UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, DC 20549




FORM 10-K/A




QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF


THE SECURITIES EXCHANGE ACT OF 1934




For the fiscal year ended December 31, 2009


Commission file number 333-136643




ONE BIO, CORP.(Exact Name of Registrant as Specified In Its Charter)
  Florida

59-3656663(State or Other Jurisdiction of Incorporation or

Organization)

(I.R.S. Employer Identification No.)
  19950 West Country Club Drive, Suite 100, Aventura, Florida

33180(Address of Principal Executive Offices)

(Zip Code)
  (305)3288662(Registrant’s Telephone Number, Including Area Code)





20900 NE 30th Avenue Suite 842 Aventura Florida 33180Former Name and Address


Securities registered under Section 12(b) of the Act:                NONE




Securities registered pursuant to Section 12(g) of the Act:      NONE




(Title of Class)







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




Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d0 of the act.  Yes   o   No   x


Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Yes:           x
No:           o





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in rule 12-b-2 of the Exchange Act.  (Check One):


Large Accelerated Filer   o   Accelerated Filer   o   Non-accelerated Filer   o   Smaller Reporting Company   x




Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).


Yes:           o
No:           x





The aggregate market value of the registrants voting and non-voting common equity held by non-affiliates as of June 30, 2009, was approximately $7,875,000.




The number of shares of common stock outstanding as of March 24, 2010 was 29,997,204.




1





TABLE OF CONTENTS




PART IItem 1.

Description of Business

2Item 1A.

Risk Factors

15Item 1B.

Unresolved Staff Comments

38Item 2.

Description of Property

38Item 3.

Legal Proceedings

40Item 4.

Submission of Matters to a Vote of Security Holders

40PART IIItem 5.

Market for Common Equity and Related Stockholder Matters

40Item 6.

Selected Financial Data

40Item 7.

Management’s Discussion and Analysis of Financial Condition and Results

41Item 8.

Financial Statements

52Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

52Item 9A.

Controls and Procedures

53PART IIIItem 10.

Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16 (A) of the Exchange Act

55Item 11.

Executive Compensation

59Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matter

62Item 13.

Certain Relationships and Related Transactions

63Item 14.

Exhibits and Reports on Form 8-K

65Item 15.

Principal Accountant Fees and Services

66SIGNATURES

67
  2




EXPLANATORY NOTE




This Annual Report on Form 10-K/A (Amendment No. 4) is being filed by ONE Bio, Corp. (“the Company”) to reflect certain revisions to our Annual Report filed on Form 10-K for the fiscal year ended December 31, 2009, which was filed with the SEC on March 30, 2010 (“the Original Annual Report”) and Form 10-K/A (Amendment No. 1) filed with the SEC on June 1, 2010 Form 10-K/A (Amendment No.2) filed with the SEC on June 30, 2010 and Form 10-K/A (Amendment No. 3) filed with SEC on September 22, 2010. This Amendment No. 4 is intended to clarify certain items in our consolidated financial statements, including:




(1)
Updated statement of Stockholders Equity to reflect reverse acquisition with Green Planet.


(2)
Updated weighted average shares and earnings per share on statement of operations.


(3)
Updated Description of Business.


(4)
Updated Risk Factors.




FORWARD-LOOKING STATEMENTS




This Annual Report on Form 10-K/A contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934.  These statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses.  Such forward-looking statements include, among others, those statements including the words “expects,” “anticipates,” “intends,” “believes,” “may,” “will,” “should,” “could,” “plans,” “estimates,” and similar language or negative of such terms.  Our actual results may differ significantly from those projected in the forward-looking statements.  Factors that might cause or contribute to such differences include, but are not limited to, those discussed in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”  You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report.  Although we believe that the expectations reflected in the forward-looking statements are reasonable, we do not know whether we can achieve positive future results, levels of activity, performance, or goals.  Actual events or results may differ materially.  We undertake no obligation to publicly release any revisions to the   forward-looking statements or reflect events or circumstances taking place after the date of this document.




1




Part I




Item 1.
Description of Business




Business




ONE Bio, Corp. (the “Company” and/or “ONE” and/or “Registrant”) (www.onehcorp.com) headquartered in Aventura, FL, is an award winning, innovative company utilizing green process manufacturing to produce raw chemicals and herbal extracts, natural supplements and organic products. ONE is focused on capitalizing on the rapidly growing markets of the Asia Pacific region. Key products include widely recognized Solanesol, CoQ10, Resveratrol and 5-HTP, organic fertilizers, and organic bamboo health food and beverages. ONE’s growth plan targets an aggressive acquisition driven strategy supported by strong organic growth. Through ONE, small private companies gain access to capital, experienced management and strategic insight. ONE builds strong synergies amongst all subsidiaries to enhance shareholder value. ONE is working with each subsidiary to promote organic and acquisition driven growth. We are committed to becoming a leader in bioengineering utilizing green processes, combining our experience in producing our chemical and herbal extract products, natural supplements and organic products with seasoned North Ameican managerial expertise. Our operations are currently focused on the Asia-Pacific region which currently generates approximately 88% of our revenue. (Unless otherwise specified all dollar amounts in this Form 10-K/A are in U.S. dollars.) We are headquartered in Miami, Florida; however, our primary contractually controlled operating enterprises, Sanming Huajian Bio-Engineering Co., Ltd. (“Sanming”) and Jianou Lujian Foodstuff Co. (“JLF”) are based in Sanming City and Jianou City, respectively, in the Fujian province of China.




Our History




The Company was incorporated under the laws of the State of Florida on June 30, 2000 under the name of Contracted Services, Inc.




On May 29, 2009 Contracted Services, Inc. entered into a material definitive agreement with Belmont Partners, LLC by which Belmont acquired eighteen million seven hundred fifty thousand (18,750,000) shares of the Company’s common stock.  The transaction closed on June 2, 2009.  Following the transaction, Belmont Partners, LLC controls approximately 92.25% of the Company’s outstanding capital stock. Additionally on May 13, 2009 Joseph Meuse was appointed to the Board of Directors as director, and as President and Secretary of the Company.  On the same date, John L. Corn and Susan E. Corn resigned from their positions as directors and/or officers of the company.




On June 4, 2009, Belmont Partners LLC (“Belmont”), the Issuer’s controlling shareholder, and Abacus Global Investments, Corp. (“Abacus”) entered into a material definitive agreement pursuant to which Abacus acquired all eighteen million seven hundred fifty thousand (18,750,000) shares of the registrant’s common stock (representing 92.25% of the Company’s issued and outstanding stock) which was owned by Belmont.  The transaction closed on June 9, 2009.  Following the transaction, Abacus Global Investments, Corp. controlled 92.25% of the Registrants outstanding capital stock.  Additionally, effective June 9, 2009 Marius Silvasan was appointed as a director and as the interim President of the company. On the same date, Joseph Meuse resigned from his positions as President, Secretary and Director.




On June 9, 2009, the company filed an amendment to its Articles of Incorporation pursuant to which the Company’s name was changed to ONE HOLDINGS, CORP. (“ONE”). The Company also changed its registered address on the same day.




Upon Abacus’ acquisition of majority control of the Company and following the name change to ONE, Abacus changed the Company’s business focus to its current strategy.




2




On July 22, 2009, the Company acquired from certain shareholders (“GP Shareholders”) of Green Planet Bioengineering Co., Ltd., a Delaware corporation (“Green Planet”) 80% of the issued and outstanding shares of common stock of Green Planet. The Company also acquired 5,101 shares of Green Planet preferred stock which preferred stock provides the Company the right to vote 1,000 votes on all matters submitted to a vote of the shareholders of Green Planet and is convertible into 1,000 shares of Green Planet common stock.  The Company acquired the Green Planet preferred stock in consideration for the issuance by the Company to Green Planet of 1,004,808 shares of the Company’s common stock.  As part of this Green Planet transaction, Green Planet and the GP Shareholders deposited into an Escrow thirty-five percent (35%) of the Company’s shares issued to Green Planet and the GP Shareholders and in the event Green Planet’s EBITDA for fiscal year 2009 is less than GP’s EBITDA for fiscal 2008, the number of shares of Registrant’s stock issued to Green Planet and the GP Shareholders shall be proportionately reduced as provided for in the Green Planet Preferred Stock Purchase Agreement (the “Preferred Stock Purchase Agreements”) and the Stock Purchase Agreement (“GP SPA”) with the GP Shareholders. Green Planet and the GP Shareholders are also subject to a lockup and leak out period and has one piggy-back registration right as further defined in the Green Planet Preferred Stock Purchase Agreement and GP SPA.  As a result of the Green Planet transactions, the Company has become the majority shareholder of Green Planet and based upon the number of shares outstanding and assuming conversion or the Green Planet preferred stock into common stock, the Company would own approximately 83% of Green Planet’s shares.  Green Planet owns 100% of FuJian Green Planet Bioengineering Co., Ltd., a WFOE, that through a series of contractual arrangements has effective control of the business and operations of and has an irrevocable option to purchase the equity and/or assets of Sanming Huajian Bio-Engineering Co., Ltd. (a PRC company), a green process manufacturer of high quality health supplements, organic fertilizers and pesticides.  Consequently, the Company effectively controls the business and operations of Green Planet, FuJian Green Planet Bioengineering Co., Ltd. (a GP WFOE) and Sanming Huajian Bio-Engineering Co., Ltd.




On September 3, 2009, ONE acquired from the shareholders of Trade Finance Solutions (“collectively referred to as “TFS Shareholders”) 3,990 shares representing 99.75% of the Shareholders’ common shares owned in Trade Finance Solutions Inc. (“TFS”). For the TFS shares each TFS Shareholder is to receive shares of the Registrant’s common stock and cash payments as per the Share Purchase Agreement with the TFS Shareholders (“TFS SPA”). The cash component of the purchase price will be calculated on an earn-out basis based on TFS’ monthly EBIT (earnings before interest and taxes) beginning with the measuring period as defined in the TFS SPA with a not to exceed purchase price of $6,000,000.00. In addition to the cash portion of the purchase price, the TFS Shareholders shall receive 1 share of ONE common stock (adjusted for forward or reverse splits following the closing) for every $5.00 in EBIT achieved during the measuring period (“TFS Stock Compensation”) subject to a maximum TFS Stock Compensation of 1.2 million shares of Registrant’s common stock. The TFS Shareholders are subject to a lockup and leak out period as further defined in the TFS SPA. Upon the purchase of the TFS Common Shares from the TFS Shareholders, Registrant has become the majority shareholder of TFS. TFS provides balance sheet financing solutions for domestic and international credit-worthy customers including accounts receivable, purchase order financing, fulfillment services and factoring or invoice discounting. The TFS acquisition is strategic to the Company beyond the direct and immediate financial contribution TFS will bring to sales and net income because it will provide the Company the ability to use TFS as an internal financing arm ready, able and dedicated to fund and facilitate the growth of the Company’s core bioengineering business.




On September 27, 2009, the Company acquired through a variety of transactions, 83% control of Jianou Lujian Foodstuff Co., Ltd. (“JLF”), a company based in the Peoples Republic of China (“PRC”).  The Registrant executed and consummated a Share Exchange Agreement (the “Supreme Agreement”) by and among (i) the Company’s 100% owned subsidiary United Green Technology Inc., a Nevada corporation, (“UGTI”), (ii) Supreme Discovery Group Limited, British Virgin Islands Company  (“Supreme”) and (iv) the stockholders who owned 100% of  Supreme’s common stock (the “Supreme Shareholders”).  Supreme is the parent company of Fujian United Bamboo Technology Company Ltd., a wholly foreign-owned enterprise (“JLF WFOE”) organized under the laws of the PRC.  The stockholders of Supreme are Tang Jinrong, Li Lifang and Tang Shuiyou, who are also the owners of JLF. JLF WFOE through a series of contractual arrangements has effective control of the business and operations of and has an irrevocable option to purchase the equity and/or assets of JLF. Consequently, the Company effectively controls the business and operations of Supreme, JLF WFOE and JLF.




3




Pursuant to the Supreme Agreement, at the closing, the Supreme Shareholders sold, transferred and assigned 100% of the outstanding common stock of Supreme to the Company’s wholly-owned subsidiary UGTI in exchange for (i) cash, (ii) shares of the Company’s common stock, and (iii) 20% of the issued and outstanding shares of common stock of UGTI.  The Company thereby acquired through UGTI ownership of all of the outstanding stock of Supreme which owns 100% ownership of JLF WFOE. As part of this transaction the Supreme Shareholders deposited into an Escrow thirty-five percent (35%) of the Company’s shares issued to them and in the event UGTI’s EBITDA for fiscal year 2010 is less than UGTI’s EBITDA for fiscal 2009, the number of shares of the Company’s stock issued to Supreme Shareholders shall be proportionately reduced as provided for in the Supreme Agreement. Supreme Shareholders are also subject to a lockup and leak out period and have one piggy-back registration right as further defined in the Agreement. JLF is an award winning green-technology bioengineering company that specializes in the production of organic products and fertilizers based on bamboo. JLF holds bamboo land contracts in Fujian Province, one of China’s largest bamboo growing areas.  JLF is the third largest bamboo producer in China and is the first bamboo company in China to gain food safety certification from China (HACCP), Japan (JAS) and Europe (ESFA). JLF was also the first company in China to formulate a “zero-to-zero” process starting from cultivation to distribution including the development of organic fertilizers from bamboo skins to eliminate waste.




Effective October 26, 2009, the Company amended its articles of incorporation to:  (i) authorize a class of preferred stock consisting of (10,000,000) shares, $0.001 par value per share; (ii) designating 10,000 shares of the preferred stock as Series A Preferred Stock; (iii) reducing the number of authorized shares of common stock from 750,000,000 shares to 150,000,000 shares and changing the par value to $0.001 per share; (iv) changing the name of the Registrant to ONE Bio, Corp.; and (v) effecting a Five (5) for one (1) reverse split of the registrant’s common stock.




On November 3, 2009, the Company and UGTI cancelled and replaced the UGTI Preferred Stock Purchase Agreement and entered into a Share Purchase Agreement (the “UGTI Share Purchase Agreement”).  Pursuant to the UGTI Share Purchase Agreement we agreed to purchase from UGTI and UGTI agreed to sell to us 10,000 shares of UGTI Common Stock in consideration for a cash payment of $1,200,000 which is payable $180,000 on May 10, 2010 and $1,020,000 on November 10, 2010.  As a result of the foregoing UGTI transactions, the Company is now 98% shareholder of UGTI.




On  November 11, 2009, the Company filed an application to list its common stock on the NASDAQ Capital Market. The Company believes it currently fulfills or will shortly meet  all  applicable  NASDAQ  Capital Market listing requirements. The Company’s listing application is  subject  to review and approval by NASDAQ’s Listing  Qualifications Department for compliance with all NASDAQ Capital Market standards.




Business Overview




ONE Bio, Corp. headquartered in Aventura, FL, is an award winning, innovative bio-engineering company that utilizes green process manufacturing to produce raw chemicals and herbal extracts, natural supplements and organic products.  We are focused on capitalizing on the rapidly growing markets of the Asia-Pacific region.  Our key products include widely recognized Solanesol, CoQ10, Resveratrol and 5-HTP, organic fertilizers, and organic bamboo health food and beverages.  Our growth plan targets an aggressive acquisition driven strategy supported by organic growth of our operating units.  Through ONE Bio, smaller private companies that we acquire are provided access to capital, experienced management and strategic insight. We strive to build synergies among all of our subsidiaries.  We work with each subsidiary to promote organic and acquisition driven growth.  We are committed to becoming a leader in bioengineering utilizing green processes, combining our experience in producing our award winning chemical and herbal extract products with proven North American managerial expertise.




4




We are headquartered in Aventura, FL, USA; however, our primary operating enterprises, Sanming and JLF are based in Sanming City and Jianou City, respectively, in the Fujian province of China.  Our operations are currently focused on the Asia-Pacific Region which currently generates approximately 95% of our revenue.




Operational Summary





Our operations are divided into two principal complementary business units that focus on producing chemical and herbal extracts (our “CHE” business unit) and organic products (our “OP” business unit) utilizing green processes. We also have an internal financing business unit that assists and supports the growth of our core bioengineering business units (see “TFS and our financing unit” herein). We believe our internal financing business unit provides us an excellent opportunity beyond funding our core operations to also provide purchase order financing to third-party clients that purchase products from our subsidiaries. In this arrangement, our internal financing business unit can insert itself into the collection process, expediting cash flow and debt repayment for all parties ultimately driving our growth rate. Because our CHE business unit was treated for accounting purposes as being acquired effective as of January 1, 2009, while our OP business unit and our financing business unit were treated for accounting purposes as having been acquired as of July 2009, during the fiscal year ended December 31, 2009, approximately 60% of our revenue came from our CHE business unit, approximately 28% came from our OP business unit and approximately 12% came from our financing business unit. However, if the full year 2009 revenues for each of our 3 business units were used, approximately 34% of our revenues would have come from our CHE business unit, approximately 48% from our OP business unit and approximately 18% from our financing business unit.
 
 In order to harvest the benefits of integrating growing and profitable Chinese operating enterprises with the management and financial techniques available to North American enterprises, we adhere to a “Yin-Yang” management strategy based on the Chinese Philosophy of “Correlative Thinking”. The core components of this approach are: constructing a strong, balanced team; addressing the needs of investors; and realizing the importance of diversity.
 
 In practical terms, our strategy is to combine the manufacturing expertise and work ethic of the Eastern world with the investment experience and management skills of seasoned North American companies. Our team in China works together with our North American management to grow our core business, and provide transparency with an emphasis on risk management and internal controls.




Green Planet and our CHE operating division




Our CHE business unit operates under the umbrella of our subsidiary Green Planet Bioengineering, Co., Ltd. (“GP”) which contractually controls and operates Sanming Huajian Bio-Engineering Co., Ltd. (“Sanming”).  Sanming is the principle operating enterprise of this business unit and is located in and organized under the laws the Peoples’ Republic of China (“PRC”).




Sanming is a research and development company with a focus on improving human health through the development, manufacture and commercialization of bio-ecological products and over-the-counter products utilizing extractions from tobacco leaves. Sanming’s position in the bioengineering industry comes from its research and development which utilizes patented methods to create downstream products ranging from plant indigenous medicine and pharmaceutical intermediates to eco-friendly products. Since 2007, Sanming has developed a variety of natural organic products using tobacco leaves.




Our CHE unit produces chemical and herbal extracts for use in a wide range of health and wellness products.  Utilizing green technology and proprietary processes, this unit extracts health supplements, fertilizers, and pesticides from waste tobacco. Our chemical extraction processes from tobacco leaves and delivers high purity Solanesol (98%) which can be further extracted into CoenzymeQ10 (“CoQ10”). The discarded tobacco leaves are further extracted to produce organic fertilizers both powdered and particulate and thereby substantially eliminates waste in the process.  Our CHE unit also extracts from a variety of plants Resveratrol and 5-HTP, which are key components in many consumer health and wellness products.




We distribute our CHE products through established independent third party distributors who enter into renewable one year distribution agreements with us.  Our distributors are focused on the bio-health industry and raw chemical intermediates industry.  This permits use to more accurately forecast sales and required production.  In addition, feedback from our distributors provides us with good visibility on changes in consumer demand.  In addition, we have established distribution channels, such as universities and hospital research centers, through referrals obtained from the support of local government in some provinces.




5




UGTI and our OP operating division




Our OP business unit operates under the umbrella of our subsidiary united Green Technology Inc. (“UGTI”) which contractually controls and operates Jianou Lujian Foodstuff Co. (“JLF”).  JLF is the principle operating enterprise of this business unit and is located in and organized under the laws of the PRC.


JLF is an award-winning green-technology enterprise that specializes in the production of organic products and fertilizers based on bamboo. JLF was also one of the first companies in China to formulate a “zero-to-zero” process starting from cultivation to distribution, and taking it further by developing organic fertilizers from bamboo skins and thereby substantially eliminates waste in the process. JLF concentrates on processing bamboo shoots and bamboos which it sells domestically in China and exports to other countries.




Our OP unit manufactures a variety of consumer and commercial-use health and energy drinks, organic food products and fertilizers primarily based on bamboo. Organic food products based on bamboo are low in saturated fat, cholesterol and sodium yet high in dietary fiber, vitamin C, potassium, zinc, and numerous other nutrients, making bamboo shoots popular for weight loss and maintaining a healthy lifestyle.  Also, the Moso bamboo leaf extract, which contains soluble and insoluble fiber and antioxidants, is used to make a caffeine-free energy drink or is infused into white rice creating green bamboo rice with health benefits.  Our OP unit also uses bamboo skins to produce organic fertilizers, thereby substantially eliminating waste in the process.




Presently, JLF operates production lines to produce both 18L boiled bamboo shoot cans and boiled vegetable cans. The production capacity in 2008 reached 20,000 tons, an annual output value of RMB 120,000,000.00. This includes the production of 50 kinds of products, such as 18L boiled bamboo shoot cans, boiled bamboo shoot cans with vacuum packing, boiled mixed vegetables, boiled seasoned vegetables and Kamameshi (a Japanese rice dish), with a quality rating that meets national and international standards.  The boiled bamboo shoots and mixed vegetables account for the majority of the products sold with approximately 80% of all products sold domestically and approximately 20% exported to other countries such as Japan, Southeast Asia, Europe and North America.




We distribute our OP products directly to large supermarket chains (such as Kobe Bussan in Japan), hotels, hospitals and restaurants.  We also distribute our products through a network of independent third party distributors who enter into renewable one year distribution agreements with us.




In order to harvest the benefits of integrating growing and profitable Chinese operating enterprises with the management and financial techniques available to North American enterprises, we adhere to a “Yin-Yang” management strategy based on the Chinese Philosophy of “Correlative Thinking”.   The core components of this approach are: constructing a strong, balanced team; addressing the needs of investors; and realizing the importance of diversity.


In practical terms, our strategy is to combine the manufacturing expertise and work ethic of the Eastern world with the investment experience and management skills of the best North American companies.   Our team in China works together with our North American management to grow our core business, and provide transparency with an emphasis on risk management and internal controls.




Chemical and Herbal Extracts (CHE)
  Our CHE business unit is a research & development company with a focus on improving human health through the development, manufacture and commercialization of bio-ecological products and over-the-counter products utilizing the extractions of tobacco leaves and a variety of other plant materials.
  This business unit produces chemical and herbal extracts for use in a wide range of health and wellness products, including:
  ●
Chemical Extracts
  °
Solanesol which is extracted from discarded tobacco leaves is the mother chemical intermediate for many high-value bio-chemicals such as Coenzyme Q10 and vitamin-K analogues.
  °
Coenzyme Q10 (which is a derivative from Solanesol) is a non-specific immune intensifier, which takes part in cell metabolism and respiration.
  ●
Herbal Extracts
  °
Resveratrol is an active component and a powerful antioxidant extracted from Huzhang (Polygonum cuspidatum).
  °
5-HTP (5-Hydroxytryptophan) which is extracted from Griffonia seed has been studied and clinically shown to be of benefit in the treatment of primary fibromyalgia, insomnia, depression, and weight control.1
  °
Powdered & Particulate Fertilizers are extracted from discarded tobacco leaves.
  While various research studies have shown beneficial effects on humans from the consumption of these chemical and herbal extracts, to date we know of no government body like the U.S. Food and Drug Administration or China’s State Food and Drug Administration that has approved these supplements for the treatment of any disease.
  Organic Products (OP)
  Our OP business unit focuses on improving human health through the development, manufacture and commercialization of a variety of consumer and commercial use organic health and energy drinks, organic food products, organic agricultural products and fertilizers based on bamboo, including:
  ●
Vacuum packed for freshness:
  o
Fresh Moso Bamboo shoots
 o
Seasoned organic bamboo shoots
 o
Seasoned organic vegetables
 o
Seasoned organic vegetables with bamboo shoots
  ●
Convenient supermarket packages: cooked
  o
Seasoned bamboo shoots
 o
Seasoned vegetables
 o
Seasoned vegetable and rice packages
  ●
Canned industrial use or commercial use (i.e. for hotels, restaurants):
  o
Water bamboo shoots
 o
Water chestnuts
 o
Water baby corn
 o
Water mixed vegetables
 o
Organic fruits
  ●
Extracts: used for organic energy beverages
  o
Bamboo extracts
  ●
Fertilizers:
  o
Organic fertilizers using bamboo skin


1 -Birdsall, Timothy C. “5-Hydroxytryptophan: A Clinically-Effective Serotonin Precursor”, Alternative Medicine Review, Vol. 3, Number 4, 1998, p.271.




6




Market Analysis




Focus on Asia-Pacific Region


China’s economic recovery continued to strengthen in the second half of 2009. China has reported that its GDP growth accelerated to 8.9% year-over-year in the third quarter and 10.7% year-over-year in the fourth quarter, up from 6.1% and 7.9% in the first two quarters. For the full year 2009, GDP growth was 8.7% year-over-year, compared to 9.8% in 2008 and 11.4% in 2007.  This continued strength in China is evidenced by, among other things, significant growth in retail sales as well as urban fixed-asset investment.  Despite the global economic downturn, China’s economic growth continues to outpace the rest of the world.  In a BBC news article publishedFriday, November 13, 2009, BBC News noted “This is an astonishing performance considering that China’s major export markets have dried up.  Why has it happened? Mainly because of the stimulus package and the accompanying rise in short-term credit (China, unlike the rest of the world, has not experienced a credit crunch).”


Our product lines and strategic focus are designed to capitalize on this growth.  At the same time, many small businesses in Asia-Pacific continue to be undervalued, providing significant opportunities for us to accretively acquire companies that complement our business strategy.  Smaller and mid-size Asian companies, partially due to numerous listing requirements in Asia, recognize the value of combining with us and as such, these target companies can be acquired at more reasonable prices.  On the cost side, traditionally lower labor costs in the Asia-Pacific Region contribute to higher profit margins, while still maintaining very high product quality standards.


China’s Expanding Organic Products Industry




Li Debo, deputy-director of the Organic Food Research Centre under the State Environmental Protection Agency, reported in 2006 that ‘‘There was virtually no domestic market for organic products in the early 1990s.  But now big cities like Beijing and Shanghai have many specialized shops for organic food, selling vegetables, tea, rice, honey and fruits.” An estimated two million hectares of farmland are under organic cultivation, while some 1,400 companies and farms have been certified organic. Exports are the main driving engine behind the sector’s growth. Chinese organic products are exported mostly to Europe where they dominate the supply of pumpkin, sunflower seeds, and kidney and black beans. The U.S. and Japan are also major buyers of Chinese organic products.


With the rapid development of living standards in China and the Asia-Pacific Region in recent years, organic agriculture and the market for organic foods in China and the Asia-Pacific Region are developing at a rate of 30% per annum.  In 2005, China introduced the China National Organic Product Standard and The Rule on Implementation of Organic Products Certification which covers production certification and imports of organic food products.  By the end of 2007, China became the second largest area of certified organic cultivation land (4.10 million hectares), producing about 30 categories and more than 500 species of organic products.  Due to the advantages of abundant resources, market demand, government support and promotion of health benefits, we believe that China’s organic food industry will continue to experience strong growth in the future.




7




Complimentary Strategies




We have assembled a combination of complementary strengths that we believe will enable us to successfully implement our accretive acquisition and organic growth strategies and capitalize on the large and growing markets for our nutraceutical and organic products.


●
Rapid and Sustainable Growth Strategy




We believe that our growth strategy allows us to focus our resources to capitalize on opportunities.  By first focusing on accretive and synergistic acquisitions, we believe that we will accelerate our expansion beyond what would be achieved through a pure organic growth strategy.  Once substantial mass is achieved, we then intend to integrate the acquisitions to improve profitability, achieve production and technology synergies, capitalize on efficiencies of scale and expand our product portfolio, distribution channels and customer base.  We believe that this strategy will increase our product diversification, reduce our business risks and increase our accretive opportunities.




●
Established Platform for Organic Growth




We are a vertically integrated company with our own agricultural lands, research and development, proprietary manufacturing processes and distribution channels. Our operating companies are profitable and have established branded products and experienced management teams.  We believe that these capabilities position us for organic growth in our product offerings and will serve as a template for successfully integrating additional acquisitions.




●
Research and Development Team with Ability to Identify Commercially Viable Products




Led by our Chief scientist, Dr. Jian Ming Chan, we have assembled what we believe to be a skilled and experienced research and development team that includes engineers, chemists, doctorates and adjunct professors.  In addition to possessing a multi-discipline background, our research and development team has affiliations with several prominent research universities in China, including the Fudan University.  Our team has leveraged these relationships and their own skills to produce, among other things, our proprietary extraction process, which affords us a production cost advantage, and our “zero-to-zero” green production process, which is favored by government authorities.  An essential component of our growth strategy is to expand our product offerings through both acquisition and organic growth.  We look to our research and development team to continue to provide the new products and innovative production techniques that will fuel our continued organic growth and provide us with a competitive advantage.




8




●
Experienced Managers with the Ability to Identify and Integrate Acquisitions




We have assembled a team with significant successful mergers and acquisition experience.  Our CEO, Marius Silvasan, is a senior executive with over 17 years of experience in business development, mergers and acquisitions, strategic alliances, marketing, sales and finance.  Our Chairman, Michael Weingarten, is a seasoned executive and entrepreneur with over 30 years of experience in managing companies from early stage of development to more seasoned corporations worldwide.  Mr. Weingarten also has extensive experience in mergers and acquisitions, having participated in over 40 such transactions throughout his career.  We believe that that our North American management team positions us properly to participate in the consolidation of our industries.




●
Seasoned Managers with the Ability to Create and Sustain Operating Success




Our China operations team, which includes sales, marketing and production personnel, is led by Min Zhao and Jin Rong Tang.  Mr. Zhao has over 20 years of business experience at a number of successful companies where he served in senior positions ranging from general manager to chairman.  Mr. Tang was selected as one of the Top Ten Most Outstanding Young Entrepreneurs in 2009 and serves as the Executive Vice President of Fujian Bamboo Association as well as the President of Nanping Association of Young Entrepreneurs.  Under their direction, our operating business units have achieved and sustained profitability.  We believe that these individuals and their respective teams are well-positioned to execute our growth plans.




●
Create Win-Win Relationships for Participants




We believe that our strategy provides us with an excellent opportunity to participate in the growth of China and the entire Asia-Pacific Region.  To our acquisition targets, we believe that we offer owners of smaller private companies the opportunity to diversify their investment by being part of a larger multi-faceted public company and at the same time provide access to capital that would not be available to them otherwise.  To the Chinese government, we offer a “zero-to-zero” green process, which minimizes waste.  To our customers, we offer safe, high-quality, organic products.  To our research partners, we offer practical implementation of innovative technology, and to our suppliers, we offer a stable well-managed growth partner.




Challenges to our growth
  While we believe we will be able to capitalize on our strengths, we are mindful of the significant challenges we face in implementing our growth plan.
  ●           Potential Changes in Government Regulation
  Various parts of our business are regulated by the governments where we produce our products as well as the markets where we sell. Changes in regulation by local, provincial, and national governments will pose a challenge to us as well as our competitors.
  ●
In China, tobacco and related products are sold exclusively by the government. Companies must rely on the local government to acquire abandoned tobacco by permits. Today, we have a provincial tobacco sector acquisition license with one major province, ensuring the supply of raw materials. We anticipate signing an agreement with a second major province in the near future, although no assurances can be given that this will occur. Our efforts are in alignment with China’s “Three Rural” policy which seeks to develop the rural agricultural economy of the country.
  ●
Government agencies like China’s State Food and Drug Administration and the FDA in the United States regulate many of the health and dietary supplements that we produce. As such, any changes in the regulations can have a profound impact on the competitive environment that we face.
  ●           Increasing Capital Requirements
  Our product diversification plans increase the requirement for working capital, construction of GMP facilities, and implementation of marketing plans for private label organic oral supplements and downstream CoQ10 products. We intend to reinvest a portion of our earned profits into this area of our business.
  ●           Market Development
  o
It is important for our CHE business unit to achieve a dominant market position faster than its competitors, strengthening its long-term viability.
  o
The development of gene technology could possibly introduce a low-cost alternative drug that might reduce the demand for Solanesol, CoQ10, or our other CHE products.
  o
The increasing demand for Solanesol in the domestic and international market may lead competitors to raise their output and technology levels, and could attract new entrants to the market, increasing competition for the company. Our CHE business unit has been focusing on consumer products such as over-the-counter private brands of health food nutrients and supplements to defuse these risks.
  o
Our CHE business unit mainly exports to Japan and intends to expand to the United States and other international markets through key distributors. These distributors are also subject to the impact of market influences.
 
 ●           Changes in the Economic Environment
  Growth in demand for our retail products is uncertain. Current market conditions indicate strong growth of bio-health products in the coming years. Nevertheless, technological developments and unstable economic growth may affect current growth forecasts of retail products.
  ●           Changes in Currency Exchange Rates
  A majority of our CHE sales and expense transactions are denominated in RMB and a significant portion of our assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC”).


Our Growth Strategies




We believe that a focused acquisition strategy for the next eight to ten quarters will allow us to grow at an accelerated, controlled, accretive pace.  Subsequently, we intend to put greater focus on organic growth, consolidation and integration of redundant labor, plant and equipment.




We believe that there are compelling opportunities to acquire target companies in the region at attractive multiples.  The acquisition targets we seek are profitable and well-run companies whose potential is constrained due to lack of access to capital from financial markets.  We provide that access along with the added benefit of our management expertise and strategic direction.  We intend to achieve scale by acquiring companies or assets that have one or more of the following characteristics:




1.
An established customer base




2.
Existing plant and equipment




3.
Excess production capacity




4.
Attractive and complementary product portfolio




5.
Vertical or horizontal integration synergy




9




6.
Innovative patents and or technology




7.
Processes or products with scalability




8.
Established complementary distribution channels




We also believe that management expertise is an essential ingredient to achieving scale, both organically and by acquisition.  To execute this strategy, we have brought together both the financial and transactional expertise to identify and acquire accretive and synergistic targets and the operational expertise to effectively integrate operations and profitably expand business or product lines.  We believe our management and operations teams combine the operational expertise and work ethics of the Asia-Pacific Region with the managerial, financial, and transactional skills of North America.  Our CHE and OP business units will principally execute and manage our organic growth strategies.




CHE Organic Growth Strategy




Our CHE unit’s principal revenue producing activity involves the extraction of Solanesol from the remains of tobacco leaves.  Our CHE unit intends to purchase additional tracts of tobacco leaf land and has the contractual relationships necessary to receive tobacco leaves from tobacco companies on an ongoing basis.  This unit also has an established relationships to negotiate additional tobacco leaf contracts necessary to support the organic growth rate of the Chemical Extract Division.  This relationship, coupled with our ability to make fertilizer out of the rest of the used tobacco leaves after the Nicotine Sulphate and Solanesol have been extracted, gives the Chinese government the comfort that such used tobacco leaves will not be reused into low-grade cigarettes and that the process results in little waste.  Further, by making organic fertilizer from tobacco leaf waste, our CHE unit also generates additional revenue from a waste product.




Our chemical extract division has a patented cost-effective extraction process that allows our CHE unit to extract Solanesol from discarded tobacco leaves and the resulting residue is further processed to produce organic fertilizer. By producing two products from our extraction process, we believe we are able to generate higher margins than we would if we used a traditional product fermentation extraction process. Additionally, we can further process the Solanesol to produce Coenzyme Q10 (“CoQ10”). Our CHE business unit has the expertise, ability and market demand to expand its manufacturing capacity and to vertically integrate the chemical extract subsidiary. With a portion of the capital raised from the proceeds from this offering, we intend to invest in increasing our manufacturing capacity to a level adequate to support the CHE unit’s planned organic growth.  As part of our vertical growth strategy, we also intend to manufacture CoQ10, which is one of the finished products produced from the chemical extract Solanesol.


We intend to expand our CHE distribution sales channels and geographic sales areas horizontally to include Europe, Asia-Pacific nations and the USA.  Our entry into the US and European markets will follow the launch of our finished or “end user” over-the-counter products.




OP Organic Growth Strategy




Our OP unit’s principal revenue producing activity involves the production of organic food products primarily from bamboo. This unit continues to purchase access to land for its bamboo cultivation as part of its vertical integration and organic growth strategy.  At present, our OP unit has approximately 35% of its land access available for growth opportunities.  We believe this unit is the 3rd largest bamboo cultivation business in all of China.  We intend to continue to grow our capacity to cultivate bamboo and organic products.  Furthermore, we intend to develop our own products for distribution over the next 4 quarters rather than distribute raw materials to the channel.




10




Our management has also identified several key strategic areas as targeted opportunities for horizontal expansion both in China and abroad.  This unit already distributes its products in Japan, China and Europe.  It will continue to expand in these geographic areas as well as the United States over the next 3 quarters.  The expansion in China is also well under way and domestic markets with strong product expansion potential have been identified.  Additionally, key entry points have been attained in Japan and exports of products are poised for growth.  The further expansion into Europe and the United States is progressing through the identification of distribution channels, but we believe will progress more slowly than the Asia-Pacific Region because of the required approval and qualification of our products by targeted countries.  We are currently in the process of obtaining certification from the FDA.  In conjunction with the expanded sales and distribution initiative, our OP unit is also in frequent contact and discussion with both the local and Federal PRC government to obtain additional land lease rights for rich bamboo.  The OP unit has been very successful in procuring these rights and expects this to continue, resulting in increased production capacity and allowing for expansion of the product lines.




Recruitment and qualification of distributors within the targeted regions has been implemented and the process is ongoing.  Distributors catering to organic food retailers and health stores are our primary targets. The existing distribution in each region is assessed and our OP division makes the decision to either engage distributors or to sign direct distribution agreements with the retailers to reach its target market.  We believe that mix of both strategies can be implemented within a targeted region.




Manufacturing and distribution of our products in China and other countries
  Our CHE and OP business units produce different products. Our CHE business unit produces raw materials such as intermediate chemicals and herbal extracts that are primarily focused on the nutraceutical, health supplement and vitamins market segments (see “Chemical and Herbal Extracts” herein for a list of our CHE products). Our OP business unit produces primarily organic food products. Our CHE and OP business units also produce fertilizers.
  We currently distribute our products in China andexport and distribute our products to Japanand other Asia-Pacific countries. We intend to establish distribution relationships in order to expand our distribution into other Asia-Pacific countries, the U.S and Europe. The manufacture, exportation and distribution of our products in China, and Japan and other Asia-Pacific countries are not subject to any health or governmental standards or regulations. However, the exportation of our products will be subject to U.S. standards and regulations once we expand to the U.S. In anticipation of expanding to the U.S., we have registered our facilities with the U.S. FDA. In order to facilitate food, pharmaceutical and product safety, many countries have embraced various manufacturing and quality control standards. Generally compliance with these standards is voluntary and failure to satisfy these standards does not necessarily disqualify manufacturers from exporting their products to a particular country. However compliance with FDA regulations is required in order to export and distribute productsto the U.S.The principle voluntarystandards for our current and intended regions of distribution are: current Good Manufacturing Practices (“cGMP”); HACCP (Hazard Analysis Critical Control Points); andJAS (Japanese Agricultural Standard).Under these standards, the burden is on the manufacturer to establish safety and efficacy. Generally these standards focus on how products are produced, maintained and held, the facility where the products are produced, and the documentation that is to be maintained by the producer to demonstrate the producer’s compliance with these standards, and the labeling of the products. The respective governing bodies generally do not certify the producer’s compliance with the applicable standards. If a consumer files a complaint regarding a producer’s product and the product is found to cause a health hazard, the producer’s facilities will generally be inspected by the applicable governing body and if such inspection reveals that the producer’s processes, documentation or products do not meet the applicable standards, the export of the products to the applicable country may be blocked until the producer can demonstrate that theproblem has been rectified. Certain of the governing bodies (such as the FDA) may require a recall of the adulterated product. Producers often obtain a certification from an independent certification company (such as Underwriters’ Laboratories) regarding the producer’s satisfaction of the generally accepted standards of the particular country; but such independentcertificationis voluntary and is not binding on the applicable governing body. However, unlike many of the other governing bodies, JAS issues certifications covering food labeling and products that have been reviewed and inspected by JAS regarding compliance with JAS Standards.
  11
 
 The following is a description of the above mentionedstandards.All of the following standards, except FDA registration, are voluntary and undertaken by us to enhance the quality and marketability of our products and our failure to satisfy these standards will not preclude us from distributing and/or exporting our products a particular country or region.
  ●
cGMP (current Good Manufacturing Practices): cGMP are the current accepted standards of design, operation, practice, and sanitization for facilities that manufacture, package or hold foods and dietary supplements. Compliance with the cGMP standards, requires an inspection of the facilities to determine whether these standards are satisfied.
 
 ●
HACCP (Hazard Analysis Critical Control Points): HACCP is a system used to manage food safety through the analysis and control of biological, chemical, and physical hazards from raw material production, procurement and handling, to manufacturing, distribution and consumption of the finished product. We believe our CHE and OP facilities utilize HACCP in order to reduce the risk of hazards getting into our products. We believe our OP facility complies with HACCP standardsand we have obtained an independent certification in China from China Quality Certification Center, an independent certification company.Our CHE business unit facilities have not been certified, and no certification is required.
 
 ●
FDA Registration: In contemplation and preparation for exporting our products for distributionin the United States, we have registered our CHE and OP facilities with the FDA pursuant to the Public Health Security and Bioterrorism Preparedness and Response Act of 2002. This Act allows the FDA and other authorities to determine the source and cause of any deliberate or accidental contamination of food. For this, the FDA uses information provided by registered food facilities prior to entry into the U.S. of food and beverages for human and animal consumption. Pursuant to this Act, the owner, the operator or agent in charge of a domestic or foreign food facility must register that facility with the FDA and provide necessary information as requested in order to import the food into the U.S. Foreign facilities are required to report emergency contact information. Except for specific exemptions, the registration requirements apply to all facilities that manufacture, process, pack, transport, distribute, receive, or hold food regulated by the FDA, including animal feed, dietary supplements, infant formula, beverages (including alcoholic beverages) and food additives. Failure of a domestic or foreign facility to register, update required elements, or cancel its registration in accordance with this Act is prohibited under the Federal Food, Drug, and Cosmetic Act and a facility that fails to register with the FDA may have its goods seized by the U.S. Customs and Border Protection agency and/or fined. Prior notice of imported foods must be provided to the FDA within prescribed time periods. The notice must include a description of the article, the manufacturer and shipper, the grower (if known), the country of origin, the country from which the article is shipped, and the anticipated port of entry. After such notice has been submitted, the FDA will provide a prior notice confirmation number that the information has been successfully received by the FDA. Once the FDA issues the confirmation number, the FDA reviews the information submitted and determines whether the cargo must be examined. If the review concludes that no further action is necessary, a customs entry may be processed for that importation. If the review concludes that further action is necessary, the importation of the food may be detained at the port of entry or prevented until any problems or errors are corrected.
  ●
JAS (Japanese Agricultural Standard): The JAS standards apply to organic plants, organic processed foods of plant origin, organic livestock products, organic processed foods of animal origin and organic feeds. These standards set forth requirements that producers of these products must comply with, if they wish to label their products “Organic”. Our OP facilities comply with the JAS standards. In addition, our JAS facilities have been certified by a registered certifying body. The JAS certification allows us to attach the organic JAS logo to products produced or manufactured in our OP facilities to indicate that they comply with relevant organic JAS standards. The fact that we maintain one or more JAS Certifications is not a guarantee that each and every OP product we produce will always be entitled to claim organic status. By submitting to these standards, we are able to put the JAS labels on our OP division products, which we believe enhances the marketability of these products.If we were to lose one or both of our JAS Certifications, we would still be able to distribute our products in Japan;however, we would not be permitted to affix the JAS labels to our products until we demonstrate that we are JAS compliant. The JAS standards are voluntary, but necessary, in order to distribute our products with the JAS labels.
  12
 
 The fact that we comply with a particular standard, system or regulations (i.e., cGMP, HACCP, FDA, JAS) is not a guarantee that each and every product we produce will be absolutely safe for consumption. Many factors can conspire to cause products such as the ones we manufacture and distribute to be adulterated or impure. If a product we produce is discovered to be adulterated, causes illness or injury, or fails to meet standards for purity or identity, such a problem can lead to interruptions of production,product recalls and claims against us. The applicable regulatory agencies, including the FDA and China’s State Food and Drug Administration (“SFDA”) may conduct on-sight inspections of our facilities. If we fail an inspection, the regulatory agency may order us to close one or more facilities. Furthermore, our products may be inspected during the import process into one of our targeted countries, and failure to pass inspection would result in our products being refused entry by that country.
  We believe we are eligible to distribute in China all of our products produced at our facilities. Based on our JAS certification, we believe we are eligible to export and distribute in Japan all of our OP productswith JAS Organic labels certified by JAS. Based upon the registration of our CHE and OP facilities with the U.S. FDA, we believeweare eligible to export anddistribute all of the products to the U.S.
 
 The following table sets forth the standards/ rules applicable to our CHE and OP business units in the indicated countries:
  Country
Standards applicable to CHE

products in the country/region
Standards applicable to OP

products in the country/regionJapan
No compliance required to distribute in Japan and JAS Certification not applicable
Voluntary JAS certification necessary for Organic labeling, but not necessary for importation and distribution (certification obtained)United States
U.S. FDA – facility registration is required

(facilities have been registered)
U.S. FDA – facility registration is required

(facilities have been registered)China
No compliance required
No compliance required (Voluntary HACCP compliance has been instituted and independent non-binding certification has been obtained)
 
 In the past, we have focused our sales and distribution efforts to China and Japan and with only limited distribution of onlycertain of our OP products and no distribution of our CHE products in Europe. We intend to establish distribution relationships in other Asia-Pacific countries, Europe and the U.S. so that we can expand distribution of our products to these markets. The foregoing notwithstanding, we may from time to time, on a case by case basis, distribute our products in Europe.




Intellectual Property




The following table is a list of our current Patents issued by the People’s Republic of China:




Patent Name

Application No.

Designer

Application date

Valid until
Owner of Patent
Products that

are dependent

upon the

PatentSynchronization

and high

efficiency process

of Solanesol and

Nicotine Sulphate

200610069846.6

Min Zhao, Chen

Yanmei, Liu

Caiqing

2006.8.11

2026.8.11
Sanming

Huajian Bioengineering

Co., Ltd.
Solanesol,

Nicotine

SulphateA Method of

Eliminating Plum

bum Products

with Basic liquid

of zymogene

mung bean

200710009735.0

Lin Xuanxian,

Chen Jianmin,

Chen Yanmei

2007.11.01

2027.11.01
Sanming

Huajian Bioengineering

Co., Ltd.
Paiqianshu




Note- The patent of “Solanesol-clean extraction method” is exclusively owned by Fudan University.  However, we have obtained the right to use this technology patent until July 27, 2010, according to the statements of Article 3, Section 1 in “Technology Development Contract “which was entered into on July 28, 2005 between Fudan University and Sanming Huajian  and which is attached hereto as an exhibit.




13




Since August 11, 2006, we have been designing the “synchronization and high efficiency process of Solanesol and Nicotine Sulphate” and applied for the patent ownership and have used it in the production process.
  Trademarks
  The following table is a list of our current trademarks issued by the People’s Republic of China:
  Trademark
Certificate No.
Date
Expiry
Category
Owner
Product

DescriptionPaiqianshu
4322405
2007.4.20
2017.4.20
No. 30 Refined food from plants, etc.
Sanming Huajian Bioengineering
Co., Ltd.
Mung bean

anti-oxidant

oral liquidsJimai QQ
4322404

(Application #)

10 years from issuance of certificate
No. 30 Refined food from plants, etc.
Sanming Huajian Bioengineering
Co., Ltd.
Fetilizer,

particulateJimai QQ
545649

(Application #)

10 years from issuance of certificate
No.1 Fertilizer, chemical products
Sanming Huajian Bioengineering
Co., Ltd.
Fetilizer,

powderJinliang
4538612

(Application #)

10 years from issuance of certificate
No.3 Cosmetic, household and personal care chemicals, etc.
Sanming Huajian Bioengineering
Co., Ltd.
Reizhi teaPURESOLAN
6869795

(Application #)

10 years from issuance of certificate
No.5 Medical products, etc.
Fujian Green Planet Bio-Engineering,
Co., Ltd
SolanesolGREENPLANET
6871472

(Application #)

10 years from issuance of certificate
No.5 Medical products, etc.
Fujian Green Planet Bio-Engineering,
Co., Ltd
Used for all

plant

extracts not

included above
 A registered trademark is protected for a term of ten years, renewable for another term of ten years under the PRC trademark law, so long as an application for renewal is submitted to the PRC Trademark Offices within six months prior to the expiration of the initial term.  In addition to trademark and patent protection law in China, we also rely on contractual provisions to protect our intellectual property rights and brand.
  TFS and our financing unit
  Our internal financing business unit operates under the umbrella of our 99.75% owned subsidiary TFS, an Ontario, Canada, company. TFS was established in 2006 to provide creative financing solutions, including purchase order financing, fulfillment services and factoring or invoice discounting for credit worthy customers of eligible goods and services. TFS has branch offices in Lima, Peru and Miami, Florida. TFS has a wholly owned subsidiary, TFP International Inc., a Florida corporation, which operates the Miami office. The remaining 0.25% is owned by Mr. Jim Reddon, who is not an affiliate of ONE Bio.
  TFS conducts a thorough review and due diligence examination of potential borrowers and the respective borrower’s customers before the particular transaction is approved. An analysis of each individual transaction also takes place through TFS’ credit approval process, in order to ensure that all parties in the transaction receive value, and that TFS will be re-paid according to the terms agreed to in the particular transaction. Security for the financing includes a first lien position on the receivables and assets of the client (UCC, PPSA), personal guaranty and credit insurance. In addition, 100% of TFS’ financing transactions are credit insured with large, multi-national insurance companies. In a typical financing transaction, a letter of credit will be utilized to provide all parties with the protections on agreed to delivery, quality and timelines. TFS’ clients are primarily small and medium size businesses registered and/or located in the United States and Canada, which export their products internationally. Through TFS we also offer purchase order financing to third-party clients that purchase products from our CHE business unit and our OP business unit to assist to assist in the collection process, and expedite cash flow and debt repayment.
  Our internal financing business unit offers the following types of financing: factoring or invoice discounting, where TFS, as factor, purchases the client’s credit insured receivables (i.e., invoices) for products or services satisfactorily rendered to creditworthy customers. By selling receivables to TFS, the client can generate cash almost immediately, instead of waiting the usual 30, 60, 90 days. TFS will verify, insure and control the transaction with the ultimate payer; purchase order financing (or “PO Funding”) which is a mechanism put in place to provide a short-term finance option to clients who have pre-sold finished goods and a requirement to pre-pay suppliers. All these PO Funding transactions are on a “per project” basis. Typically the client has a purchase order from a credit insured customer but does not have the capital to pay their supplier upfront. TFS typically requires that the client must have “pre-sold” the goods with strong profit margins. TFS utilizes letters of credit to purchase the goods from the supplier and protect all parties. Once the goods are accepted by the end customer, TFS then factors the invoice and pays off the purchase order facility; and fulfillment services, most of which are provided through TFP and which involves the goods being acquired by TFP on terms negotiated with both supplier and end-client. Here TFP has established credit insurance and marine cargo insurance policies. The customer provides the purchase order and sales contract to TFP, which completes the transaction and disburses the proceeds.
 
 Historically TFS has funded its financing transactions through the sale of debentures to institutional investors and high net worth investors, often on an individual transaction basis. The debentures pay quarterly interest to the investors solely from the interest and fees generated from the financing business unit’s activities. The debenture is secured by the assets of TFS with no recourse to other assets or business units of ONE Bio. Through ONE Bio, TFS has greater access to capital to finance its business and through its association with our other business units, access to new international markets.
  Need For Government Approval
  None
  Employees
  The Company had approximately 344 full time employees as of February 1, 2010.  Of these employees, approximately 15 worked in top management positions, approximately 19 worked in sales, approximately 19 worked in research and development and approximately 26 worked in administration, 12 worked in finance, 54 in procurement/logistics/warehousing and 199 worked in manufacturing.  We also hire between 20 and 40 seasonal /part time employees each year.
  14
  The Company entered into employment agreements with our management employees containing customary confidentiality and non-competition covenants which prohibit the employee from disclosing confidential information and from engaging in activities that compete with our business during his or her employment with us and, for an upon period after the termination of the employee’s employment with us.
  Item 1A                      Risk Factors
  You should consider carefully each of the following business and investment risk factors and all of the other information in this report. If any of the following risks and uncertainties develops into actual events, the business, financial condition or results of our operations could be materially and adversely affected. If that happens, the trading price of our shares of common stock could decline significantly. The risk factors below contain forward-looking statements regarding our business. Actual results could differ materially from those set forth in the forward-looking statements. See “Special Note Regarding Forward-Looking Information.”
  We have a limited operating history.
 
 We have a relatively limited operating history. Sanming Bioengineering and JLF, our controlled PRC operating entities and TFS through which we currently operate our business, commenced operations in April 2004, September 2002, and March 2006,  respectively.  All three entities were profitable for 2007, 2008 and 2009.  The foregoing notwithstanding, you should consider our future prospects in light of the risks and uncertainties typically experienced by companies such as ours in evolving industries such as the bioengineering industry in China and the Asia-Pacific region.  Some of these risks and uncertainties relate to our ability to:
  o
offer new and innovative products to attract and retain a larger customer base;
  o
attract additional customers and increase spending per customer;o
increase awareness of our products and brands and continue to develop user and customer loyalty;o
raise sufficient capital to sustain and expand our business;o
maintain effective control of our costs and expenses;o
respond to changes in our regulatory environment;  15
  o
respond to competitive market conditions;o
manage risks associated with intellectual property rights;o
to properly integrate any business acquisition;o
attract, retain and motivate qualified personnel; ando
upgrade our technology to support additional research and development of new products.
  If we are unsuccessful in addressing any of these risks and uncertainties, our business may be materially and adversely affected.
  Although our revenues have grown rapidly, we cannot assure you that we will maintain our profitability or that we will not incur net losses in the future. We expect that our operating expenses will increase as we expand. Any significant failure to realize anticipated revenue growth could result in operating losses.
  We will continue to encounter risks and difficulties in implementing our business model.
 
 We believe that our business model will allow us to become a leader in developing and producing chemical and herbal extracts and natural supplements and organic products for the health and wellness and organic products industries in which we operate. However, we can not assure you that our business model will be effective. We are susceptible to risks, including the failure to increase awareness of our products, protect our reputation and develop customer loyalty, the inability to manage our expanding operations, the failure to maintain adequate control of our expenses, and the inability to anticipate and adapt to changing conditions in the markets in which we operate as well as the impact of any changes in government regulation, mergers and acquisitions involving our competitors, technological developments, and other significant competitive and market dynamics. If we are not successful in addressing any or all of these risks, our business may be materially and adversely affected.
  Quarterly operating results may fluctuate.
  Our quarterly results of operations may fluctuate as a result of a number of factors, including fluctuation in the demand for and shipments of our products and changes in the price of  raw material which directly affect the price of our products and may influence the demand for our products. Therefore, quarter-to-quarter comparisons of results of operations have been and will be impacted by the volume of such orders and shipments. In addition, our operating results could be adversely affected by the following factors, among others, such as variations in the mix of product sales, price changes in response to competitive factors, increases in raw material costs and other significant costs, increases in utility costs (particularly electricity) and interruptions in plant operations resulting from the interruption of raw material supplies and other factors.
  We may incur material product liability claims and/or product recalls, which could increase our costs and adversely affect our reputation, revenues and operating income.
  As a manufacturer of products designed for human consumption, we are subject to product liability claims that the use of our products has resulted in injury. Also, in the event the use of our products results in injury, we may be forced to recall any of our products that caused the injury. We do not maintain any product liability insurance. A product liability claim against us could result in costly litigation and could adversely affect our reputation with our customers, which in turn could adversely affect our revenues and operating income.
  Certain of the countries where we distribute or intend to distribute our CHE and OP products have embraced various manufacturing and quality control standards for the distribution and/or exportation of products such as the products we produce and the labeling of such products. Even though compliance with these standards is generally voluntary, and we are typically able to distribute and/or export our products into those countries without such compliance, if we are unable to demonstrate our compliance with those standards, the marketability of our products may be adversely effected, which may in turn adversely and materially affect our revenues and profits and the market price for our stock.
  The manufacture and distribution of our products are subject to domestic (PRC) manufacturing and quality control standards, and the standards announced by the countries to which we export and intend to export our products, including Japan,Europe and the U.S. Generally these standards focus on how products are produced, maintained and held, the facility where the products are produced, and the documentation maintained by the producer supporting the producer’s compliance with these provisions and the labeling of the products. Additionally certain countries, including the U.S. require registration of facilities and compliance with regulations in order to export and distribute these products in the U.S. If a consumer files a complaint regarding a producer’s product and the product is found to cause a health hazard, the producer’s facilities will generally be inspected by the applicable governing body and if such inspection reveals that the producer’s processes, documentation or products do not meet the applicable standards, the export of the products to the applicable country may be blocked until the producer can demonstrate that the problem has been rectified. Certain of the governing bodies, including the U.S. FDA, may require a recall of the adulterated products and/or levy fines.If a producer’s facilities, processes, documentation or products do not meet the applicable agency’s rules and standards, the export of the products to the applicable country may be denied until the producer can demonstrate that it has satisfied the required standards.
 
 We believe that ourCHE and OP facilities, systems, processes, procedures and documentation comply with the standards in the countries where we distribute and export our products. However, the fact that we comply with a particular standard is not a guarantee that each and every product we produce will be absolutely safe for consumption. Many factors can cause products such as the ones we manufacture and distribute to be adulterated or impure. If a product we produce is discovered to be adulterated, causes illness or injury, or fails to meet standards for purity or identity, this can lead to interruptions of productionand, recalls or claims against us. Further no assurances can be given that we will be able to achieve or maintain compliance with announced standards, or that a governing body may not prohibit us from distributing or exporting our products to a particular country, which events could have a material adverse on our revenue and profits and the market price of our stock.
  Certain of the countries where we distribute and intend to distribute our CHE and OP products regulate the labeling and advertising of products of the type we produce and distribute.
  The products produced by our CHE and OP facilities may be subject to standards and regulations of the countries to which we export or intend to export our products which regulations govern the labeling of bulk or individual finished products. In addition, the advertising and marketing of our products may be subject to other rules that govern claims which may be made about products and their contents. These standards and regulations vary from country to country. Often when our products are imported into particular countries, inspectors review the label affixed to the product to determine whether the product should be permitted entry. When our products are purchased in bulk for use as an ingredient in other products, we may make claims regarding our products that the purchaser may rely upon and repeat on a label or in advertising. When our products are sold in finished form we may make claims ourselves about our product on it label or in advertising. The claims we make to our customers, and the statements on our labels and in advertising, are regulated in many countries. If the advertising or labeling of a product we produce fails to comply with the specific laws, rules or regulations that apply in the country where it is sought to be imported and sold, we may be unable to sell it there, we may experience delays in delivery, we may be required to re-label or revise advertising, or we may be precluded from making a claim with respect to the product (i.e., a claim that the product is “Organic”)and any of these events this can lead to loss of sales or claims against us and our revenues and profits and market price for our stock could be materially and adversely affected.
  16
  We may encounter substantial competition in our business and our failure to compete effectively may adversely affect our ability to generate revenue.
 
 The nutritional over-the-counter products and organic products industries are becoming increasingly competitive. Our competitors may have greater market recognition and substantially greater financial, technical, marketing, distribution, purchasing, manufacturing, personnel and other resources than we do. Furthermore, some of our competitors have manufacturing and sales forces that are geographically diversified, allowing them to reduce transportation expenses, tariff costs and currency fluctuations for certain customers in markets where their facilities are located. The principal elements of competition in the nutritional over the counter products and organic products industry are, in our opinion, pricing, product availability and quality. In order to succeed in the nutritional over the counter products and organic products industry, we must be competitive in our pricing, product availability and quality. If we fail to do so, we will not be able to compete effectively and will lose market share. In such case we may be forced to reduce our margins to retain or acquire that business, which could decrease our revenues or slow our future revenue growth and lead to a decline in profitability. Further, to the extent that, whether as a result of the increased cost of raw materials, the relative strength of the Chinese currency, shipping costs or other factors, we are not able to price our products competitively, our ability to sell our products in both the Chinese domestic and the international markets will suffer.
  We may not be able to effectively control and manage our growth.
 
 If our business and markets grow and develop, it may be necessary for us to finance and manage expansion in an orderly fashion.  In addition, we may face challenges in managing expanding product offerings.  Such circumstances could increase demands on our existing management and facilities.  Failure to manage this growth and expansion could interrupt or adversely affect our operations and cause production backlogs, longer product development time frames and administrative inefficiencies.
  We may not be able to successfully implement our strategy of acquiring desired target companies or to obtain financing needed to complete the acquisition of target companies.
  One of our strategies is to grow through the acquisition of profitable, well-run companies whose businesses are synergistic with our core business.  We may encounter substantial competition in connection with our efforts to complete such acquisitions which in turn could increase the cost of such acquisitions.  If we are unable to negotiate and close such acquisitions on terms acceptable to us, our anticipated growth may not occur as contemplated or may require us to pay more for a target company which could adversely affect the profitability of such acquired company and negatively affect our results of operations.  Additionally our ability to successfully acquire a desired target company may depend upon our ability to obtain funding for any such acquisition and no assurances can be given that we will be able to obtain such financing, if needed, on terms acceptable to us.
  We may not be able to effectively integrate acquired target companies or attain economies of scale.
  If we are successful in acquiring desired target companies, we will need to integrate such acquisitions with our existing core business.  Failure to effectively integrate the acquisitions of target companies could adversely affect our core business, prevent us from realizing the benefits of economies of scale, or adversely affect our ability to successfully acquire other target companies and thereby adversely impact our growth strategy.
  Shortages or disruptions in the availability of raw materials could have a material adverse effect on our business.
  We expect that raw materials used to produce and manufacture our products will continue to account for a significant portion of our cost of goods sold in the future. The prices of raw materials fluctuate because of general economic conditions, global supply and demand and other factors causing monthly variations in the costs of our raw materials purchases. The macro-economic factors, together with labor and other business interruptions experienced by certain suppliers, have contributed to periodic shortages in the supply of raw materials, and such shortages may increase in the future. If we are unable to procure adequate supplies of raw material to meet our future production needs and customer demand, shortages could result in a material loss of customers and revenues and adversely impact our results of operations. In addition, supply shortages or disruptions or the loss of suppliers may cause us to procure our raw materials from less cost-effective sources and may have a material adverse affect on our business, revenues and results of operations.
  Interruptions in growing or otherwise obtaining the raw materials used by our CHE and OP business units, whether due to problems with our crops or problems with our raw material suppliers, may affect our results of operations and our financial performance.
  We grow a significant amount of the raw materials we use for our CHE business unit and we also purchase additional raw materials for our CHE business unit from various suppliers. We are not substantially dependent on any of our suppliers for the raw materials used by our CHE business unit. Also, we grow substantially all of the raw materials for our OP business unit and accordingly, to the extent we purchase raw materials from suppliers for our OP business unit, we are not dependent on any of our suppliers for the raw materials used by our OP business unit. Any problems we may experience with our CHE or OP business unit crops could disrupt production or impact our ability to increase production and sales of our CHE or OP products respectively or require us to purchase a greater amount of raw materials from suppliers. With respect to our suppliers, we typically enter into renewable, fixed price agreements. If we experience disruptions in our obtaining supplies for either our CHE business unit or our OP business unit, whether due to problems with our crops or other circumstances, we will need to identify and access alternative sources for such supplies which may in turn increase our costs and our dependence. Also in such event, interruptions in our obtaining the necessary raw materials could disrupt production or impact our ability to increase production and sales of our CHE or OP products and negatively impact our results of operations, financial performance and the price of our common stock.
 17
 
 Due to increased volatility of raw material prices, the timing lag between the raw material purchase and product pricing can negatively impact our profitability.
  To the extent we purchase raw materials for our CHE and OP business unitsvolatility in the prices of raw materials, among other factors, may adversely impact our ability to accurately forecast demand and may have a material adverse impact on our results of operations. We seek to mitigate the impact of changing raw material prices by passing changes in prices to our customers by adjusting prices daily to reflect changes in raw material prices, as is customary in the industry.  We may not be able to adjust our product prices rapidly enough in the short-term to recover the costs of increases in raw materials. Our future profitability may be adversely affected to the extent we are unable to pass on higher raw material costs to our customers.
  Increases in raw materials prices will increase our need for working capital.
  If the prices of raw materials were to increase, our working capital requirements may increase as well. Increases in our working capital requirements can materially adversely impact our results of operations, our cash flow and our available liquidity to fund other business needs. Furthermore, there is no assurance we would be able to finance additional working capital requirements or finance such working capital requirements on favorable terms. If we were unable to obtain financing on favorable terms, our business and results of operations may be adversely affected. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources.”
  Increases in raw materials prices may increase credit and default risk with respect to our customers.
  Increases in the price of our products, if raw material prices were to rise and be passed on to our customers, may place additional demands on the working capital and liquidity needs of our customers. Accordingly, our customers’ cash flow may be negatively impacted which may have an adverse affect on the timing and amount of payment on our accounts receivable, which would in turn, negatively affect our results of operations.
  If the nutritional, over-the-counter products and organic products industries do not grow or grow at a slower speed than we project, our sales and profitability may be materially adversely affected.
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  We currently derive most of our profits from sales of our products in China. The continued development of our business depends, in large part, on continued growth in the nutritional, over-the-counter products and organic products industries in China and the Asia-Pacific Region. Although China’s nutritional, over-the-counter products and organic products industries have grown rapidly in the past, they may not continue to grow at the same growth rate or at all in the future. Any reduced demand for our products, any downturn or other adverse changes in China’s nutritional, over-the-counter products and organic products or related industries could severely impact the profitability of our business.
  Potential environmental liability could have a material adverse effect on our operations and financial condition.
  As a manufacturer, we are subject to various Chinese environmental laws and regulations on air emission, waste water discharge, solid wastes and noise. Although we believe that our operations are in substantial compliance with current environmental laws and regulations, we may not be able to comply with these regulations at all times as the Chinese environmental legal regime is evolving and becoming more stringent. Therefore, if the Chinese government imposes more stringent regulations in the future, we may have to incur additional and potentially substantial costs and expenses in order to comply with new regulations, which may negatively affect our results of operations.  Further, no assurance can be given that all potential environmental liabilities have been identified or properly quantified or that any prior owner, operator, or tenant has not created an environmental condition unknown to us.  If we fail to comply with any of the present or future environmental regulations in any material aspects, we may suffer from negative publicity and be subject to claims for damages that may require us to pay substantial fines or have our operations suspended or even be forced to cease operations.
  Adverse publicity associated with our company or our products or similar products manufactured by our competitors could have a material adverse effect on our results of operations.
  Over the past several years, there have been various incidents reported and publicized regarding the safety and efficacy of products produced in China and the production in China of counterfeit products.  Because our products include health supplements, energy drinks, organic food products as well as fertilizers and products that are used in the manufacture of health supplements, energy drinks, organic food products and fertilizers, we are highly dependent upon market perceptions of the safety and quality of our products.  Concerns over the safety of biopharmaceutical and bioengineering products manufactured in China could have an adverse effect on the sale of such products, including products manufactured by us.
  We could be adversely affected if any of our products or any similar products manufactured by other companies prove to be, or are alleged to be, unsafe or harmful to humans or to the environment.  Any negative publicity associated with the safety, adverse effects or efficacy resulting from the use or misuse of our products or any similar products manufactured by other companies could also have a material adverse impact on our results of operations. We have not, to date, experienced any significant quality control or safety problems. If in the future we become involved in incidents of the type described above, such problems could severely and adversely impact our product sales and reputation.
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  Key employees are essential to growing our business.
  We are dependent on the services of Mr. Silvasan our CEO,  Mr. Min Zhao, our CHE division’s president Mr. Jinrong Tang, our OP division’s president and Ms. Chan our Senior VP China to grow our business. Messrs. Silvasan, Zhao and Tang, and Ms. Chan are essential to our ability to continue to grow our business.  Each of Mr. Min Zhao and Mr. Jinrong Tang has established relationships within the industries in which we operate. Each of these key employees have agreed to non-solicitation and non-compete restrictions during the course of their employment with us, however, these restrictions only extend for a one year period from termination. While none of our key executives have indicated to us that they intend to leave or resign from our Company in the near future, the loss of the services of any of these executives could materially harm our business because of the cost and time necessary to recruit and train a replacement and to re-established relationships within the industries in which we operate.  Such a loss would also divert management’s attention away from operational matters.  None of our key executives have indicated to us that they intend to leave or resign from our company in the near future.  Further, we do not maintain, or intend to maintain, key person life insurance for any of our officers or key employees.  If any of them were to leave us, our growth strategy might be hindered, which could limit our ability to increase revenue. In addition, we face competition for attracting skilled personnel. If we fail to attract and retain qualified personnel to meet current and future needs, this could slow our ability to grow our business, which could result in a decrease in market share.  Historically, we have not experienced problems in attracting key employees and management personnel and should we need to replace one of our key employees or bring on additional executives and employees, we do not anticipate that we will encounter problems in doing so because China has a large pool of qualified executive level professionals and skilled employees from which we can acquire such talent.
  We may need additional financing, which may not be available on satisfactory terms or at all.
  Our capital requirements may be accelerated as a result of many factors, including timing of acquisition and development activities, underestimates of budget items, unanticipated expenses or capital expenditures, overestimates of revenues, future product opportunities with collaborators, future licensing opportunities and future business combinations. Consequently, we may need to seek additional debt or equity financing, which may not be available on favorable terms, if at all, and which may be dilutive to our stockholders.
  We may seek to raise additional capital through public or private equity offerings, debt financings or additional corporate collaboration and licensing arrangements. To the extent we raise additional capital by issuing equity securities, our stockholders may experience dilution. To the extent that we raise additional capital by issuing debt securities, we may incur substantial interest obligations, may be required to pledge assets as security for the debt and may be constrained by restrictive financial and/or operational covenants. Debt financing would also be superior to our stockholders’ interest in bankruptcy or liquidation. To the extent we raise additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to our technologies or product candidates, or grant licenses on unfavorable terms.
  If we fail to adequately protect or enforce our intellectual property rights, or to secure rights to patents of others, the value of our intellectual property rights could diminish.
  Our success, competitive position and future revenues will depend in part on our ability to obtain and maintain patent protection for our products, methods, processes and other technologies, to preserve our trade secrets, to prevent third parties from infringing on our proprietary rights and to operate without infringing the proprietary rights of third parties.
  To date, through our contractually controlled PRC operating entities, applied for or been issued The patents cover the proprietary production process used to produce Solanesol, Co-enzyme Q10, Resveratrol, 5-HTP, organic fertilizer, and potential future products. We cannot predict the degree and range of protection patents will afford us against competitors. Third parties may find ways to invalidate or otherwise circumvent any proprietary technology we own. Third parties may attempt to obtain patents claiming aspects similar to our patent applications. We also have, through our contractually controlled PRC operating entities, applied for or have been issued six trademarks in the PRC. If we need to initiate litigation or administrative proceedings, such actions may be costly whether we win or lose.
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  Our success will also depend on the skills, knowledge and experience of our scientific and technical personnel, consultants, advisors, licensors and contractors. To help protect our proprietary know-how and inventions for which patents may be unobtainable or difficult to obtain, we rely on trade secret protection and confidentiality agreements. If any of our intellectual property is disclosed, our value would be significantly impaired, and our business and competitive position would suffer.
  If we infringe the rights of third parties, we could be prevented from selling products, forced to pay damages and compelled to defend against litigation.
  If our products, methods, processes and other technologies infringe on the proprietary rights of other parties, we could incur substantial costs, and may have to obtain licenses (which may not be available on commercially reasonable terms, if at all), redesign our products or processes, stop using the subject matter claimed in the asserted patents, pay damages, or defend litigation or administrative proceedings, which may be costly whether it wins or loses.  All of the above could result in a substantial diversion of valuable management resources.
  We believe we have taken reasonable steps, including comprehensive internal and external prior patent searches, to ensure we have freedom to operate and that our development and commercialization efforts can be carried out as planned without infringing others’ proprietary rights.  However, we cannot guarantee that no third party patent has been filed or will be filed that may contain subject matter of relevance to our development, causing a third party patent holder to claim infringement.  Resolving such issues has traditionally resulted, and could in our case result, in lengthy and costly legal proceedings, the outcome of which cannot be predicted accurately.
  We do not have business insurance coverage in China.
 
 Insurance companies in China offer limited business insurance products. As a result, we do not have any business liability, loss of data or disruption insurance coverage for our operations. Any business disruption, litigation or natural disaster might cause us to incur substantial costs or divert our resources. In addition, we do not carry insurance with respect to certain risks, including product liability insurance. As a result, any product liability or other claims may materially adversely affect our business, financial condition and results of operations. Furthermore, we may need to stop selling products that result in product liability claims, which could negatively affect the range of products that we offer and the size of our customer base.
  Our corporate actions are substantially controlled by our principal stockholders and affiliated entities.
  As of February 1, 2010, our principal stockholders and their affiliated entities own approximately 70% of our outstanding common stock, representing approximately 70% of our voting power. These stockholders, acting individually or as a group, could exert substantial influence over matters such as electing directors and approving mergers or other business combination transactions.  In addition, because of the percentage of ownership and voting concentration in these principal stockholders and their affiliated entities, elections of our board of directors will generally be within the control of these stockholders and their affiliated entities.  While all of our stockholders are entitled to vote on matters submitted to our stockholders for approval, the concentration of shares and voting control presently lies with these principal stockholders and their affiliated entities.  As such, it would be difficult for stockholders to propose and have approved proposals not supported by management.  There can be no assurances that matters voted upon by our officers and directors in their capacity as stockholders will be viewed favorably by all stockholders of the company.
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  If we are unable to maintain appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations, result in the restatement of our financial statements, harm our operating results, subject us to regulatory scrutiny and sanction, and cause investors to lose confidence in our reported financial information.
  Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud.
  As a public company, we have significant additional requirements for enhanced financial reporting and internal controls.  We are required to document and test our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which requires annual management assessments of the effectiveness of our internal controls over financial reporting and a report by our independent registered public accounting firm addressing these assessments.  The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company.
  Our management with the participation of our Chief Executive Officer evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2009.  Based upon that evaluation, our CEO concluded that our disclosure controls and procedures were effective and designed to ensure that material information required to be disclosed by us in the reports that we file or submit is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and regulations and accumulated and communicated to them as appropriate to allow timely decision regarding required disclosure.
  Our management is also responsible for establishing and maintaining adequate internal control over financial reporting, which refers to the process designed by, or under the supervision of, our CFO and effected by our Board of Directors, manage and other personnel, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles.  As of December 31, 2009, our management evaluated the effectiveness of our internal control over financial reporting and concluded that at December 31, 2009, there was a material weakness in internal control over financial reporting, which related to the monitoring and review of work performed in the preparation of audit and financial statements, footnotes and financial data provided by us to our independent accounting firm.  Management concluded that our financial disclosure controls and procedures were not effective due to our limited internal resources and lack of ability to have multiple levels of transaction review.  Through the use of external consultants and the review process, management believes that the financial statements and other information presented by us are materially correct.  Our lack of accounting staff results in a lack of segregation of duties necessary for an effective system of internal control.  In order to mitigate this material weakness to the fullest extent possible, all quarterly and annual financial reports completed by our CFO are reviewed by our CEO for reasonableness and all unexpected results are investigated.  At any time, if it appears that any control can be implemented to continue to mitigate such weakness, it is immediately implemented.
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  We have implemented internal financial controls and external reporting systems that we believe meet the requirements of the Sarbanes-Oxley Act of 2002.  However, we cannot assure you that we will not, in the future, identify areas requiring improvement in our internal control over financial reporting.  We cannot assure you that the measures we will take to remediate any areas in need of improvement will be successful or that we will implement and maintain adequate controls over our financial processes and reporting in the future as we continue our growth.  If we are unable to establish appropriate internal financial reporting controls and procedures, it could cause us to fail to comply with Sarbanes-Oxley and meet our reporting obligations, result in the restatement of our financial statements, harm our operating results, subject us to regulatory scrutiny and sanction, and cause investors to lose confidence in our reported financial information.
  We may not be able to extend our Research and Development Contract with Fudan University
 
 In 2005, we entered into a Research and Development Contract with Fudan University regarding, among other things, our joint ownership with Fudan University of the patented “solanesol-clean extraction method”, research and development of downstream products and assistance  and support to be provided by Fudan University.  Because of our relationship with Fudan University, and in particular with Dr. Jian Ming Chan, who has served as Sanming’s Chief Scientist since April 2006, and has continued in that position since we acquired Green Planet on June 17, 2009, we believe that this Research and Development Contract will be further extended; however no assurances can be given that this contract will be extended. If we are unable to further extend the Research and Development Contract, if desirable, we may not have the assistance and support of Fudan University and we may be limited in the improvement of current products or the development of new downstream products.
 Risks Associated With Doing Business In China
  There are substantial risks associated with doing business in China, as set forth in the following risk factors.
  Substantially all of our assets and operations are located in the PRC and are subject to changes resulting from the political and economic policies of the Chinese government and it is possible that the PRC government could adopt material changes to their policies regarding foreign participation in businesses operating in the PRC, which could have a material and adverse effect on our business and could even cause us to lose all of our assets and operations in China.
  We conduct our business primarily through our contractually controlled, affiliated PRC operating entities.  Our business operations could be restricted by the political environment in the PRC. The PRC has operated as a socialist state since 1949 and is controlled by the Communist Party of China.  In recent years, however, the government has introduced reforms aimed at creating a socialist market economy and policies have been implemented to allow business enterprises greater autonomy in their operations.  We are generally subject to laws and regulations applicable to foreign investments in China and, in particular, laws applicable to wholly foreign-owned enterprises (“WFOE”s).  Changes in the political leadership of the PRC may have a significant effect on laws and policies related to the current economic reform programs, other policies affecting business and the general political, economic and social environment in the PRC, including the introduction of measures to control inflation, changes in the rate or method of taxation, import and export tariffs, the imposition of additional restrictions on currency conversion and remittances abroad, foreign investment and regulations relating to raw materials, environmental regulations, land use rights, property and other matters.  Moreover, economic reforms and growth in the PRC have been more successful in certain provinces than in others, and the continuation or increases of such disparities could affect the political or social stability of the PRC.  Although we believe that the economic reform and the macroeconomic measures adopted by the Chinese government have had a positive effect on the economic development of China, there is no assurance that the Chinese government will continue to pursue the current economic reform policies, or that it will not significantly alter these policies from time to time without notice and the future direction of these economic reforms is uncertain and the uncertainty may decrease the attractiveness of our Company as an investment, which may in turn result in a decline in the trading price of our common stock.  Further, we cannot assure you that the PRC government will not alter its polices to further restrict foreign participation in businesses operating in the PRC or even cause us to lose all of our assets and operations in the PRC.
  23
  Additionally, Chinese legislation and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China.  However, the PRC has not developed a fully integrated legal system and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. In particular, because these laws and regulations are relatively new, and because of the limited volume of published decisions and their non-binding nature, the interpretation and enforcement of these laws and regulations involve uncertainties. In addition, the Chinese legal system is based in part on government policies and internal rules (some of which are not published on a timely basis or at all) that may have a retroactive effect.  As a result, we may not be aware of our violation of these policies and rules until some time after the violation.  In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention.
  We cannot assure you that the current Chinese policies of economic reform will continue. Because of this uncertainty, there are significant economic risks associated with doing business in China.
  Although the majority of productive assets in China are owned by the Chinese government, in the past several years the government has implemented economic reform measures that emphasize decentralization and encourage private economic activity. In keeping with these economic reform policies, the PRC has been openly promoting business development in order to bring more business into the PRC. Because these economic reform measures may be inconsistent or ineffective, there are no assurances that:
  ●
the Chinese government will continue its pursuit of economic reform policies;●
the economic policies, even if pursued, will be successful;●
economic policies will not be significantly altered from time to time; or●
business operations in China will not become subject to the risk of nationalization.
  We cannot assure you that we will be able to capitalize on these economic reforms, assuming the reforms continue. Because our business model is dependent upon the continued economic reform and growth in China (as well as other Asia-Pacific countries), any change in Chinese government policy could materially adversely affect our ability to continue to implement our business model. China’s economy has experienced significant growth in the past decade, but such growth has been uneven across geographic and economic sectors and has recently been slowing. Even if the Chinese government continues its policies of economic reform, there are no assurances that economic growth in that country will continue or that we will be able to take advantage of these opportunities in a fashion that will provide financial benefit to us.
  The Chinese government exerts substantial influence over the manner in which our Chinese subsidiaries must conduct our business activities.
  The PRC only recently has permitted provincial and local economic autonomy and private economic activities. The government of the PRC has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in the PRC or particular regions of the PRC, and could require us to divest ourselves of any interest we then hold in our PRC subsidiaries.
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 We may be unable to enforce our rights due to policies regarding the regulation of foreign investments in China.
  The PRC’s legal system is a civil law system based on written statutes in which decided legal cases have uncertain value as precedent, unlike the common law system prevalent in the United States.  The PRC does not have a well-developed, consolidated body of laws governing foreign investment enterprises and its regulations and policies with respect to foreign investments are evolving.  As a result, the administration of laws and regulations by government agencies may be subject to considerable discretion and variation, and may be subject to influence by external forces unrelated to the legal merits of a particular matter.
  Definitive regulations and policies with respect to many of such matters have not yet been published. Statements regarding these evolving policies have been conflicting and any such policies, as administered, are likely to be subject to broad interpretation and discretion and to be modified, perhaps on a case-by-case basis. The uncertainties regarding such regulations and policies present risks which may affect our ability to achieve our stated business objectives. If we are unable to enforce any legal rights we may have under our contracts or otherwise, our ability to compete with other companies in our industry could be limited which could result in a loss of revenue in future periods which could have a material adverse effect on our business, financial condition results of operations and stock price.
  Certain agreements to which we are a party and which are material to our operations lack various legal protections which are customarily contained in similar contracts prepared in the United States.
  Our subsidiaries and affiliated entities include companies organized under the laws of the PRC and all of their business and operations are conducted in China. We are a party to certain contracts related to our operations in China and, in particular, the contracts by which we contractually control Sanming and JLF While these contracts contain the basic business terms of the agreements between the parties, these contracts do not contain certain clauses which are customarily contained in similar contracts prepared in the U.S., such as representations and warranties of the parties, confidentiality and non-compete clauses, provisions outlining events of defaults, and termination and jurisdictional clauses. Because our contracts in China omit these customary clauses, notwithstanding the differences in Chinese and U.S. laws, we may not have the same legal protections as we would if the contracts contained these additional clauses. We anticipate that our Chinese subsidiaries will likely enter into contracts in the future which will likewise omit these customary legal protections. While we have not been subject to any adverse consequences as a result of the omission of these customary clauses, and we consider the contracts to which we are a party to contain all the material terms of our business arrangements with the other party, future events may occur which lead to a dispute which could have been avoided if the contracts included customary clauses in conformity with U.S. standards. Contractual disputes which may arise from this lack of legal protection could divert management’s time from the operation of our business, require us to expend funds attempting to settle a possible dispute, limit the time our management would otherwise devote to the operation of our business, and have a material adverse effect on our business, financial condition and results of operations.  Additionally the lack of a well developed body of laws and the uncertain value of decided legal cases a precedent could, if a dispute were to arise, impact the enforceability of such contracts.
  25
 
 PRC regulations relating to acquisitions of PRC companies by foreign entities may create regulatory uncertainties that could restrict or limit our ability to operate. Our failure to obtain the prior approval of the China Securities Regulatory Commission, (the “CSRC”), for a stock offering and the listing and trading of our common stock could have a material adverse effect on our business, operating results, reputation and trading price of our common stock, and may also create uncertainties for a future stock offering.
  The PRC State Administration of Foreign Exchange, or “SAFE,” issued a public notice effective November 1, 2005, known as Circular 75, concerning the use of offshore holding companies in mergers and acquisitions in China. The public notice provides that if an offshore company controlled by PRC residents intends to acquire a PRC company, such acquisition will be subject to registration with the relevant foreign exchange authorities. The public notice also suggests that registration with the relevant foreign exchange authorities is required for any sale or transfer by the PRC residents of shares in an offshore holding company that owns an onshore company. The PRC residents must each submit a registration form to the local SAFE branch with respect to their ownership interests in the offshore company, and must also file an amendment to such registration if the offshore company experiences material events, such as changes in the share capital, share transfer, mergers and acquisitions, spin-off transactions or use of assets in China to guarantee offshore obligations.
  We are committed to complying with and to ensuring that our shareholders who are subject to the regulations will comply with the relevant rules. However, we cannot assure you that all of our shareholders who are PRC residents will comply with our request to make or obtain any applicable registrations or comply with other requirements required by Circular 75 or other related rules. Any future failure by any of our shareholders who is a PRC resident, or controlled by a PRC resident, to comply with relevant requirements under this regulation could subject us to fines or sanctions imposed by the PRC government, including restrictions on our PRC subsidiaries’ abilities to pay dividends or make distributions to us and our ability to increase our investment in our PRC subsidiaries.
  On August 8, 2006, the PRC Ministry of Commerce (“MOFCOM”), joined by the State-owned Assets Supervision and Administration Commission of the State Council, the State Administration of Taxation, the State Administration for Industry and Commerce, the China Securities Regulatory Commission and SAFE, released a substantially amended version of the Provisions for Foreign Investors to Merge with or Acquire Domestic Enterprises (the “Revised M&A Regulations”), which took effect September 8, 2006. These new rules significantly revised China’s regulatory framework governing onshore-to-offshore restructurings and foreign acquisitions of domestic enterprises. These new rules signify greater PRC government attention to cross-border merger, acquisition and other investment activities, by confirming MOFCOM as a key regulator for issues related to mergers and acquisitions in China and requiring MOFCOM approval of a broad range of merger, acquisition and investment transactions. Further, the new rules establish reporting requirements for acquisition of control by foreigners of companies in key industries, and reinforce the ability of the Chinese government to monitor and prohibit foreign control transactions in key industries.
  Among other things, the Revised M&A Regulations include new provisions that purport to require that an offshore special purpose vehicle, or SPV, formed for listing purposes and controlled directly or indirectly by PRC companies or individuals must obtain the approval of the CSRC prior to the listing and trading of such SPV’s securities on an overseas stock exchange. On September 21, 2006, the CSRC published on its official website procedures specifying documents and materials required to be submitted to it by SPVs seeking CSRC approval of their overseas listings. Our PRC counsel has advised us that, (i) Fujian GP and Fujian United were incorporated by a foreign owned enterprise, and there was no acquisition of the equity or assets of a “PRC domestic company” as such term is defined under the Revised M&A Regulations and (ii) no provision in the Revised M&A Regulations clearly classifies the contractual arrangements between Fujian GP and Sanming, Fujian United and JLF as a type of transaction falling within such rules. Therefore, we were and are not required to obtain the approval of CSRC under the Revised M&A Regulations.However, the application of this PRC regulation remains unclear with no consensus currently existing among the leading PRC law firms regarding the scope and applicability of the CSRC approval requirement.
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  If the CSRC or another PRC regulatory agency subsequently determines that CSRC approval was required, we may face regulatory actions or other sanctions from the CSRC or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on our operations in the PRC, limit our operating privileges in the PRC, or take other actions that could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our common stock.
  Also, if later the CSRC requires that we obtain its approval, we may be unable to obtain a waiver of the CSRC approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties and/or negative publicity regarding this CSRC approval requirement could have a material adverse effect on the trading price of our common stock. Furthermore, published news reports in China recently indicated that the CSRC may have curtailed or suspended overseas listings for Chinese private companies. These news reports have created further uncertainty regarding the approach that the CSRC and other PRC regulators may take.
  It is uncertain how our business operations or future strategy will be affected by the interpretations and implementation of Circular 75 and the Revised M&A Regulations. It is anticipated that application of the new rules will be subject to significant administrative interpretation, and we will need to closely monitor how MOFCOM and other ministries apply the rules to ensure that our domestic and offshore activities continue to comply with PRC law. Given the uncertainties regarding interpretation and application of the new rules, we may need to expend significant time and resources to maintain compliance.
  We conduct of our business primarily through contractually controlled PRC operating entities and our control of the day-to-day operations of such PRC entities pursuant to contracts in order to comply with Chinese law may not be as effective as conducting business through direct equity ownership of such PRC entities due to uncertainties with respect to the PRC legal system which could materially and adversely affect our results of operations.
 
 We conduct our business primarily through our contractually controlled PRC operating entities. PRC laws and regulations govern our operations in China. Our contractually controlled PRC operating entities are generally subject to laws and regulations applicable to foreign investments in China and, in particular, laws applicable to wholly foreign owned enterprises (“WFOEs”). Although members of our executive management team and our shareholders include the executive officers and owners of our contractually controlled PRC operating entities, because we do not directly own our contractually controlled PRC operating entities, we may encounter problems enforcing our rights to control the business affairs and day-to-day operations of such entities. If we find it necessary to take legal action in China to enforce our rights under our contracts with the PRC operating entities, we will be subject to the uncertainties of the PRC legal system, where prior court decisions have limited precedential value. Since 1979, PRC legislation and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China. However, China has not developed a fully integrated legal system and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. In particular, because these laws and regulations are relatively new, and because of the limited volume of published decisions and their non-binding nature, the interpretation and enforcement of these laws and regulations involve uncertainties. In addition, the PRC legal system is based in part on government policies and internal rules (some of which are not published on a timely basis or at all) that may have a retroactive effect. As a result, we may not be aware of our violation, if any, of these policies and rules until some time after the violation. In addition, any litigation in China, regardless of outcome, may be protracted and result in substantial costs and diversion of resources and management attention. Accordingly, notwithstanding our contractual control over our PRC operating entities, such control may not be as effective as if we conducted our business through direct equity owned PRC entities which could materially and adversely affect our results of operations.
 
 Our contractual arrangements with Sanming, JLF and their shareholders may not be as effective in providing control over these entities as direct ownership.
 
 We have no equity ownership interest in Sanming and JLF, we rely on the contractual arrangements of the VIE agreements to control and operate Sanming and JLF. These contractual arrangements may not be as effective in providing control over Sanming and JLF as direct ownership. For example, Sanming and JLF could fail to take actions required for our business or fail to pay dividends to Fujian GP and Fujian United despite its contractual obligation to do so. If Sanming and JLF fail to perform their obligation under the VIE agreements, we may have to rely on legal remedies under PRC law, which may not be effective
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  Uncertainty as to the enforceability of our agreements through which we control our contractually controlled PRC operating entities and their day-to-day operations.
  We entered into agreements with our PRC operating entities which provide us with the contractual control over the business affairs and the day-to-day operations of such businesses as a means to comply with PRC restrictions relating to foreign investment in PRC entities.  Our PRC counsel, DeHeng Law Offices (Bejing), has advised us that such agreements are enforceable and in compliance with PRC laws.  Based on such advice, we did not seek PRC government approval of regarding our relationships with or agreements with our PRC operating entities. Notwithstanding the foregoing, due to the uncertainties and inconsistencies of the applications and interpretations of the PRC laws and regulations and the limited precedential value of prior court decisions in the PRC legal system, we cannot assure you that we will be able to enforce our rights under our agreements with said third party PRC operating entities or otherwise control the business affairs and day-to-day operations of such businesses.
  If we make equity compensation grants to persons who are PRC citizens, they may be required to register with the State Administration of Foreign Exchange of the PRC, or SAFE. We may also face regulatory uncertainties that could restrict our ability to adopt additional equity compensation plans for our directors and employees and other parties under PRC law.
  On April 6, 2007, SAFE issued the “Operating Procedures for Administration of Domestic Individuals Participating in the Employee Stock Ownership Plan or Stock Option Plan of An Overseas Listed Company, also know as “Circular 78.” It is not clear whether Circular 78 covers all forms of equity compensation plans or only those which provide for the granting of stock options. For any plans which are so covered and are adopted by a non-PRC listed company, such as our company, after April 6, 2007, Circular 78 requires all participants who are PRC citizens to register with and obtain approvals from SAFE prior to their participation in the plan. In addition, Circular 78 also requires PRC citizens to register with SAFE and make the necessary applications and filings if they participated in an overseas listed company’s covered equity compensation plan prior to April 6, 2007. We believe that the registration and approval requirements contemplated in Circular 78 will be burdensome and time consuming.
  Effective January 5, 2010, we adopted our 2010 Incentive Stock  Plan and made stock option grants under the 2010 Incentive Stock Plan to certain of our officers, directors and employees, some of whom are PRC citizens and may be required to register with SAFE. In addition to our officers and directors that receive option grants, future participants of our 2010 Incentive Stock Plan or any other equity compensation plan we may adopt who are PRC citizens may be required to register with SAFE.  If it is determined that any of our equity compensation plans are subject to Circular 78, failure to comply with such provisions may subject us and participants of our equity incentive plan who are PRC citizens to fines and legal sanctions and prevent us from being able to grant equity compensation to our PRC employees.  In that case, our business operations may be adversely affected.
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  Because our business is located in the PRC, we may have difficulty establishing adequate management, legal and financial controls, which we are required to do in order to comply with U.S. securities laws.
  PRC companies have historically not adopted a Western style of management and financial reporting concepts and practices, which includes strong corporate governance, internal controls and, computer, financial and other control systems.  Although our senior executive officers are seasoned executives with significant experience in operating public companies and corporate governance compliance, most of our middle and top management staff in the PRC are not educated and trained in the Western system.While historically we have not experienced problems in attracting executives or management personnel from China’s large pool of professionals, should we need to replace one of our executives or key employees or bring on additional executives and key employees, we may have difficulty hiring new employees in the PRC with such Western system training.  As a result of these factors, we may experience difficulty in establishing management, legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices for our PRC subsidiaries and controlled operating entities that meet Western standards even though we have significant contractual controls over our PRC operating entities. Therefore, we may, in turn, experience difficulties in implementing and maintaining adequate internal controls as required under Section 404 of the Sarbanes-Oxley Act of 2002. This may result in significant deficiencies or material weaknesses in our internal controls, which could impact the reliability of our financial statements and prevent us from complying with SEC rules and regulations and the requirements of the Sarbanes-Oxley Act of 2002. Any such deficiencies, weaknesses or lack of compliance could have a materially adverse effect on our business.
  Restrictions on the convertibility of RMB into foreign currency may limit our ability to make dividends or other payments in U.S. dollars or fund possible business activities outside China.
  Substantially all of our net revenues are currently generated in RMB. Any future restrictions on currency exchanges may limit our ability to use net revenues generated in RMB to make dividends or other payments in U.S. dollars or fund possible business activities outside China.  Although the PRC government introduced regulations in 1996 to allow greater convertibility of RMB for current account transactions, significant restrictions still remain, including primarily the restriction that foreign-invested enterprises may only buy, sell and/or remit foreign currencies at those banks authorized to conduct foreign exchange business after providing valid commercial documents.  In addition, remittance of foreign currencies abroad and conversion of RMB for capital account items, including direct investment and loans, is subject to government approval in China, and companies are required to open and maintain separate foreign exchange accounts for capital account items. We cannot assure you the Chinese regulatory authorities will not impose more stringent restrictions on the convertibility of RMB, especially with respect to foreign exchange transactions.
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  Restrictions on making payments to us.
  We rely almost entirely on payments from the revenues generated by our controlled affiliated PRC entities under our contractual arrangements. The Chinese government also imposes controls on the conversion of the Chinese currency, RMB, into foreign currencies and the remittance of currencies out of China. We may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency.  Furthermore, if our controlled affiliated entities in China incur debt on their own in the future, the instruments governing the debt may restrict their ability to make payments. If we are unable to receive all of the revenues from our operations in the PRC through these contractual or dividend arrangements, we may be unable to pay our operating expenses as they come due.
  We do not have a financial service business license and may be restricted in extending loans directly to other companies, including affiliates.
  We do not currently have a financial service business license and PRC laws generally do not permit companies that do not possess a financial service business license to extend loans directly to other companies, including affiliates, without proceeding through a financial agency.  The enforcement of these restrictions remains unpredictable, and government authorities may declare these loans void, require the forfeiture of any interest paid and levy fines or other penalties upon the parties involved, among other remedies.  In the past, when our subsidiaries or affiliates have required capital, we have funded such needs by providing equity investments and not loans to such entities.  In the future, we intend to continue to fund the capital needs of our subsidiaries in the form of additional equity investments. Additionally, because we do not have a financial services business license our internal financing business unit may be limited in providing funding to our other business units and the their customers in China that purchase products from us. However, in the future we may seek to obtain the necessary PRC licenses or government approvals in order to provide intercompany loans to our subsidiaries subsidiaries and funding to their customers in China who purchase products from us.
 Bringing original actions in China based on United States or other foreign laws against us or our management.
  We currently conduct substantially all of our operations in China through affiliated contractually controlled PRC operating entities, substantially all of our revenues are generated by our operations in China, and substantially all of our operating assets are located in China.  The owners and executive officers who control and operate our contractually controlled PRC operating entities include individuals who are also our executive officers and shareholders who reside within China. If the owners and executive officers of our contractually controlled PRC operating entities were to decide to operate such businesses for their own benefit and the benefit of the other shareholders of such entities, and thereby breach our agreements with them we may experience difficulties enforcing our agreements with such entities.  Additionally, it may not be possible to affect service of process within the United States or elsewhere outside China upon our executive officers and other individuals who reside in China, including with respect to matters arising under U.S. federal securities laws or applicable state securities laws.  Moreover, our Chinese counsel has advised us that China does not have treaties with the United States or many other countries providing for the reciprocal recognition and enforcement of judgment of courts.
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  Governmental control of currency conversion may affect the value of your investment.
  The Chinese government imposes controls on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of currency out of China. We receive substantially all of our revenues in RMB. Under our current structure, our income is primarily derived from payments from our PRC operating divisions. Shortages in the availability of foreign currency may restrict the ability of our Chinese subsidiaries and our affiliated entities to remit sufficient foreign currency to pay dividends or other payments to us, or otherwise satisfy their foreign currency denominated obligations.  Under existing Chinese foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade-related transactions, can be made in foreign currencies without prior approval from China State Administration of Foreign Exchange by complying with certain procedural requirements.  However, approval from appropriate government authorities is required where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of bank loans denominated in foreign currencies.  The Chinese government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be able to pay our operating expenses as they come due.
  We derive a substantial portion of our sales from China and a slowdown or other adverse developments in the PRC economy may materially and adversely affect our customers, demand for our services and our business.
  Substantially all of our sales are generated from China. We anticipate that sales of our products in China will continue to represent a substantial proportion of our total sales in the near future. Although the PRC economy has grown significantly in recent years, we cannot assure you that such growth will continue. The industries in which we are involved in the PRC are relatively new and growing, but we do not know how sensitive these industries are to a slowdown in economic growth or other adverse changes in the PRC economy which may affect demand for our products.  A slowdown in overall economic growth, an economic downturn or recession or other adverse economic developments in the PRC may materially reduce the demand for our products and materially and adversely affect our business.
  Currency fluctuations and restrictions on currency exchange may adversely affect our business, including limiting our ability to convert Chinese RMB into foreign currencies and, if Chinese RMB were to decline in value, reducing our revenue in U.S. dollar terms.
  Although our reporting currency is the U.S. dollar, substantially all of our operations are in China and the RMB is used as their functional currency and substantially all of our Chinese revenue and expenses are in RMB. We are subject to the effects of exchange rate fluctuations with respect to any of these currencies. For example, the value of the RMB depends to a large extent on Chinese government policies and China’s domestic and international economic and political developments, as well as supply and demand in the local market. Since 1994, the official exchange rate for the conversion of RMB to the U.S. dollar had generally been stable and the RMB had appreciated slightly against the U.S. dollar. However, on July 21, 2005, the Chinese government changed its policy of pegging the value of Chinese RMB to the U.S. dollar. Under the new policy, Chinese RMB may fluctuate within a narrow and managed band against a basket of certain foreign currencies. It is possible that the Chinese government could adopt a more flexible currency policy, which could result in more significant fluctuation of Chinese RMB against the U.S. dollar. We can offer no assurance that Chinese RMB will be stable against the U.S. dollar or any other foreign currency.
  The income statements of our foreign operations are translated into U.S. dollars at the average exchange rates in each applicable period. To the extent the U.S. dollar strengthens against foreign currencies, the translation of these foreign currencies denominated transactions results in reduced revenue, operating expenses and net income for our international operations. Similarly, to the extent the U.S. dollar weakens against foreign currencies, the translation of these foreign currency denominated transactions results in increased revenue, operating expenses and net income for our international operations. We are also exposed to foreign exchange rate fluctuations as we convert the financial statements of our foreign operations into U.S. dollars in consolidation. If there is a change in foreign currency exchange rates, the conversion of the foreign operations’ financial statements into U.S. dollars will lead to a translation gain or loss which is recorded as a component of other comprehensive income. In addition, we have certain assets and liabilities that are denominated in currencies other than the relevant entity’s functional currency. Changes in the functional currency value of these assets and liabilities create fluctuations that will lead to a transaction gain or loss. We have not entered into agreements or purchased instruments to hedge our exchange rate risks, although we may do so in the future. The availability and effectiveness of any hedging transaction may be limited and we may not be able to successfully hedge our exchange rate risks.
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  We may have limited legal recourse under PRC law if disputes arise under our contracts with third parties.
  The Chinese government has enacted some laws and regulations dealing with matters such as corporate organization and governance, foreign investment, commerce, taxation and trade.  However, their experience in implementing, interpreting and enforcing these laws and regulations is limited, and our ability to enforce commercial claims or to resolve commercial disputes is unpredictable.  If our new business ventures are unsuccessful, or other adverse circumstances arise from these transactions, we face the risk that the parties to these ventures may seek ways to terminate the transactions, or, may hinder or prevent us from accessing important information regarding the financial and business operations of these contractually controlled companies.  The resolution of these matters may be subject to the exercise of considerable discretion by agencies of the Chinese government, and forces unrelated to the legal merits of a particular matter or dispute may influence their determination.  Any rights we may have to specific performance, or to seek an injunction under PRC law, in either of these cases, are severely limited, and without a means of recourse by virtue of the Chinese legal system, we may be unable to prevent these situations from occurring.  The occurrence of any such events could have a material adverse effect on our business, financial condition and results of operations, including the loss of all of our assets and operations located in China.  Although legislation in China over the past 30 years has significantly improved the protection afforded to various forms of foreign investment and contractual arrangements in China, these laws, regulations and legal requirements are relatively new and their interpretation and enforcement involve uncertainties, which could limit the legal protection available to us, and foreign investors, including you.  The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities or capital and could have a material adverse impact on our operations.
  It may be difficult to protect and enforce our intellectual property rights under PRC law.
  Intellectual property rights in China are still developing, and there are uncertainties involved in the protection and the enforcement of such rights.  We will need to pay special attention to protecting our intellectual property and trade secrets.  Failure to do so could lead to the loss of a competitive advantage that could not be compensated by a damages award.
  If our land use rights are revoked, we would have no operational capabilities.
  Under Chinese law, land is owned by the state or rural collective economic organizations. The state issues to tenants the rights to use property.  Use rights can be revoked and the tenants forced to vacate at any time when redevelopment of the land is in the public interest.  The public interest rationale is interpreted quite broadly and the process of land appropriation may be less than transparent.  SanmingJLF, our controlled PRC operating entity, relies on these land use rights as the cornerstone of its operations, and the loss of such rights would have a material adverse effect on this operating division and our company and our source of raw materials needed by our CHE and OP business units.
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  Because we may not be able to obtain business insurance in the PRC, we may not be protected from risks that are customarily covered by insurance in the United States.
  Business insurance is not readily available in the PRC.  To the extent that we suffer a loss of a type which would normally be covered by insurance in the United States, such as product liability and general liability insurance, we would incur significant expenses in both defending any action and in paying any claims that result from a settlement or judgment.
  Future inflation in China may inhibit our ability to conduct business in China.
  In recent years, the Chinese economy has experienced periods of rapid expansion and high rates of inflation. During the past ten years, the rate of inflation in China has been as high as 20.7% and as low as 2.2%. These factors have led to the adoption by the PRC government, from time to time, of various corrective measures designed to restrict the availability of credit or regulate growth and contain inflation. While inflation has been more moderate since 1995, high inflation may in the future cause the PRC government to impose controls on credit or prices, or to take other action, which could inhibit economic activity in China, and thereby harm the market for our products.
  We must comply with the Foreign Corrupt Practices Act.
  We are required to comply with the United States Foreign Corrupt Practices Act, which prohibits U.S. companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Foreign companies, including some of our competitors, are not subject to these prohibitions. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time-to-time in mainland China. If our competitors engage in these practices, they may receive preferential treatment from personnel of some companies, giving our competitors an advantage in securing business or from government officials who might give them priority in obtaining new licenses, which would put us at a disadvantage. Although we inform our personnel that such practices are illegal, we can not assure you that our employees or other agents will not engage in such conduct for which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties.
  The Chinese government exerts substantial influence over the manner in which we must conduct our business activities.
  We are dependent on our relationship with the local government in the province in which we operate our business.  Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership.  Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, environmental regulations, land use rights, property and other matters.  We believe that our operations in China are in material compliance with all applicable legal and regulatory requirements. However, the central or local governments of these jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations.  Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties.
  Because the M&A Rules permit the government agencies to have scrutiny over the economics of an acquisition transaction and require consideration in a transaction to be paid within stated time limits, we may not be able to negotiate a transaction that is acceptable to our shareholders or sufficiently protect their interests in a transaction.
  The M&A Rules have introduced aspects of economic and substantive analysis of the target business and the acquirer and the terms of the transaction by MOFCOM and the other governing agencies through submissions of an appraisal report and the acquisition agreement, all of which form part of the application for approval, depending on the structure of the transaction. The M&A Rules also prohibit a transaction at an acquisition price obviously lower than the appraised value of the Chinese business or assets. The M&A Rules require that in certain transaction structures, the consideration must be paid within strict time periods. Because the Chinese authorities have been unhappy with offshore flips which converted domestic companies into foreign investment enterprises (“FIEs”) in order to take advantage of certain benefits, including reduced taxation, in the PRC, the M&A Rules require foreign sourced capital of not less than 25% of the domestic company’s post-acquisition capital in order to obtain FIE treatment. In asset transactions there must be no harm of third parties and the public interest in the allocation of assets and liabilities being assumed or acquired. These aspects of the M&A Rules will limit our ability to negotiate various terms of the acquisition, including aspects of the initial consideration, contingent consideration, holdback provisions, indemnification provisions and provisions relating to the assumption and allocation of assets and liabilities. Transaction structures involving trusts, nominees and similar entities are prohibited with respect to the acquisitions among related parties. Therefore, we may not be able to negotiate a transaction with terms that will satisfy our investors and protect our shareholders interests in an acquisition of a Chinese business or assets.
 
 Compliance with the PRC Antitrust Law may limit our ability to effect an acquisition.
  The PRC Antitrust Law was promulgated on August 30, 2007, and became effective on August 1, 2008. The government authorities in charge of antitrust matters in China are the Antitrust Commission and other antitrust authorities under the State Council. The PRC Antitrust Law regulates (i) monopoly agreements, including decisions or actions in concert that preclude or impede competition, entered into by business operators; (ii) abuse of dominant market position by business operators; and (iii) concentration of business operators that may have the effect of precluding or impeding competition. The concentration of business operators refers to (i) merger with other business operators; (ii) gaining control over other business operators through acquisition of equity interest or assets of other business operators; and (iii) gaining control over other business operators through exerting influence on other business operators through contracts or other means. In the event of occurrence of any concentration of business operators and to the extent required by the Antitrust Law, the relevant business operators must file with the antitrust authority under the State Council prior to conducting the contemplated business concentration. If the antitrust authority decides not to further investigate whether the contemplated business concentration has the effect of precluding or impeding competition or fails to make a decision within 30 days from receipt of relevant materials, the relevant business operators may proceed to consummate the contemplated business concentration. When we evaluate a potential transaction, we will consider the need to comply with the Antitrust Law and other relevant regulations which may limit our ability to effect an acquisition.
  Our contractual arrangements with Sanming and JLF may result in adverse tax consequences to us.
 
 As a result of our corporate structure and contractual arrangements, Fujian GP and Fujian United are effectively subject to the 5% PRC business tax on revenues derived from Sanming and JLF pursuant to the VIE agreements. Fujian GP and Fujian United are subject to the business tax, while Sanming and JLF, as manufacturers, instead of a service provider, are not subject to the business tax.  Moreover, we would be subject to adverse tax consequences if the PRC tax authorities were to determine that the VIE agreements were not on an arm’s length basis and therefore constitute a favorable transfer pricing. As a result, the PRC tax authorities could request that we adjust the taxable income upward for PRC tax purposes. Such a pricing adjustment could adversely affect us by:
 
 · increasing Sanming and JLF’s tax expenses without reducing Fujian GP and Fujian United’s tax expenses, which could subject Sanming and JLF to late payment fees and other penalties for under-payment of taxes; and/or
 
 ·resulting in Fujian GP and Fujian United’s loss of its preferential tax treatment.
 
 Under PRC law, we are required to obtain permits and business licenses, and our failure to do so would adversely impact our ability to conduct business in China.
 
 We hold various permits, business licenses, and approvals authorizing our operations and activities, which are subject to periodic review and reassessment by the Chinese authorities. Standards of compliance necessary to pass such reviews change from time to time and differ from jurisdiction to jurisdiction, leading to a degree of uncertainty. If renewals, or new permits, business licenses or approvals required in connection with existing or new facilities or activities, are not granted or are delayed, or if existing permits, business licenses or approvals are revoked or substantially modified, we will suffer a material adverse effect. If new standards are applied to renewals or new applications, it could prove costly to us to meet any new level of compliance.
 
 New labor laws in the PRC may adversely affect our results of operations.
 
 On June 29, 2007, the PRC government promulgated a new labor law, namely, the Labor Contract Law of the PRC, or the New Labor Contract Law, which became effective on January 1, 2008. The New Labor Contract Law imposes stricter obligations on employers. Under the New Labor Contract Law, an employer is obligated to execute written labor contracts with all of its employees, otherwise an employee without a written labor contract will be entitled to claim double monthly salary from the employer. Certain of our employees hired on a temporary basis were hired without execution of a written labor contract. Should such an employee file a valid claim, there can be no assurance that we will not be required to make additional payments under the New Labor Contract Law, which would adversely affect our results of operations.
 
 The New Labor Contract Law also imposes tougher procedural requirements related to a reduction in workforce and requires certain terminations to be based upon seniority and not merit. In the event we decide to significantly change or decrease our workforce, the New Labor Contract Law could adversely affect our ability to enact such changes in a timely and cost-effective manner that is most advantageous to our business, which may materially and adversely affect our financial condition and results of operations.
 
 Our failure to fully comply with PRC labor laws exposes us to potential liability.
 
 Companies operating in China must comply with a variety of labor laws, including certain social insurance, housing fund and other staff welfare-oriented payment obligations. There exist uncertainties as to the interpretation, implementation and enforcement of such obligations. If relevant governmental authorities determine that we have not complied fully with such obligations, we may be in violation of applicable PRC labor laws and we cannot assure you that PRC governmental authorities will not impose penalties on us for any failure to comply. In addition, in the event that any current or former employee files a complaint with relevant governmental authorities, we may be subject to making up such staff-welfare oriented obligations as well as paying administrative fines.
 33
  Our global income and the dividends that we may receive from our PRC subsidiary may be subject to PRC taxes under the PRC Enterprise Income Tax Law, which would have a material adverse effect on our results of operations.
 
 Under the PRC Enterprise Income Tax Law and its implementing rules, both effective from January 1, 2008, an enterprise established outside of the PRC with “de facto management bodies” within the PRC is considered a resident enterprise and will be subject to the enterprise income tax at the rate of 25% on its global income. The implementation rules define the term “de facto management bodies” as “establishments that carry out substantial and overall management and control over the manufacturing and business operations, personnel, accounting, properties, etc. of an enterprise.” The State Administration of Taxation issued the Notice Regarding the Determination of Chinese-Controlled Offshore Incorporated Enterprises as PRC Tax Resident Enterprises on the Basis of De Facto Management Bodies, or SAT Circular 82, on April 22, 2009. SAT Circular 82 provides certain specific criteria for determining whether the “de facto management body” of a Chinese-controlled offshore-incorporated enterprise is located in China. Although SAT Circular 82 only applies to offshore enterprises controlled by PRC enterprises, not those controlled by PRC individuals, like our company, the determining criteria set forth in SAT Circular 82 may reflect the State Administration of Taxation’s general position on how the “de facto management body” test should be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises or individuals. Accordingly, we may be considered a resident enterprise and may therefore be subject to the enterprise income tax at 25% on our global income. If we are considered a resident enterprise and earn income other than dividends from our PRC subsidiary, a 25% enterprise income tax on our global income could significantly increase our tax burden and materially and adversely affect our cash flow and profitability.
 
 We face risks related to natural disasters and health epidemics in China, which could have a material adverse effect on our business and results of operations.
  Our business could be materially and adversely affected by natural disasters or the outbreak of health epidemics in China. For example, in May 2008, Sichuan Province suffered a strong earthquake measuring approximately 8.0 on the Richter scale that caused widespread damage and casualties. In addition, in the last decade, the PRC has suffered health epidemics related to the outbreak of avian influenza and severe acute respiratory syndrome, or SARS. In April 2009, an outbreak of the H1N1 virus, also commonly referred to as “swine flu”, occurred in Mexico and has spread to other countries. Cases of swine flu have been reported in Hong Kong and mainland China. If the outbreak of swine flu were to become widespread in China or increase in severity, it could have an adverse effect on economic activity in China, and our business and operations could be adversely affected. Any future natural disasters or health epidemics in the PRC could also have a material adverse effect on our business and results of operations.
  Risks Related to our Securities
 
 Our common stocks is thinly traded and you may be unable to sell at or near ask prices or at all if you desire to liquidate your shares. There is only a limited and sporadic trading market for our common stock on the OTB Bulletin Board and no trading market exists for our units or warrants.
 
 We have applied for listing on the Nasdaq Stock Market, but cannot assure you that this listing will be approved.
  Our common stock has historically been sporadically or “thinly-traded” on the OTC Bulletin Board, meaning that the number of persons interested in purchasing our common stocks at or near bid prices at any given time may be relatively small or non-existent. This situation is attributable to a number of factors, including the fact that we are a relatively small company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow a relatively unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable.  As a consequence, there had been periods of several days or more when trading activity in our shares was minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price.  We cannot give you any assurance that a broader or more active public trading market for our common stock, develop or be sustained, or that current trading levels will be sustained even if our Nasdaq listing application is approved.
  The market price for our common stock may be volatile given our status as a relatively small company with a small and thinly traded “float” that could lead to wide fluctuations in our share price.  The price at which you purchase our common stock may not be indicative of the price that will prevail in the trading market.  You may be unable to sell your common stock at or above your purchase price if at all, which may result in substantial losses to you.
  The market for our common stock is characterized by price fluctuationswhen compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. The fluctuations in our share price is attributable to a number of factors. First, as noted above, our common stock is sporadically and/or thinly traded. As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our stockholders may disproportionately influence the price of those shares in either direction. The price for our shares could, for example, decline precipitously in the event that a large number of our common stocks are sold on the market without commensurate demand, as compared to a seasoned issuer which could better absorb those sales without adverse impact on its share price. Secondly, we are a speculative or “risky” investment due to our fluctuating level of revenues or profits to date and uncertainty of future market acceptance for our current and potential products.  As a consequence of this enhanced risk, more risk-averse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the stock of a seasoned issuer. The following factors may add to the volatility in the price of our common stock actual or anticipated variations in our quarterly or annual operating results; adverse outcomes; and additions or departures of our key personnel, as well as other items discussed under this “Risk Factors” section, as well as elsewhere in this Form 10-K. Many of these factors are beyond our control and may decrease the market price of our common stock, regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for our common stock will be at any time, including as to whether our common stock will sustain their current market prices, or as to what effect that the sale of shares or the availability of common stock for sale at any time will have on the prevailing market price.
  34
  Stockholders should be aware that the market for penny stocks has suffered in recent years from patterns of fraud and abuse.  Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses.  Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns or practices could increase the volatility of our share price.  Although we believe that our shares would not currently be considered a penny stock, if our shares were to trade at a price below $5.00 per share and/or not be listed on one of the major exchanges (NSYE, NYSEAmex or Nasdaq) we may be considered a penny stock under the SEC’s rules which would impose restrictions of broker-dealers who recommend our stock to customers.
  The market price for our securities may be volatile
 
 The market price for our securities may be volatile and subject to wide fluctuations in response to factors including the following:
  o
actual or anticipated fluctuations in our quarterly operating results;o
changes in financial estimates by securities research analysts;o
conditions in health and wellness and organic products markets;o
changes in the economic performance or market valuations of other bio-engineering companies;  35
  o
announcements by us or our competitors of new products, acquisitions, strategic partnerships, joint ventures or capital commitments;o
addition or departure of key personnel;o
fluctuations of exchange rates between RMB and the U.S. dollar;o
intellectual property litigation; ando
general economic or political conditions in China.
 
 We may need additional capital and may sell additional securities or other equity securities or incur indebtedness, which could result in additional dilution to our stockholders or increase our debt service obligations.
 
 We may require additional cash resources due to changed business conditions or other future developments, including any investments or acquisitions we may decide to pursue. If our cash resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity securities or equity-linked debt securities could result in additional dilution to our stockholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.
  Substantial future sales of our securities in the public market, or the perception that these sales could occur, could cause the price of our securities to decline.
 
 Additional sales of our securities in the public market, or the perception that these sales could occur, could cause the market price of our securities to decline. As of December 31, 2009, we had outstanding warrants to purchase 1,696,000 shares of common stock. To the extent that the warrants are exercised, they may be exercised at prices below the price of our shares of common stock on the public market, resulting in a significant number of shares entering the public market and the dilution of our securities.
  We have applied for listing of our common stock on the Nasdaq Stock Market but we cannot assure you that our securities will meet the initial or the continued listing requirements be listed on Nasdaq Stock Market in the future.
  36
  If the Nasdaq should refuse our application or delist our securities from trading on its exchange once listed, we could face significant material adverse consequences including:
  ●
a limited availability of market quotations for our securities;
  ●
a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules and possibly resulting in a reduced level of trading activity in the secondary trading market for our common stock;
  ●
a limited amount of news and analyst coverage for our company; and
  ●
a decreased ability to issue additional securities or obtain additional financing in the future.
 
 If our shares of common stock become subject to the SEC’s penny stock rules, broker-dealers may experience difficulty in completing customer transactions and trading activity in our securities may be adversely affected.
 
 If at any time we have net tangible assets of $5,000,000 or less and our shares of common stock have a market price per share of less than $5.00, transactions in our common stock may be subject to the “penny stock” rules promulgated under the Securities Exchange Act of 1934, as amended. Under these rules, broker-dealers who recommend such securities to persons other than institutional accredited investors must:
  o
make a special written suitability determination for the purchaser;
  o
receive the purchaser’s written agreement to the transaction prior to sale;
  o
provide the purchaser with risk disclosure documents which identify certain risks associated with investing in “penny stocks” and which describe the market for these “penny stocks” as well as a purchaser’s legal remedies; and
  37
  o
obtain a signed and dated acknowledgment from the purchaser demonstrating that the purchaser has actually received the required risk disclosure document before a transaction in a “penny stock” can be completed.
  If our securities become subject to these rules, broker-dealers may find it difficult to effectuate customer transactions and trading activity in our securities may be adversely affected. As a result, the market price of our securities may be depressed, and you may find it more difficult to sell our securities.
  Foreign exchange risk
  We carry out the majority of our transactions in RMB. Therefore, we have an exposure to foreign exchange fluctuations. A substantial portion of our cash is held in China in interest bearing bank deposits and denominated in RMB.  The RMB is not a freely convertible currency. The PRC government may take actions that could cause future exchange rates to vary significantly from current or historical exchange rates. Fluctuations in exchange rates may adversely affect the value of any dividends we declare. Restrictions on the convertibility of RMB into foreign Currency may limit our ability to make dividends or other payments in U.S. dollars or fund possible business activities outside of China.”
  Item 1B                      Unresolved Staff Comments
  Not Applicable
  Item 2                         Description of Property
  The Company’s corporate headquarters is located at 19950 W. Country Club Drive, Suite 100 in Aventura, Florida. Additionally, the Company also has manufacturing and production sites located in the Peoples Republic of China (“PRC”). All land in the PRC is owned by the government and cannot be sold to any individual or entity. Instead, the government grants or allocates landholders a “land use right.”
  The Chemical and Herbal Extracts group has its production base located at Jikou Industrial Development Zone, Sanyuan District, Sanming City, Fujian which comprises of approximately 64,219.40 square meters which is the manufacturing and production site for all its products.
  38




Houses

Certificate No.


Area Square MetersMain factory

708976



3,483.94Synthetic building

708977



3,136.67Extracting factory

708975



1,827.10Transformer room/Boiler room

To be issued



291.00Fertilizer factory

To be issued



924.71Total






9,663.42Land use rightSanming City Sanyuan District Jikou Farm

Guoyong (2005) 6238



54,319.40Sanming City Sanyuan District Jikou Farm

To be issued



9,900.00Total






64,219.40Land leasing right

Lessor


Area Square MetersSanming City Sanyuan District Jikou Plantation base - Polygonum cuspidatum

Forestry Bureau of Sanming City



1,999,980.00Sanming City Sanyuan District - Sarcandra glaber

Forestry Bureau of Sanming City



5,333,280.00Total






7,333,260.00
 The Organic Product Division has its administrative and manufacturing facility located at Shui Xi Bei Jin Keng, Jianou City, Fujian includes 18,521.40 square meters and is the production site for its products.
  Houses

Certificate No.


Area Square Meters


NotesMain factory

0171337



6,930.34


Pledged for loanDormitory

0171338



1,124.53


Pledged for loanTotal:






8,054.87Land use rightJianou City Shui Xi Bei Jin Hang

Guoyong (2004) No. 089



13,567.00


Pledged for loanJianou City Shui Xi Bei Jin Hang

Guoyong (2004) No. 090



4,954.40


Pledged for loanTotal:






18,521.40Land leasing rights

Certificate No.


Area Square Meters


Annual rentalUS$Yushan Town Linkou Village

Yushan Town Linkou Village



41,526,251.40



492,666.37Yushan Town Jixi Village

Yushan Town Jixi Village



27,683,723.16



328,444.25Total:






69,209,974.56



821,110.61
  39
  Item 3                    Legal Proceedings
  None
  Item 4                    Submission of Matters to a Vote of Security Holders
  None
  Part II
  Item 5                     Market for Common Equity and Related Stockholder Matters
  “Bid” and “asked” offers for the common stock are listed on the NASDAQ OTC-Bulletin Board published by the National Quotation Bureau, Inc. The Company’s common stock began trading in the second quarter of 2009, under the trading symbol, ‘ONEZ”. The symbol was changed to “ONBI” in connection with the Company’s name change in November 2009.
  The following table sets forth the high and low bid prices for the Company’s common stock for the periods indicated as reported by the NASDAQ OTC-Bulletin Board. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions (amounts have been restated to reflect the 1 for 5 reverse split of November 16, 2009).
  Bid PricesQuarter Ended


High


LowFourth Quarter 2009

$
6.50


$
6.03Third Quarter 2009

$
6.00


$
5.10
  We have never declared or paid any cash dividends on our common stock. We currently intend to retain any future earnings for use in the operation and expansion of our business. We do not expect to pay any cash dividends in the foreseeable future but will review this policy as circumstances dictate.
  Item 6                    Selected Financial Data
 
 Not Applicable
  40
  Item 7                     Management’s Discussion and Analysis of financial Condition and Results
 
 Results of Operations and Financial Condition
 
 As a result of the reverse acquisition transaction with Green Planet Bioengineering, Ltd., discussed elsewhere in this report, although legally GPB was acquired by ONE, GPB was considered the accounting acquirer for accounting and financial reporting purposes and therefore the financial reporting of ONE is considered to be a continuation of GPB (“CHE”).  Our two other acquisitions that occurred during the current year, Trade Finance Solutions (“FIN”) and Supreme Discovery Group, Ltd. (“OP”)  were accounted for as purchases.  Accordingly, the information reported in our consolidated financial statements and in the following discussion and analysis of our operating results for the fiscal year ending December 31, 2009 compared to the 2008, include the operating results of GBP consolidated with the operating results of TFS and Supreme from their acquisition dates which are September 2, 2009 and September 27, 2009 respectively.   Our CHE business unit consists of Green Planet and its subsidiaries.  Our OP business unit consists of UGTI, its acquired subsidiary Supreme and its other subsidiaries.  Our FIN business unit consists of TFS and its subsidiaries.  Please refer to Note 8 in the notes to our consolidated financial statements and to the Forms 8K filed for each acquisition, for more detailed discussions of these transactions and note 22 in the notes to our consolidated financial statements included in this 10-K filing for segment information.
 
 Year Ended December 31, 2009 versus December 31, 2008
 
 Operating Revenues
 
 The Company generated $22,073,219 of revenues from operations for the year ended December 31, 2009 as compared to $10,401,530 from operations for the year ended December 31, 2008, an increase of $11,671,689 or 112.2%.  The increase in revenue is primarily the result of our acquisition and organic growth strategies.
 
 Approximately $8.7 million of the increase in revenue is due to the inclusion of revenues from the Company’s recently completed acquisition of TFS (“Financing”) and Supreme (“OP”), which contributed revenues of $2.6 million and $6.1 million respectively for the year ending December 31, 2009.  The revenues from these acquisitions are only included from the date of their respective acquisitions both of which occurred in September 2009.
 
 Approximately $2.9 million of the increase in revenues (a 27.8% increase) is due to the increase in sales resulting from the continued focus on driving customer value through all product lines.  The major contributor to the increase in sales of our CHE business unit were Resveratrol $2.3m and 5-HTP of $2.6m while the Solanesol and organic fertilizer decreased approximately $2.0m from the prior year. In addition, the Company took advantage of a shift in the product and customer mix with a broader product portfolio which contributed to the increase in sales. The Company continues to experience an increase in demand for its broad product portfolio which caters to a higher number of customers.  The following table reflects the sales volume by product for the CHE business unit and the acquisitions of the OP and Financing business units from their acquisition date.
  41
  CHE Business Unit

Sales


Sales2009


2008Solanesol from tobacco


5,591,000



7,671,079Organic fertilizer


2,680,000



2,730,451Resveratrol


2,382,000



-5 - HTP


2,651,000



-Sarcandra Glabra


69,000



-Total


13,373,000



10,401,530OP from acquisition date


6,100,000



-Fin from acquisition date


2,600,000



-Total ONE Bio, Corp


22,073,000



10,401,530
  Cost of Sales
 
 Cost of sales from operations for the year ended December 31, 2009 were $12,089,029 compared to $3,939,610 for the same period in 2008, resulting in an increase of $8,149,419 or 206.9%.  The increase in cost of sales is primarily the result of the acquisition and organic growth strategies.
 
 Approximately $6.5 million of the increase in cost of sales is due to the inclusion of costs from the Company’s recently completed acquisition of Financing and OP business units, which contributed costs of $2.6 million and $3.9 million respectively for the year ending December 31, 2009.  The cost of revenues from these acquisitions are only included from the date of their respective acquisitions both of which occurred in September 2009.
 
 Approximately $1.6 million of the increase in cost (a 40.9% increase) is primarily related to the higher net sales both organically and a shift in product mix towards broader product lines. Increases in raw material costs drove an overall decrease in gross profit as a percentage of revenues.
 
 It is significant to note that the recent acquisitions of the Financing and OP business units have higher costs of sale which result in lower margins but operate with reduced operating expenses when compared to the core business.
 
 Gross Profits
 
 Gross profits from operations for the year ended December 31, 2009 were $9,984,190 compared to $6,461,920 for the same period in 2008, resulting in an increase of $3,522,270 or 54.5%.  The increase in gross profit is primarily the result of the acquisition and organic growth strategies.
 
 Approximately $2.2 million of the increase in gross profit is due to the inclusion of gross profit from the Company’s recently completed acquisitions of the Financing and OP business units, which contributed gross profit of $2.2 million for the year ending December 31, 2009.  The acquisitions were overall accretive however, these acquisitions had the effect of reducing the consolidated gross profit as a percentage of revenues.  This reduction occurs because each acquired entity individually generates a lower gross profit percentage than does the CHE business unit.  The individual gross profit percentages of the CHE, OP and Finance business unit for the year 2009 are 58.2%, 40.1% and 14.3%, respectively.  While the recent acquisitions have lower gross margins, they also operate with lower expenses which positively contributes to the bottom line profit.
  42
  Approximately $1.3 million of the increase in gross profit is primarily a result of the CHE units operating performance.  Gross profits from the CHE operations for the year ended December 31, 2009 were $7,744,274 compared to $6,461,920 for the same period in 2008, resulting in an increase of $1,282,354 or 19.9%.  Correspondingly, gross profit as a percentage of revenues for the year ended December 31, 2009 was 58% compared to 62% for the same period in 2008.  As previously discussed, the decrease is a result of increased raw material costs in its core business and the introduction of new products such as Resveratrol and 5-HTP that contribute lower margins than the traditional core products.  Additionally, we have not yet been able to pass along all of our production cost increases to our customers in the form of price increases.  The following table reflects the gross margin by business unit and product.
 
 CHE Business Unit

Gross Margin


Gross Margin2009


2008Solanesol from tobacco


3,059,050



4,259,511Organic fertilizer


2,097,030



2,202,409Resveratrol


1,052,413



-5 - HTP


1,541,449



-Sarcandra Glabra


16,448



-Total


7,766,390



6,461,920OP from acquisition date


1,846,000



-Fin from acquisition date


371,800



-Total ONE Bio, Corp


9,984,190



6,461,920
 
 Operating Expenses from Continuing Operations
 
 Operating expenses for the year ended December 31, 2009 were $2,525,437 as compared to $1,810,124 for the year ended December 31, 2008. This represented an increase of $715,313 or 40%. Operating expenses are comprised of general and administrative expenditures, research and development and sales and marketing.  The decrease in general and administrative expenditures of $6,738 is the result of the inclusion of the acquisitions offset by aggressive cost containment programs.  Research and development cost were down approximately $65,907 as compared to the prior year. The selling and marketing expense is primary cause of the increase in operating expenditures, which increased $787,958 when compared to the prior year period.  This increase is due mainly to the inclusion of the acquisitions in the financials and the launch of new product lines in the last quarter of the year.
  43
  Operating Profit
 
 Operating profit for the year ended December 31, 2009 was $7,458,753 versus $4,651,796 for the year ended December 31, 2008 an increase of $2,806,957 or 60%.  The CHE business unit contributed $5,941,181 of the increase for a 28% organic growth over the prior year.  The OP and Financing units contributed $2,067,637 and $152,667 since the acquisitions in September 2009.  The Company continues to focus on the execution of its business plan and with the completed acquisitions of the Financing and OP business units, is positioning for continued organic growth among all product lines and subsidiaries.
 
 Financing and Other Income/Expense
 
 Financing expenses includes the interest expense on the Company’s various financial instruments.  For the year ended December 31, 2009 the Company recognized $36,633 in interest income from its various instruments along with other income of $147,236 for a total other income of $183,868.  This income was offset by financing expense from operations of $230,340 resulting in a net loss of ($46,471) in total other expense.
  Earnings Before Income Taxes and Non-controlling Interests
 
 For the year ended December 31, 2009, earnings before income taxes and non-controlling interest was $7,412,282 versus $4,573,218 for an increase of $2,839,064 or 62%.  The increase is the result of organic growth in the CHE business of $1,238,736 (27%) and the contribution of the OP and Financing business units of $2,178,058 and $150,066 offset by the corporate loss of ($727,796).
 
 Provisions for Income Taxes
 
 For the year ended December 31, 2009, provisions for income taxes were $2,027,309 versus $1,222,919 for the year ended December 31, 2008 for an increase of $804,390 or 66%.  The increase is due to the increase in profits in certain jurisdiction that was not offset by the increase in costs that was in different tax jurisdictions. Additionally, the increase is associated with the recent acquisitions completed in September 2009.
 
 Non-controlling Interest
 
 For the year ended December 31, 2009, non-controlling interest was $612,158 versus none the prior year period.  The non-controlling was created by ONE acquiring or having less than 100% interest in Green Planet, TFS and UGTI.
 
 Net Income
 
 Net income for the year ended December 31, 2009 was $4,772,814 from operations as compared to $3,350,299 an increase of $1,442,516 or 42% over the prior year. The increase was attributable to the organic growth in the CHE business unit and the additional acquisitions of the OP and Finance business units.
 
 Liquidity and Capital Resources
 
 As discussed elsewhere in this document, the Company has implemented a two pronged strategy, which is:
  ●
to encourage and support organic expansion in and synergies between the enterprises it acquires, and
  ●
to identify and acquire accretive acquisition targets.
  44
  To be successful, each strategy requires adequate funding from available liquidity resources.  Accordingly, ONE Bio has determined that its organic expansion strategy is first supported through organically generated cash flow and supplemented by available borrowing capacity depending on the requirements of the anticipated expansion project.  Any liquidity organically generated in excess of reinvestment needs will be channeled to the accretive acquisition strategy or retained for future expansion projects.
  We had working capital of $10,283,757 at December 31, 2009.  Our operating and capital requirements in connection with supporting our expanding operations and introducing new products have been and will continue to be significant to us. Although we are profitable for the years ended December 31, 2009 and 2008,  our growth strategy, which is initially focused on accretive acquisitions and organically expanding our product lines will require substantial capital which we may not be able to satisfy solely through our operations.
  Based on our current plans for the next 12 months, we anticipate that additional revenues earned from our expanded product line and broadened distribution channels will be the primary organic source of funds for future operating activities in 2010. However, to fund continued expansion of our product line and extend our reach to broader markets, including international markets, and to acquire additional subsidiaries, we may rely on bank borrowing, if available as well as capital raises.  The comments discussed below in “Cash Flows for the Year Ended December 31, 2009 compared to December 31, 2008” section address our organic cash resources and the relevant trends and drivers associated with those cash flows.
  During the year ended December 31, 2009, the Company funded its acquisition strategy through the issuance of capital stock and debt.  It executed acquisitions at a total value of $33.6 million, which was paid for by the issuance of 8.1 million shares (post split) valued at $27.2 million along with $6.4 million in debt.  The comments discussed below in “Capital Stock and Debt Financing” section address our cash resources which we have utilized to implement our accretive acquisition strategy.
  Financial Position
  Total Assets - Our total assets increased $37,801,017 or 225% to $54,663,851 as of December 31, 2009 from $16,841,811 as of December 31, 2008 primarily as a result of assets acquired through our acquisitions.
  Land Use Rights – Land use rights represent the license or lease to use available land in the PRC.  The Company utilizes a portion of its land use rights for its China offices and production facilities and for the agricultural production of its basic raw materials.  Land use rights decreased $6,735,158 to $1,106,056 at December 31, 2009.  The decrease was the result of the Company negotiating with the PRC government to move part of the existing land use rights to operating leases which secured more favorable rights for products in the portfolio.
  
 Cash and cash equivalents - Include all cash, deposits in banks and other highly liquid investments with initial maturities of three months or less to be cash equivalents.  Our cash and cash equivalents as of December 31, 2009 and 2008, by geography are:
  Location of Cash Deposits


2009


2008PRC

$
3,741,449


$
665,568North America


1,187,51



-Total

$
4,928,968


$
665,568
  Cash and cash equivalents located in the PRC were denominated in Renminbi (“RMB”) and were placed with financial institutions in the PRC. Typically, they are not freely convertible into foreign currencies and the remittance of these funds out of the PRC is subject to exchange control restrictions imposed by the PRC government.   In order to improve the accessibility of our cash on a global scale, we have begun a process of transferring certain assets and processes previously centered in our PRC based VIE entities to our WFOE entities.  PRC regulations permit WFOE’s to remit funds out of the PRC.
  45
  Cash and cash equivalents located in the North America were primarily denominated in Canadian Dollars and were placed in financial institutions in Canada. These deposits are freely convertible into foreign currencies and there are few if any practical exchange control restrictions imposed by the Canadian government.
  Cash– The increase in cash is explained more fully by the following discussion of cash flows.
  Cash Flows for the Fiscal Year Ended December 31, 2009 compared to December 31, 2008
 
 Cash Flows from Operating Activities
  Operating activities provided net cash of $4,269,910 and $1,704,438 during the years ended December 31, 2009 and 2008, respectively.  A major component of net cash provided by operations was net earnings of $5,384,973 and $3,350,299, respectively for the years ended December 31, 2009 and 2008.  In 2009, reported net earnings also included the earnings of its acquired subsidiaries from the point of acquisition of $950,139, leaving $4,434,834 of reportable net earnings from ongoing operations.   This increase in net earnings represents the impact of our various organic growth strategies on net earnings.
  Of the $10,283,756 in net working capital at December 31, 2009, $ 1,186,791 resulted from companies acquired during the year and $9,096,965 resulted from the Company’s individual operational activities.  The increase in working capital was $7,259,890, which is the combined change in working capital and non-cash transactions.  The following are the significant changes in operating activity components:
  ●
a $637,047 increase resulting from depreciation and amortization expenses recorded;
  ●
a $1,402,183 increase in accounts receivable as a result of expanded lines, increased sales and broadened customer base along with the normal timing of shipping activities, $6,258,000 of the increase in accounts receivable resulted from companies acquired during the year;
  ●
a $1,831,567 increase in prepaid and other assets results from $820,000 from the Company along with $1,011,356 generated from the operational activities of the acquired companies after they were acquired.  The Company’s increase in prepaid and other assets was primarily the result of a deposit given to a supplier to procure raw materials;
  ●
a $2,011,964 increase in accounts payable and accrued expenses as a result of expanded lines, increased sales and broadened customer base
  Cash Flows used in Investing Activities
  Our investing activities used $4,718,738 in net cash during the year ended December 31, 2009. Net cash used is composed of the following significant items:
  ●
a $3,932,199 net increase in other assets and associated land use rights which the Company negotiated an exchange of certain land use rights suitable for building construction, which they did not need for land use rights suitable for agricultural purposes which they did need to expand botanical operations.
  46
  ●
a $1,370,836 increase in loans receivable resulted from our TFS acquisition and was generated from operational activities after they were acquired, $2,853,028 of the increase in loans receivable was primarily related to our acquisition of TFS but resulted from the acquisition itself.  TFS is designed to provide accounts receivable and purchase order financing to third parties.  Its loan receivables vary directly with the amount of financing activities under contract;
  ●
invested an additional $479,426 in our proprietary process technology and potential products and
  ●
we purchased $844,615 in additional equipment to expand our capacity.
  ●
Cash balances from acquired companies of $1,908,338
  Cash Flows from Financing Activities
  Our financing activities provided net cash of $4,749,514 during the year ended December 31, 2009.  The net cash provided was composed of the following significant items:
  ●
proceeds from the issue of common stock of $1,754,000.
  ●
proceeds from bank loans of $1,860,561.
  ●
proceeds from notes payable of financing subsidiary of $1,873,567
  ●
offset by repurchase of common stock of $740,000.
  ●
and repayment of PRC government loans of approximately $146,700
  Capital Stock and Debt Financing at December 31, 2009
  
 As previously mentioned in this document, the Company has begun to execute its accretive acquisition strategy. During 2009 the Company completed a reverse recapitalization with Green Planet and two acquisitions (TFS and Supreme) totaling $33.6 million with the issuance of 8.1 million shares of common stock (post split) valued at $27.2 million along with $6.4 million in debt.  These transactions are:
 
 ●
Reverse acquisition (recapitalization) of Green Planet Bioengineering with 4.4 million shares of common stock (post split) valued at $16.4 million and debt of approximately $980,000.
  ●
Acquisition of Trade Finance Solutions with 200,000 shares of common stock (post split) valued at $593,000 and a work out plan with an estimated value of $3,000,000.
  ●
Acquisition of Supreme Discovery Group by United Green Technology, Inc. (subsidiary of ONE Bio) with issuance of 3.5 million shares of common stock (post split) valued at $10.2 million and debt of $2,438,000.
  47
  Foreign Currency Translation
  Two of the Company’s operating entities, Sanming Huajian Bio-Engineering Co., Ltd. and Jianou Lujian Foodstuff, Co.maintain their financial records in the functional currency of the People’s Republic of China, which is the “Renminbi” (RMB), the currency of the primary economic environment in which the entities operate.  Another of the Company’s operating entities, Trade Financial Solutions (“TFS”) maintain its financial records in the functional currency of Canada, the Canadian Dollar (“CAD”).   For financial reporting purposes, the financial statements are prepared using the functional currency RMB or TFS, which have been translated into United States dollars. Assets and liabilities are translated at the exchange rates at the balance sheet dates, revenue and expenses are translated at the average exchange rates and stockholders’ equity is translated at historical exchange rates. Any translation adjustments resulting are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income, a component of stockholders’ equity.
  Exchange Rates


12/31/2009

12/31/2008Fiscal period/year end RMB: US$ exchange rate


6.83

6.85Average period/yearly RMB: US$ exchange rate


6.83

6.94
 
 Significant Estimates
 
 Critical accounting polices include the areas where we have made what we consider to be particularly subjective or complex judgments in making estimates and where these estimates can significantly impact our financial results under different assumptions and conditions.
 
 We prepare our financial statements in conformity with accounting principles generally accepted in the United States of America. As such, we are required to make certain estimates, judgments and assumptions that we believe are reasonable based upon the information available. These estimates, judgments and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the periods presented. Actual results could be different than those estimates
 
 Recent Accounting Pronouncements
 
 In August 2009, the FASB issued ASU 2009-05 which includes amendments to Subtopic 820-10, “Fair Value Measurements and Disclosures—Overall”. The update provides clarification that in circumstances, in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the techniques provided for in this update. The amendments in this ASU clarify that a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability and also clarifies  that both a quoted price in an active market for the identical liability at the measurement date and the quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements. The guidance provided in this ASU is effective for the first reporting period, including interim periods, beginning after issuance.  The adoption of this standard did not have a material impact on the Company’s consolidated financial position and results of operations.
 
 In September 2009, the FASB issued ASU 2009-06, Income Taxes (Topic 740), “Implementation Guidance on Accounting for Uncertainty in Income Taxes and Disclosure Amendments for Nonpublic Entities”, which provides implementation guidance on accounting for uncertainty in income taxes, as well as eliminates certain disclosure requirements for nonpublic entities.  For entities that are currently applying the standards for accounting for uncertainty in income taxes, this update shall be effective for interim and annual periods ending after September 15, 2009. For those entities that have deferred the application of accounting for uncertainty in income taxes in accordance with paragraph 740-10-65-1(e), this update shall be effective upon adoption of those standards. The adoption of this standard is not expected to have an impact on the Company’s consolidated financial position and results of operations since this accounting standard update provides only implementation and disclosure amendments.
  48
  In September 2009, the FASB has published ASU No. 2009-12, “Fair Value Measurements and Disclosures (Topic 820) - Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)”. This ASU amends Subtopic 820-10, “Fair Value Measurements and Disclosures – Overall”, to permit a reporting entity to measure the fair value of certain investments on the basis of the net asset value per share of the investment (or its equivalent). This ASU also requires new disclosures, by major category of investments including the attributes of investments within the scope of this amendment to the Codification. The guidance in this Update is effective for interim and annual periods ending after December 15, 2009. Early application is permitted.The adoption of this standard is not expected to have an impact on the Company’s consolidated financial position and results of operations.
 
 In January 2010, the FASB has published ASU 2010-01 “Equity (Topic 505)- Accounting for Distributions to Shareholders with Components of Stock and Cash—a consensus of the FASB Emerging Issues Task Force,” as codified in ASC 505,. ASU No. 2010-01 clarifies the treatment of certain distributions to shareholders that have both stock and cash components. The stock portion of such distributions is considered a share issuance that is reflected in earnings per share prospectively and is not a stock dividend. The amendments in this Update are effective for interim and annual periods ending on or after December 15, 2009, and should be applied on a retrospective basis.  Early adoption is permitted.  The adoption of this standard did not have an impact on the Company’s (consolidated) financial position and results of operations.
  In January 2010, the FASB has published ASU 2010-02 “Consolidation (Topic 810)- Accounting and Reporting for Decreases in Ownership of a Subsidiary—a Scope Clarification,” as codified in ASC 810, “Consolidation.” ASU No. 2010-02 applies retrospectively to April 1, 2009, our adoption date for ASC 810-10-65-1. This ASU clarifies the applicable scope of ASC 810 for a decrease in ownership in a subsidiary or an exchange of a group of assets that is a business or nonprofit activity. The ASU also requires expanded disclosures. The amendments in this Update are effective for interim and annual periods ending on or after December 15, 2009, and should be applied on a retrospective basis.  .  The adoption of this standard is not expected to have any impact on the Company’s consolidated financial position and results of operations.
 
 In October 2009, the FASB has published ASU 2009-13, “Revenue Recognition (Topic 605)-Multiple Deliverable Revenue Arrangements”, which addresses the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. Specifically, this guidance amends the criteria in Subtopic 605-25, “Revenue Recognition-Multiple-Element Arrangements”, for separating consideration in multiple-deliverable arrangements. This guidance establishes a selling price hierarchy for determining the selling price of a deliverable, which is based on: (a) vendor-specific objective evidence; (b) third-party evidence; or (c) estimates. This guidance also eliminates the residual method of allocation and requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method and also requires expanded disclosures. The guidance in this update is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The adoption of this standard is not expected to have any impact on the Company’s consolidated financial position and results of operations.
 
 49
 In October 2009, the FASB has published ASU 2009-14, “Software (Topic 985)-Certain Revenue Arrangements that Include Software Elements” and changes the accounting model for revenue arrangements that include both tangible products and software elements. Under this guidance, tangible products containing software components and nonsoftware components that function together to deliver the tangible product’s essential functionality are excluded from the software revenue guidance in Subtopic 985-605, “Software-Revenue Recognition”. In addition, hardware components of a tangible product containing software components are always excluded from the software revenue guidance.  The guidance in this ASU is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted.  The adoption of this standard is not expected to have any impact on the Company’s consolidated financial position and results of operations.
  In December 2009, the FASB has published ASU 2010-16 ““Transfers and Servicing (Topic 860): Accounting for Transfers of Financial Assets.” ASU No. 2009-16 is a revision to ASC 860, “Transfers and Servicing,” and amends the guidance on accounting for transfers of financial assets, including securitization transactions, where entities have continued exposure to risks related to transferred financial assets. ASU No. 2009-16 also expands the disclosure requirements for such transactions. This ASU will become effective for us on April 1, 2010..  The adoption of this standard is not expected to have any impact on the Company’s consolidated financial position and results of operations.
  In December 2009, the FASB has published ASU 2010-17 Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities.” ASU No. 2009-17 amends the guidance for consolidation of VIEs primarily related to the determination of the primary beneficiary of the VIE. The adoption of this standard is not expected to have any impact on the Company’s consolidated financial position and results of operations.
  In January 2010, the FASB has published ASU 2010-06 “Fair Value Measurements and Disclosures (Topic 820): - Improving Disclosures about Fair Value Measurements. ASU No. 2010-06 clarifies improve disclosure requirement related to fair value measurements and disclosures – Overall Subtopic (Subtopic 820-10) of the FASB Accounting Standards Codification. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosure about purchase, sales, issuances, and settlement in the roll forward of activity in Level 3 fair value measurements.  Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The amendments in this Update are effective for interim and annual periods ending on or after December 15, 2009, and should be applied on a retrospective basis.  The adoption of this standard is not expected to have a material impact  on the Company’s consolidated financial position and results of operations.
 
 Other ASUs not effective until after December 31, 2009, are not expected to have a significant effect on the Company’s consolidated financial position or results of operations.
  50
  Off-Balance Sheet Arrangements
 
 Our financial statements include consolidated majority owned subsidiaries and consolidated VIE’s of which we are the primary beneficiary.
 
 We do not have any other off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
 
 Critical Accounting Policies
 
 The Company’s consolidated financial statements were prepared in accordance with generally accepted accounting principles, which require management to make subjective decisions, assessments and estimates about the effect of matters that are inherently uncertain. As the number of variables and assumptions affecting the judgment increases, such judgments become even more subjective. While management believes its assumptions are reasonable and appropriate, actual results may be materially different from estimated. Management has identified certain critical accounting policies, described below, that require significant judgment to be exercised by management.
 
 Revenue recognition
 
 Revenue is recognized when the following four revenue criteria are met: persuasive evidence of an arrangement exists, delivery has occurred, the selling price is fixed or determinable, and collectability is reasonably assured.
 
 Revenue is recognized when products are delivered and the customer takes ownership and assumes risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists and the sales price is fixed or determinable.
 
 Accounting for warrants
 
 The fair value of warrants granted is determined using the Black-Scholes model. Under this model, certain assumptions, including the risk-free interest rate, the expected life of the warrants and the estimated fair value of the Company’s common stock and the expected volatility, are required to determine the fair value of the warrants. If different assumptions had been used, the fair value of the warrants would have been different from the amount the Company computed and recorded, which would have resulted in either an increase or decrease in the compensation expense
  Income Taxes
 
 The Company uses the asset and liability method of accounting for income taxes pursuant to ASC Topic 740 formerly SFAS No. 109, “Accounting for Income Taxes”.  Under the asset and liability method of SFAS 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and loss carry-forwards and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
  51
  Impairment of long-lived assets
 
 Long-lived assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.  The Company recognizes impairment of long-lived assets in the event that the net book values of such assets exceed the future undiscounted cash flows attributable to such assets.  During the reporting periods, the Company has not identified any indicators that would require testing for impairment.
 
 Accounts receivable
 
 Accounts receivable is stated at cost, net of allowance for doubtful accounts.   The Company maintains allowances for doubtful accounts for estimated losses resulting from the failure of customers to make required payments.   The Company establishes an allowance for doubtful accounts based on management’s assessment of the collectability of trade and other receivables.  A considerable amount of judgment is required in assessing the amount of the allowance.  The Company considers the historical level of credit losses and applies percentages to aged receivable categories.  The Company makes judgments about the creditworthiness of each customer based on ongoing credit evaluations, and monitors current economic trends that might impact the level of credit losses in the future.  If the financial condition of the customers were to deteriorate, resulting in their inability to make payments, a larger allowance may be required.
  Market Risks
 
 The Company operates in the United States and other countries that have their own currency.  This may cause the Company to experience and be exposed to different market risks such as changes in interest rates and currency deviations.
  Item 8                     Financial Statements
 
 The financial statements and report of an independent registered certified public accounting firm are included herein immediately following the signature page of this report.
 
 Item 9
Changes in and disagreements with Accountants on Accounting and Financial Disclosure
 
 None
  52
  Item 9A                  Controls and Procedures
  Disclosure Control and Procedures
 
 Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in company reports filed or submitted under the Securities Exchange Act of 1934, or the “Exchange Act,” is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.  Disclosure controls and procedures include without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our chief executive officer as appropriate to allow timely decisions regarding disclosure.
 
 The Company’s management with the participation of the Company’s Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the Company’s disclosure controls and procedures as of December 31, 2009.  Based upon this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective and noted a material weakness (see management’s report on internal control over financial reporting), and have implemented corrective actions designed to ensure that material information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and regulations and accumulated and communicated to them as appropriate to allow timely decisions regarding required disclosure.
 
 Management’s Report on Internal Control over Financial Reporting
 
 Management is responsible for establishing and maintaining adequate “internal control over financial reporting” as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.  Internal control over financial reporting refers to the process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:
 
 i.
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
 
 ii.
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
 
 iii.
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
  53
  As of December 31, 2009 and as reported in the Registrant’s Form 10-K filing, management used the framework set forth in the report entitled “Internal Control – Integrated Framework” published by the Committee of Sponsoring Organizations of the Treadway Commission to evaluate the effectiveness of our internal control over financial reporting.  Based on its evaluation, management concluded that at December 31, 2009 there was a material weakness and concluded that the internal control over financial reporting was not effective.  A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
 
 The Company’s material weakness in its internal control over financial reporting related to the monitoring and review of work performed in the preparation of audit and financial statements, footnotes, and financial data provided to the Company’s registered public accounting firm.  Management concluded that our financial disclosure controls and procedures were not effective due to the Company’s limited internal resources and lack of ability to have multiple levels of transaction review.  Through the use of external consultants and the review process, management believes that the financial statements and other information presented herewith are materially correct.  The lack of accounting staff results in a lack of segregation of duties necessary for an effective system of internal control.  The material weakness identified did result in the amendment of a previously reported financial statement for Q3 2009 but not any other related financial disclosure, nor does management believe that it had any effect on the accuracy of the Company’s financial statements for the current reporting period.
 
 In order to mitigate this material weakness to the fullest extent possible, all quarterly and annual financial reports completed by the Chief Financial Officer are reviewed by the Chief Executive Officer for reasonableness and all unexpected results are investigated.  At any time, if it appears that any control can be implemented to continue to mitigate such weakness, it is immediately implemented.
 
 During the most recently completed fiscal quarter, there has been 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.
  54
  Part III
 
 Item 10.
Directors, Executive Officers, Controls Persons, Compliance with section 16 (A) of the Exchange Act
 
 Generally, each of our directors is elected to a term of one year and serves until his or her successor is elected and qualified. The Directors and Officers of the Company are as follows:
  Name

Age

Position

TermMichael Wiengarten

55

Chairman of the Board and Director

August 2009 – PresentMarius Silvasan

37

CEO/Vice Chairman and Director

September 2009 – PresentCris Neely

53

CFO and Director

August 2009 – PresentMin Zhao

45

President China Operations and Director

July 2009 – PresentQingsheng Fen

47

Independent Director

January 2010 – PresentJames Fernandes

39

Independent Director

January 2010 – PresentFrank Klees

59

Independent Director

January 2010 – PresentJan E. Koe

60

Independent Director

January 2010 – PresentJohn Perkins

45

Independent Director

January 2010 – Present
  Michael S. Weingarten Chairman of the Board of Directors is a seasoned executive and entrepreneur with over 30 years of experience.  Mr. Weingarten has extensive experience in mergers and acquisitions, having participated in more than 40 such transactions throughout his career.  Mr. Weingarten has served as Chairman, CEO and President of both publicly traded and privately owned companies.  Mr. Weingarten currently serves as Chairman of our Trade Finance Solutions Inc. subsidiary, and as Chairman of BAM Technology Inc. a computer and technology distribution firm located  in Doral, Florida,  and Keda Consulting Services, Inc., a consulting firm based in Toronto, Ontario, Canada.  From 1999 to 2002, he served as the Chairman and Chief Executive Officer for Commercial Consolidators, Corp., a Toronto, Ontario, Canada, based financing firm. From 1997 to 1999, Mr. Weingarten was the Chairman and Chief Executive Officer for Complete Tele-Management, Corp. a telecom firm located in Toronto,  from 1994 to 1996,  he served as the Chairman and Chief Executive Officer of the Preferred Management, Corp. and Consumer Telephone, Corp. from 1991 to1993.  Mr. Weingarten was the CEO of Network Business Supply, Inc. from 1979 to 1991 and Majestic Paper from 1982 to 1991.
  Marius Silvasan, our Vice-Chairman, Chief Executive Officer, President and Director is a senior executive with over 17 years of experience in business development, mergers and acquisitions, strategic alliances, marketing, sales and finance.  Mr. Silvasan is currently the Chairman of Abacus World, Corp. and Abacus Global Investments, Corp. located in Miami, Florida, which provides business and financial consulting services to business in the Asian Pacific region.  Mr. Silvasan also founded and served as Chairman and Chief Executive officer and director of  TelePlus World, Corp (Nasdaq: TLPE) from 1998 to 2009.  Earlier in his career, Mr. Silvasan also held the positions of President and CEO for Visioneer Calling Card Inc. and Alliance TeleCard Corp. and National Sales Manager for The Home Phone Club.  Mr. Silvasan is a graduate of HEC University in Montreal, and holds an undergraduate degree in business (1995) and an MBA (2003).
 
 Cris Neely, our Chief Financial Officer and Director, joined us in August 2009., Previously, from 2006 to 2009, he was the chief Financial Officer of TelePlus World, Corp. (Nasdaq: TLPE).  From 1999 to 2005, Mr. Neely was the Chief Financial Officer of Siemens Enterprise Networks located in Boca Raton, Florida.  He also held various other executive positions with Siemens Enterprise Networks including Senior Vice President Business Transformation, Director Internal Audit, Director of Finance for Wireless Terminals and Area Financial Manager.  Mr. Neely has also held management positions with ROLM, IBM and Cisco during his career.  After leaving Siemens in 2005, Mr. Neely worked as a consultant for small/medium organizations focusing on Sarbanes-Oxley compliance, revenue recognition and financial/operational business assessments.  Mr. Neely holds a Bachelor of BA – Finance degree from the University of Texas at Arlington, Texas and an MBA from Amberton University, Dallas, Texas.
  55
  Min Zhao, Director, is the founder and President of Sanming Huajian Bio-Engineering Co., Ltd., our CHE operating division.  His is a pioneer in the Bioengineering industry with more than 10 years of experience.  Mr. Zhao has served in senior positions in companies ranging from general manager to chairman.  Mr. Zhao has over 20 years of business experience leading various types of companies since graduating from the Chinese People’s Liberation Army University.
 
 Mr. Fan is a researcher specialized in traditional Chinese Medicine and organic and health food research. Mr. Fan research encompassed research and development on health food particularly in the preparation of healthy products from different natural plants. Mr. Fan has published 8 books and more than 60 papers in periodicals in China and abroad. Mr. Fan, as chief editor, edited one of the first systematic practical series books in China about health food according to new health food registration management measure. For the last 10 years, Mr. Fan has been a Professor at the Education Ministry food science key laboratory at Nanchang University. Mr. Fan has led 8 national and provincial appraised research projects, and presided over more than 200 health food project appraisals by the National Food and Drug Supervising Administration of China. These projects have been put into production all over China and have yielded significant benefits to over 40 companies. Prior to that Mr. Fan worked as a senior visiting researcher at the Pennsylvania State University, studying the anticancer effects of food. Before that Mr. Fan worked in the Central Laboratory at Jiangxi College of Traditional Chinese Medicine where he pursued his master’s degree in immunity pharmacology at the Shanxi College of Traditional Chinese Medicine. Prior to earning his Master’s degree, Mr. Fan graduated from the Jiangxi College of Traditional Chinese Medicine. Mr. Fan’s research and experience in traditional Chinese Medicine and organic and health food are valuable assets to ONE Bio.  Mr. Fan has served as an independent member of our Board of Directors since January 12, 2010.
 
 Mr. Fernandes is an experienced banker, fund manager and accounting professional. Mr. Fernandes is an active private investor in a diversified portfolio of private and publicly traded companies. Among other assignments, Mr. Fernandes is currently the Chairman and President of Solana Capital Solutions, a provider of growth financing for privately held companies in the retail, industrial, and consumer services sectors. Previously, Mr. Fernandes was a senior equity analyst and investment manager with Lazard Asset Management from 2007 to 2009 and Allianz Global Investors from 2005-2007 and Independence Investments LLC from 2002-2005. Prior to Independence Investments, Mr. Fernandes provided financial advisory services for privately held companies at Devland Financial. Mr. Fernandes started his investment management career with TD Asset Management, the investment management division of one of Canada’s largest banks, TD Bank, in 1996. Mr. Fernandes holds a bachelor’s degree in accounting from York University and an MBA from Cornell University’s Johnson Graduate School of Management (2002). He is also a Certified Public Accountant and Chartered Financial Analyst. Mr. Fernandes’ investment banking experience combined with his strong business and finance acumen make him a valuable board member for ONE Bio.   Mr. Fernandes has served as an independent member of our Board of Directors since January 12, 2010.
  56
  Mr. Klees is an accomplished business man, highly regarded and influential politician and active member of the board of several publicly traded corporations. Mr. Klees over the years has developed strong contacts in the Asia-Pacific region. Among several assignments, Mr. Klees currently sits on the boards of a number of energy companies including Roxul Inc., Northern Ethanol Inc., Universal Energy, Tribute Resources, and National Medical Imaging. In 1990, Mr. Klees co-founded the Municipal Gas Corporation where he served as the company’s Executive Vice President with responsibilities for business development and government relations. Mr. Klees began his business career in financial services in 1974 with the Canada Life Assurance Company, headquartered in Toronto, Canada. Mr. Klees further developed a financial services practice which further expanded into contract negotiations and investment advisory services. In June of 1995, Mr. Klees was elected to the Ontario Legislature, where he has served in numerous senior government positions, including Chief Government Whip, Deputy House Leader, Minister of Tourism and Minister of Transportation. He is currently the Official Opposition Critic for the Ministry of Transportation and the Ministry of Public Infrastructure Renewal. In his over 15 year tenure in the government, Mr. Klees developed strong contacts in the Asia-Pacific region that cover multiple fronts.  Mr. Klees continues to provide advisory services to public and private companies, drawing on his extensive business, administration and government experience.  Mr. Klees’ extensive and diverse business and public experience combined to his large network of contacts makes Mr. Klees a valuable asset to ONE Bio.   Mr. Klees has served as an independent member of our Board of Directors since January 12, 2010.
 
 Mr. Koe, Director, is a seasoned investor and principal in several US based private and publicly traded companies. Mr. Koe’s investments cover firms invested in real-estate, bioengineering and construction. Mr. Koe is a principal of Method K Partners, Inc., a commercial real estate firm located in Arlington Heights, Illinois which he founded in 1988. Mr. Koe has 30 years of experience in consulting, asset management, leasing and development working with many national real estate firms including Golub & Co., Draper & Kramer Co., Rauch & Co. and Manufacturers Real Estate, a wholly owned affiliate of Manufactures Life Insurance Company.  Among other assignments Mr. Koe’s currently provides a variety of real estate services to the medical industry including serving as a real estate consultant for prominent Chicago area medical institutions.  Mr. Koe is also a principal in Chicago based, Paving Solutions LLC. Mr. Koe holds a Bachelors degree in Business Administration and Psychology from Luther College in Decorah, Iowa. Mr. Koe’s business acumen and experience in real-estate are valuable assets to ONE Bio as it grows its manufacturing capacity and real-estate foot print to service the worldwide demand for its products.  Mr. Koe has served as an independent member of our Board of Directors since January 12, 2010.
 
 Mr. Perkins is currently Senior director, Northern and Southern Europe for Apple Inc.  Mr. Perkins held other senior management positions including, VP or Business development, Worldwide Television/Video Division, Thomson Consumer Electronics, co-CEO and co-founder of Egencia, an internet start-up that was acquired by Expedia Inc. and director of Marketing and sales, Southern Europe for Dell Inc.  Mr. Perkins was also a consultant for Bain & Company.  Mr. Perkins has a MBA from the Wharton school of business as well as an undergraduate business degree (BBA) from Wilfrid Laurier University.  Mr. Perkins has served as an independent member of our Board of Directors since January 15, 2010.
 
 Director Compensation
  All Directors of the Company will hold office until the next annual meeting of the shareholders, and until their successors have been elected and qualified. Officers of the Company are elected by the Board of Directors and hold office at the pleasure of the Board.
  57
  We enter into an Independent Director Agreement with each of our independent directors.  Effective January 12, 2010 we entered into independent Directors Agreements with each of Mr. Fan, Fernandes, Klees and Koe and on January 15, 2010 with Mr. Perkins.  Pursuant to the Independent Director Agreements, we have agreed to compensate each of our independent director as follows: (a) on the date of the execution of each Independent Director Agreement, as a bonus for agreeing to serve as an independent director, we agreed to issue to each independent director (i) two thousand five hundred (2,500) shares of our common stock and (ii) a five (5) year option to purchase ten thousand (10,000) shares of our common stock at an exercise price equal to the fair market value of a share of the common stock on the date of grant, which vests quarterly at the end of each calendar quarter in equal installments over the 12 month period during the term of the respective Independent Director Agreement; and (b) for services rendered by the respective independent director we granted to each such director (i) one thousand two hundred fifty (1,250) shares of our common stock for each quarter for with the independent Director has served as an independent director, which shares will be issued at the end of each such quarter and (ii) a five (5) year option to purchase five thousand (5,000) shares of our common stock at an exercise price equal to the fair market value of a share of the common stock on the date of grant, which vests quarterly at the end of each calendar quarter in equal installments over the 12 month period during the term of the respective Independent Director Agreement.  We also agreed to reimburse our independent directors for certain expenses they incur in performing their duties as independent directors and to indemnify our independent directors except for matters in which the independent director (i) failed to act in good faith and in a manner he/she reasonably believed to be in or not opposed to the best interests of the Company, (ii) had reasonable cause to believe that his/her conduct was unlawful or (iii) where his/her conduct constituted willful misconduct, fraud or knowing violation of law.
  Involvement in Legal Proceedings
 
 None of our executive officers or directors have been the subject of any order, judgment, or decree of any court of competent jurisdiction, or any regulatory agency permanently or temporarily enjoining, barring suspending or otherwise limiting him from acting as an investment advisor, underwriter, broker or dealer in the securities industry, or as an affiliated person, director or employee of an investment company, bank, savings and loan association, or insurance company, or from engaging in or continuing any conduct or practice in connection with any such activity or in connection with the purchase or sale of any securities.
 
 None of our executive officers or directors has been convicted in any criminal proceeding (excluding traffic violations) or is the subject of a criminal proceeding that is currently pending.
 
 None of our executive officers or directors are the subject of any pending legal proceeding.
 
 Audit Committee
 
 Mr. Fernandes serves and the Chairman and along with Mr. Perkins serve on the Company’s audit committee. The audit committee reports to the Board of Directors regarding the appointment of our independent registered public accounting firm, the scope and results of our annual audit, compliance with our accounting and financial policies and management’s procedures and policies relative to the adequacy of our internal accounting controls.
 
 Compensation Committee
 
 Mr. Koe serves as the Chair of the Company’s Compensation Committee with oversight of the employee stock option plan. The Compensation Committee reports to the Board of Directors regarding officer and director compensation arrangements, employee stock option plans, policies and programs of the Company and administer the Company’s equity-based compensation plans for all employees.
  58
  Corporate Governance and Nominating Committee
  Mr. Klees serves as the Chair of the Company’s corporate governance and nominating committee.  The corporate governance and nominating committee reports to the Board of Directors regarding the compliance with governance initiatives and nomination of Board members and key officer positions.
  Section 16 (A) Beneficial Ownership Reporting Compliance
 
 Section 16 (A) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors, executive officers and persons who own more than 10% of a class of the Company’s equity securities which are registered under the Exchange Act to file with the Securities and Exchange Commission initial reports of ownership and reports of changes of ownership of such registered securities. Such executive officers, directors and greater than 10% beneficial owners are required by Commission regulation to furnish the Company with copies of all Section 16 (A) forms filed by such reporting persons.
 
 To the Company’s knowledge, based solely on a review of the copies of such reports furnished to the Company and on representations that no other reports were required, no person required to file such a report, failed to file during fiscal 2009 and 2008.
 
 Code of Ethics
 
 We adopted a Corporate Code of Business Conduct and Ethics on January 20, 2006. The Code of Ethics is designed to deter wrongdoing and to promote ethical conduct and full, fair, accurate, timely and understandable reports that the Company files or submits to the Securities and Exchange Commission and others. A copy of the Code of Ethics is included as Exhibit 14 to our registration statement on Form SB-2, filed with the SEC on August 15, 2006. A printed copy of the Code of Ethics may also be obtained free of charge by writing to us at our headquarters.
 
 Item 11.                 Executive Compensation
 
 The following is a summary of the compensation paid by ONE Bio, Corp to its Chief Executive Officer’s for the year ended December 31, 2009. There was no compensation paid for these positions for 2008.
  59
  Summary Compensation Table
 Name andPrincipalPosition

FiscalYear

Salary


Bonus


StockAwards


OptionAwards


Non EquityIncentive
Plan


All otherCompensation


TotalMichael Weingarten

2009

$
80,000



-



-



-



-


$
-


$
80,000ChairmanMarius Silvasan

2009

$
80,000



-



-



-



-


$
-


$
80,000CEO and PresidentCris Neely

2009

$
40,000



-



-



-



-



-


$
40,000CFOJohn Corn (1)

2008

$
-



-



-



-



-


$
32,000


$
32,000CEOContracted Services Inc
 
 (1) John Corn resigned effective June 2009 with the acquisition of the company by Abacus Global Investments.
  Stock Option Awards
 
 The Corporation’s 2010 Stock Option Plan (“the “Plan”) provides for the issuance of a maximum of 4,500,000 of the issued and outstanding common shares at an exercise price equal to or greater than the market price of the Corporation’s common shares on the date of the grant to directors, officers, employees and consultants to the Corporation.  The option period for options granted under the Plan is for a maximum period of 5 years.  Options granted may be vested over certain time periods within the option period, which will limit the number of options that may be exercised.  Each stock option is exercisable into one common share of the Corporation at the price specified in the terms of the option.
  In September 2009, the Company issued 2,670,000 options at exercise prices ranging from $3.00 to $3.75 per share with varied vesting schedules.  No options were issued during 2008.   In January 2010 the Company issued 75,000 options at an exercise price of $6.09 per share with a vesting period of 5 years to its non-employee directors.
  60
  The following table sets forth information with respect to stock awards and grants of options to purchase our common stock outstanding to the named executive officers which were granted at the time of employment.
  Name

Options

Vesting
Maturity

Exercise PriceMarius Silvasan


200,000

1-Jan-10
1-Jan-15

$
3.25400,000

1-Jul-10
1-Jul-15

$
3.50400,000

1-Jul-11
1-Jul-16

$
3.75Michael Weingarten


200,000

1-Jan-10
1-Jan-15

$
3.25400,000

1-Jul-10
1-Jul-15

$
3.50400,000

1-Jul-11
1-Jul-16

$
3.75Jeanne Chan


100,000

1-Jan-10
1-Jan-15

$
3.25200,000

1-Jul-10
1-Jul-15

$
3.50200,000

1-Jul-11
1-Jul-16

$
3.75Upon Reaching
3 years afterCris Neely


40,000

Milestone
earned

$
3.00Upon Reaching
3 years after30,000

Milestone
earned

$
3.00Upon Reaching
3 years after20,000

Milestone
earned

$
3.00
 61
 
 Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matter
  Number ofShares ofCommonStock


BeneficiallyBeneficially


OwnedName of Beneficial Owner

Owned(1)


%ONE-V Group LLC(3)


9,276,000



31
%Michael Weingarten


5,677,320



19
%Jeanne Chan(4)


2,046,859



7
%Min Zhao(5)


1,424,028



5
%Jin Rong Tang


1,651,200



5
%Marius Silvasan(3)(4)


356,639



1
%Abacus Global Investment (3)


303,333



1
%Cris Neely


111,920



*Sally Ou               (5)


104,394



*Jan Koe               (6)


122,500



*Quingsheng Fan(6)


2,500



*Frank Klees(6)


2,500



*James Fernandes(6)


82,500



*John Perkins(6)


262,500



*All Directors and Executive


21,424,194



73
%Officers as a group
 
 * Less than one percent
 (1)
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock subject to securities anticipated to be exercisable or convertible at or within 60 days of the date hereof, are deemed outstanding for computing the percentage of the person holding such option or warrant but are not deemed outstanding for computing the percentage of any other person. The indication herein that shares are anticipated to be beneficially owned is not an admission on the part of the listed stockholder that he, she or it is or will be a direct or indirect beneficial owner of those shares.(2)
Based upon 29,171,990 shares of common stock issued and outstanding as of December 31, 2009.
 
 (3)
Beneficially owns 9,276,000 shares indirectly through ONE-V Group, LLC which is wholly owned by Mr. Silvasan and 303,333 shares owned indirectly throughAbacus Global Investments, Corp. of which Mr. Silvasan is the sole director and officer and controlling stockholder(4)
Mr. Silvasan and Ms. Chan are husband and wife.(5)
Mr. Min Zhao, our President, China operations and Director, and Ms. Sally Ou, our Vice President of Business Development, China, are husband and wife.
 
 (6)
Messrs. Koe, Fan, Klees and Fernandes were appointed to the Company’s Board of Directors on January 12, 2010, and Mr. Perkins was appointed to the Company’s Board of Directors on January 15 2010, and we entered into agreements with each of them pursuant to which we agreed to issue to each of them 3,750 of our common stock and options to purchase shares of our common stock of the Company. As of the date of this filing none of the options were vested.  See “Compensation of Directors”.
  62
  Change in Control
 
 The Company does not anticipate any changes in control of the Company
 
 Item 13.                 Certain Relationships and Related Transactions
 
 Certain Relationships and Related Transactions, and Director Independence
 
 Acquisition of One Bio, Corp. (f/k/a Control of Contracted Services, Inc.) by Abacus Global Investments, Corp.
  On June 4, 2009, Belmont Partners entered into a material definitive agreement with Abacus Global Investments, Corp. (“Abacus”) pursuant to which Abacus acquired eighteen million seven hundred fifty thousand (18,750,000) shares of our common stock (representing 92.25% of our issued and outstanding stock) which was owned by Belmont.  This transaction closed on June 9, 2009.  Following this transaction, Abacus controlled approximately 92.25% of our issued and outstanding capital stock.  Also pursuant to this transaction, Joseph Meuse our sole director and officer resigned and Marius Silvasan, a director of Abacus, was appointed to our only director and as our interim President.  Mr. Silvasan is our Vice Chairman and CEO is the CEO and a controlling stockholder of Abacus.
 
 Acquisition of 83% of the Stock of Green Planet Bioengineering Co., Ltd. (G.P.LB.OB) (“G.P.” and/or “Green Planet”).
 
 Pursuant to a share purchase agreement, on July 22, 2009, we acquired from certain shareholders of Green Planet (the “GP Shareholders”) 83% of the issued and outstanding shares of common stock and warrants of Green Planet. Green Planet is the umbrella entity for our CHE business unit. The purchase price consisted of $980,349 in cash (payable in two installments on the first and second anniversaries of the closing) and 2,322,349 shares of our common stock. The GP Shareholders included Min Zhao our director and President of Operations China (who was the founder, president and principal stockholder of Green Planet), Marius Silvasan, our Vice Chairman, CEO and director, Jeanne Chan our Senior Vice President, Sanyan Ou, our Vice President Business Development, China and Abacus Investments Corp. (of which Mr. Silvasan and Ms. Chan are directors). The purchase price was allocated among the GP Shareholders (who are affiliates of ONE Bio) as follows:
 GP Shareholder

Shares


First Cash

Installment


Second Cash

InstallmentMin Zhao


1,424,028


$
285,685


$
342,821Marius Silvasan


260,319


$
44,299


$
53,159Jeanne Chan


83,539


$
13,598


$
16,318Sanyan Ou


26,175


$
4,901


$
5,881
 
 As part of this transaction, the GP Shareholders agreed to a lock-up and leak-out period as further defined in this agreement. Also, upon closing of the transaction, Mr. Min Zhao was appointed as our President of China Operations and one of our directors and Ms. Ou, was appointed as our Vice President of Business Development, China. As a result of this transaction, Green Planet became the umbrella entity of our CHE business unit.
 
 Control of Sanming Huajian Bio-Engineering Co., Ltd.
 
 Through a series of irrevocable agreements, we contractually control, but do not own, Sanming, our affiliated PRC operating entity. Min Zhao, our director, shareholder and President of China Operations, is the President and one of the principal shareholders of Sanming and he together with the other Sanming shareholders signed the Entrusted Management Agreement, the Shareholders’ Voting Proxy Agreement, the Exclusive Purchase Option Agreement and the Share Pledge Agreement with Fujian GP, which they also owned. Thereafter we acquired Fujian GP as part of our acquisition of Green Planet.
  63
 Acquisition of 99.75% of Trade Finance Solutions (“TFS”)
 
 Pursuant to a share purchase agreement, on September 3, 2009, we acquired from certain of the shareholders of TFS (the “TFS Shareholders”) 3,990 shares of common stock of TFS, which represents 99.75% of the issued and outstanding shares of common stock of TFS. TFS is our business unit that provides financing solutions, including purchase order financing, fulfillment services and factoring or invoice discounting for credit worthy customers of eligible goods and services. Pursuant to the share purchase agreement, in exchange for their TFS shares, each TFS Shareholder is entitled to receive shares of our common stock and cash payments on an earn-out basis. The cash component of the purchase price will be calculated on an earn-out basis based on TFS’ monthly EBIT (earnings before interest and taxes) beginning with the Measuring Period (which is defined in the share purchase agreement as months 7 to 18 inclusive after the closing). If during the Measuring Period the aggregate monthly EBIT is equal to or greater than $2,000,000 the total cash portion of the cash portion of the purchase price will be $6,000,000. If the aggregate monthly EBIT does not reach $2,000,000 during the Measuring Period, the cash portion of the purchase price will be calculated as three times the aggregate monthly EBIT achieved during the Measuring Period. The TFS shareholders are also to receive 1 share of our common stock (adjusted for forward or reverse splits following the closing) for every $5.00 in EBIT achieved by TFS during the Measuring Period (“Stock Compensation”) subject to a maximum Stock Compensation of 1,200,000 shares of our common stock. As part of this transaction, the TFS Shareholders agreed to a lock-up and leak-out period as further defined in this agreement. Michael Weingarten, our Chairman, was the Chairman of TFS and one of the selling TFS Shareholders owning 17% of the TFS common stock. Also, in connection with this transaction, Mr. Weingarten was appointed as our Chairman, Peter Cook, the president of TFS, was appointed the president of our TFS financing unit and Steve McDonald, TFS’ Vice President, was appointed vice-president of our TFS financing unit. The remaining 0.25% of TFS is owned by Jim Reddon, who is not an affiliate of ONE Bio.
 
 Acquisition of Supreme Discovery Group Limited (“Supreme”)
 
 Pursuant to a share purchase agreement, on September 27, 2009, we acquired through our subsidiary UGTI, 100% control of Supreme Discovery in consideration for 16.7% of UGTI which was issued to the Supreme Shareholders. Supreme is the 100% owner of the WFOE Fujian United. Fujian United, through a variety of transactions and contractual arrangements controls JLF, a PRC company. In connection with this transaction, we executed and consummated a Share Exchange Agreement (the “Supreme Agreement”) with (i) our then 100% owned subsidiary UGTI, (ii) Supreme Discovery and (iii) Jinrong Tang, Li Li Fang and Tang Shuiyou, the shareholders who owned 100% of Supreme Discovery’s common stock (the “Supreme Shareholders”). In exchange for their shares of Supreme Discovery common stock, we (a) agreed to pay the Supreme Shareholders (i) $557,280 on the first anniversary of the closing; and (ii) $681,120 on the second anniversary of the closing; and (b) issued to them (i) 2,752,000 shares of our common stock; and (ii) 20% of the issued and outstanding shares of common stock of UGTI. As part of this transaction, the Supreme Shareholders agreed to a lock-up and leak-out period as further defined in this agreement. The Supreme Shareholders were also the owners of JLF and the owners of Fujian United. Also, in connection with this transaction, Mr. Jinrong Tang, was appointed our Vice President Business Development, China. On November 3, 2009, we entered into a share purchase agreement with UGTI (the “UGTI Share Purchase Agreement”), which cancelled and replaced the Supreme Agreement we consummated on September 27, 2009. Pursuant to the UGTI Share Purchase Agreement we agreed to purchase from UGTI and UGTI agreed to sell to us 10,000 shares of UGTI common stock in consideration for a cash payment of $1,200,000 which is payable $180,000 on May 10, 2010, and $1,020,000 on November 10, 2010. As a result of the foregoing UGTI transactions, we are the 98% stockholder of UGTI and UGTI became the umbrella entity of our OP business unit. The remaining 2% of UGTI common stock is owned by Mr. Tang, Ms. Fang, Li Gou Li, and Gong Xian Mu.
 
 Control of Jianou Lujian Foodstuff Co.
 
 Through a series of irrevocable agreements we contractually control, but do not own JLF, our contractually controlled PRC operating entity. Jinrong Tang, is the president and one of the principal shareholders of JLF and he (together with the other JLF shareholders) signed the Entrusted Management Agreement, the Shareholders’ Voting Proxy Agreement, the Exclusive Purchase Option Agreement and the Share Pledge Agreement with Fujian United, which they also owned. Thereafter, we acquired Fujian United as part of our acquisition of Supreme Discovery.
 
 Review, Approval or Ratification of Transactions with Related Parties
  The terms of the transactions described above were negotiated on an arm’s length basis.  Pursuant to the terms of each respective transaction, the above named principal of the acquired target company became a related party.  Accordingly, at the time of the approval of each respective transaction by our Board of Directors, that person was not a member of our Board of Directors.   We have adopted a policy that requires the review and approval of related party transactions by our independent directors.
  64
  Director Independence
  On January 12, 2010, our Board of Directors of the Company appointed Messrs. Koe, Fan, Klees and Fernandes and on January 15, 2010, appointed Mr. Perkins (the “Independent Directors”) to serve as independent directors.  Each of Messrs. Fan, Fernandes, Klees, Koe and Perkins are independent as defined by Rule 5605(a)(2) of the Marketplace Rules of The Nasdaq Stock Market, Inc., as well as under Section 303A.02 of the NYSEAmex Listed Company Manual (the “Independent Directors”).
 
 Item 14.                 Exhibits and Reports on Form 8-K
  (a)Exhibits
 31.1           Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
  31.2           Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
  32.1           Certification pursuant to 18 U.S.C. Section 1350
  32.2           Certification pursuant to 18 U.S.C. Section 1350
  (b)                           Reports on form 8-K
  The Company filed the following report on Form 8-K during the quarter for which the report is filed.
  1. Form 8-K filed on July 7, 2009 to announce a change in registrants certifying accountant.
  2. Form 8-K filed on July 27, 2009 announcing acquisition of majority control (83%) of Green Planet Bioengineering Co. Ltd.
  3. Form 8-K filed on August 13, 2009 announcing the appointment of Cris Neely as CFO and Director.  Additionally the company disclosed the change in address and change in the stock symbol to ONEZ.
  4. Form 8-K filed on August 27, 2009 announcing appointment of Michael Weingarten as Chairman.
  5. Form 8-K filed on September 1, 2009 announcing appointment of Marius Silvasan as Vice Chairman, CEO and Director.
  6. Form 8K filed on September 9, 2009 announcing acquisition of 99.75% of Trade Finance Solutions.
  7. Form 8K filed on September 30, 2009 announcing acquisition of majority control (83%) of United Green Technology, Inc.
  65
  8. Form 8K/A filed on October 6, 2009 amending previous filing to include audited financials of Trade Finance Solutions.
  9. Form 8K filed on November 17, 2009 announcing that FINRA had agreed to process the company name change to ONE Bio, Corp. and affect the 5 for 1 reverse stock split previously reported.  Additionally, the company announced filing an application for listing its common stock on the NASDAQ capital markets.
  10. Form 8K filed on December 21, 2009 announcing a revised agreement with UGTI regarding the preferred share purchase agreement.  Additionally, the Company also announced a revision to the preferred share purchase agreement with Green Planet Bioengineering, Co. Limited.
  11. Form 8K filed on January 12, 2010 announcing the appointment of Qingsheng Fan, James Fernandes, Jan Koe and Frank Klees to the Company’s Board of Directors.
  12. Form 8-A filed on January 15, 2010 application for common shares at par value of $0.001 to be registered on NASDAQ stock market.
  13. Form 8K filed on January 19, 2010 announcing initial closing of a financing transaction with UTA Capital and Udi Toledino.  Additionally, the Company announced the addition of John Perkins to the Board of Directors.
  14. Form 8K filed on January 25, 2010 announcing American Stock Transfer as the new transfer agent for the Company.  Additionally, the Company announced its new address in Aventura Flordia.
  15. Form 8K filed on February 17, 2010 announcing its issuance of $3,000,000 of the Company’s secured 8% convertible notes.
  Item 15.                 Principal Accountant Fees and Services
  Audit Fees
  The aggregate fees billed (or expected to be billed) for each of the fiscal years ended December 31, 2009 and 2008 for professional services rendered by the principal accountant for the audit of the Company’s annual financial statements was $110,000 and $50,000 respectively.
 
 The aggregate fees billed for the fiscal year ended December 31, 2009 for professional services rendered by the principal accountant for the reviews of the Company’s quarterly financial statements included in the Company’s Form 10-QSB’s was $12,500.
 
 Audit Related Fees
 None
 
 Tax Fees
 None
 
 All Other Fees
 None
 
 66
 
 SIGNATURES
 
 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized this 27th day of September, 2010.
 ONE Bio, CORP.Date: September 27, 2010
By:
/s/
Marius SilvasanMarius SilvasanChief Executive OfficerDate: September 27, 2010
By:
/s/
Michael WieingartenMichael WeingartenChairman of the BoardDate: September 27, 2010
By:
/s/
Cris NeelyCris NeelyChief Financial OfficerDate: September 27, 2010
By:
/s/
Min ZhaoMin ZhaoDirectorDate: September 27, 2010
By:
/s/
Qingsheng FanQingsheng FanDirectorDate: September 27, 2010
By:
/s/
James FernandesJames FernandesDirectorDate: September 27, 2010
By:
/s/
Frank KleesFrank KleesDirectorDate: September 27, 2010
By:
/s/
Jan KoeJan KoeDirectorDate: September 27, 2010
By:
/s/
John PerkinsJohn PerkinsDirector
  67
  ONE BIO, CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
  CONSOLIDATED
 FINANCIAL STATEMENTS
  FOR THE YEAR ENDED DECEMBER 31, 2009
 
 
  ONE BIO, CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 (Expressed in United States Dollars)
  DECEMBER 31, 2009
  CONTENTS
  PageConsolidated Financial Statements:Consolidated Balance Sheets
1Consolidated Statements of Operations and Comprehensive Income
2Consolidated Statements of Cash Flows
3Consolidated Statement of Shareholders’ Equity
4Notes to the Consolidated Financial Statements
5 – 42
  
  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 To the Board of Directors and Shareholders of
 One Bio, Corp.
 
 We have audited the accompanying consolidated balance sheets of One Bio, Corp. as of December 31, 2009 and 2008 and the related consolidated statements of operations, changes in stockholders' equity, and cash flows for the years then ended.  These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
 
 We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.
 
 In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of One Bio, Corp. as of December 31, 2009 and 2008 and the results of its consolidated operations and its consolidated cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
 
 The Company determined that additional disclosure was required to more accurately present the financial information within the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the years ended December 31, 2009 and 2008.  The additional disclosures are included in Notes 1, 2, 8, 12, 14, 18, 20, 22, 23 and 24 as they relate to other assets, warrants, income taxes, segment reporting, share based payments and options.  The Company also modified its Statement of Stockholders’ Equity and the earnings per share on its Statement of Operations to reflect the retrospective application of the share exchange ratio.  There were no changes to reported earnings as a result of these additional disclosures.
 
 
 /s/ JEWETT, SCHWARTZ, WOLFE & ASSOCIATES
 
 Hollywood, Florida
 March 19, 2010 (except for Notes 14, 18, 20, 22, 23 and 24 which are dated
 May 28, 2010 and Notes 1, 2, 8 and 12, which are dated September 21, 2010)
  One Bio, Corp.Consolidated Balance Sheets(Stated in US dollars)
  As of December 31,2009


2008ASSETSCurrent assetsCash and cash equivalents

$
4,928,968


$
665,568Receivables


12,006,585



4,429,887Inventory


2,976,031



431,569Loans Receivable


4,223,863



-Prepaid expenses


3,382,882



-Total current assets


27,518,329



5,527,024Property, plant and equipment, net


5,557,911



3,144,067Land use rights


1,106,056



7,841,214Goodwill


3,974,908



-Intangible assets


682,058



159,159Deposits for acquisition of intangible assets


161,151



161,370Other Assets


15,633,438



8,977TOTAL ASSETS

$
54,633,851


$
16,841,811LIABILITIES AND SHAREHOLDERS’ EQUITYLIABILITIESCurrent liabilitiesAccounts Payable and accrued liabilities

$
4,331,973


$
2,278,571Loans payable- current portion


12,868,796



161,505Deferred revenues


62,995



63,081Deferred taxes


(29,192
)


-Total current liabilities


17,234,572



2,503,157Loans payable


4,215,855



-Deferred taxes


101,100



-TOTAL LIABILITIES


21,551,527



2,503,157COMMITMENTS AND CONTINGENCIESSHAREHOLDERS’ EQUITYCommon stock : par value $0.001 per shareAuthorized : 150,000,000 sharesIssued and outstanding : 29,171,990


29,172



3,440shares in 2009 and 3,440,000 shares in 2008Additional paid-in capital


16,197,666



5,127,157Statutory reserve


1,740,016



848,550Accumulated other comprehensive income


1,495,835



1,476,159Retained earnings


9,965,874



6,883,348Total shareholders' equity of the company


29,428,563



14,338,654Non-Controlling Interest


3,653,761



-TOTAL EQUITY


33,082,324



14,338,654TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$
54,633,851


$
16,841,811See Notes to Consolidated Financial Statements
  1
  One Bio, Corp.Consolidated Statements of Income and Comprehensive Income(Stated in US dollars)  Year ended December 31,2009


2008Revenues

$
22,073,219


$
10,401,530Cost of sales


12,089,029



3,939,610Gross profits


9,984,190



6,461,920Operating expensesGeneral and administrative expenses


1,110,991



1,117,729Research and development expenses


378,497



444,404Selling and marketing expenses


1,035,949



247,9912,525,437



1,810,124Income from operations


7,458,753



4,651,796Interest and financing expense


(230,340
)


(151,814
)Interest income


36,633



14,141Other income


147,236



59,095Income before income taxes


7,412,282



4,573,218Provision for income taxes


(2,027,309
)


(1,222,919
)Net income


5,384,973



3,350,299Net income attributable tonon-controlling interest


(612,159
)


-Net income attributable toCompany

$
4,772,814


$
3,350,299Earnings per share- Basic

$
0.19


$
0.14- Diluted

$
0.19


$
0.14Weighted average number of shares outstanding :- Basic


25,059,623



23,529,175- Diluted


25,586,368



23,529,175STATEMENT OF COMPREHENSIVE INCOMENet Income

$
5,384,973


$
3,350,299Other comprehensive incomeUnrealized foreign currency gain (loss)


(37,286
)


747,343Comprehensive income


5,347,687



4,097,642Comprehensive income attributable tononcontrolling interest


(612,159
)


-Comprehensive income attributable to the Company

$
4,735,528


$
4,097,642
  See Notes to Consolidated Financial Statements
  2
  One Bio, Corp.
 Consolidated Statements of Cash Flows
 (Stated in US dollars)
  Year ended December 31,2009


2008Cash flows from operating activitiesNet Income

$
5,384,973


$
3,350,299Adjustments to reconcile net income to net cash provided by operating activities :Depreciation


255,555



206,592Amortization of intangible assets


64,056



39,546Amortization of land use rights


62,525



22,971Amortization of lease prepayments


254,911Deferred taxes


112,528



16,206Share-based compensation


50,470



182,239Changes in operating assets and liabilities :Accounts receivable, net


(1,402,183
)


(2,047,083
)Prepaid and other current assets


(1,831,567
)Inventories


(693,236
)


278,001Accounts payables and accrued expenses


2,011,964



(155,609
)Amount due to a related party


-



(34,380
)Income tax payable


-



(139,929
)Deferred revenue


(86
)


(14,415
)Net cash flows provided by operating activities


4,269,910



1,704,438Cash flows from investing activitiesPayments to acquire intangible assets


(479,426
)


(245,055
)Payments to acquire property, plant and equipment


(844,615
)


(1,586
)Payments on loans receivable, net


(1,370,836
)


-Cash acquired from acquisition


1,908,338



-Investment for acquisition of land use rights


(3,932,199
)


-Net cash flows used in investing activities


(4,718,738
)


(246,641
)Cash flows from financing activitiesIssue of common stock


1,754,000



140,000Issue of capital by Sanming Huajian


-



625,290Proceeds of bank loans


1,860,561



288,300Repayments of government loans


(146,700
)


(288,300
)Repurchase and cancellation of common shares


(740,000
)


-Repayments of other loans


-



(1,917,195
)Advances on loans payable


1,873,567



-Advances on notes payable


4,177



-Advances from stockholders and related parties


143,145



-Exercise of warrants


764



-Advances from a stockholder


-



(25,481
)Net cash flows used in financing activities


4,749,514



(1,177,386
)Effect of foreign currency translation on cash and cash equivalents


(37,286
)


52,076Net increase in cash and cash equivalents


4,263,400



332,487Cash and cash equivalents - beginning of year


665,568



333,081Cash and cash equivalents - end of year

$
4,928,968


$
665,568Supplemental disclosures for cash flow information:Cash paid for interest

$
80,474


$
151,382Cash paid for Income taxes

$
1,904,477


$
1,346,641Supplemental disclosure of noncash transactions:TFS net assets acquired

$
3,593,339



-UGTI net assets acquired

$
11,443,822



-Transfer of land use rights

$
5,834,519



-See Notes to Consolidated Financial Statements
  3
  One Bio, Corp.Consolidated Statements of Stockholders’ Equity(Stated in US dollars)Accumulated otherCommon stock


Additional










Total


NonNumber





paid-in


Statutory


comprehensive


Retained


Shareholders'


Controllingof shares


Amount


capital


reserve


income


earnings


Equity


Interest


TotalBalance, January 1, 2008


23,501,460


$
23,501


$
2,220,012


$
334,823


$
691,977


$
2,475,768


$
5,746,081


$
2,737,267


$
8,483,348Recapitalization


19,800



20



675,200



-



-



-



675,220







675,220Issue of common shares for cash


30,800



31



139,860



-



-



-



139,891







139,891Issue of common shares for


























-







-services rendered


11,000



11



12,450



-



-



-



12,461







12,461Issue of warrants for services


-



-



169,739



-



-



-



169,739







169,739Appropriation of statutory reserve


-



-



-



366,638



-



(366,638
)


-







-Unrealized foreign currency gain


-



-



-



-



747,343



-



747,343







747,343Net income


-



-



-



-



-



3,350,299



3,350,299



-



3,350,299Balance, December 31, 2008


23,563,060


$
23,563


$
3,217,261


$
701,461


$
1,439,320


$
5,459,429


$
10,841,034


$
2,737,267


$
13,578,301Issuance of shares for cash upon theexercise of warrants


152,740



153



















153







153Issuance of shares upon theacquisition of assets


3,640,000



3,640



11,303,904



91,589



93,801



1,294,796



12,787,730



304,335



13,092,065Issuance of common shares for cash


1,876,000



1,876



1,752,124















1,754,000







1,754,000Issuance of common shares for services


88,190



88



50,029















50,117







50,117Purchase of common sharesfor cancellation


(148,000
)


(148
)


(125,652
)










(614,200
)


(740,000
)






(740,000
)Appropriation of statutory reserve














946,966







(946,966
)


-







-Unrealized foreign currency gain


















(37,286
)






(37,286
)






(37,286
)Net income






















4,772,815



4,772,815



612,159



5,384,974Balance, December 31, 2009


29,171,990


$
29,172


$
16,197,666


$
1,740,016


$
1,495,835


$
9,965,874


$
29,428,563


$
3,653,761


$
33,082,324See Notes to Consolidated Financial Statements
  4
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
  1.
Organization and Basis of Presentation
  Description of the Business
 One Bio, Corp. (formerly ONE Holdings, Corp), (formerly Contracted Services, Inc.) (“ONE” and/or the “Company”) was incorporated June 30, 2000 in the State of Florida as Contracted Services, Inc. and changed its name to ONE Holdings, Corp. on June 9, 2009 and subsequently on November 16, 2009 changed its name to ONE Bio, Corp.  ONE and its subsidiaries (collectively the “Corporation” or “Company”) are utilizing green processes to produce raw chemicals and herbal extracts, natural supplements and organic products. Corporation is focused on the Asia Pacific region. The Corporation’s key products include widely recognized Solanesol, CoQ10, Resveratrol and 5-HTP, organic fertilizers, and organic bamboo health food and beverages.
  Basis of Presentation
 The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).
  Basis of Consolidation
 On June 9, 2009 Abacus Global Investments Corp. (“Abacus”) acquired 18,750,000 shares or 92.25% of ONE Bio Corp. (“ONE”) (formerly ONE Holdings Corp), (formerly Contracted Services Inc.) from ONE’s then majority shareholder, Belmont Partners LLC (“Belmont”).  Abacus paid Belmont $262,500 in cash.  Belmont also received shares of ONE common stock.  On June 9, 2009, concurrent with the Abacus acquisition, ONE changed its name from Contracted Services Inc to ONE Holdings Corp.  On October 26, 2009 ONE changed its name again from ONE Holdings Corp to ONE Bio Corp. and authorized a 5 for 1 reverse split in its common shares.
  At the time of this acquisition, both Abacus and ONE had nominal operations although ONE was a publicly reporting entity.  Abacus is in the business of acquiring and selling companies and in providing strategic management consulting services.  To our knowledge, Abacus engaged in only the above described transaction in 2009.  ONE (at the time known as Contracted Services Inc.) was a small lawn maintenance company.  Accordingly, neither ONE nor Abacus had any significant operations or assets.
 Abacus entered into the transaction to establish a public vehicle which it could utilize as the core of a business strategy to establish a global bio-engineering group to promote and develop organic products, intermediate chemical extracts and green processes.
 .
 Since both companies, ONE and Abacus, were small closely held companies both prior to and, immediately after the Abacus transaction, and because neither Company had substantial operations or assets, ONE viewed the Abacus transaction as a straight forward private transaction between its shareholder Belmont Partners and Abacus.  We believe that Abacus accounted for the transaction as a purchase and we concur with that determination.  Further, in accordance with the Guidance offered in ASC 805-20-55 we concluded that because, at the time, there was no distinct difference in relative size of assets or operations, and because the legal acquiree did not issue any additional shares that were not already in circulation to effect this transaction, this transaction did not meet the characteristics of a reverse acquisition.  In addition, neither of the companies were merged.
  The Abacus transaction had little or no impact on liquidity or operations other than the minor lawn service operations which were discontinued in anticipation of engaging in the new business strategy discussed above.
  The Abacus transaction had no impact on our capital structure
  5
 ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
 On July 22, 2009 (closing date of the reverse acquisition) ONE Bio Corp. (“ONE”) (formerly ONE Holdings Corp), (formerly Contracted Services Inc.) acquired 11,625,333 outstanding common shares and 4,155,066 of outstanding warrants together representing 78.28% of Green Planet Bio-Engineering Co., LTD (“GPB”) from GPB’s majority shareholders.  The transaction was accomplished through a share exchange agreement wherein in exchange for GPB common stock and warrants, ONE issued 3,442,043  of its common shares along with a note for $980,349.  The total transaction was valued at $12,336,902.
  At the time of this acquisition, ONE had nominal operations whereas GPB was a fully operational enterprise whose assets and operating results far exceeded ONE’s.  Both were publicly traded companies.
 ONE entered into the transaction as its first acquisition in implementing its business strategy to establish a global bio-engineering group to promote and develop organic products, intermediate chemical extracts and green processes.
  Both companies, ONE and GPB were public.  However, ONE’s operations and assets were nominal whereas GPB operations and assets were substantial.  Because GPB’s operations and assets were distinctly different in relative size, ONE viewed the GPB transaction as a reverse acquisition in accordance with the guidance offered in ASC 805-10-55-13.  Accordingly, although ONE was the legal acquirer, because the transaction met the characteristics of a reverse acquisition, GPB was treated as the acquirer for accounting purposes, and its reported equity was recapitalized.  The companies were not merged.
  ONE’s capital structure was changed to reflect the shares it issued to acquire GPB under the share exchange agreement.  GPB’s capital structure was recapitalized to reflect the number of shares outstanding as ONE’s shares.  Par value of common stock was adjusted to reflect ONE’s par with the offset adjusting APIC.  The following chart reflects the calculation of the exchange ratio of the conversion of Green Planet stock into ONE Bio, Corp common stock as a result of the reverse acquisition.
  Exchange Ratio CalculationLegal

Acctg

Pre


RTO


PostONE Bio, Corp

Parent

Acquiree


107,243,159



17,200,000



124,443,159Green Planet

Sub

Acquirer


15,589,367



-



15,589,367Number of common shares outstanding of Green Planet












15,589,367Exchange ratio














110
%Number of shares deemed outstanding before RTO












17,200,000Number of shares outstanding from RTO












124,443,159
  6
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
 During the year ended December 31, 2009, ONE completed two acquisitions: (i) on September 3, 2009, ONE completed the purchase of 99.75% of Trade Finance Solutions Inc; and (ii) on September 27, 2009, ONE completed the acquisition of 100% of Supreme Discovery Group Limited (“Supreme”) through its subsidiary United Green Technology, Inc. (“UGTI”).  Pursuant to this transaction, 20% of UGTI common stock was issued to the Supreme shareholders in consideration for 100% of Supreme.  Also ONE acquired 5,000 shares of UGTI preferred stock which have super voting rights resulting in ONE have an 83.3% interest in UGTI.  November 3, 2009, ONE increased its ownership of UGTI to 98%.  ONE’s consolidated financial statements incorporate the results of these acquisitions, as of the acquisition date.  See “Note 8 - Acquisitions” for the unaudited condensed pro-forma results these acquisitions for the fiscal years ended December 31, 2008 and 2007.
  Included in the Company’s consolidated financial statements are the operational results and financial position of Sanming and JLF. These companies are deemed to be variable interest entities (“VIE”) and were effectively acquired on July 22, 2009 and September 27, 2009 respectively.  As variable interest entities the Company includes their operating results in its consolidated financial results based on the execution of certain contractual relationships which grants to the Company operational control. The Company has operational control which obligates the Company to absorb the risk or loss and enables the Company to receive the majority of the VIE residual returns.
  To comply with PRC laws and regulations that restrict foreign ownership of companies the Company operates its China businesses (Sanming and JLF) through Fujian Green Planet and Fujian United wholly foreign owned enterprises (“WFOE”), which are wholly owned subsidiaries of Green Planet and UGTI.    The WFOE’s have entered into certain irrevocable agreements with Sanming and JLF through which operational and financial control of these businesses reside in the WFOE.  The following are the transactional agreements:
  Entrusted Management Agreement
  Shareholders Voting Proxy Agreement
  Exclusive Purchase Option Agreement
  Share Pledge Agreement
  As a result of these agreements, the Company is considered the primary beneficiary of Sanming and JLF both financially and operationally and accordingly their results are consolidated in the Company’s financial statements.
  ONE’s consolidated financial statements include the accounts of all of its majority owned subsidiaries and the accounts of its variable interest entities, of which ONE is the primary beneficiary.  All intercompany balances and transactions have been eliminated on consolidation.  The functional currency of ONE’s foreign subsidiaries is in the United States Dollar, Canadian Dollar and Chinese Yuan.  Certain prior year balances have been reclassified to conform to current year presentation.
  7
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
  2.
Summary of Significant Accounting Policies
  Cash and Cash Equivalents
 Cash and cash equivalents include all cash, deposits in banks and other highly liquid investments with initial maturities of three months or less to be cash equivalents.  Our cash and cash equivalents as of December 31, 2009 and 2008, by geography are:
 
 Location of Cash Deposits


2009


2008PRC

$
3,741,449


$
665,568North America


1,187,519



-Total

$
4,928,968


$
665,568
  Cash and cash equivalents located in the PRC were denominated in Renminbi (“RMB”) and were placed with financial institutions in the PRC. Typically, they are not freely convertible into foreign currencies and the remittance of these funds out of the PRC is subject to exchange control restrictions imposed by the PRC government..  In order to improve the accessibility of our cash on a global scale, we have begun a process of transferring certain assets and processes previously centered in our PRC based VIE entities to our WFOE entities.  PRC regulations permit WFOE’s to remit funds out of the PRC.
  Cash and cash equivalents located in the North America were primarily denominated in Canadian Dollars and were placed in financial institutions in Canada. These deposits are freely convertible into foreign currencies and there are few if any practical exchange control restrictions imposed by the Canadian government.
  Restricted Cash
 In accordance with ASC Topic 305 formerly Accounting Review Board (“ARB”) No. 43, Chapter 3A “Current Assets and Current Liabilities”, cash which is restricted as to withdrawal is considered a non-current asset.
  Receivables
 Accounts receivable are recognized and carried at original invoiced amount less an allowance for uncollectible accounts, as needed.
  When evaluating the adequacy of its allowance for doubtful accounts, the Company reviews the collectability of accounts receivable, historical write-offs, and changes in sales policies, customer credibility and general economic tendency.
  Loans Receivables
 These assets are non-derivatives financial assets resulting cash advances by the lender to a borrower under financing facility agreements that mature on a specific date or dates, usually less than one year or on demand. Each cash advance is typically secured by the assignment of proceeds of the borrower’s accounts receivables which usually collect within 90 day cycles from the date of the advance. These assets are initially recognized at their acquired cost adjusted for any write-offs, the allowance for loan losses, any deferred fees or costs on originated loans, less any provision for impairment. Due to the short term nature of the individual advances, their carrying value approximates fair value.   Management believes there is no impairment nor were there any write-offs or allowances for loan losses recorded as of December 31, 2009.
  Concentration of Credit
 The Company extends credit to its customers for which no credit insurance is available.  To date the Corporation has not incurred any significant loss due to this activity; however, if such occurrence was to occur, the loss may have an adverse effect on the financial position of the Company.
  8
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
 Capital Leases
 The Company’s policy is to record leases, which transfer substantially all benefits and risks incidental to ownership of property, as acquisitions of property and equipment and to record the incurrence of corresponding obligations as liabilities.  Obligations under capital leases are reduced by rental payments net of imputed interest.
  
 Inventory
 Inventories are stated at the lower of cost and current market value. Costs include the cost of purchase and processing, and other costs. Inventories are stated at cost upon acquisition. The cost of inventories is calculated using the weighted average method. Any excess of the cost over the net realizable value of each item of inventories is recognized as a provision for diminution in the value of inventories.
  Net realizable value is the estimated selling price in the normal course of business less the estimated costs to completion and the estimated expenses and related taxes to make the sale.
  Property, Plant and Equipment
 Property, plant and equipment are stated at cost, less accumulated depreciation. Expenditures for maintenance and repairs, which are not considered improvements and do not extend the useful life of the asset, are expensed as incurred; additions, renewals and betterments are capitalized. When assets are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in the statement of operations in cost of blended products.
  Depreciation is provided to recognize the cost of the asset in the results of operations. The Company calculates depreciation using the straight-line method with estimated useful life as follows:
  Building and structural components
20 yearsComputer equipment and software
5 yearsLeasehold improvements
7 yearsMachinery and equipment
10 yearsOffice equipment and furniture
5 yearsTechnology
5 - 10 yearsVehicles
5 years
  Land Use Rights
  Land use rights represent the purchased rights to use land granted PRC land authorities.  Depending on the PRC land authority, the land use rights can be conveyed in the form of a prepaid lease or a use agreement.  Land use rights are stated at cost less accumulated amortization.  Amortization is provided using the straight line method over the terms of the agreement which range over a term of 30 to 50 years obtained from the relevant PRC land authorities.
  Intangible Assets
 Intangible assets consist mainly of proprietary technology and software. The intangible assets are amortized using straight-line method over the life of the assets.
  Impairment of Long-lived Assets
 In accordance with ASC Topic 360 Formerly Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, certain assets such as property, plant, and equipment, and purchased intangibles, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Intangible assets are tested for impairment annually. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset.  There were no events or changes in circumstances that necessitated a review of impairment of long lived assets as of December 31, 2009 as well as December 31, 2008, respectively.
 
 9
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
  2. Summary of Significant Accounting Policies
  Revenue Recognition
 The Company recognizes revenues in accordance with the guidance in the Securities and Exchange Commission (“SEC”) ASC Topic 605 Formerly Staff Accounting Bulletin (“SAB”) No. 104. Revenue is recognized when persuasive evidence of an arrangement exists, when the selling price is fixed or determinable, when delivery occurs and when collection is probable. The Company recognizes sales revenue when goods are shipped or ownership has transferred.
  Employee Future Benefits
 Pursuant to the relevant laws and regulations in the PRC, the Company participates in various defined contribution retirement plans organized by the respective divisions in municipal and provincial governments for its employees. The Company is required to make contributions to the retirement plans in accordance with the contribution rates and basis as defined by the municipal and provincial governments. The contributions are charged to the respective assets or the income statement on an accrual basis. When employees retire, the respective divisions are responsible for paying their basic retirement benefits. The Company does not have any other obligations in this respect.
  Income Taxes
 The Company accounts for income taxes in accordance with ASC topic 740 formerly Statement of Financial Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes”. Under SFAS No. 109, deferred tax assets and liabilities are determined based on temporary differences between accounting and tax bases of assets and liabilities and net operating loss and credit carry forwards, using enacted tax rates in effect for the year in which the differences are expected to reverse.  Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.  A provision for income tax expense is recognized for income taxes payable for the current period, plus the net changes in deferred tax amounts.  Any interest and penalties are expensed in the year that the Notice of Assessment is received.
  The Company’s practice is to recognize interest and/or penalties to income tax matters in income tax expense.
  Use of Estimates
 The preparation of consolidated financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses for the periods reported.  Actual results could differ from those estimates.  Significant items that require estimates are goodwill, deferred tax assets, stock-based compensation, deferred tax liabilities and the depreciation, and amortization of the Corporation’s assets.
  10
 ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
 2.           Summary of Significant Accounting Policies - continued
  Costs of Raising Equity Capital
 Costs of raising capital include legal, professional fees and agent fees associated with the raising of equity and debt capital.
  Incremental costs incurred in respect of raising capital are charged against equity or debt proceeds raised.  Costs associated with the issuance of share capital are charged to capital stock upon the raising of share capital.  Costs associated with the issuance of debt are part of the carrying value of the debt and charged to operations as non-cash financing expense using the effective interest rate method.
  Foreign Currency Translation
 In accordance with ASC Topic 830 formerly SFAS No.52, “Foreign Currency Translation”, the financial statements of subsidiaries of the Company are measured using local currency (Canadian Dollar and Chinese Yuan) as the functional currency.  Assets and liabilities have been translated at period-end exchange rates and related revenue and expenses have been translated at average exchange rates. Gains and losses resulting from the translation of subsidiaries’ financial statements are included as a separate component of shareholders’ equity accumulated in other comprehensive income.
  Fair Value of Financial Instruments
 The Company estimates the fair value of its financial instruments based on current interest rates, quoted market values or the current price of financial instruments with similar terms. Unless otherwise disclosed herein, the carrying value of financial instruments, especially those with current maturities such as cash and cash equivalents, accounts receivable, and accounts payable and accrued liabilities are considered to approximate their fair values.
  Fair Value Measurements
  In April 2009, the Financial Accounting Standard Board (“FASB”) released ASC 820, Fair Value Measurements and Disclosures,(formerly SFAS No. 157 “Fair Value Measurements”) that defines fair value, establishes a framework for measuring fair value in accordance with U.S. GAAP, and expands disclosures about fair value measurements.
  According to ASC 820, investment measured and reported at fair value are classified and disclosed in one of the following hierarchy:
  Level 1 -       Quoted prices are available in active markets for identical investments as of the reporting date.  The type of investments included in Level 1 included listed equities and listed derivatives.
  Level 2 -       Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies.  Investments that are generally included in this category include corporate bonds and loans, less liquid and restricted equity securities and certain over-the-counter derivatives.
  11
 ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
  2.           Summary of Significant Accounting Policies - continued
  Level 3 -       Pricing inputs are unobservable for the investment and included situations where there is little, if any, market activity for the investment.  The inputs into the determination of fair value require significant management judgment or estimation.
  Stock-Based Compensation Plan
 The Corporation uses the fair value-based method for measurement and cost recognition of employee share-based compensation arrangements under the provisions of ASC Topic 718 formerly FASB, SFAS 123 (Revised 2004) and Share-Based Payment (SFAS 123R), using the modified prospective transitional method.
  Under the modified prospective transitional method, share-based compensation is recognized for awards granted, modified, repurchased or cancelled subsequent to the adoption of SFAS 123R.  In addition, share-based compensation is recognized, subsequent to the adoption of SFAS 123R, for the remaining portion of the vesting period (if any) for outstanding awards granted prior to the date of adoption.
  We measure share-based compensation costs on the grant date, based on the calculated fair value of the award.  We have elected to treat awards with graded vesting as a single award when estimating fair value. Compensation cost is recognized on a straight-line basis over the employee requisite service period, which in our circumstances is the stated vesting period of the award, provided that total compensation cost recognized at least equals the pro rata value of the award that has vested. Compensation cost is initially based on the estimated number of options for which the requisite service is expected to be rendered.  This estimate is adjusted in the period once actual forfeitures are known.
  Earnings Per Share
 Earnings (loss) per common share are reported in accordance with ASC Topic 260 formerly SFAS No. 128, “Earnings Per Share”. SFAS No. 128 requires dual presentation of basic earnings per share (“EPS”) and diluted EPS on the face of all statements of earnings, for all entities with complex capital structures.  Diluted EPS reflects the potential dilution that could occur from common shares issuable through the exercise or conversion of stock options, restricted stock awards, warrants and convertible securities. In certain circumstances, the conversion of these options, warrants and convertible securities are excluded from diluted EPS if the effect of such inclusion would be anti-dilutive.  Fully diluted loss per common share is not provided, when the effect is anti-dilutive.
  When the effect of dilution on loss per share is anti-dilutive, diluted loss per share equals the loss per share.
  12
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
  2. Summary of Significant Accounting Policies
  Comprehensive Income
 The Company follows ASC Topic 220 formerly Statement of Financial Accounting Standards No. 130, “Reporting Comprehensive Income”.  This statement establishes standards for reporting and display of comprehensive income and its components. Comprehensive income is net income plus certain items that are recorded directly to shareholders’ equity bypassing net income.  Other than foreign exchange gains and losses, the Company has no other comprehensive income (loss).
  Recent Changes in Accounting Standards
 Recent accounting pronouncements that the Company has adopted or that will be required to adopt in the future are summarized below.
  In August 2009, the FASB issued ASU 2009-05 which includes amendments to Subtopic 820-10, “Fair Value Measurements and Disclosures—Overall”. The update provides clarification that in circumstances, in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the techniques provided for in this update. The amendments in this ASU clarify that a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability and also clarifies  that both a quoted price in an active market for the identical liability at the measurement date and the quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements. The guidance provided in this ASU is effective for the first reporting period, including interim periods, beginning after issuance.  The adoption of this standard did not have a material impact on the Company’s consolidated financial position and results of operations.
  In September 2009, the FASB issued ASU 2009-06, Income Taxes (Topic 740), “Implementation Guidance on Accounting for Uncertainty in Income Taxes and Disclosure Amendments for Nonpublic Entities”, which provides implementation guidance on accounting for uncertainty in income taxes, as well as eliminates certain disclosure requirements for nonpublic entities.  For entities that are currently applying the standards for accounting for uncertainty in income taxes, this update shall be effective for interim and annual periods ending after September 15, 2009. For those entities that have deferred the application of accounting for uncertainty in income taxes in accordance with paragraph 740-10-65-1(e), this update shall be effective upon adoption of those standards. The adoption of this standard is not expected to have an impact on the Company’s consolidated financial position and results of operations since this accounting standard update provides only implementation and disclosure amendments.
 
 In September 2009, the FASB has published ASU No. 2009-12, “Fair Value Measurements and Disclosures (Topic 820) - Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)”. This ASU amends Subtopic 820-10, “Fair Value Measurements and Disclosures – Overall”, to permit a reporting entity to measure the fair value of certain investments on the basis of the net asset value per share of the investment (or its equivalent). This ASU also requires new disclosures, by major category of investments including the attributes of investments within the scope of this amendment to the Codification. The guidance in this Update is effective for interim and annual periods ending after December 15, 2009. Early application is permitted.The adoption of this standard is not expected to have an impact on the Company’s consolidated financial position and results of operations.
  13
 ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
  2. Summary of Significant Accounting Policies
  In January 2010, the FASB has published ASU 2010-01 “Equity (Topic 505)- Accounting for Distributions to Shareholders with Components of Stock and Cash—a consensus of the FASB Emerging Issues Task Force,” as codified in ASC 505,. ASU No. 2010-01 clarifies the treatment of certain distributions to shareholders that have both stock and cash components. The stock portion of such distributions is considered a share issuance that is reflected in earnings per share prospectively and is not a stock dividend. The amendments in this Update are effective for interim and annual periods ending on or after December 15, 2009, and should be applied on a retrospective basis.  Early adoption is permitted.  The adoption of this standard did not have an impact on the Company’s (consolidated) financial position and results of operations.
 
 In January 2010, the FASB has published ASU 2010-02 “Consolidation (Topic 810)- Accounting and Reporting for Decreases in Ownership of a Subsidiary—a Scope Clarification,” as codified in ASC 810, “Consolidation.” ASU No. 2010-02 applies retrospectively to April 1, 2009, our adoption date for ASC 810-10-65-1 as previously discussed in this financial note. This ASU clarifies the applicable scope of ASC 810 for a decrease in ownership in a subsidiary or an exchange of a group of assets that is a business or nonprofit activity. The ASU also requires expanded disclosures. The amendments in this Update are effective for interim and annual periods ending on or after December 15, 2009, and should be applied on a retrospective basis.  .  The adoption of this standard is not expected to have any impact on the Company’s consolidated financial position and results of operations.
  In October 2009, the FASB has published ASU 2009-13, “Revenue Recognition (Topic 605)-Multiple Deliverable Revenue Arrangements”, which addresses the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. Specifically, this guidance amends the criteria in Subtopic 605-25, “Revenue Recognition-Multiple-Element Arrangements”, for separating consideration in multiple-deliverable arrangements. This guidance establishes a selling price hierarchy for determining the selling price of a deliverable, which is based on: (a) vendor-specific objective evidence; (b) third-party evidence; or (c) estimates. This guidance also eliminates the residual method of allocation and requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method and also requires expanded disclosures. The guidance in this update is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The adoption of this standard did not have an impact on the Company’s consolidated financial position and results of operations.
 
 In October 2009, the FASB has published ASU 2009-14, “Software (Topic 985)-Certain Revenue Arrangements that Include Software Elements” and changes the accounting model for revenue arrangements that include both tangible products and software elements. Under this guidance, tangible products containing software components and non software components that function together to deliver the tangible product’s essential functionality are excluded from the software revenue guidance in Subtopic 985-605, “Software-Revenue Recognition”. In addition, hardware components of a tangible product containing software components are always excluded from the software revenue guidance.  The guidance in this ASU is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted.  The adoption of this standard is not expected to have any impact on the Company’s consolidated financial position and results of operations.
  14
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
 2.
Summary of Significant Accounting Policies - continued
 In December 2009, the FASB has published ASU 2010-16 ““Transfers and Servicing (Topic 860): Accounting for Transfers of Financial Assets.” ASU No. 2009-16 is a revision to ASC 860, “Transfers and Servicing,” and amends the guidance on accounting for transfers of financial assets, including securitization transactions, where entities have continued exposure to risks related to transferred financial assets. ASU No. 2009-16 also expands the disclosure requirements for such transactions. This ASU will become effective for us on April 1, 2010.  The adoption of this standard is not expected to have any impact on the Company’s consolidated financial position and results of operations.
  In December 2009, the FASB has published ASU 2010-17 Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities.” ASU No. 2009-17 amends the guidance for consolidation of VIEs primarily related to the determination of the primary beneficiary of the VIE. The adoption of this standard is not expected to have any impact on the Company’s consolidated financial position and results of operations.
  In January 2010, the FASB has published ASU 2010-06 “Fair Value Measurements and Disclosures (Topic 820): - Improving Disclosures about Fair Value Measurements. ASU No. 2010-06 clarifies improved disclosure requirements related to fair value measurements and disclosures – Overall Subtopic (Subtopic 820-10) of the FASB Accounting Standards Codification. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosure about purchase, sales, issuances, and settlement in the roll forward of activity in Level 3 fair value measurements.  Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The amendments in this Update are effective for interim and annual periods ending on or after December 15, 2009, and should be applied on a retrospective basis.  The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial position and results of operations.
 
 Other ASUs not effective until after December 31, 2009, are not expected to have a significant effect on the Company’s consolidated financial position or results of operations.
 
 3.
Supplemental Cash Flow Information
  For the Year Ended December 31,

2009


2008Supplemental disclosureInterest paid

$
80,474


$
151,382Income taxes paid

$
1,904,477


$
1,346,641Non-cash transactionsTFS Net assets acquired

$
3,593,339



--UGTI net assets acquired

$
11,443,822



--Transfer of land use rights

$
5,834,519



--
 15
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
  4.
Receivables
 
 December 31, 2009


December 31,2008Accounts receivables

$
12,017,848


$
4,429,887Allowances for doubtful accounts


(11,263
)


(- - -
)Accounts receivable, net

$
12,006,585


$
4,429,887
  5.
Inventory
 
 December 31, 2009


December 31,2008Raw material

$
140,759


$
101,280Packaging material


59,954



- - -Work in progress


2,610,245



294,798Finished goods


165,073



35,491$
2,976,031


$
431,569
 
 6.
Property, Plant and Equipment
 
 December 31, 2009


December 31,2008Building and structural components

$
3,580,686


$
1,928,892Machinery


1,806,118



860,407Office equipment and furniture


306,685



97,514Vehicles


109,590



92,8515,803,079



2,979,664Less: accumulated depreciation


(1,130,912
)


(546,505
)4,672,167



2,433,159Construction in progress


885,744



710,908$
5,557,911


$
3,144,067
  During the periods, depreciation is included in:
 
 For the Year Ended December 31,

2009


2008Cost of sales

$
158,517


$
116,137Administrative expenditures


96,942



90,455
 
 16
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
  7.
Intangible Assets
 
 The following is a summary of the Corporation’s intangible assets:
 
 December 31, 2009


December 31,2008Technology

$
871,680


$
286,065Software


5,304



3,183876,984



289,248Less: accumulated amortization


(194,926
)


(130,089
)$
682,058


$
159,159
 
 The estimated aggregate amortization expense for intangible assets for the five succeeding years is $104,748 per year.
  8.
Acquisitions
 
 a) Trade Finance Solutions Inc.
 
 On September 3, 2009, the Corporation acquired from the shareholders of Trade Finance Solutions (“collectively referred to as “TFS Shareholders”) 3,990 shares representing 99.75% of the Shareholders’ common shares owned in Trade Finance Solutions Inc. (“TFS”).  For the TFS shares each TFS Shareholder is to receive shares of the Corporation’s common stock and cash payments as per the share purchase agreement.  The cash component of the purchase price will be calculated on an earn-out basis based on TFS’ monthly EBIT (earnings before interest and taxes) beginning with the measuring period as defined in the share purchase agreement with a not to exceed purchase price of $6,000,000.  In addition to the cash portion of the purchase price, the TFS Shareholders shall receive one common share of the Corporation (adjusted for forward or reverse splits following the closing) for every $5.00 in EBIT achieved during the measuring period (“TFS Stock Compensation”) subject to a maximum TFS Stock Compensation of 1.2 million common shares of Corporation.
  TFS provides creative financing solutions, including purchase order financing, fulfillment services, and factoring or invoice discounting for domestic and international credit worthy customers of eligible goods and services. These TFS options are primarily designed for growing companies experiencing the cash flow demands commonly associated with growth and expansion.  TFS is to act as ONE’s internal financing arm ready, able and dedicated to fund and facilitate the growth of ONE’s core bioengineering business.
 
 The TFS acquisition is being accounted for as a subsidiary of ONE.  The Company has recorded the balance of TFS balance sheet on the date of the acquisition at fair value.  The following is the analysis of the fair value.  The acquisition is being accounted for as a purchase acquisition as required by ASC Topic 805, formerly SFAS 141R.
 
 17
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
  8.           Acquisitions - continued
 
 At Acquisition


Fair Value


Fair ValueAdjustmentAssets AcquiredCash and cash equivalents

$
280,619



-



280,619Receivables


1,164,844



-



1,164,844Loan receivable


2,828,597



-



2,828,597Prepaid expense


112,017



-



112,017Property and equipment


13,277



-



13,277Total assets acquired


4,399,354



-



4,399,354Liabilities AcquiredAccounts payable


204,610



-



204,610Loans payable


4,576,313



-



4,576,313Total liabilities acquired


4,780,923



-



4,780,923Net fair value of assets acquired


(381,569
)


-



(381,569
)Goodwill


3,974,908



-



3,974,908Purchase Price

$
3,593,339



-



3,593,339
  Analysis of Current Assets
 Item


CommentCash

The book value of cash approximates its fair value.Trade receivables

These amounts are comprised of accounts receivables with maturity dates within 90 days.  The interest rate is commensurate with the risk associated with the debtor.  The issue dates of these financial instruments are recent and thus the required yield on new loans to the debtors is relatively the same as that of the current yields on these financial instruments.  Thus, the trade receivable carrying value approximates their fair value, and therefore no adjustment is required.Loan receivables

The maturity dates of these amounts is within the next 6 to 12 months with interest rates at competitive market rates.  The interest rate is commensurate with the risk associated with the debtor.  The issue dates of these financial instruments are recent and thus the required yield on new loans to the debtors is relatively the same as that of the current yields on these financial instruments.  Thus, the loans receivable carrying value approximates their fair value, and therefore no adjustment is required.
  18
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
  Prepaid expenses

A review of the prepaid expenses indicates that they will be expensed within the following 12 months from the date of acquisition, and thus no adjustment is required and the book value approximates the fair value.
  Analysis of Property and Equipment
 Property and equipment consists primarily of office furniture, computer equipment and software with a total book value of $13,277.  An analysis of the book value items which comprise these assets equal the fair value, and therefore no adjustment is required.
 
 Analysis of Current Liabilities
 Item


CommentAccounts payables

These amounts are comprised of trade payables, and accrued liabilities that are non-interest bearing, with a maturity date of less than a few months.  Therefore, the trade payables carrying values approximates their fair values.Demand loan payables

These amounts are due on demand with various interest rates.  The issue dates of these financial instruments are recent and thus the required yield on new loans is relatively the same as that of the current yields on these financial instruments.  Therefore, the demand loans payables carrying value approximate their fair value.
 Based on the above analysis, it is our conclusion that the book values on the balance sheet of TFS approximate their fair value.
 
 The purchase price was settled with:
 
 Estimated cash to be paid between March 2010 and February 2011

$
3,000,000200,000 Common shares to be issued between March 2010 and February 2011


593,339$
3,593,339
  19
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
  8.
Acquisitions - continued
 
 b) Supreme Discovery Group, Limited.
 
 On September 27, 2009, the Corporation executed and consummated a Share Exchange Agreement (the “UGTI Agreement”) by and among (i) our 100% owned subsidiary United Green Technology Inc., a Nevada corporation, (“UGTI”), (ii) Supreme Discovery Group Limited, a British Virgin Islands Company  (“Supreme”) and (iii) the stockholders who owned 100% of  Supreme’s common stock (the “Supreme Shareholders”).
 
 Supreme owns 100% of subsidiary, FuJian United Bamboo Technology Company Ltd., a wholly foreign-owned enterprise (“WFOE”) organized under the laws of the PRC.  WFOE has entered into a series of contractual arrangements (Entrusted Management Agreement, Shareholders’ Voting Proxy Agreement, Exclusive Purchase Option Agreement and Share Pledge Agreement) with Jianou Lujian Foodstuff Co., Ltd (“JLF”), pursuant to which WFOE effectively controls the business, operations and equity and has an irrevocable option to purchase the equity and/or assets of JLF.
 
 Pursuant to the UGTI Agreement, the Supreme Shareholders sold, transferred and assigned 100% of the outstanding common stock of Supreme to UGTI in exchange for (i) cash in the amount of $1,238,400, (ii) 3,440,000 shares of our common stock, and (iii) 20% of the issued and outstanding shares of common stock of UGTI.As part of this transaction, a portion of the share consideration issued to Supreme Shareholders is contingent on UGTI maintaining fiscal year 2010’s EBITDA at least at 2009 levels. To secure this contingency on behalf of the Company, Supreme Shareholders deposited into an Escrow thirty-five percent (35%) of our shares issued to them, pending resolution of the contingency.   In the event UGTI’s EBITDA for fiscal year 2010 is less than UGTI’s EBITDA for fiscal 2009, the number of shares of our stock issued to Supreme Shareholders shall be proportionately reduced as provided for in the Agreement. Supreme Shareholders are also subject to a lockup and leak out period and have one piggy-back registration right as further defined in the Agreement.”
  JLF is an award-winning green-technology enterprise that specializes in the highly profitable production of organic products and fertilizers based on bamboo.  JLF’s products reflect the growing global trend for organic food and health products.  JLF holds lush bamboo land contracts of nearly 6,635 acres in Fujian province, one of China’s largest bamboo growing areas.  JLF has obtained a certification from an independent certification company that it meets the standards embraced by China (HACCP), and the Company’s OP facilities have been certified by a registered certifying body in Japan (JAS) that allows the Company to attach the organic JAS logo to products produced or manufactured in our OP facilities to indicate that they comply with relevant organic JAS standards.  JLF was also the first company in China to formulate a “zero-to-zero” process starting from cultivation to distribution, and taking it further by developing organic fertilizers from bamboo skins to eliminate its waste.  This led to JLF being named the “Forestry Enterprise of the Year” for 2009 in Fujian Province China
 
 20
 
 ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
 
 8.
Acquisitions - continued
  The Supreme acquisition is being accounted for as a subsidiary of ONE.  The Company has recorded the balance of Supreme balance sheet on the date of acquisition at fair value.  The following is an analysis of the fair value.  The acquisition is being accounted for as a purchase acquisition as required by ASC 805 formerly SFAS 141R.
 
 At Acquisition


Fair Value


Fair ValueAdjustmentAssets AcquiredCash and cash equivalents

$
1,627,719



-



1,627,719Receivables


5,141,023



-



5,141,023Inventory


1,851,227



-



1,851,227Prepaid expense


188,809



-



188,809Other Assets


7,929,451



-



7,929,451Total assets acquired


16,738,229



-



16,738,229Liabilities AcquiredBank indebtedness


731,112



-



731,112Accounts payable


806,812



-



806,812Loans payable


1,462,223



-



1,462,223Total liabilities acquired


3,000,147



-



3,000,147Net fair value of assets acquired


13,738,082



-



13,738,082Non-controlling interest


(2,294,260
)


-



(2,294,260
)Purchase Price

$
11,443,822



-



11,443,822
  Analysis of Current Assets
 Item


CommentCash

The book value of cash approximates its fair value.Trade receivables

These amounts are comprised of accounts receivables arising from the sale of the Company’s goods with maturity dates within 90 days and non-interest bearing.  The invoice dates of these financial instruments are recent.  Thus, the trade receivable carrying value approximates their fair value, and therefore no adjustment is required.  21
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
  Inventory

Inventories are stated at the lower of cost and current market value.  Costs include the cost of purchase and processing, and other costs.  The cost of inventories is calculated using the weighted average method.  Any excess of the cost over the net realizable value of each item of inventories is recognized as a provision for diminution in the value of inventories.



Net realizable value is the estimated selling price in the normal course of business less the estimated costs to completion and the estimated expenses and related taxes to make the sale.



As the book value approximates the fair value, no adjustment is required.Prepaid expenses

Prepaid expenses of $188,809 is comprised of land use rights representing the purchased rights to use land granted PRC land authorities.  Such amount is anticipated to be recognized as expenses during the following 12 months.
 Other Assets acquired is composed of the following:
 
 Property, Plant and Equipment, net

$
1,811,507Intangible Assets


107,309Restricted Cash


451,827Deferred Taxes


2,359Prepaid Land Use Rights


5,556,449Total Other Assets

$
7,929,451
 
 Property, Plant and Equipment.
Net Property, Plant and Equipment, Net consists primarily of $1,545,348 in buildings, $560,241 in machinery and equipment, $32,688 in office equipment and $1,011 in vehicles net of accumulated depreciation of $327,870 resulting in a total book value of $1,811,507.  We evaluated the existing physical plant and equipment and although there is a market for such equipment and facilities, that market is highly regulated as to participants and usage or transfer fees.  Accordingly, we judged that the carrying value of these assets approximated their fair value.
 
 Intangible Assets
Intangible assets consist of $106,142 in land use rights and $1,167 in software for a total book value of $107, 309.  An analysis of these items indicates that their carrying value approximates fair value.
 
 Restricted Cash
Cash was deposited as collateral for borrowings from the Rural Credit Cooperatives Cooperation of Jianou City.  The deposit matured on December 26, 2009 and was renewed.  Its carrying value approximates its fair value.
 
 Prepaid Land Use Rights
In 2007, the Company entered into agreements with Jixi Village and Linkou Village, Yushan Town, for the exclusive harvest right to the bamboo shoots and bamboo grown in the plantation bases leased in the two villages.  These harvest rights provides the Company with a replenishing source of its raw materials which the Company then uses to produce bamboo food products, its primary product.  Secondary products include chemical extraction and fertilizers.
  22
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
  Although the asset is key to the Company’s operations, we noted that the asset value represents approximately 8 years of harvest.  In addition to prepaying the last 10 years of the 30 year agreement, an additional $3.3 million prepayment is due May 31, 2010, which is required by the agreement to preserve these harvest rights.  The Company also pays an annual license fee ranging between $650,000 and $750,000.  Further, since the license is a specific use related to harvesting bamboo, the market for such licenses and accordingly trading the associated deposit is limited.  The government also regulates potential harvesters of its bamboo resource.  We searched for but found no comparable transactions on similar plots of land for which a market value could be inferred.  Accordingly, after considering the foregoing we concluded that the carrying value of the asset approximates its fair value.
 
 Analysis of Current Liabilities
 Item


CommentAccounts payables

These amounts are comprised of trade payables, and accrued liabilities that are non-interest bearing, with a maturity date of less than a few months.  Therefore, the trade payables carrying values approximates their fair values.Short term loan

This amount is due April 17, 2010 carrying an interest rate of 6.11%.  Due to the short maturity term of this financial obligation the short term loan’s carrying value approximate its fair value.Bank notes payables

This is amount is due to Rural Credit Cooperatives of Jian Ou City and is payable December 26, 2009.  Due to the short maturity term of this financial obligation the bank notes payable’s carrying value approximate its fair value.Notes payable

Notes payable carrying value approximates their fair value.In addition to the notes payable consideration discussed above, the    purchase price also includes share consideration.  We valued this share consideration based on the following assumptions:Consideration of the VWAP (before the 5:1 split) prior to the acquisition,Acquisition date trading price of $1.20A discount of 50% - 60% to account for lack of market liquidity, blockage and marketability.Further discount for payout timing, which would not occur until after April 30, 2011.Based on the foregoing, we arrived at a $2.9667 ($0.59334 pre-split) value per share or $10,205,422 for the shares issued which were 3,440,000 (17,200,000 pre-split) shares.
 
 23
 
 ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
 Based on the above analysis, it is our conclusion that the book values on the balance sheet of Supreme Discovery Group approximate their fair value.
  The purchase price was settled with:
 
 Notes payable due September 22, 2010

$
557,280Notes payable due September 22, 2011


681,1203,440,000 Common shares


10,205,422$
11,443,822
 
 On November 3, 2009, ONE and UGTI agreed to cancel the issuance of preferred shares to be issued by UGTI to ONE and enter in to an agreement where UGTI is to issue 10,000 common shares from its treasury at a price of $120 per share to ONE, payable in cash for a total investment of $1,200,000.  This transaction increases ONE’s ownership of UGTI to 11,000 common shares of UGTI for an economic interest of 98.21% from 83.3%.
  c) Pro-forma
 
 The following is a condensed pro-forma statement of operations for the 12 month period ended December 31, 2009, had the above transactions taken place at the beginning of the fiscal year presented.
  24
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
  Pro Forma AdjustmentsONE Bio ( a )





Supreme


ConsolidatedYear Ended


TFS ( b )


Discovery ( c )


Proforma (d)12/31/2009


Jan-Aug 2009

Jan-Sept 2009Revenue

$
22,073,219


$
4,589,272


$
12,692,262


$
39,354,753Cost

$
12,089,029


$
3,614,499


$
7,327,979


$
23,031,507Gross Profit

$
9,984,190


$
974,773


$
5,364,283


$
16,323,246Operating Expenses

$
2,525,437


$
1,013,522


$
975,064


$
4,514,023Operating Profit

$
7,458,753


$
(38,749
)

$
4,389,219


$
11,809,223Non-operating expenditures

$
(46,471
)

$
(27,915
)

$
(81,318
)

$
(155,704
)Earnings before taxes

$
7,412,282


$
(66,664
)

$
4,307,901


$
11,653,519Provision for income taxesIncome Tax

$
(2,027,309
)

$
-


$
(1,061,374
)

$
(3,088,683
)Minority Interest

$
(612,159
)

$
-


$
-


$
(612,159
)$
(2,639,468
)

$
-


$
(1,061,374
)

$
(3,700,842
)$
4,772,814


$
(66,664
)

$
3,246,527


$
7,952,677Earnings Per ShareBasic


$
0.29Diluted


$
0.28Weighted Average Shares *Basic



27,772,619Diluted



28,299,364
  Notes to Pro Forma Statement of Operations:
  (a)           This represents the full year historical results for ONE Bio, Corp. for the year ended December 31, 2009. This included the full year financials for Green Planet (accounting acquirer in the reverse acquisition), TFS for September 3 through December 31, 2009 and Supreme Discovery from September 28 through December 31, 2009.
  (b)           This column represents the pro forma adjustment to the historical results reflecting the TFS financial performance from January 1st through September 2, 2009 (the acquisition date) which reflects the effects of the business acquisition assuming the transaction was consummated at the beginning of the fiscal year presented up to the acquisition date.
  (c)           This column represents the pro forma adjustment to the historical results reflecting the Supreme Discovery financial performance from January 1 through September 27 (the acquisition date) which reflects the effects of the business acquisition assuming the transaction was consummated at the beginning of the fiscal year presented up to the acquisition date.
  (d)           The results presented represent the financial performance of ONE Bio, Corp if all acquisitions were reflected for the entire fiscal year (January 1 – December 31, 2009).
  25
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
  The weighted average shares have been adjusted to reflect the reverse capitalization with Green Planet and the acquisitions of Supreme and TFS as if the transactions had occurred for the entire fiscal year 2009.  The adjustment that was made included moving the common shares issued for Supreme (3,440,000) and TFS (200,000) from their acquisition date to the beginning balance for 2009.  This adjustment was made for pro forma purposes only and is reflective of the 1 for 5 stock split of November 16, 2009.
  9.
Goodwill
  Goodwill is recorded when the consideration paid for an acquisition of a business exceeds the fair value of identifiable net tangible and intangible assets.  Goodwill was recorded with the purchase of TFS.
  Balance December 31, 2008

$
---Acquisition of TFS


3,974,908Balance December 31, 2009

$
3,974,908
 
 Future adjustments to prior acquisitions may be required primarily due to adjustments to plans formulated in accordance with the ASC Topic 805.
  10.
Restricted Cash
 
 One of the Company’s operating subsidiaries in the PRC has established a credit facility with a local lender denominated in RMB.  The facility was partially guaranteed by the Rural Credit Cooperatives Cooperation of Jianou City.  The credit facility provides that the Company deposit 50% of the total credit applied into an Escrow Account as further guaranty against default.  As of December 31, 2009, the cash on deposit but restricted as to access was $388,227.
  11.
Loans Payable
 
 The Company has entered into certain financial agreements and loans payable as follows:
 
 Borrowings

December 31, 2009


December 31, 2008CCB

$
1,465,008


$
---Financial Institution


1,860,561



---Rural Cooperative


732,504



146,700Reverse Acquisition of GPB


980,349



---Acquisition of TFS


3,000,000



---Acquisition of Supreme


2,438,400



---Financial Services


6,449,880



---Other


157,950



14,805Total


17,084,652



161,505Loans Payable, current portion


12,868,796



161,505Loans Payable, less current portion

$
4,215,856


$
---
 
 26
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
 The Company has long term loans payable in 2011 and 2012 of $1,715,856 and $2,500,000 respectively.
  CCB - The amount represents borrowings from a financial institution and accrues interest at 6.11%.  The borrowing matures on April 17, 2010.
 
 Financial Institution - The Company has negotiated two loans, both of which carry interest at the annual rate of 7.434%.  The loan of $659,254 is secured by a guarantee company.  The Company has pledged its plant and equipment with carrying value of $750,592 and paid a counter guarantee of $146,451 to the guarantee company.  The guarantee company charges a fee at 1.8% per annum on the loan.  The other loan of $1,201,307 is secured by the Company’s property with carrying value of $1,905,145.
  Rural Cooperative - The amounts represent borrowings from the Rural Credit Cooperatives Cooperation of Jian Ou City.  The borrowing matures on July 8, 2010.
 
 Reverse Acquisition of GPB - The amounts represent notes issued in connection with the acquisition of Green Planet Bioengineering Limited.  There were two notes issued, one for $445,613 which matures on July 22, 2010 and one for $534,736 which matures on July 22, 2011.
 
 Acquisition of TFS - The amount represents the cash consideration due in connection with the acquisition of Trade Finance Services, Inc.  Payment is due based on the achievement of certain milestones.
  Acquisition of Supreme - The amounts represent notes issued in connection with the acquisition of Supreme Discovery Group Limited.  There were four notes issued.   One for $180,000 which matures on May 10, 2010 (paid in full January 2010), one for $557,280 which matures on September 22, 2010, one for $1,020,000 which matures on November 10, 2010,  and one for $681,120 which matures on September 22, 2011.
  Financial Services - Our Financial services business units borrows money from various individual private lenders at prevailing rates, which was 12% for instruments issued in fiscal 2009.  These borrowings are collateralized by first charge on the receivables of Trade Finance and mature in one year.  Interest and principal is due at maturity.
  Other - The amounts are payable to shareholder and related parties.  The amounts are interest-free, unsecured and payable on demand.
  27
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
 12.
Loans Receivable
  These assets are non-derivative financial assets resulting in cash advances by the lender to a borrower under financing facility agreements that mature on a specific date or dates, usually less than one year or on demand.  We make cash advances under these financing facility agreements which are usually secured by the assignment of proceeds of accounts receivable which usually collect within 90 day cycles from the date of the advance.   Management generally, holds the loans until maturity or payoff and values them at their outstanding principal adjusted for any write-offs, the allowance for loan losses, any deferred fees or costs on originated loans. Our loans are collateralized as follows: (a) accounts receivable financing agreements are collateralized by the assignment of the proceeds of trade receivables; (b) purchase order financing agreements are collateralized by the assignment of the assets being purchased or the proceeds of the sale once such assets are sold; further all of our financing agreements are secured by credit insurance.
  Because we purchase credit insurance on all our financing transactions our credit insurance underwriter performs extensive credit evaluations, which we rely on.  Accordingly, because our advances are fully secured by the proceeds of short term accounts receivables or products being delivered to our borrower’s customer’s and all of our advances are further secured by credit insurance, management does not believe that any allowance for doubtful accounts or loan impairment is required.
  Our FIN business unit has been successfully engaged in such financing activities for over 4 years.  During that time we have engaged in transactions with approximately 120 counterparties aggregating $21.5m in lending.
  13.
Land Use Rights
  General
 Land Use Rights are generally associated with the long-term use of land underlying a building or production facility in the PRC.  These rights have characteristics similar to a real estate property deed under western law in that they are:
  1.
paid for at initial acquisition
 2.
have an extended life, up to 50 years
 3.
generally relate to a building or production facility
 4.
may be pledged as collateral for debt
 5.
require no further payments by the owner unless the land usage or building configuration is modified
  They differ from a real estate property deed in that:
  1.
the transfer of use rights is not permanent
 2.
and therefore they are amortized over their life.
  Sanming Hujian Bio-Engineering, Co., Ltd.
 In July 2004, the Company acquired land use rights to construct its main operating and production facilities for $1,122,540.   The land use rights expire in 2054.  The Company recognizes $22,451 in expense annually as amortization of its land use rights. The Company has pledged its land use rights as collateral according to a short term borrowing agreement with the Rural Credit Cooperative.
  28
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
 Jianou Lujian Foodstuff, Co.
 In January 2004, the Company acquired land use rights to construct its main operating and production facilities for $138,645.   The land use rights expire in 2054.   The Company recognizes $2,773,100 of expense annually as amortization of its land use rights.   The Company has pledged its land use rights as collateral according to a loan agreement with the Jianou Sub-Branch of China Construction Bank.
  14.
Other Assets
  Other assets consist of the following:Dec. 31, 2009Land Lease RightsForest Bureau of Sanming City

$
9,502,044Yushan Town (Harvest Rights)


5,567,031Restricted Cash (Note 10)


388,227Other


176,136Total Other Assets

$
15,633,438
 General
 Other assets include items which also represent the right to use land but typically these rights have characteristics similar to real estate leases under western law in that they are:
 1.
paid for through a series of interim payments that permit continued use
 2.
may have long lives, up to 30 years, but are less than Land Use rights
 3.
generally relate to agricultural uses
  Transfer of Land Use Rights to Land Lease Rights
  In July 2009, Green Planet filed an application with the PRC requesting the exchange of the land use right agreement dated December 31, 2006 for the development of the 15.33 hectare of land in the Jindong Bio-industry Development Zone located in Sanming City, for a land lease agreement containing 667 hectare of agricultural land located in Sanyuan District of Sanming City.  The application included a request to transfer the deposit paid in December 2006 for the land use rights be applied to the land lease agreement to be used to net-off against the rent of the land lease agreement.
  The PRC government approved the application for the exchange of land use rights for the new land lease rights in July 2009.  This entitled Green Planet a land lease right of 667 hectares of state owned cultivation bases from the Forestry Bureau of Sanming City.  Additionally, the deposit paid on December 31, 2006 for the land use rights was approved to transfer to the land lease to be used to off-set against the rent of the land lease agreements.   As a result of the PRC’s approval, we transferred $7,656,134 previous recorded land use rights to land lease rights with the Forestry Bureau of Sanming City. The effect of this transfer had no impact on the statement of operations.
  29
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
  Forestry Bureau of Sanming City
 In July 2009 Green Planet entered into 2 land use agreements with the Forestry Bureau of Sanming City to use agricultural land on 2 plantations to grow essential botanical raw materials to support the Company’s operations.  The agreement provides for payments every five years of$9,083,051 and will expire in 2039.   As part of this agreement, the Company was required to prepay the first five year leasing period of $9,502,044 which includes an initial nonrefundable deposit of $1,845,910, which can be offset against the rental of the last year of the last leasing period.  The Company recognized $899,133 of lease expense in its reported operating expenses for 2009 reflecting the amortization of these land use agreements and will recognize $1,799,030 of lease expense in each reporting year thereafter and has the following commitments under the agreements:
  Year

Commitment


Lease Expense2010

$
-


$
1,799,0302011


-



1,799,0302012


-



1,799,0302013


-



1,799,0302014


9,083,051



1,799,030Thereafter


34,486294



43,865,545Total


43,569,345



52,681,695
  Yushan Town (harvest rights)
 In 2007 UGTI entered into 2 land leasing agreements with Jixi Village and Linkou Village, Yushan Town for exclusive harvest rights to the bamboo shoots and bamboo grown in the plantations based in the two villages, which are an essential botanical raw materials used to support the UGTI operations.  The agreement provides for annual payments on an accelerated schedule which is currently at $659,254 and will expire in 2037.   As part of this agreement, UGTI was required to make an initial nonrefundable deposit of $8,790,050, of which it has already deposited $5,567,031 leaving $3,223,018 due on May 31, 2010.  The agreement provides that the deposit can be offset against the rental of the last 10 years of the leasing period.  Accordingly, UGTI recognized $659,254 of lease expense in its reported operating expenses for 2009 reflecting the annual required rent payment for these harvest rights agreements and has the following commitments under the agreements:
  LeaseYear

Commitment


Expense2010


3,882,272


$
659,2542011


659,254



659,2542012


725,179



725,1792013


725,179



725,1792014


725,719



725,179Thereafter


2,377,056



11,167,105Total


9,094,119



14,661,150
  30
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
 15.
Defined Contribution Plan
  Pursuant to the relevant PRC regulations, the Company is required to make contributions at a rate of 29% of the average salaries for the latest fiscal year-end of Fujian Province to a defined contribution retirement plan organized by a state-sponsored social insurance plan in respect of the retirement benefits for the Company’s employees in the PRC.  The only obligation of the Company with respect to retirement plan is to make the required contributions under the plan.  No forfeited contribution is available to reduce the contribution payable in the future years.  The defined contribution plan contributions were charged to the statement of income and comprehensive income.
  The Company contributed $52,679 and $46,383 for the year ended December 31, 2009 and 2008, respectively.
  16.
Related Party Transactions
  Amounts due to the related parties are payable to entities controlled by shareholders, officers or directors of the Corporation as are transactions with these related parties.  These amounts are non-interest bearing, unsecured and not subject to specific terms of repayment unless stated otherwise.
 
 :
  For the years ended December 312009


2008Repurchase of 148,000 common shares

$
740,000


$
- - -Proceeds paid to an entity whose director is a shareholder


4,709



3,460Interest expense


- - -



37,840December 31,

2009


December 31,

2008Demand loans with no interest and recorded within loans payable


157,950



14,805
  The above transactions are in the normal course of operations and have been measured at the exchange amount which is the amount of consideration established and agreed to by the related parties.
  31
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
  17.
Capital Stock
  The Corporation is authorized to issue 150,000,000 common shares with a par value of $0.001.  Each common share entitles the holder to one vote.
  During the year ending December 31, 2009, the Corporation had the following capital transactions:
 1.
issued 600,000 units for gross proceeds of $450,000, where each unit is comprised of one common share and one share purchase warrant.  Each share purchase warrant entitles the holder to purchase one additional common share at a price of $5.00 prior to July 31, 2012;
 2.
issued 3,442,043 common shares for the acquisition of 78.28% of GPB’s common shares, in addition 1,004,808 common shares for 5,000,000 GPB Preferred shares which are eliminated upon consolidation;
 3.
reserved 200,000 common shares for the acquisition of 99.75% of TFS that are to be issued at a future date based upon the profitability of TFS;
 4.
issued 760,000 units for gross proceeds of $570,000, where each unit is comprised of one common share and one share purchase warrant.  Each share purchase warrant entitles the holder to purchase one additional common share at a price of $5.00 prior to July 31, 2012;
 5.
issued 3,440,000 common shares for the acquisition of 83.3% of Supreme; and
 6.
issued 4,447 common shares for services, with a value of $13,340.
 7.
issued 516,000 shares of common stock for gross proceeds of $760,000, and 336,000 warrants.
 8.
issued 8,000 common shares for finder fees valued at $24,000
 9.
issued 428,500 common shares to management and employees valued at $13,130.
 10.
all shares reported reflect the 1 for 5 split of the common stock which occurred on November 16, 2009.
  In addition, the Corporation  repurchased 148,000 common shares at a total cost of $740,000, which it has subsequently cancelled.  As previously stated above, the company on executed a 1 for 5 stock split effective November 16, 2009.  All shares reported in this filing are reflective of the 1 for 5 split and the following table reflects the beginning and ending balances for the fiscal years presented and the effects of the 1 for 5 split of the common stock.
  Financial Statement
 Pre Split


Post SplitDate

Shares


Shares1/1/2008


16,866,060



3,373,21212/31/2008


17,200,000



3,440,00012/31/2009


145,859,950



29,171,990
  32
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
  18.
Warrants
 
 The Company does not have a formal plan in place for the issuance of stock warrants. However, at times, the Company will issue warrants to non-employees or in connection with financing transactions. The exercise price, vesting period, and term of these warrants is determined by the Company’s Board of Directors at the time of issuance. A summary of warrants at December 31, 2009 and activity during the year then ended is presented below:
  Shares


Weighted- Average Exercise

Price


Weighted- Average Remaining Contractual Term (in years)


Aggregate Intrinsic

ValueOutstanding at January 1, 2009


—


$
0.00Issued


1,696,000



5.00






$
1,746,880Exercised


—



—Forfeited


—



—Outstanding at December 31, 2009


1,696,000


$
5.00



3.0


$
1,746,880Exercisable at December 31, 2009


—


$
0.00



3.0


$
—
  The following information applies to warrants outstanding and exercisable at December 31, 2009:
  Warrants Outstanding



Warrants ExercisableShares



Weighted-

Average

Remaining

Contractual

Term


Weighted-

Average

Exercise

Price



Shares



Weighted-

Average

Exercise

Price$
0.00 – $1.00



—



—


$
—



—


$
—$
1.01 – $2.00



—



—


$
—



—


$
—$
2.01 – $3.00



—



—


$
—



—


$
—$
3.01 – $4.00



—



—


$
—



—


$
—$
4.01 – $5.00



1,696,000



3


$
5.00



—


$
—1,696,000



3


$
5.00



—


$
—
  33
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
 
 During the year ended December 31, 2009, the Company issued the following warrants:
  Investor Units–
 For the year ended December 31, 2009, the Company issued warrants to purchase 1,696,000 shares in connection with the sale of its equity units.  Each equity unit consisted of stock and warrants.  Proceeds received from the sale of equity units were allocated between our common shares and warrants based on their relative fair value.  The fair value of the warrants was determined by the Black-Scholes valuation model, which resulted in $94,297 of the proceeds allocated to the warrants. The warrants were subject to certain “lock-up and leak out” provisions and expire on the third anniversary of the issuance date.
  The Company uses the Black-Scholes valuation model to determine the fair value of warrants on the date of grant. This model derives the fair value of options based on certain assumptions related to the expected stock price volatility, expected life, risk-free interest rates and dividend yield.  For the period through December 31, 2009 the Company’s expected volatility is based on actual fluctuations in its share prices. The risk-free interest rate assumption is based upon the U.S. Treasury yield curve appropriate for the term of the expected life of the options.
  For the year ended December 31, 2009, the fair value of each warrant grant was estimated on the date of grant using the following weighted-average assumptions.
  For the year ended

December 31,2009

2008Expected dividend yield


00.0
%


N/AExpected price volatility


30.0
%Risk free interest rate


1.35
%Expected life of options in years


3.9
  34
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
  19.
Statutory Reserve
  The Corporation’s income is distributable to its shareholders after transfer to statutory reserves as required under relevant PRC laws and regulations and the Corporation’s articles of association.  As stipulated by the relevant laws and regulations in the PRC, the Corporation is required to maintain a statutory surplus reserve fund which is non-distributable.  Appropriation to such reserves is made out of net profit after taxation of the statutory financial statements of the Corporation as a proportion of income after taxation of 10%.
  The statutory surplus reserve fund can be used to make up prior year losses, if any, and can be applied in conversion into capital by means of capitalization issue.  The appropriation may cease to apply if the balance of the fund has reached 50% of the relevant entity’s registered capital.
  20.
Taxation
  United States
  The Company is subject to the United States of America Tax law at tax rate of 40.7%.  Noprovision for the US federal income taxes has been made as the Company had no taxable income in this jurisdiction for the reporting periods. The Company has not provided deferred taxes on undistributed earnings of its non-U.S. subsidiaries or VIE as of December 31, 2009 as it was the Company’s current policy to reinvest these earnings in non-U.S. operations.
  BVI
  Elevated Throne was incorporated in the BVI and, under the current laws of the BVI, is not subject to income taxes.
  PRC
  The PRC’s legislative body, the National People’s Congress, adopted the unified Corporate Income Tax Law on March 16, 2007. This new tax law replaces the existing separate income tax laws for domestic enterprises and foreign-invested enterprises and became effective on January 1, 2008.  Under the new tax law, a unified income tax rate is set at 25% for both domestic enterprises and foreign-invested enterprises.
  Accordingly, Fujian Green Planet and Sanming Huajian, both of which are established in the PRC, are subject to PRC enterprise income tax at the rate of 25% on their assessable profits during the twelvemonth periods endedDecember 31, 2009 and 2008.
  The components of the provision for income taxes are:-
  Year ended December 31,2009



2008Current taxes - PRC

$
1,980,394


$
1,206,713Deferred taxes


46,915



16,206$
2,027,309


$
1,222,919
  35
 
 ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
  Deferred tax assets as of December 31, 2009 and 2008 composed of the following:
  As of December 31,The PRC

2009


2008Current deferred tax assets :Decelerated amortization of land use rights

$
-


$
2,608Decelerated amortization of intangible assets


4,395



2,200Provision of expenses


134,673



26,835Changes in capitalized rental expenses


(109,876
)


-$
29,192


$
31,643Non-current deferred tax assets :Accelerated amortization of intangible assets

$
18,679


$
(4,951
)Provision of expenses


28,802



13,928$
47,481


$
8,977Current deferred tax liabilitiesRental expenses capitalized in inventory

$
(148,581
)

$
-
 
  21.
Contingencies
  From time to time, the Corporation may be exposed to claims and legal actions in the normal course of business, some of which may be initiated by the Corporation.  As of December 31, 2009, no material claims were outstanding.
  22.
Segmented Information and Major Customers
  The Corporation uses the “management approach” in determining reportable operating segments.  The management approach considers the internal organization and reporting used by the Corporation’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Corporation’s reportable segments.  Accordingly, in accordance with ASC Topic 280-10 “Segment Reporting”, the Corporation’s operations comprises of three reporting segments engaged in herbal and chemical extracts, organic products and financing within Canada, China and the United States.
  36
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
 
 The following represents the segmented information based on geographical distribution as at December 31:
  For the year ended

December 31, 2009

Asia


North

America(1)


TotalSales

$
19,402,733


$
2,670,485


$
22,073,218Cost of sales


9,479,144



2,609,885



12,089,029Gross profit


9,923,589



60,600



9,984,189Operating expenses


1,914,771



(92,067
)


1,822,704Operating profit


8,008,818



152,667



8,161,485Corporate expenses, including amortization)










702,732Interest/other expense










46,471Income before income taxes and non-controlling interest










7,412,282Assets at December 31, 2009

$
41,650,473


$
12,983,378


$
54,633,851
  (1) North America segment includes $1,285,316 of interest income classified as Sales and $648,865 of interest expense classified as Cost of sales.
  For the year ended

December 31, 2008

Asia


North America


TotalSales

$
10,401,530


$
- - -


$
10,401,530Cost of sales


3,939,610



- - -



3,939,610Gross profit


6,461,920



- - -



6,461,920Operating expenses


1,810,124



- - -



1,810,124Operating profit


4,651,796



- - -



4,651,796Corporate expenses, including amortization)










-Interest/other expense










78,578Income before income taxes and non-controlling interest










4,573,218Assets at December 31, 2008

$
16,841,811


$
-


$
16,841,811
  We currently operated three business units as follows:
 CHE – Our CHE business unit produces chemical and herbal extracts for use in a wide range of health and wellness products.  This business unit is headed by Green Planet.
  OP – Our OP business unit manufactures a variety of consumer and commercial ues health and energy products, organic food products and fertilizers primarily based on bamboo.  This business unit is headed by UGTI and its acquired subsidiary Supreme.
  37
 ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
 FIN – Our Fin business unit provides creative financing solutions including purchase order financing, factoring and fulfillment services.  This business unit is headed by TFS.
  The following represents the segmented information based on operating segments as of December 31, 2009;
  For the year ended

December 31, 2009


Chemical
and Herbal
Extracts
(CHE)



Organic
Products
(OP)



Financing (1)
(FIN)



Corporate



TotalSales

$
13,297,616


$
6,105,117


$
2,670,485


$
- - -


$
22,073,218Cost of sales


5,553,342



3,925,802



2,609,885



- - -



12,089,029Gross profit


7,744,274



2,179,315



60,600



- - -



9,984,189Operating expenses


1,803,093



111,678



(92,067
)


- - -



1,822,704Operating profit


5,941,181



2,067,637



152,667



- - -



8,161,485
 Corporate expenses, (including amortization)


















702,732Interest/other expense


















46,471Income before income taxes and non-controlling interest


















7,412,282Assets at December 31, 2009

$
34,103,266


$
7,547,207


$
7,748,681


$
5,234,697


$
54,633,851
  (1)
Financing segment includes $1,285,316 of interest income classified as Sales; and $648,865 of interest expense classified as Cost of sales.
  For the year ended

December 31, 2008


Chemical
and Herbal
Extracts
(CHE)



Organic
Products
(OP)



Financing
(FIN)



Corporate



TotalSales

$
10,401,530


$
- - -


$
- - -


$
- - -


$
10,401,530Cost of sales


3,939,610



- - -



- - -



- - -



3,939,610Gross profit


6,461,920



- - -



- - -



- - -



6,461,920Operating expenses


1,810,124



- - -



- - -



- - -



1,810,124Operating profit


4,651,796



- - -



- - -



- - -



4,651,796
 Corporate expenses, (including amortization)


















-Interest/other expense


















78,578Income before income taxes and non-controlling interest


















4,573,218Assets at December 31, 2008

$
16,841,811


$
-


$
-


$
-


$
16,841,811
  38
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
 During the year ended December 31, 2009, the Company had no sales to any customer that exceeded 10% of total revenues.
 
 23.
Subsequent Events
 
 Effective January 12, 2010 the Company announced that Quingsheng Fan, James Fernandes, Jan Koe and Frank Klees were appointed to the Board of Directors.
 
 On January 13, 2010, ONE Bio, Corp. (the “Company”) held an initial closing (“Initial Closing”) of a financing transaction entered into with certain investors including UTA Capital LLC and Udi Toledano (collectively the “Investors” and together with the Company, the “Parties”). In Connection with the financing transaction, the Parties executed a Securities Purchase and Registration Rights Agreement (“SPA”).  Pursuant to the SPA upon the occurrence of certain events, the Company agreed to issue and the Investors agreed to purchase Three Million Dollars ($3,000,000) of the Company’s secured 8% convertible notes (“Notes”).  The Notes bear interest at a rate of 8% per annum, mature nine (9) months from the Initial Closing and provide the Investors with certain registration rights.  The principal amount of and all accrued interest under the Notes may be convertible, at the option of the Investors, at any time or from time to time, in whole or in part, into Company Common Stock (“Conversion Shares”) at the then effective Conversion Price.  The initial Conversion Price shall be the lesser of (a) $6.077 per share, or (b) 65% of the price per share offered by the Company in any publicly offered Common Stock or other equity-linked financing by the Company that is closed within nine months of the Initial Closing (each, a “New Financing”).  Pursuant to the SPA, the Company also issued to the Investors five (5) year warrants (“Warrants”) to purchase an aggregate of 493,664 shares of the Company’s common stock at an exercise price of $6.077 per share.
 
 The transaction will be completed in two phases.  At the Initial Closing held on January 13, 2010, the Company issued to the Investors Three Hundred Thousand Dollars ($300,000) of its Notes and at the Final Closing on February 11, 2010 the Company issued Two Million Seven Hundred Thousand Dollars ($2,700,000) of the notes bringing the total financing transaction to Three Million Dollars ($3,000,000).
 
 At the Closing, the Company’s principal shareholders pledged an aggregate of six million (6,000,000) shares of their shares of the Company Common Stock and the Company pledged certain of its assets as security for the Notes.
 
 The Company and the Investors also agreed that the proceeds will be used as follows
  (i)
$1.7 million will be used to pay the remaining unpaid registered capital of the Company’s GP WFOE prior to any other proceeds of such Closing being applied for any other purposes;(ii)
approximately $0.18 million of such additional proceeds shall be used to pay a portion of the remaining unpaid registered capital of the Company’s UGTI WFOE prior to any other proceeds of such Closing being applied for any other purposes; and(iii)
any remaining unpaid registered capital of the Company’s UGTI WFOE will be paid from the proceeds of the New Financing.
  Based on managements’ evaluation of the terms of the Three Million Dollar ($3,000,000) note, we have determined that note contains an embedded conversion feature. In accordance with the guidance offered in ASC 470-20 we have accounted for this debt, the beneficial conversion feature and the warrants by allocating proceeds of $3,000,000 between the detachable warrants and the note based on their relative fair values. Accordingly, $263,432 was allocated to the warrants and $2,642,067 was allocated to the note net of issuance costs of $94,500.
  39
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
  To effect this allocation, we used the Black-Scholes-Merton valuation model to determine the fair value of the warrants to be $299,120. The Black-Scholes-Merton valuation model applied to warrants utilized the following inputs: volatility of 9.7%, risk free interest rate of 1%, maturity of 5 years and strike price of $6.077.  Based on the foregoing, we calculated the intrinsic value of conversion option to be $357,932. We will amortize the implied discount on the notes over their 9 month term at approximately $69,000 per month.
  Effective January 5, 2010, we adopted our 2010 Incentive Stock Plan. The 2010 Incentive Stock Plan is administered by the compensation committee of the board of directors. In the absence of such committee, the board of directors administers the 2010 Incentive Stock Plan. Pursuant to our 2010 Incentive Stock Plan the Compensation Committee may make option grants as part of the compensation provided to our employees, officers or directors or to key advisers or consultants. Stock options may be granted with an exercise price that is less than the fair market value of the underlying shares as of the date of the grant of the option. 4,500,000 shares of common stock are reserved for issuance pursuant to the exercise of awards under our 2010 Incentive Stock Plan.
  Since the effective date of the 2010 Incentive Stock Plan, 75,000 options have been granted to independent directors at an exercise price of $6.09 per share and the grants vest quarterly over one year. The options were fair valued at grant date based on the Black-Scholes-Mertion (BSM) model , which resulted in a value of $44,762.  The various inputs utilized in the BSM model were, volatility @ 17.95%, risk free rate @ 2.49% and expected exercise of 2 years from issuance.  In the first quarter of 2010 the Company recorded $13,167 of expense for these options.  As of March 31, 2010, no options had any intrinsic value has the strike price exceeded the stock trading price at that date.  Each of the five new independent directors also received 2,500 shares of restricted stock as a bonus for agreeing to serve as a Director.  In the first quarter of 2010, the Company recorded $37,500 as director’s fees associated with the stock grants.
  Effective January 16,  2010, the Company announced the appointment of John Perkins to the Board of Directors.
 
 Effective January 25, 2010 ONE Bio, Corp. (the “Company”) appointed American Stock Transfer & Trust Company (“AST”) of NY, NY, as the Company’s new transfer agent.  AST replaces Pacific Stock Transfer which was the Company’s transfer agent up to that date.
 
 Effective May 1, 2010, the Company also changed its registered address now located at 19950 W. Country Club Dr., Suite 100, Aventura, FL 33180.
  40
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
  24.
Options to executives
 
 We issued 2,500,000 options on September 1, 2009 to three management personnel of the Company and recoded and expense of $16,489 for the three months ended March 31, 2010.  Of these options, 20% vest six months from issue date (with $3.25 exercise price) with 40% each vesting on the first and second anniversary of the issue date ($3.50 and $3.75 exercise price, respectively).  The options expire on September 1, 2014.   The aggregate fair value of the options granted was $23,035 at the date of grant, which was determined using the Black-Scholes option valuation model with the following assumptions: fair value stock price of $0.672 at grant date, risk-free interest rate of 2.33%, volatility of 40%, nil expected dividends and expected life of 5 years. Additionally, we issued 170,000 options to two management personnel which vest on the completion of future milestones.  The options have an exercise price of $3.00 and expire three years after achieving milestones.
 
 We also issued 75,000 options to five non-employee directors on January 12, 2010 and recorded an expense of $13,167 for the three months ended March 31, 2010.   The options vest 25% per quarter over the first year and expire on January 12, 2015, with an exercise price of $6.09.  The aggregate fair value of the options granted was $44,762 at the date of grant, which was determined using the Black-Scholes option valuation model with the following assumptions: fair value stock price of $6.09 at grant date, risk-free interest rate of 2.49%, volatility of 17.95%, nil expected dividends and expected life of 2 years.
  The Option activity during the fiscal year ended December 31, 2009 is as follows:
 
 Number of OptionsOutstanding








Outstandingas of





Granted/


as ofExercise


January





forfeited/


DecemberMonth of grant

price



1, 2009


Exercised


cancelled



31, 2009September 2009


$3.25 - $3.75



-



-



2,500,000



2,500,000September 2009


$3.00



-



-



170,000



170,000-



-



2,670,0000



2,670,000
  41
  ONE BIO CORP.
 (PREVIOUSLY CONTRACTED SERVICES, INC.)
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009
  25.
Share-Based Payments
 
 During 2009, the Company issued shares for services and fees as follows:
 
 Fees for Services - During the third and fourth quarters of 2009, the Company issued 4,447 shares of restricted common stock in aggregate to six consultants who provided various services to the Company ranging from investor relations to management consulting. The shares were valued at fair market value of the services provided.  The number of common shares were arrived at based on arms-length negotiations between the parties and considered among other things, the fair value of services provided, the legend restrictions on the common shares and the thinly traded market for our shares.  This resulted in a $3.00 value per share.  Accordingly the Company charged $13,340 to expense in 2009.
 
 Finder’s Fees - During October 2009, the Company issued 8,000 shares of restricted common stock in aggregate to two shareholders who introduced two other investors who made capital infusions into our Company.    The shares were valued at the fair value of the services provided and as stated above.  This resulted in a $3.00 value per share.  Accordingly the Company charged $24,000 to expense in 2009.
 
 Management and Employee’s - During 2009, the Company issued 428,500 shares of restricted common stock to employees and management.  404,000 of the shares were issued to key Chinese associates of Green Planet Bio Engineering Co. Ltd.  These shares were issued in Green Planet stock in January 2009, prior to the execution of the reverse acquisition.  These shares were issued in acknowledgement of their contribution to that Company as founding participants.  At the time of issuance, the Company’s assets were wholly located in the PRC.  Further, Green Planet had not yet received its trading symbol and because the international infrastructure offered by One Bio Corp, as a result of the reverse merger, had not yet been established, the shares were valued at nominal value of $0.03.  Accordingly the Company charged $13,340 to expense in 2009.
 
 24,500 shares of restricted stock of One Bio Corp were issued to Chinese key employees in October 2009.  These shares were issued in One Bio Corp stock and were restricted.