China Forestry (OTC BB:CHFY)

On May 20, 2011, the Board of Directors of the Registrant authorized the termination of the several variable interest entity contracts (the “VIE Contracts”) that had been entered into between the Registrant’s direct wholly owned subsidiary Financial International (Hong Kong) Holdings Company Limited (“FIHK”), Hanzhong Hengtai Biotech Limited (“Hengtai”), and SHAO, Zhenheng, YANG, Yongli and SHAO, Zhenzhong.

The new strucute is now a foreign invested enterprise (FIE)

diagram depicting the organizational structure of the Registrant after the termination of the VIE Contracts and the exercise of the Exclusive Option Agreement follows:

CHFY sold its original operating subsidiary on December 14, 2010 and closed antoher reverse merger:

On July 15, 2010, the Company closed a reverse merger with Financial International (Hong Kong) Holdings Co. Limited (“FIHK”). FIHK has no other material operations except a series of contractual arrangements with Hanzhong Hengtai Bio-Tech Limited (“Hengtai”), a company organized and existing under the laws of the People’s Republic of China on October 22, 2003. Through the reverse merger, the Company acquired control of Hengtai, a company incorporated under the laws of the People’s Republic of China that is engaged in the plantation and sale of garden plants used in landscaping, such as Chinese Yews of the types Taxus chinensis var. mairei and Taxus media.

On December 14, 2010, the Registrant (as Vendor) and Land Synergy Limited (as Purchaser), a company incorporated in the British Virgin Islands (“Land Synergy”), simultaneously entered into and closed the transactions contemplated by a Sale and Purchase Agreement relating to the share capital of the Jin Yuan Global Limited (“Jin Yuan”) subsidiary of the Registrant. Jin Yuan owned and operated a company known as Harbin Senrun Forestry Development Co. Ltd., which has in the past operated a timber business for the Registrant in the Heilongjiang Province of the People’s Republic of China. However, for the year ended December 31, 2007 and subsequent years, Harbin Senrun lost its wood cutting quota for log sales from the Bureau of Forestry and has had no revenues. Land Synergy paid US$2,000 for 100% of the share capital of Jin Yuan.

The Board of Directors of the Registrant determined, in the exercise of its reasonable business judgment, that the timber business of Jin Yuan no longer fit with the business plan of the Registrant as it has developed since the merger on July 15, 2010 with Hanzhong Hengtai Bio-Tech Limited, a Chinese company engaged in the business of the plantation and sale of garden plants used in landscaping. Accordingly, the Board of Directors of the Registrant determined that it was in the best interests of the company to sell its 100% equity interest in Jin Yuan to Land Synergy.

As of June 10, 2010, the Registrant entered into a Share Exchange Agreement with Financial International Holdings Co. Ltd., a company organized and existing under the laws of the Hong Kong SAR of the People’s Republic of China (“FIHK”); LIU, Shengli, the owner of 60% of the outstanding share capital of FIHK (“Liu”), and LI, Bin, the owner of 40% of the outstanding share capital of FIHK (“Li”) (Liu and Li collectively being the “Shareholders”), and Hanzhong Hengtai Bio-Tech Limited, a company organized and existing under the laws of the People’s Republic of China (“Hengtai”).

Hengtai is engaged in the business of Chinese Yew, Aesculus, Dove Tree and Dendrobium plantation. The breed of Chinese Yew and Dendrobium in the Company are endorsed by Ministry of Science & Technology of China under the China Spark Program. The paclitaxel extracted from yew is an anticancer medicine acknowledged in the world and it has obvious curative effect.

Under the terms of the share exchange agreement, CHFY will acquire 100% of all of the issued and outstanding share capital of FIHK from its shareholders in an exchange for 100,000,000 shares of newly issued common stock of the CHFY and a Convertible Note in the principal amount of $1.0 million, which note is convertible into 68,000,000 shares of common stock of CHFY. Pursuant to the Agreement, CHFY would acquire and operate FIHK and Hengtai as wholly-owned subsidiaries.