Total net operating expenses for the three months ended March 31, 2012 were RMB35.33 million (US$5.61 million) compared with RMB31.99 million during the same period in 2011. Selling and marketing expenses were RMB10.34 million (US$1.64 million) for the second quarter of fiscal 2012 compared with RMB7.71 million during the same period last year. The increase in selling and marketing expenses was mainly due to business expansion in corn business and increase in staff’s salary. General and administrative (“G&A”) expenses were RMB17.96 million (US$2.85 million) for the second quarter ended March 31, 2012, increased 7.0% from RMB16.78 million for the three months ended March 31, 2011. The increase in G&A expenses was largely due to increase in salary expense. Research and development (“R&D”) expenses decreased to RMB7.57 million (US$1.20 million) from RMB9.80 million during the second quarter of fiscal 2011 as certain R&D projects didn’t happen this quarter. Changes in the operating expenses were also impacted by the ongoing resources reallocation and restructuring activities across the organization.

Operating loss for the second quarter of 2012 amounted to RMB38.27 million (US$6.08 million) compared with an operating loss of RMB39.02 million for the same period in 2011.

Net loss for the second quarter of 2012 was RMB37.07 million (US$5.89 million), or RMB-1.58 (US$-0.25) per diluted share, as compared to a net loss of RMB35.13 million, or RMB-1.36 (US$-0.21) per diluted share in the same period one year ago.

BALANCE SHEET

As of March 31, 2012, cash and cash equivalents were RMB165.25 million (US$26.25 million), and shareholders' equity was RMB190.39 million (US$30.25 million). Short term borrowings were RMB41.00 million (US$6.51 million).

Advances from customers were RMB284.00 million (US$45.12 million) as of March 31, 2012 compared with RMB301.10 million on March 31, 2011. These represent advance cash receipts from customers for future orders.

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