One of our investigator/PRC based attorneys went to Cha You with Jing Zhang (Redchip) and Dr. Zhongyi Liu on Jan 20th 2011.  He talked with Dr. Zhongyi Liu, Mr. Mingliang Zhao, the Chairman and only owner (100%) of ChaYou QianQi Mengxing Vegetable Products Co., Ltd. (“Vegetable Company”) and the manager of Cha You Branch of Liangfang Pharmaceutical Co., Ltd., and Mr. Qibao Liu, the director of the Cha You Land Reserve Trade Center, which is a subsidiary of Cha You Land & Resource Bureau.

Cha You Trip Part 1 (Lotus Pharmaceuticals)

[youtube THyVmUeFrXo]

In general:

During the first half of Part 1, they talk about the water system of the land.

After the car drove into the gate, the conversation was about the big refrigerate room (the white construction in the video) for vegetables planted by the Vegetable Company.

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Cha You Trip Part 2 (Lotus Pharmaceuticals)

[youtube Jyo-PzFmcO4]

Hereinafter is the translation of the conversation in this clip.

Mr. Mingliang Zhao: This big piece land is the land. Here is a block…this is another block. In the west, there are two other blocks. Each block is around 260 mu (260*667=173,420 m2) and four blocks are in the similar size. Four blocks together, it is a little bit more than 1000mu, shall be around 1020 mu (1020*667=680340 m2)…

When I purchased this land with Dr. Zhongyi Liu, our purpose is for business development. At that time, there was no that road. Later, the government paved the road and compensated us another small piece land as the road occupied a small piece of our land.

When I purchased this land, the price is not high as there is no such a road. Because of financial difficulty, we did not start our construction. Two-three years later, after the pavement of the road, the government said that you shall not occupy the big piece of land without any project. Therefore, we started to build something (green houses)… For such a big piece land, if we do nothing, the government does not allow us continue to occupy this land and may even take the land back.

Currently, the land is agricultural land. Before we obtain the land use right, we cannot change the land usage (to commercial, industrial and/or residential usage). After we obtain the land use right, we can start our construction. If we cannot obtain the land use right, we cannot build anything but use it as agricultural land. This is the reason why we start to build the agricultural project (green houses) in this year. For the agricultural project, we can start and/or stop very easily. After we obtain the land use right, we can stop the agricultural business and start the construction asap. Absolutely, this land belongs to LTUS. LTUS shall decide how to construct on this land.

Our attorney: Currently, who is the owner of the land? The government? Local farmers? Or someone else?

Mr. Mingliang Zhao: It is mine…Absolutely, it is mine. It is mine for a long time.

Mr. Jing Zhang (Red Chip): But you do not have the land use right certificate, right?

Mr. Mingliang Zhao: Yes. (I do not have the land use right certificate), as we only executed the agreement with the local farmers. (This is not enough). However, I already paid the money to farmers.

Our attorney: How many local farmers did you trade with?

Mr. Mingliang Zhao: This village includes 56 families (farmers). That village includes 83 families (farmers). Totally, this land belongs to three villages. There is another village in that direction.

Our attorney: what’s the name of three villages?

Mr. Mingliang Zhao: This one is Nan Cun (Nan village). That one is Hua Cun (Hua village). The other one is Cheng Jia Cun (Chengjia village). Totally, it is 1020 mu (1020*667=680,340 m2).

Our attorney: this land is still the agricultural land of the local farmers under the contracted Management/business Right (承包经营æƒ)?

Mr. Mingliang Zhao: Yes. It is.

Our attorney: Did you execute the agreement with the village and/or farmers?

Mr. Mingliang Zhao: I executed the agreement with the village. There is a list of farmers enclosed to the agreement. Each farmer executed his name in the list after the local farmer got his compensation.

Our attorney: Do you have all these documents?

Mr. Mingliang Zhao: Yes. I have.

One of our investigator/PRC based attorney went to Cha You with Jing Zhang (Redchip) and Dr. Zhongyi Liu on Jan 20th 2011.  He talked with Dr. Zhongyi Liu, Mr. Mingliang Zhao, the Chairman and only owner (100%) of ChaYou QianQi Mengxing Vegetable Products Co., Ltd. (“Vegetable Company”) and the manager of Cha You Branch of Liangfang Pharmaceutical Co., Ltd., and Mr. Qibao Liu, the director of the Cha You Land Reserve Trade Center, which is a subsidiary of Cha You Land & Resource Bureau.