Granto, Inc. - FORM 10-Q/A - December 29, 2010

Attached files

file	filename
EX-31.1 - Granto, Inc.	v206483_ex31-1.htm
EX-32.2 - Granto, Inc.	v206483_ex32-2.htm
EX-31.2 - Granto, Inc.	v206483_ex31-2.htm
EX-32.1 - Granto, Inc.	v206483_ex32-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A-2

(MARK ONE)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED June 30, 2010.

o	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: 333-150388

Rongfu Aquaculture, Inc.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

NEVADA		98-0655634
(STATE OR OTHER JURISDICTION OF		(I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION

Dongdu Room 321, No. 475 Huanshidong Road

Guangzhou City, People’s Republic of China 510075

(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE: 011-86-20-8762-1778

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 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 Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes o 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

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

The number of shares of Common Stock of the Registrant, par value $.001 per share, outstanding on June 30, 2010 was 21,286,789.

EXPLANATORY NOTE

This Amendment No. 2 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 which was filed with the Securities and Exchange Commission (the “SEC”) on August 23, 2010 (the “Original Filing”) is being filed to include in an amended Item 1. Financial Statements, restated financial statements as described in Note 18 to the accompanying consolidated financial statements. This Form 10-Q/A amends the following items in the Original Filing to reflect the changes in accounting treatment:

Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Part I, Item 4. Controls and Procedures

Part II, Item 6. Exhibits

On September 30, 2010 we filed an Amendment No. 1 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 solely to file a revised Certification of the Chief Financial Officer of the Company to correct a reference to the date of the end of the period covered by the report. Other than such Amendment No. 1 and as described in the first paragraph above, none of the other disclosures in the Original Filing have been amended or updated. Among other things, forward-looking statements made in the Original Filing have not been revised to reflect events that occurred or facts that became known to the Company after the filing of the Original Filing, and such forward-looking statements should be read in their historical context. Accordingly, this Annual Report on Form 10-Q/A-2 should be read in conjunction with the Company’s filings with the SEC subsequent to the Original Filing.

We are also contemporaneously filing with the SEC an Amendment No. 1 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 which was filed with the SEC on May 28, 2010 to include in an amended Item 1. Financial Statements, restated financial statements as described in Note 17 to those restated financial statements as well as amendments to Items 2, 4 and 6 of such Quarterly Report.

RONGFU AQUACULTURE, INC.

INDEX TO JUNE 30, 2010 FORM 10-Q/A-2

		Page Number
Part I - Financial Information		F-1

Item 1 - Financial Statements		F-1

Consolidated Balance Sheets as of June 30, 2010 (unaudited) and December 31, 2009 (restated)		F-1

Consolidated Statements of Income and Comprehensive Income for the Three Months and Six Months ended June 30, 2010 and 2009 (unaudited and restated)		F-2

Consolidated Statements of Cash Flows for the Six Months ended June 30, 2010 (unaudited and restated) and 2009 (unaudited)		F-3

Consolidated Statement of Stockholders’ Equity for the Six Months Ended June 30, 2010 and the Year Ended December 31, 2009 (restated)		F-4

Notes to the Consolidated Financial Statements (unaudited and restated)		F-5

Item 2 - Management's Discussion and Analysis of Results of Operations and Financial Condition		4

Item 3 - Quantitative and Qualitative Disclosures About Market Risk		9

Item 4 - Controls and Procedures		9

Part II - Other Information		10

Item 6 - Exhibits		10

Signature Page		11

FORWARD-LOOKING STATEMENTS

The discussions of the business and activities of Rongfu Aquaculture, Inc. (“we,” “us,” “our” or “the Company”) set forth in this Form 10-Q/A and in other past and future reports and announcements by the Company may contain forward-looking statements and assumptions regarding future activities and results of operations of the Company. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Forward-looking statements involve risks and uncertainties. Forward-looking statements include statements regarding, among other things, (a) our projected sales, profitability, and cash flows, (b) our growth strategies, (c) anticipated trends in our industry, (d) our future financing plans and (e) our anticipated needs for working capital. They are generally identifiable by use of the words "may," "will," "should," "anticipate," "estimate," "plans," “potential," "projects," "continuing," "ongoing," "expects," "management believes," "we believe," "we intend" or the negative of these words or other variations on these words or comparable terminology. These statements may be found under "Management's Discussion and Analysis of Financial Condition and Results of Operations” as well as in this Form 10-Q generally. In particular, these include statements relating to future actions, prospective products or product approvals, future performance or results of current and anticipated products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, and financial results.

Any or all of our forward-looking statements in this report may turn out to be inaccurate. They can be affected by inaccurate assumptions we might make or by known or unknown risks or uncertainties. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially as a result of various factors, including, without limitation, the risks outlined under "Risk Factors" and matters described in the most recent Form 10-K filed by the Company. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. You should not place undue reliance on these forward-looking statements.

We undertake no obligation to update forward-looking statements to reflect subsequent events, changed circumstances, or the occurrence of unanticipated events.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

RONGFU AQUACULTURE, INC

CONSOLIDATED BALANCE SHEETS

JUNE 30, 2010 AND DECEMBER 31, 2009

	6/30/2010			12/31/2009
	(Unaudited and restated)			(Restated)
ASSETS
Current Assets
Cash	$	7,125,477		$	3,194,248
Accounts receivable		2,043,325			236,374
Inventories		8,987,628			2,979,753
Due from shareholders		-			4,008,659
Other receivable		27,149			21,208
Trade deposit		-			121,224
Prepaid expenses		679,301			230,247
Total Current Assets		18,862,880			10,791,713
Fixed assets		905,285			405,147
Biological assets		366,200			432,808
Total Assets	$	20,134,365		$	11,629,668
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable	$	5,361,607		$	-
Other payable		264,575			2,743,960
Advance from clients		-			498,785
Short-term bank loan		-			380,273
Dividend payable		-			3,466,331
Income tax payable		251,866			-
Derivative liability		8,575,785			-
Total Current liabilities		14,453,833			8,084,662

Long-term bank loan		-			1,170,070
Total liabilities		14,453,833			9,254,732

Temporary equity:
Redeemable preferred stock, par value $0.001 per share, 2,768,721 issued at June 30, 2010 and 0 at December 31, 2009.		7,700,000			-

Stockholders' Equity
Common stock, par value, $0.001 per share, 90,000,000 shares authorized, 21,286,789 and 19,623,889 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively		21,287			19,624
Additional paid in capital		1,056,365			797,808
Statutory reserve		1,076,310			1,051,089
Other comprehensive income		768,203			866,699
Retained earnings		(4,941,633	)		(360,284	)
Total Stockholders' Equity		(2,019,468	)		2,374,936
Total Liabilities and Stockholders' Equity	$	20,134,365		$	11,629,668

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

F-1

RONGFU, INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2010 AND 2009

(UNAUDITED AND RESTATED)

	Six Months Ended June 30,						Three Months Ended June 30,
	2010			2009			2010			2009
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenue	$	22,553,424		$	16,968,277		$	12,629,897		$	7,561,849
Cost of goods sold		14,446,385			10,188,007			7,726,590			3,921,262
Gross profit		8,107,039			6,780,270			4,903,307			3,640,587

Operating expenses:
Selling expenses		841,731			290,081			555,799			202,490
General and administrative expenses		939,764			1,075,070			360,352			413,198
Research and development cost		38,643			35,142			18,807			16,307
Total operating expenses		1,820,138			1,400,293			934,958			631,995

Net income from operations		6,286,901			5,379,977			3,968,349			3,008,592

Other income (expense)
Loss on fair value of derivative liability		(5,307,988	)		-			(745,740	)		-
Interest income		6,614			20,840			3,852			8,993
Interest expense		(34,841	)		(450	)		(17,447	)		(241	)

Total other (expense) income		(5,336,215	)		20,390			(759,335	)		8,751

Net income before income taxes		950,686			5,400,367			3,209,014			3,017,343

Income taxes		488,584			378,905			252,098			177,378

Net income		462,102			5,021,462			2,956,916			2,839,965
Deemed dividend from beneficial conversion feature of
Series A preferred stock		(4,374,579	)		-
Dividends paid or declared		(643,651	)
Net income (loss) available to common shareholders		(4,556,128	)		5,021,462			2,956,916			2,839,965

Net income (loss) per common share
Earnings per share – Basic and diluted		(0.22	)		0.26			0.14			0.14
Weighted average common shares outstanding
Basic and diluted		20,487,495			19,623.889			21,286,789			19,623,889

Net income	$	462,102		$	5,021,462		$	2,956,916		$	2,839,965
Other comprehensive loss		(98,496	)		(177,809	)		(95,045	)		(179,891	)
Comprehensive income	$	363,606		$	4,843,653		$	2,861,871		$	2,660,074

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

F-2

RONGFU AQUACULTURE INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2010 AND 2009

(UNAUDITED)

	2010 (restated)			2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	462,102		$	5,021,462
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		54,726			54,369
Amortization of biological assets		231,601			204,339
Change in derivative liability value		5,307,988			-
Professional fee in connection with the issuance of shares		192,361
(Increase) / decrease in assets:
Accounts receivables		(1,800,409	)		3,145,234
Inventories		(5,971,204	)		1,018,118
Prepaid expense and other receivables		(434,732	)		67,534
Trade deposit		121,718			-
Due from shareholder		4,024,965			(1,461,298	)
Increase / (decrease) in current liabilities:
Accounts payable		5,346,962			536,363
Other payable		(2,499,717	)		462,675
Advances from clients		(500,814	)		-
Income taxes payable		(748,185	)		(52,193	)
Net cash provided by operating activities		3,787,362			8,996,603

CASH FLOWS FROM INVESTING ACTIVITIES
Purchased fixed assets		(554,863	)		(69,175	)
Purchased biological assets		(164,993	)		-
Net cash used by investing activities		(719,856	)		(69,175	)

CASH FLOWS FROM FINANCING ACTIVITIES
Due to shareholder		-			(8,517,615	)
Borrowings (payment) of short-term loan, net		(381,870	)		730,649
Borrowings (payment) of long-term bank loan		(1,174,985	)		1,753,558
Dividend paid		(4,110,591	)		(14,024,570	)
Proceeds from issuance of preferred stock		6,561,077			-
Net cash provide (used) by financing activities		893,631			(20,057,978	)

Effect of exchange rate changes on cash and cash equivalents		(29,908	)		(553,287	)

Net change in cash and cash equivalents		3,931,229			(11,683,837	)

Cash and cash equivalents, beginning balance		3,194,248			14,823,476
Cash and cash equivalents, ending balance	$	7,125,477		$	3,139,639

SUPPLEMENTAL DISCLOSURES:
Cash paid during the year for:
Income tax payments	$	1,236,768		$	981,540
Interest payments	$	34,841		$	450

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

F-3

RONGFU AQUACULTURE, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2010

(UNAUDITED AND RESTATED)

	Common Stock Shares		Amount		Additional Paid-in Capital			Comprehensive Income			Statutory Reserves		Retained Earnings			Total Stockholders’ Equity
Balance December 31, 2009		19,623,889	$	19,624	$	797,808		$	866,699		$	1,051,089	$	(360,284	)	$	2,374,936

Foreign currency translation adjustments									(98,496	)							(98,496	)
Issuance of warrants						(3,267,797	)										(3,267,797	)
Syndication costs associated with preferred stock purchase agreement						(1,038,923	)										(1,038,923	)
Stock based compensation –issued in conjunction with professional services rendered		1,662,900		1663		191,174											191,174
Stock based compensation –issued in conjunction with financing						927,872											929,535
Syndication costs associated with financing						(928,348	)										(928,348	)
Dividends Paid or Declared														(643,651	)		(643,651	)
Transferred to Statutory reserve												25,221		(25,221	)		-
Deemed dividend						4,374,579								(4,374,579	)		-
Income for the six months ended June 30,2010														462,102			462,102

Balance June 30, 2010		21,286,789	$	21,287	$	1,056,365		$	768,203		$	1,076,310	$	(4,941,633	)	$	(2,019,468	)

Balance December 31, 2008		19,623,889	$	19,624	$	797,808		$	861,166		$	665,852	$	12,653,251		$	14,997,701
Foreign currency translation adjustments									5,533								5,533
Transferred to Statutory reserve												385,237		(385,237	)		-
Dividend paid or declared														(25,704,486	)		(25,704,486	)
Income for the year ended December 31, 2009														13,076,088			13,076,088

Balance December 31, 2009		19,623,889	$	19,624	$	797,808		$	866,699		$	1,051,089	$	(360,284	)	$	2,374,936

The accompanying notes are an integral part of these financial statements

F-4

RONGFU AQUACULTURE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED AND RESTATED)

Note 1 – ORGANIZATION

Rongfu Aquaculture, Inc., formerly named Granto, Inc (the “Company”) was incorporated in Nevada on February 29, 2008. On March 29, 2010, the Company entered into a Share Exchange Agreement with Rongfu Aquaculture, Inc. (“Rongfu”), certain stockholders and warrant holders of Rongfu (the “Rongfu Stockholders”) and a stockholder of Granto (the “Share Exchange Agreement”). Pursuant to the Share Exchange Agreement, on March 29, 2010, 9 Rongfu Stockholders transferred 100% of the outstanding shares of common stock and 100% of the warrants to purchase common stock of Rongfu held by them, in exchange for an aggregate of 18,623,889 newly issued shares of our Common Stock held by them (the “Share Exchange Transaction”). In addition the shareholders received warrants to purchase an aggregate of 666,666 shares of our Common Stock. In connection with the closing of the Share Exchange Agreement, the former principal stockholder agreed to and did cancel 1,150,000 of the 1,200,000 shares of Granto, Inc. Common Stock held by her.

On March 29, 2010, the Company completed its merger with Rongfu in accordance with the Share Exchange Agreement. The Share Exchange Transaction is being accounted for as a reverse acquisition. In accordance with the Accounting and Financial Reporting Interpretations and Guidance prepared by the staff of the U.S. Securities and Exchange Commission, the Company (the legal acquirer) is considered the accounting acquiree and Rongfu (the legal acquiree) is considered the accounting acquirer for accounting purposes. Subsequent to the Share Exchange Transaction, the financial statements of the combined entity will in substance be those of Rongfu. The assets, liabilities and historical operations prior to the share exchange transaction will be those of Rongfu. Subsequent to the date of the Share Exchange Transaction, Rongfu is deemed to be a continuation of the business of the Company. Therefore post-exchange financial statements will include the combined balance sheet of the Company and Rongfu, the historical operations of Rongfu and the operations of the Company and Rongfu from the closing date of the Share Exchange Transaction forward.

Rongfu was incorporated in Delaware on January 13, 2009. Flourishing Blessing (Hong Kong) Co., Ltd. (“Hong Kong Rongfu”) was incorporated on November 11, 2008. Pursuant to a Share Exchange Agreement, dated as of December 29, 2009, (the “December 2009 Agreement”) all of the shareholders of Hong Kong Rongfu exchanged all of the outstanding shares of Hong Kong Rongfu for shares of common stock of Rongfu and Rongfu became the owner of 100% of the outstanding capital stock of Hong Kong Rongfu. Hong Kong Rongfu owns 100% of the capital stock of Guangzhou Flourishing Blessing Hansen Agriculture Technology Limited (“Guangzhou Flourishing”). Guangzhou Flourishing is a wholly foreign-owned enterprise, or “WFOE,” under the laws of the People’s Republic of China (the “PRC”) by virtue of its status as a wholly-owned subsidiary of a non-PRC company, Hong Kong Rongfu. In connection with the closing of the December 2009 Agreement, Guangzhou Flourishing entered into and consummated a series of agreements (the “Contractual Agreements”),with Chen Zhisheng and Foshan Nanhai Ke Da Heng Sheng Aquatic Co., Ltd. (“Nanhai Ke Da Heng Sheng”). Under the Contractual Agreements, Guangzhou Flourishing agreed to assume control of the operations and management of Nanhai Ke Da Heng Sheng in exchange for a management fee equal to Nanhai Ke Da Heng Sheng’s earnings before taxes. As a result, the business of Nanhai Ke Da Heng Sheng and Hainan Ke Da Heng Sheng Aquit Germchit Co., Ltd., a PRC corporation (“Hainan Ke Da Heng Sheng”) , 70% of the outstanding stock of which is owned by Nanhai Ke Da Heng Sheng, will be conducted by Guangzhou Flourishing. We anticipate that Nanhai Ke Da Heng Sheng and Hainan Ke Da Heng Sheng will continue to be the contracting parties under their customer contracts, bank loans and certain other assets until such time as those may be transferred to Guangzhou Flourishing. Nanhai Ke Da Heng Sheng was formed in the PRC on April 30, 2003 as a limited liability company (a company solely owned by a natural person). Hainan Ke Da Heng Sheng was formed in the PRC on August 6, 2007 as a limited liability company. Guangzhou Flourishing was incorporated in the PRC on January 9, 2009 as a WFOE.

The Contractual Agreements completed in December 2009 provide that Guangzhou Flourishing has controlling interest in Nanhai Ke Da Heng Sheng under FASB Accounting Standards Codification “Consolidation of Variable Interest Entities”, an Interpretation of an Accounting Research Bulletin, which requires Guangzhou Flourishing to consolidate the financial statements of Nanhai Ke Da Heng Sheng and Hainan Ke Da Heng Shen and ultimately consolidate with its parent company, Rongfu Aquaculture, Inc.

The Company, through its subsidiaries, and Contractual Agreements, is engaged in integrated business of aquaculture including Tilapia brood stock, Tilapia fry, Tilapia farming, and marketing for Tilapia. It is specializing in the production of the Hengsheng Brand Nile Tilapia and the new licensed New Jifu Tilapia.

In the opinion of the management of the Company, the accompanying consolidated interim financial statements contain all material adjustments (consisting only of normal recurring adjustments) necessary to present fairly the consolidated financial position of the Company at June 30, 2010 and the results of its operations for the six- month periods ended June 30, 2010 and 2009 and its cash flows for the six month periods June 30, 2010 and 2009. Actual results may differ from these estimates as a result of different assumptions or conditions.

F-5

RONGFU AQUACULTURE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED AND RESTATED)

Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and represent the pro forma historical results of the consolidated group. The Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (the “Codification”) on July 1, 2009. For the six months ended June 30, 2010, all reference for periods subsequent to January 1, 2010 is based on the Codification. The Company’s functional currency is the Chinese Renminbi, however the accompanying consolidated financial statements have been translated and presented in United States Dollars.

Principles of Consolidation

The consolidated financial statements include the accounts of Rongfu Aquaculture ,Inc. and its wholly owned subsidiaries Hong Kong Rongfu, Guangzhou Flourishing, Nanhai Ke Da Heng Sheng, and Hainan Ke Da Heng Sheng collectively referred to herein as the Company. All material inter-company accounts, transactions and profits have been eliminated in consolidation. The Company has adopted the Consolidation Topic of the FASB Accounting Standards Codification which requires a variable interest entity (“VIE”) to be consolidated by a company if that company is subject to a majority of the risk of loss for the VIE or is entitled to receive a majority of the VIE’s residual returns.

Translation Adjustment

As of June 30, 2010 and December 31, 2009, the accounts of the Company were maintained, and its financial statements were expressed, in Chinese Yuan Renminbi (“CNY”). Such financial statements were translated into U.S. Dollars (“USD”) in accordance with the Foreign Currency Matters Topic of the Codification, with the CNY as the functional currency. According to the Codification, all assets and liabilities were translated at the current exchange rate, stockholders’ equity are translated at the historical rates and income statement items are translated at the average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with the Comprehensive Income Topic of the Codification, as a component of shareholders’ equity. Transaction gains and losses are reflected in the income statement.

Statement of Cash Flows

In accordance with the Statement of Cash Flows Topic of the Codification, cash flows from the Company’s operations are based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Comprehensive Income

The Company follows the Comprehensive Income Topic of the Codification. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income.

Risks and Uncertainties

The Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, by the general state of the PRC’s economy. The Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things

The Company is subject to substantial risks from, among other things, intense competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history, foreign currency exchange rates and the volatility of public markets.

F-6

RONGFU AQUACULTURE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED AND RESTATED)

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Contingencies

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought. There were no contingencies of this type as of June 30, 2010 and December 31, 2009.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. There were no contingencies of this type as of June 30, 2010 and December 31, 2009.

Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.

Cash and Cash Equivalents

Cash and cash equivalents include cash in hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.

Accounts Receivable

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Reserves are recorded primarily on a specific identification basis. There were no allowances for doubtful accounts as of June 30, 2010 and December 31, 2009.

Inventories

Inventories are valued at the lower of cost (determined on a weighted average basis) or market. As of June 30, 2010 and December 31, 2009, inventories consist of the following:

	6/30/2010		12/31/2009
Raw materials	$	106,687	$	47,185
Work in process and finished goods		8,880,941		2,932,568
Total	$	8.,987,628	$	2,979,753

F-7

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED AND RESTATED)

Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Property, Plant & Equipment

Property and equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method for substantially all assets with estimated lives of:

Buildings	10-20 years
Fishing gear	5-10 years
Transportation equipment	5-10 years
Office equipment	3-5 years

As of June 30, 2010 and December 31, 2009, Property, Plant & Equipment consist of the following:

	6/30/2010			12/31/2009
Buildings	$	213,538		$	73,631
Fishing gear		756,152			424,938
Transportation equipment		37,330			37,330
Office equipment		123,845			40,102
Construction in progress		-			-
Total		1,130,865			576,001
Accumulated depreciation		(225,580	)		(170,854	)
	$	905,285		$	405,147

Depreciation expense for the six months ended June 30, 2010 and 2009 was $54,726 and $54,369, respectively.

Long-Lived Assets

The Company adopted the Property, Plant and Equipment Topic of the Codification, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes previous accounting guidance, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” and “Reporting the Results of Operations for a Disposal of a Segment of a Business.” The Company periodically evaluates the carrying value of long-lived assets to be held and used, which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal. Based on its review, the Company believes that, as of June 30, 2010, there were no impairments of its long-lived assets.

Derivative Liability

The Company issued warrants in connection with the Share Exchange Agreement and Series A Preferred Stock Purchase Agreement dated March 29, 2010 (the “Stock Purchase Agreement”).

The Company determined that the warrants did not qualify for a scope exception under ASC 815 as they were determined to not be indexed to the Company’s stock as prescribed by ASC 815. The warrants, under ASC 815, were classified as derivative liability for the then relative fair market value of $3,267,797 and marked to market. For the six months ended June30, 2010, the Company recorded a loss on change in fair value of derivative liability of $5,307,988 to mark to market for the increase in fair value of the warrants through June 30, 2010. Under ASC 815, the warrants will be carried at fair value and adjusted at each reporting period.

F-8

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED AND RESTATED)

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Fair Value of Financial Instruments

In accordance with FASB ASC 820, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.

In determining fair value, the Company uses various valuation approaches. In accordance with GAAP, a fair value hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels based on the inputs as follows:

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

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

Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value.

As of June 30, 2010 and December 31, 2009, the derivative liabilities amounted to $8,575,785 and $0. In accordance with the accounting standards, the Company determined that the carrying value of these derivatives approximated the fair value using the level 1 inputs.

Revenue Recognition

The Company records revenues for goods shipped at the time of shipment. For goods delivered by the Company to a customer’s site, revenues are recognized at time of delivery.

The Company believes that recognizing revenue at these times is appropriate because the Company’s sales policies meet the four criteria of the SEC’s staff Accounting Bulletin No. 104, which are: (i) persuasive evidence that an arrangement exists, (ii) service has occurred, (iii) the seller’s price to the buyer is fixed and determinable and (iv) collection is reasonably assured.

Research and development cost

Research and development costs are expensed in the period when they are incurred. During the six months ended June 30, 2010 and 2009, research and development costs were $38,643 and $35,142, respectively. During the three months ended June 30, 2010 and 2009, research and development costs were $18,807 and $16,307, respectively.

Advertising

Advertising expenses consist primarily of costs of promotion for corporate image and product marketing and costs of direct advertising. The Company expenses all advertising costs as incurred. Advertising expense for the six months ended June 30, 2010 and 2009 were $15,688 and $8,636, respectively. Advertising expense for the six months ended June 30, 2010 and 2009 were $8,089 and $6,610, respectively.

F-9

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED AND RESTATED)

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Shipping and handling fees

The Company follows ASC 605-45, “Handling Costs, Shipping Costs”. The Company does not charge its customers for shipping and handling. The Company classifies shipping and handling costs as part of selling, general and administrative expense. Shipping and handling fees for the six months ended June 30, 2010 and 2009 were $243,593 and $47,586, respectively. Shipping and handling fees for the three months ended June 30, 2010 and 2009 were $179,152 and $45,828, respectively.

Advances from Clients

The Company records deposits received by customers prior to the completion of the sale as deferred revenues and included as a component of advances from clients. At such time as the revenue cycle is complete, these monies will be recognized into revenues.

Income Taxes

The Company utilizes the accounting guidance, “Accounting for Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. It is the Company’s intention to permanently reinvest earnings from activity with china. And thereby indefinitely postpone repatriation of these funds to the US. Accordingly, no domestic deferred income tax provision has been made for US income tax which could result from paying dividend to the Company.

There were no deferred tax difference as of June 30, 2010 and December 31, 2009.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company has a diversified customer base, all are in China. The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited.

F-10

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED AND RESTATED)

Note 3 –OTHER RECEIVABLES

Other receivables mainly consist of cash advances to rent deposit. As of June 30, 2010 and December 31, 2009, the other receivables were $27,149 and $21,208, respectively.

Note 4 – BIOLOGICAL ASSETS

As of June 30, 2010 and December 31, 2009, Biological assets at cost consist of the following:

	6/30/2010			12/31/2009
Carp	$	28,052		$	20,562
Tilapia		959,561			959,561
Yellow bone fish		55,020			-
California bass		15,894			-
Snakeheads		264,793			178,204
Total		1,323,320			1,158,327
Accumulated amortization		(957,120	)		(725,519	)
	$	366,200		$	432,808

Amortization expense for the six months ended June 30, 2010 and 2009 was $ 231,601 and $ 204,339 respectively.

Biological assets are amortized using the straight-line method over their estimated period of benefit, ranging from three to five years. Management evaluate the recoverability of biological assets periodically and take into account events or circumstances that warrant revised estimates of useful lives or that indicate that any changes exists. All of the Company’s biological assets are subject to amortization with estimated lives of:

Carp	5 years
Tilapia	3 years
Yellow bone fish	Client to Update
California bass	Client to Update
Snakeheads	3 years

Note 5 – RELATED PARTIES

One of the Company’s vendors is a related party. As of and for the six months ended June 30, 2010, the vendor accounted for approximately 20% of the Company’s purchases and 31% of accounts payable.

For the six months ended June 30, 2010, the Company collected all amounts previously due from the shareholder.

Note 6 – DUE FROM/TO SHAREHOLDER

As of June 30, 2010, due from shareholder was $0.

During the fourth quarter of 2009, the Company loaned an aggregate of RMB 21,900,000 ($3,201,343 translated at $1=RMB 6.8372) to a shareholder. The shareholder invested the entire proceeds of the loan in the construction of Foshan Nanhai Guanyao Processing Industrial Park, which has a total area of 108,000 square meters with the construction area of 85,000 square meters. The loan does not bear interest and may be paid off by deducting the shareholder’s allocation of shareholders’ dividends or other means. After the construction has been completed, the Company has a first option to rent Foshan Nanhai Guanyao Processing Industrial Park on terms to be determined. This amount is included in the Due from shareholders of $4,008,659 as of December 31, 2009. During the six months ended June 30, 2010 this loan was repaid.

F-11

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED AND RESTATED)

Note 7 – CONCENTRATIONS

As of June 30, 2010, one customer accounted for 23% of accounts receivable.

For the six months ended June 30, 2010, the Company had three vendors who accounted for 66% of total purchases. For the three moths ended June 30, 2009, two vendors accounted for 78% of total purchases. One of such vendors is a related party vendor and such vendor accounted for 69% of total purchases. As of December 31, 2009, two customers accounted for 20% of accounts receivable. For the six months ended June 30, 2009, the Company had two vendors who accounted for 59% of total purchases. One of such vendors is a related party vendor and such vendor accounted for 49% of the Company’s total purchases. At June 30, 2010, 78% of accounts payable were due to related parties.

Note 8 – COMPENSATED ABSENCES

Regulation 45 of the local labor law of the PRC entitles employees to annual vacation leave after 1 year of service. In general, all leave must be utilized annually, with proper notification. Any unutilized leave is cancelled. The Company’s management estimated that there is insignificant unutilized leave as at June 30, 2010 and June 30, 2009.

Note 9 – COMMON STOCK

On March 29, 2010, the Company entered into the Share Exchange Agreement. Pursuant to the Share Exchange Agreement, on March 29, 2010, 9 Rongfu Stockholders transferred 100% of the outstanding shares of common stock and 100% of the warrants to purchase common stock of Rongfu held by them, in exchange for an aggregate of 18,623,889 newly issued shares of our Common Stock and warrants to purchase an aggregate of 666,666 shares of our Common Stock. In connection with the closing of the Share Exchange Agreement, the former principal stockholder agreed to and did cancel 1,150,000 of the 1,200,000 shares of Rongfu Aquaculture, Inc. Common Stock held by her.

Note 10 – SERIES A CONVERTIBLE PREFERRED STOCK AND WARRANTS

On March 29, 2010, the Company entered into the Stock Purchase Agreement with eighteen investors. The Company authorized and issued to Investors $7,700,000, of the Company’s convertible, redeemable Series A Preferred Stock, $0.001 par value per share (the “Series A Stock”) at a price of $2.78 per share (the “Series A Issue Price”). The shares are convertible into shares of the Company’s common stock, par value $0.001 per share. In connection with the Stock Purchase Agreement the Company incurred offering costs of $1,038,923, which are subtracted from the total proceeds and recorded in additional paid in capital.

The Series A Stock, in preference to the holders of common stock, shall be entitled to receive, when and as declared by the Board of Directors out of funds that are legally available therefore, cumulative dividends at the rate of six percent (6%) per annum of the original Series A Issue Price on each outstanding of Series A Preferred payable semi-annually on each February 28 and August 31. Payment of these dividends shall be made, at the Company’s option, in cash or shares of common stock. Each holder of the Series A Stock shall be entitled to one vote for each whole share of common stock into which such shares of Series A Stock could be converted in accordance with the agreement.

The Company has agreed to pay liquidated damages to its warrant holders if the Registration Statement which the Company agreed to file is not filed by May 13, 2010 and/or not declared effective by the SEC on or before October 25, 2010. The liquidated damages are equal to 1% of the purchase price of the purchased shares owned by investors. The maximum aggregate liquidated damages payable to the investors under the Stock Purchase Agreement shall be 6% of the aggregate purchase price paid by the investors pursuant to the Stock Purchase Agreement.

Pursuant to the Stock Purchase Agreement the holders of Series A Stock also received 3,460,902 5 year warrants to purchase common shares. The warrants have an exercise price of $3.47 for 1,730,451 warrants and $4.17 for the remaining 1,730,451 warrants.

Assuming a valuation of $3.10 per share and the conversion of the Series A Stock into 4,221,389 shares of common stock at an effective conversion price of approximately $1.52 per share which is obtained by dividing the amount to be allocated to the BCF by the 2,768,721 common shares.

F-12

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED AND RESTATED)

Note 10 – SERIES A CONVERTIBLE PREFERRED STOCK AND WARRANTS (CONTINUED)

The Company measured and recognized an aggregate of $3,267,797 of the fair value of warrants to additional paid in capital upon issuance of these warrants. The terms of the warrants provide for an adjustment to the exercise price of these warrants if the company closes on the sale or issuance of common stock at a price which is less than the exercise price then in effect for these warrants. The Company determined that the warrants did not qualify for a scope exception under SFAS No. 133 as they were determined to not be indexed to the Company’s stock. On March 29, 2010, the warrants were classified as a derivative liability for the then fair market value and marked to market.

						Aggregate
			Exercise		Remaining	Intrinsic
	Total		Price		Life	Value

Outstanding, December 31, 2009		-
Granted in 2010
- in connection with exchange agreement		666,666	$	2.44-2.93	4.5 years
- in connection with Series A preferred		3,460,902	$	3.47-4.17	4.5 years
Exercised in 2010
Outstanding, June 30, 2010		4,127,568

Note 11-DERIVATIVE FINANCIAL INSTRUMENTS

The balance sheet caption derivative liabilities consist of warrants to purchase 4,127,568 shares of the Company’s common stock, issued to consultants and investor relations in connection with the merger agreements and in connection with the Stock Purchase Agreement. These derivative financial instruments are indexed to an aggregate of 4,127,568 and 0 shares of the Company’s common stock as of June 30, 2010 and December 31, 2009, respectively, and are carried at fair value. The following tabular presentations sets forth information about the derivative instruments for the periods June 30, 2010 and December 31, 2009:

Derivative income (expense)	Six Months Ended June 30, 2010			Three Months Ended June 30, 2010

Warrant derivative	$	(5,307,988	)	$	(745,740	)

Liabilities		June 30, 2010				December 31, 2009
Warrant derivative			8,575,785				0-

Freestanding derivative instruments, consisting of warrants are valued using the Black-Scholes-Merton valuation methodology because that model embodies all of the relevant assumptions that address the features underlying these instruments. Significant assumptions used in the Black Scholes models included: conversion or strike prices ranging from $2.44-$4.17; volatility 73.27% based upon forward terms of instruments; terms-remaining life of 4.75 years ; and a risk free rate ranging from 1.79%-2.5%.

Note 12 - INCOME TAXES

The Company operates in more than one jurisdiction with complex regulatory environments subject to different interpretations by the taxpayer and the respective governmental taxing authorities, we evaluate our tax positions and establish liabilities, if required. For uncertain tax position which may be challenged by local tax authorities and may not be fully sustained despite our belief that the underlying tax positions maybe be fully supportable. At this time the Company is not able to make a reasonable estimate of the impact on the effective tax rate related these items which could be challenged.

F-13

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED AND RESTATED)

Note 12 - INCOME TAXES – (CONTINUED)

Pursuant to the PRC Income Tax Laws, the Enterprise Income Tax (“EIT”) is at a statutory rate of 25%. The Company is an agriculture enterprise and under PRC Income Tax Laws, it is entitled to have new PRC tax policy for the agriculture enterprise. The Company’s income is derived from three areas including fish breeding, fish cultivation and selling adult fish. For income from fish breeding, it is entitled to an exemption. For income from fish cultivation, EIT is a discount rate of 12.5%. For income from selling adult fish, EIT is a rate of 25%.

The following is a reconciliation of income tax expense:

June 30, 2010	International		Total
Current	$	488,584	$	488,584
June 30, 2009	International		Total
Current	$	378,905	$	378,905

	Six Months Ended June 30,						Three Months Ended June 30,
	2010			2009			2010			2009
Reconciliation of Effective tax rate before special items to Reported Effective tax rate

Statutory tax rate		25	%		25	%		25	%		25	%
Non deductibility of permanent items		22	%		0	%		5	%		0	%
Tax benefits from discounts and exemption		(18	)%		(32	)%		(20	)%		(19	)%
Others		31	%		20	%		(2	)%		0	%
Effective tax rate		60	%		12	%		8	%		6	%

If the Company were subject to the standard 25% EIT, it would have incurred $1,164,982 and $994,634 of income tax expense for the six months ended June 30, 2010 and 2009, respectively. The standard income tax rate would have caused the Company to incur an additional expense of $0.06 and $0.05 per share for the six months ended June 30, 2010 and 2009, respectively.

If the Company were subject to the standard 25% EIT, it would have incurred $768,998 and $588,151 of income tax expense for the three months ended June 30, 2010 and 2009, respectively. The standard income tax rate would have caused the Company to incur an additional expense of $0.04 and $0.03 per share for the three months ended June 30, 2010 and 2009, respectively.

Note 13– COMMITMENTS & CONTINGENCIES

The Company leases facilities under operating leases, which expire on different dates. It pays for on an annual basis and accrues for throughout the year. For the six months ended June 30, 2010 and 2009, rent expense was $ 165,166 and $ 302,190. Future payments under these leases are as follows as of June 30:

2011	$	52,339
2012	$	52,339
2013	$	52,339
2014	$	18,903
2015	$	13,035
Thereafter	$	31,256
Total	$	220,211

F-14

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED AND RESTATED)

Note 14– EARNINGS PER SHARE

In accordance with FASB ASC Topic 260-1-50, “Earnings per Share”, and SEC Staff Accounting Bulletin No. 98, basic net income or loss per common share is computed by dividing net income or loss for the period by the weighted - average number of common shares outstanding during the period. Under FASB ASC 260-10-50, diluted income or loss per share is computed by dividing net income or loss for the period by the weighted - average number of common and common equivalent shares, such as stock options, warrants and convertible securities outstanding during the period.

The following table sets forth the computation of basic and diluted earnings per share of common stock:

	Six Months Ended September 30,					Three Months Ended June 30,
	2010			2009		2010		2009
Basic and diluted earnings per share:
Numerator:
(Loss)/Income used in computing	$	(4,556,128	)	$	5,021,462	$	2,956,916	$	2,839,965
Denominator:
Weighted average common shares outstanding		20,487,495			19,623,889		21,286,789		19,623,889
Basic and diluted earnings per share	$	(0.22	)	$	0.26	$	0.14	$	0.14

Note 15 – STATUTORY RESERVE

In accordance with the laws and regulations of the PRC, a wholly-owned Foreign Invested Enterprises income, after the payment of the PRC income taxes, shall be allocated to the statutory surplus reserves and statutory public welfare fund. Prior to January 1, 2006 the proportion of allocation for reserve was 10 percent of the profit after tax to the surplus reserve fund and additional 5-10 percent to the public affair fund. The public welfare fund reserve was limited to 50 percent of the registered capital. Effective January 1, 2006, there is now only one fund requirement. The reserve should be 10 percent of income after tax, not to exceed 50 percent of registered capital. Statutory Reserve funds are restricted for set off against losses, expansion of production and operation or increase in register capital of the respective company. Statutory public welfare fund is restricted to the capital expenditures for the collective welfare of employees. These reserves are not transferable to the Company in the form of cash dividends, loans or advances. These reserves are therefore not available for distribution except in liquidation. As of June 30, 2010 and December 31, 2009, the Company had allocated $1,076,310 and $1,051,089, to these non-distributable reserve funds.

Note 16- OTHER COMPREHENSIVE INCOME

Balances of related after-tax components comprising accumulated other comprehensive income, included in stockholders’ equity, at June 30, 2010 and December 31, 2009, are as follows:

	Foreign Currency Translation Adjustment			Accumulated Other Comprehensive Income
Balance at December 31, 2008	$	861,166		$	861,166
Change for 2009		5,533			5,533
Balance at December 31, 2009	$	866,699		$	866,699
Change for six months ended 6/30/2010		(98,496	)		(98,496	)
Balance at June 30, 2010	$	768,203			768,203

F-15

RONGFU AQUACULTURE, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

(UNAUDITED AND RESTATED)

Note 17- RESTATEMENT

The accompanying consolidated balance sheets, statements of income and comprehensive income, statements of cash flows and statement of stockholders’ equity as of, and for the year ended, December 31, 2009 and the three and six months ended June 30, 2010 and June 30, 2009 have been restated for the following matter:

1. The number of shares of the Company’s common stock outstanding at December 31, 2009 and for the quarters ended June 30, 2009 and June 30, 2010 were overstated in such financial statements.

2. The value attributed to shares of the Company’s Common Stock which were issued for prior services on March 29, 2010 should have been expensed in the Company’s income statement for the six months ended June 30, 2010.

3. $7,700,000 of Preferred Stock included under Stockholders’ Equity on the Company’s balance sheet as of June 30, 2010 should be reclassified as Temporary Equity.

Therefore, we have restated the financial statements to correct these errors. The net effect of this reclassification is as follows:

A decrease in the Company’s common stock by $1,187 from $20,811 to $19,024 and an increase of additional paid in capital by the same amount.

The accompanying consolidated balance sheet, statement of operations, statement of cash flows as of and for the period ended June 30, 2010 has been restated for the following matters:

(i)

We have restated our financial statements to treat the preferred stock as Temporary Equity (see Note 17(3)). We previously accounted for the preferred stock in equity. This restatement had the effect of decreasing our equity by $7,700,000.

(ii)

We have restated our income statement to treat the value assigned to the shares issued in conjunction with the certain professional services as expenses charged to the income statement for the six months ended June 30, 2010 (see Note 17(2)). This restatement had the effect of increasing the loss by $192,361, or $0.01 per share for the six months ended June 30, 2010.

The following table illustrates the restatement:

	Net Loss			Loss per Common Share
Net loss, as reported	$	(4,363,767	)	$	(0.21	)
Correction for common stock issued for services		(192,361	)		(0.01	)

Net loss, as restated	$	(4,556,128	)	$	(0.22	)

(iii) We have restated our income statement for the six months ended June 30, 2009 to correct the net income per common share as a result of a correction in the weighted average shares outstanding. This restatement had the effect of increasing net income per share for the six months ended June 30, 2009 by $.02.

The following table illustrates the restatement:

	Net Income		Income per Common Share
Net Income, as reported	$	5,021,462	$	0.24

Correction for weighted average shares				0.02
Net Income	$	5,021,462	$	0.26

Note 18- SUBSEQUENT EVENTS

From July 1, 2010, the Company has evaluated subsequent events for potential recognition and disclosure through December 29, 2010, the date of the restated financial statement issuance. Based upon this evaluation management has concluded that the Company did not have any material recognizable subsequent events during the period..

F-16

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of the consolidated financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes of Rongfu Aquaculture, Inc. appearing elsewhere in this report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Actual results may differ materially from those anticipated in these forward-looking statements.

Overview

The Company is engaged in commercial freshwater aquaculture in the PRC. It sells fish and fish fry and also acts as a freshwater fish dealer (generating trading profits from the purchase of fish from third party farmers and the immediate sale of such fish to wholesalers).

The Company operates 13 adult fish breeding farms, covering a total area of 8,249 mu Three of the Company’s farms are located in Hainan Province, two in the town of Wenchang and one in Nanling. The other 10 farms are located in Guangdong Province in the towns or villages of Nanhai, Qinyuan, Taishan, Yangdong and Gaoyao. 9 of the farms consist of a series of man-made ponds. Each pond is outfitted with one or more oxygen aeration machines which float on the surface and one or more feeding machines which provide food to the fish twice per day. The aeration machines provide oxygen to the fish and enable the natural removal of fish wastes so that the water does not become toxic for the fish.

4 of the Company’s farms are each comprised of a single lake created by damming a river. Oxygen aeration equipment is not needed since the lakes have a much larger area than the ponds dug by the Company. The land on which the farms are located is leased by the Company from the village under leases for terms of 4 to 30 years.

In addition to its adult fish breeding farms, the Company operates a breeding farm in Wenchang, Hainan Province in which tilapia fry are produced from brood stock.

At its facilities in Nanhai (at which the Company’s fish clinic is also located) and Wenchang, the Company also has constructed and maintains concrete tanks where the Company incubates tilapia. The Company also incubates snakehead and crucian carp fry in its tank in Nanhai. After the incubation period the Company sells approximately 95% of the fry to distributors.

Comparison of three months ended June 30, 2010 and June 30, 2009

The following table presents the Company’s consolidated revenue for its lines of business for the three months ended June 30, 2010 and three months ended June 30, 2009, respectively:

Three Months Ended June 30, 2010 and 2009					%
	2010		2009		Change

Farm growing	$	6,803,184	$	4,114,201		65	%

Breeding	$	2,799,043	$	2,462,782		14	%

Trading	$	3,027,670	$	984,866		207	%

Consolidated	$	12,629,897	$	7,561,849		67	%

Revenue for the three months ended June 30, 2010 were $12,629,897, an increase of $5,068,048 or 67%, when compared to the same period in 2009. Such increase was mainly attributed to the increase in sales of the trading business of adult fish, particularly snakehead which increased $2.1 million, and the farm growing of adult fish, particularly snakehead, which increased $2.7 million compared to the same period of 2009 following the opening in May 2010 of our logistics center which facilitated the distribution of snakehead to Guangzhou Province and other regions in the PRC. For the three months ended June 30, 2010, the sales of fish fry increased $336,260 compared to the same period of the prior year, due to sales of fry of our two new fish – yellow catfish and California perch.

Cost of goods sold for the three months ended June 30, 2010 were $7,726,590 an increase of $3,805,328 or 97%, when compared to the same sales period of the prior year, which consisted of an increase of $2,202,850 for breeding adult fish and an increase of $1,813,881 for the trading business, slightly offset by a decrease of $31,359 for breeding fish fry. The percentage increase in cost of goods sold is higher than that of the percentage increase in revenue mainly because the revenues of the farm growing segment and trading segment, with relatively higher costs of sales increased proportionately more than revenues of the breeding segment.

Gross profit for the three months ended June 30, 2010 was $4,903,307, an increase of $1,262,720 or 35%, when compared to the same period in 2009. The increase in gross profit is comprised of an increase of $666,177 for breeding adult fish, an increase of $228,924 for the Company’s trading business and an increase of $367,619 for breeding fish fry. The reason for the increase of gross profit for the three months ended June 30, 2010 was the increase in sales. The percentage increase in gross profit for the three months ended June 30, 2010 over the three months ended June 30, 2009 is lower than the percentage increase in revenues for the same periods due to higher costs of goods sold in the three months ended June 30, 2010 as a result of changes in the product mix.

Selling, general and administrative expenses for the three months ended June 30, 2010 were $916,151, an increase of $300,463 or 49%, when compared to the same period in 2009, mainly due to an increase in selling expenses of $353,309 relating to the increase in sales and an increase in general and administrative expenses of $76,962 mainly due to the expansion of the Company’s business.

Research and development expenses for the three months ended June 30, 2010 were $18,807, an increase of $2,500 or 15%, when compared with $16,307 in the same period in 2009.

Income from operations for the three months ended June 30, 2010 was $3,968,349, an increase of $959,757 or 32%, when compared to the same period in 2009. The main reason for the increase in income from operations was the increase in sales of adult fish breeding and fish fry.

Interest income for the three months ended June 30, 2010 was $3,852, a decrease of $5,141 or 57%, when compared to the same period in 2009, primarily because the Company used a part of its interest earning funds to pay dividends and income tax in the fourth quarter in 2009, which decreased the Company’s interest income as a consequence. Interest expense for the three months ended June 30, 2010 was $17,447, an increase of $17,206 due to the increase in the Company’s short term bank loans, when compared to the same period in 2009.

Income taxes for the three months ended June 30, 2010 was $252,098, an increase of $74,720, or 42%, when compared to the same period in 2009. In 2010 more fry was sold and fry was tax exempt while farmed fish was subject to a 12.5% income tax. Trading revenue from grown fish was taxed at a rate of 25%. In 2010 more revenue was contributed by farming and trading and therefore the income taxes were higher than that of 2009.

The Company recorded a loss on fair value of derivative liability of $745,740 for the three months ended June 30, 2010.

Net income for the three months ended June 30, 2010 was $2,956,916 as compared to net income of $2,839,965 for the three months ended June 30, 2009 mainly due to the increase in gross profit of $1,262,720 from business expansion offset by the increase in selling, general and administrative expenses of $300,463 and the non-cash item of loss on fair value of derivative liability of $745,740 in the second quarter in fiscal year 2010. During the first quarter of 2010, the Company completed a private placement of its preferred stock and warrants. The Company was required to separately account for the conversion option of 4,127,268 shares of common stock exercisable in 5 years embedded in Series A to D warrants issued on March 29, 2010 as a derivative instrument liability, carried at fair value and marked-to-market each period, with changes in the fair value each period charged or credited to the income statement. The warrants are therefore recorded as a derivative instrument liability, carried at fair value.

Comparison of six months ended June 30, 2010 and June 30, 2009

The following table presents the Company’s consolidated revenue for its lines of business for the six months ended June 30, 2010 and six months ended June 30, 2009, respectively:

Six Months Ended June 30, 2010 and 2009					%
	2010		2009		Change

Farm growing	$	14,015,430	$	11,176,237		25	%

Breeding	$	3,987,566	$	3,532,743		13	%

Trading	$	4,550,428	$	2,259,297		101	%

Consolidated	$	22,553,424	$	16,968,277		33	%

Revenue for the six months ended June 30, 2010 were $22,553,424, an increase of $5,585,147 or 33%, when compared to the same period in 2009. Such increase was mainly due to the increase in sales of adult fish purchased by farmers, which increased $2,291,131, and the sales of adult fish, which increased $2,839,193 compared to the same period of 2009 following the opening in May, 2010 of our logistics center which facilitated the distribution of snakehead to Guangzhou Province and other regions in the PRC. For the six months ended June 30, 2010, sales of fish fry increased $454,822 compared to the same period of the prior year, due to sales of fry of our two new fish – yellow catfish and California perch.

Cost of goods sold for the six months ended June 30, 2010 were $14,446,385, an increase of $4,258,378 or 42%, when compared to the same sales period of the prior year, which consisted of an increase of $2,171,290 for breeding adult fish, an increase of $2,032,380 for trading business, and an increase of $54,708 for breeding fish fry. The percentage increase in cost of goods sold is higher than that of the percentage increase in revenue mainly because the revenues of the farm growing segment and trading segment, with relatively higher costs of sales increased proportionately more than revenues of the breeding segment.

Gross profit for the six months ended June 30, 2010 was $8,107,039, an increase of $1,326,769 or 20%, when compared to the same period in 2009. The increase in gross profit is comprised of an increase of $667,903 for breeding adult fish, an increase of $258,751 for the Company’s trading business, and an increase of $400,115 for breeding fish fry. The reason for the increase of gross profit for the six months ended June 30, 2010 was the increase in sales. The percentage increase in gross profit for the six months ended June 30, 2010 over the six months ended June 30, 2009 is lower than the percentage increase in revenues for the same periods due to higher costs of goods sold in the six months ended June 30, 2010 as a result of changes in the product mix.

Selling, general and administrative expenses for the six months ended June 30, 2010 were $1,781,495, an increase of $416,344 or 30%, when compared to the same period in 2009, mainly attributable to the increase in selling expenses of $551,650 for the expansion of the Company’s business. The increase in selling expenses was offset by a decrease in general and administrative expenses by $135,306 due to less maintenance fees and security fees incurred in the six months ended June 30, 2009 that did not recur in the six months ended June 30, 2010.

Income from operations for the six months ended June 30, 2010 was $6,286,901, an increase of $906,924 or 17%, when compared to the same period in 2009. The main reason for the increase in income from operations was the increase in sales of adult fish and fish fry.

Interest income for the six months ended June 30, 2010 was $6,614, a decrease of $14,226 or 68%, when compared to the same period in 2009, primarily because the Company used a part of its interest earning funds to pay dividends and income tax of the fourth quarter in 2009, which decreased the Company’s interest income as a consequence. Interest expense for the six months ended June 30, 2010 was $34,841, an increase of $34,381 due to the increase in the Company’s short term bank loans, when compared to the same period in 2009.

Income taxes for the six months ended June 30, 2010 were $488,584, an increase of $109,679, or 29%, when compared to the same period in 2009. In 2010 more fry was sold and fry was tax exempt while farmed fish was subject to a 12.5% income tax. Trading revenue from grown fish was taxed at a rate of 25%. In 2010 more revenue was contributed by farming and trading and therefore the income taxes were higher than that of 2009.

The Company recorded a loss on fair value of derivative liability of $5,307,988 for the six months ended June 30, 2010. This loss on fair value was recorded to mark to market for the increase in fair value of the warrants through March 31, 2010. Under ASC 815, the warrants will be carried at fair value and adjusted at each reporting period.

Net income for the six months ended June 30, 2010 was $462,102 as compared to net income of $5,021,462 for the six months ended June 30, 2009. The $4,559,360 difference is attributable to the loss of $5,307,988 on fair value of derivative liability offset by the improvement in net income from operations in the six months ended June 30, 2010. During the first quarter of 2010, the Company completed a private placement of its preferred stock and warrants. The Company was required to separately account for the conversion option of 4,127,268 shares of common stock exercisable in 5 years embedded in Series A to D warrants issued on March 29, 2010 as a derivative instrument liability, carried at fair value and marked-to-market each period, with changes in the fair value each period charged or credited to the income statement.. The warrants are therefore recorded as a derivative instrument liability, carried at fair value.

During the six months ended June 30, 2010, total assets increased by $8,504,697, or 73%, from $11,629,668 at December 31, 2009 to $20,134,365 at June 30, 2010. The majority of the increase was in cash, accounts receivable and inventories, which was partially offset by a decrease in amount due from shareholders.

During the six months ended June 30, 2010, cash increased by $3,931,229, or 123%, to $7,125,477 as compared to $3,194,248 as of December 31, 2009. This is mainly attributed to the Company’s receipt of $6,561,077 in net proceeds from the sales of the Company’s convertible preferred stock and warrants in a private placement in March 2010, which funding was partially offset by the increase in inventories and payment of dividends to shareholders in the first six months of 2010.

At June 30, 2010, the accounts receivable balance increased by $1,806,951, or 764%, from the balance at December 31, 2009 as a result of an increase in sales during the six months ended June 30, 2010 as compared to the six months ended June 30, 2009. In addition, we have granted our customers a longer credit period as a strategy to increase our market share.

At June 30, 2010, there were no amounts due from shareholders, as compared to due from shareholders of $4,008,659 as of December 31, 2009. This is attributed to the complete repayment by shareholders during the first quarter of 2010 of the $4,008,659 due from shareholders as of December 31, 2009.

The Company's inventory as of June 30, 2010 was $8,987,628, an increase of $6,007,875, or 202%, compared to inventory at December 31, 2009. Inventories mainly consists of adult tilapia, snakehead, crucian carp and other varieties of freshwater fish. The main reason of the increase in inventory is the Company increased its breeding capacity in the six months ended June 30, 2010 in anticipation of future sales.

At June 30, 2010 fixed assets were $905,285, mainly consisting of aerators, feeding machines and other equipment used in fish farms, representing an increase of $500,138, or 123%, compared to fixed assets as of December 31, 2009.

At June 30, 2010 biological assets were $366,200, a decrease of $66,608, or 15%, compared to biological assets as of December 31, 2009. The decrease in biological assets was due to amortization for the six months in 2010, offset by the procurement of certain breeding fish during the 2010. Biological assets consist of tilapia, snakehead, crucian carp, yellow catfish and California perch.

At June 30, 2010 accounts payable were $5,361,607, as compared to $0 as of December 31, 2009. The increase in accounts payable was due to the procurement of fish food used in the Company’s fish farms and fish fry breeding.

At June 30, 2010 other payables were $264,575, a decrease of $2,479,385, or 90%, compared to other payables as of December 31, 2009. The main item included in other payables is personal income tax payable, and the high personal income tax payable was due to the dividend payable in the fiscal year ended December 31, 2009, which was paid in the first quarter of 2010.

At June 30, 2010, there was no advance from clients, as compared to the advance from clients of $498,785 as of December 31, 2009. Because goods were distributed to clients in the first quarter of 2010, there was no advance from clients as of June 30, 2010.

At June 30, 2010, there were no bank loans payable as compared to a bank loan payable of $1,550,343 as of December 31, 2009. The loan was fully repaid in the six months ended June 30, 2010.

At June 30, 2010, there was no dividend payable, as compared to a dividend payable of $3,466,331 as of December 31, 2009 since the dividend was fully paid in the six months ended June 30, 2010.

At June 30, 2010 income tax payable was $251,866, a decrease of $743,447, or 75%, compared to income tax payable (which is included as a component of other payable) of $995,313 as of December 31, 2009. This is mainly because the fourth quarter is the peak season of sales normally, and therefore the income tax for the six months ended June 30, 2010 is lower than the income tax for the whole 2009 fiscal year.

Liquidity and Capital Resources

The Company has typically financed its operations and expansion from cash flows from operations and loans from its shareholders and banks. The Company consummated a reverse merger transaction and raised approximately $7.7 million in gross proceeds in a private placement financing on March 29, 2010.

Nanhai Ke Da Heng Sheng has entered into two credit line agreements with Foshan Nanhai Allied Rural Credit Union Danzhao Credit Association with credit lines of RMB 7,000,000 (approximately $ 1,044,000 based on the conversion rate as of June 30, 2010) and RMB 5,000,000 (approximately $746,000 based on the conversion rate as of June 30, 2010), respectively. The two credit lines are secured by real estate owned by the sister-in-law of Chen Zhisheng, our Chairman of the Board. The agreements were entered into on January 14, 2009 and January 13, 2009, respectively, for two-year terms expiring in January 2011. Outstanding loans under the two credit lines bear interest at a rate of 5.4% per year. Interest is payable monthly. As of June 30, 2010, there were no outstanding loans payable

Critical Accounting Policies and Estimates

Management's discussion and analysis of its financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. Our financial statements reflect the selection and application of accounting policies which require management to make significant estimates and judgments. See note 2 to our consolidated financial statements, "Summary of Significant Accounting Policies." Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. We believe that the following reflect the more critical accounting policies that currently affect our financial condition and results of operations.

Principles of Consolidation

The consolidated financial statements include the accounts of Rongfu Aquaculture, Inc (formerly, Granto, Inc.) and its wholly owned subsidiaries, Flourishing HK, the WOFE, Nanhai Ke Da Heng Sheng, and Hainan Ke Da Heng Sheng (collectively referred to herein as the” Company”). All material inter-company accounts, transactions and profits have been eliminated in consolidation. The Company has adopted the Consolidation Topic of the FASB Accounting Standards Codification which requires a variable interest entity (“VIE”) to be consolidated by a company if that company is subject to a majority of the risk of loss for the VIE or is entitled to receive a majority of the VIE’s residual returns.

Use of Estimates

Inventories

Inventories are valued at the lower of cost (determined on a weighted average basis) or market.

Derivative Liability

The Company issued warrants in connection with the Purchase Agreement dated March 29, 2010 with certain reset exercise price provisions.

Adoption of the Derivative and Hedging Topic of the FASB Accounting Standards Codification (“ASC 815”), the Company determined that the warrants did not qualify for a scope exception under ASC 815 as they were determined to not be indexed to the Company’s stock as prescribed by ASC 815. The warrants, under ASC 815, were classified as derivative liability for the then relative fair market value of $ 3,267,797 and marked to market. For the six months ended June 30, 2010, the Company recorded a loss on change in fair value of derivative liability of $8,575,785 to mark to market for the increase in fair value of the warrants through ended June 30, 2010. Under ASC 815, the warrants will be carried at fair value and adjusted at each reporting period.

Fair Value of Financial Instruments

The Financial Instrument Topic of the Codification requires that the Company disclose estimated fair values of financial instruments. The carrying amounts reported in the statements of financial position for current assets and current liabilities qualifying as financial instruments are a reasonable estimate of fair value.

Revenue Recognition

The Company’s revenue recognition policies are in compliance with the Revenue Recognition Topic of the Codification. Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

Income Taxes

It is the Company’s intention to permanently reinvest earnings from activity with China and thereby indefinitely postpone repatriation of these funds to the U.S. Accordingly, no domestic deferred income tax provision has been made for U.S. income tax which could result from paying dividends to the Company.

At June 30, 2010, there were permanent tax differences relating to stock based compensation in conjunction with professional services of $191,141 and the loss on change in fair value of derivative liability of $5,307,988 to mark to market for the increase in fair value of the warrants through ended June 30, 2010.

Concentration of Credit Risk

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

Not applicable.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

The Company’s management, with participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. The term “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) means controls and other procedures of the Company that are designed to ensure that information required to be disclosed by a company in reports, such as this report, that it files, or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the U.S. Securities and Exchange Commission’s (“SEC”) rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on that evaluation, management concluded that, as of June 30, 2010, the Company’s disclosure controls and procedures were not effective at that reasonable assurance level to satisfy the objectives for which they are intended.

Changes in Internal Control over Financial Reporting

On March 29, 2010 the Company completed the acquisition of Rongfu Aquaculture, Inc. (“Rongfu”) pursuant to a share exchange agreement. The acquisition was accounted for as a recapitalization effected by a share exchange. Rongfu is considered the acquirer for accounting and financial reporting purposes. Prior to the acquisition the Company was a shell company.

During the preparation of our financial statements for the quarter ended September 30, 2010, we determined that there existed deficiencies in controls relating to the following and that it was necessary for the Company to restate to its previously issued financial statements as of December 31, 2009 and the quarters ended March 31, 2009 and March 31, 2010 and June 30, 2009 and June 30, 2010 for the following reasons:

1. The number of shares of the Company’s common stock outstanding as of December 31, 2009 and the weighted average common shares outstanding for the quarters ended March 31, 2009, June 30, 2009 and March 31, 2010 were overstated in such financial statements and earnings per share for the quarters ended March 31, 2009, June 30, 2009 and March 31, 2010 were understated in such financial statements.

2. The value attributed to shares of the Company’s common stock which were issued for prior services on March 29, 2010 should have been expensed in the Company’s income statements for the quarter ended March 31, 2010 and for the six months ended June 30, 2010.

3. $7,700,000 of Preferred Stock included under Stockholders’ Equity on the Company’s balance sheets as of March 31, 2010 and June 30, 2010 should be reclassified as Temporary Equity.

We have further concluded that such deficiencies represented material weaknesses. As a result, we concluded that the Company’s internal controls over financial reporting were not effective at June 30, 2010.

The Company is in the process of enhancing its financial reporting by implementation of stronger internal controls through the recruitment of high caliber personnel with strong financial reporting backgrounds and the establishment of effective checking and reviewing procedures. In 2011 we plan to enrich the accounting knowledge of all of our financial and accounting personnel by holding training to increase the awareness and use of controls and transparency by all staff and by redesigning document flows and establishing strong control points.

PART II. OTHER INFORMATION

Item 6. Exhibits

(a)

Exhibits

31.1 - Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 - Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 - Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 - Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned there unto duly authorized.

	RONGFU AQUACULTURE, INC.

Date: December 29, 2010	By:	/s/ Kelvin Chan
		Kelvin Chan
		Chief Executive Officer

Attached files

Granto, Inc. Reports

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