**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-Q**





(Mark
      One)





x
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934.





For
      the
      quarterly period ended **September
      30, 2008**




o
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934.





For
      the
      transition period from ____________ to ____________





Commission
      File Number 000-18606





**CHINA
      GREEN AGRICULTURE, INC.**


(Exact
      name of small business issuer as specified in its charter)




Nevada
            
            36-3526027(State
                or other jurisdiction of
            
            (IRS
                Employerincorporation
                or organization)
            
            Identification
                No.)





3 rd Floor, Borough A, Block A. No.181, South Taibai Road, Xi’an, Shaanxi
      Province,


People’s
      Republic of China 710065


(Address
      of principal executive offices)





+86-29-88266368


(Issuer's
      telephone number)








Indicate
      by check mark whether the issuer (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 o





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 filero
            Accelerated
                fileroNon-accelerated
                filero
              Do
                not check if a smaller reporting company
            Smaller
                reporting companyx





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








APPLICABLE
      ONLY TO CORPORATE ISSUERS





State
      the
      number of shares outstanding of each of the issuer's classes of common equity,
      as of the latest practicable date:  18,381,702 shares of Common Stock,
      $.001 par value, were outstanding as of November 7, 2008.

















TABLE
                  OF CONTENTSPART
                  I
              FINANCIAL
                  INFORMATION
              PageItem
                  1.
              Financial
                  Statements.
              1Consolidated
                  Balance Sheets
                As
                  of September 30, 2008 and June 30, 2008 (Unaudited)
              1Consolidated
                  Income Statements
                For
                  the Three Months Ended September 30, 2008 and 2007
                  (Unaudited)
              2Consolidated
                  Statements of Cash Flows
                For
                  the Three Months Ended September 30, 2008 and 2007
                  (Unaudited)
              3Notes
                  to Consolidated Financial Statements
                As
                  of September 30, 2008 (Unaudited)
              4Item
                  2.
              Management’s
                  Discussion and Analysis of Financial Condition and Results of
                  Operations.
              25Item
                  4.
              Controls
                  and Procedures.
              34PART
                  II
              OTHER
                  INFORMATIONItem
                  6.
              Exhibits
              35Signatures
              36Exhibits/Certifications





**PART
      I - FINANCIAL INFORMATION**





**Item
      1.** **Financial
      Statements**




**CHINA
          GREEN AGRICULTURE INC. AND SUBSIDIARIES**
 **CONSOLIDATED
          BALANCE SHEETS**
 **AS
          OF SEPTEMBER 30, 2008 AND JUNE 30, 2008**
  **ASSETS**




**September
                30, 2008**
            
            **June
                30, 2008****(Unaudited)****Current
                Assets**Cash
                and cash equivalents
            
            $
            16,919,102
            
            $
            16,612,416Restricted
                cash
            
            
            165,081
            
            
            193,392Accounts
                receivable, net
            
            
            6,340,147
            
            
            3,590,552Inventories
            
            
            6,572,248
            
            
            3,988,979Other
                assets
            
            
            104,926
            
            
            128,091Advances
                to suppliers
            
            
            579,582
            
            
            512,845**Total
                Current Assets**
            
            
            30,681,086
            
            
            25,026,275**Plant,
                Property and Equipment, Net**
            
            
            17,829,481
            
            
            18,199,456**Construction
                In Progress**
            
            
            5,155,894
            
            
            5,115,492**Intangible
                Assets, Net**
            
            
            1,153,538
            
            
            1,180,159**Total
                Assets**
            
            $
            54,819,998
            
            $
            49,521,382**LIABILITIES
                AND SHAREHOLDERS' EQUITY****Current
                Liabilities**Accounts
                payable
            
            $
            263,332
            
            $
            232,417Unearned
                revenue
            
            
            180,924
            
            
            88,950Other
                payables and accrued expenses
            
            
            439,015
            
            
            455,228Registration
                rights liability
            
            
            704,494
            
            
            506,142Advances
                from other unrelated companies
            
            
            336,151
            
            
            344,628Amount
                due to related parties
            
            
            31,121
            
            
            31,121Taxes
                payable
            
            
            7,480,835
            
            
            5,878,275Short
                term loans
            
            
            4,084,550
            
            
            4,201,925**Total
                Current Liabilities**
            
            
            13,520,422
            
            
            11,738,686**Common
                Stock, $.001 par value, 6,313,617 shares subject to
                redemption**
            
            
            20,519,255
            
            
            20,519,255**Commitment**
            
            
            —
            
            
            —**Stockholders'
                Equity**Preferred
                Stock, $.001 par value, 20,000,000 shares authorized, Zero shares
                issued
                and outstanding
            
            
            —
            
            
            —Common
                stock, $.001 par value, 780,000,000 shares authorized, 12,068,085
                shares
                issued and outstanding
            
            
            12,068
            
            
            12,068Additional
                paid-in capital
            
            
            1,225,209
            
            
            1,200,077Statury
                reserve
            
            
            2,280,394
            
            
            1,882,797Retained
                earnings
            
            
            14,864,409
            
            
            11,764,079Accumulated
                other comprehensive income
            
            
            2,398,240
            
            
            2,404,419Total
                Stockholders' Equity
            
            
            20,780,321
            
            
            17,263,442**Total
                Liabilities and Stockholders' Equity**
            
            $
            54,819,998
            
            $
            49,521,382


The
        accompanying notes are an integral part of these consolidated financial
        statements.


1


**CHINA
        GREEN AGRICULTURE INC. AND SUBSIDIARIES**


**CONSOLIDATED
        STATEMENTS OF INCOME AND COMPREHENSIVE INCOME**


**FOR
        THE THREE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007**
 **(Unaudited)**


**2008**
            
            **2007****Net
                sales**
            
            $
            8,880,002
            
            $
            7,191,021**Cost
                of goods sold**
            
            
            3,930,893
            
            
            2,773,761**Gross
                profit**
            
            
            4,949,109
            
            
            4,417,260**Operating
                expenses**Selling
                expenses
            
            
            216,376
            
            
            151,705General
                and administrative expenses
            
            
            437,129
            
            
            150,617**Total
                operating expenses**
            
            
            653,505
            
            
            302,322**Income
                from operations**
            
            
            4,295,604
            
            
            4,114,938**Other
                income (expense)**Other
                income (expense)
            
            
            4,655
            
            
            9,301Interest
                income
            
            
            140,395
            
            
            124Interest
                expense
            
            
            (320,864
            )
            
            (92,569
            )Bank
                charges
            
            
            (380
            )
            
            (22
            )**Total
                other expense**
            
            
            (176,194
            )
            
            (83,166
            )**Income
                before income taxes**
            
            
            4,119,410
            
            
            4,031,772Provision
                for income taxes
            
            
            621,483
            
            
            —**Net
                income**
            
            
            3,497,927
            
            
            4,031,772**Other
                comprehensive items**Foreign
                currency translation gain/(loss)
            
            
            (6,179
            )
            
            174,461**Comprehensive
                income**
            
            $
            3,491,748
            
            $
            4,206,233**Basic
                and diluted weighted average shares outstanding**
            
            
            18,381,702
            
            
            10,770,669**Basic
                and diluted net earnings per share ***
            
            $
            0.19
            
            $
            0.37


*
        Basic
        and diluted shares are the same because there are no anti dilutive effect




The
            accompanying notes are an integral part of these consolidated financial
            statements.
  2





**CHINA
        GREEN AGRICULTURE INC. AND SUBSIDIARIES**
 **STATEMENTS
        OF CASH FLOWS**
 **FOR
        THE THREE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007**
 **(Unaudited)**
  **2008**
              
              **2007****Cash
                  flows from operating activities**Net
                  income
              
              $
              3,497,927
              
              $
              4,031,772Adjustments
                  to reconcile net income to net cash provide by operating
                  activitiesShare
                  capital contribution - rental and interest paid by
                  shareholders
              
              
              —
              
              
              14,337Issuance
                  of stock options for compensation
              
              
              25,133Depreciation
              
              
              368,094
              
              
              208,898Amortization
              
              
              26,740
              
              
              24,253Decrease
                  / (Increase) in current assetsAccounts
                  receivable
              
              
              (2,750,170
              )
              
              (4,095,432
              )Other
                  receivables
              
              
              8,258
              
              
              69,214Inventories
              
              
              (2,583,908
              )
              
              (150,870
              )Advances
                  to suppliers
              
              
              (66,825
              )
              
              (318,984
              )Other
                  assets
              
              
              15,756
              
              
              (2,374
              )(Decrease)
                  / Increase in current liabilitiesAccounts
                  payable
              
              
              30,941
              
              
              287,180Unearned
                  revenue
              
              
              91,989
              
              
              94,036Tax
                  payables
              
              
              1,603,503
              
              
              757,460Advances
                  from unrelated parties
              
              
              
              
              
              (341,719
              )Other
                  payables and accrued expenses
              
              
              174,431
              
              
              (16,975
              )**Net
                  cash provided by operating activities**
              
              
              441,868
              
              
              560,796**Cash
                  flows from investing activities**Acquisition
                  of plant, property, and equipment
              
              
              (897
              )
              
              —Additions
                  to construction in progress
              
              
              (41,223
              )
              
              —**Net
                  cash used in investing activities**
              
              
              (42,120
              )
              
              —**Cash
                  flows from financing activities**Repayment
                  of loan
              
              
              (116,701
              )
              
              —Restricted
                  cash
              
              
              28,311
              
              
              —(Payments)/proceeds
                  to/from related parties
              
              
              —
              
              
              (536,621
              )**Net
                  cash used in financing activities**
              
              
              (88,391
              )
              
              (536,621
              )**Effect
                  of exchange rate change on cash and cash
                  equivalents**
              
              
              (4,671
              )
              
              1,509**Net
                  increase in cash and cash equivalents**
              
              
              306,686
              
              
              25,684**Cash
                  and cash equivalents, beginning balance**
              
              
              16,612,416
              
              
              81,716**Cash
                  and cash equivalents, ending balance**
              
              $
              16,919,102
              
              $
              107,400**Supplement
                  disclosure of cash flow information**Interest
                  expense paid
              
              $
              (122,511
              )
              $
              (92,674
              )Income
                  taxes paid
              
              $
              —
              
              $
              —




The
        accompanying notes are an integral part of these consolidated financial
        statements.




3


**CHINA** **GREEN
        AGRICULTURE INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS** **(Unaudited)**
  **NOTE
        1 -** **ORGANIZATION
        AND DESCRIPTION OF BUSINESS**
 
 China
        Green Agriculture, Inc. (the “Company”, “we”, “us”) was incorporated as
        Videophone, Inc. in 1987 under the laws of the State of Kansas. It later
        changed
        its name to Discovery Systems, Inc. till June 13, 1990 and Discovery
        Technologies, Inc. (“Discovery Technologies”) from June 14, 1990 to February 4,
        2008. The State of Kansas involuntarily dissolved the Company effective December
        1996. On December 4, 2006 the State of Kansas reinstated the Company's corporate
        charter. From December 1996 to December 2007, the Company did not engaged
        in any
        operations and was dormant.
 
 On
        August
        27, 2007 the Board of Directors unanimously adopted resolutions announcing
        a
        special meeting of shareholders to consider and act upon a proposed Agreement
        and Plan of Merger, to reincorporate Discovery Technologies, Inc. (“Discovery
        Technologies”) in the State of Nevada by merger with and into a Nevada
        corporation with the same name ("Discovery Technologies Nevada") which Discovery
        Technologies formed for such purpose (the "Migratory Merger"). Effective
        September 24, 2007, shareholders approved the Agreement and Plan of Merger
        as
        described in the definitive proxy materials filed with the Securities and
        Exchange Commission.
 
 In
        accordance with the Agreement and Plan of Merger, Discovery Technologies
        adopted
        the capital structure of Discovery Technologies Nevada, which includes total
        authorized capital stock of 800,000,000 shares, of which 780,000,000 are
        common
        stock, with a par value of $.001 per share (the "Discovery Technologies Nevada
        Common Stock") and 20,000,000 shares are blank check preferred stock, with
        a par
        value of $.001 per share (the "Preferred Stock"). In addition, on the Effective
        Date described below, the issued and outstanding shares of our Common Stock
        automatically converted into shares of Discovery Technologies Nevada Common
        Stock at a ratio of nine (9) shares of our currently outstanding Common Stock
        for one (1) share of Discovery Technologies Nevada Common Stock.
 
 As
        a
        result of the reverse stock split of registrant's common stock, registrant's
        outstanding shares of common stock were reduced from 18,746,196 shares to
        2,083,339 shares. The Migratory Merger and reverse split became effective
        on
        October 16, 2007 (the "Effective Date").
 
 Further
        on December 18, 2007, the Company had another reverse stock split at a ratio
        of
        6.771:1. As a result, registrant's outstanding shares of common stock were
        reduced from 2,083,339 shares to 308,084 shares as of December 18, 2007.
 
 All
        references in the accompanying financial statements to the number of common
        shares and per share amounts have been retroactively restated to reflect
        the
        reverse stock splits.
 
 On
        December 26, 2007, the Company acquired all of the issued and outstanding
        capital stock (the “Green Agriculture Shares”) of Green Agriculture Holding
        Corporation, a New Jersey corporation (“Green Agriculture” or “Green New
        Jersey”), through a share exchange (the “Share Exchange”) in which the Company
        issued 10,770,669 number of shares of its common stock, par value $.001 per
        share (the “Common Stock”) to Green Agriculture’s shareholders in exchange for
        the Green Agriculture Shares. Immediately prior to the Share Exchange, the
        Company redeemed 246,148 shares of Common Stock held by Michael Friess and
        Sanford Schwartz (the “Redemption”) for $550,000 and issued 111,386 new shares
        of Common Stock to Messrs. Schwartz and Friess, two of our directors at the
        time, who then appointed Tao Li as the Company’s Director and Chief Executive
        Officer who proceeded to effect the Share Exchange. In connection to the
        redemption share issuance, the Company also issued 78,462 shares of common stock
        to a consultant.
  4
 **CHINA** **GREEN
          AGRICULTURE INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS** **(Unaudited)**
 The
        Share
        Exchange has been accounted for as a reverse acquisition under the purchase
        method of accounting because the stockholders of Green Agriculture obtained
        control of the Company. Accordingly, the exchange of shares by the two companies
        has been recorded as a recapitalization of the Company, with the Company
        (Green
        Agriculture) being treated as the continuing entity. The historical financial
        statements presented are those of Green Agriculture. As a result of the reverse
        acquisition transaction described above the historical financial statements
        presented are those of Green Agriculture, the operating entity. Pro-forma
        information is not presented because the public shell’s assets are immaterial.
        Transaction costs incurred in the reverse acquisition have been charged to
        expense.
 
 On
        August
        24, 2007, Green Agriculture Holding Corporation acquired 100% outstanding
        shares
        of Shaanxi TechTeam Jinong Humic Acid Product Co., Ltd. (“Techteam Jinong”,
“Techteam” or “Jinong”) which owns 100% equity of Xi’an Jintai Agriculture
        Technology Development Company (“Xi’an Jintai” or “Jintai”). Green Agriculture
        was incorporated on January 27, 2007 under the laws of the State of New Jersey
        with initially two shareholders owning 89% and 11% of its stock. As of December
        25, 2007, immediately prior to the Share Exchange, Yinshing David To (95.1%),
        Paul Hickey (2.45%) and Greg Freihofner (2.45%), (collectively, the “Green New
        Jersey Stockholders”) owned 100% of the outstanding capital stock of Green New
        Jersey. Green New Jersey, through its Chinese subsidiaries Techteam Jinong
        and
        Xi’an Jintai is engaged in the research and development, manufacture,
        distribution and sale of humic acid organic liquid compound fertilizer. The
        exchange of shares with Techteam has been accounted for as a reverse acquisition
        under the purchase method of accounting since the stockholders of the Techteam
        obtained control of the consolidated entity. Accordingly, the merger of the
        two
        companies has been recorded as a recapitalization of Techteam, with Techteam
        being treated as the continuing entity. Inter-company amounts and balances
        have
        been eliminated.
 
 Yangling
        Techteam Jinong Humic Acid Product Co., Ltd. was founded in the People’s
        Republic of China on June 19, 2000. On February 28, 2006, Yangling Techteam
        Jinong Humic Acid Product Co., Ltd changed its name to be Shaanxi Techteam
        Jinong Humic Acid Product Co., Ltd.
 
 On
        January 19, 2007, Techteam Jinong incorporated Xi’an Jintai which provides
        testing and experimental data collection base for the function and feature
        of
        the new fertilizer products produced by Techteam Jinong by imitating the
        various
        growing conditions and stages or cycles for a variety of plants, such as
        flowers, vegetables and seedlings which the fertilizers apply on. Xi’an Jintai
        also sells such plants themselves to the customers and generates
        sales.
  5
 **CHINA** **GREEN
          AGRICULTURE INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS** **(Unaudited)**
 The
        Company, through its subsidiaries is has two business segments: Techteam
        Jinong’s main business is to produce and sell fertilizers, and Xi’an Jintai’s
        main business is to sell the products which are the by-products (fruit and
        vegetables) from the development experiment of the fertilizers.
 
 Effective
        February 5, 2008, the Company changed its name from Discovery Technologies,
        Inc.
        to China Green Agriculture, Inc. to better reflect its business. Related
        to the
        name change, the trading symbol changed from DCOV.OB to CGAG.OB on the same
        day.
 
 The
        Company’s current structure is set forth in the diagram below:
 
 
 
 **NOTE
        2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
        POLICIES**
 
 The
        accompanying unaudited financial statements of the Company have been prepared
        in
        accordance with generally accepted accounting principles for interim financial
        information. Accordingly, they do not include all of the information required
        by
        generally accepted accounting principles for complete financial statements.
        In
        the opinion of management, all adjustments (consisting of normal recurring
        adjustments) considered necessary for a fair presentation have been included.
        Operating results for the interim periods are not necessarily indicative
        of the
        results for any future period. These statements should be read in conjunction
        with the Company's audited financial statements and notes thereto for the
        fiscal
        year ended June 30, 2008. The results of the three month period ended September
        30, 2008 are not necessarily indicative of the results to be expected for
        the
        full fiscal year ending June 30, 2009.
  6
 **CHINA** **GREEN
          AGRICULTURE INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS** **(Unaudited)**
 Principle
        of consolidation
 
 The
        accompanying consolidated financial statements include the accounts of the
        Company and its wholly-owned subsidiaries, TechTeam Jinong and Xi’an Jintai. All
        significant inter-company accounts and transactions have been eliminated
        in
        consolidation.
 
 Use
        of
        estimates
 
 The
        preparation of consolidated financial statements in conformity with accounting
        principles generally accepted in the United States of America requires
        management to make estimates and assumptions that affect the reported amounts
        of
        assets and liabilities and disclosure of contingent assets and liabilities
        at
        the date of the consolidated financial statements and the amount of revenues
        and
        expenses during the reporting periods. Management makes these estimates using
        the best information available at the time the estimates are made. However,
        actual results could differ materially from those results.
 
 Cash
        and cash equivalents
 
 For
        statement of cash flows purposes, the Company considers all cash on hand
        and in
        banks, certificates of deposit and other highly-liquid investments with
        maturities of three months or less, when purchased, to be cash and cash
        equivalents. Cash overdraft as of balance sheet date will be reflected as
        liabilities in the balance sheet.  As
        of
        September 30, 2008 and June 30, 2008, cash and cash equivalents amounted
        to
        $16,919,102 and $16,612,416, respectively.
 
 Accounts
        receivable
 
 The
        Company's policy is to maintain reserves for potential credit losses on accounts
        receivable. Management reviews the composition of accounts receivable and
        analyzes historical bad debts, customer concentrations, customer credit
        worthiness, current economic trends and changes in customer payment patterns
        to
        evaluate the adequacy of these reserves. As of September 30, 2008 and June
        30,
        2008, the Company had accounts receivable of $6,340,147 and $3,590,552, net
        of
        allowance for doubtful accounts of $56,451 and $96,065,
        respectively.
 
 Advances
        to suppliers
 
 The
        Company provides advances to certain vendors for purchase of its material.
        As of
        September 30, 2008 and June 30, 2008, the advances to suppliers amounted
        to
        $579,582 and $512,845, respectively.
  7
 **CHINA** **GREEN
          AGRICULTURE INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS** **(Unaudited)**
  Inventories
 
 Inventories
        are valued at the lower of cost (determined on a weighted average basis)
        or net
        realizable value. The management compares the cost of inventories with the
        net
        realizable value and an allowance is made for writing down the inventories
        to
        their net realizable value, if lower than the cost.
 
 Property,
        plant and equipment
 
 Property,
        plant and equipment are recorded at cost. Gains or losses on disposals are
        reflected as gain or loss in the year of disposal. The cost of improvements
        that
        extend the life of plant, property, and equipment are capitalized. These
        capitalized costs may include structural improvements, equipment, and fixtures.
        All ordinary repair and maintenance costs are expensed as incurred.
 
 Depreciation
        for financial reporting purposes is provided using the straight-line method
        over
        the estimated useful lives of the assets:
  Estimated
                  Useful LifeBuilding
              
              
              10-40
                  yearsLeasehold
                  improvements
              
              
              3-5
                  yearsMachinery
                  and equipment
              
              
              5-15
                  yearsVehicles
              
              
              3-5
                  years
 
 Leasehold
        improvements are amortized over the lease term or the estimated useful life,
        whichever is shorter.
 
 Impairment
 
 The
        Company applies the provisions of Statement of Financial Accounting Standard
        No.
        144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("FAS
        No.
        144"), issued by the Financial Accounting Standards Board ("FASB"). FAS No.
        144
        requires that long-lived assets be reviewed for impairment whenever events
        or
        changes in circumstances indicate that the carrying amount of an asset may
        not
        be recoverable through the estimated undiscounted cash flows expected to
        result
        from the use and eventual disposition of the assets. Whenever any such
        impairment exists, an impairment loss will be recognized for the amount by
        which
        the carrying value exceeds the fair value.
 
 The
        Company tests long-lived assets, including property, plant and equipment
        and
        intangible assets subject to periodic amortization, for recoverability at
        least
        annually or more frequently upon the occurrence of an event or when
        circumstances indicate that the net carrying amount is greater than its fair
        value. Assets are grouped and evaluated at the lowest level for their
        identifiable cash flows that are largely independent of the cash flows of
        other
        groups of assets. The Company considers historical performance and future
        estimated results in its evaluation of potential impairment and then compares
        the carrying amount of the asset to the future estimated cash flows expected
        to
        result from the use of the asset. If the carrying amount of the asset exceeds
        estimated expected undiscounted future cash flows, the Company measures the
        amount of impairment by comparing the carrying amount of the asset to its
        fair
        value. The estimation of fair value is generally measured by discounting
        expected future cash flows as the rate the Company utilizes to evaluate
        potential investments. The Company estimates fair value based on the information
        available in making whatever estimates, judgments and projections are considered
        necessary. There was no impairment of long-lived assets for the three months
        ended September 30, 2008.
  8
 **CHINA** **GREEN
          AGRICULTURE INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS** **(Unaudited)**
 Revenue
        recognition
 
 The
        Company's revenue recognition policies are in compliance with Staff Accounting
        Bulletin (SAB) 104. Sales revenue is recognized at the date of shipment to
        customers when a formal arrangement exists, the price is fixed or determinable,
        the delivery is completed, no other significant obligations of the Company
        exist
        and collectibility is reasonably assured. Payments received before all of
        the
        relevant criteria for revenue recognition are satisfied are recorded as unearned
        revenue. As of September 30, 2008 and June 30, 2008, the Company had unearned
        revenues of $180,924 and $88,950, respectively.
 
 The
        Company's revenue consists of invoiced value of goods, net of a value-added
        tax
        (VAT). No product return or sales discount allowance is made as products
        delivered and accepted by customers are normally not returnable and sales
        discounts are normally not granted after products are delivered.
 
 Advertising
        costs
 
 The
        Company expenses the cost of advertising as incurred or, as appropriate,
        the
        first time the advertising takes place. Advertising costs for the three months
        ended September 30, 2008 and 2007, were $24,384 and $ 23,125, respectively.
 
 Income
        taxes
 
 The
        Company accounts for income taxes using an asset and liability approach which
        allows for the recognition and measurement of deferred tax assets based upon
        the
        likelihood of realization of tax benefits in future years. Under the asset
        and
        liability approach, deferred taxes are provided for the net tax effects of
        temporary differences between the carrying amounts of assets and liabilities
        for
        financial reporting purposes and the amounts used for income tax purposes.
        A
        valuation allowance is provided for deferred tax assets if it is more likely
        than not these items will either expire before the Company is able to realize
        their benefits, or that future deductibility is uncertain.
  9
 **CHINA** **GREEN
          AGRICULTURE INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS** **(Unaudited)**
 The
        Company records a valuation allowance for deferred tax assets, if any, based
        on
        its estimates of its future taxable income as well as its tax planning
        strategies when it is more likely than not that a portion or all of its deferred
        tax assets will not be realized. If the Company is able to utilize more of
        its
        deferred tax assets than the net amount previously recorded when unanticipated
        events occur, an adjustment to deferred tax assets would increase the Company
        net income when those events occur. The Company does not have any significant
        deferred tax asset or liabilities in the PRC tax jurisdiction.
 
 Foreign
        currency translation
 
 The
        functional currency of the Company is RMB. The Company uses the United States
        dollar ("U.S. dollars") for financial reporting purposes. The Company's
        subsidiaries maintain their books and records in their functional currency,
        being the primary currency of the economic environment in which their operations
        are conducted. In general, for consolidation purposes, the Company translates
        the subsidiaries' assets and liabilities into U.S. dollars using the applicable
        exchange rates prevailing at the balance sheet date, and the statement of
        income
        is translated at average exchange rates during the reporting period. Gain
        or
        loss on foreign currency transactions are reflected on the income statement.
        Gain or loss on financial statement translation from foreign currency are
        recorded as a separate component in the equity section of the balance sheet,
        as
        component of comprehensive income. The functional currency of the Company
        is
        Chinese Renminbi ("RMB"), the PRC's official currency. Until July 21, 2005,
        RMB
        had been pegged to US$ at the rate of RMB8.28: US$1.00. On July 21, 2005,
        the
        PRC government reformed the exchange rate system into a managed floating
        exchange rate system based on market supply and demand with reference to
        a
        basket of currencies. In addition, the exchange rate of RMB to US$ was adjusted
        to RMB8.11: US$1.00 as of July 21, 2005. The People's Bank of China announces
        the closing price of a foreign currency such as US$ traded against RMB in
        the
        inter-bank foreign exchange market after the closing of the market on each
        working day, which will become the unified exchange rate for the trading
        against
        RMB on the following working day. The daily trading price of US$ against
        RMB in
        the inter-bank foreign exchange market is allowed to float within a band
        of 0.3%
        around the unified exchange rate published by the People's Bank of China.
        This
        quotation of exchange rates does not imply free convertibility of RMB to
        other
        foreign currencies. All foreign exchange transactions continue to take place
        either through the Bank of China or other banks authorized to buy and sell
        foreign currencies at the exchange rates quoted by the People's Bank of China.
        Approval of foreign currency payments by the Bank of China or other institutions
        required submitting a payment application form together with invoices, shipping
        documents and signed contracts.
 
 Fair
        values of financial instruments
 
 Statement
        of Financial Accounting Standard No. 107, "Disclosures about Fair Value of
        Financial Instruments", requires that the Company disclose estimated fair
        values
        of financial instruments.
  10
 **CHINA** **GREEN
          AGRICULTURE INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS** **(Unaudited)**
 The
        Company's financial instruments primarily consist of cash and cash equivalents,
        accounts receivable, other receivables, advances to suppliers, accounts payable,
        other payables, tax payable, and related party advances and
        borrowings.
 
 As
        of the
        balance sheet dates, the estimated fair values of the financial instruments
        were
        not materially different from their carrying values as presented on the balance
        sheet. This is attributed to the short maturities of the instruments and
        that
        interest rates on the borrowings approximate those that would have been
        available for loans of similar remaining maturity and risk profile at respective
        balance sheet dates.
 
 Segment
        reporting
 
 Statement
        of Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosure about
        Segments of an Enterprise and Related Information" requires use of the
        "management approach" model for segment reporting. The management approach
        model
        is based on the way a company's management organizes segments within the
        company
        for making operating decisions and assessing performance. Reportable segments
        are based on products and services, geography, legal structure, management
        structure, or any other manner in which management disaggregates a
        company.
 
 During
        the three months ended September 30, 2008,  the
        Company was organized into two main business segments: fertilizer production
        (Jinong) and agricultural products production (Jintai). The following table
        presents a summary of operating information and quarter-end balance sheet
        information for the three months ended September 30, 2008 and 2007,
        respectively.
  11
 **CHINA** **GREEN
          AGRICULTURE INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS** **(Unaudited)**
  For
                    the three months endedSeptember
                    30, 2008
                
                September
                    30, 2007Revenues
                    from unaffiliated customers:Fertilizer
                
                $
                7,625,501
                
                $
                5,588,757Agricultural
                    products
                
                
                1,254,501
                
                
                1,602,264Consolidated
                
                $
                8,880,002
                
                $
                7,191,021Operating
                    income (expenses) :Fertilizer
                
                $
                4,125,086
                
                $
                3,131,416Agricultural
                    products
                
                
                454,104
                
                
                983,522Reconciling
                    item (1)
                
                
                —
                
                
                —Reconciling
                    item (2)
                
                
                (283,586
                )
                
                —Consolidated
                
                $
                4,295,604
                
                $
                4,114,938Identifiable
                    assets:Fertilizer
                
                $
                48,728,908
                
                $
                19,373,276Agricultural
                    products
                
                
                5,349,876
                
                
                2,325,120Reconciling
                    item (1)
                
                
                576,132
                
                
                —Reconciling
                    item (2)
                
                
                165,081
                
                
                —Consolidated
                
                $
                54,819,998
                
                $
                21,698,396Net
                    income:Fertilizer
                
                $
                3,521,739
                
                $
                3,048,148Agricultural
                    products
                
                
                454,229
                
                
                983,624Reconciling
                    item (1)
                
                
                4,043
                
                
                —Reconciling
                    item (2)
                
                
                (482,084
                )
                
                —Consolidated
                
                $
                3,497,927
                
                $
                4,031,772Depreciation
                    and amortization:Fertilizer
                
                $
                367,103
                
                $
                233,151Agricultural
                    products
                
                
                27,731
                
                
                —Reconciling
                    item (1)
                
                
                —
                
                
                —Reconciling
                    item (2)
                
                
                —
                
                
                —Consolidated
                
                $
                394,834
                
                $
                233,151Capital
                    expenditures:Fertilizer
                
                $
                42,120
                
                $
                —Agricultural
                    products
                
                
                —
                
                
                —Reconciling
                    item (1)
                
                
                —
                
                
                —Reconciling
                    item (2)
                
                
                —
                
                
                —Consolidated
                
                $
                42,120
                
                $
                —Interest
                    expense:Fertilizer
                
                $
                122,365
                
                $
                92,569Agricultural
                    products
                
                
                —
                
                
                —Reconciling
                    item (1)
                
                
                —
                
                
                —Reconciling
                    item (2)
                
                
                198,498
                
                
                —Consolidated
                
                $
                320,864
                
                $
                92,569
 (1)
        Reconciling amounts refer to the unallocated assets or expenses of Green
        Agriculture.
  (2)
        Reconciling amounts refer to the unallocated assets or expenses of the parent
        Company.
  12
  **CHINA** **GREEN
          AGRICULTURE INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS** **(Unaudited)**
 Statement
        of cash flows
 
 In
        accordance with Statement of Financial Accounting Standards No. 95, "Statement
        of Cash Flows," cash flows from the Company's operations is calculated based
        upon the local currencies. As a result, amounts related to assets and
        liabilities reported on the statement of cash flows may not necessarily agree
        with changes in the corresponding balances on the balance sheet.
 
 Recent
        accounting pronouncements
 
 In
        December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
        Consolidated Financial Statements”, which is an amendment of Accounting Research
        Bulletin (“ARB”) No. 51.  This statement clarifies that a
        noncontrolling interest in a subsidiary is an ownership interest in the
        consolidated entity that should be reported as equity in the consolidated
        financial statements.  This statement changes the way the consolidated
        income statement is presented, thus requiring consolidated net income to
        be
        reported at amounts that include the amounts attributable to both parent
        and the
        noncontrolling interest.  This statement is effective for the fiscal
        years, and interim periods within those fiscal years, beginning on or after
        December 15, 2008.  Based on current conditions, the Company does not
        expect the adoption of SFAS 160 to have a significant impact on its results
        of
        operations or financial position.
  In
        December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
        Combinations.”  This statement replaces FASB Statement No. 141,
“Business Combinations.” This statement retains the fundamental requirements in
        SFAS 141 that the acquisition method of accounting (which SFAS 141 called
        the purchase method) be used for all business combinations and for an acquirer
        to be identified for each business combination. This statement defines the
        acquirer as the entity that obtains control of one or more businesses in
        the
        business combination and establishes the acquisition date as the date that
        the
        acquirer achieves control. This statement requires an acquirer to recognize
        the
        assets acquired, the liabilities assumed, and any noncontrolling interest
        in the
        acquiree at the acquisition date, measured at their fair values as of that
        date,
        with limited exceptions specified in the statement. This statement applies
        prospectively to business combinations for which the acquisition date is
        on or
        after the beginning of the first annual reporting period beginning on or
        after
        December 15, 2008. The Company does not expect the adoption of SFAS 160 to
        have
        a significant impact on its results of operations or financial
        position.
 
 In
        March,
        2008, the FASB issued FASB Statement No. 161, “Disclosures about Derivative
        Instruments and Hedging Activities”. The new standard is intended to improve
        financial reporting about derivative instruments and hedging activities by
        requiring enhanced disclosures to enable investors to better understand their
        effects on an entity’s financial position, financial performance, and cash
        flows. It is effective for financial statements issued for fiscal years and
        interim periods beginning after November 15, 2008, with early application
        encouraged. The new standard also improves transparency about the location
        and
        amounts of derivative instruments in an entity’s financial statements; how
        derivative instruments and related hedged items are accounted for under
        Statement 133; and how derivative instruments and related hedged items affect
        its financial position, financial performance, and cash flows.
 
 FASB
        Statement No. 161 achieves these improvements by requiring disclosure of
        the
        fair values of derivative instruments and their gains and losses in a tabular
        format. It also provides more information about an entity’s liquidity by
        requiring disclosure of derivative features that are credit risk-related.
        Finally, it requires cross-referencing within footnotes to enable financial
        statement users to locate important. Based on current conditions, the Company
        does not expect the adoption of SFAS 161 to have a significant impact on
        its
        results of operations or financial position.
 
 In
        May 0f
        2008, FSAB issued SFASB No.162, The Hierarchy of Generally Accepted Accounting
        Principles. The pronouncement mandates the GAAP hierarchy reside in the
        accounting literature as opposed to the audit literature. This has the practical
        impact of elevating FASB Statements of Financial Accounting Concepts in the
        GAAP
        hierarchy. This pronouncement will become effective 60 days following SEC
        approval. The company does not believe this pronouncement will impact its
        financial statements.
 
 In
        May of
        2008, FASB issued SFASB No. 163, Accounting for Financial Guarantee Insurance
        Contracts-an interpretation of FASB Statement No. 60. The scope of the statement
        is limited to financial guarantee insurance (and reinsurance) contracts.
        The
        pronouncement is effective for fiscal years beginning after December 31,
        2008.
        The company does not believe this pronouncement will impact its financial
        statements.
  13
 
  **CHINA** **GREEN
            AGRICULTURE INC. AND SUBSIDIARIES**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS** **(Unaudited)**
 **NOTE
        3 - INVENTORIES**
 
 Inventories
        consist of the following as of September 30, 2008 and June 30,
        2008:
 
 September
                  30, 2008
              
              June
                  30, 2008Raw
                  materials
              
              $
              1,383,121
              
              $
              77,000Supplies
                  and packing materials
              
              
              1,103,825
              
              
              207,138Work
                  in progress
              
              
              3,941,483
              
              
              3,570,127Finished
                  goods
              
              
              143,820
              
              
              134,714Totals
              
              $
              6,572,248
              
              $
              3,988,979
  **NOTE
        4 - OTHER ASSETS**
 
 As
        of
        September 30, 2008 and June 30, 2008, other assets comprised of the
        following:
 September
                    30, 2008
                
                June
                    30, 2008Other
                    receivable
                
                $
                71,996
                
                $
                93,987Promotion
                    material
                
                
                32,930
                
                
                34,104Total
                
                $
                104,926
                
                $
                128,091
  Other
        receivables represent advances made to non-related companies and employees.
        The
        amounts were unsecured, interest free, and due on demand.
 
 **NOTE
        5 - PROPERTY, PLANT AND EQUIPMENT**
 
 Property,
        plant and equipment consist of the following as of September 30, 2008 and
        June
        30, 2008:
  September
                  30, 2008
              
              June
                  30, 2008Building
                  and improvements
              
              $
              8,794,392
              
              $
              8,795,804Vehicles
              
              
              23,749
              
              
              23,753Machinery
                  and equipment
              
              
              10,262,918
              
              
              10,263,668Agriculture
                  assets
              
              
              887,518
              
              
              887,518Total
              
              
              19,968,577
              
              
              19,970,743Less:
                  accumulated depreciation
              
              
              (2,139,096
              )
              
              (1,771,287
              )Total
                  property, plant and equipment
              
              $
              17,829,481
              
              $
              18,199,456
 
 Depreciation
        expenses for the three months ended September 30, 2008 and 2007 were $368,094
        and $208,898, respectively.
  14
 **CHINA** **GREEN
          AGRICULTURE INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS** **(Unaudited)**
 Agriculture
        assets consist of reproductive trees that are expected to be commercially
        productive for a period of eight years.
 
 Construction
        in Progress:
 
 As
        of
        September 30, 2008 and June 30, 2008, construction in progress, representing
        construction for a new product line, amounted to $5,155,894 and $5,115,492,
        respectively.
  **NOTE
        6 - INTAGIBLE ASSETS**
 
 The
        intangible assets comprised of following at September 30, 2008 and June 30,
        2008:
  September
                  30, 2008
              
              June
                  30, 2008Land
                  use right, net
              
              $
              910,573
              
              $
              915,864Technology
                  know-how, net
              
              
              242,965
              
              
              264,295Total
              
              $
              1,153,538
              
              $
              1,180,159
 
 LAND
        USE RIGHT
 
 Per
        the
        People's Republic of China's governmental regulations, the Government owns
        all
        land. However, the government grants the user a “land use right” (the Right) to
        use the land. The Company has recognized the amounts paid for the acquisition
        of
        rights to use land as intangible asset and amortizing over a period of fifty
        years.
 
 A
        shareholder contributed the land use rights on August 16, 2001. The land
        use
        right was recorded at cost of $1,062,898.  The
        land
        use right is for fifty years. The land use right consists of the followings
        as
        of September 30, 2008 and June 30, 2008:
 
 September
                  30, 2008
              
              June
                  30, 2008Land
                  use right
              
              $
              1,062,898
              
              $
              1,062,898Less:
                  accumulated amortization
              
              
              (152,324
              )
              
              (147,034
              )Total
              
              $
              910,573
              
              $
              915,864
 
 TECHNOLOGY
        KNOW-HOW
 
 A
        shareholder contributed the technology know-how on August 16, 2001. The
        technology know-how is recorded at cost of $857,174. This technology is the
        special formula to produce humid acid. The technology know-how is valid for
        10
        years. The technology know-how consists of the following as of September
        30,
        2008 and June 30, 2008:
  September
                  30, 2008
              
              June
                  30, 2008Technology
                  Know-how
              
              $
              857,174
              
              $
              857,174Less:
                  accumulated amortization
              
              
              (614,209
              )
              
              (592,879
              )Total
              
              $
              242,965
              
              $
              264,295
  15
 **CHINA** **GREEN
          AGRICULTURE INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS** **(Unaudited)**
 Total
        amortization expenses of intangible assets for the three months ended September
        30, 2008 and 2007 amounted to $26,740 and $24,253, respectively.
 
 Amortization
        expenses of intangible assets for the next five years after September 30,
        2008
        are as follows:
 
 September
                  30, 2009
              
              $
              106,975September
                  30, 2010
              
              
              106,975September
                  30, 2011
              
              
              87,498September
                  30, 2012
              
              
              21,258September
                  30, 2013
              
              
              21,258Total
              
              $
              343,964
 
 **NOTE
        7 - AMOUNT DUE TO RELATED PARTIES**
 
 The
        amount due to related parties were the advances to the Company’s officers and
        shareholders, and was unsecured, non-interest bearing and due
        on
        demand .
        As of September
        30, 2008 and June 30, 2008, the
        amount due to related parties is $31,121 and $31,121 ,
        respectively.
 
 **NOTE
        8 -** **ACCRUED
        EXPENSES** **AND OTHER PAYABLES**
 
 Accrued
        expenses and other payables of the following as of September 30, 2008 and
        June
        30, 2008:
 
 September
                  30, 2008
              
              June
                  30, 2008Payroll
                  payable
              
              $
              13,847
              
              $
              15,379Welfare
                  payable
              
              
              176,216
              
              
              178,500Accrued
                  expenses
              
              
              135,758
              
              
              148,070Other
                  levy payable
              
              
              113,194
              
              
              113,279**Total**
              
              **$**
              **439,015**
              
              **$**
              **455,228**
  16
 **CHINA** **GREEN
          AGRICULTURE INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS** **(Unaudited)**
 **NOTE
        9 - LOAN PAYABLES**
 
 As
        of
        September 30, 2008 and June 30, 2008, the loan payables were as
        follows:
 
 September
                  30, 2008
              
              June
                  30, 2008Short
                  term loans payable:Xi’an
                  Commercial Bank Xincheng Branch
              
              $
              2,188,152
              
              $
              2,188,502Xi’an
                  Beilin District Rural Credit Union Wenyibeilu Branch
              
              
              554,332
              
              
              554,421Agriculture
                  Bank Yanglingshifangqu Branch
              
              
              1,342,066
              
              
              1,459,002Total
              
              $
              4,084,550
              
              $
              4,201,925
 
 At
        September 30, 2008, the Company had a loan payable of $2,188,152 to Xi’an
        Commercial Bank Xincheng Branch in
        China, with an annual interest rate of 10.585%, and due on April 1, 2009.
        The
        loan is pledge by the land use right and property of the Company.
 
 At
        September 30, 2008, the Company had a loan payable of $554,332 to Xi’an
        Beilin District Rural Credit Union Wenyibeilu Branch with an
        annual interest rate of 11.795%, and due on September 16, 2009.  The
        loan
        is guaranteed by a former shareholder.
 
 At
        September 30, 2008, the Company had a loan payable of $1,342,066, to Agriculture
        Bank in China Yanglingshifangqu Branch ,
        with an
        annual interest rate of 9.71%, and due on December 28, 2008. The loan is
        guaranteed by the former shareholder.
 
 The
        interest expenses from these short-term loans are $122,365 and $92,569 for
        three
        months ended September 30, 2008 and 2007.
 
 **NOTE
        10 - TAX PAYABLES**
 
 Tax
        payables consist of the following as of September 30, 2008 and June 30,
        2008:
 
 September
                  30, 2008
              
              June
                  30, 2008VAT
                  payable
              
              $
              5,476,791
              
              
              4,495,140Income
                  tax payable
              
              
              1,659,770
              
              
              1,038,651Other
                  levies
              
              
              344,274
              
              
              344,484Total
              
              $
              7,480,535
              
              
              5,878,275
 
 **NOTE
        11 - ADVANCES FROM UNRELATED COMPANIES**
 
 Advances
        from unrelated companies were $336,151 and $344,628 at September 30, 2008
        and
        June 30, 2008, respectively. The advances were due on demand, unsecured and
        non
        interest bearing.
 
 **NOTE
        12 - OTHER INCOME (EXPENSES)**
 
 Other
        incomes (expenses) mainly consist of interest expenses and subsidy income
        from
        government.
  17
  **CHINA** **GREEN
          AGRICULTURE INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS** **(Unaudited)**
  **NOTE
        13 - INCOME TAXES**
 
 The
        Company utilizes SFAS No. 109, "Accounting for Income Taxes," which requires
        the
        recognition of deferred tax assets and liabilities for the expected future
        tax
        consequences of events that have been included in the financial statements
        or
        tax returns. Under this method, deferred income taxes are recognized for
        the tax
        consequences in future years of differences between the tax bases of assets
        and
        liabilities and their financial reporting amounts at each period end based
        on
        enacted tax laws and statutory tax rates applicable to the periods in which
        the
        differences are expected to affect taxable income. Valuation allowances are
        established, when necessary, to reduce deferred tax assets to the amount
        expected to be realized.
 
 The
        Company is subject to PRC Enterprise Income Tax at a rate of 33% on the net
        income. For the year 2007, the company can enjoy tax-free benefit because
        it
        becomes a foreign invested company according to the PRC tax law.
 
 The
        provision for income taxes as of September 30, 2008 and September 30, 2007
        consisted of the following:
  2008
                
                2007Current
                    income tax - Provision for China income and local tax
                
                $
                621,483
                
                $
                —Deferred
                    taxes
                
                
                —
                
                
                —Total
                    provision for income taxes
                
                $
                621,483
                
                $
                —
  The
        following table reconciles the U.S. statutory rates to the Company’s effective
        tax rate as of September 30, 2008 and September 30, 2007:
 
 2008
              
              2007Tax
                  at statutory rate
              
              
              34
              %
              
              34
              %Foreign
                  tax rate difference
              
              
              (19
              %)
              
              (19
              %)Net
                  operating loss in other tax jurisdiction for where no benefit is
                  realized
              
              
              0
              %
              
              (15
              %)Total
              
              
              15
              %
              
              0
              %
 
 Beginning
        January 1, 2008, in the People's Republic of China (PRC) the new Enterprise
        Income Tax (“EIT”) law will replace the existing laws for Domestic Enterprises
        (“DES”) and Foreign Invested Enterprises (“FIEs”). The new standard EIT rate of
        25% will replace the 33% rate currently applicable to both DES and FIEs.
        The two
        years tax exemption and three years 50% tax reduction tax holiday for
        production-oriented FIEs will be eliminated. From
        January 1, 2008, TechTeam
        Jinong is
        subject to income tax at a rate of 15%. Xi’an Jintai is exempt from paying
        income tax for calendar 2007 as it is a wholly owned subsidiary of TechTeam
        which was exempt from income tax. Jintai is also exempt from paying income
        tax
        for calendar 2008 as it produces the products which fall into the tax exemption
        list newly issued by the government.
  18
 **CHINA** **GREEN
          AGRICULTURE INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS** **(Unaudited)**
 Due
        to
        non-operation in U.S. and tax free status in China, the Company had no deferred
        tax as of September 30, 2008 and September 30, 2007.
 
 **NOTE
        14 - CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS**
 
 The
        Company's operations are all carried out in the PRC. Accordingly, the Company's
        business, financial condition and results of operations may be influenced
        by the
        political, economic and legal environments in the PRC, and by the general
        state
        of the PRC's economy.
 
 The
        Company's operations in the PRC are subject to specific considerations and
        significant risks not typically associated with companies in the North America
        and Western Europe. These include risks associated with, among others, the
        political, economic and legal environments and foreign currency exchange.
        The
        Company's results may be adversely affected by changes in governmental policies
        with respect to laws and regulations, anti-inflationary measures, currency
        conversion and remittance abroad, and rates and methods of taxation, among
        other
        things.
 
 **MAJOR
        CUSTOMERS AND VENDORS**
 
 There
        were two vendors from which the Company purchased more than 10% of its raw
        materials for the three months ended September 30, 2008 with each vendor
        individually accounting for about 14% and 11%. Accounts payable to those
        venders
        amounted to $ 15,806 as of
        September 30, 2008.
 
 There
        are
        one vendor that are over 10% of the total purchase for the three months ended
        September 30, 2007 with accounting for about 12%. Accounts payable to the
        vender
        amounted to $ 10,211 as of
        September 30, 2007.
 
 There
        was
        no customer that accounted over 10% of the total sales as of three months
        ended
        September 30, 2008 and September 30, 2007.
 
 **NOTE
        15- STOCKHOLDERS’ EQUITY**
 
 6,313,617
        shares of common stock were issued to 31 accredited investors (the “Investors”)
        at $3.25 per share in a private placement of the Company’s common stock that was
        completed on December 26, 2007. If any governmental agency in the PRC challenges
        or otherwise takes any action that adversely affects the transactions
        contemplated by the Exchange Agreement, and the Company cannot undo such
        governmental action or otherwise address the material adverse effect to the
        reasonable satisfaction of the Investors within sixty (60) days of the
        occurrence of such governmental action, then, upon written demand from an
        Investor, the Company shall promptly, and in any event within thirty (30)
        days
        from the date of such written demand, pay to that Investor, as liquidated
        damages, an amount equal to that Investor’s entire Investment Amount with
        interest thereon from the Closing date until the date paid at the rate of 10%
        per annum. As a condition to the receipt of such payment, the Investor shall
        return to the Company for cancellation of the certificates evidencing the
        Shares
        acquired by the Investor under the Agreement. In accordance with EITF D-98:
        “Classification and Measurement of Redeemable Securities”, the Company has
        classified the equity as temporary equity, as “Common Stock, $.001 par value,
        6,313,617 shares subject to redemption”.
  19
  977,948
        shares were issued to the consultants relating to the private placement.
        Net
        proceeds from the private placement were $18,602,723, of which $188,388 was
        received in January 2008. The direct costs related to this placement, including
        legal and professional fees, were deducted from the related proceeds and
        the net
        amount in excess of par value was recorded as additional paid-in capital.
        The
        total of $4,250,000 was placed in escrow and booked as restricted cash. The
        total of $4,250,000 in escrow is pursuant to a Securities Purchase Agreement
        and
        the Holdback Make Good Agreement entered into in connection with the placement
        for the following:
  1.
              $2,000,000
                  is held pending the company hiring a qualified CFO. The Company
                  appointed
                  a CFO in April 2008.
 2.
              $2,000,000
                  is held pending the company hiring two independent directors, therefore
                  constituting a majority independent directors in the board. The
                  Company
                  appointed a majority of independent directors in April 2008.
 3.
              $250,000
                  is for the retaining of an Investors Relation firm.
 
 As
        of
        September 30, 2008, the balance of restricted cash is $165,081.
 
 In
        connection with the Securities Purchase Agreement and the Private Placement,
        the
        Company also entered into a registration rights agreement (the “Registration
        Rights Agreement”) and a lockup agreement (the “Lockup Agreement”). Among other
        things, the Securities Purchase Agreement: (i) establishes targets for after
        tax
        net income and earnings per share for our fiscal year ending June 30, 2009
        at
        not less than $12,000,000 and $0.609, respectively (the “2009 Targets”); (ii)
        provides for liquidated damages in the event that PRC governmental policies
        or
        actions have a material adverse effect on the transactions contemplated by
        the
        Share Exchange Agreement (a “Material Adverse Effect”); and (iii) requires us to
        hire a new, fully qualified chief financial officer (“CFO”) satisfactory to the
        Investors. In order to secure our obligations to meet the 2009 profit target
        and
        earnings per share target, Mr. To has placed 3,156,808 shares of Common Stock
        (“2009 Make Good Shares”) into an escrow account pursuant to the terms of the
        Make Good Escrow Agreement by and among us, Mr. To, the Investors and the
        escrow
        agent named therein. In the event we do not achieve either of the 2009 Targets,
        the 3,156,808 shares of Common Stock will be conveyed to the Investors pro-rata
        in accordance with their respective investment amount for no additional
        consideration. In the event that we meet the 2009 Targets, the 3,156,808
        shares
        will be transferred to Mr. Tao Li. If PRC governmental actions or policies
        result in a Material Adverse Effect, as defined in the Securities Purchase
        Agreement, that cannot be reversed or cured to the Investors’ reasonable
        satisfaction, we will be obligated to pay to the Investors as liquidated
        damages
        the entire principal amount of their investment, with interest at 10% per
        annum.
  20
 **CHINA** **GREEN
          AGRICULTURE INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS** **(Unaudited)**
 Within
        45
        days of the closing of the Private Placement (the “Filing Date”), the Company
        was obligated to file a registration statement with the Commission covering
        and
        registering for re-sale all of the common stock offered and sold in the Private
        Placement. If a registration statement was not filed by the Filing Date,
        the
        company would have been obligated to pay the Investors liquidated damages
        equal
        in amount to one percent (1%) of the principal amount subscribed for by the
        Investors for each month (or part thereof) after the Filing Date until the
        registration statement is filed (“Filing Damages”).
 
 If
        the
        registration statement is not declared effective by the Commission within
        150
        days after the closing of the Private Placement (the “Effective Date”), the
        company will be obligated to pay liquidated damages to the Investors equal
        in
        amount to one percent (1%) of the principal amount subscribed for by the
        Investors for each month (or part thereof) after the Effective Date until
        the
        registration statement is effective (“Effectiveness Damages”). The aggregate of
        Filing Damages and Effectiveness Damages is subject to a cap of ten percent
        (10%).
 
 In
        accordance with this agreement the company has accrued $704,494 as registration
        right liability and interest expense of 198,353 for the three month ended
        September 30, 2008.
 
 **NOTE
        16 - STATUTORY RESERVES**
 
 As
        stipulated by the Company Law of the People's Republic of China (PRC), net
        income after taxation can only be distributed as dividends after appropriation
        has been made for the following:
 
 i)
              Making
                  up cumulative prior years' losses, if any;
 
 ii)
              Allocations
                  to the "Statutory surplus reserve" of at least 10% of income after
                  tax, as
                  determined under PRC accounting rules and regulations, until the
                  fund
                  amounts to 50% of the Company's registered capital;
 
 iii)
              Allocations
                  of 5-10% of income after tax, as determined under PRC accounting
                  rules and
                  regulations, to the Company's "Statutory common welfare fund",
                  which is
                  established for the purpose of providing employee facilities and
                  othercollective
                  benefitsto
                  the Company's employees; andstatutory
                  common welfare fund is no longer required per the new cooperation
                  law
                  executed in 2006.
 
 iv)
              Allocations
                  to the discretionary surplus reserve, if approved in the shareholders'
                  general meeting.
 
 In
        accordance with the Chinese Company Law, the company has allocated 10% of
        its
        net income to surplus. The amount included in the statutory reserves as of
        September 30, 2008 and June 30, 2008 amounted to $2,280,394 and $1,882,797,
        respectively.
  21
  **CHINA** **GREEN
          AGRICULTURE INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS** **(Unaudited)**
  **NOTE
        17- STOCK OPTIONS**
 
 Effective
        January 1, 2006, the Company adopted Statement of Financial Accounting
        Standards (SFAS) No. 123-R, “Share-Based Payment”**(“SFAS
        No. 123-R”), which requires the measurement and recognition of compensation
        expense for all share-based payment awards made to employees and directors,
        including stock options based on their fair values. SFAS No. 123-R supersedes
        Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to
        Employees”**(“APB
        25”), which the Company previously followed in accounting for stock-based
        awards. In March 2005, the SEC issued Staff Accounting Bulletin
        No. 107**(SAB
        107)
        to provide guidance on SFAS No. 123-R. The Company has applied SAB 107 in
        its
        adoption of SFAS No. 123-R.
 
 On
        January 31, 2008, the Company issued 123,000 stock options to its employees
        with
        an exercise price of $3.25 and term of three years. Compensation expense
        for the
        year ended June 30, 2008 recorded was $388,452. On June 24, 2008, the employees
        requested a cashless exercise of 76,500 options at an exercise price of $3.25
        per share. Based on the formula provided in the options agreement, the employees
        received 67,685 shares.
 
 The
        assumptions used in calculating the fair value of options granted using the
        Black-Scholes option pricing model are as follows:
 
 Risk-free
                  interest rate
              2.27%Expected
                  life of the options
              3
                  yearExpected
                  volatility
              252%Expected
                  dividend yield
              0
                  %
 
 On
        April
        8, 2008, the Company issued 35,000 stock options to two directors with an
        exercise price of $6 and term of two years. 10,500 options vested on June
        29,
        2008, and 24,500 options vested on July 1, 2009. Compensation expense for
        the
        three months ended September 30, 2008 recorded was $15,922.
 
 The
        assumptions used in calculating the fair value of options granted using the
        Black-Scholes option pricing model are as follows:
 
 Risk-free
                  interest rate
              1.87%Expected
                  life of the options
              2
                  yearExpected
                  volatility
              540%Expected
                  dividend yield
              0
                  %
 
 On
        April
        23, 2008, the Company issued 40,000 stock options to the formal CFO with
        an
        exercise price of $6 and term of two years. 12,000 options vested on June
        29,
        2008, and 28,000 options vested on July 1, 2009. Compensation expense for
        the
        year ended June 30, 2008 recorded was $38,994.
  22
 **CHINA** **GREEN
          AGRICULTURE INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS** **(Unaudited)**
 The
        assumptions used in calculating the fair value of options granted using the
        Black-Scholes option pricing model are as follows:
 
 Risk-free
                  interest rate
              2.22%Expected
                  life of the options
              2
                  yearExpected
                  volatility
              544%Expected
                  dividend yield
              0
                  %
 
 On
        September 10, 2008, the Company issued 28,000 stock options to the CFO with
        an
        exercise price of $4 and term of two years. The options will vest on July
        1,
        2009. Compensation expense for the three months ended September 30, 2008
        recorded was $9,211.
 
 The
        assumptions used in calculating the fair value of options granted using the
        Black-Scholes option pricing model are as follows:
 
 Risk-free
                  interest rate
              2.22%Expected
                  life of the options
              2
                  yearExpected
                  volatility
              538%Expected
                  dividend yield
              0
                  %
 
 Options
        outstanding as of September 30, 2008 and related weighted average price and
        intrinsic value are as follows:
 
 Exercise
                  Prices
              
              Total
                Options
                Outstanding
              
              Weighted
                Average
                Remaining
                  Life
                (Years)
              
              Total
                Weighted
                Average
                Exercise
                  Price
              
              Options
                Exercisable
              
              Weighted
                Average
                Exercise
                  Price
              
              Aggregate
                Intrinsic
                Value$3.25-$6
              
              121,500
              
              2.05
              
              $4.49
              
              69,000
              
              $4.15
              
              1,860
 
 The
        following table summarizes the options outstanding as of September 30,
        2008:
  Options
                OutstandingOutstanding,
                  June 30, 2008
              
              
              121,500Granted
              
              
              28,000Forfeited/Canceled
              
              
              (28,000
              )Exercised
              
              
              —Outstanding,
                  September 30, 2008
              
              
              121,500
  23
  **CHINA** **GREEN
          AGRICULTURE INC. AND SUBSIDIARIES**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS** **(Unaudited)**
 **NOTE
        18 - COMMITMENTS AND LEASES**
 
 The
        Company has recorded the free lease as rent expenses and contributed capital
        based on Xian house rental market. From July 2007, the company signed an
        office
        lease with the shareholder and started to pay the rent for $1,702 per month.
        The
        Company recorded rent expenses of $5,104 and $2,589 as rent expenses for
        the
        three months ended September 30, 2008 and 2007, respectively. Rent expenses
        for
        the 5 years after September 30, 2008 is as follows:
 
 September
                  30, 2009
              
              $
              20,418September
                  30, 2010
              
              
              20,418September
                  30, 2011
              
              
              20,418September
                  30, 2012
              
              
              20,418September
                  30, 2013
              
              
              20,418Total
              
              $
              102,090
 
 24




**Item
      2.** **Management’s
      Discussion** **and
      Analysis of Financial Condition and Results of
      Operations**




*The
      following discussion and analysis of our financial condition and results of
      operations should be read in conjunction with our consolidated financial
      statements and the notes to those financial statements appearing elsewhere
      in
      this report. This discussion and analysis contains forward-looking statements
      that involve significant risks and uncertainties. As a result of many factors,
      such as the slow-down of the global financial market and its impact on economic
      growth in general,* *the
      competition in the fertilizer industry and the impact of such competition on
      pricing, revenues and margins, the weather conditions in the areas where our
      customers are based, the cost of attracting and retaining highly skilled
      personnel, the prospects for future acquisitions,* *and
      the factors set forth elsewhere in this report, our actual results may differ
      materially from those anticipated in these forward-looking statements.* *Unless
      the context indicates otherwise, as used in the following discussion, "Company”,
      "we,” "us,” and "our,” refer to (i) China Green Agriculture, Inc. (“Green
      Nevada”, formerly known as Discovery Technologies, Inc.), a corporation
      incorporated in the State of Nevada; (ii) Green Agriculture Holding Corporation
      (“Green New Jersey”), a wholly-owned subsidiary of Green Nevada incorporated in
      the State of New Jersey; (iii) Shaanxi TechTeam Jinong Humic Acid Product Co.,
      Ltd. (“Techteam”), a wholly-owned subsidiary of Green New Jersey organized under
      the laws of the People’s Republic of China (the “PRC”); and (vi) Xi’an Jintai
      Agriculture Technology Development Company (“Jintai”), wholly-owned subsidiary
      of Techteam in the PRC.*




**Overview**




We,
      through our indirect wholly owned subsidiaries, Techteam and Jintai, have two
      business segments: (i) research, development, production and distribution of
      humic acid organic liquid compound fertilizer; and (ii) development, production
      and distribution of agricultural products, namely, top-grade fruits, vegetables,
      flowers and colored seedlings. The fertilizer business has been our main
      business which generated 85.9% and 77.7% of our total revenues in the three
      months ended September 30, 2008 and September 30, 2007,
      respectively.





Fertilizers
      can be organic (composed of organic matter), or inorganic (made of
      simple, inorganic chemicals or minerals). Inorganic fertilizers or chemical
      fertilizers generally may lead to ecosystem degradation. Organic compound
      fertilizer, the fertilizer we produce, comprises a balance of both organic
      and
      inorganic substances, thereby combining the speedy effectiveness of chemical
      fertilizers with the environmental benefits of the organic
      fertilizers.




25




We
      employ
      a multi-tiered product strategy in which we tailor our products to different
      needs and preferences of the different geographic regions across China. Each
      region has varying climate and soil conditions and grows different crops which
      require fertilizer which addresses local conditions. For example, in Southern
      and Eastern China, farmers are able to grow high margin crops such as fruits
      and
      seasonal vegetables where climate and rainfall permits, hence they can gain
      more
      return on investment from more expensive, specialized fertilizers, whereas
      in
      Northwest areas, farmers’ low profit margin crops disincentivize investment in
      fertilizer requiring that we market a more broad spectrum, low cost
      fertilizer.





Currently,
      we sell our products through a network of about 486 regional distributors
      covering 27 provinces in China. Roughly 20 million farmers are using our
      fertilizer products. We produced and sold approximately 4,114 and 3,234 metric
      tons of our fertilizer products for the three months ended September 30, 2008
      and September 30, 2007, respectively.





We
      have
      developed more than 123 different fertilizer products, including four new
      products introduced to the market in the quarter ended September 30, 2008.
      The
      leading five provinces by revenue for the three months ended September 30,
      2008
      are Heilongjiang (12.2%), Shandong (8.8%), Xinjiang (8.3%), Guangdong (8.2%)
      and
      Hebei (6.9%), in which we generated a total of $3,386,121 revenues, or
      approximately 44% of our total fertilizer sales from the sale of our fertilizer
      products for the quarter ended September 30, 2008. Our top five fertilizer
      products by revenue for the quarter ended September 30, 2008 generated a total
      of approximately $2,391,228 or 31.4% of the total fertilizer sales during that
      period.





We
      also
      export our humic acid organic liquid compound fertilizer to some foreign
      countries, including India, Ecuador, Pakistan and Lebanon through contracted
      distributors. Total revenues from exported products currently account for
      approximately 1% of our sales for the three months ended September 30, 2008.





We
      conduct our research and development activities through our wholly owned
      subsidiary, Jintai, which tests new fertilizers and grows high quality flowers,
      vegetables and seedlings for commercial sales.





**Recent
      Development**





During
      the three months ended September 30, 2008, we launched four new fertilizer
      products under the Company’s high-end brand, Jinong. They generated
      approximately $122,796, or 1.6% of our total revenues from our fertilizer
      products sold for the quarter ended September 30, 2008.




26




We
      are
      constructing new production facilities in order to increase our annual
      fertilizer production capacity from the current 10,000 metric tons to 50,000
      metric tons by using approximately $13 million of the net proceeds we received
      in the private placement consummated in December 2007. We anticipate our new
      production lines will commence trial production in March 2009, and we seek
      to
      commence actual production in August 2009.





**Results
      of Operations**





The
      following table shows the operating results of the Company on a consolidated
      basis for the three months ended September 30, 2008 and September 30,
      2007.





**Three
                months ended**
            
            **Three
                months ended****September
                30, 2008**
            
            **September
                30, 2007**Net
                Sales
            
            $
            8,880,002
            
            $
            7,191,021Cost
                of Goods Sold
            
            
            3,930,893
            
            
            2,773,761Gross
                Profit
            
            
            4,949,109
            
            
            4,417,260Selling
                Expenses
            
            
            216,376
            
            
            151,705General
                and Administrative Expenses
            
            
            437,129
            
            
            150,617Income
                from Operations
            
            
            4,295,604
            
            
            4,114,938Total
                Other Income (expense)
            
            
            (176,194
            )
            
            (83,166
            )Income
                Before Income Taxes
            
            
            4,119,410
            
            
            4,031,772Provision
                for Income Taxes
            
            
            621,483
            
            
            —Net
                Income
            
            
            3,497,927
            
            
            4,031,772





*Net
      Sales*





Total
      net
      sales for the three months ended September 30, 2008 increased $1,688,981, or
      24%, from $ 7,191,021
      for the three months ended September 30, 2007. The increase was attributable
      to
      an increase
      of $2,036,744 in sales
      by Techteam, offset by a decrease of $347,763 in sales by Jintai.





Techteam’s
      net sales, which accounted for 86% of total net sales, were driven by the sales
      of humic
      acid organic liquid compound fertilizers. For the three months ended September
      30, 2008, Techteam’s net sales increased $2,036,744, or 36%, to $7,625,501 from
      $5,588,757 for the three months ended September 30, 2007. Sales volume increased
      27% to 4,114 tons for the three months ended September 30, 2008 from 3,234
      tons
      for the three months ended September 30, 2007. We launched four new products
      that accounted for $122,796 of net sales for the three months ended September
      30, 2008.




27




Jintai’s
      net sales, which include sales of agricultural
      products, namely top-grade fruits, vegetables, flowers and colored seedlings
      by
      using our existing and new fertilizers, decreased $347,763, or 22%, to
      $1,254,501 for the three months ended September 30, 2008 from $1,602,264 for
      the
      same period in 2007. The earthquake and flooding that occurred in China earlier
      this year had a negative impact on our business in the beginning of the quarter
      ended September 30 2008. In addition, during the comparable quarter in 2007,
      Jintai’s sales were significantly higher than normal due to a one time
      project.





*Cost
      of Goods Sold*





Total
      cost of goods sold for the three months ended September 30, 2008 increased
      $1,157,132, or 42%, to $3,930,893 compared to that for the three months ended
      September 30, 2007.





Cost
      of
      goods sold by Techteam for the three months ended September 30, 2008 increased
      $1,087,777, or 51%, to $3,225,946 compared to that for the same period in 2007.
      This increase was primarily due to higher costs of packaging materials which
      accounted for over two thirds of the cost of our fertilizer products, the
      increase in our sales volume and the weakening US dollar against the Renminbi,
      the official currency in China. As a percentage of total net sales, cost of
      goods sold by Techteam approximated 36% and 30% for the three months ended
      September 30, 2008 and 2007, respectively.





Cost
      of
      goods sold by Jintai increased $69,354, or 11%, to $704,947 for the three months
      ended September 30, 2008 compared to that for the three months ended September
      30, 2007. Jintai reduced costs by cultivating its own plants as opposed to
      purchasing them from the outside vendors; however, increases in electricity
      consumption arising from the addition of new machinery and equipment to our
      greenhouse and depreciation expenses for our new greenhouse facilities which
      commenced during the second quarter of fiscal 2008 outweighed the cost saving.
      As a percentage of total net sales, cost of goods sold by Jintai approximated
      8%
      and 9% for the three months ended September 30, 2008 and 2007, respectively.





*Gross
      Profit*





Total
      gross profit for the three months ended September 30, 2008 increased $531,849,
      or 12%, to $4,949,109 compared to $4,417,260 for the three months ended
      September 30, 2007. Gross profit margin approximated 56% and 61% for the three
      months ended September 30, 2008 and 2007, respectively.





Gross
      profit from Techteam sales increased $948,967, or 28%, to $4,399,555 for the
      three months ended September 2008 from $3,450,588 for the three months ended
      September 2007. Gross profit margin from Techteam sales approximated 58% and
      62%
      for the three months ended September 30, 2008 and 2007, respectively.




Gross
      profit from Jintai sales decreased $417,117, or 43% for the three months ended
      September 30, 2008, to $549,554 compared to $966,671 for the three months ended
      September 30, 2007. Gross profit margin from Jintai sales approximated 44%
      and
      60% for the three months ended September 30, 2008 and 2007, respectively.




28




*Selling
      Expenses*





Selling
      expenses consist primarily of salaries of sales personnel, advertising and
      promotion expenses, freight charges and related compensation. Selling expenses
      were $216,376, or 2% of net sales for the three months ended September 30,
      2008
      as compared to $151,705, or 2% of net sales for the three months ended September
      30, 2007, an increase of $64,671, or approximately 43%. Most of this increase
      was due to higher travel and lodging expenses for our sales representatives,
      increases in freight charges due to higher fuel prices and higher salaries
      from
      our expanded sales force. We increased our full-time sales representatives
      to
      107 as of September 30, 2008 from 85 as of September 30, 2007.





*General
      and Administrative Expenses*





General
      and administrative expenses consisted primarily of rental expenses, related
      salaries, business development, depreciation and travel expenses incurred by
      our
      general and administrative departments and legal and professional expenses.
      General and administrative expenses were $437,129, or 5% of net sales for the
      three months ended September 30, 2008, as compared to $150,617, or 2% for the
      three months ended September 30, 2007, an increase of $286,512. The increase
      was
      primarily attributable to the expenses incurred for operating as a US public
      company and expanding our board of directors and management team.





*Total
      Other Income (Expenses)*





Total
      other income (expenses) consisted of subsidy income from the PRC government,
      interest income, interest expenses and bank charges. Total other expenses for
      the three months ended September 30, 2008 and 2007 were $176,194 and $83,166,
      respectively. The increase in total other expenses was due to the carry over
      from the quarter ended June 30, 2008 of part of the liquidated damages incurred
      to investors in connection with our registration statement, offset by an
      increase in interest income.





*Income
      Taxes*





Techteam
      is subject to a preferred tax rate of 15% as a result of Techteam’s operation
      being classified as a High-Tech project under the new PRC Enterprise Income
      Tax
      Law (“EIT”) effective on January 1, 2008. Prior to that, Techteam enjoyed an
      income tax holiday until December 31, 2007, due to its status as a wholly
      foreign owned enterprise (“WFOE”) and the PRC regulations provided such a tax
      incentive through December 31, 2007. Therefore, Techteam incurred income tax
      expenses of $621,483 for the three months ended September 30, 2008, compared
      to
      $0 for the same period in the prior year.




29




Jintai
      has been exempt from paying income tax since its formation as it produces
      products which fall into the tax exemption list set out in the EIT. This
      exemption will last as long as the related EIT does not change.





*Net
      Income*





Our
      net
      income was $3,497,927 for the three months ended September 30, 2008, a decrease
      of $533,845 or 13% from $4,031,772 for the three months ended September 30,
      2007. The increase in gross profit was offset by income taxes which were
      previously exempted, higher operating expenses associated with our obligation
      in
      compliance with a public company’s reporting and corporate governance
      requirements and one-time liquidated damages as mentioned above. Net income
      as a
      percentage of total net sales approximated 39% and 56% for the three months
      ended September 30, 2008 and 2007, respectively.





**Discussion
      of Segment Profitability Measures**





Our
      business consists of two segments - the sales of fertilizer products through
      Techteam and the sales of agricultural products through Jintai. Each of the
      segments prepares its own quarterly and annual projections with regard to
      marketing, research and development, production and sales along with financial
      budgets. We also have a monthly forecasting process and provide variation
      analysis to the budget.





**Liquidity
      and Capital Resources**





Our
      principal sources of liquidity include cash from operations, borrowings from
      local commercial banks and proceeds from our December 2007 private placement.





As
      of
      September 30, 2008, cash and cash equivalents were $16,919,102, an increase
      of
      $306,686 from $16,612,416 as of June 30, 2008, primarily due to cash from
      operations. This does not include the restricted cash from our escrow account.
      Pursuant to the Securities Purchase Agreement and Holdback Escrow Agreement
      by
      and among the Company and the investors in the private placement, a total of
      $250,000 cash from the private placement proceeds was escrowed for investor
      relations purposes. The funds are released to the Company on a monthly basis
      to
      pay invoices issued by the Company’s investor relations firm. As of September
      30, 2008, there was $165,081 left in the escrow account.





Based
      on
      our current operating plan, we believe that existing cash and cash equivalents
      balances, cash forecasted by management to be generated by operations and
      borrowings from existing credit facilities will be sufficient to meet our
      working capital and capital requirements for at least the next 12 months.
      However, if events or circumstances occur such that we do not meet our operating
      plan as expected, we may be required to seek additional capital and/or reduce
      certain discretionary spending, which could have a material adverse effect
      on
      our ability to achieve our business objectives. We may seek additional
      financing, which may include debt and/or equity financing. There can be no
      assurance that any additional financing will be available on acceptable terms,
      if at all. Any equity financing may result in dilution to existing stockholders
      and any debt financing may include restrictive covenants.




30





The
      following table sets forth a summary of our cash flows for the periods
      indicated:





**Three
                months ended September 30****2008**
            
            **2007**Net
                cash provided by / (used in) operating activities
            
            
            411,868
            
            
            560,796Net
                cash used in investing activities
            
            
            (42,120
            )
            
            —Net
                cash provided by financing activities
            
            
            (88,391
            )
            
            (536,621
            )Effect
                of exchange rate change on cash and cash equivalents
            
            
            (4,671
            )
            
            1,509Net
                increase in cash and cash equivalents
            
            
            306,686
            
            
            25,684Cash
                and cash equivalents, beginning balance
            
            
            16,612,416
            
            
            81,716Cash
                and cash equivalents, ending balance
            
            
            16,919,102
            
            
            107,400





*Operating
      Activities*





Net
      cash
      provided by operating activities was $411,868 for the three months ended
      September 30, 2008, a decrease of $118,928 from $560,796 for the same
      period in 2007. The decrease was mainly due to an increase in inventory which
      was partly offset by a decrease in outstanding accounts receivable.





*Investing
      Activities*





Net
      cash
      used in investing activities in the three months ended September 30, 2008
      was $42,120, mainly due to additions made for our new production line. We did
      not have any investment activities for the same period in 2007.





*Financing
      Activities*





Net
      cash
      used by financing activities in the three months ended September 30, 2008
      totaled $88,391. The proceeds of $28,311 from the restricted escrow account
      were
      offset by the repayment of $116,701 of our loans.





As
      of
      September 30, 2008, our loans payable were as follows:





Short
                term loans payable:
            Amount
                Outstanding
            Repayment
                Terms
            Expiration
                DateXi’an
                Commercial Bank Xincheng Branch
            $2,188,152
            Annual
                Interest Rate: 10.585%, repaid on a monthly basis
            04/01/2009Xi’an
                Beilin District Rural Credit Union Wenyibeilu Branch
            $554,332
            Annual
                Interest Rate: 11.795%, repaid on a monthly basis
            09/16/2009Agriculture
                Bank Yanglingshifangqu Branch
            $1,342,066
            Annual
                Interest Rate: 9.71%, repaid on a monthly basis
            12/28/2008Total
            $4,084,550




31




None
      of
      our officers or shareholders has made commitments to the Company for financing
      in the form of advances, loans or credit lines.





*Accounts
      Receivable*





Our
      accounts receivable, net of allowance for doubtful accounts, was $6,340,147
      as
      of September 30, 2008, compared to $3,590,552 as of June 30, 2008, an increase
      of $2,749,595. The increase resulted from the following factors: (i) our sales
      increased by approximately 24% from the quarter ended June 30, 2008, many of
      which occurred in the latter half of the quarter ended September 30, 2008;
      and
      (ii) the earthquake and seasonal flooding that occurred in China earlier this
      year resulted in slight delays for payments of our products. However, we do
      not
      believe that the increase in accounts receivable during the quarter will result
      in any significant change in our ability to collect these receivables based
      on
      our historical practices. Additionally, in the comparable period in 2007, our
      accounts receivable had reached $6,046,270, or approximately 84% of the net
      sales for that period, compared to the approximately 71% of our net sales for
      the three months ended September 30, 2008.





Our
      allowance for doubtful accounts was $56,451 as of September 30, 2008 compared
      with $96,065 as of June 30, 2008, a decrease of $39,614 due to improvements
      we
      made to collect accounts receivable amounts that were greater than 90 days
      past
      due.





*Inventories*





We
      had
      inventory of $6,572,248 as of September 30, 2008 as compared to $3,988,979
      as of
      June 30, 2008, an increase of $2,583,268. This increase was mainly due to the
      increased purchase of raw materials and packaging materials for higher
      production demands for the next quarter.




32




**Off-Balance
      Sheet Arrangements**





We
      do not
      have any off-balance sheet arrangements.





**Critical
      Accounting Policies and Estimates**





Management's
      discussion and analysis of its financial condition and results of operations
      are
      based upon our consolidated financial statements, which have been prepared
      in
      accordance with United States generally accepted accounting principles. Our
      financial statements reflect the selection and application of accounting
      policies which require management to make significant estimates and judgments.
      See Note 2 to our consolidated financial statements, “Basis of Presentation and
      Summary of Significant Accounting Policies.” We believe that the following
      paragraphs reflect the more critical accounting policies that currently affect
      our financial condition and results of operations:





Use
      of
      estimates





The
      preparation of consolidated financial statements in conformity with accounting
      principles generally accepted in the United States of America requires
      management to make estimates and assumptions that affect the reported amounts
      of
      assets and liabilities and disclosure of contingent assets and liabilities
      at
      the date of the consolidated financial statements and the amount of revenues
      and
      expenses during the reporting periods. Management makes these estimates using
      the best information available at the time the estimates are made. However,
      actual results could differ materially from those estimates.





Revenue
      recognition





Sales
      revenue is recognized at the date of shipment to customers when a formal
      arrangement exists, the price is fixed or determinable, the delivery is
      completed, no other significant obligations of the Company exist and
      collectability is reasonably assured. Payments received before all of the
      relevant criteria for revenue recognition are satisfied are recorded as unearned
      revenue.





The
      Company's revenue consists of invoiced value of goods, net of a value-added
      tax
      (VAT). No product return or sales discount allowance is made as products
      delivered and accepted by customers are normally not returnable and sales
      discounts are normally not granted after products are delivered.





Cash
      and cash equivalents





For
      statement of cash flows purposes, the Company considers all cash on hand and
      in
      banks, certificates of deposit and other highly-liquid investments with
      maturities of three months or less, when purchased, to be cash and cash
      equivalents.




33




Accounts
      receivable





The
      Company's policy is to maintain reserves for potential credit losses on accounts
      receivable. Management reviews the composition of accounts receivable and
      analyzes historical bad debts, customer concentrations, customer credit
      worthiness, current economic trends and changes in customer payment patterns
      to
      evaluate the adequacy of these reserves. Any accounts receivable that is
      outstanding for more than three months will be accounted as allowance for bad
      debts.





Segment
      reporting





Statement
      of Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosure About
      Segments of an Enterprise and Related Information" requires use of the
      "management approach" model for segment reporting. The management approach
      model
      is based on the way a company's management organizes segments within the company
      for making operating decisions and assessing performance. Reportable segments
      are based on products and services, geography, legal structure, management
      structure, or any other manner in which management disaggregates a
      company.





During
      the three months ended September 30, 2008, the Company was organized into two
      main business segments: produce fertilizer (Techteam) and agricultural products
      (Jintai).




**Item
      4.** **Controls
      and Procedures**




(a)   *Evaluation
      of disclosure controls and procedures* .
      At the
      conclusion of the period ended September 30, 2008 we carried out an evaluation,
      under the supervision and with the participation of our management, including
      our Chief Executive Officer and Chief Financial Officer, of the effectiveness
      of
      the design and operation of our disclosure controls and procedures (as defined
      in the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Rules
      13a-15e and 15d-15e). Based upon that evaluation, our Chief Executive Officer
      and Chief Financial Officer concluded that as of the end of the period covered
      by this report, our disclosure controls and procedures were effective and
      adequately designed to ensure that the information required to be disclosed
      by
      us in the reports we submit under the Exchange Act is recorded, processed,
      summarized and reported within the time periods specified in the applicable
      rules and forms and that such information was accumulated and communicated
      to
      our Chief Executive Officer and Chief Financial Officer, in a manner that
      allowed for timely decisions regarding required disclosure.





(b)  *Changes
      in internal controls* .
      During
      the period covered by this report, there was no change in our internal control
      over financial reporting that has materially affected, or is reasonably likely
      to materially affect our internal control over financial reporting.




34


**PART
      II OTHER INFORMATION**





**Item
      6.** **Exhibits**





(a)
      Exhibits





31.1
      –
      Certification of Chief Executive Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002 by Mr. Tao Li.





31.2
–
      Certification of Chief Financial Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002 by Ms. Ying Yang.





32.1
–
      Certification of Chief Executive Officer and Chief Financial Officer pursuant
      to
      Section 906 of the Sarbanes-Oxley Act of 2002 by Mr. Tao Li and Ms. Ying
      Yang.




35




SIGNATURES





Pursuant
      to the requirements of the Securities Act of 1934, the Registrant has duly
      caused this report to be signed on its behalf by the undersigned there unto
      duly
      authorized.





CHINA
                  GREEN AGRICULTURE, INC.Date:
                  November 10, 2008
              BY:
              /s/
                  Tao LiTao
                  LiPresident
                  and Chief Executive Officer(principal
                  executive officer)Date:
                  November 10, 2008
              BY:
              /s/
                  Ying YangYing
                  YangChief
                  Financial Officer(principal
                  financial officer and accounting
                  officer)
  36