BTX HOLDINGS INC - FORM 10-K - July 13, 2011

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EX-31.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - BTX HOLDINGS INCf10k2011ex31i_rebornne.htm
EX-10.1 - FORM OF REGIONAL DISTRIBUTION AGREEMENT (ENGLISH TRANSLATION) - BTX HOLDINGS INCf10k2011ex10i_rebornne.htm
EX-32.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER OF THE COMPANY, PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - BTX HOLDINGS INCf10k2011ex32i_rebornne.htm
UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
(Mark One)
 
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
  For the fiscal year ended March 31, 2011
 
or

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: 000-53465
 
Rebornne (USA), Inc.
(Name of small business issuer in its charter)
 
Florida
  
 90-0515106
(State or other jurisdiction of
incorporation or organization)
  
(IRS Employer Identification No.)
 
Level 23, 120 Albert Street, Auckland City, Aukland, New Zealand
  
1010
(Address of principal executive offices)
  
(Zip Code)
 
(+0064) 9-909-8886
(Registrant’s telephone number, including area code)
 
Securities registered under Section 12(b) of the Exchange Act:
   
Title of each class registered:
Name of each exchange on which registered:
None
None
 
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $0.001 par value
(Title of class)
 
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 Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ¨  No ¨

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes x No o
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference Part III of this Form 10-K or any amendment to this Form 10-K.   x
 
Indicate by check mark whether the registrant is a large accelerated filer, an 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
(Do not check if a smaller reporting company)
 
The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant, as of September 30, 2010, the last business day of the registrant’s most recently completed second fiscal quarter, based on the closing price of the common stock on OTC Bulletin Board on such date was $60,120.12.
 
Number of shares of the registrant’s common stock outstanding as of June 30, 2011 was 54,807,032.
 
Documents Incorporated by Reference: None.
 
 
 
 
 
TABLE OF CONTENTS

Item Number and Caption
  
Page
         
PART I
    
         
Item 1.
  
Business.
     1
         
Item 1A.
  
Risk Factors.
     8
         
Item 2.
  
Properties.
     14
         
Item 3.
  
Legal Proceedings.
     14
         
Item 4.
  
(Removed and Reserved).
     14
         
PART II
    
         
Item 5.
  
Market for Registrant’s Common Equity, and Related Stockholder Matters and Issuer Purchases of Equity Securities.
     14
         
Item 6.
  
Selected Financial Data.
     15
         
Item 7.
  
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
     15
         
Item 7A.
  
Quantitative and Qualitative Disclosures About Market Risk.
     18
         
Item 8.
  
Financial Statements and Supplementary Data.
     18
         
Item 9.
  
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
     18
         
Item 9A.   
  
Controls and Procedures.
     19
         
PART III
    
         
Item 10.
  
Directors, Executive Officers, Promoters and Corporate Governance.
     19
         
Item 11.
  
Executive Compensation.
     20
         
Item 12.
  
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
     21
         
Item 13.
  
Certain Relationships and Related Transactions, and Director Independence.
     22
         
Item 14.
  
Principal Accountant Fees and Services.
     22
         
PART IV
    
         
Item 15.
  
Exhibits, Financial Statement Schedules.
     22
         
SIGNATURES
         24

 
 
 
 
PART I
 
ITEM 1. DESCRIPTION OF BUSINESS.
 
Rebornne (USA) Inc. (“we,” “us,” “our,” or “the Company”) was incorporated under the laws of the State of Florida on April 24, 2003 under the name King Capital Holdings, Inc.

We were originally incorporated to develop and employ technologies from around the world to process biomass (plant derived) waste, extract the usable fractions, and then utilize or sell those extractions for varied applications or in further processes. Activities during the development stage included developing the business plan, acquiring technology and raising capital.

Pursuant to a share purchase agreement, dated December 30, 2005, we entered into an agreement with BioTex Corporation, pursuant to which BioTex Corporation, exchanged all of its issued and outstanding shares of common stock for 180,551 shares or approximately 89% of our common stock. This transaction has been accounted for as a reverse acquisition. Accounting principles applicable to reverse acquisitions have been applied to record the acquisition. Under this basis of accounting, BioTex Corporation is the acquirer and, accordingly, the consolidated entity is considered to be a continuation of BioTex Corporation, with our net assets deemed to have been acquired and recorded at its historical cost. The statements of operations include the results of BioTex Corporation for the years ended December 31, 2009 and 2008 and for the period from January 3, 2003 (inception) to December 31, 2009. On December 30, 2005, we changed our name from King Capital Holdings, Inc. to BTX Holdings, Inc.
 
On January 29, 2010, we entered into a share purchase agreement (the “Purchase Agreement”) with Rebornne New Zealand Limited (“Rebornne NZ”), a corporation incorporated in Auckland, New Zealand in 2001. On March 22, 2010, the Company completed the transactions contemplated by a stock purchase agreement pursuant to which the Company issued a total of 750,000 shares (post reverse split), representing approximately 51% of the issued and outstanding common stock of the Company after the reverse split on the closing date, to Rebornne NZ for a cash payment of $240,000. As a result, Rebornne NZ became the majority shareholder of the Company.  The transaction resulted in a change in control of the Company. Effective March 22, 2010, our corporate name was changed to Rebornne (USA) Inc.

In connection with the change of control transaction, Scott J. Silverman resigned from the Board of Directors effective April 2, 2010, which is ten (10) days following the filing and mailing of the Schedule 14f-1 as promulgated by the Securities Exchange Act of 1934. On March 22, 2010, Mr. Silverman resigned from all his positions as officer of the Company effectively immediately. Dairy Global was appointed as the sole officer of the Company effectively immediately and appointed as the sole director effective April 12, 2010.
 
On May 28, 2010, we entered into a share exchange agreement by and among the Company, Rebornne NZ, and the shareholders of Rebornne NZ. The closing took place on May 28, 2010. On the closing date, pursuant to the terms of the share exchange agreement, we acquired all of the outstanding shares of Rebornne NZ from the shareholders of Rebornne NZ; and the shareholders of Rebornne NZ transferred and contributed all of their interests to us. In exchange, we issued an aggregate of 26,546,997 shares of our common stock to the shareholders of Rebornne NZ, which totals 92.2% of the Company’s issued and outstanding shares on a fully diluted bases as of and immediately after the closing of the transaction.  Following the share exchange transaction, there were 28,800,000 shares of common stock issued and outstanding. Dairy Global remains the sole director and officer of the Company.
 
We operate our business mainly through our wholly owned subsidiary Rebornne NZ and its subsidiaries. The following sets forth the business plan of Rebornne NZ and its subsidiaries:
 
Overview

Rebornne NZ was incorporated in Auckland, New Zealand in 2001 by its sole shareholder and owner Dairy Global.  Rebornne NZ is a growing dairy product company in New Zealand with wholly-owned subsidiaries in the People’s Republic of China (PRC). Through our wholly owned subsidiaries, we produce, market, and sell our products under the “Rebornne” brand name. We focus on selling colostrums and infant formula products in China, which included both premium and a more affordable series, targeted towards the general masses. In order to sell our products, we have established an extensive sales and distribution network nationwide, covering a total of 3,000 (increasing) sale locations throughout China.

Organization and Subsidiaries

We conduct business in both New Zealand and in China through our wholly owned New Zealand subsidiary and PRC subsidiaries. Rebornne NZ operates as a base of administration, including powder purchasing from New Zealand sources and transport.

We have the following subsidiaries:

·
Rebornne New Zealand Limited, located in Auckland, New Zealand, was established in late 2001 and is engaged in administration, purchasing of powder from New Zealand, and shipping of premium milk powder to China.
 
 
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·
Rebornne (Guangzhou) Dairy Company, located in Guangzhou, China, was established in 10th July 2006 and is engaged in packing, blending of milk powders and various ingredients purchased from sources including New Zealand, United States and Australia. It also serves as the base of marketing, administration, distribution and customer service within the Chinese Guangdong region.
   
·
Rebornne (Shenzhen) Dairy Company, located in Shenzhen, China, handles marketing, sales, promotion, customer service and administrative functions in the nearby provinces.
  
The chart below describes our current corporate structure:
 
Our two wholly owned PRC subsidiaries, Rebornne (Guangzhou) Dairy Company and Rebornne (Shenzhen) Dairy Company, are wholly foreign owned entities (the “WFOE”) in China, wholly owned by our subsidiaries Rebornne New Zealand Limited. In China, the WFOE is incorporated under the Wholly Foreign-Owned Enterprise Law, Catalogue for the Guidance of Foreign Investment Industries (Amended in 2007) and other related laws and regulations. Our above two PRC subsidiaries were approved at the time of their incorporations under the above mentioned laws and regulations, including the tax filing requirements for wholly foreign owned companies in China, and there is no investment restriction or limits for foreign companies to engage in the milk powder formula industry in China.
 
Products and Services
 
Rebornne NZ is a producer of colostrums, milk powder and energy drinks in the PRC. Throughout our sales network with currently 51 dealers, our products are sold in more than 9,000 sales locations, including GuangZhou, HaiKou, SanYa, MaoMing, JieYang, NanNing, SiChuan, HuNan, SuZhou, HangZhou, NingBo, ShangHai, BeiJing, DaLian, ChangChun, JiuJiang, QingDao, TengZhou, NanChang, ZhengZhou, XiAn, and WenZhou.

All of our products are marketed under the same brand: Rebornne. We began using this brand name for our colostrums as early as 2002. The Rebornne name has been associated with our infant milk powders since 2006.

Colostrum milk powders

In early 2002, we began selling colostrum milk powder produced and packaged in New Zealand under the brand “Rebornne”. These products are made by a contract dairy manufacturer, being marketed as a premium product and used as a nutritional supplement, suitable for babies, children, pregnant or post-birth women and other adults.

There is considerable market demand for colostrums from New Zealand, as they are considered as a valuable product in China. Based on the following web link, the Colostrums is very popular in China and other countries. The link showed an experience of a supplement products exporter story and his point of view: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10535511.
 
 
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Infant Milk Powder Formulas

The milk powder market is one of the most lucrative segments in the dairy market. Based on the statistics from the China Custom and Border Office in the year as of September 2010, the imported dairy products (including the milk powder) from foreign countries to China kept increasing.  Research have showed that, the biggest cities in China i.e. Shanghai, Beijing and Guangzhou, more than 80% population in these cities choose to consume imported infant milk powder formula rather than domestic products and imported infant formula is getting more popular than China domestic products.  According to the New Zealand National Statistic Office national statistical office, as of March 2011, there was a largest increase in exports in the milk powder products to foreign countries.  There were examples of companies in New Zealand engaging in baby milk powder products exportation to Asia making high profits. The link provided is a view of colostrums which is a considerable market in New Zealand http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10582412 and the milk powder is considered one of the biggest export commodities in New Zealand.

Apart from colostrums, all of our current milk powders are designed specifically for infants and young children. Currently, there are two lines of infant milk powders; Rebornne New Zealand Gold Series and Rebornne Domestic Gold Series. A third major series, QQ Care, will commence production on late 2011 in Guangzhou at the earliest. Rebornne New Zealand Gold Series is the high end series, produced and packed in New Zealand, whereas the QQ Care and Domestic Gold series targets the middle-priced market. Each of our product series uses different formulations and packaging designs, despite having the same branding. However, all products are designed to suit nutritional requirements and promote growth of the baby or toddler at its developmental stage. In order to develop appropriate formulations to suit nutritional needs, we have devoted resources to product development, and emphasize on quality and nutrition. Our product portfolio is consistently adjusted and improved, and capital is spent on upgrading product lines, allowing new products to be introduced, and increase our production capability to meet market demands. The pricing, packaging design is also updated periodically to meet consumer expectations. For example, all currently available milk powder series are available in 900g packs in metal cans. New 500g pack in can is available in The Domestic Gold series and it has been introduced to the market since November 2009.

Our milk powder products include:

·
Milk powder formula for infants aged 0 – 6 months old – it is specially designed as a substitute for breast milk, to provide nutrients such as calcium, phosphorus, bioactives, and more than 20 different nutrients and minerals necessary for healthy growth and development.

·
Milk powder formula for babies 6 – 12 months old – it is specifically designed to provide all the necessary nutrients for babies in that age, optimising their growth and development of the brain and body. The formulation remains similar to the compositions of breast milk.

·
Milk powder formula for toddlers 1 – 3 years old – it is a dairy-based nutritional supplement important for the continuous brain and body development.

·
Milk powder formula for children 3 – 12 years old – it is a dairy-based nutritional supplement important for the continuous growth and development of a child.

Planned future products

We plan to introduce several milk powder products in the future including:

·
The QQ Care series, specially designed for infants and young children from birth to 12 years old. The products are designed to provide good nutrition for the growth and development suitable for their age group. Novel ingredients such as prebiotics, probiotics, and nucleotides are incorporated into particular products. These are targeted toward the middle-priced market in China. Milk powders of the products will be sourced mainly from New Zealand, Australia or the United States. Planned production will commence on late 2012, at the Guangzhou factory.

·
Adult milk powder-series. Multi-dimensional formula for pregnant women and breast-feeding mothers, these will be designed to supplement the women with nutrition needed to ensure good health of the infant and mother. Planned production will commence on early 2012.

·
High calcium and sugar-free milk powder for mature and elderly individuals. These will be marketed as a nutritional supplement, enriched with calcium which prevents osteoporosis of elderly consumers. Planned production will commence on late 2012.

In addition to milk powder products, we also plan to produce Protein Powder specially designed for women, Grain Powder, and Rice Powder to use as a nutritional supplement. These products will all be manufactured under the brand name “Rebornne”, at the Guangzhou factory. We have also formulated an ‘Energy Drink’ to tailor to local taste, and production will begin from the end of 2010.
 
 
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Market Summary
 
The dairy industry in China is a fast growing industry with increasing marketing demands. The Chinese government understands that the consumption of dairy products improves the health, diet and well-being of the Chinese people, and recognizes its importance towards its domestic agricultural industry.
 
Raw Materials and Suppliers
 
Our business depends on maintaining a regular and adequate supply of high-quality raw materials. A key ingredient for our powdered formulas is high-quality raw milk. For our Domestic Gold Infant Formula Series produced in Guangzhou, we currently source the majority of milk powder from New Zealand, Australia and the United States. The imported milk powder is purchased in bulk (25kg bags). We generally negotiate the prices for each separate purchase on spot and do not sign long term contracts with our suppliers. In New Zealand, milk powder is purchased by our agent, Sutton Group, from Fonterra. The foreign milk powder sources ensure that the milk used is of high quality, without the presence of harmful adulterants such as melamine.

Whey protein powder is the other key ingredient used in the production of our powdered infant formula products and our other dairy-based products. Like all powdered milk producers, we use whey protein powder as the active ingredient to help reconstituted dairy-based formula to mimic the consistency of breast milk, which can constitute as much as 40.0% of the final powdered infant formula product by weight. Whey protein powder is a byproduct of cheese-making processes, and is difficult and costly to produce as a stand-alone product. Our New Zealand Gold Series uses whey powder produced from New Zealand. For our Domestic Gold Series, we obtain whey protein powder in volume from overseas sources (eg: France), as China is not a large consumer or producer of cheese and cheese products. Based on our experience, prices of milk powder and whey protein powder can fluctuate over relatively short periods of time depending on market conditions. We carefully monitor price movements and makes major purchases at times when prices are low, subject to projected customer order flow and other factors.
 
Many of our powdered milk products, including our powdered infant formulas, also include additives such as DHA and ARA fatty acids and other nutritional additives. DHA and ARA fatty acids are long-chain poly-unsaturated fatty acids found in breast milk that are believed to aid in the development of an infant’s brain, eyes and nervous system. Studies have suggested that DHA and ARA fortification can replicate some of the nutritional benefits of breast milk in infant formulas. Currently the DHA and ARA powders of our New Zealand Gold Series products are manufactured, and added within New Zealand, whereas we purchase these powders from foreign countries for our Domestic Gold Series products. We use vegetable oils in our dry-spraying powder infant formula production processes as a binder for the dry ingredients, helping diminish the occurrence of “lumpiness” or uneven texture when reconstituting powdered infant formula. After years of development, we have formed steady, complementary and cooperative relationships with many of our suppliers. As our sales increase, more capital will be obtained to strengthen our negotiation leverage, allowing us to acquire less expensive and quality raw materials more easily. The procurement of raw materials is mainly done through bidding and other forms of network transactions. Product packages, packaging boxes, packing cans, and other packaging materials are also mainly settled by the long-term vendors.

In most cases, we have managed to purchase all major raw materials we need from these suppliers without difficulties, and have been able to sell all the products we have produced.  We believe the suppliers of our raw materials and packaging materials will be able to keep up with our growth for the foreseeable future.

Sales and Distribution
 
Our market network in China include 51 dealers and 9000 point-of-sale in China, including GuangZhou, HaiKou, SanYa, MaoMing, JieYang, NanNing, SiChuan, HuNan, SuZhou, HangZhou, NingBo, ShangHai, BeiJing, DaLian, ChangChun, JiuJiang, QingDao, TengZhou, NanChang, ZhengZhou, XiAn and WenZhou, etc. Our sales staff sells to chain store head offices who distribute to their own stores. The agents sell to supermarkets. There are also strong sales online, driven by marketing letters sent out to local new families. Currently, our sales and distribution only cover a very small part of China, but we plan to cover all provinces of China in the future.

Since January 2011, we have entered into regional distribution agreements with our distribution agents. The distribution agreement is regional exclusive and we limit each contractual period for one (1) year at a renewable option by the contractual parties. We require a preliminary market sales volume targets for each distribution agent in the agreements and the distribution agent shall make full payments of the purchased products within three (3) days upon the purchase order processed.  We will also provide bonus by rebate in purchases to our agents who rank top sales and will terminate the agreements if the agents fail to complete the agreed market sales volume.

We currently have approximately 100 sales persons (commission based) for our products.
 
 
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Our milk powders manufactured in New Zealand are shipped or transported by air-flight to our head offices in China. Orders are initiated by our sales people and distribution agents depending on their local customers’ demands, and shall be approved by their province (regional) managers.  Regional managers then combine the orders from various distribution agents and sales and send the orders to our headquarter. After confirmation of the orders from the regional managers, our headquarter gives the instructions to the third party delivery companies to distribute products, according to the combined orders, to regional branch offices. We distribute our products from our headquarter to the sale offices in a large combined order based on regions.

We compensate our sales personnel through a combination of fixed salaries and bonuses determined based on sales growth.

Research and development

Our research and development activities focus on new product formulation, new ingredient development, creation of new methods to incorporate certain nutrients in our products, and improvement in product tastes and ingredient shelf stabilities. We engage in regular product refinement and new product development for our dairy-based formula products, as well as other forms of foods and nutritional supplements. Currently, new formulas of energy drinks, milk drinks and yoghurts are being developed for manufacture at the Dong Ying facility. In addition, a product series using local milk sources will be developed, priced lower compared to the currently available series, and targeting for the lower end of the market.

We utilize our research and development facilities to engage in the development of trial products that improve our technical capabilities and serve to promote our brand image. We also engage third-party research institutions to research and develop such trial products for us.

We seek to leverage our research and development resources in order to extend our new product pipeline. We believe we can accomplish this goal with new formulations and product concepts in dairy-based formula products as well as other nutritional food products and supplements.
 
Market Share and Competitors
 
The infant formula industry in China is highly competitive. We only have a small market share within China, accounting for less than 0.1% of the Chinese market. Some of our major competitors include Healtheries, Nutricia Karicare, and Natrapure. These are New Zealand imported infant formulas currently available in China, and occupy a similar market niche to us. In addition, we also compete with larger, more established multinational and domestic Chinese infant formula producers. Competitive factors include brand recognition, perceived quality, advertising, formulation, packaging and price. With the demise of Sanlu, the main infant formula brands in China include Wyeth, Dumex, MeadJohnson, Abbot, Nestle, Yili, Yashili, Shengyuan and Beingmate. According to data collected by the PRC National Commercial Information Center, or CIC, an entity affiliated with the PRC General Chamber of Commerce responsible for collecting retail sales data, the top ten brands accounted for 78.4% of total infant formulas sold in China in 2008. We seek to increase our market share within China by emphasizing our brand as a safe, foreign brand using imported milk sources.

In some aspects, we are at a competitive disadvantage because many of our current and potential competitors have longer operating histories and greater name recognition, and possess substantially greater financial, marketing and other competitive resources than we do.

Our competitors can be classified generally into the following two groups:

Multinational and New Zealand Producers

•
Nutricia, a New Zealand producer of infant formulas marketed under the brand name Karicare;
•
Abbot Laboratories’ Ross Products Division, a U.S. producer and distributor of infant formulas marketed under the brand names of Similac and Enfalac family of formulas;
•
Biolife, a producer of New Zealand infant formulas marketed under the brand name Natrapure;
•
Mead Johnson Nutrition Co., or Mead Johnson, formerly a Bristol-Myers Squibb Company Division, a U.S.;producer and distributor of the Enfamil family of formulas;
•
Groupe Danone SA’s Numico division, or Numico, a Dutch producer of baby foods, which sells and markets infant formula products in China under the Dumex brand;
•
Wyeth, a U.S. producer and distributor of infant formula sold under private label brands;
•
Nestlé Suisse SA, or Nestlé, a Swiss producer and distributor of starter and follow-up formulas, milk, cereals, oral supplements and performance foods marketed under Nestlé brands such as Carnation; and
 
 
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Chinese Producers

•
Inner Mongolia Yili Industrial Group Co., Ltd., or Yili, a PRC producer and distributor of liquid and powdered milk under their Yili brand;
•
Beingmate Group Company Limited, or Beingmate, a PRC producer and distributor of infant formula products under their Beingmate brand;
•
Guangdong Yashili Group Co., Ltd., or Yashili, a PRC consumer brand marketer which sells a line of infant formula products under their Yashili brand; and
•
American Dairy, Inc., a PRC producer and distributor of milk formula products under their Feihe brand.

Growth Strategy

The growth of the business has been severely limited by the ability of the current shareholder to fund it. Since Rebornne products have built up high reputation and trust among the consumers, this will facilitate the new capital funding. In addition, to establish an invisible advertisement and confidence in physical not only required big amount capital but also time consuming. Below are our growth strategies:

·
New capital is crucial resource to the large-scale of markets in China. With this resource on hand, Rebornne could speed up the market sales volume and bring in mainly the high quality infant formula milk powder and liquid milk products.

·
Raw materials and qualified complementary documents. Rebornne could use domestic products license to manufacture large amount of milk powder to replace the 50% low-end market vacancies that caused by melamine incident and reinforce more advertisements through media by using new capital.

·
Market share. Liquid milk powder products for instance, since we already have formula, these products could be introduced into the current dealer networks and therefore salespeople could monitors new products with other products at the same time which then help to minimize the market cost.

·
Current employees from Rebornne are with high qualification and have professional milk powder formula knowledge which helps to minimize time consuming for training.
 
Production strategy

Since we owned most of the dairy product licenses in China, we can manufacture more different products and therefore could occupy greater market share in the future.
 
With our PRC product licenses, we can produce milk products, including pure milk, milk yogurt, milk drinks, fruit drinks, infant formula milk powder, middle/elder –aged formula milk powder, maternal formula milk powder, children formula milk powder, lady protein powder, children protein powder and colostrums milk powder.

The factory in Guangzhou was initially established to process New Zealand powder only, but due to the later funding issues because of the higher prices in New Zealand’s manufacturing market shipping costs, and the longer delivery time, a mixture of New Zealand and other imported products from other countries are used. We are considering a move to more New Zealand sourced powder products..

Market strategy

Rebornne has advertised about our products at the China Education Meteorological Station Advertisement, Jilin Life Desk and Yanbian Satellite TV Desk throughout the year. Our own markets are distributed around WM, ZhongBai, WuShang, Carrefour, RenRenLe etc.

Currently, we have sales and marketing infrastructure set up in China using sales agents, but not all of the country is covered. Throughout our sales network, our products are distributed throughout 26 provinces in China, covering more than 9,000 sale locations, including Guangzhou, Haikou, Sanya, Maoming, Jieyang, Nanning, Sichuan, Hunan, Suzhou, Hangzhou, Ningbo, Shanghai, Beijing, Dalian, Changchun, Jiujiang, Qingdao, Tengzhou, Nanchang, Zhengzhou, Xi’an and Wenzhou, etc.

We also plan to enter into energy drink and functional health drink market. We are in the process of acquiring a factory in Dong Ying city in Shandong province, which will allow us to expand our products to Beijing and Northern Chinese markets. The new investment in Shandong will allow diversification into other market segments, but still using the strengths the Rebornne brand has in China.

In particular, the energy drink and functional health drink market has huge potential in China. A functional beverage can be defined as a drink product that is non-alcoholic, ready to drink and includes non-traditional ingredients in its formulation. This includes herbs, vitamins, minerals, amino acids or additional raw fruit or vegetable ingredients, so as to provide specific health benefits that go beyond general nutrition. These include sports and performance drinks, energy drinks, ready to drink (RTD) teas, enhanced fruit drinks, soy beverages and enhanced water. Up until now, the only entrants (products such as ‘V’) have not allowed for the local Asian taste preferences, so their uptake has been poor compared to western markets. Therefore, the Dong Ying facility will serve as a manufacturing base for energy drink suited to the tastes of the Chinese masses. There is considerable room for development in the Chinese energy drink and functional health drink market, and Rebornne is seizing this opportunity to capitalize this market opportunity. This is to respond to the gradual increasing demands of healthy beverages in China, and our realization that the health awareness of the Chinese people leads to an increased preference of functional beverages.
 
 
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Functional beverages have become popular due to its appeal to consumers who are seeking specific health benefits in their foods and beverages with their 'healthiness-on-the-go' idea. Both convenience and health have been identified as important factors when consumers make decisions about purchasing foods and beverages. Functional drinks are promoted with benefits such as heart health, improved immunity and digestion, joint health, satiety, and energy-boosting. Provided that we market these products focusing on health and well-being, this will offer us a huge potential in product diversification and expansion.

Intellectual Property

We have obtained trademark registrations for the use of our tradename “Rebornne”, which have been registered with the Trademark Bureau of the State Administration for Industry and Commerce in PRC with respect to our milk powder products. We believe our trademarks are important to the establishment of consumer recognition of our products.

The formulations for the blends have been formulated with the co-operation of Rebornne Guangzhou, Sutton New Zealand and the Laboratory of Chinese Research. We have not registered or applied for protections in China for most of our intellectual property or proprietary technologies relating to the formulations of our powdered infant formula. Although we believe that, as of today, patents and copyrights have not been essential to maintaining our competitive market position, we intend to assess appropriate occasions in the future for seeking patent and copyright protections for those aspects of our business that provide significant competitive advantages.
 
Environmental Protection

Our manufacturing facilities are subject to various pollution control regulations with respect to noise, water and air pollution and the disposal of waste and hazardous materials. We are also subject to periodic inspections by local environmental protection authorities. Our operating subsidiaries have received certifications from the relevant PRC government agencies in charge of environmental protection indicating that their business operations are in material compliance with the relevant PRC environmental laws and regulations. We are not currently subject to any pending actions alleging any violations of applicable PRC environmental laws.

Regulations

We are regulated under both national and county laws in China. The following information summarizes certain aspects of those regulations applicable to us and is qualified in its entirety by reference to all particular statutory or regulatory provisions.

Regulations at the national, province and county levels are subject to change. To date, compliance with governmental regulations has not had a material impact on our level of capital expenditures, earnings or competitive position, but, because of the evolving nature of such regulations, management is unable to predict the impact such regulation may have in the foreseeable future.

As a manufacturer and distributor of food products, we are subject to regulations of China’s Agricultural Ministry. This regulatory scheme governs the manufacture (including composition and ingredients), labeling, packaging and safety of food. It also regulates manufacturing practices, including quality assurance programs, for foods through its current good manufacturing practices regulations, and specifies the standards of identity for certain foods, including the products we sell, and prescribes the format and content of many of the products we sell, prescribes the format and content of certain nutritional information required to appear on food products labels and approves and regulates claims of health benefits of food products.

In addition, China’s Agricultural Ministry authorizes regulatory activity necessary to prevent the introduction, transmission or spread of communicable diseases. These regulations require, for example, pasteurization of milk and milk products. Both we and our products are also subject to province and county regulations through such measures as the licensing of dairy manufacturing facilities, enforcement of standards for its products, inspection of our facilities and regulation of its trade practices in connection with the sale of dairy products.

Employees

As of the date hereof, we have approximately 60 employees in Guangzhou, 20 in Shenzhen, and 2 in New Zealand. None of our employees is subject to a collective bargaining agreement. We consider our relationship with its employees to be good.
 
 
7
 
 
ITEM 1A. RISK FACTORS.
 
You should carefully consider the risks described below together with all of the other information included in this report before making an investment decision with regard to our securities.  The statements contained in or incorporated herein that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In that case, you may lose all or part of your investment.
 
Risks Relating to Our Business

MOST OF OUR BUSINESS, ASSETS AND OPERATIONS ARE LOCATED IN THE PRC.
 
Most of our business, assets and operations are located in the PRC. The economy of the PRC differs from the economies of most developed countries in many respects. The economy of PRC has been transitioning from a planned economy to a market-oriented economy. However, a substantial portion of productive assets in PRC is still owned by the PRC government. In addition, the PRC government continues to play a significant role in regulating industry by imposing industrial policies. It also exercises significant control over PRC’s economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. Some of these measures may have a negative effect on us.
 
WE DERIVE SUBSTANTIALLY ALL OF OUR REVENUES FROM SALES IN THE PRC AND ANY DOWNTURN IN THE CHINESE ECONOMY COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND FINANCIAL CONDITION.
 
Substantially all of our revenues are generated from sales in the PRC. We anticipate that revenues from sales of our products in the PRC will continue to represent the substantial portion of our total revenues in the near future. Our sales and earnings can also be affected by changes in the general economy since purchases of juice products are generally discretionary for consumers. Our success is influenced by a number of economic factors which affect disposable consumer income, such as employment levels, business conditions, interest rates, oil and gas prices and taxation rates. Adverse changes in these economic factors, among others, may restrict consumer spending, thereby negatively affecting our sales and profitability.

CONCERNS OVER FOOD SAFETY AND PUBLIC HEALTH MAY AFFECT OUR OPERATIONS BY INCREASING OUR COSTS AND NEGATIVELY IMPACTING DEMAND FOR OUR PRODUCTS.
 
We could be adversely affected by diminishing confidence in the safety and quality of certain food products or ingredients, even if our practices and procedures are not implicated. As a result, we may also elect or be required to incur additional costs aimed at increasing consumer confidence in the safety of our products. For example, a crisis in China over melamine-contaminated milk in 2008 has adversely impacted overall Chinese food exports since October 2008 as reported by the Chinese General Administration of Customs, even though most foods exported from China were not implicated in these issues. We believe that the contaminated milk crisis also had a negative effect on sales of our concentrated juices in fiscal year 2008.  Our success depends on our ability to maintain the product quality of our existing products and new products.  Product quality issues, real or imagined, or allegations of product contamination, even if false or unfounded, could tarnish the image of the affected brands and may cause consumers to choose other products.

GOVERNMENTAL REGULATIONS AFFECTING THE IMPORT OR EXPORT OF PRODUCTS COULD NEGATIVELY AFFECT OUR REVENUES.

The United States and various foreign governments have imposed controls, export license requirements, and restrictions on the export of some of our products.  We do not currently export the Company’s products directly or indirectly out of the PRC. However, if we were to begin exporting our products in the future, governmental regulation of exports, or our failure to obtain required export approval for our products, could harm our international and domestic sales and adversely affect our revenues.  In addition, failure to comply with such regulations could result in penalties, costs, and restrictions on export privileges.
   
WE MAY EXPERIENCE MAJOR ACCIDENTS IN THE COURSE OF OUR OPERATIONS, WHICH MAY CAUSE SIGNIFICANT PROPERTY DAMAGE AND PERSONAL INJURIES.
 
We may experience major accidents in the course of our operations, which may cause significant property damage and personal injuries. Significant industry-related accidents and natural disasters may cause interruptions to various parts of our operations, or could result in property or environmental damage, increase in operating expenses or loss of revenue. The occurrence of such accidents and the resulting consequences may not be covered adequately, or at all, by the insurance policies we carry. In accordance with customary practice in China, we do not carry any business interruption insurance or third party liability insurance for personal injury or environmental damage arising from accidents on our property or relating to our operations other than our automobiles. Losses or payments incurred may have a material adverse effect on our operating performance if such losses or payments are not fully insured.
 
 
8
 
 
OUR PLANNED EXPANSION AND TECHNICAL IMPROVEMENT PROJECTS COULD BE DELAYED OR ADVERSELY AFFECTED BY, AMONG OTHER THINGS, DIFFICULTIES IN OBTAINING SUFFICIENT FINANCING, TECHNICAL DIFFICULTIES, OR HUMAN OR OTHER RESOURCE CONSTRAINTS.
 
Our planned expansion and technical improvement projects could be delayed or adversely affected by, among other things, difficulties in obtaining sufficient financing, technical difficulties, or human or other resource constraints. Moreover, the costs involved in these projects may exceed those originally contemplated. Costs savings and other economic benefits expected from these projects may not materialize as a result of any such project delays, cost overruns or changes in market circumstances. Failure to obtain intended economic benefits from these projects could adversely affect our business, financial condition and operating performances.
 
WE MAY ENCOUNTER SUBSTANTIAL COMPETITION IN OUR BUSINESS AND ANY FAILURE TO COMPETE EFFECTIVELY COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS.
 
We anticipate that our competitors will continue to improve their products and to introduce new products with competitive price and performance characteristics. Aggressive marketing or pricing by our competitors or the entrance of new competitors into our markets could have a material adverse effect on our business, results of operations and financial condition.

OUR LIMITED OPERATING HISTORY MAY NOT SERVE AS AN ADEQUATE BASIS TO JUDGE OUR FUTURE PROSPECTS AND RESULTS OF OPERATIONS.

Our limited operating history may not provide a meaningful basis for evaluating our business. We cannot guaranty that we will maintain profitability or that we will not incur net losses in the future. We will continue to encounter risks and difficulties that companies at a similar stage of development frequently experience, including the potential failure to:
 
 
·
obtain sufficient working capital to support our expansion;

 
·
maintain or protect our intellectual property;

 
·
maintain our proprietary technology;

 
·
expand our product offerings and maintain the high quality of our products;

 
·
manage our expanding operations and continue to fill customers’ orders on time;

 
·
maintain adequate control of our expenses allowing us to realize anticipated revenue growth;

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

 
·
successfully integrate any future acquisitions; and

 
·
anticipate and adapt to changing conditions in the milk product industry resulting from changes in government regulations, mergers and acquisitions involving our competitors, technological developments and other significant competitive and market dynamics.
 
If we are not successful in addressing any or all of the foregoing risks, our business may be materially and adversely affected.

WE NEED TO MANAGE GROWTH IN OPERATIONS TO MAXIMIZE OUR POTENTIAL GROWTH AND ACHIEVE OUR EXPECTED REVENUES AND OUR FAILURE TO MANAGE GROWTH WILL CAUSE A DISRUPTION OF OUR OPERATIONS RESULTING IN THE FAILURE TO GENERATE REVENUE AT LEVELS WE EXPECT.
 
In order to maximize potential growth in our current and potential markets, we believe that we must expand our producing and marketing operations. This expansion will place a significant strain on our management and our operational, accounting, and information systems. We expect that we will need to continue to improve our financial controls, operating procedures, and management information systems. We will also need to effectively train, motivate, and manage our employees. Our failure to manage our growth could disrupt our operations and ultimately prevent us from generating the revenues we expect.

WE MAY NOT BE ABLE TO SUCCESSFULLY INTRODUCE NEW PRODUCTS, WHICH COULD DECREASE OUR PROFITABILITY.

Our future business and financial performance depends, in part, on our ability to successfully respond to consumer preference by introducing new products and improving existing products. We incur significant development and marketing costs in connection with the introduction of new products. Successfully launching and selling new products puts pressure on our sales and marketing resources, and we may fail to invest sufficient funds in order to market and sell a new product effectively.  If we are not successful in marketing and selling new products, our results of operations could be materially adversely affected.
  
 
9
 
 
IF WE NEED ADDITIONAL CAPITAL TO FUND OUR OPERATIONS, WE MAY NOT BE ABLE TO OBTAIN SUFFICIENT CAPITAL AND MAY BE FORCED TO LIMIT THE SCOPE OF OUR OPERATIONS.

If adequate additional financing is not available on reasonable terms, we may not be able to undertake expansion, purchase additional machinery and purchase equipment for our operations and we would have to modify our business plans accordingly. There is no assurance that additional financing will be available to us.
 
In connection with our growth strategies, we may experience increased capital needs and accordingly, we may not have sufficient capital to fund our future operations without additional capital investments. Our capital needs will depend on numerous factors, including (i) our profitability; (ii) the release of competitive products by our competition; (iii) the level of our investment in research and development; and (iv) the amount of our capital expenditures, including acquisitions. We cannot assure you that we will be able to obtain capital in the future to meet our needs.

In recent years, the securities markets in the United States have experienced a high level of price and volume volatility, and the market price of securities of many companies have experienced wide fluctuations that have not necessarily been related to the operations, performances, underlying asset values or prospects of such companies. For these reasons, our common shares can also be expected to be subject to volatility resulting from purely market forces over which we will have no control. If we need additional funding we will, most likely, seek such funding in the United States (although we may be able to obtain funding in the P.R.C.) and the market fluctuations affect on our stock price could limit our ability to obtain equity financing.
 
If we cannot obtain additional funding, we may be required to: (i) limit our expansion; (ii) limit our marketing efforts; and (iii) decrease or eliminate capital expenditures.
 
Such reductions could materially adversely affect our business and our ability to compete.
 
Even if we do find a source of additional capital, we may not be able to negotiate terms and conditions for receiving the additional capital that are favorable to us. Any future capital investments could dilute or otherwise materially and adversely affect the holdings or rights of our existing shareholders. In addition, new equity or convertible debt securities issued by us to obtain financing could have rights, preferences and privileges senior to the Units. 
 
NEED FOR ADDITIONAL EMPLOYEES.

The Company’s future success also depends upon its continuing ability to attract and retain highly qualified personnel. Expansion of the Company’s business and the management and operation of the Company will require additional managers and employees with industry experience, and the success of the Company will be highly dependent on the Company’s ability to attract and retain skilled management personnel and other employees. There can be no assurance that the Company will be able to attract or retain highly qualified personnel. Competition for skilled personnel in our industry is significant. This competition may make it more difficult and expensive to attract, hire and retain qualified managers and employees
 
WE MAY INCUR SIGNIFICANT COSTS TO ENSURE COMPLIANCE WITH UNITED STATES CORPORATE GOVERNANCE AND ACCOUNTING REQUIREMENTS.
 
We may incur significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the Securities and Exchange Commission. We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. We also expect that these applicable rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these newly applicable rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

WE MAY NOT BE ABLE TO MEET THE INTERNAL CONTROL REPORTING REQUIREMENTS IMPOSED BY THE SECURITIES AND EXCHANGE COMMISSION RESULTING IN A POSSIBLE DECLINE IN THE PRICE OF OUR COMMON SHARES AND OUR INABILITY TO OBTAIN FUTURE FINANCING.

As directed by Section 404 of the Sarbanes-Oxley Act, the SEC adopted rules requiring each public company to include a report of management on the company’s internal controls over financial reporting in its annual reports. Although the Dodd-Frank Wall Street Reform and Consumer Protection Act exempts companies with a public float of less than $75 million from the requirement that our independent registered public accounting firm attest to our financial controls, this exemption does not affect the requirement that we include a report of management on our internal control over financial reporting and does not affect the requirement to include the independent registered public accounting firm’s attestation if our public float exceeds $75 million.
 
 
10
 
 
While we expect to expend significant resources in developing the necessary documentation and testing procedures required by Section 404 of the Sarbanes-Oxley Act, there is a risk that we may not be able to comply timely with all of the requirements imposed by this rule. Regardless of whether we are required to receive a positive attestation from our independent registered public accounting firm with respect to our internal controls, if we are unable to do so, investors and others may lose confidence in the reliability of our financial statements and our stock price and ability to obtain equity or debt financing as needed could suffer.

In addition, in the event that our independent registered public accounting firm is unable to rely on our internal controls in connection with its audit of our financial statements, and in the further event that it is unable to devise alternative procedures in order to satisfy itself as to the material accuracy of our financial statements and related disclosures, it is possible that we would be unable to file our Annual Report on Form 10-K with the SEC, which could also adversely affect the market for and the market price of our common stock and our ability to secure additional financing as needed.
   
CERTAIN OF OUR EXISTING STOCKHOLDERS HAVE SUBSTANTIAL INFLUENCE OVER OUR COMPANY, AND THEIR INTERESTS MAY NOT BE ALIGNED WITH THE INTERESTS OF OUR OTHER STOCKHOLDERS.
 
Dairy Global, our sole officer and director, beneficially owns approximately 97.3% of our issued and outstanding common shares. Therefore, he can exercise significant control us and control the election of our directors and officers. This concentration of ownership may also have the effect of discouraging, delaying or preventing a future change of control, which could deprive our stockholders of an opportunity to receive a premium for their shares as part of a sale of our company and might reduce the price of our shares.

DAIRY GLOBAL, OUR PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF THE BOARD OF DIRECTORS, HAS A CONTROLLING INFLUENCE IN US AND OUR SUBSIDIARIES, WHICH ENABLES HIM IN DETERMINING THE OUTCOME OF ANY CORPORATE TRANSACTION OR OTHER MATTERS SUBMITTED TO OUR SHAREHOLDERS FOR APPROVAL. WE CANNOT ASSURE YOU THAT MR. DAIRY GLOBAL WILL ALWAYS ACT IN THE BEST INTEREST OF THE COMPANY OR ITS SHAREHOLDERS.

Dairy Global is currently the President, Chief Executive Officer and Chairman of the Board of Directors of the Company.  Mr. Dairy Global has a controlling influence in determining the outcome of any corporate transaction or other matters submitted to our shareholders for approval, including mergers, consolidations and the sale of all or substantially all of our assets, election of directors, and other significant corporate actions. Dairy Global may also have the power to prevent or cause a change in control. In addition, without the consent of Dairy Global, we could be prevented from entering into transactions that could be beneficial to us. Therefore we cannot assure you that Mr. Dairy Global will always act in the best interest of the Company or its shareholders.

OUR MANAGEMENT HAS LIMITED EXPERIENCE IN MANAGING AND OPERATING A PUBLIC COMPANY. ANY FAILURE TO COMPLY OR ADEQUATELY COMPLY WITH FEDERAL SECURITIES LAWS, RULES OR REGULATIONS COULD SUBJECT US TO FINES OR REGULATORY ACTIONS, WHICH MAY MATERIALLY ADVERSELY AFFECT OUR BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

Our current management has limited experience managing and operating a public company and relies in many instances on the professional experience and advice of third parties including its consultants, attorneys and accountants. Failure to comply or adequately comply with any laws, rules, or regulations applicable to our business may result in fines or regulatory actions, which may materially adversely affect our business, results of operation, or financial condition.
 
Risks Relating to the People's Republic of China 
 
CERTAIN POLITICAL AND ECONOMIC CONSIDERATIONS RELATING TO THE PRC COULD ADVERSELY AFFECT OUR COMPANY.
 
The PRC is transitioning from a planned economy to a market economy. While the PRC government has pursued economic reforms since its adoption of the open-door policy in 1978, a large portion of the PRC economy is still operating under five-year plans and annual state plans. Through these plans and other economic measures, such as control on foreign exchange, taxation and restrictions on foreign participation in the domestic market of various industries, the PRC government exerts considerable direct and indirect influence on the economy. Many of the economic reforms carried out by the PRC government are unprecedented or experimental, and are expected to be refined and improved. Other political, economic and social factors can also lead to further readjustment of such reforms. This refining and readjustment process may not necessarily have a positive effect on our operations or future business development. Our operating results may be adversely affected by changes in the PRC’s economic and social conditions as well as by changes in the policies of the PRC government, such as changes in laws and regulations (or the official interpretation thereof), measures which may be introduced to control inflation, changes in the interest rate or method of taxation, and the imposition of restrictions on currency conversion in addition to those described below.
 
 
11
 
 
THE RECENT NATURE AND UNCERTAIN APPLICATION OF MANY PRC LAWS APPLICABLE TO US CREATE AN UNCERTAIN ENVIRONMENT FOR BUSINESS OPERATIONS AND THEY COULD HAVE A NEGATIVE EFFECT ON US.
 
The PRC legal system is a civil law system. Unlike the common law system, the civil law system is based on written statutes in which decided legal cases have little value as precedents. In 1979, the PRC began to promulgate a comprehensive system of laws and has since introduced many laws and regulations to provide general guidance on economic and business practices in the PRC and to regulate foreign investment. Progress has been made in the promulgation of laws and regulations dealing with economic matters such as corporate organization and governance, foreign investment, commerce, taxation and trade. The promulgation of new laws, changes of existing laws and the abrogation of local regulations by national laws could have a negative impact on our business and business prospects.

For example, Chinese laws and regulations concerning the validity of the contractual arrangements are uncertain, as many of these laws and regulations are relatively new and may be subject to change, and their official interpretation and enforcement by the Chinese government may involve substantial uncertainty. Additionally, our contractual arrangements are governed by Chinese laws and provide for the resolution of disputes through arbitration proceedings pursuant to Chinese laws. If any of our customers and/or suppliers or its stockholders fail to perform the obligations under the contractual arrangements, we may have to rely on legal remedies under PRC laws, including seeking specific performance or injunctive relief, and claiming damages, and there is a risk that we may be unable to obtain these remedies. The legal environment in China is not as developed as in other jurisdictions. As a result, uncertainties in the legal system could limit our ability to enforce the contractual arrangements.
 
CURRENCY CONVERSION COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION.
 
The PRC government imposes control over the conversion of Renminbi into foreign currencies. Under the current unified floating exchange rate system, the People’s Bank of China publishes an exchange rate, which we refer to as the PBOC exchange rate, based on the previous day's dealings in the inter-bank foreign exchange market. Financial institutions authorized to deal in foreign currency may enter into foreign exchange transactions at exchange rates within an authorized range above or below the PBOC exchange rate according to market conditions.
 
Pursuant to the Foreign Exchange Control Regulations of the PRC issued by the State Council which came into effect on April 1, 1996, and the Regulations on the Administration of Foreign Exchange Settlement, Sale and Payment of the PRC which came into effect on July 1, 1996, regarding foreign exchange control, conversion of Renminbi into foreign exchange by Foreign Investment Enterprises, or FIEs, for use on current account items, including the distribution of dividends and profits to foreign investors, is permissible. FIEs are permitted to convert their after-tax dividends and profits to foreign exchange and remit such foreign exchange to their foreign exchange bank accounts in the PRC. Conversion of Renminbi into foreign currencies for capital account items, including direct investment, loans, and security investment, is still under certain restrictions. On January 14, 1997, the State Council amended the Foreign Exchange Control Regulations and added, among other things, an important provision, which provides that the PRC government shall not impose restrictions on recurring international payments and transfers under current account items.
 
Enterprises in the PRC (including FIEs) which require foreign exchange for transactions relating to current account items, may, without approval of the State Administration of Foreign Exchange, or SAFE, effect payment from their foreign exchange account or convert and pay at the designated foreign exchange banks by providing valid receipts and proofs.

Convertibility of foreign exchange in respect of capital account items, such as direct investment and capital contribution, is still subject to certain restrictions, and prior approval from the SAFE or its relevant branches must be sought.
 
Furthermore, the Renminbi is not freely convertible into foreign currencies nor can it be freely remitted abroad. Under the PRC’s Foreign Exchange Control Regulations and the Administration of Settlement, Sales and Payment of Foreign Exchange Regulations, Foreign Invested Enterprises are permitted either to repatriate or distribute its profits or dividends in foreign currencies out of its foreign exchange accounts, or exchange Renminbi for foreign currencies through banks authorized to conduct foreign exchange business. The conversion of Renminbi into foreign exchange by Foreign Invested Enterprises for recurring items, including the distribution of dividends to foreign investors, is permissible. The conversion of Renminbi into foreign currencies for capital items, such as direct investment, loans and security investment, is subject, however, to more stringent controls.

Our operating company is a FIE to which the Foreign Exchange Control Regulations are applicable. Accordingly, we will have to maintain sufficient foreign exchange to pay dividends and/or satisfy other foreign exchange requirements.
 
 
12
 
 
EXCHANGE RATE VOLATILITY COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION.

Since 1994, the exchange rate for Renminbi against the United States dollar has remained relatively stable, most of the time in the region of approximately RMB8.28 to $1.00. However, in 2005, the Chinese government announced that it would begin pegging the exchange rate of the Chinese Renminbi against a number of currencies, rather than just the U.S. dollar and, the exchange rate for the Renminbi against the U.S. dollar became RMB8.02 to $1.00. If we decide to convert Chinese Renminbi into United States dollars for other business purposes and the United States dollar appreciates against this currency, the United States dollar equivalent of the Chinese Renminbi we convert would be reduced. There can be no assurance that future movements in the exchange rate of Renminbi and other currencies will not have an adverse effect on our financial condition.
 
SINCE MOST OF OUR ASSETS ARE LOCATED IN PRC, ANY DIVIDENDS OF PROCEEDS FROM LIQUIDATION IS SUBJECT TO THE APPROVAL OF THE RELEVANT CHINESE GOVERNMENT AGENCIES.
 
Our assets are predominantly located inside PRC. Under the laws governing Foreign Invested Enterprises in PRC, dividend distribution and liquidation are allowed but subject to special procedures under the relevant laws and rules. Any dividend payment will be subject to the decision of the board of directors and subject to foreign exchange rules governing such repatriation. Any liquidation is subject to the relevant government agency’s approval and supervision as well as the foreign exchange control. This may generate additional risk for our investors in case of dividend payment and liquidation.
 
IT MAY BE DIFFICULT TO AFFECT SERVICE OF PROCESS AND ENFORCEMENT OF LEGAL JUDGMENTS UPON OUR COMPANY AND OUR OFFICERS AND DIRECTORS BECAUSE THEY RESIDE OUTSIDE THE UNITED STATES.
 
As our operations are presently based in PRC and our director and officer resides in PRC, service of process on our company and such director and officer may be difficult to effect within the United States. Also, our main assets are located in PRC and any judgment obtained in the United States against us may not be enforceable outside the United States.

AN OUTBREAK OF AVIAN INFLUENZA, THE H1N1 “SWINE-FLU” VIRUS, A REOCCURRENCE OF SEVERE ACUTE RESPIRATORY SYNDROME (“SARS”), OR ANOTHER WIDESPREAD PUBLIC HEALTH PROBLEM, COULD ADVERSELY AFFECT OUR OPERATIONS.
 
A more widespread outbreak of the H1N1 virus, avian influenza or a renewed outbreak of SARS or any other widespread public health problem in the PRC, where all of our operations are conducted, could have an adverse effect on our operations. If such an outbreak were to occur, our operations may be impacted by a number of health-related factors, including quarantines or closures of some of our offices, that would adversely disrupt our operations.
 
THE CHINESE GOVERNMENT EXERTS SUBSTANTIAL INFLUENCE OVER THE MANNER IN WHICH WE MUST CONDUCT OUR BUSINESS ACTIVITIES.

We are dependent on our relationship with the local government in the province in which we operate our business. 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, environmental regulations, land use rights, property and other matters. We believe that our operations in China are in material compliance with all applicable legal and regulatory requirements. However, 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.

Future inflation in China may inhibit our ability to conduct business in China. In recent years, the Chinese economy has experienced periods of rapid expansion and high rates of inflation. Rapid economic growth can lead to growth in the money supply and rising inflation. If prices for our products rise at a rate that is insufficient to compensate for the rise in the costs of supplies, it may have an adverse effect on profitability. 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. 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.

Risks Associated with Our Securities

IN ORDER TO RAISE SUFFICIENT FUNDS TO CONTINUE OPERATIONS, WE MAY HAVE TO ISSUE ADDITIONAL SECURITIES AT PRICES WHICH MAY RESULT IN SUBSTANTIAL DILUTION TO OUR SHAREHOLDERS.
 
If we raise additional funds through the sale of equity or convertible debt, our current stockholders’ percentage ownership will be reduced. In addition, these transactions may dilute the value of common shares outstanding. We may have to issue securities that may have rights, preferences and privileges senior to our common shares. We cannot provide assurance that we will be able to raise additional funds on terms acceptable to us, if at all. If future financing is not available or is not available on acceptable terms, we may not be able to fund our future needs, which would have a material adverse effect on our business plans, prospects, results of operations and financial condition.
 
 
13
 
 
WE ARE NOT LIKELY TO PAY CASH DIVIDENDS IN THE FORESEEABLE FUTURE.
 
We currently intend to retain any future earnings for use in the operation and expansion of our business. Accordingly, we do not expect to pay any cash dividends in the foreseeable future, but will review this policy as circumstances dictate. Should we determine to pay dividends in the future, our ability to do so will depend upon the receipt of dividends or other payments from our PRC subsidiaries. The PRC subsidiaries may, from time to time, be subject to restrictions on its ability to make distributions to us, including restrictions on the conversion of RMB into New Zealand dollars and U.S. dollars or other hard currency and other regulatory restrictions.

WE ARE SUBJECT TO THE PENNY STOCK RULES WHICH WILL MAKE THE OUR COMMON SHARES MORE DIFFICULT TO SELL.
 
We are subject to the SEC’s “penny stock” rules as our common shares sell below $5.00 per share. Penny stocks generally are equity securities with a price of less than $5.00. The penny stock rules require broker-dealers to deliver a standardized risk disclosure document prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson, and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information must be given to the customer orally or in writing prior to completing the transaction and must be given to the customer in writing before or with the customer's confirmation.

In addition, the penny stock rules require that prior to a transaction, the broker dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. The penny stock rules are burdensome and may reduce purchases of any offerings and reduce the trading activity for our common shares. As long as our common shares are subject to the penny stock rules, the holders of such common shares may find it more difficult to sell their securities.

ITEM 2. DESCRIPTION OF PROPERTY.
 
Our corporate headquarters is located at Level 24, 120 Albert Street, Auckland City, Aukland, New Zealand 1010. We rent this office until February 2012 for NZD1,725, or approximately $1,416, per month

ITEM 3.LEGAL PROCEEDINGS.
 
Currently there are no legal proceedings pending or threatened against the Company or our subsidiaries. However, from time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business.  Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.
 
ITEM 4. (REMOVED AND RESERVED).
 
PART II
 
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
 
Public Market for Common Stock
 
Our common stock is currently traded on the OTC Bulletin Board under the symbol “RBOR.OB.” Our common stock has been quoted on the OTC Bulletin Board since July 26, 2005. From September 9, 2008 until March 22, 2010, we traded under the symbol BTXN.OB. On March 22, 2010 our symbol changed to RBOR.OB based on the reverse split and name change. The following table sets forth the range of high and low bid quotations for each quarter of 2010 and 2011. These quotations as reported by the OTC Bulletin Board reflect inter-dealer prices without retail mark-up, mark-down, or commissions and may not necessarily represent actual transactions.
  
 
14
 
 
YEAR
  
HIGH
    
LOW
  
             
For the Three Months Ended March 31, 2010
  
$
0.35
    
$
0.08
  
For the Three Months Ended June 30, 2010
  
$
1.01
    
$
0.02
  
For the Three Months Ended September 30, 2010
  
$
1.01
    
$
0.04
  
For the Three Months Ended December 31, 2010
  
$
0.75
    
$
0.05
  
For the Three Months Ended March 31, 2011
  
$
0.60
    
$
0.60
  
For the Three Months Ended June 30, 2011
  
$
0.60
    
$
0.18
  

Holders
 
There are approximately 176 holders of our common stock.

Dividends
 
Since inception we have not paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock, when issued pursuant to this offering. Although we intend to retain our earnings, if any, to finance the exploration and growth of our business, our Board of Directors will have the discretion to declare and pay dividends in the future.
 
Payment of dividends in the future will depend upon our earnings, capital requirements, and other factors, which our Board of Directors may deem relevant.
 
Stock Option Grants
 
Mr. Silverman received options to purchase 70,325 shares of our common stock with an expiration date of December 31, 2005 in the following quantities and at the following exercise prices: 14,065 shares at $35.55, 14,065 at $53.33, 14,065 at $71.10, 14,065 at $106.65 and 14,065 at $142.20. All options have been cancelled on February 2, 2010 in exchange for the spin-off and sale of the Company’s wholly owned subsidiary, BioTex Corp., to Mr. Silverman.
 
There are no other options to purchase our securities outstanding. We may in the future establish an incentive stock option plan for our directors, employees and consultants.
 
Equity Compensation Plan Information
 
We presently do not have any equity based or other long-term incentive programs. In the future, we may adopt and establish an equity-based or other long-term incentive plan if it is in the best interest of the Company and our stockholders to do so.

ITEM 6. SELECTED FINANCIAL DATA.
 
Not applicable because we are a smaller reporting company.
 
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.

The following discussion and analysis of the results of operations and financial condition for the fiscal years ended March 31, 2011 and 2010, should be read in conjunction with our financial statements, and the notes to those financial statements that are included elsewhere in this Form 10-K. References in this section to “we,” “us,” “our,” or the “Company” are to the consolidated business of Rebornne (USA) Inc.

Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors, Cautionary Notice Regarding Forward-Looking Statements and Business sections in this Form 10-K. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

COMPANY OVERVIEW

We operate our business through Rebornne NZ, which was incorporated in Auckland, New Zealand in 2001 by its sole shareholder and owner Dairy Global.  Rebornne NZ is a growing dairy product company in New Zealand with subsidiaries in the PRC. We produce, market, and sell our products under the “Rebornne” brand name. We focus on selling New Zealand produced colostrums and infant formula products in China, which included both premium and a more affordable series, targeted towards the general masses. In order to sell our products, we have established an extensive sales and distribution network nationwide throughout China.
 
 
15
 
 
RESULTS OF OPERATIONS

Results of Operations for the Year Ended March 31, 2011 as Compared to the Year Ended March 31, 2010

The following tables set forth key components of our results of operations for the period indicated, in US dollars, and key components of our revenue for the period indicated, in US dollars. The discussion following the table is based on the audited results. Percentage of difference is calculated for comparison.

   
For the Year Ended
        
   
March 31, 2011
    
March 31, 2010
    
Difference
  
 
USD
    
%
    
USD
    
%
    
%
  
Revenues
                              
Sales
     5,127,272       100.0       4,738,528       100.0       8.20  
Cost of Goods Sold
     2,188,776       42.69       2,329,061       49.15       (6.02 )
Gross profit
     2,938,496       57.31       2,409,467       50.84       21.96  
Operating Expenses
                                        
Selling Expenses
     742,875       14.49       919,564       19.41       (19.21 )
General & Administrative Expenses
     1,974,318       38.51       1,084,189       22.88       82.10  
Total Operating Expenses
     2,717,193       52.99       2,003,753       42.29       35.61  
Operating Income
     221,303       4.32       405,714       8.56       (45.45 )
Other Income (Expenses)
                                        
Other Income
     28,702       0.56       854       0.02       3260.9  
Other Expenses
     (1649 )     (0.03 )     (226 )     (0.005 )     629.65  
Interest Income
     98       0.002       -       -       -  
Interest Expense
     (31,118 )     (0.61 )     (1834 )     (0.04 )     1596.7  
Total Other Income/ (Expenses)
     (4,012 )     (0.08 )     (1206 )     (0.03 )     232.67  
Earnings before Tax
     217,291       4.24       404,508       8.54       (46.28 )
Income Tax
     (94,839 )     (1.85 )     (69,935 )     (1.48 )     35.61  
Net Income
     122,452       2.39       334,573       7.06       (63.4 )

Net Revenue:

Net revenue for the year ended March 31, 2011 increased by $388,744 or 8.20% from $4,738,528 for the year ended March 31, 2010 to $5,127,272. The main factors that results net revenues for year ended 2011 have increased gradually included cost of sales sold and operating expenses. The details of each cost will be discusses below.

Cost of sales:

Our cost of sales decreased by $140,285 or 6.02% from $2,329,061 for the year ended March 31, 2010 to $2,188,776 for the year ended March 31, 2011. Even though it is a decrease result, but it is not a very significant figure. The decreased cost of sales has lead to an increase of gross profit. At the beginning of 2010, Rebornne started another selling strategy to increase sales result but minimized the cost of sales. We promote our colostrums products at restaurants in Shenzhen city by using Site-Prepared Method. The Site-Prepared Method could cut down the goods package budget, which is the main cost of sales concern other than ingredient materials.

Gross profit:

Gross profit increased by $529,029 or 21.96% from $2,409,467 for the year ended March 31, 2010 to $2,938,496 for the year ended March 31, 2011. The gross profit increased is in the line of sales increased. We have increased number of dealers from 30 to 100 people. As more selling points are developed, our products are introduced to more places and hence increase of sales result.

Operating Expenses:

The total operating expenses increased by $713,440 or 35.61% from $2,003,753 for the year ended March 31, 2010 to $2,717,193 for the year ended March 31, 2011. The selling expenses for fiscal year 2011 have decreased 19.21% compared to fiscal year 2010. The promotion and advertisements costs are the main expenses in selling expenses portion which is about $450,000. The other two costs which need to be noticed included shipping cost ($65,000) and hotel site fees ($65,000). The hotel site fees occurred since early year 2010. This is because we have started our new selling strategy, Site-Prepared selling at hotel restaurants.
 
 
16
 
 
General & administrative expenses (G&A) are the main reason that caused the huge increase in total operating expenses. G&A in year 2011 is $1,974,318 which increased $890,129 as compared to year 2010, $1,084,189. Rebornne Guangzhou subsidiary which involved the large amount of G&A cost with approximately $965,000. Rebornne Guangzhou is the biggest subsidiary among others, which involved most employees (salary), living expenses (electricity and water), laboratory expenses, employee benefits cost and company expenses (license registration fees, insurance, depreciation and others). Rebornne Shenzhen subsidiary is the second main cost of G&A which involved approximately $250,000. The main expenses of Rebornne Shenzhen also involved in employee salary, employee benefit, office rental fees and electricity charge.

The overall reasons that result in increase of total operating expenses are due to increase number of employees, more varieties of products being manufactured and even more advertisements and promotion events being running to introduce company products into big China market.

Operating Income:

The operating income was $221,303 for the year ended March 31, 2011 compared to $405,714 for year ended March 31, 2010, a significant decrease of $184,411 or 45.45%.  Although the gross profit increased gradually but it does not help to rise up the operating income since General & Administrative Expenses consumed a huge amount of money.

Net Income:

The net income was $334,573 for the year ended March 31, 2010 compared to $122,452 for the year ended March 31, 2011, a decrease of $212,121 or 63.1%. The net income decreases is because the huge General & Administrative Expenses.

LIQUIDITY AND CAPITAL RESOURCES

The following table sets forth the summary of our cash flows stated in US Dollar for the year ended March 31, 2011 and 2010.

   
As of
  
   
March 31, 2011
    
March 31, 2010
  
Cash Flows from Operating Activities
    $ 202,435      $ 1,952,155  
Cash Flows from Investing Activities
     (667,618 )     (338,391 )
Cash Flows from Financing Activities
     554,768       (1,220,075 )
Net Increase/(Decrease) in Cash & Cash Equivalents for the Period
     89,585       393,689  
Effect of other Comprehensive Income
     117,056       (11,908 )
Cash & Cash Equivalents at Beginning of Period
     385,445       3,664  
Cash & Cash Equivalents at End of Period
     592,086       385,445  

Operating Activities:
 
During the year ended March 31, 2011, net cash provided by operating activities was $202,435 as compared to net cash used for operating activities of $1,952,155 for the year ended March 31, 2010. The net flow in year 2011 is significantly lower compare to year 2010. This is because the new China Regulation (Infant Formula Milk Powder Product and Review of Rules Permit Conditions Version 2010) requires all infant formula manufacturers must purchase specified laboratory instruments. These expensive laboratory instruments must be purchased and ready to be run before the manufacturer licences been renewed. Therefore, large amount of cash capital was putting into this purchase at the beginning of year 2011.

In addition, for the year ended 2011, Rebornne withdrew the Rebornne Colostrums Products Distributor Right from its previous distributor and hence it cost another large amount of capital to pay for the Rebornne Colostrums Products market networks (Intangible Property).

Investing Activities:

The cash flows from investing activities showed negative are due to the accumulated depreciation with current inventories.

Our total cash and cash equivalents increased to $592,086 as March 31, 2011, as compared to $385,445 as of March 31, 2010. The primary uses of cash are for selling and marketing expenses, development expenses and investment capital.

CRITICAL ACCOUNTING POLICIES
 
Our significant accounting policies are summarized in Note 2 of our financial statements included in this annual report on Form 10-K for the year ended March 31, 2011. Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.
 
 
17
 
 
Recent Accounting Pronouncements
 
In January 2010, the FASB issued ASU 2010-02, Consolidation (Topic 810) — Accounting and Reporting for Decreases in Ownership of a Subsidiary — A Scope Clarification. ASU 2010-02 clarifies that the scope of previous guidance in the accounting and disclosure requirements related to decreases in ownership of a subsidiary apply to (i) a subsidiary or a group of assets that is a business or nonprofit entity; (ii) a subsidiary that is a business or nonprofit entity that is transferred to an equity method investee or joint venture; and (iii) an exchange of a group of assets that constitutes a business or nonprofit activity for a noncontrolling interest in an entity. ASU 2010-02 also expands the disclosure requirements about deconsolidation of a subsidiary or derecognition of a group of assets to include (i) the valuation techniques used to measure the fair value of any retained investment; (ii) the nature of any continuing involvement with the subsidiary or entity acquiring a group of assets; and (iii) whether the transaction that resulted in the deconsolidation or derecognition was with a related party or whether the former subsidiary or entity acquiring the assets will become a related party after the transaction. The provisions of ASU 2010-02 will be effective for the first reporting period beginning after December 13, 2009. The adoption of this standard did not have a material impact on the financial position, results of operations or cash flows of the Company.

In January 2010 the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820) —Improving Disclosures About Fair Value Measurements. ASU 2010-06 clarifies the requirements for certain disclosures around fair value measurements and also requires registrants to provide certain additional disclosures about those measurements. The new disclosure requirements include (i) the significant amounts of transfers into and out of Level 1 and Level 2 fair value measurements during the period, along with the reason for those transfers, and (ii) separate presentation of information about purchases, sales, issuances and settlements of fair value measurements with significant unobservable inputs. ASU 2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009. The adoption of this standard did not have a material impact on the financial position, results of operations or cash flows of the Company.
  
OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
 
Not applicable because we are a smaller reporting company.

ITEM 8.FINANCIAL STATEMENTS.
 
The financial statements begin on page F-1.
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
 
Webb & Company, P.A. (“Webb”) served as our independent auditor in connection with the audits of the Company’s financial statements for the fiscal years ended December 31, 2009 and 2008, and review of the subsequent interim period through May 28, 2010.  In connection with the Share Exchange, our board of directors recommended and approved the appointment of Samuel H. Wong & Co., LLP (“SHW”) as the independent auditor for the Company and Rebornne NZ.

During the fiscal years ended December 31, 2009 and 2008 and through the date hereof, neither us nor anyone acting on our behalf consulted SHW with respect to (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report was provided to us or oral advice was provided that SHW concluded was an important factor considered by us in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was the subject of a disagreement or reportable events set forth in Item 304(a)(1)(v) of Regulation S-K.
 
 
18
 
 
ITEM 9A. CONTROLS AND PROCEDURES.
 
Evaluation of Disclosure Controls and Procedures

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) (the Company’s principal financial and accounting officer), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. 
 
Management’s Annual Report on Internal Control over Financial Reporting.

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.  Our internal control system was designed to, in general, provide reasonable assurance to the Company’s management and board regarding the preparation and fair presentation of published financial statements, but because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of the Company’s internal control over financial reporting as of March 31, 2011.  The framework used by management in making that assessment was the criteria set forth in the document entitled “ Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, our management has determined that as of March 31, 2011, the Company’s internal control over financial reporting was effective for the purposes for which it is intended.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.
 
Changes in Internal Control over Financial Reporting

No change in our system of internal control over financial reporting occurred during the period covered by this report, fourth quarter of the fiscal year ended March 31, 2011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Auditor Attestation

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. The Dodd-Frank Wall Street Reform and Consumer Protection Act exempts us, as a company with a public float of less than $75 million, from the requirement that our independent registered public accounting firm attest to our financial controls.
 
PART III
 
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Directors and Executive Officers
 
The following table sets forth the name, age, and position of our executive officers and sole director. Executive officers are elected annually by our Board of Directors.  Each executive officer holds his office until he resigns, is removed by the Board, or his successor is elected and qualified.  Directors are elected annually by our stockholders at the annual meeting.  Each director holds his office until his successor is elected and qualified or his earlier resignation or removal.

Name
  
Age
  
Position
Dairy Global
  
42
  
President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Chairman of the Board of Directors

DAIRY GLOBAL, President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Chairman of the Board of Directors. Mr. Global have over 20 years experience in international trade, manufacturing and engineering.  Mr. Global graduated from Beijing University of Aeronautics and Astronautics majoring in Engineering in 1990. He have a proven track record in senior management, covering change management, business planning and strategic direction, day-to-day management, general management, supply chain management, manufacturing, operations and logistics, retail, sales and marketing, human resources and finance and administration.
 
 
19
 
 
He began his career for Hainan Airline as a Aircraft-electric engineer, by being selected to Boeing Inc, USA for his working performance and was granted the graduation diploma by Boeing, Inc. in Seattle, USA. In 2001, Mr Global founded Rebornne New Zealand Limited after running several companies which build up with extensive national and international experience including food & beverage, energy, engineering, industrial plant and equipment services. In 2006, Rebornne New Zealand Limited established Rebornne China Dairy Factory in southern China to meet the increasing market demands in China. Rebornne also established Dongying Dairy Factory in northern China later on.

We currently do not have employment agreement with our sole officer and director.

Committees and Meetings

We do not have a standing audit committee of the Board of Directors.  Management has determined not to establish an audit committee at present because of our limited resources and limited operating activities do not warrant the formation of an audit committee or the expense of doing so.  We do not have a financial expert serving on the Board of Directors or employed as an officer based on management’s belief that the cost of obtaining the services of a person who meets the criteria for a financial expert under Item 407(d) of Regulation S-K is beyond its limited financial resources and the financial skills of such an expert are simply not required or necessary for us to maintain effective internal controls and procedures for financial reporting in light of the limited scope and simplicity of accounting issues raised in its financial statements at this stage of its development.

Family Relationships

There are no family relationships between our director and executive officers.
 
Involvement in Certain Legal Proceedings
 
Our sole director and officer has not been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, nor has been a party to any judicial or administrative proceeding during the past ten years that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws, except for matters that were dismissed without sanction or settlement. Except as set forth in our discussion below in “Certain Relationships and Related Transactions,” our sole director and officer has not been involved in any transactions with us or any of our affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.

Compliance With Section 16(A) Of The Exchange Act.
 
Section 16(a) of the Exchange Act requires the Company’s officers and directors, and persons who beneficially own more than 10% of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission and are required to furnish copies to the Company. To the best of the Company’s knowledge, no reports required to be filed were timely filed in fiscal year ended March 31, 2011.
 
ITEM 11. EXECUTIVE COMPENSATION.
 
Compensation of Executive Officers
 
The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers during the years ended March 31, 2011 and 2010 in all capacities for the accounts of our executives, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO):
 
 
20
 
 
Summary Compensation Table

Name and Principal Position
  
Year
  
Salary
($)
    
Bonus
($)
    
Stock Awards
($)
    
Option Awards
($)
    
Non-Equity Incentive Plan Compensation ($)
    
Non-Qualified Deferred Compensation Earnings
($)
    
All Other Compensation
($)
    
Totals
($)
  
                                                     
Dairy Global (1)
President, CEO, CFO & Chairman
  
2011
   $ 166,667       0       0       0       0       0       0     $ 166,667  
 
2010
   $ 0       0       0       0       0       0       0     $ 0  
                                                                     
Scott Silverman (2) Former President, CEO & CFO
  
2010
   $ 150,000       0       0       0       0       0       0     $ 150,000  
                                                                     
  
(1)  
Dairy Global, our sole director and officer, receives an annual salary of $200,000 starting from June 1, 2010.
(2)  
In connection with the change of control transaction, Scott J. Silverman resigned from the Board of Directors effective April 2, 2010, which is ten (10) days following the filing and mailing of the Schedule 14f-1 as promulgated by the Securities Exchange Act of 1934. On March 22, 2010, Mr. Silverman resigned from all his positions as officer of the Company effectively immediately. Dairy Global was appointed as the sole officer of the Company effectively immediately and appointed as the sole director effective April 12, 2010.
 
Employment Agreements
 
We currently do not have employment agreement with our sole officer and director.
 
Compensation of Directors

Directors are permitted to receive fixed fees and other compensation for their services as directors. The Board of Directors has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity.

Option Grants Table

Mr. Silverman received options to purchase 70,325 shares of our common stock with an expiration date of December 31, 2005 in the following quantities and at the following exercise prices: 14,065 shares at $35.55, 14,065 at $53.33, 14,065 at $71.10, 14,065 at $106.65 and 14,065 at $142.20. All options have been cancelled on February 2, 2010 in exchange for the spin-off and sale of the Company’s wholly owned subsidiary, BioTex Corp., to Mr. Silverman.
 
There are no other options to purchase our securities outstanding. We may in the future establish an incentive stock option plan for our directors, employees and consultants.
  
Aggregated Option Exercises and Fiscal Year-End Option Value Table

There were no stock options exercised during period ending March 31, 2011 by the executive officer named in the Summary Compensation Table.
 
Long-Term Incentive Plan (‘LTIP’) Awards Table

There were no awards made to a named executive officer as of March 31, 2011 under any LTIP.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
 
The following table sets forth certain information as of the date hereof with respect to the beneficial ownership of our common stock, the sole outstanding class of our voting securities, by (i) each stockholder known to be the beneficial owner of more than 5% of the outstanding ordinary shares of the Company, (ii) each executive officer and director, and (iii) all executive officers and directors as a group.

As of June 30, 2011, we have 54,807,032 shares of common stock issued and outstanding.

Name and Address of Beneficial Owner (1)(2)
  
Amount and Nature of Beneficial Ownership
    
Percent of Class
Dairy Global (4)
    
53,296,997
      
97.3
%
All Executive Officers and Directors as a group (1 person)
    
53,296,997
      
97.3
%
 
(1)  
Unless otherwise indicated, the persons or entities identified herein have sole voting and investment power with respect to the shares shown as beneficially held by them, subject to community property laws where applicable.

(2)  
The address is c/o Rebornne New Zealand Limited, Level 23, 120 Albert Street, Auckland City, Auckland, New Zealand Postal Code: 1010.
 
 
21
 
 
ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

   
As of March 31,
2011
    
As of March 31,
2010
  
Rebornne Trading Company Limited
   $ 47,825     $ 48,004  
Rebornne Dairy Dongying Company
     133,377       126,539  
Pai Cun (Guangzhou) Health Limited
     198,894       -  
    $ 380,096     $ 174,543  

The Company, Pai Cun (Guangzhou) Health Limited and Rebornne Trading Company Limited have common shareholders, whereas Rebornne NZ has an ownership interest in Rebornne Dairy Dongying Company. The amounts due from these related parties have no specific terms of repayment and are non-interest bearing and unsecured.
 
ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES.
 
(1) Audit Fees

The aggregate fees paid for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the Company’s annual financial statements and review of financial statements included in the Company’s Form 10-K or 10-Q or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years was $35,000 for the fiscal year ended March 31, 2011 and $54,000 for the fiscal year ended March 31, 2010. 

(2) Audit-Related Fees
 
There were no fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of the Company’s financial statements.
 
(3) Tax Fees
 
There were no fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.
 
(4) All Other Fees
 
There were no other fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported above.
 
(5) Pre-Approval Policies and Procedures
 
Before the accountant is engaged by the issuer to render audit or non-audit services, the engagement is approved by the Company’s the board of directors acting as the audit committee.
 
PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a) The following documents are filed as part of this report:
 
(1) Financial Statements and Report of Independent Registered Public Accounting Firm, which are set forth in the index to Consolidated Financial Statements on pages F-1 through F-18 of this report.
 
Report of Independent Registered Public Accounting Firm— Samuel H. Wong & Co., LLP
  
        Balance Sheets
  
        Statements of Income and Comprehensive Income
  
        Statements of Shareholders’ Equity
  
        Statements of Cash Flows
  
        Notes to Financial Statements
  
 
(2) Financial Statement Schedule: None.
 
 
22
 
 
(3) Exhibits

Exhibit No.
  
Description
     
2.1
  
Share Exchange Agreement by and between the Company, Rebornne NZ, and the Rebornne NZ Shareholders, dated May 28, 2010 (1)
3.1
  
Certificate of Incorporation (2)
3.2
  
By Laws (2)
10.1
  
Form of Regional Distribution Agreement (English Translation) *
31.1
  
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *
     
32.1
  
Certification of Chief Executive Officer and Chief Financial Officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *
 
(1) Incorporated by reference to the Company’s current report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2010.
(2) Incorporated by reference to the Company’s ­­­­­­­­­­­­­­­­­­­­­­­registration statement on Form SB-2 filed with the Securities and Exchange Commission on November 7, 2003.
* Filed herein.
 
 
23
 
 
SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized.
 
 
REBORNNE (USA) INC
     
Date: July 13, 2011
By:
/s/ Dairy Global
   
Dairy Global
   
Chairman of the Board of Directors,
Chief Executive Officer,
Chief Financial Officer, Controller,
Principal Accounting Officer

 
 
24
 

 
Rebornne (USA), Inc.

Audited Consolidated Financial Statements

March 31, 2011 and 2010

(Stated in US Dollars)
 

 
 
 
 
 
Rebornne (USA), Inc.


Contents
Pages
   
Report of Independent Registered Public Accounting Firm
F-1
   
Consolidated Balance Sheets
F-2
   
Consolidated Statements of Operations
F-3
   
Consolidated Statements of Changes in Stockholder’s Equity
F-4
   
Consolidated Statements of Cash Flows
F-5 – F-6
   
Notes to Consolidated Financial Statements
F-7 - F-18

 
 
 
 
To:          The Stockholder and Board of Directors
Rebornne (USA), Inc.



Report of Independent Registered Public Accounting Firm


We have audited the accompanying consolidated balance sheets of Rebornne (USA), Inc. as of March 31, 2011 and 2010, and the related consolidated statements of operations, changes in stockholder’s equity, and cash flows for the years then ended.  These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Rebornne (USA), Inc. as of March 31, 2011 and 2010, and the results of its operations and its cash flows for each of the years then ended in conformity with accounting principles generally accepted in the United States of America.
 
 San Mateo, California  Samuel H. Wong & Co., LLP
 May 20, 2011       Certified Public Accountants
 
 
F-1
 
 
Rebornne (USA), Inc.
Consolidated Balance Sheets
As of March 31, 2011 and 2010
(Stated in US Dollars)
                                                                                                      
ASSETS
  
Notes
    
03/31/2011
    
3/31/2010
  
Current Assets
                  
   Cash and Cash Equivalents
         $ 592,086     $ 385,445  
   Accounts Receivable
           74,984       1,926  
   Other Receivable
           80,190       27,221  
   Inventories
   3       1,401,273       429,738  
   Advance to Suppliers
           952,865       55,753  
   Related Parties Receivable
   4       380,096       174,543  
   Prepaid Expenses
           1,075       -  
      Total Current Assets
           3,482,569       1,074,626  
Non-Current Assets
                      
   Property, Plant & Equipment, net
   5       2,506,049       2,286,977  
   Intangible Assets
   6       152,437       -  
   Long-term Investment
   7       29,970       29,970  
   Other Assets
           -       2,984  
TOTAL ASSETS
           6,171,025     $ 3,394,557  
                       
LIABILITIES
                      
Current Liabilities
                      
   Accounts Payable
           330,947     $ 18,502  
   Taxes Payable
   8       1,224,411       622,288  
   Other Payable
           168,464       61,573  
   Current Portion of Long-term Debt
   9       15,987       -  
   Note Payable
   10       106,706       -  
   Related Party Payable
           732,239       963,385  
   Customer Deposits
           1,154,280       69,107  
       Total Current Liabilities
           3,733,034       1,734,855  
Non-Current Liabilities
                      
Long-term Debt
   9       45,328       -  
TOTAL LIABILITIES
           3,778,362       1,734,855  
STOCKHOLDER’S EQUITY
            
Preferred Stock ($0.001 par value, 10,000,000 shares authorized, 0 share issued and outstanding at March 31, 2011 and 2010)
Common Stock ($0.001 par value, 100,000,000 shares authorized, 52,546,997 and 26,546,997 shares issued and outstanding at March 31, 2011 and 2010 respectively)
     52,547       26,547  
  Additional Paid in Capital
     468,288       835  
   Retained Earnings
     1,756,932       1,634,480  
   Accumulated Other Comprehensive Income
     114,896       (2,160 )
TOTAL STOCKHOLDER’S EQUITY
     2,392,663       1,659,702  
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY
     6,171,025     $ 3,394,557  
 
See Notes to Consolidated Financial Statements and Accountant’s Report
 
 
F-2
 

Rebornne (USA), Inc.
Consolidated Statements of Operations
For the year ended March 31, 2011 and 2010
(Stated in US Dollars)

 
Note
  
3/31/2011
    
3/31/2010
  
Revenue
              
Sales
       5,127,272     $ 4,738,528  
Cost of Goods Sold
       2,188,776       2,329,061  
    Gross Profit
       2,938,496       2,409,467  
                   
Operating Expenses
                  
Selling Expenses
       742,875       919,564  
General & Administrative Expenses
       1,974,318       1,084,189  
    Total Operating Expenses
       2,717,193       2,003,753  
                   
Operating Income
       221,303       405,714  
                   
Other Income (Expenses)
                  
Other Income
       28,702       854  
Other Expenses
       (1,694 )     (226 )
Interest Income
       98       -  
Interest Expense
       (31,118 )     (1,834 )
    Total Other Income (Expenses)
       (4,012 )     (1,206 )
                   
Earnings before Tax
       217,291       404,508  
                   
Income Tax
       (94,839 )     (69,935 )
                   
Net Income
     $ 122,452     $ 334,573  

Earnings per share
            
- Basic
     0.00       0.01  
- Diluted
     0.00       0.01  
                 
Weighted average shares outstanding
                
- Basic
     30,580,055       26,546,997  
- Diluted
     30,580,055       26,546,997  
 
See Notes to Consolidated Financial Statements and Accountant’s Report
 
 
F-3
 
 
Rebornne (USA), Inc.
Consolidated Statements of Changes in Stockholder’s Equity
As of and for the year ended March 31, 2011 and 2010
 (Stated in US Dollars)
                           
Accumulated
        
   
Number
          
Additional
          
Other
        
   
Of
    
Common
    
Paid in
    
Retained
    
Comprehensive
        
   
Shares
    
Stock
    
Capital
    
Earnings
    
Income
    
Total
  
Balance at April 1, 2009
     26,546,997     $ 26,547     $ 835     $ 2,519,984     $ 9,748     $ 2,557,114  
Net Income
     -       -       -       334,573       -       334,573  
Distribution of Dividends
     -       -       -       (1,220,077 )     -       (1,220,077 )
Foreign Currency Translation Adjustment
     -       -       -       -       (11,908 )     (11,908 )
Balance at March 31, 2010
     26,546,997     $ 26,547     $ 835     $ 1,634,480     $ (2,160 )   $ 1,659,702  
                                                 
Balance at April 1, 2010
     26,546,997     $ 26,547     $ 835     $ 1,634,480     $ (2,160 )   $ 1,659,702  
Issuance of common stock
     26,000,000       26,000       467,453       -       -       493,453  
Net Income
     -       -       -       122,452       -       122,452  
Foreign Currency Translation Adjustment
     -       -       -       -       117,056       117,056  
Balance at March  31, 2011
     52,546,997       52,547       468,288       1,756,932       114,896       2,392,663  

   
Comprehensive Income
        
   
03/31/2011
    
3/31/2010
    
Accumulated Total
  
Net Income
   $ 122,452     $ 334,573     $ 457,025  
Foreign Currency Translation Adjustment
     117,056       (11,908 )     105,148  
    $ 239,508     $ 322,665     $ 562,173  

See Notes to Consolidated Financial Statements and Accountant’s Report
 
 
F-4
 

Rebornne (USA), Inc.
Consolidated Statements of Cash Flows
For the year ended March 31, 2011 and 2010
 (Stated in US Dollars)
   
3/31/2011
    
3/31/2010
  
Cash Flows from Operating Activities
            
Cash Received from Customers
   $ 6,086,418     $ 4,872,709  
Cash Paid to Suppliers & Employees
     (5,765,650 )     (2,498,787 )
Cash Paid for Selling Expenses
     (620,530 )     (699,181 )
Cash Received for Other Income
     28,702       876  
Cash Paid for Other Expenses
     (1,694 )     -  
Interest Received
     98       -  
Interest Paid
     (31,118 )     (1,834 )
VAT and Other Tax (Payments)/Refunds Received
     506,209       278,598  
Miscellaneous Payments
     -       (226 )
Cash Sourced/(Used) in Operating Activities
     202,435       1,952,155  
                 
Cash Flows from Investing Activities
                
Purchase of Intangible Assets
     (152,437 )     1,023  
Purchase of Property, Plant, and Equipment
     (518,165 )     (309,440 )
Disposal (Purchase) of Other Assets
     2,984       (4 )
Purchase of Long-term Investment
     -       (29,970 )
Cash Used/(Sourced) in Investing Activities
     (667,618 )     (338,391 )
                 
Cash Flows from Financing Activities
                
Issuance of Common Stock
     493,453       -  
Payment of Long-term Debt
     61,315       -  
Distribution of Dividends
     -       (1,220,075 )
Cash Sourced/(Used) in Financing Activities
     554,768       (1,220,075 )
                 
Net Increase/(Decrease) in Cash & Cash Equivalents for the Year
     89,585       393,689  
Effect of Other Comprehensive Income
     117,056       (11,908 )
Cash & Cash Equivalents at Beginning of Year
     385,445       3,664  
Cash & Cash Equivalents at End of Year
     592,086       385,445  
                 
Non-cash Investing Activity
                
Purchase of Motor Vehicle by Way of Long-term Debt
     66.628       -  
 
See Notes to Consolidated Financial Statements and Accountant’s Report
 
F-5
 
 
Rebornne (USA), Inc.
Reconciliation of Net Income to Cash Sourced/(Used) in Operations
For the year ended March 31, 2011 and 2010
(Stated in US Dollars)
   
3/31/2011
    
3/31/2010
  
             
Net Income
   $ 122,452     $ 334,573  
                 
Adjustments to Reconcile Net Income to
                
Net Cash Provided by Operating Activities:
                
                 
   Depreciation
     295,822       269,416  
   Loss on Disposal of Property, Plant and Equipment
     3,271       -  
   Decrease/(Increase) in Accounts Receivable
     (73,058 )     84,386  
   Decrease/(Increase) in Other Receivable
     (52,969 )     (19,290 )
   Decrease/(Increase) in Inventories
     (971,535 )     433,570  
   Decrease/(Increase) in Advance to Suppliers
     (897,112 )     (47,365 )
   Decrease/(Increase) in Related Parties  Receivable
     (205,553 )     (110,430 )
 Decrease/(Increase) in Prepaid Expenses
     (1,075 )     -  
   Increase/(Decrease) in Note Payable
     106,706       -  
   Increase/(Decrease) in Accounts Payable
     312,445       (19,166 )
   Increase/(Decrease) in Taxes Payable
     602,123       348,533  
   Increase/(Decrease) in Other Payable
     106,891       61,397  
   Increase/(Decrease) in Related Party Payable
     (231,146 )     547,424  
   Increase/(Decrease) in Customer Deposits
     1,085,173       69,107  
                 
Total of all adjustments
     79,983       1,617,582  
                 
Cash Sourced (Used) in Operation
   $ 202,435     $ 1,952,155  
 
See Notes to Consolidated Financial Statements and Accountant’s Report
 
 
F-6
 
 
Rebornne (USA), Inc.
Notes to Consolidated Financial Statements
As of and for the years ended March 31, 2011 and 2010
 
 
1.             The Company and Principal Business Activities

Rebornne (USA), Inc. (the “Company”), formerly BTX Holdings, Inc., is a holding company whose primary business operations are conducted through its operating subsidiaries Rebornne New Zealand Ltd. (“Rebornne NZ”), Rebornne (Guangzhou) Diary Company (“Rebornne Guangzhou”), Rebornne (Shenzhen) Dairy Company (“Rebornne Shenzhen”) and Shenzhen Xin Sheng Advertising and Strategy Ltd. (“Shenzhen Xin Sheng”).

Rebornne NZ is principally engaged in formulation and production of milk powder and colostrums tablets for infants.  Rebornne NZ markets its products under the Rebornne brand name.   The Company sells to distributors in New Zealand and China.  Rebornne Guangzhou has production facilities in Guangzhou, China.  It blends and produces mainly milk powder by using Rebornne NZ’s formulations.  It packages the final milk powder products and sells them throughout China under the Rebornne brand name.   Rebornne Shenzhen operates a retail store in Shenzhen, China.  It mainly sells packaged milk powder products as well as health food.  It also has a warehouse in Shenzhen to stock its inventories.  Shenzhen Xin Sheng was set up by the Company on July 16, 2010 and it is in the business of providing advertising services.
.
The Company was formed under the laws of the State of Florida on April 24, 2003.  On May 28, 2010, the Company entered into a share exchange agreement with Rebornne NZ.   Rebornne NZ wholly owns Rebornne Guangzhou and Rebornne Shenzhen.  Pursuant to the share exchange agreement, the Company issued 26,546,997 shares in exchange for all of Rebornne NZ’s issued and outstanding shares.  Rebornne NZ became a wholly owned subsidiary of the Company and Rebornne NZ became the Company’s controlling stockholder.

The share exchange transaction has been accounted for as a recapitalization of Rebornne NZ where the Company (the legal acquirer) is considered the accounting acquiree and Rebornne NZ (the legal acquiree) is considered the accounting acquirer.  As a result of this transaction, the Company is deemed to be a continuation of the business of Rebornne NZ.

Accordingly, the financial data included in the accompanying consolidated financial statements is that of the accounting acquirer (Rebornne NZ).  The historical stockholders’ equity of the accounting acquirer prior to the share exchange has been retroactively restated as if the share exchange transaction occurred as of the beginning of the first period presented.

 
F-7
 
 
Rebornne (USA), Inc.
Notes to Consolidated Financial Statements
As of and for the years ended March 31, 2011 and 2010
 
 
2.             Summary of Significant Accounting Policies

(A)  
Method of Accounting

The Company maintains its general ledger and journals with the accrual method of accounting for financial reporting purposes. The financial statements and notes are representations of management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States of America and have been consistently applied in the presentation of financial statements.

(B)  
Consolidation

The consolidated financial statements include all the accounts of the Company and its three wholly-owned subsidiaries. Inter-company transactions, such as sales, cost of sales, due to/due from balances, investment in subsidiary, and subsidiary’s capitalization have been eliminated.

As of December 31, 2010, the detailed identities of the consolidated subsidiaries are as follows:

Name of Entity
Date of Incorporation
Place of Incorporation
Attributable Equity Interest
Registered Capital
         
Rebornne New Zealand Ltd.
December 17, 2001
New Zealand
100%
NZD $2,000
Rebornne (Guangzhou) Dairy Company
July 10, 2006
PRC
100%
USD $1,380,000
Rebornne (Shenzhen) Dairy Company
January 18, 2010
PRC
100%
USD $100,000
Shenzhen Xin Sheng Advertising and Strategy Ltd.
July 16, 2010
PRC
100%
RMB $500,000

(C)  
Use of Estimates

In the preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting years.  These accounts and estimates include, but are not limited to, the valuation of accounts receivable, inventories, and the estimation on useful lives of property, plant and equipment.  Actual results could differ from those estimates.

 
F-8
 
 
Rebornne (USA), Inc.
Notes to Consolidated Financial Statements
As of and for the years ended March 31, 2011 and 2010

(D)  
Cash and Cash Equivalents

Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.

(E)  
Accounts Receivable

Accounts receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An allowance for doubtful accounts is made when recovery of the full amount is doubtful.

(F)  
Inventories

Inventories are stated at the lower of cost or market value. Cost is computed using the first-in, first-out method and includes all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. Market value is determined by reference to the sales proceeds of items sold in the ordinary course of business or estimates based on prevailing market conditions.

(G)  
Advances to Suppliers

Advances to suppliers represent the cash paid in advance for the purchase of goods. The advances to suppliers are interest free and unsecured.

(H)  
Property, Plant, and Equipment

Property, plant, and equipment are stated at cost.  Repairs and maintenance to these assets are charged to expense as incurred; major improvements enhancing the function and/or useful life are capitalized. When items are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gains or losses arising from such transactions are recognized.

Property, plant, and equipment are depreciated using the straight-line or declining balance method over their estimated useful lives.  Their useful lives are as follows:

Fixed Assets Classification
Useful Lives
Property and Leasehold Improvements
10 Years
Equipment and Furniture
2.5 to 10 Years
Motor Vehicles
4  Years

 
F-9
 
 
Rebornne (USA), Inc.
Notes to Consolidated Financial Statements
As of and for the years ended March 31, 2011 and 2010

 
(I)  
Intangible Assets

Intangible assets that are acquired individually or as part of a group of assets, other than those acquired in a business combination, are initially recorded at their fair value. The cost of a group of assets acquired in a transaction is allocated to the individual assets based on their relative fair values. Goodwill does not arise in such a transaction. Intangible assets that are acquired in a business combination are accounted for in accordance with ASC Topic 805, Business Combinations . The costs of intangible assets that are developed internally, as well as the costs of maintaining or restoring intangible assets that have indeterminate lives or that are inherent in a continuing business and related to the entity as a whole, are expensed as incurred.

The accounting for intangible assets, other than goodwill, subsequent to acquisition is based on the asset’s useful life. The useful life of the intangible asset is the period over which the asset is expected to contribute directly or indirectly to the entity’s future cash flows. An asset for which no legal, regulatory, contractual, competitive, economic, or other factors limit its useful life is considered to have an indefinite useful life.

(J)  
Long-Term Investment

Investee companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equity method of accounting. Under the equity method of accounting, an investee company’s accounts are not reflected within the Company’s consolidated balance sheets and statements of operations; however, the Company’s share of the earnings or losses of the investee company is reflected in the consolidated statements of operations. The Company’s carrying value in an equity method investee company is reflected in the Company’s consolidated balance sheets.

When the Company’s carrying value in an equity method Investee company is reduced to zero, no further losses are recorded in the Company’s consolidated financial statements unless the Company guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized.

Investee companies not accounted for under the consolidation or the equity method of accounting are accounted for under the cost method of accounting. Under this method, the Company’s share of the earnings or losses of such investee companies is not included in the consolidated balance sheet or statement of operations. However, impairment charges are recognized in the consolidated statement of operations. If circumstances suggest that the value of the investee company has subsequently recovered, such recovery is not recorded.
 
 
F-10
 
 
Rebornne (USA), Inc.
Notes to Consolidated Financial Statements
As of and for the years ended March 31, 2011 and 2010

(K)  
Customer Deposits

Customer deposits represent the money the Company has received from customers in advance for the purchase of goods. The Company considers customer deposits as a liability until the title of goods have been transferred at which point the balance will be credited to sales revenue.

(L)  
Comprehensive Income

In accordance with SFAS No. 130, “Reporting Comprehensive Income”, comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners.  Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements.  The Company’s current components of other comprehensive income are unrealized gain or loss in investment and the foreign currency translation adjustment.

(M)  
Revenue Recognition

Revenue from product sales is recognized net of discounts and trade allowances when the goods are shipped and title has passed.

(N)  
Cost of Goods Sold

Cost of goods sold is primarily comprised of cost of goods.

(O)  
Selling Expenses

Selling expenses include outbound freight, wages of the sales force, commissions, and advertising.

(P)  
General & Administrative Expenses

General and administrative expenses are comprised of executive compensation, wages of administrative and factory staff, professional fees, depreciation, travel and lodging, meals and entertainment, utilities, and rental.

(Q)  
Advertising Expenses

Costs related to advertising and promotion expenditures are expensed as incurred during the year.  Advertising costs are charged to selling expenses.

 
F-11
 
 
Rebornne (USA), Inc.
Notes to Consolidated Financial Statements
As of and for the years ended March 31, 2011 and 2010

 
(R)  
Retirement Plan

The employees of the Company participate in the defined contribution retirement plans managed by the local government authorities whereby the Company is required to contribute to the schemes at fixed rates of the employees’ salary. The Company’s contributions to this plan are charged to profit or loss when incurred. The Company has no obligations for the payment of retirement and other post-retirement benefits of staff other than the contributions described above.

(S)  
Income Tax

The Company uses the accrual method of accounting to determine and report its taxable reduction of income taxes for the year in which they are available. In accordance with SFAS No. 109 “Accounting for Income Taxes”, the Company accounts for income tax using an asset and liability approach and allows for recognition of deferred tax benefits in future years.  Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not that such items will either expire before the Company is able to realize their benefits, or that future realization is uncertain.

In respect of the Company and its subsidiaries domiciled and operated in New Zealand and the People’s Republic of China, the taxation of these entities is summarized below:

Entities
Countries of Domicile
Income Tax Rate
Rebornne (USA), Inc.
United States
15.00%  -  35.00%
Rebornne New Zealand Limited
New Zealand
30.00%
Rebornne (Guangzhou) Dairy Company
PRC
25.00%
Rebornne (Shenzhen) Dairy Company
PRC
25.00%
Shenzhen Xin Sheng Advertising and Strategy Ltd.
PRC
25.00%

(T)  
Foreign Currency Translation

The Company and its operating subsidiaries Rebornne New Zealand Limited, Rebornne (Guangzhou) Dairy Company and Rebornne (Shenzhen) Dairy Company maintain their financial statements in their functional currencies, which are the New Zealand dollar and the Renminbi (RMB) respectively. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchanges rates prevailing at the dates of the transaction.  Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective periods.
 
 
F-12
 
 
Rebornne (USA), Inc.
Notes to Consolidated Financial Statements
As of and for the years ended March 31, 2011 and 2010

For financial reporting purposes, the financial statements of Rebornne NZ, Rebornne Guangzhou and Rebornne Shenzhen, which are prepared using their respective functional currencies, have been translated into United States dollars.  Assets and liabilities are translated at the exchange rates at the balance sheet dates and revenue and expenses are translated at the average exchange rates, and stockholders’ equity is translated at historical exchange rates. Translation adjustments are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income, a component of stockholders’ equity.

Exchange Rates
  
3/31/11
    
12/31/10
    
03/31/10
  
Period end RMB : US$ exchange rate
     6.5601       6.6118       6.8361  
Average period RMB : US$ exchange rate
     6.7087       6.7600       6.8383  
                         
Period end NZD : US$ exchange rate
     1.3165       1.3009       1.4073  
Average period HKD : US$ exchange rate
     1.3658       1.3806       1.4845  

(U)  
Financial Instruments

The Company’s financial instruments are cash and cash equivalents, accounts receivable, other receivable, advances to suppliers, related parties receivable, accounts payable, other payable, notes payable, related party payable and long-term debt. The recorded values of these financial instruments approximate their fair values due to their short-term nature.   The difference between the carrying and fair values of long-term debt is not significant.

(V)  
Impairment of Intangible Assets

The Company evaluates the recoverability of identifiable intangible assets whenever events or changes in circumstances indicate that an intangible asset’s carrying amount may not be recoverable. Such circumstances could include, but are not limited to (1) a significant decrease in the market value of an asset, (2) a significant adverse change in the extent or manner in which an asset is used, or (3) an accumulation of costs significantly in excess of the amount originally expected for the acquisition of an asset. The Company measures the carrying amount of the asset against the estimated undiscounted future cash flows associated with it. Should the sum of the expected future net cash flows be less than the carrying value of the asset being evaluated, an impairment loss would be recognized. The impairment loss would be calculated as the amount by which the carrying value of the asset exceeds its fair value. The fair value is measured based on quoted market prices, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including the discounted value of estimated future cash flows. The evaluation of asset impairment requires the Company to make assumptions about future cash flows over the life of the asset being evaluated. These assumptions require significant judgment and actual results may differ from assumed and estimated amounts.
 
 
F-13
 
 
Rebornne (USA), Inc.
Notes to Consolidated Financial Statements
As of and for the years ended March 31, 2011 and 2010

(W)  
Recent Accounting Pronouncements

In January 2010, the FASB issued ASU 2010-02, Consolidation (Topic 810) — Accounting and Reporting for Decreases in Ownership of a Subsidiary — A Scope Clarification. ASU 2010-02 clarifies that the scope of previous guidance in the accounting and disclosure requirements related to decreases in ownership of a subsidiary apply to (i) a subsidiary or a group of assets that is a business or nonprofit entity; (ii) a subsidiary that is a business or nonprofit entity that is transferred to an equity method investee or joint venture; and (iii) an exchange of a group of assets that constitutes a business or nonprofit activity for a noncontrolling interest in an entity. ASU 2010-02 also expands the disclosure requirements about deconsolidation of a subsidiary or derecognition of a group of assets to include (i) the valuation techniques used to measure the fair value of any retained investment; (ii) the nature of any continuing involvement with the subsidiary or entity acquiring a group of assets; and (iii) whether the transaction that resulted in the deconsolidation or derecognition was with a related party or whether the former subsidiary or entity acquiring the assets will become a related party after the transaction. The provisions of ASU 2010-02 will be effective for the first reporting period beginning after December 13, 2009. The adoption of this standard did not have a material impact on the financial position, results of operations or cash flows of the Company.

In January 2010 the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820) —Improving Disclosures About Fair Value Measurements. ASU 2010-06 clarifies the requirements for certain disclosures around fair value measurements and also requires registrants to provide certain additional disclosures about those measurements. The new disclosure requirements include (i) the significant amounts of transfers into and out of Level 1 and Level 2 fair value measurements during the period, along with the reason for those transfers, and (ii) separate presentation of information about purchases, sales, issuances and settlements of fair value measurements with significant unobservable inputs. ASU 2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009. The adoption of this standard did not have a material impact on the financial position, results of operations or cash flows of the Company.

 
F-14
 
 
Rebornne (USA), Inc.
Notes to Consolidated Financial Statements
As of and for the years ended March 31, 2011 and 2010


(X)  
Subsequent Events

The Company evaluates subsequent events that have occurred after the consolidated balance sheet date but before the consolidated financial statements are issued. There are two types of subsequent events:  (1) recognized, or those that provide additional evidence with respect to conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements, and (2) nonrecognized, or those that provide evidence with respect to conditions that did not exist at the date of the balance sheet but arose subsequent to that date. The Company has evaluated subsequent events, and based on this evaluation, the Company did not identify any recognized or nonrecognized subsequent events that would have required adjustments to the consolidated financial statements.


3.             Inventories

   
3/31/2011
    
3/31/2010
  
Raw materials
   $ 156,213     $ 49,808  
Finished goods
     1,245,060       379,930  
    $ 1,401,273     $ 429,738  
                 
 
4.             Related Parties Receivable

   
3/31/2011
    
03/31/2010
  
             
Rebornne Trading Company Limited
   $ 47,825     $ 48,004  
Rebornne Dairy Dongying Company
     133,377       126,539  
Pai Cun (Guangzhou) Health Limited
     198,894       -  
    $ 380,096     $ 174,543  

The Company, Pai Cun (Guangzhou) Health Limited and Rebornne Trading Company Limited have common shareholders, whereas Rebornne NZ has an ownership interest in Rebornne Dairy Dongying Company. The amounts due from these related parties have no specific terms of repayment and are non-interest bearing and unsecured.

 
F-15
 
 
Rebornne (USA), Inc.
Notes to Consolidated Financial Statements
As of and for the years ended March 31, 2011 and 2010

5.             Property, Plant, and Equipment

         
Accumulated
        
3/31/2011
  
Cost
    
Depreciation
    
Net
  
Property and Leasehold Improvements
   $ 800,697     $ 254,500     $ 546,197  
Equipment and Furniture
     2,048,006       407,066       1,640,940  
Motor Vehicles
     396,653       77,741       318,912  
    $ 3,245,356     $ 739,307     $ 2,506,049  
                         
           
Accumulated
          
3/31/2010
  
Cost
    
Depreciation
    
Net
  
Property and Leasehold Improvements
   $ 765,056     $ 96,457     $ 668,599  
Equipment and Furniture
     1,638,590       221,329       1,417,261  
Motor Vehicles
     323,544       122,427       201,117  
    $ 2,727,190     $ 440,213     $ 2,286,977  


6.             Intangible Assets

Intangible assets consist of the exclusive right to distribute the Rebornne Colostrums products and the related customer contracts.  Pursuant to the distributor right agreement dated December 1, 2010 between Rebornne NZ and Hainan Guo Jian High-tech Milk Industry Company Limited (“Hainan), Rebornne NZ agreed to purchase the exclusive distribution network of the Rebornne Colostrums products and related customers from Hainan by issuing 1.8 million common stock of Rebornne (USA), Inc. and paying RMB $3 million in cash as consideration.  As of March 30, 2011, Rebornne NZ paid $154,286 in cash (RMB $1 million).  The 1.8 million common stock of Rebornne (USA), Inc. and the remaining cash payment of RMB $2 million will be issued by December 2011 as agreed between both parties.  As there are no legal, regulatory, contractual, competitive, economic or other factors limiting the useful life of these intangible assets, they are considered to have an indefinite useful life and no amortization is taken.  Instead, they will be tested for impairment annually.


7.             Long-Term Investment

In April 2008, Rebornne NZ entered into an agreement to acquire 60% interest in Rebornne Dairy Dongying Company (“Rebornne Dongying”).  Rebornne Dongying is located is Shandong, PRC.  Rebornne Dongying’s primary business activity is production of fresh milk.  As consideration for the 60% interest, Rebornne NZ committed to contribute $2,303,945 (RMB$15,750,000) in capital by April 29, 2010.  As of March 31, 2011, the Company has contributed $29,970 in cash.  The Company has also contributed a milk powder formulation to Rebornne Dongying. The milk powder formulation has been appraised at $841,123 (RMB$5,750,000).
 
 
F-16
 
Rebornne (USA), Inc.
Notes to Consolidated Financial Statements
As of and for the years ended March 31, 2011 and 2010

The Company has not recognized an intangible asset on its balance sheet related to the milk powder formulation; the Company believes there is a difference in accounting recognition between PRC GAAP and US GAAP for the milk powder formulation.  Under PRC GAAP, the milk powder formulation can be recognized as an intangible asset; however, the Company, from a conservative interpretation of US GAAP, has accounted for the milk powder formulation as research and development costs that have been expensed to the statements of operations in prior periods that are not presented herein.

The cash contribution made by Rebornne NZ does not exceed 20% of the net assets of Rebornne Dongying.  Neither the Company nor Rebornne NZ has not been able to exert significant influence over Rebornne Dongying in terms of management of the finances and business operations for the periods presented; therefore, in light of the foregoing circumstance, the Company, at March 31, 2011 and 2010, has accounted for its investment in Rebornne Dongying using the cost method.  If in the future the Company is able to exert more significant influence or increase its capital contribution, the Company would change the method for which it accounts for its investment in Rebornne Dongying.


8.             Taxes Payable

   
3/31/2011
    
03/31/2010
  
             
Value Added Tax
   $ 1,042,213     $ 524,971  
Other Tax
     12,263       19,405  
Income Tax Payable
     149,935       77,912  
    $ 1,224,411     $ 622,288  
 
 
9.             Note Payable

 
The note is payable to an unrelated individual. It is unsecured, due on demand and bears interest at 5% per month.


10.           Related Party Payable and Transactions

Related party payable relates to amounts owing to the shareholder of the Company.  It has no specific terms of repayment and is non-interest bearing.

In addition, the sole shareholder received $166,667 (2010 - $35,196) in remuneration from the Company and Rebornne NZ for the year ended March 31, 2011.

 
F-17
 
 
Rebornne (USA), Inc.
Notes to Consolidated Financial Statements
As of and for the years ended March 31, 2011 and 2010

 
11.           Long-term Debt

   
3/31/2011
    
03/31/2010
  
             
Motor Vehicle Loan
   $ 61,315     $ -  
Less: Current Portion
     (15,987 )     -  
    $ 45,328     $ -  
 
Long-term debt relates to a motor vehicle loan.  It matures in July 2014, is secured by the motor vehicle, bears interest at 12% per annum and is repayable at $2,443 per month.


12.           Commitments

The Company and its three wholly owned subsidiaries have operating leases for their premises expiring between October 2011 and May 2016.  The minimum lease payments for the next five fiscal years are as follows:
 
2012    $ 117,710  
2013   $ 93,451  
2014   $ 99,306  
2015    $ 99,306  
2016   $ 104,271  
 
 
13.           Economic, Political, and Legal Risks

The Company’s operations in China are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the economic, political, legal environment, and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in China, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, restriction on international remittances, and rates and methods of taxation, among other things.



F-18

BTX HOLDINGS INC Reports

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