Revenues

We had no revenues for three months ended June 30, 2007, compared to revenues of $4,094,201 for the same period one year ago.  This substantial decrease in revenue is due to the fact that we did not market or sell any of our products to customers in the three months ended June 30, 2007. This was as a result from the new regulations and standards imposed by the government. The Company recently received a notice from the Chinese National Environmental bureau that all chemical manufacturing facilities must be located in designed "chemical zones"; going forward, and for manufacturing plants not located there now will have to be relocated. The Company's manufacturing facility is not currently located in a chemical zone and, therefore, the Company will be forced to move the facility to a chemical zone at some point in the next 1-2 years. The Company anticipates the cost of moving the facility will be substantial, but does not yet have an estimate as to the cost. Due to the fact that we were not able to negotiate discounted rates to use the plant and equipment of DRC and the new government regulations and standards on herbicides and pesticides, to which our own facilities are not able to meet, we did not sell any products in the three months ended June 30, 2007.

However, as noted above, we were able to begin trial production of Acetochlor in May, 2007.  These trials produced product that would be able to meet the government and our primary prospective client.  Unfortunately, due to the new regulations regarding all manufacturing facilities being located in a “chemical zone” we do not currently plan to produce anything more than trial runs of our product until we are able to move our plant to a “chemical zone” as our management has determined it would not be cost effective to invest the required funds to ramp up our production to commercial levels only to have to move the manufacturing facility.  Additionally, given the new regulations, we will need to obtain a waiver from the local government in order to produce any of our product at our current location.  We have

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applied for this waiver for trial production amounts only and are waiting to hear if our waiver has been approved.  Therefore, until we are able to manufacture product at our own plant it is very unlikely that we will produce any product to sell or generate any revenues unless we are able to utilize DRC’s manufacturing facility.

Cost of Sales

Our cost of sales were nil for the three months ended June 30, 2007, compared to cost of sales of $2,934,109 for the same period one year ago.  We did not have any cost of sales because, as described above, we did not have any sales during this three month period.

Gross Profit

Our gross profit was nil for the three months ended June 30, 2007, compared to gross profit of $1,160,092 for the same period one year ago.  Our gross profit was significantly lower for the current three-month period compared to the same period one year ago due to the above-mentioned significant decrease in revenues.  

Total Operating Expenses

Our total operating expenses were $187,153 for the three months ended June 30, 2007, compared to total operating expenses of $373,586 for the same period one year ago.  All of our operating expenses for the two periods were attributable to general and administrative expenses.  For the three months ended June 30, 2007, our operating expenses of $187,153 consisted primarily of amortized costs related depreciation of $121,265.

For the same period one-year ago DHC and Runze’s general and administrative expenses consisted primarily of administrative expenses.  During that period, part of depreciation was not factored into the general and administrative expenses, but rather cost of sales as we actually were able to manufacture product with our own equipment.

We believe our total operating expenses of $187,153 for the three months ended June 30, 2007 are fairly indicative of our total operating expenses for a three-month period in which we do not manufacture any products.  As a comparison, our total operating expenses for the three months ended March 31, 2007, another three-month period in which we did not manufacture any products, totaled $218,490.

Net Income (Loss)

Net loss for the three months ended June 30, 2007 totaled ($187,153) compared to net income of $786,506 for the comparable period one year ago.  This significant difference is largely attributable to our lack of revenues.  We anticipate this net loss to be fairly indicative of future quarters in which we do not manufacture our own products but instead purchase finished product from DRC.  As a comparison, our net loss for the three months ended March 31, 2007, another three-month period in which we did not manufacture any products, was ($218,490).

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Nine Months Ended June 30, 2007 Compared to Nine Months Ended June 30, 2006

Results of Operations

Revenues

For the reasons stated above, we did no have any revenues for the nine months ended June 30, 2007, compared to revenues of $9,908,385 for the same nine-month period one year ago.  We do not expect to generate revenues until we begin producing our own products in either DRC’s facilities or our own facilities depending on whether we successfully move our manufacturing facility to a designation “chemical zone,” as discussed above.

Cost of Sales

Our cost of sales were nil for the nine months ending June 30, 2007, compared to cost of sales of $7,259,998 for the same period one year ago.  As noted above, we did not have any cost of sales during this period because we did not have any sales during this nine-month period and all the goods we purchased went to pay off payables with third party vendors.

Gross Profit

Our gross profit was nil for the nine months ended June 30, 2007, compared to gross profit of $2,648,387 for the same period one year ago.  Our gross profit was significantly lower for the current nine-month period compared to the same period one year ago due to the above-mentioned significant decrease in revenues.  

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Total Operating Expenses

Our total operating expenses were $611,049 for the nine months ended June 30, 2007, compared to total operating expenses of $629,756 for the same period one year ago.  All of our operating expenses for the two periods were attributable to general and administrative expenses.  For the nine months ended June 30, 2007 our operating expenses of $611,049 consisted primarily of amortized costs related to financial consulting services which totaled approximately $129,784 and depreciation of $357,595.

For the same period one-year ago DHC and Runze’s general and administrative expenses consisted primarily of administrative expenses.  During that period, part of depreciation was not factored into the general and administrative expenses, but rather cost of sales as we actually were able to manufacture product with our own equipment.

Net Income (Loss)

Net loss for the nine months ended June 30, 2007 totaled ($613,719) compared to net income of $2,016,503 for the comparable period one year ago.  This significant difference is largely attributable to the lack of revenues, and is also due to our similar total general and administrative expenses for the current nine-month period.  We anticipate this net loss to be fairly indicative of future nine-month periods in which we do not manufacture our own products but instead either purchase finished product from DRC or do not produce or purchase any products.

Liquidity and Capital Resources

Introduction

As of June 30, 2007, we had cash and cash equivalents totaling $97,127, no accounts receivable as a result of the collection all $2,013,529 in account receivables as of September 30, 2006, inventory totaling $493,152, prepaid financial consulting expense of $452,765, due from an affiliated company of $337,166, and other current assets totaling $13,197.  Our current inventory is primarily our stock of raw material chemicals and finished chemical products awaiting shipment and distribution.  The prepaid financial consulting expense is an amount we prepaid to individual consultants for general advice and guidance.  Our total current liabilities as of June 30, 2007, were $1,288,731 consisting entirely of accounts payable. All of our accounts payable were due to unrelated third parties and we had no amounts due to related parties.  Currently we hope to fund operations out of our sales of herbicides and pesticides going forward, but there is no assurance we will be able to do so, particularly because we are not currently manufacturing any products for sale.  If we are not able to fund our operations from sales then we will likely fund operations through the sale of our stock and from loans.  

Our cash, accounts receivable, inventories, prepaid expenses, amounts due from an affiliated party, accounts payable (due to unaffiliated third parties) and accrued liabilities, and total current liabilities as of June 30, 2007, compared to the end of our last fiscal year were:

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Cash Requirements

We intend to use our available funds as working capital to improve our own facilities to produce trial amounts of Acetochlor if our waiver is approved, as well to prepare for the move of our manufacturing facility.  We believe that our available funds will  provide us with  adequate  capital  for at least the next  twelve  months; however,  to the extent that we make  acquisitions or are forced to move our manufacturing facility,  we may  require  additional capital for the acquisition, for the operation of the combined  companies, or the relocation of our manufacturing facility.  We cannot assure that such funding will be available.

Sources and Uses of Cash

Operations

Net cash provided by operating activities of $716,984 for the nine months ended June 30, 2007 was primarily a result of collecting accounts receivable totaling $2,098,853 and depreciation of $357,595, offset by our net loss for the nine months of $613,719, prepaid expenses and sundry current assets of $451,599, the payment of accounts payable of $567,542, inventories of $78,048, and accrued expenses, taxes and sundry current liabilities of $28,556.  Our net cash provided by operating activities totaled $904,834 for the same nine-month period one year ago.  The primary difference between the two periods is in the period ended June 30, 2006 we incurred $4,265,721 in accounts payable, had inventories of $1,755,652 and did not collect any accounts receivables during that period.

Investing

Net cash used in investing activities totaled $23,525 for the nine months ended June 30, 2007, as compared to $755,722 for the same period one year ago.  Our investing activities for the nine-month period ended June 30, 2007 consisted entirely of the acquisition of property and equipment in the amount of $23,525. During the same period in 2006, we had investing activities, also related to the acquisition of property and equipment, totaling $755,722.  The decrease for the current period is attributable to the additions to our infrastructure and production lines in 2006 as compared to 2007 when we had already built up our manufacturing base to an operational level.

Financing

Net cash used in financing activities totaled $694,621 for the nine months ended June 30, 2007, as compared to $128,737 in net cash provided by financing activities for the nine months ended June 30, 2006.  Our net cash used for financing activities for the nine months ended June 30, 2007 related to the payment of our loan from DRC, which is an affiliated.  The $128,737 in net cash provided by financing activities for the nine months ended June 30, 2006, was the resulted of $128,737 in loans from DRC, an affiliated company.  

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Debt Instruments, Guarantees, and Related Covenants

Our related party debt is non-interest bearing and payable on demand.  Our long term debt obligation bears interest at 0.3% over the prime rate in effect in the PRC and is payable interest only through July 2009, followed by annual installments of approximately 233,000 RMB ($29,000).

Critical Accounting Policies

The preparation of our financial statements that are in conformity with accounting principles generally accepted in the United States of America require our management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities as well as the disclosure of contingent assets and liabilities at the date of the financial statements.   The same also applies for reported amounts of revenues and expenses during the reporting period.  As such, in accordance with the use of accounting principles generally accepted in the United States of America, our actual realized results may differ from management’s initial estimates as reported.  A summary of our significant accounting policies are located in the notes to the financial statements which are an integral component of this filing.   

ITEM 3

Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risks, which include interest rate changes in United States of America and the People’s Republic of China, commodity prices and, to a lesser extent, foreign exchange rates.  We do not engage in financial transactions for trading or speculative purposes.

Interest Rate Risk. The interest payable on our long term debt is based on variable interest rates and therefore affected by changes in market interest rates in People’s Republic of China.  In addition, there may be interest charged on our accounts payable, as well as interest we charge on our accounts receivable, depending on their age.  Typically these interest rates are fixed are not affected by changes in market interest rates.  

Commodity Prices. We are exposed to fluctuation in market prices for our raw materials.  To mitigate risk associated with increases in market prices and commodity availability, we negotiate contracts with favorable terms directly with vendors.  We do not enter into forward contracts or other market instruments as a means of achieving our objectives or minimizing our risk exposures on these materials.

Foreign Currency Risks. Our market risk associated with foreign currency rates is not considered to be material.  To date, we have only had minor amounts of transactions that were denominated in currencies other than the currency of the country of origin, and, therefore, we have only minimal exposure to foreign currency exchange risk.  We do not hedge against foreign currency risks and believe that foreign currency exchange risk is immaterial to our current business.

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ITEM 4

Controls and Procedures

We conducted an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of June 30, 2007, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities Exchange Commission’s rules and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.  Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of June 30, 2007, our disclosure controls and procedures were effective to ensure the timely collection, evaluation and disclosure of information relating to the Company.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II

ITEM 1

  Legal Proceedings

In the ordinary course of business, we may be from time to time involved in various pending or threatened legal actions.  The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations.  However, in the opinion of our management, matters currently pending or threatened against us are not expected to have a material adverse effect on our financial position or results of operations.

ITEM 1A

Risk Factors

On at least an annual basis, we are required to provide our shareholders with a statement of risk factors and other considerations for their review.  These risk factors and other considerations include:

Our manufacturing plants are located in China and our pesticide and herbicide production, sale and distribution is subject to Chinese regulation.

Economic reforms adopted by the Chinese government have had a positive effect on the economic development of the country, but the government could change these economic reforms or any of the legal systems at any time.  This 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; methods of allocating resources; iv) international trade restrictions; and v) international conflict.  Additionally, as a pesticide and herbicide manufacturer located in China, we are a state-licensed company and facility and subject to Chinese regulation and environmental laws.  The Chinese government has been active in regulating the pesticide industry.  If we were to lose our state-licensed status we would no longer be able to manufacture herbicides or pesticides in China, which is our sole operation.  

We recently received a notice from the Chinese National Environmental Bureau that all chemical manufacturing facilities must be located in designated “chemical zones” going forward, and for manufacturing plants not located there now will have to be relocated.  Our manufacturing facility is not currently located in a “chemical zone” and, therefore, we will be forced to move our facility to a “chemical zone” at some point in the next 1-2 years.  We anticipate the cost of moving our facility will be substantial, but do not yet have an estimate as to the cost.  We should receive a further relocation notice prior to the time we are forced to move our manufacturing plant, but we are beginning to prepare for that move now.  Until we receive the further relocation notice we hope to continue to manufacture limited amounts of Acetochlor at our plant, in the same volume levels which we conducted our trail productions in May, 2007.  However, in order to manufacture even this limited product we must obtain a waiver from the local government.  We have applied for this waiver but have not received a response yet.  We will not attempt to produce higher volume levels of Acetochlor until we receive further details about the relocation.

We depend upon governmental laws and regulations that may be changed in ways that hurt our business.

Our business and products are subject to government regulations mandating the use of pesticides and herbicides in China and other countries.  Changes in the laws or regulations in China, 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

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herbicides and pesticides.  If our herbicides or pesticides contained that chemical agent then such a change would reduce our productivity of that product.

Recently, the Chinese government implemented new regulations related to the manufacturing of herbicides and pesticides.  Our current manufacturing facilities do not meet these new stricter regulations and, therefore, we cannot use these facilities to manufacture our products until we meet these new standards.

The Chinese government exerts substantial influence over the manner in which we must conduct our business activities.

China only recently has permitted provincial and local economic autonomy and private economic activities.  Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership.  Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, import and export tariffs, environmental regulations, land use rights, property and other matters.  Currently, our only manufacturing facility does not have current environmental permits and is not operational, which has caused us to manufacture our product(s) at DRC’s manufacturing facility.  We hope to obtain appropriate permits during fiscal year 2007, but there is no assurance this will occur.  Additionally, even if we obtain appropriate permits, the central or local governments of these jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations.

Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties or joint ventures.

Future inflation in China may inhibit our activity to conduct business in China.

In recent years, the Chinese economy has experienced periods of rapid expansion and high rates of inflation.  During the past ten years, the rate of inflation in China has been as high as 20.7% and as low as -2.2%.  These factors have led to the adoption by Chinese government, from time to time, of various corrective measures designed to restrict the availability of credit or regulate growth and contain inflation.  While inflation has been more moderate since 1995, high inflation may in the future cause Chinese government to impose controls on credit and/or prices, or to take other action, which could inhibit economic activity in China, and thereby harm the market for our products.

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Restrictions on currency exchange may limit our ability to receive and use our revenues effectively.

The majority of our revenues will be settled in Renminbi, and any future restrictions on currency exchanges may limit our ability to use revenue generated in Renminbi to fund any future business activities outside China or to make dividend or other payments in U.S. dollars.  Although the Chinese government introduced regulations in 1996 to allow greater convertibility of the Renminbi for current account transactions, significant restrictions still remain, including primarily the restriction that foreign-invested enterprises may only buy, sell or remit foreign currencies after providing valid commercial documents, at those banks in China authorized to conduct foreign exchange business.  In addition, conversion of Renminbi for capital account items, including direct investment and loans, is subject to governmental approval in China, and companies are required to open and maintain separate foreign exchange accounts for capital account items.  We cannot be certain that the Chinese regulatory authorities will not impose more stringent restrictions on the convertibility of the Renminbi.

The value of our securities will be affected by the foreign exchange rate between U.S. dollars and Renminbi.

The value of our common stock will be affected by the foreign exchange rate between U.S. dollars and Renminbi, and between those currencies and other currencies in which our sales may be denominated.  For example, to the extent that we need to convert U.S. dollars into Renminbi for our operational needs and should the Renminbi appreciate against the U.S. dollar at that time, our financial position, the business of the Company, and the price of our common stock may be harmed.  Conversely, if we decide 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. dollar appreciates against the Renminbi, the U.S. dollar equivalent of our earnings from our subsidiaries in China would be reduced.

For the three and six months ended March 31, 2007, we did not sell any products and had no revenues.

In the past, we have only had one customer for our products, Jilin Ruiye Pesticide Co., an unrelated third party located in China.  For the three and six months ended March 31, 2007, we had no revenues.  Due to the fact that we were not able to negotiate discounted rates to use the plant and equipment of DRC and the new government regulations and standards on herbicides and pesticides, which our own facilities are not currently able to meet, we did not sell any products in the three months ended March 31, 2007.   We hope this will not continue in future quarters, but if we are not able to use DRC’s facilities and cannot get our facilities up to our clients’ and the government standards, we will not be able to manufacture any product to sell.  If this occurs it would have a significant impact on our ability to continue as an operating company.  We are currently looking for additional sales channels utilizing Mr. Wang’s connections in the industry but there is no assurance we will be successful.

We give no assurances that any plans for future expansion will be implemented.

We plan on improving our current Acetochlor manufacturing facility to meet stricter manufacturing standards.  In order to accomplish this we must obtain certain environmental permits and improve the quality control procedures at our facility.  However, we have not made any definitive plans or signed any binding agreements to improve this facility.  We may decide to use operating income to finance these expenditures, which would reduce our operating capital.  

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

We are in our early stages of development and face risks associated with a new company in a growth industry.  We may not successfully address these risks and uncertainties or successfully implement our operating strategies.  If we fail to do so, it could materially harm our business to the point of having to cease operations and could impair the value of our common stock to the point 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.

We will face a lot of competition, some of which may be better capitalized and more experienced than us.  

We face competition in the herbicide and pesticide industry.  Many of the other herbicide and pesticide producing companies that sell into our markets may be more successful than us and/or have more experience and money that we do.  This additional experience and money may enable our competitors to produce more effective herbicides and/or pesticides and be sell their product with more success than we are able to, which would decrease our sales.

Our business is largely subject to the uncertain legal environment in China and your legal protection could be limited.

The Chinese legal system is a civil law system based on written statutes.  Unlike common law systems, it is a system in which precedents set in earlier legal cases are not generally used.  The overall effect of legislation enacted over the past 20 years has been to enhance the protections afforded to foreign invested enterprises in China.  However, these laws, regulations and legal requirements are relatively recent and are evolving rapidly, and their interpretation and enforcement involve uncertainties.  These uncertainties could limit the legal protections available to foreign investors, such as the right of foreign invested enterprises to hold licenses and permits such as requisite business licenses.  In addition, some of our executive officers and our directors may be residents of China 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 affect service of process in the United States, or to enforce a judgment obtained in the United States against us or any of these persons.

Our business is largely seasonal and sales of our products are subject to changes in the weather.

Since we are in the business of manufacturing and selling herbicide and pesticide products our clients and end users are engaged in farming and crop production, which is subject to changes in the seasons and weather.  Therefore, the sales of our products will generally substantially decrease during the autumn and winter months.  Unusual weather such as prolonged freezing temperatures or particularly hot temperatures also effect crop production and, therefore, could affect the sales of our products.

ITEM 2  

  Unregistered Sales of Equity Securities and Use of Proceeds

There have been no events that are required to be reported under this Item.

ITEM 3

  Defaults Upon Senior Securities

There have been no events that are required to be reported under this Item.

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ITEM 4

  Submission of Matters to a Vote of Security Holders

There have been no events that are required to be reported under this Item.

ITEM 5

  Other Information

Fiscal Year Change

On May 1, 2006, our Board of Directors approved the change of our fiscal year end from December 31 to September 30.

SEC Comments

On February 15, 2007, we received comments from the Securities and Exchange Commission regarding our Annual Report on Form 10-K and our First Amended Annual Report on Form 10-K/A for the year ended September 30, 2006.  We responded to the comments on May 3, 2007.  On May 8, 2007, we received additional comments from the Securities and Exchange Commission.  We responded to these comments on August 9, 2007.  After we have completed the comment process we will have to file a second amendment to our Annual Report on Form 10-K/A for the year ended September 30, 2006.  Additionally, we do not know if the comments impact the disclosure in this Quarterly Report.  If the comments impact this Quarterly Report we will file an amended Quarterly Report, if necessary.

ITEM 6

  Exhibits

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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