TNBI 10-Q Quarterly Report June 30, 2011 | Alphaminr
Tanke Biosciences Corp
ALPHAMINR

TNBI 10-Q Quarter ended June 30, 2011

Balance Sheet
Cash Flow
Income Statement
10-Q 1 e608794_10q-tanke.htm FORM 10-Q Unassociated Document
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

R
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2011
Or
£
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to

Commission File Number: 000-53529
_______________

TANKE BIOSCIENCES CORPORATION
(Exact name of registrant as specified in its charter)

Nevada
No. 26-3853855
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
Room 2801, East Tower of Hui Hao Building, No. 519 Machang Road Pearl River New City, Guangzhou, P. R. China
510627
(Address of principal executive offices)
(Zip Code)

Registrant’s telephone number, including area code:
86-(20) 3885-9025

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

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 company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer £ Accelerated filer £

Non-accelerated filer £ Smaller reporting company R
I ndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £ No R
13,324,093 shares of Common Stock, par value $.001, were outstanding at August 15, 2011.
TANKE BIOSCIENCES, CORP.
Throughout this Quarterly Report on Form 10-Q, the “Company”, “we,” “us,” and “our,” refer to (i) Tanke Biosciences Corporation, a Nevada corporation (“Tanke”), (ii) China Flying Development Limited, a Hong Kong corporation (“China Flying”), and (iii) Guangzhou Kanghui Agricultural Technology Co., Ltd., a wholly foreign enterprise under the laws of the People’s Republic of China (“Kanghui Agricultural”), and our principal operating business, Guangzhou Tanke Industry Co., Ltd. (“Guangzhou Tanke”), a company organized under the laws of the People’s Republic of China (“China” or the “PRC”), which we control via a series of variable interest entity contractual agreements (the “VIE Agreements”), unless otherwise indicated or the context otherwise requires.
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains certain forward-looking statements (as such term is defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934).  The statements herein which are not historical reflect our current expectations and projections about the Company’s future results, performance, liquidity, financial condition, prospects and opportunities and are based upon information currently available to us and our management and our interpretation of what we believe to be significant factors affecting our business, including many assumptions about future events.  Such forward-looking statements include statements regarding, among other things:

·
our ability to produce, market and generate sales of our products;
·
our ability to develop, acquire and/or introduce new products;
·
our projected future sales, profitability and other financial metrics;
·
our future financing plans;
·
our plans for expansion of our facilities;
·
our anticipated needs for working capital;
·
the anticipated trends in our industry;
·
our ability to expand our sales and marketing capability;
·
acquisitions of other companies or assets that we might undertake in the future;
·
our operations in China and the regulatory, economic and political conditions in China;
·
our ability as a U.S. company to operate our business in China through an indirect wholly-owned subsidiary; and
·
competition existing today or that will likely arise in the future.
Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “should,” “will,” “plan,” “could,” “target,” “contemplate,” “predict,” “potential,” “continue,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “seek,” or “project” or the negative of these words or other variations on these or similar words.  Actual results, performance, liquidity, financial condition and results of operations, prospects and opportunities could differ materially from those expressed in, or implied by, these forward-looking statements as a result of various risks, uncertainties and other factors, including the ability to raise sufficient capital to continue the Company’s operations.  These statements may be found under Part I, Item 2—“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in the sector entitled “Risk Factors” contained in our Form 10-K for the year ended December 31, 2010, as well as elsewhere in this Quarterly Report on Form 10-Q generally.  Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined in the sector entitled “Risk Factors” and matters described in this Quarterly Report on Form 10-Q generally.  In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this Quarterly Report on Form 10-Q will in fact occur.

Potential investors should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, there is no undertaking to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on Form 10-Q.  Such statements are presented only as a guide about future possibilities and do not represent assured events, and we anticipate that subsequent events and developments will cause our views to change.  You should, therefore, not rely on these forward-looking statements as representing our views as of any date after the date of this Quarterly Report on Form 10-Q.
This Quarterly Report on Form 10-Q also contains estimates and other statistical data prepared by independent parties and by us relating to market size and growth and other data about our industry. These estimates and data involve a number of assumptions and limitations, and potential investors are cautioned not to give undue weight to these estimates and data. We have not independently verified the statistical and other industry data generated by independent parties and contained in this Quarterly Report on Form 10-Q. In addition, projections, assumptions and estimates of our future performance and the future performance of the industries in which we operate are necessarily subject to a high degree of uncertainty and risk.

Potential investors should not make an investment decision based solely on our projections, estimates or expectations.
TANKE BIOSCIENCES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

June 30,
December 31,
2011
2010
ASSETS
(Unaudited)
Restated
Current Assets
Cash and cash equivalents
$ 10,519,392 $ 76,075
Restricted cash
706,802 -
Accounts receivable, net
1,706,005 -
Inventory
1,211,279 -
Note receivable-related parties, current portion
1,856,626 -
Other receivables
864,274 -
Other current assets
1,738,137 -
Deferred tax assets
2,298 -
Total current assets
18,604,813 76,075
Property, plant and equipment, net
4,340,336 -
Investment in Tanke Bio-Tech
- 1,922,664
Construction in progress
111,402 -
Intangible asset, net
293,862 -
TOTAL ASSETS
$ 23,350,413 $ 1,998,739
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Other payable and accrued liabilities
219,068 -
Income tax payable
1,017,429 -
Accounts payable
615,717 -
Current portion of long-term borrowing
927,128 73,150
Due to related party
81,336 75,035
Total current liabilities
$ 2,860,678 $ 148,185
Convertible notes payable
4,162,410 -
Advance from governement grant
11,049 -
Long term borrowing
927,128 -
TOTAL LIABILITIES
7,961,265 148,185
STOCKHOLDER’S EQUITY
Common stock $0.001 par value, 50,000,000 shares authorized; 13,324,083 and 10,758,000 shares issued and outstanding, as of June 30, 2011 and December 31, 2010, respectively
13,324 10,758
Additional paid-in capital
16,293,036 (9,468 )
Retained earnings
(1,652,760 ) 1,884,554
Accumulated other comprehensive income
735,548 (35,290 )
TOTAL STOCKHOLDER’S EQUITY
15,389,148 1,850,554
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$ 23,350,413 $ 1,998,739

The accompanying notes are an integral part of these condensed consolidated financial statements.
TANKE BIOSCIENCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended
Six Months Ended
June 30,
June 30,
2011
2010
2011
2010
Revenues
Net sales
$ 4,989,843 $ - $ 10,931,313 $ -
Costs of goods sold
(3,217,801 ) - (6,732,867 ) -
Gross profit
1,772,042 - 4,198,446 -
Operating expenses:
Selling expenses
(618,806 ) - (1,204,056 ) -
General and administrative expenses
(780,518 ) - (3,324,905 ) (250 )
Depreciation and amortization
(51,460 ) - (63,179 ) -
Income from Tanke Bio-Tech
0 188,404 - 368,184
Other operating expenses
(91,689 ) - (91,689 ) -
Income (loss) from operations
229,569 188,404 (485,383 ) 367,934
Other income (expense):
Gain on bargain purchase of Tanke Bio-Tech
- - 248,073 924,557
Interest income
2,220 - 3,610 -
Interest expense
(423,495 ) - (682,949 ) -
Amortization of discount on notes
(1,381,806 ) - (2,141,040 ) -
Foreign exchange gains (loss), net
26,646 - (52,400 ) -
(Loss) income before tax
(1,546,866 ) 188,404 (3,110,089 ) 1,292,491
Income tax
(106,953 ) - (320,308 ) -
Net (loss) income
(1,653,819 ) 188,404 (3,430,397 ) 1,292,491
Other comprehensive income,net of tax:
Effects of foreign currency conversion
649,101 - 240,768 (35,290 )
Comprehensive (loss) income
$ (1,004,718 ) $ 188,404 $ (3,189,629 ) $ 1,257,201
Net (loss) income available to common
shareholders per share:
Basic (loss) earnings per share
$ (0.12 ) $ 0.02 $ (0.27 ) $ 0.12
Diluted (loss) earnings per share
$ (0.12 ) $ 0.02 $ (0.27 ) $ 0.12
Weighted average shares outstanding:
Basic
13,324,083 10,758,000 12,756,993 10,758,000
Diluted
13,324,083 10,758,000 12,756,993 10,758,000

The accompanying notes are an integral part of these condensed consolidated financial statements.
TANKE BIOSCIENCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)


Additional
Other
Paid-in
Retained
Comprehensive
Common Stock
Capital
Earnings
Income
Total
Shares
Amount
Balances at December 31,2010, restated in
terms of the Share Exchange Agreement
10,758,000 $ 10,758 $ (9,468 ) $ 1,884,554 $ (35,290 ) $ 1,850,554
Effect of VIE Agreement with Tanke
7,633,338 - 530,070 8,163,408
Effect of Share Exchange Agreement
399,180 399 54,200 - - 54,599
Effect of Private Placement
6,125,195 - - 6,125,195
Shares issued for consulting services
2,166,903 2,167 2,489,771 - - 2,491,938
Net loss
- - - (3,430,397 ) - (3,430,397 )
Dividend distribution
- - - (106,917 ) - (106,917 )
Other comprehensive income effects of
foreign currency conversion
- - - 240,768 240,768
Balances at June 30, 2011 (Unaudited)
13,324,083 $ 13,324 $ 16,293,036 $ (1,652,760 ) $ 735,548 $ 15,389,148
The accompanying notes are an integral part of these condensed consolidated financial statements.
TANKE BIOSCIENCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended
June 30,
2011
2010
Cash Flows from Operating Activities
Net (loss) income
$ (3,430,397 ) $ 1,292,491
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in income of Tanke Bio-Tech
- (368,184 )
Gain on bargain purchase of Tanke Bio-Tech
- (924,557 )
Increase in allowance for doubtful accounts
3,341 -
Depreciation and amortization
63,179 -
Common stock issued for services
2,491,938 -
Amortization of discount on convertible notes payable
2,141,040 -
Amortization of offering asset
615,549 -
Gain on increase in holding from 25% to 100%
248,073 -
Changes in operating assets and liabilities:
Accounts receivable
70,537 -
Inventory
143,178 -
Other current assets
(1,096,667 ) -
Other receivables
(44,836 ) -
Government grant
(62,455 ) -
Accounts payable
69,443 -
Accrued expenses and other payables
26,742 -
Income tax payable
317,675 -
Deferred tax assets
15,591 -
Advance from customer
(3,176 ) -
Net cash provided by (used in) operating activities
1,568,755 (250 )
Cash Flows from Investing Activities
Purchase of property, plant and equipment
(119,132 ) -
Change in restricted cash
(706,754 ) -
Construction in progress
2,145,950 -
Net cash provided by investing activities
1,320,064 -
Cash Flows from Financing Activities
Due from (to) a related party
1,233,191 75,035
Net proceeds from issuance of convertible notes
5,825,360 -
Increase in bank borrowing
495,074 -
Net cash provided by financing activities
7,553,625 75,035
Effects of foreign currency conversion on cash
873 -
Net increase in cash and cash equivalents
10,443,317 74,785
Cash at beginning of period
76,075 1,290
Cash at end of period
$ 10,519,392 $ 76,075
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for:
Interest paid on bank loan
$ 67,405 $ -
Income taxes
$ 31,562 $ -

The accompanying notes are an integral part of these condensed consolidated financial statements.
TANKE BIOSCIENCES CORPORATION
NOTES TO FINANCIAL STATEMENTS

1.
ORGANIZATION AND PRINCIPAL ACTIVITIES

In these consolidated financial statements, unless the context requires otherwise, the terms “we”, “our”, “us” and the “Company” refer to Tanke Biosciences Corporation, a Nevada corporation formerly known as Greyhound Commissary, Inc. (“Greyhound”), as well as our direct and indirect subsidiaries, and our principal operating business, Guangzhou Tanke Industry Co., Ltd. (“Guangzhou Tanke”), a company organized under the laws of the People’s Republic of China (“China” or the “PRC”), which we control via a series of variable interest entity contractual agreements (the “VIE Agreements”) more fully described below.

We conduct our business through our subsidiaries, principally our wholly-owned subsidiary China Flying Development Limited (“China Flying”), a Hong Kong incorporated company, and its wholly-owned subsidiary Guangzhou Kanghui Agricultural Technology Co., Ltd. (“Kanghui Agricultural” or the “WFOE”), a wholly foreign owned enterprise incorporated as a limited liability company under the laws of the PRC.  The Company operates and controls Guangzhou Tanke through Kanghui Agricultural and China Flying and in connection with the VIE Agreements.

On January 3, 2011, our board of directors unanimously approved a resolution to enter into a Share Exchange Agreement with China Flying, and Golden Genesis, a British Virgin Islands company, the sole stockholder of China Flying.  Under the terms of the Share Exchange, Golden Genesis exchanged 100% of its capital stock in China Flying for 10,758,000 shares of authorized, but previously unissued Greyhound common stock, post-split as described below.  Following the closing of the agreement on February 9, 2011, China Flying became our wholly owned subsidiary.

As management of China Flying obtained control of the Company, the Share Exchange was treated as a reverse merger. Accordingly, for accounting purposes China Flying was the acquirer so historical financial information presented herewith is that of China Flying.

Also on January 3, 2011, Kanghui Agricultural, which is wholly owned by China Flying entered into a series of agreements with Guangzhou Tanke, pursuant to which Kanghui effectively assumed management of the business activities of Guangzhou Tanke.  Kanghui is entitled to 100% of the net income of Guangzhou Tanke and is able to direct Guangzhou Tanke’s actions. Consequently, on that date we began consolidating the activities of Guangzhou Tanke into China Flying.

Our board of directors further approved unanimously on January 3, 2011, a one share for 8.512 shares reverse split of our issued and outstanding common stock.  The effective date of the split was established by our board on a date prior to the closing of the acquisition of China Flying. The split was also approved by our principal stockholder, owning 88.3% of our outstanding shares, by written consent.

Upon the effectiveness of the split, each share of our issued and outstanding common stock was reverse split on a one share for 8.512 shares basis.  No fractional shares were issued in connection with the reverse split.  Stockholders who would otherwise be entitled to receive fractional shares, because they hold a number of shares of common stock that is not evenly divided by the split ratio, will have the number of new shares to which they are entitled rounded up to the next whole number of shares.  No stockholders received cash in lieu of fractional shares.

At the time of the Share Exchange Agreement, Greyhound had 3,397,787 shares of common stock issued and outstanding.  Following the reverse split, but prior to the issuance of shares pursuant to the acquisition of China Flying, the outstanding shares were reduced to approximately 399,180 shares, without giving effect to the rounding up of fractional shares. Split shares issued in connection with the reverse stock split are fully paid and non-assessable. The number of stockholders remained unchanged as a result of the reverse split. The par value of our common stock remained unchanged.

On February 9, 2011, the Company entered into a Securities Purchase Agreement with individual investors relating to a private placement transaction by the Company (the “Private Placement”) of 6,669,627 units.  Each unit consisted of a $1.15 principal amount 8% Senior Convertible Note (the “Notes”) and a Common Stock Purchase Warrant (the “Warrants”) to purchase one share of the Company’s common stock at an exercise price of $1.40 per share.

“RMB” and “Renminbi” refer to the legal currency of China and “$”, “US dollar” and “US$” refer to the legal currency of the United States.
Overview of Our Business

Through Guangzhou Tanke, our principal operating business, we are one of the leading animal nutrition and innovative feed additive providers in China.  Our products are distinguished from traditional artificial feed additives in that they are environmentally-friendly and are designed to optimize the growth and health of livestock such as pigs and cattle, as well as farmed fish.

2.           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)  Basis of Preparation

The Company’s consolidated financial statements have been stated in US dollars and prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial statements and with instructions to Form 10-Q pursuant to the rules and regulations of Securities and Exchange Act of 1934, as amended (the "Exchange Act") and Article 8-03 of Regulation S-X under the Exchange Act. In the opinion of our management, we have included all adjustments considered necessary (consisting of normal recurring adjustments) for a fair presentation. Operating results for the six months ended June 30, 2011 are not indicative of the results that may be expected for the fiscal year ending December 31, 2011.  You should read these unaudited consolidated financial statements in conjunction with the audited financial statements and the notes thereto included in the Company's Form 8-K/A for the year ended December 31, 2010 filed with the SEC on August 15, 2011.

(b)  Basis of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries (the “Group'').  All significant inter-company balances and transactions within the Group have been eliminated.

(c)  Use of Estimates

In preparing 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 periods.  These accounts and estimates include, but are not limited to, the valuation of the amount due from related parties, the net realizable value of inventories, the estimation of useful lives of property and equipment and intangible assets, and the value of warrants. Actual results could differ from those estimates.

(d)  Concentrations of Credit Risk

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, accounts receivable and amounts due from related parties. The Company places its cash with financial institutions with high-credit ratings and quality. The Company maintains bank accounts in the PRC only. In addition, the Company conducts periodic reviews of the related party financial conditions and payment practices.

Approximately 98% of the Company’s revenue is generated from buyers in mainland China.

(e)  Concentrations of Suppliers

All the Company’s suppliers are located in mainland China.

(f)  Cash and Cash Equivalents

The Company considers all highly liquid investments with initial maturities of three months or less to be cash equivalents.
(g)  Restricted Cash

Deposits that are restricted in use are classified as restricted cash. Such restricted cash is in an escrow account and represents one year of interest on the convertible notes payable. When the notes mature or are converted into stock, the cash in this account will be released from restriction.

(h)  Trade and Other Receivables

The Company periodically assesses its accounts receivable for collectability on a specific identification basis. If collectability of an account becomes unlikely, an allowance is recorded for that doubtful account. Once collection efforts have been exhausted, the account receivable is written off against the allowance.  The Company does not require collateral for trade or other accounts receivable.

As of June 30, 2011 and December 31, 2010, the Company’s allowance for doubtful accounts amounted to $143,097 and $0, respectively.

(i)  Inventories

Inventories are stated at the lower of cost or net realizable value. Cost is determined using the weighted average method. The cost of inventories includes the purchase cost and other costs incurred in bringing the inventories to their present location and condition. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

As of June 30, 2011 and December 31, 2010, the Company did not make any provision for slow-moving or defective inventories.
(j) Investment in Tanke Bio-Tech

The Company’s investment in Tanke Bio-Tech is presented in accordance with ASC 323-10, Investments - Equity Method and Joint Ventures. Under this method, the investments are originally recorded at cost, and adjusted for dividends received from the investees.

Such investments are assessed for impairment annually and more frequently if conditions change such that the Company’s carrying amount might not be recoverable.
(k)  Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its existing use.

Depreciation of property and equipment is calculated using the straight-line method over their estimated useful lives. The estimated useful lives are as follows:

Buildings
15-20 years
Plant and machinery
3-20 years
Motor vehicle
10 years
Office equipment
3-10 years

Expenditures for additions, major renewals and betterments are capitalized and expenditures for maintenance and repairs are charged to expense as incurred.

Upon sale or disposition, the applicable amounts of asset cost and accumulated depreciation are removed from the accounts and the net amount less the proceeds from disposal is charged or credited to income.

(l)  Land use rights

Land use rights are recorded at cost less accumulated amortization. Amortization is provided over the term of the land use right agreements on a straight-line basis.

(m)  Impairment of Long-lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. The Company recognizes impairment of long-lived assets in the event that the net book values of such assets exceed the future undiscounted cash flows attributable to such assets.

(n)  Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 605-10, Revenue Recognition, and SEC Staff Accounting Bulletin No. 104. Pursuant to these pronouncements, revenue is recognized when all of the following criteria are met:

- Persuasive evidence of an arrangement exists;
- Delivery has occurred or services have been rendered;
- The seller's price to the buyer is fixed or determinable; and
- Collectability is reasonably assured.

The Company’s revenue is generated through the wholesale and retail sale of livestock feed including organic trace mineral additives, functional regulation additives, herbal medicinal additives and raw materials. Before the Company recognizes revenue on these product sales, written purchase orders and contracts are received in advance of all shipments of goods to customers. For sales within the Company’s own province, delivery is made by Company employees. Such delivery occurs on the same day as shipment. For delivery outside the province, shipment is made through a separate logistics company that assumes the risk of loss. Revenue is recognized upon shipment of goods to the customers. The Company typically does not incur bad debt losses because this type of loss is deducted from the salesperson’s compensation, thereby mitigating the loss to the Company. Therefore, collectability is reasonably assured.

Revenue is presented net of sales returns, which are not significant. However, the Company continually performs analyses of returns and records a provision at the time of sale if necessary.  As of June 30, 2011 and December 31, 2010, it was determined that potential returns and allowances were not material so the Company did not record a provision for returns. The Company revisits this estimate regularly and adjusts it if conditions change.

(o)  Cost of Goods Sold

Cost of revenue consists primarily of material cost, labor cost, rent of land allocated to production, overhead associated with the manufacturing process and directly related expenses.

(p)  Research and Development Costs

Research and development costs are charged to expense as incurred and are included in operating expenses.

(q)  Income taxes

The Company uses the asset and liability method of accounting for income taxes pursuant to ASC 740, ”Income Tax”.  Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and loss carry forwards and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

(r)  Comprehensive Income

Comprehensive income is defined to include all changes in equity except those resulting from net income or loss, investments by owners and distributions to owners. The Company’s only component of other comprehensive income is the foreign currency translation adjustment.

(s)  Commitments and Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.

(t)  Foreign Currency Translation

The Company and its subsidiaries maintain financial statements in the functional currency of each entity. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective periods.

The financial statements of each entity are prepared using the functional currency, and have been translated into United States dollars (“US$” or “$”). Assets and liabilities are translated at the exchange rates at the balance sheet dates and revenue and expenses are translated at the average exchange rates for the period.  Stockholders’ equity is translated at historical exchange rates. Any translation adjustments are included as a foreign exchange adjustment in other comprehensive income, a component of stockholders’ equity.

RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation.

(u)  Financial Instruments

The carrying amounts of cash and cash equivalents, restricted cash, accounts receivable, due to/from related parties, notes payable, other payable and accrued liabilities and income tax payable approximate their fair values due to the short-term nature of these items. The carrying amounts of long-term borrowings approximate the fair value based on the Company’s expected borrowing rate for debt with similar remaining maturities and comparable risk.

Convertible notes are not carried at fair value due to the discounts for warrants and the beneficial conversion feature. As the interest on these notes approximates market interest, the fair value is their face value of $7,670,071.

It is management’s opinion that the Company is not exposed to significant interest, price or credit risks arising from these financial instruments.

(v)  Recent Accounting Updates

In October 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-13 “Multiple-Deliverable Revenue Arrangements — a consensus of the FASB Emerging Issues Task Force” that provides amendments to the criteria for separating consideration in multiple-deliverable arrangements. As a result of these amendments, multiple-deliverable revenue arrangements will be separated in more circumstances than under existing U.S. GAAP. The ASU does this by establishing a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable will be based on vendor-specific objective evidence if available, third-party evidence if vendor-specific objective evidence is not available, or estimated selling price if neither vendor-specific objective evidence nor third-party evidence is available. A vendor will be required to determine its best estimate of selling price in a manner that is consistent with that used to determine the price to sell the deliverable on a standalone basis. This ASU also eliminates the residual method of allocation and will require that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method, which allocates any discount in the overall arrangement proportionally to each deliverable based on its relative selling price. Expanded disclosures of qualitative and quantitative information regarding application of the multiple-deliverable revenue arrangement guidance are also required under the ASU. The ASU does not apply to arrangements for which industry specific allocation and measurement guidance exists, such as long-term construction contracts and software transactions.  The ASU is effective beginning January 1, 2011. The Company adopted this update and it did not have any impact on the financial statements.
In January 2010, the FASB issued ASU No. 2010-02 “Accounting and Reporting for Decrease in Ownership of a subsidiary – a Scope Clarification”. The update provides amendments to subtopic 810-10 and related guidance within US GAAP to clarify that the scope of the decrease in ownership provisions of the Subtopic and related guidance applies to three cases. The amendments in this Update also clarify that the decrease in ownership guidance in Subtopic 810-10 does not apply to the sales of in substance real estate and conveyances of oil and gas mineral rights transactions even if they involve businesses. If a decrease in ownership occurs in a subsidiary that is not a business or nonprofit activity, and entity first needs to consider whether the substance of the transaction causing the decrease in ownership in addressed in other U.S.GAAP, such as transfers of financial assets, revenue recognition, exchanges of nonmonetary assets, sales of in substance real estate, or conveyances of oil and gas mineral rights, and apply that guidance as applicable. If no other guidance exists, an entity should apply the guidance in Subtopic 810-10. The amendments in this Update also expand the disclosure about the deconsolidation of a subsidiary or derecognition of a group of assets within the scope of Subtopic 810-10. The Company adopted this Update on January 1, 2010 and there was no impact.

In June 2009, the FASB issued SFAS No.167, “Amendments to FASB Interpretation No.46(R)”, which is codified as ASC 810. ASC 810 amends FASB Interpretation No.46(R), “Variable Interest Entities” for determining whether an entity is a variable interest entity (“VIE”) and requires an enterprise to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in a VIE. Under ASC 810, an enterprise has a controlling financial interest when it has a) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. ASC 810 also requires an enterprise to assess whether it has an implicit financial responsibility to ensure that a VIE operates as designed when determining whether it has power to direct the activities of the VIE that most significantly impact the entity’s economic performance.

ASC 810 also requires ongoing assessments of whether an enterprise is the primary beneficiary of a VIE, requires enhanced disclosures and eliminates the scope exclusion for qualifying special-purpose entities. ASC 810 shall be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. ASC 810 is effective for the Company and the consolidation of Guangzhou Tanke was in accordance with this new update.
3.  INVENTORIES
Inventories consisted of the following:

As of
As of
June 30, 2011
December 31, 2010
(Unaudited)
Work in progress
$ 153,196 $ -
Finished goods
306,891 -
Packing materials
37,461 -
Raw material
713,731 -
$ 1,211,279 $ -
4.  ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following:

As of
As of
June 30, 2011
December 31, 2010
(Unaudited)
Account receivables
$ 1,852,443 $ -
Less: Bad debt allowance
(146,438 ) -
$ 1,706,005 $ -

5.  OTHER CURRENT ASSETS

Other current assets consisted of the following:

As of
As of
June 30, 2011
December 31, 2010
(Unaudited)
Prepayment to suppliers
$ 674,659 $ -
Deferred expenses
55,024 -
Offering costs, net
1,008,454 -
$ 1,738,137 $ -

Deferred expenses primarily represent accrued input VAT which has not been declared to the tax bureau.

In connection with the private placement, the Company incurred $1,624,002 of closing costs. These costs have been reflected as other current assets and are being amortized over the life of the related convertible notes payable. As of June 30, 2011, the remaining book value of these closing costs amounted to $1,008,454.

6.  PROPERTY, PLANT AND EQUIPMENT, NET

Property and equipment consisted of the following.

As of
As of
June 30, 2011
December 31, 2010
(Unaudited)
Leasehold land and buildings
$ 4,105,970 $ -
Plant and equipment
630,644 -
Motor vehicles
62,649 -
Office equipment
343,451 -
5,142,714 -
Less: accumulated depreciation and amortization
802,378 -
$ 4,340,336 $ -
The Company has buildings on the site it occupies, including factory buildings. Due to the lack of a Land Use Right Certificate, the Company is unable to apply for the Property Ownership Certificate for the buildings. However, as the buildings are in use, the Company depreciates them over their expected useful lives. During the quarter ended June 30, 2011, the Company’s factory campus construction project was completed and the costs were moved from construction in process to the buildings account. Upon placement in service, the Company began depreciating them.

7.  LAND USE RIGHT, NET

The land use right consisted of the following.

As of
As of
June 30, 2011
December 31, 2010
(Unaudited)
Intangible Assets
$ 293,862 $ -

On November 21, 2003, the Company applied to the Government of Huaqiao Town, Huadu District, Guangzhou, for the land use right of No. 2 Industry Area of Huaqiao Town (i.e., Laohutou Lot, Wangongtang) covering an area of around 430,000 square feet. The total consideration for the land use right is $598,536. As of June 30, 2011, the Company has paid $295,100 of this amount.

While the final approval of the application of land use right is pending, the Company entered into an agreement on April 15, 2006 to lease the land from its beneficial owner until such time as a land use certificate is issued by the government or May 21, 2021, whichever occurs first. Until that time, the lease is at will and payments under the terms of the lease are $8,800 per year.


8.  OTHER PAYABLE AND ACCRUED LIABILITIES

As of
As of
June 30, 2011
December 31, 2010
(Unaudited)
Other payables
$ 46,893 $ -
Staff welfare payable
67,540 -
Value added tax payable
83,442 -
Other tax payable
21,193 -
$ 219,068 $ -

Other payables represent loans from third parties, which are interest free, unsecured and repayable on demand.
9.  CONVERTIBLE NOTES PAYABLE

On February 9, 2011, the Company entered into a Securities Purchase Agreement with individual investors relating to a private placement transaction by the Company (the “Private Placement”) of 6,669,627 units.  Each unit consisted of a $1.15 principal amount 8% Senior Convertible Note (the “Notes”) and a Common Stock Purchase Warrant (the “Warrants”) to purchase one share of the Company’s common stock at an exercise price of $1.40 per share.

As a result of the Private Placement, the Company offered and sold $7,670,071 worth of Notes convertible into 6,669,627 shares of common stock.  The Notes are payable 24 months from February 9, 2011 with an interest rate of 8% per annum payable semiannually in arrears.  The Company placed in escrow an amount of the proceeds of the Private Placement equal to one semi-annual interest payment on the Notes to secure prompt interest payments.  Until such time as 75% of the Notes are converted into shares of Common Stock, if such escrow is depleted in order to make interest payments, the Company will replenish such escrow amount.  At the option of the holder, the Notes may be converted into Common Stock at a price of $1.15 per share, which is subject to customary weighted average and stock based anti-dilution protection.  The issuance of the Notes was not registered under the Securities Act as such issuance was exempt from registration under Section 4(2) of the Securities Act and Regulation D.

The Notes contain customary events of default and affirmative and negative covenants of the Company, including negative covenants which restrict the Company’s ability to do the following (among other things) without the consent of the investors: (i) incur, or permit to exist, any indebtedness  for borrowed money in excess of (A) US$3,000,000 during the twelve (12) month period beginning on February 9, 2011, or (B) US$5,000,000 during the two-year period beginning on February 9, 2011 and ending on February 9, 2013 (the maturity date of the Notes), except in the ordinary course of the Company’s business; (ii) lend or advance money, credit or property to or invest in (by capital contribution, loan, purchase or otherwise) any person or entity in excess of US$1,000,000 except: (A) investments in United States Government obligations, certificates of deposit of any banking institution with combined capital and surplus of at least $200,000,000; (B) accounts receivable arising out of sales in the ordinary course of business; and (C) inter-company loans between and among the Company and its subsidiaries; (iii) pay dividends or make any other distribution on shares of the capital stock of the Company; (iv) create, assume or permit to exist, any lien on any of the Company’s property or assets now owned or hereafter acquired, subject to existing liens and certain exceptions; (v) assume guarantees, subject to certain exceptions; (vi) engage in “sale-leaseback” transactions, subject to certain exceptions; (vii) make capital expenditures in excess of US$5,000,000 in any fiscal year, subject to certain exceptions; and (viii) materially alter the Company’s business.

The warrants issued as a component of the units were valued using the Black-Scholes method using the following assumptions: (1) estimated life of warrants of 3 years, (2) annualized volatility of 100%, (3) fair value of stock as of grant date of $1.15, (4) exercise price of $1.40, (5) annual dividend rate of 0%, and (6) discount rate of 1.34%. Such calculation resulted in a warrant value of $4,470,536.

In accordance with ASC 470-20-25, the proceeds of the unit offering were allocated to the Notes and warrants based on their relative fair values on a weighted average basis, with the resulting allocated value of the warrants of $2,824,350 being classified to additional paid in capital. Such discount to the Notes is being amortized over their term of two years.

The beneficial conversion feature associated with the issuance of the above Notes, amounted to $2,824,350, which has also been recorded as a discount to the convertible notes payable and is being amortized over the life of the Notes.

As of June 30, 2011, the book value of the Notes amounted to $4,162,410, which consisted of the aggregate face value of $7,670,071, less the remaining discount of $3,507,661.
10.  INCOME TAX

The Company’s operating subsidiary, Guangzhou Tanke, is a “domestic enterprise” that is registered and operated in Guangzhou, the PRC.

The PRC's legislative body, the National People's Congress, adopted the unified Enterprise Income Tax ("EIT") Law on March 16, 2007. This new tax law replaces the existing separate income tax laws for domestic enterprises and foreign-invested enterprises and became effective on January 1, 2008. Under the new tax law, a unified income tax rate is set at 25% for both domestic enterprises and foreign-invested enterprises. However, there is a transition period for enterprises, whether foreign-invested or domestic, that are currently receiving preferential tax treatments granted by relevant tax authorities. Enterprises that are subject to an enterprise income tax rate lower than 25% may continue to enjoy the lower rate and will transit into the new rate over a five year period beginning on the effective date of the EIT Law. Enterprises that are currently entitled to exemptions for a fixed term may continue to enjoy such treatment until the exemption term expires. Income tax expense for the three and six months ended June 30, 2011 and 2010 represents the provision for current income tax expenses in the PRC.

Tanke Bio-Tech, a subsidiary of Guangzhou Tanke, is a joint venture with a foreign entity that received a full exemption from income taxes in 2007 and 2008 and half rate reduction for years 2009, 2010 and 2011 in accordance with the Law of the People's Republic of China on Income Tax of Enterprises with Foreign Investment and Foreign Enterprises and Notification of the State Council on Carrying out the Transitional Preferential Policies concerning Enterprise Income Tax (Guofa (2007) No. 39).

As of June 30, 2011 and December 31, 2010, the income tax payable for the Company amounted to $1,017,429 and $0, respectively.

Significant components of the Company’s deferred tax asset are as follows.

As of
As of
June 30, 2011
December 31, 2010
(Unaudited)
Deferred tax asset
Allowance for doubtful accounts
$ 2,298 $ -

The Company is not subject to United States income tax. Furthermore, the Company is audited every year by an agency of the Chinese tax authority. Consequently, there are no uncertain tax positions requiring accrual or disclosure or timing differences in accordance with ASC 740-10, Income Taxes.

11.  LONG-TERM BORROWINGS

The details of the Company’s long-term borrowings are as follows:

As of
As of
June 30, 2011
December 31, 2010
(Unaudited)
Bank loans (uncollateralized)
$
1,854,256
$
73,150
Less: Current portion
(927,128
)
(73,150
)
$
927,128
$
-
The bank loans consist of $1,081,649 (RMB7,000,000) and $772,607 (RMB5,000,000), bearing interest at 5.4% and 5.85% per annum, maturing on May 21, 2012 and January 30, 2013, respectively.
12.  GOVERNMENT GRANT

The government grant liability represents an advance from the Chinese government for research and development projects. The Company has recorded the grants received as a government grant liability, and ratably recognizes the amount as a reduction of research and development expense when the related research and development activities are performed.

13.  RELATED PARTY TRANSACTIONS

Apart from the transactions and balances disclosed elsewhere in the financial statements, the Company had no material transactions with its related parties during the periods presented.

14.  SEGMENT INFORMATION

Tanke operates in four segments: organic trace mineral additives, functional regulation additives, herbal medicinal additives and other revenues. Management oversees each of these operations separately.

Organic trace mineral additives constitute the largest and fastest growing area of our business. These are various minerals added to animal feed to provide a balanced diet. Functional feed additives are widely used to enhance the properties of other products, improve feed efficiency and stimulate the rapid maturation of the immune system. Chinese herbal feed additives utilize traditional Chinese medicine theory to improve an animal’s digestion and appetite and to regulate the yin and yang balance of an animal’s health. Other revenue consists of the reselling of raw materials.

Property, equipment and other assets are shared and not tracked separately by segment. Administrative expenses are also not tracked by segment. Following is a breakdown of revenue and costs of sales by segment.

Three Months Ended
Six Months Ended
June 30,
June 30,
2011
2010
2011
2010
Segment revenues
Organic Trace Mineral Additives
$ 3,939,129 $ - $ 8,801,243 $ -
Functional Regulation Additives
948,663 - 1,658,775 -
Herbal Medicinal Additives
83,016 - 84,268 -
Other
19,035 - 387,027 -
$ 4,989,843 $ - $ 10,931,313 $ -
Segment costs of sales
Organic Trace Mineral Additives
$ 2,520,275 $ - $ 5,399,720 $ -
Functional Regulation Additives
601,392 - 1,025,072 -
Herbal Medicinal Additives
74,878 - 75,674 -
Other
21,256 - 232,401 -
$ 3,217,801 $ - $ 6,732,867 $ -
Segment gross profit
Organic Trace Mineral Additives
$ 1,418,854 $ - $ 3,401,523 $ -
Functional Regulation Additives
347,271 - 633,703 -
Herbal Medicinal Additives
8,138 - 8,594 -
Other
(2,221 ) - 154,626 -
$ 1,772,042 $ - $ 4,198,446 $ -

ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with our financial statements and the related notes. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties, such as its plans, objectives, expectations and intentions. Its actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements. As a result of the Share Exchange and the VIE Agreements, the Company, through Kanghui Agricultural, its indirect wholly owned subsidiary, assumed management of the business activities of Guangzhou Tanke and has the right to appoint all executives and senior management and the members of the board of directors of Guangzhou Tanke.  As used in this section, the terms “we”, “our”, “us” and the “Company” refer to the Company, our direct and indirect subsidiaries and Guangzhou Tanke, our principal operating business.

Overview

We are one of leading animal nutrition and feed additive providers in China and in 2001 were designated a certified high-tech company by the Guangzhou City Commission of Science and Technology as recognition for new technology developed by us in the agriculture industry. Our products optimize the growth and health of livestock such as pigs and cattle, as well as farmed fish, and seek to capitalize on China’s growing demand for safe and reasonably priced food.  Feed additives are utilized in China at less than half the rate of the United States and Europe, and we have a significant growth opportunity as Chinese farmers and ranchers include a greater amount of increasingly sophisticated additive to their feed.

We have more than 150 employees, with 40 engaged in sale or sales-related activities.  Our headquarters and manufacturing facilities are in a state-of-the-art 34,000 square-meter facility in the capital city of Guangzhou, in Guangdong province.  We currently produce 21 branded feed additives, with each brand available in seven different mixes that correspond to different states of an animal’s life cycle.

Our major products address most key market categories within China’s animal feed additive industry including: Organic Trace Mineral Additives, which account for approximately 81% of our revenue, Feed Acidifiers, Seasonings and Flavor Enhancers, which account for approximately 15% of our revenue, and Herbal Medicinal Additives, which account for approximately 1% of our revenue. Our extensive distribution network reaches China’s top 10 feed producers and the 500 largest animal farming operations. We currently market 21 different brands of feed additives at various price points to meet the demands of existing and prospective customers. Within each brand there are seven different mixes that correspond to the different growth stages of an animal’s life cycle. While the majority of our sales are domestic, international sales, mainly in Southeast Asia, Latin American and other developing countries, currently account for approximately 1.64% of our total sales .

Critical Accounting Policies
While our significant accounting policies are more fully described in Note 2 to our consolidated financial statements, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Basis of Presentation

Our consolidated financial statements have been stated in US dollars and prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial statements and with instructions to Form 10-Q pursuant to the rules and regulations of Securities and Exchange Act of 1934, as amended (the "Exchange Act") and Article 8-03 of Regulation S-X under the Exchange Act. In the opinion of our management, we have included all adjustments considered necessary (consisting of normal recurring adjustments) for a fair presentation. Operating results for the six months ended June 30, 2011 are not indicative of the results that may be expected for the fiscal year ending December 31, 2011.  You should read these unaudited consolidated financial statements in conjunction with the audited financial statements and the notes thereto included in the Company's Form 8-K/A for the year ended December 31, 2010 filed with the SEC on August 15, 2011.

Use of Estimates

In preparing 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 periods.  These accounts and estimates include, but are not limited to, the valuation of the amount due from related parties, the net realizable value of inventories, the estimation of useful lives of property and equipment and intangible assets, and the value of warrants. Actual results could differ from those estimates.
Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 605-10, Revenue Recognition, and SEC Staff Accounting Bulletin No. 104. Pursuant to these pronouncements, revenue is recognized when all of the following criteria are met:

- Persuasive evidence of an arrangement exists;
- Delivery has occurred or services have been rendered;
- The seller's price to the buyer is fixed or determinable; and
- Collectability is reasonably assured.

The Company’s revenue is generated through the wholesale and retail sale of livestock feed, including organic trace mineral additives, functional regulation additives, herbal medicinal additives and raw materials. Before the Company recognizes revenue on these product sales, written purchase orders and contracts are received in advance of all shipments of goods to customers. For sales within the Company’s own province, delivery is made by Company employees. Such delivery occurs on the same day as shipment. For delivery outside the province, shipment is made through a separate logistics company that assumes the risk of loss. Revenue is recognized upon shipment of goods to the customers. The Company typically does not incur bad debt losses because this type of loss is deducted from the salesperson’s compensation, thereby mitigating the loss to the Company. Therefore, collectability is reasonably assured.

Revenue is presented net of sales returns, which are not significant. However, the Company continually performs analyses of returns and records a provision at the time of sale if necessary.  As of June 30, 2011, it was determined that potential returns and allowances were not material so the Company did not record a provision for returns. The Company revisits this estimate regularly and adjusts it if conditions change.

Research and Development Costs

Research and development costs are charged as expense when incurred and included in operating expenses.

Foreign Currency Translation

The Company and its subsidiaries maintain financial statements in the functional currency of each entity. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective periods.

The financial statements of each entity are prepared using the functional currency, and have been translated into United States dollars (“US$” or “$”). Assets and liabilities are translated at the exchange rates at the balance sheet dates and revenue and expenses are translated at the average exchange rates for the period.  Stockholders’ equity is translated at historical exchange rates. Any translation adjustments are included as a foreign exchange adjustment in other comprehensive income, a component of stockholders’ equity.

RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation.

Results of Operations

Comparison of Three Months Ended June 30, 2011, March 31, 2011 and June 30, 2010

The following is a comparison of our revenue, costs of sales and gross profit by segment for the three months ended June 30, 2011 and 2010.  As we obtained control of Guangzhou Tanke in January 2011, the results of operations for the three and six months ended June 30, 2011 are not comparable to the corresponding periods in 2010.  As a result, we have also included a discussion and analysis of our revenue and costs of sales for the three months ended June 30, 2011, as compared to the three months ended March 31, 2011.

Revenue and Costs of Sales

The Company operates in four segments: (1) Organic Trace Mineral Additives, (2) Functional Regulation Additives, (3) Herbal Medicinal Additives and (4) Other. Management tracks each of these operations separately.  The Company evaluates the performance of its operating segments based on segment revenue and gross profit, and management uses aggregate segment gross profit as a measure of the overall performance of the business. The Company believes that information about aggregate segment gross profit assists investors by allowing them to evaluate changes in the gross profit of the Company’s various offerings separate from factors other than product offerings that affect net income.

Increase (Decrease)
Three Months Ended
Three Months
Three Months Ended
June 30,
Ended
June 30, 2011 vs.
Percentage
2011
2010
March 31, 2011
March 31, 2011
Change
Segment revenues
Organic Trace Mineral Additives
$ 3,939,129 $ - $ 4,862,113 $ (922,984 ) -19 %
Functional Regulation Additives
948,663 - 710,112 238,551 34 %
Herbal Medicinal Additives
83,016 - 1,252 81,764 6529 %
Other
19,035 - 367,992 (348,957 ) -95 %
$ 4,989,843 $ - $ 5,941,470 $ (951,627 ) -16 %
Segment costs of sales
Organic Trace Mineral Additives
$ 2,520,275 $ - 2,879,446 (359,171 ) -12 %
Functional Regulation Additives
601,392 - 423,680 177,712 42 %
Herbal Medicinal Additives
74,878 - 796 74,082 9309 %
Other
21,256 - 211,145 (189,889 ) -90 %
$ 3,217,801 $ - $ 3,515,066 $ (297,265 ) -8 %
Segment gross profit
Organic Trace Mineral Additives
$ 1,418,854 $ - 1,982,668 (563,814 ) -28 %
Functional Regulation Additives
347,271 - 286,432 60,839 21 %
Herbal Medicinal Additives
8,138 - 456 7,682 1683 %
Other
(2,221 ) - 156,848 (159,069 ) -101 %
$ 1,772,042 $ - $ 2,426,404 $ (654,362 ) -27 %
Organic Trace Mineral Additives

Organic trace mineral additives constitute the largest and fastest growing area of our business. We are one of China’s largest domestic providers of organic trace mineral additives, specializing in the development and production of chelated organic trace mineral additives. Our current trace mineral manufacturing facility is the one of the largest chelating facility in China and has the capacity to produce approximately 250 metric tons of organic trace minerals per week.

Revenue from organic trace mineral additives increased in 2011, as compared to 2010 because the activity reflected in 2010 is that of China Flying which had no substantial operations. In 2011, this revenue accounted for approximately 79% of our revenues for the three months ended June 30, 2011 as compared to 82% for the three months ended March 31, 2011.  Revenue for the three months ended June 30, 2011 decreased by $922,984, or 19%, as compared to the three months ended March 31, 2011 as there was unusually hot weather and natural calamities that impacted the livestock. These factors caused disease in swine, raising the price for animal products in China, especially for pigs. The inventory of pigs across the country decreased 40% as compared to the same period in 2010. Consequently, as there were fewer pigs, the demand for pig feed decreased by 30% throughout the country.
We were able to hold our decrease to 19% because there was a lesser decline in other animal feed and our lower pricing strategy allows us better penetration into the market both to existing and new customers, even as the market overall is contracting.

Our costs of sales in this segment decreased 12% in the quarter ended June 30, 2011 as compared to the quarter ended March 31, 2011. This is due to lower sales volume, however as a percentage of sales, the costs increased from 59% to 64% in those same periods. This was due to the need to keep prices very low to maintain market share, particularly in light of the contracting market described above. Going forward, we will be closely monitoring the selling prices to balance market penetration with profitability.

Functional Regulation Additives

Functional feed additives are widely used to enhance the properties of other products, improve feed efficiency and stimulate the rapid maturation of the immune system.
We currently produce two types of functional regulation additives: feed acidifiers and flavor enhancers. Feed acidifiers are used to prevent microbial degradation of raw materials or finished feeds and to maintain the quality of feed. Flavor enhancers are used to improve feed palatability, enhance animal appetite and stimulate saliva, gastric and pancreatic juices and other digestive juice secretion and gastrointestinal motility and ultimately feed consumption and yield from production animals.
Revenue from functional regulation additives accounted for approximately 19% of our revenues for the three months ended June 30, 2011 compared to 12% for the three months ended March 31, 2011. Like the increase in organic trace mineral additive revenue between 2010 and 2011, our revenue from functional regulation additives increased compared to 2010 because the activity reflected in 2010 is that of China Flying, which had no substantial operations.  Revenue for the three months ended June 30, 2011 increased by $238,551, or 34%, as compared to the three months ended March 31, 2011 because the Company hired more salespeople to expand the market. We had lower sales from old clients, but the additional sales force was able to compensate for that loss and grow this revenue despite the decrease in old clients. This product line is a constant requirement for livestock owners, so it is more stable than the organic trace mineral additive products. However there is pricing pressure like in the organic trace mineral additives product line.

Costs of sales increased by 42% during the quarter ended June 30, 2011 as compared to the quarter ended March 31, 2011. This was due to the increase in sales volume, but like the organic trace mineral additives, there was an increase in costs of sales as compared to revenue from 60% in the first quarter to 63% in the second quarter. This was due to a combination of increasing costs, as well as our lower pricing strategy being used by the new salespeople to expand market share.

Herbal Medicinal Additives

Chinese herbal feed additives utilize traditional Chinese medicine theory to improve an animal’s digestion and appetite and to regulate the yin and yang balance of an animal’s health.

Herbal medicines come from plants, plant extracts, fungal and bee products, minerals, shells and certain animal parts. Compared to synthetic antibiotics or inorganic chemicals, these naturally-derived products are less toxic, residue free and thought to be ideal feed additives in food animal production.
Revenue from herbal medicinal additives accounted for approximately 2% of our revenue for the three months ended June 30, 2011 compared to less than 1% for the three months ended March 31, 2011.  Like the increase in the other revenue segments, our revenue from herbal medicinal additives increased compared to 2010 because the activity reflected in 2010 is that of China Flying, which had no substantial operations. Revenue for the three months ended June 30, 2011 increased by $81,764, or 6,529%, as compared to the three months ended March 31, 2011 due to the widespread disease in animals as discussed above in the organic trace mineral additives section. However, despite the demand caused by disease, farmers were suffering losses and were hesitant to spend money. So we needed to offer the products at very low prices.

Our costs of sales, as a percentage of revenue increased from 64% in the first quarter of 2011 to 90% for the quarter ended June 30, 2011. This was due to the price concessions we needed to offer to make these sales.
Other
Other revenue mainly consists of buying and then reselling raw materials. Revenue from raw material sales accounted for less than 1% of our revenue for the three months ended June 30, 2011 as compared to 6% for the three months ended March 31, 2011.  This revenue is very price sensitive, and since our costs increased in the second quarter to the point that selling raw materials actually lost money, we curtailed this activity. Going forward, we do not expect this to be a significant source of revenue.
Operating Expenses and Other Income / Expenses

The following table reconciles aggregate segment gross profit to net income for the three months ended June 30, 2011 and 2010, as well as provides a comparison between the balances for the three months ended June 30, 2011 and the three months ended March 31, 2011. As we obtained control of Guangzhou Tanke in January 2011, the results of operations for the three and six months ended June 30, 2011 are not comparable to the corresponding periods in 2010.  As a result, we have also included a discussion and analysis of our operating expenses and other income/expense for the three months ended June 30, 2011 compared to the three months ended March 31, 2011.
Increase (Decrease)
Increase (Decrease)
Three Months Ended
Three Months
Three Months Ended
Three Months Ended
June 30,
Ended March 31,
June 30, 2011 vs.
June 30, 2011 vs.
2011
2010
2011
March 31, 2011
June 30, 2010
Gross profit
$ 1,772,042 $ - $ 2,426,404 $ (654,362 ) $ 1,772,042
Operating expenses:
Selling expenses
(618,806 ) - (585,250 ) 33,556 618,806
General and administrative expenses
(780,518 ) - (2,544,387 ) (1,763,869 ) 780,518
Depreciation and amortization
(51,460 ) - (11,719 ) 39,741 51,460
Income from Tanke Bio-Tech
- 188,404 - - 188,404
Other operating expenses
(91,689 ) - - 91,689 91,689
Income (loss) from operations
229,569 188,404 (714,952 ) 944,521 41,165
Other income (expense):
Gain on bargain purchase of Tanke Bio-Tech
- - 248,073 (248,073 ) -
Interest income
2,220 - 1,390 830 2,220
Interest expense
(423,495 ) - (259,454 ) 164,041 423,495
Amortization of discount on notes
(1,381,806 ) - (759,234 ) 622,572 1,381,806
Foreign exchange gains (loss), net
26,646 - (79,046 ) 105,692 26,646
(Loss) income before tax
(1,546,866 ) 188,404 (1,563,223 ) 16,357 (1,735,270 )
Income tax
(106,953 ) - (213,355 ) (106,402 ) 106,953
Net (loss) income
(1,653,819 ) 188,404 (1,776,578 ) 122,759 (1,842,223 )

Selling, General and Administrative Expenses

Selling expenses for the three months ended June 30, 2011 amounted to $618,806 for the three months ended June 30 2011.  The amount represents primarily travel and meeting expenses for sales department staff to develop new customers and expand the market.  The amount is consistent with the selling expenses incurred during the three months ended March 31, 2011 of $585,250.  We had no significant costs in 2010, as our results consisted of China Flying only, which did not have any substantial operations.

General and administrative expenses for three months ended June 30, 2011 amounted to $780,518, as compared to $2,544,387 for the three months ended March 31, 2011.  The decrease in general and administrative expenses is primarily due to our issuance of common stock in the first quarter of 2011 with a value of $2,116,000 for consulting services received during the first quarter of 2011.  Additionally, we had accounting and legal expenses related to our reverse merger in the first quarter that did not recur in the second quarter.  As a result, the expenses were higher during the first quarter.  We had no significant costs in 2010, as our results consisted of China Flying only, which did not have any substantial operations.
During 2010, we had income from Tanke Bio-Tech, which represented China Flying’s 25% equity share of Tanke Bio-Tech. The $188,404 represents China Flying’s portion of the earnings of Tanke Bio-Tech.  As China Flying effectively gained control over Tanke Bio-Tech in January 2011 in connection with the VIE Agreements, the investment income in 2011 was $0, as the results of Tanke Bio-Tech are consolidated in their entirety.

Our selling, general and administrative expenses may fluctuate in the future due to a variety of factors, including, but not limited to:

·
Additional expenses as a result of becoming a reporting company including, but not limited to, director and officer insurance, compensation for the director, SEC reporting and compliance, transfer agent fees, additional staffing, professional fees and similar expenses;
·
Expenses resulting from developing new products or expansion of new markets, including travel and entertainment and advertising expenses.

Other Income/Expenses

During the first quarter of 2011, we had a gain from the consolidation of Tanke Bio-Tech of $248,073.  This was a one-time gain which will not reoccur in future fiscal quarters.  As a result, the balance was $0 for the three months ended June 30, 2011.

Interest expense for the three months ended June 30, 2011 amounted to $423,495 as compared to $259,454 for the three months ended March 31, 2011.  This represented an increase of $164,041.  The primary reason for this increase was related to the amortization of our capitalized offering costs, which amounted to $397,269 for second quarter of 2011, as compared to $218,280 for the first quarter of 2011.  These amounts are recorded as a component of interest expense.  The amounts for the second quarter were higher, as it reflects a full three months worth of amortization, whereas the first quarter only reflects approximately 1.5 months of amortization as the debt offering costs were paid in February 2011. We did not have capitalized offering costs in 2010, hence there was no amortization expense.

The expense associated with the amortization of discounts on our convertible notes payable for the three months ended June 30, 2011 amounted to $1,381,806 as compared to $759,234 for the three months ended March 31, 2011.  This represented an increase of $622,572.  As discussed above with the amortization of the capitalized offering costs, the convertible notes payable were issued in February 2011, and as a result, the first quarter of 2011 only reflected approximately 1.5 months of amortization, whereas the second quarter of 2011 reflected a full three months of expense. These notes were not outstanding in 2010, therefore there is no amortization expense recorded.

Income Tax Expense

We pay different income tax rates depending on which company records the activity. For example, Guangzhou Tanke is taxed at 25%, while Tanke Bio-Tech is taxed at 12.5%. In the second quarter of 2011, proportionally more income was generated by Tanke Bio-Tech, so the effective tax rate is lower than that in the quarter ended March 31, 2011.

Taking into consideration the new tax law, the effective statutory tax rate for Guangzhou Tanke Bio-Tech Co. Ltd was 12.5% both for three and six months ended June 30, 2011.

Pursuant to Section 26 of the Inland Revenue Ordinance ('IRO'), the governing statute of Hong Kong taxation, any dividend income received by any entity subject to IRO would not be taxable in Hong Kong. Furthermore, foreign (non-Hong Kong) investment income that is repatriated to Hong Kong is not subject to Hong Kong profits (income) tax.

Six Months ended June 30, 2011 Compared to the Six Months ended June 30, 2010

The following is a comparison of our results of operations for the six months ended June 30, 2011 as compared to 2010.
Six Months Ended
June 30,
Increase /
2011
2010
(Decrease)
Revenues
Net sales
$ 10,931,313 $ - $ 10,931,313
Costs of goods sold
(6,732,867 ) - 6,732,867
Gross profit
4,198,446 - 4,198,446
Operating expenses:
Selling expenses
(1,204,056 ) - 1,204,056
General and administrative expenses
(3,324,905 ) (250 ) 3,324,655
Depreciation and amortization
(63,179 ) - 63,179
Income from Tanke Bio-Tech
- 368,184 (368,184 )
Other operating expenses
(91,689 ) - 91,689
(Loss) income from operations
(485,383 ) 367,934 (853,317 )
Other income (expense):
Gain on bargain purchase of Tanke Bio-Tech
248,073 924,557 (676,484 )
Interest income
3,610 - 3,610
Interest expense
(682,949 ) - 682,949
Amortization of discount on notes
(2,141,040 ) - 2,141,040
Foreign exchange loss, net
(52,400 ) - 52,400
(Loss) income before tax
(3,110,089 ) 1,292,491 (4,402,580 )
Income tax
(320,308 ) - 320,308
Net (loss) income
(3,430,397 ) 1,292,491 (4,722,888 )
Revenue, Costs of Sales and Gross Profit

The revenue for the six months ended June 30, 2011 increased by $10,931,313 as compared to 2010, as our results in 2010 consisted of China Flying only, which did not have any substantial operations.  In addition, our gross profit increased by $4,198,446 as compared to the same period in 2010.  Our revenues, cost of goods sold, and gross profit consists of the four segments discussed above in the discussion and analysis relating to the three months ended June 30, 2011.

Operating Expenses and Other Income/ Expenses
As discussed above in the analysis relating to the three months ended June 30, 2011, our selling expenses consist primarily of travel and meeting expenses for sales department staff to develop new customers and expand the market.  These amounts during the 6 months ended June 30, 2011 here higher as compared to the same period in 2010 due to China Flying having no significant operations in the prior year.

General and administrative expenses for the six months ended June 30, 2011 amounted to $3,324,905, which primarily consisted of $2,491,938 of expenses associated with the issuance of shares of common stock to service providers.  These amounts during the 6 months ended June 30, 2011 here higher as compared to the same period in 2010 due to China Flying having no significant operations in the prior year.
During 2010, we had income from Tanke Bio-Tech, which represented China Flying’s equity share of Tanke Bio-Tech’s earnings resulting from their 25% investment.  As China Flying effectively gained control over Tanke Bio-Tech in January 2011 in connection with the VIE Agreements, the investment income in 2011 was $0, as the results are consolidated.

Other Income/Expenses

During the first quarter of 2011, we had a gain from the consolidation of Tanke Bio-Tech of $248,073, as compared to a gain of $925,557 recorded in the first quarter of 2010 resulting from China Flying’s 25% investment in Tanke Bio-Tech.  These transactions will not reoccur in future periods.

Interest expense for the six months ended June 30, 2011 amounted to $682,949, which consisted primarily of $615,549 for the amortization of capitalized offering costs relating to the convertible notes payable issued in February 2011.  Accordingly, we also recorded amortization associated with the discounts on our convertible notes payable of $2,141,040 for the six months ended June 30, 2011.

Liquidity and Capital Resources

As of June 30, 2011, and 2010 we had cash and balances of $10,519,392 and $76,075, respectively. The following table provides detailed information about our net cash flow for all financial statement periods presented in this report. To date, we have financed our operations primarily by cash from operations, issuance of convertible notes and capital contribution by our stockholders.

The following table sets forth a summary of our cash flows for the periods indicated.

Six Months Ended
June 30,
June 30,
2011
2010
Change
Net cash provided by (used in) operating activities
$ 1,568,755 $ (250 ) 1,569,005
Net cash provided by investing activities
1,320,064 - 1,320,064
Net cash provided by financing activities
7,553,625 75,035 7,478,590
Effects of exchange rate change on cash
873 - 873
Net increase in cash
$ 10,443,317 $ 74,785 10,368,532

Operating Activities

Net cash provided by operating activities was $1,568,755 for the six months ended June 30, 2011 compared to cash provided of $250 for the six months ended June 30, 2010.  Although we had a net loss of $3,430,397 during the six months ended June 30, 2011, a significant amount of our expenses were non-cash related such as $2,491,938 in expenses associated with the issuance of common stock for services, $2,141,040 for the amortization of the discounts recorded on our convertible notes payable, as well as $615,549 of offering cost amortization.  As a result, we had net cash provided by our operations in 2011 of $1,568,755.  During 2010, we did not have any substantial operations.

Investing Activities

Net cash provided by investing activities was $1,320,064 for the six months ended June 30, 2011, which was the result of cash of $2,145,950 acquired as a result of the VIE agreement with Tanke in the first quarter of 2011, offset by spending for the acquisition of property and equipment, as well as an increase in restricted cash.

Financing Activities

Net cash provided by financing activities was $7,553,625 for the six months ended June 30, 2011.  The proceeds from financing activities were the result of net proceeds from the issuance of convertible notes of $5,825,360, the increase of scheduled payment for the notes between the Company and the shareholder of $1,233,191, and the increase of bank borrowing $495,074.

We have historically funded our operation primarily through cash generated from operations. Over the next twelve months, we intend to pursue organic and acquisitive growth and increase our market share in mainland China.  We believe that our cash on hand and cash flow from operations will meet our present operating cash needs for the next 12 months.  However, we will require additional cash resources to meet the cash requirements of our planned growth.

Additionally, we may require additional cash resources due to changed business conditions, implementation of our strategy to ramp up our marketing efforts and increase brand awareness, or acquisitions we may decide to pursue.  If our own financial resources are insufficient to satisfy our capital requirements, we may seek to sell additional equity, securities, convertible notes or warrants in the future.

Effect of Changes in the Foreign Exchange Rate

Upon translation of the Company’s financial statements into US Dollars for the purpose of financial reporting in the United States, the exchange rate between the Chinese Renminbi and the US Dollar can have an impact on the amount of reported cash on hand.

However all of the Company’s revenue is generated in China, and currently over 90% of its cost is within China. As a result, from an operational standpoint, a change in the exchange rate has relatively little impact on the Company. Such change is not expected to affect the Company’s liquidity in any significant way.

Economy and Inflation

Inflation and changing prices have not had a material effect on our business and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future.

We have not experienced any significant cancellation in orders due to the downturn in the economy.  Furthermore, we have also had only a small number of customer-requested delays in delivery or production.

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements that have, or are reasonably likely to have a current or future effect on our financial statements.
Seasonality

Our operating results and operating cash flows historically have not been subject to significant seasonal variations.  However, sales around Chinese New Year are typically comparatively lower than other months. This pattern may change as a result of new market opportunities or new product introduction.

Recent Accounting Pronouncements

See Note 2 of the accompanying consolidated financial statements for a description of recent accounting pronouncements. We do not anticipate that the adoption of these recent accounting pronouncements will have a material impact on our financial statements.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Item 4 . Controls and Procedures.
Disclosure Controls and Procedures.
We maintain disclosure controls and procedures as required under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
As of June 30, 2011, our management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures.

Based on that assessment, management identified material weaknesses in internal control over financial reporting related to the maintenance of our books and records in accordance with GAAP used in the Peoples’ Republic of China, and the conversion of those books and records to GAAP used in the United States of America. Specifically, the material weaknesses related to (1) our process for periodic financial reporting, including documentation of procedures and timely review of financial reports and statements, particularly as it relates to the conversion from Chinese to US GAAP, (2) adequate qualified staff necessary to effectively apply the process, and (3) methods and practices employed to report unusual transactions such as our reverse merger. A material weakness is a control deficiency, or combination of control deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. Based on this assessment, management concluded that the Company's internal control over financial reporting was not effective as of June 30, 2011. Our management has discussed the material weakness described above with our audit committee.
In an effort to remediate the identified material weaknesses, we have hired a new Chief Financial Officer. We also plan to document our process and procedures governing our internal reporting. Furthermore, we plan to implement additional changes to our internal control over financial reporting, including (1) timely review of reports prior to issuance, (2) a re-evaluation of our staffing needs, and (3) analysis of unusual transactions as they are occurring to allow adequate time for multiple levels of review.
Our internal control system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. There is no assurance that our disclosure controls or our internal controls over financial reporting can prevent all errors. An internal control system, no matter how well designed and operated, has inherent limitations, including the possibility of human error. Because of the inherent limitations in a cost-effective control system, misstatements due to error may occur and not be detected. We monitor our disclosure controls and internal controls and make modifications as necessary. Our intent in this regard is that our disclosure controls and our internal controls will improve as systems change and conditions warrant.

Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II . OTHER INFORMATION
Item 1.  Legal Proceedings.
The nature of our business exposes us to the potential for legal proceedings related to labor and employment, personal injury, property damage, and environmental matters. Although the ultimate outcome of any legal matter cannot be predicted with certainty, based on present information, including our assessment of the merits of each particular claim, as well as our current reserves and insurance coverage, we do not expect that any known legal proceeding will in the foreseeable future have a material adverse impact on our financial condition or the results of our operations.
Item 1A.  Risk Factors.
There has been no material change to our Risk Factors from those presented in our Form 10-K for the fiscal year ended December 31, 2010.
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3.  Defaults Upon Senior Securities.
None.
Item 4.  Reserved.
None.
Item 5.  Other Information.
None.
Item 6.  Exhibits.
(a) Exhibits
31.1
Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer of the Company.
31.2
Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer of the Company.
32.1
Section 1350 Certification of the Chief Executive Officer and Chief Financial Officer.
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: August 22, 2011
TANKE BIOSCIENCES CORPORATION
By:
/s/ Guixiong Qiu
Guixiong Qiu
Chairman, Chief Executive Officer and President (principal executive officer) & Chief Financial Officer (principal financial officer and principal accounting officer)
Exhibit Index
31.1
Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer of the Company.
31.2
Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer of the Company.
32.1
Section 1350 Certification of the Chief Executive Officer and Chief Financial Officer.
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