The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto appearing elsewhere in this Report on Form 10-K/A. The following discussion contains forward-looking statements. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that may cause future results to differ materially from those projected in the forward-looking statements include, but are not limited to, those discussed in "Risk Factors" and elsewhere in this Form 10-K/A.

OVERVIEW

On March 15, 2007, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with China Organic Agriculture Limited ("COA"), and the shareholders of COA.

COA is a corporation formed under the laws of the British Virgin Islands and is a holding company that owns all of the issued and outstanding stock of Jilin Songyuan City ErMaPao Green Rice Limited ("ErMaPao"). ErMaPao is the operating company organized under the laws of China. Jilin Yutian of Organic Agriculture Co., Ltd ("Yutian") was founded in August 2007 under the laws of the People's Republic of China. It is owned 100% by ErMaPao. The Company is engaged in the business of rice production and processing.

The Company consummated the Merger Transaction and acquired COA from the COA Shareholders and thereby indirectly acquired the Chinese operating company ErMaPao. In exchange for transferring COA to the Company, the COA Shareholders received 24,100,000 shares of the Company's common stock. The reorganization of the Company was treated as an acquisition by the accounting acquiree (COA) that is being accounted for as a recapitalization and as a reverse merger by the legal acquirer (CNOA) for accounting purposes. Pursuant to the recapitalization, all capital stock shares and amounts and per share data have been retroactively restated. Accordingly:

(1) The balance sheets included herein consist of the net assets of the accounting acquirer (COA) at historical cost and the net assets of the legal acquirer (IESI) at historical cost.

(2) The statements of operations included herein reflect the operations of COA for the periods presented and the operations of CNOA from the date of the merger.

For 2006 and 2007 we were engaged in the business of rice production and processing. However, as a result of the purchase of the Bellisimo Vineyard and the acquisition of Dalian and sale of Erma Pao, our focus will become the procurement, international and domestic trading, wholesale sales and delivery logistics of a variety of agricultural products, including rice and other grains. Consequently, the financial results of the Company to date and the discussions below, which primarily reflect our rice producing activities, should not be deemed indicative of our future performance. In addition, we will likely continue the operations of the Bellisimo Vineyard and seek to import wine produced at the Bellisimo Vineyard or acquired from other sources into China.

Results of operations for the years ending December 31, 2006 and 2007

All financial information is presented for the year ending December 31, 2007 and the year ending December 31, 2006.

                        CONSOLIDATED STATEMENTS OF INCOME
                 FOR THE YEARS ENDING DECEMBER 31, 2007 AND 2006


                                                          12/31/2007          12/31/2006
                                                         ------------        ------------
Sales, net                                               $ 44,500,003           9,002,345

Cost of sales                                              29,382,399           5,210,575
                                                         ------------        ------------
Gross profit                                               15,117,604           3,791,770

Selling, general and administrative expenses                1,556,350             364,500
                                                         ------------        ------------
Income from operations                                     13,561,254           3,427,270
                                                         ------------        ------------

Other expense (income)                                         70,295              (3,827)
Interest (income)                                              (1,631)
                                                         ------------        ------------
Income before income taxes                                 13,492,590           3,431,097

Provision for income taxes                                         --                  --
                                                         ------------        ------------
Net income                                               $ 13,492,590           3,431,097
                                                         ============        ============

Weighted average number of common shares, basic            46,662,749          27,448,746
Weighted average number of common shares, dilutive         46,730,345          27,448,746
Net Income:
Basic                                                    $       0.29        $       0.13
Dilutive                                                 $       0.29        $       0.13

Net sales

Net sales for the year ending December 31, 2007 totaled $44,500,003 compared to $9,002,345 for the year ending December 31, 2006. This increase of $35,497,685, which is an increase of approximately 394% and, was almost entirely attributable to the increase in our green rice sales due to increases consumer demand of the product in part resulting from higher availability and brand awareness created through new distribution channels. We have expanded our distribution points from individual retailers to large company retailers and supermarkets in the second half of the year. Our products have been introduced in supermarkets in large cities such as Shanghai, Beijing, and Nanjing. This expansion along with increased production has been the major factor of our increase in products sales for 2007.

The Company realized a 61% increase in the price of green rice from 2006 to 2007, and 13% for organic rice from 2006 to 2007. The Company has signed more contracts with family farmers and has purchased rice grain from Xinmiao Grain Depot, which caused more rice grain to be available for sale in 2007. In 2006, the Company sold approximately 8,460 tons of green rice and 3,155 tons of organic rice. In 2007, the Company sold approximately 49,564 tons of green rice and 3,500 tons of organic rice. To accommodate the increase of our production, the Company has expanded our distribution channels and our largest four distributors which make up almost half of our total revenue have signed distribution contracts with us in 2007.

Gross Profit Margin

Gross profit margin for the year ending December 31, 2007 was 34.0% compared to 42.1 % for the year ending December 31, 2006. The decline in gross profit margin is due to the increase of sales of less profitable green rice. In 2006, our organic rice made up about 56% of our sales with green rice making up the rest. Organic rice had a profit margin in 2006 of approximately 55% and green rice had a margin of 21% due to higher sale prices for organic rice. In 2007, our green rice sales increased significantly resulting in those sales representing about 85% of revenues and organic rice comprising about 15% of revenues. Gross profit margins in 2007 were about 57% for organic rice and 27% for green rice. Shipments of green rice reached 49,500 tons and organic rice shipments reached 3,500 tons in 2007. There can be no assurance that the upward trend in the prices we are receiving for our rice products will continue. Our gross margins would be adversely affected by any decreases in the prices we receive for our products.

Gross profit was up two percentage points for organic rice in 2007 due to improvements in the sales price while the costs remained constant. Green rice's gross profit margin increased by approximately six percentage points due to a higher mix of sales of the boxed green rice, which sells for a higher unit price as compared to bagged green rice.

Our business focus is to increase production in both organic and green rice. However, due to capital, technology, environment constraints, and certain organic certification restrictions, expansion of organic rice production is more constrained as compared to green rice. Our organic rice plantation is constantly being researched and developed to improve production levels while complying with the "organic" requirements. The significant increase in green rice production in 2007 is in part attributed to signing an agreement with Xinmiao Grain Depot which acquires green rice product for us and another agreement with Wukeshu Grain Depot to process roughly 42,000 tons of green rice annually for China Organic Agriculture.

Selling, General and Administrative Expense

Selling, general and administrative expense for the year ending December 31, 2007 totaled $1,556,350 or approximately 3.5% of Sales, compared to $364,500 or approximately 4.0% for the year ending December 31, 2006. Our expenses increased due largely to accommodate the expansion of our sales level. This has required additional staff at the distribution centers and related costs, as well as increased advertising promotion.

The Company is governed by the Income Tax Laws of PRC. Pursuant to the PRC Income Tax Laws, until December 31, 2007 the Enterprise Income Tax was at a statutory rate of 25%. However, the Company enjoyed an exemption from this tax because of its involvement in agricultural production and in the PRC Urban Labor and Employment Services Program. As of January 1, 2008, a new tax policy became generally applicable to Chinese enterprises, and hence the Company, wherein the Company became potentially liable for income taxes at the 25% rate. However, the Company believes that it may be exempt from this tax based upon its continued involvement in the abovementioned employment program, and has applied for the exemption. As of the date hereof, no decision has been received regarding this application. The Company is thus accruing taxes in 2008 at the statutory rate and intends to pay the tax on its earnings, with the expectation that any payments would be refunded if the Company is eventually allowed the exemption.

Income from Operations and Net Income

Income from operations for the year ending December 31, 2007 was $13,561,254 or 30.5% of Sales as compared to income from operations of $3,427,270 for the year ending December 31, 2006 or 38.1% of Sales. Net income was $13,492,590 or 30.3% of Sales for the year ending December 31, 2007, compared to $3,431,097 or 38.1% of Sales for the year ending December 31, 2006.

Both of these increases reflect the higher sales level discussed previously. In 2007 the Company benefitted from an exemption from certain annual income taxes. It is possible that the Company will not be eligible for this exemption in 2008. The loss of this exemption will adversely impact the Company's net income.

Liquidity and Capital Resources

Cash has historically been generated from operations. Operations and liquidity needs are funded primarily through cash flows from operations and short-term borrowings. Cash and cash equivalents were $9,697,793, current assets totaled $15,152,917, and current liabilities were $920,315 at December 31, 2007. Working capital at December 31, 2007 was $14,232,602.

Cash Flow


                                                          Year Ended December 31,
                                                       ------------------------------
                                                           2007               2006
                                                       -----------        -----------
Net cash provided by operating activities              $ 9,559,590        $ 3,217,755
Net cash used in investing activities                  $  (852,041)       $   (32,490)
Net cash provided (used in) financing activities       $   364,865        $(3,429,165)
Effects of exchange rates on cash                      $   309,318        $   (66,217)
                                                       -----------        -----------
Net cash flow                                          $ 9,381,732        $  (310,117)
                                                       ===========        ===========

Net Cash Provided by Operating Activities

During the twelve months ended December 31, 2007, we had positive cash flow from operating activities of $9,559,590, primarily attributable to net income of $13,492,590. The cash provided by operating activities in 2007 of $9,559,590 represents an increase of $6,341,835 over the 2006 level of $3,217,755. This increase was largely due to the $10,061,493 increase in net income in 2007 over the 2006 level, partially offset by increases in accounts receivable ($1,029,630), inventory ($2,616,994), as well as a decrease in accounts payable and accrued expenses ($880,005). The increases in accounts receivable and inventory reflect the higher level of sales and production in 2007 as compared to 2006, and the lower level of accounts payable and accrued expenses in 2007 is due to the cash available to pay down outstanding balance.

Net Cash Provided (Used) by Investing Activities and Financing Activities

The Company used $852,041 for the construction of new production lines and facilities during fiscal 2007. These projects were financed by cash flows from operating activities.

We anticipate that our available funds and cash flows generated from operations will be sufficient meet our anticipated on-going operating needs for the next twelve (12) months. However, we will likely raise additional capital in order to fund our ongoing constructions and acquisitions. We expect to raise this through funds obtained from lending institutions or other groups, the issuance of equity, or a combination of both. There can be no guarantee that we will be able to obtain such funding, whether through the insurance of debt or equity, on terms satisfactory to management and our board of directors.

In connection with the acquisition for $14,750,000 of the Bellisimo Vineyard on February 28, 2008 we incurred debt in the amount of $8,515,000 for which we granted the lender a first lien on the Winery. This debt bears interest at an initial rate of 7.7% per annum and is repayable in varying monthly payments over a period of 20 years. In addition, we received funding from a related party (shareholder) of an additional $6,216,000 used to purchase the Winery, at 4% interest over a five year term.

We have previously announced our intention to acquire Dalian Baoshui District Huiming Trading Limited. This acquisition remains subject to our due diligence and the receipt of governmental consents, and there can be no assurance that it will be consummated. If we were to complete this acquisition, it is likely that we would have to issue additional debt or equity securities, including debt or equity issued to the shareholders of Dalian as part of the purchase price. There is no assurance that the funds needed to acquire Dalian will be available to us or, if available, that the terms will be commercially reasonable.