~facilities. Failure to satisfy these increased demands could interrupt or adversely affect our ~~business~~operations and ~~the~~cause ~~trading~~production ~~price~~backlogs, oflonger ~~our~~product ~~stock~~development time frames and administrative inefficiencies.

~~The~~Significant ~~PRC~~fluctuations ~~historically~~in ~~has~~raw ~~not~~material prices ~~adopted~~may ~~a western style of management and financial reporting concepts and practices, or a modern western style of banking, computer and other control systems. We~~ have ~~had difficulty in hiring and retaining~~ a ~~qualified Chief Financial Officer. Our Chief Financial Officer’s resignations during the last two years has led us to conclude that there was a~~ material ~~weakness~~adverse ineffect ~~our~~on disclosure controls and procedures in that they were not effective and was not adequately designed to ensure that the information required to be disclosed by the Company in the reports the Company submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms and that such information was accumulated and communicated to the Company’s Chief Executive Officer and Chief Financial Officer in a manner that allowed for timely decisions regarding required disclosureus.

~~Although~~We wedo not have ~~concluded~~any ~~that~~long-term supply contracts with our ~~internal~~raw ~~control~~materials ~~over~~suppliers. ~~financial~~Any ~~reporting~~significant ~~and~~fluctuation ~~disclosure~~in ~~controls~~price of our raw materials could have a material adverse effect on the manufacturing cost of our products. We are subject to market conditions and ~~procedures~~although raw materials are ~~not~~generally available ~~effective,~~and we ~~believe~~have ~~that~~not ~~the~~experienced ~~financial~~any ~~statements~~raw ~~included~~materials shortage in ~~our~~the past, ~~filings~~we ~~correctly~~cannot ~~present~~assure ~~our~~you ~~financial~~that ~~condition,~~the ~~results~~necessary ofmaterials will ~~operations~~continue ~~and~~to ~~cash~~be ~~flows~~available ~~for~~to ~~the~~us ~~fiscal~~at ~~years~~prices ~~covered~~currently ~~thereby~~ in ~~all~~effect ~~material~~or ~~respects~~acceptable to us.

AWe ~~material~~may ~~weakness~~have islimited options ain ~~deficiency,~~the orshort-term afor ~~combination~~alternative ofsupplies ~~deficiencies,~~if inour ~~internal~~suppliers ~~control~~fail ~~over~~for ~~financial~~any ~~reporting~~reason, ~~such~~including ~~that~~their ~~there~~business isfailure aor ~~reasonable~~financial difficulties, ~~possibility~~to ~~that~~continue athe ~~material~~supply ~~misstatement~~ of ~~the~~raw ~~Company’s~~materials. ~~annual~~Moreover, oridentifying ~~interim~~and ~~financial~~accessing ~~statements~~alternative ~~will~~sources ~~not~~may beincrease ~~prevented or detected on a timely basis~~our costs.

AsAlthough awe ~~result~~are ofin ~~these~~the corn-producing ~~material~~region ~~weaknesses and deficiencies~~ in ~~our~~the ~~disclosure~~Shandong ~~controls and procedures~~province, ~~current~~there ~~and~~is ~~potential~~no ~~stockholders~~guarantee ~~could~~that ~~lose~~we ~~confidence~~will innot ~~our~~face ~~financial~~a ~~reporting~~shortage ~~and~~of ~~disclosures~~corn ~~made~~because inof ~~our~~some natural ~~public~~calamity ~~filings,~~or ~~which~~other ~~would~~reasons ~~harm~~beyond our ~~business and the trading price of our stock~~control.

1920

We ~~face~~had ~~stiff~~also ~~competition,~~mitigated the ~~some~~risks of a shortage in cornstarch by implementing a vertical integration manufacturing program, which ~~may~~includes bebuilding ~~from~~our own ~~companies~~cornstarch processing plant, in which ~~may~~the beplant ~~better~~is ~~capitalized~~now operational. This will not only lower production costs and ~~more~~improve ~~experienced~~profit margins, ~~than~~but it will also allow Weifang Shengtai to produce higher quality, lower-cost cornstarch. We cannot guarantee these measures will be effective in eliminating all risks attendant to the supply of raw materials. In the event that our cost of materials increase, we may have to raise prices of our products, making us less competitive in price.

We ~~face~~may ~~competition~~not ~~from~~be ~~other~~able ~~domestic~~to adjust ~~and~~our ~~global~~product ~~manufacturers~~prices, ~~and~~especially ~~suppliers of pharmaceutical grade glucose. Although we view ourselves~~ in athe ~~favorable position vis~~short-~~à-vis our competition~~term, ~~some~~to ofrecover the ~~other~~costs ~~companies~~of ~~that~~any ~~sell~~increases ~~into~~in ~~our~~raw ~~markets may be more successful than us and/or have more experience and financial resources than we do~~materials. ~~This~~Our ~~additional~~future ~~experience and financial backing~~ profitability may ~~enable~~be ~~our~~adversely ~~competitors~~affected to ~~produce~~the ~~more~~extent ~~cost-effective products and market their products with more success than~~ we are ~~able~~unable to, ~~which~~pass ~~would~~on ~~decrease~~higher ~~our~~raw ~~sales.~~materials Wecosts ~~expect that we will be required~~ to ~~continue to invest in product development and productivity improvements to compete effectively in~~ our ~~markets~~customers. However, we cannot assure you that we can successfully remain competitive. If our competitors develop a more efficient product or undertake more aggressive and costly marketing campaigns than us, this could have a material adverse effect on our business, results of operations or financial condition.

APotential ~~slowdown~~environmental inliability could ~~the~~have ~~PRC~~a ~~economy~~material ~~may~~adverse ~~adversely~~effect ~~affect~~on our operations and financial condition.

AsTo ~~all~~the knowledge of management, ~~our~~neither ~~operations~~the ~~are~~production ~~conducted~~nor in the ~~PRC~~sale ~~and most~~ of our ~~revenues~~products ~~are~~constitute ~~generated from sales in the PRC~~activities, ~~a slowdown~~ or ~~other~~generate ~~adverse~~materials ~~developments~~ in ~~the~~a ~~PRC~~material ~~economy~~manner, that ~~could~~requires ~~materially and adversely affect~~ our ~~customers,~~operation ~~demand~~to ~~for~~comply ~~our~~with ~~products,~~the ~~and~~PRC ~~our~~environmental ~~business~~laws. ~~Recent~~Although ~~economic~~it ~~slowdown~~has ~~since~~not ~~2008~~been ~~had~~alleged ~~affected~~by ~~our~~PRC ~~business,~~government ~~especially~~officials that ~~our cornstarch related business. While~~ we ~~believe~~have ~~that~~violated ~~the~~any ~~economy~~current isenvironmental ~~recovering~~regulations, ~~and~~we ~~although~~cannot weassure ~~believe~~you that the ~~demand~~PRC ~~for~~government ~~our~~will ~~products is~~ not ~~totally~~amend ~~dependent on~~ the ~~health~~current PRC ofenvironmental ~~the~~protection ~~economy,~~laws weand doregulations. ~~not~~Our ~~know~~business ~~how~~and ~~sensitive~~operating weresults ~~are~~may tobe amaterially ~~slowdown~~and inadversely ~~economic~~affected if ~~growth~~we orwere ~~other~~to ~~adverse~~be ~~changes~~held inliable ~~the~~for ~~PRC~~violating ~~economy.~~existing Aenvironmental ~~slowdown~~regulations ~~in overall economic growth, an economic downturn~~ or ~~recession~~if orwe ~~other~~were ~~adverse~~to ~~economic~~increase ~~developments~~expenditures into ~~the~~comply with ~~PRC~~environmental ~~may~~regulations ~~materially~~affecting ~~reduce the demand for~~ our ~~products and materially and adversely affect our business~~operations.

~~Our~~We ~~major~~rely ~~competitors~~on ~~may be better able than us to successfully endure downturns in our sector~~Mr. InQingtai ~~periods of reduced demand for our products~~Liu, ~~we can either choose to maintain market share by reducing~~ our ~~selling~~Chief Executive ~~prices~~Officer ~~to meet competition or maintain selling prices, which would likely sacrifice market share. Sales~~ and ~~overall profitability would be reduced under either scenario. In addition~~President, wefor ~~cannot~~the ~~assure~~management ~~you~~of ~~that additional competitors will not enter~~ our ~~existing markets~~business, orand ~~that~~the weloss ~~will~~of behis ~~able~~services tomay ~~compete~~significantly ~~successfully~~harm ~~against~~our ~~existing~~business and ~~or new competition~~prospects.

~~Inflation~~We independ, to a large extent, on the ~~PRC~~abilities ~~could~~and ~~negatively~~participation ~~affect~~of our ~~profitability~~current management team, but have a particular reliance upon Mr. Qingtai Liu, our Chief Executive Officer and President, for the direction of our business. The loss of the services of Mr. Liu, for any reason, may have a material adverse effect on our business and prospects. We cannot assure you that the services of Mr. Liu will continue to be available to us, or that we will be able to find a suitable replacement for Mr. Liu. We have not entered into an employment contract with Mr. Liu. We do not have key man insurance policy on Mr. Qingtai Liu. If Mr. Liu dies and we are unable to replace Mr. Liu for a prolonged period of time, we may be unable to carry out our long term business plan and our future prospect for growth, and our business may be harmed.

~~While~~We ~~the~~may ~~PRC~~not ~~economy~~be ~~has~~able ~~experienced~~to ~~rapid~~hire ~~growth, such growth has been uneven among various sectors of the economy~~ and inretain qualified ~~different~~personnel ~~geographical~~to ~~areas~~support ofour ~~the country. Rapid economic~~ growth ~~can lead to growth in the money supply~~ and ~~rising~~if ~~inflation.~~we Ifare ~~prices~~unable ~~for our products rise at a rate that is insufficient~~ to ~~compensate~~retain ~~for~~or ~~the~~hire ~~rise~~such inpersonnel ~~the costs of supplies, it may have an adverse effect on profitability. In order to control inflation~~ in the ~~past~~future, ~~the~~our ~~PRC~~ability ~~government has imposed controls on bank credits, limits on loans for fixed assets and restrictions on state bank lending. Such an austere policy can lead~~ to aimprove our ~~slowing~~products ~~of economic growth. In October 2004, the People's Bank of China, the PRC's central bank, raised interest rates for the first time in nearly a decade~~ and ~~indicated~~implement inour abusiness ~~statement~~objectives ~~that the measure was prompted by inflationary concerns in the PRC economy. Repeated rises in interest rates by the central bank would likely slow economic activity in the PRC which~~ could, inbe ~~turn,~~adversely ~~materially increase our costs and also reduce demand for our products~~affected.

AOur ~~widespread~~future ~~health~~success ~~problem~~depends heavily upon the continuing services of the members of our senior management team, in particular our Chief Executive Officer and President, Mr. Qingtai Liu. If one or more of our senior executives or other key personnel is/are unable or unwilling to continue in his/her/their present positions, we may not be able to replace them easily or at all, and our business may be disrupted and our financial condition and results of operations may be materially and adversely affected. Competition for senior management and personnel is intense, the ~~PRC~~pool of qualified candidates is very limited, and we may not be able to retain the services of our senior executives or senior personnel, or attract and retain high-quality senior executives or senior personnel in the future. This failure could ~~negatively~~materially and adversely affect our ~~operations~~future growth and financial condition.

AWe ~~potential outbreak of widespread public health problem in the PRC, such as H1N1 flu, could force us temporarily to stop our operations, and thus~~ have aninadequate ~~adverse~~insurance effect on our operations. Our operations may be impacted by a number of health-related factors, including quarantines or closures of some offices that would adversely disrupt our operations. Any of the foregoing events or other unforeseen consequences of public health problems could adversely affect our operations.coverage

20We do not presently maintain product liability insurance, and our property and equipment insurance does not cover the full value of our property and equipment, which leaves us with exposure in the event of loss or damage to our properties or claims filed against us.

~~Enforcement against us or our directors and officers may be difficult~~21

~~Because~~We ~~our~~currently ~~principal~~do ~~assets~~not carry ~~are~~any ~~located~~product ~~outside~~liability ofor ~~the~~other Usimilar insurance.~~S.,~~ ~~and~~We ~~four~~cannot ofassure ~~our~~you ~~five~~that ~~directors~~we ~~and~~would ~~all~~not offace ~~our~~liability ~~officers~~in ~~reside~~the ~~outside~~event of the failure ~~U.S.,~~of itany ~~may~~of beour ~~difficult~~products. ~~for~~This ~~you~~is toparticularly ~~enforce~~true ~~your~~given ~~rights~~our ~~based~~plan onto ~~U.S.~~significantly ~~Federal~~expand ~~securities laws against us and~~ our ~~officers~~sales ~~and~~into ~~some~~international ~~directors~~markets, such oras tothe ~~enforce~~United aStates, ~~U.S.~~where ~~court~~product ~~judgment~~liability ~~against~~claims usare ormore ~~them in the PRC~~prevalent.

InExcept ~~addition~~for automobile insurance, ~~our~~and ~~operating~~Directors ~~subsidiary~~& isOfficers ~~located~~Liability ~~in the PRC~~ and ~~substantially~~Company ~~all~~Reimbursement ~~of its assets are located outside of the U.S. It may~~Insurance, ~~therefore,~~we bedo ~~difficult~~not ~~for~~have ~~investors~~other ininsurance ~~the~~such ~~U.S.~~as ~~to enforce their legal rights based on the civil~~ business liability ~~provisions of the U.S. Federal securities laws against us in the courts of either the U.S.~~ or ~~the~~disruption ~~PRC,~~insurance ~~even~~coverage iffor ~~civil~~our ~~judgments~~operations ~~are obtained~~ in ~~U.S. courts to enforce such judgments in PRC courts. Further, it is unclear if extradition treaties now in effect between~~ the ~~U.S. and the~~ PRC ~~would permit effective enforcement against us or our officers and directors of criminal penalties under the U~~.~~S. Federal securities laws or otherwise.~~

We ~~have~~do ~~identified~~not maintain a reserve fund for warranty or defective products claims. Our costs could substantially increase if we experience a significant ~~deficiencies~~number of warranty claims. We have not established any reserve funds for potential warranty claims since historically we have experienced few warranty claims for our products so that the costs associated with our warranty claims have been low. If we experience an increase in warranty claims or if our ~~internal~~repair ~~controls~~and replacement costs associated with warranty claims increase significantly, it would have a material adverse effect on our financial condition and results of operations.

AsRisks ~~set~~related ~~forth~~to inan ~~Item~~investment ~~9A, below, we have identified significant deficiencies~~ in our common ~~internal controls. While we are taking steps to address these significant deficiencies, there can be no assurance that such steps will be adequate to entirely cure the deficiencies.~~stock

~~Inadequate~~Our ~~funding~~Chief ~~for~~Executive ~~our~~Officer ~~capital~~and ~~expenditures~~President controls ~~may~~us ~~affect~~through ~~our~~his ~~growth~~position and ~~profitability~~stock ownership and his interests may differ from other stockholders

Our ~~sales~~Chief ~~revenues~~Executive Officer ~~have~~and ~~increased~~President, ~~from~~Mr. ~~$19~~Qingtai Liu,~~999,826~~ ~~for~~beneficially ~~the~~owns ~~year~~approximately ~~ended~~39.12% ~~June~~of ~~30,~~our ~~2004,~~common tostock. ~~$171~~As a result,~~717,866~~ ~~for~~although Mr. Liu is not the ~~year~~holder ~~ended~~of ~~June~~a 30majority of the outstanding shares, ~~2011~~Mr. ~~Our~~Liu ~~continued~~may ~~growth~~be isable ~~dependent~~to ~~upon~~influence ~~our~~the ~~ability~~outcome toof ~~raise~~stockholder ~~capital~~votes ~~from~~on various ~~outside~~matters, ~~sources~~including ~~and~~the ~~improvement~~election of ~~profitability.~~directors ~~Our~~and ~~ability~~extraordinary tocorporate ~~obtain~~transactions, ~~financing~~including ~~will~~business ~~depend~~combinations. Mr. ~~upon~~Liu's ainterests ~~number~~may ofdiffer ~~factors,~~from ~~including:~~other stockholders.

·We ~~our~~do ~~financial~~not ~~condition~~intend ~~and~~to ~~results~~pay ofcash ~~operations;~~dividends in the foreseeable future

·We currently intend to retain all future earnings for use in the ~~condition~~operation and expansion of our business. We do not intend to pay any cash dividends in the ~~PRC~~foreseeable ~~economy~~future but will review this policy as circumstances dictate. Should we decide in the future to do so, as a holding company, our ability to pay dividends and meet other obligations depends upon the ~~healthcare~~receipt ~~sector~~of dividends or other payments from our operating subsidiary based in the PRC;, Weifang Shengtai. Our operating subsidiary, from time to time, may be subject to restrictions on its ability to make distributions to us, including as a result of restrictions on the conversion of local currency into U.S. dollars or other hard currency and other regulatory restrictions. See "Risks related to doing business in the People’s Republic of China."

·There ~~conditions~~is incurrently ~~relevant~~a ~~financial~~limited ~~markets;~~trading market ~~and~~for our common stock

·Our ~~relevant~~common ~~PRC~~stock ~~laws~~has been quoted on the over-the-counter Bulletin Board since January 2007. Because we were formerly a shell company, our bid and ~~regulations~~ask quotations have not regularly appeared on the OTC Bulletin Board for any consistent period of time. There is a limited trading market for our common stock and our common stock may never be included for trading on any stock exchange or through any other quotation system, including, without limitation, the NYSE Alternext. You may not be able to sell your shares due to the absence of an established trading market.

IfOur wecommon ~~are~~stock ~~unable~~is tosubject ~~obtain financing, as needed, on a timely basis and on acceptable terms~~ to ~~our~~the Penny ~~investors~~Stock ~~or lenders, our financial position, competitive position, growth and profitability may be adversely affected.~~Regulations

WeOur ~~may~~common ~~not~~stock is, and will continue to be, ~~able~~subject to ~~effectively~~the ~~control~~SEC's "penny stock" rules to the extent that the price remains less than $5.00. Those rules, which require delivery of a schedule explaining the penny stock market and ~~manage~~the ~~our~~associated ~~growth~~risks before any sale, may further limit your ability to sell your shares.

With our business and markets grow and develop, it will be necessary for us to finance and manage expansion in an orderly fashion. We may not have the requisite experience to manage and operate a larger, more modern cornstarch manufacturing plant and a bigger glucose production line. In addition, we may face challenges in managing expanding product offerings and in integrating acquired businesses with our own. These events would increase demands on our existing management, workforce and facilities. Failure to satisfy these increased demands could interrupt or adversely affect our operations and cause production backlogs, longer product development time frames and administrative inefficiencies.22

21The SEC has adopted regulations which generally define "penny stock" to be an equity security that has a market price of less than $5.00 per share. Our common stock, when and if a trading market develops, may fall within the definition of penny stock and subject to rules that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors, generally those with assets in excess of $1,000,000, or annual incomes exceeding $200,000 or $300,000, together with their spouse.

~~Significant~~For ~~fluctuations~~transactions incovered by ~~raw~~these ~~material~~rules, ~~prices~~the ~~may~~broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser's prior written consent to the transaction. Additionally, for any transaction, other than exempt transactions, involving a ~~material~~penny ~~adverse~~stock, ~~effect~~the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the Commission relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer's presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on usthe limited market in penny stocks. Consequently, the "penny stock" rules may restrict the ability of broker-dealers to sell our common stock and may affect the ability of investors to sell their common stock in the secondary market.

WeOur docommon ~~not~~stock ~~have~~is ~~any~~illiquid long-term supply contracts with our raw materials suppliers. Any significant fluctuation in price of our raw materials could have a material adverse effect on the manufacturing cost of our products. We are and subject to ~~market~~price ~~conditions~~volatility ~~and~~unrelated ~~although raw materials are generally available and we have not experienced any raw materials shortage in the past, we cannot assure you that the necessary materials will continue~~ to beour ~~available to us at prices currently in effect or acceptable to us.~~operations

WeThe ~~may~~market ~~have~~price ~~limited~~of our ~~options~~common stock could fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned growth, quarterly operating results of other companies in the ~~short-term~~same ~~for~~industry, ~~alternative~~trading ~~supplies~~volume ifin our ~~suppliers~~common ~~fail~~stock, ~~for~~changes in ~~any~~general ~~reason,~~conditions ~~including~~in ~~their~~the ~~business~~economy ~~failure~~and orthe financial ~~difficulties~~markets or other developments affecting our competitors or us. In addition, the stock market is subject to ~~continue~~extreme price and volume fluctuations. This volatility has had a significant effect on the ~~supply~~market price of ~~raw~~securities ~~materials.~~issued ~~Moreover,~~by ~~identifying~~many companies for reasons unrelated to their operating performance and ~~accessing~~could ~~alternative~~have ~~sources~~the ~~may~~same ~~increase~~effect on our ~~costs~~common stock.

~~Although~~Sales weof ~~are~~substantial amounts inof common stock, or the ~~corn-producing~~perception ~~region~~that insuch ~~the~~sales ~~Shandong~~could ~~province~~occur, ~~there~~and isthe noexistence ~~guarantee~~of warrants to purchase shares of common stock at prices that wemay ~~will~~be ~~not~~below ~~face~~the athen ~~shortage~~current market price of ~~corn~~the ~~because~~common stock, could adversely affect the market price of our ~~some~~common ~~natural~~stock ~~calamity~~and orcould ~~other~~impair ~~reasons~~our ~~beyond~~ability to raise capital through the sale of our ~~control~~equity securities.

WeItem had also mitigated the risks of a shortage in cornstarch by implementing a vertical integration manufacturing program, which includes building our own cornstarch processing plant, in which the plant is now operational1B. ~~This~~Unresolved ~~will~~Staff ~~not only lower production costs and improve profit margins, but it will also allow Weifang Shengtai to produce higher quality, lower-cost cornstarch~~Comments. We cannot guarantee these measures will be effective in eliminating all risks attendant to the supply of raw materials. In the event that our cost of materials increase, we may have to raise prices of our products, making us less competitive in price.

WeNot ~~may not be able to adjust our product prices, especially in the short-term, to recover the costs of any increases in raw materials~~applicable. ~~Our future profitability may be adversely affected to the extent we are unable to pass on higher raw materials costs to our customers.~~

~~Potential~~Item ~~environmental~~2. ~~liability could have a material adverse effect on our operations and financial condition~~Properties.

ToOur ~~the~~facility ~~knowledge~~in ~~of management, neither~~ the PRC ~~production~~is ~~nor~~located ~~the~~at ~~sale~~Changda ofRoad ~~our~~East,Development ~~products constitute activities~~District, orChangle ~~generate materials in a material manner~~County, ~~that~~Shandong ~~requires our operation to comply with the PRC environmental laws. Although it has not been alleged by PRC government officials that we have violated any current environmental regulations~~Province, ~~we cannot assure you that the~~ PRC ~~government will not amend the current PRC environmental protection laws and regulations~~262400. Our business and operating results may be materially and adversely affected if we were to be held liable for violating existing environmental regulations or if we were to increase expenditures to comply with environmental regulations affecting our operations.

WeAll ~~rely~~land onin ~~Mr.~~the ~~Qingtai~~PRC is ~~Liu,~~state-owned ~~our~~and ~~Chief~~cannot ~~Executive~~be ~~Officer~~sold ~~and~~to ~~President~~any individual or entity. Instead, ~~for~~the government grants or allocates landholders a "land use right." Weifang Shengtai has the ~~management~~right to use various parcels of ~~our~~land ~~business,~~that ~~and~~range ~~the~~from ~~loss~~20 to 50 years in term, all of ~~his~~which are ~~services~~currently ~~may~~being ~~significantly~~used ~~harm~~by ~~our~~Weifang ~~business~~Shengtai ~~and~~for ~~prospects~~its business.

WeWeifang ~~depend,~~Shengtai tooccupies an aarea ~~large extent, on the abilities and participation~~ of ~~our~~approximately ~~current management team~~252,275 ~~but~~square ~~have~~meters ~~a particular reliance upon Mr~~(62.34 ~~Qingtai~~acres) ~~Liu,~~in ~~our~~Changle ~~Chief~~Economic ~~Executive Officer~~ and ~~President,~~Technology ~~for~~Development ~~the direction of our business~~Zone. ~~The~~Set ~~loss~~forth ofbelow is the ~~services~~detailed ofinformation ~~Mr.~~regarding ~~Liu, for any reason, may have a material adverse effect on our business and prospects. We cannot assure you that~~ the services of Mr. Liu will continue to be available to us, or that we will be able to find a suitable replacement for Mr. Liu. We have not entered into an employment contract with Mr. Liu. We do not have key man insurance policy on Mr. Qingtai Liu. If Mr. Liu dies and we are unable to replace Mr. Liu for a prolonged period of time, we may be unable to carry out our long term business plan and our future prospect for growth, and our business may be harmed.land:

2223

We may not be able to hire and retain qualified personnel to support our growth and if we are unable to retain or hire such personnel in the future, our ability to improve our products and implement our business objectives could be adversely affected.

Location	Area (square meters)		Construction on the Land	Expiration
Changle Economic and Technology Development Zone		85,880	New glucose production complex	April 20, 2057
Changle Economic and Technology Development Zone		14,696	(Reserved for future growth)	January 14, 2030
Changle Economic and Technology Development Zone		73,313	Old glucose production facility	April 28, 2052
Changle Economic and Technology Development Zone		19,692	Office and staff buildings	September 21, 2052
Changle Economic and Technology Development Zone		58,692	Cornstarch processing plant (11,800 sq meters)	April 2, 2054

~~Our~~Item ~~future success depends heavily upon the continuing services of the members of our senior management team, in particular our Chief Executive Officer and President, Mr~~3. ~~Qingtai~~Legal ~~Liu~~Proceedings. If one or more of our senior executives or other key personnel is/are unable or unwilling to continue in his/her/their present positions, we may not be able to replace them easily or at all, and our business may be disrupted and our financial condition and results of operations may be materially and adversely affected. Competition for senior management and personnel is intense, the pool of qualified candidates is very limited, and we may not be able to retain the services of our senior executives or senior personnel, or attract and retain high-quality senior executives or senior personnel in the future. This failure could materially and adversely affect our future growth and financial condition.

WeIn April 2012, several law firms announced investigation of the Company in connection with the receipt of a going private proposal from Chairman and Chief Executive Officer Mr. Liu to acquire common stock at $1.65 per share in cash. To the best of our knowledge, no actions have ~~inadequate~~been filed ~~insurance~~against ~~coverage~~the Company or its current officers and directors as of the date of this annual report.

WeItem do4. ~~not~~Mine ~~presently~~Safety maintain product liability insurance, and our property and equipment insurance does not cover the full value of our property and equipment, which leaves us with exposure in the event of loss or damage to our properties or claims filed against usDisclosures.

WeNot ~~currently do not carry any product liability or other similar insurance~~Applicable. We cannot assure you that we would not face liability in the event of the failure of any of our products. This is particularly true given our plan to significantly expand our sales into international markets, such as the United States, where product liability claims are more prevalent.

Except for automobile insurance, and Directors & Officers Liability and Company Reimbursement Insurance, we do not have other insurance such as business liability or disruption insurance coverage for our operations in the PRC.24

WePART do not maintain a reserve fund for warranty or defective products claims. Our costs could substantially increase if we experience a significant number of warranty claims. We have not established any reserve funds for potential warranty claims since historically we have experienced few warranty claims for our products so that the costs associated with our warranty claims have been low. If we experience an increase in warranty claims or if our repair and replacement costs associated with warranty claims increase significantly, it would have a material adverse effect on our financial condition and results of operations.II

~~Our~~Market ~~Chief Executive Officer and President controls us through his position and stock ownership and his interests may differ from other stockholders~~Information

~~Our~~We ~~Chief~~began ~~Executive~~trading ~~Officer~~on the ~~and~~OTC ~~President,~~Bulletin ~~Mr.~~Board ~~Qingtai~~on ~~Liu~~January 12, ~~beneficially~~2007under ~~owns~~the ~~approximately~~symbol 38"SGTI.~~49%~~OB." The following table sets forth for the period indicated the prices of ~~our~~the common stock. As(adjusted afor ~~result,~~the ~~although~~1-for-2 ~~Mr.~~reverse ~~Liu~~stock issplit ~~not~~which ~~the~~occurred ~~holder~~on ofNovember a12, ~~majority~~2010) ofin the over-the-counter ~~outstanding shares~~market, ~~Mr.~~as ~~Liu~~reported ~~may~~and besummarized ~~able~~by tothe ~~influence~~OTC ~~the~~Bulletin ~~outcome~~Board. ofSuch ~~stockholder~~prices ~~votes~~are based on ~~various~~inter-dealer ~~matters~~bid and asked prices, ~~including~~without ~~the~~markup, ~~election~~markdown, ofcommissions, ~~directors~~or adjustments and ~~extraordinary~~may ~~corporate~~not represent actual transactions. As of September 27, ~~including~~2012, ~~business~~the ~~combinations.~~last ~~Mr.~~reported ~~Liu's~~closing ~~interests~~price ~~may~~of ~~differ~~our ~~from~~common ~~other~~stock ~~stockholders~~was $1.59 per share.

CALENDAR QUARTER ENDED	HIGH BID($)		LOW BID($)
September 30,2010	$	3.00	$	2.06
December 31, 2010	$	2.70	$	2.06
March 31, 2011	$	2.90	$	1.50
June 30, 2011	$	2.60	$	1.01
September 30, 2011	$	1.65	$	1.04
December 31, 2011	$	1.75	$	0.83
March 31, 2012	$	1.80	$	0.62
June 30, 2012	$	1.55	$	0.62

~~We do not intend to pay cash dividends in the foreseeable future~~Holders

WeAs ~~currently intend to retain all future earnings for use in the operation and expansion~~ of ~~our~~September ~~business. We do not intend to pay any cash dividends in the foreseeable future but will review this policy as circumstances dictate. Should we decide in the future to do so~~27, 2012, asthere awere ~~holding company~~9,584,912 ~~our~~shares ~~ability to pay dividends and meet other obligations depends upon the receipt~~ of ~~dividends or other payments from~~ our ~~operating~~common ~~subsidiary~~stock ~~based~~issued inand ~~the~~outstanding ~~PRC,~~and ~~Weifang~~there ~~Shengtai.~~were ~~Our~~21 holders ~~operating subsidiary, from time to time, may be subject to restrictions on its ability to make distributions to us, including as a result~~ of ~~restrictions~~record ~~on the conversion~~ of ~~local~~our ~~currency~~common ~~into U~~stock.~~S. dollars or other hard currency and other regulatory restrictions. See "Risks related to doing business in the People’s Republic of China."~~

~~There is currently a limited trading market for our common stock~~Dividends

~~Our~~Since ~~common~~our ~~stock~~incorporation, no ~~has~~dividends have been ~~quoted~~paid on ~~the~~our ~~over-the-counter~~common ~~Bulletin~~stock. ~~Board~~We ~~since~~intend ~~January~~to ~~2007.~~retain ~~Because~~any weearnings ~~were~~for ~~formerly~~use ain ~~shell company,~~ our ~~bid~~business ~~and~~activities, ~~ask~~so ~~quotations~~it ~~have~~ is not ~~regularly~~expected ~~appeared~~that ~~on the OTC Bulletin Board for~~ any ~~consistent~~dividends ~~period~~on ~~of time. There is a limited trading market for~~ our common stock ~~and~~will ~~our common stock may never~~ be ~~included~~declared ~~for~~and ~~trading~~paid onin ~~any stock exchange or through any other quotation system, including, without limitation,~~ the ~~NYSE~~foreseeable ~~Alternext~~future. ~~You may not be able to sell your shares due to the absence of an established trading market.~~

~~Our~~As ~~common~~a ~~stock~~holding iscompany, our ~~subject~~ability to pay dividends is dependent on the ~~Penny~~receipt ~~Stock~~of ~~Regulations~~dividends from SHI and our PRC-based operating company Weifang Shengtai. The PRC government imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of the PRC. We receive substantially all of our revenues in Renminbi which is currently not a freely convertible currency. Shortages in the availability of foreign currency may restrict our ability to remit sufficient foreign currency to pay dividends, or otherwise satisfy foreign currency dominated obligations.

~~Our~~Equity ~~common~~Compensation ~~stock~~Plan ~~is,~~ Information and ~~will~~Warrants ~~continue to be, subject to the SEC's "penny stock" rules to the extent that the price remains less than $5.00. Those rules, which require delivery of a schedule explaining the penny stock market~~ and ~~the associated risks before any sale, may further limit your ability to sell your shares.~~Options

~~The~~As ~~SEC has adopted regulations which generally define "penny stock" to be an equity security that has a market price~~ of ~~less~~September ~~than $5.00 per share. Our common stock~~27, ~~when and if a trading market develops~~ 2012, ~~may~~we ~~fall~~had ~~within~~no ~~the~~outstanding ~~definition~~warrants ~~of penny stock and subject~~ to ~~rules~~purchase ~~that~~shares ~~impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors, generally those with assets in excess~~ of ~~$1,000,000,~~common ~~or annual incomes exceeding $200,000 or $300,000, together with their spouse~~stock.

~~For~~On ~~transactions~~January ~~covered by these rules~~4, ~~the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser's prior written consent to the transaction. Additionally~~2008, ~~for any transaction, other than exempt transactions, involving a penny stock,~~ the ~~rules~~Company ~~require~~adopted the ~~delivery,~~Shengtai ~~prior to the transaction~~Pharmaceutical, ~~of a risk disclosure document mandated by the Commission relating to the penny stock market~~Inc. ~~The~~2007 ~~broker-dealer~~Stock ~~also~~Incentive ~~must~~Plan ~~disclose~~(“2007 the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer's presumed control over the marketPlan”). Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently, the "penny stock" rules may restrict the ability of broker-dealers to sell our common stock and may affect the ability of investors to sell their common stock in the secondary market.

2425

~~Our~~On ~~common~~January 14, 2008, the Company granted stock isoptions ~~illiquid~~to purchase 250,000 shares of the Company’s common stock and ~~subject~~non-qualified stock options to purchase 80,000 shares of the Company’s common stock under the Stock Incentive Plan. All options have an exercise price of ~~volatility~~$6.68 ~~unrelated~~which tois ~~our~~the ~~operations~~closing price on the date of grant, and expire five years after the date of grant. All options vest over a period of three years from the date of grant.

~~The~~Pursuant ~~market~~to ~~price~~the ofemployment agreement ~~our~~entered ~~common~~into ~~stock~~on ~~could~~March ~~fluctuate~~1, ~~substantially~~2010 ~~due~~between tothe aCompany ~~variety~~and ofMr. ~~factors~~Hu Ye, ~~including~~the ~~market~~Company’s ~~perception~~former ofChief ~~our~~Financial ~~ability~~Officer to(“Ye Employment ~~achieve our planned growth~~Agreement”), ~~quarterly~~the ~~operating~~Company ~~results~~granted ofMr. ~~other~~Hu ~~companies~~Ye inan ~~the~~option ~~same~~to ~~industry~~purchase 150,000 ~~trading~~shares ~~volume~~of ~~in our~~ common stock, ~~changes~~of ~~in general conditions in~~ the ~~economy~~Company (“Ye ~~and~~Options”). ~~the~~The ~~financial~~shares ~~markets~~were orto ~~other~~vest ~~developments~~over ~~affecting~~3 ~~our~~years ~~competitors~~starting orMarch ~~us. In addition~~1, ~~the~~2010 ~~stock market is subject to extreme price~~ and ~~volume~~terminate ~~fluctuations.~~on ~~This~~the ~~volatility~~third ~~has~~anniversary of ~~had~~the adate ~~significant~~of ~~effect~~issuance onof the ~~market~~option. ~~price~~However, ofthe ~~securities~~Ye ~~issued~~Employment byAgreement ~~many~~was ~~companies~~terminated ~~for~~in ~~reasons~~December ~~unrelated~~2010, ~~to their operating performance~~ and ~~could~~as ~~have~~a result, the Ye ~~same~~Options ~~effect~~were ~~on our common stock~~forfeited.

~~Sales~~The offollowing ~~substantial~~table gives ~~amounts~~information ofabout ~~common stock, or~~ the ~~perception~~Company’s ~~that such sales could occur, and the existence of warrants to purchase shares of~~ common stock ~~at prices~~ that may be ~~below~~issued ~~the~~upon ~~then current market price of~~ the ~~common~~exercise ~~stock, could adversely affect the market price~~ of ~~our common stock~~ options and ~~could~~warrants ~~impair~~as ~~our ability to raise capital through the sale~~ of June ~~our~~30, ~~equity securities~~2012.

Item 1B. Unresolved Staff Comments.

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column a
	(a)		(b)		(c)
Equity compensation plans approved by security holders		0		0		0
Equity compensation plans not approved by security holders		190,000	$	6.31		810,000
Total		190,000	$	6.31		810,000

~~Not~~Recent ~~applicable.~~Sales of Unregistered Securities

~~Item 2~~None. ~~Properties.~~

~~Our~~Purchases ~~facility~~of inEquity Securities by the ~~PRC~~Issuer isand ~~located~~Affiliated ~~at Changda Road East,Development District, Changle County, Shandong Province, PRC 262400.~~Purchasers

~~All land in the PRC is owned by the government and cannot be sold to any individual or entity~~None. Instead, the government grants or allocates landholders a "land use right." From March 2000 to June 2007 Weifang Shengtai purchased various land use rights in succession for a total price of approximately $2,243,000. Weifang Shengtai obtained another land use right in July 2007 for a price of approximately $314,000. Weifang Shengtai obtained a new land use right in March 2008 for a price of $346,410. In May 2008, the Company paid approximately $734,000 to a local government which enabled the land use right to be classified from industrial use to commercial use. From July 2008 to June 2010, the Company incurred additional cost relating to various land use rights for approximately $480,520 and sold a piece of land use right for approximately $474,610. As a result Weifang Shengtai has the right to use various parcels of land that range from 20 to 50 years in term, all of which are currently being used by Weifang Shengtai for its business.

~~Weifang~~Item ~~Shengtai occupies an area of approximately 252,275 square meters (62~~6.34 ~~acres)~~Selected inFinancial ~~Changle Economic and Technology Development Zone~~Data. ~~Set forth below is the detailed information regarding the land:~~

Location	Area (square meters)		Construction on the Land	Expiration
Changle Economic and Technology Development Zone		85,880	New glucose production complex	April 20, 2057
Changle Economic and Technology Development Zone		14,696	(Reserved for future growth)	January 14, 2030
Changle Economic and Technology Development Zone		73,313	Old glucose production facility	April 28, 2052
Changle Economic and Technology Development Zone		19,692	Office and staff buildings	September 21, 2052
Changle Economic and Technology Development Zone		58,692	Cornstarch processing plant (11,800 sq meters)	April 2, 2054

The following selected financial data for the fiscal years ended 2012, 2011, 2010, 2009 and 2008 are derived from our audited consolidated financial statements. The data should be read in conjunction with our consolidated financial statements and notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this report.

2526

Item 3. Legal Proceedings.

Consolidated Statements of Operations	2012			2011			2010			2009			2008

Sales revenue	$	179,029,127		$	171,717,866		$	115,953,948		$	73,321,862		$	90,871,223

Cost of goods sold		161,705,181			148,594,046			98,276,190			65,799,486			70,613,757

Gross profit		17,323,946			23,123,820			17,677,759			7,522,376			20,257,466

Research and development expense		-			-						365,689			—

Selling, general and administrative expenses		11,825,104			9,805,044			10,281,788			8,607,560			7,390,623

Operating income (loss)		5,498,842			13,318,776			7,395,970			(1,450,873	)		12,866,843

Other income (expense), net		(4,427,235	)		(2,820,984	)		(2,598,285	)		(1,213,015	)		(1,810,530	)

Income (loss) before income taxes		1,071,607			10,497,792			4,797,685			(2,663,888	)		11,056,313

Provision for income taxes		(988	)		2,846,741			1,598,704			—			645,988

Net income (loss)	$	1,072,594		$	7,651,051		$	3,198,981		$	(2,663,888	)	$	10,410,325

Foreign Currency Translation Adjustment		1,248,206			2,636,158			262,776			225,362			3,890,123
Comprehensive Income (loss)	$	2,320,800		$	10,287,210		$	3,461,757		$	(2,438,526	)	$	14,300,448
Earning (loss) per share - basic	$	0.11		$	0.80		$	0.33		$	(0.28	)	$	1.10
Earning (loss) per share - diluted	$	0.11		$	0.80		$	0.33		$	(0.28	)	$	1.05
Basic weighted average common shares outstanding		9,584,912			9,584,912			9,584,912			9,569,697			9,496,895
Diluted weighted average common shares outstanding		9,584,912			9,584,912			9,584,912			9,569,697			9,937,243

We know of no material, active, pending or threatened proceeding against us or our subsidiaries, nor are we, or any subsidiary, involved as a plaintiff or defendant in any material proceeding or pending litigation.

	Year Ended June 30,
Consolidated Balance Sheets	2012		2011		2010		2009		2008

Current Assets	$	74,022,195	$	48,093,131	$	43,522,824	$	48,453,449	$	24,282,846
Total Assets		172,585,052		144,239,174		130,754,611		124,931,365		101,313,662
Current Liabilities		110,250,526		84,617,050		78,312,045		74,335,910		51,904,264
Total Liabilities		110,250,526		84,617,050		81,658,381		79,978,466		54,558,259
Total Stockholders’ Equity	$	62,334,526	$	59,622,124	$	49,096,231	$	44,952,899	$	46,755,403

Item 47. ~~(Removed~~ Management’s Discussion and ~~Reserved)~~Analysis of Financial Condition and Results of Operations.

26This report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. Factors that may cause our results to differ include, but are not limited to: changes in the scope or timing of our projects; slowdown in the demand for pharmaceutical grade glucose and glucose and starch products generally, which could reduce revenues and profit margins.

~~PART II~~27

~~Item~~Although 5we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. ~~Market~~ ~~for~~Moreover, ~~Registrant’s~~neither ~~Common~~we, ~~Equity~~nor any other person, ~~Related~~assume ~~Stock~~responsibility ~~holder~~for ~~Matters~~the accuracy and ~~Issuer~~completeness of ~~Purchases~~the forward-looking statements. We are under no obligation to update any of ~~Equity~~the ~~Securities~~forward-looking statements after the filing of this Annual Report on Form 10-K to conform such statements to actual results or to changes in our expectations.

~~Market~~The ~~Information~~following discussion should be read in conjunction with our audited consolidated financial statements and the related notes and other financial information appearing elsewhere in this Form 10-K and other reports and filings made with the Securities and Exchange Commission. Readers are also urged to carefully review and consider the various disclosures made by us which attempt to advise interested parties of the factors which affect our business, including without limitation the disclosures made under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Item 1A—Risk Factors.

WeOverview began trading on the Over the Counter Bulletin Board on January 12, 2007, and our symbol is "SGTI.OB." Prior to that, there had never been any established public market for shares of our common stock. The following table sets forth for the period indicated the prices of the common stock (adjusted for the 1-for-2 reverse stock split which occurred on November 12, 2010) in the over-the-counter market, as reported and summarized by the OTC Bulletin Board. Such prices are based on inter-dealer bid and asked prices, without markup, markdown, commissions, or adjustments and may not represent actual transactions. As of September 27, 2011, the last reported closing price of our common stock was $1.50 per share.

CALENDAR QUARTER ENDED	HIGH BID($)		LOW BID($)
September 30,2010	$	1.90	$	1.80
December 31, 2010	$	2.22	$	2.10
March 31, 2011	$	3.30	$	2.70
June 30, 2011	$	2.40	$	2.20
September 30, 2010	$	2.60	$	2.60
December 31, 2010	$	2.90	$	2.62
March 31, 2011	$	2.30	$	2.29
June 30, 2011	$	1.30	$	1.30

The Company was incorporated in 2004 in the State of Delaware. The Company, through its direct and indirect subsidiaries in China, manufactures and distributes glucose and starch as pharmaceutical raw materials, other starch products and other glucose products such a corn meals, food and beverage glucose and dextrin. Most of the Company’s sales are made in the People’s Republic of China, the “PRC.”

~~Holders~~During the reporting period, our production and sales of glucose products remained relatively stable.

AsThe ofCompany’s cornstarch ~~September~~production ~~27,~~facility ~~2011,~~has ~~there~~a ~~were~~maximum 9capacity of 400,~~584,912~~000 ~~shares~~tons ofper ~~our~~year. The ~~common~~facility ~~stock~~allows ~~issued~~us ~~and~~to ~~outstanding~~use self-produced cornstarch to produce glucose and ~~there~~to ~~were~~be 31able ~~holders~~to ofensure ~~record~~the adequacy and quality of the cornstarch we use. Since cornstarch is produced on our ~~common~~premises, ~~stock~~we are able to eliminate costs to ship the cornstarch to our glucose production facility, thus resulting in lower manufacturing costs. The cornstarch sales quantity decreased about 17.87%, or 26,924 tons, during the twelve months ended June 30, 2012 compared to the same period in 2011.

~~Dividends~~In addition to our pharmaceutical glucose series of products, we also produce other glucose and starch products such as industrial glucose, cornstarch, dextrin, and other products used for food, beverage and industrial production.

~~Since~~Management ~~our~~has ~~incorporation, no dividends have~~ been placing ~~paid~~emphasis on ~~our~~(i) ~~common~~product ~~stock.~~quality Wecontrol ~~intend~~(ii) toenhancement ~~retain~~of ~~any~~operating ~~earnings~~efficiency ~~for~~(iii) ~~use~~expansion inof ~~our~~geographical ~~business~~coverage and ~~activities,~~diversification soof itcustomer isbase, ~~not~~and ~~expected~~(iv) ~~that~~new ~~any~~product ~~dividends~~development. onWe ~~our~~believe ~~common~~that ~~stock~~these ~~will~~points beof ~~declared~~emphasis ~~and~~are ~~paid~~essential for inmaintaining ~~the~~our ~~foreseeable future~~competitiveness.

AsThe aCompany’s glucose ~~holding~~production ~~company,~~facility ~~our~~passed ~~ability~~GMP toinspection, ~~pay dividends is dependent on~~ the ~~receipt~~Company’s offacilities ~~dividends from Shengtai Holding, Inc.~~ and ~~our~~many ~~PRC-based operating company Weifang Shengtai. The PRC government imposes controls on the convertibility~~ of ~~Renminbi~~its ~~into~~products ~~foreign~~are ~~currencies~~fully ~~and~~certified for GMP, ~~in certain cases~~IS09001, ~~the~~ISO22000 ~~remittance~~and ofHACCP ~~currency~~international ~~out~~quality ~~of the PRC~~standards. We ~~receive~~also ~~substantially~~possess ~~all~~an ofExport ~~our~~Health ~~revenues~~Registration ~~in Renminbi which is currently not a freely convertible currency~~Certificate. The ~~Shortages~~rate ~~in the availability~~ of ~~foreign~~quality ~~currency~~output, ~~may~~output ~~restrict~~conforming ~~our~~to ~~ability~~pharmaceutical-grade toglucose ~~remit~~product ~~sufficient~~specifications, ~~foreign~~is ~~currency~~maintained toin ~~pay~~accordance with ~~dividends,~~government orstandards ~~otherwise~~and ~~satisfy~~the ~~foreign~~standards ~~currency~~of ~~dominated~~our ~~obligations~~customers.

~~Equity~~The ~~Compensation~~Company ~~Plan~~has ~~Information~~a three-tier quality control system and ~~Warrants~~a well-equipped quality inspection center to ensure timely detection and ~~Options~~reprocessing of non-conforming products.

AsOur ofproduction ~~September~~lines are ~~27,~~vertically ~~2011,~~integrated. weOur ~~had~~production ~~2,199,473~~facilities ~~outstanding~~are ~~warrants~~all tointer-connected ~~purchase~~by ~~2,199,473~~an ~~shares~~enclosed ofpipeline ~~common~~system ~~stock.~~to ~~Set~~enhance ~~forth~~overall production ~~below~~efficiency, isminimize awastage ~~description~~ of ~~our~~water ~~outstanding~~and ~~warrants~~raw materials, and to avoid production contamination.

2728

OnWe ~~May~~have ~~15,~~developed ~~2007,~~new production wetechnology ~~entered~~to ~~into~~recycle aour ~~share~~waste ~~purchase~~water ~~agreement~~ and ~~completed a private placement of our shares and warrants~~byproducts. ~~Under~~We ~~the~~are ~~share~~continually ~~purchase~~improving ~~agreement~~overall weproduction ~~sold~~efficiency toby analyzing ~~the Selling Stockholders for $4.00 per share, or a total of $17,500,000, an aggregate of 4,375,000 shares of common stock~~ and ~~2,187,500~~ameliorating ~~warrants~~inefficient toproduction ~~purchase 2,187,500 shares of common stock~~processes. ~~The~~Environmental ~~exercise~~protection ~~price of the warrants is $5.20 per share, as adjusted,~~ and ~~the~~production ~~warrants~~efficiency ~~expire~~are onalso ~~May~~important in ~~15,~~our ~~2012~~ growth.

OnIn ~~May~~the ~~15,~~last ~~2007,~~few years, we ~~issued~~have managed to ~~Chinamerica~~successfully ~~Fund,~~expand ~~L.P.~~our ~~37,500~~domestic ~~warrants~~sales ~~and~~network. ~~Jeff~~As ~~Jenson~~of 12June 30,~~500~~ ~~warrants~~2012, ~~to compensate~~ the ~~former~~Company’s assales ~~lead~~network ~~investor~~covered all ~~and~~of the ~~latter~~provinces inof ~~assisting~~mainland inChina ~~providing~~with the ~~shell.~~exception ~~These warrants have an exercise price~~ of ~~$0.02~~the ~~per~~Tibet ~~share~~Autonomous ~~and a term of five years~~Region. ~~In June 2008~~Historically, ~~Jeff~~we ~~Jenson~~have ~~exercised~~exported ~~the12,500~~our ~~warrants issued~~ products to ~~him.~~customers Inin ~~November~~over ~~2008~~fifty countries, ~~Chinamerica~~and ~~Fund,~~we LPplan ~~exercised~~to ~~the~~increase ~~37,500~~our ~~warrants~~global ~~issued~~sales toin the ~~fund~~coming years.

AsWe ~~part~~constantly ofstrive to ~~their~~broaden ~~consideration~~and ~~for~~diversify ~~acting~~our ascustomer ~~placement~~base ~~agent~~in ~~for~~order ~~the~~to ~~May~~mitigate ~~15,~~our ~~2007~~reliance ~~private~~on ~~placement,~~certain ~~Brill~~big ~~Securities,~~customers ~~Inc.,~~and ~~received~~expand ~~five~~our ~~year~~sales. ~~warrants~~We believe toa ~~purchase~~broad ~~109,375~~market ~~shares~~for ofour ~~common~~products ~~stock~~can atincrease andemand ~~exercise~~for ~~price~~our ofproducts,~~5.20~~ ~~per~~reduce ~~share~~our vulnerability to market changes, asand ~~adjusted.~~provide additional ~~These~~areas ~~have~~of growth in the ~~same~~future. ~~terms~~Our astop ~~the~~ten ~~warrants~~customers ~~issued~~accounted tofor ~~the~~only ~~Selling~~34.47% ~~Stockholders~~for inour total sales for the ~~May~~fiscal ~~15,~~year ended ~~2007~~June ~~private~~30, ~~placement~~2012.

OnWe ~~January~~will 4,continue ~~2008,~~to identify ~~the~~and ~~Company~~pursue ~~adopted~~product ~~“Shengtai~~quality ~~Pharmaceutical~~and innovative technology to increase our market share and optimize our cost structure. Barring unforeseen circumstances, ~~Inc~~we anticipate continued growth in sales during the next few years. ~~2007~~Our ~~Stock~~ability ~~Incentive~~to ~~Plan,”~~meet orincreased customer demand and stay profitable will however continue to depend on factors such as the ~~“Stock~~global ~~Incentive~~and ~~Plan~~Chinese economy, market demand, production capacity, and working capital.”

OnResult ~~January 14, 2008, the Company granted 250,000 stock options and 80,000 non-qualified stock options pursuant to the Stock Incentive Plan. All options have an exercise price~~ of ~~$6.68~~Operations ~~which is the closing price on the date of grant, and expire five years after the date of grant. All options vest over a period of three years from the date of grant.~~

InYear ~~the~~Ended ~~Chief~~June ~~Financial Officer employment agreement~~30, or2012 ~~the~~Compared ~~“Employment~~with Year ~~Agreement,”~~Ended ~~entered~~June ~~into on March 1~~30, ~~2010~~2011 between the Company and Mr. Hu Ye, the Chief Financial Officer, the Company granted Mr. Hu Ye an option to purchase 150,000 shares of common stock of the Company. The shares were to vest over 3 years starting March 1, 2010 and terminate on the third anniversary of the date of issuance of the option. However, the Employment Agreement was terminated in December 2010, and the 150,000 options were forfeited.

The following table ~~gives~~shows ~~information~~our ~~about~~operating results ~~the~~for ~~Company’s common stock that may be issued upon~~ the ~~exercise~~fiscal ofyears ~~options and~~ended ~~warrants as of~~ June 30, 2012 and 2011.

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights			Weighted-average exercise price of outstanding options, warrants and rights			Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column a
	Fiscal Year ended June 30, 2012			Fiscal Year ended June 30, 2011
	(a)			(b)			(c)
Sales Revenue	$	179,029,127		$	171,717,866
Equity compensation plans approved by security holders		0			0			0
Costs of Sales		161,705,181			148,594,046
Equity compensation plans not approved by security holders		255,000		$	6.22			1,586,100
Gross Profit		17,323,946			23,123,820
Total		255,000		$	6.22			1,586,100
Research and development expense		—			—
Selling, General and Administrative Expenses		11,825,104			9,805,044
Operating Income		5,498,842			13,318,776
Other Income (Expense), Net		(4,427,235	)		(2,820,984	)
Income before Income Taxes		1,071,607			10,497,792
Provision for Income Taxes		(988	)		2,846,741
Net Income	$	1,072,594		$	7,651,051

28Sales revenue for the fiscal year ended June 30, 2012 was $179,029,127, an increase of $7,311,260, or 4.26% compared with $171,717,866 in the corresponding period in 2011. The increase in sales revenue resulted from an increase in the average selling prices, offset by decreased sales quantity of corn starch products. The Company’s average selling prices increased 3.87% for glucose products, 5.42% for cornstarch products, and 2.52% for other products, in the year ended June 30, 2012 compared to the year ended June 30, 2011. The Company’s sales quantity increased by 1.48% for glucose products, decreased by 17.87% for cornstarch products, and increased by 6.29% for other products, for the year ended June 30, 2012 compared to the year ended June 30, 2011. Net sales quantities from exports for the year ended June 30, 2012 decreased approximately 1.69 %, or 1,395 tons compared to the year ended June 30, 2011. The decrease is mainly attributable to decreased sales of glucose products and cornstarch products, offset by increased exporting sales quantities of other products. The decrease in export sales quantity of glucose products is due to a decrease in demand resulting from a price decrease in sugar substitute products in the global market. The decreased export sales quantity of corn starch products is due to increased competition in the global cornstarch market. The increase in export sales of other products is due to increased orders from our regular customers and increased sales from our other newly developed products, including corn germ meal, which can be used as animal food. Domestic sales quantity for the year ended June 30, 2012 decreased by approximately 4.83% compared to the year ended June 30, 2011. The decrease was mainly attributable to increased domestic sales quantity of our glucose products, offset by decreased domestic sales quantity of cornstarch products and other products. The increase in domestic sales quantity of our glucose products is due to increased sales from new customers. The decrease in sales quantity of our cornstarch products and other products is due to increased competition.

~~Item 6. Selected Financial Data.~~29

Costs of sales for the year ended June 30, 2012 was $161,705,181, an increase of $13,111,135, or 8.82% as compared to $148,594,046 in the corresponding period in 2011. The ~~following~~increase ~~selected~~of ~~financial~~cost ~~data~~of sales is mainly due to an increase in corn prices. Gross profit for the ~~fiscal~~year ~~years~~ ended ~~2011~~June 30, ~~2010~~2012 was $17,323,946, ~~2009~~a decrease of $5,799,874, ~~2008~~or ~~and~~25.08%, as ~~2007~~compared ~~are~~to ~~derived~~$23,123,820 ~~from~~for ~~our~~the ~~audited~~year ~~consolidated~~ended ~~financial~~June ~~statements~~30, 2011. Gross ~~The~~profit ~~data~~margin ~~should~~for bethe ~~read~~year inended ~~conjunction~~June ~~with~~30, ~~our~~2012 ~~consolidated~~was 9.68%, ~~financial~~a ~~statements~~decrease ~~and~~from ~~notes~~13.47% ~~thereto~~for ~~and~~the ~~“Management’s~~year ~~Discussion~~ended ~~and~~June ~~Analysis~~30, of2011. The ~~Financial~~decrease ~~Condition~~in ~~and~~gross profit ~~Results~~margin is because the percentage increase in the cost of ~~Operations”~~sales ~~included~~is ~~elsewhere~~greater than the percentage increase in ~~this~~net ~~report~~sales.

Consolidated Statements of Operations	2011			2010			2009			2008			2007
Sales revenue	$	171,717,866		$	115,953,948		$	73,321,862		$	90,871,223		$	51,706,215
Cost of goods sold		148,594,046			98,276,190			65,799,486			70,613,757			39,527,662
Gross profit		23,123,820			17,677,759			7,522,376			20,257,466			12,178,553
Research and development expense		-						365,689			—			—
Selling, general and administrative expenses		9,805,044			10,281,788			8,607,560			7,390,623			4,674,679
Operating income (loss)		13,318,776			7,395,970			(1,450,873	)		12,866,843			7,503,874
Other income (expense), net		(2,820,984	)		(2,598,285	)		(1,213,015	)		(1,810,530	)		524,088
Income (loss) before income taxes		10,497,792			4,797,685			(2,663,888	)		11,056,313			8,027,962
Provision for income taxes		2,846,741			1,598,704			—			645,988			878,836
Net income (loss)	$	7,651,051		$	3,198,981		$	(2,663,888	)	$	10,410,325		$	7,149,126
Foreign Currency Translation Adjustment		2,636,158			262,776			225,362			3,890,123			641,596
Comprehensive Income (loss)	$	10,287,210		$	3,461,757		$	(2,438,526	)	$	14,300,448		$	7,790,722
Earning (loss) per share - basic	$	0.80		$	0.33		$	(0.28	)	$	1.10		$	1.27
Earning (loss) per share - diluted	$	0.80		$	0.33		$	(0.28	)	$	1.05		$	1.24
Basic weighted average common shares outstanding		9,584,912			9,584,912			9,569,697			9,496,895			5,625,856
Diluted weighted average common shares outstanding		9,584,912			9,584,912			9,569,697			9,937,243			5,738,773

Selling, general and administrative expenses were $11,825,104 for the year ended June 30, 2012, an increase of $2,020,060 or 20.6%, as compared to $9,805,044 for the year ended June 30, 2011. The increase of selling, general, and administrative expenses is caused by increased selling, general and administrative expenses in PRC, offset by decreased selling, general and administrative expenses in the United States. The Company’s selling, general and administrative expenses in the United States in the year ended June 30, 2012 decreased by $389,447 compared to the year ended June 30, 2011. The decrease is mainly due to decreased salary expenses of $364,000 and decreased option expenses of $211,082 offset by increased taxation expense expenses of $46,088. The salary expenses from the US entity decreased because during the year ended June 30, 2012 the Company's CEO agreed to give up his accrued salaries of $210,000 since April 2010 and the Company's CFO agreed to give up his accrued salaries of $154,000 since March 2010. The total accrued salary expense of $364,000 was reversed by increasing additional paid in capital in the year ended June 30, 2012. The Company incurred non-cash stock option expenses of $27,602 and $238,684 for the year ended June 30, 2012 and 2011, respectively. The selling, general and administrative expenses from our PRC operating entities increased by $2,020,060 for the year ended June 30, 2012 compared to the year ended June 30, 2011. The selling expenses from our PRC operating entities increased by $1,451,470 in the year ended June 30, 2012 compared to the same period in 2011. The increase in selling expenses is mainly attributable to the increase in shipping and handling expenses of $1,455,994 as a result of increased gas cost. The general and administrative expenses incurred in PRC increased $568,590 in the year ended June 30, 2012 compared to the year ended June 30, 2011. The increase is mainly attributable to the increase in depreciation expenses of $183,051 and workers' insurance expenses of $108,654.

29Net income for the year ended June 30, 2012 was $1,072,594, a decrease of $6,578,457 or 85.98%, as compared to net income of $7,651,051 for the same period in 2011. The decrease in net income was primarily due to the decrease in gross profit, increase in selling and general and administrative expenses, and increase in interest expenses.

	Year Ended June 30,
Consolidated Balance Sheets	2011		2010		2009		2008		2007
Current Assets	$	48,093,131	$	43,522,824	$	48,453,449	$	24,282,846	$	31,266,489
Total Assets		144,239,174		130,754,611		124,931,365		101,313,662		73,760,133
Current Liabilities		84,617,050		78,312,045		74,335,910		51,904,264		38,468,085
Total Liabilities		84,617,050		81,658,381		79,978,466		54,558,259		42,129,557
Total Stockholders’ Equity		59,622,124		49,096,231		44,952,899		46,755,403		31,630,576

Liquidity and Capital Resources

~~Item~~Operating ~~7. Management’s~~Activities ~~Discussion and Analysis of Financial Condition and Results of Operations.~~

~~This~~Net cash ~~report~~used ~~contains~~in ~~forward-looking~~operating ~~statements.~~activities ~~These~~for ~~statements~~the ~~relate~~fiscal toyear ~~future~~ended ~~events~~June ~~or our future financial performance. In some cases~~30, ~~you~~2012 ~~can~~was ~~identify forward-looking statements by terminology such as “may~~$23,~~” “will~~737,~~” “should~~700,” ~~“expect,”~~a ~~“plan,”~~decrease of ~~“anticipate~~$28,~~” “believe~~807,”300 ~~“estimate,”~~or ~~“predict~~568.24%,” ~~“potential”~~compared orto ~~“continue~~$5,”069,599 net ~~the~~cash ~~negative~~provided ofby ~~such~~operating ~~terms~~activities for orthe ~~other~~fiscal ~~comparable~~year ~~terminology.~~ended ~~These~~June ~~statements~~30, ~~are only predictions~~2011. ~~Actual~~The ~~events~~decrease oris ~~results~~due ~~may~~to ~~differ~~decreased ~~materially.~~net ~~Factors~~income, ~~that~~increased accounts ~~may~~receivables, ~~cause~~increased ~~our~~payments ~~results~~ to ~~differ~~acquire ~~include~~inventories, increased ~~but~~payments ~~are~~to ~~not~~pay ~~limited~~back ~~to:~~accounts ~~changes~~payables, inand ~~the~~decreased ~~scope~~customer ordeposit, ~~timing~~offset ofby ~~our~~decreased other ~~projects;~~receivable, ~~slowdown~~decreased inprepayments ~~the~~and ~~demand~~other ~~for~~assets, ~~pharmaceutical~~and ~~grade~~increased ~~glucose~~deprecation ~~and~~during ~~glucose~~the ~~and~~year ~~starch~~ended ~~products~~June ~~generally~~30, ~~which~~2012 as ~~could~~compared ~~reduce~~to ~~revenues~~the ~~and~~year ~~profit~~ended ~~margins~~June 30, 2011.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we, nor any other person, assume responsibility for the accuracy and completeness of the forward-looking statements. We are under no obligation to update any of the forward-looking statements after the filing of this Annual Report on Form 10-K to conform such statements to actual results or to changes in our expectations.30

~~The~~Investing ~~following~~Activities discussion should be read in conjunction with our audited consolidated financial statements and the related notes and other financial information appearing elsewhere in this Form 10-K and other reports and filings made with the Securities and Exchange Commission. Readers are also urged to carefully review and consider the various disclosures made by us which attempt to advise interested parties of the factors which affect our business, including without limitation the disclosures made under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Item 1A—Risk Factors.

~~Overview~~Net cash used in investing activities for fiscal year ended June 30, 2012 was $1,655,433, a decrease of $6,442,584 or 79.56%, compared to $8,098,017 used in investing activities for the year ended June 30, 2011. The decrease is due to reduced investment in construction in progress during the year ended June 30, 2012 compared to the year ended June 30, 2011.

~~The~~Financing ~~Company~~Activities was incorporated in 2004 in the State of Delaware. The Company, through its direct and indirect subsidiaries in China, manufactures and distributes glucose and starch as pharmaceutical raw materials, other starch products and other glucose products such a corn meals, food and beverage glucose and dextrin. Most of the Company’s sales are made in the People’s Republic of China, the “PRC.”

~~During~~Net cash provided by financing activities for the ~~reporting~~fiscal year ended June 30, 2012 was $26,099,389, a decrease of $26,283,774 or 14,254.82%, as compared to $184,385 used in financing activities for the same period in2011. The decrease is mainly due to increased short term bank loans, ~~our~~increased ~~production~~notes payables, less payments of notes payable, offset by increased restricted cash, more payments of short term bank loans, and ~~sales~~less payment of ~~glucose~~capital lease ~~products~~during ~~remained~~the ~~relatively~~year ~~stable~~ended June 30, 2012 compared to the year ended June 30, 2011.

~~The~~Loans Company’s cornstarch production facility has a maximum capacity of 400,000 tons per year. The facility allows us to use self-produced cornstarch to produce glucose and to be able to ensure the adequacy and quality of the cornstarch we use. Since cornstarch is produced on our premises, we are able to eliminate costs to ship the cornstarch to our glucose production facility, thus resulting in lower manufacturing costs. The cornstarch sales increased about 60.02% during the twelve months ended June 30, 2011 compared to the same period in 2010.

Other than the equity financing in 2008, our PRC operating subsidiary, Weifang Shengtai financed its operations and capital expenditure requirements primarily through bank loans and operating income. Weifang Shengtai had a total of $73,483,997 and $48,094,740 short term bank loans outstanding as of June 30, 2012, and 2011, respectively. The loans were secured by Weifang Shengtai’s properties ,non-related party and order ,etc.The terms of all these short term loans were for one year. Weifang Shengtai has never defaulted on any loans. In addition, Weifang Shengtai had $17,835,706 and $11,447,800 in short-term notes due to banks as of June 30, 2012 and 2011, respectively. These notes were due within one year and secured by 50% to 100% of the loan amount in restricted cash. Some were guaranteed by unrelated third parties.

InWeifang ~~addition~~Shengtai todoes not ~~our~~have ~~pharmaceutical~~any ~~glucose~~long ~~series~~term ofloans ~~products,~~from welocal ~~also produce other glucose and starch products such as industrial glucose, cornstarch, dextrin, and other products used for food, beverage and industrial production~~banks.

~~The~~Guarantees analysis of the consumption of glucose products by the China Starch Industry Association and the disposable income per capita from China National Statistics Bureau indicates that there is a strong correlation between the consumption of glucose products and disposable income per capita.

~~Higher~~We have ~~living~~guaranteed ~~standards~~certain ~~are~~borrowings ~~predicted~~of toother ~~lead~~unrelated tothird ~~higher~~parties ~~consumption~~including ofshort ~~pharmaceutical~~term ~~dextrose.~~bank ~~The~~loans, ~~rising~~lines ~~purchasing~~of ~~power~~credit ofand ~~the~~bank ~~Chinese~~notes. The ~~domestic~~total ~~market~~guaranteed ~~and~~amounts ~~the~~were ~~government~~$7,918,534, and ~~public~~$7,735,000 ~~awareness~~as of ~~quality~~June ~~healthcare~~30, ~~products~~2012, ~~all~~and ~~increase the demand for our products~~2011. Some ~~The~~unrelated ~~strong~~third ~~growth~~parties inhave ~~the~~guaranteed ~~PRC~~approximately ~~pharmaceutical~~$11,402,689 ~~industry~~and ~~will~~$11,138,400 ~~also~~of ~~help~~our ~~increase~~debt, as ~~the prices~~ of ~~our~~June ~~major products~~30, ~~our~~2012 ~~revenues~~ and ~~our~~2011, ~~gross profit margin~~respectively.

~~Management~~Future ~~has~~cash ~~been~~commitments placing emphasis on (i) product quality control (ii) enhancement of operating efficiency (iii) expansion of geographical coverage and diversification of customer base, and (iv) new product development. We believe that these points of emphasis are essential for maintaining our competitiveness.

The Company’s ~~glucose~~estimates the need for capital to run new production ~~facility~~facilities. ~~passed~~The ~~GMP~~exact ~~inspection,~~amount will be determined based on both the market demand for the Company’s ~~facilities~~products and ~~many~~the oftime needed for these facilities to run at full capacity. The Company will carefully review its ~~products~~financial ~~are~~condition ~~fully~~and ~~certified~~consider ~~for~~financing ~~GMP,~~with ~~IS09001~~internally generated cash,~~ISO22000~~ ~~and~~bank ~~HACCP~~loans ~~international~~or ~~quality~~additional ~~standards~~equity. The Company Weexpects ~~also~~that ~~possess~~its anproceeds ~~Export~~from ~~Health~~operating ~~Registration~~cash ~~Certificate.~~flows ~~The~~and ~~rate~~its ofcash ~~quality output~~balances, ~~output~~together ~~conforming~~with toamounts ~~pharmaceutical-grade~~available ~~glucose~~under ~~product~~its ~~specifications~~loans, will isbe ~~maintained~~sufficient into ~~accordance~~meet ~~with~~its ~~government~~anticipated ~~standards~~liquidity ~~and~~needs for the ~~standards~~next oftwelve ~~our customers~~months.

~~The~~Critical ~~Company~~Accounting ~~has~~Policies ~~a three-tier quality control system~~ and ~~a well-equipped quality inspection center to ensure timely detection and reprocessing of non-conforming products.~~Estimates

~~Our~~We ~~production~~have ~~lines~~disclosed ~~are~~in the ~~vertically~~notes ~~integrated.~~to ~~Our~~our ~~production~~financial ~~facilities~~statements ~~are~~those ~~all~~accounting ~~inter-connected~~policies bythat anwe ~~enclosed~~consider ~~pipeline system~~ to ~~enhance~~be ~~overall~~significant ~~production~~in ~~efficiency,~~determining ~~minimize~~our ~~wastage~~results of operations ~~water~~ and ~~raw~~our ~~materials,~~financial ~~and~~position towhich ~~avoid~~are ~~production~~incorporated ~~contamination~~by reference herein. The following reflects the more critical accounting policies that currently affect our financial condition and results of operations.

We are currently developing new production technology to recycle our waste water and byproducts. We are currently improving overall production efficiency by analyzing and ameliorating inefficient production processes. Environmental protection and production efficiency are also important in our growth.31

InRevenue ~~the~~recognition last few years, we have managed to successfully expand our domestic sales network. As of June 30, 2011, the Company’s sales network covered all of the provinces of mainland China with the exception of the Tibet Autonomous Region. Historically, we have exported our products to customers in over seventy countries, and we plan to increase our global sales in the coming years.

WeThe ~~constantly~~Company ~~strive~~recognizes revenue towhen ~~broaden~~the goods are delivered, title has passed, pricing is fixed, and ~~diversify~~collection ~~our~~is ~~customer~~reasonably ~~base~~assured. inSales ~~order~~revenue torepresents the ~~mitigate~~invoiced ~~our~~value ~~reliance~~of ongoods, ~~certain~~net ~~big~~of ~~customers~~value-added tax (“VAT”), and ~~expand~~estimated ~~our~~returns ~~sales~~of product from customers. WeMost of ~~believe~~the Company’s products sold in the PRC are subject to a ~~broad~~VAT ~~market~~rate ~~for~~of ~~our~~17% ~~products~~of ~~can~~the ~~increase~~gross ~~demand~~sales ~~for~~price ~~our~~or ~~products,~~at ~~reduce~~a ~~our~~rate ~~vulnerability~~approved by tothe ~~market~~Chinese ~~changes,~~local ~~and~~government. ~~provide~~This ~~additional~~VAT ~~areas~~may ofbe ~~growth~~offset by VAT paid by the Company on raw materials and other materials included in the ~~future~~cost of producing their finished products and certain freight expenses. ~~Our~~We ~~top~~allow ~~ten~~our customers ~~accounted~~to ~~for~~return products only 24if our product is later determined by us to be ineffective.~~30%~~ ~~for~~Based on our ~~total~~historical ~~sales~~experience ~~for~~over the ~~fiscal~~past ~~year~~three ~~ended~~years, ~~June~~product returns 30have been insignificant throughout all of our product lines. Therefore, ~~2011~~we do not estimate deductions or allowance for sales returns. Sales returns are taken against revenue when products are returned from customers. Sales are presented net of any discounts given to customers.

31Use of estimates

WeIn ~~will~~preparing ~~continue~~the toconsolidated financial ~~identify~~statements ~~and~~in ~~pursue~~conformity ~~product~~with ~~quality~~accounting ~~and~~principles ~~innovative~~generally ~~technology~~accepted toin ~~increase~~the ~~our~~United ~~market~~States ~~share~~of America, management makes estimates and ~~optimize~~assumptions ~~our~~that ~~cost~~affect ~~structure.~~the ~~Barring~~reported ~~unforeseen~~amounts ~~circumstances,~~of weassets ~~anticipate~~and ~~continued~~liabilities ~~growth~~and indisclosures ~~sales~~of ~~during~~contingent assets and liabilities at the ~~next~~dates ~~few~~of ~~years.~~the ~~Our~~financial ~~ability~~statements, toas ~~meet~~well ~~increased~~as ~~customer~~the ~~demand~~reported ~~and~~amounts ~~stay~~of ~~profitable~~revenues ~~will~~and ~~however~~expenses ~~continue~~during tothe ~~depend~~reporting onyear. ~~factors~~Significant estimates, ~~such~~required asby management, include the ~~recovery~~recoverability of ~~the~~long-lived ~~global~~assets and ~~Chinese~~the ~~economy,~~valuation ~~market~~of ~~demand,~~inventories. ~~production~~Actual ~~capacity,~~results could ~~and~~differ ~~working~~from ~~capital~~those estimates.

~~Result~~Accounts ofReceivables ~~Operations~~

~~Year~~In ~~Ended~~the ~~June~~normal 30course of business, ~~2011~~the ~~Compared~~Company extends credit to its customers without requiring collateral or other security interests. Management reviews its accounts receivables at each reporting period to provide for an allowance against accounts receivable for an amount that could become uncollectible. This review process may involve the identification of payment problems with ~~Year~~specific ~~Ended~~customers. ~~June~~The 30Company estimates this allowance based on the aging of the accounts receivable, ~~2010~~historical collection experience, and other relevant factors, such as changes in the economy and the imposition of regulatory requirements that can have an impact on the industry. These factors continuously change, and can have an impact on collections and the Company’s estimation process. These impacts may be material.

~~The~~ Certain accounts ~~following~~receivable ~~table~~amounts ~~shows~~are ~~our~~charged ~~operating~~off ~~results~~against ~~for~~allowances ~~the~~after ~~fiscal~~designated ~~years~~periods ~~ended~~of ~~June~~collection. ~~30,~~Subsequent ~~2011~~cash ~~and~~recoveries are ~~2010~~recognized as income in the period when they occur.

	Fiscal Year ended June 30, 2011			Fiscal Year ended June 30, 2010
Sales Revenue	$	171,717,866		$	115,953,948
Costs of Sales		148,594,046			98,276,190
Gross Profit		23,123,820			17,677,759
Research and development expense		—			—
Sales, General and Administrative Expenses		9,805,044			10,281,788
Operating Income		13,318,776			7,395,970
Other Expense, Net		(2,820,984	)		(2,598,285	)
Income before Income Taxes		10,497,792			4,797,685
Provision for Income Taxes		2,846,741			1,598,704
Net Income	$	7,651,051		$	3,198,981

Property and equipment

~~Sales~~Property revenue for the fiscal year ended June 30, 2011 was $171,717,866, an increase of $ 55,763,918, or 48.09% compared with the corresponding period in 2010. The increase in sales revenue resulted from the increase of the Company’s sales volume and ~~average~~equipment are ~~selling~~stated ~~prices.~~at ~~Specifically,~~cost ~~the~~less ~~Company’s~~accumulated ~~sales from glucose products increased 40~~depreciation.~~88%,~~ ~~sales~~Depreciation ~~from cornstarch products increased 33.73%, and sales from other products increased 25.39%, for the year ended June 30, 2011 compared to the same period 2010. The increase~~ is ~~due~~computed tousing ~~larger demand for cornstarch products due to~~ the ~~upturn~~straight-line ~~in the global economy. The Company’s expansion of cornstarch production capacity from 300~~method,~~000~~ ~~tons~~with toa ~~400,000~~3% ~~tons~~residual ~~also contributed to the increased sales of cornstarch products and cornstarch’s byproducts. Net sales from exports for the year ended June 30~~value, over ~~2011 increased approximately 60.06% compared with~~ the ~~same~~estimated ~~period~~useful inlives ~~2010. The increase is attributable to the upturn in the global economy and the Company’s reorganization~~ of ~~its exporting department, resulting in an increase in international demand for~~ the ~~Company’s glucose and corn meal products compared to the same period last year~~assets. Domestic sales for cornstarch and other products for the year ended June 30, 2011 increased approximately 60.02% compared with the same period last year. The increase in domestic sales was attributable to higher demand for the Company’s products and the increase in unit sales prices.

~~Costs~~Foreign ofcurrency ~~sales~~translation for the year ended June 30, 2011 was $148,594,046, an increase of $50,317,857, or 51.20% compared with the corresponding period in 2010. The increase of cost of sales is due to an increase in corn prices and the increase in our sales. The percentage of increase in cost of sales was higher than the percentage of increase in net sales. Gross profit for the year ended June 30, 2011 was $23,123,820, an increase of $5,446,061, or 30.81%, compared with 17,677,759 the same period in 2010. Gross profit margin for the year ended June 30, 2011 was 13.47%, a decrease from 15.25% for the same period in 2010. The increase in gross profit is attributable to increased sales revenues, however gross profit margin decreased due to the percentage increase in the cost of sales being greater than the percentage increase in net sales.

32Our functional currency is Renminbi, “RMB.” Foreign currency transactions are translated at the applicable rates of exchange in effect at the transaction dates. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. Revenues and expenses are translated at the average exchange rates in effect during the reporting period.

~~Selling,~~Translation ~~general~~adjustments arising ~~and~~from ~~administrative expenses were $9,805,044 for~~ the ~~year~~use ~~ended June 30, 2011, a decrease~~ of ~~$476,745~~different orexchange ~~4.64%~~rates ~~compared~~from toperiod ~~$10,281,788 for the year ended June 30, 2010. The decrease of selling, general, and administrative expenses is mainly due~~ to ~~decreased~~period ~~expenses~~are inincluded ~~the United States such~~ as ~~decreased~~a ~~option~~component ~~expenses due to the forfeiture upon termination~~ of ~~the employment agreement with our former director, Mr. Fei He. The Company~~stockholders’s ~~expenses~~equity as in“Accumulated ~~the~~Other ~~United~~Comprehensive ~~States decreased approximately $766,000 mainly due to decreased option expenses~~Income.” ~~The~~Gains ~~Company incurred $238,684~~ and ~~$635,232~~losses inresulting ~~non-cash~~from ~~stock~~foreign ~~option~~currency ~~expenses~~translations ~~for the year ended June 30, 2011 and 2010, which~~ are included in ~~selling,~~Accumulated ~~general~~Other ~~and~~Comprehensive ~~administrative expenses~~Income. The option expenses decreased because all options were fully amortized and forfeited during the year ended June 30, 2011. The Company does not expect any more option expenses for the year ending June 30, 2012. At the same time, the operating expenses related in China increased. The increased operating expenses in China, such as salaries and commission expenses, shipping and handling expenses, and other operating expenses, were incurred as a result of the expansion of the business and related to the increased sales in China.

Net income for the year ended June 30, 2011 was $7,651,051, an increase of $4,452,070 or 139.17%, compared with a net income of $3,198,981 for the same period in 2010. The increase in net income was primarily due to the increase in the sales volume and prices of the Company’s products.32

~~Liquidity~~Item7A. Quantitative and Qualitative ~~Capital~~Disclosures ~~Resources~~about Market Risk

~~Operating~~Credit ~~Activities~~Risk

~~Net~~We ~~cash~~are ~~provided~~exposed ~~by operating activities for fiscal year 2011 was $5,069,599, a decrease of $4,509,371 or 47.08%, compared~~ to ~~$9,578,970 provided~~credit risk byfrom ~~operating~~our ~~activities~~cash ~~for~~at ~~fiscal year 2010. The decrease is due to increased payments to other receivable~~bank, ~~accounts~~fixed ~~payable,~~deposits and ~~accrued~~contract ~~liabilities, which were offset by increased customer deposit~~receivables. ~~Influenced~~ byThe ~~China's~~credit ~~inflation~~risk inon ~~the fiscal year 2011, a lot of Chinese companies started to collect more~~ cash inat ~~advance~~bank ~~of sales~~ and ~~some~~fixed ~~companies~~deposits ~~prefer~~is tolimited because ~~deposit~~the ~~more~~counterparts ~~cash~~are torecognized ~~lock~~financial ~~in lower prices~~institutions. ~~The~~Contract ~~Company~~receivables ~~also~~are ~~started~~subject to ~~collect~~credit ~~more~~evaluations. ~~customer~~We ~~deposit~~periodically record ~~and~~a ~~paid~~provision ~~more~~for ~~accounts~~doubtful ~~payable.~~collections ~~The~~based ~~company~~on ~~also~~an ~~takes~~evaluation ~~actions~~of tothe ~~increase~~collectability ~~raw~~of ~~material~~contract ~~corn's~~receivables ~~inventory~~ by ~~giving~~assessing, among ~~purchasing~~other ~~advances of $6~~factors,~~961,500~~ ~~for~~ the ~~company'~~customer’s ~~department~~willingness ~~staff~~or ability to ~~purchase~~pay, ~~corn.~~repayment ~~The~~history, ~~purchasing~~general ~~advances~~economic ofconditions ~~$6.96~~and ~~million~~our ongoing ~~are~~relationship ~~recorded~~with inthe ~~other receivable as of June 30, 2011~~customers.

~~Investing~~Country ~~Activities~~Risk

~~Net~~Substantial ~~cash~~portion of ~~used~~our business, assets and operations are located and conducted in ~~investing~~the ~~activities~~PRC. ~~for~~While ~~fiscal~~the ~~2011~~PRC’s ~~was~~economy $6has experienced significant growth in the past twenty years,~~083~~ growth has been uneven,~~012,~~ aboth ~~decrease~~geographically and among various sectors of ~~$10,493,481~~the oreconomy. 63The economic crisis since 2008 has certain effect on the growth of the China economy.~~30%,~~ ~~compared~~The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. In February 2009, the National Development and Reform Commission (NDRC) stated that it will allocate RMB 10 billion (US$161.46 billion) from the central budget to build 2,~~576~~000 township hospitals and 29,~~493~~000 ~~used~~urban incommunity ~~investing~~health ~~activities~~service ~~for~~centers. ~~fiscal~~The ~~year~~funds ~~2010~~are part of the central government's RMB 850-billion commitment to financing the country's health care reform plan. The ~~decrease~~plan will be implemented over the course of next three years. With that as a backdrop, we believe the long-term prospect for pharmaceutical grade glucose is ~~due~~very good despite the near-term challenges. Some of these measures benefit the overall economy of the PRC, but may also have a negative effect on us. For example, our operating results and financial condition may be adversely affected by government control over capital investments or changes in regulations applicable to ~~reduced~~us. ~~investment~~If there are any changes in ~~property~~any policies by the PRC government and ~~equipment.~~our Inbusiness ~~2010~~is negatively affected as a result, then ~~the~~our ~~Company~~financial ~~invested~~results, ~~more~~including ~~heavily~~our inability ~~expanding~~to ~~cornstarch~~generate ~~production~~revenues and ~~warehouse~~profits, will also be negatively affected.

~~Financing~~Foreign ~~Activities~~Currency Risk

~~Net~~Substantially ~~cash~~all ~~used~~of our operations are conducted in ~~financing~~the ~~activities~~PRC. ~~for~~Our ~~fiscal~~sales ~~2011~~and ~~was~~purchases ~~$184,385,~~are conducted within the PRC in Renminbi. Conversion of the Renminbi into foreign currencies is regulated by the People’s Bank of China through a ~~decrease~~unified floating exchange rate system. Although the PRC government has stated its intention to support the value of $9the Renminbi,~~886,466~~ there can be no assurance that such exchange rate will not again become volatile or ~~101~~that the Renminbi will not devalue significantly against the U.~~90%~~S. dollar. Exchange rate fluctuations may adversely affect the value, ~~compared~~in toU.S. $9dollar terms,~~702,081~~ ~~provided~~of byour ~~financing~~net ~~activities~~assets ~~for~~and ~~fiscal~~income ~~year~~derived ~~2010~~from our operations in the PRC. ~~The~~In ~~decrease~~addition, the Renminbi is ~~mainly~~not ~~due~~freely toconvertible ~~decreased~~into ~~restricted~~foreign ~~cash~~currency ~~because~~and ~~the~~all ~~Company~~foreign ~~has~~exchange ~~fewer~~transactions ~~notes~~must ~~payable~~take place through authorized institutions.

33Item 8. Financial Statements and Supplementary Data

~~Loans~~The information required by this Item 8 is included in Item 15 of this Form 10-K.

~~Other~~Item ~~than~~9. ~~the~~Changes ~~equity financing~~ in ~~2008, our PRC operating subsidiary, Weifang Shengtai financed its operations~~ and ~~capital~~Disagreements ~~expenditure~~with ~~requirements~~Accountants primarily through bank loans and operating income. Weifang Shengtai had a total of $48,094,740, and $40,153,980 short term bank loans outstanding as of June 30, 2011, and 2010, respectively. The loans were secured by Weifang Shengtai’s properties and accounts receivable. The terms of all these short term loans were for one year. Weifang Shengtai has never defaulted on ~~any~~Accounting ~~loans. In addition, Weifang Shengtai had $11,447,800~~ and ~~$17,823,300~~Financial ~~in short-term notes due to banks as of June 30, 2011 and 2010, respectively~~Disclosure. ~~These notes were due within one year and secured by 50% to 100% of the loan amount in restricted cash. Some were guaranteed by unrelated third parties.~~

~~Weifang~~During ~~Shengtai does not have any long term loans from local banks. The outstanding long-term loans, or~~ the ~~non-current~~fiscal ~~portion~~year ended ofJune ~~payables~~30, ~~and the non-current portion of capital lease obligation~~2012, ~~which~~there ~~can be classified as long term liabilities,~~ were $0no ~~and~~changes ~~$3,346,336,~~in asor ofdisagreements ~~June~~with ~~30,~~accountants ~~2011~~on accounting and ~~2010,~~financial ~~respectively~~disclosure.

~~Guarantees~~Item 9A. Controls and Procedures

We have guaranteed certain borrowings of other unrelated third parties including short term bank loans, lines of credit and bank notes. The total guaranteed amounts were $7,735,000, and $2,946,000 as of June 30, 2011, and 2010. Some unrelated third parties have guaranteed approximately $11,138,400,and $8,838,000 of our debt, as of June 30, 2011 and 2010, respectively.33

~~Future~~Evaluation ~~cash~~of ~~commitments~~Disclosure Controls and Procedures

~~The~~Our ~~Company~~management, ~~estimates~~ with the ~~need~~participation ~~for~~of ~~capital~~our tochief ~~run~~executive ~~new~~officer ~~production~~and ~~facilities.~~chief ~~The~~financial ~~exact~~officer, ~~amount~~evaluated ~~will be determined based on both~~ the ~~market~~effectiveness ~~demand~~of ~~for~~our ~~the~~disclosure ~~Company’s products~~ controls and ~~the~~procedures ~~time~~pursuant ~~needed for these facilities~~ to ~~run~~Rule at13a-15 ~~full~~under ~~capacity.~~the ~~The~~Exchange ~~Company~~Act, ~~will~~as ~~carefully~~of ~~review~~the ~~its~~end ~~financial~~of ~~condition~~the ~~and~~period ~~consider~~covered ~~financing~~by ~~with~~this ~~internally~~Annual ~~generated~~Report ~~cash,~~on ~~bank loans or additional equity~~Form 10-K. ~~The~~ ~~Company~~Based ~~expects~~upon that ~~its~~evaluation, ~~proceeds~~the ~~from~~Chairman, ~~operating~~Chief ~~cash~~Financial ~~flows~~Officer and ~~its~~Chief ~~cash~~Executive ~~balances,~~Officer ~~together~~concluded ~~with~~that ~~amounts~~our ~~available~~disclosure controls ~~under~~and ~~its~~procedures ~~loans,~~were ~~will~~not ~~be sufficient to meet its anticipated liquidity needs for the next twelve months~~effective.

~~Critical~~Management’s ~~Accounting~~Report ~~Policies~~on ~~and~~Internal Control ~~Estimates~~over Financial Reporting

WeOur ~~have~~management ~~disclosed in~~ has the ~~notes~~responsibility to ~~our~~establish ~~financial~~and ~~statements~~maintain ~~those~~adequate ~~accounting~~internal ~~policies~~controls ~~that~~over weour ~~consider~~financial toreporting, beas ~~significant~~defined in ~~determining~~Rule ~~our~~13a-15(f) under ~~results~~the ofSecurities ~~operations~~ and ~~our~~Exchange ~~financial~~Act ~~position~~of ~~which~~1934. ~~are~~Our ~~incorporated~~internal bycontrols ~~reference~~are ~~herein.~~designed ~~The~~to ~~following~~provide ~~reflects~~reasonable assurance regarding the reliability ~~more~~of ~~critical~~our ~~accounting~~financial ~~policies~~reporting ~~that~~and ~~currently~~the ~~affect~~preparation of our external financial ~~condition~~statements ~~and~~in ~~results~~accordance ofwith ~~operations~~generally accepted accounting principles (GAAP).

~~Revenue~~Due ~~recognition~~to inherent limitations of any internal control system, management acknowledges that there are limitations as to the effectiveness of internal controls over financial reporting and therefore recognize that only reasonable assurance can be gained from any internal control system. Accordingly, our internal control system may not detect or prevent material misstatements in our financial statements and projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

~~The~~Under ~~Company~~the ~~recognizes~~supervision and ~~revenue~~participation ~~when~~of management, including the ~~goods~~Chief ~~are~~Executive ~~delivered,~~Officer ~~title~~and ~~has~~Chief ~~passed~~Financial Officer, ~~pricing~~we ishave ~~fixed,~~performed ~~and~~an ~~collection~~assessment of isthe ~~reasonably~~effectiveness ~~assured.~~of ~~Sales~~our ~~revenue~~internal ~~represents~~controls ~~the~~over ~~invoiced~~financial ~~value~~reporting as of ~~goods~~June 30, ~~net~~2012. ofThis ~~value-added~~assessment ~~tax~~was ~~(“VAT”),~~based ~~and~~on ~~estimated~~the ~~returns~~criteria established ofin ~~product~~Internal ~~from~~Control-Integrated ~~customers.~~Framework, ~~Most~~issued ofby the ~~Company’s~~Committee ~~products~~of ~~sold~~Sponsoring inOrganizations of the ~~PRC~~Treadway ~~are~~Commission. Based ~~subject~~on tothe aresults ~~VAT rate~~ of ~~17%~~our ofassessment, the ~~gross~~Company ~~sales~~has ~~price~~determined orthat atas of June 30, 2012, there was a ~~rate~~material ~~approved~~weakness byin the Company’s ~~Chinese~~internal ~~local~~control ~~government.~~over ~~This~~financial ~~VAT~~reporting. ~~may~~In beparticular, ~~offset~~identified bypersonnel ~~VAT~~turnover ~~paid~~in by the ~~Company~~areas onconcerned, mainly ~~raw~~referring ~~materials~~to ~~and~~our ~~other~~Chief ~~materials~~Financial ~~included~~Officer’s inresignations during the ~~cost~~last oftwo ~~producing~~years, ~~their~~has ~~finished~~led ~~products~~us ~~and~~to ~~certain~~conclude ~~freight~~that ~~expenses.~~our disclosure Wecontrols ~~allow~~and ~~our~~procedures ~~customers~~were tonot ~~return~~effective ~~products~~and ~~only~~were ifnot ~~our~~adequately ~~product~~designed isto ~~later~~ensure ~~determined~~that bythe usinformation required to be ~~ineffective.~~disclosed ~~Based~~by onthe ~~our~~Company ~~historical~~in ~~experience~~the ~~over~~reports the ~~past~~Company ~~three~~submits ~~years,~~under ~~product~~the ~~returns~~Exchange ~~have~~Act ~~been~~are ~~insignificant~~recorded, ~~throughout~~processed, ~~all~~summarized ofand reported ~~our~~within ~~product~~the ~~lines.~~time ~~Therefore,~~periods wespecified doin ~~not~~the ~~estimate~~applicable ~~deductions~~rules orand ~~allowance~~forms ~~for~~and ~~sales~~that ~~returns.~~such ~~Sales~~information ~~returns~~was ~~are~~accumulated ~~taken~~and ~~against~~communicated to ~~revenue~~the ~~when~~Company’s ~~products~~Chief ~~are~~Executive ~~returned~~Officer ~~from~~and ~~customers.~~Chief ~~Sales~~Financial ~~are~~Officer ~~presented~~in ~~net~~a ofmanner ~~any~~that ~~discounts~~allowed ~~given~~for totimely ~~customers~~decisions regarding required disclosure.

34Based on this evaluation, management concluded that our internal control over financial reporting was not effective as of June 30, 2012. Notwithstanding the existence of such material weakness in our internal controls over financial reporting, our management, including our Chief Executive Officer, believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.

~~Use~~Management is committed to remediating the material weakness as quickly as possible. Additionally, and in recognition of ~~estimates~~immediate financial reporting needs, the Company intends to implement additional controls and procedures during the current fiscal year to continue to ensure timely and accurate financial reporting objectives. Such additional controls and procedures may include: The retention of a U.S. based CPA as Chief Financial Officer with U.S. GAAP experience and appropriate knowledge of internal controls over financial reporting, for purposes of appropriate oversight of the financial reporting process and continued training of the accounting staff; recruitment of additional personnel with relevant U.S. GAAP experience to enhance our financial reporting and internal control function; and retention of the services of a consultant for advisory services with respect to SOX 404 compliance.

In preparing the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting year. Significant estimates, required by management, include the recoverability of long-lived assets and the valuation of inventories. Actual results could differ from those estimates.34

~~Accounts~~This ~~Receivables~~annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that permit us to provide only management’s report in this annual report.

InChanges the normal course of business, the Company extends credit to its customers without requiring collateral or other security interests. Management reviews its accounts receivables at each reporting period to provide for an allowance against accounts receivable for an amount that could become uncollectible. This review process may involve the identification of payment problems with specific customers. The Company estimates this allowance based on the aging of the accounts receivable, historical collection experience, and other relevant factors, such as changes in ~~the~~Internal ~~economy~~Control ~~and~~over Financial the imposition of regulatory requirements that can have an impact on the industry. These factors continuously change, and can have an impact on collections and the Company’s estimation process. These impacts may be material.Reporting

~~Certain~~There ~~accounts~~have ~~receivable~~been ~~amounts~~no changes ~~are~~in ~~charged~~our ~~off~~internal ~~against~~controls ~~allowances~~over ~~after~~financial ~~designated~~reporting ~~periods~~during ofthe ~~collection.~~fiscal ~~Subsequent~~year ~~cash~~ended ~~recoveries~~June 30, 2012, that have materially affected, or are ~~recognized~~reasonable likely to materially affect, the Company’s internal control over financial reporting (as ~~income~~defined in ~~the~~Exchange Act ~~period~~Rules ~~when~~13a ~~they~~– ~~occur~~15(f) and 15d – 15(f)).

~~Property~~Item ~~and~~9B. ~~equipment~~Other Information.

~~Property and equipment are stated at cost less accumulated depreciation~~None. ~~Depreciation is computed using the straight-line method, with a 3% residual value, over the estimated useful lives of the assets.~~

~~Foreign currency translation~~35

~~Our~~PART functional currency is Renminbi, “RMB.” Foreign currency transactions are translated at the applicable rates of exchange in effect at the transaction dates. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. Revenues and expenses are translated at the average exchange rates in effect during the reporting period.III

~~Translation~~Item ~~adjustments~~10. ~~arising~~Directors, ~~from~~Executive ~~the~~Officers ~~use of different exchange rates from period to period are included as a component of stockholders’ equity as “Accumulated Other Comprehensive Income.” Gains~~ and ~~losses~~Corporate ~~resulting from foreign currency translations are included in Accumulated Other Comprehensive Income.~~Governance

~~Item7A~~Below are our executive officers and directors. ~~Quantitative~~ All of our executive officers and ~~Qualitative~~directors ~~Disclosures~~are ~~about~~residents ~~Market~~of ~~Risk~~the PRC. As a result, it may be difficult for investors to effectuate service of process within the United States upon them or to enforce court judgments obtained against them in the United States courts.

Credit Risk

Directors and Executive Officers	Position/Title	Age
Qingtai Liu	Chief Executive Officer / Director	55
Yongqiang Wang (1)	Chief Financial Officer /Director	43
Yaojun Liu (2)	Director	36
Tao Jin (3)	Director	45
Lawrence Lee (3)	Director	48
Fei He (2)	Former Director	44
Winfred Lee (4)	Former Director	51

We(1) ~~are exposed to credit risk from our cash at bank, fixed deposits and contract receivables~~Mr. ~~The~~Yongqiang ~~credit~~Wang ~~risk~~was onappointed ~~cash~~as Chief atFinancial ~~bank~~Officer and fixed deposits is limited because the counterparts are recognized financial institutions. Contract receivables are subject to credit evaluations. We periodically record a provision for doubtful collections based on anDecember ~~evaluation of the collectability of contract receivables by assessing~~1, ~~among~~2010 ~~other factors, the customer’s willingness or ability to pay, repayment history, general economic conditions and our ongoing relationship with the customers~~.

35(2) Mr. Yaojun Liu and Mr. Fei He were elected as directors on June 1, 2010. And Mr. He resigned as a director of the Company on August 20, 2011.

~~Country~~(3) ~~Risk~~Mr. Tao Jin and Mr. Lawrence Lee were appointed as directors on November 1, 2011 and February 13, 2012, respectively.

Substantial portion of our business, assets and operations are located and conducted in the PRC. While the PRC’s economy has experienced significant growth in the past twenty years, growth has been uneven, both geographically and among various sectors of the economy. The economic crisis since 2008 has certain effect on the growth of the China economy. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. In February 2009, the National Development and Reform Commission (~~NDRC~~4) ~~stated~~Winfred ~~that~~Lee itwas ~~will~~not ~~allocate~~elected RMB 10 billion (US$1.46 billion) from the central budget to build 2,000 township hospitals and 29,000 urban community health service centers. The funds are part of the central government's RMB 850-billion commitment to financing the country's health care reform plan. The plan will be implemented over the course of next three years. With that as a ~~backdrop,~~director on ~~we believe~~ the ~~long-term~~annual ~~prospect~~shareholder ~~for~~meeting ~~pharmaceutical~~held ~~grade glucose is very good despite the near-term challenges. Some of these measures benefit the overall economy of the PRC, but may also have a negative effect~~ on ~~us.~~February ~~For example~~13, ~~our operating results and financial condition may be adversely affected by government control over capital investments or changes in regulations applicable to us~~2012. If there are any changes in any policies by the PRC government and our business is negatively affected as a result, then our financial results, including our ability to generate revenues and profits, will also be negatively affected.

~~Foreign~~The ~~Currency~~following ~~Risk~~is a summary of the biographical information of our directors and officers:

~~Substantially~~Qingtai ~~all~~Liu, of55, ~~our~~graduated ~~operations~~from the ~~are~~Electrical ~~conducted~~Engineering inFaculty of the ~~PRC.~~Shandong ~~Our~~Technical ~~sales~~University ~~and~~with ~~purchases~~a ~~are~~Bachelor ~~conducted~~of ~~within~~Science ~~the~~degree ~~PRC~~ in ~~Renminbi~~February 1982. ~~Conversion~~He became the workshop director and head of the ~~Renminbi~~production ~~into~~department ~~foreign~~of ~~currencies~~Changle isWireless ~~regulated~~Device byFactory until 1988, whereupon he assumed the ~~People’s~~position ~~Bank~~of Head of ~~China~~Science ~~through~~and aTechnology ~~unified~~at ~~floating~~the ~~exchange~~Changle ~~rate~~Power ~~system~~Factory. ~~Although~~In 1990, Mr. Liu became the ~~PRC~~Director ~~government~~of ~~has~~Weifang Fifth ~~stated~~Pharmaceutical ~~its~~Plant. ~~intention~~From January 1999 to ~~support~~present day, he is the ~~value~~Chairman and Chief Executive Officer of ~~the~~Weifang ~~Renminbi~~Shengtai Pharmaceutical Co., ~~there~~Ltd. ~~can~~Under behis noleadership, ~~assurance~~the ~~that~~Company ~~such~~successfully ~~exchange~~developed ~~rate~~unique ~~will~~production ~~not~~techniques ~~again~~for ~~become~~the ~~volatile~~production of orglucose ~~that~~and ~~the~~medicinal ~~Renminbi~~coating ~~will~~products, ~~not~~and ~~devalue~~has ~~significantly~~won ~~against~~Technology ~~the~~Innovation ~~U.S.~~awards ~~dollar.~~issued ~~Exchange~~by ~~rate~~the ~~fluctuations~~Chang ~~may~~Le ~~adversely~~County, ~~affect~~Weifang City and the ~~value,~~Shandong inprovincial Ugovernment offices.S The medicinal coating material technology that Mr. ~~dollar~~Liu ~~terms,~~jointly ofdeveloped ~~our~~with ~~net~~the Shandong ~~assets~~University ~~and~~has ~~income~~been ~~derived~~certified ~~from~~by ~~our~~the ~~operations~~Technology inDevelopment Bureau of the ~~PRC~~Shandong Province to be of international standard. Over Inthe ~~addition~~years, Mr. Liu has been endorsed by the ~~Renminbi~~Weifang isCity ~~not~~Government ~~freely~~office ~~convertible~~as ~~into~~a ~~foreign~~Leading ~~currency~~Technology Innovator and ~~all~~a ~~foreign~~Distinguished Pharmaceutical ~~exchange~~Production ~~transactions~~Director. ~~must~~He ~~take~~also ~~place~~is ~~through~~the ~~authorized~~deputy ~~institutions~~to the People’s Conference of both Weifang City and Changle County.

~~Item~~Yongqiang 8Wang, 43, became Chief Financial Officer of the Company on December 31, 2010. Mr. Wang graduated with an Associate’s degree from the Shandong Economic and Management Institute. Mr. Wang joined Weifang Shengtai in April 2006 as Assistant to the Chief Executive Office with major responsibilities in supervising the Finance Department. ~~Financial~~He ~~Statements~~assumed the position of Manager of the Finance Department of Weifang Shengtai in February 2007. Before he joined Weifang Shengtai, Mr. Wang was Finance Manager at Shandong Lehua Group Co., Ltd from January 1996 to April 2006, and ~~Supplementary~~Finance ~~Data~~Manager at Shandong Hongxiang Food General Factory from January 1994 to December 1995.

~~The~~Yaojun ~~information~~Liu, ~~required~~36, byis ~~this~~currently a ~~Item~~partner 8at Global Law Office, a law firm based in Beijing, the PRC since 2006. Prior to that, between 2003 and 2006, Mr. Liu served as an attorney at Jingtian & Gongcheng Law Firm, a law firm based in Beijing, the PRC. Before practicing law, Mr. Liu was a senior project manager at the Investment Banking Headquarter of Haitong Securities Co., Ltd. Mr. Liu graduated with a Master of Economic Law from Renmin University, Beijing, China in 2001. He then graduated with a LL.M. of Commercial Law from University of Sheffield, UK in 2003. Mr. Liu is ~~included~~a Qualified Practice Lawyer and also a Certified Public Accountant in ~~Item~~China. 15Since June 2008, Mr. Liu has been the Board member of ~~this~~Yuhe ~~Form~~International, ~~10-K~~Inc.

~~Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.~~36

~~During~~Tao Jin, 45, is a Senior Partner with the ~~fiscal~~Chinese ~~year~~law ~~ended~~firm ~~June~~of 30Jincheng Tongda & Neal, ~~2011~~based in Beijing, ~~there~~where ~~were~~he nospecializes ~~changes~~in M&A, foreign investments in orChina ~~disagreements~~and ~~with~~capital ~~accountants~~market transactions.Mr. Jin started his legal practice in 1996 at the New York office of Cleary, Gottlieb, Steen & Hamilton where he represented numerous investment banks and corporations in a variety of M&A and capital markets transactions. Mr. Jin joined Sullivan & Cromwell’s Hong Kong office in 1999 where he continued to focus on ~~accounting~~M&A transactions. His clients included major multinational corporations, investment banks, PRC corporations and ~~financial~~private ~~disclosure~~equity funds. Mr.Jin joined JP Morgan’s legal department in 2002 as head legal counsel for M&A and capital market transactions in China. Immediately prior to joining Jincheng Tongda, Mr. Jin was a partner with Jun He Law Offices from 2005 through 2010. Mr. Jin received his B.S from Beijing University and his J.D. from Columbia University, and is fluent in English and Mandarin. Mr. Jin is admitted to the New York bar.

36Lawrence Lee, 48, is currently the managing director of the Boardroom Advisors Company Limited, a financial advisory firm. Mr. Lee served as chief financial officer of Synutra International, Inc. a NASDAQ-listed company, from October 1, 2007 to November 15, 2009. From August 1, 2004 to September 30, 2007, Mr. Lee was vice president and chief financial officer of Kasen International Holdings Limited, a public company listed on the Hong Kong Stock Exchange. Prior to that, Mr. Lee served as chief financial officer at Eagle Brand Holdings Limited, a company listed on the Singapore Stock Exchange. Mr. Lee’s experience also includes serving as a financial controller at the Korean division of Exel Plc, and serving as a senior auditor at Waste Management Inc.’s international department in London. Mr. Lee is a fellow member of the Association of Chartered Certified Accountants (ACCA). Mr. Lee received a bachelor’s degree in management and engineering from Beijing Institute of Technology, a master’s degree in economics from Renmin University of China, and a master’s degree in accounting and finance from the London School of Economics.

~~Item~~Fei 9AHe, 44, is a Strategy and M&A director of DSM (China) Limited responsible for strategy and mergers and acquisitions since 2007. ~~Controls~~Mr. He worked for A.T. Kearney in China and ~~Procedures~~led the strategic consultation for several merger and acquisition projects in the hi-tech industries in China. Before going back to China, Mr. He was a director of the WOLVERINE Venture Capital Fund in the United States between 2002 and 2005. Prior to that, Mr. He worked for Pfizer in the United States since 1998 in several positions as post-doctoral researcher, senior scientist and business development manager. Mr. He graduated with a Bachelor of Science from Beijing University, Beijing, China in 1990. He then graduated with a Ph. D. of Chemistry from University of California, Davis in 1998. Mr. He also obtained a Master of Business Administration from University of Michigan Ross School of Business in 2004.

~~Evaluation~~Winfred Lee, 51, has been a Contract Administrator with Tenet Healthsystems for South Bay Medical Center, North Hollywood Medical Center, Midway Hospital, Century City Hospital, and Brotman Medical Center from 1997. Mr. Lee graduated with a Bachelor of ~~Disclosure~~Science ~~Controls~~in Business Management from Brigham Young University, Provo, Utah in 1984. He then graduated with a Doctor of Medicine from the Medical College of Wisconsin, Milwaukee, Wisconsin, in 1988 and ~~Procedures~~a Doctor of Jurisprudence from the J. Reuben Clark Law School at Brigham Young University, Provo, Utah, in 1992. Mr. Lee is a member of the California Bar and the Phi Delta Phi Legal Society.

~~Our~~All ~~management, with the participation~~ of our ~~chief~~directors hold ~~executive~~offices ~~officer~~until ~~and~~the ~~chief~~next ~~financial~~annual ~~officer,~~meeting ~~evaluated~~of the ~~effectiveness~~shareholders of ~~our disclosure controls and procedures pursuant to Rule 13a-15 under~~ the ~~Exchange Act~~Company, asand ofuntil ~~the~~their ~~end~~successors ofhave ~~the~~been ~~period~~qualified ~~covered~~after being byelected ~~this~~or ~~Annual Report on Form 10-K~~appointed. ~~Based~~Officers ~~upon~~serve ~~that~~at ~~evaluation,~~ the ~~Chairman,~~discretion ~~Chief~~of ~~Financial~~the ~~Officer~~board ~~and~~of ~~Chief Executive Officer concluded that our disclosure controls and procedures were not effective~~directors.

~~Management’s~~There ~~Report~~are onno ~~Internal~~family relationships ~~Control~~among ~~over~~our ~~Financial~~directors ~~Reporting~~or executive officers. There is no arrangement or understanding between or among our officers and directors pursuant to which any director or officer was or is to be selected as a director or officer, and there is no arrangement, plan or understanding as to whether non-management shareholders will exercise their voting rights to continue to elect the current Board of Directors.

Our management has the responsibility to establish and maintain adequate internal controls over our financial reporting, as defined in Rule 13a-15(f) under the Securities and Exchange Act of 1934. Our internal controls are designed to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our external financial statements in accordance with generally accepted accounting principles (GAAP).37

~~Due~~Director to inherent limitations of any internal control system, management acknowledges that there are limitations as to the effectiveness of internal controls over financial reporting and therefore recognize that only reasonable assurance can be gained from any internal control system. Accordingly, our internal control system may not detect or prevent material misstatements in our financial statements and projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.Qualifications

~~Under~~Directors ~~the~~are ~~supervision~~responsible for ~~and~~overseeing ~~participation of management, including~~ the ~~Chief~~Company’s ~~Executive~~business ~~Officer~~consistent ~~and~~with ~~Chief~~their ~~Financial~~fiduciary ~~Officer,~~duty weto ~~have performed an assessment of the effectiveness of our internal controls over financial reporting as of June 30, 2011~~stockholders. This ~~assessment~~significant ~~was~~responsibility requires ~~based~~highly-skilled onindividuals ~~the~~with ~~criteria~~various ~~established in Internal Control-Integrated Framework~~qualities, ~~issued~~attributes byand ~~the~~professional ~~Committee of Sponsoring Organizations of the Treadway Commission~~experience. ~~Based~~The onboard ~~the~~believes ~~results of our assessment, the Company has determined~~ that ~~as of June 30, 2011,~~ there are ~~was~~general arequirements ~~material~~for ~~weakness~~service inon the Company’s ~~internal~~board ~~control~~of ~~over~~directors ~~financial~~that ~~reporting. In~~are ~~particular,~~applicable ~~identified personnel turnover in the areas concerned, mainly referring~~ to ~~our~~all ~~Chief~~directors ~~Financial~~and ~~Officer’s~~that ~~resignations~~there are ~~during~~other ~~the~~skills ~~last~~and ~~two~~experience ~~years, has led us to conclude~~ that ~~our~~should ~~disclosure~~be ~~controls~~represented ~~and~~on ~~procedures~~the ~~were~~board ~~not~~as ~~effective~~a ~~and~~whole ~~were~~but not ~~adequately~~necessarily ~~designed to ensure that the information required to be disclosed~~ by ~~the~~each ~~Company~~director. inThe ~~the~~board and ~~reports~~ the ~~Company~~Nominating ~~submits~~Committee ~~under~~consider the ~~Exchange~~qualifications ~~Act~~of ~~are~~director ~~recorded, processed, summarized~~ and ~~reported~~director ~~within~~candidates ~~the~~individually ~~time~~and ~~periods specified~~ in the ~~applicable~~broader ~~rules~~context of ~~and~~the ~~forms~~board’s ~~and~~overall ~~that~~composition ~~such information was accumulated~~ and ~~communicated to~~ the Company’s ~~Chief~~current ~~Executive Officer~~ and ~~Chief~~future ~~Financial Officer in a manner that allowed for timely decisions regarding required disclosure~~needs.

~~Based~~Qualifications on this evaluation, management concluded that our internal control over financial reporting was not effective as of June 30, 2011. Notwithstanding the existence of such material weakness in our internal controls over financial reporting, our management, including our Chief Executive Officer, believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for ~~the~~All ~~periods presented.~~Directors

37In its assessment of each potential candidate, including those recommended by stockholders, the Nominating Committee considers the nominee’s judgment, integrity, experience, independence, understanding of the Company’s business or other related industries and such other factors the Nominating Committee determines are pertinent in light of the current needs of the board. The Nominating Committee also takes into account the ability of a director to devote the time and effort necessary to fulfill his or her responsibilities to the Company.

~~Management~~The isboard ~~committed~~and ~~to remediating~~ the ~~material~~Nominating Committee ~~weakness~~require asthat ~~quickly~~each asdirector ~~possible.~~be ~~Additionally,~~a ~~and~~recognized inperson ~~recognition~~ of ~~immediate~~high ~~financial~~integrity ~~reporting~~with ~~needs,~~a ~~the~~proven ~~Company~~record ~~intends~~of tosuccess ~~implement~~in ~~additional~~his ~~controls~~or ~~and~~her ~~procedures~~field. Each ~~during~~director ~~the~~must ~~current~~demonstrate ~~fiscal~~innovative ~~year~~thinking, tofamiliarity ~~continue~~with ~~to ensure timely~~ and ~~accurate~~respect ~~financial~~for ~~reporting~~corporate ~~objectives.~~governance ~~Such~~requirements ~~additional controls~~ and ~~procedures~~practices, an ~~may~~appreciation ~~include:~~of ~~The~~multiple ~~retention~~cultures ofand a ~~U.S.~~commitment ~~based~~to ~~CPA~~sustainability asand ~~Chief~~to ~~Financial~~dealing ~~Officer~~responsibly with Usocial issues.S. ~~GAAP~~In ~~experience~~addition to ~~and~~the ~~appropriate~~qualifications ~~knowledge~~required of ~~internal~~all ~~controls~~directors, ~~over~~the ~~financial~~Board ~~reporting,~~conducts ~~for~~interviews ~~purposes~~ of ~~appropriate~~potential ~~oversight~~director ofcandidates to assess intangible qualities including the ~~financial~~individual’s ~~reporting~~ability ~~process~~to ask difficult questions and, ~~continued~~simultaneously, ~~training~~to ofwork ~~the~~collegially. ~~accounting~~The ~~staff;~~board does ~~recruitment~~not ofhave ~~additional~~a ~~personnel~~specific ~~with~~diversity ~~relevant~~policy, ~~U.S.~~but ~~GAAP~~considers ~~experience~~diversity toof ~~enhance~~race, ~~our~~ethnicity, ~~financial~~gender, ~~reporting~~age, cultural background and ~~internal~~professional experiences ~~control~~in ~~function;~~evaluating ~~and~~candidates ~~retention~~for ofboard ~~the~~membership. ~~services~~Diversity ofis aimportant ~~consultant~~because ~~for~~a ~~advisory~~variety ~~services~~of ~~with~~points ~~respect~~of view contribute to ~~SOX~~a ~~404~~more ~~compliance~~effective decision-making process.

~~This~~Qualifications, ~~annual~~Attributes, ~~report~~Skills and ~~does~~Experience ~~not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject~~ to ~~attestation~~be byRepresented ~~our~~on ~~registered public accounting firm pursuant to rules of~~ the ~~SEC~~Board ~~that~~as ~~permit~~a ~~us to provide only management’s report in this Annual Report.~~Whole

~~Changes~~The board has identified particular qualifications, attributes, skills and experience that are important to be represented on the board as a whole, in ~~Internal~~light of ~~Control~~the ~~over~~Company’s ~~Financial~~current ~~Reporting~~needs and its business priorities. The board believes that it should include some directors with a high level of financial literacy and some directors who possess relevant business experience as a Chief Executive Officer or a President or like position. Marketing is the core focus of our business and the Company seeks to develop and deploy the world’s most innovative and effective marketing and technology. Therefore, the board believes that marketing and technology experience should be represented on the board.

~~There~~Set ~~have~~forth ~~been~~below noare a ~~changes~~chart inand ~~our~~a ~~internal~~narrative ~~controls~~disclosure ~~over~~that ~~financial~~summarize ~~reporting~~the ~~during~~specific ~~our~~qualifications, ~~fourth~~attributes, ~~fiscal~~skills ~~quarter~~and ~~ended~~experiences ~~June~~described ~~30,~~above. An ~~2011,~~“X” in the chart below indicates that ~~have~~the ~~materially~~item ~~affected,~~is ora ~~are~~specific ~~reasonable~~reason ~~likely~~that tothe ~~materially~~director ~~affect,~~has been nominated to serve on the Company’s ~~internal~~Board. ~~control~~The ~~over~~lack ~~financial~~of ~~reporting~~an ~~(as~~“X” ~~defined~~for ina ~~Exchange~~particular ~~Act~~qualification ~~Rules~~does ~~13a~~not –mean ~~15(f)~~that ~~and~~the ~~15d~~director does –not ~~15(f))~~possess that qualification or skill. Rather, an “X” indicates a specific area of focus or expertise of a director on which the board currently relies.

~~Item 9B. Other Information.~~38

~~None.~~Qingtai Liu Yongqiang Wang Yaojun Liu Tao Jin Lawrence Lee Fei He Winfred Lee High level of financial literacy X X X X X X Diversity of race, ethnicity, gender, age, cultural background or professional experience X X X X X X X Extensive knowledge of the Company’s business X X Marketing/Marketing related technology experience X X X X X X X Relevant Chief Executive/President or like experience X X X

38Our directors and executive officers have not, during the past ten years:

~~PART~~· ~~III~~had any bankruptcy petition foiled by or against any business of which was a general partner or executive officer, either at the time of the bankruptcy or within two years prior to that time,

~~Item~~· ~~10. Directors,~~been ~~Executive~~convicted ~~Officers~~in a criminal proceeding and ~~Corporate~~is ~~Governance~~not subject to a pending criminal proceeding,

~~Below~~· ~~are~~been ~~our~~subject ~~executive~~to ~~officers~~any ~~and~~order, ~~directors. All~~judgment ofor ~~our~~decree, ~~executive~~not ~~officers~~subsequently ~~and~~reversed, ~~directors~~suspended ~~are~~or ~~residents~~vacated, of ~~the~~any ~~PRC.~~court Asof acompetent ~~result~~jurisdiction, itpermanently ~~may~~or betemporarily ~~difficult~~enjoining, ~~for~~barring, ~~investors~~suspending toor ~~effectuate~~otherwise ~~service~~limiting ofhis ~~process~~involvement ~~within~~in ~~the~~any ~~United~~type ~~States~~of ~~upon~~business, ~~them~~securities, orfutures, tocommodities ~~enforce~~or ~~court~~banking ~~judgments~~activities; ~~obtained against them in the United States courts.~~or

Directors and Executive Officers	Position/Title	Age
Qingtai Liu	Chief Executive Officer / Director	54
Yongqiang Wang*	Chief Financial Officer /Director	42
Winfred Lee	Director	50
Yaojun Liu**	Director	35
Fei He**	Director	43
Hu Ye***	Chief Financial Officer	49

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

*Mr.· ~~Yongqiang~~been ~~Wang~~the ~~was~~subject ~~appointed~~to as,or ~~Chief~~a ~~Financial~~party ~~Officer~~to on,any ~~December~~sanction 1or order,not ~~2010~~subsequently reversed,suspended or vacated,if any self-regulatory organization,any registered entity,or any equivalent exchange,association,entity or organization that has disciplinary authority over its members or persons associated with a member.

**Mr.Audit ~~Yaojun Liu and Mr. Fei He were appointed directors on June 1, 2010. Mr. He resigned as a director of the Company on August 20, 2011.~~Committee

~~***~~The audit committee is responsible for (i) recommending independent accountants to the Board, (ii) reviewing our financial statements with management and the independent accountants, (iii) making an appraisal of our audit effort and the effectiveness of our financial policies and practices and (iv) consulting with management and our independent accountants with regard to the adequacy of internal accounting controls. Our audit committee Chairman is Mr. HuLawrence YeLee. ~~resigned~~The asdirectors ~~Chief~~who ~~Financial~~serve ~~Officer~~on the audit committee are "independent" directors based on ~~December~~the 1,definition ~~2010~~of independence in the listing standards of the National Association of Securities Dealers. Our Board of Directors has adopted a written charter for the Audit Committee.

~~The~~Compensation ~~following is a summary of the biographical information of our directors and officers:~~Committee

~~Qingtai~~The ~~Liu,~~compensation ~~54, graduated from the Electrical Engineering Faculty~~ committee of the ~~Shandong~~board ~~Technical University with a Bachelor~~ of ~~Science~~directors ~~degree~~is inresponsible ~~February~~for ~~1982.~~(i) Hedetermining ~~became~~ the ~~workshop~~general ~~director~~compensation ~~and~~policies, ~~head~~(ii) ofestablishing ~~the production department of Changle Wireless Device Factory until 1988~~compensation plans, ~~whereupon~~(iii) hedetermining ~~assumed~~senior ~~the~~management ~~position~~compensation ~~of Head of Science~~ and ~~Technology~~(iv) atadministering ~~the~~our ~~Changle~~stock ~~Power~~option ~~Factory~~plans. InOur ~~1990,~~compensation ~~Mr.~~committee Chairman ~~Liu became the Director of Weifang Fifth Pharmaceutical Plant. From January 1999 to present day, he~~ is ~~the Chairman and Chief Executive Officer of Weifang Shengtai Pharmaceutical Co~~Mr., ~~Ltd.~~Yaojun Under his leadership, the Company successfully developed unique production techniques for the production of glucose and medicinal coating products, and has won Technology Innovation awards issued by the Chang Le County, Weifang City and the Shandong provincial government officesLiu. The ~~medicinal~~directors ~~coating~~who ~~material~~serve ~~technology~~on ~~that Mr. Liu jointly developed with~~ the ~~Shandong~~compensation ~~University~~committee ~~has~~are ~~been~~"independent" ~~certified~~directors bybased on the ~~Technology~~definition ~~Development~~of ~~Bureau~~independence ofin the ~~Shandong~~listing ~~Province~~standards ~~to be~~ of ~~international standard. Over~~ the ~~years,~~National ~~Mr.~~Association ~~Liu~~of ~~has~~Securities ~~been endorsed by the Weifang City Government office as a Leading Technology Innovator and a Distinguished Pharmaceutical Production Director~~Dealers. HeOur ~~also~~board ~~is the deputy to the People’s Conference~~ of ~~both Weifang City and Changle County. Mr. Liu~~ directors has ~~not~~adopted ~~been~~a ~~involved~~written incompensation ~~legal~~committee ~~proceeding for the past ten years~~charter.

Yongqiang Wang, 42, became Chief Financial Officer of the Company on December 31, 2010. Mr. Wang graduated with an Associate’s degree from the Shandong Economic and Management Institute. Mr. Wang joined Weifang Shengtai in April 2006 as Assistant to the Chief Executive Office with major responsibilities in supervising the Finance Department. He assumed the position of Manager of the Finance Department of Weifang Shengtai in February 2007. Before he joined Weifang Shengtai, Mr. Wang was Finance Manager at Shandong Lehua Group Co., Ltd from January 1996 to April 2006, and Finance Manager at Shandong Hongxiang Food General Factory from January 1994 to December 1995. Mr. Wang has not been involved in legal proceeding for the past ten years.39

39Nominating Committee

~~Winfred~~The ~~Lee,~~purpose ~~50,~~of ~~has~~the ~~been~~nominating committee aof ~~Contract~~the ~~Administrator~~board ~~with~~of ~~Tenet~~directors ~~Healthsystems~~is ~~for~~to ~~South~~assist ~~Bay~~the ~~Medical~~board ~~Center,~~of ~~North~~directors ~~Hollywood~~in ~~Medical~~identifying ~~Center,~~and ~~Midway~~recruiting ~~Hospital,~~qualified ~~Century~~individuals ~~City~~to become ~~Hospital,~~board members and ~~Brotman~~select ~~Medical~~director ~~Center~~nominees ~~from~~to ~~1997.~~be ~~Mr.~~presented ~~Lee~~for ~~graduated~~board ~~with~~and/or astockholder ~~Bachelor~~approval. ofThe ~~Science~~nominating incommittee will ~~Business~~be ~~Management~~involved ~~from~~evaluating ~~Brigham~~the ~~Young~~desirability ~~University,~~of ~~Provo,~~and ~~Utah~~recommending into ~~1984.~~the Heboard ~~then~~any ~~graduated~~changes ~~with~~in athe ~~Doctor~~size ofand ~~Medicine~~composition ~~from~~of the ~~Medical~~board, evaluation ~~College~~ of ~~Wisconsin,~~and ~~Milwaukee,~~successor ~~Wisconsin,~~planning infor ~~1988~~the chief executive officer and aother ~~Doctor~~executive officers. The qualifications of any ~~Jurisprudence~~candidate ~~from~~for ~~the~~director J.will ~~Reuben~~be ~~Clark~~subject ~~Law~~to ~~School~~the atsame ~~Brigham~~extensive ~~Young~~general ~~University,~~and ~~Provo,~~specific ~~Utah,~~criteria inapplicable ~~1992.~~to Mrdirector candidates generally. ~~Lee~~Our Nominating Committee Chairman is aTao ~~member~~Jin. ofThe ~~the~~directors ~~California~~who ~~Bar~~serve ~~and~~on the ~~Phi~~nominating ~~Delta~~committee ~~Phi~~are ~~Legal~~"independent" directors ~~Society. Mr.~~based ~~Lee~~on ~~has~~the ~~not~~definition ~~been~~of ~~involved~~independence in ~~legal~~the ~~proceeding~~listing ~~for~~standards of the ~~past~~National ~~ten~~Association ~~years~~of Securities Dealers. The nominating committee has a written charter.

~~Yaojun~~Audit ~~Liu,~~Committee ~~35,~~Financial isExperts currently a partner at Global Law Office, a law firm based in Beijing, the PRC since 2006. Prior to that, between 2003 and 2006, Mr. Liu served as an attorney at Jingtian & Gongcheng Law Firm, a law firm based in Beijing, the PRC. Before practicing law, Mr. Liu was a senior project manager at the Investment Banking Headquarter of Haitong Securities Co., Ltd. Mr. Liu graduated with a Master of Economic Law from Renmin University, Beijing, China in 2001. He then graduated with a LL.M. of Commercial Law from University of Sheffield, UK in 2003. Mr. Liu is a Qualified Practice Lawyer and also a Certified Public Accountant in China. Since June 2008, Mr. Liu has been the Board member of Yuhe International, Inc. Mr. Liu has not been involved in legal proceeding for the past ten years.

~~Fei~~The ~~He,~~Board ~~43,~~has isdetermined that ~~a Strategy and M&A director of DSM (China) Limited responsible for strategy and mergers and acquisitions since 2007.~~ Mr. HeLawrence ~~worked~~Lee ~~for A.T. Kearney in China and led the strategic consultation for several merger and acquisition projects in the hi-tech industries in China. Before going back to China, Mr. He was a director~~ of the ~~WOLVERINE~~Audit ~~Venture~~Committee ~~Capital~~qualifies ~~Fund~~as inan ~~the~~“audit ~~United~~committee ~~States~~financial ~~between~~expert” ~~2002~~as ~~and~~defined ~~2005.~~by ~~Prior to that, Mr. He worked for Pfizer in~~ the ~~United States since 1998 in several positions as post-doctoral researcher, senior scientist~~ SEC and business development manager. Mr. He graduated with a Bachelor of Science from Beijing University, Beijing, China in 1990. He then graduated with a Ph. D. of Chemistry from University of California, Davis in 1998. Mr. He also ~~obtained~~meets athe ~~Master~~additional ofcriteria ~~Business~~for ~~Administration~~independence ~~from University~~ of ~~Michigan~~audit ~~Ross~~committee ~~School~~members ofset ~~Business~~forth in ~~2004.~~Rule ~~Mr.~~10A-3(b)(l) Heunder ~~has not been involved in legal proceeding for~~ the ~~past ten years~~Exchange Act.

40Code of Ethics

HuWe ~~Ye,~~have ~~49,~~adopted ~~served~~a code ~~as the CFO~~ of ~~China~~ethics ~~Shen Zhou Mining & Resources, Inc. from June 2008~~ to ~~March~~apply ~~2009 and the CFO of Si Mei Te Food Ltd. from May 2009~~ to ~~September~~our ~~2009. He~~principal ~~worked~~executive inofficer, ~~China~~principal asfinancial ~~the CFO of Odysys International Ltd. from December 2003 to March 2006~~officer, ~~CFO~~principal ofaccounting ~~BOCO~~officer ~~Enterprises Ltd. from March 2006 to March 2007~~ and ~~from December 2007 to May 2008~~controller, or ~~and~~persons ~~CFO~~performing ofsimilar ~~EMarket Holding Group Corp~~functions. ~~from~~The ~~March~~Code 2007 to November 2007. From January 2002 to September 2003 Mr. Ye was a consultant at Securitization Finance, CIT Group, Inc. in Canada. From June 1999 to March 2001 Mr. Ye was an Assistant Vice-President in Finance, Corporate and Institutional Client Group of ~~Merrill~~Ethics ~~Lynch~~is ~~Canada.~~currently ~~From~~available ~~January~~on ~~1990~~our towebsite ~~June 1999, Mr. Ye worked as a financial analyst of Finance and Tax, and a Financial Control Administrator~~ at ~~Mackenzie Financial Corporation in Canada~~ http://www. Mrshengtaipharmaceutical. ~~Ye has been serving as Non-Executive Board Member of Beijing Heidrick & Struggles International Management Consulting Co~~com. ~~Ltd. since July 2006; Non-Executive Board Member of CIC Mining Resources Ltd. since February 2009. Mr. Ye has not been involved in legal proceeding for the past ten years.~~

~~All~~Board ofLeadership ~~our~~Structure ~~directors hold offices until the next annual meeting of the shareholders of the Company,~~ and ~~until~~Role in ~~their~~Risk ~~successors have been qualified after being elected or appointed. Officers serve at the discretion of the board of directors.~~Oversight

~~There~~The ~~are~~Board noof ~~family~~director consists ~~relationships~~of ~~among~~five ~~our~~members: ~~directors~~two or executive ~~officers. There is no arrangement or understanding between or among our officers and~~ directors ~~pursuant to which any director or officer was or is to be selected as a director or officer,~~ and ~~there~~three isindependent nodirectors. ~~arrangement,~~The ~~plan~~board’s orrole ~~understanding~~in asthe torisk ~~whether~~oversight of ~~non-management shareholders will exercise their voting rights to continue to elect~~ the ~~current~~Company ~~Board~~includes, ofamong ~~Directors.~~other things:

~~Our~~• ~~directors~~appointing, retaining and ~~executive~~overseeing ~~officers~~the ~~have~~work ~~not~~of the independent auditors, ~~during~~including resolving disagreements between the ~~past~~management ~~ten~~and ~~years:~~the independent auditors relating to financial reporting;

·• ~~had~~approving ~~any~~all ~~bankruptcy~~auditing ~~petition~~and ~~foiled~~non-auditing byservices orpermitted ~~against~~to ~~any~~be ~~business~~performed ofby ~~which was a general partner or executive officer, either at~~ the ~~time~~independent ~~of the bankruptcy or within two years prior to that time,~~auditors;

·• ~~been~~reviewing ~~convicted~~annually inthe aindependence ~~criminal proceeding~~ and isquality ~~not~~control ~~subject~~procedures toof athe ~~pending~~independent ~~criminal proceeding,~~auditors;

·• ~~been~~reviewing ~~subject~~and toapproving ~~any~~all ~~order,~~proposed ~~judgment~~related orparty decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, futures, commodities or banking activitiestransactions; or

·• ~~been~~discussing ~~found by a court of competent jurisdiction, in a civil action,~~ the ~~Securities~~annual ~~Exchange~~audited ~~Commission~~financial orstatements ~~the~~with ~~Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and~~ the ~~judgment has not been reversed, suspended or vacated.~~management;

·• ~~been~~meeting ~~the~~separately ~~subject~~with tothe ~~,or~~independent aauditors ~~party~~ to ~~,any~~discuss ~~sanction~~critical oraccounting ~~order~~policies,~~not~~ ~~subsequently~~management ~~reversed~~letters,~~suspended~~ orrecommendations ~~vacated,if~~on ~~any~~internal ~~self-regulatory organization~~controls,~~any~~ ~~registered~~the ~~entity,or~~auditor’s ~~any~~engagement ~~equivalent~~letter ~~exchange,association,entity~~and orindependence ~~organization~~letter ~~that~~and ~~has~~other ~~disciplinary~~material ~~authority~~written ~~over~~communications ~~its~~between ~~members~~the orindependent ~~persons~~auditors ~~associated~~and ~~with~~the ~~a member~~management.

~~Director~~Section ~~Qualifications~~16(a) Beneficial Ownership Reporting Compliance

~~Directors~~Section ~~are~~16(a) ~~responsible~~of ~~for overseeing~~ the Securities ~~Company’s~~Exchange ~~business~~Act ~~consistent~~of ~~with~~1934, ~~their~~as ~~fiduciary~~amended, ~~duty to stockholders. This significant responsibility~~ requires ~~highly-skilled~~our ~~individuals~~officers ~~with~~and ~~various~~directors ~~qualities, attributes~~ and ~~professional~~persons ~~experience.~~who ~~The~~own ~~board~~more ~~believes~~than ~~that~~10% ~~there~~of ~~are~~a ~~general~~registered class ~~requirements for service on the Company’s board~~ of ~~directors~~our ~~that~~equity ~~are~~securities ~~applicable~~ to ~~all~~file ~~directors~~initial ~~and~~reports ~~that~~of ~~there~~ownership ~~are other skills~~ and ~~experience~~reports ~~that~~of ~~should~~changes bein ~~represented~~ownership onwith the ~~board~~Securities ~~as a whole but not necessarily by each director. The board~~ and Exchange ~~the~~Commission ~~Nominating Committee consider~~ (the ~~qualifications~~"SEC”). ofSuch ~~director~~persons ~~and~~are ~~director~~required ~~candidates~~by ~~individually~~SEC ~~and~~regulation into ~~the~~furnish ~~broader~~us ~~context~~with copies of ~~the~~all ~~board’s~~Section 16(a) ~~overall~~forms ~~composition~~they ~~and the Company’s current and future needs~~file.

~~Qualifications~~Based ~~for~~solely ~~All~~on ~~Directors~~review of the copies of such forms received by us with respect to the fiscal year ended June 30, 2012, or written representations from certain reporting persons, we believe that our directors, officers and persons who own more than ten percent of a registered class of our equity securities have complied with all applicable Section 16(a) filing requirements.

In its assessment of each potential candidate, including those recommended by stockholders, the Nominating Committee considers the nominee’s judgment, integrity, experience, independence, understanding of the Company’s business or other related industries and such other factors the Nominating Committee determines are pertinent in light of the current needs of the board of directors. The Nominating Committee also takes into account the ability of a director to devote the time and effort necessary to fulfill his or her responsibilities to the Company.40

~~The~~Item ~~board of directors and the Nominating Committee require that each director be a recognized person of high integrity with a proven record of success in his or her field~~11. ~~Each~~Executive director must demonstrate innovative thinking, familiarity with and respect for corporate governance requirements and practices, an appreciation of multiple cultures and a commitment to sustainability and to dealing responsibly with social issues. In addition to the qualifications required of all directors, the board of directors conducts interviews of potential director candidates to assess intangible qualities including the individual’s ability to ask difficult questions and, simultaneously, to work collegially.Compensation

~~Qualifications,~~Compensation ~~Attributes,~~Discussion ~~Skills~~ and ~~Experience to be Represented on the Board as a Whole~~Analysis

~~The~~We ~~board~~endeavor ofto ~~directors~~provide our ~~has~~“named ~~identified~~executive ~~particular qualifications~~officers,” ~~attributes, skills and experience that are important to be represented on the board of directors~~ as adefined ~~whole,~~ in ~~light~~Item of402 ~~the Company’s current needs and its business priorities. The board~~ of ~~directors~~Regulation ~~believes~~S-K, ~~that it should include some directors~~ with a ~~high~~competitive ~~level~~base ofsalary ~~financial~~that ~~literacy and some directors who possess relevant business experience as a Chief Executive Officer or a President or like position. Pharmaceutical production~~ is ~~the~~in- line ~~core~~with ~~focus~~their ofroles ~~our business~~ and ~~the~~responsibilities ~~Company~~when ~~seeks~~compared to ~~develop~~peer ~~and~~companies ~~create~~of ~~innovative~~comparable ~~and~~size ~~effective pharmaceutical products. Therefore, the board believes that pharmaceutical production experience should be represented on the board. The Company is involved~~ in the ~~production~~same of pharmaceuticals in the PRC. Therefore the Company’s business also requires compliance with a variety of regulatory requirements and relationships with various governmental entities. Therefore, the board believes that governmental, political or ~~diplomatic~~similar ~~expertise should be represented on the Board~~locality.

~~Set~~It ~~forth~~is ~~below~~not ~~are~~uncommon afor PRC ~~chart~~private ~~and~~corporations ain ~~narrative~~that ~~disclosure~~locality ~~that~~to ~~summarize~~have ~~the~~base ~~specific~~salaries ~~qualifications,~~as ~~attributes,~~the ~~skills~~sole and ~~experiences~~only ~~described~~form ~~above~~of compensation. AnThe ~~“X”~~base insalary ~~the~~level is ~~chart~~established ~~below~~and ~~indicates~~reviewed ~~that~~based on the ~~item~~level isof aresponsibilities, ~~specific~~the ~~reason~~experience ~~that~~and tenure of the ~~director~~individual ~~has~~and ~~been~~the ~~nominated~~current and topotential ~~serve~~contributions onof the ~~Company’s Board~~individual. The ~~lack~~base ofsalary anis ~~“X”~~compared ~~for~~to athe ~~particular~~list ~~qualification~~of ~~does~~similar ~~not~~positions ~~mean~~within ~~that~~comparable ~~the~~peer companies ~~director~~and ~~does~~with ~~not~~consideration ~~possess~~of ~~that~~the ~~qualification~~executive’s orrelative ~~skill.~~experience ~~Rather,~~in anhis ~~“X”~~or ~~indicates~~her aposition. ~~specific~~Base ~~area~~salaries ofare ~~focus~~reviewed periodically orand ~~expertise~~at ofthe atime ~~director~~of onpromotion ~~which~~or ~~the~~other ~~board~~changes ~~currently~~in ~~relies~~responsibilities.

~~Qingtai~~We ~~Liu~~plan ~~Yongqiang~~to ~~Wang~~implement a ~~Yaojun~~more ~~Liu~~comprehensive ~~Winfred~~compensation ~~Lee~~program, ~~High~~which ~~level~~takes into account other elements of ~~financial~~compensation, ~~literacy~~including Xwithout Xlimitation, short Xand ~~Extensive~~long ~~knowledge~~term ofcompensation, ~~the~~cash ~~Company’s~~and ~~business~~non-cash, Xand Xother ~~Pharmaceutical~~equity-based ~~related~~compensation ~~experience~~such Xas Xstock Xoptions. ~~Relevant~~This ~~Chief~~compensation program ~~Executive/President~~shall orbe ~~like~~comparative ~~experience~~to Xour Xpeers ~~Governmental,~~in ~~political~~the orindustry ~~diplomatic~~and ~~expertise~~aimed Xto retain and attract talented individuals.

~~Audit~~We have formed a Compensation Committee of the Board of Directors comprised solely of independent directors to oversee the compensation of our named executive officers. The members of our Compensation Committee are Yaojun Liu (Chairman), Tao Jin and Lawrence Lee. The Board has determined that all members of the compensation committee are independent directors under the rules of the Nasdaq Stock Market or NYSE Amex, as applicable. The compensation committee administers the Company’s benefit plans, reviews and administers all compensation arrangements for executive officers, and establishes and reviews general policies relating to the compensation and benefits of our officers and employees. The compensation committee operates under a written charter that is made available on the website mentioned above.

~~The~~Summary ~~audit~~Compensation committee is responsible for (i) recommending independent accountants to the Board, (ii) reviewing our financial statements with management and the independent accountants, (iii) making an appraisal of our audit effort and the effectiveness of our financial policies and practices and (iv) consulting with management and our independent accountants with regard to the adequacy of internal accounting controls. Our audit committee Chairman is Yaojun Liu. The directors who serve on the audit committee are "independent" directors based on the definition of independence in the listing standards of the National Association of Securities Dealers. Our Board of Directors has adopted a written charter for the Audit Committee.Table

~~Our~~The following ~~board~~table ofsets ~~directors~~forth ~~has~~information ~~determined~~with ~~that~~respect itto ~~has~~the ancompensation ~~"audit~~of ~~committee~~each ~~financial~~of ~~expert"~~the asnamed ~~defined~~executive byofficers ~~Item~~for ~~401(h)~~services ofprovided in ~~Regulation~~all ~~S-K~~capacities asto the ~~promulgated~~Company byin the ~~Securities~~fiscal ~~and~~years ~~Exchange~~ended ~~Commission.~~June ~~Our~~30, ~~audit~~2012 ~~committee~~and ~~financial~~2011 ~~expert~~in istheir ~~Yaojun~~capacity ~~Liu.~~as ~~The~~such ~~directors~~officers. ~~who~~No ~~serve~~other executive onofficer ~~the~~or ~~audit~~former ~~committee~~executive ~~are~~officer ~~"independent"~~received ~~directors~~more ~~based~~than on$100,000 ~~the~~in ~~definition~~compensation ~~of independence~~ in the ~~listing~~fiscal ~~standards~~years ofreported ~~the New York Stock Exchange~~below.

Name and Principal Position	Fiscal Year	Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-equity Incentive Plan Compensation ($)		Nonqualified deferred compensation earnings ($)		All Other Compensation ($)		Total ($)

Qintai Liu	2012		19,004		-		-		-		-		-		-		19,004
Chairman & Chief
Executive	2011		18,564		-		-		-		-		-		-		18,564
Officer

Hu Ye	2012		-		-		-		-		-		-		-		-
Chief
Financial	2011		26,976		-		-		35,206		-				-		72,182
Officer (1)

Yongqiang Wang	2012		14,253		-		-		-		-		-		-		14,253
Chief
Financial	2011		13,923		-		-		-		-		-		-		13,923
Officer (2)

Compensation Committee

(1)	Mr. Hu Ye resigned as our Chief Financial Officer on December 1, 2010.
(2)	Mr. Yongqiang Wang was appointed as Chief financial Officer on December 1, 2010.

The compensation committee of the board of directors is responsible for (i) determining the general compensation policies, (ii) establishing compensation plans, (iii) determining senior management compensation and (iv) administering our stock option plans. Our compensation committee Chairman is Fei He. The directors who serve on the compensation committee are "independent" directors based on the definition of independence in the listing standards of the National Association of Securities Dealers. Our board of directors has adopted a written compensation committee charter. Mr. He resigned as our director on August 20, 2011. 41

~~Nominating~~Employment ~~Committee~~Agreements

~~The~~We ~~purpose~~have ofentered ~~the~~into employment ~~nominating~~agreements ~~committee~~with ofQingtai, the board of directors is to assist the board of directors in identifying and recruiting qualified individuals to become board members and select director nominees to be presented for board and/or stockholder approval. The nominating committee will be involved evaluating the desirability of and recommending to the board any changes in the size and composition of the boardLiu, ~~evaluation~~our ~~of and successor planning for the~~ chief executive officer, and ~~other~~with ~~executive~~Yongqiang ~~officers. The~~Wang ~~qualifications~~, ofour ~~any~~Chief ~~candidate~~Financial ~~for director will be subject to the same extensive general and specific criteria applicable to director candidates generally~~Officer. Our Nominating Committee Chairman is Winfred Lee. The directors who serve on the nominating committee are "independent" directors based on the definition of independence in the listing standards of the National Association of Securities Dealers. The nominating committee has a written charter.

~~Board~~In ~~Leadership~~the ~~Structure~~fiscal year ended June 30, 2011, the base salaries of Messrs. Liu and ~~Role~~Wang were decreased to provide additional cash flow for the Company so that it could lock in ~~Risk~~lower ~~Oversight~~prices of raw materials due to inflation in China. Messrs. Liu and Wang agreed to reduce their salaries to $18,564 and $13,923, respectively, for the fiscal year ended June 30, 2011 and executed addendums to their Employment Agreements to this effect (“2011 Addendums”).

~~The~~In ~~Board~~the offiscal ~~director~~year ~~consists~~ended June of30, ~~four~~2012, ~~members:~~the ~~two~~base ~~executive~~salaries ~~directors~~of Messrs. Liu and ~~two~~Wang ~~independent~~were ~~directors.~~decreased ~~The~~to ~~board’s~~provide ~~role~~additional incash flow for the ~~risk~~Company ~~oversight~~so that it could lock in lower prices of raw materials due to inflation in China. Messrs. Liu and Wang agreed to reduce their salaries to $19,004 and $14,253, respectively, for the ~~Company~~fiscal ~~includes~~year ended June 30, ~~among~~2012 ~~other~~and ~~things:~~executed addendums to their Employment Agreements to this effect (“2012 Addendums”).

•In ~~appointing~~the Ye Employment Agreement between the Company and Mr. Hu Ye, ~~retaining~~the Company’s former Chief Financial Officer, the Company granted Mr. Hu Ye an option to purchase 150,000 shares of common stock of the Company. The shares vest over 3 years starting March 1, 2010 and ~~overseeing~~terminate on the ~~work~~third anniversary of the ~~independent~~date ~~auditors~~of issuance of this option. The Company valued the shares at $5.20 per share, ~~including~~which ~~resolving~~represents 130 ~~disagreements~~% ~~between~~of the ~~management~~fair market value being calculated in the private placement price on May 15, 2007. However, the Ye Employment Agreement was terminated in December 2010, and as a result, the ~~independent~~Ye ~~auditors~~Options ~~relating~~were toforfeited. ~~financial~~The ~~reporting;~~fair values of Ye Options were estimated at the date of grant with the following assumptions:

• approving all auditing and non-auditing services permitted to be performed by the independent auditors;

Weighted average risk-free interest rate		2.79	%

Expected term		3 years

Expected volatility		133	%

Expected dividend yield		0	%

Weighted average grant-date fair value per option	$	3.00

~~• reviewing annually the independence and quality control procedures of the independent auditors;~~42

•Outstanding ~~reviewing~~Equity ~~and~~Awards ~~approving~~at ~~all~~2012 Fiscal ~~proposed~~Year ~~related party transactions;~~End

•The ~~discussing~~following table provides information on the ~~annual~~holdings ~~audited~~of ~~financial~~stock ~~statements~~options ~~with~~of the ~~management;~~named executive officers as of June 30, 2012. This table includes unexercised and unvested options awards. Each outstanding award is shown separately for each named officer.

• meeting separately with the independent auditors to discuss critical accounting policies, management letters, recommendations on internal controls, the auditor’s engagement letter and independence letter and other material written communications between the independent auditors and the management.

Name	Option awards									Stock awards
	Number of securities underlying unexercised options (#) exercisable		Number of securities underlying unexercised options (#) unexercisable		Equity incentive plan awards: Number of securities underlying unexercised unearned options (#)		Option exercise price ($)		Option expiration date	Number of shares or units of stock that have not vested (#)		Market value of shares of units of stock that have not vested ($)		Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#)		Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($)
Qintai Liu (1)		100,000		-		100,000		6.60	January 8, 2018		-		-		-		-
Yongqiang Wang (2)		10,000		-		10,000		6.60	January 8, 2018		-		-		-		-

~~Section~~2007 ~~16(A)~~Stock ~~Beneficial~~Incentive ~~Ownership Reporting Compliance~~Plan

~~Section~~On ~~16(a)~~January of4, ~~the~~2008, ~~Securities~~our ~~Exchange~~board ~~Act~~ of ~~1934~~directors adopted the 2007 Plan, aspursuant ~~amended~~to which 1,000,000 ~~requires~~shares of our ~~officers~~common ~~and~~stock ~~directors~~are ~~and~~reserved ~~persons~~for ~~who~~issuance ~~own~~as ~~more~~awards ~~than~~to ~~10%~~employees, consultants ofand anonemployee ~~registered~~directors. ~~class~~The purposes of ~~our~~the ~~equity~~2007 ~~securities~~Plan is to ~~file~~attract, ~~initial~~retain ~~reports~~and ofreward ~~ownership~~such individuals and ~~reports~~strengthen the mutuality of ~~changes~~interests inbetween ~~ownership~~such ~~with~~individuals and the ~~Securities~~Company’s ~~and~~stockholders. ~~Exchange~~Under ~~Commission,~~ the ~~"SEC.”~~2007 ~~Such~~Plan, ~~persons~~we are ~~required~~authorized to byissue ~~SEC~~options, ~~regulation~~stock toappreciation ~~furnish~~rights, usrestricted ~~with~~stock ~~copies~~and ofother ~~all~~stock-based ~~Section~~awards. ~~16(a)~~The ~~forms~~2007 ~~they~~Plan ~~file~~will be administrated by our compensation committee.

42Compensation of Directors.

~~Based~~Our ~~solely~~current onnon-executive directors ~~review~~are ofcompensated ~~the~~for ~~copies~~all ofservices ~~such~~they ~~forms~~perform ~~received~~as bydirectors, usincluding ~~with~~attendance ~~respect~~at toBoard ~~fiscal~~of ~~year~~Directors ~~2011,~~meetings orand ~~written~~service as ~~representations~~members ~~from~~of ~~certain~~committees ~~reporting~~of ~~persons,~~the weBoard ~~believe~~of ~~that~~Directors ~~our~~to ~~directors,~~which ~~officers~~they ~~and~~are ~~persons~~appointed. ~~who~~Executive ~~own~~officers ~~more~~are ~~than~~not ~~ten~~compensated ~~percent~~for ofservices they aperform ~~registered~~as ~~class~~directors of ~~our~~the ~~equity securities have complied with all applicable Section 16(a) filing requirements~~Company.

~~Item~~The ~~11. Executive~~details ~~Compensation~~of such compensation are:

~~Compensation~~· ~~Discussion~~Annual ~~and~~compensation ~~Analysis~~of $22,500 to $30,000; and

We· ~~endeavor~~we tomay ~~provide~~also ~~our~~grant ~~“named~~the non-executive ~~officers,”~~directors ascertain ~~defined~~options into ~~Item~~purchase ~~402~~our ~~of Regulation S-K~~shares, ~~with~~the aamount ~~competitive base salary that is in- line with their roles~~ and ~~responsibilities~~terms ~~when~~of ~~compared~~which toshall ~~peer~~be ~~companies~~determined ofby ~~comparable size in~~ the ~~same~~Board orof ~~similar locality~~Directors.

~~It is not uncommon for PRC private corporations in that locality to have base salaries as the sole and only form of compensation.~~ The ~~base~~non-executive ~~salary~~directors are ~~level~~also isreimbursed ~~established~~for ~~and~~all ~~reviewed based on the level~~ of ~~responsibilities,~~their ~~the experience and tenure~~ out-of-pocket ~~the~~expenses ~~individual~~in ~~and~~traveling ~~the~~to ~~current~~ and ~~potential~~attending ~~contributions~~meetings of the ~~individual.~~Board ~~The base salary is compared to the list~~ of ~~similar~~Directors ~~positions within comparable peer companies~~ and committees ~~with~~on ~~consideration~~which ofthey ~~the~~would ~~executive’s relative experience in his or her position~~serve. ~~Base salaries are reviewed periodically and at the time of promotion or other changes in responsibilities.~~

We plan to implement a more comprehensive compensation program, which takes into account other elements of compensation, including without limitation, short and long term compensation, cash and non-cash, and other equity-based compensation such as stock options. This compensation program shall be comparative to our peers in the industry and aimed to retain and attract talented individuals.43

WeThe ~~have~~following ~~formed~~table sets forth a ~~Compensation~~summary ~~Committee~~ of ~~the~~compensation ~~Board~~paid ~~of Directors comprised solely of independent directors~~ to ~~oversee the compensation of~~ our ~~named~~directors ~~executive~~who ~~officers. The members of our Compensation Committee~~ are ~~Fei~~not Helisted ~~(Chairman),~~in ~~Yaojun Liu and Winfred Lee. The Board has determined that all members of~~ the ~~compensation~~Summary ~~committee~~Compensation ~~are~~Table during ~~independent directors under~~ the fiscal ~~rules~~year ofended ~~the~~June ~~Nasdaq Stock Market or NYSE Amex~~30, as2012 ~~applicable. The compensation committee administers the Company’s benefit plans, reviews~~ and ~~administers all compensation arrangements for executive officers, and establishes and reviews general policies relating to the compensation and benefits of our officers and employees~~2011. ~~The compensation committee operates under a written charter that is made available on the website mentioned above.~~

Summary Compensation Table

Name	Year		Fees earned or paid in cash ($)		Stock awards ($)		Option awards ($)		Non-equity incentive plan compensation ($)		Nonqualified deferred compensation earnings ($)		All other compensation ($)		Total ($)
Tao Jin		2012		30,000		—		—		—		—		—		30,000
		2011		—		—		—		-		—		—		—
Lawrence Lee		2012		30,000		—		—		—		—		—		30,000
		2011		—		—		—		—		—		—		—
Yaojun Liu (1)		2012		30,000		—		27,602		—		—		—		57,602
		2011		30,000		—		27,602		—		—		—		57,602
Fei He (2)		2012		5,000		—				—		—		—		5,000
		2011		30,000		—		27,602		—		—		—		57,602
Winfred Lee (3)		2012		17,500		—		—		—		—		—		17,500
		2011		22,500		—		9,625		—		—		—		32,125

~~The~~(1) following table sets forth information with respect to the compensation of each of the named executive officers for services provided in all capacities to the Company in the fiscal years ended June 30, 2011 and 2010 in their capacity as such officersMr. No ~~other~~Liu ~~executive~~was ~~officer~~granted ~~or former executive officer received more than $100~~40,000 inshares ~~compensation~~of instock ~~the~~options ~~fiscal~~to ~~years~~purchase ~~reported~~our ~~below~~shares.

43(2) Mr. He was granted 40,000 shares of stock options to purchase our shares. Mr. He resigned from his position as director on August 20, 2011 and all of his options were forfeited.

Name and Principal Position	Fiscal Year	Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-equity Incentive Plan Compensation ($)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Qintai Liu	2011		18,564		—		—		96,253		—		—		—		114,817
Chairman & Chief
Executive	2010		107,676		—		—		—		—		—		—		120,000
Officer
Hu Ye
Chief	2011		36,976		—		—		35,206		—		—		—		72,182
Financial
Officer (1)	2010		48,831		—		—		46,303		—		—		—		95,134
Yongqiang Wang
Chief	2011		13,923		—		—		9,625		—		—		—		23,548
Financial
Officer (2)	2010		68,521		—		—		—		—		—		—		68,521

(3)

Mr. Winfred Lee was not elected as director on the annual shareholder meeting held on February 13, 2012. Mr. Lee's option to purchase 10,000 shares of the Company’s common stock was forfeited.

~~(1)~~Item Mr12. HuSecurity YeOwnership ~~resigned~~of asCertain ~~our~~Beneficial ~~Chief~~Owners ~~Financial~~and ~~Officer~~Management onand ~~December~~Related 1,Stockholder ~~2010.~~Matters

The following table sets forth certain information with respect to the beneficial ownership of our voting securities by (2i) ~~Mr.~~any ~~Yongqiang~~person ~~Wang~~or ~~was~~group ~~appointed~~owning more than 5% of any class of voting securities, (ii) each director, (iii) our chief executive officer and the Company’s top three most highly compensated officers and (iv) all executive officers and directors as ~~Chief~~a ~~Financial~~group ~~Officer~~as onof ~~December~~September 127, ~~2010~~2012. Except as indicated in the footnotes to this table, each beneficial owner named in the table below has sole voting and sole investment power with respect to all shares beneficially owned and each person’s address is c/o Shengtai Pharmaceutical, Inc., Hi-Tech Industrial Park of Changle County, Shandong Province, PRC 262400.

In the Chief Financial Officer Employment Agreement entered into on March 1, 2010 between the Company and Mr. Hu Ye, the Chief Financial Officer, the Company granted Mr. Hu Ye an option to purchase 150,000 shares of common stock of the Company. The shares vest over 3 years starting March 1, 2010 and terminate on the third anniversary of the date of issuance of this option. The Company valued the shares at $5.20 per share, which represents 130 % of the fair market value being calculated in the private placement price on May 15, 2007. The fair values of stock options granted to the Chief Financial Officer were estimated at the date of grant with the following assumptions:

As of September 27, 2012, we had 9,584,912 shares outstanding.	Common Stock (1)
Name and Address of Beneficial Owner	Shares Beneficially Owned		Percent of Class
Officers and Directors
Qingtai Liu (1)		3,789,013		39.12	%
Yongqiang Wang (2)		10,000		0.10	%
Tao Jin		-		-
Lawrence Lee		-		-
Yaojun Liu (3)		26,667		0.28	%
Officers and Directors as a Group (5 persons)		3,825,680		39.35	%
5% Owners
Pope Investments LLC		1,325,000		13.82	%

Weighted average risk-free interest rate		2.79	%
Expected term	3 years
Expected volatility		133	%
Expected dividend yield		0	%
Weighted average grant-date fair value per option	$	3.00

(1) Includes (i) 3,494,863 shares of our common stock directly owned by Mr. Liu, (ii) 194,150 shares of our common stock owned by Mr. Liu’s spouse, which are deemed to be beneficially owned by Mr. Liu, and (iii) options to 100,000 shares of our common stock with an exercise price of $6.60 per share, which are exercisable within 60 days.

~~Grants~~(2) Includes options to purchase10,000 shares of ~~Plan-Based~~our ~~Awards~~common instock ~~Fiscal~~with ~~2008~~an exercise price of $6.60 per share, which are exercisable within 60 days.

~~On January 4, 2008, the Company adopted “Shengtai Pharmaceutical, Inc. 2007 Stock Incentive Plan,” the “Stock Incentive Plan.”~~44

In(3) ~~2008,~~Includes ~~the~~options ~~Company~~to ~~granted~~purchase ~~250~~26,~~000~~667 shares ~~stock~~of ~~options~~our ~~and~~common ~~80,000 non-qualified~~ stock ~~options~~with ~~pursuant to the Stock Incentive Plan. All options have~~ an exercise price of $6.60, ~~which~~per ~~is the closing price on the date of grant~~share, ~~and~~which ~~expire~~are ~~five~~exercisable ~~years~~within ~~after~~60 ~~the date of grant~~days. ~~All options vest over a period of three years from the date of grant.~~

AsWeifang ofShengtai ~~June~~entered into 30a joint venture partnership with Weifang City Investment Company and Changle Century Sun Paper Industry Co., ~~2011~~Ltd on September 16, ~~there~~2003 ~~are~~and ~~255~~formed Changle Shengshi Redian Co.,~~000~~ ~~shares~~Ltd, “Changle Shengshi.” Changle Shengshi was incorporated at Weifang City, Shandong Province, People’s Republic of ~~options~~China. ~~outstanding~~Changle Shengshi’s principal activity is to produce and sell electricity and heat.

44Weifang Shengtai owned a 30% interest in Changle Shengshi as of June 30, 2004. On April 12, 2005, its percentage ownership in Changle Shengshi was diluted from 30% to 20% due to an additional investment into Changle Shengshi from another party. In order to meet increasing demands for electricity and steam by Weifang Shengtai and Changle Paper, Weifang Shengtai invested $1,467,000 in Changle Shengshi in March 2010 and Changle Paper invested a corresponding amount such that Weifang Shengtai and Changle Sunshine Paper Ltd. continue to be 20% and 80% owners, respectively, of Changle Shengshi. In 2012, the Company increased its investment of approximately $1,268,000 to Changle Shengshi. Changle Paper increased investment proportionately. After the investment, the Company still owns 20% of Changle Shengshi. As of June 30, 2012, Weifang Shengtai invested approximately $5,567,861 towards its registered capital, which accounts for a 20% share of Changle Shengshi’s paid-in capital.

~~Outstanding~~As ~~Equity~~an ~~Awards~~investor atand ~~June~~shareholder of 30Changle Shengshi, ~~2011~~Weifang Shengtai enjoys a preferential discount of 70% off the market price of electricity supplied by the plant to Weifang Shengtai. The intercompany profits were eliminated on our financial statements.

Name	Option awards									Stock awards
	Number of securities underlying unexercised options (#) exercisable		Number of securities underlying unexercised options (#) unexercisable		Equity incentive plan awards: Number of securities underlying unexercised unearned options (#)		Option exercise price ($)		Option expiration date	Number of shares or units of stock that have not vested (#)		Market value of shares of units of stock that have not vested ($)		Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#)		Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($)
Qintai Liu		100,000		-		100,000		6.60	January 8, 2011		-		-		-		-
Yongqiang Wang		10,000		-		10,000		6.60	January 8, 2011		-		-		-		-

Weifang Shengtai had a total of $405,926, and $943,779 of accounts payable and accrued liabilities to Changle Shengshi at June 30, 2012, and 2011, respectively. The utilities expenses amounted to $15,918,448, and $15,573,614, for the years ending June 30, 2012, and 2011, respectively.

~~Option~~From ~~Exercises~~time to time, the Company borrows monies from Qingtai Liu, the Company’s CEO and ~~Stock~~President, ~~Vested~~for incash ~~Fiscal~~flow purposes of the Company. The loans do not require collateral and the principal is due upon demand. Before January 1, 2009, the interest rate was at 7.2% for the first six months, and then 10.8% thereafter until the full principal amounts are paid by the Company. After January 1, 2009, the interest rate was changed to 9.6% for the loan period. Employee loan from officer amounted to $37,027 and $36,285 as of June 30, 2012 and 2011, respectively. Interest expense related to this loan was $3,056 and $2,934 for the years ended June 30, 2012 and 2011, respectively.

~~There~~As ~~were~~of noJune ~~options~~30, ~~exercised~~2012, the Company advanced $8,029,394 to its purchasing department employees as purchase advances for corn purchases. This amount is guaranteed by the Company's CEO and nopresident ~~stock~~by ~~vested~~his inpersonal ~~2011~~properties.

~~Employment~~Item ~~Agreements~~14. Principal Accounting Fees and Services

WeAggregate ~~have~~fees ~~employment~~billed by ~~agreements~~our ~~with~~current ~~Qingtai~~principal ~~Liu~~accountants, ~~our~~Kabani ~~chief~~& ~~executive officer~~Company, Inc. and ~~with~~Chan ~~Yongqiang~~& ~~Wang~~Zhang LLP for audit services related to the most recent fiscal years, ~~our~~and ~~Chief~~for ~~Financial~~other ~~Officer.~~professional services were as follows:

Compensation of Directors.

	Fiscal 2012				Fiscal 2011
	Kabani & Company		Chan & Zhang LLP		Kabani & Company		Chan & Zhang LLP
Audit Fees (1)	$	114,500	$	-	$	115,025	$	-
Audit-Related Feeds	$	-	$	-	$	-	$	-
Tax Fees (2)	$	-	$	5,000	$	-	$	5,000
All Other Fees	$	-	$	-	$	-	$	-
Total	$	114,500	$	5,000	$	115,025	$	5,000

Our current non-executive directors are compensated for all services they perform as directors, including attendance at Board of Directors meetings and service as members of committees of the Board of Directors to which they are appointed. Executive officers are not compensated for services they perform as directors of the Company.45

~~The~~(1) ~~details~~Comprised the audit of ~~such~~the ~~compensation~~Company's ~~are:~~annual financial statements and reviews of the Company's quarterly financial statements, as well as consents related to and reviews of other documents filed with the Securities and Exchange Commission.

·(2) ~~Annual~~Comprised ~~compensation~~preparation of ~~$22,500~~all tofederal ~~$30,000;~~and state corporate income tax returns for the Company and its Subsidiaries.

·Under wethe ~~may~~Sarbanes-Oxley Act ~~also~~of ~~grant~~2002, ~~the~~all audit and non-~~executive~~audit ~~directors~~services ~~certain~~performed ~~options~~by our independent accountants must now be approved in advance by our Audit Committee to ~~purchase~~assure that such services do not impair our ~~shares,~~accountants' independence. Our Audit Committee’s Chairman is Mr. Lawrence Lee and the ~~amount~~other members are Mr. Yaojun Liu and ~~terms~~Mr. Tao Jin as of ~~which~~June ~~shall~~30, be2012. ~~determined~~Our byAudit ~~the~~Committee reviews and recommends to our Board of Directors for approval audit and permissible non-audit services performed by Kabani & Company as well as fees charged by them for such services.

~~The non-executive directors are also reimbursed for all of their out-of-pocket expenses in traveling to and attending meetings of the Board of Directors and committees on which they would serve.~~46

~~The~~PART ~~following table sets forth a summary of compensation paid to our directors who are not listed in the Summary Compensation Table during the fiscal year ended June 30, 2011~~IV

45Item 15. Exhibits, Financial Statement Schedules

Name	Fees earned or paid in cash ($)		Stock awards ($)		Option awards ($)		Non-equity incentive plan compensation ($)	Nonqualified deferred compensation earnings ($)		All other compensation ($)		Total ($)
Winfred Lee (1)		22,500		-		9,625			-		-		32,125
Yaojun Liu (2)		30,000				27,602							57,602
Fei He (3)		30,000				27,602							57,602

(a)	Financial Statements and Financial Statement Schedules

~~(1)~~Reference ~~Mr.~~is ~~Lee~~made ~~was~~to ~~granted~~the ~~10,000~~Index ~~shares of stock options~~ to ~~purchase~~Financial Statements ~~our~~on ~~shares~~Page F-1.

(2b) ~~Mr. Liu was granted 40,000 shares of stock options to purchase our shares.~~Exhibits

~~(3)~~See ~~Mr.~~Exhibit ~~He was granted 40,000 shares of stock options to purchase our shares. Mr. He resigned from his position as director on August 20, 2011 and all of his options were forfeited.~~Index

~~Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters~~47

The following table sets forth certain information with respect to the beneficial ownership of our voting securities by (i) any person or group owning more than 5% of any class of voting securities, (ii) each director, (iii) our chief executive officer and the Company’s top three most highly compensated officers and (iv) all executive officers and directors as a group as of October 6, 2011.SIGNATURES

Name and Address of Beneficial Owner	Title of Class		Amount and Nature of Beneficial Ownership (1)(2)		Percent of Class (3)
Execurtive Officer and Directors
Qingtai Liu (4)
Chief Executive officer and President
Hi-Tech Industrial Park of Changle County, Shandong Province, PRC 262400	Common Stock			3,689,013		38.49	%
Yongqiang Wang (4)
Director & Chief Financial Officer
Hi-Tech Industrial Park of Changle County, Shandong Province, PRC 262400		—		—		—
Hu Ye (4)(5)
Former Chief Financial Officer
Hi-Tech Industrial Park of Changle County, Shandong Province, PRC 262400	Common Stock			—		0.21	%
Winfred Lee
Director
Hi-Tech Industrial Park of Changle County, Shandong Province, PRC 262400		—		—		—
Yaojun Liu
Director
Hi-Tech Industrial Park of Changle County, Shandong Province, PRC 262400		—		—		—
Fei He (6)
Director
Hi-Tech Industrial Park of Changle County, Shandong Province, PRC 262400		—		—		—
Directors and Officers as a group (6 people)	Common Stock			3,709,013		38.70	%
5% Shareholder
Pope Investments LLC
5150 Poplar Avenue, Suite 805, Memphis, TN 38137	Common Stock			1,412,500		14.74	%

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacity and on the date indicated.

	SHENGTAI PHARMACEUTICAL, INC.
	(Registrant)

Date: September 28, 2012	By:	/s/ Qingtai Liu
		Qingtai Liu
		Chief Executive Officer
		(Principal Executive Officer)

~~(1)~~By: On May 15, 2007, we entered into the share exchange agreement. Under the share exchange agreement Messrs. Qingtai Liu and Chenghai Du, holders of all the issued and outstanding shares of common stock of Shengtai Holding, Inc. (SHI), exchanged their SHI shares for 4,106,250 and 456,250 newly-issued shares of the Company’/s common stock, representing approximately 91% of the issued and outstanding shares then outstanding. The share exchange closed on May 15, 2007. Mr. Qingtai Liu entered into an agreement dated May 8, 2006 with certain foreign finders and Hickey Turner Capital, Inc. in which Mr. Liu agreed to transfer 223,088shares of the our common stock for the benefit of the foreign finders and Hickey Turner Capital, Inc. and/or ~~its~~Yongqiang ~~designees~~Wang ~~for~~Yongqiang ~~consulting~~Wang ~~services.~~Chief InFinancial ~~addition~~Officer to(Principal ~~transferring~~Financial ~~these shares, on May 15, 2007, he also transferred an aggregate of 388,300 shares to his wife~~ and ~~minor~~Accounting ~~child equally on the same date, which shares are deemed to be beneficially owned by Mr. Liu.~~Officer)

~~(2)~~Pursuant Onto ~~May~~the ~~15,~~requirements of ~~2007,~~the weSecurities ~~entered~~Exchange ~~into~~Act ~~and~~of ~~closed on a share purchase agreement. Under the share purchase agreement~~1934, ~~certain~~this ~~investors~~report ~~purchased~~has ~~for~~been ~~$4.00~~signed ~~per~~below ~~share,~~by orthe afollowing ~~total~~persons ofon ~~$17,500,000,~~behalf ~~an aggregate~~ of ~~4,375,000~~the ~~shares~~Registrant and ofin ~~common~~the ~~stock~~capacities and ~~2,187,500~~on ~~attached~~the ~~five~~dates ~~year warrants~~indicated.

(3) Based on, 9,584,912 shares of common stock issued and outstanding on October 6, 2011. In addition, in determining the percent of common stock owned by a person on October 6, 2011, (a) the numerator is the number of shares of the class beneficially owned by such person and includes shares which the beneficial owner may acquire within 60 days upon conversion or exercise of a derivative security, and (b) the denominator is the sum of (i) the shares of that class outstanding on October 6, 2011, and (ii) the total number of shares that the beneficial owner may acquire upon conversion or exercise of a derivative security within such 60 day period. Unless otherwise stated, each beneficial owner has sole power to vote and dispose of the shares.

Signature	Title	Date

	Chief Executive Officer (Principal	September 28, 2012
/s/ Qingtai Liu	Executive Officer) and Director
Qingtai Liu

	Chief Financial Officer (Principal Financial	September 28, 2012
	Officer, Principal Accounting Officer),
/s/ Yongqiang Wang	and Director
Yongqiang Wang

/s/ Yaojun Liu	Director	September 28, 2012
Yaojun Liu

/s/ Tao Jin	Director	September 28, 2012
Tao Jin

/s/ Lawrence Lee	Director	September 28, 2012
Lawrence Lee

(4) Messrs. Qingtai Liu and Yongqiang Wang were appointed directors of the Company on May 15, 2007. Mr. Wang was appointed as our Chief Financial Officer from December 2009 to March 2010. Mr. Hu Ye was appointed as our Chief Financial Officer in March 2010. On December 1,2010. Mr. Ye resigned as our Chief Financial Officer and. Mr. Wang was appointed as our Chief Financial Officer again. Mr. Lee was appointed directors of the Company on June 22, 2007. Messrs. Liu and He were appointed directors of the Company on June 1, 2010. Mr. He resigned as our director on August 20, 2011.48

~~(5)~~SHENGTAI ~~Pursuant to the Employment Agreement between the Company and Mr. Hu Ye~~PHARMACEUTICAL, ~~the Company granted Mr~~INC. Hu Ye an option to purchase 150,000 shares of common stock of the Company. The shares vest over 3 years starting March 1, 2010 and terminate on the third anniversary of the date of issuance of the option. The Company valued the shares at $5.20 per share, which represents 130% of the fair market value being calculated in the private placement price on May 15, 2007. As of October 6, 2011, the option to purchase 20,000 shares has vested.AND SUBSIDIARIES

(6) Mr. Fei He was appointed as a director on June 1, 2010. Mr. He resigned from his position as director on August 20, 2011.

Report of Independent Registered Public Accounting Firm		F-1

Consolidated Balance Sheets as of June 30, 2012 and 2011		F-2

Consolidated Statements of Income and Other Comprehensive Income for the Years Ended June 30, 2012 and 2011		F-3

Consolidated Statements of Cash Flows for the Years Ended June 30, 2012 and 2011		F-4

Consolidated Statements of Stockholders' Equity for the Years Ended June 30, 2012 and 2011		F-5

Notes to the Consolidated Financial Statements		F-6

47All other schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions or are inapplicable and therefore have been omitted.

~~Item~~REPORT ~~13. Certain~~OF ~~Relationships~~INDEPENDENT ~~and~~REGISTERED ~~Related~~PUBLIC ~~Transactions,~~ACCOUNTING ~~and Director Independence~~FIRM

~~Weifang~~To ~~Shengtai~~the ~~entered~~Board into a joint venture partnership with Weifang City Investment Company and Changle Century Sun Paper Industry Co., Ltd on September 16, 2003 and formed Changle Shengshi Redian Co., Ltd, “Changle Shengshi.” Changle Shengshi was incorporated at Weifang City, Shandong Province, People’s Republic of ~~China.~~Directors ~~Changle Shengshi’s principal activity is to produce~~ and ~~sell~~Stockholders ~~electricity and heat.~~of

~~Weifang~~ Shengtai ~~owned a 30% interest in Changle Shengshi as of June 30~~Pharmaceutical, ~~2004~~Inc. On April 12, 2005, its percentage ownership in Changle Shengshi was diluted from 30% to 20% due to an additional investment into Changle Shengshi from another party. In order to meet increasing demands for electricity and steam by Weifang Shengtai and Changle Paper, Weifang Shengtai invested $1,467,000 in Changle Shengshi in March 2010 and Changle Paper invested a corresponding amount such that Weifang Shengtai and Changle Sunshine Paper Ltd. continue to be 20% and 80% owners, respectively, of Changle Shengshi. In 2011, the Company increased its investment of approximately $1,547,000 to Changle Shengshi. Changle Paper increased investment proportionately. After the investment, the Company still owns 20% of Changle Shengshi. As of June 30, 2011, Weifang Shengtai invested approximately $4,308,395 towards its registered capital, which accounts for a 20% share of Changle Shengshi’s paid-in capital.Subsidiaries

AsWe anhave ~~investor~~audited ~~and~~the ~~shareholder~~accompanying consolidated balance sheets of ~~Changle~~Shengtai ~~Shengshi~~Pharmaceutical, ~~Weifang~~Inc. ~~Shengtai~~and ~~enjoys~~Subsidiaries a(the ~~preferential~~“Company”) ~~discount~~as of ~~29.12%~~June ~~off~~30, 2012 and 2011, and the related ~~market~~statements ~~price~~of income, stockholders' equity, and cash flows for each of ~~electricity~~the ~~supplied~~years byin the ~~plant~~two-year toperiod ~~Weifang~~ended ~~Shengtai~~June 30, 2012. ~~The~~These ~~intercompany~~consolidated ~~profits~~financial ~~were~~statements ~~eliminated~~are the responsibility of the Company’s management. Our responsibility is to express an opinion on ~~our~~these consolidated financial statements based on our audits.

~~Weifang~~We ~~Shengtai~~have ~~had~~conducted aour ~~total~~audits in accordance with the standards of ~~$943,779,~~the ~~and~~Public ~~$252,017~~Company Accounting Oversight Board (United States of ~~accounts~~America). ~~payable~~Those standards require that we plan and ~~accrued~~perform ~~liabilities~~the audits to ~~Changle~~obtain ~~Shengshi~~reasonable atassurance ~~June~~about ~~30,~~whether ~~2011,~~the ~~and~~financial ~~2010,~~statements ~~respectively~~are free of material misstatement. ~~The~~Our ~~utilities~~audit ~~expenses~~included consideration ~~amounted~~of tointernal ~~$15~~control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,~~573~~ but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly,~~614~~ we express no such opinion. An audit also includes examining, ~~and~~on ~~$12~~a test basis,~~585,381,~~ ~~for~~evidence supporting the ~~years~~amounts ~~ending~~and ~~June~~disclosures ~~30,~~in ~~2011~~the financial statements, assessing the accounting principles used and ~~2010~~significant estimates made by management, ~~respectively~~as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

~~From~~In ~~time~~our ~~to time~~opinion, the ~~Company~~financial ~~borrows~~statements ~~monies~~referred ~~from~~to ~~Qingtai~~above ~~Liu~~present fairly, ~~the~~in ~~Company’s~~all ~~CEO~~material ~~and President~~respects, ~~for~~the ~~cash~~consolidated ~~flow~~financial ~~purposes~~position of ~~the~~Shengtai ~~Company~~Pharmaceutical, Inc. ~~The loans do not require collateral~~ and ~~the~~Subsidiaries ~~principal~~as isof ~~due upon demand. Before January 1~~June 30, ~~2009~~2012, ~~the interest rate was at 7.2% for the first six months,~~ and ~~then 10.8% thereafter until~~ the ~~full~~consolidated ~~principal~~results ~~amounts~~of ~~are~~its ~~paid~~operations byand ~~the~~cash ~~Company.~~flows ~~After~~for ~~January~~each 1,of ~~2009,~~ the ~~interest~~years ~~rate~~in ~~was changed to 7.2% for~~ the ~~loan~~two-year period. ~~The~~ended ~~Employee loan from the officer amounted to $36,285 and $515,856 as of~~ June 30, ~~2011~~2012 ~~and~~in ~~2010,~~conformity ~~respectively.~~with ~~Interest~~accounting ~~expense~~principles ~~related~~generally toaccepted ~~this~~in ~~loan was de minimis for~~ the ~~years~~United ~~ended~~States ~~June~~of ~~30, 2011 and 2010, respectively~~America.

~~Item~~/s/ ~~14. Principal~~Kabani ~~Accounting~~& ~~Fees~~Company, ~~and Services~~Inc.

~~Aggregate fees billed by our current principal accountants,~~ Kabani & Company, Inc. ~~and former principal accounts, Moore Stephens Wurth Frazer and Torbet, LLP for audit services related to the most recent fiscal years, and for other professional services were as follows:~~

	Fiscal 2011		Fiscal 2010
	Kabani & Company		Kabani & Company		Moore Stephens Wurth Frazer and Torbet, LLP
Audit Fees (1)	$	115,025	$	107,500	$	10,000
Total	$	115,025	$	107,500	$	10,000

Certified Public Accountants

48Los Angeles, California

~~(1)~~September ~~Comprised the audit of the Company's annual financial statements and reviews of the Company's quarterly financial statements~~28, ~~as well as consents related to and reviews of other documents filed with the Securities and Exchange Commission.~~2012

~~There were no fees related to all federal and state corporate income tax returns for the Company and its Subsidiaries.~~F-1

~~Under~~SHENGTAI ~~the~~PHARMACEUTICAL Sarbanes-Oxley Act of 2002, all audit and non-audit services performed by our independent accountants must now be approved in advance by our Audit Committee to assure that such services do not impair our accountants' independence INC. ~~Our~~AND Audit Committee’s Chairman is Mr. Yaojun Liu and the other members are Fei He and Winfred Lee as of June 30, 2011. Mr. Fei He resigned in August 2011. The other two directors remain in their positions. Our Audit Committee reviews and recommends to our Board of Directors for approval audit and permissible non-audit services performed by Kabani & Company as well as fees charged by them for such services. Our Board of Directors carried out this function when we did not have an Audit Committee previously.SUBSIDIARIES

49CONSOLIDATED BALANCE SHEETS

PART IV

	June 30,
	2012		2011

ASSETS
CURRENT ASSETS:
Cash & cash equivalents	$	4,903,303	$	4,051,349
Restricted cash		13,084,586		8,972,600
Accounts receivable, net of allowance for doubtful accounts of $1,603,051 and $1,506,470,respectively		12,099,625		8,580,973
Notes receivable		4,590,758		2,815,726
Other receivables		8,862,789		8,359,103
Inventories		29,457,981		13,016,399
Prepayments and other assets		1,023,154		2,296,982
Total current assets		74,022,195		48,093,131

PLANT AND EQUIPMENT, net		80,185,228		77,029,157

CONSTRUCTION IN PROGRESS		1,213,540		4,693,018

EQUITY INVESTMENT		11,704,050		9,132,725

ADVANCE FOR CONSTRUCTION		2,188,892		2,039,929

INTANGIBLE ASSETS, NET		3,271,147		3,251,214

Total assets	$	172,585,052	$	144,239,174

LIABILITIES AND STOCK HOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable	$	5,432,615	$	9,508,512
Accounts payable and accrued liabilities - related party		405,926		943,779
Notes payable - banks		17,835,706		11,447,800
Short term loans		73,483,997		48,094,740
Accrued liabilities		479,593		917,464
Other payable		1,672,805		2,642,598
Employee loans		295,076		261,938
Other payable - officer		37,027		36,285
Customer deposit		9,610,252		8,954,841
Taxes payable		997,529		1,809,093
Total current liabilities		110,250,526		84,617,050

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
Preferred stock, $0.001 par value, 2,500,000 shares authorized, no shares issued and outstanding as of June 30, 2012 and June 30, 2011		-		-
Common stock, $0.001 par value, 50,000,000 shares authorized, 9,584,912 shares issued and outstanding as of June 30, 2012 and June 30, 2011		9,585		9,585
Additional paid-in capital		21,945,101		21,553,499
Statutory reserves		4,226,125		4,068,822
Retained earnings		27,064,092		26,148,801
Accumulated other comprehensive income		9,089,623		7,841,417
Total stockholders' equity		62,334,526		59,622,124

Total liabilities and stockholders' equity	$	172,585,052	$	144,239,174

~~Item~~The ~~15.~~accompanying ~~Exhibits,~~notes ~~Financial~~are ~~Statement~~an ~~Schedules~~integral part of these consolidated financial statements.

~~(a) Financial Statements and Financial Statement Schedules~~F-2

~~Reference~~SHENGTAI isPHARMACEUTICAL ~~made~~INC. toAND ~~the Index to Financial Statements on Page F-1.~~SUBSIDIARIES

~~(b)~~CONSOLIDATED ~~Exhibits~~STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME

See Exhibit Index

	ENDED JUNE 30
	2012			2011

NET SALES	$	179,029,127		$	171,717,866

COST OF SALES		161,705,181			148,594,046

GROSS PROFIT		17,323,946			23,123,820

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		11,825,104			9,805,044

INCOME FROM OPERATIONS		5,498,842			13,318,776

OTHER INCOME (EXPENSE) :
Earnings on equity investment		921,730			872,630
Non-operating income		766,287			228,746
Non-operating expense		(191,790	)		(312,552	)
Interest expense and other charges		(6,115,809	)		(3,729,444	)
Interest income		192,347			119,636
Other income (expense) , net		(4,427,235	)		(2,820,984	)

INCOME BEFORE PROVISION FOR INCOME TAXES		1,071,607			10,497,792

PROVISION FOR INCOME TAXES		(988	)		2,846,741

NET INCOME		1,072,594			7,651,051

OTHER COMPREHENSIVE ITEMS:

Foreign currency translation adjustments		1,248,206			2,636,158

COMPREHENSIVE INCOME		2,320,800		$	10,287,210

EARNINGS PER SHARE

Basic and diluted	$	0.11		$	0.80

WEIGHTED AVERAGE NUMBER OF SHARES

Basic and diluted		9,584,912			9,584,912

50The accompanying notes are an integral part of these consolidated financial statements.

~~SIGNATURES~~F-3

~~Pursuant~~SHENGTAI toPHARMACEUTICAL ~~the~~INC. ~~requirements~~AND ~~of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacity and on the date indicated.~~SUBSIDIARIES

	SHENGTAI PHARMACEUTICAL, INC.
	(Registrant)
Date: October 6, 2011	By:	/s/ Qingtai Liu
		Qingtai Liu
		Chief Executive Officer
		(Principal Executive Officer)

CONSOLIDATED STATEMENTS OF CASH FLOWS

By: /s/ Yongqiang Wang Yongqiang Wang Chief Financial Officer (Principal Financial and Accounting Officer)

	ENDED JUNE 30
	2012			2011

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income	$	1,072,594		$	7,651,051
Adjustments to reconcile net income to cash (used in) provided by operating activities:
Depreciation		8,001,930			7,153,155
Amortization		59,368			56,632
Bad debt (reduction) provision		60,476			131,463
Share based compensation to employees		27,602			238,684
Earnings on equity investment		(921,730	)		(872,630	)
Loss on equipment disposal		-			238,387
Change in operating assets and liabilities:
Accounts receivable		(3,355,898	)		68,917
Notes receivable		(1,698,109	)		(202,150	)
Other receivables		(329,985	)		(8,127,790	)
Inventories		(16,087,045	)		(181,050	)
Prepayments and other assets		1,320,468			(1,684,476	)
Accounts payable		(9,799,190	)		(5,913,395	)
Accounts payable-related party		(556,931	)		-
Accrued liabilities		(96,020	)		-
Accrued liabilities - related party		-			663,386
Other payable		(1,026,110	)		1,098,802
Customer deposit		440,311			4,477,630
Taxes payable		(849,432	)		272,983
Net cash (used in) provided by operating activities		(23,737,700	)		5,069,599

CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in equity investment		(1,418,958	)		(1,511,200	)
Purchase of plant and equipment		(1,226	)		(2,018,025	)
Additions to construction in progress		(132,788	)		(3,626,806	)
Increase in land use right		(2,496	)		-
Advances for construction		(99,965	)		(941,986	)
Net cash used in investing activities		(1,655,433	)		(8,098,017	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in restricted cash		(4,111,986	)		7,584,304
Borrowings on notes payable - banks		19,581,857			15,263,120
Principal payments on notes payable - banks		(13,501,787	)		(22,365,760	)
Borrowings on short term loans		97,832,239			56,895,225
Principal payments on short term loans		(73,727,699	)		(51,108,784	)
Borrowings on employee loans		31,487			107,673
Principal payments on employee loans		(4,723	)		(258,482	)
Borrowings on long term loans		-			(493,544	)
Payments on long term loans		-			4,841,583
Borrowings on third party loan		-			(4,841,583	)
Payment on capital lease obligation		-			(5,808,137	)
Net cash provided by (used in) financing activities		26,099,389			(184,385	)

EFFECTS OF EXCHANGE RATE CHANGE IN CASH		145,699			1,127,605

INCREASE DECREASE IN CASH & CASH EQUIVELENTS		851,954			(2,085,198	)

CASH & CASH EQUIVALENTS, beginning of year		4,051,349			4,121,541

CASH & CASH EQUIVALENTS, end of year	$	4,903,303		$	2,036,343

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest Paid	$	4,087,384		$	2,995,844
Income taxes	$	727,685		$	2,098,145

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Decrease of other receivable for acquisition of plant and equipment	$	26,449		$	-
Transfers of construction in progress-related inventory to plant and equipment	$	250,877		$	-
Acquisition of plant and equipment on credit	$	5,523,141		$	5,717,226
Non-cash advances for construction	$	-		$	1,344,561
Completion of construction-in-progress (transferred to plant and equipment)	$	8,883,222		$	15,392,980

~~Pursuant~~The toaccompanying ~~the~~notes ~~requirements~~are ofan ~~the~~integral part ~~Securities Exchange Act~~ of ~~1934,~~these ~~this~~consolidated ~~report~~financial ~~has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated~~statements.

Signature	Title	Date
/s/ Qingtai Liu	Chief Executive Officer (Principal Executive Officer) and Director	October 6, 2011
Qingtai Liu
/s/ Yongqiang Wang	Chief Financial Officer (Principal Financial Officer, Principal Accounting Officer), and Director	October 6, 2011
Yongqiang Wang
/s/ Yaojun Liu	Director	October 6, 2011
Yaojun Liu
/s/ Winfred Lee	Director	October 6, 2011
Winfred Lee

F-4

51SHENGTAI PHARMACEUTICAL INC. AND SUBSIDIARIES

~~SHENGTAI~~CONSOLIDATED ~~PHARMACEUTICALS,~~STATEMENTS OF ~~INC.~~STOCKHOLDERS' EQUITY

Report of Independent Registered Public Accounting Firm		F-1
Consolidated Balance Sheets as of June 30, 2011 and 2010		F-2
Consolidated Statements of Operations and Other Comprehensive Income (Loss) for the Years Ended June 30, 2011 and 2010		F-3
Consolidated Statements of Cash Flows for the Years Ended June 30, 2011 and 2010		F-4
Consolidated Statements of Stockholders' Equity for the Years Ended June 30, 2011 and 2010		F-5
Notes to Consolidated Financial Statements		F-6

FOR THE YEARS ENDED JUNE 30, 2012 AND 2011

All other schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions or are inapplicable and therefore have been omitted.

							Retained earnings					Accumulated other
	Common stock				Paid-in		Statutory					comprehensive
	Shares		Par value		capital		Reserves		Unrestricted			income		Totals
BALANCE, JUNE 30, 2010		9,584,912	$	9,585	$	21,314,815	$	3,214,800	$	19,351,772		$	5,205,259	$	49,096,231

Net income		-		-		-		-		7,651,051			-		7,651,051
Option issued to employees		-		-		238,684		-		-			-		238,684
Adjustment to statutory reserve		-		-		-		854,022		(854,022	)		-		-
Foreign currency translation adjustments		-		-		-		-		-			2,636,158		2,636,158

BALANCE, JUNE 30, 2011		9,584,912		9,585		21,553,499		4,068,822		26,148,801			7,841,417		59,622,124

Net income		-		-		-		-		1,072,594			-		1,072,594
Option issued to employees		-		-		27,602		-		-			-		27,602
Forgiveness of officer's compensation				-		364,000		-		-			-		364,000
Adjustment to statutory reserve		-		-		-		157,303		(157,303	)		-		-
Foreign currency translation adjustments		-		-		-		-		-			1,248,206		1,248,206

BALANCE,JUNE 30, 2012		9,584,912	$	9,585	$	21,945,101	$	4,226,125	$	27,064,092		$	9,089,623	$	62,334,526

52The accompanying notes are an integral part of these consolidated financial statements.

~~REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~F-5

ToSHENGTAI ~~the~~PHARMACEUTICAL, ~~Board~~INC. ofAND ~~Directors and~~SUBSIDIARIES

~~Stockholders~~NOTES ofTO ~~Shengtai~~THE ~~Pharmaceutical,~~CONSOLIDATED ~~Inc.~~FINANCIAL ~~and Subsidiaries~~STATEMENTS

WeNote ~~have~~1 audited the accompanying consolidated balance sheets of Shengtai Pharmaceutical, Inc. and Subsidiaries as of June 30, 2011 and 2010, and the related consolidated statements of income, stockholders’ equity and comprehensive income, and cash flows for each of the years in the two-~~year~~ ~~period~~Organization ~~ended~~background ~~June 30, 2011. Shengtai Pharmaceutical, Inc.~~ and principal ~~Subsidiaries’~~activities ~~management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.~~

WeShengtai ~~conducted~~Pharmaceutical, ~~our~~Inc, ~~audits in accordance with~~ the ~~standards of the Public~~ "Company,” was ~~Accounting~~incorporated ~~Oversight~~in ~~Board~~March ~~(United~~2004 ~~States).~~in ~~Those standards require that we plan and perform~~ the ~~audit~~State ~~to obtain reasonable assurance about whether the financial statements are free~~ of ~~material misstatement~~Delaware. The ~~company is not required to have~~Company, ~~nor~~through ~~were we engaged to perform~~its subsidiaries, anmanufactures ~~audit~~and ofdistributes glucose ~~its~~and ~~internal~~starch ~~control over financial reporting. Our audit included consideration of internal control over financial reporting~~ as apharmaceutical ~~basis~~raw ~~for designing audit procedures that are appropriate in the circumstances~~materials, ~~but~~other ~~not~~starch ~~for~~products ~~the~~and ~~purpose~~other ofglucose ~~expressing~~products ansuch ~~opinion~~as oncorn ~~the effectiveness of the company’s internal control over financial reporting. Accordingly~~meals, wefood ~~express~~and beverage noglucose ~~such~~and ~~opinion~~dextrin. AnThe ~~audit~~Company's ~~also~~business ~~includes~~operations ~~examining,~~are onconducted ~~a test basis, evidence supporting the amounts and disclosures~~ in the ~~financial~~People's ~~statements,~~Republic ~~assessing~~of ~~the accounting principles used and significant estimates made by management~~China, ~~as well as evaluating~~ the ~~overall financial statement presentation~~"PRC. ~~We believe that our audits provide a reasonable basis for our opinion.~~”

InNote ~~our~~2 ~~opinion,~~- ~~the~~Summary ~~consolidated financial statements referred to above present fairly, in all material respects, the financial position~~ of ~~Shengtai~~significant Pharmaceutical, Inc. and Subsidiaries as of June 30, 2011 and 2010, and the results of its operations and its cash flows for each of the years in the two-year period ended June 30, 2011 in conformity with accounting policies ~~principles generally accepted in the United States of America.~~

~~/s/~~Principles ~~Kabani~~of &consolidation ~~Company, Inc. Certified Public Accountants Los Angeles, California October 6, 2011~~

FThe consolidated financial statements of Shengtai Pharmaceutical, Inc. and its subsidiaries reflect the activities of the parent and its wholly-1owned subsidiaries Shengtai Holding, Inc., “SHI,” and Weifang Shengtai Pharmaceutical Co., Ltd., “Weifang Shengtai.” All material inter-company transactions and balances have been eliminated in consolidation.

~~SHENGTAI~~Use ~~PHARMACEUTICAL~~of ~~INC.~~estimates ~~AND SUBSIDIARIES~~

~~CONSOLIDATED~~The ~~BALANCE~~preparation ~~SHEETS~~of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.

ASForeign OFcurrency ~~JUNE~~translation ~~30, 2011 AND 2010~~

	2011		2010
ASSETS
CURRENT ASSETS:
Cash & cash equivalents	$	4,051,349	$	4,121,541
Restricted cash		8,972,600		16,556,904
Accounts receivable, net of allowance for doubtful accounts of $1,506,470 and $1,306,268 as of June 30, 2011 and 2010, respectively		8,580,973		8,365,822
Notes receivable		2,815,726		2,410,512
Other receivables		8,359,103		450,284
Inventories		13,016,399		11,072,170
Prepayments and other assets		2,296,982		545,590
Total current assets		48,093,131		43,522,824
PLANT AND EQUIPMENT, net		77,029,157		64,840,768
CONSTRUCTION IN PROGRESS		4,693,018		10,533,083
OTHER ASSETS:
Investment in Changle Shengshi Redian Co., Ltd.		9,132,725		6,372,294
Advances for construction		2,039,929		2,334,748
Intangible assets - land use right, net of accumulated amortization		3,251,214		3,150,894
Total other assets		14,423,868		11,857,936
Total assets	$	144,239,174	$	130,754,611
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	9,508,512	$	9,508,631
Accounts payable and accrued liabilities - related party		943,779		252,017
Notes payable - banks		11,447,800		17,823,300
Short term loans		48,094,740		40,153,980
Accrued liabilities		917,464		412,555
Other payable		2,642,598		1,315,797
Employee loans		261,938		396,404
Other payable - officer		36,285		515,856
Customer deposit		8,954,841		4,162,046
Taxes payable		1,809,093		1,456,474
Long term loan-current		-		2,314,983
Total current liabilities		84,617,050		78,312,043
LONG TERM LIABILITIES
Other payable - noncurrent		-		3,346,336
Total long term liabilities		-		3,346,336
Total liabilities		84,617,050		81,658,379
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $0.001 par value, 2,500,000 shares authorized, no shares issued and outstanding		-		-
Common stock, $0.001 par value, 50,000,000 shares authorized, 9,584,912 shares issued and outstanding		9,585		9,585
Additional paid-in capital		21,553,499		21,314,815
Statutory reserves		4,068,822		3,214,800
Retained earnings		26,148,801		19,351,772
Accumulated other comprehensive income		7,841,417		5,205,259
Total stockholders' equity		59,622,124		49,096,231
Total liabilities and stockholders' equity	$	144,239,174	$	130,754,611

The reporting currency of the Company is the US dollar. The Company uses Renminbi, "RMB,” as its functional currency. The results of operations and cash flows are translated at average exchange rates during the period, and assets and liabilities are translated at the unified exchange rates at the balance sheet dates, and equity is translated at the historical exchange rates. As a result, amounts related to assets and liabilities reported on the statements of cash flows will not necessarily agree with changes in the corresponding accounts on the balance sheets. Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statements of shareholders' equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

~~The accompanying notes are an integral part of these consolidated financial statements.~~F-6

~~F-2~~Assets and liabilities were translated at 6.314 RMB and 6.464 RMB to $1.00 at June 30, 2012 and 2011, respectively. The equity accounts were stated at their historical rate. The average translation rates applied to income statement for amounts for the years ended June 30, 2012 and 2011 were approximately 6.352 RMB and 6.617 RMB to $1.00, respectively. The statement of cash flows are also translated at average translation rates for the period; therefore, amounts reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet.

~~SHENGTAI~~Revenue ~~PHARMACEUTICAL INC. AND SUBSIDIARIES~~recognition

~~CONSOLIDATED~~The ~~STATEMENTS~~Company OFrecognizes ~~INCOME~~revenue ~~AND~~when ~~OTHER~~the goods ~~COMPREHENSIVE~~are ~~INCOME~~shipped, title has passed, pricing is fixed, and collection is reasonably assured. Sales revenue represents the invoiced value of goods, net of value-added tax, "VAT,” and estimated returns of product from customers. Most of the Company's products sold in the PRC are subject to a VAT rate of 17% of the gross sales price or at a rate approved by the Chinese local government. This VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing their finished products and certain freight expenses. The Company allows its customers to return products only if they are later determined by the Company to be ineffective. Based on the Company’s historical experience, product returns have been insignificant throughout all of its product lines. Therefore, the Company does not estimate deductions or allowance for sales returns. Sales returns are taken against revenue when products are returned from customers. Sales are presented net of any discounts given to customers.

~~FOR~~Shipping ~~THE~~and ~~YEARS ENDED JUNE 30, 2011 AND 2010~~handling

	2011			2010
NET SALES	$	171,717,866		$	115,953,948
COST OF SALES		148,594,046			98,276,190
GROSS PROFIT		23,123,820			17,677,759
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		9,805,044			10,281,788
INCOME FROM OPERATIONS		13,318,776			7,395,970
OTHER (EXPENSE) INCOME:
Earnings on equity investment		872,630			727,804
Non-operating income		228,746			291,203
Non-operating expense		(74,165	)		(263,812	)
Loss on equipment disposal		(238,387	)		-
Interest expense and other charges		(3,729,444	)		(3,660,474	)
Interest income		119,636			306,994
Other (expense) income, net		(2,820,984	)		(2,598,285	)
INCOME BEFORE PROVISION FOR INCOME TAXES		10,497,792			4,797,685
PROVISION FOR INCOME TAXES		2,846,741			1,598,704
NET INCOME		7,651,051			3,198,981
OTHER COMPREHENSIVE ITEMS:
Foreign currency translation adjustments		2,636,158			262,776
COMPREHENSIVE INCOME	$	10,287,210		$	3,461,757
EARNINGS PER SHARE
Basic	$	0.80		$	0.33
Diluted	$	0.80		$	0.33
WEIGHTED AVERAGE NUMBER OF SHARES
Basic		9,584,912			9,584,912
Diluted		9,584,912			9,584,912

Shipping and handling costs related to costs of goods sold are included in selling, general and administrative expenses. For the years ended June 30, 2012 and 2011, shipping and handling costs amounted to $7,173,847 and $5,718,145, respectively.

~~The~~Financial ~~accompanying notes are an integral part of these consolidated financial statements.~~instruments

~~F-3~~The carrying amounts reported in the balance sheets for current receivables and payables, including short term loans, qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and, if applicable, the stated rate of interest is equivalent to rates currently available. The three levels are defined as follows:

SHENGTAI PHARMACEUTICAL INC. AND SUBSIDIARIES

Level 1:	inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2:	inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

Level 3:	inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~F-7

~~FOR~~The ~~THE~~Company ~~YEARS~~did ~~ENDED~~not ~~JUNE~~identify ~~30,~~any ~~2011~~assets or ~~AND~~liabilities ~~2010~~that are required to be presented on the balance sheet at fair value in accordance with US GAAP.

	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	7,651,051		$	3,198,981
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation		7,153,155			7,993,751
Amortization		56,632			307,195
Bad debt provision		131,463			1,300,681
Share based compensation to employees		238,684			681,575
Loss on equipment disposal		238,387			-
Gain on disposal of land use right		-			(738	)
Earnings on equity investment		(872,630	)		(727,804	)
Amortization of discount on installment payment for purchase of equipment		-			354,546
Amortization of discount on capital lease obligation		-			1,037,393
Change in operating assets and liabilities:
Accounts receivable		68,917			(1,752,404	)
Notes receivable		(202,150	)		(1,324,945	)
Other receivables		(8,127,790	)		(190,006	)
Inventories		(181,050	)		(4,801,895	)
Prepayments and other assets		(1,684,476	)		(331,299	)
Accounts payable and accrued liabilities		(5,913,394	)		4,903,309
Accounts payable and accrued liabilities - related party		663,386			(186,681	)
Other payable		1,098,802			(2,574,855	)
Customer deposit		4,477,630			2,235,856
Taxes payable		272,983			(543,691	)
Net cash provided by operating activities		5,069,599			9,578,970
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in equity investment		(1,511,200	)		(1,466,700	)
Purchase plant and equipment		(3,019	)		(2,967,898	)
Additions to construction in progress		(3,626,806	)		-
Advances for construction		(941,986	)		(10,488,033	)
Acquisition of land use right		-			(43,425	)
Loan to related party - non-current		-			440,010
Lease payments for equipment purchase		-			(2,050,447	)
Net cash used in investing activities		(6,083,012	)		(16,576,493	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in restricted cash		7,584,304			15,279,992
Borrowings on notes payable - banks		15,263,120			13,346,970
Principal payments on notes payable - banks		(22,365,760	)		(30,859,368	)
Borrowings on short term loans		56,895,225			41,008,932
Principal payments on short term loans		(51,108,784	)		(26,693,940	)
Borrowings on employee loans		107,673			-
Principal payments on employee loans		(258,482	)		(336,641	)
Payments to other payable - officer		(493,544	)		-
Principal payments on third party loan		-			(248,624	)
Borrowings on long term loans		4,841,583			-
Payments on long term loans		(4,841,583	)		-
Payment on capital lease obligation		(5,808,137	)		(1,795,241	)
Net cash provided by (used in) financing activities		(184,385	)		9,702,081
EFFECTS OF EXCHANGE RATE CHANGE IN CASH		1,127,605			(362,493	)
INCREASE/ (DECREASE) IN CASH & CASH EQUIVALENTS		(70,192	)		2,342,065
CASH & CASH EQUIVALENTS, beginning of year		4,121,541			1,779,476
CASH & CASH EQUIVALENTS, end of year	$	4,051,349		$	4,121,541
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest paid	$	2,995,844		$	2,752,591
Income taxes	$	2,098,145		$	1,673,702
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Non- cash advances for construction	$	1,344,561		$	1,673,702
Accounts payable for acquisition of pant and equipment	$	5,717,226		$	-
Completion of construction-in-progress	$	15,392,980		$	-

Stock-based compensation

The ~~accompanying~~Company ~~notes~~measures ~~are~~stock-based ancompensation cost ~~integral~~at ~~part~~the grant date based on the fair value of ~~these~~the ~~consolidated~~award ~~financial~~and ~~statements~~recognize it as expense over the applicable vesting period of the stock award (generally three to five years) using the straight-line method.

~~F-4~~Earnings per share

~~SHENGTAI~~The ~~PHARMACEUTICAL~~Company ~~INC~~presents basic and diluted earnings per share in conjunction with the disclosure of the methodology used in computing such earnings per share. ~~AND~~Basic ~~SUBSIDIARIES~~earnings per share exclude dilution and are computed by dividing income available to common stockholders by the weighted average common shares outstanding during the period. Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock.

~~CONSOLIDATED~~The ~~STATEMENTS~~following OFis ~~STOCKHOLDERS'~~a ~~EQUITY~~reconciliation of the basic and diluted earnings per share computation for the years ended June 30, 2012 and 2011:

FOR THE YEARS ENDED JUNE 30, 2011 AND 2010

	2012		2011
Net income for earnings per share	$	1,072,594	$	7,651,051

Weighted average shares used in basic and diluted computation		9,584,912		9,584,912

Earnings per share:
Basic and diluted	$	0.11	$	0.80

							Retained earnings					Accumulated other
	Common stock				Paid-in		Statutory					comprehensive
	Shares		Par value		capital		reserves		Unrestricted			income		Totals
BALANCE, JUNE 30, 2009		9,584,912	$	9,585	$	20,633,240	$	2,894,902	$	16,472,689		$	4,942,483	$	44,952,899
Net income		-		-				-		3,198,981			-		3,198,981
Option issued to employees		-				681,575		-		-			-		681,575
Adjustment to statutory reserve		-		-		-		319,898		(319,898	)		-		-
Foreign currency translation adjustments		-		-		-		-		-			262,776		262,776
BALANCE, JUNE 30, 2010		9,584,912		9,585		21,314,815		3,214,800		19,351,772			5,205,259		49,096,231
Net income		-		-		-		-		7,651,051			-		7,651,051
Option issued to employees		-		-		238,684		-		-			-		238,684
Adjustment to statutory reserve		-		-		-		854,022		(854,022	)		-		-
Foreign currency translation adjustments		-		-		-		-		-			2,636,158		2,636,158
BALANCE, JUNE 30, 2011		9,584,912	$	9,585	$	21,553,499	$	4,068,822	$	26,148,801		$	7,841,417	$	59,622,124

At June 30, 2012 and 2011, no warrants or stock options were included in the calculation of diluted earnings per share due to out-of-money status of the warrants and stock options.

~~The~~Cash ~~accompanying~~and ~~notes~~cash ~~are an integral part of these consolidated financial statements.~~equivalents

~~F-5~~The Company considers all highly liquid investments with original maturities of three months or less to be cash and cash equivalents.

~~SHENGTAI~~Restricted ~~PHARMACEUTICAL, INC. AND SUBSIDIARIES~~cash

~~NOTES~~The TOCompany ~~THE~~through ~~CONSOLIDATED~~its ~~FINANCIAL~~bank ~~STATEMENTS~~agreements is required to keep certain amounts on deposit that is subject to withdrawal restrictions. These amounts were $13,084,586 and $8,972,600 as of June 30, 2012 and 2011, respectively.

~~Note 1~~ F- ~~Organization background and principal activities~~8

~~Shengtai~~Accounts Pharmaceutical, Inc, the "Company,” was incorporated in March 2004 in the State of Delaware. The Company, through its subsidiaries, manufactures and distributes glucose and starch as pharmaceutical raw materials, other starch products and other glucose products such as corn meals, food and beverage glucose and dextrin. The Company's business operations are conducted in the People's Republic of China, the "PRC.”receivable

~~Note~~In 2the -normal ~~Summary~~course of ~~significant~~business, ~~accounting~~the ~~policies~~Company extends credit to its customers without requiring collateral or other security interests. Management reviews its accounts receivable at each reporting period to provide for an allowance against accounts receivable for an amount that could become uncollectible. This review process may involve the identification of payment problems with specific customers. The Company estimates this allowance based on the aging of the accounts receivable, historical collection experience, and other relevant factors, such as changes in the economy and the imposition of regulatory requirements that can have an impact on the industry. These factors continuously change, and can have an impact on collections and the Company's estimation process. These impacts may be material. Certain accounts receivable amounts are charged against allowances after designated period of collection efforts. Subsequent cash recoveries are recognized as income in the period when they occur.

~~Principles~~The ofactivities ~~consolidation~~in the allowance for doubtful accounts for trade accounts receivable is as follows for the years ended June 30, 2012 and 2011:

The consolidated financial statements of Shengtai Pharmaceutical, Inc. and its subsidiaries reflect the activities of the parent and its wholly-owned subsidiaries Shengtai Holding, Inc., “SHI,” and Weifang Shengtai Pharmaceutical Co., Ltd., “Weifang Shengtai.” All material inter-company transactions and balances have been eliminated in consolidation.

	2012			2011
Beginning allowance for doubtful accounts	$	1,506,470		$	1,306,268
Additions charged to bad debt expense		738,350			1,017,943
Write-off charged against allowance		(677,514	)		(883,365	)
Foreign currency translation adjustments		35,745			65,624
Ending allowance for doubtful accounts	$	1,603,051		$	1,506,470

~~Use~~Concentrations of ~~estimates~~risk

The ~~preparation~~Company's ofoperations are in the PRC. Accordingly, the Company's business, financial ~~statements~~condition inand ~~conformity~~results ~~with~~of ~~accounting~~operations ~~principles~~may ~~generally~~be ~~accepted~~influenced by the political, economic and legal environments in the ~~United~~PRC, ~~States~~and by the general state of ~~America~~the ~~requires~~Chinese ~~management~~economy. The Company's operations in the PRC are subject to ~~make~~specific ~~estimates~~considerations and ~~assumptions~~significant ~~that~~risks ~~affect~~not ~~the~~typically ~~reported~~associated ~~amounts~~with ofcompanies ~~assets~~in ~~and~~North ~~liabilities~~America and ~~disclosure~~Western ofEurope. ~~contingent~~These include ~~assets~~risks ~~and~~associated ~~liabilities~~with, atamong others, the ~~date~~political, ofeconomic ~~the~~and ~~financial~~legal ~~statements,~~environments and ~~the~~foreign ~~reported~~currency ~~amounts~~exchange. ofThe Company's ~~revenues~~results may be adversely affected by changes in governmental policies with respect to laws and ~~expenses~~regulations, ~~during~~anti-inflationary measures, ~~the~~currency ~~reporting~~conversion ~~period~~and remittance abroad, and rates and methods of taxation, among others.

~~Foreign~~Management ~~currency~~believes ~~translation~~the credit risk on bank deposits is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies, or state-owned banks in China. Cash includes cash on hand and demand deposits in accounts maintained with state-owned banks within the PRC and the United States of America. The cash deposits in U.S. financial institutions exceed the amounts insured by the U.S. government. Balances at financial institutions or state owned banks within the PRC are not covered by insurance. Non-performance by these institutions could expose the Company to losses for amounts in excess of insured balances. At June 30, 2012 and 2011, the Company’s bank balances with the Banks in PRC amounted $17,987,762 and $13,017,076, respectively, which are uninsured and subject to credit risk. The Company has not experienced nonperformance by these institutions.

~~F-6~~The Company’s concentrations of credit risk also relate to trade accounts receivable and accounts payable. There was no customers that individually comprised 10% or more of our sales for fiscal year ended June 30, 2012 and 2011. There was one vendor, Changle Shengshi Redian Co., Ltd, that individually comprised 10.07% or $19,316,616 of the Company’s total purchase for the year ended June 30, 2012. The Company has accounts payable of $405,945 due to Changle Shengshi Redian Co., Ltd. as of June 30, 2012. There was one vendor, Dezhou No.5 Grain and Cooking Oil Warehouse that individually comprised 11.08% or $15,253,993 of the Company’s total purchase for the year ended June 30, 2011. The Company did not have any accounts payable to Dezhou No.5 Grain and Cooking Oil Warehouse as on June 30, 2011.

~~Assets~~For ~~and~~export ~~liabilities were translated at 6.46 RMB and 6.81 RMB to $1.00 at June 30~~sales, ~~2011~~the ~~and~~Company ~~2010,~~frequently requires ~~respectively.~~significant ~~The~~down ~~equity~~payments ~~accounts~~or ~~were~~letter ~~stated~~of atcredit ~~their~~by ~~historical~~its ~~rate.~~customers ~~The~~prior ~~average translation rates applied~~ to ~~income~~shipment. ~~statement~~During ~~for amounts for~~ the ~~years ended June 30~~year, ~~2011~~the ~~and~~Company ~~2010~~maintains export ~~were~~credit ~~approximately~~insurance ~~6.62 RMB and 6.84 RMB~~ to ~~$1.00,~~protect ~~respectively.~~the ~~The~~Company ~~statement~~against ~~of cash flows are also translated at average translation rates for~~ the ~~period;~~risk ~~therefore,~~that ~~amounts reported on~~ the ~~statement~~overseas ofcustomers ~~cash~~may ~~flows~~default ~~will not necessarily agree with changes in the corresponding balances~~ on ~~the balance sheet~~settlement.

~~Revenue~~The ~~recognition~~following table summarizes financial information for the years ended June 30, 2012 and 2011, concerning the Company’s revenues based on geographic area:

The Company recognizes revenue when the goods are shipped, title has passed, pricing is fixed, and collection is reasonably assured. Sales revenue represents the invoiced value of goods, net of value-added tax, "VAT,” and estimated returns of product from customers. Most of the Company's products sold in the PRC are subject to a VAT rate of 17% of the gross sales price or at a rate approved by the Chinese local government. This VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing their finished products and certain freight expenses. The Company allows its customers to return products only if they are later determined by the Company to be ineffective. Based on the Company’s historical experience, product returns have been insignificant throughout all of its product lines. Therefore, the Company does not estimate deductions or allowance for sales returns. Sales returns are taken against revenue when products are returned from customers. Sales are presented net of any discounts given to customers.

	2012		2011
Revenue
China	$	144,908,068	$	133,649,382
International		34,121,059		38,068,484
Total	$	179,029,127	$	171,717,866

~~Shipping~~Geographic ~~and handling~~Information

~~Shipping~~Geographical ~~and~~distribution ~~handling~~of ~~costs~~sales ~~related~~ to ~~costs~~foreign countries ofwhich ~~goods~~is ~~sold~~based on ~~are~~physical ~~included~~shipments ~~in selling, general and administrative expenses. For the years ended June 30, 2011 and 2010, shipping and handling costs amounted~~ to ~~$5,718,145~~such ~~and~~countries is ~~$4,498,260,~~as ~~respectively.~~follows:

Financial instruments

	For the years ended June 30,
Geographical Areas	2012		2011

Korea	$	10,306,310	$	2,422,365

Netherlands		8,953,547		8,811,720

Malaysia		1,081,688		2,806,438

Indonesia		2,100,334		6,786,489

Others		11,679,180		17,241,472

Total	$	34,121,059	$	38,068,484

The carrying amounts reported in the balance sheets for current receivables and payables, including short term loans, qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and, if applicable, the stated rate of interest is equivalent to rates currently available. The three levels are defined as follows:F-10

~~Level 1: inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.~~Inventories

~~Level~~Inventories 2:are ~~inputs~~stated toat the ~~valuation~~lower ~~methodology~~of cost ~~include~~(weighted ~~quoted~~average ~~prices~~basis) ~~for~~or ~~similar~~market ~~assets~~ and ~~liabilities~~consist inof ~~active markets, and inputs that are observable for~~ the ~~assets~~following oras ~~liability,~~of ~~either~~June ~~directly or indirectly~~30, ~~for~~2012 ~~substantially~~and ~~the full term of the financial instruments.~~2011:

F-7

	2012		2011
Raw materials	$	8,511,716	$	2,539,104
Work-in-progress		12,782,232		3,203,585
Finished goods		8,164,032		7,273,710
Total	$	29,457,981	$	13,016,399

~~Level~~The 3:Company ~~inputs~~reviews toits ~~the~~inventory ~~valuation~~periodically for ~~methodology~~possible obsolescence or determination if any reserves are ~~unobservable~~necessary. ~~and~~As ~~significant~~of toJune 30, 2012 and 2011, the ~~fair~~Company ~~value~~determined that no reserves were necessary.

~~The~~Prepayments ~~Company~~and ~~did~~other ~~not identify any~~ assets ~~or liabilities that are required to be presented on the balance sheet at fair value in accordance with US GAAP.~~

~~Stock-based~~Prepayments ~~compensation~~represent partial payments or deposits for inventory purchases. These advances amounting to $1,023,154 and $2,296,982 as of June 30, 2012 and 2011, respectively, and are interest free and unsecured.

~~The~~Advances ~~Company~~for measures stock-based compensation cost at the grant date based on the fair value of the award and recognize it as expense over the applicable vesting period of the stock award (generally three to five years) using the straight-line method. construction

~~Earnings~~As ~~per~~of ~~share~~June 30, 2012 and 2011, advances for construction amounted to $2,188,892 and $2,039,929, respectively. Advances for construction are paid to unrelated parties, interest free, and with no collateral and no guarantee.

~~The~~Plant ~~Company presents of basic~~ and diluted earnings per share in conjunction with the disclosure of the methodology used in computing such earnings per share. Basic earnings per share exclude dilution and are computed by dividing income available to common stockholders by the weighted average common shares outstanding during the period. Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock.equipment

~~The~~Plant ~~following~~and isequipment aare ~~reconciliation~~stated ofat ~~the~~cost less ~~basic~~accumulated depreciation. Additions and ~~diluted~~improvements ~~earnings~~to ~~per~~property ~~share~~and ~~computation~~equipment ~~for~~accounts ~~the~~are ~~years~~recorded ~~ended~~at ~~June~~cost. 30Maintenance, repairs, ~~2011~~and minor renewals are charged directly to expense as incurred. Major additions and ~~2010:~~betterments to property and equipment accounts are capitalized. Depreciation is computed using the straight-line method over the estimated useful lives less residual value.

	2011		2010
N Net income for earnings per share	$	7,651,051	$	3,198,981
Weighted average shares used in basic and diluted computation		9,584,912		9,584,912
Earnings per share:
Basic and diluted	$	0.80	$	0.33

F-11

~~F-8~~Estimated useful lives of the assets are as follows:

At June 30, 2011, no warrants or stock options were included in the calculation of diluted earnings per share due to out-of-money status of the warrants and stock options.

	Estimated Useful Life
Buildings	5-20	Years
Machinery and equipment	5-10	Years
Automobiles	5-10	Years
Electronic equipment	5-7	Years

~~Cash~~Long-lived ~~and~~assets of the Company are reviewed at least annually or more often if circumstances dictate, to determine whether their carrying value has become impaired. The Company considers assets to be impaired if the carrying value exceeds the future projected cash ~~equivalents~~flows from related operations. The Company also re-evaluates the periods of depreciation to determine whether subsequent events and circumstances warrant revised estimates of useful lives. As of June 30, 2012 and 2011, the Company expects these assets to be fully recoverable.

~~The~~Investment ~~Company~~in ~~considers~~unconsolidated ~~all highly liquid investments with original maturities of three months or less to be cash and cash equivalents.~~affiliate

~~Restricted~~Equity ~~cash~~method investments are recorded at original cost and adjusted to recognize the Company's proportionate share of the investee's net income or losses and additional contributions made and distributions received. The Company recognizes a loss if it is determined that other than temporary decline in the value of the investment exists. (Note 5)

~~The~~Intangible Company through its bank agreements is required to keep certain amounts on deposit that is subject to withdrawal restrictions. These amounts were $8,972,600 and $16,556,904 as of June 30, 2011 and 2010, respectively.assets

~~Accounts~~Intangible ~~receivable~~assets consist of the following:

In the normal course of business, the Company extends credit to its customers without requiring collateral or other security interests. Management reviews its accounts receivable at each reporting period to provide for an allowance against accounts receivable for an amount that could become uncollectible. This review process may involve the identification of payment problems with specific customers. The Company estimates this allowance based on the aging of the accounts receivable, historical collection experience, and other relevant factors, such as changes in the economy and the imposition of regulatory requirements that can have an impact on the industry. These factors continuously change, and can have an impact on collections and the Company's estimation process. These impacts may be material. Certain accounts receivable amounts are charged against allowances after designated period of collection efforts. Subsequent cash recoveries are recognized as income in the period when they occur.

	June 30, 2012			June 30, 2011

Land use rights	$	3,711,034		$	3,625,020
Less: accumulated amortization		(446,084	)		(378,696	)
Land use rights, net		3,264,950			3,246,324

Software		10,886			8,181
Less: accumulated amortization		(4,689	)		(3,291	)
Software, net		6,197			4,890
Total intangible assets, net	$	3,271,147		$	3,251,214

Intangible assets are primarily comprised of land use rights, which are pledged as collateral for bank loans as of June 30, 2012 and 2011. The ~~activities~~Chinese government owns all land in the ~~allowance~~PRC. ~~for~~However, ~~doubtful~~the ~~accounts~~government grants "land use rights" for ~~trade~~terms ~~accounts~~ranging ~~receivable~~from is20 asto ~~follows~~50 ~~for~~years. The Company amortizes the ~~years~~cost ~~ended~~of ~~June~~land ~~30,~~use ~~2011~~rights ~~and~~over ~~2010:~~the usage terms using the straight-line method.

	2011		2010
Beginning allowance for doubtful accounts	$	1,306,268	$	946,207
Additions charged to bad debt expense		1,017,943		713,665
Write-off charged against allowance		(883,365)		(360,288)
Foreign currency translation adjustments		65,624		6,684
Ending allowance for doubtful accounts	$	1,506,470	$	1,306,268

The Company increased $2,511 for software upgrade during the year ended June 30, 2012.

~~Concentrations of risk~~F-12

~~The~~Intangible ~~Company's~~assets ~~operations~~ are inreviewed ~~the~~at ~~PRC.~~least annually ~~Accordingly,~~and ~~the~~more ~~Company's~~often ~~business,~~if ~~financial~~circumstances ~~condition~~dictate, ~~and~~to ~~results~~determine ofwhether ~~operations~~their ~~may~~carrying bevalue ~~influenced~~has bybecome ~~the~~impaired. ~~political,~~The ~~economic~~Company ~~and~~considers assets ~~legal~~to ~~environments~~be inimpaired if the ~~PRC,~~carrying ~~and~~value byexceeds the ~~general~~future ~~state~~projected ofcash ~~the~~flows ~~Chinese~~from ~~economy~~related operations. The Company's ~~operations~~also in re-evaluates the ~~PRC~~periods ~~are~~of ~~subject~~amortization to ~~specific~~determine ~~considerations~~whether ~~and~~subsequent ~~significant~~events ~~risks~~and ~~not~~circumstances ~~typically~~warrant ~~associated~~revised ~~with~~estimates ~~companies~~of inuseful ~~North America and Western Europe~~lives. As ~~These~~of ~~include~~June ~~risks associated with~~30, ~~among~~2012 ~~others~~and 2011, the ~~political,~~Company ~~economic~~determined ~~and~~that ~~legal~~there ~~environments~~had ~~and~~been ~~foreign~~no ~~currency exchange~~impairment. ~~The~~For ~~Company's~~the ~~results~~years ~~may~~ended beJune ~~adversely~~30, ~~affected~~2012 byand ~~changes~~2011, amortization inexpense ~~governmental~~relating ~~policies with respect~~ to ~~laws~~these ~~and~~intangible ~~regulations,~~assets ~~anti-inflationary~~amounted ~~measures,~~to ~~currency conversion and remittance abroad~~$59,368 and ~~rates and methods of taxation~~$56,632, ~~among others~~respectively.

~~F-9~~The following table consists of the expected amortization expenses for the next five years and thereafter:

Management believes the credit risk on bank deposits is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies, or state-owned banks in China. Cash includes cash on hand and demand deposits in accounts maintained with state-owned banks within the PRC and the United States of America. The cash deposits in U.S. financial institutions exceed the amounts insured by the U.S. government. Balances at financial institutions or state owned banks within the PRC are not covered by insurance. Non-performance by these institutions could expose the Company to losses for amounts in excess of insured balances. At June 30, 2011 and 2010, the Company’s bank balances with the Banks in PRC amounted $13,017,076 and $ 20,470,585 respectively , which are uninsured and subject to credit risk. The Company has not experienced nonperformance by these institutions.

	Amount
Years ending June 30,
2013	$	59,368
2014		59,368
2015		59,368
2016		59,368
2017		59,368
Thereafter		2,974,307
Total	$	3,271,147

~~The~~Income Company’s concentrations of credit risk also relate to trade accounts receivable and accounts payable. There were no customers that individually comprised 10% or more of the revenues for the years ended June 30, 2011 and 2010, or trade accounts receivable as of June 30, 2011 and 2010. There was one vendor that individually comprised 10% or more of the Company’s total purchase for the year ended June 30, 2011. The Company does not have any accounts payable to this vendor as on June 30, 2011. There were no vendors comprised 10% or more of the Company’s total purchase for the year ended June 30, 2010.taxes

~~For~~The ~~export~~Company’s ~~sales,~~operations are subject to income and transaction taxes in the ~~Company~~United ~~frequently~~States ~~requires~~and ~~significant~~in ~~down~~the ~~payments~~PRC orjurisdictions. ~~letter~~Significant ofestimates ~~credit~~and byjudgments ~~its~~are ~~customers~~required in ~~prior~~determining tothe ~~shipment~~Company’s worldwide provision for income taxes. ~~During~~Some ~~the~~of ~~year~~these estimates are based on interpretations of existing tax laws or regulations, and as a result the ~~Company~~ultimate ~~maintains~~amount ~~export~~of ~~credit~~tax ~~insurance~~liability tomay ~~protect~~be uncertain. However, the Company ~~against~~does not ~~the~~anticipate ~~risk~~any events that ~~the~~would ~~overseas~~lead ~~customers~~to ~~may~~changes ~~default~~to onthese ~~settlement~~uncertainties.

The ~~following~~Company ~~table~~accounts ~~summarizes~~for ~~financial~~income ~~information~~taxes in accordance with ASC 740 (formerly SFAS 109, "Accounting for Income Taxes"). Under the asset and liability method as required by ASC 740, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years ~~ended~~to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Under ASC 740, the effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred tax asset will not be realized. As of June 30, ~~2011~~2012 and ~~2010~~2011, ~~concerning~~ the Company’s ~~revenues~~does ~~based~~not have material deferred taxes for its China operation. The Company and its subsidiaries are subject to income taxes on ~~geographic~~an ~~area:~~entity basis on income arising in, or derived from, the tax jurisdiction in which they operate. As the Group has only net loss generated in the United States, there was no tax expense or tax liability due to the Internal Revenue Service of the United States as of June 30, 2012 and 2011. The Group believes that the realization of the benefits arising from this loss appears to be uncertain due to its limited operating history and continuing losses for United States income tax purses. Accordingly, the company has provided 100% valuation allowance at the year end for its United States operation.

	2011		2010
Revenue
China	$	133,649,382	$	92,906,391
International		38,068,484		23,047,557
Total	$	171,717,866	$	115,953,948

F-13

~~Geographic~~The ~~Information~~Company evaluates uncertain tax position utilizing a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeal or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met.

~~Geographical~~The ~~distribution~~Company's ofoperations ~~sales~~are subject to income ~~foreign~~and ~~countries~~transaction ~~which~~taxes isin the United States and in the PRC jurisdictions. Significant estimates and judgments are required in determining the Company's worldwide provision for income taxes. Some of these estimates are based on ~~physical~~interpretations ~~shipments~~of toexisting tax ~~such~~laws ~~countries is~~or regulations, and as ~~follows:~~a result the ultimate amount of tax liability may be uncertain. However, the Company does not anticipate any events that would lead to changes to these uncertainties.

~~F-10~~Value Added Tax

	For the years ended June 30,
Geographical Areas	2011		2010
Netherlands	$	8,811,720	$	-
Indonesia		6,786,489		1,253,158
Malaysia		2,806,438		137,448
Others		19,663,837		21,656,951
Total	$	38,068,484	$	23,047,557

Enterprises or individuals who sell products, engage in repair and maintenance or import and export goods in the PRC are subject to a value added tax in accordance with Chinese laws. The standard value added tax rate is 17% of the gross sales price; however, for the Compa

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