---

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, 2009

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

For 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 whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such
files).Yes[ ] 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 or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K.[
]

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 [ ]                                                   | Accelerated filer [ ]          
|----------------------------------------------------------------------------- | -------------------------------
|Non-accelerated filer [ ] (Do not check if a smaller
      reporting company) | 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: $6,647,611 based on a price of $0.25 per
share, being the average bid and asked price of such common equity as of June
30, 2009.

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.
42,000,232 shares of common stock as of March 29, 2010.

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

-2-

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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 Renminbi (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 7.785 and from the Renminbi at a
rate of 6.794. Both of these rates are based on the average 2009 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 Biopack Environmental Solutions Inc. and our
wholly-owned subsidiaries. For your convenience, we have included a company
organization chart on page 3, below.

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, production and sale 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 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, a British
  Virgin Islands corporation. 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.

During 2009, we restructured our organization to improve the
efficiency of our corporate structure. On September 18, 2009, we dissolved Roots
Biopack Group. The following table shows our current structure:

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BIOPACK ENVIRONMENTAL SOLUTIONS INC. 
  Organization Structure as at 31.12.2009



Subsidiaries

The following is a list of our subsidiaries:

Name of Subsidiary
      Corresponding number on diagram
      Date of Incorporation
      Jurisdiction of Incorporation
      PurposeStarmetro Group Limited
      2
      April 1, 2005
      British Virgin 
        Islands
      Serves as an investment
          holding company which holds all subsidiaries.Biopack Environmental 
        Limited (formerly E-ware 
        Corporation Limited)
      3
      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.Roots Biopack (Intellectual 
        Property) Limited
      6
      April 27, 2005
      Hong Kong
      Serves as a vehicle for
          the patent and trademark registration of our biodegradable food container
          and industrial packaging products.


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Roots Biopark Limited
      4
      February 16, 2006
      Hong Kong
      Serves as an investment
          holding company which holds Jiangmen Roots Biopack Ltd.Jiangmen Roots Biopack 
        Limited
      5
      March 30, 2006
      The Peoples 
        Republic of China 
        (PRC)
      Serves as an investment
          holding company for our manufacturing plant located in Jiangmen, China.


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
multi-national 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:

By the end of 2007 we had 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).

During 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.

During 2009, we installed two additional machines in our
factory. These have been fitted with molds and are fully operational. With the
16 production machines currently installed and in operation, we are now capable
of producing approximately 6,000,000 units per month.

We plan to add eight more production machines by the end of
2010 to the existing 16 machines currently installed. Our plan contemplates that
six of these new machines will be fully automated and two will be
semi-automated. When the new machines have been installed, we would have a total
of 24 production machines. 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 moulds.

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.

We estimate the cost of these improvements, including the new
machines and the additional mixing and pulping pools, will be approximately
$1,000,000. 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 capabilities at our Biopark facility, we believe that the pace of our
expansion will begin to increase. Our plan is to focus on increasing European
orders and expansion into the North American market and the coated tray
market.

We continue to see a 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 continues to influence 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 have continued to focus on the
  expansion of our production capabilities and we hope to expand our marketing
  efforts, focusing on an expansion of our sales, primarily in North America.
  During the year, we entered the U.S. packaging market through Biopack America
  and we entered into a distribution agreement with Sonray Sales Ltd., a Canadian
  company that distributes to wholesalers, retailers, supermarket chains and food
  service providers in Canada and abroad. In addition, we have begun to market
  our products in Asia and achieved entry into the Asian sustainable packaging
  market, through sales of our green fruit trays to citysuper, a
  high end supermarket chain with stores in Hong Kong and Taiwan.

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Our most significant achievement of 2009 was our reaction to
  a customer order for a water resistant or "coated" tray. We designed, tested,
  manufactured and shipped this new custom-made coated fish tray upon request
  to meet the packaging needs of a large international food retailer. Our eco-friendly,
  100% biodegradable and compostable coated fish tray was specifically made to
  complement an existing product within this retailers Sustainable Seafood Program,
  a 10-point policy which dictates how seafood is purchased and sold based on
  social, ecological and economic considerations.

We spent considerable resources to develop this coated tray
because we believe that the market for a more water and moisture resistant tray
for large retailers represents a significant new opportunity for our company.
Sustainable packaging for this new large market segment includes frozen food and
entrees, ready-made meals, fresh and frozen meat, cut fruit and vegetables,
baked goods and, of course, the seafood market. We believe that our coated trays
can deliver advantages across a wide spectrum of applications.

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
multinational 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 Practices 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/ShreddingFine 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

TrimmingUltra violet
Sterilization/Sanitization Packing

During the trimming stage, rough edges are trimmed from the
finished product  the material that is removed will be reused 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 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.

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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


Domain Names

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

- 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, or the loss of the one importer that sources their needs, would
adversely affect revenues and results of operations.

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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 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, 2009
and $12,495 for the year ended December 31, 2008.

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 CentreFood 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);

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- 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 66 full time and no part time employees. Of
these, 4 work in our Hong Kong administrative offices and 62 work in our Biopark
factory in Jiangmen City, PRC.

ITEM 1A. RISK FACTORS.

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

We had net profit for the year ended December 31, 2009 of
$867,547. On December 31, 2009, we had an accumulated deficit of $4,891,933 and
a working capital deficit of $2,250,368. 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 products to become profitable. On December 31, 2009, we had
cash of $3,997. We estimate that our operating expenses over the next 12 months
will be approximately $75,000 per month and we plan to spend approximately
$1,000,000 to add additional production capacity to our Biopark facility.
Therefore, we estimate that we will need approximately $1,900,000 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, 2009, 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.

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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.

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 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.

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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 30.42% 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 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.

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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.

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 1B. UNRESOLVED STAFF COMMENTS.

Not applicable.

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. While this lease expired on March 19, 2010,
we still maintain our head office at this location. We signed a new office lease
in late March 2010 and we expect to move to a new office in early April 2010.
Until we move to the new office, we expect to maintain our head office at our
current location.

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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 Biopark.

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. 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 (Renminbi 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 Renminbi
103,000 (approximately $13,720), or Renminbi 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:

Name of Landlord
    Property location
    Rental Charges
      Monthly
    Duration
    Lease Contract UnderRoco Investment Limited and Exact Grow
      Development Limited.
    Room 905, 9/F, Two Chinachem Exchange
      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, 2010
    184,260December 31, 2011
    178,897December 31, 2012
    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.

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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 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 Renminbi 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 Renminbi 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 Renminbi 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 Renminbi 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 Renminbi 309,000. Moreover,
we discovered that a total of Renminbi 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 Renminbi and a condition
that he return 750,000 Renminbi 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. (REMOVED AND RESERVED).

---

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, 2009
    $0.58
    $0.46September 30, 2009
    $0.52
    $0.25June 30, 2009
    $0.25
    $0.10March 31, 2009
    $0.22
    $0.08December 31, 2008
    $0.60
    $0.14September 30, 2008
    $1.40
    $0.55June 30, 2008
    $1.68
    $0.90March 31, 2008
    $5.10
    $1.10


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

On March 29, 2010, the closing price for the common stock as
reported by the quotation service operated by the OTC Bulletin Board was
$0.22.

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 29, 2010, there were approximately 1,412 registered
holders of record of our common stock. As of such date, 42,000,232 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.

Recent Sales of Unregistered Securities

Since the beginning of the fourth quarter of our fiscal year
ended December 31, 2009, we have not sold any equity securities that were not
registered under the Securities Act of 1933 that were not previously reported in
a quarterly report on Form 10-Q or in a current report on Form 8-K, with the
exception of the following:

On December 16, 2009, we issued 1,750,000 shares of our common
stock upon the conversion of 350,000 Series C Preferred Shares. The holder of
these Series C Preferred Shares is not a U.S. person and this transaction did
not occur in the United State. We issued these Series C Preferred Shares to this
holder upon conversion of the convertible debenture dated December 27, 2007. In
issuing these shares of our common stock, we relied on the registration
exemption provided by Section 3(a)(9) of the Securities Act of 1933 and/or
Regulation S, promulgated thereunder.

---

Securities Authorized for Issuance Under Equity Compensation
Plans

The following table summarizes our equity compensation plan
information for the fiscal year end December 31, 2009;

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, 2009.

ITEM 6. SELECTED FINANCIAL DATA.

Not Applicable.

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

Our managements discussion and analysis of financial condition
and results of operation provides a narrative about our financial performance
and condition that should be read in conjunction with the audited consolidated
financial statements and related notes thereto included in this annual report on
Form 10-K. This discussion contains forward looking statements reflecting our
current expectations and estimates and assumptions about events and trends that
may affect our future operating results or financial position. Our actual
results and the timing of certain events could differ materially from those
discussed in these forward-looking statements due to a number of factors,
including, but not limited to, those set forth in the sections of this Form 10-K
titled Risk Factors and Forward-Looking Statements.

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
multi-national 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 PRC.

Result of Operations for the year ended December 31, 2009 as
compared to the year ended December 31, 2008.

During the year ended December 31, 2009 we made a net profit of
$867,547, compared to net loss of $1,867,330 for the year ended December 31,
2008. Among the net profit of $867,547 for the year ended December 31, 2009,
$2,108,033 was contributed by gain on disposal of a subsidiary.

Our loss from operation was $1,197,451 for the year ended
December 31, 2009 which was consistent to $1,088,125 for the year ended December
31, 2008. The slight increase in the amount of our operating loss was due
primarily to increased depreciation expenses.

---

Net Sales and Cost of Sales

Net sales for the year ended December 31, 2009 were $921,281,
compared to net sales of $793,474 for the year ended December 31, 2008. The
increase in sales is primarily attributable to our sales teams effort to secure
the packaging orders in Europe market for the fruit season. We manufactured all
products in the Jiangmen factory during the year ended December 31, 2009,
compare to in 2008 while we mainly filled orders through OEM suppliers. With the
increase in production capacity, we expect that future production from our
factory in Jiangmen will increase dramatically.

Cost of sales for the year ended December 31, 2009 was
$828,606, which provided a gross margin of $92,675 or a gross margin rae of
10.06%, compared to cost of sales of $775,588 for the year ended December 31,
2008, which provided a gross margin of $17,886, or a gross margin rate of 2.25%
for the year ended December 31, 2008. The increase in gross margin is primarily
due to the fact that the margins we realized by production in our factory is
higher than the gross margin realized on OEM supplied product. With our
increased production capacity we have eliminated all OEM suppliers for the year
ended December 31, 2009. Our Jiangmen factory products provide higher quality
products than previous OEM suppliers with better quality control and better raw
material ingredient. As the factory facilitys infrastructure was designed to
support up to 40 machines, we are expecting the gross margin to increase when we
reach the economy of scale in the next 12 months.

Operating Expenses

Operating expenses for the year ended December 31, 2009 were
$1,290,126, compared to $1,106,011 for the year ended December 31, 2008. The
increase in operating expenses was due primarily to the increase in depreciation
expenses.

Our depreciation expenses for the year ended December 31, 2009
were $218,322 compare to $65,305 for the year ended 2008. The increase in
depreciation expenses was due to the fact that we have now manufactured most of
our product by our own factory facility rather than OEM compare to the year
ended December 31, 2008. Our depreciation is based on the usage of our factory
facilities by the number of product we produced during the year.

Our legal and professional expenses for the year ended December
  31, 2009 were $44,162, compared to $88,691 for the year ended December 31, 2008.
  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 53. Most of the legal
  expenses incurred this year are related to U.S. regulatory compliance and raising
  capital.

Our total general and administrative expenses were $1,071,804
for the year ended December 31, 2009 which is consistent to the total general
and administrative expenses of $1,040,706 for the year ended December 31, 2008.
The consistency in expenses is mainly due to a better financial control policy
to cut back non-essential spending as well as reductions of salaries and
administrative personnel.

Interest Expenses

We incurred interest expense of $43,034 during the year ended
December 31, 2009, compared to $793,483 during the year ended December 31, 2008.
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. The decrease is primarily due to
less convertible debenture were issued during the year ended 2009 compare to
2008.

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, 2009
we had cash and equivalents of $3,997, compared to $128,039 at December 31,
2008. We estimate that our operating expenses over the next 12 months will be
approximately $75,000 per month and we plan to spend approximately $1,000,000 to
add additional production capacity including mixing and pulping pools to our
Biopark facility. Therefore, we estimate that we will need approximately
$1,900,000 over the next 12 months in order to continue our operations and
complete construction of the Biopark facility. We estimate that we will be able
to source approximately $900,000 from our sales revenue in the next 12 months.
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, 2009 we had a working capital deficit of
$2,250,368, compared to a working capital deficit of $2,359,764 at December 31,
2008. 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, 2009 our operating activities
provided net cash of $908,511, compared to $2,152,224 used for the year ended
December 31, 2008. 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, 2009 investing activities used
net cash of $203,950 compared to $851,674 for the year ended December 31, 2008.
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,
2008.

Cash Flow Provided by Financing Activities

For the year ended December 31, 2009, financing activities used
cash of $828,603 compared to $3,035,477 cash provided in the year ended December
31, 2008. The cash flow used in financing activities in 2009 was primarily for
the interest accrued on the debts as well as debts redemption. The cash flow
provided by financing activities during 2008 was primarily from issuance of
convertible debentures and promissory notes.

During the year ended December 31, 2009, we engaged in the
following financing transactions:

On April 8, 2009, we sold one convertible debenture to one
investor for gross proceeds of $60,000. 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 May 15, 2009, we sold one convertible debenture to one
investor for gross proceeds of $50,000. This convertible debenture has a face
amount of $50,000, a three year term, earns interest at a rate of 1% per annum
and is convertible, at the option of the holder upon not less than 61 days prior
notice, into shares of our common stock at a price of ten cents per share.

On May 15, 2009, we sold one convertible debenture to one
investor for gross proceeds of $48,000. This convertible debenture has a face
amount of $48,000, a three year term, earns interest at a rate of 12% per annum
and is convertible, at the option of the holder upon not less than 61 days prior
notice, into shares of our common stock at a price of six and two-thirds cents
per share.

On June 12, 2009, we issued 225,000 shares of our common stock
to San Diego Torrey Hills Capital, Inc. pursuant to the consulting agreement.

On July 28, 2009, we issued 1,124,438 shares of our common
stock to the holder of a convertible debenture dated March 3, 2008 pursuant to
the conversion of a portion of the principal balance of that convertible
debenture.

On July 28, 2009, we issued 1,125,001 shares of our common
stock to the holder of a convertible debenture dated December 29, 2008 pursuant
to the conversion of a portion of the principal balance of that convertible
debenture.

On July 29, 2009, we issued 1,250,000 shares of our common
stock to the holder of a convertible debenture dated December 27, 2007 pursuant
to the conversion of a portion of the principal balance of that convertible
debenture.

On July 31, 2009, we sold one convertible debenture to one
investor for gross proceeds of $16,000. This convertible debenture has a face
amount of $16,000, a three year term, earns interest at a rate of 1% per annum
and is convertible, at the option of the holder upon not less than 61 days prior
notice, into shares of our common stock at a price of ten cents per share.

On December 7, 2009, we issued 400,000 shares of our common
stock to Dragon Gate Asia Ltd. pursuant to the consulting agreement.

On December 7, 2009, we issued 20,000 shares of our common
stock to The Long Island Investment Banking Group pursuant to the consulting
agreement.

On December 7, 2009, we sold 1,500,000 shares of our common
stock to one investor at a price of $0.1417 per share, in consideration of the
debt owed by our company to the investor of $212,500.

---

On December 16, 2009, we issued 1,750,000 shares of our common
stock upon the conversion of 350,000 Series C Preferred Shares. We issued these
Series C Preferred Shares upon conversion of the convertible debenture dated
December 27, 2007.

On December 21, 2009, we issued 1,125,001 shares of our common
stock to one person upon the conversion of the $75,000 principal balance due
under a convertible debenture previously issued by us dated December 29, 2008,
at a conversion price of $0.0666 per share.

On December 31, 2009, we issued 284,932 shares of our common
stock to one investor at a price of $0.3819 per share in consideration of the
debt owed by our company to the investor of $108,834.

On January 15, 2010, we issued 500,000 shares of our common
stock to the holder of a convertible debenture dated May 15, 2009 upon
conversion of the principal and interest due under that convertible debenture,
at a conversion price of $0.10 per share.

On February 2, 2010, we issued an aggregate of 2,331,955 shares
of our common stock to two investors in consideration of the debt owed by our
company to the investors of an aggregate principal amount of $857,000 and an
aggregate amount of accrued interest in the amount of $56,893, at a price of
$0.3919 per share.

On February 22, 2010, we issued 3,651,672 shares of our common
stock to one person upon the conversion of the remaining principal ($204,940)
and accrued interest ($38,626.57) due under a convertible debenture previously
issued by us dated March 3, 2008, at a conversion price of $0.0667 per
share.

Capital Expenditures

During the year ended December 31, 2009, the bulk of our
capital expenditure was focused on the development of our Biopark production
facility. As of December 31, 2009, we do not have any material commitments for
capital expenditures. Over the next twelve months, we plan to spend
approximately $1,000,000 on the completion of the third production phases at our
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 made a net profit for the year ended December 31,
2009 of $867,547 and, on December 31, 2009 we had an accumulated deficit of
$4,891,933 and a working capital deficit of $2,250,368. 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 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.

---

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

---

BIOPACK ENVIRONMENTAL SOLUTIONS INC.

(INCORPORATED IN THE UNITED STATES OF AMERICA)

CONSOLIDATED FINANCIAL STATEMENTS

YEAR ENDED 31 DECEMBER 2009



---

C O N T E N T S

|                                                               | Page  
|-------------------------------------------------------------- | ------
|                                                               |       
|                                                               |       
|Report of Independent Registered
      Public Accounting Firm  | 1     
|Consolidated Balance
      Sheets                              | 2     
|Consolidated Statement of
      Operations                     | 4     
|Consolidated Statement of Change in Shareholders
      Equity | 5     
|Consolidated Statement of
      Cash Flow                      | 6     
|Notes to the Consolidated
      Financial Statements           | 7 - 25

(All Amounts in United States Dollars unless otherwise
stated)

---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM TO
THE BOARD OF DIRECTORS AND SHAREHOLDERS OF

BIOPACK ENVIRONMENTAL SOLUTIONS INC. (INCORPORATED IN THE
UNITED STATES OF AMERICA WITH LIMITED LIABILITY)

We have audited the accompanying consolidated balance sheets of
Biopack Environmental Solutions Inc. and its subsidiaries, as of 31 December
2009, and the related consolidated statements of operations, change in
shareholders equity and cash flows for the year ended 31 December 2009. 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 audit. The financial statements of Biopack
Environmental Solutions Inc. as of December 31, 2008, were audited by other
auditors whose report dated March 31, 2009, expressed an unqualified opinion on
those statements.

We conducted our audits in accordance with standards of the
Public Company Accounting Oversight Board (United States of America). The
Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits 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. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the consolidated financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe our audit provide a reasonable basis for our
opinion.

In our opinion, the 2009 consolidated financial statements
referred to above present fairly, in all material respects, the consolidated
financial position of Biopack Environmental Solutions Inc. and its
subsidiaries as of 31 December 2009, and the results of its consolidated
operations and its consolidated cash flows for each of the year then ended 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 10 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.

*/s/ WONG LAM LEUNG & KWOK CPA LIMITED*

WONG LAM LEUNG & KWOK CPA LIMITED
  Certified Public Accountants
  Hong Kong
  29 March 2010

Ref : B301/PW/1007/1008/486



---

1

|BIOPACK ENVIRONMENTAL SOLUTIONS INC.      
|------------------------------------------
|(INCORPORATED IN UNITED STATES OF AMERICA)
|                                          
|CONSOLIDATED BALANCE SHEETS               
|AT 31 DECEMBER 2009                       

|                                       |  | Notes |  |  | 2009       |   |  | 2008       |  
|-------------------------------------- |  | ----- |  |  | ---------- | - |  | ---------- | -
|                                       |  |       |  |  | $          |   |  | $          |  
|NON-CURRENT ASSETS                     |  |       |  |  |            |   |  |            |  
|Property, plant and equipments         |  | 3     |  |  | 2,139,536  |   |  | 2,091,229  |  
|Construction in progress               |  | 3     |  |  | 111,747    |   |  | 174,426    |  
|Deposits                               |  |       |  |  | 52,963     |   |  | 56,056     |  
|                                       |  |       |  |  |            |   |  |            |  
|                                       |  |       |  |  | 2,304,246  |   |  | 2,321,711  |  
|                                       |  |       |  |  |            |   |  |            |  
|CURRENT ASSETS                         |  |       |  |  |            |   |  |            |  
|Inventories                            |  | 4     |  |  | 100,725    |   |  | 376,773    |  
|Prepaid expenses and other receivables |  | 5     |  |  | 141,233    |   |  | 334,995    |  
|Accounts receivable                    |  | 6     |  |  | 103,375    |   |  | 69,777     |  
|Cash and cash equivalents              |  |       |  |  | 3,997      |   |  | 128,039    |  
|                                       |  |       |  |  |            |   |  |            |  
|TOTAL CURRENT ASSETS                   |  |       |  |  | 349,330    |   |  | 909,584    |  
|                                       |  |       |  |  |            |   |  |            |  
|TOTAL ASSETS                           |  |       |  |  | 2,653,576  |   |  | 3,231,295  |  
|                                       |  |       |  |  |            |   |  |            |  
|CURRENT LIABILITIES                    |  |       |  |  |            |   |  |            |  
|Accounts payable and accrued expenses  |  | 7     |  |  | 1,294,304  |   |  | 1,394,230  |  
|Amounts due to directors               |  | 8     |  |  | 21,761     |   |  | 59,752     |  
|Amounts due to shareholders            |  | 8     |  |  | -          |   |  | 625,589    |  
|Short term debt                        |  | 9     |  |  | 1,336,596  |   |  | 1,008,786  |  
|Tax payable                            |  |       |  |  | -          |   |  | 237,047    |  
|                                       |  |       |  |  |            |   |  |            |  
|TOTAL CURRENT LIABILITIES              |  |       |  |  | 2,652,661  |   |  | 3,325,404  |  
|                                       |  |       |  |  |            |   |  |            |  
|NON-CURRENT LIABILITIES                |  |       |  |  |            |   |  |            |  
|Long term debt                         |  | 9     |  |  | 331,000    |   |  | 1,886,103  |  
|Long term debt from a director         |  | 9     |  |  | 250,000    |   |  | 50,000     |  
|                                       |  |       |  |  |            |   |  |            |  
|TOTAL NON-CURRENT LIABILITIES          |  |       |  |  | 581,000    |   |  | 1,936,103  |  
|                                       |  |       |  |  |            |   |  |            |  
|EQUITY AND LIABILITIES                 |  |       |  |  |            |   |  |            |  
|Capital and reserves                   |  |       |  |  |            |   |  |            |  
|Preferred stock                        |  | 15    |  |  | 1,620      |   |  | 1,620      |  
|Common stock                           |  | 15    |  |  | 3,438      |   |  | 2,483      |  
|Additional paid-in capital             |  |       |  |  | 4,082,773  |   |  | 3,557,227  |  
|Stock issued at less than par value    |  |       |  |  | (2,683     | ) |  | (2,683     | )
|Accumulated other comprehensive income |  |       |  |  | 226,700    |   |  | 170,621    |  
|Accumulated losses                     |  |       |  |  | (4,891,933 | ) |  | (5,759,480 | )
|                                       |  |       |  |  |            |   |  |            |  
|TOTAL EQUITY                           |  |       |  |  | (580,085   | ) |  | (2,030,212 | )
|                                       |  |       |  |  |            |   |  |            |  
|TOTAL EQUITY AND LIABILITIES           |  |       |  |  | 2,653,576  |   |  | 3,231,295  |  

The notes on pages 6 to 25 are an integral part of these
consolidated financial statements Report of Independent Registered Public
Accounting Firm  Page 1

---

2

|BIOPACK ENVIRONMENTAL SOLUTIONS INC.      
|------------------------------------------
|(INCORPORATED IN UNITED STATES OF AMERICA)
|                                          
|CONSOLIDATED STATEMENT OF OPERATIONS      
|FOR THE YEAR ENDED 31 DECEMBER 2009       

|                                                         |  | Notes |            |  | 2009       |            |  | 2008       |  
|-------------------------------------------------------- |  | ----- | ---------- |  | ---------- | ---------- |  | ---------- | -
|                                                         |  |       |            |  | $          |            |  | $          |  
|                                                         |  |       |            |  |            |            |  |            |  
|Turnover                                                 |  |       |            |  | 921,281    |            |  | 793,474    |  
|Cost of sales                                            |  |       |            |  | (828,607   | )          |  | (775,588   | )
|                                                         |  |       |            |  |            |            |  |            |  
|Gross profit                                             |  |       |            |  | 92,674     |            |  | 17,886     |  
|                                                         |  |       |            |  |            |            |  |            |  
|Other income                                             |  |       |            |  | 159,000    |            |  | 14,278     |  
|Gain on disposal of subsidiaries                         |  |       |            |  | 2,083,487  |            |  | -          |  
|Administrative expenses                                  |  |       |            |  | (1,071,804 | )          |  | (1,040,706 | )
|Depreciation                                             |  |       |            |  | (218,322   | )          |  | (65,305    | )
|Finance cost                                             |  |       |            |  | (177,488   | )          |  | (793,483   | )
|                                                         |  |       |            |  |            |            |  |            |  
|PROFIT/(LOSS) BEFORE TAX                                 |  |       |            |  | 867,547    |            |  | (1,867,330 | )
|Income tax                                               |  | 14    |            |  | -          |            |  | -          |  
|                                                         |  |       |            |  |            |            |  |            |  
|NET PROFIT/(LOSS) FOR THE YEAR                           |  |       |            |  | 867,547    |            |  | (1,867,330 | )
|                                                         |  |       |            |  |            |            |  |            |  
|                                                         |  |       |            |  |            |            |  |            |  
|Earnings/(loss) per share                                |  |       |            |  | 0.03       |            |  | (0.10      | )
|Weighted average common shares outstanding               |  |       |            |  | 26,801,863 |            |  | 19,241,414 |  
|                                                         |  |       |            |  |            |            |  |            |  
|Diluted earnings/(loss) per share                        |  |       |            |  | 0.02       |            |  | (0.10      | )
|Diluted weighted average common shares
      outstanding |  |       | 37,329,307 |  |            | 19,241,414 | 

The notes on pages 6 to 25 are an integral part of these
consolidated financial statements Report of Independent Registered Public
Accounting Firm  Page 1

---

3

BIOPACK ENVIRONMENTAL SOLUTIONS INC.(INCORPORATED IN
UNITED STATES OF AMERICA)

CONSOLIDATED STATEMENT OF CHANGE IN SHAREHOLDERS EQUITY FOR
THE YEAR ENDED 31 DECEMBER 2009

|                                                                                    |                 |   |  |              |   |  |              |   |  |          |   |  |            |   |  | 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 31 December 2007                                                         | -               |   |  | -            |   |  | 108,000,000  |   |  | 10,800   |   |  | -          |   |  | (2,683        | ) |  | 1,119,425     |   |  | (787        | ) |  | 1,126,755  |  
|Recapitalization as result of reverse merger 27 March 2007                          | -               |   |  | -            |   |  | 64,526,196   |   |  | 6,453    |   |  | (800,824   | ) |  | -             |   |  | -             |   |  | 6,599       |   |  | (787,772   | )
|Stock issued to convert debt 27 March 2007                                          | -               |   |  | -            |   |  | 1,293,225    |   |  | 129      |   |  | 1,034,451  |   |  | -             |   |  | -             |   |  | -           |   |  | 1,034,580  |  
|Preferred share issued for repay debt owned by a subsidiary
      on 17 August 2007 | 2,000,000       |   |  | 2,000        |   |  | -            |   |  | -        |   |  | 1,232,795  |   |  | -             |   |  | -             |   |  | -           |   |  | 1,234,795  |  
|Translation adjsutment                                                              | -               |   |  | -            |   |  | -            |   |  | -        |   |  | -          |   |  | -             |   |  | -             |   |  | 130,261     |   |  | 130,261    |  
|Net loss for the year ended 31 December 2007                                        | -               |   |  | -            |   |  | -            |   |  | -        |   |  | -          |   |  | -             |   |  | (5,011,575    | ) |  | -           |   |  | (5,011,575 | )
|Balance at 31 December 2007                                                         | 2,000,000       |   |  | 2,000        |   |  | 173,819,421  |   |  | 17,382   |   |  | 1,466,422  |   |  | (2,683        | ) |  | (3,892,150    | ) |  | 136,073     |   |  | (2,272,956 | )
|Share cancellation 17 February 2008                                                 | -               |   |  | -            |   |  | (11,000,000  | ) |  | (1,100   | ) |  | 866        |   |  | -             |   |  | -             |   |  | -           |   |  | (234       | )
|Convertion of Debt to Common Share 14 May 2008                                      | -               |   |  | -            |   |  | 4,758,212    |   |  | 476      |   |  | 665,664    |   |  | -             |   |  | -             |   |  | -           |   |  | 666,140    |  
|Reverse split 10 to 1 11 June 2008                                                  | -               |   |  | -            |   |  | (150,819,870 | ) |  | (15,082  | ) |  | 15,082     |   |  | -             |   |  | -             |   |  | -           |   |  | -          |  
|Convertion of Preferred A share to Common Share 14 July 2008                        | (380,000        | ) |  | (380         | ) |  | 1,900,000    |   |  | 190      |   |  | (190       | ) |  | -             |   |  | -             |   |  | -           |   |  | (380       | )
|Convertion of Debt to Common Share 5 September 2008                                 | -               |   |  | -            |   |  | 1,492,537    |   |  | 149      |   |  | 99,851     |   |  | -             |   |  | -             |   |  | -           |   |  | 100,000    |  
|Convertion of Debt to Common Share 19 September 2008                                | -               |   |  | -            |   |  | 1,800,000    |   |  | 180      |   |  | 119,820    |   |  | -             |   |  | -             |   |  | -           |   |  | 120,000    |  
|Convertion of Debt to Common Share 15 October 2008                                  | -               |   |  | -            |   |  | 2,750,000    |   |  | 275      |   |  | 399,725    |   |  | -             |   |  | -             |   |  | -           |   |  | 400,000    |  
|Common stock issued in exchange of consulting services 1 December
      2008        | -               |   |  | -            |   |  | 125,000      |   |  | 13       |   |  | (13        | ) |  | -             |   |  | -             |   |  | -           |   |  | -          |  
|Intrinsic value of convertible debt                                                 | -               |   |  | -            |   |  | -            |   |  | -        |   |  | 790,000    |   |  | -             |   |  | -             |   |  | -           |   |  | 790,000    |  
|Translation adjustment                                                              | -               |   |  | -            |   |  | -            |   |  | -        |   |  | -          |   |  | -             |   |  | -             |   |  | 34,548      |   |  | 34,548     |  
|Net loss for the year ended 31 December 2008                                        | -               |   |  | -            |   |  | -            |   |  | -        |   |  | -          |   |  | -             |   |  | (1,867,330    | ) |  | -           |   |  | (1,867,330 | )
|Balance at 31 December 2008                                                         | 1,620,000       |   |  | 1,620        |   |  | 24,825,300   |   |  | 2,483    |   |  | 3,557,227  |   |  | (2,683        | ) |  | (5,759,480    | ) |  | 170,621     |   |  | (2,030,212 | )
|Common stock issued in exhange of consulting services 8th
      June 2009           | -               |   |  | -            |   |  | 2,145,000    |   |  | 214      |   |  | (214       | ) |  | -             |   |  | -             |   |  | -           |   |  | -          |  
|Convertible of debt to common share                                                 | -               |   |  | -            |   |  | 7,418,050    |   |  | 741      |   |  | 525,760    |   |  |               |   |  |               |   |  |             |   |  | 526,501    |  
|Translation adjustment                                                              | -               |   |  | -            |   |  | -            |   |  | -        |   |  | -          |   |  | -             |   |  | -             |   |  | 56,079      |   |  | 56,079     |  
|Net income for the year ended 31 December 2009                                      | -               |   |  | -            |   |  | -            |   |  | -        |   |  | -          |   |  | -             |   |  | 867,547       |   |  | -           |   |  | 867,547    |  
|Balance at 31 December 2009                                                         | 1,620,000       |   |  | 1,620        |   |  | 34,388,350   |   |  | 3,438    |   |  | 4,082,773  |   |  | (2,683        | ) |  | (4,891,933    | ) |  | 226,700     |   |  | (580,085   | )





The notes on pages 6 to 25 are an integral part of these
consolidated financial statements Report of Independent Registered Public
Accounting Firm  Page 1

---

|BIOPACK ENVIRONMENTAL SOLUTIONS INC.      
|------------------------------------------
|(INCORPORATED IN UNITED STATES OF AMERICA)
|                                          
|CONSOLIDATED STATEMENT OF CASH FLOW       
|FOR THE YEAR ENDED 31 DECEMBER 2009       

|                                                                                     |  | 2009       |   |  | 2008       |  
|------------------------------------------------------------------------------------ |  | ---------- | - |  | ---------- | -
|                                                                                     |  | $          |   |  | $          |  
|Cash flows from operating activities                                                 |  |            |   |  |            |  
|Net profit/(loss) for the year                                                       |  | 867,547    |   |  | (1,867,330 | )
|Adjustments to reconcile net
      income to net cash                                |  |            |   |  |            |  
|provided by operating activities
      :                                             |  |            |   |  |            |  
|Depreciation and
      amortisation                                                  |  | 218,322    |   |  | 65,305     |  
|Gain on disposal of subsidiaries                                                     |  | (2,083,487 | ) |  | -          |  
|Interest expenses                                                                    |  | 177,488    |   |  | 793,483    |  
|Other comprehensive income                                                           |  | 56,079     |   |  | 34,548     |  
|Changes in operating assets
      and liabilities :                                  |  |            |   |  |            |  
|Decrease/(increase) in inventory                                                     |  | 276,048    |   |  | (317,933   | )
|Increase in
      accounts receivable                                                |  | (33,598    | ) |  | (69,777    | )
|Decrease/(increase) in
                 prepaid
      expenses and other receivables |  | 193,762    |   |  | (76,614    | )
|Decrease in
      amounts due to shareholders and directors                          |  | (663,580   | ) |  | (1,471,150 | )
|Decrease/(increase) in deposits                                                      |  | 3,093      |   |  | (10,938    | )
|Increase in
      accruals and other payables                                        |  | 2,133,883  |   |  | 769,580    |  
|Taxes payable                                                                        |  | (237,047   | ) |  | (1,398     | )
|                                                                                     |  |            |   |  |            |  
|Net cash flows generated from/(used in) operating
      activities                   |  | 908,510    |   |  | (2,152,224 | )
|                                                                                     |  |            |   |  |            |  
|Cash flows from investing activities                                                 |  |            |   |  |            |  
|Acquisition of
      plant and equipment                                             |  | (266,629   | ) |  | (1,972,436 | )
|Construction in progess                                                              |  | 62,679     |   |  | 1,120,762  |  
|                                                                                     |  |            |   |  |            |  
|Net cash flows used in investing activities                                          |  | (203,950   | ) |  | (851,674   | )
|                                                                                     |  |            |   |  |            |  
|Cash flows from financing activities                                                 |  |            |   |  |            |  
|Proceeds from
      note payable                                                     |  | 50,000     |   |  | 1,008,786  |  
|Proceeds from issuance of
      debentures                                           |  | 174,000    |   |  | 744,649    |  
|Redemption of
      debts                                                            |  | (1,579,103 | ) |  | -          |  
|Additional paid up capital                                                           |  | 525,546    |   |  | 1,297,322  |  
|Common stock
      $0.0001 par value                                                 |  | 214        |   |  | (16,360    | )
|Common stock issued to retire
      debentures                                       |  | 741        |   |  | 1,080      |  
|                                                                                     |  |            |   |  |            |  
|Net cash flows (used in)/from financing activities                                   |  | (828,602   | ) |  | 3,035,477  |  
|                                                                                     |  |            |   |  |            |  
|Net increase in cash and cash equivalents                                            |  | (124,042   | ) |  | 31,579     |  
|Cash and cash equivalents - beginning of
      year                                  |  | 128,039    |   |  | 96,460     |  
|                                                                                     |  |            |   |  |            |  
|Cash and cash equivalents - end of year                                              |  | 3,997      |   |  | 128,039    |  
|                                                                                     |  |            |   |  |            |  
|Supplemental disclosure of cashflow
      information:                               |  |            |   |  |            |  
|Cash paid for interest                                                               |  | -          |   |  | 26,155     |  

The notes on pages 6 to 25 are an integral part of these
consolidated financial statements Report of Independent Registered Public
Accounting Firm  Page 1

---

BIOPACK ENVIRONMENTAL SOLUTIONS INC.

(INCORPORATED IN UNITED STATES OF AMERICA)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

31 DECEMBER 2009

|1. | THE COMPANY
|-- | -----------

Biopack Environmental Solutions Inc.
and its subsidiaries develop, manufacture, distribute and market biodegradable
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.

The Company evaluates consolidation of
entities under FAS No. 167, Amendments to FASB Interpretation No. 46(R) (FAS
167), which changes the approach to determining the primary beneficiary of a
variable interest entity (VIE), (Formerly known as Financial Accounting
Standards Board (FASB) Interpretation No.46, Consolidation of Variable Interest
Entities (FIN 46)). FAS 167 replaces the quantitative-based risks and rewards
approach with a qualitative approach that focuses on identifying which
enterprise has (i) the power to direct the activities of a VIE that most
significantly impact the entitys economic performance and (ii) the obligation
to absorb losses or the right to receive benefits of the entity that could
potentially be significant to the VIE. FAS 167 also requires ongoing
reassessment of whether an enterprise is the primary beneficiary of a VIE, and
requires additional disclosures about an enterprises involvement in VIEs. FAS
167 is effective for the Company as of the beginning of fiscal year 2011 and its
adoption is not expected to have a material effect on the Companys unaudited
condensed 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, 2009, the Company had
cash and cash equivalents of $3,997.

Report of Independent Registered Public Accounting Firm  Page
1

---

|BIOPACK ENVIRONMENTAL SOLUTIONS INC.          
|----------------------------------------------
|(INCORPORATED IN UNITED STATES OF AMERICA)    
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|31 DECEMBER 2009                              

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (CONTINUED)
|-- | ------------------------------------------------------------

(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.

(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 onetime 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.

Report of Independent Registered Public Accounting Firm  Page
1

---

|BIOPACK ENVIRONMENTAL SOLUTIONS INC.          
|----------------------------------------------
|(INCORPORATED IN UNITED STATES OF AMERICA)    
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|31 DECEMBER 2009                              

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (CONTINUED)
|-- | ------------------------------------------------------------

(g) Property, Plant and Equipment (continued)

The estimated useful lives are as
follows:

| |                                          | Years  
| | ---------------------------------------- | -------
| | Leasehold improvements                   | 5      
| | Furniture, fixtures and office equipment | 5      
| | Motor Vehicles                           | 5 to 10
| | Computer equipment                       | 5      
| | Plant and Machinery                      | 5 to 20

(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 December 31, 2009.

(i) Income Taxes

Income taxes are accounted for under
the asset and liability method. 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 and operating loss and tax credit carry forwards.
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. 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.

The FASB issued Accounting Standard
Codification Topic 740 (ASC 740) Income Taxes, (Formerly known as
interpretation No. 48, Accounting for Uncertainty in Income Taxes, an
interpretation of Statement of Financial Accounting Standards No. 109 (FIN
48)). ASC 740 clarifies the accounting for uncertainty in tax positions. This
requires that an entity recognized in the consolidated financial statements the
impact of a tax position, if that position is more likely than not of being
sustained upon examination, based on the technical merits of the position. The
adoption of ASC 740 did not have any impact on the Groups results of operations
or financial condition for the year ended December 31, 2009. As of the date of
the adoption of ASC 740, the Group has no material unrecognized tax benefit
which would favorably affect the effective income tax rate in future periods.
The Group has elected to classify interest and penalties related to unrecognized
tax benefits, if and when required, as part of income tax expense in the
consolidated statements of operations.

Report of Independent Registered Public Accounting Firm  Page
1

---

|BIOPACK ENVIRONMENTAL SOLUTIONS INC.          
|----------------------------------------------
|(INCORPORATED IN UNITED STATES OF AMERICA)    
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|31 DECEMBER 2009                              

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (CONTINUED)
|-- | ------------------------------------------------------------

(j) Foreign Currency Transactions

The Companys functional currency is
Hong Kong Dollars (HKD) and Renminbi (RMB) 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 FASB Accounting Standard Codification Topic 260
(ASC 260) Earnings Per Share (Formerly known as Statement of Financial
Accounting Standards No. 128, Earnings per Share (SFAS No. 128)), and SEC
Staff Accounting Bulletin No. 98 (SAB 98). ASC 260 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.

Report of Independent Registered Public Accounting Firm  Page
1

---

|BIOPACK ENVIRONMENTAL SOLUTIONS INC.          
|----------------------------------------------
|(INCORPORATED IN UNITED STATES OF AMERICA)    
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|31 DECEMBER 2009                              

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (CONTINUED)
|-- | ------------------------------------------------------------

(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.

(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 September 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.

Report of Independent Registered Public Accounting Firm  Page
1

---

|BIOPACK ENVIRONMENTAL SOLUTIONS INC.          
|----------------------------------------------
|(INCORPORATED IN UNITED STATES OF AMERICA)    
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|31 DECEMBER 2009                              

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (CONTINUED)
|-- | ------------------------------------------------------------

(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.

(p) Recently issued accounting pronouncements

In December 2007, ASC 805, Business
Combinations (ASC 805) (formerly included under Statement of Financial
Accounting Standards No. 141 (revised 2007), Business Combinations) contains
guidance that was issued by the FASB. It requires the acquiring entity in a
business combination to recognize all assets acquired and liabilities assumed in
a transaction at the acquisition-date fair value, with certain exceptions.
Additionally, the guidance requires changes to the accounting treatment of
acquisition related items, including, among other items, transaction costs,
contingent consideration, restructuring costs, indemnification assets and tax
benefits. ASC 805 also provides for a substantial number of new disclosure
requirements. ASC 805 also contains guidance that was formerly issued as FSP FAS
141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in a Business
Combination That Arise from Contingencies which was intended to provide
additional guidance clarifying application issues regarding initial recognition
and measurement, subsequent measurement and accounting, and disclosure of assets
and liabilities arising from contingencies in a business combination. ASC 805
was effective for business combinations initiated on or after the first annual
reporting period beginning after December 15, 2008. The Company implemented this
guidance effective January 1, 2009. Implementing this guidance did not have an
effect on the Companys financial position or results of operations; however it
will likely have an impact on the Companys accounting for future business
combinations, but the effect is dependent upon acquisitions, if any, that are
made in the future.

In March 2008, the FASB issued ASC 815
(SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities,
an amendment of FASB Statement No. 133) to amend and expand the disclosures
about derivatives and hedging activities. The standard requires enhanced
qualitative disclosures about an entitys objectives and strategies for using
derivatives, and tabular quantitative disclosures about the fair value of
derivative instruments and gains and losses on derivatives during the reporting
period. This standard is effective for both fiscal years and interim periods
that begin after November 15, 2008. The adoption of this standard on December
29, 2008, the beginning of the Companys fiscal year, did not have a material
impact on its unaudited condensed consolidated financial statements.

Report of Independent Registered Public Accounting Firm  Page
1

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|BIOPACK ENVIRONMENTAL SOLUTIONS INC.          
|----------------------------------------------
|(INCORPORATED IN UNITED STATES OF AMERICA)    
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|31 DECEMBER 2009                              

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (CONTINUED)
|-- | ------------------------------------------------------------

(p) Recently issued accounting pronouncements
  (continued)

In December 2007, ASC 810,
Consolidation (ASC 810) includes new guidance issued by the FASB governing the
accounting for and reporting of noncontrolling interests (previously referred to
as minority interests). This guidance established reporting requirements which
include, among other things, that noncontrolling interests be reflected as a
separate component of equity, not as a liability. It also requires that the
interests of the parent and the noncontrolling interest be clearly identifiable.
Additionally, increases and decreases in a parents ownership interest that
leave control intact shall be reflected as equity transactions, rather than step
acquisitions or dilution gains or losses. This guidance also requires changes to
the presentation of information in the financial statements and provides for
additional disclosure requirements. ASC 810 was effective for fiscal years
beginning on or after December 15, 2008. The Company implemented this guidance
as of January 1, 2009. The effect of implementing this guidance was not material
to the Companys financial position or results of operations.

In May 2009, ASC 855, Subsequent
Events (ASC 855) (formerly Statement of Financial Accounting Standards No.
165, Subsequent Events) includes guidance that was issued by the FASB, and is
consistent with current auditing standards in defining a subsequent event.
Additionally, the guidance provides for disclosure regarding the existence and
timing of a companys evaluation of its subsequent events. ASC 855 defines two
types of subsequent events, recognized and non-recognized. Recognized
subsequent events provide additional evidence about conditions that existed at
the date of the balance sheet and are required to be reflected in the financial
statements. Non-recognized subsequent events provide evidence about conditions
that did not exist at the date of the balance sheet but arose after that date
and, therefore; are not required to be reflected in the financial statements.
However, certain non-recognized subsequent events may require disclosure to
prevent the financial statements from being misleading. This guidance was
effective prospectively for interim or annual financial periods ending after
June 15, 2009. The Company implemented the guidance included in ASC 855 as of
April 1, 2009. The effect of implementing this guidance was not material to the
Companys financial position or results of operations.

Report of Independent Registered Public Accounting Firm  Page
1

---

|BIOPACK ENVIRONMENTAL SOLUTIONS INC.          
|----------------------------------------------
|(INCORPORATED IN UNITED STATES OF AMERICA)    
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|31 DECEMBER 2009                              

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (CONTINUED)
|-- | ------------------------------------------------------------

(p) Recently issued accounting pronouncements
  (continued)

In June 2009, the FASB issued
Statement of Financial Accounting Standards No. 166, Accounting for Transfers of
Financial Assets an amendment of FASB Statement No. 140 (Statement No. 166).
Statement No. 166 revises FASB Statement of Financial Accounting Standards
No.140, Accounting for Transfers and Extinguishment of Liabilities a replacement
of FASB Statement 125 (Statement No. 140) and requires additional disclosures
about transfers of financial assets, including securitization transactions, and
any continuing exposure to the risks related to transferred financial assets. It
also eliminates the concept of a qualifying special-purpose entity, changes
the requirements for derecognizing financial assets, and enhances disclosure
requirements. Statement No. 166 is effective prospectively, for annual periods
beginning after November 15, 2009, and interim and annual periods thereafter.
Although Statement No. 166 has not been incorporated into the Codification, in
accordance with ASC 105, the standard shall remain authoritative until it is
integrated. The Company does not expect the adoption of Statement No. 166 will
have a material impact on its financial position or results of operations.

In September 2009, the FASB has
published ASU 2009-12, Fair Value Measurements and Disclosures (Topic 820) -
Investments in Certain Entities That Calculate Net Asset Value per Share (or Its
Equivalent). This ASU amends Subtopic 820-10, Fair Value Measurements and
Disclosures Overall, to permit a reporting entity to measure the fair value of
certain investments on the basis of the net asset value per share of the
investment (or its equivalent). This ASU also requires new disclosures, by major
category of investments including the attributes of investments within the scope
of this amendment to the Codification. The guidance in this update is effective
for interim and annual periods ending after December 15, 2009. Early application
is permitted. The Company is in the process of evaluating the impact of this
standard on its consolidated financial position and results of operations.

Report of Independent Registered Public Accounting Firm  Page
1

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|BIOPACK ENVIRONMENTAL SOLUTIONS INC.          
|----------------------------------------------
|(INCORPORATED IN UNITED STATES OF AMERICA)    
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|31 DECEMBER 2009                              

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (CONTINUED)
|-- | ------------------------------------------------------------

(p) Recently issued accounting pronouncements
  (continued)

In October 2009, the FASB has
published ASU 2009-13, Revenue Recognition (Topic 605)-Multiple Deliverable
Revenue Arrangements, which addresses the accounting for multiple-deliverable
arrangements to enable vendors to account for products or services
(deliverables) separately rather than as a combined unit. Specifically, this
guidance amends the criteria in Subtopic 605-25, Revenue
Recognition-Multiple-Element Arrangements, for separating consideration in
multiple-deliverable arrangements. This guidance establishes a selling price
hierarchy for determining the selling price of a deliverable, which is based on:
(a) vendor-specific objective evidence; (b) third-party evidence; or (c)
estimates. This guidance also eliminates the residual method of allocation and
requires that arrangement consideration be allocated at the inception of the
arrangement to all deliverables using the relative selling price method and also
requires expanded disclosures. The guidance in this update is effective
prospectively for revenue arrangements entered into or materially modified in
fiscal years beginning on or after June 15, 2010. Early adoption is permitted.
The adoption of this standard is not expected to have a material impact on the
Companys consolidated financial position and results of operations.

ASC 105, Generally Accepted Accounting
Principles (ASC 105) (formerly SFAS No. 168, The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles a
replacement of FASB Statement No. 162), reorganized by topic existing accounting
and reporting guidance issued by the Financial Accounting Standards Board
(FASB) into a single source of authoritative generally accepted accounting
principles (GAAP) to be applied by nongovernmental entities. All guidance
contained in the Accounting Standards Codification (ASC) carries an equal
level of authority. Rules and interpretive releases of the Securities and
Exchange Commission (SEC) under authority of federal securities laws are also
sources of authoritative GAAP for SEC registrants. Accordingly, all other
accounting literature will be deemed non-authoritative. ASC 105 is effective
on a prospective basis for financial statements issued for interim and annual
periods ending after September 15, 2009. The Company has implemented the
guidance included in ASC 105 as of July 1, 2009. The implementation of this
guidance changed the Companys references to GAAP authoritative guidance but did
not impact the Companys financial position or results of operations.

Report of Independent Registered Public Accounting Firm  Page
1

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|BIOPACK ENVIRONMENTAL SOLUTIONS INC.          
|----------------------------------------------
|(INCORPORATED IN UNITED STATES OF AMERICA)    
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|31 DECEMBER 2009                              

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (CONTINUED)
|-- | ------------------------------------------------------------

(p) Recently issued accounting pronouncements
  (continued)

In January 2010, the FASB issued
Accounting Standards Update No. 2010-06 (ASU 2010-06), Fair Value Measurements
and Disclosures which amends ASC Topic 820, adding new requirements for
disclosures for Levels 1 and 2, separate disclosures of purchases, sales,
issuances, and settlements relating to Level 3 measurements and clarification of
existing fair value disclosures. ASU 2010-06 is effective for interim and annual
periods beginning after December 15, 2009, except for the requirement to provide
Level 3 activity of purchases, sales, issuances, and settlements on a gross
basis, which will be effective for fiscal years beginning after December 15,
2010 (the Companys fiscal year 2012); early adoption is permitted. The Company
is currently evaluating the impact of adopting ASU 2009-14 on its financial
statements.

|3. | PROPERTY, PLANT AND EQUIPMENT, NET
|-- | ----------------------------------

| |                                |  | 2009      |   |  | 2008      |  
| | ------------------------------ |  | --------- | - |  | --------- | -
| |                                |  | $         |   |  | $         |  
| | Cost                           |  |           |   |  |           |  
| | Leasehold improvements         |  | 389,564   |   |  | 311,920   |  
| | Motor Vehicles                 |  | 47,616    |   |  | 47,576    |  
| | Office furniture and equipment |  | 36,349    |   |  | 36,326    |  
| | Computer
      equipment       |  | 13,020    |   |  | 13,028    |  
| | Plant and Machinery            |  | 1,951,903 |   |  | 1,762,498 |  
| |                                |  |           |   |  |           |  
| |                                |  | 2,438,452 |   |  | 2,171,348 |  
| | Accumulated depreciation       |  | (298,916  | ) |  | (80,119   | )
| |                                |  |           |   |  |           |  
| |                                |  | 2,139,536 |   |  | 2,091,229 |  

Depreciation expense for the year
ended December 31, 2009 was $218,322.

Report of Independent Registered Public Accounting Firm  Page
1

---

|BIOPACK ENVIRONMENTAL SOLUTIONS INC.          
|----------------------------------------------
|(INCORPORATED IN UNITED STATES OF AMERICA)    
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|31 DECEMBER 2009                              

|3. | PROPERTY, PLANT AND EQUIPMENT, NET
      (CONTINUED)
|-- | ----------------------------------------------------

(b) Construction in progress

| |                                    |  | 2009    |   |  | 2008       |  
| | ---------------------------------- |  | ------- | - |  | ---------- | -
| |                                    |  | $       |   |  | $          |  
| |                                    |  |         |   |  |            |  
| | Opening as at 1 January            |  | 174,426 |   |  | 1,295,188  |  
| | Additions                          |  | 16,002  |   |  | 777,850    |  
| | Transfer to plant and Machinery    |  | (1,422  | ) |  | (1,675,626 | )
| | Transfer to lease hold improvement |  | (77,259 | ) |  | (222,986   | )
| |                                    |  |         |   |  |            |  
| | As at 31 December                  |  | 111,747 |   |  | 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, 2009, the Company had a balance
of $111,747 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
|-- | -----------

As at December 31, 2009, the Companys
subsidiary in Jiangmen, PRC held inventory of $100,725.

| |                  |  | 2009    |  |  | 2008    | 
| | ---------------- |  | ------- |  |  | ------- | 
| |                  |  | $       |  |  | $       | 
| |                  |  |         |  |  |         | 
| | Raw materials    |  | 51,655  |  |  | 70,906  | 
| | Work-in-progress |  | 9,893   |  |  | 68,979  | 
| | Finished goods   |  | 39,177  |  |  | 236,888 | 
| |                  |  |         |  |  |         | 
| |                  |  | 100,725 |  |  | 376,773 | 

Report of Independent Registered Public Accounting Firm  Page
1

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|BIOPACK ENVIRONMENTAL SOLUTIONS INC.          
|----------------------------------------------
|(INCORPORATED IN UNITED STATES OF AMERICA)    
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|31 DECEMBER 2009                              

|5. | PREPAID EXPENSES AND OTHER RECEIVABLES
|-- | --------------------------------------

| |                   |  | 2009    |  |  | 2008    | 
| | ----------------- |  | ------- |  |  | ------- | 
| |                   |  | $       |  |  | $       | 
| |                   |  |         |  |  |         | 
| | Prepaid expenses  |  | 124,029 |  |  | 169,359 | 
| | Other receivables |  | 17,204  |  |  | 165,636 | 
| |                   |  |         |  |  |         | 
| |                   |  | 141,233 |  |  | 334,995 | 

|6. | ACCOUNTS RECEIVABLE
|-- | -------------------

Accounts receivable consists of
receivables on trade as follows:

| |                                       |  | 2009    |  |  | 2008   | 
| | ------------------------------------- |  | ------- |  |  | ------ | 
| |                                       |  | $       |  |  | $      | 
| | Ageing of trade and other receivables |  |         |  |  |        | 
| | 0 - 30 days                           |  | 2,990   |  |  | 69,777 | 
| | Over 30 days                          |  | 100,385 |  |  | -      | 
| |                                       |  |         |  |  |        | 
| |                                       |  | 103,375 |  |  | 69,777 | 

As at December 31, 2009, the Companys
subsidiaries had receivables total $103,375. The Company believes that there is
no issue of recoverability and the balances receivable are indicative of fair
value.

|7. | ACCOUNTS PAYABLE AND ACCRUED EXPENSES
|-- | -------------------------------------

| |                                    |  | 2009      |  |  | 2008      | 
| | ---------------------------------- |  | --------- |  |  | --------- | 
| |                                    |  | $         |  |  | $         | 
| |                                    |  |           |  |  |           | 
| | Accrued expense and other payables |  | 935,264   |  |  | 1,112,709 | 
| | Customers deposits received        |  | -         |  |  | 126,315   | 
| | Accounts payables                  |  | 359,040   |  |  | 155,206   | 
| |                                    |  |           |  |  |           | 
| |                                    |  | 1,294,304 |  |  | 1,394,230 | 

Report of Independent Registered Public Accounting Firm  Page
1

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|BIOPACK ENVIRONMENTAL SOLUTIONS INC.          
|----------------------------------------------
|(INCORPORATED IN UNITED STATES OF AMERICA)    
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|31 DECEMBER 2009                              

|8. | DUE TO SHAREHOLDERS & DIRECTORS
|-- | -------------------------------

| |                             |  | 2009   |  |  | 2008    | 
| | --------------------------- |  | ------ |  |  | ------- | 
| |                             |  | $      |  |  | $       | 
| |                             |  |        |  |  |         | 
| | Amounts due to directors    |  | 21,761 |  |  | 59,752  | 
| | Amounts due to shareholders |  | -      |  |  | 625,589 | 
| |                             |  |        |  |  |         | 
| |                             |  | 21,761 |  |  | 685,341 | 

Directors of the Company have advanced
$21,761 in the form of unsecured, non-interest bearing advances with no due
date.

|9. | LOAN PAYABLE
|-- | ------------

| |                  |  | 2009      |  |  | 2008      | 
| | ---------------- |  | --------- |  |  | --------- | 
| |                  |  | $         |  |  | $         | 
| |                  |  |           |  |  |           | 
| | Short term loans |  | 1,336,596 |  |  | 1,008,786 | 

As at December 31, 2009, the Company
has short term loans on demand of $1,336,596 including accrued interest of
$204,833. The loans bear interest at the rate of 1% to 6% per annum.

| |                                                         |  | 2009    |  |  | 2008      | 
| | ------------------------------------------------------- |  | ------- |  |  | --------- | 
| |                                                         |  | $       |  |  | $         | 
| | Long term loans                                         |  |         |  |  |           | 
| | Tayna Environmental Technology Co. Limited              |  | -       |  |  | 1,146,103 | 
| | Convertible debenture issued to non related
      party |  | 331,000 |  |  | 740,000   | 
| | Convertible debenture issued to a director              |  | 250,000 |  |  | 50,000    | 
| |                                                         |  |         |  |  |           | 
| |                                                         |  | 581,000 |  |  | 1,936,103 | 

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1

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|BIOPACK ENVIRONMENTAL SOLUTIONS INC.          
|----------------------------------------------
|(INCORPORATED IN UNITED STATES OF AMERICA)    
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|31 DECEMBER 2009                              

|9. | LOANS PAYABLE (CONTINUED)
|-- | -------------------------

Long term loans (continued)

On March 30, 2008, the Companys former
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.

On September 18, 2009, Roots Biopack
Group Limited was dissolved and being detached from the Company. Tayna
Environmental Technology Co. Limited has signed the waiver of debt on 30 June
2009 to waive to claim the sum of $1,146,103 together with the interest thereon.

Convertible Debts

| |                                                      |  | 2009    |  |  | 2008    | 
| | ---------------------------------------------------- |  | ------- |  |  | ------- | 
| |                                                      |  | $       |  |  | $       | 
| |                                                      |  |         |  |  |         | 
| | Opening Balance of Convertible
      Debentures      |  | 790,000 |  |  | 600,000 | 
| | Plus : Convertible debentures issued during the year |  | 374,000 |  |  | 810,000 | 
| | Less : Debentures converted to common
      shares   |  | 583,000 |  |  | 620,000 | 
| |                                                      |  |         |  |  |         | 
| | Closing Balance Convertible
      Debentures         |  | 581,000 |  |  | 790,000 | 

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 between 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.

Report of Independent Registered Public Accounting Firm  Page
1

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|BIOPACK ENVIRONMENTAL SOLUTIONS INC.          
|----------------------------------------------
|(INCORPORATED IN UNITED STATES OF AMERICA)    
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|31 DECEMBER 2009                              

|10. | GOING CONCERN
|--- | -------------

The accompanying consolidated financial
statements have been prepared in accordance with 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 made a net profit
for the year ended December 31, 2009 of 867,547 and, on December 31, 2009 it had
an accumulated deficit of $4,891,933 and a working capital deficit of
$2,250,368. 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 condition 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 during the Year Ended December 31, 2009:

| |          |  | 2009    |  |  | 2008    | 
| | -------- |  | ------- |  |  | ------- | 
| |          |  | $       |  |  | $       | 
| |          |  |         |  |  |         | 
| | Premises |  | 234,117 |  |  | 155,565 | 

Report of Independent Registered Public Accounting Firm  Page
1

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|BIOPACK ENVIRONMENTAL SOLUTIONS INC.          
|----------------------------------------------
|(INCORPORATED IN UNITED STATES OF AMERICA)    
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|31 DECEMBER 2009                              

|12. | COMMITMENTS AND CONTINGENCIES
      (CONTINUED)
|--- | -----------------------------------------------

| | (a) | Operating Lease Arrangements (continued)
| | --- | ----------------------------------------

At December 31, 2009, 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:

| |                                         |  | 2009      |  |  | 2008      | 
| | --------------------------------------- |  | --------- |  |  | --------- | 
| |                                         |  | $         |  |  | $         | 
| |                                         |  |           |  |  |           | 
| | Within one year                         |  | 181,915   |  |  | 200,352   | 
| | In the second to fifth years, inclusive |  | 753,432   |  |  | 748,399   | 
| | After five years                        |  | 1,475,877 |  |  | 1,665,482 | 
| |                                         |  |           |  |  |           | 
| |                                         |  | 2,411,224 |  |  | 2,614,233 | 

Operating leases relate to the
Companys manufacturing premises in PRC with a lease term of 15 years from 1
March 2007, with an option to extend the term. The Company does not have an
option to purchase the leased asset at the expiry of the lease period.

| | (b) | Capital Commitments
| | --- | -------------------

| |                                     |  | 2009   |  |  | 2008    | 
| | ----------------------------------- |  | ------ |  |  | ------- | 
| |                                     |  | $      |  |  | $       | 
| | Contracted for but not provided for |  |        |  |  |         | 
| | Construction projects in PRC        |  | 51,256 |  |  | 200,509 | 

|13. | RELATED PARTY TRANSACTIONS
|--- | --------------------------

| |                                      |  | 2009   |  |  | 2008   | 
| | ------------------------------------ |  | ------ |  |  | ------ | 
| |                                      |  | $      |  |  | $      | 
| | Amounts due to directors             |  |        |  |  |        | 
| | CHOU Si Hou, Eddie - Former director |  | -      |  |  | 45,385 | 
| | LAU Kin Chung, Gerald  Director     |  | 8,399  |  |  | 8,602  | 
| | Sean Webster - Director              |  | 13,362 |  |  | 5,765  | 
| |                                      |  |        |  |  |        | 
| |                                      |  | 21,761 |  |  | 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.

Report of Independent Registered Public Accounting Firm  Page
1

---

|BIOPACK ENVIRONMENTAL SOLUTIONS INC.          
|----------------------------------------------
|(INCORPORATED IN UNITED STATES OF AMERICA)    
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|31 DECEMBER 2009                              

|13. | RELATED PARTY TRANSACTIONS (CONTINUED)
|--- | --------------------------------------

| |                       |  | Nature of      |  |  | Connected           |  |  | 2009 |  |  | 2008   | 
| | --------------------- |  | -------------- |  |  | ------------------- |  |  | ---- |  |  | ------ | 
| | Name of company       |  | transactions   |  |  | part(ies)           |  |  | $    |  |  | $      | 
| | Grand Power Express   |  |                |  |  | Mr. Ricky           |  |  |      |  |  |        | 
| | International Limited |  | Office rental  |  |  | Chiu Tong           |  |  | -    |  |  | 48,779 | 
| |                       |  |                |  |  | (Former director)   |  |  |      |  |  |        | 
| |                       |  |                |  |  |                     |  |  |      |  |  |        | 
| |                       |  |                |  |  | Spouse of former    |  |  |      |  |  |        | 
| | InterPacific Capital  |  |                |  |  | director -Mr. Ricky |  |  |      |  |  |        | 
| | Limited               |  | Consultant fee |  |  | Chiu Tong           |  |  | -    |  |  | 12,850 | 
| |                       |  |                |  |  |                     |  |  |      |  |  |        | 
| |                       |  |                |  |  |                     |  |  | -    |  |  | 61,629 | 

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.

|14. | INCOME TAX
|--- | ----------

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.

No provision for US tax has been made
for any of the year presented as the Company does not have any assessable
profits during the year.

No deferred tax is recognized in the
consolidated balance sheets as of December 31, 2009.

|**15.** | SHARE CAPITAL
|------- | -------------

On October 15, 2008, the Company issued
500,000 shares of the Companys common stock to Ma Cheng Ji pursuant to the
conversion of a convertible debenture in the amount of $250,000.

Report of Independent Registered Public Accounting Firm  Page
1

---

|BIOPACK ENVIRONMENTAL SOLUTIONS INC.          
|----------------------------------------------
|(INCORPORATED IN UNITED STATES OF AMERICA)    
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|31 DECEMBER 2009                              

|15. | SHARE CAPITAL (CONTINUED)
|--- | -------------------------

On April 8, 2009, the Company sold one
convertible debenture to one investor for gross proceeds of $60,000. 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 May 15, 2009, the Company sold one
convertible debenture to one investor for gross proceeds of $50,000. This
convertible debenture has a face amount of $50,000, a three year term, earns
interest at a rate of 1% per annum and is convertible, at the option of the
holder upon not less than 61 days prior notice, into shares of our common stock
at a price of ten cents per share.

On May 15, 2009, the Company sold one
convertible debenture to one investor for gross proceeds of $48,000. This
convertible debenture has a face amount of $48,000, a three year term, earns
interest at a rate of 12% per annum and is convertible, at the option of the
holder upon not less than 61 days prior notice, into shares of our common stock
at a price of six and two-thirds cents per share.

On June 12, 2009, the Company issued
225,000 shares of our common stock to San Diego Torrey Hills Capital, Inc.
pursuant to the consulting agreement.

On July 28, 2009, the Company issued
1,124,438 shares of our common stock to the holder of a convertible debenture
dated March 3, 2008 pursuant to the conversion of a portion of the principal
balance of that convertible debenture.

On July 28, 2009, the Company issued
1,125,001 shares of our common stock to the holder of a convertible debenture
dated December 29, 2008 pursuant to the conversion of a portion of the principal
balance of that convertible debenture.

On July 29, 2009, the Company issued
1,250,000 shares of our common stock to the holder of a convertible debenture
dated December 27, 2007 pursuant to the conversion of a portion of the principal
balance of that convertible debenture.

On July 31, 2009, the Company sold one
convertible debenture to one investor for gross proceeds of $16,000. This
convertible debenture has a face amount of $16,000, a three year term, earns
interest at a rate of 1% per annum and is convertible, at the option of the
holder upon not less than 61 days prior notice, into shares of our common stock
at a price of ten cents per share.

On December 7, 2009, the Company issued
400,000 shares of our common stock to Dragon Gate Asia Ltd. pursuant to the
consulting agreement.

Report of Independent Registered Public Accounting Firm  Page
1

---

|BIOPACK ENVIRONMENTAL SOLUTIONS INC.          
|----------------------------------------------
|(INCORPORATED IN UNITED STATES OF AMERICA)    
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|31 DECEMBER 2009                              

|15. | SHARE CAPITAL (CONTINUED)
|--- | -------------------------

On December 7, 2009, the Company issued
20,000 shares of our common stock to The Long Island Investment Banking Group
pursuant to the consulting agreement.

On December 7, 2009, the Company sold
1,500,000 shares of our common stock to one investor at a price of $0.1417 per
share, in consideration of the debt owed by our company to the investor of
$212,500.

On December 16, 2009, the Company
issued 1,750,000 shares of our common stock to the holder of a convertible
debenture dated December 27, 2007 pursuant to the conversion of the balance of
that convertible debenture.

On December 21, 2009, the Company
issued 1,125,001 shares of our common stock to one person upon the conversion of
the $75,000 principal balance due under a convertible debenture previously
issued by us dated December 29, 2008, at a conversion price of $0.0666 per
share.

On December 31, 2009, the Company
issued 284,932 shares of our common stock to one investor at a price of $0.3819
per share in consideration of the debt owed by our company to the investor of
$108,834.

|16. | SUBSEQUENT EVENTS
|--- | -----------------

On January 15, 2010, the Company issued
500,000 shares of our common stock to the holder of a convertible debenture
dated May 15, 2009 upon conversion of the principal and interest due under that
convertible debenture, at a conversion price of $0.10 per share.

On February 2, 2010, the Company issued
an aggregate of 2,331,955 shares of our common stock to two investors in
consideration of the debt owed by our company to the investors of an aggregate
principal amount of $857,000 and an aggregate amount of accrued interest in the
amount of $56,893, at a price of $0.3919 per share.

On February 22, 2010, the Company
issued 3,651,672 shares of our common stock to one person upon the conversion of
the remaining principal ($204,940) and accrued interest ($38,626.57) due under a
convertible debenture previously issued by us dated March 3, 2008, at a
conversion price of $0.0667 per share.

|17. | 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.

Report of Independent Registered Public Accounting Firm  Page
1

---

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 Rule 13a-15(b) under the Securities Exchange Act
of 1934, as amended, our management, including our chief executive officer and
our chief financial officer, performed an evaluation of the effectiveness of our
disclosure controls and procedures, as that term is defined in Rules 13a-15(e)
of the Exchange Act, as of the end of the period covered by this annual report.
Based on that evaluation, our management has concluded that our disclosure
controls and procedures were effective as of the end of the period covered by
this annual report.

Report of Management on Internal Control over Financial
Reporting

Our management is responsible for establishing and maintaining
adequate internal control over financial reporting as defined in Rules 13a-15(f)
under the Securities Exchange Act of 1934, as amended. Our internal control over
financial reporting is a process designed to provide reasonable assurance
regarding the reliability of our financial reporting and the preparation of
financial statements for external purposes in accordance with Generally Accepted
Accounting Principles (GAAP) in the United States of America and includes those
policies and procedures that (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of our company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of consolidated
financial statements in accordance with GAAP, and that receipts and expenditures
of our company are being made only in accordance with authorizations of our
management and directors; and (3) provide reasonable assurance regarding
prevention or timely detection of the unauthorized acquisition, use or
disposition of our companys assets that could have a material effect on the
consolidated financial statements. Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to
the risks that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may
deteriorate.

Our management conducted an evaluation of the effectiveness of
our companys internal control over financial reporting as of December 31, 2009
based on the framework in Internal ControlIntegrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on this
evaluation, our management concluded that our internal control over financial
reporting was effective as of December 31, 2009.

This annual report does not include an attestation report of
our registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by our registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit our company to provide only management's report
in this annual report.

Changes in Internal Control over Financial Reporting

As required by Rule 13a-15(d), under the Exchange Act, our
management, including our chief executive officer and our chief financial
officer, also conducted an evaluation of our internal control over financial
reporting to determine whether any changes occurred during our fourth fiscal
quarter have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting. Based on that evaluation, it has
been determined that there has been no such change during our fourth fiscal
quarter.

ITEM 9B. OTHER INFORMATION.

None.

---

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE.

Directors and Executive Officers

As at March 29, 2010, 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
      53
      March 27, 2007 
        March 30, 2006Ma Cheng Ji
      Director 
        Director of Biopack Environmental 
        Limited
      67
      April 1, 2008 
        April 8, 2008Michael Joseph Forster
      Director
      44
      April 29, 2008James Yiu Yeung Loong
      Director 
        Director of Biopack Environmental 
        Limited
      56
      April 1, 2008 
        March 25, 2008Sean Webster
      Chief Financial Officer, Secretary 
        and Treasurer 
        Director 
        Director of Biopack Environmental 
        Limited
      37
      October 6, 2008 
        August 6, 2008 
        October 1, 2008


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
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.

We believe Mr. Lau is qualified to serve on our board of
directors because of his knowledge of our companys history and current
operations, which he gained from working for our company as described above, in
addition to his education and business experiences as described above.

---

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.

We believe Mr. Webster is qualified to serve on our board of
directors because of his knowledge of our companys history and current
operations, which he gained from working for our company as described above, in
addition to his education and business experiences as described above.

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.

We believe Mr. Yiu is qualified to serve on our board of
directors because of his knowledge of our companys history and current
operations, which he gained from working for our company as described above, in
addition to his education and business experiences as described above.

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.

We believe Mr. Ma is qualified to serve on our board of
directors because of his knowledge of our companys history and current
operations, which he gained from working for our company as described above, in
addition to his education and business experiences as described above.

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.

---

We believe Mr. Forster is qualified to serve on our board of
directors because of his knowledge of our companys history and current
operations, which he gained from working for our company as described above, in
addition to his education and business experiences as described above.

Term of Office

Our directors hold office until the next annual meeting or
until their successors have been elected and qualified, or until they resign or
are removed. Our board of directors appoints our officers, and our officers hold
office until their successors are chosen and qualify, or until their resignation
or their removal.

Family Relationships

There are no family relationships among our directors or
officers.

Involvement in Certain Legal Proceedings

Our directors and executive officers have not been involved in
any of the following events during the past ten 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);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | 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;                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | 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;                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | 5. | being the subject of, or a party to, any federal or state
      judicial or administrative order, judgment, decree, or finding, not
      subsequently reversed, suspended or vacated, relating to an alleged
      violation of: (i) any federal or state securities or commodities law or
      regulation; or (ii) any law or regulation respecting financial
      institutions or insurance companies including, but not limited to, a
      temporary or permanent injunction, order of disgorgement or restitution,
      civil money penalty or temporary or permanent cease- and-desist order, or
      removal or prohibition order; or (iii) any law or regulation prohibiting
      mail or wire fraud or fraud in connection with any business entity;
    or
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | 6. | being the subject of, or a party to, any sanction or
      order, not subsequently reversed, suspended or vacated, of any
      self-regulatory organization (as defined in Section 3(a)(26) of the
      Securities Exchange Act of 1934), any registered entity (as defined in
      Section 1(a)(29) of the Commodity Exchange Act), or any equivalent
      exchange, association, entity or organization that has disciplinary
      authority over its members or persons associated with a
  member.                                                                                                                                                                                                                                                               

Committees

All proceedings of the board of directors for the year ended
December 31, 2009 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 29, 2010, 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;                                                          
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                              
| | (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, 2009, 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 Timely Basis
    Failure to File Requested FormsGerald Lau
    Nil
    Nil
    NilSean Webster
    1(1)
    Nil
    NilMa
      Cheng Ji
    Nil
    Nil
    NilMichael Forster
    Nil
    Nil
    NilJames Yiu Yeung Loong
    Nil
    Nil
    NilBegonia Participation Corp.
    Nil
    Nil
    NilLadix Properties Inc.
    Nil
    Nil
    Nil


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

|ITEM 11. EXECUTIVE COMPENSATION.
|--------------------------------

The particulars of compensation paid to the following
persons:

| | (a) | all individuals serving as our principal executive
      officer during the year ended December 31, 2009;                                                                                                                             
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                       
| | (b) | each of our two most highly compensated executive
      officers other than our principal executive officer who were serving as
      executive officers at December 31, 2009 who had total compensation
      exceeding $100,000; and
| |     |                                                                                                                                                                                                                                       
| | (c) | up to two additional individuals for whom disclosure
      would have been provided under (b) but for the fact that the individual
      was not serving as our executive officer at December 31,
  2009,                             

who we will collectively refer to as the named executive
officers, for the years ended December 31, 2009 and 2008, are set out in the
following summary compensation table:

---

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
      ($)
    Change in
      Pension Value and Nonqualified
      Deferred Compensation Earnings
      ($)
    All
      Other Compensa -tion ($)
    Total ($)Gerald Lau(1)President, Chief Executive
      Officer
    2009 2008
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    Nil NilEddie Chou(2)Former Secretary,
      Treasurer, Chief Financial Officer and Chief Technology
      Officer, Chief Executive Officer, E-Ware Corporation Ltd.
    2009 2008
    Nil 17,989 (3)
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    Nil 17,989(3)Sean Webster(3)Secretary, Treasurer,
      Chief Financial Officer
    2009 2008
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    Nil NilJames Yiu Yeung 
        Loong (4)
        Director
      2009 
        2008
      Nil
        Nil
      Nil
        Nil
      Nil
        Nil
      Nil
        Nil
      Nil
        Nil
      Nil
        Nil
      Nil
        Nil
      Nil
        NilMa Cheng Ji(5)Director
    2009 2008
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    Nil NilMichael Forster(6)Director
    2009 2008
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil
    Nil Nil


(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.

(3) 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.

(4) James Yiu Yeung Loong was appointed as a director of our
company on April 1, 2008.

(5) Ma Cheng Ji was appointed as a director of our company on
April 1, 2008.

(6) Michael Forster was appointed as a director of our company
on April 29, 2008.

Outstanding Equity Awards at Fiscal Year-End

There were no outstanding stock options or stock appreciation
rights granted to our executive officers and directors at December 31, 2009.

---

Aggregated Option Exercises

There were no options exercised by any officer or director of
our company during our twelve month period ended December 31, 2009.

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

No director received compensation for the fiscal years December
31, 2009 and December 31, 2008. 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.

Retirement or Similar Benefit Plans

There are no arrangements or plans in which we provide
retirement or similar benefits for our directors or executive officers.

Resignation, Retirement, Other Termination, or Change in
Control Arrangements

We have no contract, agreement, plan or arrangement, whether
written or unwritten, that provides for payments to our directors or executive
officers at, following, or in connection with the resignation, retirement or
other termination of our directors or executive officers, or a change in control
of our company or a change in our directors or executive officers
responsibilities following a change in control.

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

As of March 29, 2010, there were 42,000,232 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 of Beneficial
      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
    25.62%Common Shares
    Sean Webster Unit 905, 9thFloor, Two
      Chinachem Exchange Square, 338 Kings Road, North Point, Hong
      Kong
    Nil
    Nil


---

Common Shares
    Ma
      Cheng Ji Unit 905, 9thFloor, Two Chinachem Exchange
      Square, 338 Kings Road, North Point, Hong Kong
    500,000
    1.19%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.(6)Pasea Estate
      Road Town, Tortola BVI
    10,000,000(6)
    19.96% of class 46.36% of voting powerCommon Shares
    Ladix
      Properties Inc. Swiss Tower 16th Floor, World Trade Centre
      Panama City, Republic of Panama
    2,250,000
    5.61%Common Shares
    Directors and Executive Officers as a
      Group
    11,259,788
    26.81%


|(1) | Regulation S-K promulgated under the Securities Exchange
      Act of 1934, 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 29, 2010, and the date of this annual report.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(2) | Calculated based on the basis of 42,000,232 issued and
      outstanding shares of common stock as of March 29, 2010 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(6) | Begonia Participation Corp. owns 1,900,000 common shares,
      620,000 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
      50,500,000 votes at any meeting of our security
holders.

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 as 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.

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 $50,000.

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.

As of December 31, 2009, $13,362 was due to Sean Webster, who
is a director, Chief Financial Officer, Secretary, Treasurer of our company.
$8,399 was due to Gerald Lau, who is a director and Chief Executive Officer of
our company. This amount represents money advanced to our company which has not
been repaid back to them. The amount is unsecured and bears no interest.

Corporate Governance

Our Board of Directors currently consists of: Gerald Lau, Sean
Webster, Ma Cheng Ji, Michael Forster and James Yiu Yeung Loong. We do not have
a board member that qualifies as independent as the term is used in NASDAQ
rule 5605(a)(2).

---

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Audit fees

On April 30, 2009, we dismissed Gruber & Company, LLC as
our principal independent accountant, and on April 30, 2009, we engaged Wong Lam
Leung & Kwok CPA Limited as our principal independent accountant. Our board
of directors approved the decisions to dismiss Gruber & Company, LLC and to
appoint Wong Lam Leung & Kwok CPA Limited. Gruber & Company, LLCs
report dated March 31, 2009, on our financial statements for the most recent
fiscal years ended December 31, 2008 and 2007 did not contain an adverse opinion
or disclaimer of opinion, or qualification or modification as to uncertainty,
audit scope, or accounting principles, except that Gruber & Company, LLCs
report contained an explanatory paragraph in respect to the substantial doubt as
to our ability to continue as a going concern.

In connection with the audit of our financial statements for
the two years ended December 31, 2008 and 2007 and in the subsequent interim
period through the date of dismissal, there were no disagreements, resolved or
not, with Gruber & Company, LLC on any matters of accounting principles or
practices, financial statement disclosure or auditing scope or procedures, which
disagreements, if not resolved to the satisfaction of Gruber & Company, LLC,
would have caused Gruber & Company, LLC to make reference to the subject
matter of the disagreement in connection with its report on the financial
statements for such years.

The aggregate fees billed for the two most recently completed
fiscal periods ended December 31, 2009 and December 31, 2008 for professional
services rendered by Wong Lam Leung & Kwok CPA Limited and 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:

Year Ended
      December 31, 2009
    Year Ended
      December 31, 2008Audit Fees and
      Audit Related Fees
    $56,048
    $69,953Tax Fees
    Nil
    $6,424All Other Fees
    Nil
    NilTotal
    $56,048
    $76,377


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 before the respective services were
rendered.

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

---

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)                                                                                                                                   
|      |                                                                                                                                                                                                                                                                                             
|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)                                                                                                                                            
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                    
|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 
      Roots Biopack (Intellectual Property) Limited, incorporated in Hong Kong
      
      Roots Biopark Limited, incorporated in Hong Kong 
      Jiangmen Roots Biopack Ltd., incorporated in the Peoples Republic
      of China 
      Starmetro Group Limited, incorporated in British Virgin Islands 
      Biopack Environmental Limited (f/k/a E-ware Corporation Limited), incorporated
      in Hong Kong
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(31)  | Rule 13a-14(a)/15d-14(a) Certifications                                                                                                                                                                                                                                                                                                                                                                                            
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|31.1* | Section
      302 Certification under Sarbanes-Oxley Act of 2002 of Gerald Lau                                                                                                                                                                                                                                                                                                                                                     
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|31.2* | Section
      302 Certification under Sarbanes-Oxley Act of 2002 of Sean Webster                                                                                                                                                                                                                                                                                                                                                   
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|(32)  | Section 1350 Certifications                                                                                                                                                                                                                                                                                                                                                                                                        

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|32.1* | Section
      906 Certification under Sarbanes-Oxley Act of 2002
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* Filed herewith

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,
2010

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, 2010

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,
2010

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, 2010

By: /s/ James Yiu Yeung Leung James Yiu Yeung Leung
Director Date: March 31, 2010

By: /s Ma Cheng Ji 
  Ma Cheng Ji 
  Director
  Date: March 31, 2010

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