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 March 31,
2009




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.)





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


_People’s Republic of China
_______      710065__


(Address
of principal executive offices) (Zip Code)





______________+86-29-88266368______________


(Issuer's
telephone number, including area code)





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 has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes o  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
      filer ̈
                
                Accelerated
      filer                        
        ̈Non-accelerated
      filer            
       ̈
                  (Do
      not check if a smaller reporting company)
                
                Smaller
      reporting company       x





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





APPLICABLE
ONLY TO CORPORATE ISSUERS:





Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 18,595,186 shares of Common
Stock, $.001 par value, were outstanding as of May 4, 2009.








TABLE OF
CONTENTS





PagePART
      I
                              FINANCIAL
      INFORMATIONItem
      1.
                              Financial
      Statements.
                              3Consolidated
      Balance SheetsAs
      of March 31, 2009 (Unaudited) and June 30, 2008
                              3Consolidated
      Statements of Income and Comprehensive Income For the Three and Nine
      Months Ended March 31, 2009 and 2008 (Unaudited)
                              4Consolidated
      Statements of Cash Flows For the Nine Months Ended March 31, 2009 and 2008
      (Unaudited)
                              5Notes
      to Consolidated Financial Statements As of March 31, 2009
      (Unaudited)
                              6Item
      2.
                              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.
                              23Item
      3.
                              Quantitative
      and Qualitative Disclosures About Market Risk
                              35Item
      4T.
                              Controls
      and Procedures.
                              35PART II
                              OTHER INFORMATIONItem
      6.
                              Exhibits
                              36Signatures
                              
                              37Exhibits/Certifications


2





PART
I - FINANCIAL INFORMATION





Item
      1.
            Financial
      Statements




CHINA
GREEN AGRICULTURE INC. AND SUBSIDIARIES
 CONSOLIDATED
BALANCE SHEETS
 AS
OF MARCH 31, 2009 AND JUNE 30, 2008
 (UNAUDITED)
 
 March
      31, 2009
                                      
                                      
                                      June
      30, 2008ASSETSCurrent
      AssetsCash
      and cash equivalents
                                      
                                      $
                                      13,632,961
                                      
                                      
                                      $
                                      16,612,416Restricted
      cash
                                      
                                      
                                      118,318
                                      
                                      
                                      
                                      193,392Accounts
      receivable, net
                                      
                                      
                                      6,866,974
                                      
                                      
                                      
                                      3,590,552Inventories
                                      
                                      
                                      8,258,769
                                      
                                      
                                      
                                      3,988,979Other
      assets
                                      
                                      
                                      111,311
                                      
                                      
                                      
                                      128,091Advances
      to suppliers
                                      
                                      
                                      140,347
                                      
                                      
                                      
                                      512,845Total
      Current Assets
                                      
                                      
                                      29,128,680
                                      
                                      
                                      
                                      25,026,275Plant,
      Property and Equipment, Net
                                      
                                      
                                      17,564,935
                                      
                                      
                                      
                                      18,199,456Construction
      In Progress
                                      
                                      
                                      8,184,068
                                      
                                      
                                      
                                      5,115,492Intangible
      Assets, Net
                                      
                                      
                                      1,101,277
                                      
                                      
                                      
                                      1,180,159Total
      Assets
                                      
                                      $
                                      55,978,960
                                      
                                      
                                      $
                                      49,521,382LIABILITIES
      AND SHAREHOLDERS' EQUITYCurrent
      LiabilitiesAccounts
      payable
                                      
                                      $
                                      1,235,570
                                      
                                      
                                      $
                                      232,417Unearned
      revenue
                                      
                                      
                                      58,935
                                      
                                      
                                      
                                      88,950Other
      payables and accrued expenses
                                      
                                      
                                      481,526
                                      
                                      
                                      
                                      455,228Registration
      rights liability
                                      
                                      
                                      -
                                      
                                      
                                      
                                      506,142Advances
      from other unrelated companies
                                      
                                      
                                      324,957
                                      
                                      
                                      
                                      344,628Amount
      due to related parties
                                      
                                      
                                      31,157
                                      
                                      
                                      
                                      31,121Taxes
      payable
                                      
                                      
                                      1,470,549
                                      
                                      
                                      
                                      5,878,275Short
      term loans
                                      
                                      
                                      3,681,197
                                      
                                      
                                      
                                      4,201,925Total
      Current Liabilities
                                      
                                      
                                      7,283,892
                                      
                                      
                                      
                                      11,738,686Common
      Stock, $.001 par value, 6,313,617 shares subject to
    redemption
                                      
                                      
                                      20,519,255
                                      
                                      
                                      
                                      20,519,255Commitment
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Stockholders'
      EquityPreferred
      Stock, $.001 par value,  20,000,000 shares authorized, Zero
      shares issued and outstanding
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Common
      stock, $.001 par value,   780,000,000 shares
      authorized,  12,281,569 shares issued and
      outstanding
                                      
                                      
                                      12,282
                                      
                                      
                                      
                                      12,068Additional
      paid-in capital
                                      
                                      
                                      2,016,604
                                      
                                      
                                      
                                      1,200,077Statuary
      reserve
                                      
                                      
                                      2,988,308
                                      
                                      
                                      
                                      1,882,797Retained
      earnings
                                      
                                      
                                      20,704,629
                                      
                                      
                                      
                                      11,764,079Accumulated
      other comprehensive income
                                      
                                      
                                      2,453,990
                                      
                                      
                                      
                                      2,404,419Total
      Stockholders' Equity
                                      
                                      
                                      28,175,813
                                      
                                      
                                      
                                      17,263,442Total
      Liabilities and Stockholders' Equity
                                      
                                      $
                                      55,978,960
                                      
                                      
                                      $
                                      49,521,382
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
 
 3
 
 CHINA
GREEN AGRICULTURE INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF  INCOME AND COMPREHENSIVE INCOME
 FOR
THE THREE AND NINE MONTHS ENDED MARCH 31, 2009 AND 2008
 (UNAUDITED)
 
 Nine
      Months Ended March 31,
                  
                  
                  Three
      Months Ended March 31,2009
                  
                  
                  2008
                  
                  
                  2009
                  
                  
                  2008Net
      sales
                  
                  $
                  24,721,802
                  
                  
                  $
                  15,382,089
                  
                  
                  $
                  8,841,675
                  
                  
                  $
                  4,434,926Cost
      of goods sold
                  
                  
                  10,608,336
                  
                  
                  
                  6,377,066
                  
                  
                  
                  3,776,138
                  
                  
                  
                  1,982,084Gross
      profit
                  
                  
                  14,113,466
                  
                  
                  
                  9,005,023
                  
                  
                  
                  5,065,537
                  
                  
                  
                  2,452,841Operating
      expensesSelling
      expenses
                  
                  
                  786,462
                  
                  
                  
                  614,646
                  
                  
                  
                  203,925
                  
                  
                  
                  142,808General
      and administrative expenses
                  
                  
                  1,432,514
                  
                  
                  
                  1,430,762
                  
                  
                  
                  408,740
                  
                  
                  
                  256,800Total
      operating expenses
                  
                  
                  2,218,976
                  
                  
                  
                  2,045,408
                  
                  
                  
                  612,665
                  
                  
                  
                  399,608Income
      from operations
                  
                  
                  11,894,490
                  
                  
                  
                  6,959,615
                  
                  
                  
                  4,452,872
                  
                  
                  
                  2,053,233Other
      income (expense)Other
      income(expense)
                  
                  
                  4,862
                  
                  
                  
                  39,647
                  
                  
                  
                  207
                  
                  
                  
                  655Interest
      income
                  
                  
                  306,359
                  
                  
                  
                  27,224
                  
                  
                  
                  163,340
                  
                  
                  
                  11,697Interest
      expense
                  
                  
                  (560,257
                  )
                  
                  
                  (284,361
                  )
                  
                  
                  (112,334
                  )
                  
                  
                  (86,761
                  )Bank
      charges
                  
                  
                  (1,560
                  )
                  
                  
                  (6,442
                  )
                  
                  
                  (130
                  )
                  
                  
                  (4,939
                  )Total
      other income (expense)
                  
                  
                  (250,596
                  )
                  
                  
                  (223,933
                  )
                  
                  
                  51,083
                  
                  
                  
                  (79,348
                  )Income
      before income taxes
                  
                  
                  11,643,894
                  
                  
                  
                  6,735,682
                  
                  
                  
                  4,503,955
                  
                  
                  
                  1,973,886Provision
      for income taxes
                  
                  
                  1,597,833
                  
                  
                  
                  301,841
                  
                  
                  
                  613,673
                  
                  
                  
                  301,841Net
      income
                  
                  
                  10,046,061
                  
                  
                  
                  6,433,842
                  
                  
                  
                  3,890,282
                  
                  
                  
                  1,672,045Other
      comprehensive itemsForeign
      currency translation gain
                  
                  
                  49,570
                  
                  
                  
                  1,511,242
                  
                  
                  
                  57,891
                  
                  
                  
                  957,245Comprehensive
      income
                  
                  $
                  10,095,631
                  
                  
                  $
                  7,945,084
                  
                  
                  $
                  3,948,173
                  
                  
                  $
                  2,629,290Basic
      weighted average shares outstanding
                  
                  
                  18,439,569
                  
                  
                  
                  13,482,590
                  
                  
                  
                  18,559,206
                  
                  
                  
                  18,314,017Basic
      net earnings per share
                  
                  $
                  0.54
                  
                  
                  $
                  0.48
                  
                  
                  $
                  0.21
                  
                  
                  $
                  0.09Diluted
      weighted average shares outstanding
                  
                  
                  18,440,958
                  
                  
                  
                  13,482,590
                  
                  
                  
                  18,560,594
                  
                  
                  
                  18,314,017Diluted
      net earnings per share
                  
                  $
                  0.54
                  
                  
                  $
                  0.48
                  
                  
                  $
                  0.21
                  
                  
                  $
                  0.09
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
 
 4
 
 CHINA
GREEN AGRICULTURE INC. AND SUBSIDIARIES
 STATEMENTS
OF CASH FLOWS
 FOR
THE NINE MONTHS ENDED MARCH 31, 2009 AND 2008
 (UNAUDITED)
 
 2009
                            
                            
                            2008Cash
      flows from operating activitiesNet
      income
                            
                            $
                            10,046,061
                            
                            
                            
                            6,433,842Adjustments
      to reconcile net income to net cashprovided
      by operating activitiesShare
      capital contribution - rental and interest paid by
      shareholders
                            
                            
                            -
                            
                            
                            
                            32,656Issuance
      of stock options for compensation
                            
                            
                            112,247
                            
                            
                            
                            -Depreciation
                            
                            
                            1,121,989
                            
                            
                            
                            703,271Amortization
                            
                            
                            80,267
                            
                            
                            
                            78,693Decrease
      / (Increase) in current assetsAccounts
      receivable
                            
                            
                            (3,269,466
                            )
                            
                            
                            256,854Other
      receivables
                            
                            
                            12,465
                            
                            
                            
                            79,100Inventories
                            
                            
                            (4,261,570
                            )
                            
                            
                            (3,696,399
                            )Advances
      to suppliers
                            
                            
                            372,837
                            
                            
                            
                            (45,061
                            )Other
      assets
                            
                            
                            6,528
                            
                            
                            
                            (16,581
                            )(Decrease)
      / Increase in current liabilitiesAccounts
      payable
                            
                            
                            1,002,165
                            
                            
                            
                            131,130Unearned
      revenue
                            
                            
                            (30,100
                            )
                            
                            
                            33,561Tax
      payables
                            
                            
                            (4,411,497
                            )
                            
                            
                            1,855,704Other
      payables and accrued expenses
                            
                            
                            199,071
                            
                            
                            
                            (365,254
                            )Net
      cash provided by operating activities
                            
                            
                            980,997
                            
                            
                            
                            5,481,516Cash
      flows from investing activitiesAcquisation
      of plant, property, and equipment
                            
                            
                            (465,648
                            )
                            
                            
                            (4,917,610
                            )Advances
      for construction in progress
                            
                            
                            -
                            
                            
                            
                            (409,841
                            )Additions
      to construction in progress
                            
                            
                            (3,059,913
                            )
                            
                            
                            (20,655
                            )Net
      cash used in investing activities
                            
                            
                            (3,525,561
                            )
                            
                            
                            (5,348,106
                            )Cash
      flows from financing activitiesRepayment
      of loan
                            
                            
                            (525,475
                            )
                            
                            
                            (1,827,836
                            )Shares
      issuance cost
                            
                            
                            -
                            
                            
                            
                            1,353,952Proceeds
      issuance of shares subject to redemption
                            
                            
                            -
                            
                            
                            
                            18,602,720Restricted
      cash
                            
                            
                            75,074
                            
                            
                            
                            (4,228,641
                            )(Payments)/proceeds
      to/from related parties
                            
                            
                            -
                            
                            
                            
                            (642,342
                            )Net
      cash provided by (used in) financing activities
                            
                            
                            (450,401
                            )
                            
                            
                            13,257,854Effect
      of exchange rate change on cash and cash equivalents
                            
                            
                            15,509
                            
                            
                            
                            513,415Net
      increase (decrease) in cash and cash equivalents
                            
                            
                            (2,979,455
                            )
                            
                            
                            13,904,679Cash
      and cash equivalents, beginning balance
                            
                            
                            16,612,416
                            
                            
                            
                            81,716Cash
      and cash equivalents, ending balance
                            
                            $
                            13,632,961
                            
                            
                            $
                            13,986,395Supplement
      disclosure of cash flow informationInterest
      expense paid
                            
                            $
                            (339,203
                            )
                            
                            $
                            (222,260
                            )Income
      taxes paid
                            
                            $
                            (2,734,352
                            )
                            
                            $
                            -Non
      Cash Transaction:Stock
      issued for settlement of registration rights liability
                            
                            $
                            704,494
                            
                            
                            $
                            -
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
 
 5




NOTE
1 – ORGANIZATION AND DESCRIPTION OF BUSINESS





China
Green Agriculture, Inc. (the “Company”, “we”, “us”) was incorporated in 1987. 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”).





Green
Agriculture was incorporated on January 27, 2007 under the laws of the State of
New Jersey. On August 24, 2007, Green Agriculture 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”).
Techteam is engaged in the research and development, manufacture, distribution
and sale of humic acid based liquid compound fertilizer. It was incorporated in
the People’s Republic of China on June 19, 2000 under the name of Yangling
Techteam Jinong Humic Acid Product Co., Ltd.. On February 28, 2006, Yangling
Techteam Jinong Humic Acid Product Co., Ltd changed its name to 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 its customers and generates
sales.





As a
result of the Share Exchange on December 26, 2007, the Company’s corporate
structure is as follows:


6








The
Company, through its subsidiaries has two business segments: Techteam Jinong’s
main business is to produce and sell fertilizers, and Xi’an Jintai’s main
business is to conduct research and development on new fertilizer products and
sell high quality agricultural products.





NOTE
2 – BASIS OF PRESETATION 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 nine months ended
March 31, 2009 are not necessarily indicative of the results to be expected for
the full fiscal year ending June 30, 2009.





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.


7





Use of
estimates





The
preparation of consolidated financial statements in conformity with generally
accepted accounting principles 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 March 31, 2009 and June 30, 2008, cash
and cash equivalents amounted to $13,632,961 and $16,612,416,
respectively.





Accounts
receivable





The
Company's policy is to maintain reserves for potential credit losses on accounts
receivable. As of March 31, 2009 and June 30, 2008, the Company had accounts
receivable of $6,866,974 and $3,590,552, net of allowance for doubtful accounts
of $62,999 and $96,065, respectively.





Advances to
suppliers





The
Company provides advances to certain vendors for purchase of its material. As of
March 31, 2009 and June 30, 2008, the advances to suppliers amounted to $140,347
and $512,845, respectively.





Inventories





Inventories
are valued at the lower of cost (determined on a weighted average basis) or net
realizable value. Inventories consist of raw materials, work in process,
finished goods and packaging materials.





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




8





Leasehold
improvements are amortized over the lease term or the estimated useful life,
whichever is shorter.





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 March 31, 2009 and June 30, 2008, the Company had unearned
revenues of $58,935 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 March 31, 2009 and 2008, were $0 and $2,731, respectively. Advertising
costs for the nine months ended March 31, 2009 and 2008, were $51,031 and
$231,411, 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.





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.


9




Foreign currency
translation





The
reporting currency of the Company is the US dollar. The functional currency of
China Green Agriculture and Green Holding is the US dollar.The functional currency of
Techteam Jinong and its subsidiary Xi’an Jintai is the Chinese Yuan or Renminbi
(“RMB”). For the subsidiaries whose functional currencies are other than the US
dollar, all asset and liability accounts were translated at the exchange rate on
the balance sheet date; stockholder's equity is translated at the historical
rates and items in the cash flow statements are translated at the average rate
in each applicable period. Translation adjustments resulting from this process
are included in accumulated other comprehensive income in the statement of
shareholders’ equity. The resulting translation gains and losses that arise from
exchange rate fluctuations on transactions denominated in a currency other than
the functional currency are included in the results of operations as
incurred.





Accumulated
other comprehensive income amounted to $2,453,990 and $2,404,419 as of March 31,
2009 and June 30, 2008, respectively.





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.





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 nine months ended March 31, 2009,the Company was organized
into two main business segments: fertilizer production (Techteam) and
agricultural products production (Jintai). The following tables present a
summary of operating information and quarter-end balance sheet information for
the nine and three months ended March 31, 2009 and 2008,
respectively.


10





For
      the three months ended March 31,2009
                                                                                                          
                                                                                                          
                                                                                                          2008Revenues
      from unaffiliated customers:Fertilizer
                                                                                                          
                                                                                                          $
                                                                                                          6,864,495
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          3,520,293Agricultural
      products
                                                                                                          
                                                                                                          
                                                                                                          1,977,180
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          914,633Consolidated
                                                                                                          
                                                                                                          $
                                                                                                          8,841,675
                                                                                                          
                                                                                                          
                                                                                                          $
                                                                                                          4,434,926Operating
      income :Fertilizer
                                                                                                          
                                                                                                          $
                                                                                                          4,028,758
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          1,764,790Agricultural
      products
                                                                                                          
                                                                                                          
                                                                                                          637,323
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          357,981Reconciling
      item (1)
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          (69,538
                                                                                                          )Reconciling
      item (2)
                                                                                                          
                                                                                                          
                                                                                                          (169,652
                                                                                                          )
                                                                                                          
                                                                                                          
                                                                                                          -Reconciling
      item (2)—stock compensation
                                                                                                          
                                                                                                          
                                                                                                          (43,557
                                                                                                          )
                                                                                                          
                                                                                                          
                                                                                                          -Consolidated
                                                                                                          
                                                                                                          $
                                                                                                          4,452,872
                                                                                                          
                                                                                                          
                                                                                                          $
                                                                                                          2,053,233Net
      income:Fertilizer
                                                                                                          
                                                                                                          $
                                                                                                          3,465,314
                                                                                                          
                                                                                                          
                                                                                                          $
                                                                                                          1,386,985Agricultural
      products
                                                                                                          
                                                                                                          
                                                                                                          637,352
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          346,123Reconciling
      item (1)
                                                                                                          
                                                                                                          
                                                                                                          826
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          (61,063
                                                                                                          )Reconciling
      item (2)
                                                                                                          
                                                                                                          
                                                                                                          (183,210
                                                                                                          )
                                                                                                          
                                                                                                          
                                                                                                          -Consolidated
                                                                                                          
                                                                                                          $
                                                                                                          3,890,282
                                                                                                          
                                                                                                          
                                                                                                          $
                                                                                                          1,672,045Depreciation
      and Amortization:Fertilizer
                                                                                                          
                                                                                                          $
                                                                                                          403,739
                                                                                                          
                                                                                                          
                                                                                                          $
                                                                                                          330,273Agricultural
      products
                                                                                                          
                                                                                                          
                                                                                                          7,560
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -Consolidated
                                                                                                          
                                                                                                          $
                                                                                                          411,299
                                                                                                          
                                                                                                          
                                                                                                          $
                                                                                                          330,273Interest
      expense:Fertilizer
                                                                                                          
                                                                                                          $
                                                                                                          112,334
                                                                                                          
                                                                                                          
                                                                                                          $
                                                                                                          86,761Agricultural
      products
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -Reconciling
      item (2)
                                                                                                          
                                                                                                          
                                                                                                          -
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -Consolidated
                                                                                                          
                                                                                                          $
                                                                                                          112,334
                                                                                                          
                                                                                                          
                                                                                                          $
                                                                                                          86,761Capital
      Expenditure:Fertilizer
                                                                                                          
                                                                                                          $
                                                                                                          1,600,332
                                                                                                          
                                                                                                          
                                                                                                          $
                                                                                                          148,952Agricultural
      products
                                                                                                          
                                                                                                          
                                                                                                          -Consolidated
                                                                                                          
                                                                                                          $
                                                                                                          1,600,332
                                                                                                          
                                                                                                          
                                                                                                          $
                                                                                                          148,952




11





Identifiable
      assets:
                                          
                                          As
      of 03/31/09
                                          
                                          
                                          As
      of 06/30/08Fertilizer
                                          
                                          $
                                          48,170,528
                                          
                                          
                                          $
                                          43,930,733Agricultural
      products
                                          
                                          
                                          7,547,286
                                          
                                          
                                          
                                          4,601,269Reconciling
      item (1)
                                          
                                          
                                          142,828
                                          
                                          
                                          
                                          795,988Reconciling
      item (2)
                                          
                                          
                                          118,318
                                          
                                          
                                          
                                          193,392Consolidated
                                          
                                          $
                                          55,978,960
                                          
                                          
                                          $
                                          49,521,382





For
      the nine months ended March 31,2009
                                                                                                            
                                                                                                            
                                                                                                            2008Revenues
      from unaffiliated customers:Fertilizer
                                                                                                            
                                                                                                            $
                                                                                                            19,435,021
                                                                                                            
                                                                                                            
                                                                                                            $
                                                                                                            11,852,614Agricultural
      products
                                                                                                            
                                                                                                            
                                                                                                            5,286,781
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            3,529,475Consolidated
                                                                                                            
                                                                                                            $
                                                                                                            24,721,802
                                                                                                            
                                                                                                            
                                                                                                            $
                                                                                                            15,382,089Operating
      income :Fertilizer
                                                                                                            
                                                                                                            $
                                                                                                            10,698,680
                                                                                                            
                                                                                                            
                                                                                                            $
                                                                                                            5,850,358Agricultural
      products
                                                                                                            
                                                                                                            
                                                                                                            2,013,618
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            1,835,514Reconciling
      item (1)
                                                                                                            
                                                                                                            
                                                                                                            -
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            (69,588
                                                                                                            )Reconciling
      item (2)
                                                                                                            
                                                                                                            
                                                                                                            (705,561
                                                                                                            )
                                                                                                            
                                                                                                            
                                                                                                            (656,669
                                                                                                            )Reconciling
      item (2)—stock compensation
                                                                                                            
                                                                                                            
                                                                                                            (112,247
                                                                                                            )
                                                                                                            
                                                                                                            
                                                                                                            -Consolidated
                                                                                                            
                                                                                                            $
                                                                                                            11,894,490
                                                                                                            
                                                                                                            
                                                                                                            $
                                                                                                            6,959,615Net
      income:Fertilizer
                                                                                                            
                                                                                                            $
                                                                                                            9,041,228
                                                                                                            
                                                                                                            
                                                                                                            $
                                                                                                            5,312,719Agricultural
      products
                                                                                                            
                                                                                                            
                                                                                                            2,013,881
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            1,835,760Reconciling
      item (1)
                                                                                                            
                                                                                                            
                                                                                                            7,384
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            (57,968
                                                                                                            )Reconciling
      item (2)
                                                                                                            
                                                                                                            
                                                                                                            (1,016,432
                                                                                                            )
                                                                                                            
                                                                                                            
                                                                                                            (656,669
                                                                                                            )Consolidated
                                                                                                            
                                                                                                            $
                                                                                                            10,046,061
                                                                                                            
                                                                                                            
                                                                                                            $
                                                                                                            6,433,842Depreciation
      and Amortization:Fertilizer
                                                                                                            
                                                                                                            $
                                                                                                            1,119,014
                                                                                                            
                                                                                                            
                                                                                                            $
                                                                                                            781,964Agricultural
      products
                                                                                                            
                                                                                                            
                                                                                                            83,242
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            -Consolidated
                                                                                                            
                                                                                                            $
                                                                                                            1,202,256
                                                                                                            
                                                                                                            
                                                                                                            $
                                                                                                            781,964Interest
      expense:Fertilizer
                                                                                                            
                                                                                                            $
                                                                                                            361,633
                                                                                                            
                                                                                                            
                                                                                                            $
                                                                                                            284,361Agricultural
      products
                                                                                                            
                                                                                                            
                                                                                                            -
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            -Reconciling
      item (2)
                                                                                                            
                                                                                                            
                                                                                                            198,624
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            -Consolidated
                                                                                                            
                                                                                                            $
                                                                                                            560,257
                                                                                                            
                                                                                                            
                                                                                                            $
                                                                                                            284,361Capital
      Expenditure:Fertilizer
                                                                                                            
                                                                                                            $
                                                                                                            3,525,561
                                                                                                            
                                                                                                            
                                                                                                            $
                                                                                                            5,348,106Agricultural
      products
                                                                                                            
                                                                                                            
                                                                                                            -
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            -Consolidated
                                                                                                            
                                                                                                            $
                                                                                                            3,525,561
                                                                                                            
                                                                                                            
                                                                                                            $
                                                                                                            5,348,106





Identifiable
      assets:
                                      
                                      As
      of 03/31/09
                                      
                                      
                                      As
      of 06/30/08Fertilizer
                                      
                                      $
                                      48,170,528
                                      
                                      
                                      $
                                      43,930,733Agricultural
      products
                                      
                                      
                                      7,547,286
                                      
                                      
                                      
                                      4,601,269Reconciling
      item (1)
                                      
                                      
                                      142,828
                                      
                                      
                                      
                                      795,988Reconciling
      item (2)
                                      
                                      
                                      118,318
                                      
                                      
                                      
                                      193,392Consolidated
                                      
                                      $
                                      55,978,960
                                      
                                      
                                      $
                                      49,521,382




(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.





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 are 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.


12





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 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. Management is
currently evaluating the effect of this pronouncement on financial
statements.





In May of
2008, FASB 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.





In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”. This
Statement replaces SFAS No. 141, Business Combinations. This Statement retains
the fundamental requirements in Statement 141 that the acquisition method of
accounting (which Statement 141 called the purchase method) be used for all
business combinations and for an acquirer to be identified for each business
combination. This Statement also establishes principles and requirements for how
the acquirer: a) recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any noncontrolling
interest in the acquiree; b) recognizes and measures the goodwill acquired in
the business combination or a gain from a bargain purchase and c) determines
what information to disclose to enable users of the financial statements to
evaluate the nature and financial effects of the business combination. SFAS No.
141(R) will apply prospectively to business combinations for which the
acquisition date is on or after Company’s fiscal year beginning October 1, 2009.
While the Company has not yet evaluated this statement for the impact, if any,
that SFAS No. 141(R) will have on its consolidated financial statements, the
Company will be required to expense costs related to any acquisitions after
September 30, 2009.


13


On
December 30, 2008 FASB issued FIN 48-3, “Effective Date of FASB Interpretation
No. 48 for Certain Nonpublic Enterprises”. This FSP defers the effective date of
FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, for
certain non-public enterprises as defined in paragraph 289, as amended, of FASB
Statement No. 109, Accounting for Income Taxes, including non-public
not-for-profit organizations. However, non-public consolidated entities of
public enterprises that apply U. S. GAAP are not eligible for the deferral.
Nonpublic enterprises that have applied the recognition, measurement, and
disclosure provisions of Interpretation 48 in a full set of annual financial
statements issued prior to the issuance of this FSP also are not eligible for
the deferral. This FSP shall be effective upon issuance. The Company does not
believe this pronouncement will impact its financial statements.





On
January 12, 2009 FASB issued FSP EITF 99-20-01, “Amendment to the Impairment
Guidance of EITF Issue No. 99-20”. This FSP amends the impairment guidance in
EITF Issue No. 99-20, “Recognition of Interest Income and Impairment on
Purchased Beneficial Interests and Beneficial Interests That Continue to be Held
by a Transferor in Securitized Financial Assets,” to achieve more consistent
determination of whether an other-than-temporary impairment has occurred. The
FSP also retains and emphasizes the objective of an other-than-temporary
impairment assessment and the related disclosure requirements in FASB Statement
No. 115, Accounting for Certain Investments in Debt and Equity Securities, and
other related guidance. The FSP is shall be effective for interim and annual
reporting periods ending after December 15, 2008, and shall be applied
prospectively. Retrospective application to a prior interim or annual
reporting period is not permitted. The Company does not believe this
pronouncement will impact its financial statements.





NOTE
3 – INVENTORIES





Inventories
consist of the following as of March 31, 2009 and June 30, 2008:





March 31, 2009
                            
                            
                            June 30, 2008Raw
      materials
                            
                            $
                            687,783
                            
                            
                            $
                            77,000Supplies
      and packing materials
                            
                            
                            877,623
                            
                            
                            
                            207,138Work
      in progress
                            
                            
                            6,236,221
                            
                            
                            
                            3,570,127Finished
      goods
                            
                            
                            457,142
                            
                            
                            
                            134,714Totals
                            
                            $
                            8,258,769
                            
                            
                            $
                            3,988,979




NOTE
4 – OTHER ASSETS





As of
March 31, 2009 and June 30, 2008, other assets comprised of the
following:





March 31, 2009
                    
                    
                    June 30, 2008Other
      receivable
                    
                    $
                    69,091
                    
                    
                    $
                    93,987Promotion
      material
                    
                    
                    42,220
                    
                    
                    
                    34,104Total
                    
                    $
                    111,311
                    
                    
                    $
                    128,091




14


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 March 31, 2009 and June 30,
2008:





March 31, 2009
                  
                  
                  June 30, 2008Building
      and improvements
                  
                  $
                  8,619,165
                  
                  
                  $
                  8,795,804Vehicles
                  
                  
                  23,782
                  
                  
                  
                  23,753Machinery
      and equipment
                  
                  
                  10,625,931
                  
                  
                  
                  10,263,668Agriculture
      assets
                  
                  
                  1,192,382
                  
                  
                  
                  887,518Total
                  
                  
                  20,461,260
                  
                  
                  
                  19,970,743Less:
      accumulated depreciation
                  
                  
                  (2,896,325
                  )
                  
                  
                  (1,771,287
                  )Total
      property, plant and equipment
                  
                  $
                  17,564,935
                  
                  
                  $
                  18,199,456





Depreciation
expenses for the three months ended March 31, 2009 and 2008 were $384,526 and
$300,489, respectively. Depreciation expenses for the nine months ended March
31, 2009 and 2008 were $1,121,989 and $703,271, respectively.





Agriculture
assets consist of reproductive trees that are expected to be commercially
productive for a period of eight years.





Construction
in Progress:





As of
March 31, 2009 and June 30, 2008, construction in progress, representing
construction for a new product line, amounted to $8,184,068 and $5,115,492,
respectively.





NOTE
6 - INTAGIBLE ASSETS





The
intangible assets comprised of following at March 31, 2009 and June 30,
2008:





March 31, 2009
                  
                  
                  June 30, 2008Land
      use right, net
                  
                  $
                  901,024
                  
                  
                  $
                  915,864Technology
      know-how, net
                  
                  
                  200,253
                  
                  
                  
                  264,295Total
                  
                  $
                  1,101,277
                  
                  
                  $
                  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 a cost of $1,064,202.The land use right is for
fifty years. The land use right consists of the following as of March 31, 2009
and June 30, 2008:


15





March 31, 2009
                    
                    
                    June 30, 2008Land
      use right
                    
                    $
                    1,064,202
                    
                    
                    $
                    1,062,898Less:
      accumulated amortization
                    
                    
                    (163,178
                    )
                    
                    
                    (147,034
                    )Total
                    
                    $
                    901,024
                    
                    
                    $
                    915,864





CONTRIBUTION OFTECHNOLOGY





A
shareholder contributed the technology to Techteam on August 16, 2001. The
technology is recorded at a cost of $858,225. This technology is a formulation
for the production of humic acid andis amortized over a period of 10
years. The technology consists of the following as of March 31, 2009 and
June 30, 2008:





March 31, 2009
                    
                    
                    June 30, 2008Technology
                    
                    $
                    858,225
                    
                    
                    $
                    857,174Less:
      accumulated amortization
                    
                    
                    (657,972
                    )
                    
                    
                    (592,879
                    )Total
                    
                    $
                    200,253
                    
                    
                    $
                    264,295





Total
amortization expenses of intangible assets for the three months ended March 31,
2009 and 2008 amounted to $26,774 and $29,784, respectively. Total amortization
expenses of intangible assets for the nine months ended March 31, 2009 and 2008
amounted to $80,267 and $78,693, respectively.





Amortization
expenses of intangible assets for the next five years after March 31, 2009 are
as follows:





March
      31, 2010
                  
                  $
                  107,107March
      31, 2011
                  
                  
                  107,107March
      31, 2012
                  
                  
                  49,892March
      31, 2013
                  
                  
                  21,284March
      31, 2014
                  
                  
                  21,284Total
                  
                  $
                  306,674





NOTE
7 - AMOUNT DUE TO RELATED PARTIES





The
amount due to related parties was the advances from the Company’s officers and
shareholders, which are unsecured, non-interest bearing and due on demand. As of
March 31, 2009 and June 30, 2008, the amount due to related parties is
$31,157 and $31,121, respectively.





NOTE
8 - ACCRUED EXPENSES AND OTHER PAYABLES





Accrued
expenses and other payables of the following as of March 31, 2009 and June 30,
2008:





March 31, 2009
                  
                  
                  June 30, 2008Payroll
      payable
                  
                  $
                  13,864
                  
                  
                  $
                  15,379Welfare
      payable
                  
                  
                  173,378
                  
                  
                  
                  178,500Accrued
      expenses
                  
                  
                  180,932
                  
                  
                  
                  148,070Other
      levy payable
                  
                  
                  113,352
                  
                  
                  
                  113,279Total
                  
                  $
                  481,526
                  
                  
                  $
                  455,228




16


NOTE 9 - LOAN
PAYABLES





As of
March 31, 2009 and June 30, 2008, the loan payables were as
follows:





March 31, 2009
                
                
                June 30, 2008Short
      term loans payable:Xi’an
      Commercial Bank Xincheng Branch
                
                $
                2,191,189
                
                
                $
                2,188,502Xi’an
      Beilin District Rural Credit Union Wenyibeilu Branch
                
                
                555,101
                
                
                
                554,421Agriculture
      Bank Yanglingshifangqu Branch
                
                
                934,907
                
                
                
                1,459,002Total
                
                $
                3,681,197
                
                
                $
                4,201,925





As of
March 31, 2009, the Company had a loan payable of $2,191,189 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. The Company renewed the loan with a term of one year and a new annual
interest rate of 12.70%





As of
March 31, 2009, the Company had a loan payable of $555,101 to Xi’an Beilin
District Rural Credit Union Wenyibeilu Branch with an annual interest rate of
11.79%, and due on September 16, 2009.The loan is guaranteed by
a former shareholder.





As of
March 31, 2009, the Company had a loan payable of $934,907, to Agriculture Bank
in China Yanglingshifangqu Branch, with an annual interest rate of 7.02% and due
on December 28, 2009. The loan is guaranteed by a former
shareholder.





The
interest expenses from these short-term loans are $112,334 and $86,761 for three
months ended March 31, 2009 and 2008, respectively. The interest expenses from
these short-term loans are $361,633 and $284,361 for the nine months ended March
31, 2009 and 2008, respectively.





NOTE
10 - TAXES PAYABLE





Taxes
payable consist of the following as of March 31, 2009 and June 30,
2008:





March 31, 2009
                              
                              
                              June 30, 2008VAT
      payable
                              
                              $
                              582,925
                              
                              
                              
                              4,495,140Income
      tax payable
                              
                              
                              525,716
                              
                              
                              
                              1,038,651Other
      levies
                              
                              
                              361,908
                              
                              
                              
                              344,484Total
                              
                              $
                              1,470,549
                              
                              
                              
                              5,878,275





NOTE
11 – ADVANCES FROM UNRELATED COMPANIES





Advances
from unrelated companies were $324,957 and $344,628 at March 31, 2009 and June
30, 2008, respectively. The advances were due on demand, unsecured and non
interest bearing.


17


NOTE
12 - OTHER INCOME (EXPENSES)





Other
income (expenses) mainly consists of interest expense and subsidy income from
government.





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.





From
January 1, 2008, TechTeam Jinong is subject to an income tax at a rate of
15%. Jintai is exempt from paying income tax for calendar year 2008 and
calendar year 2009 as it produces the products which fall into the tax exemption
list newly issued by the government.




The
provision for income taxes as of March 31, 2009 and March 31, 2008 consisted of
the following:




2009
                      
                      
                      2008Current
      income tax - Provision for China income and local tax
                      
                      $
                      1,597,833
                      
                      
                      $
                      301,841Deferred
      taxes
                      
                      
                      -
                      
                      
                      
                      -Total
      provision for income taxes
                      
                      $
                      1,597,833
                      
                      
                      $
                      301,841





The
following table reconciles the U.S. statutory rates to the Company’s effective
tax rate as of March 31, 2009 and 2008:





2009
                    
                    
                    2008Tax
      at statutory rate
                    
                    
                    34
                    %
                    
                    
                    34
                    %Foreign
      tax rate difference
                    
                    
                    (19
                    )%
                    
                    
                    (19
                    )%Net
      operating loss in other tax jurisdiction for where no benefit is
      realized
                    
                    
                    (1
                    )%
                    
                    
                    (11
                    )%Total
                    
                    
                    14
                    %
                    
                    
                    4
                    %





United
States of America





The
Company has significant income tax net operating losses carried forward from
prior years.  Due to the change in ownership of more than fifty
percent, the amount of $2,272,338 NOL which may be used in any one year will be
subject to a restriction under section 382 of the Internal Revenue Code. Due to
the uncertainty of the realizability of the related deferred tax assets of
$847,582, a reserve equal to the amount of deferred income taxes has been
established at March 31, 2009. The Company has provided 100% valuation allowance
to the deferred tax assets as of March 31, 2009.


18


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 three vendors accounted for more than 10% of the Company’s total purchases
for the three months ended March 31, 2009 with each vendor individually
accounting for about 16%, 15% and 10%. Accounts payable to those venders
amounted to $0, $298,377 and $152,281 as of March 31, 2009.





There
were three vendors that accounted for more than 10% of the Company’s total
purchases for the three months ended March 31, 2008 with each vendor
individually accounting for about 19%, 15% and 10%. Accounts payable to the
vendor amounted to $0, $385, and $49,697as of March 31,
2008.





There was
no customer that accounted for more than 10% of the total sales for the nine
months ended March 31, 2009 and 2008.





NOTE
15– STOCKHOLDERS’ EQUITY




On
December 26, 2007 the Company issued 6,313,617 shares of common stock to 31
accredited investors (the “Investors”) at $3.25 per share in a private placement
(the “Private Placement”). 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”.




The
Company issued 977,948 shares of common stock to 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 as of December 31, 2007. 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:


19





1.
            $2,000,000
      is held pending the company hiring a qualified CFO. The Company appointed
      a CFO in April 2008 and $2,000,000 was released to the Company
      accordingly.


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 and $2,000,000
      was released to the Company
accordingly.


3.
            $250,000
      is for the retaining of an Investors Relation firm. The company retained
      an Investors Relation firm in January 2008 and the money was released to
      the company on a monthly basis.





As of
March 31, 2009, the balance of restricted cash is $118,318.





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 (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.





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 in amount
equal to one percent (1%) of the principal amount subscribed for by the
Investors starting from the first day following the Effective Date for each
30-day period (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%). The
Company incurred the Effectiveness Damages of $704,494.




20


As of
December 29, 2008, the Company reached an agreement with the holders of a
majority shares issued in the Private Placement to issue an aggregate of 213,484
shares of common stock to the Investors on a pro rata basis in lieu of the cash
payment of the Effectiveness Damages. On January 16, 2009, the Company issued
an aggregate of 213,484 shares of restricted common stock on a pro rata
basis to the Investors in the Private Placement.





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 other
      collective benefits to the Company's employees; and statutory 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 March
31, 2009 and June 30, 2008 amounted to $2,988,308 and $1,882,797,
respectively.




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
                  %




21


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 will vest on July 1, 2009. Compensation expense for the
nine months ended March 31, 2009 recorded was $47,767.





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 former CFO with an
exercise price of $6 and term of two years. 12,000 options vested on June 29,
2008 and 28,000 options were forfeited due to the former CFO’s resignation.
Compensation expense for the year ended June 30, 2008 recorded was
$38,994.





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 nine months ended March
31, 2009 recorded was $64,480.





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
                  
                  
                  584
                  %Expected
      dividend yield
                  
                  
                  0
                  %





Options
outstanding as of March 31, 2009 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
                
                
                
                1.55
                
                
                $
                4.49
                
                
                
                69,000
                
                
                $
                4.15
                
                
                $
                4,650




22


The
following table summarizes the options outstanding as of March 31,
2009:




Options
                      OutstandingOutstanding,
      June 30, 2008
                    
                    
                    121,500Granted
                    
                    
                    28,000Forfeited/Canceled
                    
                    
                    (28,000
                    )Exercised
                    
                    
                    -Outstanding,
      March 31, 2009
                    
                    
                    121,500





NOTE
18 - COMMITMENTS AND LEASES




In 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 $5,106 and
$2,739 as rent expenses for the three months ended March 31, 2009 and 2008,
respectively. The Company recorded rent expenses of $15,318 and $7,908 as rent
expenses for the nine months ended March 31, 2009 and 2008, respectively. Rent
expenses for the 5 years after March 31, 2009 are as follows:





March
      31, 2010
                    
                    $
                    20,423March
      31, 2011
                    
                    
                    20,423March
      31, 2012
                    
                    
                    20,423March
      31, 2013
                    
                    
                    20,423March
      31, 2014
                    
                    
                    20,423Total
                    
                    $
                    102,115





Item
      2.
            Management’s
      Discussionand 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.


23


Overview





We,
through our indirect wholly owned subsidiaries, Techteam and Jintai, have two
business segments: (i) research, development, production and distribution of
humic acid based liquid compound fertilizer (conducted through Techteam); and
(ii) development, production and distribution of agricultural products
(conducted through Jintai), namely, top-grade fruits, vegetables, flowers and
colored seedlings. The fertilizer business has been our main business which
generated 77.6% and 79.4% of our total revenues in the three months ended March
31, 2009 and 2008, respectively. In the nine months ended March 31, 2009 and
2008, the fertilizer business has generated 78.6% and 77.1% of our total
revenues, respectively.





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 approximately 511 regional
distributors covering 27 provinces in China. We sold 3,364 and 2,091 metric tons
of our fertilizer products for the three months ended March 31, 2009 and 2008,
respectively. In the nine months ended March 31, 2009 and 2008, we sold 10,799
and 6,992 metric tons of our fertilizer products respectively.





We have
developed over 131 different fertilizer products, including six new products
introduced to the market in the three months ended March 31, 2009. The leading
five provinces by revenue for the three months ended March 31, 2009 are Shannxi
(12.2%), Shandong (10.6%), Anhui (6.2%), Xinjiang (6.0%) and Henan (5.4%), which
in total accounted for 40.5% of our total fertilizer sales from the sale of our
fertilizer products for the quarter ended March 31, 2009. Our top five
fertilizer products by revenue for the three months ended March 31, 2009
accounted for 24.4% of the total fertilizer sales during that
period.





We also
export our humic acid based liquid compound fertilizer to some foreign
countries, including India, Ecuador, Pakistan and Lebanon through contracted
distributors. Total revenues from exported fertilizer products currently account
for approximately 0.4% of fertilizer sales for the three months ended March 31,
2009.


24


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
Developments





During
the three months ended March 31, 2009, we launched six new fertilizer products
under the Company’s high-end brand, Techteam. They generated approximately
$146,213, or 2.1% of the revenues from our fertilizer products sold for the
quarter ended March 31, 2009.





As of
March 31, 2009, we have completed the construction of a three-story building
totaling approximately 13,803 square meters (i.e., approximately 148,574 square
feet) for our new production facility with an annual production capacity of
up to 40,000 metric tons of our fertilizer products. We also completed the
installation of the liquid fertilizer production line. While our current factory
is already highly automated, our new addition will have the added feature of
automatic packaging equipment which increases efficiency and further reduces
reliance on manual labor. In addition, while we currently specialize
in liquid fertilizer products, our new facility will give us the
flexibility to expand into the production of highly concentrated fertilizer. We
anticipate our new facility could commence actual production in August 2009 and
we could ramp up to full utilization of our new facility over the three years
thereafter when our total annual production capacity could be expanded to 55,000
metric tons considering our current production capacity of 15,000 metric
tons.





Results of
Operations





THREE
MONTHS ENDED MARCH 31, 2009 COMPARED WITH THREE MONTHS ENDED MARCH 31,
2008.





The
following table shows the operating results of the Company on a consolidated
basis for the three months ended March 31, 2009 and 2008.





Three
      months
                        ended
                      
                      
                      Three
      months endedMarch
      31, 2009
                      
                      
                      March
      31, 2008Net
      Sales
                      
                      $
                      8,841,675
                      
                      
                      $
                      4,434,926Cost
      of Goods Sold
                      
                      
                      (3,776,138
                      )
                      
                      
                      (1,982,084
                      )Gross
      Profit
                      
                      
                      5,065,537
                      
                      
                      
                      2,452,842Selling
      Expenses
                      
                      
                      (203,925
                      )
                      
                      
                      (142,808
                      )General
      and Administrative Expenses
                      
                      
                      (408,740
                      )
                      
                      
                      (256,800
                      )Income
      from Operations
                      
                      
                      4,452,872
                      
                      
                      
                      2,053,234Total
      Other Income (expense)
                      
                      
                      51,083
                      
                      
                      
                      (79,348
                      )Income
      Before Income Taxes
                      
                      
                      4,503,955
                      
                      
                      
                      1,973,886Provision
      for Income Taxes
                      
                      
                      (613,673
                      )
                      
                      
                      (301,841
                      )Net
      Income
                      
                      
                      3,890,282
                      
                      
                      
                      1,672,045




25


Net
Sales





Total net
sales for the three months ended March 31, 2009 increased $8,841,675, or 99.4%,
from $4,434,926 for the three months ended March 31, 2008.





Techteam’s net sales, which accounted for 77.6%
of our total net sales, were driven by the sales ofhumic acid based
liquid compound fertilizers. For the three months ended March 31, 2009,
Techteam’s net sales increased $3,344,201, or 95.0%, to $6,864,494 from
$3,520,293 for the three months ended March 31, 2008. We have introduced 17 new
products to the market during the past 12 months, which contributed
approximately 63.8% to this increase. In addition, our recent upgrades to the
current production facility increased annual capacity from 10,000 metric ton to
15,000 metric ton and enabled us to meet the strong demands for the fertilizer
products. Sales volume increased 60.8% to 3,364 tons for the three months ended
March 31, 2009 from 2,091 tons for the three months ended March 31,
2008.





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, increased $1,062,547, or 116.2%, to $1,977,180 for the three months
ended March 31, 2009 from $914,633 for the same period in 2008. This increase
was largely due to the strong sales of our various decorative flowers, mainly
butterfly orchids, big orchids and red leaf flowers during this year’s holiday
seasons. The sales for these three products accounted for 82.6% of Jintai’s
sales for the three months ended March 31, 2009.





Cost
of Goods Sold





Total
cost of goods sold for the three months ended March 31, 2009 increased
$1,794,054, or 90.5%, to $3,776,138 for the three months ended March 31,
2008.





Cost of
goods sold by Techteam for the three months ended March 31, 2009 increased
$1,058,520, or 70.5%, to $2,560,795 compared to the same period in 2008. As a
percentage of total net sales, cost of goods sold by Techteam approximated 29.0%
and 33.9% for the three months ended March 31, 2009 and 2008,
respectively.





Cost of
goods sold by Jintai increased $735,534, or 153.3%, to $1,215,343 for the three
months ended March 31, 2009 compared to that for the three months ended March
31, 2008. This increase was partly due to the increases in raw materials and
allocated overhead as a result of the addition of new machinery. As a percentage
of total net sales, cost of goods sold by Jintai approximated 13.7% and 10.8%
for the three months ended March 31, 2009 and 2008,
respectively.


26





Gross
Profit





Total
gross profit for the three months ended March 31, 2009 increased $2,612,695, or
106.5%, to $5,065,537 compared to $2,452,842 for the three months ended March
31, 2008. Gross profit margin approximated 57.3% and 55.3% for the three months
ended March 31, 2009 and 2008, respectively.





Gross
profit from Techteam increased $2,285,681, or 113.3%, to $4,303,699 for the
three months ended March 31, 2009 from $2,018,018 for the three months ended
March 31, 2008. Gross profit margin from Techteam sales approximated 62.7% and
57.3% for the three months ended March 31, 2009 and 2008, respectively. The
increase in gross profit margin was mainly due to the relatively low purchase
costs in packaging materials and the increasing focus on high-end products
comparing to those of the same period a year ago.





Gross
profit from Jintai increased $327,013, or 75.2% for the three months ended March
31, 2009, to $761,837 compared to $434,824 for the three months ended March 31,
2008. Gross profit margin from Jintai sales approximated 38.5% and 47.5% for the
three months ended March 31, 2009 and 2008, respectively. The decrease in gross
profit margin was primarily due to the increasing amortization as a result of
the greenhouse upgrades in March 2008. In addition, we adjusted our sales price
on decorative flowers to make them more competitive given the entry of more
competitors in this field and the slow-down of the overall economy.





Selling
Expenses





Selling
expenses consist primarily of salaries of sales personnel, advertising and
promotion expenses, freight charges and related compensation. Selling expenses
were $203,925, or 2.3% of net sales for the three months ended March 31, 2009 as
compared to $142,808, or 3.2% of net sales for the three months ended March 31,
2008, an increase of $61,117, or approximately 42.8%. Most of this increase was
due to an increase in the number of sales representatives, marketing expenses
for our new products and freight-out expenses.





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 $408,740, or 4.6% of net sales for the
three months ended March 31, 2009, as compared to $256,800, or 5.8% for the
three months ended March 31, 2008, an increase of $151,940. The increase was
largely attributable to professional and management compensation expenses
related to the Company’s status as a public company in the US.


27





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 income for the
three months ended March 31, 2009 was $51,083 and total other expenses for the
three months ended March 31, 2008 were $79,348. The increase of $130,431 was
mainly due to the interest income from a certificate of deposit.





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. Techteam incurred income tax expenses
of $613,673 for the three months ended March 31, 2009, compared to $301,841 for
the same period in the prior year, an increase of $311,832, primarily
contributable to our increased operating income.





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 $3,890,282 for the three months ended March 31, 2009, an increase of
$2,218,237 or 132.7% from $1,672,045 for the three months ended March 31, 2008.
The increase in net income was largely due to the increase in net sales. Net
income as a percentage of total net sales approximated 44.0% and 37.7% for the
three months ended March 31, 2009 and 2008, respectively.





NINE
MONTHS ENDED MARCH 31, 2009 COMPARED WITH NINE MONTHS ENDED MARCH 31,
2008.





The
following table shows the operating results of the Company on a consolidated
basis for the nine months ended March 31, 2009 and 2008.





Nine months ended
                  
                  
                  Nine months endedMarch 31, 2009
                  
                  
                  March 31, 2008Net
      Sales
                  
                  $
                  24,721,802
                  
                  
                  $
                  15,382,089Cost
      of Goods Sold
                  
                  
                  (10,608,336
                  )
                  
                  
                  (6,377,066
                  )Gross
      Profit
                  
                  
                  14,113,466
                  
                  
                  
                  9,005,023Selling
      Expenses
                  
                  
                  (786,462
                  )
                  
                  
                  (614,646
                  )General
      and Administrative Expenses
                  
                  
                  (1,432,514
                  )
                  
                  
                  (1,430,762
                  )Income
      from Operations
                  
                  
                  11,894,490
                  
                  
                  
                  6,959,615Total
      Other Income (expense)
                  
                  
                  (250,596
                  )
                  
                  
                  (223,933
                  )Income
      Before Income Taxes
                  
                  
                  11,643,894
                  
                  
                  
                  6,735,682Provision
      for Income Taxes
                  
                  
                  (1,597,833
                  )
                  
                  
                  (301,841
                  )Net
      Income
                  
                  
                  10,046,061
                  
                  
                  
                  6,433,842


28





Net
Sales





Total net
sales for the nine months ended March 31, 2009 increased $9,339,713, or 60.7%,
from $15,382,089 for the nine months ended March 31, 2008.





Techteam’s net sales, which accounted for 78.6%
of total net sales, were driven by the sales ofhumic acid based liquid
compound fertilizers. For the nine months ended March 31, 2009, Techteam’s net
sales increased $7,582,407, or 64.0%, to $19,435,021 from $11,852,614 for the
nine months ended March 31, 2008. We have introduced 17 new products to the
market during the past 12 months, which contributed approximately 49.8% to this
increase. In addition, our recent upgrades to the current production facility
increased annual capacity from 10,000 metric ton to 15,000 metric ton and
enabled us to meet the strong demands for the fertilizer products. Sales volume
increased 54.4% to 10,799 tons for the nine months ended March 31, 2009 from
6,992 tons for the nine months ended March 31, 2008.





Jintai’s
net sales increased $1,757,307, or 49.8%, to $5,826,782 for the nine months
ended March 31, 2009 from $3,529,475 for the same period in 2008. This increase
was largely due to the sales of our various decorative flowers, such as
butterfly orchids, big orchids and red leaf flowers during this year’s holiday
seasons. The sales for these three products accounted for 76.7% of Jintai’s
sales for the nine months ended March 31, 2009.





Cost
of Goods Sold





Total
cost of goods sold for the nine months ended March 31, 2009 increased
$4,231,270, or 66.4%, to $10,608,336 compared to that for the nine months ended
March 31, 2008.





Cost of
goods sold by Techteam for the nine months ended March 31, 2009 increased
$2,835,966, or 58.7%, to $7,667,116 compared to that for the same period in
2008. As a percentage of total net sales, cost of goods sold by Techteam
approximated 31.0% and 31.4% for the nine months ended March 31, 2009 and 2008,
respectively.





Cost of
goods sold by Jintai increased $1,395,305, or 90.3%, to $2,941,221 for the nine
months ended March 31, 2009 compared to that for the nine months ended March 31,
2008. This increase was primarily due to the increase in purchases of seedlings
and flowers. In addition, the maintenance costs have increased comparing to
those a year ago. As a percentage of total net sales, cost of goods sold by
Jintai approximated 11.9% and 10.1% for the nine months ended March 31, 2009 and
2008, respectively.





Gross
Profit





Total
gross profit for the nine months ended March 31, 2009 increased $5,108,441, or
56.7%, to $14,113,466 compared to $9,005,023 for the nine months ended March 31,
2008. Gross profit margin approximated 57.1% and 58.5% for the nine months ended
March 31, 2009 and 2008, respectively.


29





Gross
profit from Techteam increased $4,746,441, or 67.6%, to $11,767,905 for the nine
months ended March 31, 2009 from $7,021,464 for the nine months ended March 31,
2008. Gross profit margin from Techteam sales approximated 60.5% and 59.2% for
the nine months ended March 31, 2009 and 2008, respectively.





Gross
profit from Jintai increased $362,002, or 18.3% for the nine months ended March
31, 2009, to $2,345,561 compared to $1,983,559 for the nine months ended March
31, 2008. Gross profit margin from Jintai sales approximated 44.4% and 56.2% for
the nine months ended March 31, 2009 and 2008, respectively. The decrease in
gross profit margin was primarily due to the increasing maintenance costs and
amortization expenses as a result of the greenhouse upgrades in March 2008. In
addition, we adjusted our sales price on decorative flowers to make them more
competitive given the entry of more competitors in this field and the slow-down
of the overall economy.





Selling
Expenses





Selling
expenses consist primarily of salaries of sales personnel, advertising and
promotion expenses, freight charges and related compensation. Selling expenses
were $786,462 for the nine months ended March 31, 2009, an increase of $171,816,
or approximately 28.0% as compared to $614,646 for the nine months ended March
31, 2008. Most of this increase was due to higher travel and salary expenses for
our expended sales force. However, as a percentage of net sales, the selling
expenses accounted for 3.2% of net sales for the nine months ended March 31,
2009 as compared to 4% for the same period in the prior year.





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 $1,432,514, or 5.8% of net sales for
the nine months ended March 31, 2009, as compared to $1,430,762, or 9.3% for the
nine months ended March 31, 2008, an increase of $1,752.





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 nine months ended March 31, 2009 and 2008 were $250,596 and $223,933,
respectively. The increase in interest income was offset by an increase in
interest expenses related to the liquidated damages the Company incurred in
the quarter ended September 30, 2008 arising from its contractual obligations
for the late effectiveness of our registration statement.


30





Income
Taxes





Techteam
incurred income tax expenses of $1,597,833 for the nine months ended March 31,
2009, compared to $301,841 for the same period in the prior year. The main
reason for the increase is that Techteam enjoyed tax exemption during the first
two quarters in the prior fiscal year due to its status as a wholly foreign
owned enterprise (“WFOE”) and the PRC regulations provided such a tax incentive
through December 31, 2007. The increased income tax is also attributable to our
increased operating income.





As set
forth above, Jintai is exempt from paying income tax under the PRC Enterprise
Income Tax Law.





Net Income





Our net
income was $10,046,061 for the nine months ended March 31, 2009, an increase of
$3,612,219 or 56.1% from $6,433,842 for the nine months ended March 31, 2008.
The increase was mainly a result of our increased net sales. Net income as a
percentage of total net sales approximated 40.6% and 41.8% for the nine months
ended March 31, 2009 and 2008, 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.





Liquidity and Capital
Resources





Our
principal sources of liquidity include cash from operations, borrowings from
local commercial banks and net proceeds of $18,602,723 from our private
placement consummated in December 2007 (the “Private Placement”).





As of
March 31, 2009, cash and cash equivalents were $13,632,961, a decrease of
$2,979,455 from $16,612,416 as of June 30, 2008, primarily due to payments made
with respect to our new production facility of $3,059,913. This does not include
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 expenditures. The funds
are being released to the Company on a monthly basis to pay invoices issued by
the Company’s investor relations firm. As of March 31, 2009, there was $118,318
left in the escrow account.





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


31





Nine months ended March 31,2009
                  
                  
                  2008Net
      cash provided by operating activities
                  
                  
                  980,997
                  
                  
                  
                  5,481,516Net
      cash used in investing activities
                  
                  
                  (3,525,561
                  )
                  
                  
                  (5,348,106
                  )Net
      cash provided by/ (used in) financing activities
                  
                  
                  (450,401
                  )
                  
                  
                  13,257,854Effect
      of exchange rate change on cash and cash equivalents
                  
                  
                  15,509
                  
                  
                  
                  513,415Net
      increase in cash and cash equivalents
                  
                  
                  (2,979,455
                  )
                  
                  
                  13,904,679Cash
      and cash equivalents, beginning balance
                  
                  
                  16,612,416
                  
                  
                  
                  81,716Cash
      and cash equivalents, ending balance
                  
                  
                  13,632,961
                  
                  
                  
                  13,986,395





Operating
Activities





Net cash
provided by operating activities was $980,997 for the nine months ended March
31, 2009, a decrease of $4,500,519 from $5,481,516, net cash provided by
operating activities for the same period in 2008. The decrease was mainly due to
an increase in accounts receivable as a result of the strong sales in the second
half of the quarter ended March 31, 2009 and a decrease in tax payables as a
result of payment of an accrued income tax and VAT obligation.





Investing
Activities





Net cash
used in investing activities in the nine months ended March 31, 2009 was
$3,525,561, mainly due to the upgrades to the existing production line and
additions made for our new production line. The net cash used in investing
activities for the same period in 2008 was $5,348,106, mainly due to the
acquisition of Techteam and advances for construction in progress of upgrading
our greenhouse facilities.





Financing
Activities





Net cash
used by financing activities in the nine months ended March 31, 2009 totaled
$450,401. The release of $75,074 from the escrow account was offset by the
repayment of $525,475 of our short-term loans. The net cash provided from
financing activities for the same period in 2008 was $13,257,854, primarily due
to the Private Placement.





On March
13, 2009 we paid off principal of $146,079 to Agriculture Bank Yangling
Shifangqu Branch. As of March 31, 2009, our loans payable were as
follows:


32





Shorttermloans
                                            payable:
                                          
                                          Amount
                                            Outstanding
                                          
                                          RepaymentTerms
                                          
                                          ExpirationDateXi’an
      Commercial Bank Xincheng Branch
                                          
                                          $
                                          2,191,189
                                          
                                          Annual
      Interest Rate: 12.699%, repaid on a monthly basis
                                          
                                          03/31/2010Xi’an
      Beilin District Rural Credit Union Wenyibeilu Branch
                                          
                                          $
                                          555,101
                                          
                                          Annual
      Interest Rate: 11.794%, repaid on a monthly basis
                                          
                                          09/16/2009Agriculture
      Bank Yanglingshifangqu Branch
                                          
                                          $
                                          934,907
                                          
                                          Annual
      Interest Rate: 7.02%, repaid on a monthly basis
                                          
                                          06/29/2009Total
                                          
                                          $
                                          3,681,197





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 $6,866,974 as
of March 31, 2009, compared to $3,590,552 as of June 30, 2008, an increase of
$3,276,422. $3,052,933, the increase in accounts receivables at Techteam was
mainly due to strong sales in March 2009. Compared to the balance of net
accounts receivable as of December 31, 2008, the balance for Techteam increased
$2,491,607 and that for Jintai decreased $160,962.





Our
allowance for doubtful accounts was $62,998 as of March 31, 2009 compared with
$96,065 as of June 30, 2008, a decrease of $33,066 due to improvements we made
to collect accounts receivables that were greater than 90 days past due. Jintai
did not have any allowance for bad debt as of March 31, 2009.





Inventories





We had
inventory of $8,258,769 as of March 31, 2009 as compared to $3,988,979 as of
June 30, 2008, an increase of $4,269,790. Of this increase, $1,524,232 was an
increase in Techteam mainly due to the increased purchase of raw materials and
packaging materials for higher production demands and $2,745,557 in Jintai as a
result of the increased work in progress at Jintai to accommodate the demands
for the decorative flowers and for new fertilizer products
testing.


33





Accounts
Payable





We had
accounts payable of $1,235,570 as of March 31, 2009 as compared to $232,417 as
of June 30, 2008, an increase of $1,003,153. Of this increase, $976,959 was due
to increased purchases of raw materials and packaging materials at Techteam at
the end of the quarter ended March 31, 2009, to prepare for the peak sales
season in the next quarter.





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
collectibility 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.


34





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.





Accounts
receivable





The
Company's policy is to maintain reserves for potential credit losses on accounts
receivable. 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 March 31, 2009, the Company was organized into two main
business segments: produce fertilizer (Techteam) and agricultural products
(Jintai).





Item 3.
            Quantitative and
      Qualitative Disclosures About Market
Risk




This item does not apply to smaller
reporting company such as us.




Item 4T.
            Controls and
      Procedures




(a)            Evaluation of disclosure controls
and procedures. At the conclusion of the period ended March 31, 2009 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.


35





(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.





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.


36





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 thereunto duly
authorized.





CHINA
      GREEN AGRICULTURE, INC.Date:
      May 11, 2009
                  BY:
                  /s/Tao LiTao
      LiPresident
      and Chief Executive Officer(principal
      executive officer)Date:
      May 11, 2009
                  BY:
                  /s/ Ying YangYing
      YangChief
      Financial Officer(principal
      financial officer and accounting
officer)


37