Anpulo Food, Inc.

Anpulo Food, Inc. (referred to herein as “Anpulo” or the “Company”) is a holding company incorporated under the laws of the State of Nevada on July 30, 2010. The Company’s business operations consist of processing and distributing pork products. The Company also engages in the research and development, manufacturing and distribution of chilled pork, frozen pork and prepared meats. The Company distributes its products to the clients mainly in Hubei and Hunan Provinces in the People’s Republic of China, (the “PRC” or “China”).

On September 30, 2014 and December 31, 2013, the construction in progress was $28,440 and $2,142,989, respectively. Construction in progress consisted of amounts expended for the construction of new hotel project which was cooperated with the government of Laifeng County. This project was a “Build-Operate-Transfer” or BOT hotel project. According to the BOT agreement, the Company would invest in building a hotel in Laifeng County and own the operating right for 20 years from October 1, 2012 to September 30, 2032. After September 30, 2032, the title of the hotel would be transferred to the government of Laifeng County.

During the nine months ended September 30, 2014, revenue from sales to “branded” retail stores and supermarket stores was $8.3 million, which represented a decrease of $0.3 million, or approximately 4%, as compared to the nine months ended September 30, 2013. During the nine months ended September 30, 2014, revenues from sales to food service distributors decreased to $2.8 million, which represented a decrease of $0.8 million, or approximately 23%, as compared to the nine months ended September 30, 2013. During the nine months ended September 30, 2014, revenue from sales to restaurants and non-commercial customers decreased to $733,000, which represented a decrease of $690,000, or approximately 48%, as compared to the nine months ended September 30, 2013. As stated above, we were suffering the sale decline from all of our distribution channels primarily due to an apparent decline in the demand in China pork market caused by H7N9 avian flu which temporarily diverted consumption demand for pork to chicken or beef.

Expenses. Selling, general and administrative expenses increased by $173,908 in the nine months ended September 30, 2014 as compared to the same period in 2013. The increase was primarily a result of a decrease in bad debt expense of $50,000 accrued over accounts receivable and other receivables which had been partially offset by an increase of $228,000 in payroll and relevant social security taxes related to our expanded sales team and administrative staffs.

Net cash used in operating activities was $2 million in the nine months ended September 30, 2013. Cash used in operating activities in the nine months ended September 30, 2013 consisted primarily of net loss of $0.7 million due to increased operating expenses of $1.0 million and reduced governmental subsidy of $0.2 million, depreciation and amortization of $0.6 million, and $0.6 million advances received from customers for undelivered goods, which was, partly, offset by decreases from accounts receivable of $0.4 million, a prepayment to suppliers for undelivered goods of $0.9 million which had been delivered in the following month, and an increase of $1.0 million at other current assets which represents cash held by our CEO and employees on behalf of the Company.