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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

(Mark One)

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2008

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 F

or the transition period from ________________
to________________

Commission file number 000-29981

BIOPACK ENVIRONMENTAL SOLUTIONS INC.(Exact name of registrant as specified in its charter)

|Nevada                                                               | 91-2027724                          
|-------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S. Employer Identification No.)
|                                                                     |                                     
|Room 905, 9/F, Two Chinachem Exchange Square, 338                    |                                     
|Kings Road, North Point, Hong Kong                                  | _______________                     
|(Address of principal executive offices)                             | (Zip Code)                          

Registrants telephone number, including area code
852.3586.1383

Securities registered under Section 12(b) of the Act:

|None                | N/A                                      
|------------------- | -----------------------------------------
|Title of each class | Name of each exchange on which registered

Securities registered under Section 12(g) of the Act:

Common Stock, $0.001 par value(Title
of class)

Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ 
 ]    No [X]

Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or 15(d) of the Act. Yes [  
]    No [X]

Indicate by check mark whether the registrant has (1) filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes
[X]    No [   ]

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrants
knowledge, in definitive proxy

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or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.

Large accelerated filer [   ]
    (Do not check if a smaller
      reporting company)
    Accelerated
      filer                  
      [   ]Non-accelerated filer   [   ]
    
    Smaller reporting company [X]


Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Act). Yes [   ]   
No [X]

State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price at
which the common equity was last sold, or the average bid and asked price of
such common equity, as of the last business day of the registrants most
recently completed second fiscal quarter: $7,910,13 based on a price of
$1.20 per share, being the average bid and asked price of such common equity as
of June 30, 2008.

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PAST FIVE YEARS:

Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court. Yes [   ]   
No [   ]    N/A

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

Indicate the number of shares outstanding of each of the
registrants classes of common stock, as of the latest practicable date.
24,825,300 shares of common stock as of March 25, 2009.

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by
reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into
which the document is incorporated: (1) any annual report to security holders;
(2) any proxy or information statement; and (3) any prospectus filed
pursuant to Rule 424(b) or (c) of the Securities Act of 1933. The listed
documents should be clearly described for identification purposes (e.g., annual
report to security holders for fiscal year ended December 24, 1980). Not
Applicable

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PART I

Forward Looking Statements.

This report contains forward-looking statements.
Forward-looking statements are projections in respect of future events or our
future financial performance. In some cases, you can identify forward-looking
statements by terminology such as may, should, intends, expects,
plans, anticipates, believes, estimates, predicts, potential, or
continue or the negative of these terms or other comparable terminology. These
statements are only predictions and involve known and unknown risks,
uncertainties and other factors, including the risks in Item 1A Risk Factors
commencing on page 11 of this report, which may cause our or our industrys
actual results, levels of activity or performance to be materially different
from any future results, levels of activity or performance expressed or implied
by these forward-looking statements.

Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity or performance. Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to actual
results.

In this report, unless otherwise specified, all dollar amounts
are expressed in United States dollars and all references to common shares
refer to the common shares in our capital stock. Many of our obligations are
payable in either Hong Kong dollars or in RMB (the currency of the Peoples
Republic of China). Throughout this document, we have converted those
obligations from the native currency into U.S. dollars for purposes of making
meaningful disclosure, though we have attempted to provide the amount paid in
the native currency in parenthesis where appropriate. We have converted from
Hong Kong dollars to U.S. dollars at a rate of 7.7824 and from the RMB at a rate
of 6.9090. Both of these rates are based on the average 2008 closing middle
market telegraphic transfer rates supplied by the Hang Seng Bank Limited.

As used in this report and unless otherwise indicated, the
terms we, us and our refer to Upstream Biosciences Inc. and our
wholly-owned subsidiaries.

ITEM 1. BUSINESS

Corporate History

We were incorporated on August 28, 2000 in the state of Nevada
under the name Quadric Acquisitions. Following our incorporation we were not
actively engaged in any business activities. On April 25, 2001, we were acquired
by Zkid Network Company and changed our name to ZKid Network Co. As a result, we
became engaged in the business of providing media content for children through
the use of our proprietary software.

On February 8, 2006, we announced that we would be unable to
raise the necessary funds to continue with our then-existing business model and
plan. Accordingly, we decided to seek an active company to acquire.

On May 8, 2006, we closed a share exchange agreement with Star
Metro Group Limited, which became our wholly-owned subsidiary. Under the terms
of the share exchange agreement we exchanged 60,000,000 shares of our company
for 100% of the issued and outstanding shares of Star Metro Group at a ratio of
1 share of our common stock for each 2,000 shares of Star Metro Group Limiteds
stock. As a result of the share exchange agreement, we became engaged in the
development of a line of biodegradable, single use, food and beverage
containers.

On March 20, 2006, we changed our name from ZKid Network Co. to
Eatware Corporation.

On November 27, 2006, we changed our name from Eatware
Corporation to Star Metro Corp.. We were required to effect this name change
by the terms of an agreement we entered into on November 13, 2006, with Glory
Team Industrial Limited and Eddie Chou, an ex-director of our company. We
effected this name change by merging

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Star Metro Corp., our newly incorporated and wholly-owned
subsidiary that was created for this purpose, into our company, with our company
carrying on as the surviving corporation under the name Star Metro Corp..

On February 26, 2007, we changed our name from Star Metro
Corp. to Biopack Environmental Solutions Inc.. This name change was effected
by merging Biopack Environmental Solutions Inc., our newly incorporated and
wholly-owned subsidiary that was created for this purpose, into our company,
with our company carrying on as the surviving corporation under the name
Biopack Environmental Solutions Inc..

On March 27, 2007, we completed a share exchange with the
shareholders of Roots Biopack Group Limited, a company formed under the laws of
the British Virgin Islands. Under the terms of the share exchange agreement we
acquired all of the issued and outstanding common shares of Roots Biopack Group
in exchange for the issuance by our company of 90,000,000 common shares to the
former shareholders of Roots Biopack Group. As of the closing date of the share
exchange agreement, the former shareholders of Roots Biopack Group held
approximately 62.13% of the issued and outstanding common shares of our company.

Prior to our acquisition of the common shares of Roots Biopack
Group, we had one wholly owned subsidiary, Starmetro Group Limited, which is
incorporated in the British Virgin Islands. Starmetro Group Limited, in its
turn, had two wholly owned subsidiaries: Biopack Environmental Ltd. (formerly
named as E-ware Corporation Limited), a Hong Kong corporation, and Bioplanet
Distribution Sdn Bhd, a Malaysian corporation.

Effective July 25, 2007, we filed a certificate of designation
with the Secretary of State of Nevada, designating 1,000,000 Series B Preferred
Shares. Each Series B Preferred Share has the right to thirty (30) votes at any
meeting of our shareholders and the right to convert, at any time at the
holders option, into five (5) common shares in the capital stock of our
company. On February 25, 2008, we filed a certificate of designation with the
Secretary of State of Nevada designating 2,000,000 Series C Preferred Shares.
The rights and restrictions of these Series C Preferred Shares are identical to
the rights and restrictions for our Series B Preferred Shares.

Effective June 11, 2008, the Secretary of State of Nevada
accepted for filing a Certificate of Change with respect to a consolidation of
our authorized and issued and outstanding shares of common stock on a one new
for ten old basis, as approved by our board of directors on May 31, 2008. As a
result, our authorized common share capital decreased from 500,000,000 shares of
common stock to 50,000,000 shares of common stock and correspondingly our issued
and outstanding common share capital decreased from 167,569,367 shares of common
stock to approximately 16,756,937 shares of common stock. Fractional shares were
rounded-up. Preferred shares and convertible securities were not consolidated.
Except as otherwise expressly stated to the contrary, the disclosure of share
data in this Form 10-K has been adjusted to reflect this consolidation.

When we acquired Roots Biopack Group Limited, we also acquired
its subsidiaries. The following tables show our current corporate structure:

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BIOPACK ENVIRONMENTAL SOLUTIONS INC. Organization
Structure



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Subsidiaries

The following is a list of our subsidiaries:

Name of Subsidiary
      Corresponding number on
      diagram
      Date of
      Incorporation
      Jurisdiction of
      Incorporation
      PurposeRoots Biopack Group Limited
    2
    May 14, 2006
    British Virgin Islands
    Serves as an investment holding
      company which holds some of our subsidiariesStarmetro Group Limited
    3
    April 1, 2005
    British Virgin Islands
    Serves as an investment holding
      company which holds some of our subsidiaries.Roots Biopack Limited
    4
    May 24, 2004
    Hong Kong
    Served as a vehicle for the sales
      and marketing of our biodegradable food containers and industrial
      packaging products. Ceased operation effective Dec 31, 2007 and sales and
      marketing functions are now performed by Biopack Environmental Ltd.Eglinton Group Limited
    5
    April 20, 2004
    British Virgin Islands
    A dormant company currently
      without any operating activities.Expert Result Group Limited
    6
    April 19, 2006
    British Virgin Islands
    Serves as an investment holding
      company, which holds Roots Biopark Limited, which in turn holds Jiangmen
      Roots Biopack Ltd.Biopack Environmental Limited (formerly E-ware Corporation
      Limited)
    7
    November 28, 2005
    Hong Kong
    Provided corporate administrative
      services until December 31, 2007; has served as a vehicle for sales and
      marketing of our biodegradable food containers and industrial packaging
      products since December 31, 2007.Bioplanet Distribution Sdn Bhd (formerly Eatware
      (Malaysia) Sdn Bhd
    8
    December 5, 2005
    Malaysia
    This company was involved in our
      raw material development project in Malaysia. We discontinued our Malaysia
      operations effective January 31, 2008 and this company is currently
      inactive.Roots Biopack (Intellectual Property) Limited
    9
    April 27, 2005
    Hong Kong
    Serves as a vehicle for the
      patent and trademark registration of our biodegradable food container and
      industrial packaging products.Roots Biopark Limited
    10
    February 16, 2006
    Hong Kong
    Serves as an investment holding
      company which holds Jiangmen Roots Biopack Ltd.Jiangmen Roots Biopack Limited
    11
    March 30, 2006
    The PRC
    Serves as a holding company for our manufacturing plant located in Jiangmen, Peoples Republic of China.


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Our Business

We develop, manufacture, distribute and market bio-degradable
food containers and disposable industrial packaging for consumer products. We
supply our biodegradable food containers and industrial packaging products to
multinational corporations, supermarket chains and restaurants located across
North America, Europe and Asia.

We manufacture our products in our own factory, known as
Biopark, which is located in Jiangmen City in the Peoples Republic of China
(PRC).

Factory Development:

On August 19, 2007, our wholly-owned subsidiary, Roots Biopack
Group Limited, entered into a comprehensive agreement with Tayna Environmental
Technology Co. Limited, an unrelated third party, to set up the first phase of
our Biopark factory. Under this agreement, our subsidiary agreed to develop and
sell to Tayna 20 production machines, to help Tayna set up and manage the
factory, and to assist in sales after the commencement of production. Tayna was
unable to complete development of the factory because the local government would
only grant an operating license to the factory owner or lessee and, on March 30,
2008, we agreed to cancel the August 19, 2007 agreement. To March 30, 2008,
Tayna had spent $1,146,102.56 in performance of its obligations under the
comprehensive agreement. In a cancellation agreement and a related loan
agreement dated March 30, 2008, Tayna agreed to loan that amount to our
subsidiary to be repaid over a three-year term expiring March 30, 2011. Our
subsidiary has an option to extend this three-year initial term for an
additional two calendar years by sending written notice to Tayna no later than
three months prior to the original maturity date (i.e., no later than December
30, 2010). Although the loan agreement originally provided that outstanding
principal would earn interest at a rate of 12 percent, on December 1, 2008, we
amended the loan agreement, effective from March 30, 2008, to reduce the rate of
interest to three percent per annum.

Our original plan contemplated that Tayna would complete our
Biopark facility in a three phase program, with the commencement of unit
production keyed to completion of phase one. Originally, phase one consisted of
two production lines with ten machines on each line, while each of phase two and
three consisted of one production line (consisting of ten machines in each
production line). In late 2007 and early 2008, we reconsidered our original plan
in light of our dispute with Patrick Oung (one of the former directors of our
subsidiary Roots Biopack Group Limited and other subsidiaries of our company)
over ownership of four of our machines (see discussion at page 17) and the
licensing difficulties that were then being encountered by Tayna. We decided to
scale our production lines down to five machines rather than ten and, with one
production line in place, we began limited production, primarily of product
samples. Although we have continued to outsource some production of customer
orders to third party factories as we ramped-up our own production capabilities
during 2008, the percentage of orders that we have outsourced has steadily
decreased as our own production capacity has increased. We currently outsource
less than 10% of our production.

We currently have 14 production machines, together with the
boiler, transformer and compressor units necessary for their operation,
installed and fully operational at our Biopark facility. Each production machine
is fitted with a set of customer/product specific molds. These molds are
designed by our customers to suit their specific product specifications (e.g.,
shape and size). All of the currently installed production machines have been
fitted with molds and are fully operational and we are now capable of producing
approximately 6,000,000 units per month.

In December of 2008 we completed installation of a new
wastewater treatment system at our Biopark facility. This system uses a seven
stage process to treat up to 23,800 gallons per day of waste water, which
permits us to reduce fresh water consumption while increasing efficiency and our
production capacity for colored product.

Over the next year, we plan to add an additional six production
machines (two of which are already on order). We have four production machines
stored at our Biopark facility pending resolution of a dispute with Patrick
Oung, one of the former directors of Roots Biopack Group Limited and other
subsidiaries of our company (see discussion beginning at page 4). The two on
order, together with the four machines that are stored subject to our dispute
with Mr. Oung, would give us a total of 20 machines, or four production lines of
five machines each.

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Industry Overview

Currently, the majority of disposable packaging products are
made from plastic, paper or polystyrene, which are typically non-recyclable and
non-biodegradable. Consequently, millions of tons of plastic, paper, or
polystyrene disposable packaging products are discarded in landfills across the
world each year. In the last decade there has been increasing public concern
over the harmful impact that plastic, paper, or polystyrene disposable packaging
products have on the environment. Because of this public concern, governments
have begun to adopt regulations intended to restrict and in some cases even ban
the use of plastic, paper, or polystyrene disposable packaging products and
multi-national corporations, acknowledging the need for environmentally sound
solutions, have begun to seek alternatives to plastic, paper, or polystyrene
disposable packaging products that are less harmful to the environment. As these
trends continue, we believe that market for biodegradable food containers and
industrial packaging products will face rapid growth.

Principal Products

Our current product line-up of food containers and industrial
packaging products include: plates, bowls, boxes, trays, shoe supporters and
cases for electronic devices. We can fabricate any of these or other items to
meet customer-specific requirements, including shape, size, color, density and
the degree to which they are impervious to oil and water.

Each of our products is:

- biodegradable.
- made from natural materials (primarily sugarcane fiber, or bagasse, which
  is a renewable resource that is a by-product of the sugar refining process).
- refrigerator, freezer, microwave and oven friendly in temperatures ranging
  from -25°C to 220°C.
- sterilized by an ultraviolet light process.

Competitive Advantages

We believe that we have the following competitive advantages:

- We employ our own research and development, sales and marketing, quality
  control team and customer service team.
- Successful cultivation of long-term supplier relationships with our key
  distributors and consistent quality gives us a first mover advantage, which
  helps us maintain brand loyalty.
- We have our own in-house production facilities and we manufacture our own
  proprietary product using fully automated machinery. This gives us versatility
  and permits us to react quickly to market demands for product design and
  development.

We have received a number of internationally recognized
certifications and awards for our biodegradable food container and industrial
packaging products, including: the Good Manufacturing Practises awarded by SGS
Hong Kong Ltd. for compliance with international practices pertaining to quality
and management systems; the HACCP awarded by the World Health Organization for
compliance with the standards for food safety management systems set by World
Health Organization & World Food and Agricultural Organization; the
BRC/Iop awarded by the British Retail Consortium / Institute of Packaging for
food packaging products (food contact items); the ISO 9001/14001 awarded by
the International Organization for Standardization for compliance with the
standards for quality management systems and environmental management
systems.

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Sales and Marketing

Our sales and marketing efforts currently consist primarily of
direct marketing, agents, legacy clients and attendance at trade shows and
expositions. To enhance our corporate image and brand awareness we actively
participate in various events. Our biodegradable food container and industrial
packaging products were selected for use in the following events: 2006 Winter
Olympics, 2005 World Youth Day, 2005 Winterfest, 2003 World Alpine Ski
Championship, 2003 World Expo, 2002 World Expo.

Through our distributors we supply our biodegradable food
containers and industrial packaging products to multinational corporations,
supermarket chains and restaurants, located across North America, Europe and
Asia. We have distributors in The Netherlands, Switzerland, Hong Kong, Sweden,
South Africa, the United States, Japan, Taiwan and Israel. Although we have
historically concentrated the bulk of our marketing efforts on the European
market, we have recently decided to increase our efforts in North America during
the next 12 months.

Manufacturing Process

We currently manufacture our products in our factory in
Jiangmen City, PRC (see discussion, above). The manufacturing process at our
Biopark facility consists of the following stages: Raw Material
Preparation

Crunching/Shredding Fine mixing
(set correct concentration) Dosing (adding additives)

These first 3 stages prepare the mixture for the pulp forming
stage.

Pulp Formation

Forming Cold press Hot press

During these three phases the product is shaped. The mixture
(fibers in water suspension) is poured into the forming mold. Wire mesh filters
the water away leaving the fiber in the form of the product. The formed product
is transferred through automation to the cold press, where additional water is
squeezed out. The pressed product is then transferred through automation to the
final drying stage where it is heat dried.

Trimming & Packing

Trimming Ultra violet
Sterilization/Sanitization Packing

During the trimming stage, rough edges are trimmed from the
finished product  the material that is removed will be re-used for other
product (returned to stage 1). Exposure to ultra violet ensures that all
coliform, germs and bacteria that may have survived the prior processing is
killed. Trimming and packaging are currently not automated (these tasks are
currently performed manually by laborers in our factory) but we are currently
developing an automatic trimming machine.

Competition

The market for disposable packaging products is competitive and
subject to frequent product introductions with improved price and or performance
characteristics. We face competition from companies who provide disposable

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packaging products which are made from plastic, paper or
polystyrene. Many of these companies have greater financial, research and
development, marketing and sales resources, offer a broader product line, have
better brand recognition and have a larger customer base than we do. Examples of
these companies include: Eastman Chemical Company, BASF Corporation - Apack AG,
SK Chemicals, Showa and Highpolymer. We also face competition from companies who
provide disposable packaging products which are made from bioplastics and other
types of natural materials. Example of these companies include: Earthshell Corp,
Starch Tech Incorporated, Biocorp NA, KTM Industries Incorporated, Eco-Products
Incorporated, Insulair, Incorporated, Novamont SPA, Green Shell Company Limited,
Far East Green World Corporation, Sanshi Green Packaging Company and Green
Eternity Company Limited.

Availability of Raw Materials

Our raw materials are sourced from the following regions:

Material Provided
      RegionSugarcane Fiber
    Guangdong Province (China)
      Guangxi Province (China)Palm Fiber
    MalaysiaPE/ PET Film
    Guangzhou (China)Coloring
    Guangdong Province (China)Water Repellent
    Guangdong Province (China)Oil Repellent
    Hong Kong CanadaCarton Box
    Guangdong Province (China)
      Hong KongMachinery
    Guangdong Province (China)


Intellectual Property

We have not registered any patent or proprietary technology.

Trademarks

Our Roots Biodegradable trademark is currently registered in
Switzerland, Hong Kong, India and the United States and it is also registered
through the Community Trademark Registration, giving us rights in all 25 member
states of the enlarged European single market, including Austria, Belgium,
Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece,
Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands,
Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom. We
are currently applying for trademark registration in Canada, Japan, India and
China. We plan to apply for trademark registrations in; Australia, New Zealand,
Malaysia, Israel, Saudi Arabia, Turkey. Details of our registered trademarks are
below:

Date
      Country
      Registration NumberJune 1, 2006
    Hong
      Kong
    200302488September 1, 2006
    Switzerland
    548477March 27, 2007
    United
      States
    3222538September 13, 2007
    European Union
    005083101


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Our trademark registration applications in Switzerland and
Japan have been opposed by Roots Canada Limited. We believe that this opposition
is not warranted because we are not involved in the same or a similar industry
as Roots Canada Limited. We are currently engaged in discussions with Roots
Canada Limited in an effort to negotiate an amicable resolution to its
opposition.

Domain Names

We own and operate the following two registered internet domain
names:

- www.rootsbiopack.com.
- www.biopackenvironmental.com

The information contained on our website does not form part of
this annual report.

Dependence on one or more main customers

Until August of 2007, we relied on our five largest customers
for approximately 80% of our sales in 2007. In August of 2007, these five
customers were effectively consolidated when they made the decision to rely on
one importer to source all of their needs. The loss of any or all of these
customers would adversely affect revenues and results of operations, and the
loss of any other significant customers could adversely affect revenues and
results of operations unless and until the lost business is replaced.

Pension Plan

We participate in a defined contribution pension plan under the
Mandatory Provident Fund Schemes Ordinance for all our eligible employees in
Hong Kong. The Mandatory Provident Fund Scheme is available to all employees
aged 18 to 64 with at least 80 days of service in the employment in Hong Kong.
Contributions are made at 5% of the participants relevant income with a ceiling
of HK$20,000. The participants are entitled to 100% of our contributions
together with accrued returns irrespective of their length of service with our
company, but the benefits are required by law to be preserved until retirement
age of 65. Our only obligation is to make the required contributions under the
plan. The assets and the schemes are controlled by trustees and held separately
from those of our company. Our total pension cost was $5,848 for the year ended
December 31, 2008 and $12,495 for the year ended December 31, 2007.

Until January 31, 2008, we also participated in a compulsory
savings scheme in Malaysia. All employees in Malaysia who have reached the age
of 16 and employed under a contract of service whether express or implied, and
whether oral or in writing must be registered as a member of the Employees
Provident Fund. As an employer, we contributed 12% of the employees wages and
the employee contributed 11% of the monthly wages towards the employees
account. The total cost for this plan through our Malaysian subsidiary was $Nil
in 2008 and $3,983 in 2007. On January 31, 2008, we closed our office in
Malaysia and no longer participate in this plan.

Independent Testing

To ensure that our products meet health and safety and performance
  standards, we have them put through the tests described in the following table.

Criteria
    Objectives / Purpose
    Independent Testing LaboratoriesPhysical Performance Test
    - Temperature resistance, steamer,
      microwave    and oven tests - Water and oil proof
      tests - Acid Resistance tests
    Hong Kong Standards and Testing Centre
      Hong Kong Standards and Testing Centre Hong Kong
      Standards and Testing Centre


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Food Safety Tests
    - Microbiological Tests, Coliform Bacteria,
         Pesticides Residues, Moulds and Yeasts Tests -
      Overall Migration Test - Heavy Metals Analysis, - Hong
      Kong Q-Mark Product Award
    SGS Hong Kong Limited SGS Hong Kong
      Limited SGS Hong Kong Limited Hong Kong Q-Mark CouncilBiodegradability
    - ASTM D6400 (USA), DIN V 54900 and DIN
         EN 13432 (European Countries) - OK Compost and OK
      Compost Home    Conformity Marks - Hong Kong Green
      Label Scheme
    DIN CERTCO, Belgium AIB-Vincotte,
      Belgium Hong Kong Green Council


Governmental Regulation

With the emergence of alternatives to disposable packaging
products, which are made from plastic, paper and polystyrene, various standards
and guidelines have been developed by government organizations to assess the
performance of these substitutes. Through our quality assurance tests, we
attempt to ensure that our biodegradable food containers and industrial
packaging products meet or exceed the applicable government standards and
guidelines.

Our products comply with the following international
regulations:

|- | German Regulation to the
      protection from dangerous materials  Gefhstoff-Verordnung (Oct 26, 1993);
|- | ---------------------------------------------------------------------------------------------------------
|  |                                                                                                          
|- | U.S. CFR Title 21 (FDA
      Regulation);                                                                
|  |                                                                                                          
|- | Taiwan Hygienic Standard for Food
      Utensil, Container and Packaging (Revised 82.7.7); and,          
|  |                                                                                                          
|- | Biodegradability and Food
      Standards of Hong Kong Environmental Protection Department (HKEPD).      

Research and Development

Our research and development team consists of five employees,
all of whom work from our Biopark factory in Jiangmen City, PRC. Three of the
team members are engineers who focus on machine design and efficiency. The other
two focus on ecological studies. The research and development expenses are
mainly staff cost and product testing fees which are minimal at this stage.

Employees

We currently have 155 full time and no part time employees. Of
these, four work in our Hong Kong administrative offices and 151 work in our
Biopark factory in Jiangmen City, PRC.

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ITEM 1A. RISK FACTORS

Our audited annual consolidated financial statements have
been prepared assuming that we will continue as a going concern

We incurred a net loss of $1,587,330 for the fiscal year ended
December 31, 2008 and a net loss since inception of $5,497,480. At December 31,
2008, we had a working capital deficit of $2,415,819. We anticipate that we will
continue to incur operating expenses that will only partially be offset by
operating revenues unless and until we increase our production capabilities and
begin producing enough product to become profitable. On December 31, 2008, we
had cash of $128,039. We estimate that our operating expenses over the next 12
months will be approximately $75,000 per month and we plan to spend
approximately $750,000 to add additional production capacity to our Biopark
facility. Therefore, we estimate that we will need approximately $1,650,000 over
the next 12 months in order to continue our operations and complete construction
of the Biopark facility. Although we believe that we will be able to pay some of
these expenses from our sales revenue, we believe that we will need to raise
additional funds to meet all of our currently budgeted operating requirements
for the next 12 months. As we cannot assure a lender that we will be able to
successfully increase our production capabilities and begin profitable
operations, we will probably find it difficult to raise debt financing from
traditional lending sources. We have traditionally raised our operating capital
from sales of equity and, more recently, convertible debt securities but there
can be no assurance that we will be able to continue to do so. If we cannot
raise the money that we need in order to continue to operate and improve our
production capabilities, we may be forced to delay, scale back or even eliminate
some or all of our activities. If any of these were to occur, our business could
fail. These circumstances raise substantial doubt about our ability to continue
as a going concern, as described in the explanatory paragraph to our independent
auditors report on our consolidated financial statements for the year ended
December 31, 2008, which are included in this annual report on Form 10-K.
Although our consolidated financial statements raise substantial doubt about our
ability to continue as a going concern, they do not include any adjustments
relating to recoverability and classification of recorded assets, or the amounts
or classifications of liabilities that might be necessary in the event our
company cannot continue in existence.

We operate in a competitive industry and our failure to
compete effectively may adversely affect our ability to generate revenue.

The disposable packaging industry is competitive and subject to
frequent product introductions with improved price and or performance
characteristics. Many companies, including those who manufacture their
disposable packaging products out of plastic, paper or polystyrene, have greater
financial, research and development, marketing and sales resources, offer a
broader product line, have better brand recognition and have a larger customer
base than we do. Increased competition in the disposable packaging industry
could result in significant price competition, reduced profit margins or loss of
market share, any one of which could have a material adverse effect on our
ability to generate revenues and successfully operate our business.

Our competitors may reduce their prices or engage in
advertising or marketing campaigns designed to protect their respective market
shares and impede market acceptance of our disposable packaging products. We
expect that many of our competitors may actively seek competitive alternatives
to our disposable packaging products. The development of competitive disposable
packaging products could render our disposable packaging products obsolete and
could impair our ability to compete, which would have an adverse effect on our
business, financial condition and results of operations.

We may suffer significant losses resulting from general
product liability, which may harm our financial condition and result of
operations.

As a manufacturer of disposable packaging products we are at
risk for potentially significant product liability and associated losses. We
cannot predict or protect against all potential losses or liabilities that may
arise relating to our disposable food container and industrial packaging
products. We maintain insurance against many, but not all, potential losses and
liabilities, in accordance with customary industry practice and in amounts we
believe to be necessary. If any losses or liabilities are not covered by
insurance, or if the insurance is insufficient, we would be required to satisfy
these losses and liabilities and our financial condition and results of
operations may be adversely affected.

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We rely on a number of different suppliers to supply us with
the materials that we require to manufacture our disposable packaging products.
We could be adversely affected by an increase in our suppliers prices or a
significant decline in our suppliers financial condition. As a result, our
business may fail and investors may lose their entire investment.

We rely on a number of different suppliers to supply our
company with the materials that we require to manufacture our disposable
packaging products. We could be adversely affected by an increase in any one of
our suppliers prices or a significant decline in any one of our suppliers
financial condition. If the relationship with any of our suppliers is terminated
and we are unsuccessful in establishing a relationship with an alternative
supplier who offers similar products at similar prices, our results of
operations could be adversely affected. As a result, our business may fail and
investors may lose their entire investment.

We rely on certain strategic raw materials for our
operations. If the raw materials we use to manufacture our disposable packaging
products increase substantially in price or for whatever reason becomes
unavailable to us our business could fail and investors could lose their entire
investment.

Although we believe that there are sufficient quantities of the
raw materials we use to manufacture our disposable packaging products, the
continuous existence and availability and price of these raw materials may be
affected by natural disasters, domestic and world markets, political conditions,
changes in government regulation and war or other outbreak of hostilities. If
the raw materials we use to manufacture our disposable packaging products
increase substantially in price or for any reason become unavailable to us our
business could fail and investors could lose their entire investment.

Substantially all of our assets, all of our directors and
all of our executive officers reside outside the United States. As a result it
may be difficult for investors to enforce within the United States any judgments
obtained against us or any of our directors or executive officers.

Substantially all of our assets are located outside the United
States and we do not currently maintain a permanent place of business within the
United States. In addition, all of our directors and executive officers are
nationals and residents of countries other than the United States, and all or a
substantial portion of such persons assets are located outside the United
States. As a result, it may be difficult for investors to enforce within the
United States any judgments obtained against us or our officers or directors,
including judgments predicated upon the civil liability provisions of the
securities laws of the United States or any state thereof. Consequently,
investors may be effectively prevented from pursuing remedies under United
States federal securities laws against us or any of our directors or executive
officers.

Our ability to hire and retain qualified personnel will be
an important factor in the success of our business and a failure to hire and
retain key personnel may result in our inability to manage and implement our
business plan.

Our ability to hire and retain qualified personnel will be an
important factor in the success of our business. The competition for qualified
personnel in the disposable packaging industry in which we operate is high. In
addition, in order to manage growth effectively, we must implement management
systems and continue to recruit and train new employees. We may not be able to
attract and retain the necessary qualified personnel. If we are unable to retain
or to hire qualified personnel as required, we may not be able to adequately
manage and implement our business plan.

Our international operations subject us to a number of
risks, including unfavorable political, regulatory, labor and tax conditions in
foreign countries. We may not be able to develop and implement policies and
strategies that will be effective in each location where we do business and as a
result our business could fail and investors could lose their entire investment.

Our international operations subject us to the legal,
political, social and regulatory requirements and economic conditions of many
jurisdictions. Risks inherent to international operations include the following:

| | - | difficulty in enforcing
      agreements in foreign legal systems;
| | - | ------------------------------------------------------------------

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| | - | foreign countries may impose additional withholding taxes
      or otherwise tax our foreign income, impose tariffs or adopt other
      restrictions on foreign trade and investment, including currency exchange
      controls;                    
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                       
| | - | fluctuations in exchange rates may affect product demand
      and may adversely affect our profitability in United States dollars to the
      extent the price of our products and cost of raw materials is denominated
      in a foreign currency;
| |   |                                                                                                                                                                                                                                                       
| | - | Inability to obtain, maintain or enforce intellectual
      property rights;                                                                                                                                                                          
| |   |                                                                                                                                                                                                                                                       
| |   | Changes in general economic and political conditions in
      the countries in which we operate;                                                                                                                                                      
| |   |                                                                                                                                                                                                                                                       
| | - | unexpected adverse changes in foreign laws or regulatory
      requirements, including those with respect to export duties and quotas;                                                                                                                
| |   |                                                                                                                                                                                                                                                       
| | - | difficulty with staffing and managing widespread
      operations;                                                                                                                                                                                    
| |   |                                                                                                                                                                                                                                                       
| | - | trade barriers such as export requirements, tariffs,
      taxes and other restrictions and expenses, which could increase the prices
      of our products and make us less competitive in some countries; and,                                      
| |   |                                                                                                                                                                                                                                                       
| | - | difficulty of and costs relating to compliance with the
      different commercial and legal requirements of the overseas markets in
      which we offer and sell our products.                                                                      

Our international operations require us to respond to rapid
changes in market conditions in these countries. The success of our
international operations depends, in part, on our ability to succeed in
differing legal, regulatory, economic, social and political conditions. We may
not be able to develop and implement policies and strategies that will be
effective in each location where we do business and as a result our business
could fail and investors could lose their entire investment.

In addition, we source all of our manufacturing in China. China
is experiencing very rapid economic growth which could have a negative impact on
our business activities there. These include worsening inflation, fluctuations
in currency and challenges to the nations electric power supply capacity. In
addition, developments in Chinas financial system and current legislative
trends could pose future business risks, including changes to its laws that
might prohibit or restrict foreign ownership.

The limitation of our available manufacturing capacity due
to significant disruption in our manufacturing operation could have a material
adverse effect on sales revenue and results of operations and financial
condition.

We manufacture our disposable packaging products using complex
processes that require technologically advanced equipment and continuous
modification to improve yields and performance. From time to time, we have
experienced minor disruptions in our manufacturing process as a result of power
outages or equipment failures. If production at our manufacturing plant is
disrupted for any number of reasons, manufacturing yields may be adversely
affected and we may be unable to meet our customers requirements. Consequently,
our customers may purchase disposable food packaging products from our
competitors. This could result in a significant loss of revenues and damage to
our customer relationships, which could materially adversely effect our
business, results of operations or financial condition.

Our disposable packaging products may be perceived poorly by
environmental groups, customers and government regulators, which could have an
adverse effect on our business, causing us to cease operations.

Our success depends substantially on our ability to manufacture
disposable packaging products that are less harmful to the environment than
disposable packaging products made from plastic, paper or polystyrene. Although
we

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believe that our disposable packaging products are less harmful
to the environment than other disposable packaging products, which are made from
paper, plastic and polystyrene, our disposable packaging products may also
possess characteristics that environmental groups could perceive as negative for
the environment. When biodegradable waste is disposed of in landfills, it breaks
down under uncontrolled anaerobic conditions. This produces landfill gas which,
if not harnessed, escapes into the atmosphere. Landfill gas contains methane, a
more harmful greenhouse gas than carbon dioxide. The European Union Landfill
Directive puts key requirements on member states for the management of
biodegradable waste in order to stop global warming. Whether, on balance, our
disposable packaging products are better for the environment than other
disposable packaging products, which are made from either plastic, paper or
polystyrene is a somewhat subjective judgment. Environmental groups, customers,
and governmental regulators may not agree that our disposable packaging products
have an advantage over other disposable packaging products, which are made from
plastic, paper or polystyrene. If our disposable packaging products are
perceived as being harmful to the environment, our revenues will likely suffer
and as a result we could go out of business.

We have a stable customer base; however, loss of, or
material financial weakness of, our largest distributor could adversely affect
our financial condition and results of operations until such business is
replaced and no assurances can be made that we would be able to regain or
replace any lost customers. This could cause us to go out of business and
investors could lose their entire investment.

We rely on one distributor for approximately 80% of our sales.
The loss of this distributor would adversely affect revenues and results of
operations, and the loss of any other significant customers could adversely
affect revenues and results of operations unless and until the lost business is
replaced. We believe that it is unlikely that we could replace this one
distributor. If we were to lose this distributor and we did not replace it, we
could be forced to cease operations and investors in our company could lose
their entire investment.

Our business is subject to complex health, safety and
environmental laws and industry regulations, which require and will continue to
require significant expenditures to remain in compliance with such laws and
regulations currently and in the future. Costs of such compliance will likely
reduce our probability.

Our business is subject to complex health, safety and
environmental laws and industry regulations, which require and will continue to
require significant expenditures to remain in compliance with such laws and
regulations currently and in the future. Unanticipated government enforcement
action, or changes in health, safety and environmental laws and industrial
regulations could result in higher costs which may negatively affect our
profitability.

Because our executive officers, directors control a high
percentage of our common stock, such insiders may have the ability to influence
matters affecting our shareholders.

Our executive officers and directors, in the aggregate,
beneficially own 42.13% of the issued and outstanding shares of our common
stock. As a result, they have the ability to influence matters affecting our
shareholders, including the election of our directors, the acquisition or
disposition of our assets, and the future issuance of our shares. Because our
executive officers, directors and principal shareholders control such shares,
investors may find it difficult to replace our management if they disagree with
the way our business is being operated. Because the influence by these insiders
could result in management making decisions that are in the best interest of
those insiders and not in the best interest of the investors, you may lose some
or all of the value of your investment in our common stock.

RISKS RELATED TO OUR COMMON STOCK

A decline in the price of our common stock could affect our
ability to raise further working capital and adversely impact our ability to
continue operations.

A prolonged decline in the price of our common stock could
result in a reduction in the liquidity of our common stock and a reduction in
our ability to raise capital. Because a portion of our continued operations will
be financed through the sale of equity securities, a decline in the price of our
common stock could be especially detrimental to

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our liquidity and our operations. Such reductions may force us
to reallocate funds from other planned uses and may have a significant negative
effect on our business plan and operations, including our ability to develop new
products and continue our current operations. If our stock price declines, we
can offer no assurance that we will be able to raise additional capital or
generate funds from operations sufficient to meet our obligations. If we are
unable to raise sufficient capital in the future, we may not be able to have the
resources to continue our normal operations.

The market price for our common stock may also be affected by
our ability to meet or exceed expectations of analysts or investors. Any failure
to meet these expectations, even if minor, may have a material adverse effect on
the market price of our common stock.

If we issue additional shares in the future, it will result
in the dilution of our existing shareholders.

Our certificate of incorporation, as amended, authorizes the
issuance of up to 50,000,000 shares of common stock with a par value of $0.0001
and 10,000,000 shares of preferred stock with a par value of $0.001. Our board
of directors may choose to issue some or all of such shares to provide
additional financing in the future. The issuance of any such shares will result
in a reduction of the book value and market price of the outstanding shares of
our common stock. If we issue any such additional shares, such issuance will
cause a reduction in the proportionate ownership and voting power of all current
shareholders. Further, such issuance may result in a change of control of our
company.

Trading of our stock may be restricted by the Securities
Exchange Commissions penny stock regulations, which may limit a stockholders
ability to buy and sell our stock.

The Securities and Exchange Commission has adopted regulations
which generally define penny stock to be any equity security that has a market
price (as defined) less than $5.00 per share or an exercise price of less than
$5.00 per share, subject to certain exceptions. Our securities are covered by
the penny stock rules, which impose additional sales practice requirements on
broker-dealers who sell to persons other than established customers and
accredited investors. The term accredited investor refers generally to
institutions with assets in excess of $5,000,000 or individuals with a net worth
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
with their spouse. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document in a form prepared by the Securities and
Exchange Commission, which provides information about penny stocks and the
nature and level of risks in the penny stock market. The broker-dealer also must
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customers account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customers confirmation. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt
from these rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchasers written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in and limit the marketability of our common stock.

The Financial Industry Regulatory Authority, or FINRA, has
adopted sales practice requirements which may also limit a stockholders ability
to buy and sell our stock.

In addition to the penny stock rules described above, FINRA
has adopted rules that require that in recommending an investment to a customer,
a broker-dealer must have reasonable grounds for believing that the investment
is suitable for that customer. Prior to recommending speculative low priced
securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customers financial status,
tax status, investment objectives and other information. Under interpretations
of these rules, FINRA believes that there is a high probability that speculative
low priced securities will not be suitable for at least some customers. FINRA
requirements make it more difficult for broker-dealers to recommend that their
customers buy our common stock, which may limit your ability to buy and sell our
stock and have an adverse effect on the market for our shares.

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Our common stock is illiquid and the price of our common
stock may be negatively impacted by factors which are unrelated to our
operations.

Our common stock currently trades on a limited basis on the OTC
Bulletin Board. Trading of our stock through the OTC Bulletin Board is
frequently thin and highly volatile. There is no assurance that a sufficient
market will develop in our stock, in which case it could be difficult for
shareholders to sell their stock. The market price of our common stock could
fluctuate substantially due to a variety of factors, including market perception
of our ability to achieve our planned growth, quarterly operating results of our
competitors, trading volume in our common stock, changes in general conditions
in the economy and the financial markets or other developments affecting our
competitors or us. In addition, the stock market is subject to extreme price and
volume fluctuations. This volatility has had a significant effect on the market
price of securities issued by many companies for reasons unrelated to their
operating performance and could have the same effect on our common stock.

ITEM 2.       
PROPERTIES.

Offices

Our head office is located at Room 905, 9/F, Two Chinachem Exchange
  Square, 338 Kings Road, North Point, Hong Kong. Our telephone number is
  (852) 3586-1383. Our facsimile number is (852) 3586-2366. We lease this space,
  which consists of approximately 994 square feet, from an unrelated third party
  for the sum of approximately $1,788 per month ( HK$ 13,916) for a term of two
  years expiring March 19, 2010.

Our Malaysia subsidiary, Bioplanet Distribution Sdn Bhd,
maintained an office located at Suite E-09-07, Level 9, Block E, Plaza Mont
Kiara, No. 2, Jalan Kiara, Mont Kiara, 50480 Kuala Lumpur, Wilayah Persekutuan,
Malaysia. We closed this office (and discontinued our operations in Malaysia)
effective January 31, 2008. We do not have any continuing lease obligations in
connection with this action.

Our subsidiary, Roots Biopack Limited, leased office space at
  Unit 2009, Hopewell Centre, 183 Queens Road East, Wan Chai, Hong Kong.
  Management of this subsidiary moved into our principal executive office on May
  21, 2007, leaving the office space at Hopewell Centre vacant. The lease for
  this office expired on November 14, 2008.

Factory

Our Peoples Republic of China (PRC) subsidiary, Jiangmen Roots
Biopack Limited, leases 4 adjacent properties situated at No.3, Yangjiaokeng
Industrial District, Tingyuan Village, Duruan Town, Jiangmen City, PRC. We call
this area Roots Biopark.

Roots Biopark includes a factory, dormitories, a shop on the
first floor, an office on the second floor, toilets, a garage, a storage shelter
and land, a substation and an electricity transformer (315kW). The premises are
equipped with kitchen appliances, water, electricity and fire prevention and
fire fighting equipment. Roots Biopark has a total area of 10,440 square meters,
including a 2,700 square meter dormitory.

The lease term is 15 years from March 1, 2007, with one option
to renew the term. A copy of the lease agreement and the translation of the
lease agreement were attached as exhibits to our annual report filed on April
17, 2007. We have a right of first refusal to purchase the premises in the event
that the landlord desires to sell.

We paid the sum of approximately $56,448 (RMB 390,000.00) as a
rental deposit. Pursuant to the terms of our rental agreement, the rental
deposit is to be refunded to us without interest upon the expiration of the
lease.

From the first to the fifth year, our monthly rent is RMB
103,000 (approximately $13,720), or RMB 1,236,000 (approximately $164,646 per
annum. From the sixth year onward, our rent will increase by 5% every 3 years.

The table reproduced below provides a summary of our lease
commitments:

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Name of Landlord
    Property location
    Rental **Charges**Monthly
    Duration
    Lease Contract UnderRoco Investment and Exact Development Limited.
    Limited Room 905, 9/F, Two Chinachem Exchange
      Grow Square, 338 Kings Road, North Point, Hong Kong
    $1,788
    20/3/2008 - 19/3/2010
    Biopack Environmental Ltd. (HK)CHENG, Jin Yao
    No.3, Yangjiaokeng Industrial
      District,Tingyuan Village, Duruan Town, Jiangmen City, PRC
    $14,908
    01/03/2007 - 28/2/2022
    Jiangmen Roots Biopack Ltd. (China)


Twelve Months Ending
    Future MinimumDecember 31:
    Lease Payments$December 31, 2009
    200,352December 31, 2010
    184,261December 31, 2011
    178,897


We believe our facilities are suitable to our current needs and
for our needs in the foreseeable future.

ITEM 3. LEGAL PROCEEDINGS.

Other than as disclosed below, we know of no material, active
or pending legal proceedings against us, nor are we involved as a plaintiff in
any material proceedings or pending litigation. There are no proceedings in
which any of our directors, officers or affiliates, or any registered beneficial
shareholder are an adverse party or has a material interest adverse to us.

By letter dated April 12, 2007 an attorney claiming to
represent Good Value Galaxy Limited, a British Virgin Islands corporation that
is a significant shareholder of our company, advised us that all of the issued
shares of Good Value Galaxy Limited had been transferred. This attorney advised
that the shares of Good Value Galaxy Limited, which had previously been
beneficially owned by Gerald Lau, our President and Chairman of our board of
directors, had been transferred to Oung Cheng Hai effective April 11, 2007. In
addition, this attorney advised that Gerald Lau, who had previously been the
sole director of Good Value Galaxy Limited, had resigned as a director of that
company and Mr. Albert Oung had been appointed as the sole director of Good
Value Galaxy Limited.

In a second letter, also dated April 12, 2007, this same
attorney advised that he represented both Good Value Galaxy Limited and Joyful
Services Limited and that these two companies owned in excess of 10% of our
companys issued and outstanding common shares. This attorney, allegedly on
behalf of Good Value Galaxy Limited and Joyful Services Limited, demanded that
our company convene a special meeting of our shareholders to consider and pass
resolutions to remove Gerald Lau (our President and a director) and Edwin Chan
(a director of our company), appointing Albert Oung and Patrick Oung to serve as
directors from that date forward.

Upon our receipt of this correspondence, our attorneys asked
Gerald Lau for confirmation of the alleged transfer of shares of Good Value
Galaxy Limited and they asked the attorney making the allegations to provide us
with credible evidence to support his allegations. Mr. Laus attorneys informed
us that no such transfer had taken place and that Mr. Lau continued to be the
sole shareholder of both Good Value Galaxy Limited and Joyful Services Limited.
The attorney making the allegation that the shares of Good Value Galaxy Limited
were transferred to Oung Cheng Hai has not yet provided us with any credible
evidence that this alleged transfer took place. In light of the absence of
credible evidence of a transfer and the assertion from Gerald Lau, through his
attorneys, that there has been no such transfer, we do not currently intend to
comply with the requests of April 12, 2007.

On May 8, 2007, we received a letter from a different law firm
asserting that it represented Good Value Galaxy Limited and Joyful Services
Limited and enclosing a document alleged to be the written consent of Good Value
Galaxy Limited and Joyful Services Limited. Albert Oung signed this alleged
written consent on behalf of each of Good Value Galaxy Limited and Joyful
Services Limited. The alleged written consent purports to appoint Albert

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Oung and Patrick Oung to our board of directors effective
immediately and to amend and restate our Bylaws. Our attorneys replied to this
letter of May 8, 2007, stating that we cannot accept the claim that ownership of
the shares of Good Value Galaxy Limited and Joyful Services Limited has been
transferred absent receipt of a persuasive explanation of the circumstances of
the transfer and credible evidence showing how and why the alleged transfer took
place. We have not yet received any such explanation or credible evidence. Until
we do, we cannot accept the alleged written consent as the act of Good Value
Galaxy Limited and Joyful Services Limited.

On May 31, 2007, our President and Chairman of our board of
directors, Gerald Lau, filed a statement of claim in the High Court of the Hong
Kong Special Administrative Region  Court of First Instance against Albert
Oung, Oung Cheng Hai, Good Value Galaxy Limited and Joyful Services Limited
regarding ownership of approximately 54.06% shares of our common stock.

In his statement of claim, Mr. Lau alleges that in or about
January 2007, upon him learning of a severe medical condition that he developed,
he agreed to execute a declaration of trust in favour of Mr. Oung Cheng Hai
which was to take effect upon the completion of a number of conditions. Mr. Lau
alleges that he signed a declaration of trust, an instrument of transfer in
respect of the one (1) issued share in Good Value Galaxy Limited, a notice of
resignation of Good Value Galaxy Limited, a written resolution of the sole
director of Good Value Galaxy Limited approving the transfer of the share, the
resignation of the sole director and the appointment of Mr. Oung Cheng Hai. Mr.
Lau further alleges that all the executed documents were to remain undated and
were not to take effect until the following conditions were met:

- the declaration of trust was to give effect to Mr. Laus intentions that
  the shares in Good Value Galaxy Limited and any funds and benefits derived
  therefrom were to be utilized for charitable purposes;
- the declaration of trust should not take effect or become operative until
  12 to 18 months after the completion of the share exchange with the
  shareholders of Roots Biopack Group Limited and our company;
- the declaration of trust should not take effect or become operative until
  after the approval and or clearance from the United State Securities and
  Exchange Commission is obtained for the transfer of the share in Good Value
  Galaxy Limited and for the resignation of Mr. Lau from our company; and
- the declaration of trust was subject to Mr. Laus agreement and consent as
  to the date on which the documents shall take effect or become operative.

Mr. Lau further alleges that while the documents were held in
escrow by Mr. Oung Cheng Hai and Mr. Albert Oung, the documents were dated and
materially altered in breach of the agreement and the conditions referred to
above without the agreement, knowledge or consent of Mr. Lau. In particular, Mr.
Lau alleges that the declaration of trust was back-dated to the 17th
of September 2003 and the instrument of transfer, notice of resignation and
corporate resolution were dated the 11th of April 2007. Mr. Lau seeks
redress from the court to declare such documents as ineffective and/or void
and/or of no effect. No hearing in this matter has yet been scheduled.

On July 13, 2007, Foshan City Shunde District Ka Fook Recycle
Products Ltd. with its legal representative Mr. Patrick Oung instituted civil
proceedings against our wholly owned subsidiary Jiangmen Roots Biopack Limited.
Foshan City Shunde District Ka Fook Recycle Products Ltd. and its legal
representative Mr. Patrick Oung allege that we and our subsidiary authorized
them to handle and establish early stage inspections, assessments, negotiations
and all matters which were in the set-up process and to provide consultation
services for setting up the factory. Foshan City Shunde District Ka Fook Recycle
Products Ltd. and its legal representative Mr. Patrick Oung further allege that
during this period our subsidiary had transferred a total of RMB 5,110,000 to
Foshan City Shunde District Ka Fook Recycle Products Ltd. but because of
conflicts arising during the course of the set-up processes between directors of
our subsidiary, our subsidiary had not checked or reconciled the transactions
with Foshan City Shunde District Ka Fook Recycle Products Ltd. Foshan City
Shunde District Ka Fook Recycle Products Ltd. and its legal representative Mr.
Patrick Oung have asked the court to confirm that RMB 5,110,000 has been paid to
Foshan City Shunde District Ka Fook Recycle Products Ltd. and to order our
subsidiary to check and reconcile these transactions.

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On May 31, 2007, Foshan City Shunde District Ka Fook Recycle
Products Ltd. with its legal representative Mr. Patrick Oung instituted civil
proceedings against our wholly owned subsidiary Jiangmen Roots Biopack Limited.
Foshan City Shunde District Ka Fook Recycle Products Ltd. and its legal
representative Mr. Patrick Oung allege that in February 2007 they signed a
rental agreement with our wholly owned subsidiary for the sublease of
approximately 5,000 m2in a factory located in Yangjiaokeng
Industrial District, Tingyuan Village, Duran Town at a rate of 50,000 yans per
month.

Foshan City Shunde District Ka Fook Recycle Products Ltd. and
its legal representative Mr. Patrick Oung further allege that they had moved a
number of machines inside the factory and established production of machines for
environmentally friendly products. They further allege that on May 4, 2007 a
dispute arose amongst the directors of our company, and that our subsidiary
prohibited them from entering the factory, seized their assets and deliberately
used and damaged these properties. Foshan City Shunde District Ka Fook Recycle
Products Ltd. and its legal representative Mr. Patrick Oung have asked the court
to order our subsidiary to return all machinery, production facilities,
materials, products, tools, business data and information and any related
property belonging to Foshan City Shunde District Ka Fook Recycle Products Ltd.

On June 4, 2007, pending the hearing of the case, the court
ordered that the properties in dispute and RMB 2,800,000 be seized.

Also on June 4, 2007, the court ordered that all materials,
including all business information such as accounting records, information
registered under the name of Foshan City Green Machine Factory and placed at the
factory area of our wholly owned subsidiary plus our subsidiarys production
equipment, products and business records seized, detained, photographed,
video-taped, copied, investigated, and listed, in order to preserve the
evidence. Included among this property placed for safekeeping at our Biopark
factory facility are four new production machines that we cannot use in our
production line until this dispute has been resolved.

On May 10, 2007, our wholly owned subsidiary, Jiangmen Roots
Biopack Limited, and Gerald Lau as our subsidiarys legal representative filed a
report of crime with the Public Security Bureau of Jiangmen City. In the report
of crime we alleged that Patrick Oung, a former director of our subsidiary, was
given the authority to handle the early stages of the establishment of our
factory in Jiangmen due to a serious illness to our president, Gerald Lau. We
further alleged that in April 2007 we discovered that Patrick Oung had paid a
total of RMB 1,000,000 for a factory lease guarantee through our subsidiarys
bank account by affixing our subsidiarys company seal without proper
authorization from its board of directors or legal representative, where the
actual factory lease guarantee required was only RMB 309,000. Moreover, we
discovered that a total of RMB 610,000 was transferred to Patrick Oungs
personal account on March 6, 7, and 8, 2007. For these reasons, we decided to
file a criminal complaint and seek assistance from the Public Security Bureau of
Jiangmen City. On August 1, 2007, the Public Security Bureau of Jiangmen City
decided to prosecute Patrick Oung for embezzlement of our subsidiarys funds.
Mr. Oung was arrested on August 8, 2007, while entering the Peoples Republic of
China at Zhong Shan Port, and he was detained in the Jiangmen Detention Center.
While under detention, Mr. Oung was examined at the hospital and found to be in
serious physical condition. In view of his poor health and his promise to return
all of the money he had embezzled from our company within three months of his
release, Mr. Oung was released from detention on bail and for humanitarian
grounds. Part of Mr. Oungs bail consisted of 450,000 RMB and a condition that
he return 750,000 RMB to our companys subsidiary. Mr. Oungs release includes a
condition that he not be allowed to leave the Peoples Republic of China. This
criminal proceeding was to be adjudicated early in 2009 but, in contravention of
the terms of his release from custody, Mr. Oung has fled the Peoples Republic
of China and the case cannot be tried in his absence. A warrant has been issued
for his arrest if and when he re-enters the Peoples Republic of China.

On September 1, 2007 our Hong Kong subsidiary Roots Biopack
Industry Limited filed suit against Patrick Oung in the High Court of the Hong
Kong Special Administrative Region Court of First Instance (Action No. 1860)
alleging that Mr. Oung acted as a shadow director of the plaintiff and that he
breached fiduciary duties owed to the plaintiff by causing the plaintiff to
engage in wrongful transactions that enriched the defendant. The plaintiff has
demanded an accounting and return of all money misapplied and/or misappropriated
by Mr. Oung.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

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PART II

ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market for Securities

Our common shares are quoted for trading on the OTC Bulletin
Board under the symbol BPAC.

The following quotations obtained from www.finance.yahoo.com
reflect the highs and low bids for our common stock based on inter-dealer
prices, without retail mark-up, mark-down or commission an may not represent
actual transactions. The high and low bid prices of our common stock for the
periods indicated below are as follows:

Quarter Ended
      High
      LowDecember 31, 2008
    $0.60
    $0.14September 30, 2008
    $1.40
    $0.55June 30, 2008
    $1.68
    $0.90March 31, 2008
    $5.10
    $1.10December 31, 2007
    $6.30
    $2.50September 30, 2007
    $9.50
    $4.00June 30, 2007
    $15.10
    $7.10March 31, 2007
    $8.50
    $6.50


The above share price has been adjusted for the 10 to 1 share
consolidation effective on June 11, 2008.

On March 25, 2009, the closing price for the common stock as
reported by the quotation service operated by the OTC Bulletin Board was
$0.08.

Our transfer agent and registrar for our common stock is
Madison Stock Transfer Inc. Their address is PO Box 145, Brooklyn, New York, USA
11229-0145. Their telephone number is 718.627.4453. Their fax number is
718.627.6341.

Holders of our Common Stock

As of March 25, 2009, there were 1,403 registered holders of
record of our common stock. As of such date, 24,825,300 common shares were
issued and outstanding.

Dividends

We have not paid dividends on our common stock in the past and
do not anticipate paying dividends in the near future. We intend to retain
earnings, if any, for use in our business and do not anticipate paying any cash
dividends. Our board of directors will determine if and when dividends should be
declared and paid in the future based on our financial position at the relevant
time. All of our shares of common stock are entitled to an equal share in any
dividends declared and paid.

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Recent Sales of Unregistered Securities

On January 31, 2008, we sold one convertible debenture with a
face amount of $150,000 to one investor for gross proceeds of $150,000. This
convertible debenture is for a two year term and is convertible at any time at
the option of the holder after giving 60 days prior notice to our company, into
shares of our common stock at a price of six and two-thirds cents per share.
This investor is not a U.S. person, the transaction did not occur in the United
States and, in selling this debenture we relied on the registration exemption
provided by Regulation S, promulgated under the Securities Act of 1933, as
amended.

On February 4, 2008, we sold one convertible debenture with a
face amount of $100,000 to one investor for gross proceeds of $100,000. This
convertible debenture is for a three year term and is convertible, at any time
at the option of the holder after giving 60 days prior notice to our company,
into shares of our common stock at a price of six and two-thirds cents per
share. This investor is not a U.S. person, the transaction did not occur in the
United States and, in selling this debenture we relied on the registration
exemption provided by Regulation S, promulgated under the Securities Act of
1933, as amended.

On March 3, 2008, we sold one convertible debenture with a face
amount of $400,000 to one investor for gross proceeds of $400,000. This
convertible debenture is for a three year term and is convertible, at any time
at the option of the holder after giving 60 days prior notice to our company,
into shares of our common stock at a price of six and two-thirds cents per
share. This investor is not a U.S. person, the transaction did not occur in the
United States and, in selling this debenture we relied on the registration
exemption provided by Regulation S, promulgated under the Securities Act of
1933, as amended.

On May 14, 2008, we sold an aggregate of 4,758,212 shares of
our common stock to four investors at a price of $0.14 per share (after
adjustment for our share consolidation, 474,821 shares for a price of $1.40 per
share). Two of these investors are ex-directors of our company, one of these
investors is a director of two of our subsidiaries and the fourth investor is
our President and Chairman of our Board of Directors. In each case the purchase
price for the shares was paid by way of satisfaction of debt owed by our company
in the aggregate amount of $666,140. All four of these investors are not U.S.
persons, none of these transactions occurred in the United States and, in
selling these shares of our common stock we relied on the registration exemption
provided by Regulation S, promulgated under the Securities Act of 1933, as
amended.

On July 4, 2008, we issued 1,900,000 shares of our common stock
to Begonia Participation Corp. pursuant to the conversion of 380,000 Series A
Preferred Shares. Begonia Participation Corp. is not a U.S. person, this
transaction did not occur in the United States and in issuing these shares of
our common stock we relied on the registration exemption provided by Regulation
S, promulgated under the Securities Act of 1933, as amended.

On September 5, 2008, we issued 1,492,537 shares of our common
stock to Gaofeng Holding Co. Limited pursuant to the conversion of a convertible
debenture in the amount of $100,000. Gaofeng Holding Co. Limited is not a U.S.
person, this transaction did not occur in the United States and in issuing these
shares of our common stock we relied on the registration exemption provided by
Regulation S, promulgated under the Securities Act of 1933, as amended.

On September 19, 2008, we issued 1,800,000 shares of our common
stock to CAT Brokerage AG pursuant to the conversion of a convertible debenture
in the amount of $400,000. CAT Brokerage AG is not a U.S. person, this
transaction did not occur in the United States and in issuing these shares of
our common stock we relied on the registration exemption provided by Regulation
S, promulgated under the Securities Act of 1933, as amended.

On October 9, 2008, we issued 125,000 shares of our common
stock to San Diego Torrey Hills Capital, Inc. pursuant to a consulting
agreement. San Diego Torrey Hills Capital, Inc. is a U.S. person and in issuing
these shares of our common stock we relied on Rule 506 of Regulation D and/or
Section 4(2) of the Securities Act of 1933.

On October 15, 2008, we issued 500,000 shares of our common
stock to Ma Cheng Ji, a director of our company, pursuant to the conversion of a
convertible debenture in the amount of $250,000. Ma Cheng Ji is not a U.S.
person,

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this transaction did not occur in the United States and in
issuing these shares of our common stock we relied on the registration exemption
provided by Regulation S, promulgated under the Securities Act of 1933, as
amended.

On October 15, 2008, we issued 2,250,000 shares of our common
stock to Ladix Properties Inc. pursuant to the conversion of a convertible
debenture in the amount of $150,000. Ladix Properties Inc. is not a U.S. person,
this transaction did not occur in the United States and in issuing these shares
of our common stock we relied on the registration exemption provided by
Regulation S, promulgated under the Securities Act of 1933, as amended.

Securities Authorized for Issuance Under Equity Compensation
Plans

The following table summarizes our equity compensation plan
information for the fiscal year end December 31, 2008;

Plan Category
      Number of Securities to be Issued Upon
      Exercise of Outstanding Options, Warrants and
      Rights
      Weighted-Average Exercise Price of
      Outstanding Options, Warrants and Rights
      Number of Securities Remaining Available for
      Future Issuance Under Equity Compensation
      Plans (Excluding Securities Reflected in
      Column)Equity compensation plans approved by security
      holders
    Nil
    Nil
    NilEquity
      compensation plans not approved by security holders(1)
    6,000,000
    $Nil
    NilTotal
    6,000,000
    $Nil
    Nil


|(1) | On July 8, 2005, we filed a registration statement on
      Form S-8 registering 6,000,000 shares at a proposed offering price of
      $0.013 per share or $78,000. Under this plan we issued 6,000,000 shares to
      five individuals in consideration for consulting
  services.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Purchases of Equity Securities by the Issuer and Affiliated
Purchasers

We did not purchase any of our shares of common stock or other
securities during our fiscal year ended December 31, 2008.

ITEM 6. SELECTED FINANCIAL DATA.

Not Applicable.

ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.

Our financial statements are stated in United States dollars
and are prepared in conformity with generally accepted accounting principles in
the United States of America for interim financial statements. The following
discussion should be read in conjunction with our financial statements and the
related notes that appear elsewhere in this quarterly report.

As used in this quarterly report and unless otherwise
indicated, the terms we, us and our refer to Biopack Environmental
Solutions Inc. and our subsidiaries, unless otherwise indicated. Unless
otherwise specified, all dollar

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amounts are expressed in United States dollars and all
references to common shares refer to shares of our common stock.

Note Regarding Forward-Looking Statements

This annual report on Form 10-K includes forward-looking
statements. Forward-looking statements are statements that relate to future
events or our future financial performance. In some cases, you can identify
forward-looking statements by terminology such as may, should, expects,
plans, anticipates, believes, estimates, predicts, potential or
continue or the negative of these terms or other comparable terminology. These
statements are only predictions and involve known and unknown risks,
uncertainties and other factors, including the risks in the section of this
quarterly report entitled Risk Factors beginning at page 11 above, any of
which may cause our or our industrys actual results, levels of activity,
performance or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or implied by these
forward-looking statements. While these forward-looking statements, and any
assumptions upon which they are based, are made in good faith and reflect our
current judgment regarding the direction of our business, actual results will
almost always vary, sometimes materially, from any estimates, predictions,
projections, assumptions or other future performance suggested herein.

We caution the reader that important factors in some cases have
affected and, in the future, could materially affect our actual results and
could cause our actual results in the future to differ materially from the
results expressed in any estimates, projections or other forward-looking
statements contained in this annual report on Form 10-K. Except as may
otherwise be required by applicable law, including the securities laws of the
United States, we do not intend to update any of the forward-looking statements
to conform them to actual results.

Our Business

We develop, manufacture, distribute and market bio-degradable
food containers and disposable industrial packaging for consumer products. We
currently manufacture most of our products in our own factory, located in
Jiangmen City, in the Peoples Republic of China. We are in the process of
increasing the production capacity of our Biopark factory. For a more detailed
discussion of our business and our factory, please refer to the discussions
under the headings Business, beginning at page 5, above, and
Properties, beginning at page 16, above.

Over the next year, we plan to add 10 more production machines
to the existing 14 machines currently installed at our factory. Six of these new
machines will be fully automated and four will be semi-automated. When the new
machines have been installed, we would have a total of 24 production machines,
20 of which will be fully automated and four of which will be semi-automated. We
plan to set up four production lines of five fully automated machines each, with
the four semi-automated machines operating separately. We have found that the
semi-automated machines provide greater flexibility when using different mixes
of product molds.

We have already ordered two of the new semi-automated machines
and we expect delivery in May, 2009.

To accommodate the additional production capacity that these
new machines will add to our factory, we also intend to add two additional
mixing and pulping pools.

Because our research and development team is still refining the
design of these machines in an effort to increase efficiency, it is too early to
price them but we anticipate that each will cost approximately $20,000. We
estimate the cost of these improvements, including the new machines and the
additional mixing and pulping pools, to be approximately $750,000 over the next
12 months. In addition, we believe that once all of the new machines are
installed and in operation, we will need to add additional trimming machines but
we cannot estimate the number needed until our expansion is complete. In the
short term, we plan to handle any additional trimming needs by adding extra work
shifts.

Over the next 12 months, we plan to increase sales of our
existing products and add new products, including additional industrial
packaging products and complementary products. Now that we have stabilized our
production

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capabilities at our Biopark facility, we believe that the pace
of our expansion will begin to increase. Our plan over the coming year is to
focus on increasing European orders and expansion into the North American
market.

We have noticed a dramatic difference in the environmental
packaging market. Although the European market has shown a preference for
environmentally sensitive products for some time now, we believe that the
current U.S. administrations focus on green technology for both economic and
environmental reasons is already influencing a shift away from more traditional
packaging products such as those made from Styrofoam, which has actually been
banned in a number of U.S. cities, towards environmentally friendly products
like ours. We believe that our products and our company can benefit from this
trend.

Our sales and marketing team is located in Hong Kong. Through
our sales and marketing team and our distributors, we supply our biodegradable
food containers and industrial packaging products to multi-national
corporations, supermarket chains and restaurants located across North America,
Europe and Asia. During calendar year 2008 we were focused primarily on
establishing and expanding our production capabilities and servicing existing
accounts, primarily located in Europe. During calendar year 2009 we intend to
continue to expand our production capabilities and we hope to expand our
marketing efforts, focusing on an expansion of our sales, primarily in North
America.

Result of Operations for the year ended December 31, 2008 as
compared to the year ended December 31, 2007.

During the year ended December 31, 2008 we had a net operating
loss of $1,587,330, as compared to net operating loss of $5,011,576 for the year
ended December 31, 2007. The decrease in the amount of our operating loss was
due primarily to the cut backs in non-essential spending as well as reductions
of salaries and administrative personnel.

Net Sales and Cost of Sales

Net sales for the year ended December 31, 2008 were $793,474,
compared to net sales of $1,075,902 for the year ended December 31, 2007. This
decrease in sales is primarily attributable to the global economic contraction,
coupled with a re-tooling of machines and modifications to our factory to allow
for production increases. Certain changes to Chinese labour laws also
contributed to higher end prices, which led to some reductions in sales. As
well, with our increased production capacity we were able to decrease our need
for OEM suppliers, and fill our order backlogs with our own product that is in
higher demand. We expect that future production from our new factory will
increase dramatically, as the current facilitys infrastructure and design can
support up to 40 machines. Most of the up front costs have already been spent to
set up the necessary electrical, piping, water filtration, building
requirements, etc. We anticipate we will generate new orders with our
corresponding increase in production capacity.

Cost of sales for the year ended December 31, 2008 was
$793,474, compared to $1,075,902 for the same period in 2007, which provided a
gross margin of 2.3%, as compared to 20.9% during the same period of 2007. The
difference in the margin is primarily due to the fact that the margins we
realized on OEM supplied product was much lower than that our product supplied
by our former Shunde City factory (both their product quality and their
production costs are lower than ours). Certain changes to Chinese labour laws
also contributed to higher cost of our product. Systematically, many
manufacturers in the Guang Dong province in PRC saw their cost of labour rise as
much as 30% due to the implementation of poorly timed new labour laws that were
introduced at a time that the economy was growing at an exorbitant pace.

Operating Expenses

Operating expenses for the year ended December 31, 2008 were
$1,106,011, compared to $5,115,689 during the same period in 2007. The decline
in operating expenses was due primarily to the absence of marketing and other
costs associated with the business combination that had been incurred in the
prior year. Many of these costs were non-recurring. In addition, significant
costs were reduced due to reductions in staff in our Hong Kong administration
offices.

The high operating expenses for the year ended December 31,
2007 were due primarily to the write-off of construction work in Malaysia in the
amount of $154,506, provision for doubtful debts in the amount of $243,625, a

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write-off of amounts due from related parties of $2,876,402 and
an increase in administration expenses resulting from the development of phase
one of our production capacity at our Biopark facility.

Our legal and professional expenses for the year ended December
31, 2008 were $88,691, compared to $163,707 for the year ended December 31,
2007. The decrease in legal and professional expense was primarily due to the
lack of activity in the litigation proceedings commenced during the year ended
December 31, 2007 and described in the Legal Proceedings section of
this annual report on Form 10-K, beginning above at page 17. Most of the legal
expenses incurred this year are related to U.S. regulatory compliance and
raising capital.

Our rent for the year ended December 31, 2008 was $155,565
compare to rent for the year ended December 31, 2007 of $228,159. The decrease
in rent of $72,594 for the year ended December 31, 2008 was primarily due to the
downsizing of our Hong Kong offices.

Other Income and Expenses

We had other income of $14,278 during the year ended December
31, 2008, compared to $12,249 during the year ended December 31, 2007. This is
primarily due to exchange rate gain on the Hong Kong dollar against the China
RMB.

We incurred interest expense of $513,483 during the year ended
December 31, 2008, compared to $60,143 during the year ended December 31, 2007.
Interest expense was incurred primarily due to the recognition of the conversion
feature embedded in the convertible debentures issued by our company. Each
convertible debenture is valued separately at issuance and recognized and
measured by allocating a portion of the proceeds equal to the intrinsic value of
that feature to additional paid-in capital. That amount is calculated as the
difference in the conversion price and the fair value of the common stock into
which the debenture is convertible, multiplied by the number of shares. The
intrinsic value cannot exceed the proceeds.

Liquidity and Capital Resources

Our principal cash requirements are for daily working capital,
manufacturing and installation of plant and machinery and the cost of
infrastructure at our leased factory in Jiangmen City, PRC. On December 31, 2008
we had cash and equivalents of $128,039, compared to $4,729 at December 31,
2007. We estimate that our operating expenses over the next 12 months will be
approximately $75,000 per month and we plan to spend approximately $750,000 to
add additional production capacity to our Biopark facility. Therefore, we
estimate that our cash outflow would be approximately $1,650,000 over the next
12 months attributable to continue our operations and complete construction of
the Biopark facility. We look to construct an equity and/or debt financing plan
in the amount of approximately $1,000,000 over the next 12 months. There is
currently no definitive offering of financing in place.

As at December 31, 2008 we had a working capital deficit of
$2,415,819, compared to a deficiency of $1,717,380 at December 31, 2007. The
increase in working capital for the period was primarily financed by the
issuance of debentures and demand promissory notes.

Cash Flow Used in Operating Activities

For the year ended December 31, 2008 our operating activities
used net cash of $1,263,699, compared to $2,797,650 for the year ended December
31, 2007. The decrease in cash outflow was primarily due to a reduction in trade
deposits, decreases in receivables and increases in payables and accrual expense
which were primarily due to better credit terms negotiated with suppliers.

Cash Flow Used in Investing Activities

For the year ended December 31, 2008 investing activities used
net cash of $851,674 compared to $1,450,246 for the year ended December 31,
2007. The decrease in net cash used in investing activities this year was
primarily due to the slower pace of construction progress in our new Biopark
production facility compared to the pace of construction during the year ended
December 31, 2007.

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Cash Flow Provided by Financing Activities

For the year ended December 31, 2008 financing activities
provided cash of $2,416,952 compared to cash outflow of $3,542,392 in the year
ended December 31, 2007. The cash flow provided by financing activities was
primarily from issuance of convertible debentures and promissory notes.

During the year ended December 31, 2008, we engaged in the
following financing transactions:

On January 31, 2008, we sold a convertible debenture with a
face value of $150,000. This convertible debenture has a two year term and was
convertible, at the option of the holder upon 90 days prior notice, into shares
of our common stock at a price of six and two-thirds cents per share. On October
15, 2008, we issued 2,250,000 shares of common stock pursuant to the conversion
of this convertible debenture.

On February 4, 2008, we sold a convertible debenture for gross
proceeds of $100,000. This convertible debenture has a three year term and was
convertible, at the option of the holder upon 90 days prior notice, into shares
of our common stock at a price of six and two-thirds cents per share. On
September 5, 2008, we issued 1,492,537 shares of common stock pursuant to the
conversion of this convertible debenture.

On March 3, 2008, we sold a convertible debenture for gross
proceeds of $400,000. This convertible debenture has a three year term and is
convertible, at the option of the holder with 90 days prior notice, into common
stock at a price of six and two-thirds cents per share. On September 19, 2008,
we issued 1,800,000 shares of common stock pursuant to a partial conversion of
this convertible debenture. The balance due on this convertible debenture as at
the date of this annual report on Form 10-K is $280,000, plus accrued interest.

On March 30, 2008, our subsidiary, Roots Biopack Group Limited,
entered into a loan agreement with Tayna Environmental Technology Co. Limited,
whereby Tayna Environmental agreed to advance to Roots Biopack the sum of
$1,144,538 for a three-year initial term expiring March 30, 2011. Our subsidiary
has an option to extend this three-year initial term for an additional two
calendar years by sending written notice to Tayna Environmental no later than
three months prior to the original maturity date (i.e., no later than December
30, 2010). Principal due under the loan bears interest at the rate of 3% per
annum.

On May 14, 2008, we issued 4,758,212 shares of our common stock
at a price of $0.14 per share (after adjusting for our 10:1 share consolidation,
475,821 shares at a price of $1.40 per share) to four investors pursuant to
subscription agreements dated May 14, 2008. The consideration for these shares
was paid by applying the debt owed by our company to these four investors in the
aggregate amount of $666,140. Two of these investors are ex-directors of our
company, one of these investors is a director of two of our subsidiaries and the
fourth investor is our President and Chairman of our Board of Directors.

On June 30, 2008, we sold two promissory notes for an aggregate
amount of $245,000. These promissory notes are payable on demand and bear
interest at a rate of 6% per annum. Interest is payable on the first day of each
and every month.

On July 20, 2008, we sold one promissory note for $90,500. This
promissory note is payable on demand and bears interest at a rate of 6% per
annum. Interest is payable on the first day of each and every month.

On September 15, 2008, we sold one promissory note for $80,000.
This promissory note is payable on demand and bears interest at the rate of 6%
per annum. Interest is payable on the first day of each and every month.

On December 29, 2008, we sold one convertible debenture for
gross proceeds of $150,000. This convertible debenture has a three year term and
is convertible, at the option of the holder upon 90 days prior notice, into
shares of our common stock at a price of six and two-thirds cents per share.

On December 31, 2008, we sold two promissory notes for an
aggregate amount of $582,000. These promissory notes are payable on demand and
bear interest at a rate of 6% per annum. Interest is payable on the first day of
each and every month.

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Capital Expenditures

During the year ended December 31, 2008, the bulk of our
capital expenditure was focused on the development of our Roots Biopark
production facility. As of December 31, 2008, we do not have any material
commitments for capital expenditures. Over the next twelve months, we plan to
spend approximately $500,000 on the completion of the third production phases at
our Roots Biopark production facility.

Going Concern

The accompanying consolidated financial statements have been
prepared in accordance with the accounting principles generally accepted in the
United States of America (US GAAP), which contemplate the continuation of our
company as a going concern. We incurred a net loss for the year ended December
31, 2008 of $1,587,330, had an accumulated deficit of $5,479,480 and a working
capital deficit of $2,415,819. These conditions raise substantial doubt as to
our companys ability to continue as a going concern. These consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty. These consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
These consolidated financial statements do not include any adjustments relating
to the recoverability and classification of recorded asset amounts, or amounts
and classifications of recorded asset amounts, or amounts and classifications of
liabilities that might be necessary should our company be unable to continue as
a going concern.

The future of our company is dependent upon its attaining
profitable operations and raising the capital it will require in order to
achieve profitable operations through the issuance of equity securities,
borrowings or a combination thereof.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or
are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that is
material to investors.

Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of
Biopack Environmental Solutions Inc. and its wholly owned subsidiaries. All
material intercompany balances and transactions have been eliminated from the
consolidated financial statements.

Use of Estimates

In preparing consolidated financial statements in conformity
with US GAAP, management is required to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reported periods. Significant estimates include
depreciation. Actual results could differ from those estimates.

Cash and Cash Equivalents

Our company considers all highly liquid investments with
original maturities of three months or less at the time of purchase to be cash
equivalents. As of December 31, 2008, we had cash and equivalents of $128,039.

Short-term Investment

Our company classifies its short-term investment as
held-to-maturity debt securities and is measured at amortized cost (which
approximates fair value) with interest and realized gains and losses, if any,
reported in non-operating income in the income statement.

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Accounts Receivable

Accounts receivable are stated at original amounts less an
allowance made for doubtful receivables, if any, based on a review of all
outstanding amounts at the end of the period. Full allowance for doubtful
receivables are made when the receivables are overdue for one year and an
allowance is made when there is objective evidence that our ompany will not be
able to collect all amounts due according to the original terms of a receivable.
Bad debts are written against the allowance when identified. We extend credit to
customers on an unsecured basis in the normal course of business and believes
that all accounts receivable in excess of the allowance for doubtful accounts
are fully collectible. We do not accrue interest on trade accounts receivable.
The normal credit terms range from 15 to 60 days.

Allowance for Doubtful Accounts

Our company recognizes an allowance for doubtful accounts to
ensure accounts receivable are not overstated due to uncollectibility. An
allowance for doubtful accounts is maintained for all customers based on a
variety of factors, including the length of time the receivables are past due,
significant one-time events and historical experience. An additional reserve for
individual accounts is recorded when our company becomes aware of a customers
inability to meet its financial obligations, such as in the case of bankruptcy
filings or deterioration in the customers operating results or financial
position. If circumstances related to a customer change, estimates of the
recoverability of receivables would be further adjusted.

Property, Plant and Equipment

Property, plant and equipment are stated at cost. Depreciation
is provided principally by use of the straight-line method over the useful lives
of the related assets, except for leasehold properties, which are depreciated
over the terms of their related leases or their estimated useful lives,
whichever is less. Expenditures for maintenance and repairs, which do not
improve or extend the expected useful life of the assets, are expensed to
operations while major repairs are capitalized.

The estimated useful lives are as follows:

|                                         | Years  
|---------------------------------------- | -------
|Leasehold improvements                   | 5      
|Furniture, fixtures and office equipment | 5 to 10
|Motor Vehicles                           | 5      
|Computer equipment                       | 5      
|Plant and Machinery                      | 10     

Impairment of Assets

In accordance with Statement of Financial Accounting Standards
(SFAS) No. 144, Accounting for Impairment or Disposal of Long-Lived Assets,
our company evaluates its long-lived assets to determine whether later events
and circumstances warrant revised estimates of useful lives or a reduction in
carrying value due to impairment. If indicators of impairment exist and if the
value of the assets is impaired, an impairment loss would be recognized. There
was no impairment loss made for property and equipment as of December 31, 2008.

Income Taxes

Our company accounts for income taxes under SFAS No. 109,
Accounting for Income Taxes. Under SFAS No. 109, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. Under SFAS No. 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.

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Foreign Currency Transactions

Our companys functional currency is Hong Kong Dollars (HKD),
Renminbi (RMB) and Malaysia Ringatt (MYR) and its reporting currency is U.S.
dollars. Our companys consolidated balance sheet accounts are translated into
U.S. dollars at the year-end exchange rates and all revenue and expenses are
translated into U.S. dollars at the average exchange rates prevailing during the
periods in which these items arise. Translation gains and losses are deferred
and accumulated as a component of other comprehensive income in stockholders
equity. Transaction gains and losses that arise from exchange rate fluctuations
from transactions denominated in a currency other than the functional currency
are included in the statement of operations as incurred.

Fair Value of Financial Instruments

SFAS No. 107, Disclosures about Fair Values of Financial
Instruments, requires disclosing fair value to the extent practicable for
financial instruments that are recognized or unrecognized in the balance sheet.
The fair value of the financial instruments disclosed herein is not necessarily
representative of the amount that could be realized or settled, nor does the
fair value amount consider the tax consequences of realization or settlement.

For certain financial instruments, including cash, accounts and
other receivables, accounts payable, accruals and other payables, it was assumed
that the carrying amounts approximate fair value because of the near term
maturities of such obligations. The carrying amounts of long-term loans
approximate fair value as the interest on these loans is minimal.

Earnings Per Share

Our company computes earnings per share (EPS) in accordance
with Statement of Financial Accounting Standards No. 128, Earnings per Share
(SFAS No. 128), and SEC Staff Accounting Bulletin No. 98 (SAB 98). SFAS No.
128 requires companies with complex capital structures to present basic and
diluted EPS. Basic EPS is measured as the income or loss available to common
shareholders divided by the weighted average common shares outstanding for the
period. Diluted EPS is similar to basic EPS but presents the dilutive effect on
a per share basis of potential common shares (e.g., convertible securities,
options, and warrants) as if they had been converted at the beginning of the
periods presented, or issuance date, if later. Potential common shares that have
an anti-dilutive effect (i.e., those that increase income per share or decrease
loss per share) are excluded from the calculation of diluted EPS.

Accumulated Other Comprehensive Income

Accumulated other comprehensive income represents the change in
equity of our company during the periods presented from foreign currency
translation adjustments.

Stock-Based Compensation

In March 2004, the FASB issued a proposed statement,
Share-Based Payment, which addresses the accounting for share-based payment
transactions in which an enterprise receives employee services in exchange for
equity instruments of the enterprise or liabilities that are based on the
grant-date fair value of the enterprises equity instruments or that may be
settled by the issuance of such equity instruments. The proposed statement would
eliminate the ability to account for share-based compensation transactions using
Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued
to Employees, and generally would require instead that such transactions be
accounted for using a fair-value-based method. In December 2004, the FASB issued
SFAS No. 123(R), Share-Based Payment, which is a revision of SFAS No. 123.
Generally, the approach in SFAS No. 123(R) is similar to the approach described
in SFAS No. 123. However, SFAS No. 123(R) requires all share-based payments to
employees, including grants of employee stock options, to be recognized in the
income statement based on their grant-date fair values. Pro forma disclosure is
no longer an alternative.

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As permitted by SFAS No. 123, for 2005, we accounted for
share-based payments to employees using APB Opinion No. 25s intrinsic value
method and, as such, generally recognized no compensation cost for employee
stock options.

Effective January 1, 2006, our company adopted SFAS No.
123(R)s fair value method of accounting for share based payments. Accordingly,
the adoption of SFAS No. 123(R)s fair value method may have a significant
impact on our companys results of operations as it is required to recognize the
cost of employee services received in exchange for awards of equity instruments
based on the grant-date fair value of those awards. SFAS No. 123(R) permits
public companies to adopt its requirements using either the modified
prospective method or the modified retrospective method.

Our company adopted SFAS No. 123(R) using the modified
prospective method. In April 2005, the SEC delayed the effective date of SFAS
No. 123(R), which is now effective for public companies for annual rather than
interim periods that begin after Sept 15, 2005. The impact of the adoption of
SFAS No. 123(R) cannot be predicted at this time because it will depend on
levels of share-based payments granted in the future.

Revenue Recognition

Revenue is recognized in accordance with SEC Staff Accounting
Bulletin No. 101, Revenue Recognition in Financial Statements. Our company
recognizes revenue when the significant risks and rewards of ownership have been
transferred to the customer pursuant to applicable laws and regulations,
including factors such as when there has been evidence of a sales arrangement,
the performance has occurred, or service have been rendered, the price to the
buyer is fixed or determinable, and collectability is reasonably assured.

In November 2004, the FASB issued SFAS No. 151 Inventory
Costs, an amendment of ARB No. 43, Chapter 4, (SFAS No. 151). The amendments
made by SFAS 151 clarify that abnormal amounts of idle facility expense,
freight, handling costs, and wasted materials (spoilage) should be recognized as
current-period charges and require the allocation of fixed production overheads
to inventory based on the normal capacity of the production facilities. The
guidance is effective for inventory costs incurred during fiscal years beginning
after Sept 15, 2005. Earlier application is permitted for inventory costs
incurred during fiscal years beginning after November 23, 2004. WE have
evaluated the impact of the adoption of SFAS 151, and do not believe the impact
will be significant to our overall results of operations or financial
position.

In December 2004, the FASB issued SFAS No.152, Accounting for
Real Estate Time-Sharing Transactions-an amendment of FASB Statements No. 66 and
67 (SFAS 152) SFAS 152 amends SFAS No. 66, Accounting for Sales of Real
Estate, to reference the financial accounting and reporting guidance for real
estate time-sharing transactions that is provided in AICPA Statement of Position
(SOP) 04-2, Accounting for Real Estate TimeSharing Transactions. SFAS 152 also
amends SFAS No. 67, Accounting for Costs and Initial Rental Operations of Real
Estate Projects, to state that the guidance for (a) incidental operations and
(b) costs incurred to sell real estate projects does not apply to real estate
time-sharing transactions. The accounting for those operations and costs is
subject to the guidance in SOP 04-2. SFAS 152 is effective for financial
statements for fiscal years beginning after Sept 15, 2005, with earlier
application encouraged. Our company has evaluated the impact of the adoption of
SFAS 152, and does not believe the impact will be significant if any, to our
companys overall results of operations or financial position since our company
does not enter into such transactions.

In December 2004, the FASB issued SFAS No.153, Exchanges of
Nonmonetary Assets, an amendment of APB Opinion No. 29, Accounting for
Nonmonetary Transactions. The amendments made by SFAS 153 are based on the
principle that exchanges of nonmonetary assets should be measured based on the
fair value of the assets exchanged. Further, the amendments eliminate the narrow
exception for nonmonetary exchanges of similar productive assets and replace it
with a broader exception for exchanges of nonmonetary assets that do not have
commercial substance. Previously, Opinion 29 required that the accounting for an
exchange of a productive asset for a similar productive asset or an equivalent
interest in the same or similar productive asset should be based on the recorded
amount of the asset relinquished. Opinion 29 provided an exception to its basic
measurement principle (fair value) for exchanges of similar productive assets.
That exception required that some nonmonetary exchanges, although commercially
substantive, be recorded on a carryover basis. By focusing the exception on
exchanges that lack commercial substance, the FASB believes SFAS No.153 produces
financial reporting that more faithfully represents the

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economics of the transactions. SFAS No.153 is effective for
nonmonetary asset exchanges occurring in fiscal periods beginning after Sept 15,
2005. Earlier application is permitted for nonmonetary asset exchanges occurring
in fiscal periods beginning after the date of issuance. The provisions of SFAS
No.153 shall be applied prospectively. Our company has evaluated the impact of
the adoption of SFAS 153, and does not believe the impact will be significant to
our companys overall results of operations or financial position.

In December 2004, the FASB issued SFAS No.123 (revised 2004),
Share-Based Payment (SFAS 123(R)). SFAS 123(R) will provide investors and
other users of financial statements with more complete and neutral financial
information by requiring that the compensation cost relating to share-based
payment transactions be recognized in financial statements. That cost will be
measured based on the fair value of the equity or liability instruments issued.
SFAS 123(R) covers a wide range of share-based compensation arrangements
including share options, restricted share plans, performance-based awards, share
appreciation rights, and employee share purchase plans. SFAS 123(R) replaces
SFAS No. 123, Accounting for Stock-Based Compensation, and supersedes APB
Opinion No. 25, Accounting for Stock Issued to Employees. SFAS 123, as
originally issued in 1995, established as preferable a fair-value-based method
of accounting for share-based payment transactions with employees. However, that
statement permitted entities the option of continuing to apply the guidance in
Opinion 25, as long as the footnotes to financial statements disclosed what net
income would have been had the preferable fair-value-based method been used.
Public entities (other than those filing as small business issuers) were
required to apply SFAS 123(R) as of the first interim or annual reporting period
that began after September 15, 2005. This pronouncement was effective for our
company, a small business issuer, as of the first interior annual reporting
period that began after December 15, 2005. Our company has evaluated the impact
of the adoption of SFAS 123(R), and does not believe the impact will be
significant to our companys overall results of operations or financial
position.

In May, 2005, The FASB issued SFAS No. 154, entitled Accounting
Changes and Error Corrections  a replacement of APB Opinion No. 20 and FASB
Statement No. 3. This Statement replaces APB Opinion No. 20, Accounting Changes
and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial
Statements, and changes the requirements for the accounting for and reporting of
a change in accounting principle. This statement applies to all voluntary
changes in accounting principles. It also applies to changes required by an
accounting pronouncement in the unusual instance where the pronouncement does
not include specific transition provisions. Opinion 20 previously required that
most voluntary changes in accounting principle be recognized by including in net
income of the period of the change the cumulative effect of changing to the new
accounting principle. This Statement requires retrospective application to prior
periods financial statements of changes in accounting principle, unless it is
impracticable to determine either the period-specific effects or the cumulative
effect of the change. This Statement defines as the application of a different
accounting principle to prior accounting periods as if that principle had always
been used or as the adjustment of previously issued financial statements to
reflect a change in the reporting entity. This statement also redefines
restatement as the revising of previously issued financial statements to reflect
the correction of an error. The adoption of SFAS 154 did not impact the
financial statements.

In February, 2006, FASB issued SFAS No. 155, Accounting for
Certain Hybrid Financial Statements. SFAS No. 155 amends SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities and SFAS No. 140,
Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities. SFAS No. 155, permits fair value measurement for any hybrid
financial instrument that contains an embedded derivative that otherwise would
require bifurcation, clarifies which interest-only strips and principal-only
strips are not subject to the requirements of SFAS No. 133, establishes a
requirement to evaluate interest in securitized financial assets to identify
interests that are freestanding derivatives or that are hybrid financial
statements that contain an embedded derivative requiring bifurcation, clarifies
that concentrations of credit risk in the form of subordination are not embedded
derivatives, and amends SFAS No. 140 to eliminate the prohibition on the
qualifying special-purpose entity from holding a derivative financial instrument
that pertains to a beneficial interest other than another derivative financial
instrument. This statement was effective for all financial instruments acquired
or issued after the beginning of our companys first fiscal year that began
after September 15, 2006. We believe that this statement did not have a
significant impact on the financial statements.

In March, 2006 FASB issued SFAS 156 Accounting For Servicing
of Financial Assets. This Statement amends FASB Statement No. 140, Accounting
for Transfers and Servicing of Financial Assets and Extinguishment of
Liabilities, with respect to the accounting for separately recognized servicing
assets and servicing liabilities. This Statement:

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Requires an entity to recognize a
servicing asset or servicing liability each time it undertakes an obligation to
service a financial asset by entering into a servicing contract.

Requires all separately recognized
servicing assets and servicing liabilities to be initially measured at fair
value, if practicable.

Permits an entity to choose
amortization method or fair value measurement method for each class of
separately recognized servicing assets and servicing liabilities.

At its initial adoption, permits a
one-time reclassification of available-for-sale securities to trading securities
by entities with recognized servicing rights, without calling into question the
treatment of other available-for-sale securities under Statement 115, provided
that the available-for-sale securities are identified in some manner as
offsetting the entitys exposure to changes in fair value of servicing assets or
servicing liabilities that a servicer elects to subsequently measure at fair
value.

Requires separate presentation of
servicing assets and liabilities subsequently measured at fair value in the
statement of financial position and additional disclosures for all separately
recognized servicing assets and servicing liabilities.

Our company believes that this statement will not have a
significant impact on its financial statements.

In September 2006, FASB issued SFAS 157 Fair Value
Measurements. This Statement defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles (GAAP), and
expands disclosures about fair value measurements. This Statement applies under
other accounting pronouncements that require or permit fair value measurements,
the Board having previously concluded in those accounting pronouncements that
fair value is the relevant measurement attribute. Accordingly, this Statement
does not require any new fair value measurements. However, for some entities,
the application of this Statement will change current practice. This Statement
is effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. Our company is
currently evaluating the effect of this pronouncement on financial statements.

In September 2006, FASB issued SFAS 158 Employers Accounting
for Defined Benefit Pension and Other Postretirement Plansan amendment of FASB
Statements No. 87, 88, 106, and 132(R).

This Statement improves financial reporting by requiring an
employer to recognize the overfunded or underfunded status of a defined benefit
postretirement plan (other than a multiemployer plan) as an asset or liability
in its statement of financial position and to recognize changes in that funded
status in the year in which the changes occur through comprehensive income of a
business entity or changes in unrestricted net assets of a not-for-profit
organization. This Statement also improves financial reporting by requiring an
employer to measure the funded status of a plan as of the date of its year-end
statement of financial position, with limited exceptions. An employer with
publicly traded equity securities is required to initially recognize the funded
status of a defined benefit postretirement plan and to provide the required
disclosures as of the end of the fiscal year ending after December 15, 2006. An
employer without publicly traded equity securities is required to recognize the
funded status of a defined benefit postretirement plan and to provide the
required disclosures as of the end of the fiscal year ending after Sept 15,
2007. However, an employer without publicly traded equity securities is required
to disclose the following information in the notes to financial statements for a
fiscal year ending after December 15, 2006, but before Sept 16, 2007, unless it
has applied the recognition provisions of this Statement in preparing those
financial statements. The requirement to measure plan assets and benefit
obligations as of the date of the employers fiscal year-end statement of
financial position is effective for fiscal years ending after December 15, 2008.
Our company is currently evaluating the effect of this pronouncement on its
financial statements.

In February 2007, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 159, The Fair Value
Option for Financial Assets and Financial Liabilities and is effective for
fiscal years beginning after November 15, 2007. This Statement permits entities
to choose to measure many financial instruments and certain other items at fair
value. The objective is to improve financial reporting by providing

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entities with the opportunity to mitigate volatility in
reported earnings caused by measuring related assets and liabilities differently
without having to apply complex hedge accounting provisions. Our company is
currently assessing the impact the adoption of this pronouncement will have on
its financial statements.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.









Biopack Environmental Solutions Inc.

Consolidated Financial StatementsFor the Years Ended December 31, 2008 and 2007(Stated in US Dollars)

-34-

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Biopack Environmental Solutions Inc.

CONSOLIDATED FINANCIAL STATEMENTS

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS





|Report
      of Independent Registered Public Accounting Firm                 
|------------------------------------------------------------------------------
|                                                                              
|Consolidated
      Balance Sheets                                             
|                                                                              
|Consolidated
      Statements of Operations                                   
|                                                                              
|Consolidated
      Statements of Cash Flows                                   
|                                                                              
|Consolidated
      Statements of Stockholders Equity and Comprehensive Income
|                                                                              
|Notes
      to Consolidated Financial Statements                              

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors and ShareholdersBiopack
Environmental Solutions Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of
Biopack Environmental Solutions Inc. and Subsidiaries as of December 31, 2008,
and the related consolidated statements of operations, stockholders equity, and
cash flows for the each of the two years ended December 31, 2008. These
consolidated financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform an audit of the
Companys internal control over financial reporting. Our audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Companys
internal control over financial reporting. Accordingly, we express no such
opinion. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the consolidated financial statements, assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the consolidated financial
position of Biopack Environmental Solutions Inc. and Subsidiaries as of December
31, 2008 and the results of its consolidated operations and its consolidated
cash flows for each of the two years ended December 31, 2008 in conformity with
accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As described in Note
1 to the financial statements conditions exist which raise substantial doubt
about the companys ability to continue as a going concern unless it is able to
generate sufficient cash flows to meet its obligations and sustain its
operations. Those conditions raise substantial doubt about its ability to
continue as a going concern. Managements plans regarding those matters are also
described in Note 1. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

Gruber & Company, LLC Lake Saint Louis, Missouri

March 31, 2009

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Biopack Environmental Solutions, Inc. and Subsidiaries
Consolidated Balance Sheets

|                                                                      |   | Audited           |   |   | Audited           |  
|--------------------------------------------------------------------- | - | ----------------- | - | - | ----------------- | -
|                                                                      |   | December 31, 2008 |   |   | December 31, 2007 |  
|Assets                                                                |   |                   |   |   |                   |  
|Current assets                                                        |   |                   |   |   |                   |  
|Cash and equivalents                                                  | $ | 128,039           |   | $ | 96,460            |  
|Accounts receivables                                                  |   | 69,777            |   |   | -                 |  
|Prepaid expenses and other receivables                                |   | 334,995           |   |   | 258,381           |  
|Inventory                                                             |   | 376,773           |   |   | 58,840            |  
|Total current assets                                                  |   | 909,584           |   |   | 413,682           |  
|                                                                      |   |                   |   |   |                   |  
|Purchase of property and equipment                                    |   | 2,091,229         |   |   | 184,098           |  
|Construction in progress                                              |   | 174,426           |   |   | 1,295,188         |  
|Deposits                                                              |   | 56,056            |   |   | 45,119            |  
|Total assets                                                          |   | 3,231,295         |   |   | 1,938,087         |  
|                                                                      |   |                   |   |   |                   |  
|Liabilities and stockholders' equity                                  |   |                   |   |   |                   |  
|Current liabilities                                                   |   |                   |   |   |                   |  
|Accounts payable and accrued expenses                                 |   | 1,394,230         |   |   | 624,650           |  
|Due to Shareholders & Directors                                       |   | 685,341           |   |   | 1,267,966         |  
|Short Term Debt                                                       |   | 1,008,786         |   |   |                   |  
|Taxes Payable                                                         |   | 237,047           |   |   | 238,445           |  
|Total current liabilities                                             |   | 3,325,404         |   |   | 2,131,062         |  
|                                                                      |   |                   |   |   |                   |  
|Long Term Liabilities                                                 |   |                   |   |   |                   |  
|Long term debt                                                        |   | 1,886,103         |   |   | 1,141,454         |  
|Due to related parties                                                |   | 50,000            |   |   | 938,525           |  
|Total long term liabilities                                           |   | 1,936,103         |   |   | 2,079,980         |  
|                                                                      |   |                   |   |   |                   |  
|Stockholders' equity                                                  |   |                   |   |   |                   |  
|Preferred stock, $.001 par value, 10,000,000 shares
      authorized; |   |                   |   |   |                   |  
|1,620,000 shares issued and
      outstanding                         |   | 1,620             |   |   | 2,000             |  
|Common stock; $.0001 par value; 50,000,000 shares
      authorized;   |   |                   |   |   |                   |  
|24,825,300 shares issued and outstanding                              |   | 2,483             |   |   | 17,382            |  
|Additional paid-in capital                                            |   | 3,557,227         |   |   | 1,466,422         |  
|Stock issued at less than par value                                   |   | (2,683            | ) |   | (2,683            | )
|Accumulated other comprehensive income                                |   | 170,622           |   |   | 136,074           |  
|Retained Earnings                                                     |   | (5,759,480        | ) |   | (3,892,150        | )
|                                                                      |   |                   |   |   |                   |  
|Total stockholders' equity                                            |   | (2,030,211        | ) |   | (2,272,955        | )
|                                                                      |   |                   |   |   |                   |  
|Total liabilities and stockholders'
      equity                      | $ | 3,231,295         |   | $ | 1,938,087         |  

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Biopack Environmental Solutions, Inc. and Subsidiaries
Consolidated Statement of Operations December 31, 2008 and 2007

|                                           |   | Audited            | 
|------------------------------------------ | - | ------------------ | 
|                                           |   | For the Year Ended | 
|                                           |   | December 31,       | 
|                                           |   | 2008               | 
|                                           |   |                    | 
|Revenues                                   | $ | 793,474            | 
|                                           |   |                    | 
|Cost of Sales                              |   | 775,588            | 
|                                           |   |                    | 
|Gross profit 2.3%                          |   | 17,886             | 
|                                           |   |                    | 
|Expenses                                   |   |                    | 
|General and administrative                 |   | 623,887            | 
|Depreciation and amortization              |   | 65,305             | 
|Legal & Professional                       |   | 88,691             | 
|Bad Debts - Related Party                  |   | 0                  | 
|Provision for doubtful accounts            |   | 0                  | 
|Impairment of property and Equipment       |   | 0                  | 
|Wages & Salaries                           |   | 328,127            | 
|                                           |   |                    | 
|Total operating expenses                   |   | 1,106,011          | 
|                                           |   |                    | 
|Income from operations                     |   | -1,088,125         | 
|                                           |   |                    | 
|Other Income (expense)                     |   |                    | 
|Other income                               |   | 14,278             | 
|Interest expense                           |   | -793,483           | 
|                                           |   |                    | 
|Income before income taxes                 |   | -1,867,330         | 
|                                           |   |                    | 
|                                           |   |                    | 
|Income tax                                 |   | 0                  | 
|                                           |   |                    | 
|Net income                                 | $ | -1,867,330         | 
|                                           |   |                    | 
|Earnings per share                         | $ | -0.10              | 
|Weighted average common shares outstanding |   | 19,241,414         | 
|                                           |   |                    | 
|Diluted Earnings per share                 |   | -0.10              | 
|Diluted Weighted avera ge common shares    |   |                    | 
|outstanding                                |   | 19,241,414         | 

-38-

---

Biopack Environmental Solutions, Inc. and Subsidiaries
Statements of Cash flow

|                                                             |   | For the year ended | 
|------------------------------------------------------------ | - | ------------------ | 
|                                                             |   | Dec 31,            | 
|                                                             |   | 2008               | 
|Cash flows from operating activities                         |   |                    | 
|Net inc om e                                                 | $ | -1,867,330         | 
|Adjustm ents to reconcile net loss to net cash
      used in |   |                    | 
|operating activities :                                       |   |                    | 
|Depreciation
      and amortization                          |   | 65,305             | 
|Loss on Dis pos al                                           |   | 0                  | 
|W rite down
      in value of assets                         |   | 0                  | 
|Provision for B ad deb t                                     |   | 0                  | 
|W rite off of deposit                                        |   | 0                  | 
|Interes t ex penses accrual                                  |   | 793,483            | 
|Other com
      prehensive inc om e (loss )                  |   | 34,548             | 
|Changes in assets and liabilities :                          |   |                    | 
|A ccounts
      receivable and other receivables             |   | -69,777            | 
|P repaid expens es                                           |   | -76,614            | 
|Advances to related
      parties                            |   | -582,626           | 
|Inventories                                                  |   | -317,933           | 
|Deposits                                                     |   | -10,938            | 
|A ccounts payable and accruals                               |   | 769,580            | 
|Taxes Payable                                                |   | -1,398             | 
|Net cash used in operating activities                        |   | -1,263,699         | 
|Cash flow from investing activities                          |   |                    | 
|P urchase of property and
      equipm ent                   |   | -1,972,436         | 
|Construction
      in progress                               |   | 1,120,762          | 
|Net cash used in investing activities                        |   | -851,674           | 
|Cash flow from financing activities                          |   |                    | 
|Proceeds from
      notes payable                            |   | 1,008,786          | 
|Repaym
      ent of lease obligation                         |   | 0                  | 
|Amounts due
      to related parties                         |   | -888,525           | 
|Proceeds
      from issuance of debentures                   |   | 744,649            | 
|Repaym ent
      to Shareholder                              |   | 0                  | 
|Additional
      Paid up Capital                             |   | 1,297,322          | 
|Common stock
      $.0001 par value                          |   | -16,360            | 
|Non-cash financing activities                                |   |                    | 
|Common stock
      issued to retire debentures               |   | 1,080              | 
|Net cash provided by financing activities                    |   | 2,146,952          | 
|Net change in cash                                           |   | 31,579             | 
|Cash, beginning                                              |   | 96,460             | 
|Cash, ending                                                 | $ | 128,039            | 
|Supplem ental disclosure of cash flow inform
      ation:    |   |                    | 
|Cash paid for incom e taxes                                  | $ | 0                  | 
|Cash paid for interest                                       | $ | 26,155             | 
|Non-cash investing and financing activities:                 |   |                    | 
|Stock is sued to retire
      debt                           |   | 6,518,358          | 

-39-

---

Biopack Environmental Solutions, Inc. and Subsidiaries
Consolidated Statements of Shareholders' Equity

|                                                      |  |                 |   |   |              |           |  |              |     |   |          |         |   |             |   |   | Stock Issued  |   |   |               |   |   | Accumulated |         |   |            |  
|----------------------------------------------------- |  | --------------- | - | - | ------------ | --------- |  | ------------ | --- | - | -------- | ------- | - | ----------- | - | - | ------------- | - | - | ------------- | - | - | ----------- | ------- | - | ---------- | -
|                                                      |  |                 |   |   |              |           |  |              |     |   |          |         |   | Additional  |   |   | at Less       |   |   | Retained      |   |   | Other       |         |   | Total      |  
|                                                      |  | Preferred Stock |   |   | Common Stock |           |  | Paid-in      |     |   | Than Par |         |   | Earnings    |   |   | Comprehensive |   |   | Shareholders' |  
|                                                      |  | Shares          |   |   | Amount       |           |  | Shares       |     |   | Amount   |         |   | Capital     |   |   | Value         |   |   | (Deficit)     |   |   | Income      |         |   | Equity     |  
|Balance at December 31, 2005                          |  | 1,000,000       |   |   | 1,000        |           |  | 202,869,709  |     |   | 20,287   |         |   | 9,173,440   |   |   | (2,683        | ) |   | (9,837,473    | ) |   |             |         |   | (645,429   | )
|Common stock issued to repay debt                     |  |                 |   |   |              |           |  | 34,100,000   |     |   | 3,410    |         |   | 491,029     |   |   |               |   |   |               |   |   |             |         |   | 494,439    |  
|Common stock sold for cash                            |  | --              |   | $ | --           |           |  | 260,000,000  |     |   | 26,000   |         |   | 194,000     |   |   | --            |   |   | --            |   |   |             |         |   | 220,000    |  
|Common stock issued to                                |  |                 |   |   |              |           |  |              |     |   |          |         |   |             |   |   |               |   |   |               |   |   |             |         |   |            |  
|acquire StarMetro Group                               |  | --              |   |   | --           |           |  | 60,000,000   |     |   | 6,000    |         |   | (234,713    | ) |   | --            |   |   | --            |   |   |             |         |   | (228,713   | )
|Private placement                                     |  | --              |   |   | --           |           |  | 800,000      |     |   | 80       |         |   | 384,812     |   |   | --            |   |   | --            |   |   |             |         |   | 384,892    |  
|Common stock issued for                               |  |                 |   |   |              |           |  |              |     |   |          |         |   |             |   |   |               |   |   |               |   |   |             |         |   |            |  
|services                                              |  | --              |   |   | --           |           |  | 30,500,000   |     |   | 3,050    |         |   | 236,950     |   |   | --            |   |   | --            |   |   |             |         |   | 240,000    |  
|Cancellation of GTI shares                            |  | --              |   |   | --           |           |  | (12,000,000  | )   |   | (1,200   | )       |   | 1,200       |   |   | --            |   |   | --            |   |   |             |         |   | --         |  
|Reverse split 4,000 to 1                              |  | --              |   |   | --           |           |  | (493,743,513 | )   |   | (49,374  | )       |   | 49,374      |   |   | --            |   |   | --            |   |   |             |         |   | --         |  
|Accumulated translation                               |  |                 |   |   |              |           |  |              |     |   |          |         |   |             |   |   |               |   |   |               |   |   |             |         |   |            |  
|adjustment                                            |  | --              |   |   | --           |           |  | --           |     |   | --       |         |   | --          |   |   | --            |   |   | --            |   |   | 6,599       |         |   | 6,599      |  
|Net loss for the year ended                           |  |                 |   |   |              |           |  |              |     |   |          |         |   |             |   |   |               |   |   |               |   |   |             |         |   |            |  
|December 31, 2006                                     |  | --              |   |   | --           |           |  | --           |     |   | --       |         |   | --          |   |   | --            |   |   | (1,149,781    | ) |   | --          |         |   | (1,149,781 | )
|Restructuring for Reverse Merger                      |  | (1,000,000      | ) |   | (1,000       | )         |  | 25,473,804   |     |   | 2,547    |         |   | (10,296,092 | ) |   |               |   |   | 12,106,679    |   |   | (7,386      | )       |   | 1,804,748  |  
|                                                      |  |                 |   |   |              |           |  |              |     |   |          |         |   |             |   |   |               |   |   |               |   |   |             |         |   |            |  
|Balance at December 31, 2006                          |  | --              |   |   | --           |           |  | 108,000,000  |     | $ | 10,800   |         | $ | --          |   | $ | (2,683        | ) | $ | 1,119,425     |   | $ | (787        | )       | $ | 1,126,755  |  
|Recapitalization as result of                         |  |                 |   |   |              |           |  |              |     |   |          |         |   |             |   |   |               |   |   |               |   |   |             |         |   |            |  
|reverse merger Mar 27, 2007                           |  | --              |   |   | --           |           |  | 64,526,196   |     |   | 6,453    |         |   | (800,824    | ) |   |               |   |   |               |   |   | 6,599       |         |   | (787,772   | )
|Stock issued to convert debt Mar 27, 2007             |  | --              |   |   | --           |           |  | 1,293,225    |     |   | 129      |         |   | 1,034,451   |   |   |               |   |   |               |   |   |             |         |   | 1,034,580  |  
|Preferred share issued for repay debt                 |  |                 |   |   |              |           |  |              |     |   |          |         |   |             |   |   |               |   |   |               |   |   |             |         |   |            |  
|owned by a subsidiiary on Aug 17, 2007                |  | 2,000,000       |   |   | 2,000        |           |  |              |     |   |          |         |   | 1,232,795   |   |   |               |   |   |               |   |   |             |         |   | 1,234,795  |  
|Translation adjustment                                |  |                 |   |   |              |           |  |              |     |   |          |         |   |             |   |   |               |   |   |               |   |   | 130,262     |         |   | 130,262    |  
|Net income for the year                               |  |                 |   |   |              |           |  |              |     |   |          |         |   |             |   |   |               |   |   |               |   |   |             |         |   |            |  
|ended Dec 31, 2007                                    |  |                 |   |   |              |           |  |              |     |   |          |         |   |             |   |   |               |   |   | (5,011,575    | ) |   |             |         |   | (5,011,575 | )
|Balance at Dec 31, 2007                               |  | 2,000,000       |   | $ | 2,000        |           |  | 173,819,421  |     | $ | 17,382   |         | $ | 1,466,422   |   | $ | (2,683        | ) | $ | (3,892,150    | ) | $ | $136,074    |         |   | (2,272,955 | )
|Share cancellation Feb 17, 2008                       |  |                 |   |   |              |           |  | (11,000,000  | )   |   | (1,100   | )       |   | 866         |   |   |               |   |   |               |   |   |             |         |   | (234       | )
|Convertion of Debt to Common Share May 14, 2008       |  |                 |   |   |              | 4,758,212 |  |              | 476 |   |          | 665,664 |   |             |   |   |               |   |   |               |   |   |             | 666,140 |  
|Reverse split 10 to 1 June 11, 2008                   |  |                 |   |   |              |           |  | (150,819,870 | )   |   | (15,082  | )       |   | 15,082      |   |   |               |   |   |               |   |   |             |         |   | (0         | )
|Convertion of Preferred A share                       |  | (380,000        | ) |   | (380         | )         |  | 1,900,000    |     |   | 190      |         |   | (190        | ) |   |               |   |   |               |   |   |             |         |   | (380       | )
|to Common Share Jul 14, 2008                          |  |                 |   |   |              |           |  |              |     |   |          |         |   |             |   |   |               |   |   |               |   |   |             |         |   |            |  
|Convertion of Debt to Common Share Sep 5, 2008        |  |                 |   |   |              | 1,492,537 |  |              | 149 |   |          | 99,851  |   |             |   |   |               |   |   |               |   |   |             | 100,000 |  
|Convertion of Debt to Common Share
      Sep 19, 2008 |  |                 |   |   |              | 1,800,000 |  |              | 180 |   |          | 119,820 |   |             |   |   |               |   |   |               |   |   |             | 120,000 |  
|Convertion of Debt to Common Share Oct 15, 2008       |  |                 |   |   |              | 2,750,000 |  |              | 275 |   |          | 399,725 |   |             |   |   |               |   |   |               |   |   |             | 400,000 |  
|Common stock issued in exchange of                    |  |                 |   |   |              |           |  | 125,000      |     |   | 13       |         |   | (13         | ) |   |               |   |   |               |   |   |             |         |   | 0          |  
|consulting services Dec 1, 2008                       |  |                 |   |   |              |           |  |              |     |   |          |         |   |             |   |   |               |   |   |               |   |   |             |         |   |            |  
|Net income for year ended Dec 31, 2008                |  |                 |   |   |              |           |  |              |     |   |          |         |   | 790,000     |   |   |               |   |   | (1,867,330    | ) |   | 34,548      |         |   | (1,042,782 | )
|Balance at Dec 31, 2008                               |  | 1,620,000       |   |   | 1,620        |           |  | 24,825,300   |     |   | 2,483    |         |   | 3,557,227   |   |   | (2,683        | ) |   | (5,759,480    | ) |   | 170,622     |         |   | (2,030,212 | )

-40-

---

BIOPACK ENVIRONMENTAL SOLUTIONS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.The Company

Biopack Environmental Solutions Inc. (formerly Star Metro
Corp.) and its subsidiaries develop, manufacture, distribute and market
bio-degradable food containers and disposable industrial packaging for consumer
products made from natural materials.

2.Summary of Significant
Accounting Policies

(a) Basis of Presentation

The consolidated financial statements include the accounts of
Biopack Environmental Solutions Inc. and its wholly owned subsidiaries. All
material intercompany balances and transactions have been eliminated from the
consolidated financial statements.

(b) Use of Estimates

In preparing consolidated financial statements in conformity
with US GAAP, management is required to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reported periods. Significant estimates include
depreciation. Actual results could differ from those estimates.

(c) Cash and Cash Equivalents

The Company considers all highly liquid investments with
original maturities of three months or less at the time of purchase to be cash
equivalents. As of December 31, 2008, the Company had cash and equivalents of
$128,039.

(d) Short-term Investment

The Company classifies its short-term investment as
held-to-maturity debt securities and is measured at amortized cost (which
approximates fair value) with interest and realized gains and losses, if any,
reported in non-operating income in the income statement.

(e) Accounts Receivable

Accounts receivable are stated at original amounts less an
allowance made for doubtful receivables, if any, based on a review of all
outstanding amounts at the end of the period. Full allowance for doubtful
receivables are made when the receivables are overdue for one year and an
allowance is made when there is objective evidence that the Company will not be
able to collect all amounts due according to the original terms of a receivable.
Bad debts are written against the allowance when identified. The Company extends
credit to customers on an unsecured basis in the normal course of business and
believes that all accounts receivable in excess of the allowance for doubtful
accounts are fully collectible. The Company does not accrue interest on trade
accounts receivable. The normal credit terms range from 15 to 60 days.

-41-

---

BIOPACK ENVIRONMENTAL SOLUTIONS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUE)

(f) Allowance for Doubtful Accounts

The Company recognizes an allowance for doubtful accounts to
ensure accounts receivable are not overstated due to uncollectibility. An
allowance for doubtful accounts is maintained for all customers based on a
variety of factors, including the length of time the receivables are past due,
significant one-time events and historical experience. An additional reserve for
individual accounts is recorded when the Company becomes aware of a customers
inability to meet its financial obligations, such as in the case of bankruptcy
filings or deterioration in the customers operating results or financial
position. If circumstances related to a customer change, estimates of the
recoverability of receivables would be further adjusted.

(g) Property, Plant and Equipment

Property, plant and equipment are stated at cost. Depreciation
is provided principally by use of the straight-line method over the useful lives
of the related assets, except for leasehold properties, which are depreciated
over the terms of their related leases or their estimated useful lives,
whichever is less. Expenditures for maintenance and repairs, which do not
improve or extend the expected useful life of the assets, are expensed to
operations while major repairs are capitalized.

The estimated useful lives are as follows:

|                                         | Years  
|---------------------------------------- | -------
|Leasehold improvements                   | 5      
|Furniture, fixtures and office equipment | 5 to 10
|Motor Vehicles                           | 5      
|Computer equipment                       | 5      
|Plant and Machinery                      | 10     

(h) Impairment of Assets

In accordance with Statement of Financial Accounting Standards
(SFAS) No. 144, "Accounting for Impairment or Disposal of Long-Lived Assets",
the Company evaluates its long-lived assets to determine whether later events
and circumstances warrant revised estimates of useful lives or a reduction in
carrying value due to impairment. If indicators of impairment exist and if the
value of the assets is impaired, an impairment loss would be recognized. There
was no impairment loss made for property and equipment as of Sept 30, 2008.

(i) Income Taxes

The Company accounts for income taxes under SFAS No. 109,
"Accounting for Income Taxes". Under SFAS No. 109, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. Under SFAS No. 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.

-42-

---

BIOPACK ENVIRONMENTAL SOLUTIONS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUE)

(j) Foreign Currency Transactions

The Companys functional currency is Hong Kong Dollars (HKD),
Renminbi (RMB) and Malaysia Ringatt (MYR) and its reporting currency is U.S.
dollars. The Companys consolidated balance sheet accounts are translated into
U.S. dollars at the year-end exchange rates and all revenue and expenses are
translated into U.S. dollars at the average exchange rates prevailing during the
periods in which these items arise. Translation gains and losses are deferred
and accumulated as a component of other comprehensive income in stockholders
equity. Transaction gains and losses that arise from exchange rate fluctuations
from transactions denominated in a currency other than the functional currency
are included in the statement of operations as incurred.

(k) Fair Value of Financial Instruments

SFAS No. 107, Disclosures about Fair Values of Financial
Instruments, requires disclosing fair value to the extent practicable for
financial instruments that are recognized or unrecognized in the balance sheet.
The fair value of the financial instruments disclosed herein is not necessarily
representative of the amount that could be realized or settled, nor does the
fair value amount consider the tax consequences of realization or settlement.

For certain financial instruments, including cash, accounts and
other receivables, accounts payable, accruals and other payables, it was assumed
that the carrying amounts approximate fair value because of the near term
maturities of such obligations. The carrying amounts of long-term loans
approximate fair value as the interest on these loans is minimal.

(l) Earnings Per Share

The Company computes earnings per share (EPS) in accordance
with Statement of Financial Accounting Standards No. 128, Earnings per Share
(SFAS No. 128), and SEC Staff Accounting Bulletin No. 98 (SAB 98). SFAS No.
128 requires companies with complex capital structures to present basic and
diluted EPS. Basic EPS is measured as the income or loss available to common
shareholders divided by the weighted average common shares outstanding for the
period. Diluted EPS is similar to basic EPS but presents the dilutive effect on
a per share basis of potential common shares (e.g., convertible securities,
options, and warrants) as if they had been converted at the beginning of the
periods presented, or issuance date, if later. Potential common shares that have
an anti-dilutive effect (i.e., those that increase income per share or decrease
loss per share) are excluded from the calculation of diluted EPS.

(m) Accumulated Other Comprehensive Income

Accumulated other comprehensive income represents the change in
equity of the Company during the periods presented from foreign currency
translation adjustments.

-43-

---

BIOPACK ENVIRONMENTAL SOLUTIONS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUE)

(n) Stock-Based Compensation

In March 2004, the FASB issued a proposed statement,
Share-Based Payment, which addresses the accounting for share-based payment
transactions in which an enterprise receives employee services in exchange for
equity instruments of the enterprise or liabilities that are based on the
grant-date fair value of the enterprise's equity instruments or that may be
settled by the issuance of such equity instruments. The proposed statement would
eliminate the ability to account for share-based compensation transactions using
Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued
to Employees, and generally would require instead that such transactions be
accounted for using a fair-value-based method. In December 2004, the FASB issued
SFAS No. 123(R), Share-Based Payment, which is a revision of SFAS No. 123.
Generally, the approach in SFAS No. 123(R) is similar to the approach described
in SFAS No. 123. However, SFAS No. 123(R) requires all share-based payments to
employees, including grants of employee stock options, to be recognized in the
income statement based on their grant-date fair values. Pro forma disclosure is
no longer an alternative.

As permitted by SFAS No. 123, for 2005, the Company accounted
for share-based payments to employees using APB Opinion No. 25's intrinsic value
method and, as such, generally recognized no compensation cost for employee
stock options.

Effective January 1, 2006, the Company adopted SFAS No.
123(R)'s fair value method of accounting for share based payments. Accordingly,
the adoption of SFAS No. 123(R)'s fair value method may have a significant
impact on the Company's results of operations as it is required to recognize the
cost of employee services received in exchange for awards of equity instruments
based on the grant-date fair value of those awards. SFAS No. 123(R) permits
public companies to adopt its requirements using either the "modified
prospective" method or the "modified retrospective" method.

The Company adopted SFAS No. 123(R) using the modified
prospective method. In April 2005, the SEC delayed the effective date of SFAS
No. 123(R), which is now effective for public companies for annual rather than
interim periods that begin after Sept 15, 2005. The impact of the adoption of
SFAS No. 123(R) cannot be predicted at this time because it will depend on
levels of share-based payments granted in the future.

(o) Revenue Recognition

Revenue is recognized in accordance with SEC Staff Accounting
Bulletin No. 101, Revenue Recognition in Financial Statements. The Company
recognizes revenue when the significant risks and rewards of ownership have been
transferred to the customer pursuant to applicable laws and regulations,
including factors such as when there has been evidence of a sales arrangement,
the performance has occurred, or service have been rendered, the price to the
buyer is fixed or determinable, and collectability is reasonably assured.

In November 2004, the FASB issued SFAS No. 151 "Inventory
Costs, an amendment of ARB No. 43, Chapter 4, (" SFAS No. 151"). The amendments
made by SFAS 151 clarify that abnormal amounts of idle facility expense,
freight, handling costs, and wasted materials (spoilage) should be recognized as
current-period charges and require the allocation of fixed production overheads
to inventory based on the normal capacity of the production facilities. The
guidance is effective for inventory costs incurred during fiscal years beginning
after Sept 15, 2005. Earlier application is permitted for inventory costs
incurred during fiscal years beginning after November 23, 2004. The Company has
evaluated the impact of the adoption of SFAS 151, and does not believe the
impact will be significant to the Company's overall results of operations or
financial position.

-44-

---

BIOPACK ENVIRONMENTAL SOLUTIONS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUE)

In December 2004, the FASB issued SFAS No.152, "Accounting for
Real Estate Time-Sharing Transactions-an amendment of FASB Statements No. 66 and
67" ("SFAS 152") SFAS 152 amends SFAS No. 66, "Accounting for Sales of Real
Estate", to reference the financial accounting and reporting guidance for real
estate time-sharing transactions that is provided in AICPA Statement of Position
(SOP) 04-2, "Accounting for Real Estate Time-Sharing Transactions". SFAS 152
also amends SFAS No. 67, "Accounting for Costs and Initial Rental Operations of
Real Estate Projects", to state that the guidance for (a) incidental operations
and (b) costs incurred to sell real estate projects does not apply to real
estate time-sharing transactions. The accounting for those operations and costs
is subject to the guidance in SOP 04-2. SFAS 152 is effective for financial
statements for fiscal years beginning after Sept 15, 2005, with earlier
application encouraged. The Company has evaluated the impact of the adoption of
SFAS 152, and does not believe the impact will be significant if any, to the
Company's overall results of operations or financial position since the Company
does not enter into such transactions.

In December 2004, the FASB issued SFAS No.153, "Exchanges of
Nonmonetary Assets, an amendment of APB Opinion No. 29, Accounting for
Nonmonetary Transactions." The amendments made by SFAS 153 are based on the
principle that exchanges of nonmonetary assets should be measured based on the
fair value of the assets exchanged. Further, the amendments eliminate the narrow
exception for nonmonetary exchanges of similar productive assets and replace it
with a broader exception for exchanges of nonmonetary assets that do not have
commercial substance. Previously, Opinion 29 required that the accounting for an
exchange of a productive asset for a similar productive asset or an equivalent
interest in the same or similar productive asset should be based on the recorded
amount of the asset relinquished. Opinion 29 provided an exception to its basic
measurement principle (fair value) for exchanges of similar productive assets.
That exception required that some nonmonetary exchanges, although commercially
substantive, be recorded on a carryover basis. By focusing the exception on
exchanges that lack commercial substance, the FASB believes SFAS No.153 produces
financial reporting that more faithfully represents the economics of the
transactions. SFAS No.153 is effective for nonmonetary asset exchanges occurring
in fiscal periods beginning after Sept 15, 2005. Earlier application is
permitted for nonmonetary asset exchanges occurring in fiscal periods beginning
after the date of issuance. The provisions of SFAS No.153 shall be applied
prospectively. The Company has evaluated the impact of the adoption of SFAS 153,
and does not believe the impact will be significant to the Company's overall
results of operations or financial position.

In December 2004, the FASB issued SFAS No.123 (revised 2004),
"Share-Based Payment" ("SFAS 123(R)"). SFAS 123(R) will provide investors and
other users of financial statements with more complete and neutral financial
information by requiring that the compensation cost relating to share-based
payment transactions be recognized in financial statements. That cost will be
measured based on the fair value of the equity or liability instruments issued.
SFAS 123(R) covers a wide range of share-based compensation arrangements
including share options, restricted share plans, performance-based awards, share
appreciation rights, and employee share purchase plans. SFAS 123(R) replaces
SFAS No. 123, "Accounting for Stock-Based Compensation", and supersedes APB
Opinion No. 25, "Accounting for Stock Issued to Employees". SFAS 123, as
originally issued in 1995, established as preferable a fair-value-based method
of accounting for share-based payment transactions with employees. However, that
statement permitted entities the option of continuing to apply the guidance in
Opinion 25, as long as the footnotes to financial statements disclosed what net
income would have been had the preferable fair-value-based method been used.
Public entities (other than those filing as small business issuers) were
required to apply SFAS 123(R) as of the first interim or annual reporting period
that began after Sept 15, 2005. This pronouncement was effective for the
Company, a small business issuer, as of the first interior annual reporting
period that began after December 15, 2005. The Company has evaluated the impact
of the adoption of SFAS 123(R), and does not believe the impact will be
significant to the Company's overall results of operations or financial
position.

-45-

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BIOPACK ENVIRONMENTAL SOLUTIONS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUE)

In May, 2005, The FASB issued SFAS No. 154, entitled Accounting
Changes and Error Corrections  a replacement of APB Opinion No. 20 and FASB
Statement No. 3. This Statement replaces APB Opinion No. 20, Accounting Changes
and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial
Statements, and changes the requirements for the accounting for and reporting of
a change in accounting principle. This statement applies to all voluntary
changes in accounting principles. It also applies to changes required by an
accounting pronouncement in the unusual instance where the pronouncement does
not include specific transition provisions. Opinion 20 previously required that
most voluntary changes in accounting principle be recognized by including in net
income of the period of the change the cumulative effect of changing to the new
accounting principle. This Statement requires retrospective application to prior
periods financial statements of changes in accounting principle, unless it is
impracticable to determine either the period-specific effects or the cumulative
effect of the change. This Statement defines as the application of a different
accounting principle to prior accounting periods as if that principle had always
been used or as the adjustment of previously issued financial statements to
reflect a change in the reporting entity. This statement also redefines
restatement as the revising of previously issued financial statements to reflect
the correction of an error. The adoption of SFAS 154 did not impact the
financial statements.

In February, 2006, FASB issued SFAS No. 155, Accounting for
Certain Hybrid Financial Statements. SFAS No. 155 amends SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities and SFAS No. 140,
Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities. SFAS No. 155, permits fair value measurement for any hybrid
financial instrument that contains an embedded derivative that otherwise would
require bifurcation, clarifies which interest-only strips and principal-only
strips are not subject to the requirements of SFAS No. 133, establishes a
requirement to evaluate interest in securitized financial assets to identify
interests that are freestanding derivatives or that are hybrid financial
statements that contain an embedded derivative requiring bifurcation, clarifies
that concentrations of credit risk in the form of subordination are not embedded
derivatives, and amends SFAS No. 140 to eliminate the prohibition on the
qualifying special-purpose entity from holding a derivative financial instrument
that pertains to a beneficial interest other than another derivative financial
instrument. This statement was effective for all financial instruments acquired
or issued after the beginning of the Companys first fiscal year that began
after September 15, 2006. The Company believes that this statement did not have
a significant impact on the financial statements.

In March, 2006 FASB issued SFAS 156 Accounting For Servicing
of Financial Assets. This Statement amends FASB Statement No. 140, Accounting
for Transfers and Servicing of Financial Assets and Extinguishment of
Liabilities, with respect to the accounting for separately recognized servicing
assets and servicing liabilities. This Statement:

Requires an entity to recognize a
servicing asset or servicing liability each time it undertakes an obligation to
service a financial asset by entering into a servicing contract.

Requires all separately recognized
servicing assets and servicing liabilities to be initially measured at fair
value, if practicable.

-46-

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BIOPACK ENVIRONMENTAL SOLUTIONS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUE)

Permits an entity to choose
amortization method or fair value measurement method for each class of
separately recognized servicing assets and servicing liabilities.

At its initial adoption, permits a
one-time reclassification of available-for-sale securities to trading securities
by entities with recognized servicing rights, without calling into question the
treatment of other available-for-sale securities under Statement 115, provided
that the available-for-sale securities are identified in some manner as
offsetting the entitys exposure to changes in fair value of servicing assets or
servicing liabilities that a servicer elects to subsequently measure at fair
value.

Requires separate presentation of
servicing assets and liabilities subsequently measured at fair value in the
statement of financial position and additional disclosures for all separately
recognized servicing assets and servicing liabilities.

The Company believes that this statement will not have a
significant impact on its financial statements.

In September 2006, FASB issued SFAS 157 Fair Value
Measurements. This Statement defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles (GAAP), and
expands disclosures about fair value measurements. This Statement applies under
other accounting pronouncements that require or permit fair value measurements,
the Board having previously concluded in those accounting pronouncements that
fair value is the relevant measurement attribute. Accordingly, this Statement
does not require any new fair value measurements. However, for some entities,
the application of this Statement will change current practice. This Statement
is effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. The Company is
currently evaluating the effect of this pronouncement on financial statements.

In September 2006, FASB issued SFAS 158 Employers Accounting
for Defined Benefit Pension and Other Postretirement Plansan amendment of FASB
Statements No. 87, 88, 106, and 132(R).

This Statement improves financial reporting by requiring an
employer to recognize the overfunded or underfunded status of a defined benefit
postretirement plan (other than a multiemployer plan) as an asset or liability
in its statement of financial position and to recognize changes in that funded
status in the year in which the changes occur through comprehensive income of a
business entity or changes in unrestricted net assets of a not-for-profit
organization. This Statement also improves financial reporting by requiring an
employer to measure the funded status of a plan as of the date of its year-end
statement of financial position, with limited exceptions. An employer with
publicly traded equity securities is required to initially recognize the funded
status of a defined benefit postretirement plan and to provide the required
disclosures as of the end of the fiscal year ending after December 15, 2006. An
employer without publicly traded equity securities is required to recognize the
funded status of a defined benefit postretirement plan and to provide the
required disclosures as of the end of the fiscal year ending after Sept 15,
2007. However, an employer without publicly traded equity securities is required
to disclose the following information in the notes to financial statements for a
fiscal year ending after December 15, 2006, but before Sept 16, 2007, unless it
has applied the recognition provisions of this Statement in preparing those
financial statements. The requirement to measure plan assets and benefit
obligations as of the date of the employers fiscal year-end statement of
financial position is effective for fiscal years ending after December 15, 2008.
The Company is currently evaluating the effect of this pronouncement on its
financial statements.

-47-

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BIOPACK ENVIRONMENTAL SOLUTIONS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUE)

In February 2007, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 159, The Fair Value
Option for Financial Assets and Financial Liabilities and is effective for
fiscal years beginning after November 15, 2007. This Statement permits entities
to choose to measure many financial instruments and certain other items at fair
value. The objective is to improve financial reporting by providing entities
with the opportunity to mitigate volatility in reported earnings caused by
measuring related assets and liabilities differently without having to apply
complex hedge accounting provisions. The Company is currently assessing the
impact the adoption of this pronouncement will have on its financial statements.

3.Property, Plant and Equipment, net

|Cost                           |   | 2008      |   |  | 2007      |  
|------------------------------ | - | --------- | - |  | --------- | -
|Leasehold improvements         | $ | 283,531   |   |  | 5,688     |  
|Motor Vehicles                 |   | 78,010    |   |  | 75,188    |  
|Office furniture and equipment |   | 74,283    |   |  | 58,293    |  
|Computer equipment             |   | 13,028    |   |  | 12,874    |  
|Plant and Machinery            |   | 1,762,498 |   |  | 86,872    |  
|Construction in progress       |   | 174,426   |   |  | 1,295,188 |  
|                               |   | 2,385,776 |   |  | 1,534,103 |  
|Accumulated depreciation       |   | (120,122  | ) |  | (54,817   | )
|                               | $ | 2,265,654 |   |  | 1,479,286 |  

Depreciation expense for the year ended December 31, 2008 was
$65,305.

(b) Construction in progress

|                                   |   | 2008       |   |  | 2007      | 
|---------------------------------- | - | ---------- | - |  | --------- | 
|Opening as at 1 January            | $ | 1,295,188  |   |  | -         | 
|Additions                          |   |            |   |  | 1,295,188 | 
|                                   |   | 777,850    |   |  |           | 
|Transfer to plant and Machinery    |   |            |   |  | -         | 
|                                   |   | (1,675,626 | ) |  |           | 
|Transfer to lease hold improvement |   |            |   |  | -         | 
|                                   |   | (222,986   | ) |  |           | 
|                                   |   |            |   |  |           | 
|As 31 December 2008                |   |            |   |  | 1,295,188 | 
|                                   |   | 174,426    |   |  |           | 

Construction in progress represents the expenditure incurred in
the development project of a manufacturing plant by a subsidiary in Jiangmen,
PRC. As of December 31, 2008, the Company had a balance of $174,426 on the
construction. These costs are included on the balance sheet as property, plant
and equipment costs. No depreciation will be provided until the plant is
completed and operating. No interest has been capitalized in construction in
progress for the year.

The Company believes that the carrying amount of construction
in progress is approximate to its fair value.

4.Inventories

The Companys inventory consists of raw materials held for
production. As of December 31, 2008, the Companys subsidiary in Jiangmen, PRC
held inventory of $376,773.

-48-

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BIOPACK ENVIRONMENTAL SOLUTIONS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUE)

5.Accounts receivable

Accounts receivable consists of receivables on trade as
follows:

|Ageing of trade and other receivables |   | 2008   |  |  | 2007 | 
|------------------------------------- | - | ------ |  |  | ---- | 
|0  30 days                           | $ | 69,777 |  |  | -    | 
|31  60 days                          |   | -      |  |  |      | 
|                                      | $ | 69,777 |  |  | -    | 

As of December 31, 2008, the Companys subsidiaries had
receivables totaling $69,777. The Company believes that there is no issue of
recoverability and the balances receivable are indicative of fair value.

6.Deposits and prepayment and other
receivable

|                           |   | 2008    |  |  | 2007    | 
|-------------------------- | - | ------- |  |  | ------- | 
|Prepayment                 | $ | 169,359 |  |  | 199,608 | 
|Other receivable           |   | 165,636 |  |  | 58,773  | 
|                           | $ | 334,995 |  |  | 258,381 | 
|                           |   |         |  |  |         | 
|Rental and utility deposit |   | 55,056  |  |  | 45,119  | 

7.Accrued and payables

|                            |   | 2008      |  |  | 2007    | 
|--------------------------- | - | --------- |  |  | ------- | 
|Accrued and other payables  | $ | 1,112,709 |  |  | 325,111 | 
|Customers deposits received |   | 126,315   |  |  | 125,469 | 
|Accounts payables           |   | 155,206   |  |  | 174,070 | 
|                            | $ | 1,394,230 |  |  | 624,650 | 

8.Amount due to Shareholders &
Directors

|Amount due to Shareholder | $ | 625,589 | 
|------------------------- | - | ------- | 
|Amount due to Directors   |   | 59,752  | 
|                          |   | 685,341 | 

The amount due to shareholder, Good Value Galaxy Limited in the
amount of $625,589 is unsecured, interest free and has no fixed terms of
repayment.

Directors of the Company have advanced $59,752 in the form of
unsecured, non-interest bearing advances with no due date.

-49-

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BIOPACK ENVIRONMENTAL SOLUTIONS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUE)

9.Loans payable

|Tayna Environmental Technology Co Limited             | $ | 1,146,103 | 
|----------------------------------------------------- | - | --------- | 
|Convertible debenture issued to non related party     |   | 740,000   | 
|Convertible debenture issued to a related
      party |   | 50,000    | 
|                                                      |   | 1,936,103 | 
|                                                      |   |           | 
|Short Term Loan                                       | $ | 1,008,786 | 

Long Term Loan

On March 30, 2008, our subsidiary, Roots Biopack Group Limited,
entered into a loan agreement with Tayna Environmental Technology Co. Limited,
whereby Tayna Environmental agreed to advance to Roots Biopack Group Limited the
sum of $1,146,103 for a three-year initial term expiring March 30, 2011. Our
subsidiary has an option to extend this three-year initial term for an
additional two calendar years by sending written notice to Tayna Environmental
no later than three months prior to the original maturity date (i.e., no later
than December 30, 2010). Principal due under the loan bears interest at the rate
of 3% per annum.

Convertible Debts

In December, 2007, the Company sold a convertible debenture for
gross proceeds of $300,000. The convertible debentures have a term of three
years and are convertible, at the option of the holder with 60 days prior
notice, into Series C Preferred Stock at a price of $0.50 per preferred share.

In December, 2007, the Company sold a convertible debenture to
a director for gross proceeds of $300,000. The convertible debentures have a
term of three years and are convertible, at the option of the holder with 60
days prior notice, into Series C Preferred Stock at a price of $0.50 per
preferred share. On October 15, 2008, the Company issued 500,000 shares of
common stock pursuant to the conversion of $250,000 of the convertible
debenture.

On January 31, 2008, the Company sold a convertible debenture
with a face value of $150,000. This convertible debenture has a two year term
and is convertible, at the option of the holder with 90 days prior notice, into
common stock at a price of six and two-thirds cents per share. On October 15,
2008, the Company issued 2,250,000 shares of common stock pursuant to the
conversion of the convertible debenture.

On February 4, 2008, the Company sold a convertible debenture
for gross proceeds of $100,000. This convertible debenture has a three year term
and is convertible, at the option of the holder with 90 days prior notice, into
common stock at a price of six and two-thirds cents per share. On September 5,
2008, the Company issued 1,492,537 shares of common stock pursuant to the
conversion of the convertible debenture.

-50-

---

BIOPACK ENVIRONMENTAL SOLUTIONS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUE)

On March 3, 2008, the Company sold a convertible debenture for
gross proceeds of $400,000. This convertible debenture has a three year term and
is convertible, at the option of the holder with 90 days prior notice, into
common stock at a price of six and two-thirds cents per share. On September 19,
2008, the Company issued 1,800,000 shares of common stock pursuant to the
conversion of $120,000 of the convertible debenture.

On March 3, 2008, the Company sold a convertible debenture for
gross proceeds of $10,000. This convertible debenture has a three year term and
is convertible, at the option of the holder with 90 days prior notice, into
common stock at a price of six and two-thirds cents per share.

On December 29, 2008, the Company sold a convertible debenture
for gross proceeds of $150,000. This convertible debenture has a three year term
and is convertible, at the option of the holder with 90 days prior notice, into
common stock at a price of six and two-thirds cents per share.

|Following
      summarizes the Convertible debenture as 31/12/2008 |  |         |  |  |         | 
|------------------------------------------------------------------ |  | ------- |  |  | ------- | 
|                                                                   |  |         |  |  |         | 
|                                                                   |  | 2008    |  |  | 2007    | 
|                                                                   |  |         |  |  |         | 
|Opening Balance of Convertible Debentures                          |  | 600,000 |  |  |         | 
|                                                                   |  |         |  |  |         | 
|Convertible debentures issued during the
      year                |  | 810,000 |  |  | 600,000 | 
|                                                                   |  |         |  |  |         | 
|Less:
      Debentures converted to common shares                  |  | 620,000 |  |  |         | 
|                                                                   |  |         |  |  |         | 
|Debentures not converted                                           |  | 790,000 |  |  | 600,000 | 
|                                                                   |  |         |  |  |         | 

The embedded beneficial conversion features present in the
convertible debenture is valued separately at issuance and recognized and
measured by allocating a portion of the proceeds equal to the intrinsic value of
that feature to additional paid-in capital. That amount is calculated as the
difference the conversion price and the fair value of the common stock into
which the debenture is convertible, multiplied by the no. of shares. The
intrinsic value cannot exceed the proceeds.

Short Term Loan

On 30 June 08, the Company issued two demand promissory notes
with aggregate amount of $245,000. The demand promissory notes bear an interest
rate of 6% annually, payable on the first day of each and every month.

On 20 July 08, the Company issued a demand promissory notes
with amount of $90,500. The demand promissory notes bear an interest rate of 6%
annually, payable on the first day of each and every month.

On 15 Sept 08, the Company issued a demand promissory notes
with amount of $80,000. The demand promissory notes bear an interest rate of 6%
annually, payable on the first day of each and every month.

On 31 Dec 08, the Company issued two demand promissory notes
with aggregate amount of $582,000. The demand promissory notes bear an interest
rate of 6% annually, payable on the first day of each and every month.

-51-

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BIOPACK ENVIRONMENTAL SOLUTIONS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUE)

10.Going Concern

The accompanying consolidated financial statements have been
prepared in accordance with the accounting principles generally accepted in the
United States of America (US GAAP), which contemplate the continuation of the
Company as a going concern. The Company incurred a net loss for year ended
December 31, 2008 of $1,867,330 had an accumulated deficit of $5,759,480 and a
working capital deficit of $2,415,819. These conditions raise substantial doubt
as to the Companys ability to continue as a going concern. These consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty. These consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
These consolidated financial statements do not include any adjustments relating
to the recoverability and classification of recorded asset amounts, or amounts
and classifications of recorded asset amounts, or amounts and classifications of
liabilities that might be necessary should the Company be unable to continue as
a going concern.

The future of the Company is dependent upon its attaining profitable
  operations and raising the capital it will require in order to achieve profitable
  operations through the issuance of equity securities, borrowings or a combination
  thereof.

11.Concentrations and Credit Risk

Concentration of credit risk is limited to accounts receivable
and is subject to the financial conditions of major customers. The Company does
not require collateral or other security to support accounts receivable. The
Company conducts periodic reviews of its clients financial condition and
customers payment practices to minimize collection risk on accounts receivable.

12.Commitments and Contingencies

(a) Operating Lease Arrangements

Minimum lease payments recognized as an expense under operating
leases in respect of the premises and land use right in PRC in PRC during the
year ended December 31 2008:

|         |   | 2008    |  |  | 2007    | 
|-------- | - | ------- |  |  | ------- | 
|Premises | $ | 155,565 |  |  | 207,793 | 

At December 31 2008, the Company had outstanding commitments
for future minimum lease payments under non-cancelable operating leases in
respect of premises and land use rights in PRC, which fall due as follows:

|                                        |   | 2008      |  |  | 2007      | 
|--------------------------------------- | - | --------- |  |  | --------- | 
|Within one year                         | $ | 200,352   |  |  | 170,980   | 
|In the second to fifth years, inclusive |   | 748,399   |  |  | 691,047   | 
|After five years                        |   | 1,665,482 |  |  | 1,746,225 | 
|                                        | $ | 2,617,051 |  |  | 2,608,252 | 

Operating leases relate to manufacturing premise in PRC with
lease terms of 15 years from 1 March 2007, with an option to extend for renew.
The Company does not have an option to purchase the leased asset at the expiry
of the lease period.

-52-

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BIOPACK ENVIRONMENTAL SOLUTIONS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUE)

(b) Capital Commitments

|                                              |   | 2008    |  |  | 2007      | 
|--------------------------------------------- | - | ------- |  |  | --------- | 
|Contracted for but not provided for           | $ |         |  |  |           | 
|Capital injection for a subsidiary in PRC     |   |         |  |  |           | 
|Purchase of three pieces of land
      in PRC |   | -       |  |  | 969,022   | 
|Construction projects in PRC                  |   | 200,509 |  |  | 199,962   | 
|                                              | $ | 200,209 |  |  | 1,168,984 | 

13.Related Party Transactions

Amount due to related parties

|                                     |   | 2008   |  |  | 2007 | 
|------------------------------------ | - | ------ |  |  | ---- | 
|CHOU Si Hou, Eddie  Former Director | $ | 45,385 |  |  | -    | 
|LOU Kin Chung, Gerald  Director     |   | 8,602  |  |  | -    | 
|Sean Webster  Director              |   | 5,765  |  |  |      | 
|                                     |   | 59,752 |  |  |      | 

The advances are unsecured, interest free and have no fixed
terms of repayment. The respective parties are or were directors of the company.

On May 14, 2008, the Company entered into a subscription
agreement with four investors, whereby the company agreed to issue 4,758,212
shares of our common stock at a price of $0.14 per share to the four investors
in consideration of the debt owned by our company to them in the aggregate
amount of $666,140. Two of these investors are ex-directors of our company, one
of these investors is a director of two of the Companys subsidiaries and the
fourth investor is our President and Chairman of the Companys Board of
Directors.

|Related Party Transactions |  |                |  |  |             |  |  |        |  |  |         | 
|-------------------------- |  | -------------- |  |  | ----------- |  |  | ------ |  |  | ------- | 
|                           |  | Nature of      |  |  | Connected   |  |  | 2008   |  |  | 2007    | 
|Name of the company        |  | transaction    |  |  | party (ies) |  |  | $      |  |  | $       | 
|                           |  |                |  |  |             |  |  |        |  |  |         | 
|Grand Power Express        |  | Renovation     |  |  | Mr. Ricky   |  |  | -      |  |  | 34281   | 
|International              |  | and equipment  |  |  | Chiu Tong   |  |  |        |  |  |         | 
|Limited                    |  |                |  |  |             |  |  |        |  |  |         | 
|                           |  |                |  |  |             |  |  |        |  |  |         | 
|                           |  | Office rental  |  |  | Mr. Ricky   |  |  | 48,779 |  |  | 27,451  | 
|                           |  |                |  |  | Chiu Tong   |  |  |        |  |  |         | 
|                           |  |                |  |  |             |  |  |        |  |  |         | 
|                           |  | Management fee |  |  | Mr. Ricky   |  |  | -      |  |  | 37,926  | 
|                           |  |                |  |  | Chiu Tong   |  |  |        |  |  |         | 
|                           |  |                |  |  |             |  |  |        |  |  |         | 
|InterPacific Capital       |  | Consultant fee |  |  | Spouse of   |  |  | 12,850 |  |  | 38,308  | 
|Limited                    |  |                |  |  | Mr. Ricky   |  |  |        |  |  |         | 
|                           |  |                |  |  | Chiu Tong   |  |  |        |  |  |         | 
|                           |  |                |  |  |             |  |  | 61,629 |  |  | 137,966 | 

-53-

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BIOPACK ENVIRONMENTAL SOLUTIONS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUE)

14.INCOME TAXES

No provision for HK Profits tax has been made in consolidated
financial statements as the subsidiaries sustained loss for the year. The
current year amount represented under provision of taxation in previous years.

No provision for PRC income tax has been made in the consolidated
  financial statements as the PRC subsidiary sustained loss during the year. No
  provision for deferred taxation has been recognized in the financial statements
  as the amount involved is insignificant.

|                      |  | 2008   |  |  | 2007   | 
|--------------------- |  | ------ |  |  | ------ | 
|Hong Kong profits tax |  | 42,403 |  |  | 72,427 | 
|Deferred taxes        |  |        |  |  | -      | 
|                      |  | 42,403 |  |  | 72,427 | 

|                                                       |  | 2008     |   |  | 2007       |  
|------------------------------------------------------ |  | -------- | - |  | ---------- | -
|(Loss) / Profit before taxes                           |  | (486,924 | ) |  | (3,958,361 | )
|                                                       |  |          |   |  |            |  
|Provision for income taxes at Hong Kong
      income   |  |          |   |  |            |  
|tax rate 17.5%                                         |  | (111,784 | ) |  | (692,713   | )
|Under provision of taxation in previous
      year     |  | 111,784  |   |  | 74,303     |  
|Tax effect of non-deductible expenses                  |  | 42,403   |   |  | 430,083    |  
|Tax effect of non-taxable income                       |  |          |   |  | (153       | )
|Tax effect of reversal of temporary difference         |  |          |   |  | (1,876     | )
|Tax effect of utilized tax losses not
      recognised |  |          |   |  | 225,472    |  
|Tax effect of tax losses not allowed                   |  |          |   |  | 37,311     |  
|Tax exemption granted to PRC subsidiary                |  | -        |   |  | -          |  
|                                                       |  | 42,403   |   |  | 72,427     |  

No deferred tax is recognized in the consolidated balance
sheets as of 31 December 2008.

15.Preferred Stock Issued to Convert Debt

On August 17, 2007 the Company repaid the principal and accrued
interest on a promissory note in the amount of $ 1,133,668 through the issuance
of 1,000,000 shares of Series A preferred stock and 1,000,000 shares of newly
authorized Series B preferred stock. Each of these preferred shares have thirty
votes, and are convertible into five common shares.

16.Share Capital

On February 17, 2008, pursuant to a Share Cancellation
Agreement with Eddie Chou, one of the Companys directors and its Chief
Technical Officer, 1,200,000 shares of the Companys common stock held by Mr.
Chou were cancelled and returned to treasury.

On February 17, 2008, pursuant to a Share Cancellation
Agreement with Ricky Chiu, an ex-director of the Company, 1,800,000 shares of
the Companys common stock held by Mr. Chiu were cancelled and returned to
treasury.

On February 17, 2008, pursuant to a Share Cancellation
Agreement with Legend View Limited, 8,000,000 shares of the Companys common
stock were cancelled and returned to treasury. The Companys President and the
chairman of its Board of Directors, Mr. Gerald Lau, owns a controlling interest
in Legend View Limited.

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BIOPACK ENVIRONMENTAL SOLUTIONS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUE)

On May 14, 2008, the Company entered into a subscription
agreement with four investors, whereby we agreed to issue 4,758,212 shares of
our common stock at a price of $0.14 per share to the four investors in
consideration of the debt owned by our company to them in the aggregate amount
of $666,140. Two of these investors are ex-directors of our company, one of
these investors is a director of two of our subsidiaries and the fourth investor
is our President and Chairman of our Board of Directors.

On July 4, 2008, the Company issued 1,900,000 shares of common
stock to Begonia Participation Corp. pursuant to the conversion of 380,000
Series A Preferred Shares.

On September 5, 2008, the Company issued 1,492,537 shares of
common stock pursuant to the conversion of a convertible debenture in the amount
of $100,000.

On September 19, 2008, the Company issued 1,800,000 shares of
common stock pursuant to the conversion of a convertible debenture in the amount
of $120,000.

On October 1, 2008, we entered into a consulting agreement with
San Diego Torrey Hills Capital, Inc., whereby San Diego Torrey Hills has agreed
to provide consulting services to our company in consideration for, among other
things: (i) a monthly cash fee of US$10,000, the first payment of which is due
on October 1, 2008, with subsequent monthly payments due on the monthly
anniversary dates of the consulting agreement; and (ii) the issuance of 125,000
shares of restricted common stock of the company. 125,000 shares of which are
issued on October 1, 2008.

17.Subsequent Events

There are no material subsequent events after the fiscal year
ended December 31, 2008 before the issue of the audit report.

18.Legal proceedings

The Company is involved in various unresolved legal actions,
administrative proceedings and claims in the ordinary course of business.
Although it is not possible to predict with certainty the outcome of these
unresolved actions, the Company believes these unresolved legal actions will not
have a material effect on its financial position or results of operation.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

As required by paragraph (b) of Rules 13a-15 or 15d-15 under
the Exchange Act, our principal executive officer and principal financial
officer evaluated our companys disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the
period covered by this annual report on Form 10-K. We discovered that on a
number of occasions during the year ended December 31, 2008, certain members of
our companys management had failed to recognize that certain transactions
entered into by our company constituted material definitive agreements of our
company and, in the result, we were unable to make timely decisions concerning
the disclosure of these agreements. Based on this evaluation, these officers
concluded that as of the end of the period covered by this Annual Report on Form
10-K, these disclosure controls and procedures were not adequate to ensure that
the information required to be disclosed by our company in reports it files or
submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the rules and forms of the Securities and
Exchange Commission and that they did not include controls and procedures
designed to ensure that such information is accumulated and communicated to our
companys management, including our companys principal executive officer and
principal financial officer, to allow timely decisions regarding required
disclosure. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues,
if any, within our company have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty and that
breakdowns can occur because of simple error or mistake. We have recently
initiated a program of education intended to remediate this failure of our
disclosure controls and procedures.

Managements Report on Internal Control Over Financial
Reporting

Our management is responsible for establishing and maintaining
adequate internal control over our financial reporting as defined in Rules
13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as
amended. Our system of internal control over financial reporting is designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. Because of its inherent
limitations, however, internal control over financial reporting may not prevent
or detect misstatements.

In order to evaluate the effectiveness of our internal control
over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act,
our management was required to conduct an assessment, including testing, using
the criteria in Internal Control - Integrated Framework, issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO). Our management
failed to conduct the required evaluation, under the framework in Internal
Control-Integrated Framework, of our internal control over financial reporting
and we are therefore unable to report that our internal control over financial
reporting was effective as of December 31, 2008. Our management is currently
conducting the required evaluation.

This annual report does not include an attestation report of
our independent registered public accounting firm regarding internal control
over financial reporting. Our internal control over financial reporting was not
subject to attestation by our independent registered public accounting firm
pursuant to temporary rules of the Securities and Exchange Commission.

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Changes in Internal Control Over Financial Reporting.

There were no changes in our companys internal control over
financial reporting during the quarter ended December 31, 2008 that have
materially affected, or are reasonably likely to materially affect, our
companys internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

None.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE

Directors and Executive Officers

As at March 25, 2009, our directors and executive officers,
their ages, positions held, and duration of such, are as follows:

Name
      Position Held with our Company
      Age
      Date First Elected or AppointedGerald Lau King Chung
    President, Chief Executive
      Officer and Director Director of Jiangment Roots Biopack
      Limited
    52
    March 27, 2007 March 30, 2006Ma Cheng Ji
    Director Director of Biopack Environmental Limited
    66
    April
      1, 2008 April 8, 2008Michael Joseph
      Forster
    Director
    43
    April
      29, 2008James Yiu Yeung
      Loong
    Director Director of Biopack Environmental Limited
    55
    April
      1, 2008 March 25, 2008Sean Webster
    Chief
      Financial Officer, Secretary and Treasurer Director Director
      of Biopack Environmental Limited
    36
    October 6, 2008 August 6, 2008 October 1, 2008Cheng King Hung
    Director of Jiangmen Roots Biopack Limited
    53
    March 30, 2006Edwin Chan
    Director of Jiangmen Roots Biopack Limited
    43
    May 10, 2007Faith Lam
    Director of Jiangmen Roots Biopack Limited
    40
    May 10, 2007


Business Experience

The following is a brief account of the education and business
experience of each director and executive officer during at least the past five
years, indicating each persons principal occupation during the period, and the
name and principal business of the organization by which he was employed.

Gerald Lau  Chief Executive Officer and Director of our
company and Director of our subsidiary Jiangmen Roots Biopack Ltd.

Gerald Lau was appointed as our Chief Executive Officer and a
director upon the closing of the share exchange agreement with Roots Biopack
Group, which occurred on March 27, 2007. He is responsible for accounting
functions, as well as overall financial planning and management. During the
period of November 2004 to June 2006, Mr. Lau served as a director for Good
Value International Limited, Good Value Galaxy Limited and Joint Eagle
Investment Limited. From November 2002 to October 2004, he served as an
executive director of GIN International Limited, a Hong Kong based company
specializing in SMS text messaging services. While with GIN International

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Limited, Mr. Lau was responsible for the general administration
and accounting matters. Mr. Lau was awarded a bachelors degree in Business
Administration majoring in Business Economics & Quantitative Methods at
University of Hawaii at Manoa in August 1981.

Sean Webster  Secretary, Treasurer, Chief Financial Officer
and Director of our company and Director of our subsidiary Jiangmen Roots
Biopack Ltd.

Mr. Webster is currently a director of our company and was
appointed as our Secretary, Treasurer and Chief Financial Officer on October 6,
2008. Mr. Webster had been in the financial services industry beginning with
Yorkton Securities Inc. in January 1999 and finishing with the same company
under the name Blackmont Capital Inc. in October of 2007. In his work there, he
was a fully licensed Investment Advisor with the Investment Dealers Association
of Canada, focusing on the raising of funds for small cap public companies and
managing client portfolios. He was the lead broker for Grand Power Logistics
Group Inc.s (TSX-V:GPW) initial public offering in November 2004 on the TSX
Venture Exchange, and is currently their Senior Vice President, Finance and
Business Development. Grand Power is an air-freight forwarding and sea-freight
services, customs brokerage, logistics, warehousing and distribution company
with its main operations in Hong Kong and throughout Greater China. In addition,
Mr. Webster is the President and Chief Financial Officer of Boashinn Corporation
(OTCBB:BHNN.OB), a listed company which is based in Hong Kong and offers
extended travel services primarily focused on wholesale business and corporate
clients. In 1996, he received a B.A. in Economics and Management from the
University of Calgary

James Yiu Yeung Loong  Director of our company and our
subsidiary Biopack Environmental Limited

Mr. Yiu was appointed a director of our subsidiaries Biopack
Environmental Limited and Starmetro Group Limited on March 25, 2008 and a
director of our company on April 1, 2008. Mr. Yiu is the Managing Director of a
consulting company in Hong Kong providing consultancy services to both the
private and public company sectors. Mr. Yiu specializes in raising capital,
corporate and financial restructuring, mergers and acquisitions. Mr. Yiu is an
experienced entrepreneur and is familiar with business practices in the Greater
China region. Mr. Yiu graduated from the College of Education in Hong Kong in
1973.

Ma Cheng Ji  Director of our company and our subsidiary
Biopack Environmental Limited

Mr. Ma was appointed a director of our subsidiaries Biopack
Environmental Limited and Starmetro Group Limited on April 8, 2008. Mr. Ma is
the Director of Jiujiang Gaofeng Mining Industry, a production and exploration
mining company focused in the Greater China region. Mr. Ma is also the President
of Shanghai Trust Investment Consultant Co., Ltd, where he specializes in
research and analysis of Asian public equity markets; he also provides
management consultation to both public and private enterprises. Mr. Ma graduated
in 1961 with a Bachelors degree in publishing from Shanghai Publishing College,
and he received a postgraduate degree in comparative literature from Japan
University in Tokyo in 1989.

Michael Joseph Forster - Director

Mr. Forster is the CEO/President/Chairman of Power-Save Energy
Company (Symbol PWSV) whose shares of common stock are listed Over the Counter
on the Bulletin Board (OTCBB). Mr. Forster is an experienced entrepreneur in
all facets of business. He has organized and executed the start-up of companies.
He has worked under contract in both the private and public company sectors to
affect corporate and financial restructuring. As well, Mr. Forster has held
senior management level positions at a Fortune 500 company. Mr. Forster holds a
Bachelor of Science Degree in Aeronautical Engineering from California
Polytechnic State University.

Cheng Kin-hung  Director of Jiangmen Roots Biopack
Limited

Mr. Cheng King-hung has been an executive with the government
and a few major public organizations in Hong Kong, including the Kowloon-Canton
Railway Corporation and the University of Science and Technology for over 25
years, before focusing on his own investment in environmental industry and
financial services since 2005. Mr.

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Cheng received a B.Sc from Southern Illinois University, USA in
1980, a M.Phil from the Chinese University of Hong Kong in 1986. and a Ph.D from
Zhu Hai College of Hong Kong in 1991. He has been serving the community in
various positions, such as Chairman of Writers Fellowship and Board Member of
Tang Siu Tong Secondary School. He also serves as an independent non-executive
director of Innotech Holdings Limited (Stock Code 8202), a Hong Kong company
listed on the GEM Board of The Stock Exchange of Hong Kong.

Faith Lam  Director of Jiangmen Roots Biopack Limited

Mr. Lam Koon Fai Faith started his career in Auditing in 1990.
Mr. Lam later joined Deloitte Touche Tohmatsu in 1994. He has served clients as
auditor in various industries including telecommunication, airline, truck
manufacturing and the rail industry. Prior to joining our group, Mr. Lam was the
qualified accountant in a company listed on the main board of the Stock Exchange
of Hong Kong. He is a Certified Public Accountant of the Hong Kong Institute of
Certified Public Accountants and a fellow member of The Association of Chartered
Certified Accountants.

Edwin Chan  Director of Jiangmen Roots Biopack Limited

Edwin Chan was appointed as a director of Jianmen Roots Biopack
Limited on May 10, 2007. Mr. Chan was a director of our company from March 27,
2007 to April 1, 2008 and the Chief Financial Officer from July 24, 2007 to
October 2, 2007. Mr. Chan served as a Director of Roots Biopack Group Limited
since May 4, 2007. From July 2004 to June 2006, Mr. Chan was the Senior
Manager at China Everbright Securities (HK) Limited (Hong Kong), an investment
banking firm. While with China Everbright Securities (HK) Limited, Mr. Chan was
responsible for sales and brokerage of securities to institutional investors in
China and Hong Kong. During the period April 2002 to June 2004, he was the
Senior Manager (Business Valuation) of Vigers Appraisal & Consulting Ltd.
(Hong Kong). From January 2000 to March 2002, Mr. Chan was the Research Manager
for Asia Financial Securities Ltd. (Hong Kong).

Mr. Chan was awarded an MBA degree from the Schulich School of
Business, York University, Canada, with a specialization in Corporate Finance,
Investment and Financial Management in 1999. He also graduated with an LLB
degree from Tsinghua University in the Peoples Republic of China in 2005, a
Bachelors of Science degree (Environmental Science Stream) from the Chinese
University of Hong Kong in 1987 and a postgraduate certificate in Education from
the University of Hong Kong in 1988.

Family Relationships

There are no family relationships between our directors and
executive officers.

Significant Employees

We have no significant employees other than the officers of our
company.

Family Relationships

There are no family relationships among our directors or
officers.

Involvement in Certain Legal Proceedings

Our directors, executive officers and control persons have not
been involved in any of the following events during the past five years:

| | 1. | any bankruptcy petition filed by or against any business
      of which such person was a general partner or executive officer either at
      the time of the bankruptcy or within two years prior to that
  time;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                    
| | 2. | any conviction in a criminal proceeding or being subject
      to a pending criminal proceeding (excluding traffic violations and other
      minor offenses);                                                     

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| | 3. | being subject to any order, judgment, or decree, not
      subsequently reversed, suspended or vacated, of any court of competent
      jurisdiction, permanently or temporarily enjoining, barring, suspending or
      otherwise limiting his involvement in any type of business, securities or
      banking activities; or
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                
| | 4. | being found by a court of competent jurisdiction (in a
      civil action), the Securities and Exchange Commission or the Commodity
      Futures Trading Commission to have violated a federal or state securities
      or commodities law, and the judgment has not been reversed, suspended, or
      vacated.             

Committees

All proceedings of the board of directors for the year ended
December 31, 2008 were conducted by resolutions consented to in writing by the
board of directors and filed with the minutes of the proceedings of our board of
directors. Our company currently does not have nominating, compensation or audit
committees or committees performing similar functions nor does our company have
a written nominating, compensation or audit committee charter. Our board of
directors does not believe that it is necessary to have such committees because
it believes that the functions of such committees can be adequately performed by
the board of directors.

Our company does not have any defined policy or procedural
requirements for shareholders to submit recommendations or nominations for
directors. The board of directors believes that, given the stage of our
development, a specific nominating policy would be premature and of little
assistance until our business operations develop to a more advanced level. Our
company does not currently have any specific or minimum criteria for the
election of nominees to the board of directors and we do not have any specific
process or procedure for evaluating such nominees. The board of directors will
assess all candidates, whether submitted by management or shareholders, and make
recommendations for election or appointment.

A shareholder who wishes to communicate with our board of
directors may do so by directing a written request addressed to our president at
the address appearing on the first page of this annual report.

Audit Committee Financial Expert

Our board of directors has determined that it does not have an
audit committee member that qualifies as an audit committee financial expert
as defined in Item 407(d)(5)(ii) of Regulation S-K. We believe that the audit
committee members are collectively capable of analyzing and evaluating our
financial statements and understanding internal controls and procedures for
financial reporting. In addition, we believe that retaining an independent
director who would qualify as an audit committee financial expert would be
overly costly and burdensome and is not warranted in our circumstances given the
early stages of our development and the fact that we have not generated revenues
to date.

Nomination Procedures For Appointment of Directors

As of March 25, 2009, we did not effect any material changes to
the procedures by which our stockholders may recommend nominees to our board of
directors.

Code of Ethics

Effective March 26, 2003, our companys board of directors
adopted a Code of Business Conduct and Ethics that applies to, among other
persons, members of our board of directors, our companys officers, contractors,
consultants and advisors. As adopted, our Code of Business Conduct and Ethics
sets forth written standards that are designed to deter wrongdoing and to
promote:

| | (1) | honest and ethical conduct, including the ethical
      handling of actual or apparent conflicts of interest between personal and
      professional relationships;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| | (2) | full, fair, accurate, timely, and understandable
      disclosure in reports and documents that we file with, or submit to, the
      Securities and Exchange Commission and in other public communications made
      by us;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                              
| | (3) | compliance with applicable governmental laws, rules and
      regulations;                                                                                                                                                   
| |     |                                                                                                                                                                                                                              
| | (4) | the prompt internal reporting of violations of the Code
      of Business Conduct and Ethics to an appropriate person or persons
      identified in the Code of Business Conduct and Ethics; and                            
| |     |                                                                                                                                                                                                                              
| | (5) | accountability for adherence to the Code of Business
      Conduct and Ethics.                                                                                                                                               

Our Code of Business Conduct and Ethics requires, among other
things, that all of our company's senior officers commit to timely, accurate and
consistent disclosure of information; that they maintain confidential
information; and that they act with honesty and integrity.

In addition, our Code of Business Conduct and Ethics emphasizes
that all employees, and particularly senior officers, have a responsibility for
maintaining financial integrity within our company, consistent with generally
accepted accounting principles, and federal and state securities laws. Any
senior officer who becomes aware of any incidents involving financial or
accounting manipulation or other irregularities, whether by witnessing the
incident or being told of it, must report it to our company. Any failure to
report such inappropriate or irregular conduct of others is to be treated as a
severe disciplinary matter. It is against our company policy to retaliate
against any individual who reports in good faith the violation or potential
violation of our company's Code of Business Conduct and Ethics by another.

Our Code of Business Conduct and Ethics was filed with the
Securities and Exchange Commission on April 15, 2003 as Exhibit 20.1 to our
annual report. We will provide a copy of the Code of Business Conduct and Ethics
to any person without charge, upon request. Requests can be sent to: Biopack
Environmental Solutions Inc., Room 905, Two Chinachem Exchange Square, 338
Kings Road, North Point, Hong Kong, Att: President.

Section 16(a) Beneficial Ownership Compliance

Section 16(a) of the Securities Exchange Act requires our executive
  officers and directors, and persons who own more than 10% of our common stock,
  to file reports regarding ownership of, and transactions in, our securities
  with the Securities and Exchange Commission and to provide us with copies of
  those filings. Based solely on our review of the copies of such forms received
  by us, or written representations from certain reporting persons, we believe
  that during fiscal year ended December 31, 2008, all filing requirements applicable
  to our officers, directors and greater than 10% percent beneficial owners were
  complied with, with the exception of the following:

Name
      Number of **Late**Reports
      Number of Transactions
      **Not**Reported on a TimelyBasis
      **Failure** to File
      Requested FormsGerald Lau
      Sean Webster
    1(2)1(1)
    1(2)1(1)
    1(2)1(1)Ma Cheng Ji
      Michael Forster James Yiu Yeung Loong Begonia
      Participation Corp.
    2(1)(2)1(1)1(1)1(2)
    1(1)(2)None None 3(2)
    2(1)(2)1(1)1(1)None


|(1) | The named officer, director or greater than 10%
      stockholder, as applicable, filed a late Form 3 - Initial Statement of
      Beneficial Ownership of Securities.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|(2) | The named officer, director or greater than 10%
      stockholder, as applicable, filed a late Form 4  Statement in Changes of
      Beneficial Ownership.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------

ITEM 11. EXECUTIVE COMPENSATION.

The following table sets forth all compensation received during
the two years ended December 31, 2008 by our Chief Executive Officer, Chief
Financial Officer and each of the other most highly compensated executive
officers whose total compensation exceeded $100,000 in such fiscal year. These
officers are referred to as the Named Executive Officers in this Report.

Summary Compensation

The following table provides a summary of the compensation
received by the persons set out therein for each of our last two fiscal years:

SUMMARY COMPENSATION
        TABLEName and Principal
        Position
      Year
      Salary
        ($)
      Bonus
        ($)
      Stock Awards ($)
      Option Awards ($)(4)
      Non- Equity
        Incentive Plan Compensa-tion
        ($)
      Change **in** Pension Value **and** NonqualifiedDeferred Compensation**Earnings**
        ($)
      **All** Other **Compensa** -tion ($)
      Total
        ($)Gerald Lau(1)
        President, Chief 
        Executive Officer
      2008 
        2007
      Nil 
        $3,830
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        3,830Eddie Chou(2)
        Former Secretary, 
        Treasurer, Chief 
        Financial Officer and 
        Chief Technology 
        Officer, Chief 
        Executive Officer, E- 
        Ware Corporation 
        Ltd.
      2008 
        2007
      17,989
        
        58,091(3)
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      17,989
        
        58,091(3)Sean Webster(4)
        Secretary, Treasurer, 
        Chief Financial 
        Officer
      2008 
        2007
      Nil 
        N/A
      Nil 
        N/A
      Nil 
        N/A
      Nil 
        N/A
      Nil 
        N/A
      Nil 
        N/A
      Nil 
        N/A
      Nil 
        N/ARicky Chiu(5)
        Former President and 
        Director
      2008 
        2007
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        NilEdwin Chan(6)
        Former Chief 
        Financial Officer
      2008 
        2007
      Nil 
        10,852
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        Nil
      Nil 
        10,852


(1) Gerald Lau was appointed our President and Chief Executive
Officer on March 27, 2007.

(2) Eddie Chou was appointed as our Secretary, Treasurer and
Chief Financial Officer on February 6, 2006 and as our Chief Technology Officer
on March 27, 2007. On July 24, 2007, Eddie Chou resigned as our Chief Financial
Officer and was then reappointed as our Chief Financial Officer on October 2,
2007. Mr. Chou resigned as our Chief Financial Officer on October 1, 2008.

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(3) This amount reflects compensation paid to Eddie Chou for
his services as both director of our company and as Chief Executive Officer and
director of our wholly owned subsidiary, E-Ware Corporation Limited. Mr. Chous
compensation is provided pursuant to an oral arrangement with our company.

(4) Sean Webster was appointed as a director of our company on
August 6, 2008 and as our Secretary, Treasurer and Chief Financial Officer on
October 6, 2008.

(5) Ricky Chiu resigned as our President and Chief Executive
Officer on March 27, 2007. He resigned from our Board of Directors on February
4, 2008.

(6) Edwin Chan was our Chief Financial Officer from July 24,
2007 to October 2, 2007. He resigned from our Board of Directors effective April
1, 2008.

Compensation Discussion and Analysis

Although we have no formal plan for compensating our directors
for their service in their capacity as directors, some of our directors are
currently being compensation with minimum salaries. Our directors are expected
in the future to receive stock options to purchase common shares as awarded by
our board of directors or (as to future stock options) a compensation committee
which may be established. Directors are entitled to reimbursement for reasonable
travel and other out-of-pocket expenses incurred in connection with attendance
at meetings of our board of directors. Our board of directors may award special
remuneration to any director undertaking any special services on our behalf
other than services ordinarily required of a director. No director received
and/or accrued any compensation for their services as a director, including
committee participation and/or special assignments.

Outstanding Equity Awards at Fiscal Year-End

There were no grants of stock options or stock appreciation
rights to our executive officers and directors made during the fiscal years
ended December 31, 2008 and December 31, 2007.

Aggregated Option Exercises

There were no options exercised by any officer or director of
our company during our twelve month period ended December 31, 2008.

Long-Term Incentive Plan

Currently, our company does not have a long-term incentive plan
in favor of any director, officer, consultant or employee of our company.

Directors Compensation

Except those mentioned in the above Summary Compensation Table,
no director received compensation for the fiscal years December 31, 2008,
December 31, 2007 and December 31, 2006. We have no formal plan for compensating
our directors for their service in their capacity as directors, although such
directors are expected in the future to receive stock options to purchase common
shares as awarded by our board of directors or (as to future stock options) a
compensation committee which may be established. Directors are entitled to
reimbursement for reasonable travel and other out-of-pocket expenses incurred in
connection with attendance at meetings of our board of directors. Our board of
directors may award special remuneration to any director undertaking any special
services on our behalf other than services ordinarily required of a director.

Pension and Retirement Plans

Currently, we do not offer any annuity, pension or retirement
benefits to be paid to any of our officers, directors or employees, in the event
of retirement.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

As of March 25, 2009, there were 24,825,300 shares of our common
  stock outstanding. The following table sets forth certain information known
  to us with respect to the beneficial ownership of our common stock as of that
  date by (i) each of our directors, (ii) each of our executive officers, and
  (iii) all of our directors and executive officers as a group. Except as set
  forth in the table below, there is no person known to us who beneficially owns
  more than 5% of our common stock.

Title of Class
      Name and Address ofBeneficial
      Owner
      **Amount and Nature of**Beneficial
      Ownership(1)
      **Percentage** of
      Class(2)Common Shares
      Gerald Lau(3)(4)(5)
        Unit 905,
      9thFloor, Two 
      Chinachem Exchange 
      Square, 338 Kings
      Road, 
      North Point, Hong Kong
      10,759,788
      43.34%Common Shares
      Sean Webster 
        Unit 905, 9thFloor, Two 
        Chinachem Exchange 
        Square, 338 Kings Road, 
      North Point, Hong Kong
      2,500
      0.01%Common Shares
    Ma Cheng Ji Unit 905, 9thFloor, Two Chinachem Exchange Square, 338 Kings Road,
      North Point, Hong Kong
    500,000
    2.01%Common Shares
      Michael Forster 
        Unit 905, 9thfloor, two 
        Chinachem Exchange 
        Square, 338 Kings Road, 
        North Point, Hong
      Kong
      Nil
      NilCommon Shares
      James Yiu Yeung 
        Loong 
        Unit 905, 9thFloor, Two 
        Chinachem Exchange 
        Square, 338 Kings Road, 
        North Point, Hong
      Kong
      Nil
      NilCommon Shares
      Begonia Participation 
        Corp.(7)
        Pasea Estate 
        Road Town, Tortola 
      BVI
      10,000,000(7)
      30.37% of class
      67.04% of voting 
      powerCommon Shares
    Gaofeng Holding Co. Limited
      2202-03 Nan Fung Tower, 173 Des Voeux Road, Central, Hong Kong
    1,492,537
    6.01%Common Shares
    CAT
      Brokerage AG(8)Gutenbergstrasse 10 CH-8027 Zurich
    1,800,000(8)
    7.25%


-65-

---

Common Shares
    Ladix
      Properties Inc. 
      Swiss Tower 
      16th Floor, World Trade 
      Centre 
      Panama City, Republic of 
      Panama
    2,250,000
    9.06%Common Shares
    Ricky Chiu 18/F Metroplaza
      Tower II, 23 Hing Fong Road, Kwai Chung, New Territories,
      Hong Kong
    1,668,777
    6.72%Common Shares
    Directors and Executive Officers as a
      Group
    11,262,288
    45.37%


|(1) | Regulation S-K promulgated under the Exchange Act,
      defines a beneficial owner of a security as any person who, directly or
      indirectly, through any contract, arrangement, understanding,
      relationship, or otherwise, has or shares: (i) voting power, which
      includes the power to vote, or to direct the voting of shares; and (ii)
      investment power, which includes the power to dispose or direct the
      disposition of shares. Certain shares may be deemed to be beneficially
      owned by more than one person (if, for example, persons share the power to
      vote or the power to dispose of the shares). In addition, shares are
      deemed to be beneficially owned by a person if the person has the right to
      acquire the shares (for example, upon exercise of an option) within 60
      days of the date as of which the information is provided. In computing the
      percentage ownership of any person, the amount of shares outstanding is
      deemed to include the amount of shares beneficially owned by such person
      (and only such person) by reason of these acquisition rights. As a result,
      the percentage of outstanding shares of any person as shown in this table
      does not necessarily reflect the persons actual ownership or voting power
      with respect to the number of shares of common stock actually outstanding
      on March 25, 2009, and the date of this annual report.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(2) | Calculated based on the basis of 24,825,500 issued and
      outstanding shares of common stock as of March 25, 2009 plus, for each
      person or group, any securities that person or group has the right to
      acquire within 60 days pursuant to options, warrants, conversion
      privileges or other rights.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(3) | Gerald Lau, our President, Chief Executive Officer and
      Director, is 50% owner and controller of Legend View Holdings Ltd., which
      owns 280,000 common shares of our company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(4) | Gerald Lau, our President, Chief Executive Officer and
      Director, owns and controls Good Value Galaxy Limited, which owns
      7,560,000 common shares of our company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(5) | Gerald Lau, our President, Chief Executive Officer and
      Director, owns and controls Joyful Services Ltd, which owns 1,836,000
      common shares of our company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(7) | Begonia Participation Corp. owns 1,000,000 shares of our
      Series A Preferred Stock and 1,000,000 shares of our Series B Preferred
      Stock. Each share of Series A Preferred Stock and each share of Series B
      Preferred Stock is entitled to 30 votes at any meeting of our security
      holders and is convertible, at any time at the option of the holder, into
      5 shares of our common stock. Therefore, Begonia Participation Corp.
      beneficially owns 10,000,000 shares of our common stock but, unless and
      until it elects to convert any of the Series A Preferred Stock or any of
      the Series B Preferred Stock it controls 30,000,000 votes at any meeting
      of our security holders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(8) | Cat Brokerage AG owns 1,800,000 common shares, and
      holding a convertible debenture of $280,000 which can be converted into
      4,200,000 shares of common share any time before March 3, 2010. This
      amount doesnt include the 4,200,000 shares of common stock that could be
      issued upon conversion of the Convertible
Debenture                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

-66-

---

Changes in Control

We are unaware of any contract or other arrangement the
operation of which may at a subsequent date result in a change of control of our
company.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE.

Other than set out below, we have not been a party to any
transaction, proposed transaction, or series of transactions during the last two
years in which the amount involved exceeded the lesser of $120,000 or one
percent of the average of our total assets at year end for the last two
completed fiscal years, and in which, to our knowledge, any of the following
persons had, or is to have, a direct or indirect material interest: a director
or executive officer of our company; a nominee for election as a director of our
company; a beneficial owner of more than five percent of the outstanding shares
of our common stock; or any member of the immediate family of any such person.

As of December 31, 2008, the sum of $45,385 was due to Eddie
Chou, who was then our Chief Financial Officer, Secretary, Treasurer and a
director. This amount represents money advanced to our company which has not
been repaid to Mr. Chou. The amount is unsecured and bears no interest.

During the period from November 22, 2007 to December 27, 2007,
Mr Chiu Wan Kee, father of Ricky Chiu, loaned an aggregate of $338,525 to our
subsidiary, Starmetro Group Limited. The proceeds of this loan were used to fund
some of the cost of phase one of our Biopark facility. The amount is still
outstanding as of December 31, 2008. The amount is unsecured and bears no
interest.

During the period April 26, 2007 to December 31, 2007, Gerald
Lau, our President and Chief Executive Officer, loaned an aggregate of $319,182
to our subsidiary, Roots Biopark Ltd, for use as working capital. During the
period April 26, 2007 to December 31, 2007, Mr Lau advanced to our company the
amount of $20,862 by way of expenses paid on behalf of our subsidiary, Roots
Biopark Ltd.; this amount has not yet been reimbursed. On May 14, 2008, we
entered into a subscription agreement with Mr. Lau pursuant to which we agreed
to issue 2,837,884 shares of our common stock at a purchase price of $0.14 per
share. Payment of the purchase price was made by way of applying $397,303.81 of
debt owed by our company to Mr. Lau. As of December 31, 2008, the sum of $8,602
was due to Mr. Lau, which represents the amounts have been advanced to our
company temporarily. The amount is unsecured and bears no interest.

As of December 31, 2008, the sum of $5,765 was due to Sean
Webster, who is our Chief Financial Officer, Secretary, Treasurer and a
director. The amount represents money advanced to our company which has not been
repaid to him. The amount is unsecured and bears no interest.

On May 14, 2007, Edwin Chan, our former Chief Financial Officer
and a former director, loaned $63,837. to our subsidiary, Roots Biopark Ltd, for
use as working capital. $8,682 was due to Mr Chan from our subsidiary, Roots
Biopark Ltd, for remuneration during the period June 1, 2007 to August 31, 2007.
This amount was repaid on May 14, 2008, when Mr. Chan applied our companys debt
to him, in the then total balance of $72,820.51, as the purchase price for
520,146 shares of our common stock purchased at a price of $0.14 per share
pursuant to a subscription agreement dated May 14, 2008. Mr. Chan resigned from
our board of directors on April 1, 2008. As of December 31, 2008, there are no
outstanding amount between Edwin Chan and our company.

On June 22, 2007, Hilary Chu, a former director, loaned $63,836
to our subsidiary, Roots Biopark Ltd, for use as working capital. This amount
was repaid on May 14, 2008, when Ms. Chu applied our companys debt to her, in
the then total balance of $64,102.56, as the purchase price for 457,875 shares
of our common stock purchased at a price of $0.14 per share pursuant to a
subscription agreement dated May 14, 2008. As of December 31, 2008, there are no
outstanding amount between Hilaru Chu and our company.

-67-

---

During the period from May 11, 2007 to June 15, 2007, Cheng
King Hung, a director of our subsidiaries, loaned $127,673 to our subsidiary,
Roots Biopark Ltd, for use as working capital. $3,703 was due to Mr Cheng from
our subsidiary, Roots Biopark Ltd, for remuneration during the period June 1,
2007 to August 31, 2007; these amounts were re-paid on May 14, 2008, when Mr.
Cheng applied our companys debt to him, in the total amount of $131,923.08, as
the purchase price for 942,307 shares of our common stock purchased at a price
of $0.14 per share pursuant to a subscription agreement dated May 14, 2008. As
of December 31, 2008, there are no outstanding amount between Cheng King Hung
and our company.

During the period from January 1, 2006 to December 31, 2007,
our subsidiary, Roots Biopark Ltd. borrowed from Good Value Galaxy Ltd the
amount of $686,956, of which it has repaid $65,560. The balance due is $621,396.
As of December 31, 2008, the amount is still outstanding with our company. The
amount is unsecured and bears no interest.

On February 17, 2008, pursuant to a Share Cancellation
Agreement with Eddie Chou, one of our directors and our Chief Technical Officer,
1,200,000 shares of our common stock held by Mr. Chou were cancelled and
returned to treasury.

On February 17, 2008, pursuant to a Share Cancellation
Agreement with Ricky Chiu, an ex-director of our company, 1,800,000 shares of
our common stock held by Mr. Chiu were cancelled and returned to treasury.

On February 17, 2008, pursuant to a Share Cancellation
Agreement with Legend View Limited, 8,000,000 shares of our common stock were
cancelled and returned to treasury. Our President and the chairman of our Board
of Directors, Mr. Gerald Lau owns a controlling interest in Legend View Limited.

On July 4, 2008, we issued 1,900,000 shares of our common stock
to Begonia Participation Corp. upon the conversion of 380,000 shares of our
Series A Preferred Stock. Begonia Participation Corp. is an affiliate of our
company solely as a result of its beneficial ownership of equity in our company.
After adjusting for this transaction, Begonia Participation Corp. was the
registered owner of 1,900,000 shares of our common stock, 620,000 shares of our
Series A Preferred Stock and 1,000,000 shares of our Series B Preferred Stock.
Each share of our Series A Preferred Stock and each share of our Series B
Preferred Stock carries 30 votes and is convertible into five shares of our
common stock.

On October 15, 2008, we issued 500,000 shares of our common
stock to Ma Cheng Ji, one of our directors, upon the conversion of a convertible
debenture in the principal amount of $250,000.

On October 15, 2008, we issued 2,250,000 shares of our common
stock to Ladix Properties Inc. upon the conversion of a convertible debenture in
the principal amount of $150,000. Ladix Properties Inc. is an affiliate of our
company solely as a result of its beneficial ownership of equity in our company.

During the year ended December 31, 2007 we have become involved
in a number of disputes with Patrick Oung, an ex-director of Roots Biopack Group
Limited and other subsidiaries of our company. These disputes are discussed in
some detail in the section of this Annual Report on Form 10-K titled Legal
Proceedings beginning at page 17, above. Mr. Oung resigned from the Board
of Directors of our company at the completion of the transaction whereby we
acquired our subsidiary Roots Biopack Group Limited and he has subsequently been
removed from the Board of Directors of all of our subsidiary companies.

Corporate Governance

Our Board of Directors currently consists of: Gerald Lau, Sean
Webster, Ma Cheng Ji, Michael Forster and James Yiu Yeung Loong.

-68-

---

Committees of the Board

All proceedings of the board of directors for the year ended
December 31, 2008 were conducted by resolutions consented to in writing by the
board of directors and filed with the minutes of the proceedings of our board of
directors. Our company currently does not have nominating, compensation or audit
committees or committees performing similar functions nor does our company have
a written nominating, compensation or audit committee charter. Our board of
directors does not believe that it is necessary to have such committees because
it believes that the functions of such committees can be adequately performed by
the board of directors.

Our company does not have any defined policy or procedural
requirements for shareholders to submit recommendations or nominations for
directors. The board of directors believes that, given the stage of our
development, a specific nominating policy would be premature and of little
assistance until our business operations develop to a more advanced level. Our
company does not currently have any specific or minimum criteria for the
election of nominees to the board of directors and we do not have any specific
process or procedure for evaluating such nominees. The board of directors will
assess all candidates, whether submitted by management or shareholders, and make
recommendations for election or appointment.

A shareholder who wishes to communicate with our board of
directors may do so by directing a written request addressed to our president at
the address appearing on the first page of this annual report.

Audit Committee Financial Expert

Our board of directors has determined that we do not have a
board member that qualifies as an audit committee financial expert as defined
in Item 401(e) of Regulation S-B, nor do we have a board member that qualifies
as independent as the term is used in Rule 4200(a)(15) of the NASDAQ
Marketplace Rules.

We believe that our board of directors is capable of analyzing
and evaluating our financial statements and understanding internal controls and
procedures for financial reporting. The board of directors of our company does
not believe that it is necessary to have an audit committee because management
believes that the functions of an audit committee can be adequately performed by
the board of directors. In addition, we believe that retaining an independent
director who would qualify as an audit committee financial expert would be
overly costly and burdensome and is not warranted in our circumstances given the
stage of our development and the fact we have not generated any positive cash
flows from operations to date.

Transactions with Independent Directors

Other than as set out below or disclosed under the heading
Certain Relationships and Related Transactions, and Director Independence,
none of our independent directors entered into any transaction, relationship or
arrangement during the year ended December 31, 2008 that was considered by our
board of directors in determining whether the director maintained his or her
independence in accordance with Nasdaq Marketplace Rule 4200(a)(15).

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit fees

The aggregate fees billed for the two most recently completed
fiscal periods ended December 31, 2008 and December 31, 2007 for professional
services rendered by Gruber & Company, LLC for the audit of our annual
consolidated financial statements, quarterly reviews of our interim consolidated
financial statements and services normally provided by the independent
accountant in connection with statutory and regulatory filings or engagements
for these fiscal periods were as follows:

-69-

---

Year Ended December 31,
      2008
    Year Ended December 31,
      2007Audit Fees and Audit Related Fees
    $69,953
    $20,250Tax
      Fees
    $6,424
    NilAll
      Other Fees
    Nil
    NilTotal
    $76,377
    $20,250


In the above table, audit fees are fees billed by our
companys external auditor for services provided in auditing our companys
annual financial statements for the subject year. Audit-related fees are fees
not included in audit fees that are billed by the auditor for assurance and
related services that are reasonably related to the performance of the audit
review of our companys financial statements. Tax fees are fees billed by the
auditor for professional services rendered for tax compliance, tax advice and
tax planning. All other fees are fees billed by the auditor for products and
services not included in the foregoing categories.

Policy on Pre-Approval by Audit Committee of Services
Performed by Independent Auditors

The board of directors pre-approves all services provided by
our independent auditors. All of the above services and fees were reviewed and
approved by the board of directors either before or after the respective
services were rendered.

The board of directors has considered the nature and amount of
  fees billed by Gruber & Company, LLC and believes that the provision of
  services for activities unrelated to the audit is compatible with maintaining
  Gruber & Company, LLC.

-70-

---

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

|Exhibit |                                                                                                                                                                                                                                                                                                                                              
|------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description                                                                                                                                                                                                                                                                                                                                  
|        |                                                                                                                                                                                                                                                                                                                                              
|(2)     | Plan of Purchase, Sale, Reorganization, Arrangement,
      Liquidation or Succession                                                                                                                                                                                                                                                         
|        |                                                                                                                                                                                                                                                                                                                                              
|2.1     | Share exchange agreement dated February 8, 2007 between
      our company, Roots Biopack Group, Good Value Galaxy Limited, Joyful
      Services Ltd., Legend View Holdings Ltd, Erich Muller Holding AG, and
      Eddie Chou and Ricky Chiu (incorporated by reference from our Current
      Report on Form 8-K filed on January 11, 2007)
|        |                                                                                                                                                                                                                                                                                                                                              
|(3)     | Articles of Incorporation and Bylaws                                                                                                                                                                                                                                                                                                         
|        |                                                                                                                                                                                                                                                                                                                                              
|3.1     | Articles of Incorporation (incorporated by reference from
      our Current Report on Form 8-K filed on May 9, 2001)                                                                                                                                                                                                                         
|        |                                                                                                                                                                                                                                                                                                                                              
|3.2     | Bylaws (incorporated by reference from our Current Report
      on Form 8-K filed on May 9, 2001)                                                                                                                                                                                                                                            
|        |                                                                                                                                                                                                                                                                                                                                              
|3.3     | Certificate of Amendment of Articles of Incorporation
      (incorporated by reference from our Current Report on Form 8-K filed on
      May 9, 2001)                                                                                                                                                                                       
|        |                                                                                                                                                                                                                                                                                                                                              
|3.4     | Articles of Merger (incorporated by reference from our
      Current Report on Form 8-K filed on May 9, 2001)                                                                                                                                                                                                                                
|        |                                                                                                                                                                                                                                                                                                                                              
|3.5     | Certificate of Designation (incorporated by reference
      from our Current Report on Form 8-K filed on May 9, 2001)                                                                                                                                                                                                                        
|        |                                                                                                                                                                                                                                                                                                                                              
|3.6     | Articles of Merger filed with the Secretary of State of
      Nevada on November 21, 2006 effective on November 26, 2006 (incorporated
      by reference from our Current Report on Form 8-K filed on November 28,
      2006)                                                                                                              
|        |                                                                                                                                                                                                                                                                                                                                              
|3.7     | Articles of Merger filed with the Secretary of State of
      Nevada on February 21, 2007 effective on February 26, 2007 (incorporated
      by reference from our Current Report on Form 8-K filed on February 27,
      2007)                                                                                                              
|        |                                                                                                                                                                                                                                                                                                                                              
|3.8     | Certificate of Correction filed with the Secretary of
      State of Nevada on June 27, 2007 (incorporated by reference from our
      Annual Report on Form 10-KSB filed on April 15, 2008)                                                                                                                                                 
|        |                                                                                                                                                                                                                                                                                                                                              
|3.9     | Certificate of Designation filed with the Secretary of
      State of Nevada on July 27, 2007 (incorporated by reference from our
      Annual Report on Form 10-KSB filed on April 15, 2008)                                                                                                                                                
|        |                                                                                                                                                                                                                                                                                                                                              
|3.10    | Certificate of Change filed with the Secretary of State
      of Nevada on June 6, 2008 (incorporated by reference from our Current
      Report on Form 8-K filed on June 11, 2008)                                                                                                                                                         
|        |                                                                                                                                                                                                                                                                                                                                              
|(10)    | Material Contracts                                                                                                                                                                                                                                                                                                                           
|        |                                                                                                                                                                                                                                                                                                                                              
|10.1    | Technology License and Materials Purchase Agreement with
      Glory Team Industrial Ltd., Starmetro Group Limited dated December 7, 2005
      (incorporated by reference from our quarterly report on Form 10-QSB filed
      on November 20, 2006)                                                                                        
|        |                                                                                                                                                                                                                                                                                                                                              
|10.2    | Agreement dated effective November 13, 2006 with Glory
      Team Industrial Ltd. and Eddie Chou S. Hou (incorporated by reference from
      our Current Report on Form 8-K filed on November 17, 2006)                                                                                                                                     
|        |                                                                                                                                                                                                                                                                                                                                              
|10.3    | Share Exchange Agreement dated January 5, 2007 among our
      company, Roots, the Stockholders, Chou and Chiu (incorporated by reference
      from our Current Report on Form 8-K filed on January 10, 2007)                                                                                                                               
|        |                                                                                                                                                                                                                                                                                                                                              
|10.4    | Agreement for Transfer of State-Owned Land Usage Right
      (incorporated by reference from our Current Report on Form 8-K filed on
      April 2, 2007)                                                                                                                                                                                    

-71-

---

|10.5  | Factory Leasing Agreement (incorporated by reference from
      our Current Report on Form 8-K filed on April 2, 2007)                                                                                                                                                                      
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                             
|10.6  | Factory Leasing Agreement  Translation (incorporated by
      reference from our Current Report on Form 8-K filed on April 2,
    2007)                                                                                                                                                    
|      |                                                                                                                                                                                                                                                                                             
|10.7  | Roots Tenancy Agreement (incorporated by reference from
      our Current Report on Form 8-K filed on April 2, 2007)                                                                                                                                                                       
|      |                                                                                                                                                                                                                                                                                             
|10.8  | Sales and Purchase of Machinery, Technical Assistance and
      Factory Management Agreement dated August 19, 2007 between our company and
      Tayna Environmental Technology Co. Limited (incorporated by reference from
      our Quarterly Report on Form 8-K filed on August 21, 2007)
|      |                                                                                                                                                                                                                                                                                             
|10.9  | Distribution Agreement dated July 26, 2007 between our
      wholly owned subsidiary, Roots Biopack Limited and Packagegroup Moonen
      (incorporated by reference from our Current Report on Form 8-K filed on
      August 27, 2007)                                                    
|      |                                                                                                                                                                                                                                                                                             
|10.10 | Boiler Project Contract dated June 28, 2007 between our
      wholly owned subsidiary, Jiangmen Roots Biopack Limited and Dongguan
      Hongyuan Boiler Equipments Co., Ltd. (incorporated by reference from our
      Current Report on Form 8-K filed on August 27, 2007)                
|      |                                                                                                                                                                                                                                                                                             
|10.11 | Construction Project Agreement dated June 11, 2007
      between our wholly owned subsidiary, Jiangmen Roots Biopack Limited and Li
      Bailia (incorporated by reference from our Current Report on Form 8-K
      filed on August 27, 2007)                                             
|      |                                                                                                                                                                                                                                                                                             
|10.12 | Compressor Project Contract dated June 6, 2007 between
      our wholly owned subsidiary, Jiangmen Roots Biopack Limited and Sky Blue
      (incorporated by reference from our Current Report on Form 8-K filed on
      August 27, 2007)                                                  
|      |                                                                                                                                                                                                                                                                                             
|10.13 | Debt Settlement and Subscription Agreement dated August
      1, 2007 between our company and Begonia Participation Corp. (incorporated
      by reference from our Quarterly Report on Form 8-K filed on August 20,
      2007)                                                            
|      |                                                                                                                                                                                                                                                                                             
|10.14 | Share Cancellation Agreement dated February 17, 2008
      between our company and Eddie Chou (incorporated by reference from our
      Current Report on Form 8-K filed on March 5, 2008)                                                                                                  
|      |                                                                                                                                                                                                                                                                                             
|10.15 | Share Cancellation Agreement dated February 17, 2008
      between our company and Ricky Chiu (incorporated by reference from our
      Current Report on Form 8-K filed on March 5, 2008)                                                                                                  
|      |                                                                                                                                                                                                                                                                                             
|10.16 | Share Cancellation Agreement dated February 17, 2008
      between our company and Legend View Holdings Limited (incorporated by
      reference from our Current Report on Form 8-K filed on March 5,
    2008)                                                                            
|      |                                                                                                                                                                                                                                                                                             
|10.17 | Land Purchase Settlement Agreement dated April 8, 2008
      (incorporated by reference from our Annual Report on Form 10-KSB filed on
      April 15, 2008)                                                                                                                                
|      |                                                                                                                                                                                                                                                                                             
|10.18 | Cancellation Agreement dated March 30, 2008 between Roots
      Biopack Group Limited and Tayna Environmental Technology Co. Limited
      (incorporated by reference from our Current Report on Form 8-K filed on
      April 3, 2008)                                                     
|      |                                                                                                                                                                                                                                                                                             
|10.19 | Loan Agreement dated March 30, 2008 between Roots Biopack
      Group Limited and Tayna Environmental Technology Co. Limited (incorporated
      by reference from our Current Report on Form 8-K filed on April 3,
      2008)                                                             
|      |                                                                                                                                                                                                                                                                                             
|10.20 | Form of Subscription Agreement between our company and
      LAU Kin Chung (Gerald Lau), CHENG King Hung (King Cheng), CHAN Kam Fai
      (Edwin Chan) and CHU Wei Ling Hilary (Hilary Chu) (incorporated by
      reference from our Current Report on Form 8-K filed on May 30,
  2008)   

-72-

---

|10.21 | Consulting Agreement
        with San Diego Torrey Hills Capital, Inc. (incorporated by reference from
        our Current Report on Form 8-K filed on October 10, 2008)                
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                         
|10.22 | Loan Amendment
        Agreement with Tayna Environmental Technology Co. Limited (incorporated
        by reference from our Current report on Form 8-K filed on March 31, 2009)        
|      |                                                                                                                                                                                         
|10.23 | Demand Promissory
        Note with Lainey Advisors Inc. dated July 1, 2008 (incorporated by reference
        from our Current report on Form 8-K filed on March 31, 2009)             
|      |                                                                                                                                                                                         
|10.24 | Demand Promissory
        Note with Creative Mind Assets Limited dated July 1, 2008 (incorporated
        by reference from our Current report on Form 8-K filed on March 31, 2009)     
|      |                                                                                                                                                                                         
|10.25 | Demand Promissory
        Note with Lainey Advisors Inc. dated July 20, 2008 (incorporated by reference
        from our Current report on Form 8-K filed on March 31, 2009)            
|      |                                                                                                                                                                                         
|10.26 | Demand Promissory
        Note with Kuo-Hsien Chen dated September 15, 2008 (incorporated by reference
        from our Current report on Form 8-K filed on March 31, 2009)             
|      |                                                                                                                                                                                         
|10.27 | Demand Promissory
        Note with Creative Mind Assets Limited dated December 31, 2008 (incorporated
        by reference from our Current report on Form 8-K filed on March 31, 2009)
|      |                                                                                                                                                                                         
|10.28 | Demand Promissory
        Note with Kuo-Hsien Chen dated December 31, 2008(incorporated by reference
        from our Current report on Form 8-K filed on March 31, 2009)               
|      |                                                                                                                                                                                         
|(14)  | Code of Ethics                                                                                                                                                                          
|      |                                                                                                                                                                                         
|14.1  | Code of Business
        Conduct and Ethics (incorporated by reference from our Annual Report on
        Form 10-KSB filed on April 15, 2003)                                           
|      |                                                                                                                                                                                         
|(21)  | Subsidiaries
        of the Small Business Issuer                                                                                                                                       
|      |                                                                                                                                                                                         
|      | Roots Biopack
        Group                                                                                                                                                             
|      |                                                                                                                                                                                         
|      | Roots Biopack
        Limited                                                                                                                                                           
|      |                                                                                                                                                                                         
|      | Roots Biopack
        (Intellectual Property) Limited                                                                                                                                   
|      |                                                                                                                                                                                         
|      | Expert Result
        Group Limited                                                                                                                                                     
|      |                                                                                                                                                                                         
|      | Roots Biopark
        Limited                                                                                                                                                           
|      |                                                                                                                                                                                         
|      | Jiangmen Roots
        Biopack Ltd.                                                                                                                                                     
|      |                                                                                                                                                                                         
|      | Eglinton Group
        Limited                                                                                                                                                          
|      |                                                                                                                                                                                         
|      | Starmetro Group
        Limited                                                                                                                                                         
|      |                                                                                                                                                                                         
|      | Biopack Environmental
        Limited (f/k/a E-ware Corporation Limited)                                                                                                                
|      |                                                                                                                                                                                         
|      | Bioplanet Distribution
        Sdn Bhd                                                                                                                                                  
|      |                                                                                                                                                                                         
|(31)  | Rule 13a-14(a)/15d-14(a)
        Certifications                                                                                                                                         
|      |                                                                                                                                                                                         
|31.1* | Section
        302 Certification under Sarbanes-Oxley Act of 2002 of Gerald Lau                                                                                                        
|      |                                                                                                                                                                                         
|31.2* | Section
        302 Certification under Sarbanes-Oxley Act of 2002 of Sean Webster                                                                                                      
|      |                                                                                                                                                                                         
|(32)  | Section 1350
        Certifications                                                                                                                                                     
|      |                                                                                                                                                                                         
|32.1* | Section
        906 Certification under Sarbanes-Oxley Act of 2002                                                                                                                      

* Filed herewith

-73-

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

BIOPACK ENVIRONMENTAL SOLUTIONS INC.

By: /s/ Gerald Lau Gerald LauPresident, Chief Executive
Officer and Director (Principal Executive Officer) Date: March 31, 2009

By: /s/ Sean Webster 
  Sean Webster Chief Financial
Officer, Chief Technology Officer, Secretary, Treasurer and
Director(Principal Financial Officer and Principal Accounting Officer)
Date: March 31, 2009

Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.

By: /s/ Gerald Lau Gerald LauPresident, Chief Executive
Officer and Director (Principal Executive Officer) Date: March 31, 2009

By: /s/ Sean Webster 
  Sean Webster Chief Financial
Officer, Chief Technology Officer, Secretary, Treasurer and
Director(Principal Financial Officer and Principal Accounting Officer)
Date: March 31, 2009

By: /s/ James Yiu Yeung Leung 
  James Yiu Yeung Leung
Director Date: March 31, 2009

By: /s Ma Cheng Ji Ma Cheng Ji Director Date:
March 31, 2009

By: /s/ Michael ForsterMichael Forster Director
Date: March 31, 2009

-74-

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