Shiner International, Inc. - FORM 10-K

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EX-21 - EXHIBIT 21 - Shiner International, Inc.	v307454_ex21.htm
EX-32.1 - EXHIBIT 32.1 - Shiner International, Inc.	v307454_ex32-1.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2011

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _______________.

Commission File No. 001-33960

SHINER INTERNATIONAL, INC.

(Exact Name of Registrant as Specified in Its Charter)

Nevada

98-0507398

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer Identification No.)

19th Floor, Didu Building, Pearl River Plaza

No. 2 North Longkun Road

Haikou, Hainan Province, China 570125

(Address of Principal Executive Offices, including zip code)

011-86-898-68581104

(Registrant’s Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Exchange Act:

Common Stock, $0.001 par value		The Nasdaq Stock Market LLC
(Title of each class)		(Name of each exchange on which registered)

Securities registered under Section 12(g) of the Exchange Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ¨ No x

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 ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405) 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 in 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, accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer ¨		Accelerated filer ¨
Non-accelerated filer ¨	(Do not check if a smaller reporting company)	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

As of June 30, 2011 (the last business day of the registrant’s most recently completed second fiscal quarter), the aggregate market value of the shares of the registrant’s common stock held by non-affiliates was approximately $9.54 million. Shares of the registrant’s common stock held by each executive officer and director and each by each person who owns 10% or more of the outstanding common stock have been excluded from the calculation in that such persons may be deemed to be affiliates of the registrant. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

Documents Incorporated by Reference

None.

Annual Report on Form 10-K
For the Fiscal Year Ended December 31, 2011

TABLE OF CONTENTS

		Page
	PART I

Item 1.	Business	2
Item 1A.	Risk Factors	14
Item 1B.	Unresolved Staff Comments	31
Item 2.	Properties	31
Item 3.	Legal Proceedings	32
Item 4.	Submission of Matters to a Vote of Security Holders	32
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	33
Item 6.	Selected Financial Data	33
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 8.	Financial Statements and Supplementary Data	41
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	41
Item 9A.	Controls and Procedures	41
Item 9B.	Other Information	42
	PART III
Item 10.	Directors and Executive Officers of the Registrant	42
Item 11.	Executive Compensation	46
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	48
Item 13.	Certain Relationships and Related Transactions	49
Item 14.	Principal Accountant Fees and Services	50
	PART IV
Item 15.	Exhibits and Financial Statement Schedules	51

SIGNATURES		53
EXHIBITS

Special Note Regarding Forward Looking Statements

In addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We use words such as “believe,” “expect,” “anticipate,” “project,” “target,” “plan,” “optimistic,” “intend,” “aim,” “will” or similar expressions which are intended to identify forward-looking statements. Such statements include, among others, those concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those identified in Item 1A “Risk Factors” included herein, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause the results of the Company to differ materially from those expressed or implied by such forward-looking statements.

Readers are urged to carefully review and consider the various disclosures made by us in this report and our other filings with the SEC. These reports attempt to advise interested parties of the risks and factors that may affect our business, financial condition and results of operations and prospects. The forward-looking statements made in this report speak only as of the date hereof and we disclaim any obligation, except as required by law, to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations or future events.

Use of Certain Defined Terms

Except where the context otherwise requires and for the purposes of this report only:

●

“Shiner,” “Company,” “we,” “us” or “our” are to Shiner International, Inc., a Nevada corporation, and its wholly-owned subsidiaries, Hainan Shiny-Day Color Printing Packaging Co., Ltd., or “Shiny-Day,” a PRC company, and Shimmer Sun Ltd., or “Shimmer Sun,” a PRC company; its 30% minority-owned subsidiary, Zhuhai Modern Huanuo Packaging Material Co., Ltd., or “Zhuhai Modern”, a PRC company; Shiny-Day’s wholly-owned subsidiary, Hainan Shiner Industrial Co., Ltd., or “Shiner Industrial,” a PRC company, and its 40% minority-owned subsidiary, Hainan Modern Hi-Tech Industrial Co., Ltd., or “Hainan Modern,” a PRC company; Shiner Industrial’s 70% majority-owned subsidiaries, Zhuhai Modern and Shanghai Juneng Functional Film Company, Ltd. or “Shanghai Juneng,” a PRC company, and its 60% majority-owned subsidiary, Hainan Modern; Shimmer Sun's wholly-owned subsidiary, Hainan JingYue New Materials Co., Ltd., a PRC company (“Jingyue”); Jingyue’s wholly-owned subsidiary, Hainan Shunhao New Materials Co., Ltd. , a PRC company (“Shunhao”); Shunhao’s wholly-owned subsidiary, Hainan Yongxin Environmental Co., Ltd., a PRC company (“Yongxin”) and Yongxin’s 65% majority-owned subsidiary company, Ningbo Neisuoer Latex Co., Ltd., or "Ningbo," a PRC company;

●

“SEC” are to the United States Securities and Exchange Commission;

●

“Securities Act” are to the Securities Act of 1933, as amended; and “Exchange Act” are to the Securities Exchange Act of 1934, as amended;

●

“RMB” are to Renminbi, the legal currency of China; and “U.S. dollar,” “USD,” “US$” and “$” are to the legal currency of the United States;

●

“China,” “Chinese” and “PRC” are to the People’s Republic of China; and

●

“BVI” are to the British Virgin Islands.

PART I

ITEM 1. BUSINESS.

Overview

We were incorporated in Nevada in November 2003, but since July 2007, have been headquartered in Hainan, China. Through our operating subsidiaries, Hainan Shiner, Shiny-Day, Hainan Modern, Zhuhai Modern, Shimmer Sun, Ningbo and Shanghai Juneng we manufacture and sell packaging and Advanced plastic film to manufacturers and producers in China. We also sell three of our products, Advanced film, coated film, and color printing, in international markets through a network of distributors and converters.

Our primary business consists of the manufacture and distribution of technology driven advanced packaging film products in five business segments: bi-axially oriented polypropylene, or BOPP, film for wrapping tobacco; water-based latex; coated film; color printed packaging; and advanced film. Our products are sold to customers in the food, tobacco, chemical, medical and pharmaceutical, personal care, electronics, automotive, construction, graphics, music and video publishing industries. Our current production capacity consists of: five coated film lines with a total capacity of 15,000 tons a year; one BOPP tobacco film production line with a total capacity of 3,500 tons a year; one BOPP film production line with a total capacity of 7,000 tons a year; three color printing lines; four Advanced film lines with a total capacity of 2,500 tons a year; and two water-based latex reaction kettles with a total capacity of 3,000 tons a year.

	Percent of Total Revenue
Product	2011			2010
BOPP tobacco film		51	%		29	%
Water-based latex		1	%		0	%
Coated film		30	%		40	%
Color printed packaging		7	%		7	%
Advanced film		11	%		24	%

During the fiscal year ended December 31, 2011, each of our business segments contributed 51%, 1%, 30%, 7% and 11%, respectively, of our total revenue, compared to 29%, 0%, 40%, 7% and 24%, respectively, for the fiscal year ended 2010. International sales for the fiscal year ended December 31, 2011 were $12.1 million, or 16.1%, of our total revenues and were a $1.1 million or 10.5% increase from the $11.0 million in international sales for the fiscal year ended December 31, 2010.

We have 19 patents by the State Intellectual Property Office of China and have 10 patent applications relating to our products and manufacturing processes pending. Although our patents and processes provide us with a competitive advantage, we do not believe the loss of any single patent would have a material adverse effect on our business as a whole.

Corporate History and Structure

We were incorporated in Nevada on November 12, 2003 as Cartan Holdings Inc. Until July 23, 2007, we were an exploration stage company involved in the search for mineral deposits and owned a 100% undivided right, title and interest in and to the mineral property known as the “Cartan Mineral Claim,” which expired on December 15, 2007.

Acquisition of Shiny-Day

On July 23, 2007, we entered into a Share Exchange Agreement and Plan of Reorganization with Sino Palace Holdings Limited, or Sino Palace, a corporation formed under the laws of the British Virgin Islands. Pursuant to the share exchange agreement, we acquired from Sino Palace all of the issued and outstanding capital stock of Shiny-Day, a PRC company, in exchange for the issuance of an aggregate of 16,500,000 shares of our common stock to the stockholders of Sino Palace. As a result of the acquisition, Shiny-Day and its subsidiaries, Zhuhai Modern and Shiner Industrial became our wholly-owned subsidiaries.

	·	Shiny-Day, formed on March 19, 2004 and acquired on July 23, 2007 with a registered capital of $8,000,000, engages in the business of manufacturing and sales of color printing, plastic and rubber type products.

	·	Shiner Industrial, formed on May 21, 2003 with a registered capital of RMB100,000 (approximately $15,873), engages in the business of manufacture and sales of plastic film, packaging materials, PVDC latex and PVOH and R&D, manufacture, application and sales of anti-counterfeit film

	·	Zhuhai Modern, formed on October 27, 2006 with a registered capital of RMB5,000,000 (approximately $79,365), engages in the business of manufacturing and sales of color printing, plastic and rubber type products, and packaging materials and R&D for flexible packaging materials.

In late 2009, in an effort to improve efficiencies, reduce expenses and take advantage of favorable tax treatment, we consolidated the operations that were previously carried on by three of our subsidiaries – Shiner Industrial, Shiny-day and Hainan Hi-Tech – into Shiner International. Shiny-day and Hainan Hi-Tech are currently inactive subsidiaries of the Company.

Establishment of Shanghai Juneng

On September 20, 2010, we commenced operations of our 70% majority-owned subsidiary, Shanghai Juneng. The remaining 30% minority interest in Shanghai Juneng is held by Shanghai Shifu Material Co., Ltd., an unaffiliated third-party.. Shanghai Juneng was formed on July 21, 2010 for the purpose of wholesale and retail of plastic film and packaging materials, chemical products, labels and anti-counterfeit film. Shanghai Juneng currently markets and sells food safety packaging products to domestic food producers.

Acquisition of Shimmer Sun

On May 2, 2011, we entered into an equity transfer agreement with Fu Zhiyong, pursuant to which we acquired Shimmer Sun from Fu Zhiyong for an aggregate purchase price of $3,200,000. As a result of the transaction, Shimmer Sun became our wholly-owned subsidiary and its subsidiaries and indirect subsidiaries, Jingyue, Shunhao, Yongxin and Ningbo became our indirect subsidiaries.

	·	Jingyue, formed on January 25, 2011 with a registered capital of HK$3,900,000 (approximately $495,237), engages in the business of sales of plastic film packaging, printing products, anti-counterfeit and packaging materials, water-based latex, and related consulting and technological services.

	·	Shunhao, formed on March 15, 2011 with a registered capital of RMB2,500,000 (approximately $396,825) , engages in the business of sales of plastic film, packaging and printing products, anti-counterfeit and packaging materials, water-based latex, and related consulting and technological services.

	·	Yongxin, formed on April 15, 2011 with a registered capital of RMB2,000,000 (approximately $317,460), engages in the business of sales of water-based latex, plastic film and packaging printing products, and R&D application and sale of anti-counterfeit technology products.

	·	Ningbo, formed on May 8, 2007 with a registered capital of RMB 2,080,000 (approximately $330,158) , engages in the business of manufacture and R&D and processing of PVDC latex series of products and being an import and export agent for latex products and technologies.

The following chart reflects our organizational structure as of the date of this report:

Our principal executive offices are located at 19th Floor, Didu Building, Pearl River Plaza, No. 2 North Longkun Road, Haikou, Hainan Province, China 570125. Our telephone number is +86-898-68581104 and our website is accessible at www.shinerinc.com.

Our Growth Strategy

Our principal business objective is to grow our market share in the flexible packaging film business and continue to expand domestically and internationally by pursuing the following key strategies:

Increase our market share by expanding our sales network and customer service. We believe the flexible packaging industry in China has substantial growth potential. In order to penetrate the key markets, we plan to set up a processing factory and warehouse in Shanghai. We plan to attract new customers and increase our market share by increasing our existing sales and marketing activities and strengthening our customer service within and outside of China. We plan to strengthen our customer service network by establishing a global customer service center located in Shanghai.

Continue to expand our production capacity with a focus on key geographic markets. We plan to increase our production capacity through potential acquisitions or installation of new production lines, or both, to meet the expected increase in the demand for our products. We foresee industry consolidation and believe we are well positioned to benefit from such a market trend. We believe we are in a position to acquire companies with advanced technology and a good customer base to expand our production capacity.

Strengthen our R&D capabilities, expand our product portfolio and improve our production efficiency. In order to maintain our competitiveness, we will continue to strengthen our R&D capabilities through staff training, equipment upgrades and collaborative R&D programs. We will focus our R&D efforts on the expansion of our product portfolio to meet the changing needs of our customers and the growing demands for packaging products. Moreover, we intend to develop technologies that would help us improve production efficiency and product quality while lowering production costs.

Strategically explore value-enhancing acquisitions and/or joint ventures to further grow our market share. To date, we have relied on organic expansion to achieve growth. We may strategically explore value-enhancing acquisitions and/or joint ventures to further grow our market share. We may also consider targeted acquisitions or investments where we stand to gain access to additional production capacity or proprietary technology relating to packaging, which we believe may further enhance our current products and services, and expand our position in key markets.

Further expand and penetrate selective international markets. We plan to continue our efforts to move beyond the PRC market and establish new sales offices in select markets to grow as a flexible packaging provider in 2012 and beyond. These new sales offices will allow us to maintain closer relationships and contacts with the end users of our products, improving our responsiveness and our ability to gather intelligence and feedback.

Industry Overview and Outlook

PRC Package Industry

We manufacture and distribute advanced packaging film products in China. China’s packaging industry has grown steadily since the mid-1980s with one of the highest growth rates in the international packaging market. Domestic consumption has always been considered by the Chinese government as one of the key drivers for national economic growth. Over the past several years, the Chinese government has released a number of industry policies and measures to encourage domestic consumption that would benefit the packaging industry. In July 2008, the Ministry of Finance of China established a fund to support the development of new and innovative products and technologies for the packaging industry, focusing on environmental protection, energy efficiency and renewable applications. According to China Packaging Federation, the Chinese packaging market reached over RMB1.0 trillion (approximately $147.5 billion) in 2009 and is estimated to have reached over RMB1.4 trillion (approximately $216.7billion) in 2011. China is the second largest packaging market in the world since 2008. According to Euromonitor International’s Packaging Industry in China Report in January 2009, the packaging industry became China’s 14th largest industry sector and contributes about 2.5% of the country’s GDP.

Market Trends

With the mild recovery of the global economy, and growing consumer confidence in the Chinese domestic markets, we are cautiously optimistic that consumption of our products will continue to grow. We are experiencing an increase of inquiries from food manufacturers on how to comply with the Food Safety Law that went into effect in 2009. This renewed interest from manufacturers affects our entire breadth of products and we are confident this will lead to an overall improvement in our business. We believe we are well positioned to be the prime beneficiary of increased domestic consumption, a growing world economy, and increased market penetration as the full impact of the Food Safety Law requirements are realized.

We believe there are several positive trends that will continue to accelerate our growth, consumer demand for packaged goods, which offer convenience, quality, aesthetics and lifestyle branding will grow as Chinese consumers find themselves with increasing disposable income and as more purchases are made in supermarkets and away from wet markets and small independent food stores. We are well positioned to take advantage of these trends by providing retail foods and consumer goods manufacturers with beautiful printed flexible packaging.

Rapid Economic Growth and Rising Disposable Income. The growth of the flexible packaging industry is highly correlated with economic growth as the demand for packaging products is driven by improving demographic trends, including living standards and urbanization, as well as expanding industrial output. According to China National Bureau of Statistics, China is one of the fastest growing economies, its GDP having grown rapidly with a compound annual growth rate of 16.0% in the past five years. Per capita disposable income of urban households had a compound annual growth rate of 11.8% over the past ten years and per capita disposable income of rural households had a compound annual growth rate of 9.6% during the same period. China’s economy is expected to continue to grow in the next few years with an average GDP growth forecast of 8.4% from 2009 to 2014 by the World Bank.

High Growth of the Domestic Consumer Sectors. The main customers of the flexible packaging industry are consumer and industrial goods manufacturers that use corrugated paper cartons for packaging and shipping their products, including food and beverage, daily necessities, pharmaceuticals, and consumer goods. Catalyzed by the high growth of per capita disposable income and a series of favorable government policies, retail sales of consumer goods in China have grown rapidly and reached RMB18.4 trillion (approximately $2.8 trillion) in 2011, representing a compound annual growth rate (CAGR) of 17.1% from 2004, according to China National Bureau of Statistics. The continued robust growth in retail sales of consumer goods has had a significant positive impact on the demand for flexible packaging products.

Substitution to Other Packaging Materials Due to Environmental Concerns. With environmental concerns becoming an increasingly important topic around the world, the Chinese government is demanding more environmentally friendly properties in packaging materials. Packaging materials are expected to be energy saving, toxic-free, reusable, degradable and multi-functional. Compared to packaging materials made of metal, plastic, wood or glass, flexible packaging film has always been regarded as relatively “greener packaging” due to its lighter weight and degradable qualifies, along with the ease of storage, shipment and processing.

Products

We produce customized, high-quality and competitively priced products used by manufacturers in a variety of applications, including producers of foods such as baked goods, beverages, candy and confections, dairy, fruits/vegetables and nuts, and consumer goods, like pharmaceuticals, tobacco, cosmetics and compact discs. Our packaging provides protection from tampering and contamination and preserves the texture, flavor and integrity of perishable items. In addition, we provide printing services for a variety of consumer products. Packaged goods require different porosity levels for humidity, gases, as well as fragrance and heat resistance barriers depending on whether the item is edible or a non-food product.

Flexible Packaging Material

We primarily use biaxially-oriented polypropylene (“BOPP”) as the base film from which more sophisticated films, such as Advanced, coated and tobacco films are produced. There are multiple manufacturers of BOPP film in China qualified to meet international standards. BOPP refers to the manufacture of polypropylene films using an orienting system. BOPP is manufactured by three different processes, with resulting films having different properties. BOPP films are widely used in printing, lamination and over-wrap packaging. The main benefits of BOPP films are its stiffness, durability, high tensile strength and clear optics. The film is light-weight, non-toxic, odorless, transparent, glossy, temperature and moisture-resistant, and retains high barrier resistance, making it suitable for many forms of flexible packaging, printing, laminating, and other applications. We sell our products to packaging customers and distributors in China and throughout Asia, and have been expanding out international business in the Middle East, Australia, North America and Europe.

Upon request of our customers we may use different base films to create products customized to our customers’ needs. The base films include: biaxially-oriented polyethylene terephthalate (BoPET), a polyester film made from stretched polyethylene terephthalate (PET) that is used for its high tensile strength, chemical and dimensional stability, transparency, reflectivity and gas and aroma barrier properties; and biaxially-oriented polyamide film (BOPA), a nylon film used for its high tensile strength, high flex-/stress-crack and puncture resistance, barrier to gases, flavors and odors and high resistance to oil, greases, hydrocarbons and chemicals. Each base film can undergo one of three different processes to create films with different properties. A sequential or double bubble process is used for coating the films, in which a base film, generally a BOPP, BoPET or BOPA film is coated with a water-based latex compound. That compound is usually acrylic, Polyvinylidene Chloride (PVDC) or polyvinyl alcohol (PVOH), which enhance the moisture and oxygen barrier properties of the film while retaining its functionality. Films can be single or double coated with co-extruded structures, in transparent, opaque, or metalized varieties. In the metalized variety, the base film is usually coated with aluminum foil, which gives the film stronger insulation and anti-pressure properties.

Coated film is a functional packaging film in which a thin layer of polyolefin-based film is sealed either on one or both sides of the film with a varying type of chemical substance (coating layer). Depending on which coating layer is used, coated films have greater endurance and tensile strength and can be produced in heat-resistant, shrink-wrapped, peelable or other varieties. Coated film is a functional packaging film with moisture and oxygen barrier property, flavor and aroma preservation properties, as well as their superior clarity and printability. We currently produce 15 varieties of regular coated packaging films and can produce irregular coated packaging films according to the requirements of customers. As a result of these capabilities and our technology, we believe we provide the most diverse film product offering in China.

BOPP tobacco film is a box over-wrap film designed to meet the industry requirements for packaging appearance, product freshness and clear optics.

We provide color printing services that consist of surface printing and reverse printing services used mainly by consumer goods manufacturers and beverage companies. We provide printing services to our clients in our effort to provide value-added services and a one-stop-shop experience. Our printing capabilities span a range of products, such as food, drugs, cosmetics and chemicals. We use alcohol-soluble, benzene free printing ink to meet international environmental and safety standards.

Advanced Film

Advanced film is a specialty product derived from BOPP film and embossed with an advanced technology, multi-dimensional insignia that creates eye-catching images and makes it easier for user’s to increase brand identity. We use proprietary technology to develop specialized Advanced film products. Losses from piracy and counterfeiting affect a wide number of industries including: music and video publishing, food, medicine, cosmetics, cigarettes and liquor. Advanced film is generally used in the packaging of high-end cigarettes, DVDs and other frequently imitated or pirated products.

Manufacturing

Our production facilities for packaging film are located in Haikou, Hainan Province and Zhuhai, Guangdong Province in the PRC and our water-based latex production facilities are located in Ningbo, Zhejiang Province. Our production facilities are more fully discussed in Item 2, “Properties.”

Our products have been ISO9001:2000 accredited since 2003. We believe stringent quality control standards are crucial to our success and the continuous growth of our business. In order to maintain such standards, we conduct inspection at all stages during the production process. In that regard, we have adopted a quality management system covering the sourcing of raw materials, each stage of production, the delivery of final products, and post-sales quality control. We also provide employees with continuous training in order to help reduce the frequency of repeated errors. Below chart is our production process.

Our current production capacity consists of:

	·	five coated film lines with a total capacity of 15,000 tons a year;
	·	one BOPP tobacco film production line with a total capacity of 3,500 tons a year;
	·	one BOPP film production line with a total capacity of 7,000 tons a year;
	·	three color printing lines;
	·	four advanced film lines with a total capacity of 2,500 tons a year; and
	·	Two water-based latex reaction kettles with a total capacity of 3,000 tons a year.

Awards and Certifications

Our subsidiary, Shiner Industrial, has received the following awards and certificates, each of which, we believe, is an indication of our achievements, the quality of our products and makes us more attractive to potential customers and therefore a more competitive company both in the local and international markets:

Date	Award/Certificate	Issuing Authority
November 2003 (1)	ISO 9001:2000 Certificate	China Certification Center for Quality Mark

September 2007	Key High-Tech Enterprise of the National Torch Program	Ministry of Science and Technology

January 2010	Awarded as one of the Top Ten Leading Enterprises in China food packaging industry	CNTV.COM, the website for China Network Television

December 2010	Designated as “Advanced Enterprise of Chinese Plastic Industry”	China Packaging Federation

December 2010	2010 China Packaging Brand Excellence Award	China Packaging Federation
December 2010	Key High-Tech Enterprise of the National Torch Program	Ministry of Science and Technology

May 2011	Packaging Film Public R&D Platform	Hainan Provincial Department of Commerce

July 2011	Hainan independent innovation excellent research and development team	Hainan Industry and Information Department

September 2011	High and New Technology Enterprise Certificate	Provincial Science and Technology Department

(1)	ISO 9000 certification has become an international reference for quality management requirements in business-to-business dealings. This certification enables us to compete on many more markets around the world and provides our customers with assurances about our quality, safety and reliability.

Sales and Marketing

Our sales and marketing strategy focuses on establishing and maintaining a reputation for consistent and stable production of innovative high quality packaging film at competitive prices, providing dependable and efficient customer support services, and building stable and enduring relationships with our customers.

We sell our packaging film and services to dozens of food, beverage, and consumer goods manufacturers throughout the world, with a focus on the PRC market. Our customers are located in 20 provinces, three municipalities and three autonomous regions in the PRC. Our sales group is divided into two teams, a domestic sales team focusing on the PRC market and an international sales team focusing on the European, North American, Southeast Asian, Australasian and Middle Eastern markets. We currently have 30 full time sales representatives servicing our domestic and international customers. The majority of our sales professionals are university graduates and 10 of them have more than ten years industry experience. We seek to expand our market share in the European and North American markets that we believe possess growth potential. Our domestic sales team is divided into five major sales regions in the PRC based on the location of our customers - Guangdong and Guangxi, Northwest China, Southwest China, Northeast China and Eastern China.

Our sales representatives maintain regular contact with customers to track product performance to ensure customer satisfaction. They are responsible for handling inquiries, processing and allocating orders to our production team, confirming orders and product specifications from customers, and providing after-sales services such as gathering market information and conducting surveys. In addition, these sales personnel are also responsible for handling ad hoc product inquiries and for cultivating relationships with potential new customers. Through regular contact with our customers, we are able to ascertain the current and future demand for existing products and the potential demand for new products.

In the international market, our sales team has adopted a strategic regional sales and marketing system and established an extensive sales and marketing network throughout North America, Europe and Southeast Asia. We have entered into preliminary letters of intent with potential representatives and agents in Southeast Asia, Europe, and the United States in relation to marketing and distribution of our products.

We have refocused our marketing and sales strategy to match our customer focused business strategy. Our marketing activities are geared towards supporting the activities of our sales team by keeping abreast of industry trends, interacting with existing customers, cultivating new relationships and building brand awareness. By visiting our customers in the PRC regularly and nurturing close relationships it enables us to identify market trends, understand customers’ evolving needs, adjust and manage our production processes and proactively resolve customers’ issues and concerns. These regular contacts, visits, and interviews allow us to gain insight into the latest market trends and to capture business opportunities ahead of our competitors. We also distribute marketing materials we produce from time to time to our customers in person during such visits or otherwise by email or mail. Because of the attractive location of our plant and facilities in Haikou on Hainan Island, generally known as the “Hawaii” of China, we frequently invite potential customers to visit and inspect our operations first-hand and we also host many of the annual tobacco and other large industry management conventions.

We participate regularly in industry exhibitions and international trade fairs held in the PRC and internationally. To attract new customers and to maintain brand awareness in the industry, we regularly advertise our Company and products in industry magazines and on our own website. Members of our senior management team are frequent speakers at industry events and also give interviews to industry magazines from time to time to raise our profile.

Raw Materials and Suppliers

Major raw materials required in the manufacturing processes for our packaging products include petroleum-based resins and mixing chemicals, which are primarily supplied to us by large chemical companies. For these raw materials, we generally maintain purchase contracts for a period of up to six months. However, for many other materials, we can generally choose from multiple producers and such orders are placed on an “as-needed” monthly basis.

As all BOPP film is petroleum based, the effects of any short-term fluctuations in the price of oil will be averaged into the earnings over the period due to the cyclical nature of production, inventory and sales. Any long-term increases in the price of oil will have an adverse impact on our earnings. However, as there are currently no synthetics or substitute materials available in the market, management believes that any long-term increase in the price of oil will be made up for by an increase in sale prices by all film producers.

The base materials for many of Shiner Industrial’s products are derived from petroleum. Approximately 50% of the raw materials for Shiner Industrial’s BOPP tobacco film operation are imported from multi-national chemical companies such as Sumitomo Chemical Co., Ltd. In contrast, only about 8% of the raw materials for our coated films are imported because the current base BOPP film can be supplied through qualified domestic suppliers in China. All of the raw materials for our color printing operations are purchased domestically in China. There are numerous suppliers for these raw materials. We generally select a supplier based on the best combination of quality, price and service. There are no raw materials used in our color printing production process that are provided by any sole supplier.

BOPP is a major raw material for our flexible packaging films; our Zhuhai BOPP film line produces sufficient basic BOPP film to satisfy our coated film production needs. As a result, in 2011 we were able to reduce our raw material costs by approximately $75per metric ton.

In general, we do not have long term contracts with our suppliers. We maintain relationships with two to three approved suppliers for each raw material purchased and generally experience no delay in meeting our production needs on a timely basis. Currently, raw materials are readily available and we expect to continue to successfully manage raw material supplies without significant supply interruptions. None of our suppliers accounted for more than 10% of raw material purchases in 2011.

Customers

Our customers are composed mainly of consumer products manufacturers, distributors, printers and packaging industry distributers. About 80% of our customers are in China, with the remainder in Southeast Asia, Europe and North America. While most of our products are sold in the international market, our color printing business mainly serves customers in China who are looking for one-stop service to fulfill their printing and packaging needs by a single vendor.

Flexible Packaging Material

We are the leading producer of coated film in China, with approximately 70% market share of the Chinese domestic coated film output in 2011. Our domestic competitors exist only in the form of smaller rivals with an average annual capacity of several hundred metric tons. Approximately 70% of our sales are made directly to customers and the remaining 30% of our sales are made through domestic distributors servicing one-off, small-scale packaging operations. We believe we are the leading producer of coated films nationally, and enjoy a reputation both for first-rate quality and service. We maintain contracts with our larger customers generally for periods ranging from six months to one year. Smaller customers, those that constitute less than 2% of our overall sales are subject to pre-payment on all orders. Our largest domestic customer, Xufuji Co., Ltd., a manufacturer of cakes and snack foods, accounted for approximately 6% of our coated sales in China and 2% of our total sales in 2011.

During 2011, our top 10 customers accounted for approximately 70% of our total international coated film sales with an average sale of $400,000 per customer. Approximately 40% of our exported coated film is sold to printing and packaging companies located in Australia with the remainder sold to companies located in the United States, Europe, New Zealand and Turkey. Approximately 50% of our exported coated film sales are made to the “converter” industry, which represents mass packaging operations mainly in Southeast Asia and Eastern Europe that serve as packaging hubs for products sold in the U.S. and European markets. Rolls of finished coated film are sent to the converters where they print, cut, fold, and insert re-sealable zips to form pouches for items such as dried fruits, nuts, beverages and dairy products like cheese and yogurt. Our largest international customer, Impak Films Pty. Ltd. (“Impak”), an Australian packaging distributor, accounted for approximately 10% of our coated film sales and 3% of our total sales in 2011.

As tobacco remains one of the state-controlled industries in China, all of our domestic BOPP tobacco film sales are made to provincial cigarette manufacturers who can buy only from pre-approved domestic manufacturers meeting the quality and technical specifications as well as the standard price requirements of the Chinese government. We currently sell our BOPP tobacco film to 28 of 32 provincial cigarette manufacturers (representing approximately 70% of this market) and have contracts to sell over 5,000 metric tons of film per year to the state owned cigarette company of China.

The main customers of our color printing business are brand-name food and commodity companies in China that have strict requirements for quality and service. We believe our customers are also attracted to the one-stop service that we offer by fulfilling both their packaging film and printing requirements. Our largest customer, Chun Guang Foodstuff Co., Ltd., accounted for 34% of color printing sales in 2011.

Advanced Film

We introduced Advanced film products in 2005 as a superior alternative to the industry’s hologram printed films. Our largest customer in the domestic market is Hainan Yeshu Group, and our largest customer in the international market is Vietnam Tobacco Imports and Exports Co. (“Vintaba”), the tobacco production company of the Government of Vietnam. Our Advanced product sales were approximately $8.1 million in 2011, of which Vintaba accounted for approximately 17.3% and the Hainan Yeshu Group accounted for approximately 11% of these sales. A majority of our customers are brand name producers seeking to protect copyrights and reduce the occurrence of pirated product. According to the American Film Institute, the Chinese film market suffers a loss of $2.7 billion each year due to piracy, including the annual loss of $1.6 billion from piracy of CDs and DVDs.

At the Sixth Global Congress to Combat Counterfeiting & Piracy (February 2011), International Chamber of Commerce Secretary General Jean-Guy Carrier reported that “the total impact of illicit trade in “fakes” is staggering, with more than $1.0 trillion in annual losses to global economies, governments and consumers and potentially more than two million jobs at risk.” Reports from the Congress showed that the trade of counterfeit cigarettes currently accounts for 6% of the global tobacco trading and manufacturing and selling counterfeit cigarettes in the global market has reached approximately 150 billion units per year. According to new research of the Business Software Alliance, the percentage of counterfeit software in the global market increased to 43% in 2010 from the 41% in 2008, resulting in more than $50 billion in losses to the industry.

Research and Development

We highly value our strong R&D support team. Our R&D team includes 21 engineers and technicians with each person holding a bachelor or other advanced degree and most personnel have direct or related field experience. Our R&D team strives to improve our production process, product quality and product compatibility to reinforce our competitive advantage in the market. In particular, our R&D efforts are focused on: (i) identifying processes that improve our cost-efficiency and our customers’ production efficiency; (ii) identifying alternative production materials to generate comparable performance at a lower cost to our customers

Our R&D team is the first point of contact for customers in the event of quality related concerns and assists customers with identifying and resolving problems, offering effective and efficient solutions and facilitating discussion with our production team. Our R&D team has a long track record of experience in the flexible packaging industry and is capable of translating customer requests into solutions.

We built Hainan Film Engineering Center in Haikou, which has four well-equipped professional laboratories. In addition, we also set up R&D centers in both of our Hainan and Zhuhai locations. Our engineers have designed two of our coated film production lines. By designing our own production lines, we intend to reduce our fixed asset investment by approximately 35% and better meet our specific manufacturing needs. The director of our research department has over 15 years experience in the industry.

During 2010 and 2011, we spent approximately $2.8 and $1.4 million respectively, on R&D projects with the majority expended on new product trials and experimental manufacturing techniques, including fog prevention and high heat shrinkable films. In 2011, we spent approximately $2,8 million in the development of functional coatings of coated films and functional BOPP film. Functional coatings and film are designed to meet certain functional requirements of our customers and market, such as improved sealing and barrier properties. All R&D costs are funded through our operating cash flow and are expensed as incurred.

In addition to in-house R&D, we have sponsored several projects with research institutions and universities in China to which we retain all proprietary rights for the research funded by us. We also have a formal agreement with China’s Science & Technology University through 2015 for which we have proprietary rights to all findings based upon dedicated research conducted on our behalf. We also have informal alliances with Fudan University in Shanghai, Sun Yat Sen University (Zhong Shan) in Guangzhou and Tsinghua University in Beijing.

Intellectual Property

We hold 19 patents on both products and production equipment that have been issued by the State Intellectual Property Office of China.

Name of Patents	Patent No.	Issue Date
Acrylic Acid Coated Film & Its Manufacturing Methods	ZL2005100777111.3	Jan 31,2007
BOPP Tobacco Film & Its Manufacturing Methods	ZL03102455.6	Jan 31,2007
BOPP Shrinkable Monofilm & Its Manufacturing Methods	ZL03149870.1	Nov 15,2006
Production System of Microwave Drying Coated Film	ZL03149871.X	March 22,2006
Heat-sealed Printing Films	ZL03242094.3	May 12,2004
Printing Films for Tobacco Packaging	ZL02244326.6	April 2,2003
Coating Device for Films	ZL03265702.1	Aug 11,2004
A Kind of Reverse Gravure Coating Device	ZL03263561.3	Aug 4,2004
A Kind of Packaging Film	ZL02285887.3	Dec 3,2003
Laser Hologram Advanced Films	ZL02282170.8	Aug 4,2004
Color Fiber Advanced Films	ZL01269865.2	Dec 4,2002
Molding Equipment for Advanced Shrinkable Films	ZL01226489.X	May 15,2002
A Kind of Coated Film& Its Manufacturing Methods	ZL200510075370.2	May 16,2007
BOPP Shrinkable Tobacco film & Its Manufacturing Methods	ZL01118669.0	May 14, 2008
Manufacturing Methods for Heat Shrinkable Coated Films	031498728	March 27, 2009
A Kind of Heat-sealed BOPP Film	200810177464.4	March 24, 2010
Coated Film Latex for Low Temperature Heat-sealed High Barrier Food Packaging &Its Manufacturing Methods	ZL200810120694.7	February 10, 2010
A Modified PVOH Coated Film for Print &Its Manufacturing Methods	ZL201010208100.5	January 11, 2012
Methods for Producing Coated Film	US8007873B2	August 30, 2011

We have additional products and production equipment for which 10 patent applications are currently pending which we expect to receive approval for in 2011. Our current patents expire between 2012 and 2030. We also have two trademarks issued by the State Intellectual Property Office of China.

Employees

We have a centralized labor management system for our operating subsidiaries. Labor and employment affairs of each subsidiary are managed by our central human resources department. Currently, we have 470 full-time, and no part-time, employees.

The following table sets forth the number of our employees by function.

Department	Number of Employees
Executives		17
R&D		21
Human Resources		5
Manufacturing		391
Finance		14
Marketing & Sales		19
Other		3
Total		470

Each employee must enter into multiple employment contracts, including a non-competition agreement, which are then filed with the municipal government. All employees receive a base monthly salary. Executive employees are also entitled to a year-end bonus based upon our overall performance results, seniority and individual performance and contribution to the Company. Production employees are entitled to a monthly bonus calculated on the basis of the quality of the products produced, and their respective contribution to volume, safe production, correct use of equipment and energy saving. Our production employees are not subject to collective bargaining agreements. However, we maintain a satisfactory working relationship with our employees, and we have not experienced any significant labor disputes or any difficulty in recruiting staff for our operations.

Our employees in China participate in a state pension plan mandated by Chinese municipal and provincial governments. Benefits include social security, pension benefits, and medical insurance. The Company contributes approximately 37% of annual salaries to the pension plan on behalf of all qualified employees.

We believe that we are in material compliance with relevant PRC labor laws.

Regulation

The Food Safety Law of the PRC (“Food Safety Law”) was enacted on February 28, 2009 by the Standing Committee of the National People’s Congress and became effective on June 1, 2009. The Implementation Regulations of the Food Safety Law (the “Implementation Regulations”) were subsequently promulgated on July 20, 2009 and were immediately effective.

Pursuant to the Food Safety Law and its Implementation Regulations, the Chinese government regulates food manufacturers (producers and processors) and operators (distributors and caterers), as well as manufacturers of (i) food additives, (ii) packaging materials, containers, detergents and disinfectants used with food and (iii) tools and equipment used in production and processing of food. Under this law, manufacturers who are engaged in the production of food, food additives and food related products must comply with applicable food safety standards and must satisfy inspection and approval procedures with regard to their products before sending them into the market. In addition, food manufacturers are required to check business permits and product qualification certificates of their suppliers from whom they purchase food materials, additives and related products and to inspect such products to ensure that they conform to applicable food safety standards. Any violation of the Food Safety Law and its Implementation Regulations may result in legal liabilities, such as warnings, fines, damages, or even in criminal liabilities for serious violations.

Shiner has been appointed a “Standards Creator” in Coated Film by the Standardization Administration of the PRC. As such, Shiner has been working closely with various government agencies to assist the regulatory authorities in drafting new packaging guidelines that that will help ensure a safe food supply as outlined in the Food Safety Law. It is our belief that large domestic Chinese food manufacturers will utilize coated film packaging to meet the requirements detailed in the Food Safety Law standards.

Additionally, our products are subject to regulation by agencies of the provincial government of Haikou responsible for food packaging and hygiene and the regulatory schemes of international governmental authorities governing the food safety, quality and hygiene of our customers. The safety, quality and hygiene requirements of many of our customers, especially those located internationally, exceed government requirements in China. Our PVDC and all coated films have already met FDA requirements, as well as the requirements for food products packaging sold in the European Economic Community (“EEC”).

Business registrations, our production processes, and certain products are certified on a regular basis and must be in compliance with the laws, rules and regulations of various governments and industry agencies. Our subsidiaries have been assessed and certified as meeting the requirements of ISO 9001:2000 for designing and manufacturing BOPP films, PVDC coated film, BOPP laser holographic Advanced film for packaging by the SGS Group.

We are also subject to China’s National Environmental Protection Law as well as a number of other national and local laws and regulations regarding pollutant discharge for air, water and noise pollution. We believe we are in compliance with such laws and regulations.

In 2011, we incurred expenses of approximately $15,000, to comply with governmental and environmental regulations in China.

Competition

We believe our expertise in manufacturing specialty films provides us a distinct advantage over competitors in China, most of whom are focused mainly on commodity films, such as BOPP, BoPET, PVC and BOPA. We are the leading producer of coated films in China with limited domestic competition only in the form of smaller rivals with an average annual capacity of several hundred metric tons. Internationally, we face competition from industry leaders such as DuPont Energy Co., Innovia Films Ltd. and Exxon Mobil Corporation. Each of these corporations has much larger production capacity than us and has a strong reputation as they have significant experience in the coated films market.

As tobacco remains a state-owned and operated industry in China, the government buys only from approved PRC domestic vendors and competition exists only in the form of other domestic film companies. In addition, each province is required to maintain two to three suppliers. Thus, competition among qualified players is limited. In the domestic market there are several qualified large producers including: Jiangsu Zhongda New Material Group Co., Ltd., Foshan Plastics Group Co., Ltd, Zhanjiang Packaging Enterprises Ltd., Yunnan Kunlene Film Industries Co., Ltd., Yunnan Hongta Plastics Co., Ltd., Hubei Firsta Packaging Co., Ltd. As we have attained certification as a government supplier, a certain level of annual sales is guaranteed to us from the government of China. In the international market, we face competition from large multi-nationals as well as Southeast Asian and Japanese firms. We believe we have a price advantage over our Western competitors due to our lower production costs.

Our Advanced film is unique; as such we do not have a direct competitor for this product. However, established international producers such as Applied Extrusion Technologies, Inc. and Innovia Films Ltd. do produce their own Advanced films based mainly on printed holograms, which are relatively simple to duplicate. Rather than direct competition, we are focusing on marketing efforts on awareness and educating buyers as to the superior quality of our products over these hologram-based counterfeit films.

We are the largest color printing service provider in Hainan province and rank approximately 20th in the overall Chinese market. Due to low operating costs, the printing industry is highly fragmented with approximately 4,000 soft packaging and printing companies in China. As a result, competition in China is fierce and industry margins are low. Accordingly, we maintain our printing services mainly as a convenience for current film customers who are more concerned with quality, service, and one-stop printing and packaging service than with price.

The primary barriers to enter the market include obtaining a printing license and significant capital investment in large-scale production facilities. We believe our competitive advantages over domestic players are better cost-efficiencies due to economies of scale and significant order volumes, long standing relationships with customers, advanced technologies and equipment deployed in our manufacturing process, high product quality with competitive cost structure and a well-known brand name. Our competitive advantages over international players include significant production capacity, a large existing customer base, the flexibility to customize our products, better local knowledge and connections in the PRC, lower price resulting from our lower cost structure and competitive product quality.

Competitive Strengths

We believe we are able to effectively compete in both the domestic Chinese and international markets by means of proven quality, cost advantages and a service team that supports our customers before, during and after the sale process in order to build long-term customer relationships. Our customer-oriented perspective permeates each business unit and is largely responsible for our ability to penetrate new markets and successfully build on sales to new customers.

Established long-term relationships with reputable customers in diversified end markets. We have established an extensive customer base in a wide variety of industries, including food, beverage, cigarette, pharmaceuticals, chemicals, and other consumer and industrial goods. We believe this wide range of end markets reflects the strength of our experience and reputation as a qualified flexible packaging and advanced film producer, as well as the broad range of available markets for our products. Many of our customers are PRC’s Top 500 enterprises, and we believe we are well positioned to benefit from our established customer relationships.

Ability to provide customized products and solutions. As part of our differentiation strategy, we work closely with customers to understand and design innovative products based on our ability to formulate different blends of resins and additives to produce film with specific properties for our customers based on their unique requirements. This strategic advantage is difficult for our competitors to duplicate given the technological and manufacturing flexibility that it demands. As a result of our diverse, high quality product offering, we have been able to increase pricing of our certain coated film products.

One-stop service. We are able save customers both lead-time and costs by providing one-stop service in which we not only sell the film but also develop the production processes that produce the end packaging product.

Advanced production facilities and stringent quality control. We continually invest in our production capabilities and furnish our facilities with advanced equipment. Our products have been ISO9001:2000 accredited since 2003. We believe stringent quality control standards are crucial to our success and the continuous growth of our business. In order to maintain such standards, we conduct inspection at all stages during the production process. In that regard, we have adopted a quality management system covering the sourcing of raw materials, each stage of production, the delivery of final products, and post-sales quality control. We also provide employees with continuous training in order to help reduce the frequency of repeated errors.

Strong R&D capabilities. We have an experienced R&D team of 21 professionals. The team has successfully developed new products and technologies, which have led to 16 patents and 10 pending patent applications. We also work with reputable academic and research institutions to undertake specific R&D projects. In 2006, we entered into a five-year research agreement with China’s Science & Technology University. Under the terms of this agreement, six professors, all holding advanced degrees, work in conjunction with our R&D team. Shiner owns the proprietary rights to all findings to dedicated research projects which are undertaken at our request. We pay the university estimated fees of $12,850 annually under this agreement. This agreement was renewed in 2010 for an additional five years on the same terms.

ITEM 1A. RISK FACTORS.

An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this report, before making an investment decision. If any of the following risks actually occurs, our business, financial condition or results of operations could suffer. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. You should read the section entitled “Special Note Regarding Forward-Looking Statements” above for a discussion of what types of statements are forward-looking statements, as well as the significance of such statements in the context of this report.

RISKS RELATED TO OUR BUSINESS

We cannot be certain that our product innovations and marketing successes will continue.

We believe our past performance has been based on, and our future success will depend upon, in part, our ability to continue to improve our existing products through product innovation and to develop, market and produce new products. We cannot assure you that we will be successful in the introduction, marketing and production of new products or product innovations, or that we will develop and introduce in a timely manner innovations to our existing products which satisfy customer needs or achieve market acceptance. Although we have developed products that have met customers’ requirements in the past, there is no assurance that any of our R&D efforts will necessarily lead to any new or enhanced products or generate sufficient market share to justify commercialization. We must continually improve our current products and develop and introduce new or enhanced products that address the requirements of our customers and are competitive in terms of functionality, performance, quality and price in order to maintain and increase our market share. If our new products are unable to gain market acceptance, we would be forced to write-off the related inventory and would not be able to generate future revenue from our investment in R&D. In such event, we would be unable to increase our market share and achieve and sustain profitability. Our failure to develop new products and introduce them successfully and in a timely manner could harm our ability to grow our business and could have a material adverse effect on our business, results of operations and financial condition.

Our Advanced technology may not satisfy the changing needs of our customers.

With any Advanced product authentication technology, including the technology of our current and proposed products, there are risks that the technology may not successfully address all of our customers’ needs. While we have already established successful relationships with Chinese customers with regard to our products, our customers’ ultimate needs may change or vary, thus introducing variables which may affect the ability of our proposed products to address all of our customers’ ultimate technology needs in an economically feasible manner.

Our growth strategy and future success depends upon commercial acceptance of products incorporating technologies we have developed and are continuing to develop. Technological trends have had and will continue to have a significant impact on our business. Our results of operations and ability to remain competitive are largely based upon our ability to accurately anticipate customer and market requirements. Our success in developing, introducing and selling new and enhanced products depends upon a variety of factors, including:

accurate technology and product selection;

timely and efficient completion of product design and treatment;

timely and efficient implementation of manufacturing processes;

product performance; and

product support and effective sales and marketing.

We may not be able to accurately forecast or respond to commercial and technological trends in the industries in which we operate.

We may not be able to keep pace with rapid technological changes in the Advanced product industry.

The Advanced product authentication industry is a relatively new industry and market, especially in China and other parts of Asia, and continues to evolve in terms of customer/market needs, applications, and technology. We believe we have hired or engaged personnel and outside consultants who have experience and are recognized within the industry to be experts in the Advanced product authentication industry. With respect to technology, while we continue to seek out and develop “next generation” technology through acquisition, strategic partnerships, and our own R&D, there is no guarantee that we will be able to keep pace with technological developments and market demands in this evolving industry and market. Technological changes, process improvements, or operating improvements that could adversely affect us include:

development of new technologies by our competitors or counterfeiters;

changes in product requirements of our customers; and

improvements in the alternatives to our technologies.

We may not have sufficient funds to devote to R&D, or our R&D efforts may not be successful in developing products in the time, or with the characteristics, necessary to meet customer needs. If we do not adapt to such changes or improvements, our competitive position, operations and prospects would be materially affected.

Intense competition in the Advanced and packaging markets may adversely affect our operating results.

We operate in highly competitive and rapidly evolving fields, and new developments are expected to continue at a rapid pace. We believe there are few barriers to entry into many of our markets. As a result, we may experience competition resulting from new manufacturers of various types of film in our product lines. Competitors may succeed in developing alternative technologies and products that are more effective, easier to use or less expensive than those which have been or are being developed by us or that would render our technology and products obsolete and non-competitive. Any of these actions by our competitors could adversely affect our sales.

In addition, we face competition from a substantial number of companies, which sell similar and substitute packaging products. Although we believe we have developed strategic relationships in China to best penetrate China’s market, we face competition from other providers, some of which have greater financial and human resources, have had a longer operating history, and have greater name recognition than we do. Many of these competitors have substantially greater financial and technical resources, production and marketing capabilities, and may have extensive production facilities, well-developed sales and marketing staffs and substantial financial resources. Competitive products are also available from a number of local manufacturers. This results in competition that is highly price sensitive. We also compete on the basis of quality, service, timely delivery and differentiation of product properties.

An increase in competition could result in material selling price reductions or loss of our market share. This could materially adversely affect our operations and financial condition.

We are a major purchaser of many commodities that we use for raw materials in the manufacturing process of our products, and price changes for the commodities we depend on may adversely affect our profitability.

With the rapid growth of China’s economy, the demand for certain raw materials is great while the supply may be more limited. This may affect our ability to secure the necessary raw materials we need in a cost-effective manner, including chemicals and other items needed for production of our products at the volume of purchase orders that we anticipate receiving.

For example, the PET resin used in our coated film products is currently used as a raw material in China’s textile industry, and the market prices of PET resin may fluctuate due to changes in supply and demand conditions in that industry. Any sudden shortage of supply of, or significant increase in demand for, PET resin and additives may result in higher market prices and thereby increase our cost of sales. The prices of PET resin and additives are, to a certain extent, affected by the price movement of crude oil.

If there is a significant increase in the cost of our raw materials and we are unable to pass on such increase to our customers on a timely basis or at all, our profit margins and results of operations will be adversely affected.

Petroleum prices impact our operating results.

Petroleum is the prime ingredient in many plastics that we use to make many of our products. We estimate that an increase in the price of crude oil of $10.00 per barrel could cause our gross margin to decline by up to 6% on the sale of these products. There has been some increase in the cost of our raw materials as a result of an increase in crude oil prices throughout the year. Current political unrest in the Middle East has resulted in an increase in the price of crude oil and may result in further increases in the price of crude oil.

We may not be able to adequately protect our technology and other proprietary rights.

Our success will depend in part on our ability to obtain and protect our products, methods, processes and other technologies, to preserve our trade secrets, and to operate without infringing on the proprietary rights of third parties both domestically in China and abroad. We rely on patents, trademarks and licenses to protect our intellectual property. We also have patent applications pending in China, and have worked and continue to work closely with China’s patent officials to preserve our intellectual property rights. If we are unable to adequately protect or enforce our intellectual property rights with respect to our products, methods, processes and other technologies, our prospects for revenue growth could be significantly diminished. Additionally, if our products, methods, processes and other technologies infringe on the intellectual property rights of other parties, we could incur substantial costs.

Our ability to compete in our markets and to achieve future revenue growth will depend, in significant part, on our ability to protect our proprietary technology and operate without infringing upon the intellectual property rights of others. The legal regime in China for the protection of intellectual property rights is still at its early stage of development. Intellectual property protection became a national effort in China in 1979 when China adopted its first statute on the protection of trademarks. Since then, China has adopted its Patent Law, Trademark Law and Copyright Law and promulgated related regulations such as Regulation on Computer Software Protection, Regulation on the Protection of Layout Designs of Integrated Circuits and Regulation on Internet Domain Names. China has also acceded to various international treaties and conventions in this area, such as the Paris Convention for the Protection of Industrial Property, Patent Cooperation Treaty, Madrid Agreement and its Protocol Concerning the International Registration of Marks. In addition, when China became a party to the World Trade Organization in 2001, China amended many of its laws and regulations to comply with the Agreement on Trade-Related Aspects of Intellectual Property Rights. Despite many laws and regulations promulgated and other efforts made by China over the years to tighten up its regulation and protection of intellectual property rights, private parties may not enjoy intellectual property rights in China to the same extent as they would in many Western countries, including the US, and enforcement of such laws and regulations in China have not achieved the levels reached in those countries. Both the administrative agencies and the court system in China are not well-equipped to deal with violations or handle the nuances and complexities between compliant technological innovation and non-compliant infringement.

There is no assurance that the measures that we have put into place to protect our intellectual property rights will be sufficient. As the number of patents, trademarks, copyrights and other intellectual property rights in our industry increases, and as the coverage of these rights and the functionality of the products in the market further overlap, we believe business entities in our industry may face more frequent infringement claims. Litigation to enforce our intellectual property rights could result in substantial costs and may not be successful. If we are not able to successfully defend our intellectual property rights, we might lose rights to technology that we need to conduct and develop our business. This may seriously harm our business, operating results and financial condition, and enable our competitors to use our intellectual property to compete against us.

Entry of new BOPP and Advanced film producers in China may increase the supply of, and decrease the prices of, BOPP and Advanced film in the industry, and hence lead to a decline in our profit margins.

We believe we are currently one of the few producers of BOPP and Advanced film in China with R&D capabilities. Our past financial performance is attributable to our market position in the industry. Over time, there may be new entrants into our industry, whether as a result of increased access to the production technology of BOPP and Advanced film or otherwise. Accordingly, we may experience increased competition, and the entry of new BOPP and Advanced producers will also lead to an increase in the industry supply of BOPP and Advanced film resulting in more competitive pricing. We may have to price our products in response to competitive market conditions and this may lead to a decline in our profit margins. In the event that we are unable to successfully compete or retain effective control over the pricing of our products, our profit margins will decrease and our revenues and net income may also decrease.

In addition, China has gradually lifted its import restrictions, lowered import tariffs and relaxed foreign investment restrictions after its entry into the World Trade Organization in December 2001. This may lead to increased competition from foreign companies in our industry, some of which are significantly larger and financially stronger than us. If we fail to compete effectively with these companies in the future, our current business and future growth potential could be adversely affected.

With respect to our BOPP tobacco film and other flexible packaging materials, we have a large amount of sales concentrated in a small number of customers.

Any decrease in the demand for our flexible packaging materials, particularly our BOPP tobacco film, will significantly affect our financial performance. Although demand for our BOPP tobacco film has gradually been increasing, any significant fall in the consumption of tobacco, in particular, whether as a result of health concerns or otherwise, could result in a decline in the sales of our products and adversely impact our financial condition, business and operation.

A disruption in the supply of utilities, fire or other calamity at our manufacturing plants would disrupt production of our products and adversely affect our sales.

Our films are manufactured solely at our production facilities located in Haikou City and Zhuhai City in China. While we have not experienced any calamities in the past which disrupted production, any disruption in the supply of utilities, in particular, electricity or power supply or any outbreak of fire, flood or other calamity resulting in significant damage at our facilities, would severely affect our production capabilities. As a result, we could incur substantial liabilities that could reduce or eliminate the funds available for product development, or result in a loss of equipment and properties. While we maintain insurance policies covering losses with respect to damage to our properties, machinery and inventories of raw materials and products, we cannot assure you that our insurance would be sufficient to cover all of our potential losses.

We have limited experience in operating outside mainland China, and failure to achieve our international marketing and sales strategy may have an adverse effect on our business growth in the future.

Our future growth depends, to a considerable extent, on our ability to develop both the domestic and overseas markets. We are currently exploring new business opportunities outside mainland China for our products. We have a limited number of customers outside China, mainly in the US and Europe. However, we have limited experience in operating outside mainland China, including dealing with foreign regulatory environments and market practices, and cannot guarantee that we will be able to penetrate any international market. In connection with our initial efforts to expand overseas, we have encountered many obstacles, including cultural and linguistic differences, difficulties in keeping abreast of market, business and technical developments in foreign jurisdictions, and political and social disturbances. Failure in the development of international markets may have an adverse effect on our business growth in the future.

Compliance with the Sarbanes-Oxley Act of 2002 and related corporate governance and public disclosure requirements have resulted in significant additional expense.

Changing laws, regulations, and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and the associated SEC regulations and Nasdaq rules, have resulted in significant additional expense as well as a diversion of management time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new or changed laws, regulations, and standards differ from the activities intended by regulatory or governing bodies, we might be subject to lawsuits or sanctions or investigation by regulatory authorities, such as the SEC or Nasdaq, and our reputation may be harmed.

We are subject to many environmental and safety regulations that may result in unanticipated costs or liabilities, that could reduce our profitability.

We are subject to extensive federal, local and foreign laws, regulations, rules and ordinances relating to pollution, protection of the environment and the generation, storage, handling, transportation, treatment, disposal and remediation of hazardous substances and waste materials. Actual or alleged violations of environmental laws or permit requirements could result in restrictions or prohibitions on plant operations, substantial civil or criminal sanctions, as well as, under some environmental laws, the assessment of strict liability and/or joint and several liability. Moreover, changes in environmental regulations could inhibit or interrupt our operations, or require us to modify our facilities or operations. Accordingly, environmental or regulatory matters may cause us to incur significant unanticipated losses, costs or liabilities that could reduce our profitability.

In addition, we could incur significant expenditures in order to comply with existing or future environmental or safety laws. Capital expenditures and costs relating to environmental or safety matters will be subject to evolving regulatory requirements and will depend on the timing of the promulgation and enforcement of specific standards which impose requirements on our operations. Capital expenditures and costs beyond those currently anticipated may therefore be required under existing or future environmental or safety laws.

Furthermore, we may be liable for the costs of investigating and cleaning up environmental contamination on or from our properties or at off-site locations where we disposed of or arranged for the disposal or treatment of hazardous materials or from disposal activities that pre-dated our purchase of our businesses. We may therefore incur additional costs and expenditures beyond those currently anticipated to address all such known and unknown situations under existing and future environmental laws. In 2011, we incurred expenses of approximately $15,000 to comply with environmental and safety laws.

Failure to adequately comply with hygiene and food safety standards set by the PRC may disrupt our operations.

In accordance with the laws and regulations of the PRC, we are required to comply with applicable hygiene and food safety standards, including the standards set forth in the Food Safety Law, and any rules and regulations promulgated by the central Chinese government or local provincial governments thereunder. Failure to comply with these laws, rules and regulations, could require us to temporarily or permanently suspend some or all of our production operations, which could disrupt our operations and adversely affect our revenues and profitability.

PRC food safety and hygiene laws may become more onerous, which may adversely affect our operations and financial performance and lead to an increase in our costs which we may be unable to pass on to our customers.

As a manufacturer of food-related products, we are subject to extensive governmental regulation. For example, we are subject to the Food Safety Law (“FSL”) and the rules and regulations promulgated thereunder. We cannot assure stockholders that in the future the PRC food safety and hygiene laws will not become more onerous, providing for stricter and more comprehensive monitoring and regulation of food-related product manufacturers, which may lead to an increase in our costs of complying with such regulations resulting in a material adverse effect on its results of operations. In 2011, we incurred expenses of approximately $30,000 to comply with the FSL.

Concerns with the safety and quality of packaged food products could cause consumers to avoid such products and our customers to stop producing packaged food products.

We could be adversely affected if consumers lose confidence in the safety and quality of packaged food products. Adverse publicity about these types of concerns, such as the publicity concerning the use of the substance melamine in milk and infant formula, may discourage consumers from buying packaged food products, which would reduce or eliminate the need for our food packaging, causing production disruptions. Any negative change in customer perceptions about the safety and quality of packaged food products could adversely affect our business and financial condition.

Increased consumption tax on cigarettes may materially impact our tobacco film sales

On May 1, 2009, the central Chinese government raised the consumption tax on cigarettes in an effort to curb smoking and increase state revenues. The consumption tax was raised by between 6% and 11% and is based on the sales price of the cigarettes – the higher the sales price the higher the percentage of consumption tax. This tax hike, together with a new 5% tax on cigarette wholesalers, which became effective on May 1, 2009, may negatively impact the cigarette manufacturing business in China and, depending on the severity of the impact thereon, may create a severe softening of our sales in the tobacco film market. Coupled with the decrease in our sales as a result of the economic crisis, the new tobacco-related taxes may have a material adverse effect on both our sales price and volume for the foreseeable future.

Deterioration of economic conditions could negatively impact our business.

Our business may be adversely affected by changes in global economic conditions, including inflation, interest rates, availability of capital markets, consumer spending rates, energy availability and costs (including fuel surcharges) and the effects of governmental initiatives to manage economic conditions. Any such changes could adversely affect the demand for our products or the cost and availability of our needed raw materials, thereby negatively affecting our financial results.

The recent disruptions in credit and other financial markets and deterioration of global economic conditions, could, among other things:

make it more difficult or costly for us to obtain financing for our operations or investments or to finance debt in the future;

impair the financial condition of some of our customers or suppliers, thereby increasing bad debts or non-performance by suppliers; and

negatively impact demand for our products, which could result in a reduction of sales, operating income and cash flows.

RISKS RELATED TO CONDUCTING OUR BUSINESS IN CHINA

We are subject to international economic and political risks over which we have little or no control and may be unable to alter our business practice in time to avoid the possibility of reduced revenues.

A substantial portion of our business is conducted in China. Doing business outside the US, particularly in China, subjects us to various risks including changing economic and political conditions, major work stoppages, exchange controls, currency fluctuations, armed conflicts and unexpected changes in United States and foreign laws relating to tariffs, trade restrictions, transportation regulations, foreign investments and taxation. We have no control over most of these risks and may be unable to anticipate changes in international economic and political conditions. Therefore, we may be unable to alter our business practices in time to avoid the possibility of reduced revenues.

China’s economic policies could affect our business.

Generally, all of our assets are located in China and a substantial amount of our revenue is derived from our operations in China. Accordingly, our results of operations and prospects are subject, to a significant extent, to the economic, political and legal developments in China.

While China’s economy has experienced significant growth in the past twenty years, such growth has been uneven, both geographically and among various sectors of the economy. China’s government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures benefit the overall economy of China, but they may also have a negative effect on us. For example, operating results and financial condition may be adversely affected by the government control over capital investments or changes in tax regulations. The economy of China has been changing from a planned economy to a more market-oriented economy. In recent years, China government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of corporate governance in business enterprises; however, a substantial portion of productive assets in China are still owned by our government. In addition, China government continues to play a significant role in regulating industry development by imposing industrial policies. It also exercises significant control over China’s economic growth through the allocation of resources, the control of payment of foreign currency-denominated obligations, the setting of monetary policy and the provision of preferential treatment to particular industries or companies.

We may have difficulty establishing adequate management, legal and financial controls in China.

China historically has not adopted a Western style of management and financial reporting concepts and practices, as well as in modern banking, computer and other control systems. We may have difficulty in hiring and retaining a sufficient number of qualified employees to work in China. As a result of these factors, we may experience difficulty in establishing management, legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices that meet Western standards.

Our bank accounts are not insured or protected against loss.

We maintain our cash with various banks and trust companies located in China. Our cash accounts are not insured or otherwise protected. Should any bank or trust company holding our cash deposits become insolvent, or if we are otherwise unable to withdraw funds, we would lose the cash on deposit with that particular bank or trust company.

As we have limited business insurance coverage in China, any loss which we suffer may not be insured or may be insured to only a limited extent.

The insurance industry in China is still in an early state of development and insurance companies located in China offer limited business insurance products. In the event of damage or loss to our properties, our insurance may not provide as much coverage as if we were insured by insurance companies in the United States.

Tax laws and regulations in China are subject to substantial revision, some of which may adversely affect our profitability.

China’s tax system is in a state of flux, and it is anticipated that China’s tax regime will be altered in the coming years. Tax benefits that we presently enjoy may not be available in the wake of these changes, and we could incur tax obligations to our government that are significantly higher than anticipated. These increased tax obligations could negatively impact our financial condition and our revenues, gross margins, profitability and results of operations may be adversely affected as a result.

Certain tax exemptions that we presently enjoy in China are scheduled to expire over the next several years.

Since a substantial portion of our operations are located in a privileged economic zone, we are entitled to certain tax benefits. These tax benefits are presently scheduled to expire over the next several years. For example, Zhuhai presently has a 50% exemption from federal tax through December 31, 2012. As these exemptions expire, our income tax expenses will increase, reducing our net income below what it would be if we continued to enjoy these exemptions.

We may face judicial corruption in China.

Another obstacle to foreign investment in China is corruption. There is no assurance that we will be able to obtain recourse in any legal disputes with suppliers, customers or other parties with whom we conduct business, if desired, through China’s poorly developed and sometimes corrupt judicial systems.

If relations between the United States and China worsen, investors may be unwilling to hold or buy our stock and our stock price may decrease.

At various times during recent years, the United States and China have had significant disagreements over political and economic issues. Controversies may arise in the future between these two countries. Any political or trade controversies between the United States and China, whether or not directly related to our business, could reduce the price of our common stock.

The government of China could change its policies toward private enterprise or even nationalize or expropriate private enterprises, which could result in the total loss of our and your investment.

Our business is subject to significant political and economic uncertainties and may be affected by political, economic and social developments in China. Over the past several years, the government of China has pursued economic reform policies including the encouragement of private economic activity and greater economic decentralization. The government of China may not continue to pursue these policies or may significantly alter them to our detriment from time to time with little, if any, prior notice.

Changes in policies, laws and regulations or in their interpretation or the imposition of confiscatory taxation, restrictions on currency conversion, restrictions or prohibitions on dividend payments to stockholders, or devaluations of currency could all cause a decline in the price of our common stock, should a market for our common stock ever develop. Nationalization or expropriation could even result in the total loss of your investment.

The nature and application of many laws of China create an uncertain environment for business operations and they could have a negative effect on us.

The legal system in China is a civil law system. Unlike the common law system, the civil law system is based on written statutes and decided legal cases have little value as precedents. In 1979, China 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 China 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 cause a decline in the price of our common stock. Since these laws, regulations and legal requirements are relatively recent, their interpretation and enforcement involve significant uncertainty.

As we import goods into and export goods out of China, fluctuation of the RMB may affect our financial condition by affecting the volume of cross-border money flow.

Although we use the United States dollar (“USD”) for financial reporting purposes, many of the transactions effected by our operating subsidiaries are denominated in RMB. The value of the RMB fluctuates and is subject to changes in China’s political and economic conditions. We do not currently engage in hedging activities to protect against foreign currency risks. Even if we chose to engage in such hedging activities, we may not be able to do so effectively. Future movements in the exchange rate of the RMB could adversely affect our financial condition as we may suffer financial losses when transferring money raised outside of China into the country or when paying vendors for services performed outside of China.

We may not be able to obtain regulatory approvals for our products.

The manufacture and sale of our products in China are regulated by China and the local provincial governments. Although our licenses and regulatory filings are current, the uncertain legal environment in China and our industry may be vulnerable to local government agencies or other parties who wish to renegotiate the terms and conditions of, or terminate their agreements or other understandings with us.

It will be extremely difficult to acquire jurisdiction and enforce liabilities against our officers, directors and assets based in China.

As our executive officers and several of our directors, including the chairman of our Board of Directors, are Chinese citizens, it may be difficult, if not impossible, to acquire jurisdiction over these persons in the event a lawsuit is initiated against us and/or our officers and directors by a stockholder or group of stockholders in the United States. Also, because our operating subsidiaries and assets are located in China, it may be extremely difficult or impossible for one to access those assets to enforce judgments rendered against us or our directors or executive officers by United States courts. In addition, the courts in China may not permit the enforcement of judgments arising out of United States federal and state corporate, securities or similar laws. Accordingly, United States investors may not be able to enforce judgments against us for violation of United States securities laws.

We may face obstacles from the communist system in China.

Foreign companies conducting operations in China face significant political, economic and legal risks. The Communist regime in China, including a cumbersome bureaucracy, may hinder Western investment.

Recent PRC regulations relating to acquisitions of PRC companies by foreign entities may create regulatory uncertainties that could restrict or limit our ability to operate. Our failure to obtain required prior approval for the share exchange, reverse merger and the listing and trading of our common stock could have a material adverse effect on our business, operating results, reputation and trading price of our common stock.

The PRC State Administration of Foreign Exchange, or “SAFE,” issued a public notice in November 2005, known as Circular 75, concerning the use of offshore holding companies controlled by PRC residents in mergers and acquisitions in China. This circular requires that (1) a PRC resident shall register with a local branch of the SAFE before he or she establishes or controls an overseas special purpose vehicle, or “SPV,” for the purpose of overseas equity financing (including convertible debt financing); (2) when a PRC resident contributes the assets of or his or her equity interests in a domestic enterprise to an SPV, or engages in overseas financing after contributing assets or equity interests to an SPV, such PRC resident must register his or her interest in the SPV and any changes in such interest with a local branch of the SAFE; and (3) when the SPV undergoes a material change outside of China, such as a change in share capital or merger or acquisition, the PRC resident shall, within 30 days from the occurrence of the event that triggers the change, register such change with a local branch of the SAFE. In addition, SAFE issued updated internal implementing rules, or the Implementing Rules in relation to Circular 75. The Implementing Rules were promulgated and became effective on May 29, 2007. Such Implementing Rules provide more detailed provisions and requirements regarding the overseas investment foreign exchange registration procedures. However, even after the promulgation of Implementing Rules there still exist uncertainties regarding the SAFE registration for PRC residents’ interests in overseas companies. If any PRC resident stockholder of a SPV fails to make the required SAFE registration and amended registration, the onshore PRC subsidiaries of that offshore company may be prohibited from distributing their profits and the proceeds from any reduction in capital, share transfer or liquidation to the offshore entity. Our PRC resident beneficial holders have not completed such approvals and registrations required by the SAFE regulations. Failure to comply with the SAFE registration and amendment requirements described above could result in liability under PRC laws for evasion of applicable foreign exchange restrictions. Because of uncertainty in how the SAFE notice will be interpreted and enforced, we cannot be sure how it will affect our business operations or future plans. For example, our PRC subsidiaries’ ability to conduct foreign exchange activities, such as the remittance of dividends and foreign currency-denominated borrowings, may be subject to compliance with the SAFE notice by our PRC resident beneficial holders over whom we have no control. In addition, we cannot assure you that such PRC residents will be able to complete the necessary approval and registration procedures required by the SAFE regulations. Failure by any PRC resident beneficial holder to register as required with the relevant branch of SAFE could subject these PRC resident beneficial holders to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our PRC subsidiaries’ ability to make distributions or pay dividends or affect our ownership structure, which could adversely affect our business and prospects.

On August 8, 2006, the PRC Ministry of Commerce (“MOFCOM”), joined by the State-owned Assets Supervision and Administration Commission of the State Council, the State Administration of Taxation, the State Administration for Industry and Commerce, the China Securities Regulatory Commission (“CSRC”) and SAFE, released a substantially amended version of the Provisions for Foreign Investors to Merge with or Acquire Domestic Enterprises (the “Revised M&A Regulations”), which took effect September 8, 2006. These new rules significantly revised China’s regulatory framework governing onshore-to-offshore restructurings and foreign acquisitions of domestic enterprises. These new rules signify greater PRC government attention to cross-border merger, acquisition and other investment activities, by confirming MOFCOM as a key regulator for issues related to mergers and acquisitions in China and requiring MOFCOM approval of a broad range of merger, acquisition and investment transactions. Further, the new rules establish reporting requirements for acquisition of control by foreigners of companies in key industries, and reinforce the ability of the Chinese government to monitor and prohibit foreign control transactions in key industries.

Among other things, the Revised M&A Regulations include new provisions that purport to require that an offshore special purpose vehicle, or a SPV, formed for listing purposes and controlled directly or indirectly by PRC companies or individuals must obtain the approval of the CSRC prior to the listing and trading of such SPV’s securities on an overseas stock exchange. On September 21, 2006, the CSRC published on its official website procedures specifying documents and materials required to be submitted to it by SPVs seeking CSRC approval of their overseas listings. However, the application of this PRC regulation remains unclear with no consensus currently existing among the leading PRC law firms regarding the scope and applicability of the CSRC approval requirement.

According to the M&A Regulations, a “Related Party Acquisition” is defined as having taken place when a PRC business that is owned by PRC individual(s) is sold to a non-PRC entity that is established or controlled, directly or indirectly, by those same PRC individual(s). Under the M&A Regulations, any Related Party Acquisition must be approved by MOFCOM and any indirect arrangement or series of arrangements which achieves the same end result without the approval of MOFCOM is a violation of PRC law.

The PRC regulatory authorities may take the view that the acquisition by us from Sino Palace of all of the issued and outstanding capital stock of each of Shiner Industrial and Shiny-day, Hainan Hi-Tech and Zhuhai in exchange for the issuance of an aggregate of 16,500,000 shares of our common stock to the stockholders of Sino Palace was a Related Party Acquisition, because at the end of these transactions, PRC individuals become majority owners and effective controlling parties of a foreign entity that acquired ownership of PRC subsidiaries. If the PRC regulatory authorities take the view that the acquisition of the PRC subsidiaries constituted a Related Party Acquisition without the approval of the national offices of MOFCOM, they could invalidate our acquisition and ownership of these entities. Additionally, the PRC regulatory authorities may take the view that the share exchange constitutes a transaction which requires the prior approval of the CSRC. If this takes place, we would attempt to find a way to re-establish control of the PRC subsidiaries’ business operations through a series of contractual arrangements rather than an outright purchase of PRC subsidiaries. But we cannot assure you that any such contractual arrangements will be protected by PRC law or that the Company can receive as complete or effective economic benefit and overall control of the PRC subsidiaries’ business than if the Company had direct ownership of these subsidiaries. In addition, we cannot assure you that any such contractual arrangements can be successfully effected under PRC law. If we cannot obtain MOFCOM or CSRC approval if required by the PRC regulatory authorities to do so, and if we cannot put in place or enforce relevant contractual arrangements as an alternative and equivalent means of control of PRC subsidiaries, our business and financial performance will be materially adversely affected.

If the CSRC approval is not obtained, we may face regulatory actions or other sanctions from the CSRC or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on our operations in the PRC, limit our operating privileges in the PRC, delay or restrict the repatriation of the proceeds from any financings into the PRC, or take other actions that could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our common stock. The CSRC or other PRC regulatory agencies also may take actions requiring us, or making it advisable for us, to halt the proposed public offering before settlement and delivery of the common stock offered thereby. Consequently, if investors engage in market trading or other activities in anticipation of and prior to settlement and delivery, they do so at the risk that settlement and delivery may not occur.

Any uncertainties and/or negative publicity regarding this CSRC approval requirement could have a material adverse effect on the trading price of our common stock. Furthermore, published news reports in China recently indicated that the CSRC may have curtailed or suspended overseas listings for Chinese private companies. These news reports have created further uncertainty regarding the approach that the CSRC and other PRC regulators may take with respect to us.

It is uncertain how our business operations or future strategy will be affected by the interpretations and implementation of the aforementioned rules and regulations. It is anticipated that application of the new rules will be subject to significant administrative interpretation, and we will need to closely monitor how MOFCOM and other ministries apply the rules to ensure that our domestic and offshore activities continue to comply with PRC law. Given the uncertainties regarding interpretation and application of the new rules, we may need to expend significant time and resources to maintain compliance.

Our labor costs are likely to increase as a result of changes in Chinese labor laws.

We expect to experience an increase in our cost of labor due to recent changes in Chinese labor laws which are likely to increase costs further and impose restrictions on our relationship with our employees. In June 2007, the National People’s Congress of the PRC enacted new labor law legislation called the Labor Contract Law and more strictly enforcing existing labor laws. The new labor law, which became effective on January 1, 2008, amended and formalized workers’ rights concerning overtime hours, pensions, layoffs, employment contracts and the role of trade unions. Generally, this labor law increased our cost of labor. In addition, under the new law, employees who either have worked for the Company for 10 years or more or who have had two consecutive fixed-term contracts must be given an “open-ended employment contract” that, in effect, constitutes a lifetime, permanent contract, which is terminable only in the event the employee materially breaches the Company’s rules and regulations or is in serious dereliction of his duty. Such non-cancelable employment contracts will substantially increase its employment related risks and limit the Company’s ability to downsize its workforce in the event of an economic downturn. No assurance can be given that the Company will not in the future be subject to labor strikes or that it will not have to make other payments to resolve future labor issues caused by the new laws. Furthermore, there can be no assurance that the labor laws will not change further or that their interpretation and implementation will vary, which may have a negative effect upon our business and results of operations.

Inflation in the PRC could negatively affect our profitability and growth.

While the PRC economy has experienced rapid growth, such growth has been uneven among various sectors of the economy and in different geographical areas of the country. Rapid economic growth can lead to growth in the money supply and rising inflation. Furthermore, in order to control inflation in the past, the PRC government has imposed controls on bank credits, limits on loans for fixed assets and restrictions on state bank lending. In January 2010, the Chinese government took steps to tighten the availability of credit including ordering banks to increase the amount of reserves they hold and to reduce or limit their lending. The implementation of such policies may impede economic growth. In 2004, the People’s Bank of China, the PRC’s central bank, raised interest rates for the first time in nearly a decade and indicated in a statement that the measure was prompted by inflationary concerns in the Chinese economy. In 2007, and most recently in October 2010, the People’s Bank of China raised the interest rate again. Repeated rises in interest rates by the central bank would likely slow economic activity in China which could, in turn, materially increase our costs and also reduce demand for our products and services.

Failure to comply with the United States Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences.

As our ultimate holding company is a Nevada corporation, we are subject to the United States Foreign Corrupt Practices Act, which generally prohibits United States companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Foreign companies, including some that may compete with us, are not subject to these prohibitions. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices may occur from time-to-time in the PRC. We can make no assurance, however, that our employees or other agents will not engage in such conduct for which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our business, financial condition and results of operations.

Any outbreak of the Swine Flu (H1N1), severe acute respiratory syndrome, or SARS, the Avian Flu, or another widespread public health problem in the PRC could adversely affect our operations.

There have been recent outbreaks of the highly pathogenic Swine Flu, caused by the H1N1 virus, in certain regions of the world, including parts of China, where all of our manufacturing facilities are located and where all of our sales occur. Our business is dependent upon our ability to continue to manufacture and distribute our products, and an outbreak of the Swine Flu, or a renewed outbreak of SARS, the Avian Flu, or another widespread public health problem in China, could have a negative effect on our operations. Any such outbreak could have an impact on our operations as a result of:

quarantines or closures of our manufacturing or distribution facilities or offices;

quarantines or closures of the manufacturing or distribution facilities or officers of our suppliers or customers;

the sickness or death of our key officers and employees; and

a general slowdown in the Chinese economy.

Any of the foregoing events or other unforeseen consequences of public health problems could adversely affect our operations.

We face risks related to natural disasters, terrorist attacks or other events in China that could have a material adverse effect on our business and results of operations.

Our business could be materially and adversely affected by natural disasters, terrorist attacks or other events in China. The Hainan province in which we operate is prone to typhoons and flooding. Earthquakes, tsunamis and other storms that may occur in China may impact our distribution capabilities and those of our suppliers. Any future natural disasters, terrorist attacks or other events in China could cause severe disruptions to our operations, as well as those of our suppliers and customers, which could have a material adverse effect on our business and results of operations.

Because our business is located in the PRC, we may have difficulty establishing adequate management, legal and financial controls, which we are required to do in order to comply with U.S. GAAP and securities laws, and which could cause a materially adverse impact on our financial statements, the trading of our common stock and our business.

PRC companies have historically not adopted a Western style of management and financial reporting concepts and practices, which includes strong corporate governance, internal controls and, computer, financial and other control systems. Most of our middle and top management staff are not educated and trained in the Western system, and we may have difficulty hiring new employees in the PRC with experience and expertise relating to U.S. GAAP and U.S. public-company reporting requirements. In addition, we may have difficulty in hiring and retaining a sufficient number of qualified employees to work in the PRC. As a result of these factors, we may experience difficulty in establishing management, legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices that meet Western standards. Therefore, we may, in turn, experience difficulties in implementing and maintaining adequate internal controls as required under Section 404 of the Sarbanes-Oxley Act of 2002. This may result in significant deficiencies or material weaknesses in our internal controls which could impact the reliability of our financial statements and prevent us from complying with SEC rules and regulations and the requirements of the Sarbanes-Oxley Act of 2002. Any such deficiencies, material weaknesses or lack of compliance could result in restatements of our historical financial information, cause investors to lose confidence in our reported financial information, have an adverse impact on the trading price of our common stock, adversely affect our ability to access the capital markets and our ability to recruit personnel, lead to the delisting of our securities from the stock exchange on which they are traded, lead to litigation claims, thereby diverting management’s attention and resources, and which may lead to the payment of damages to the extent such claims are not resolved in our favor, lead to regulatory proceedings, which may result in sanctions, monetary or otherwise, and have a materially adverse effect on our reputation and business.

Contract drafting, interpretation and enforcement in China involves significant uncertainty.

We have entered into numerous contracts governed by PRC law, many of which are material to our business. As compared with contracts in the United States, contracts governed by PRC law tend to contain less detail and are not as comprehensive in defining contracting parties’ rights and obligations. As a result, contracts in China are more vulnerable to disputes and legal challenges. In addition, contract interpretation and enforcement in China is not as developed as in the United States, and the result of any contract dispute is subject to significant uncertainties. Therefore, we cannot assure you that we will not be subject to disputes under our material contracts, and if such disputes arise, we cannot assure you that we will prevail.

Under the new Enterprise Tax Law, we may be classified as a “resident enterprise” of China for tax purpose, which may subject us and/or our subsidiaries to PRC income tax on taxable global income.

Under the new PRC Enterprise Income Tax Law (the “New EIT Law”) and its implementing rules, both of which became effective on January 1, 2008. Under the New EIT Law, enterprises are classified as resident enterprises and non-resident enterprises. An enterprise established outside of China with its “de facto management bodies” located within China is considered a “resident enterprise,” meaning that it can be treated in a manner similar to a Chinese domestic enterprise for enterprise income tax purposes.

The implementing rules of the New EIT Law define de facto management body as a managing body that in practice exercises “substantial and overall management and control over the production and operations, personnel, accounting, and properties” of the enterprise. Due to the short history of the New EIT law and lack of applicable legal precedents, it remains unclear how the PRC tax authorities will determine the PRC tax resident treatment of a foreign company such as us, with all of the members of its management located in China. If the PRC tax authorities determine that we are a “resident enterprise” for PRC enterprise income tax purposes, we may be subject to the enterprise income tax at a rate of 25% on our worldwide taxable income, as well as PRC enterprise income tax reporting obligations.

We are actively monitoring the possibility of “resident enterprise” treatment for the applicable tax years and are evaluating appropriate organizational changes to avoid this treatment, to the extent possible. If we are required to pay income tax on our worldwide income at the 25% tax rate, the amount of dividends we could, if any, pay to our stockholders would be materially reduced.

If we were treated as a “resident enterprise” by PRC tax authorities, we would be subject to taxation in both the U.S. and China, and our PRC tax may not be credited against our U.S. tax. As a result of the New EIT Law, our historical operating results will not be indicative of our operating results for future periods and the value of our common stock.

Dividends we receive from our subsidiaries located in the PRC may be subject to PRC withholding tax.

If we are not treated as a resident enterprise under the New EIT Law, then dividends that we receive from our Chinese subsidiaries may be subject to PRC withholding tax. The New EIT Law provides that an income tax rate of 20% may be applicable to dividends payable to non-resident investors, which (i) do not have an establishment or place of business in the PRC or (ii) have an establishment or place of business in the PRC but the relevant income is not effectively connected with the establishment or place of business, to the extent such dividends are derived from sources within the PRC. The State Council of the PRC reduced such rate to 10% through the implementation regulations of the New EIT Law. Further, pursuant to the Double Tax Avoidance Arrangement between Hong Kong and Mainland China and the Notice on Certain Issues with Respect to the Enforcement of Dividend Provisions in Tax Treaties issued on February 20, 2009 by the State Administration of Taxation, if the Hong Kong resident enterprise owns more than 25% of the equity interest in a company in China incessantly within 12 months immediately prior to obtaining dividend from such company, the 10% withholding tax on the dividends the Hong Kong resident enterprise received from such company in China is reduced to 5%.

However, based on the Notice on Certain Issues with Respect to the Enforcement of Dividend Provisions in Tax Treaties, if the relevant PRC tax authorities determine, in their discretion, that a company benefits from such reduced income tax rate due to a structure or arrangement that is primarily tax-driven, such PRC tax authorities may adjust the preferential tax treatment; and based on the Notice on the Comprehension and Recognition of Beneficial Owner in Tax Treaties issued on October 27, 2009 by the State Administration of Taxation, funnel companies, which are established for the purpose of evading or reducing tax, transferring or accumulating profits, shall not be recognized as beneficial owner, and thus, are not entitled to the abovementioned reduced income tax rate of 5% under the Double Tax Avoidance Arrangement. If we are required under the New EIT Law to pay income tax for any dividends we receive from our PRC subsidiaries, or if our PRC subsidiaries are determined by PRC government authority as receiving benefits from reduced income tax rate due to a structure or arrangement that is primarily tax-driven, it would materially and adversely affect the amount of dividends, if any, we may pay to our stockholders.

Dividends payable by us to our foreign investors and any gain on the sale of our shares may be subject to taxes under PRC tax laws.

If dividends payable to stockholders by the Company are treated as income derived from sources within China, then the dividends that stockholders receive from us, and any gain on the sale or transfer of our shares, may be subject to taxes under PRC tax laws.

Under the New EIT Law, PRC enterprise income tax at the rate of 20% is applicable to dividends payable by us to our investors that are non-resident enterprises which (i) do not have an establishment or place of business in the PRC or (ii) have an establishment or place of business in the PRC but the relevant income is not effectively connected with the establishment or place of business, to the extent such dividends are derived from sources within the PRC. The State Council of the PRC reduced such rate to 10% through the implementation regulations of the New EIT Law. Similarly, any gain realized on the transfer of our shares by such investors is also subject to a 10% PRC income tax if such gain is regarded as income derived from sources within China and the Company is considered as a resident enterprise which is domiciled in China for tax purpose. If we are required under the New EIT Law to withhold PRC income tax on our dividends payable to our foreign stockholders or investors who are non-resident enterprises, or if you are required to pay PRC income tax on the transfer or our shares under the circumstances mentioned above, the value of your investment in our shares may be materially and adversely affected.

In January 2009, the State Administration of Taxation promulgated the Provisional Measures for the Administration of Withholding of Enterprise Income Tax for Non-resident Enterprises (“Measures”), pursuant to which, the entities which have the direct obligation to make the following payment to a non-resident enterprise shall be the relevant tax withholders for such non-resident enterprise, and such payment includes: incomes from equity investment (including dividends and other return on investment), interests, rents, royalties, and incomes from assignment of property as well as other incomes subject to enterprise income tax received by non-resident enterprises in China. Further, the Measures provides that in case of equity transfer between two non-resident enterprises which occurs outside China, the non-resident enterprise which receives the equity transfer payment shall, by itself or engage an agent to, file tax declaration with the PRC tax authority located at place of the PRC company whose equity has been transferred, and the PRC company whose equity has been transferred shall assist the tax authorities to collect taxes from the relevant non-resident enterprise. However, it is unclear whether the Measures refer to the equity transfer by a non-resident enterprise which is a direct or an indirect stockholder of the said PRC company. Given these Measures, there is a possibility that the Company may have an obligation to withhold income tax in respect of the dividends paid to non-resident enterprise investors.

Furthermore, non-resident individual investors may be required to pay PRC individual income tax at a rate of 20% on interests or dividends payable to the investors or any capital gains realized from the transfer of shares if such gains are deemed income derived from sources within the PRC. Under the PRC Individual Income Tax Law, or IIT Law, non-resident individual refers to an individual who has no domicile in China and does not stay in the territory of China or who has no domicile in China and has stayed in the territory of China for less than one year. Pursuant to the IIT Law and its implementation rules, for purposes of the PRC capital gains tax, the taxable income will be the balance of the total income obtained from the transfer of the shares minus all the costs and expenses that are permitted under PRC tax laws to be deducted from the income. If we are considered a ’‘resident enterprise’’ and relevant competent PRC tax authorities consider dividends we could pay with respect to our shares and the gains realized from the transfer of our shares to be income derived from sources within the PRC, such gains earned by non-resident individuals may be subject to PRC withholding tax at a rate of 20%. If we are required under PRC law to withhold PRC income tax on dividends payable to our non-PRC investors that are non-resident individuals or if you are required to pay PRC income tax on the transfer of our shares, the value of your investment in our shares may be materially and adversely affected.

We will not be able to complete an acquisition of prospective acquisition targets in the PRC unless their financial statements can be reconciled to U.S. generally accepted accounting principles in a timely manner.

Companies based in the PRC may not have properly kept financial books and records that may be reconciled with U.S. generally accepted accounting principles. If we attempt to acquire a significant PRC target company and/or its assets, we would be required to obtain or prepare financial statements of the target that are prepared in accordance with and reconciled to U.S. generally accepted accounting principles. Federal securities laws require that a business combination meeting certain financial significance tests require the public acquirer to prepare and file historical and/or pro forma financial statement disclosure with the SEC. These financial statements must be prepared in accordance with, or be reconciled to U.S. generally accepted accounting principles and the historical financial statements must be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB. If a proposed acquisition target does not have financial statements that have been prepared in accordance with, or that can be reconciled to, U.S. generally accepted accounting principles and audited in accordance with the standards of the PCAOB, we will not be able to acquire that proposed acquisition target. These financial statement requirements may limit the pool of potential acquisition targets with which we may acquire and hinder our ability to expand our retail operations.

We face uncertainty from China’s “Circular on Strengthening the Administration of Enterprise Income Tax on Non-Resident Enterprises’ Share Transfer” that was released in December 2009 with retroactive effect from January 1, 2008.

The Chinese State Administration of Taxation released a circular (“Circular 698”) on December 10, 2009 that addresses the transfer of shares by nonresident companies. Circular 698, which is effective retroactively to January 1, 2008, may have a significant impact on many companies that use offshore holding companies to invest in China. Pursuant to Circular 698, where the withholding agent does not withhold in accordance with laws or cannot perform the withholding obligation, the non-resident enterprises shall file a tax declaration with the PRC tax authority located at place of the resident enterprise whose equity has been transferred, within seven days since the date of equity transfer provided under the contracts.

Where a foreign investor indirectly transfers equity interests in a Chinese resident enterprise by selling the shares in an offshore holding company, and the latter is located in a country or jurisdiction where the effective tax burden is less than 12.5% or where the offshore income of his, her, or its residents is not taxable, the foreign investor is required to provide the tax authority in charge of that Chinese resident enterprise with the relevant information within 30 days of the transfers. Moreover, where a foreign investor indirectly transfers equity interests in a Chinese resident enterprise through an abuse of form of organization and there are no reasonable commercial purposes such that the corporate income tax liability is avoided, the PRC tax authority will have the power to re-assess the nature of the equity transfer and deny the existence of the offshore holding company that is used for tax planning purposes.

There is uncertainty as to the application of Circular 698. For example, while the term “indirectly transfer” is not defined, it is understood that the relevant PRC tax authorities have jurisdiction regarding requests for information over a wide range of foreign entities having no direct contact with China. Moreover, the relevant authority has not yet promulgated any formal provisions or formally declared or stated how to calculate the effective tax in the country or jurisdiction and to what extent and the process of the disclosure to the tax authority in charge of that Chinese resident enterprise. In addition, there are not any formal declarations with regard to how to decide abuse of form of organization and reasonable commercial purpose, which can be utilized by us to balance if our company complies with the Circular 698. As a result, we may become at risk of being taxed under Circular 698 and we may be required to expend valuable resources to comply with Circular 698 or to establish that we should not be taxed under Circular 698, which could have a material adverse effect on our financial condition and results of operations.

RISKS RELATED TO OUR SECURITIES

Our common stock price is subject to significant volatility, which could result in substantial losses for investors.

During the six month period from August 15, 2007 through February 11, 2008, the high and low bid prices of our common stock on the Over-The-Counter Bulletin Board (“OTCBB”) were $8.74 per share and $2.00 per share, respectively. Prior to that date, our common stock was traded sporadically on the “pink sheets.” Since our commencement of trading on the Nasdaq Capital Market on February 12, 2008 through December 31, 2012, the high and low sales prices of our common stock were $8.74 and $0.34. Prices for our shares are determined in the marketplace and may accordingly be influenced by many factors, including, but not limited to:

the depth and liquidity of the market for the shares;

quarter-to-quarter variations in our operating results;

announcements about our performance as well as the announcements of our competitors about the performance of their businesses;

investors’ evaluations of our future prospects and the food industry generally;

changes in earnings estimates by, or failure to meet the expectations of, securities analysts;

our dividend policy; and

general economic and market conditions.

In addition, the stock market often experiences significant price fluctuations that are unrelated to the operating performance of the specific companies whose stock is traded. These market fluctuations could adversely affect the trading price of our shares.

The price at which investors purchase shares of our common stock may not be indicative of the price that will prevail in the trading market. Investors may be unable to sell their shares of common stock at or above their purchase price, which may result in substantial losses.

If the price of our common stock continues to remain below $1.00 per share for a sustained period, our common stock may be delisted from the Nasdaq Capital Market.

Our common stock is currently traded on the Nasdaq Capital Market. The Nasdaq Capital Market imposes, among other requirements, listing maintenance standards including minimum bid and public float requirements. In particular, Nasdaq rules require us to maintain a minimum bid price of $1.00 per share of our common stock. On September 1, 2011, we received a letter from Nasdaq stating that the minimum bid price of our common stock was below $1.00 per share for 30 consecutive business days and that we were therefore not in compliance with Marketplace Rule 5550(a)(2) (the “Bid Price Rule”). The notification letter stated that we had until February 28, 2012 to regain compliance with the Bid Price Rule. In accordance with Marketplace Rule 5810(c)(3)(a), to regain compliance the closing bid price of the our common stock must meet or exceed $1.00 per share for at least 10 consecutive business days. On February 29, 2012, the Company received a second letter from NASDAQ notifying the Company that it had not regained compliance during the initial 180-day grace period, but that NASDAQ was granting the Company an additional 180-day grace period, or until August 27, 2012, to regain compliance. NASDAQ’s determination was based on the Company having met the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing on the NASDAQ Capital Market, with the exception of the bid price requirement, and on the Company’s written notice to NASDAQ of its intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary.

If our common stock bid price does not meet Nasdaq’s minimum requirement to remain on the Nasdaq Capital Market, we may execute a reverse split, take other remedial actions, or elect to move back to the OTCBB, which is generally considered to be more “thin” and less liquid than trading on the Nasdaq’s Capital Market. However, a reverse split, moving to the OTCBB or other remedial actions could adversely impact our stock price and lead to a number of other negative implications, including reduced liquidity in our common stock, the loss of federal preemption of state securities laws, fewer business development opportunities and greater difficulty in obtaining financing.

Future sales of shares of our common stock by our stockholders could cause our stock price to decline.

We cannot predict the effect, if any, that market sales of shares of our common stock or the availability of shares of common stock for sale will have on the market price prevailing from time to time. Sales of shares of our common stock in the public market covered under an effective registration statement, or the perception that those sales may occur, could cause the trading price of our common stock to decrease or become lower than it might be in the absence of those sales or perceptions.

Shares eligible for future sale may adversely affect the market for our common stock.

As of March 27, 2012, we had a significant number of convertible or derivative securities outstanding, including 60,000 shares of common stock issuable upon exercise of outstanding stock options at a weighted average exercise price of $1.25 per share and 521,664 shares of common stock issuable upon exercise of our outstanding warrants at a weighted average exercise price of $1.70 per share. If or when these securities are exercised into shares of our common stock, the number of our shares of common stock outstanding will increase. Increases in the number of our outstanding shares and any sales of shares could have an adverse effect on the trading activity and market price of our common stock.

In addition, from time to time, certain of our shareholders may be eligible to sell all, or a portion of, their shares of common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act of 1933, or under effective resale prospectuses. Any substantial sale of our common stock pursuant to Rule 144 or any resale prospectus may have an adverse effect on the market price of our securities.

We may issue additional shares of our capital stock or debt securities to raise capital or complete acquisitions, which would reduce the equity interest of our stockholders.

Our articles of incorporation authorize the issuance of up to 75,000,000 shares of common stock, par value $.001 per share. There are currently approximately 27,941,491 authorized and unissued shares of our common stock that have not been reserved and are available for future issuance. Although we have no commitments as of the date of this offering to issue our securities, we may issue a substantial number of additional shares of our common stock to complete a business combination, to raise capital or to compensate our employees and/or directors. The issuance of additional shares of our common stock:

may significantly reduce the equity interest of investors in this offering; and

may adversely affect prevailing market prices for our common stock.

Our directors and senior management own a significant amount of our common stock, giving them influence or control in corporate transactions and other matters, and their interests could differ from those of other stockholders.

The Chairman of our board of directors owns approximately 41.82% of our outstanding common stock and, together with our other directors and senior management, they own approximately 42.35% of our outstanding common stock. As a result, they are in a position to significantly influence the outcome of matters requiring a stockholder vote, including the election of directors, the adoption of any amendment to our articles of incorporation or bylaws, and the approval of significant corporate transactions. Their control may delay or prevent a change of control on terms favorable to our other stockholders and may adversely affect your voting and other stockholders rights.

The ability of our Chinese operating subsidiaries to pay dividends may be restricted due to foreign exchange control and other regulations of China.

Under applicable PRC regulations, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, a foreign-invested enterprise in China is required to set aside at least 10% of its after-tax profit based on PRC accounting standards each year to its general reserves until the accumulative amount of such reserves reach 50% of its registered capital. These reserves are not distributable as cash dividends. The board of directors of a foreign-invested enterprise has the discretion to allocate a portion of its after-tax profits to staff welfare and bonus funds, which may not be distributed to equity owners except in the event of liquidation.

Furthermore, the ability of our Chinese operating subsidiaries to pay dividends may be restricted due to the foreign exchange control policies and availability of cash balance of the Chinese operating subsidiaries. Because substantially all of our operations are conducted in China and a substantial majority of our revenues are generated in China, a majority of our revenue being earned and currency received are denominated in RMB. RMB is subject to the exchange control regulation in China, and, as a result, we may unable to distribute any dividends outside of China due to PRC exchange control regulations that restrict our ability to convert RMB into USD.

Our inability to receive dividends or other payments from our Chinese operating subsidiaries could adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business. The funds of our Chinese operating subsidiaries may not be readily available to us to satisfy obligations which have been incurred outside the PRC, which could adversely affect our business and prospects or our ability to meet our cash obligations. Accordingly, if we do not receive dividends from our Chinese operating subsidiaries, our liquidity, financial condition and ability to make dividend distributions to our stockholders will be materially and adversely affected.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 2. PROPERTIES.

All land in China is owned by the State. Individuals and companies are permitted to acquire rights to use land or land use rights for specific purposes. In the case of land used for industrial purposes, the land use rights are granted for a period of 50 years. This period may be renewed at the expiration of the initial and any subsequent terms. Granted land use rights are transferable and may be used as security for borrowings and other obligations.

We currently have land use rights to approximately 40.32 acres consisting of manufacturing facilities, warehouse and office buildings in China. The chart below lists all facilities owned by us.

Location	Type of Facility	Size of Land (acre)
19th Floor, Didu Building, Pearl River Plaza, No. 2 North Longkun Road, Haikou, Hainan Province	Principal executive offices		0.23

Taipingpo, Yongxing Town, Xiuying District, Haikou, Hainan Province	Manufacturing facilities and warehouse		11.90

Shiziling Feidi Industrial Park, Haikou, Hainan Province	Manufacturing facilities		25.00

Pingshasan Road, Pingsha Town, Jinwan District, Zhuhai, Guangdong Province	Manufacturing facilities		3.13

Room 307, 3rd Floor, Unit 3, Lane 1800, Xinsongjiang Road, Songjiang District, Shanghai	Sales office		0.06

Hainan Factories

We have been granted the right to use three plots of land in Haikou City by the Municipal Administration of China for state-owned land. With respect to two of these plots, our rights run through January 2059 and, with respect to the third plot, our rights run through October 2060. Our original Hainan Factory currently has one BOPP tobacco film production line with total capacity of 3,500 metric tons per year, three Advanced film lines with an annual capacity of 1,000 metric tons, three coated film lines with an annual capacity of 6,000 metric tons and two 8-color printing lines. Our original Hainan Factory consists of four buildings dedicated to film production and administrative offices. We made one-time payment of RMB2,667,879 (approximately $322,013) for the right to use the land.

In 2009, we purchased a plot of land and entered into a 10-year lease for an adjacent, then-undeveloped, plot from Hainan Xiandai Keji Group, in the Hainan Shiziling Feidi Industrial Park and began construction of a new manufacturing facility there. We completed phase 1 of construction on our new manufacturing facility in Hainan in May 2010 and have successfully begun operations. The new facility in Hainan is a well-designed industrial park, with a total factory space of approximately 500,000 square feet. The new plant allows us to consolidate operations and processes from three separate locations into this central location; which will provide immediate operational efficiencies, improved quality control and cost savings. We believe this new facility provides us with the opportunity to better serve international customers and puts Shiner in a better competitive position to win new business. We have no rental obligations for this property through 2012.

We built a new BOPP tobacco film production line that was launched in the fourth quarter of 2011. The new line is in a fully automated plant equipped with state-of-the-art production machinery from Germany and England. We expect this additional production line to increase our annual BOPP tobacco film capacity by an additional 10,000 metric tons.

Zhuhai Factory

We completed the construction of our Zhuhai Factory in 2006 to meet the growing demand for BOPP films. The Zhuhai Factory is equipped with one BOPP film production line with an annual capacity of 7,000 metric tons, two coated film lines with an annual capacity of 9,000 metric tons, one Advanced film line with an annual capacity of 1,500 metric tons and one 10-color printing line. We lease the Zhuhai Factory for approximately $387,000 per year and our lease runs through 2016.

Sales Office

On September 20, 2010, Shanghai Juneng opened a new sales office in Shanghai. Through this office we are pursuing sales opportunities among the domestic food safety packaging markets and targeting China’s leading food producers. Shanghai Juneng leases this office for approximately $10,000 per year under a lease that runs until 2015.

ITEM 3. LEGAL PROCEEDINGS.

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm business. We are currently not aware of any such legal proceedings or claims that will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.

ITEM 4. (REMOVED AND RESERVED).

PART II

ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER REPURCHASES OF EQUITY SECURITIES.

Market Information

Through February 11, 2008, our common stock was quoted on the OTCBB under the symbol “SHNL.OB.” Our common stock is currently traded on the Nasdaq Global Market under the symbol “BEST.” The following table sets forth, for the periods indicated, the quarterly high and low selling prices for our common stock as reported by Nasdaq.

	For the Year Ended December 31,
	2011				2010
		High		Low		High		Low
First Quarter	$	1.69	$	1.04	$	1.65	$	1.13
Second Quarter		1.17		0.80		1.39		0.89
Third Quarter		1.03		0.68		1.10		0.85
Fourth Quarter		0.84		0.34		1.52		1.02

On March 27, 2012, the closing price of our common stock as reported on Nasdaq was $0.44 per share.

Holders

As of March 27, 2012, there were 27,941,491 shares of our common stock outstanding held by approximately 67 stockholders of record. The number of our stockholders of record excludes any estimate by us of the number of beneficial owners of shares held in street name, the accuracy of which cannot be guaranteed.

Dividend Policy

Except for dividends paid to those persons who held shares of our common stock prior to the consummation of the share exchange transaction discussed in this Annual Report on Form 10-K, we have not paid any cash dividends on our common stock and we have no intention of paying cash dividends in the foreseeable future. Whether we will declare and pay dividends in the future will be determined by our board of directors at their discretion, subject to certain limitations imposed under Nevada corporate law. In addition, our ability to pay dividends may be affected by the foreign exchange controls in China. The timing, amount and form of dividends, if any, will depend on, among other things, our results of operations, financial condition, cash requirements and other factors deemed relevant by our board of directors.

Securities Authorized for Issuance under Equity Compensation Plans

The following table provides information as of December 31, 2011 about our common stock that may be issued upon the exercise of options and rights granted to employees or members of our Board of Directors:

Plan Category	(a) Number of securities to be issued upon exercise of outstanding options, warrants and rights		(b) Weighted- average exercise price of outstanding options, warrants and rights		(c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders		120,000	$	1.03		0
Equity compensation plans not approved by security holders		0	$	0.00		0
Total		120,000	$	1.03		0

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

None.

ITEM 6. SELECTED FINANCIAL DATA.

Not required.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We were incorporated in Nevada in November 2003, but since July 2007, have been headquartered in Hainan, China. Through our operating subsidiaries, Hainan Shiner, Shiny-Day, Hainan Modern, Zhuhai Modern, Shimmer Sun, Ningbo and Shanghai Juneng we manufacture and sell packaging and anti-counterfeit plastic film to manufacturers and producers in China. We also sell three of our products, anti-counterfeit film, coated film, and color printing, in international markets through a network of distributors and converters.

Our primary business consists of the manufacture and distribution of technology driven advanced packaging film products in five business segments: bi-axially oriented polypropylene, or BOPP, film for wrapping tobacco; water-based latex; coated film; color printed packaging; and advanced film. Our products are sold to customers in the food, tobacco, chemical, medical and pharmaceutical, personal care, electronics, automotive, construction, graphics, music and video publishing industries. Our current production capacity consists of: five coated film lines with a total capacity of 15,000 tons a year; one BOPP tobacco film production line with a capacity of 3,500 tons a year; one BOPP film production line with a capacity of 7,000 tons a year; three color printing lines; four anti-counterfeit film lines with a total capacity of 2,500 tons a year; and two water-based latex reaction kettles with a total capacity of 3,000 tons a year.

The table below shows the percentage of revenue by each of our business segments for the years ended December 31, 2011 and 2010:

	Percent of Revenue
	2011			2010
BOPP tobacco film		51.0	%		28.9	%
Water-based latex		0.5	%		0.0	%
Coated film		30.1	%		40.4	%
Color printing		7.6	%		6.4	%
Advanced film		10.8	%		24.3	%
		100.0	%		100.0	%

We have 19 patents by the State Intellectual Property Office of China and have 10 patent applications relating to our products and manufacturing processes pending. Although our patents and processes provide us a competitive advantage, we do not believe the loss of any single patent would have a material adverse effect on our business.

Results of Operations

Comparison of the Year Ended December 31, 2011 and 2010

						$			%
	2011		2010			Change			Change
Revenues	$	75,294,512	$	58,165,410		$	17,129,102			29.4	%
Cost of goods sold		65,275,356		48,361,075			16,914,281			35.0	%
Gross profit		10,019,156		9,804,335			214,821			2.2	%
Selling, general and administrative expenses		7,988,178		5,176,194			2,811,984			54.3	%
Interest expense, net of interest income		1,093,095		217,849			875,246			401.8	%
Other income (expense), net		1,404,336		649,800			754,536			116.1	%
Exchange gain (loss)		61,442		(93,170	)		154,612			-165.9	%
Income tax expense		763,424		818,769			(55,345	)		-6.8	%
Net loss attributed to noncontrolling interest		102,239		8,079			94,160			1165.5	%
Net income attributed to Shiner	$	1,742,476	$	4,156,232		$	(2,413,756	)		-58.1	%

Revenues

Our revenue by business segment is as follows:

					$			%
Revenue by business segment	2011		2010		Change			Change
BOPP tobacco film	$	38,407,457	$	16,830,883	$	21,576,574			128.2	%
Water-based latex		383,729		-		383,729			n/a
Coated film		22,634,520		23,474,569		(840,049	)		-3.6	%
Color printing		5,736,812		3,707,089		2,029,723			54.8	%
Advanced film		8,131,994		14,152,869		(6,020,875	)		-42.5	%
	$	75,294,512	$	58,165,410	$	17,129,102			29.4	%

The increase in revenue was primarily caused by an increase in domestic product volume. 83.9%, or $63.2 million, of our sales in 2011 were made to Chinese companies. In 2010, 81.1%, or $47.2 million, of our sales were made domestically. The Company provides coated film to its largest customer which manufactures snack cakes and our remaining top three customers are tobacco manufacturers which use our BOPP tobacco film.

Internationally, we sell three lines of products: Advanced film (anti-counterfeit film), coated film, and color printing. International sales for 2011 were $12.1 million, or 16.1%, of our revenues in 2011 as compared to 11.0 million or 18.9% of revenue for 2010. The increase was not significant. All international sales are indirect using a network of distributors and converters.

The increase in revenue of BOPP tobacco film is due to the increased volume and price, we derived an increase of $20.4 million due to increased sales volume and $1.2 due to higher unit prices for BOPP tobacco film. The decrease in revenue of coated film is due to the increased volume and decreased price, we derived an increase of $4.3 million due to an increased sales volume offset by a $5.2 million decrease in unit prices for coated film. The increase in revenue of color printing products is mainly due to the increase of volume. The decrease in revenue of Advanced film is due to the increase of volume and decrease of price. We derived an increase of $0.5 million due to an increase in sales volume offset by a $6.5 million decrease in unit prices for Advanced film.

Our five largest customers accounted for 7%, 4%, 3%, 3% and 3% of our revenue, respectively, for 2011 and 16%, 10%, 8%, 7% and 4% of our revenue, respectively, for 2010.

Cost of Goods Sold

Cost of goods sold increased $16.9 million, or 35.0%, from $48.4 million for 2010 to $65.3 million for 2011. The cost of goods sold was 86.5% and 83.1% of our revenue in the year ended 2011 and 2010, respectively. The principal cost component of our cost of goods sold is raw materials which includes petroleum. The increase in cost of goods sold year to year was primarily caused by an increase in raw material costs due to petroleum price fluctuations. We estimate an increase in the price of crude oil of $10 per barrel would cause our raw material cost to increase by approximately 6%. There was some increase in the cost of our raw materials as a result of an increase in crude oil prices throughout the period. There has not been a significant difference in the cost of goods sold percentages among our different product lines and therefore, any increase or decrease in our raw material costs would be expected to have a similar impact to our different product lines’ profitability.

The packaging industry requirements for the food industry mandate the use of non-benzene based products. To be environmentally friendly and improve work conditions in our factory, Shiner switched to non-benzene based ink products in a corporate effort to be green. This change also contributed to our compliance with the food safety laws, as our food packaging operations are conducted in the same facility. We had a favorable response from all of our customers at the time.

The percentage increase in our cost of goods sold for 2011 was influenced by a 70% increase in raw material costs due to petroleum price fluctuations; a 30% increase in the cost of labor; and the amortization of the added depreciation of Phase I of the Hainan manufacturing facility into the cost of goods sold.

Gross Profit

Our gross profit for 2011 was $10.2 million, a profit margin of 13.3%, a decrease of 3.5% from 16.9% for 2010. The decrease in gross profit margin was primarily a consequence of an increase in overhead unit rates as a result of increased labor costs and depreciation of the new property.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses increased by 54.3%, or $2.8 million, to $8.0 million for 2011 compared to $5.2 million in 2010. General and administrative expenses include rent, management and staff salaries, insurance, marketing, accounting, legal, and research and development expenses. Although we have strict standards to control our general and administrative expenses, we have increased our research and development expenditures as compared to 2010. The increase in selling, general and administrative expenses is mainly due to an increase of $1.4 million research and development expenses, an increase of $0.5 million for marketing activities and an increase of $0.5 million for insurance expenses.

Interest Expense, net

Interest expense, net for 2011 increased by 402%, or $875,246, to $1,093,095 compared to $217,849 in 2010. We obtained additional short-term and long-term loans during 2011 compared to 2010.

Other Income

Other income increased by $0.8 million or 116.1% to $1.4 million for 2011 compared to income of $649,800 in 2010. During 2011, we received $1.4 million in subsidy income from Chinese Governmental Agencies for developing technology and research and development projects. We did not have these subsidies during 2010. During 2010, we received $293,000 from a former landlord for vacating leased space, which was paid in full during 2010.

Income Tax Expense

For 2011, we recorded a tax provision of $763,424 compared to $818,769 for 2010. Our effective tax rates for 2011 and 2010 were 31.8% and 16.5%, respectively. The increase in the effective tax rate is due to losses incurred by certain subsidiaries where the loss was not able to offset income generated by other subsidiaries.

Net Income

The decrease in our net income for 2011 compared to 2010 was mainly due to increased labor costs, depreciation of the new property, no other income from a former landlord offset by an increase in subsidy income.

Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements as of December 31, 2011 that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our interests.

Liquidity and Capital Resources

At December 31, 2011, we had $2.8 million in cash and equivalents on hand, compared to $8.6 million at December 31, 2010, and we had working capital of $9.7 million, a decrease of $3.1 million from December 31, 2010. The decrease in working capital is primarily due to the use of current assets such as cash, other payables and short-term loans to purchase non-current assets. Our principal demands for liquidity are: increasing capacity, purchasing raw materials, sales distribution and the possible acquisition of new subsidiaries in our industry, as well as other general corporate purposes. The following table summarizes the key cash flow metrics from our condensed consolidated statements of cash flows for 2011 and 2010.

Cash Flows

Below is a summary of the cash flow activity for 2011 and 2010:

	2011			2010
Net cash (used in) provided by operating activities	$	379,709		$	5,996,894
Net cash used in investing activities		(19,641,558	)		(6,769,342	)
Net cash provided by financing activities		13,347,652			6,315,290
Effect of exchange rate changes on cash and equivalents		123,970			19,397
Net (decrease)/increase in cash and equivalents		(5,790,227	)		5,562,239
Cash and cash equivalents at beginning of the year		8,622,035			3,059,796
Cash and cash equivalents at end of the year	$	2,831,808		$	8,622,035

Operating Activities

Net cash flows provided by operating activities for 2011 was $0.4 million, which was comprised primarily of net income of $3.8 million and depreciation of $2.3 million, offset by an increase in working capital components of $5.8 million.

Investing Activities

We used $19.6 million from our investing activities during 2011 primarily for the acquisition of property and equipment including construction in progress and the purchase of Shimmer Sun Ltd. for $3.2 million. We are building a new tobacco film production line. The new line will be a BOPP film production line in a fully automated plant equipped with state-of-the-art production machinery. The cost of this new facility is approximately $14.0 million. We have an RMB 70 million ($11.1 million) credit facility we can draw down upon to pay for the cost of the building (see discussion under “Liabilities” below).

Financing Activities

Net cash provided by financing activities during 2011 was $13.4 million from the issuance of short and long-term loans. $7.0 million was paid to repay short-term loans offset by $20.4 million provided by the issuance of short-term loans and long-term loans under the credit facility bearing interest rates between 6.06% and 8.20%.

Assets

As of December 31, 2011, our accounts receivable decreased by $2.3 million compared with December 31, 2010. The decrease in accounts receivable during 2011 was due primarily to our collection of accounts receivable. We intend to continue our efforts to maintain accounts receivable at reasonable levels in relation to our sales. As of December 31, 2011, our inventory increased by $2.9 million compared with December 31, 2010.

Liabilities

Our current liabilities increased by $6.6 million during 2011 principally due to an increase in short-term loan and other payables. The increase in short-term loans during 2011 was due primarily to the need for additional cash to finance our increased sales volume.

We entered into a formal agreement with a vendor whereby we agreed to purchase new equipment for $13.2 million. We already paid $10.0 million toward the purchase of this equipment and issued a letter of credit for the remaining amount. The equipment was installed in the third quarter of 2011, and became operational in the first quarter of 2012.

On August 2, 2010, Hainan Shiner, our wholly owned subsidiary, entered into a credit facility with the Hainan Branch of the Bank of China. The credit facility is comprised of a seven-year 70 million RMB, or approximately $11.1 million, secured revolving credit facility. Hainan Shiner may not make any draw downs under this facility after December 31, 2011. On each of January 24, February 10, February 16, February 17, March 25, November 30, and December 23, 2011, Hainan Shiner made withdrawals on the credit facility of approximately $2.5 million, $2.6 million, $2.2 million, $1.2 million, $0.4 million, $0.2 million and $0.5 million, respectively. We have approximately $0.8 million of available credit. Hainan Shiner may only use the loan proceeds to improve the technology of its BOPP film and to purchase certain equipment necessary for these improvements. Proceeds under the facility not used for these purposes may be subject to a misappropriation penalty interest rate of 100% of the current interest rate on the loan.

The initial interest rate on each withdrawal from the facility will be the 5-year benchmark lending rate announced by the People’s Bank of China on the date of such withdrawal, and is subject to adjustment every 12 months based upon this benchmark. Additional interest will be paid on any overdue loan under this credit facility of 50% of the current interest rate on the loan. Hainan Shiner and certain of its affiliates, including the Company, provided guarantees and certain land, buildings, and property as collateral under this facility.

The credit facility includes financial covenants that prohibit Hainan Shiner from making distributions to its sole shareholder if (a) its after-tax net income for the fiscal year is zero or negative, (b) its after-tax net income is insufficient to make up its accumulated loss for the last several fiscal years, (c) its income before tax is not utilized in paying off the capital, interest and expense of the lender, or (d) the income before tax is insufficient to pay the capital, interest and expense of the lender.

During 2011, we paid approximately $7.0 million of our short-term loans and borrowed an additional $10.5 million in short-term loans. These loans are due between February 2012 and June 2012. We intend to meet our liquidity requirements, including capital expenditures related to the purchase of equipment, purchase of raw materials, and the expansion of our business, through cash flow provided by operations, and our current credit facility.

Critical Accounting Policies

Accounts Receivable

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Reserves are recorded primarily on a specific identification basis.

Inventory

Inventory is valued at the lower of cost (determined on a weighted average basis) or market. Management compares the cost of inventory with this market value and allowance is made to write down inventory to market value, if lower.

Revenue Recognition

The Company’s revenue recognition policies are in compliance with SEC Staff Accounting Bulletin (“SAB”) 104. Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

Sales revenue consists of the invoiced value of goods, which is net of value-added tax (“VAT”). All of the Company’s products are sold in the PRC and are subject to Chinese VAT of 17% of the gross sales price. This VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing their end product. The Company recorded VAT payable and VAT receivable net of payments in the financial statements. The VAT tax return is filed offsetting the payables against the receivables.

Sales and purchases are recorded net of VAT collected and paid. VAT taxes are not affected by the income tax holiday.

Stock-Based Compensation

The Company records stock-based compensation in accordance with ASC Topic 718, “Compensation – Stock Compensation.” ASC 718 requires companies to measure compensation cost for stock-based employee compensation at fair value at the grant date and recognize the expense over the employee’s requisite service period. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees. There were 120,000 options outstanding as of December 31, 2011.

Income Taxes

The Company accounts for income taxes in accordance with ASC Topic 740, “Income Taxes.” ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The adoption had no effect on the Company’s consolidated financial statements.

Basic and Diluted Earnings Per Share

Earnings per share (“EPS”) is calculated in accordance with the ASC Topic 260, “Earnings Per Share.” Basic EPS is based upon the weighted average number of common shares outstanding. Diluted EPS is based on the assumption that all dilutive convertible shares and stock warrants were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. There were 120,000 options and 521,664 warrants outstanding as of December 31, 2011. All options and warrants were excluded from the diluted loss per share calculation due to their anti-dilutive effect since the exercise prices are greater than the average stock price.

Recent Accounting Pronouncements

In May 2011, the FASB issued ASU 2011-04 which was issued to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and IFRS. ASU 2011-04 changes certain fair value measurement principles and enhances the disclosure requirements particularly for Level 3 fair value measurements. This guidance is effective for us beginning on January 1, 2012. The adoption of ASU 2011-04 is not expected to significantly impact our consolidated financial statements.

In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income. ASU 2011-05 revises the manner in which entities present comprehensive income in their financial statements. The new guidance removes the presentation options in Accounting Standards Codification (ASC) 220, Comprehensive Income, and requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. The ASU does not change the items that must be reported in other comprehensive income. In December 2011, the FASB issued ASU 2011-12 which defers the requirement in ASU 2011-05 that companies present reclassification adjustments for each component of accumulated other comprehensive income in both net income and other comprehensive income on the face of the financial statements. ASU 2011-05 is effective for fiscal years and interim reporting periods within those years beginning after December 15, 2011, with early adoption permitted. The adoption of ASU 2011-05, as amended by ASU 2011-12, is not expected to significantly impact our consolidated financial statements.

In September 2011, the FASB issued ASU 2011-08 which provides an entity the option to first assess qualitative factors to determine whether it is necessary to perform the current two-step test for goodwill impairment. If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required. The revised standard is effective for us for our annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of ASU 2011-08 is not expected to significantly impact our consolidated financial statements.

Contractual Obligations

Our significant contractual obligations as of December 31, 2011 are as follows:

	Payments due by Period
	Less than		One to		Three to		More Than
	One Year		Three Years		Five Years		Five Years		Total
Short-term loan	$	10,684,625	$	-	$	-	$	-	$	10,684,625
Long-term loans		-		-		-		9,957,090		9,957,090
Interest on loan obligations		797,497		657,168		657,168		657,168		2,769,001
Lease obligations		440,571		788,000		-		-		1,228,571
Total	$	11,922,693	$	1,445,168	$	657,168	$	10,614,258	$	24,639,287

Seasonality of our Sales

The first quarter of the calendar year is typically the slowest season of the year due to the Chinese New Year holiday. During this period, accounts receivable collection is very slow and we also need to prepare for upcoming busier seasons by making payments for inventory.

Inflation

Inflation does not materially affect our business or the results of our operations.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risks related to changes in interest rates and foreign currency exchange rates, however, we believe those risks to be not material in relation to our operations. We do not have any derivative financial instruments.

Interest Rate Risk

As of December 31, 2011, we held no money market securities or short term available for sale marketable securities. Due to the short term duration of our investment portfolio, an immediate 10% change in interest rates would not have a material effect on the fair market value of our portfolio. Therefore, we would not expect our operating results or cash flows to be affected to any significant degree by the effect of a sudden change in market interest rates on our securities portfolio.

Foreign Currency Exchange Risk

All of our revenues are denominated in RMB and, as a result, we have certain exposure to foreign currency exchange risk with respect to current revenues. A majority of our expenses are payable in foreign currency. We do not use forward exchange contracts to hedge exposures denominated in foreign currencies or any other derivative financial instruments for trading or speculative purposes. The effect of an immediate 10% change in exchange rates would not have a material impact on our future operating results or cash flows.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The full text of our audited consolidated financial statements as of December 31, 2011 and 2010 begins on page F-1 of this report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None

ITEM 9A. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

Our management, under the supervision and with the participation of our chief executive officer and chief financial officer, has performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report, as required by Rule 13a-15(b) under the Exchange Act. Disclosure controls and procedures are those controls and procedures designed to provide that the information required to be disclosed in our Exchange Act filings is (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules, regulations and related forms, and (2) accumulated and communicated to management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Annual Report on Form 10-K.

Management’s Annual Report on Internal Control over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles (“GAAP”). Internal control over financial reporting includes policies and procedures that:

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and/or our board of directors; and

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the interim or annual consolidated financial statements.

Under the supervision and with the participation of our chief executive officer and chief financial officer, management conducted an evaluation of the effectiveness of Shiner’s internal control over financial reporting as of December 31, 2011, using the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“Treadway”).

Based on this evaluation, our management concluded that our internal control over financial reporting was effective and that there was no material weakness or significant deficiency discovered as of December 31, 2011.

Inherent Limitations Over Internal Controls

Because of its inherent limitations, internal control over financial reporting may not prevent or detect all errors or misstatements and all fraud. Therefore, even those systems determined to be effective can provide only reasonable, not absolute, assurance that the objectives of the policies and procedures are met. 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.

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 SEC that permit the company to provide only management’s report in this annual report.

Changes in Internal Control Over Financial Reporting

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Information about our Board of Directors

The size of our Board of Directors has been set at five directors by action of the Board of Directors. Set forth below are the names, ages, principal occupations, and length of service of each of the members of our Board of Directors. In addition, we briefly describe the particular experience, qualifications, attributes or skills that led our Board of Directors to conclude that the person should serve as a director of Shiner.

Yuet Ying	58	Mr. Ying has served as Chairman of our Board of Directors since July 2007. Prior to that, Mr. Ying served as chairman and a director of Sino Palace Holdings Limited, Shiner’s predecessor, from January 2004 to July 2007. He served as chairman of Hainan Modern Technology Group from 1996 to December 2003. Mr. Ying holds a Bachelor’s Degree in Management from the Institute of the CPC Party School and an Advanced certificate of M.B.A. studies from Renmin People’s University. Mr. Ying is the father-in-law of Qingtao Xing, the President and Chief Executive Officer of Shiner. Mr. Ying’s history of leadership experience in the technology industry and his business education were significant to the decision to nominate him and remain important in his role as Chairman.

Jian Fu	47	Mr. Fu joined our Board of Directors in July 2007. He currently serves as Shiner’s Executive Vice President of Manufacturing. From July 2007 until February 2010, he served as our Chief Executive Officer. Prior to that, Mr. Fu served as chief executive officer and a director of Sino Palace Holdings Limited, Shiner’s predecessor, from January 2004 to July 2007. He worked at Hainan Plastic Industrial Co., Ltd. as Vice Chairman of the Hainan Modern Technology Group from 1998 to December 2003 and as General Manager from 1985 to 1997. Mr. Fu holds a undergraduate degree in Plastic Engineering Technique from South China Institute of Technology and an Advanced Certificate of M.B.A. studies from Renmin University. Mr. Fu’s engineering experience and technological acumen, along with his knowledge of Shiner’s operations and previous executive experience, are attributes we value in our directors.

Brian G. Cunat

Mr. Cunat joined our Board of Directors in November 2007. He has served as the president of Cunat, Inc., a land development, construction and property management firm since 1976. Since October 2007, he also has served as chairman of Golden Eagle Community Bank, a full service bank that he founded. From 1996 to November 2005, he was the vice chairman of the board for Illinois State Bank, a bank that he founded in 1996. From 1993 to March 2004, Mr. Cunat was president of Royal Japan Corporation, a real estate development and property management firm based in Japan. Mr. Cunat has been active on many charitable and community organizations, including Kiwanis International President, Family Services and Community Mental Health, Home Builders Association, and Chicagoland Apartment Association. In 1997, he received the Entrepreneur of the Year Award from Ernst & Young. The financial acumen that Mr. Cunat obtained through his banking and real estate experience, along with his independence, were attributes that were important to his nomination and to his service on Shiner’s standing Board committees.

Michael J. Antonoplos	60	Mr. Antonoplos joined our Board of Directors in July 2010. He is a 36-year veteran of the commercial real estate industry. He is a principal of a firm he started in 2000, which provides debt and equity for a variety of real estate investments. Mr. Antonoplos has previously served as an officer and board member for two public companies. Mr. Antonoplos graduated from the University of Pittsburgh with bachelor of science degrees in both psychology and political science. Mr. Antonoplos recently concluded his tenure as a receiver for a corporation under an appointment from the U.S. District Court of the Eastern District of Pennsylvania. In this capacity, he was responsible for overseeing the operation of the enterprise, managing its bank accounts, and obtaining funds to satisfy a bankruptcy judgment, while maintaining the viability of the company. Mr. Antonoplos' business acumen, understanding of financial statements and prior public board service were several key factors that Shiner's board deemed important to his nomination and service on the Board and appointment as Chairman of the Audit Committee.

Zhenhuan Yuan	44	Mr. Yuan joined our Board of Directors in July 2010. He is the founding-partner of Sunstone International LLC, a California based investment advisory and management firm. He is also the Senior Vice President of Cunat Inc., a real estate investment and management company. Mr. Yuan served as the Vice President at Fortress Investment Group for the Shanghai Office from 2008 to 2009, where he was in charge of acquisitions and asset management. From 2006 to 2008, Mr. Yuan worked for Jones Lang LaSalle in China, where he was responsible for sourcing, negotiating and underwriting real estate investment deals in the region. Mr. Yuan received a bachelor of engineering degree from Harbin Institute of Technology and his M.B.A. degree from Cornell University. Mr. Yuan is fluent in English, Chinese and Japanese. Mr. Yuan’s extensive business background and understanding of Chinese culture and business were attributes that Shiner considered important in connection with his nomination to the Board and service on each of the Board’s standing committees.

Composition of the Board

Our Board of Directors oversees our business and affairs and monitors the performance of management. Management is responsible for the day-to-day operations of our company. As of the date of this proxy statement, our board has five directors. Our board has determined that each of Messrs. Cunat, Antonoplos and Yuan are “independent directors” within the meaning of applicable Nasdaq Stock Market rules and the rules promulgated by the SEC.

During 2011, the board met 9 times and acted by unanimous consent 5 times. We had three standing committees in 2011 - an audit committee, a compensation committee and a nominating committee. Each of our directors attended at least 75% of the meetings of the board and meetings of the committees on which they served that were held in 2011 during the term of their service on the board and each committee. We strongly encourage our Board of Directors to attend our annual meeting of stockholders.

Committees of the Board

The table below provides 2011 membership and meeting information for each of the committees.

Name

Audit

Compensation

Nominating

Michael J. Antonoplos

Brian Cunat

Jian Fu

Yuet Ying

Zhenhuan Yuan

2011 Meetings

2011 Consents

* Committee Chair

Audit Committee

The Audit Committee is responsible for: monitoring the quality, reliability and integrity of the accounting policies and financial statements of Shiner; overseeing our compliance with legal and regulatory requirements; reviewing the independence, qualifications and performance of our internal and external auditors; overseeing the performance of Shiner’s internal audit function and independent auditors; reviewing and monitoring the provisions of non-audit services performed by our independent auditors; and preparing a committee report as required by the SEC to be included in our annual proxy statement. Our Board of Directors has made an affirmative determination that each member of the Audit Committee (a) is an “independent director” as that term is defined by Nasdaq Marketplace Rules and (b) satisfies Nasdaq Marketplace Rules relating to financial literacy and experience.

Our Board of Directors has adopted a written Audit Committee charter, a copy of which may be viewed on the “Annual Meeting” page of our website located at www.shinerinc.com/annualmeeting.html or a printed copy may be obtained by making a written request to Mr. Adam Liu, Corporate Secretary of Shiner International, Inc., at 19/F, Didu Building, Pearl River Plaza, No. 2 North Longkun Road, Haikou, Hainan Province, China 570125.

Audit Committee Financial Expert

The Board of Directors has examined the composition of the Audit Committee in light of the listing standards of the Nasdaq Stock Market and the regulations under the Securities Exchange Act of 1934 (“Exchange Act”) applicable to audit committees. Based upon this examination, the Board of Directors has determined that each of the audit committee members is an “independent” director within the meaning of such listing standards and the Exchange Act and the rules and regulations thereunder. Mr. Antonoplos qualifies as an “audit committee financial expert” as that term is defined in applicable regulations of the SEC.

Compensation Committee

The Compensation Committee is responsible for recommending compensation arrangements for our executive officers; evaluating the performance of our chief executive officer; and administering our compensation plans. All members of the Compensation Committee are independent under the standards for independence established by the applicable Nasdaq Marketplace Rules. Our Board of Directors has adopted a written compensation committee charter, a copy of which may be viewed on the “Annual Meeting” page of our website located at www.shinerinc.com/annualmeeting.html or a printed copy may be obtained by making a written request to Mr. Adam Liu, Corporate Secretary of Shiner International, Inc., at 19/F, Didu Building, Pearl River Plaza, No. 2 North Longkun Road, Haikou, Hainan Province, China 570125.

Nominating Committee

The Nominating Committee is responsible for, among other thing, assisting the board in identifying individuals qualified to become members of the board and executive officers, selecting, or recommending that the board select, director nominees for election as directors by the stockholders, developing and recommending to the Board a set of effective governance policies and procedures applicable to Shiner, and recommending to the board director nominees for each committee. All members of the Nominating Committee are independent under the standards for independence established by the applicable Nasdaq Marketplace Rules. The nominating committee acts under a written charter adopted by our Board of Directors (a copy of which may be viewed on the “Annual Meeting” page of our website located at www.shinerinc.com/annualmeeting.html or a printed copy may be obtained by making a written request to Mr. Adam Liu, Corporate Secretary of Shiner International, Inc., at 19/F, Didu Building, Pearl River Plaza, No. 2 North Longkun Road, Haikou, Hainan Province, China 570125).

Procedure for Stockholder Nominations of Directors

Nominations for the election of directors may only be made by the Board of Directors in consultation with its nominating committee. A stockholder of record may recommend to the committee a candidate for consideration as a nominee. The committee will consider a stockholder nominee only if a stockholder provides written notice to: Shiner International, Inc., 19/F, Didu Building, Pearl River Plaza, No. 2 North Longkun Road, Haikou, Hainan Province, China 570125), Attention: Corporate Secretary for the Nominating Committee, with a copy to our counsel, William W. Uchimoto, Esq., Stevens & Lee, P.C., 1818 Market Street, 29th Floor, Philadelphia, PA 19103-1702, not later than 120 days prior to the anniversary of the mailing of the proxy statement for the prior year’s annual meeting of stockholders. Each such notice must include the name, address and telephone number of the potential nominee; a detailed biography of the potential nominee; and evidence of stock ownership by the presenting stockholder, including the number of shares owned. Nominees properly proposed by eligible stockholders will be evaluated by the nominating committee in the same manner as nominees identified by the committee. To date, no stockholder or group of stockholders has put forth any director nominees.

Executive Officers

Our executive officers, in addition to Mr. Fu, are listed below:

Qingtao Xing	35	Mr. Xing has been our Chief Executive Officer since February 22, 2010. Mr. Xing became President of Shiner in May 2008, having joined Shiner in January 2008, serving as Shiner’s Vice President for strategic initiatives. Prior to joining Shiner, Mr. Xing worked as a project development associate for LaSalle Investment Management from July 2007 to January 2008, as managing partner of New Frontiers Investment Management from May 2007 to January 2008 and as a summer intern for Citigroup Property Investors in Hong Kong during 2006. Mr. Xing received his master of professional studies degree from Cornell University in 2007 and holds a bachelor’s degree from Tongji University. Prior to attending Cornell, Mr. Xing was associated with two real estate companies in China, which developed residential and commercial properties. Mr. Xing is the son-in-law of our Chairman, Mr. Ying.

Xue Zhu Xu	50	Ms. Xu is our interim Chief Financial Officer and Corporate Controller. Ms. Xu served as our Chief Financial Officer from July 2007 until February 2010. Prior to that, Ms. Xu served as chief financial officer of Sino Palace Holdings Limited, Shiner’s predecessor, from January 2004 to July 2007. She worked at Hisense Company Limited as chief financial officer from 1996 to December 2003. From 1990 to 1996 Ms. Xu worked as an accounting manager at Hainan Hisense Group. She worked as the accounting manager in Hainan WenChang Foreign Trade Co. from 1981 to 1990. Ms. Xu graduated from Hainan Supply and Marketing School in 1981 with a bachelor’s degree in accounting. She received an Advanced certificate of MBA studies from Renmin University in 2004.

Ming Biao Li	46	Mr. Li has served as our Chief Operating Officer since January 1, 2008, having served as our vice president of technology from July 2007 through December 2007. Prior to that, Mr. Li served as general manager of our subsidiary, Hainan Shiner Industrial Co., Ltd., from January 2003 to March 2005 and as its Chairman from July 2004 to July 2007. He served as general manager of our subsidiary, Hainan Shiny-day Color Printing Packaging Co., Ltd., from September 2003 to May 2004. From October 1997 to December 2002, he worked in Hainan Weilin Electron Co. as general manager. Mr. Li served as section chief of the Project Investment and Evaluation group of the Guangxi Auto & Tractor Research Institution from 1995 to 1997. From 1990 to 1995, he headed up the automated equipment group at the Guangxi Auto & Tractor Research Institution. Mr. Li graduated from Tsinghua University in 1987 with a Bachelor’s degree in Automotive Engineering. He later obtained his Master’s in Transport Engineering from Beijing University in 1991.

Code of Conduct

We have adopted a code of conduct that applies to our chief executive officer, chief financial officer and all of our other officers, employees and directors, a copy of which may be viewed on the “Corporate Governance” page of our website located at www.shinerinc.com/inves_cg.html or a printed copy may be obtained by making a written request to Mr. Adam Liu, Corporate Secretary of Shiner International, Inc., at 19/F, Didu Building, Pearl River Plaza, No. 2 North Longkun Road, Haikou, Hainan Province, China 570125.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires directors, executive officers and persons who are the beneficial owners of more than 10% of our common stock to file reports of their ownership and changes in ownership of our equity securities with the SEC. The reporting persons are required by SEC regulation to furnish us with copies of all Section 16 reports they file. Based on a review of the copies of such forms furnished to us and other written representations that no other reports were required during the year ended December 31, 2011, we believe our directors, executive officers and greater than ten percent beneficial owners timely filed all Section 16(a) reports required during the year ended December 31, 2011.

ITEM 11. EXECUTIVE COMPENSATION.

Summary Compensation Table

The following table shows the compensation of each of our named executives in 2011. Our named executives are: our chief executive officer and president, Mr. Qingtao Xing; our interim chief financial officer and corporate controller, Ms. XueZhu Xu; and our next two most highly compensated executive officers - our executive vice president of manufacturing, Mr. Jian Fu, and our chief operating officer, Mr. MingBao Li.

												Change in
												Pension
										Non-Equity		Value and
										Incentive		Nonqualified
				Stock		Option				Plan		Deferred		All Other
Name and		Salary		Awards		Awards		Bonus		Compensation		Compensation		Compensation
Principal Position	Year	($)*		($)		($)		($)*		($)		Earnings ($)		($)		Total ($)*
Qingtao Xing,	2011		8313		—		—		31931		—		—		—		40244
President and Chief Executive Officer	2010		7,464		—		—		32,931		—		—		—		40,395

Xuezhu Xu,	2011		7879		—		—		15479		—		—		—		23359
Interim Chief Financial Officer and Corporate Controller	2010		6,736		—		—		20,390		—		—		—		27,126

Jian Fu,	2011		8313		—		—		18576		—		—		—		26889
Executive Vice President of Manufacturing	2010		7,464		—		—		19,843		—		—		—		27,307

MingBiao Li,	2011		7988		—		—		18576		—		—		—		26564
Chief Operating Officer	2010		6,918		—		—		17,537		—		—		—		24,455

*	Each of the named executive officer were paid their salaries and bonuses in RMB and the amounts in the foregoing table represent the U.S. dollar equivalent based on a conversion rate of US$1=6.4599RMB and RMB6.5916 at December 31, 2011 and 2010, respectively.

Narrative Disclosure to Summary Compensation Table.

Compensation paid to our named executives in 2011 consisted solely of cash salary and bonus. However, in the future, our named executive officers may be eligible to receive other forms of compensation.

Historically, we have not provided our named executives with perquisites or other personal benefits. Additionally, we do not provide any company-sponsored retirement benefits or deferred compensation programs to any employee, including the named executive officers (other than a mandatory state pension scheme in which all of our employees in the People’s Republic of China participate), because it is not customary to provide such benefits and programs in the People’s Republic of China.

We maintain employment agreements with each of our named executive officers. The terms of these employment agreements generally provide that the employment relationship must comply with the laws and regulations of the People’s Republic of China. These agreements do not specifically provide any payments in the event of a change in control of Shiner or the executive’s termination, other than payments that may be required pursuant to Chinese labor laws.

Mr. Fu and Ms. Xu are subject to a two-year non-compete under their employment agreements. The non-compete prohibits them from working for any other organization which provides the same kind of products or services as Shiner and from competing with Shiner for its employees and customers.

Director Compensation

The following table provides information concerning the compensation of our non-executive directors for the year ended December 31, 2011. Messrs. Antonoplos and Yuan each joined the board of directors in July 2010 and Messrs. Cogan and Staloff each resigned from the board of directors in July 2010. Therefore, the amounts below for these directors only represent a partial year of service.

									Change in
									Pension
									Value and
							Non-Equity		Nonqualified Deferred
	Fees Earned or Paid in Cash		Stock Awards		Option Awards		Incentive Plan Compensation		Compensation Earnings		All Other Compensation		Total
	($)		($)		($)		($)		($)		($)		($)
Michael Antonoplos		20,000		—		—		—		—		—		20,000
Brian Cunat		15,000		—		—		—		—		—		15,000
Yuet Ying (1)		—		—		—		—		—		—		—
Zhenhuan Yuan		15,000		—		—		—		—		—		15,000
Marshall Cogan		0		—		—		—		—		—		0
Arnold Staloff		0		—		—		—		—		—		0

(1)

Mr. Ying has elected to forego any compensation for his board service for 2011.

Narrative to Director Compensation Table.

Mr. Fu, as an executive officer of Shiner, did not receive any compensation for serving on our Board of Directors. Mr. Ying elected to forego any compensation for his board service for the 2011 fiscal year. The other non-executive directors received a $3,750 quarterly cash retainer, which was pro rated for those directors not serving a full year. Mr. Antonoplos received $3,750 as an annual cash retainer and an additional quarterly retainer $1,250 for serving as chairman of our Audit Committee.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table sets forth information regarding beneficial ownership of our common stock as of March 27, 2012 (i) by each person who is known by us to beneficially own more than 5% of our common stock; (ii) by each of our officers and directors; and (iii) by all of our officers and directors as a group. Unless otherwise specified, the address of each of the persons set forth below is in care of Shiner International, Inc., 19th Floor, Didu Building, Pearl River Plaza, No. 2 North Longkun Road, Haikou, Hainan Province, 570125 People’s Republic of China.

Name & Address of Beneficial Owner	Office, If Any	Title of Class	Amount &Nature of Beneficial Ownership(1)	Percent of Class(2)

Officers and Directors

Yuet Ying	Director	Common Stock, $0.001 par value	11,518,408	41.22%

Jian Fu (3)	Chief Executive Officer and Director	Common Stock, $0.001 par value	51,000	*

Qingtao Xing	Chief Financial Officer and Board Chair	Common Stock, $0.001 par value	0	*

XueZhu Xu (4)	Chief Operating Officer	Common Stock, $0.001 par value	40,000	*

MingBao Li	Director	Common Stock, $0.001 par value	0	*

Brian Cunat (5) 5400 W. Elm St., Suite 110, McHenry, IL 60050	Director	Common Stock, $0.001 par value	30,000	*

Michael Antonoplos (6) 345 Strathmore Drive Bryn Mawr, PA 19010	Director	Common Stock, $0.001 par value	30,000	*

Zhenhuan Yuan (7)	Non-Executive and Non-Voting Director		30,000	*

All Officers and Directors as a group (7 persons named above)	--	--	11,629,408	41.62%

5% Security Holders

First Wilshire Securities Management, Inc. (8) 1224 East Green Street, Suite 200, Pasadena, California 91106	Common Stock, $0.001 par value	2,420,544	8.66%

Yuet Ying	Common Stock, $0.001 par value	11,518,408	41.22%

*	Less than 1 percent

(1)	In computing the number and percentage of shares beneficially owned by a person, shares that may be acquired by such person within 60 days of March 27, 2012 are counted as outstanding, while these shares are not counted as outstanding for computing the percentage ownership of any other person.

(2)	Beneficial ownership has been determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934. Unless otherwise noted, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. At the close of business on March 27, 2012, we had 27,941,491 shares of common stock outstanding.

(3)	The shares reported include 51,000 shares held by Mr. Fu’s spouse; Mr. Fu disclaims beneficial ownership of all of these shares.

(4)	The shares reported include 40,000 shares held by Ms. Xu’s daughter; Ms. Xu disclaims beneficial ownership of all of these shares.

(5)	The shares reported include 30,000 shares issuable upon the exercise of vested options granted to Mr. Cunat on June 5, 2009. The options have an exercise price of $1.25 per share and expire on June 6, 2014.

(6)	The shares reported include 30,000 shares issuable upon the exercise of options granted to Mr. Antonoplos on September 12, 2011. The options have an exercise price of $0.80 per share and expire on December 8, 2016

(7)	The shares reported include 30,000 shares issuable upon the exercise of vested options granted to Mr. Yuan on September 12, 2011. The options have an exercise price of $0.80 per share and expire on December 8, 2017.

(8)	This information is derived from a Schedule 13G/A filed by First Wilshire Securities Management, Inc. ("First Wilshire"), a registered broker-dealer, on February 15, 2011. Matthew Dunn, First Wiltshire's Chief Compliance Officer is deemed to have dispositive power with respect to these 988,880.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Transactions with Related Persons

We are not a party to any transactions required to be disclosed pursuant to Item 404 of Regulation S-K, including any transaction or series of transactions between us and any officer, director or affiliates of Shiner that has an aggregate value in excess of $120,000, or 1% of the average of our total assets for the last two completed fiscal years.

Related Party Transaction Approval Policy

It is our policy that the Audit Committee review and approve in advance all related party transactions that are required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC. If advance approval is not feasible, the Audit Committee must approve or ratify the transaction at the next scheduled meeting of the committee. Transactions required to be disclosed pursuant to Item 404 include any transaction or series of transactions between Shiner and any officer, director or certain affiliates of Shiner which has an aggregate value in excess of the lesser of $120,000, or 1% of the average of our total assets for the last two completed fiscal years. In reviewing related party transactions, the Audit Committee evaluates all material facts about the transaction, including the nature of the transaction, the benefit provided to Shiner, whether the transaction is on commercially reasonable terms that would have been available from an unrelated third-party and any other factors necessary to its determination that the transaction is fair to Shiner. To identify related party transactions, each year, we submit and require our directors and officers to complete director and officer questionnaires identifying any transaction with us or any of our subsidiaries in which the officer or director or their family members have an interest.

Director Independence

Our board has determined that each of Messrs. Antonoplos, Cunat, and Yuan are “independent directors” within the meaning of applicable Nasdaq Stock Market rules and the rules promulgated by the SEC.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

The following table sets forth fees billed to us by Goldman Kurland and Mohidin, LLP for professional services rendered for 2011 and 2010:

	2011		2010
Audit Fees	$	106,000	$	103,000
Audit-Related Fees		0		0
Tax Fees		0		0
All Other Fees		0		0
Total	$	106,000	$	103,000

Audit Fees . This category includes the aggregate fees billed for professional services rendered for the audits of our consolidated financial statements for fiscal years 2011 and 2010, respectively, for the reviews of the financial statements included in our quarterly reports on Form 10-Q and for services that are normally provided by Goldman Kurland and Mohidin, LLP in connection with statutory and regulatory filings or engagements for the relevant fiscal year.

Audit-Related Fees . This category includes the aggregate fees billed during the period for fiscal years 2011 and 2010, respectively, for assurance and related services by Goldman Kurland and Mohidin, LLP that are reasonably related to the performance of the audits or reviews of the financial statements and are not reported above under “Audit Fees.” These amounts generally consist of fees for due diligence accounting consultation with respect to our agreed-upon procedure reports.

Tax Fees. This category includes tax preparation, tax compliance and tax advice.

All Other Fees. This category includes all accounting services which are not included in the foregoing categories.

Policy for Pre-Approval of Audit and Non-audit Services.

Under the Sarbanes-Oxley Act of 2002, all audit and non-audit services performed by our auditors must be approved in advance by our Board of Directors to assure that such services do not impair the auditors’ independence from us. The Audit Committee has adopted an approval policy regarding the approval of audit and non-audit services provided by the independent accountants, which approval policy describes the procedures and the conditions pursuant to which the Audit Committee may grant general pre-approval for services proposed to be performed by our independent accountants. All services provided by our independent accountants, both audit and non-audit, must be pre-approved by the Audit Committee. Our Audit Committee has delegated to the chairman of the audit committee the authority to grant pre-approvals of non-audit services provided by Goldman Kurland and Mohidin, LLP. The decisions of the Chairman of the Audit Committee to pre-approve such a service are required to be reported to the audit committee at its next regularly scheduled meeting.

In determining whether to approve a particular audit or permitted non-audit service, the Audit Committee (or the Chairman thereof) will consider, among other things, whether such service is consistent with maintaining the independence of the independent accountant. The Audit Committee (or the Chairman thereof) will also consider whether the independent accountant is best positioned to provide the most effective and efficient service to our Company and whether the service might be expected to enhance our ability to manage or control risk or improve audit quality.

PART IV

ITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

Financial Statements and Schedules

The financial statements are set forth under Item 8 of this annual report on Form 10-K. Financial statement schedules have been omitted since they are either not required, not applicable, or the information is otherwise included.

Exhibits

Exhibit		Description of Exhibit

2.1		Share Exchange Agreement by and between Sino Palace Holdings Limited and Cartan Holdings Inc. dated as of July 23, 2007 (incorporated by reference to Exhibit 2.1 of Shiner’s Current Report on Form 8-K (Commission File No. 001-33960) filed with the SEC on July 27, 2007).

2.2		Return to Treasury Agreement between Cartan Holdings, Inc. and Zubeda Mohamed-Lakhani, dated as of July 23, 2007 (incorporated by reference to Exhibit 2.2 of Shiner’s Current Report on Form 8-K (Commission File No. 001-33960) filed with the SEC on July 27, 2007).

3.1		Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.3 of Shiner’s Current Report on Form 8-K (Commission File No. 001-33960) filed with the SEC on July 27, 2007).

3.2		Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 of Shiner’s Current Report on Form 8-K (Commission File No. 001-33960) filed with the SEC on July 27, 2007).

4.1		Specimen Stock Certificate (incorporated by reference to Exhibit 4.1 of Shiner’s Current Report on Form 8-K (Commission File No. 001-33960) filed with the SEC on July 27, 2007).

10.1		Registration Rights Agreement, dated as of September 30, 2007, between Shiner and the investors signatory thereto (incorporated by reference to Exhibit 10.1 of Shiner’s Registration Statement on Form SB-2 (Commission File No. 333-148304), filed with the SEC on December 21, 2007).

10.2		Form of Common Stock Purchase Warrant (incorporated by reference to Exhibit 10.2 of Shiner’s Registration Statement on Form SB-2 (Commission File No. 333-148304), filed with the SEC on December 21, 2007).

10.3		Form of Stock Option Agreement (incorporated by reference to Exhibit 10.3 of Shiner’s Registration Statement on Form SB-2 (Commission File No. 333-148304), filed with the SEC on December 21, 2007).

Exhibit		Description of Exhibit

10.4		Employment Agreement, dated January 1, 2008, by and between Shiner and Jian Fu (incorporated by reference to Exhibit 10.4 of Shiner’s Annual Report on Form 10-K (Commission File No. 001-33960) filed with the SEC on March 28, 2008).

10.5		Employment Agreement, dated January 1, 2008, by and between Shiner and Xuezhu Xu (incorporated by reference to Exhibit 10.5 of Shiner’s Annual Report on Form 10-K (Commission File No. 001-33960) filed with the SEC on March 28, 2008).

10.6		Employment Agreement, dated January 1, 2008, by and between Shiner and Mingbiao Li (incorporated by reference to Exhibit 10.6 of Shiner’s Annual Report on Form 10-K (Commission File No. 001-33960) filed with the SEC on March 28, 2008).

10.7		Employment Agreement, dated February 11, 2010, by and between Shiner and Jeffrey T. Roney (incorporated by reference to Exhibit 10.7 of Shiner’s Current Report on Form 8-K (Commission File No. 001-33960) filed with the SEC on February 26, 2009).

10.8		Employment Agreement, dated February 3, 2010, by and between Shiner and Qingtao Xing (incorporated by reference to Exhibit 10.8 of Shiner’s Annual Report on Form 10-K (Commission File No. 001-33960) filed with the SEC on March 25, 2010).

10.9		Articles of Association of Shanghai Juneng Functional Film Company, Ltd., a joint venture between Shiner and Shanghai Shifu Film Material, Co., Ltd. (incorporated by reference to Exhibit 10.1 of Shiner’s Current Report on Form 8-K (Commission File No. 001-33960) filed with the SEC on September 21, 2010).

10.10		Credit Facility between Hainan Shiner Industrial Co., Ltd. and the Hainan Branch of the Bank of China, dated June 29, 2010 (incorporated by reference to Exhibit 10.10 of Shiner’s Quarterly Report on Form 10-Q (Commission File No. 001-33960) filed with the SEC on November 15, 2010).

10.11		Securities Purchase Agreement for Non-US Persons, dated as of December 28, 2010, between the Company and the Investors thereto (incorporated by reference to Exhibit 10.11 of Shiner’s Current Report on Form 8-K (Commission File No. 001-33960) filed with the SEC on December 29, 2010).

10.12		Securities Purchase Agreement, dated as of December 28, 2010, between the Company and the Investors thereto (incorporated by reference to Exhibit 10.12 of Shiner’s Current Report on Form 8-K (Commission File No. 001-33960) filed with the SEC on December 29, 2010).

10.13		Form of Warrant of the Company (incorporated by reference to Exhibit 10.13 of Shiner’s Current Report on Form 8-K (Commission File No. 001-33960) filed with the SEC on December 29, 2010).

10.14		Registration Rights Agreement, dated as of December 28, 2010, by and between the Company and the Investors (incorporated by reference to Exhibit 10.14 of Shiner’s Current Report on Form 8-K (Commission File No. 001-33960) filed with the SEC on December 29, 2010).

10.15		Amendment to Securities Purchase Agreement, dated as of January 10, 2011, between the Company and the Investors thereto (incorporated by reference to Exhibit 10.15 of Shiner’s Current Report on Form 8-K (Commission File No. 001-33960) filed with the SEC on January 14, 2011).

10.16		Share Transfer Agreement, dated as of May 2, 2011, by and between Fu Zhiyong and Shiner International, Inc. (incorporated by reference to Exhibit 2.3 of the Company's quarterly report on Form 10-Q filed with the SEC on May 16, 2011)

21		List of Subsidiaries.

31.1		Certifications of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certifications of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

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

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

_____________________ * Filed herewith

SIGNATURES

Pursuant to the requirements of the 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, thereunto duly authorized on the 12^th day of April, 2012.

	Shiner International, Inc.

	By:	/s/ Qingtao Xing
		Name: Qingtao Xing
		Title: President and Chief Executive Officer (Principal Executive Officer)


	By:	/s/ Qingtao Xing
		Name: Qingtao Xing
		Title: Interim Chief Financial Officer (Principal Financial and Accounting Officer)

In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date

/s/ Qingtao Xing	President and Chief Executive Officer	April 12, 2012
Qingtao Xing

/s/XueZhu Xu	Interim Chief Financial Officer	April 12, 2012
XueZhu Xu	(Chief Accounting Officer)

/s/ Yuet Ying	Chairman of the Board of Directors	April 12, 2012
Yuet Ying

/s/ Michael J. Antonoplos	Director	April 12, 2012
Michael J. Antonoplos

/s/ Brian G. Cunat	Director	April 12, 2012
Brian G. Cunat

/s/ Jian Fu	Director	April 12, 2012
Jian Fu

/s/ Zhenhuan Yuan	Director	April 12, 2012
Zhenhuan Yuan

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES

Consolidated Financial Statements

For the Years Ended December 31, 2011 and 2010

Table of Contents

		Page

Report of Independent Registered Public Accounting Firm		F-1

Financial Statements:

	Consolidated Balance Sheets as of December 31, 2011 and 2010	F-2

	Consolidated Statements of Operations and Other Comprehensive Income for the years ended December 31, 2011 and 2010	F-3

	Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2011 and 2010	F-4

	Consolidated Statements of Cash Flows for the years ended December 31, 2011 and 2010	F-5

	Notes to Consolidated Financial Statements	F-6

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders of

Shiner International, Inc.

We have audited the accompanying consolidated balance sheets of Shiner International, Inc. and Subsidiaries as of December 31, 2011 and 2010, and the related consolidated statements of operations and other comprehensive income, stockholders’ equity, and cash flows for the years ended December 31, 2011 and 2010. 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 consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. 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 consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Shiner International, Inc. and Subsidiaries as of December 31, 2011 and 2010, and the consolidated results of their operations and their consolidated cash flows for the years ended December 31, 2011 and 2010, in conformity with U.S. generally accepted accounting principles.

Goldman Kurland and Mohidin LLP

Encino, California

March 28, 2012

F-1

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2011 AND 2010

	2011			2010
ASSETS

CURRENT ASSETS:
Cash & equivalents	$	2,831,808		$	8,622,035
Restricted cash		57,613			-
Accounts receivable, net of allowance for doubtful
accounts of $121,017 and $262,502 at 2011 and 2010		7,744,377			10,005,572
Advances to suppliers		10,042,214			3,462,074
Notes receivable		7,865			26,056
Inventory, net		10,252,955			7,355,601
Prepaid expenses & other current assets		1,072,326			610,066

Total current assets		32,009,158			30,081,404

Property and equipment, net		27,836,253			19,399,717
Construction in progress		12,037,154			4,017,721
Advance for the purchase of equipment		763,427			1,356,989
Intangible assets, net		3,063,646			1,061,855
Goodwill		2,023,342			-
TOTAL ASSETS	$	77,732,980		$	55,917,686

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable	$	5,133,835		$	5,350,064
Other payables		7,021,179			4,655,300
Unearned revenue		1,313,320			295,609
Accrued payroll		193,884			141,884
Short-term loans		10,684,625			6,826,500

Total current liabilities		24,346,843			17,269,357

Long-term loans		9,957,090			-

Total Liabilities		34,303,933			17,269,357

Commitments and contingencies

EQUITY:
Shiner stockholders' equity:
Common stock, par value $0.001; 75,000,000 shares authorized,
27,603,336 shares issued and 27,541,491 shares outstanding at 2011 and 2010		27,603			27,603
Additional paid-in capital		14,332,392			14,321,484
Treasury stock (61,845 shares)		(58,036	)		(58,036	)
Other comprehensive income		5,426,393			4,060,637
Statutory reserve		3,523,273			2,905,861
Retained earnings		18,478,618			17,353,554
Total Shiner stockholders' equity		41,730,243			38,611,103
Noncontrolling interest		1,698,804			37,226
Total equity		43,429,047			38,648,329

TOTAL LIABILITIES AND EQUITY	$	77,732,980		$	55,917,686

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

F-2

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	2011			2010


Net Revenue	$	75,294,512		$	58,165,410

Cost of goods sold		65,275,356			48,361,075
Gross profit		10,019,156			9,804,335

Operating expenses
Selling		2,443,574			1,858,874
General and administrative		5,544,604			3,317,320
Total operating expenses		7,988,178			5,176,194

Income from operations		2,030,978			4,628,141

Non-operating income (expense):
Other income, net		1,404,336			649,800
Interest income		14,064			11,838
Interest expense		(1,107,159	)		(229,687	)
Exchange gain (loss)		61,442			(93,170	)
Total non-operating income		372,683			338,781

Income before income tax		2,403,661			4,966,922

Income tax expense		763,424			818,769

Net income		1,640,237			4,148,153

Net loss attributed to noncontrolling interest		(102,239	)		(8,079	)

Net income attributed to Shiner	$	1,742,476		$	4,156,232

Comprehensive income
Net income	$	1,640,237		$	4,148,153
Foreign currency translation gain		1,406,496			1,081,195

Comprehensive income	$	3,046,733		$	5,229,348

Weighted average shares outstanding :
Basic		27,541,491			24,647,196
Diluted		27,543,922			24,647,196

Earnings per share attributed to Shiner common stockholders
Basic	$	0.06		$	0.17
Diluted	$	0.06		$	0.17

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

F-3

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	Common Stock				Additional Paid in			Treasury			Other Comprehensive		Statutory		Retained			Total Stockholders'			Noncontrolling			Total
	Shares		Amount		Capital			Stock			Income		Reserve		Earnings			Equity			Interest			Equity
Balance, December 31, 2009		24,650,000	$	24,650	$	11,389,756		$	(58,036	)	$	2,980,077	$	2,872,856	$	13,230,327		$	30,439,630		$	-		$	30,439,630

Stock compensation expense for options issued		-		-		2,781			-			-		-		-			2,781			-			2,781

Contribution by non-controlling interest		-		-		-			-			-		-		-			-			44,670			44,670

Foreign currency translation gain		-		-		-			-			1,080,560		-		-			1,080,560			635			1,081,195

Shares issued for cash		2,608,336		2,608		3,127,392			-			-		-		-			3,130,000			-			3,130,000

Payment of offering costs		-		-		(262,000	)		-			-		-		-			(262,000	)		-			(262,000	)

Shares issued as payment of offering costs		300,000		300		(300	)		-			-		-		-			-			-			-

Shares issued for services		45,000		45		63,855			-			-		-		-			63,900			-			63,900

Net income		-		-		-			-			-		-		4,156,232			4,156,232			(8,079	)		4,148,153

Transfer to statutory reserve		-		-		-			-			-		33,005		(33,005	)		-			-			-

Balance, December 31, 2010		27,603,336		27,603		14,321,484			(58,036	)		4,060,637		2,905,861		17,353,554			38,611,103			37,226			38,648,329

Stock compensation expense for options issued		-		-		10,908			-			-		-		-			10,908			-			10,908

Foreign currency translation gain		-		-		-			-			1,365,756		-		-			1,365,756			40,740			1,406,496

Net income		-		-		-			-			-		-		1,742,476			1,742,476			(102,239	)		1,640,237

Non controlling interest acquired with acquisition		-		-		-			-			-		-		-			-			1,723,077			1,723,077

Transfer to statutory reserve		-		-		-			-			-		617,412		(617,412	)		-			-			-

Balance, December 31, 2011		27,603,336	$	27,603	$	14,332,392		$	(58,036	)	$	5,426,393	$	3,523,273	$	18,478,618		$	41,730,243		$	1,698,804		$	43,429,047

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

F-4

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	2011			2010


CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,640,237		$	4,148,153
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation		2,256,579			1,627,111
Amortization		198,752			7,023
Stock compensation expense		10,908			2,781
Stock issued for services		-			63,900
Change in working capital components:
Accounts receivable		2,695,309			(3,297,689	)
Inventory		(2,273,992	)		1,217,669
Advances to suppliers		(6,347,879	)		(157,071	)
Other assets		(398,717	)		(263,995	)
Accounts payable and accrued expenses		(238,732	)		2,492,941
Unearned revenue		984,652			51,757
Other payables		1,817,821			105,947
Accrued payroll		34,771			(1,633	)

Net cash provided by operating activities		379,709			5,996,894

CASH FLOWS FROM INVESTING ACTIVITIES
Payment of notes payable		34,329			63,647
Purchase of Shimmer Sun Ltd.		(3,200,000	)		-
Cash acquired in acquisition of Shimmer Sun Ltd.		248,742			-
Payments for property and equipment		(9,555,336	)		(6,882,529	)
Payments for construction in progress		(7,112,596	)		-
Payments for intangible assets		-			(690,114	)
(Increase)/decrease in restricted cash		(56,697	)		739,654

Net cash used in investing activities		(19,641,558	)		(6,769,342	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of short-term loans		(6,966,000	)		(1,775,280	)
Proceeds from short-term loans		10,514,812			5,177,900
Proceeds from long-term loans		9,798,840			-
Proceeds from the issuance of stock		-			3,130,000
Payment of offering costs		-			(262,000	)
Contribution from non-controlling interest		-			44,670

Net cash provided by financing activities		13,347,652			6,315,290

Effect of exchange rate changes on cash and cash equivalents		123,970			19,397

NET INCREASE (DECREASE) IN CASH & EQUIVALENTS		(5,790,227	)		5,562,239

CASH & EQUIVALENTS, BEGINNING BALANCE		8,622,035			3,059,796

CASH & EQUIVALENTS, ENDING BALANCE	$	2,831,808		$	8,622,035

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid	$	923,998		$	161,948
Income taxes paid	$	789,711		$	449,165

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

F-5

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010

Note 1 - Organization and Basis of Presentation

Organization and Line of Business

Shiner International, Inc. (the “Company” or “Shiner”)was incorporated in the State of Nevada on November 12, 2003. The Company, through its subsidiaries is engaged in the manufacture of Biaxially Oriented Polypropylene (“BOPP”) tobacco film, coated films, color printing products, advanced film, and water based coatings selling to customers throughout China, Asia, Australia, Europe, the Middle East and North America. Our products are sold to companies in the following industries: food, tobacco, chemical, agribusiness, medical, pharmaceutical, personal care, electronics, automotive, construction, graphics, music and video publishing and other consumer goods.

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Shiner and its subsidiaries as follows:

	Place	Percentage
Subsidiary	Incorporated	Owned	Parent
Shiner International, Inc.	Nevada, USA		None
Shiner Industrial Co.	China	100%	Shiner International, Inc.
Shiny Day	China	100%	Shiner International, Inc.
Modern Hi-Tech	China	100%	Shiny Day
Zhuhai	China	100%	Shiny Day
Neng Film	China	70%	Shiner International, Inc.
Shimmer Sun Ltd.	China	100%	Shiner International, Inc.
Jingyue	China	100%	Shimmer Sun Ltd.
Shunhao	China	100%	Jingyue
Yongxin	China	100%	Shunhao
Ningbo	China	65%	Yongxin

The accompanying consolidated financial statements were prepared in conformity with accounting principles generally accepted in the United States (“US GAAP”). The Company’s functional currency is the Chinese Yuan Renminbi (“RMB”); however, the accompanying consolidated financial statements were translated and presented in United States Dollars (“$” or “USD”).

Noncontrolling Interest

On September 20, 2010, the Company commenced operations of a majority-owned subsidiary, Shanghai Juneng Functional Film Company, Ltd. (“Shanghai Juneng”), with Shanghai Shifu Film Material, Co., Ltd., (‘Shanghai Shifu”). Under the terms of the agreement, Shiner owns 70% of Shanghai Juneng, and Shanghai Shifu owns the remaining 30%. The general manager of Shanghai Juneng reports directly to Shiner’s Chief Executive Officer. Shanghai Juneng pursues sales opportunities among China’s leading food producers in the Yangtze River Delta, one of China’s largest economic centers.

On May 2, 2011, Shiner acquired 100% of the stock of Shimmer Sun Ltd. ("Shimmer") for $3.2 million. The Company paid $1.3 million in cash and the remaining $1.9 million was recorded as “other payables’ which was paid by September 30, 2011. The acquisition gave Shiner a 65% controlling interest in Shimmer's subsidiary company, Ningbo Neisuoer Latex Co., Ltd. ("Ningbo"). The transaction was accounted for under the acquisition method of accounting, with the purchase price allocated based on the fair value of the individual assets acquired and liabilities assumed.

The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “Consolidation,” which governs the accounting for and reporting of noncontrolling interests (“NCIs”) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCIs be treated as a separate component of equity, not as a liability, that increases and decreases in the parent’s ownership interest that leave control intact be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially owned consolidated subsidiary be allocated to the NCI even when such allocation might result in a deficit balance. This standard also required changes to certain presentation and disclosure requirements.

F-6

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010

The net income (loss) attributed to the NCI was separately designated in the accompanying statements of operations and other comprehensive income. Losses attributable to the NCI in a subsidiary may exceed the NCI’s interests in the subsidiary’s equity. The excess attributable to the NCI is attributed to those interests. The NCI shall continue to be attributed its share of losses even if that attribution results in a deficit NCI balance.

Principles of Consolidation

The accompanying consolidated financial statements include the account of Shiner International, Inc. and its subsidiaries. All significant intercompany transactions and balances were eliminated in consolidation.

Foreign Currency Translation

The accounts of the Company’s Chinese subsidiaries are maintained in the RMB and the accounts of the U.S. parent company are maintained in the USD. The accounts of the Chinese subsidiaries are translated into USD in accordance with ASC Topic 830 “Foreign Currency Matters,” with the RMB as the functional currency for the Chinese subsidiaries. According to Topic 830, all assets and liabilities are translated at the exchange rate on the balance sheet date, stockholders’ equity is translated at historical rates and statement of operations items are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with ASC Topic 220, “Comprehensive Income.” Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the statement of operations.

Note 2 - Summary of Significant Accounting Policies

Use of Estimates

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

Cash and Equivalents

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

Restricted Cash

Restricted cash consists of monies restricted by the Company’s lender related to its outstanding debt obligations.

Accounts Receivable

F-7

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010

Advances to Suppliers

To insure a steady supply of raw materials, the Company is required from time to time to make cash advances when placing its purchase orders. Management determined that no reserve was necessary for advances to suppliers and the balances were $10,042,214 and $3,462,074 as of December 31, 2011 and 2010, respectively. The advances to suppliers are interest free and unsecured.

Inventory

Inventory is valued at the lower of the inventory’s cost (weighted average basis) or the current market price of the inventory. Management compares the cost of inventory with its market value and an allowance is made to write down inventory to market value, if lower.

Notes Receivable

Notes receivable consist of bank notes received from customers as payment of their accounts receivable balance. The notes are guaranteed by a bank and bear no interest. The notes are generally due within six months from the date of issuance.

Property and Equipment

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

Operating equipment			10 years
Vehicles			8 years
Office equipment			5 years
Buildings and improvements			20 years

The following are the details regarding the Company’s property and equipment at December 31, 2011 and 2010:

	2011			2010

Operating equipment	$	14,028,345		$	13,028,014
Vehicles		801,057			162,799
Office equipment		250,809			189,301
Buildings		18,912,102			9,597,807
Building and equipment improvements		538,930			667,050
		34,531,243			23,644,971
Less accumulated depreciation		(6,694,990	)		(4,245,254	)
	$	27,836,253		$	19,399,717

Construction in Progress and Government Grants

Construction in progress mainly consists of amounts expended to build a new manufacturing workshop in Hainan and a new product line for a BOPP tobacco line. The costs incurred and capitalized as construction in progress at December 31, 2011 are $12.0 million, which includes the facility and the equipment. Once the project is completed, the project will be transferred from “Construction in progress” to “Property and equipment. The first phase of the project was completed during 2010. The total cost of the new Hainan manufacturing workshop and the BOPP tobacco line is expected to be approximately $25.1 million. In October 2009, the Company received a government grant for this project of approximately $4.3 million from the Hainan Province Finance Bureau (“HPFB”). The Company is required to provide detailed expenses of the construction project to the HPFB. At the end of the project, the government will determine if the funds were used in accordance with the grant. At December 31, 2011 and 2010, the RMB 29.1 million ($4.5 million at December 31, 2011) government grant was recorded in “Other payables” on the accompanying consolidated financial statements. If the government determines the funds were used for their intended purpose, the amount of the government grant is then amortized into other income over the useful life of the asset on the same basis being used to depreciate the asset.

F-8

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010

In 2011, the Company received a government grant of RMB 14 million ($2.2 million) from the Haikou Finance Bureau (“HFB”) for the construction of a new structure and the purchase and installation of equipment for that structure. The Company is required to provide detailed expenses of the construction project to the HFB. At the end of the project, the government will determine if the funds were used in accordance with the grant. At December 31, 2011, the grant was recorded in “Other payables” on the accompanying consolidated financial statements. If the government determines the funds were used for their intended purpose, the amount of the government grant is then amortized into other income over the useful life of the asset on the same basis being used to depreciate the asset.

Long-Lived Assets

The Company applies ASC Topic 360, “Property, Plant, and Equipment,” which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. ASC 360 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair values are reduced to recognize the cost of disposal. Based on its review, the Company believes that as of December 31, 2011 and 2010, there was no significant impairment of its long-lived assets.

Intangible Assets

Intangible assets consist of rights to use three plots of land in Haikou City by the Municipal Administration of China for state-owned land. For two of these plots, the Company’s rights run through January 2059 and, for the third plot, the Company’s rights run through October 2060. The Company also acquired a patent with the acquisition of Shimmer that is being amortized over 10 years. The Company evaluates intangible assets for impairment, at least on an annual basis and whenever events or changes in circumstances indicate the carrying value may not be recoverable from its estimated future cash flows. Recoverability of intangible and other long-lived assets is measured by comparing their net book value to the related projected undiscounted cash flows from these assets, considering a number of factors including past operating results, budgets, economic projections, market trends and product development cycles. If the net book value of the asset exceeds the related undiscounted cash flows, the asset is considered impaired, and a second test is performed to measure the amount of impairment loss.

Goodwill

Goodwill represents the excess of purchase price over the underlying net assets of businesses acquired. Under accounting requirements, goodwill is not amortized but is subject to annual impairment tests. The impairment testing is based on the fair value of the reporting units, which is estimated based on a discounted cash flow valuation model and the projected future cash flows of the underlying businesses. As of December 31, 2011 the Company performed the required impairment review which resulted in no impairment adjustments.

Summary of changes in goodwill by reporting segments is as follows:

	Water-based
	latex		Total

Balance, December 31, 2010	$	-	$	-
Purchased through acquisition		1,956,571		1,956,571
Foreign currency adjustment		66,771		66,771
Balance, December 31, 2011	$	2,023,342	$	2,023,342

F-9

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010

Fair Value of Financial Instruments

For certain of the Company’s financial instruments, including cash and equivalents, restricted cash, accounts receivable, advances to suppliers, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities. In addition, the Company has long-term debt with financial institutions. The carrying amounts of the line of credit and other long-term liabilities approximate their fair values based on current rates of interest for instruments with similar characteristics.

ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

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

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

Level 3 inputs to the valuation methodology us one or more unobservable inputs which are significant to the fair value measurement.

The Company analyzes all financial instruments with features of both liabilities and equity under ASC Topic 480, “Distinguishing Liabilities from Equity,” and ASC Topic 815, “Derivatives and Hedging.”

As of December 31, 2011 and 2010, the Company did not identify any assets and liabilities required to be presented on the balance sheet at fair value.

Revenue Recognition

The Company’s revenue recognition policies comply with SEC Staff Accounting Bulletin 104 (codified in FASB ASC Topic 605). Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

Sales revenue consists of the invoiced value of goods, which is net of value-added tax (“VAT”). All of the Company’s products are sold in the People’s Republic of China (“PRC”) and are subject to Chinese VAT of 17% of the gross sales price. This VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing their end product. The Company recorded VAT payable and VAT receivable net of payments in the financial statements. The VAT tax return is filed offsetting the payables against the receivables.

Sales and purchases are recorded net of VAT collected and paid. VAT taxes are not affected by the income tax holiday.

F-10

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010

Sales returns and allowances was $0 for 2011 and 2010. The Company does not provide unconditional right of return, price protection or any other concessions to its dealers or other customers.

Other Income

The other income and (expenses) for 2011 and 2010 is $1,404,336 and $649,800, respectively. The Company recognizes other income in the period the Company has earned the revenue and collectability is reasonably assured. Other income consists primarily of subsidy income which is received from Chinese Government Agencies for developing technology and research and development. The Company must manage the funds according to government requirements. The Company recognizes the revenue over the contract period. Included in other income for 2010 was $293,875, from a payment from the Company’s former landlord for vacating leased space at the request of the landlord.

Advertising Costs

The Company expenses the cost of advertising as incurred or, as appropriate, the first time the advertising takes place. Advertising costs for 2011 and 2010, were not significant.

Research and Development

The Company expenses its research and development costs as incurred. Research and development costs included in general and administrative expenses for 2011 and 2010 were $2,801,932 and $1,430,345, respectively.

Stock-Based Compensation

Income Taxes

Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is more than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The adoption had no effect on the Company’s consolidated financial statements.

Basic and Diluted Earnings Per Share

Earnings per share is calculated in accordance with the ASC Topic 260, “Earnings Per Share.” Basic earnings per share (“EPS”) is based upon the weighted average number of common shares outstanding. Diluted EPS is based on the assumption that all dilutive convertible shares and stock warrants were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. There were 120,000 options and 521,664 warrants outstanding as of December 31, 2011 with weighted-average exercise prices of $1.03 and $1.70, respectively. There were 60,000 options and 521,664 warrants outstanding as of December 31, 2010 with weighted-average exercise prices of $1.25 and $1.70, respectively. The following is a reconciliation of the number of shares (denominator) used in the basic and diluted EPS computations for 2011 and 2010:

F-11

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010

	2011				2010
			Per Share				Per Share
	Shares		Amount		Shares		Amount
Basic earnings per share		27,541,491	$	0.06		24,647,196	$	0.17
Effect of dilutive stock options and warrants		2,431		-		-		-
Diluted earnings per share		27,543,922	$	0.06		24,647,196	$	0.17

Foreign Currency Translation

The accounts of the Company’s Chinese subsidiaries are maintained in RMB and the accounts of the U.S. parent company are maintained in USD. The accounts of the Chinese subsidiaries were translated into USD in accordance with ASC Topic 830, “Foreign Currency Matters,” with the RMB as the functional currency for the Chinese subsidiaries. According to ASC Topic 830, all assets and liabilities were translated at the exchange rate on the balance sheet date, stockholders’ equity is translated at historical rates and statement of operations items are translated at the weighted average exchange rate for the year. The resulting translation adjustments are reported under other comprehensive income in accordance with ASC Topic 220, “Comprehensive Income.” Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the statement of operations.

Foreign Currency Transactions and Comprehensive Income

US GAAP generally requires recognized revenue, expenses, gains and losses be included in net income. Certain statements, however, require entities to report specific changes in assets and liabilities, such as gain or loss on foreign currency translation, as a separate component of the equity section of the balance sheet. Such items, along with net income, are components of comprehensive income. The functional currency of the Company’s Chinese subsidiaries is the RMB. Translation gains of $5,426,393 and $4,060,637 at December 31, 2011 and 2010, respectively, are classified as an item of other comprehensive income in the stockholders’ equity section of the consolidated balance sheets.

Statement of Cash Flows

In accordance with ASC Topic 230, “Statement of Cash Flows,” cash flows from the Company’s operations are calculated based upon the local currencies using the average translation rates. As a result, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets.

Segment Reporting

ASC Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. The Company has determined it has five reportable segments. See Note 14.

F-12

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010

Recent Accounting Pronouncements

In May 2011, the FASB issued ASU 2011-04 which was issued to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and IFRS. ASU 2011-04 changes certain fair value measurement principles and enhances the disclosure requirements particularly for Level 3 fair value measurements. This guidance is effective for the Company beginning on January 1, 2012. The adoption of ASU 2011-04 is not expected to significantly impact the Company’s consolidated financial statements.

In September 2011, the FASB issued ASU 2011-08 which provides an entity the option to first assess qualitative factors to determine whether it is necessary to perform the current two-step test for goodwill impairment. If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required. The revised standard is effective for the Company for its annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of ASU 2011-08 is not expected to significantly impact the Company’s consolidated financial statements.

Note 3 - Inventory

Inventory at December 31, 2011 and 2010 consisted of the following:

	2011			2010

Raw Material	$	4,093,316		$	3,099,222
Work in process		1,724,754			842,793
Finished goods		4,781,927			3,547,916
		10,599,997			7,489,931
Less: Obsolescence reserve		(347,042	)		(134,330	)
	$	10,252,955		$	7,355,601

Note 4 - Intangible Assets

Intangible assets at December 31, 2011 and 2010 consisted of the following:

	2011			2010

Patent	$	2,120,348		$	-
Right to use land		1,153,434			1,112,371
Less: Accumulated amortization		(210,136	)		(50,516	)
Intangible assets, net	$	3,063,646		$	1,061,855

F-13

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010

Pursuant to the acquisition discussed in Note 16, the Company recorded purchased intangibles.

Pursuant to the regulations, the PRC government owns all land. The Company has recognized the amounts paid for the acquisition of rights to use land as an intangible asset and amortizing such rights over the period the Company has use of the land, which range from 54 to 57 years.

Amortization of intangible assets is as follows:

Year ending December 31,
2012	$	235,104
2013		235,104
2014		235,104
2015		235,104
2016		235,104
Thereafter		1,888,126
	$	3,063,646

Note 5 – Other Payables

Other payables at December 31, 2011 and 2010 consisted of the following:

	2011		2010

Special purpose fund for Shi Zi Ling workshop	$	4,577,430	$	4,414,470
Special purpose fund for structure and equipment		2,202,200		-
Miscellaneous payables		241,549		240,830
	$	7,021,179	$	4,655,300

The $4,577,430 and $2,202,200 payables are the liability recorded pursuant to the funds received as part of government grants. See “Construction in Progress and Government Grants in Note 2.

Note 6 - Debt

Short-term loans at December 31, 2011 and 2010 consisted of the following:

	2011		2010

From December 20, 2010 to December 19, 2011, with interest of 5.56% at December 31, 2010. The loan was collateralized by buildings and equipment	$	-	$	1,972,100

From November 12, 2010 to November 11, 2011, with interest of 5.56% at December 31, 2010. The loan was collateralized by buildings and equipment		-		455,100

From September 20, 2010 to September 19, 2011, with interest of 5.56% at December 31, 2010. The loan was collateralized by buildings and equipment		-		606,800

From July 21, 2010 to July 20, 2011, with interest of 5.56% at December 31, 2010. The loan was collateralized by buildings and equipment		-		758,500

From June 24,2010 to June 24, 2011, with interest of 5.56% at December 31, 2010. The loan was collateralized by buildings and equipment		-		1,517,000

From May 07, 2010 to May 6, 2011, with interest of 5.841% at December 31, 2010. The loan was collateralized by buildings and equipment		-		1,517,000

From February 28, 2011 to February 28, 2012, with interest of 6.06% at December 31, 2011. The loan is collateralized by equipment*		4,247,100		-

From June 30, 2011 to June 30, 2012, with interest of 8.203% at December 31, 2011. The loan is collateralized by buildings and equipment		1,573,000		-

Short-term loans payable to bank, with an interest from 3.52% to 6.71%. The loans are due ranging from January 19, 2012 to March 28, 2012 and are collateralized by accounts receivable*		2,795,039		-

Bank acceptance bills that are payable on various dates through June 23, 2012		2,069,486		-

	$	10,684,625	$	6,826,500

*These short-term loans were paid off when due.

F-14

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010

Long-term loans at December 31, 2011 and 2010 consisted of the following:

From January 24, 2011 to January 24, 2018, with interest of 6.60% at December 31, 2011. The loan is collateralized by buildings and land use rights	$	2,516,800

From February 10, 2011 to February 10, 2018, with interest of 6.60% at December 31, 2011. The loan is collateralized by buildings and land use rights		2,831,400

From February 16, 2011 to February 16, 2018, with interest of 6.60% at December 31, 2011. The loan is collateralized by buildings and land use rights		2,280,850

From February 17, 2011 to February 17, 2018, with interest of 6.60% at December 31, 2011. The loan is collateralized by buildings and land use rights		1,242,670

From March 25, 2011 to March 25, 2018, with interest of 6.60% at December 31, 2011. The loan is collateralized by buildings and land use rights		424,710

From November 30, 2011 to November 30, 2018, with interest of 6.60% at December 31, 2011. The loan is collateralized by buildings and land use rights		157,300

From December 23, 2011 to December 23, 2018, with interest of 6.60% at December 31, 2011. The loan is collateralized by buildings and land use rights		503,360

	$	9,957,090

Aggregate future maturities of long-term loans at December 31, 2011 are as follows:

Year ending December 31,
2012	$	-
2013		-
2014		-
2015		-
2016		-
Thereafter		9,957,090
	$	9,957,090

The weighted average interest rate on long-term loans is 6.60%.

F-15

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010

On August 2, 2010, Hainan Shiner Industrial Co., Ltd. (“Hainan Shiner”), the Company’s wholly owned subsidiary, entered into a credit facility with the Hainan Branch of the Bank of China. The credit facility is a seven-year 70 million RMB, or approximately $11.1 million, secured revolving credit facility. Hainan Shiner may only use the loan proceeds to improve the technology of its BOPP film and to purchase certain equipment necessary for these improvements. Proceeds under the facility not used for these purposes may be subject to a misappropriation penalty interest rate of 100% of the current interest rate on the loan.

The initial interest rate on each withdrawal from the facility will be the 5-year benchmark lending rate announced by the People’s Bank of China on the date of such withdrawal, and is subject to adjustment every 12 months based upon the benchmark. Additional interest will be paid on an overdue loan under this credit facility of 50% of the current interest rate on the loan. Hainan Shiner and certain of its affiliates, including the Company, have provided guarantees and certain land, buildings, and property as collateral under this facility.

During the years ended December 31, 2011, the Company drew down approximately $10.0 million and at December 31, 2011, there is approximately $0.8 million available credit for future draw downs. Subsequent to December 31, 2011, the Company drew down the remaining $0.8 million.

Note 7 – Stockholders’ Equity

Common Stock

On December 28, 2010, the Company entered into Securities Purchase Agreements with a number of accredited investors in connection with a private placement transaction providing for, among other things, the issuance of up to 3,333,333 units (the “Units”), with each Unit consisting of one share of the Company’s common stock and a warrant to purchase twenty percent (20%) of one share of the Company’s common stock at $1.70 per share, at a purchase price of $1.20 per Unit. The Company issued 2,608,336 Units and received gross proceeds of $3,130,000.

F-16

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010

Treasury Stock

During 2009, the Company purchased 61,845 shares of its common stock on the open market (treasury shares) for $58,036. The Company accounted for the purchase of these treasury shares using the cost method.

Note 8 - Stock Options and Warrants

Stock Options

The following is a summary of the Company’s stock option activity for the years ended December 31, 2011 and 2010:

				Weighted
				Average		Aggregate
	Options			Exercise Price		Intrinsic
	Outstanding			Price		Value
Outstanding at December 31, 2009		250,000		$	2.73	$	-
Granted		-
Canceled		(190,000	)
Exercised		-
Outstanding at December 31, 2010		60,000		$	1.25	$	-
Granted		60,000			0.80
Canceled		-			-
Exercised		-			-
Outstanding at December 31, 2011		120,000		$	1.03	$	-
Exercisable at December 31, 2011		90,000		$	1.05	$	-

The number and weighted average exercise prices of all options outstanding as of December 31, 2011, are as follows:

Options Outstanding
						Weighted
				Weighted		Average
		Number		Average		Remaining
Range of		Outstanding		Exercise		Contractual Life
Exercise Price		December 31, 2011		Price		(Years)

$	0.80		60,000	$	0.80		4.94
	1.25		60,000		1.25		1.43
			120,000

The number and weighted average exercise prices of all options exercisable as of December 31, 2011, are as follows:

Options Exercisable
						Weighted
				Weighted		Average
		Number		Average		Remaining
Range of		Outstanding		Exercise		Contractual Life
Exercise Price		December 31, 2011		Price		(Years)

$	0.80		40,000	$	0.80		4.94
	1.25		50,000		1.25		1.23
			90,000

F-17

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010

The assumptions used in calculating the fair value of options granted using the Black-Scholes option- pricing model for options granted during 2011 and 2010 are as follows:

	2011			2010
Expected life (years)		3.0			-
Risk-free interest rate		2.0	%		-
Expected volatility		77	%		-
Expected dividend yield		0	%		-

For options granted during 2011 where the exercise price exceeded the stock price at the date of the grant, the weighted-average fair value of such options was $0.20 and the weighted-average exercise price of such options was $0.80. No options were granted during 2011, where the exercise price was less than the stock price at the date of the grant or the exercise price was equal to the stock price at the date of grant. At December 31, 2011, the unamortized compensation costs related to nonvested options amounted to $4,064, which will be expensed through the fourth quarter of 2012.

Warrants

The following is a summary of the Company’s warrant activity for 2011 and 2010:

						Weighted
				Weighted		Average
				Average		Remaining
	Warrants			Exercise Price		Contractual Life
	Outstanding			Price		(Years)
Outstanding at December 31, 2009		970,050		$	6.00
Granted		521,664			1.70
Canceled		(970,050	)		6.00
Exercised
Outstanding at December 31, 2010		521,664		$	1.70
Granted		-			-
Canceled		-			-
Exercised		-			-
Outstanding at December 31, 2011		521,664		$	1.70		1.24
Exercisable at December 31, 2011		521,664		$	1.70		1.24

Note 9 - Income Taxes

Local PRC Income Tax

Pursuant to the tax laws of the PRC, general enterprises are subject to income tax at an effective rate of 25%.

F-18

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010

The Company operates in a privileged economic zone which entitles it to certain tax benefits (tax holiday) as follows:

Shiner Industrial - enjoys a tax rate of 15% from January 1, 2009 to December 31, 2014 since it is recognized as a high-tech enterprise.

Zhuhai - exemption from federal tax from January 1, 2008 to December 31, 2009. In addition, it also enjoys a 50% federal tax reduction from January 1, 2010 to December 31, 2012.

Shiner Industrial acquired all of the assets of Shiny-day and Modern in 2009, partially in response to the expiration of the tax holiday previously enjoyed by them.

According to the new PRC income tax law, for enterprises to which the 15% tax rate was applicable previously, these rates shall apply from 2007 to 2012:

Year		Tax rate			Income tax rate- Shiner Industrial
	2007		15	%		7.5	%
	2008		18	%		9	%
	2009		20	%		15	%
	2010		22	%		15	%
	2011		24	%		15	%
	2012		25	%		15	%

Income tax expense reflected in the consolidated statements of operations and other comprehensive income consist of the following for 2011 and 2010:

	2011		2010
Current expense:
Federal	$	-	$	-
State		-		-
Foreign		763,424		818,769
		763,424		818,769
Deferred expense:
Federal		-		-
State		-		-
Foreign		-		-
Total income tax expense	$	763,424	$	818,769

The components of deferred income tax assets and liabilities as of December 31, 2011 and 2010 are as follows:

	2011			2010

Deferred tax assets:
Net operating loss	$	501,000		$	364,000
Total deferred tax assets		501,000			364,000
Less valuation allowance		(501,000	)		(364,000	)
	$	-		$	-

F-19

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010

A reconciliation of tax at United States federal statutory rate to provision for income tax recorded in the financial statements for 2011 and 2010 is as follows:

	2011	2010
Tax provision at statutory rate	34%		34	%
Foreign tax rate difference	-9%		-9	%
US and Chinese current NOL for which no benefit is realized	17%		-
Effect of tax holiday	-10%		-9	%
Effective rate	32%		16	%

The effect of the change of tax status was accounted for in accordance with ASC Topic 740-10-25, which states that the effect of a change in tax status is computed as of the date of change and is included in the tax provision for continuing operations. Management believes that the local tax authorities would not have waived past taxes had it not been for the change in the Company’s subsidiary’s tax status.

If the Company had not been exempt from income taxes due to operating in a privileged economic zone, for 2011 net income would have been decreased by approximately, $196,000 and been decreased by approximately, $447,000 for 2010. The net effect on EPS had income tax been applied would have been $0.01 for 2011 and would have been $0.02 for 2010.

Foreign pretax earnings approximated $2,045,000 and $5,227,000 for 2011 and 2010 respectively. Pretax earnings of a foreign subsidiary are subject to US taxation when effectively repatriated. The Company provides income taxes on the undistributed earnings of non-US subsidiaries except to the extent such earnings are indefinitely invested outside the United States. At December 31, 2011, approximately $18,400,000 of accumulated undistributed earnings of non-US subsidiaries was indefinitely invested. At the existing US federal income tax rate, additional taxes of $3,736,000 would have to be provided if such earnings were remitted currently.

If the Company had not been exempt from income taxes due to operating in a privileged economic zone, 2010 net income would have been decreased by approximately $447,000 and been unaffected in 2009. The net effect on EPS had income tax been applied would have been $0.02 for 2010 and would have had no effect on EPS share for 2009.

Note 10 - Employee Welfare Plans

The expense for employee common welfare was $59,688 and $130,060 for 2011 and 2010, respectively. The Company did not record a welfare payable as of December 31, 2011 and 2010. The Chinese government abolished the 14% welfare plan policy in 2007. The Company is not required to establish welfare and common welfare reserves.

Note 11 - Statutory Common Welfare Fund

As stipulated by the Company Law of the PRC, net income after taxation can only be distributed as dividends after appropriation has been made for the following:

Making up cumulative prior years’ losses, if any;

ii.

Allocations to the “statutory surplus reserve” of at least 10% of income after tax, as determined under PRC accounting rules and regulations, until the reserve reaches 50% of the Company’s registered capital;

iii.

Allocations of 5% to 10% of income after tax, as determined under PRC accounting rules and regulations, to the Company’s “statutory common welfare fund,” which is established for the purpose of providing employee facilities and other collective benefits to the Company’s employees; and

iv.

Allocations to the discretionary surplus reserve, if approved in the stockholders’ general meeting.

The Company appropriated $617,412 and $33,005 as reserve for the statutory surplus reserve and statutory common welfare fund for 2011 and 2010, respectively.

F-20

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010

Note 12 - Current Vulnerability Due to Certain Concentrations

No customer accounted for more than 10% of the Company’s sales for 2011. Two customers accounted for 16% and 10% of the Company’s sales for 2010.

One vendor provided 15% of the Company’s raw materials for 2011. One vendor provided 34% of the Company’s raw materials for 2010.

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

Note 13 – Commitments and Contingencies

The Company leases its office space under non-cancelable operating lease agreements which expire on various dates through 2013. Future annual minimum lease payments, including maintenance and management fees, for non cancelable operating leases, are as follows:

Year ending December 31,
2012	$	440,571
2013		394,000
2014		394,000
	$	1,228,571

At December 31, 2011, the Company is contingently liable to banks for discounted notes receivable and to vendors for endorsed notes receivable of $1,458,018.

Note 14 – Segment Information

The Company reclassified its business segment information at the end of 2010 to more closely align its financial reporting with its business structure. Prior period amounts were restated to conform to the current presentation. The Company recognized our products as five segments: BOPP tobacco films, water-based latex, coated film, color printed packaging, and advanced film. The water-base latex is one of the raw materials used in coated film to make the packaging more environmental and the barrier property better; therefore, approximately 70% of the water-base latex products manufactured by Ningbo are sold to Hainan Shiner, Hainan shiny-day and Zhuhai Huanuo.

The following tables summarize the Company’s segment information for 2011 and 2010:

	2011		2010

Revenues from unrelated entities
Tobacco film	$	38,407,457	$	16,830,883
Water-based latex		383,729		-
Coated film		22,634,520		23,474,569
Color printing		5,736,812		3,707,089
Advanced film		8,131,994		14,152,869
	$	75,294,512	$	58,165,410

F-21

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010

Intersegment revenues
Tobacco film	$	13,223,405		$	12,058,029
Water-based latex		837,006			-
Coated film		4,660,727			5,159,125
Color printing		2,892,938			1,459,535
Advanced film		-			-
	$	21,614,076		$	18,676,689

Total Revenues
Tobacco film	$	51,630,862		$	28,888,912
Water-based latex		1,220,735			-
Coated film		27,295,247			28,633,694
Color printing		8,629,750			5,166,624
Advanced film		8,131,994			14,152,869
Less Intersegment revenues		(21,614,076	)		(18,676,689	)
	$	75,294,512		$	58,165,410

Income (loss) from operations
Tobacco film	$	3,407,144		$	2,913,671
Water-based latex		135,193			-
Coated film		(384,147	)		454,051
Color printing		(589,943	)		(694,795	)
Advanced film		(131,919	)		2,216,200
Holding Company		(405,350	)		(260,986	)
	$	2,030,978		$	4,628,141

Interest income
Tobacco film	$	6,175		$	2,196
Water-based latex		61			-
Coated film		3,619			3,061
Color printing		917			483
Advanced film		1,300			4,760
Holding Company		1,992			1,338
	$	14,064		$	11,838

Interest Expense
Tobacco film	$	662,812		$	59,282
Water-based latex		-			-
Coated film		270,555			99,845
Color printing		74,999			19,409
Advanced film		97,124			51,151
Holding Company		1,669			-
	$	1,107,159		$	229,687

F-22

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010

Income tax expense (benefit)
Tobacco film	$	716,027		$	387,277
Water-based latex		-			-
Coated film		47,397			60,351
Color printing		-			-
Advanced film		-			371,141
Holding Company		-			-
	$	763,424		$	818,769

Net Income (loss)
Tobacco film	$	2,822,463		$	2,469,308
Water-based latex		99,473			-
Coated film		(160,984	)		728,192
Color printing		(664,025	)		(713,721	)
Advanced film		(51,663	)		1,924,417
Holding Company		(405,027	)		(260,043	)
	$	1,640,237		$	4,148,153

Provision for depreciation
Tobacco film	$	1,059,617		$	836,268
Water-based latex		42,575			-
Coated film		705,536			133,254
Color printing		195,578			339,433
Advanced film		253,273			318,156
Holding Company		-			-
	$	2,256,579		$	1,627,111

	As of		As of
	December 31,		December 31,
	2011		2010
Total Assets
Tobacco film	$	31,239,495	$	14,680,846
Water-based latex		797,500		-
Coated film		20,810,552		24,720,052
Color printing		5,768,795		4,805,203
Advanced film		7,470,573		10,141,213
Holding Company		11,646,065		1,570,372
	$	77,732,980	$	55,917,686

Note 15 - Geographical Sales

The geographical distribution of Shiner’s revenue for the years ended December 31, 2011 and 2010 is as follows:

Geographical Areas	2011		2010

Chinese Main Land	$	63,157,832	$	47,186,882
Asia (outside Mainland China)		5,995,951		4,447,030
Australia		2,251,898		2,408,284
Middle East		1,825,847		1,698,365
North America		1,600,260		1,719,238
Africa		290,881		291,854
Europe		150,243		362,965
South America		21,600		50,792
	$	75,294,512	$	58,165,410

F-23

SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011 AND 2010

Note 16 – Purchase of Shimmer Sun Ltd

On May 2, 2011, Shiner acquired 100% of the stock of Shimmer for $3.2 million. The Company paid $1.3 million in cash and has a payable of $1.9 million to the former shareholder which is recorded in “other payables” on the accompanying consolidated balance sheets. The acquisition, through Shimmer’s wholly owned subsidiaries, gives Shiner a 65% controlling interest in Shimmer's subsidiary, Ningbo. The Company acquired Shimmer as part of its overall strategy of seeking opportunities for vertical integration.

The transaction was accounted for under the acquisition method of accounting, with the purchase price allocated based on the fair value of the individual assets acquired and liabilities assumed. The acquisition-date fair value of the total consideration was $3.2 million, which was allocated as follows:

Cash & cash equivalents	$	248,743
Accounts receivable		104,714
Advances to suppliers		1,876
Notes receivable		15,211
Inventory		304,707
Prepaid expenses & other current assets		108,061
Property and equipment, net		293,741
Patent		2,118,628
Goodwill		1,956,571
Accounts payable		(46,338	)
Other payables		(168,258	)
Unearned revenue		(3,525	)
Accrued payroll		(11,054	)
Noncontrolling interest		(1,723,077	)
	$	3,200,000

The patent acquired with this acquisition is being amortized over its estimated life of 10 years.

The operating results of Shimmer and its subsidiaries are included in the accompanying consolidated statements of operations from the acquisition date. Shimmer’s operating results from the acquisition date to December 31, 2011 are as follows:

Revenue	$	1,021,002
Cost of goods sold		791,608
Gross profit		229,394
Operating expenses		194,880
Income from operations		34,514
Net income	$	22,351

The pro forma financial information presented below show the consolidated operations of the Company as if the Shimmer acquisition had occurred as of January 1, 2010:

	2011		2010
Revenues	$	75,639,953	$	60,182,390
Gross profit		10,112,440		10,347,964
Income from operations		2,032,991		4,903,734
Provision for income taxes		767,582		865,964
Net income		1,637,699		4,372,322
Basic earnings per share	$	0.06	$	0.18

F-24

Attached files

Shiner International, Inc. Reports

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