Redwood Group International (RDWD)

[Mariner*]

We have acquired the land use certificate for 89 acres of land in Dalian City, which entitles us to use and dispose of the land and the commercial or residential buildings located on the land. Our Food Co. occupies this piece of land.

From 10 K
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Net cash flow used in investing activities was $1,920,586 for fiscal 2006 and compared to net cash used in investing activities of $11,453,481 in fiscal 2005. In 2004 we completed the construction of our plant and equipment used in our fresh pork, frozen pork, and processed foods business. We used $10.5 million in cash in 2004 and $$11.4 million in cash to pay for this construction. Although we began operations in December 2004, a large portion of our construction cost was deferred to 2005 because it was dependent upon completion of a government permitting process which was completed in 2005. In addition, we acquired a 50 year land use right from the government in 2004, however, pursuant to an agreement with the local government, we were permitted to defer a one-time payment of $4.2 million to 2007. Since the one-time payment secures us land use rights for fifty year, management does not presently anticipate that any additional cash payments will be required of us in connection with land use rights in the foreseeable future.