Tianli Agritech (NASDAQ:OINK)

Our participation in the Enshi Black Hog program will require us to incur various costs and contribute various amounts to cover the costs of different aspects of the program as more fully described above. As of June 30, 2011, we provided funding totaling $1.16 million to local independent farmers to construct small-scale hog farms in which the farmers will grow the black hogs for sale to the Company. We expect further funding for this program may be required later this year to construct additional farms, and we believe that such funds will be available out of the cash flow generated by operations.

We are actively pursuing the acquisition of additional hog farms. While we do not have any firm agreement, or commitment, we are in discussions to acquire such facilities. We believe that the average purchase price for a hog farm with an annual production capacity of 20,000 hogs is approximately $2 million. We expect to continue to make purchases of purebred breeding stock.

GeoTeam® Note: The company comments regarding liquidity needs are much less detailed in the 2010 10Q than in the 2010 third quarter report.  This could open the door for a dilutive event.

Commitments for Capital Expenditures We are considering acquiring additional hog farms. While we do not have any firm agreement, understanding or commitment to acquire such a facility, we are in negotiations for such facilities. The average selling price for a hog farm with an annual capacity of 20,000 hogs is approximately $2 million to $2.5 million. While we do not have any commitments to do so, we expect to purchase additional purebred hogs over the next 15 months for approximately $1.0 million to $1.5 million, in part for use in any new farms acquired. We are also investigating a plan to open retail shops to sell our pork products at a premium price so that we can further benefit from our reputation for producing high-quality, low-pollution and low-additive pork products. We expect that the total cost for opening such retail locations would be less than $400,000.

Our Chief Executive Officer, Ms. Hanying Li, has loaned funds to our Company to complete the construction of our ninth farm, which commenced operations in May 2010. While the loan from Ms. Li is payable on demand, we do not believe the repayment of the loan is likely to affect our liquidity during the rest of 2010 as Ms. Li has agreed not to request repayment of the loan during 2010.

On July 19, 2010, we closed our IPO. We sold 2,000,000 common shares at a price of $6.00 per share and the shares commenced trading on the NASDAQ Global Market on July 20, 2010. Net proceeds from the offering were approximately $10,600,000, and these funds were placed in our bank account in Hong Kong. We are not able to utilize these net proceeds within China until we have completed certain remittance procedures. On August 2, 2010 we received $2,775,127 of these funds. We expect to utilize these net proceeds to construct and/or acquire additional hog farms, purchase additional breeding stock, possibly establish retail shops in Wuhan City as well as for our working capital needs and professional fees including Sarbanes-Oxley compliance costs.