UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C.  20549
 
 FORM 10-K/A
 (AMENDMENT NO. 3 )
  x  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the fiscal year ended: December 31, 2009
  o    TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the transition period from __________ to ____________
  Commission File Number: 000-53208
  SINO GREEN LAND CORPORATION
  (Exact name of registrant as specified in its charter)
 
 Nevada

54-0484915(State or other jurisdiction of incorporation or organization)

(I.R.S.  Employer Identification Number)
  6/F No.947,Qiao Xing Road, Shi Qiao Town

Pan Yu District, Guang Zhou

People’s Republic of China(Address of principal executive office and zip code)86-20-84890337(Registrant’s telephone number, including area code)N/A(Former name, former address and former fiscal year, if changed since last report)
  Securities registered pursuant to Section 12(b) of the Act: NoneSecurities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.001 per shareIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.Yes o  No xIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) 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 Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes x   NoIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. oIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):Large accelerated filer  o
Accelerated filer o
Non-accelerated filer o
Smaller reporting company xIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).Yes  o  No  xThe number of shares of common stock held by non-affiliates as of the last business day of the registrant’s most recently completed second fiscal quarter was 17,537,771.  As of June 30, 2009, no market value was computed based upon the fact that no active trading market was establishedThere were 147,759,340 shares of common stock outstanding as of September 30, 2010.DOCUMENTS INCORPORATED BY REFERENCE:Information required by Part III is incorporated by reference from the Company’s definitive information statement which was filed with the Securities and Exchange Commission on May 27, 2010.
  
 
 
 SINO GREEN LAND CORPORATION
 FORM 10-K
 
 For the Fiscal Year Ended December 31, 2009
 
 TABLE OF CONTENTS
  PagePart IItem 1.  Business
1Item 1A. Risk Factors
12Item 1B. Unresolved Staff Comments
24Item 2. Properties
24Item 3. Legal Proceedings
25Item 4. (Removed and Reserved)
25Part IIItem 5.  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
25Item 6. Selected Financial Data
26Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
26Item 7A. Quantative and Qualitative Disclosures About Market Risk
38Item 8.  Financial Statements and Supplementary Data
38Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
38Item 9A. Controls and Procedures
38Item 9B. Other Information
40Part IIIItem 10.  Directors, Executive Officers and Corporate Governance
40Item 11. Executive Compensation
40Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
40Item 13. Certain Relationships and Related Transactions, and Director Independence
40Item 14. Principal Accounting Fees and Services
40Part IVItem 15. Exhibits, Financial Statement Schedules
41
   
 EXPLANATORY NOTE
 
 This annual report on Form 10-K is being filed as Amendment No. 3 to our Annual Report on Form 10-K which was originally filed on April 15, 2010 with the Securities and Exchange Commission and amended to include Part III information on April 30, 2010 and further amended on October 27, 2010 to include restated financial statements, to reflect the ineffectiveness of our internal controls and to make related changes . We are amending this annual report to reflect only a change in the dating of the report of our independent registered accounting firm. Currently dated Exhibits 31.1, 31.2 and 32.1 are included in this filing.
 
 PART I
  Item 1. Business
  Overview of Our Business
  We are engaged in the sale and distribution of various fruits and vegetables in the People’s Republic of China, or the PRC.  To date, almost all of our revenues have been generated by sales of the following products:
  ·
Fuji apples;
  ·
Emperor bananas; and
  ·
Tangerine oranges.
  Historically, Fuji apples have been our main profit centers, comprising 87% and 85% of our revenues in 2008 and 2009, respectively.  Emperor bananas and tangerine oranges have been the only other products that have generated meaningful revenues for us to date.
  Our Growth Strategy
  Our growth strategy for 2010 and 2011 is to increase sales of our current products and to develop a new line of higher margin green foods, to begin selling our products through our green foods distribution hub and to export our products to new markets both within the PRC and internationally. Our long-term growth plans include both the expansion of our present distribution business and the development and implementation of our green foods distribution hub, which is described under “Business – Proposed Green Foods Distribution Hub.”
  As a company that seeks to market premium specialty fruit, we believe we are well positioned to capitalize on future industry growth in China. We believe that our produce can be treated as premium fruit because we have been successfully marketing our produce at premium prices because of the overall quality of our produce.  We are dedicated to providing healthy and high nutritional premium specialty fruit and vegetables.  We intend to implement the following strategic plans to take advantage of industry opportunities and our competitive strengths:
 
  ·
Strengthen and expand our supply sources.  We believe that a steady supply of premium specialty fruits is crucial to our future success.  Currently, we have built strong relationships with three plantation bases in Shaanxi, Guangdong, and Guangxi Provinces. We intend to further strengthen our existing cooperative relationships with our plantation bases and plan to expand our supply sources by securing more first priority purchase rights with suppliers across China. Thus, in order to expand, we need to purchase the long-term leases, which have a significant up-front cost.
   1
  ·
Expand our distribution network to increase the prevalence of our products nationwide.  Our current sales depend heavily on our regional distributors and their network. To support our rapid growth in sales, we plan to further expand our distribution network by leveraging our steady and expanding supply sources and capture the higher margin business of sales to retail stores and super markets.
  ·
Expand the fruits that we sell to satisfy different customer preferences. We currently focus on apples, bananas and oranges because they are the best selling fruits in the world.  However, we constantly evaluate our product line and seek to adapt to changing market conditions by updating our products to fulfill market needs. Currently, we are testing a few new fruits, such as pears.  Additionally, we recently introduced a new product, sweet corn, and we have started a test plantation for the sweet corn. Revenue from sweet corn accounted for less than 1% of our revenue for 2009.
  Proposed Green Foods Distribution Hub
 
 We have commenced construction of our green foods distribution hub in the Guangzhou Yuncheng wholesale market.  The building, when completed, will cover approximately 220,000 square feet.  At this hub, we intend to sell to both wholesale and retail accounts.   We also intend to market our products to supermarkets and other retail stores.  We expect that construction of the hub will be completed in late 2010 with operations commencing in 2011, although we can give no assurance that we will be able to meet these schedules.  Our ability to meet these schedules is dependent upon our ability to raise the necessary financings to complete the physical structure and the initial inventory.
 
 At the green foods distribution hub, we plan to sell a wide variety of food items which are sold by members of the China Green Food Association whose food products meet standards set by the China Ministry of Agriculture.  We believe that foods that meet these standards can be sold at a higher price than produce that does not meet these standards.  The China Green Food Association has more than 6,000 members who sell more than 17,000 food items.
 
 We expect that our food items will include fruits and vegetables, rice and other grains, meat, eggs and oil that have been certified as green foods by the Green Food Development Center. Green food is a Chinese certification program for food.  The China Green Food Development Center, an agency of the Ministry of Agriculture, is responsible for establishing the green food standards and granting the green food certification
 
 In general, in order for a food product to obtain green food certification, it must meet four conditions.
 
 ·
It must be grown in a good ecological environment. The quality of the soil, air and water must meet the environmental requirements for the area in which the foods are grown.
  ·
The production process for green foods must comply with the green food production technical standards, relating to such matters as pesticides, fertilizers, veterinary drugs, feed and food additives.
  ·
The food products must be tested by an authorized testing organization.  The physical and chemical (heavy metals, pesticide residues and veterinary drug residues and microbiological indices must meet the green food product standards.
  ·
The packing of the green food product, including the use of the green food logo, must meet the requirements for green food packaging.
  Information on the Green Food Development Center is available at http://www.greenfood.org.cn/sites/GREENFOOD/; however, information on that website is not provided by us and does not constitute a part of this annual report.
 
 In developing this business we will require supply agreements with each supplier.  At present we have informal understandings with the suppliers through the China Green Food Association.   However, these understandings are subject to further negotiation which will be conducted as we are closer to opening our green food distribution hub.  We anticipate that the agreements will have a range of payment terms, with some suppliers being paid in advance, others providing us with food on consignment and others being paid in installments.  We anticipate that our initial cash requirement for inventory will be approximately $2 million and that we will normally have an inventory of approximately $4 million.
 
  2
  We also intend to market our foods to supermarkets and other retail stores from our green food distribution hub.  We anticipate that some of these customers will take delivery from the distribution hub, while others will require that we deliver the foods to their stores or their own distribution center.   In order for us to offer a delivery service, we will require a fleet of refrigerated trucks for us to deliver perishable foods to our retail customers.
  Our Corporate History and Structure
  Corporate History and Share Exchange
  We were incorporated under the laws of Virginia in May 1948 as Henry County Plywood Corporation.  We were originally formed for the purchase, sale, lease and manufacture of lumber, and other wood products.  We reincorporated in Nevada on March 18, 2008.  From July 2004 until January 15, 2009, we were a shell company with no operations and our sole purpose was to consummate a merger or acquisition with a private operating company.
  Organic Region Group Limited, or Organic Region, was incorporated in the BVI on January 30, 2003.  On January 15, 2009, we completed a reverse acquisition transaction with Organic Region, whereby we issued to the stockholders of Organic Region 81,648,554 shares of our common stock, par value $0.001 per share, in exchange for 100% of the issued and outstanding capital stock of Organic Region.  As a result of the reverse acquisition transaction, we now conduct our operations in the PRC through subsidiaries and related entities.
  Organizational Chart
 
 The following chart reflects our organizational structure as of the date of this report:
 
 
 
 
 3
 
 Variable Interest Entity
  In 2005, Organic Region entered into exclusive arrangements with Guangzhou Greenland Co., Ltd., or Guangzhou Greenland, an individual business entity incorporated in Guangdong Province, PRC on July 20, 2004.  Guangzhou Greenland is the operating company for our wholesale fruits and vegetables business.  Mr. Xiong Luo, our chief executive officer and president, is the owner and holder of the business license for Guangzhou Greenland.
  Pursuant to these arrangements, Organic Region has agreed to provide consulting services, including business operations, human resources and research and development services necessary for Guangzhou Greenland to operate its wholesale fruit and vegetable distribution business in China.  In exchange for such services, Mr. Luo agreed to pay a consulting services fee to Organic Region equal to all of the revenues obtained by Guangzhou Organic. In addition, Organic Region obtained the right to substantially influence Guangzhou Greenland’s daily operations and financial affairs, appoint its senior executives and approval all matters requiring stockholder approval. Mr. Luo also irrevocably granted the Company an exclusive option to purchase, to the extent permitted under PRC law, all or part of the equity interests in Guangzhou Greenland and agreed to entrust all voting power to a person designated by Organic Region.
  Guangzhou Greenland is considered a variable interest entity, and its financial statements are included in our consolidated financial statements.
  Subsidiaries
  Organic Region is a holding company which owns 100% of the following entities: Zhuhai Organic Region Modern Agriculture Ltd., or Zhuhai Organic, and Guangzhou Organic Region Agriculture Ltd., or Guangzhou Organic, are wholly foreign-owned entities which were formed in the PRC on November 13, 2003 and August 20, 2004, respectively.  Fuji Sunrise International Enterprises Limited, or Fuji Sunrise, and Southern International Development Limited, or Southern, were formed in the British Virgin Islands on March 6, 2008 and March 5, 2008, respectively.  HK Organic Region Limited, or HK Organic, was formed in Hong Kong on February 4, 2008.
  The following table describes our corporate structure:
 
 Name of Entity

Relationship to Us

Nature of BusinessSino Green Land Corporation

N.A.

Holding companyOrganic Region Group Limited

100% owned by us

Holding companyZhuhai Organic Region Modern Agriculture Ltd.

100% owned by Organic Region

Plantation and exportGuangzhou Organic Region Agriculture Ltd.

100% owned by Organic Region

Cleaning and preparing vegetables for distribution and distribution of vegetablesFuji Sunrise International Enterprises Limited

100% owned by Organic Region

Presently inactive, with plans for apple distributionSouthern International Develop Limited

100% owned by Organic Region

Leaseholder for green food distribution center presently under constructionHK Organic Region Limited

100% owned by Organic Region

Proposed import and export operationsGuangzhou Greenland Co., Ltd.

100% owned by our former chief operating officer and treated as a variable interest entity controlled by us

Wholesale sale of fruit, and the source of substantially all of our revenue.
  We intend to form a new domestic subsidiary to be 100% owned by our wholly-owned subsidiary, Southern International Development Ltd., which will operate our new higher margin green foods business.  See “Item 1.  Business —Our Products—Green Foods.”
   4
  Corporate Information
  Our corporate headquarters are located at 6/F No. 947, Qiao Xing Road, Shi Qiao Town, Pan Yu  District, Guang Zhou, China. Our telephone number is +86-20-84890337.  Our website is http://www.sinogreenland.com.  Information on our website or any other website does not constitute a part of this annual report.
  Our Industry
  In 1984, the PRC government began to implement a system of reforms in the industry which transformed the industry from a fully state oriented structure, including state oriented pricing and state controlled distribution, to a market oriented structure, with market oriented pricing and multi channel distribution. These changes promoted the development of fruit production through increased income for farmers and more variation in the fruits and vegetables available to residents.
  These reforms led to the development of planting and storage technologies which enabled consumers to purchase fruits all year round and in small amounts, rather than purchase an annual supply all at one time when fruits were in season. The reforms also led to the introduction of multiple transportation channels and the opening up of new markets across China. As a result, consumers throughout China today have access to fruits from all regions in China and are no longer limited to locally produced fruits.
  In addition, the improvement of people’s living standards in the PRC has led to an increased emphasis in the PRC on consumption of healthy foods, including fresh fruits and vegetables.  This increase in demand has led to good prospects for the whole fruit and vegetable industry.
  As a result of land reforms during the past 20 years, orchards in China are generally small and the average farmer only owns between 0.4 to 0.5 acres of land. As a result, there are very few large marketing and distribution enterprises in the Chinese fruit industry. In general, apples in China are sold through small fruit brokers who buy apples from farmers for cash. The brokers sort and pack the fruit and resell it at fresh fruit markets or package it for delivery to processors.
  Our Products
  We are engaged in the sale and distribution of various fruits and vegetables in the PRC.  To date, almost all of our revenues have been generated by sales of the following products:
  ·
Fuji apples;
  ·
Emperor bananas; and
  ·
Tangerine oranges.
  Historically, Fuji apples have been our main profit centers.  Emperor bananas and tangerine oranges have been the only other products that have generated meaningful revenues for us to date.  We also sell a variety of vegetables, as described below.
  Fuji Apples
  Fuji apples comprised approximately 85% of our sales in the year ended December 31, 2009 and approximately 87% of our sales in the year ended December 31, 2008.  Because we are able to sell high quality Fuji apples throughout the entire year, these apples are considered a high-end fruit in the PRC and our revenues from sales of these apples are not seasonal.  See “Item 1. Business —Processing and Storage.”
  Emperor Bananas
  Emperor bananas comprised approximately 9% of our sales in the year ended December 31, 2009 and approximately 7% of our sales in the year ended December 31, 2008.  The emperor bananas that we purchase from farmers and subsequently sell to wholesale customers are harvested throughout the year.  Because we are able to sell high quality emperor bananas throughout the entire year, these bananas are considered a high-end fruit in the PRC and our revenues from sales of these bananas are not seasonal.
  5
   Tangerine Oranges
  Tangerine oranges comprised approximately 5% of our sales in the year ended December 31, 2009 and approximately 6% of our sales in the year ended December 31, 2008.  Our tangerine oranges are harvested and distributed from October to March each year.  Consequently, our revenues from sales of these oranges are seasonal.  See “—Seasonality” below.
  Vegetables
  We also sell a variety of vegetables, including tomatoes, cauliflower, cucumber, lettuce, spinach, leek, celery, peppers, Chinese cabbage, carrots, loofah, pumpkin, bitter gourd, white gourd, gherkin and yams.  Vegetable products have comprised a small percentage of our business to date.
  We use production line processing technology to cleanse and sort all of our vegetables.  Deep processing involves the following steps: water immersion, screening, high pressure spraying, sorting, freezing, rinsing, ultraviolet treatment and packaging.  Our vegetable products generate higher margins as a result of this processing.
  We plan to increase sales of the deep processed vegetables that we believe will increase our revenues and gross margin.
  Green Foods
  Our goal is to sell green food agriculture products, including fruits, vegetables, rice, meat, eggs, and oilthat have been certified as green foods byGreen Food Development Center under the PRC Ministry of Agriculture.  Green foods are healthy and environmentally friendly, and their profit margins are expected to be significantly higher than our current products.  Over 17,000 food items are currently certified as green foods in the PRC.  There are currently more than 6,000 suppliers of green foods certified by Green Food Development Center.  Because of the diversity of available sources of these products, we believe that we will be able to obtain an adequate supply of green foods at a reasonable cost.
  We expect to develop a strong customer base in the PRC for our green food products, which represented approximately 5% of total agricultural output in China in 2007, and to export these products internationally.  Over 40 trade partner countries with the PRC currently recognize the Green Food Development Center’s certifications of green food products.
  In addition, our long-term goal is to sell green foods agriculture products, including fruits, vegetables, rice, meat, eggs and oil that have been certified as green foods by the Green Food Development Center under the PRC Ministry of Agriculture.  Green foods are healthy and environmentally friendly whose profit margins are expected to be significantly higher than our current products. We are in the process of constructing a new hub in the Guangdong wholesale market.  We believe that our hub will be the first hub in the PRC to provide wholesale customers with the ability to purchase such a wide variety of green foods from one distributor in one location.  Wholesale distributors who purchase from our hub will sell our products to customers in various regions in the PRC and to the Pearl River Delta, including Hong Kong and Macao, thereby potentially providing us with a larger market and significant revenues.
  Our Raw Materials and Suppliers
  General
  Our business depends on obtaining a reliable supply of various agricultural products, including primarily Fuji apples, emperor bananas and tangerine oranges.  In 2008, approximately 86.8% of our raw materials consisted of Fuji apples, 6.9% emperor bananas and 5.7% tangerine oranges.  The remaining 0.6% consisted of various vegetables, including tomatoes, cauliflower, cucumber, lettuce, spinach, leek, celery, peppers, Chinese cabbage, carrots, loofah, pumpkin, bitter gourd, white gourd, gherkin and yams.  In 2009, approximately 85.4% of our raw materials consisted of Fuji apples, 8.9% emperor bananas and 5.1% tangerine oranges.  The remaining 0.6% consisted of various vegetables, including tomatoes, cauliflower, cucumber, lettuce, spinach, leek, celery, peppers, Chinese cabbage, carrots, loofah, pumpkin, bitter gourd, white gourd, gherkin and yams.
   6
  Fruits
  We purchase all of our Fuji apples, emperor bananas and tangerine oranges from farming cooperatives located in the PRC.  Each farming cooperative consists of individual farmers that grow the same type of product and sell to the same customers.  We have entered into several land lease agreements with various farming cooperatives in the PRC since 2004. The term of each agreement is 25 years.  Pursuant to each agreement, we lease from the cooperative the land on which the plantation is situated at a price of approximately $1,200 per acre. We grant the farming rights to such lands to the cooperative, so that the cooperative is responsible for farming the land and we acquire the fruits that the members of the cooperative produce. In exchange for our lease payment, we have first priority on purchasing the cooperative’s production at market wholesale prices. We do not receive any rental or other income from these arrangements. These arrangements allow us to avoid the substantial capital required to maintain and finance agricultural production. Because we have first priority to purchase produce from these cooperatives, we believe that our raw materials are currently in adequate supply and will continue to be so in the future.
  The following table provides the size of the plantations on which our fruits are harvested, the type of fruit produced and the annual number of tons produced for the year ended December 31, 2009.
  Plantation

Acres

Product

TonsKuibai Town,Luochuan County, Shaanxi Province


7,428

Apples


62,132Laomiao Town,Luochuan County, Shaanxi Province


3,778

Apples


32,031Shiquan Town,Luochuan County, Shaanxi Province


2,500

Apples


9,874Wanqingsha Town, Nansha District, Guangzhou in Guangdong Province


2,864

Bananas


12,100Liuzhou, Guangxi Province


1,283

Oranges


7,540
  We intend to expand the size of these plantations and to acquire additional plantations in the future.
  Other Products
  We purchase all of our other vegetable products from wholesalers located in the PRC.  We do not have any long-term contracts with any of these suppliers.  We purchased approximately 1,100 tons of these vegetables, in the aggregate, from these wholesalers in 2008 and approximately 1,600 tons in 2009.  Vegetable products have comprised a small percentage of our business to date.
  Our Customers and Sales
  In 2008 and 2009, we sold almost all of our products to various wholesale fruit and vegetable distributors located in Beijing and Guangdong in the PRC.  These distributors then distributed these products to retail stores and supermarkets in Beijing and Guangdong, respectively, as well as neighboring regions in the PRC.
  We distributed almost all of our products in 2008 and 2009 from our leased space in the Guangdong Yun Cheng Wholesale Market and the Beijing Xin Fadi Agricultural Products Wholesale Market.  A wholesale market is a marketplace designated for bulk sales by distributors such as us to wholesalers.  Numerous distributors lease space in the wholesale market and distribute their products to their customers from this location.  The Guangdong Yun Cheng Wholesale Market is one of the major wholesale centers for apples in southern China, with an annual sales volume of approximately 1.8 million tons of apples.  The wholesalers who purchase products at this market distribute their products to regions populated by approximately 43 million people within a 200 kilometer radius from the market.  Similarly, the Beijing Xin Fadi Agricultural Products Wholesale Market has an annual sales volume of approximately 3.5 million tons of apples.  The wholesalers who purchase products at this market distribute their products to regions populated by approximately 24 million people.
   7
  We generally do not enter into long-term contracts with our customers.  Our customers generally purchase our products pursuant to purchase orders.
  Our customers generally purchase on credit, depending on their credit history and volume of purchases from us.  However, in 2008 and 2009, we did not experience any significant delays in the collection of our accounts receivable.
  We do not depend heavily on any of our customers.  In 2008 and 2009, none of our customers accounted for 10% or more of our revenues.
  To date, all of our products have been sold to a limited number of regions in the PRC.  Our goal is to expand our domestic distribution network and distribute our products to other regions in the PRC and to export our products to various foreign countries.
  Our Marketing Efforts
  We have not spent a significant amount of capital on advertising to date.  Our marketing team is located at the wholesale markets where we sell our products and they market our products to various wholesale distributors in the PRC who conduct business in these markets.  Since the end of 2009, our marketing team has initiated discussions with numerous retail companies in an attempt to sell our products directly to these companies.  Our goal is to begin selling our products directly to retail customers instead of wholesale customers in the near future.
  Quality Control
  In 2006, we passed both the ISO9001:2000 quality management system and the HACCP-EC-01 food security management system granted by the National Business Inspection Bureau.
  We have also established our own quality control system for all our fresh fruits and vegetables, and we have adopted what we consider a very high quality standard.
  For our tangerine oranges and emperor bananas, our field quality control teams check and inspect all products before they are delivered to the wholesale markets and to our customers. In addition, we have a quality control team in Shaanxi Province which monitors all shipments of Fuji apples with a view to making sure that the fruit in each truck load complies with our standards.
  Existing Plantations
  We currently lease three main plantations: the Luochuan Apple Plant Base in Yan’an, Shaanxi Province; the Nansha Wanqingsha emperor banana plantation base in Guangzhou, Guangdong Province and the Rong’an tangerine orange plantation base in Liuzhou, Guangxi Province.  See “—Our Raw Materials and Suppliers” above.
  Proposed New Green Foods Hub
  We are in the process of constructing a new hub for the sale of green foods in the Guangdong wholesale market.  We believe that our hub will be the first hub in the PRC to provide wholesale and retail customers with the ability to purchase such a wide variety of green foods from one distributor in one location.  We have invested approximately $4 million in the construction of this hub to date from cash generated by our operations and from funds which we raised from several small equity offerings in 2009 and early 2010.  We anticipate completing the construction of the hub by the end of 2010 and to begin the operations of our new green foods product line in 2011.
  We anticipate that the total investment to launch this business will be $18 million.  We will need to raise a substantial amount of capital from equity or debt markets in order to complete the construction of our hub and launch our new green food product line.  We currently have no commitments from any financing source.  There is no assurance that we will be able to raise any funds on terms favorable to us, or at all.  In the event that we issue shares of equity or convertible securities, holdings of our existing stockholders would be diluted.
  8
  Competition
  As a result of land reforms during the past 20 years, orchards in China are generally small and the average farmer only owns between 0.4 to 0.5 acres of land.  As a result, there are very few large marketing and distribution enterprises in the Chinese fruit industry.   In general, apples in China are sold through small fruit brokers who buy apples from farmers for cash. The brokers sort and pack the fruit and resell it at fresh fruit markets or package it for delivery to processors.
 
 Although statistics are not available, we do not believe that there are any distributors of Fuji apples, emperor bananas or tangerine oranges that handle more overall annual tonnage than we do.  We also believe that our emphasis on premium products set us apart from other distributors of apples, bananas and oranges, although other companies market premium products, including Fuji and other premium quality apples.  In the Chinese market, we believe that only the Yan’an Apple Group and the Qixia Apple Group, which are state-owned enterprises, are our closest competitors.
 
 We face indirect competition from the publicly held companies Chaoda Modern Agriculture (Holdings) Limited and China Green Agriculture, Inc. Chaoda Modern Agriculture, a Hong-Kong listed company, primarily produces vegetables and, to a lesser extent, fruits, while China Green Agriculture, a Hong-Kong listed company, primarily produces fertilizers.
 
 We believe that our success to date and potential for future growth can be attributed to a combination of our strengths, including the following:
 
 ·
Strong Supplier Relationships – We implement a cooperative (collaborative) supply chain model, under which we have total control of the production cycle of our high value fruits and of our resale at wholesale centers.  Under the 25-year lease agreements, we acquire first priority purchase rights from what we believe are the best plantation bases, we provide farming cooperatives with technological support to enable them to produce high yields and we provide them with ready market for their produce through our multi-channel marketing network. We believe that our structure provides motivation to the farmers.
  ·
Recognition for the Way we Conduct Business – In 2007, we became qualified for bidding as a United Nations supplier, which means that we are recognized as subscribing to the UN Supplier Code of Conduct in the conduct of our business and operations.  In 2006, we received both the ISO9001:2000 quality management system certificate and the HACCP-EC-01 food security management system certificate from the National Business Inspection Bureau.
  ·
Production Line Processing Technology– Our production line processing technology (for which we have applied for a patent in China) provides standardized procedures for inspection, grading, cleansing and packaging of our fruits and vegetables.  We use this “deep cleansing” technology to provide healthy, fresh and high-quality produce with our Organic Region brand name.  In 2006, our Organic Region brand was granted the National “3.15” China Famous Brand Authentication award, and in 2006, we received the Guangzhou Nansha District Agricultural Technology Breakthrough Support Prize Certificate for introducing emperor banana cultivation technology.
  ·
High Product Quality – Based on the market acceptance of our products as premium prices, we believe that our products are viewed as high quality products by our customers, and in the past three years we believe that we have established a reliable reputation in wholesale centers in China.  We have chosen to focus on the premium fruits and vegetables.   We do not compete in low-end markets.  We believe that only by providing high quality and adhering to high-end market standards can we remain successful.
   9
  Research and Development
  Our research and development programs concentrate on sustaining the productivity of our agricultural lands, product quality, value-added product development and packaging design. Agronomic research is directed toward sustaining and improving product yields and product quality by examining and improving agricultural practices in all phases of production (such as development of specifically adapted fruit varieties, land preparation, fertilization, cultural practices, pest and disease control, post-harvesting, handling, packing and shipping procedures). We also provide on-site technical services to our suppliers and is also responsible for the implementation and monitoring of recommended agricultural practices. Our research and development expenses were not significant in 2008 or 2009.
  Intellectual Property
  We have no patents or patent applications outside of China.  Our application for a Chinese invention patent for “cleaning, freshening and sterilizing method and device for fruit and vegetable” (Application No. 2005100888659) is pending.  This patent application right is held in the names of Mr. Xiong Luo and Mr. Anson Yiu Ming Fong, who transferred the application right to us for no consideration, pursuant to a patent transfer agreement, among Mr. Luo, Mr. Fong and the Company, dated January 10, 2009.
 
 We also have 16 trademark applications pending, including our logo and the term organic region in both English and Chinese.
 
 We also seek to protect our technological know-how through confidentiality agreements entered into with the employees in our production department.  However, we cannot assure you that our patents, trademarks and confidentiality agreements will be adequate to protect our intellectual property rights.
 
 Regulation
  The food industry is subject to extensive regulation in China.  The following summarizes the most significant PRC regulations governing our business in China.
 
 Food Hygiene and Safety Laws and Regulations
 
 As a distributor and producer of food products in China, we are subject to a number of PRC laws and regulations governing food safety and hygiene, including:
 
 ·
the PRC Product Quality Law;
  ·
the PRC Food Hygiene Law;
  ·
the Implementation Rules on the Administration and Supervision of Quality and Safety in Food Producing and Processing Enterprises (trail implementation);
  ·
the Regulation on the Administration of Production Licenses for Industrial Products;
  ·
the General Measure on Food Quality Safety Market Access Examination;
  ·
the General Standards for the Labeling of Prepackaged Foods;
  ·
the Standardization Law;
  ·
the Regulation on Hygiene Administration of Food Additive;
  ·
the Regulation on Administration of Bar Code of Merchandise; and
  ·
the PRC Metrology Law.
   10
  These laws and regulations set out safety and hygiene standards and requirements for various aspects of food production, such as the use of additives, production, packaging, handling, labeling and storage, as well as facilities and equipment.  Failure to comply with these laws and regulations may result in confiscation of our products and proceeds from the sales of non-compliant products, destruction of our products and inventory, fines, suspension of production and operation, product recalls, revocation of licenses, and, in extreme cases, criminal liability.
 
 We believe that our exposure to these risks is limited since our business model and our agreements with our suppliers provide a cushion which shields us from product liability exposure and we control food hygiene and food quality by implementing a strict quality control system and we believe that we comply in all material respects with these laws and regulations.  To the extent that the government imposes additional laws or restrictions, we would have to comply with those laws as well.  To the extent that we purchase foods from other suppliers for our green food distribution hub, we may be subject to liability exposure to the extent that our suppliers either do not comply with all applicable regulation or from impurities in foods we purchase from them.
 
 Environmental Regulations
 
 We are subject to various governmental regulations related to environmental protection. The major environmental regulations applicable to us include:
 
 ·
the Environmental Protection Law of the PRC;
  ·
the Law of PRC on the Prevention and Control of Water Pollution;
  ·
Implementation Rules of the Law of PRC on the Prevention and Control of Water Pollution;
  ·
the Law of PRC on the Prevention and Control of Air Pollution;
  ·
Implementation Rules of the Law of PRC on the Prevention and Control of Air Pollution;
  ·
the Law of PRC on the Prevention and Control of Solid Waste Pollution; and
  ·
the Law of PRC on the Prevention and Control of Noise Pollution.
  We have obtained all permits and licenses required for production of our products and believe that we are in material compliance with all applicable laws and regulations.
 
 Our packaging facilities are subject to various pollution control regulations with respect to noise, water and air pollution and the disposal of waste and hazardous materials.  We are also subject to periodic inspections by local environmental protection authorities.  We have received certifications from the relevant PRC government agencies in charge of environmental protection, indicating that our business operations are in material compliance with relevant PRC environmental laws and regulations.
 
 Employees
  As of December 31, 2009, we employed a total of 146 full-time employees. The following table sets forth the number of our employees by function.
  Function

Number of

EmployeesSenior Management


5Human resource and administration.


10Production


38Procurement


8Marketing


4Sales


17Logistic


41Research and development


3quality control


10Accounting


10Total


146
 
  11
 
 Our employees are not represented by a labor organization or covered by a collective bargaining agreement.  We have not experienced any work stoppages.  We believe that our employee relations are good.
 
 We are required under PRC law to make contributions to the employee benefit plans at specified percentages of the after-tax profit.  In addition, we are required by the PRC law to cover employees in China with various types of social benefits.  We believe that we are in material compliance with the relevant PRC laws.
 
 Seasonality
 
 Our fresh fruit business is highly seasonal.  Fuji apples are harvested mainly from late August until early November and are sold throughout the year. Tangerine oranges are harvested in late September through late November with the result that we have limited sales of tangerine oranges in the third quarter of the year.  Emperor bananas are harvested throughout the year.  They grow in an eight-month cycle, and are cultivated and harvested all year long. As harvested fruits cannot be stored at room temperature for a long time, they must be processed for sale as soon as they are harvested or stored at a cold temperature. As a result, the sales volume for our produce occurs during the harvesting season and for the months following the harvesting season.
 
 We generally experience higher sales in the second half of the year.   Sales in second half of 2009 accounted for approximately 63% of our revenue for 2009, and sales in the second half of 2008 accounted for approximately 59% of our revenue for 2008.  If sales in the second half of the year are lower than expected, our operating results would be adversely affected, and it would have a disproportionately large impact on our annual operating results. Sales of tangerine oranges were nominal during the third quarter of 2009.
 
 Because of the large number of green foods products which we plan to distribute through at our green foods distribution hub, there will be many different seasons for the different products we operate.  We cannot predict at this time how the seasonality of the various products we propose to sell will affect our overall profitability.
  Item 1A. Risk Factors
  RISKS RELATED TO OUR BUSINESS
  Because we restated our financial statements, investors may lack confidence in our ability to present financial information and the results of our operations and it may be difficult for us to raise funds for our operations.
  On August 23, 2010, we concluded, after a review of the pertinent facts, that the previously issued financial statements contained in our annual report on Form 10-K for the year ended December 31, 2009 and our quarterly reports on Form 10-Q for the quarters ended March 31, 2010, September 30, 2009, June 30, 2009 and March 31, 2009, respectively, should not be relied upon for reasons set forth in Note 14 of Notes to Consolidated Financial Statements.  This annual report reflects restated financial statements for the years ended December 31, 2009 and 2008 because of our failure to account properly for the treatment of securities issued in financings during 2009 and 2008.  As a result, our net income, as originally reported, was overstated by approximately $3.5 million for 2009 and understated by $113,000 for 2008.  Our need to restate our financial statements reflects the inadequacy of our disclosure controls and our controls over financial reporting and may impair our ability to raise funds we require for our operations and may otherwise impair our operations and our relationships with our investors.   Further, we cannot assure you that further restatements will not be required.
   12
  Because we have limited working capital, we will require funds for our operations, including our proposed green foods hub.
  At December 31, 2009, we had a working capital deficiency of approximately $3.7 million, primarily as a result of a $5.2 million derivative liability. We anticipate that we will require additional capital for our operations, and, in particular with respect to our green foods hub, which is under construction. Through December 31, 2009, we have made advances of approximately $4.6 million for the construction of our hub.  We made this payment from cash generated by our operations and from funds which we raised from several small equity offerings in 2009.  We anticipate that the total investment to launch this business will be $18 million, and we have no present commitment for such funds.Because of our low stock price and the lack of an active trading market in our common stock, as well as our restated financial statements, it may be difficult for us to raise funds on terms which are favorable to us, if at all. Our increases in revenue in the year ended December 31, 2009 as compared with the 2008 resulted in large part from increased sales stemming from our purchase of long-term leases on which farming cooperatives can grow products for us to sell. The payment of the full amount of the leases, which was approximately $3.4 million in the year ended December 31, 2009 and approximately $7.2 million for the year ended December 31, 2008, is due at the beginning of the lease. In order for us to expand our business in a manner which seeks to provide us with a continuing source of supply (subject to conditions which affect farming generally), we require capital to purchase the leasehold interests. Our failure to raise the necessary funds could impair our ability to expand our business.
 
 Our operations are cash intensive, and our business could be adversely affected if we fail to maintain sufficient levels of working capital.
 
 We spend a significant amount of cash on our operations, principally to procure fruits and vegetables as well as the procurement of long-term lease for farm land for which payment is required at the inception of the lease. Historically, our primary capital needs have been to fund our working capital requirements and our primary sources of funds have been cash generated from operations. If we fail to generate sufficient sales, we may not have sufficient liquidity to fund our operating costs and our business could be adversely affected. If available liquidity is not sufficient to meet our operating requirements, we plan consider pursuing financing arrangements or further reducing expenditures as necessary to meet our cash requirements. However, there is no assurance that, if required, we will be able to raise additional capital or reduce discretionary spending to provide the required liquidity. Currently, the capital markets for small capitalization companies are difficult and banking institutions have become stringent in their lending requirements. Accordingly, we cannot be sure of the availability or terms of any third party financing.
 
 Since our proposed green foods distribution business is a new, cash intensive business in which we have no prior experience we may not be able to develop this business or operate this business profitably.
 
 To date, substantially all of our revenue has been derived from the sale of Fuji apples, tangerine oranges and emperor bananas, which we purchase from farming cooperatives to which we lease the land on which the produce is grown.  We are in the process of constructing a new green foods hub in the Guangzhou Yuncheng wholesale market.  This business is different from our present business and involved additional risks, including the following:
 
 ·
We will seek to purchase a wide range of food products from different vendors who have no independent relationship with us and with whom we do not have long-term supply contracts.
  ·
We will seek to sell products which are very different from the foods that we presently sell, which may include some or all of rice, meat, eggs, oil as well as fruits and vegetables.  We do not have experience in purchasing and selling any foods other than our fruits and vegetables.
  ·
We are constructing a 220,000 square foot hub.  Since we plan to purchase and sell a wide range of foods, we would need to hire a significant number of employees, and we would require these employees to be knowledgeable with respect to the specific foods that they are purchasing and selling.
  ·
While many wholesale distribution facilities lease space to different vendors, with each vendor having responsibility for its own product line, we would have the full responsibility for many product lines in our green foods hub.  As a result, we would bear the full risk of operating the market.  The risks described in this annual report that relate to our fruits and vegetables would apply to each product we sell, but the effect could be greater if they affect one or more of our food products at or about the same time.
   13
  ·
We will be required to maintain an inventory for each product that we market.  Because all food products are perishable, if we do not project accurately both our requirements and the prices at which we can sell the products, we may have significant surpluses or shortages of products and we may pay prices which do not generate an adequate gross margin.  Many of our proposed products must be sold very shortly after they are received, often on the same day that they are received, with the result that any unsold products are unsalable.  Our failure to estimate our requirements accurately could impair our ability to operate this business profitable.
  ·
We would need to develop and implement inventory control systems designed for a business which is different from and significantly larger than our present business.  The failure to implement such a system could impair our ability to operate profitably.
  ·
Because we expect to purchase products from many different vendors, over whom we have no control, we may have difficulty controlling and monitoring the quality of our products.  The failure to deliver quality products could impair our ability to operate this business profitably.
  ·
Although we plan to purchase product from a large number of independent suppliers, in the event that there is a recall of one or more products, it could affect customers’ willingness to purchase other products from us.
  ·
Although we plan to develop a number of different product lines, if we cannot successfully develop only a small portion of these lines, we may be unable to operate the market as a whole profitably.
  ·
Both the cost of the construction of the green foods hub and the purchase of inventory require significant cash outlays, and we have no present commitment for the required cash.  Our inability to obtain the necessary funding could impair our ability to develop the green foods hub.
  ·
If we are not successful in completing construction of the green foods hub or funding our purchase of an adequate inventory of a variety of funds, we may not be able to operate this business, in which event we would have to write off our significant investment in the project.
  ·
Because of the nature of the distribution business, our failure to have established financial controls may affect our ability to control our costs in connection with the green foods distribution center.
  In the proposed development of our green foods distribution hub, we may sell directly to supermarkets and other retail outlets, which will present us with additional risks and financial requirements.
 
 As part of our green hub distribution business, we may seek to expand our customer base to include supermarkets and other retail stores.  In connection with this aspect of our proposed green foods program, we will be subject to additional risks, including the foregoing:
  ·
We would need to develop and implement a marketing program to bring our produce to the attention of a new customer base.  We presently sell almost exclusively at two wholesale markets, which does not require any significant marketing effort.  Our wholesale customers purchase products at these markets for sale to their retail customer base.  We would be seeking to sell directly to the retail customer base.  If we are not successful in establishing a marketing program, we may not be able to operate this phase of our business profitably.
  ·
We presently deliver our produce to two wholesale markets at which we sell our produce, and wholesale companies purchase our produce and deliver it to their customers.  If we sell directly to retail markets, we may have the obligation to deliver our produce to some of our retail customers, which will increase our costs.
  ·
Any delay in delivery of produce could affect the quality of the produce and could result in a rejection of a shipment if the customer questions the quality of our produce, if the customer had to obtain the produce from other sources or for any other reason.
   14
  Any financing we obtain may result in significant dilution to our stockholders.
 
 We have no commitment from any bank or other financing source for our anticipated cash requirements, including those related to the construction of our green foods hub or for any additional working capital which may be required in connection with the operation of the green foods hub and the proposed marketing effort directed at supermarkets and other retail outlets.  We cannot assure you that any warrants will be exercised.  If we raise funds through the sale of our equity securities, including convertible debt securities, it may be necessary for us to issue shares at a price which is below the current market price.  Any such sale would result in significant dilution to our stockholders.  We cannot assure you that financing will be available or that any terms which are available would not be unfavorable to us.
 
 We may be unable to manage future rapid growth.
 
 We have grown rapidly over the last few years and, if we implement our green foods distribution hub business, the business growth could place a significant strain on our managerial, operational and financial resources. In addition to hiring a significant number of employees necessary to operate our expanded business, we will need to expand our management staff to adequate manage a large operation.  If we are not able to implement management controls over this business, we may be unable to operate profitably.  Our ability to manage future growth will depend on our ability to continue to implement and improve operational, financial and management information systems on a timely basis and to expand, train, motivate and manage our workforce. Our personnel, systems, procedures and controls may not be adequate to support our future growth. Thus, for example, staffing and supporting an enterprise that operates in a 220,000 square foot facility with number difference products purchased from many different suppliers requires different management skills and controls, including inventory controls, than our present business. Our failure or inability to effectively manage our expansion may lead to increased costs, a decline in sales and reduced profitability.
 
 Our business is subject to weather conditions, natural disasters and other conditions beyond our control which could affect our revenue, gross margins and net income.
 
 Severe weather conditions and natural disasters, such as floods, droughts, frosts, earthquakes, plant disease or other pestilence, which are difficult to anticipate and cannot be controlled by us, may affect both the supply and the distribution of our products and otherwise disrupt our operations. Such disasters may affect the cost and supply of raw materials, including fruits and vegetables or result in reduced supplies of raw materials, lower recoveries of usable raw materials, higher costs of cold storage if harvests are accelerated and processing capacity is unavailable or interruptions in our production schedules if harvests are delayed.  If our supplies of raw materials are reduced, we may not be able to find enough supplemental supply sources on favorable terms, if at all, which could impact our ability to supply product to our customers and adversely affect our business, financial condition and results of operations. Similarly, if our distribution network is not able to operate, we would not be able to sell our products.  We have no business interruption or similar insurance to provide protection from these and other business disruptions.
 
 As a company which sells fresh food, our business can be impaired by product liability claims, recalls, adverse publicity or negative public perception regarding particular fruits we sell as consumers may avoid our products.
 
 The food industry is subject to risks posed by food spoilage and contamination, product tampering, product recall, and consumer product liability claims.  Our operations could be impacted by both genuine and fictitious claims regarding our and our competitors’ products. In the event of product contamination or tampering, we may need to recall some of our products.  A widespread product recall could result in significant loss due to the cost of conducting a product recall including destruction of inventory and the loss of sales resulting from the unavailability of the product for a period of time.  Further, adverse publicity or negative public perception regarding the type of products that we sell, our products, our actions relating to our products, or our industry in general, including recalls relating to products sold by others, could result in a substantial drop in demand for our products.  This negative public perception may include publicity regarding the safety or quality of our products in general, of other companies or of our products specifically. Negative public perception may also arise from regulatory investigations or product liability claims, regardless of whether those investigations involve us or whether any product liability claim is successful against us.  We could also suffer losses from a significant product liability judgment against us since we do not have product liability insurance.  Either a significant product recall or a product liability judgment, involving either our company or our competitors, could also result in a loss of consumer confidence in our products or the food category, and an actual or perceived loss of value of our brands, materially impacting consumer demand.
  15
  Climate changes could affect the availability and cost of produce.
 
 Since all of our products are agricultural products, our ability to purchase produce and the cost and quality of our produce may be affected both by long-term climate changes as well as season variations in weather conditions which vary from season to season.  Changes in rainfall and unusual variations in temperature during the growing season could affect both the availability and quality of our produce.
 
 We are dependent upon a small number of suppliers.
 
 We only have long-term arrangements to purchase our produce from five farming cooperatives whose farmers grow produce on land leased from us.  Because prices are not set in the long-term contracts that we enter into with the cooperatives, any increase in the prices of our produce would affect the price at which we can sell the produce.  If we are not able to raise our prices to pass on increased costs to our customers, we would be unable to maintain our profit margins.  Similarly, in times of decreasing prices, we may have to sell our products at prices which are lower than the prices at which we purchased our produce. Further, although it has not been necessary for us to purchase produce from other suppliers through the date of this annual report, in the event that we are not able to purchase our produce from these farming cooperative or in the event of a product shortage, it may become necessary for us to purchase from other suppliers, which could result in increased costs as a result of both market conditions and the short-term nature of arrangements. Our inability to obtain produce at a reasonable cost would affect our revenue and gross margins.  Further, if our costs are too high, it may be necessary for us to sell one or more products at a small or negative margin in order to maintain the relationship with our customers.
 
 We are dependent upon sales in two agriculture wholesale markets.
 
 Almost all of our products are sold by us at the Guangdong Yun Cheng Wholesale Market and the Beijing Xin Fadi Agricultural Products Wholesale Market, two major markets for the sale of agricultural products in their respective areas where we lease space to sell our produce. We derived more than 99% of our revenue from these two markets in the first quarter of 2010 and in the years ended December 31, 2009 and 2008. Our inability to sell our products at these markets could impair our sales as well as our ability to operate profitably.  Because the gross margins for our products are not high, any additional expenses resulting from changes in our distribution methods could impair our ability to operate profitably.
 
 If we cannot establish brand name recognition, our sales may be impaired.
 
 Because we are seeking to establish brand identity in an industry where fruits and vegetables are generally considered commodities, we are dependent upon our ability to develop a reputation as a high quality vendor of food products.  Our ability to distinguish our products from others is critical to our ability to market our products as premium foods, rather than commodities.  Although we try to market our produce as premium food, we cannot assure you that consumers will pay the price associated with a premium, rather than a commodity, product.   We cannot assure you that our products and brand will achieve and maintain satisfactory levels of acceptance by independent distributors and retail consumers to enable us to charge for our products as premium goods, which would impact our sales and gross margins.  Further, since we are seeking to promote our foods as premium goods, in times of economic hardship, consumers may purchase cheaper products which could impact both our sales and, if we lower prices in order to compete, our gross margin.
 
 16
   Because we experience seasonal fluctuations in our sales, our quarterly results will fluctuate and our annual performance will depend largely on results from two quarters.
 
 Our business is seasonal, reflecting the harvest season of our primary source foods from mid September to mid November.  Typically, a substantial portion of our revenues are earned during the second half of the year.  We generally experience lowest revenues during our second quarter.  Sales in the second half of 2009 account for approximately 63%of the revenue for 2009 and approximately 59% for 2008.  If sales in the second half of the year are lower than expected, our operating results for the year would be adversely affected since any decline in sales in these periods would have a disproportionately large impact on our annual operating results.
 
 Because we are dependent on our chief executive officer, and the loss of his services and the failure to hire additional qualified key personnel could harm our business.
 
 Our business is largely dependent upon the continued efforts of our senior executive officers.  Anson Yiu Ming Fong, who was our chief executive officer and president until October 2010, when he retired for reasons of health, was important to the development of our business.  Prior to April 2010, Mr. Luo was our chief operating officer.  Mr. Luo resigned from this position in April 2010 and, following the resignation of Mr. Fong, Mr. Luo was elected chief executive officer and president in October 2010.  However, the loss of Mr. Fong or any of our other key employees could have a material adverse effect upon our ability to operate profitably.
 
 Our officers and directors control a significant amount of our common stock.
 
 As of December 31, 2009, our officers and directors owned or controlled approximately 61.5% of our outstanding common stock and they, together with members of their families owned, directly or through companies owned by them, approximately 65.4% of our outstanding common stock and they would have the power to elect all of our directors and to take any action requiring stockholder approval.
 
 Efforts to comply with securities laws and regulations will increase our costs and require additional management resources, and we still may fail to comply.
 
 The SEC requires us, as a reporting company, to include a report of management on our internal controls over financial reporting in our annual reports on Form 10-K. Organic Region was not a public company at December 31, 2008 and was not subject to the internal controls requirements of the Sarbanes Oxley Act at that date.  As of December 31, 2009, our financial controls were not effective and we have identified material weaknesses in our internal controls and disclosure controls. We cannot assure you that we will be successful in addressing any issues that may be raised particularly if we are able to expand our business to operate our proposed green foods distribution hub.  If we are unable to address these issues, or are unable to conclude that we have effective internal controls over financial reporting or if our independent auditors are unable to provide us with an unqualified report as to the effectiveness of our internal controls over financial reporting for 2010, investors could lose confidence in the reliability of our financial statements, especially in view of our need to restate prior financial statements, which could result in a decrease in the value of our securities.  We cannot assure you that we will be able to adequately address any internal controls issues in a timely manner.  Further, although the Dodd-Frank Wall Street Reform and Consumer Protection Act exempts companies with a public float of less than $75 million from the requirement that our independent accountant attest to our financial controls, this exemption does not affect the requirement that we include a report of management on our internal controls over financial reporting and will not affect the requirement to include the auditor’s attestation if our public float exceeds $75 million.   Regardless of whether we are required to receive an attestation from our independent registered public accounting firm with respect to our internal controls, if we are unable to do so, especially in view of our need to restate financial statements following an 8-K filing in which we stated that you cannot rely on our previously published financial statements, investors and others may lose confidence in the reliability of our financial statements and our stock price and ability to obtain equity or debt financing as needed could suffer.
 
 17
   RISKS RELATED TO OUR CORPORATE STRUCTURE
  Our contractual arrangements with Xiong Luo, our chief executive officer and president, may not be as effective in providing control over Guangzhou Greenland as direct ownership.
 
 Since the law of the PRC limits foreign equity ownership in companies in China, most of our revenue and net income is derived from Guangzhou Greenland, which is owned by Xiong Luo, our chief executive officer and president, and we have no equity ownership interest in the Guangzhou Greenland.  We rely on contractual arrangements with Mr. Luo to control and operate this business. These contractual arrangements may not be effective in providing control over the Guangzhou Greenland as direct ownership. We cannot assure you that the Mr. Luo would always act in our best interests.
 
 Because our contracts with Mr. Luo are governed by the laws of the PRC, and because the legal system of the PRC is not as well developed as the United States legal system, we may have difficulty in enforcing any rights we may have under our agreements with Mr. Luo.
 
 Our contractual arrangements with Mr. Luo would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. If Mr. Luo fails to perform his obligations under these contracts, we may have to incur substantial costs to enforce such arrangements and rely on legal remedies under PRC law, including seeking specific performance or injunctive relief, and claiming damages, which may not be available. The legal environment in the PRC is not as developed as in the United States and uncertainties in the Chinese legal system could limit our ability to enforce these contractual arrangements. In the event that we are unable to enforce these contractual arrangements, our business, financial condition and results of operations could be materially and adversely affected since we could cease to have any control over the operations of Guangzhou Greenland, which is required in order to include Guangzhou Greenland’s revenue and income in our financial statements.
 
 If the PRC government determines that the contractual arrangements through which we control Guangzhou Greenland do not comply with applicable regulations, our business could be adversely affected.
 
 Although we believe our contractual relationships through which we control Guangzhou Greenland comply with current licensing, registration and regulatory requirements of the PRC, we cannot assure you that the PRC government would agree, or that new and burdensome regulations will not be adopted in the future. If the PRC government determines that our structure or operating arrangements do not comply with applicable law, it could revoke our business and operating licenses, require us to discontinue or restrict our operations, restrict our right to collect revenues, require us to restructure our operations, impose additional conditions or requirements with which we may not be able to comply, impose restrictions on our business operations or on our customers, or take other regulatory or enforcement actions against us that could be harmful to our business.
 
 The owner Guangzhou Greenland has potential conflicts of interest with us, which may adversely affect our business.
 
 Guangzhou Greenland is not a corporate entity but is a proprietorship owned by Xiong Luo, who served as our chief operating officer until his resignation in April 2010.  Conflicts of interest between his dual roles as owner of Guangzhou Greenland and as one of our officers and directors may arise. We cannot assure you that when conflicts of interest arise, Mr. Luo will act in our best interests or that conflicts of interest will be resolved in our favor. In addition, Mr. Luo may breach or refuse to renew the existing contractual arrangements that allow us to receive economic benefits from Guangzhou Greenland. We rely on Mr. Luo to act in good faith and in our best interests, and not use his positions for personal gain. If we cannot resolve any conflicts of interest or disputes between us and Mr. Luo, we would have to rely on legal proceedings, which could result in disruption of our business and substantial uncertainty as to the outcome of any such legal proceedings.
  RISKS ASSOCIATED WITH COMPANIES CONDUCTING BUSINESS IN THE PRC
  PRC food hygiene and safety laws may become more onerous, which may adversely affect our operations and financial performance and lead to an increase in our costs which we may be unable to pass on to our customers.
 
 Operators within the PRC food processing industry are subject to compliance with PRC food hygiene and safety laws and regulations.  Although our business does not involve processed foods, these laws and regulations may nonetheless require us to obtain a hygiene license. They also set out hygiene standards with respect to food and food additives, packaging and containers, labeling on packaging as well as hygiene requirements for food production and sites, facilities and equipment used for the transportation and the sale of food.  Failure to comply with PRC food hygiene and safety laws may result in fines, suspension of operations, loss of hygiene license and, in certain cases, criminal proceedings against an enterprise and its management.  Although we believe that we are in compliance with current PRC food hygiene and safety laws and regulations that relate to our business, in the event that such laws and regulations become more stringent or widen in scope, we may fail to comply with such laws, or if we comply, our production and distribution costs may increase, and we may be unable to pass these additional costs on to our customers.
   18
 
 Because the scope of our business license is limited, we may need government approval to expand our business.
 
 Our principal operations are conducted through a variable interest entity, which is owned and operated in the name of a director and former chief operating officer.  Our other subsidiaries, including the subsidiary that will operate our green foods distribution center, are wholly foreign-owned enterprises, commonly known as WFOEs. The scope of business is narrowly defined for all businesses in China, and a Chinese company, including a WFOE, can only conduct business within its approved business scope, which appears on the business license. Our license permits us to engage in our present businesses. Any change in the scope of our business requires further application and government approval. Inevitably, there is a negotiation with the authorities to approve as broad a business scope as is permitted, and we cannot assure you that we will be able to obtain the necessary government approval for any change or expansion of our business.
 
 If the PRC enacts regulations which forbid or restrict foreign investment, our ability to grow may be severely impaired.
 
 We intend to expand our business both by increasing our product range, selling products directly to supermarkets and other retail outlets, developing our green foods distribution hub, entering into joint ventures and making acquisitions of companies in related industries. Many of the rules and regulations that we would face are not explicitly communicated, and we may be subject to rules that would affect our ability to grow, either internally or through acquisition of other Chinese or foreign companies. There are also substantial uncertainties regarding the proper interpretation of current laws and regulations of the PRC. New laws or regulations that forbid foreign investment could severely impair our businesses and prospects. Additionally, if the relevant authorities find us in violation of PRC laws or regulations, they would have broad discretion in dealing with such a violation, including, without limitation:
  ·
levying fines;
  ·
revoking our business and other licenses; and
  ·
requiring that we restructure our ownership or operations.
  Any deterioration of political relations between the United States and the PRC could impair our operations.
 
 The relationship between the United States and the PRC is subject to sudden fluctuation and periodic tension. Changes in political conditions in the PRC and changes in the state of Sino-U.S. relations are difficult to predict and could adversely affect our operations or cause potential acquisition candidates or their goods and services to become less attractive even though we do sell almost all of our products in the PRC. Such a change could lead to a decline in our profitability. Any weakening of relations between the United States and the PRC could have a material adverse effect on our operations, particularly in our efforts to raise capital to expand our business activities.
 
 Our operations and assets in the PRC are subject to significant political and economic uncertainties.
 
 Government policies are subject to rapid change and the government of the PRC may adopt policies which have the effect of hindering private economic activity and greater economic decentralization. There is no assurance that the government of the PRC will not significantly alter its policies from time to time without notice in a manner with reduces or eliminates any benefits from its present policies of economic reform. In addition, a substantial portion of productive assets in the PRC remains government-owned. For instance, all land is state-owned and leased to business entities or individuals through governmental granting of state-owned land use rights. The granting process is typically based on government policies at the time of granting, which could be lengthy and complex. This process may adversely affect our future expansion, especially as we are seeking both to expand and diversify our fruit and vegetable production. The government of the PRC also exercises significant control over China’s economic growth through the allocation of resources, controlling payment of foreign currency and providing preferential treatment to particular industries or companies. Uncertainties may arise with changing of governmental policies and measures. In addition, changes in laws and regulations, or their interpretation, or the imposition of confiscatory taxation, restrictions on currency conversion, imports and sources of supply, devaluations of currency, the nationalization or other expropriation of private enterprises, as well as adverse changes in the political, economic or social conditions in the PRC, could have a material adverse effect on our business, results of operations and financial condition.
 
 19
   Our operations may not develop in the same way or at the same rate as might be expected if the PRC economy were similar to the market-oriented economies of OECD member countries.
 
 The economy of the PRC has historically been a nationalistic, “planned economy,” meaning it functions and produces according to governmental plans and pre-set targets or quotas. In certain aspects, the PRC’s economy has been making a transition to a more market-oriented economy, although the government imposes price controls on certain products and in certain industries. However, we cannot predict the future direction of these economic reforms or the effects these measures may have. The economy of the PRC also differs from the economies of most countries belonging to the Organization for Economic Cooperation and Development (the “OECD”), an international group of member countries sharing a commitment to democratic government and market economy. For instance:
 
 ·
the level of state-owned enterprises in the PRC, as well as the level of governmental control over the allocation of resources is greater than in most of the countries belonging to the OECD;
  ·
the level of capital reinvestment is lower in the PRC than in other countries that are members of the OECD;
  ·
the government of the PRC has a greater involvement in general in the economy and the economic structure of industries within the PRC than other countries belonging to the OECD; and
  ·
the PRC has various impediments in place that make it difficult for foreign firms to obtain local currency, as opposed to other countries belonging to the OECD where exchange of currencies is generally free from restriction.
  As a result of these differences, our business may not develop in the same way or at the same rate as might be expected if the economy of the PRC were similar to those of the OECD member countries.
 
 Price controls may affect both our revenues and net income.
 
 The laws of the PRC provide for the government to fix and adjust prices. Although our products are not presently subject to price controls, the government has the power to impose controls on both the price at which we sell products and the price we pay for products.  To the extent that we become subject to price control, our revenue, gross profit, gross margin and net income will be affected since the revenue we derive from our sales would be limited by price controls on our selling prices and, unless there is also price control on the products that we purchase from our suppliers, we may face no limitation on our costs. Further, if price controls affect both our revenue and our costs, our ability to be profitable and the extent of our profitability will be effectively subject to determination by the applicable regulatory authorities in the PRC.   We cannot assure you that the government will not adopt price controls that affect our business.
 
 Because our officers and some of our directors reside outside of the United States, it may be difficult for you to enforce your rights against them or enforce United States court judgments against them in the PRC.
 
 Most of our directors and all of our executive officers reside in the PRC and substantially all of our assets are located in the PRC. It may therefore be difficult for United States investors to enforce their legal rights, to effect service of process upon our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties of our directors and officers under federal securities laws. Further, it is unclear if extradition treaties now in effect between the United States and the PRC would permit effective enforcement of criminal penalties of the federal securities laws.
 
  20
   We may have limited legal recourse under Chinese law if disputes arise under contracts with third parties.
 
 Almost all of our agreements with our employees and third parties, including our supplier and customers and our agreement with Mr. Luo with respect to Guangzhou Greenland, are governed by the laws of the PRC. The legal system in the PRC is a civil law system based on written statutes. Unlike common law systems, such as we have in the United States, it is a system in which decided legal cases have little precedential value. The government of the PRC 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. The resolution of these matters may be subject to the exercise of considerable discretion by agencies of the PRC, 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 Chinese law 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.
 
 Because we have limited business insurance in the PRC, we may not be protected from risks that are customarily covered by insurance in the United States.
 
 We have and will continue to maintain workers’ insurance for all of our workers on our processing lines, at our wholesale centers and on our plantation bases in Luo Chuan and Wanqingsha. However, 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.
 
 Failure to comply with the United States Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences.
 
 We are subject to the United States Foreign Corrupt Practices Act, which generally prohibits United States companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Foreign companies, including some that may compete with us, are not subject to these prohibitions. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time-to-time in the PRC. We can make no assurance, however, 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 and other consequences that may have a material adverse effect on our business, financial condition and results of operations.
 
 If the United States imposes trade sanctions on the PRC due to its currency, export or other policies, our ability to succeed in the international markets may be diminished.
 
 The PRC currently “pegs” its currency to a basket of currencies, including United States dollar. This means that each unit of Chinese currency has a set ratio for which it may be exchanged for United States currency, as opposed to having a floating value like other countries’ currencies. This policy is currently under review by policy makers in the United States. Trade groups in the United States have blamed the cheap value of the Chinese currency for causing job losses in American factories, giving exporters an unfair advantage and making its imports expensive. There is increasing pressure for the PRC to change its currency policies to provide for its currency to float freely on international markets. As a result, Congress is considering the enacting legislation which could result in the imposition of quotas and tariffs. If the PRC changes its existing currency policies or if the United States or other countries enact laws to penalize the PRC for its existing currency policies, our business may be adversely affected, even though we do not sell outside of the PRC. The implementation of policies sought by the United States could make our products most costly in the international market.  We cannot predict what action the PRC may take in the event that the United States imposes tariffs, quotas or other sanctions on Chinese products. Even though we do not sell products into the United States market and our international sales are not significant, it is possible that such action by the PRC may nonetheless affect our business since we are a United States company, although we cannot predict the nature or extent thereof. Any government action which has the effect of inhibiting foreign investment could hurt our ability to raise funds that we need for our operations. The devaluation of the currency of the PRC against the United States dollar would have adverse effects on our financial performance and asset values when measured in terms of the United States dollar.
 
  21
  Exchange controls that exist in the PRC may limit our ability to utilize our cash flow effectively.
 
 We are subject to the PRC’s rules and regulations affecting currency conversion. Any restrictions on currency exchanges may limit our ability to use our cash flow for the distribution of dividends to our stockholders or to fund operations we may have outside of the PRC. Conversion of RMB, the currency of the PRC, for capital account items, including direct investment and loans, is subject to governmental approval in the PRC, and companies are required to open and maintain separate foreign exchange accounts for capital account items. We cannot be certain that the regulatory authorities of the PRC will not impose more stringent restrictions on the convertibility of the RMB, especially with respect to foreign exchange transactions.  To the extent that we develop an export business, we could be affected by the PRC’s exchange controls.
 
 A downturn in the economy of the PRC may slow our growth and profitability.
 
 The growth of the Chinese economy has been uneven across geographic regions and economic sectors. There can be no assurance that growth of the Chinese economy will be steady or that any downturn will not have a negative effect on our business especially if it results in either a decreased use of products such as ours or in pressure on us to lower our prices.
 
 If certain tax exemptions within the PRC regarding withholding taxes are removed, we may be required to deduct corporate withholding taxes from any dividends we may pay in the future.
 
 Under the PRC’s current tax laws, regulations and rulings, companies are exempt from paying withholding taxes with respect dividends paid to stockholders outside of the PRC. However, if the foregoing exemption is removed, we may be required to deduct certain amounts from any dividends we pay to our stockholders.
 
 If our favorable tax treatment is overturned, we may be subject to significant penalties.
 
 On March 16, 2007, the PRC’s National People’s Congress passed a new corporate income tax law, which became effective on January 1, 2008. This new income tax unifies the corporate income tax rate of domestic enterprise and foreign investment enterprises to 25%. Preferential tax treatments will continue to be granted to entities that are classified as “high and new technology enterprises strongly supported by the State” or conduct business in sectors that are encouraged by the PRC’s National People’s Congress. This new tax law, however, does not clearly define the requirements or criteria for receiving these preferential tax treatments. As agriculture companies, some of our subsidiaries presently benefit from full or 50% exemptions from enterprise income tax. Because clear implementation and requirement rules or guidelines for the new tax law have not yet been promulgated, we cannot assure you that our subsidiaries will maintain their preferential tax status or that we will not be assessed significant penalties.
 
 If the PRC tax authorities dispute our method of paying value added taxes, we may be subject to penalties under the tax laws of the PRC.
 
 Under the commercial practice of the PRC, we paid value added taxes (“VAT”) and business tax based on tax invoices issued. We generally issue our tax invoice subsequent to the date on which revenue is recognized, and there may be a considerable delay between the date on which the revenue is recognized and the date on which the tax invoice is issued. In the event that the PRC tax authorities dispute the date of which revenue is recognized for tax purposes, the PRC tax office has the right to assess a penalty which can range from zero to five times of tax which is determined to have been improperly deferred. Although we believe that we are paying VAT and business taxes in accordance with the common practice in PRC, we cannot assure you that the PRC tax authorities would not reach a different conclusion and determine that common practice is not in accordance with the tax laws of the PRC. If a penalty is ultimately assessed against us, the penalty could represent a material amount.
   22
 
 Because the government has the power to withdraw our licenses, we cannot guarantee that we will continue to hold the necessary licenses.
 
 In order for a company to engage in a business in the PRC, it must have a business license, which is issued by the government.  Our subsidiaries possess business licenses which permit them to engage in their respective businesses.  These licenses are subject to inspection by the government agencies of our facilities.  The government has the power to withdraw a license from those companies which may be disqualified as a result of these inspections by the central government. We cannot provide any assurance that we may be able to maintain our present licenses or that we will be able to obtain any additional licenses that may be required if we seek to expand the scope of our business.
 
 RISKS ASSOCIATED WITH INVESTING IN OUR COMMON STOCK
  The market price of our common stock is volatile, leading to the possibility of its value being depressed at a time when you may want to sell your holdings.
 
 Although our stock is quoted on the OTB Bulletin Board, there is not an active market for our common stock.  There are many days in which there is no or insignificant trading volume in our common stock. The absence of any significant activity can result in a very volatile stock.  When there is little trading activity, the purchase or sale of a relatively small number of shares could result in a disproportionate change in the stock price.  In addition, numerous other factors, many of which are beyond our control, may cause the market price of our common stock to fluctuate significantly.  In addition to market and industry factors, the price and trading volume for our common stock may be highly volatile for specific business reasons.  Factors such as variations in our revenues, earnings and cash flow, announcements of new investments, cooperation arrangements or acquisitions, and fluctuations in market prices for our products could cause the market price for our shares to change substantially.  Securities class action litigation is often instituted against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs to us and divert our management’s attention and resources.
 
 Because of our low stock price, you may have difficulty selling shares of our common stock.
 
 The SEC has adopted regulations which generally define so-called “penny stocks” to be an equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions.  The definition of a penny stock does not treat as a penny stock the stock of issuers that meet certain financial requirements, including average revenue of at least $6,000,000 for the last three years.  Although we do not believe that our stock meets the definition of a penny stock because our revenue for each of the past three years exceeded $6 million, many brokerage firms will not process stock purchases or sales of low-priced stocks, regardless of whether the stock meets the definition of a penny stock.
 
 Our common stock is quoted on the OTC Bulletin Board which may have an unfavorable impact on our stock price and liquidity.
 
 Our common stock is quoted on the OTC Bulletin Board, which is not a stock exchange.  The OTC Bulletin Board is a significantly more limited market than the New York Stock Exchange or NASDAQ Stock Market.  The quotation of our shares on the OTC Bulletin Board may result in a less liquid market available for existing and potential stockholders to trade shares of our common stock, could depress the trading price of our common stock and could have a long-term adverse impact on our ability to raise capital in the future.
 
 Our ability to issue preferred stock may make it more difficult for a third party to effect a change-of-control.
 
 Our articles of incorporation authorize our board of directors to issue up to 20,000,000 shares of preferred stock.  The preferred stock may be issued in one or more series, the terms of which may be determined at the time of issuance by the board of directors without further action by the stockholders.  These terms may include preferences as to dividends and liquidation, conversion rights, redemption rights and sinking fund provisions.  The issuance of any preferred stock could diminish the rights of holders of our common stock, and therefore could reduce the value of such common stock.  In addition, specific rights granted to future holders of preferred stock could be used to restrict our ability to merge with, or sell assets to, a third party.  The ability of the board of directors to issue preferred stock could make it more difficult, delay, discourage, prevent or make it more costly to acquire or effect a change-in-control, which in turn could prevent our stockholders from recognizing a gain in the event that a favorable offer is extended and could materially and negatively affect the market price of our common stock.
  23
 The potential sale of 20,000,000 shares pursuant to a registration statement, as well as the existence of other outstanding warrants, may have a depressive effect on the price and market for our common stock.
 
 As of December 31, 2009, we had outstanding warrants to purchase 43,927,210 shares of common stock, and we have filed a registration statement with respect the shares of common stock issuable upon exercise of warrants to purchase 20,000,000 of these shares. The potential sale of 20,000,000 shares of common stock pursuant to the registration statement together with the other outstanding warrants may have a depressive effect on our stock price and make it more difficult for us to raise any significant funds in the equity market if our business requires additional funding.
 
 The market for our common stock may be affected by the reset and liquidated damage provisions which we granted in connection with a private placement of common stock.
 
 In May 2010, we sold 17,000,000 shares of common stock at $0.20 per share pursuant to two agreements, one covering 3,375,000 shares and the other 13,625,000 shares.  In October 2010, we sold 5,000,000 shares of common stock at $0.20 to two investors.  The agreement with the purchasers of 3,375,000 shares in the May 2010 financing and the agreement for the October 2010 financing provide that if, at any time as long as any of the investors holds any of the shares of common stock purchased in the financing, we sell shares of common stock or issue convertible notes or preferred stock with a conversion price which is less than the $0.20 price paid in the financing, we are to issue additional shares to the investors so that the effective price per share is equal to such lower price.  The agreements with each of the groups of investors provide for liquidated damages of 1% per month, payable in cash or stock (based on the closing price of the transaction) if we fail to comply with certain covenants, including effecting a reverse split and filing for the listing of our common stock on the American Stock Exchange, within certain timetables.  See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” for more information relating to these provision.  The potential issuance of additional shares resulting from a downward adjustment in the purchase price of the shares, which would result in increased dilution to the stockholders, together with the potential for liquidated damages, could have an adverse effect upon the market for and the market price of our common stock.
  ITEM 1B  UNRESOLVED STAFF COMMENTS
  Not required for smaller reporting companies.
  Item 2. PROPERTIES
  In China, there is no private ownership of land. Rather, the government owns all real property and issues certificates of property right, known as a land use right, which are transferable, generally have a term of 50 years and permit the holder to use the property.
 
 Our headquarters occupy approximately 7,400 square feet of space at 6/F No.947, Qiao Xing Road, Shi Qiao Town, Pan Yu District, Guangzhou, China, at the rate of approximately $2,000 per month, pursuant to a five-year lease agreement between the Company and Guang LV Industrial Co., Ltd., as supplemented. The lease will expire on May 1, 2012.  We have the option to extend the lease under the same terms and conditions.
 
 We lease approximately 2,000 square feet of space in the Beijing Xin Fadi Agricultural Products Wholesale Market in Beijing at an annual rental of $4,700, pursuant to a two-year lease that expires in 2011.  The lease provides for a renewal option.
   24
 
 We lease approximately 2,700 square feet of space in the Guangdong Yun Cheng Wholesale Market in Guangzhou at an annual rental of $2,000 pursuant to a ten-year lease that expires in 2017.  The lease provides for a renewal options.
 
 We also lease approximately 8,600 square feet of space for vegetable deep processing in the Guangdong Yun Cheng Wholesale Market in Guangzhou at an annual rental of $24,000 pursuant to an eight-year lease that expires in 2017. The lease provides for a renewal option.
 
 As of December 31, 2009, we were a party to 15 land lease and development agreements that we entered into since 2005.  These agreements have terms of 25 years and expire at various dates from 2030 to 2034.  We paid the rental for the 25 year at inception at a total cost of approximately $21 million.  At December 31, 2009, the unamortized portion of these leases was approximately $19 million.  The leases cover approximately 13,700 acres in Luochuan County, in Shaanxi, on which Fuji apples are grown, 2,860 acres in the Nanhsa District in Guangzhou, in Guangdong, where emperor bananas are grown, and approximately 1,280 acres in Rongan County, Liuzhou, in Guangxi, where tangerine oranges are grown.  This land is leased to farming cooperatives.
 
 We believe that all our properties have been adequately maintained, are generally in good condition and are suitable for our business.   In order to expand our business, it will be necessary for us to lease more plantation land, and we plan to lease more plantation land.
 
 We lease the land on which our 220,000 square foot green food distribution hub is being constructed at the Guangdong Yun Cheng wholesale market.  The lease has a term of 18 years, and, as of December 31, 2009, no rent was due under the lease.  The lease provides that the landlord will construct the hub, but we are required to advance RMB40 million, which is approximately $5.8 million at the current exchange rate. As of December 31, 2009, we had advanced approximately $4.6 million. Our rent commences upon completion of the hub.  The lease provides for an annual rent of approximately $1.1 million.
 
 Item 3.      Legal Proceedings
  We are not aware of any legal proceedings or claims that we believe will have a material adverse affect on our business, financial condition or operating results.
  Item 4.      (Removed and Reserved)
  PART II
  Item 5.      Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
  Market Information
  Our common stock is quoted on the OTC Bulletin Board trades under the symbol “SGLA.” The following table sets forth, for the periods indicated, the high and low bid prices of our common stock.  These prices reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.
  Closing Bid Prices(1)High


LowYear Ended December 31, 2009First Quarter

$
0.30


$
0.09Second Quarter

$
0.10


$
0.08Third Quarter

$
0.25


$
0.04Fourth Quarter

$
0.40


$
0.12Year Ended December 31, 2008First Quarter

$
0.005


$
0.005Second Quarter

$
0.005


$
0.002Third Quarter

$
0.004


$
0.002Fourth Quarter

$
0.040


$
0.040
 __________________
  (1) The above tables set forth the range of high and low closing bid prices per share of our common stock as reported by www.quotemedia.com for the periods indicated.
   25
  Holders of our Common Stock
  As of December 31, 2009, there were approximately 156 stockholders of record of our common stock.  This number does not include shares held by brokerage clearing houses, depositories or others in unregistered form.
  Dividends
  We have never declared or paid a cash dividend.  Any future decisions regarding dividends will be made by our board of directors.  We currently intend to retain and use any future earnings for the development and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future.  Our board of directors has discretion on whether to pay dividends.  Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant.
  Securities Authorized for Issuance Under Equity Compensation Plans
  We do not have in effect any compensation plans under which our equity securities are authorized for issuance and we do not have any outstanding stock options.
  Item 6.      Selected Financial Data
  Not required for smaller reporting companies.
  Item 7.      Management’s Discussion and Analysis of Financial Condition and Results of Operations
  The following discussion of the results of our operations and financial condition should be read in conjunction with our financial statements and the related notes, which appear elsewhere in this annual report. The following discussion includes forward-looking statements.
  Statements in this annual report may be “forward-looking statements.” Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions. These statements are based on current expectations, estimates and projections about our business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may, and are likely to, differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those described above and those risks discussed from time to time in this annual report, including the risks described under “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this annual report. In addition, such statements could be affected by risks and uncertainties related to weather and natural disasters, our ability to conduct business in the PRC, product demand, including the demand for fruit and vegetable products, our ability to develop and maintain good relations with local cooperative suppliers, our ability to raise any financing which we may require for our operations, including financing for our green produce hub, competition, government regulations and requirements, pricing and development difficulties, our ability to make acquisitions and successfully integrate those acquisitions with our business, as well as general industry and market conditions and growth rates, and general economic conditions. Any forward-looking statements speak only as of the date on which they are made, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this annual report.
  26
  Overview
  We are engaged in the wholesale distribution, marketing and sales of premium fruits in China. Our main products include Fuji apples, emperor bananas and tangerine oranges. We purchase our products directly from farming cooperative groups to whom we provide varying degrees of farming, harvesting and marketing services. Almost all of our products are sold by us at the Guangdong Yun Cheng wholesale market and the Beijing Xin Fadi agricultural products wholesale market, two major markets for the sale of agricultural products in their respective areas, where we lease space to sell our produce. We sell to trading agents who sell our products to customers in and around the provinces in which the produce is grown.  We have recently introduced a line of vegetable products, which we process and distribute to end users.  However, our revenue from vegetables has been nominal through December 31, 2009.
  Fruits, such as apples, bananas and oranges, as well as vegetables are considered staples in the Chinese diet, similar to rice and meat, and historically, demand for these products has not fluctuated with the ups and downs of the general economy. As a result, we have not yet seen a significant decline in our business from the recent economic downturn and the global credit crisis. However, if economic conditions further deteriorate, including business layoffs, downsizing, industry slowdowns and other similar factors that affect our distributors, customers, suppliers, farmers and creditors, we could see a reduction in the demand for our products which could have a material adverse effect on our business operations. Since we promote our products as premium foods, in troubled economic times, consumers may purchase cheaper fruits and vegetables rather than our products, which could affect both our revenue and our gross margin.
  All fruits and vegetables are perishable, and are subject to spoilage if they are not delivered to market in a timely manner.  Our ability to both purchase and sell produce is dependent upon a number of factors which are not under our control.  Severe weather conditions and natural disasters, such as floods, droughts, frosts, earthquakes or pestilence, may affect our ability both to purchase products and to sell our products at the wholesale markets.  Under these conditions, we may incur a higher cost of cold storage with no assurance that, even in the best conditions, spoilage cannot be avoided.
  Since weather conditions are not uniform throughout China, our competitive position may be impaired if our competitors are able to deliver produce to market at a time when we are not able to make deliveries, either because we are unable to purchase the produce or because we are unable to bring the produce to market.
  We only have long-term arrangements to purchase produce from five farming cooperatives.  If we are not able to purchase our produce from these farmers, whether because of a shortage, because of government regulations or otherwise, we may be unable to purchase produce from other co-ops or farmers, and if we are able to purchase produce, our costs may be greater, which could impair our gross margins.
  Substantially all of our produce is grown by farming cooperatives on land which we lease pursuant to 25-year lease and development agreements which we entered into since 2005.  All of these leases were entered into with the farmers who held the land use rights from the government.  The farming cooperatives consist of many farmers who held the land use rights.  Pursuant to these agreements, as of December 31, 2009, we had paid a total of $21 million to the holders of the land use rights, who are not affiliated with us, and the farmers agreed to manage the land and plant the crops and we received a priority right to purchase the crops at fair market price.  The farming cooperatives do not pay us rent for the land.  We amortize our payments over the life of the leases.  The amortization of our lease payments is included in cost of goods sold.
  We are in the process of constructing a new hub for the sale of green foods in the Guangdong wholesale market.  We believe that our hub will be the first hub in the PRC to provide wholesale and retail customers with the ability to purchase a wide variety of green foods in one location.  We intend to purchase green foods from members of the China Green Food Association, who sell more than 17,000 food items, and sell the foods in our green foods hub.  As of December 31, 2009, we had paid approximately $4.6 million in connection with the construction of this hub from cash generated by our operations and from funds which we raised in 2009.  We anticipate completing the construction of the hub by the end of 2010 and to begin the operations of our new green foods product line in 2011.  We anticipate that the total investment to launch this business will be $18 million, which includes construction costs of approximately $12 million, with approximately $4 million auxiliary facilities, such as refrigerated cold-storage trucking capabilities and air conditioning, and $2 million for initial inventory of new green foods products.  On an ongoing basis, we believe that we will need to maintain inventory in the range of $4 million.
   27
  As part of our green foods distribution hub business, we may market our green foods directly to supermarkets and other retail stores.  We anticipate that some of the retail markets will purchase our green food products at our distribution hub while others will require us to deliver the foods to them.  In order to develop this business, we will need to expand our marketing effort and establish a delivery system for the retail food.
  We will require significant additional funding for our green foods distribution hub business. We have no commitments for the funding and our failure to obtain funding will impair our ability to develop this business.  If we are not able to operate the green foods hub, we may not be able to recover our costs, in which event we would include a charge equal to the amount of the unrecovered costs.
  While we currently generate sufficient operating cash flows to support our operations, our capital requirements and the cash flow provided by future operating activities, if any, will vary greatly from quarter to quarter, depending on the volume of business during the period and payment terms with our customers.  A significant portion of our revenue growth has resulted from increased land use rights which we lease under long-term leases that require us to pay the rental for the entire lease term at the inception of the lease.  During 2009, we expended approximately $3.4 million to purchase additional leases.  If we are to expand our business, we will continue to lease additional farm land on which our produce can be grown, which will require significant additional capital.
  We have commenced construction of our green foods distribution hub in the Guangdong wholesale market at an estimated cost of approximately $18 million, of which we paid approximately $4.6 million as of December 31, 2009 toward the construction of the hub. These funds were generated from our operations and the sale of our equity securities.  We have no commitment for the balance of our estimated cost.  Our failure to raise the necessary funds for this project could impair our ability to complete the project and we may lose the money we have invested to date.
 We presently sell our produce in the wholesale markets, where our customers are wholesale distributors.  In connection with, and as part of, our green foods distribution hub, we may seek to market to supermarkets and other retail outlets.  To the extent that we develop this business, we would incur additional marketing, shipping and other expenses.
  The current uncertainty arising out of domestic and global economic conditions, including the disruption in credit markets, may affect our ability to obtain either debt or equity financing which we may require in order to expand our business. Although our products are considered staples in Chinese consumers’ daily life, and, historically, demand for such staples has not fluctuated with the ups and downs of the general economy, if the current economic situation continues to deteriorate, we could see a more drastic reduction in the demand for our products.  Since we are marketing our products as premium produce, consumers, in a time of economic difficulties, could purchase non-premium produce, which could have a material adverse effect on our business.
  Seasonality
 
 Our fresh fruit business is highly seasonal.  Fuji apples are harvested mainly from late August until early November and are sold throughout the year. Tangerine oranges are harvested in late September through late November with the result that we have limited sales of tangerine oranges in the third quarter of the year.  Emperor bananas are harvested throughout the year.  They grow in an eight-month cycle, and are cultivated and harvested all year long. As harvested fruits cannot be stored at room temperature for a long time, they must be processed for sale as soon as they are harvested or stored at a cold temperature. As a result, the sales volume for our produce occurs during the harvesting season and for the months following the harvesting season.
  28
  We generally experience higher sales in the second half of the year.   Sales in second half of 2009 accounted for approximately 63% of our revenue for 2009, and sales in the second half of 2008 accounted for approximately 59% of our revenue for 2008.  If sales in the second half of the year are lower than expected, our operating results would be adversely affected, and it would have a disproportionately large impact on our annual operating results. Sales of tangerine oranges were nominal during the third quarter of 2009.
  Because of the large number of green foods products which we plan to distribute through at our green foods distribution hub, there will be many different seasons for the different products we operate.  We cannot predict at this time how the seasonality of the various products we propose to sell will affect our overall profitability.
  Taxation
  The PRC Enterprise Income Tax Law and Implementing Rules impose a unified EIT rate of 25.0% on all domestic-invested enterprises and foreign-invested enterprises, or FIEs, unless they qualify under certain limited exceptions. The law gives the FIEs established before March 16, 2007, such as our subsidiaries Zhuhai Organic and Guangzhou Organic, a five-year grandfather period during which they can continue to enjoy their existing preferential tax treatment. During this five-year grandfather period, the old FIEs which enjoyed tax rates lower than 25% under the original EIT law shall gradually increase their EIT rate by 2% per year until the tax rate reaches 25%. In addition, the FIEs that are eligible for a full exemption and 50% reduction under the original law are allowed to retain their preferential treatment until these holidays expire.
  Under the current income tax laws and the related implementing rules, FIEs engaging in agriculture businesses, such as Guangzhou Organic, are entitled to a two-year tax exemption from PRC enterprise income tax, subject to approval from local taxation authorities. Guangzhou Organic is tax exempt for 2008 to 2009 and is entitled to a 50% tax reduction for the three years thereafter. Due to the absence of significant business in 2008, Zhuhai Organic was entitled to tax exemption in 2007, and will be entitled to a one-year tax exemption after the business resumes.  However, Zhuhai Organic did not constitute a significant source of revenue or income in 2009 or 2008.  Currently, pursuant to income tax law, the income tax rate for foreign-capitalized enterprises is 25% and the value-added tax rate is 13%.
  Accounting Treatment of Financing Instruments
  In April 2008, Organic Region, which was then a privately-owned company, issued, for $500,000, its one-year 18% convertible notes in the principal amount of $500,000 and warrants to purchase common stock after Organic Region effects a going public transaction, which includes a reverse acquisition with a publicly traded shell corporation. Due to variability in the terms of the warrants’ exercise price for which accounting rules preclude them from being considered as indexed to our common stock, the warrants are recorded at fair value, with changes in value reported in the income statement each period. Although the debt was paid off in 2009, the warrants remain outstanding.
  The series A preferred stock issued in 2009 were issued with warrants and/or a conversion feature that require the proceeds received on the transaction to be allocated to each applicable component. Any resulting warrant liabilities are recorded at fair value, with changes in value recorded in the income statement each period. Any proceeds allocated to beneficial conversion features on the preferred shares are recorded as a discount on such shares, with a credit to additional paid-in capital. The discounts are then charged immediately to retained earnings as deemed preferred stock dividends pursuant to the terms of the agreement which provide immediate conversion rights.
  Restatement of Financial Statements
  On August 23, 2010, we concluded, after a review of the pertinent facts, that the previously issued financial statements contained in our annual report on Form 10-K for the year ended December 31, 2009 and our quarterly reports on Form 10-Q for the quarters ended March 31, 2010, September 30, 2009, June 30, 2009 and March 31, 2009, respectively, should not be relied upon for reasons set forth in Note 14 of Notes to Consolidated Financial Statements.  This annual report reflects restated financial statements for the years ended December 31, 2009 and 2008 because of our failure to account properly for the treatment of securities issued in financings during 2009 and 2008.  As a result, our net income, as originally reported, was overstated by approximately $3.5 million for 2009 and understated by $113,000 for 2008.    As described in Note 14 of Notes to Consolidated Financial Statements, our balance sheet at December 31, 2009 and 2008 and our statements of income and comprehensive income for the years then ended have been restated to reflect the derivative liability and the effect of changes in derivative liability.
   29
  Results of Operations
  The following table sets forth information relating to our products for the years ended December 31, 2009 and 2008 (dollars in thousands):
  Period

Product

Sales


Percentage


Cost of Sales


Gross ProfitYear Ended December 31, 2009

Fuji Apples

$
92,027



85.2
%

$
82,258


$
9,769Emperor Bananas


9,872



9.1
%


8,618



1,255Tangerine Oranges


5,575



5.2
%


4,937



638Vegetables


572



0.5
%


496



76Total

$
108,045






$
96,308


$
11,737Year EndedDecember 31, 2008

Fuji Apples

$
63,682



86.6
%

$
57,130



6,552Emperor Bananas


5,199



7.1
%


4,533



666Tangerine Oranges


4,289



5.8
%


3,767



522Vegetables


392



0.5
%


395



(3Total

$
73,563






$
65,825


$
7,737
 
 Years ended December 31, 2008 and 2009
  The following table sets forth the key components of our results of operations for the years ended December 31, 2008 and 2009, in dollars and as a percentage of sales and the changes in these components from 2008 to 2009 in dollars and as a percentage (dollars in thousands):
  30
  Change from Year EndedYear Ended December 31,


December 31, 20082009 (Restated)


2008 (Restated)


To December 31, 2009Amount


Percent


Amount


Percent


Amount


PercentSales

$
108,045



100.0
%

$
73,563



100.0
%

$
34,482



46.9
%Cost of sales


96,308



89.1
%


65,825



89.5
%


30,483



46.3
%Gross profit


11,737



10.9
%


7,737



10.5
%


4,000



51.7
%Operating expenses:Selling expenses


2,581



2.4
%


1,631



2.2
%


950



58.2
%General and administrative expenses


2,249



2.1
%


1,073



1.5
%


1,143



106.5
%Total operating expenses


4,831



4.4
%


2,704



3.7
%


2,094



77.4
%Income from operations


6,906



6.4
%


5,033



6.8
%


1,906



37.9
%Other income (expenses)Interest expense, net


(64
)


(0.1
%)


(134
)


(0.2
%)


70



(52.2
%)Loss on debt extinguishment


(139
)


(0.1
%)


--



--



(139
)



2Change in derivative liability


(3,866
)


(3.6
%)


(201
)


(0.3
%)


(3,665
)


1,823.8
%Other, net


154



0.1
%


15



0.0
%


139



926.7
%Total other income (expense)


(3,915
)


(3.6
%)


(319
)


(0.4
%)


(3,596
)


1,126.4
%Net income1


3,024



2.8
%


4,714



6.4
%


(1,690
)


(35.8
%)Deemed preferred stock dividend


650



0.6
%


--



--



650




2Net income allocable to common stockholders


2,374



2.2
%


4,714



6.4
%


(2,340
)


(49.6
%)Foreign currency translation gain (loss)


(313
)


(0.3
%)


778



1.1
%


(1,091
)


(140.2
%)Comprehensive income


2,711



2.5
%


5,492



7.5
%


(2,781
)


(50.6
%)
  1
Pursuant to the tax laws of the PRC, no income tax was due with respect to 2009 or 2008.  If income tax were payable at the statutory rate, the net income available to common stockholders would have been $1,385,874 for 2009 and $3,563,650 for 2008.
  2
The percentages were not included since they do not provide meaningful information.  Sales. Sales increased $34.4 million, or 46.9%, to $108.0 million in 2009 from $73.6 million in 2008. This increase was mainly due to our expanded plantation bases and supply sources during 2009 period, as we increased the land which we leased by approximately 8,700 acres during 2009, of which 4,000 acres generated produce during the second half of 2009.  Sales of our Fuji apples increased by 43.7% in 2009 as compared to 2008, with 97% of this increase being attributable to increased sales volume and 3% to increases in the average sales price.  Sales of our emperor bananas increased by 88.9% in 2009 as compared to 2008, with 94% of this increase being attributable to increased sales volume and 6% attributable to increases in the average sales price of these products.  Sales of our tangerine oranges increased by 29.3% in 2009 as compared to 2008, with 81.6% of this increase is attributable to increased sales volume and 18.4% is attributable to increases in the average sales price of these products.  Our sales volume was significantly lower than usual during the first quarter of 2008 as a result of low supplies of Fuji apples due to heavy snow in the regions in which our Fuji apples are grown. During the first quarter of 2009, more favorable weather conditions resulted in increased supplies and increased sales.  In addition, our sales volume increased by an aggregate of 38,500 tons in 2009 because we leased an additional 3,220 acres of land from the farming cooperative that supplies us with Fuji apples, and 833 acres of land from the farming cooperative that supplies us with emperor bananas.  We began generating revenues from sales of products harvested on these newly leased lands in the third quarter of 2009.
  31
  Cost of Sales. Our cost of sales is primarily comprised of the costs of our produce from our farming cooperatives and, to a significantly lesser extent, the amortization of our long-term lease prepayments relating to the land used by the farming cooperatives. Our cost of sales increased $30.4 million, or 46.3%, to $96.3 million in 2009 from $65.8 million in 2008. This increase was mainly due to an increase of sales during 2009 and is proportionate to the increase in sales, and also reflects the additional amortization of our long-term leases resulting from the additional land under lease.  Our amortization of our long-term lease prepayments was $0.6 million in 2009 and $0.5 million in 2008.
  Gross Profit and Gross Margin. Our gross profit increased $4.0 million to $11.7 million in 2009 from $7.7 million in 2008.  Our gross margin was 10.9% in 2009 and 10.5% in 2008, reflecting a modest increase resulting from our ability to effect price increases in 2009. Although our sales prices and costs remained relatively stable between 2008 and 2009, we cannot predict whether this will continue.  The relationship between our sales prices and costs can be affected by a number of factors, including government regulations, climate and weather conditions, and changes in consumer preferences.
  Selling Expenses. Our selling expenses are comprised of marketing expense, the salaries of our marketing staff, bonus, rent and other selling expense. Our selling expenses increased $1.0 million, or 58.2%, to $2.6 million in 2009 from $1.6 million in 2008. As a percentage of sales, our selling expenses increased to 2.4% in 2009 from 2.2% in 2008.
  General and Administrative Expenses. Our general and administrative expenses are comprised of salary of executives, travel expense, office expense, product development, market research, exhibition, audit expense, advisory expense.   Our administrative expenses increased $1.2 million, or 116.3%, to $2.2 million in 2009 from $1.0 million in 2008. As a percentage of sales, administrative expenses increased to 2.1% in 2009, as compared with 1.4% in 2008.The increase in general and administrative expenses also reflects $0.5 million in expenses relating to the reverse acquisition, $0.2 million in increased compensation  and $0.4 million of legal, consulting and other expenses resulting from our status as a public company.
  Interest Expense.  In April 2008, we issued, for $500,000, our 18% convertible notes in the principal amount of $500,000 and warrants to purchase a number of shares to be determined based on future financings. The interest for the 2009 period reflects interest on the outstanding notes.
  Loss on debt extinguishment.  In April 2008, Organic Region issued, for $500,000, its 18% convertible debentures in the principal amount of $500,000 and warrants to purchase shares of common stock, with the exercise price and the number of shares to be determined after the completion of a reverse acquisition transaction and the completion of one or more financings generating proceeds of $3 million.  In January 2009, as part of the reverse acquisition, we assumed the convertible debt along with the obligation to issue the warrants.  In December 2009, we completed raising $3 million in financing and the terms of the warrants were then determined.  The $500,000 proceeds were allocated between the convertible notes ($361,000) and the warrants ($139,000).  The convertible notes were paid in August 2009, and the $139,000 difference between the $500,000 payment and the $361,000 carrying value of the notes was treated as a loss on debt extinguishment. See Note 7 of Notes to Consolidated Financial Statements.
  Change in derivative liability.  The $3.9 million change of derivative liability compared for 2009, as compared with to $0.2 million for 2008, representing the change in fair value of warrants outstanding. The change in fair value, as computed using the Black-Scholes option pricing model, primarily reflected the increase in our stock price, which was $0.25 at December 31, 2009 and $0.09 at December 31, 2008.
  Tax.Since our operating subsidiaries benefited from a tax exemption for agriculture products for 2008 and 2009, we did not incur any income tax liability in 2008 or 2009.
  Net Income. As a result of the factors described above, our net income was $3.0 million for 2009, as compared with $4.7 million for  2008.
  Deemed Preferred Stock Dividend.  In August 2009, we issued for $1,000,000 (i) 1,000,000 shares of series A preferred stock, (ii) an option to purchase an additional 1,000,000 shares of series A preferred stock and (iii) warrants to purchase a total of 20,000,000 shares of common stock.  We incurred deemed preferred stock dividend of $650,000 in December 2009 in connection with the exercise of an option to purchase 650,000 shares of series A preferred stock, representing the difference between the market price of the common stock on the date of exercise and the purchase price of the common stock issuable upon conversion of the series A preferred stock on an “as if converted” basis.  With respect to the issuance of the series A preferred stock in August 2009, since all of the consideration received was allocated to the option to purchase preferred stock and the warrants, there was no consideration allocated to the series A preferred stock with the effect that (i) there is no deemed preferred stock dividend with respect to that issuance and (ii) no part of the consideration received is shown as preferred stock on the statement of stockholders’ equity.
  32
  Net Income Applicable to Common Stockholders. As a result of deemed preferred stock dividend, our net income per share of common stock for 2009 was $2.7 million, or $0.03 per share (basic) and $0.02 per share (diluted), as compared with $4.7 million, or $0.06 per share (basic and diluted) for  2008.
  Liquidity and Capital Resources
  At December 31, 2009, we had a working capital deficiency of approximately $3.7 million, as compared with a working capital deficiency of approximately $1.2 million at December 31, 2008.  The increase in working capital reflects the $4.9 million increase in the derivative liability, which reflects the increase in the value of the derivatives resulting from the increase in our stock price.  Our working capital also reflects our investment in long-term lease prepayments of $3.3 million, advances relating to construction of our green foods hub of $4.6 million and equity financings which generated $2.7 million and cash flow used in operations of $0.8 million. The following table sets forth information as to the principal changes in the components of our working capital (dollars in thousands).
 
 Category







December 31, 2008 to

March 31, 2009December 31,

2009


December 31,

2008

Change


Percent

ChangeCurrent Assets:Cash and cash equivalents

$
1,987


$
545



1,442



264.6
%Accounts receivable, net


171



201



(30
)


(14.9
)%Due from related parties


1



353



(352
)


(99.7
)%Inventories


10



17



(7
)


(41.2
)%Advances – current portion


256



--



256


NAOther current assets


343



58



285



491.4
%Total current assets


2,769



1,173



1,596



136.1
%Current Liabilities:Accounts payable and accrued expenses


1,186



1,530



(344
)


(22.4
)%Advances from customers


49



56



(7
)


(12.5
)%Due to related parties


3



129



(126
)


(97.7
)%Convertible debenture


--



361



(361
)


(100.0
)%Derivative liability


5,207



340



4,867



1431.5
%Total current liabilities


6,446



2,417



4,029



166.7
%Net working capital deficiency


(3,677
)


(1,244
)


(2,433
)


(195.6
)%
  In 2009, we used $0.8 million in our operations, as compared with cash flow from operations of $0.1 million in 2008.  Our cash flow from operations for both 2009 and 2008 reflected significant cash expenditures for long-term lease obligations which are payable at the commencement of the lease.  For 2009, cash used in operations included approximately $4.1 million in advances and $3.4 million in long-term prepaid lease obligations and reflected the $3.9 million change in derivative liability.  The principal item in the advances is the payment of approximately $4 million, which represented a payment toward the construction of the distribution hub, which we will be leasing from a non-affiliated party.  The $3.4 million in long-term lease obligations represents the lease payments for the 25-year leases for the land on which our farming cooperatives grow our produce.  Under the terms of the leases, the rent for the full 25 years is payable at the beginning of the lease. For 2008, the long-term lease obligation payments were $7.2 million.  Since these payments are reflected in our cash flow from operations for 2009 and 2008, our operations used $0.8 million in 2009 and generated $0.1 million in 2008.
  33
  Cash flow used in investing activities was approximately $0.5 million in 2009, as compared with cash flow used in operations for 2008 of $0.1 million.  The principal investing activity in 2009 was additional property, plant and equipment.  Cash funds used in investing activities was immaterial for 2008.   For 2009, our cash flow from financing activities was $2.9 million, compared with cash used in financing activities of $0.1 million in 2008, reflecting $0.5 million from the sale of convertible notes and payments of $0.6 million of payments to related parties.
  Our primary source of funds, other than operations, was the sale of our equity securities, from which we received $3.4 million in 2009.
  In June and July 2009, we borrowed $1.43 million from a group of investors.  Effective August 3, 2009, we entered into two agreements with the noteholders and with another investor who invested $200,000.  Pursuant to these agreements, the notes were cancelled and we issued common stock and warrants as follows:
  Pursuant to one agreement, we issued 13,129,410 shares of common stock at a purchase price of $0.085 per share and two-year warrants to purchase 10,145,454 shares of common stock at an exercise price of $0.11 per share.
  Pursuant to the second agreement, we issued 4,333,334 shares of common stock at a purchase price of $0.12 per share, granted the investors an option to purchase acquire up to 6,500,000 shares of common stock at a purchase price of $0.12 per share and issued two-year warrants to purchase 3,466,666 shares of common stock at an exercise price of $0.15 per share.  In the event that such investors exercise the option to purchase shares of common stock, we will issue two-year warrants to purchase up to 5,200,000 shares of common stock at an exercise price of $0.15 per share. In January 2010, in connection with the exercise of an option to purchase 2,333,333 shares, we issued the exercising party a warrant to purchase 1,866,667 shares of common stock at $0.15 per share.  In July 2010, the remaining options were exercised, and we issued the exercising party warrants to purchase 3,333,333 shares of common stock.
  On August 7, 2009, we entered into a series A convertible preferred stock and warrant purchase agreement with three accredited investors, who are the selling stockholders, to whom we sold, for $1,000,000, an aggregate of 1,000,000 shares of the series A convertible preferred stock and five-year warrants to purchase 10,000,000 shares of common stock at $0.14 per share and 10,000,000 shares of common stock at $0.25 per share. The investors had the option to acquire an additional 1,000,000 shares of preferred stock at $1.00 per share, and, in December 2009 and January 2010, they exercised this option and we issued 1,000,000 shares of series A preferred stock for $1,000,000. We paid an aggregate of $50,000 of broker fees in connection with this transaction and an additional $50,000 upon the exercise of the option.  We also reimbursed the investors for $45,000 of due diligence expenses.
  In February 2010, we sold to two of the investors in the August 7, 2009 financing and their affiliates, 4,167,000 shares of common stock for $0.12 per share, for a total of $500,000.
  In May 2010, we raised $3.4 million from the sale of 17,000,000 shares of common stock at $0.20 per share pursuant to agreements with two sets of investors.  One group of investors purchased a total of 3,375,000 shares for $675,000 (the “group A investors”) and the other group purchased 13, 625,000 shares of common stock for $2,725,000 (the “group B investors”).  In connection with the May 2010 financing, we agreed with the investors that:
  ·
If, as any time as long as any of the group A investors holds any of the shares of common stock purchased in the financing, we sell shares of common stock or issue convertible notes or preferred stock with a conversion price which is less than the $0.20 per share price paid in the financing, we are to issue additional shares to the investors so that the effective price per share is equal to such lower price.  The group B investors have no comparable provision.
  ·
We would hire a finance manager or chief financial officer with United States public company experience, within 45 days after the closing.  If we fail to meet this covenant, we must pay the group A investors liquidated damages of 1% per month in cash or stock (based on the closing price of the transaction) to the investors until the position is filled.  We satisfied this covenant.
  34
  ·
Within 45 of closing, we shall have a majority of independent directors of which two are to be English-speaking and have prior experience with United States public companies.  If we fail to meet this covenant, we must pay the group A investors liquidated damages of 1% per month in cash or stock (based on the closing price of the transaction) to the investors until the covenant is met.  We have satisfied this requirement.
  ·
Within 120 days of closing with respect to the group A investors and 180 days with respect to the group B investors, we must have sent in the necessary paperwork to apply for a listing on the American Stock Exchange.  If we fail to meet this covenant, we must pay the investors liquidated damages of 1% per month in cash or stock (based on the closing price of the transaction) to the investors until the covenant is met.
  ·
Within 90 days of closing, we agreed with the group A investors to “conduct a minimum of an eight (8) for one (1) and maximum of ten (10) for one (1) reverse stock split” and we agreed with the group B investors to “conduct a minimum of a six (6) for one (1) and maximum of eight (8) for one (1) reverse stock split.” If we fail to meet this covenant, we must pay the group A investors liquidated damages of 1% per month in cash or stock (based on the closing price of the transaction) to the investors until the covenant is met.
  On October 4, 2010, we sold 5,000,000 shares of common stock to two investors at $0.20 per share to two investors, for total gross proceeds of $1,000,000.  In connection with the financing, we agreed with the investors that:
  ·
If, as any time as long as any investor holds any of the shares of common stock purchased in the financing, we sell shares of common stock or issue convertible notes or preferred stock at a price or with a conversion price which is less than the $0.20 per share price paid in the financing, we are to issue additional shares to the investors so that the effective price per share is equal to such lower price.
  ·
Within 120 days of closing, we must have sent in the necessary paperwork to apply for a listing on the American Stock Exchange.  If we fail to meet this covenant, we must pay the investors liquidated damages of 1% per month in cash or stock (based on the closing price of the transaction) to the investors until the covenant is met.
  ·
Within 90 days of closing, we agreed with to “conduct a minimum of an eight (8) for one (1) and maximum of ten (10) for one (1) reverse stock split.” If we fail to meet this covenant, we must pay the group A investors liquidated damages of 1% per month in cash or stock (based on the closing price of the transaction) until the covenant is met.
  We believe that our cash flow from operations will provide us with sufficient funds to enable us to continue our basic operations, including the purchase of additional land use rights for growing our produce.    In the past, we have leased farmland for periods of 25 years on terms which required us to make all of the lease payments at the inception of the lease, which has required us to make significant cash outlays in the past.  These payments were approximately $3.4 million in the 2009 and $7.2 million for 2008 and the funding for these leases was generated from our operations.
 
 As of December 31, 2009, we had advanced approximately $4.6 million in the construction of our green foods distribution hub.  Upon completion of the construction, the construction cost advances will be reflected as leasehold improvements and amortized over the 18 year term of the lease.  We estimate our total initial costs of this operation to be approximately $18 million, which includes construction costs of approximately $12 million, with approximately $4 million for auxiliary facilities, such as a cold storage facility as part of the distribution hub and refrigerated trucking capabilities, and $2 million for initial inventory of new green foods products.  On an ongoing basis, we believe that we will need to maintain inventory in the range of $4 million.
 We will need to raise a substantial amount of capital from equity or debt markets, or to borrow funds from local banks, in order to complete the construction of our hub, launch and operate our new green foods business and maintain inventory.  However, there is no assurance that, if required, we will be able to raise additional capital or reduce discretionary spending to provide the required capital.  Currently, the capital markets for small capitalization companies are difficult and banking institutions have become stringent in their lending requirements.
 
 35
 
 Accordingly, we cannot be sure of the availability or terms of any third party financing, and any financing that may be available may be on terms which are not favorable to us and our stockholders and may result in significant dilution to our stockholders.  In addition, if our outstanding warrants are not exercised, the presence of such a large number of warrants combined with the lack of an active trading market in our stock and our need to restate our financial statements and our filing of a Form 8-K stating that you cannot rely on our previously issued financial statements may impair both our ability to raise capital in the equity markets and the terms on which any funds could be made available to us.  Although we are seeking equity and debt financings to provide us with the funds we require to construct and operate our green foods distribution hub, as of the date of this annual report, we do not have any formal or informal agreement or understanding with respect to any transaction which would provide us with the necessary cash.  The failure to obtain funding when required could significantly impair our ability to develop this business.
  To the extent that we are able to generate funds from the sale of our equity and debt securities, our first priority is the completion and operation of the green foods distribution hubs.  To the extent that we develop operations directed to sales to retail operations, these operations will be included as a phase of the green foods distribution hub.  We do not currently plan to develop independent operations directed to the retail market. To the extent that we are not able to generate funds from the sale of debt or equity securities, we will limit the expansion of our fruit business to land which we can purchase from our cash flow from operations.
 
 Critical Accounting Policies and Estimates
  The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial conditions and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments.
  We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements.
  Accounts Receivable – Our policy is to maintain reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves.
  Inventories – Inventories are valued at the lower of cost (determined on a weighted average basis) or market value. Management compares the cost of inventories with market value and an allowance is provided to reduce the value of inventories to their net market value.
  Impairment – We apply the provisions of ASC 360-10 (Originally issued as FAS No. 144). ASC 360-10 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. We test long-lived assets, including property, plant and equipment and intangible assets subject to periodic amortization, for recoverability at least annually or more frequently upon the occurrence of an event or when circumstances indicate that the net carrying amount is greater than its fair value. Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. We consider historical performance and future estimated results in our evaluation of potential impairment, and then we compare the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, we measure the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally measured by discounting expected future cash flows as the rate we utilize to evaluate potential investments. We estimate fair value based on the information available in making whatever estimates, judgments and projections are considered necessary.
  36
  Revenue Recognition – Our revenue recognition policies are in compliance with ASC 605 (originally issued as Staff Accounting Bulletin (SAB) 104). Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue. Revenues from the sale of products are recognized at the point of sale of our products. Discounts provided to customers by us at the time of sale are recognized as a reduction in sales as the products are sold. Discounts provided by vendors are not recognized as a reduction in sales provided the coupons are redeemable at any retailer that accepts coupons. Sales taxes are not recorded as a component of sales. The “Cost of Good Sold” line item of the Consolidated Statements of Income includes product costs, net of discounts and allowances. Discounts provided to us by vendors at the time of purchase are recognized as a reduction in inventory cost as the products are delivered. All other costs, including warehousing costs, transportation costs; salaries, rent expense and depreciation expense, are shown separately in selling expenses or general and administrative expense in our consolidated statements of income.
  Foreign Currency Translation – We use United States dollars for financial reporting purposes. Our subsidiaries maintain their books and records in their functional currency - RMB, which is currency of China, where all of our operations are conducted. Such financial statements were translated into United States dollars in accordance with ASC 830 (originally issued as Statement of Financial Accounts Standards (“SFAS”) No. 52, “Foreign Currency Translation”). According to the Statement, all assets and liabilities are translated at the current exchange rate on the balance sheet date, stockholder’s equity are translated at the historical rates and income statement items are translated at the average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with ASC 220 (Originally issued as SFAS No. 130, “Reporting Comprehensive Income”) as a component of stockholders’ equity.
  Derivative Liability – The derivative liability represents the value of warrants to purchase common stock that were issued in connection with certain debt and preferred stock offerings in 2008 and 2009. According to the guidance provided in FASB ASC 815-40-15-5 through 815-40-15-8, we accounted for the value of these warrants as derivative liabilities. The warrants are reported at fair value using the Black-Scholes model.  Changes in the value of the warrants are reflected in earnings for the period as a change in derivative liability.
  New Accounting Pronouncements
  In June 2009, the FASB issued ASC 105 (previously SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles ("GAAP") - a replacement of FASB Statement No. 162), which will become the source of authoritative accounting principles generally accepted in the United States recognized by the FASB to be applied to nongovernmental entities.
  In June 2009, the FASB issued ASC 855 (previously SFAS No. 165, Subsequent Events), which establishes general standards of accounting for and disclosures of events that occur after the balance sheet date but before the financial statements are issued or available to be issued. It is effective for interim and annual periods ending after June 15, 2009. There was no material impact upon the adoption of this standard on the Company’s consolidated financial statements.
  In June 2009, the FASB issued ASC 860 (previously SFAS No. 166, “Accounting for Transfers of Financial Assets”) , which requires additional information regarding transfers of financial assets, including securitization transactions, and where companies have continuing exposure to the risks related to transferred financial assets. SFAS 166 eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures. SFAS 166 is effective for fiscal years beginning after November 15, 2009. The Company does not believe this pronouncement will impact its financial statements.
  37
  In June 2009, the FASB issued ASC 810 (previously SFAS No. 167) for determining whether to consolidate a variable interest entity. These amended standards eliminate a mandatory quantitative approach to determine whether a variable interest gives the entity a controlling financial interest in a variable interest entity in favor of a qualitatively focused analysis, and require an ongoing reassessment of whether an entity is the primary beneficiary. These amended standards are effective for us beginning in the first quarter of fiscal year 2010 and we are currently evaluating the impact that adoption will have on our consolidated financial statements.
  In August 2009, the FASB issued Accounting Standards Update (“ASU”) 2009-05, which amends ASC Topic 820, Measuring Liabilities at Fair Value, which provides additional guidance on the measurement of liabilities at fair value. These amended standards clarify that in circumstances in which a quoted price in an active market for the identical liability is not available, we are required to use the quoted price of the identical liability when traded as an asset, quoted prices for similar liabilities, or quoted prices for similar liabilities when traded as assets. If these quoted prices are not available, we are required to use another valuation technique, such as an income approach or a market approach. These amended standards are effective for us beginning in the fourth quarter of fiscal year 2009 and are not expected to have a significant impact on our consolidated financial statements.
  Off Balance Sheet Arrangements
  We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity or capital expenditures or capital resources that is material to an investor in our securities.
  Item 7A. Quantitative and Qualitiative Disclosure about Market Risk
  Not required for smaller reporting companies.
  Item 8. Financial Statements and Supplementary Financial Data
  The consolidated financial statements begin on page F-1.
  Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  Not required for smaller reporting companies.
  ITEM 9A. CONTROLS AND PROCEDURES
   Disclosure Controls and Procedures
  We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are designed to ensure that information that would be required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including to our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
  As required by Rule 13a-15 under the Exchange Act, our management, including our chief executive officer and chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2009.  Based on that evaluation, our chief executive officer and chief financial officer concluded that as of December 31, 2009, and as of the date that the evaluation of the effectiveness of our disclosure controls and procedures was completed, our disclosure controls and procedures were not effective to satisfy the objectives for which they are intended, as reflected in our need to restate our financial statements for the years ended December 31, 2009 and 2008 which are included in this annual report, and for each of the quarters in the year ended December 31, 2009.
  Internal Controls over Financial Reporting
  38
  Management’s Annual Report on Internal Control over Financial Reporting.
  Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  Based on that evaluation, our management concluded that our internal control over financial reporting are not effective as of December 31, 2009, as reflected by our need to restate our financial statements for the years ended December 31, 2009 and 2008 which are included in this annual report, and for each of the quarters in the year ended December 31, 2009.
  On August 23, 2010, we concluded, after a review of the pertinent facts, that the previously issued financial statements originally contained in our annual report on Form 10-K for the years ended December 31, 2009 should not be relied upon due to the following:
  ·
We improperly allocated, for financial statement purposes, the proceeds received in connection with the April 2008 debt financing transaction and the August and December 2009 preferred stock financing transactions (collectively, “the financings”). The restated financial statements include the effects of properly allocating the financing proceeds between (1) the debt or preferred stock, as applicable, (2) any derivative liabilities associated with warrants for the purchase of common stock, and (3) any beneficial conversion features (“BCF”), as a component of additional paid-in capital, which allow the debt and preferred stockholders to convert their investment into the Company’s common stock on favorable terms.
  ·
Due to the improper allocation of proceeds on the April 2008 debt financing which resulted in an incorrect basis for the debt, we improperly reported the loss on debt extinguishment upon its settlement in August 2009. The debt settlement is now reported in the 2009 income statement.
  ·
Certain warrants containing variable exercise terms associated with the financings were reported as a component of paid-in capital instead of properly reflecting them as a derivative liability at fair value, with changes in fair value reported in the income statement each period. The restated financial statements include the effects of reporting the derivative liabilities and their associated changes in value correctly.
  ·
A BCF was inappropriately recorded as a debt discount on the April 2008 financing in addition to being amortized over the subsequent 12 months with a charge to expense. Furthermore, separate BCFs associated with the December 2009 preferred stock financings were erroneously omitted due to a misallocation of proceeds for financial statement purposes. The restated financial statements include the effects of allocating financing proceeds to the applicable BCFs by recording a preferred stock discount with a credit to additional paid-in capital. The discounts were then charged immediately to retained earnings as deemed preferred stock dividends pursuant to the terms of the agreement which provide immediate conversion rights.
  ·
Earnings per share has been restated to include the effects of the restated financial statements
  We intend to take such steps as are necessary, including the engagement of accounting personnel with experience in US GAAP, in order that its financial controls and disclosure controls are effective.
  Changes in Internal Controls over Financial Reporting.
  During the fiscal year ended December 31, 2009, there were no changes in our internal control over financial reporting identified in connection with the evaluation performed during the fiscal year covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. However, subsequent to year end, we determined that we need to improve our internal controls relating to the issuance of equity and financial instruments to insure that such transactions are properly accounted for.
  39
  Attestation Report
  This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm.
  ITEM 9B.                      Other Information
  None.
  PART III
  Item 10.  Directors and Executive Officers
  Item 11.  Executive Compensation
  Item 12. Security Ownership of Certain Beneficial Owners and Management
  Item 13.  Certain Relationships And Related Transactions, and Director Independence
  Item 14.  Principal Accounting Fees and Services
  Information required under Part III (Items 10, 11, 12, 13 and 14) is contained in our definitive information statement which was filed with the SEC on May 27, 2010 and is incorporated herein by reference.
  40
  PART IV
  Item 15.  Exhibits, Financial Statement Schedules
  (c)  Exhibits
  2.1 (1)

Share Exchange Agreement, dated January 15, 2009, among the registrant, Organic Region Group Limited and its subsidiaries and stockholders.3.1(2)

Articles of Incorporation of the registrant, as amended.3.2 (1)

Bylaws of the registrant adopted on March 11, 2008.3.3 (5)

Certificate of Designation of the Series A Convertible Preferred Stock.4.1 (1)

Piggyback Registration Rights Agreement, dated January 15, 2009, by and among the registrant, Michael Friess and Sanford Schwartz.4.2 (1)

Redemption Agreement, dated January 15, 2009, by and among the registrant, Michael Friess and Sanford Schwartz.4.3 (1)

Form of Convertible Promissory Note issued by the registrant, dated January 15, 2009.4.4 (1)

Form of Convertible Promissory Note issued by Organic Region Group Limited, dated April 23, 2008.4.5 (1)

Form of Warrant issued by Organic Region Group Limited, dated April 23, 2008.4.6 (4)

Form of Warrant issued by Sino Green Land Corporation, dated August 3, 2009.4.7 (5)

Form of Series A Warrant issued by Sino Green Land Corporation, dated August 7, 2009.4.8 (5)

Form of Series B Warrant issued by Sino Green Land Corporation, dated August 7, 2009.10.1 (1)

Indemnification Agreement, dated January 15, 2009, by Michael Friess and Sanford Schwartz in favor of the registrant and Organic Region Group Limited and its subsidiaries and stockholders.10.2 (1)

Form of Securities Purchase Agreement, dated April 23, 2008.10.3 (1)

Consulting Services Agreement, dated January 1, 2005, between Organic Region Group Limited and Mr. Xiong Luo (English Translation).10.4 (1)

Director Agreement, dated February 15, 2008, between Organic Region Group Limited and Mr. Anson Yiu Ming Fong.10.5 (1)

Director Agreement, dated January 5, 2004, between Organic Region Group Limited and Mr. Xiong Luo.10.6 (1)

Director Agreement, dated November 22, 2007, between Organic Region Group Limited and Mr. Chi Ming Leung.10.7 (1)

Executive Employment Agreement, dated September 1, 2007, between Organic Region Group Limited and Mr. Chi Ming Leung.10.8 (1)

Executive Employment Agreement, dated September 1, 2007, between Organic Region Group Limited and Mr. Xiong Luo.10.9

[omitted].10.10 (1)

Luochuan Apple Land Lease and Joint Development Contract, dated May 4, 2004, between Guangzhou Organic Region Agriculture Ltd. and the Apple Association of Kuibai Town, Luochuan County (English Translation).10.11 (1)

Luochuan Apple Land Lease Cooperation Development Contract, dated October 29, 2007, between Guangzhou Organic Region Agriculture Ltd. and the Apple Association of Kuibai Town, Luochuan County (English Translation).10.12 (1)

Wanqingsha emperor Banana Land Lease Cooperation Development Contract, dated October 17, 2006, between Guangzhou Organic Region Agriculture Ltd. and the Fruits Association of Wanqingsha Town, Nansha District of Guangzhou (English Translation).10.13 (1)

Wanqingsha emperor Banana Land Lease Cooperation Development Contract, dated January 3, 2008, between Guangzhou Organic Region Agriculture Ltd. and the Fruits Association of Wanqingsha Town, Nansha District of Guangzhou (English Translation).10.14 (1)

Guangxi Tangerine Land Lease Cooperation Development Contract, dated October 12, 2005, between Guangzhou Organic Region Agriculture Ltd. and Guangxi Wanshanhong Fruits Co., Ltd. (English Translation).10.15 (1)

Guangzhou City Panyu District Premises Lease Contract, dated December 12, 2007, between Guangzhou Panyu District Guang Lv Industrial Co. Ltd. and Guangzhou Organic Region Agriculture Ltd. (English Translation).10.16 (1)

Supplementary Agreement to Premises Lease Agreement between Guangzhou Panyu District Guang Lv Industrial Co. Ltd. and Guangzhou Organic Region Agriculture Ltd. (English Translation).  41
  10.17 (1)

Transfer Agreement of Patent Application Right, January 10, 2009, by and among Guangzhou Organic Region Agriculture Ltd., Mr. Xiong Luo and Mr. Anson Yiu Ming Fong (English Translation).10.18 (3)

Director Agreement, between Sino Green Land Corporation and Jeremy Goodwin, dated February 2, 2009.10.19 (4)

Form of Common Stock and Warrant Purchase Agreement, dated as of August 3, 2009, between Sino Green Land Corporation and the investors.10.20 (4)

Form of Common Stock and Warrant Purchase Agreement, dated as of August 3, 2009, between Sino Green Land Corporation and the investors.10.21 (5)

Form of Common Stock and Warrant Purchase Agreement, dated as of August 7, 2009, between Sino Green Land Corporation and the investors.16.1 (1)

Letter from Schumacher & Associates, Inc., regarding change in certifying accountant.21 (1)

Subsidiaries of the registrant.31.1

Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *31.2

Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *32.1

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *
 
 *Included herewith
 (1)
Incorporated by reference to the exhibit of the same number to the Company’s Current Report on Form 8-K filed on January 21, 2009.(2)
Incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form 8-K/A filed on April 21, 2009.
 (3)
Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on February 5, 2009.(4)
Incorporated by reference to Exhibits 4.1, 10.1, and 10.2 to the Company's Current Report on Form 8-K/A filed on August 7, 2009.
 (5)
Incorporated by reference to Exhibits 3.1, 4.1, 4.2, and 10.1 to the Company's Current Report on Form 8-K filed on August 13, 2009.
  42
  SIGNATURES
  Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
  Date: November 24 , 2010
  SINO GREEN LAND CORPORATION/s/ Xiong LuoXiong LuoChief Executive Officer and President
  
 Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities on the dates indicated.
 
  Signature
Title
Date/s/ Xiong Luo
Chief Executive Officer and President
November 24 , 2010Xiong Luo
(Principal Executive Officer)/s/ Huasong Sheena Shen *
Chief Financial Officer
November 24 , 2010Huasong Sheena Shen
(Principal Financial and Accounting Officer)/s/ Jeremy Goodwin *
Director
November 24, 2010Jeremy Goodwin/s/ Danvil Kin Hang Chan *
Director
November 24, 2010Danvil Kin Hang Chan/s/ Karen Tse *
Director
November 24, 2010Karen Tse*By Xiong Luo

November 24, 2010Xiong Luo, Attorney in fact
  
 43





SINO GREEN LAND CORPORATION AND SUBSIDIARIES
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
  PageReport of Independent Registered Accounting Firm
F-2Consolidated Balance Sheets for the years ended as at December 31, 2009 (Restated) and December 31, 2008 (Restated)
F-3Consolidated Statements of Income for the years ended as at December 31, 2009 (Restated) and 2008 (Restated)
F-4Consolidated Statements of Stockholders’ Equity for the year ended December 31, 2009 (Restated) and 2008 (Restated)
F-5Consolidated Statements of Cash Flows for the years ended as at December 31, 2009 (Restated) and 2008 (Restated)
F-6Notes to Consolidated Financial Statements (Restated)
F-7
  F-1
 
 Report of Independent Registered Public Accounting Firm
 
 
 
 
 Board of Directors and Stockholders of
 Sino Green Land Corp and Subsidiaries
 
 We have audited the accompanying consolidated balance sheets of Sino Green Land Corp and Subsidiaries as of December 31, 2009 and 2008 (restated), and the related restated consolidated statements of income, stockholders' equity, and cash flows for the two years period ended December 31, 2009. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
 
 We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated 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 consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
 In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Sino Green Land Corp and Subsidiaries as of December 31, 2009 and 2008, and the results of their operations and their cash flows for the two years period ended December 31, 2009, in conformity with U.S. generally accepted accounting principles.
 
 As discussed in Note 14 to the consolidated financial statements, the 2009 and 2008 consolidated financial statements have been restated to correct misstatements.
 
 
 
 /s/ Kabani & Company, Inc.
 Certified Public Accountants
 
 Los Angeles, California
 April 12, 2010  except for note 2, 7, 8, 9, 14 which is of October 27, 2010
 
 F-2
  SINO GREEN LAND CORP AND SUBSIDIARIES
  CONSOLIDATED BALANCE SHEETS
  AS OF DECEMBER 31, 2009 AND 2008
  2009


2008(Restated)


(Restated)ASSETSCurrent AssetsCash and cash equivalents

$
1,987,616


$
544,860Accounts receivable, net


171,143



200,731Due from related parties


1,006



352,799Inventories


9,934



16,931Advances-current portion


256,225



-Other current assets


343,169



58,045Total Current Assets


2,769,093



1,173,366Property and Equipment, net


547,727



139,765Deposit


365,647



-Advances


4,355,829



497,568Long-term Prepayments


18,961,869



16,258,707Total Assets

$
27,000,165


$
18,069,406LIABILITIES AND STOCKHOLDERS' EQUITYCurrent LiabilitiesAccounts payable and accrued expenses

$
1,186,923


$
1,529,786Advances from customers


48,690



56,443Due to related parties


3,364



129,444Convertible debentures


-



360,710Derivative liability


5,206,567



340,266Total Current Liabilities


6,445,544



2,416,650Stockholders' EquityPreferred stock, par value $.001 per share,20,000,000 shares authorized, of which

2,000,000and 0shares are designated as series A convertiblepreferred stock, with

1,650,000and 0 shares issued and outstanding as of December 31, 2009 and  2008, respectively


650



-Common stock, $0.001 par value, 780,000,000

shares authorized, 104,943,337 and 81,648,554 issued and outstanding as of December 31, 2009 and 2008, respectively


104,944



81,649Additional Paid-in capital


7,736,406



4,919,351Other comprehensive income


762,504



1,075,973Retained earnings


11,950,117



9,575,783Total stockholders' equity


20,544,621



15,652,756Total Liabilities and Stockholders' Equity

$
27,000,165


$
18,069,406The accompanying notes are integral part of these consolidated financial statements.
  F-3
  SINO GREEN LAND CORP AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF INCOME
 FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
 
 2009


2008(Restated)


(Restated)Sales

$
108,045,437


$
73,562,759Cost of goods sold


96,308,289



65,825,333Gross profit


11,737,148



7,737,426Operating expensesSelling expenses


2,581,330



1,630,781General and administrative expenses


2,216,416



1,073,400Total operating expenses


4,797,746



2,704,181Operating income


6,939,402



5,033,245Other income(expense)Interest expenses, net


(63,882
)


(133,650
)Loss on debt extinguishment


(139,289
)


-Change in derivative liability


(3,866,300
)


(200,977
)Others, net


154,404



15,399Total other expense


(3,915,068
)


(319,228
)Net income


3,024,334



4,714,017Deemed preferred stock dividend


(650,000
)


-Net income applicable to common stockholders


2,374,334



4,714,017Comprehensive income:Net income


3,024,334



4,714,017Other comprehensive income (loss)Foreign currency translation gain (loss)


(313,469
)


777,795Comprehensive income

$
2,710,865



5,491,812Net income per shareBasic

$
0.03


$
0.06Diluted

$
0.02


$
0.06Weighted average number of shares outstandingBasic


89,772,302



81,648,554Diluted


117,579,469



81,648,554
 
 The accompanying notes are integral part of these consolidated financial statements.
  F-4
  SINO GREEN LAND CORP AND SUBSIDIARIES
 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
 FOR THE YEARS ENDED DECEMBER 31, 2009 (RESTATED) AND 2008 (RESTATED)
 
 
 Preferred Stock


Common StockShares


Amount


Shares


Amount


Additional Paid In Capital


Other Comprehensive Income


Retained Earnings


Total

Stockholders’

EquityBalance as of December 31, 2007


–


$
–



81,648,554



81,649


$
4,919,351


$
298,178


$
4,861,766


$
10,160,944Foreign currency translation gain


–



–



–



–



–



777,795



–



777,795Net income for the year ended December 31, 2008


–



–



–



–



–



–



4,714,017



4,714,017Balance as of December 31, 2008 (Restated)


–



–



81,648,554



81,649



4,919,351



1,075,973



9,575,783



15,652,756Recapitalization due to reverse acquisition


–



–



5,832,039



5,832



(5,832
)


–



–



–Issuance of preferred stock


1,650,000.00



650



–



–



554,350



–



–



555,000Issuance of common stock


–



–



17,462,744



17,463



1,618,537



–



–



1,636,000Foreign currency translation gain


–



–



–



–



–



(313,469
)


–



(313,469
)Deemed dividend for preferred stock










–



–



650,000



–



(650,000
)


–Net income for the year ended December 31, 2009


–



–



–



–



–



–



3,024,334



3,024,334Balance as of December 31, 2009 (Restated)


1,650,000


$
650



104,943,338


$
104,944


$
7,736,406


$
762,504


$
11,950,117


$
20,554,621
 The accompanying notes are integral part of these consolidated financial statements.
  F-5
  SINO GREEN LAND CORP AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 FOR THE YEARS ENDED DECEMBER 31, 2009 (RESTATED) AND 2008 (RESTATED)
 2009 (Restated)


2008

(Restated)Cash flows from operating activitiesNet income

$
3,024,334


$
4,714,017Adjustments to reconcile net income to net cashprovided by operating activitiesDepreciation


79,178



83,694Amortization


627,304



508,713Loss on debt extinguishment


139,289



-Gain  from debt forgiveness


(162,949
)Change in derivative liability


3,866,300



200,977Debt discount (part of interest expense)


(32,948
)


71,266Decrease / (Increase) in current assetsAccounts receivable


29,140



5,893Inventories


6,957



23,992Other current assets


(285,095
)


(8,160
)Deposit


(365,450
)


–Advances


(4,113,619
)


(23,745
)Long-term prepaid expense


(3,363,950
)


(7,209,225
)Increase in current liabilities-Accounts payable & accrued expense


(367,118
)


1,190,819Advances from customer


(7,629
)


(26,579
)Tax payables


156



68Other payables


128,410



558,905Net cash (used in) provided by operating activities


(797,689
)


123,583Cash flows from investing activitiesAcquisition of plant, property, and equipment


(487,221
)


(4,276
)Cash flows from financing activitiesProceeds from (payment to) issuance of convertible notes


(502,684
)


500,000Net proceeds from issuance of preferred stock and warrants


1,555,000



–Proceeds from issuance of common stock and warrants


1,636,000



–Proceeds from (payments to) related parties


226,405



(603,970
)Net cash provided by (used in) financing activities


2,914,721



(103,970
)Effect of exchange rate change on cash and cash equivalents


(187,055
)


86,477Net increase in cash and cash equivalents


1,442,756



101,814Cash and cash equivalents, beginning balance


544,860



443,046Cash and cash equivalents, ending balance

$
1,987,616


$
544,860Supplement disclosure of cash flow informationInterest expense paid

$
104,800


$
–Income taxes paid

$
–


$
–The accompanying notes are integral part of these consolidated financial statements.
 
 F-6
 
 SINO GREEN LAND CORPORATION AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  1. ORGANIZATION AND DESCRIPTION OF BUSINESS
  Organization
  Sino Green Land Corporation (the “Company”) was incorporated in Nevada in March 2008 under the name of Henry County Plywood Corporation, as the successor by merger to a Virginia corporation organized in May 1948 under the same name. On March 23, 2009, the Company’s corporate name was changed to Sino Green Land Corporation.
  The Company, through its Chinese operating subsidiaries and a variable interest entity,  is engaged in the wholesale distribution, marketing and sales of premium fruits through wholesale centers and to supermarkets in China.
 
 On January 15, 2009, the Company entered into a share exchange agreement with Organic Region Group Limited (“Organic Region”), its stockholders and its wholly owned subsidiaries, Zhuhai Organic Region Modern Agriculture Ltd. (“Zhuhai Organic”), Guangzhou Organic Region Agriculture Ltd. (“Guangzhou Organic”), Fuji Sunrise International Enterprises Limited (“Fuji Sunrise”), Southern International Develop Limited (“Southern International”) and HK Organic Region Limited (“HK Organic”). Pursuant to the share exchange agreement and a related agreement with the Company’s two former principal stockholders:
 ·
The Company issued to the former stockholders of Organic Region a total of 81,648,554 shares of common stock, constituting approximately 98% of our outstanding stock, in exchange for all of the capital stock of Organic Region; and
  ·
Our former majority stockholders sold to the Company 1,666,298 shares of common stock, representing 50% of the then outstanding shares, for $500,000 non-interest bearing convertible promissory notes. The Company cancelled these shares. As of April 27, 2009, the Company had paid the principal and accrued interest on the notes in full and had no further obligations to the former majority stockholders.
  Prior to the closing of these transactions, the Company, then known as Henry County Plywood Corporation, was not engaged in any business activity.
  The Company is the sole stockholder of Organic Region, a British Virgin Islands corporation which was incorporated on January 30, 2003. Organic Region is the sole stockholders of five limited liability companies organized under the laws of the People’s Republic of China, each of which is a wholly foreign-owned entity, known as a WFOE: Zhuhai Organic, Guangzhou Organic, Fuji Sunrise, Southern International and HK Organic.
  Under generally accepted accounting principles, the acquisition by the Company of Organic Region is equivalent to the acquisition by Organic Region of the Company, then known as Henry County Plywood Corporation, with the issuance of stock by Organic Region for the net monetary assets of the Company. This transaction is reflected as a recapitalization, and is accounted for as a change in capital structure. Accordingly, the accounting for the acquisition is identical to that resulting from a reverse acquisition. Under reverse acquisition accounting, the comparative historical financial statements of the Company, as the legal acquirer, are those of the accounting acquirer, Organic Region. The accompanying financial statements reflect the recapitalization of the stockholders’ equity as if the transactions occurred as of the beginning of the first period presented. Thus, only the 81,648,554 shares of common stock issued to the former Organic Region stockholders are deemed to be outstanding for all periods reported prior to the date of the reverse acquisition. As a result of the reverse acquisition effected by the share exchange agreement, the Company’s business has become the business of the Organic Region. The 1,666,297 shares of common stock that were outstanding on January 15, 2009, net of the 1,666,298 shares that were purchased by the Company and cancelled, are treated as if they were issued on January 15, 2009, as part of a recapitalization.
  Zhuhai Organic was formed by a British Virgin Islands corporation known as Nature Institution Group Ltd. (“NI Group”) on January 3, 2004, and Guangzhou Organic was formed by NI Group on September 24, 2004. On December 31, 2007, NI Group transferred to Organic Region all of the stock of Zhuhai Organic for $5,000,000 and all of the stock of Guangzhou Organic for no consideration since Guangzhou Organic had negative equity. At the time of the transfer, NI Group had made the required capital contributions to both Zhuhai Organic and Guangzhou Organic, the transfers were treated as transfers between related parties because, at the time of the transfer, one of NI Group’s stockholders, who held a 13.5% interest in NI Group, was also a 50% stockholder in Organic Region. Since the transfers were between related parties, the assets of the acquired companies were carried at their historical cost and the amount by which the total purchase price exceeded the value of the assets of Zhuhai Organic and Guangzhou Organic, which was $365,755, was recorded as deemed dividend to the stockholder on December 31, 2007.
  The Company has an exclusive agreement with Xiong Luo, who is one of the Company’s senior executive officers and the owner and holder of the business license for Guangzhou Greenland Co. Ltd. (“Guangzhou Greenland”). Pursuant to this agreement, Organic Region provides consulting services, including business operations, human resources and research and development services, to Mr. Luo with respect to Guangzhou Greenland to enable Guangzhou Greenland to operate the fruit trading business in China. In exchange for such services, Mr. Luo agreed to pay a consulting services fee to Organic Region equal to all of the revenues obtained by Guangzhou Greenland. The agreement gave the Company the ability to substantially influence Guangzhou Greenland’s daily operations and financial affairs, appoint its senior executives and approve all matters requiring stockholder approval. Mr. Luo also irrevocably granted the Company an exclusive option to purchase, to the extent permitted under PRC law, all or part of the equity interests in Guangzhou Greenland and agreed to entrust all the rights to exercise voting power to the person appointed by the Company. Guangzhou Greenland is considered a variable interest entity under ASC 810 (Originally issued as FIN 46R), and its financial statements are included in our consolidated financial statements. Substantially all of the Company’s revenue is derived from the business of Guangzhou Greenland.
  F-7
  2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  a. Principle of consolidation
  The accompanying restated consolidated financial statements (See Note 14 for a description of the restatements) include the accounts of the Company and its wholly-owned subsidiaries, Zhuhai Organic and Guangzhou Organic, Fuji Sunrise, HK Organic and Southern International, together with its 100% Variable Interest Entity (VIE), Guangzhou Greenland. All significant inter-company accounts and transactions have been eliminated in consolidation.
  In accordance with ASC 810 (Originally issued as Financial Interpretation No. 46R, Consolidation of Variable Interest Entities “FIN 46R”), VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes.
  On January 1, 2005, Organic Region entered into exclusive arrangements with Mr. Xiong Luo, who was then the Company’s chief operating officer and has since become the Company’s chief executive officer and president, and who holds the business license for Guangzhou Greenland, that give the Company the ability to substantially influence Guangzhou Greenland’s daily operations and financial affairs, appoint its senior executives and approve all matters requiring stockholder approval. As a result, the Company consolidates the financial results of Guangzhou Greenland as variable interest entity pursuant to ASC 810 (Originally issued as Financial Interpretation No. 46R, Consolidation of Variable Interest Entities “FIN 46R”).
  a.
Guangzhou Greenland holds the licenses necessary to operate its fruit trading business in China.b.
The Company has the exclusive privilege to purchase the fruit and vegetables from and it provides other general business operation services to Guangzhou Greenland in return for a consulting services fee which is equal to Guangzhou Greenland’s revenue.c.
Mr. Xiong Luo irrevocably granted the Company an exclusive option to purchase, to the extent permitted under PRC law, all or part of the equity interests in Guangzhou Greenland and agreed to entrust all the rights to exercise his voting power to the person appointed by the Company.
  b. Use of estimates
  The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the amount of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. However, actual results could differ materially from those results.
  c. Cash and cash equivalents
  The Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents.
  d. Accounts receivable
  The Company’s policy is to maintain reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. As of December 31, 2009 and December 31, 2008, the Company had accounts receivable, of $171,143 and $200,731, net of allowance for bad debts in the amount of $9,244 and $9,264, respectively.
  e. Other current assets
  Other current assets, valued at $343,169 as of December 31, 2009, represents an unsecured loan receivable in the amount of $292,517, at an interest rate of 5.31%, from an unrelated party. This loan was due in January 2010 and relates to a loan made to the local fruit association in connection with the construction of a seeding lab for emperor bananas. The loan was collected in March 2010. The interest income for the year ended December 31, 2009 was $15,524. As of December 31, 2008, the other current assets amounted to $58,045.
  f. Advances
  As of December 31, 2009, the Company advances amounted to $4,355,829. The Company provides advances to one unrelated party in return for 18 years lease starting 2010. The advances are required to be used to construct a multi level distribution center the Company intends to lease. As of December 31, 2008, the advances amounted to $497,568.
   F-8
 
  Deposit
  As of December 31, 2009 and 2008, the Company has deposit amounted to $365,647 and $0, respectively. The deposit is to an unrelated party and refundable after the expiration of the term of the lease (described in note 1.f Advances).
  h. Inventories
  Inventories are valued at the lower of cost (determined on a weighted average basis) or market value. Management compares the cost of inventories with market value and an allowance is provided to reduce the value of inventories to their net market value.
  Inventories consisted of produce in the amount of $9,934 and $16,931 as of December 31, 2009 and 2008, respectively.
  i. Property and equipment
  Property and equipment are recorded at cost. Gains or losses on disposals are reflected as gain or loss in the year of disposal. The cost of improvements that extend the life of plant, property, and equipment are capitalized. These capitalized costs may include structural improvements, equipment, and fixtures. All ordinary repair and maintenance costs are expensed as incurred.
  Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets: 5 to 10 years for manufacturing machinery, 5 years for office equipment, and 5 years for motor vehicles.
  j. Impairment
  The Company applies the provisions ASC 360-10 (Originally issued as FAS No. 144). ASC 360-10 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value.
  The Company tests long-lived assets, including property, plant and equipment and intangible assets subject to periodic amortization, for recoverability at least annually or more frequently upon the occurrence of an event or when circumstances indicate that the net carrying amount is greater than its fair value. Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally measured by discounting expected future cash flows as the rate the Company utilizes to evaluate potential investments. The Company estimates fair value based on the information available in making whatever estimates, judgments and projections are considered necessary. There was no impairment of long-lived assets for the years ended December 31, 2009 and 2008.
  k. Derivative liability
  The derivative liability represents the value of warrants to purchase common stock that were issued in connection with certain debt and preferred stock offerings in 2008 and 2009. The warrants are reported at fair value using the Black-Scholes model with changes in value reflected in earnings for the period.
  l. Deemed Preferred Stock Dividend
  The Company records a deemed preferred stock dividend for the amortization of any discount arising from beneficial conversion features associated with its preferred shares. Upon issuance, this discount is offset by a credit to additional paid-in capital, and is generally amortized over its earliest conversion period. Due to the perpetual nature of the preferred shares and the immediate conversion rights, the full discount is reflected as a deemed preferred stock dividend upon issuance.
  m. Revenue recognition
  The Company’s revenue recognition policies are in compliance with ASC 605 (Originally issued as Staff Accounting Bulletin (SAB) 104). Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.
  Sales
  Revenues from the sale of products are recognized at the point of sale of the Company’s products. Discounts provided to customers by the Company at the time of sale are recognized as a reduction in sales as the products are sold. Sales taxes are not recorded as a component of sales.
  Cost of Goods Sold
  The “Cost of Goods Sold” line item of the Consolidated Statements of Income includes product costs and the amortization of the long-term leases on which the produce is grown and for which the full payment was made at the commencement of the lease. Discounts provided to the Company by vendors at the time of purchase are recognized as a reduction in inventory cost as the products are delivered.
  F-9
  All other costs, including warehousing costs, transportation costs, salaries, rent expense and depreciation expense, are shown separately in Selling Expense or General and Administrative Expense in the Consolidated Statements of Income.
  n. Income taxes
  The Company utilizes ASC 740 (Originally issued as SFAS No. 109, “Accounting for Income Taxes”), which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
  The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.
  The Company records a valuation allowance for deferred tax assets, if any, based on its estimates of its future taxable income as well as its tax planning strategies when it is more likely than not that a portion or all of its deferred tax assets will not be realized. If the Company is able to utilize more of its deferred tax assets than the net amount previously recorded when unanticipated events occur, an adjustment to deferred tax assets would increase the Company net income when those events occur. The Company does not have any significant deferred tax asset or liabilities in the PRC tax jurisdiction.
  o. Income per share of common stock
  Income per share of common stock is calculated in accordance with the ASC 260 (Originally issued as Statement of Financial Accounting standards No. 128, “Earnings per share”). Income per share for all periods presented has been restated to reflect the adoption of ASC 260. Basic income per share is based upon the weighted average number of common shares outstanding. Diluted income per share is based on the assumption that all dilutive convertible shares and stock options and warrants were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.
 
 Basic net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted income per share is computed by dividing net income by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. Potentially dilutive common shares consist of common stock issuable upon the conversion of the outstanding shares of Series A preferred stock (using the if-converted method) and common stock warrants (using the treasury stock method). The following table presents a reconciliation of basic and diluted net income per share (in thousands, except per share amounts):
  Years Ended December 31,2009


2008Net income

$
3,024


$
4,714Weighted average shares of common stock outstanding


89,772



81,649Diluted effect of warrants, options, and preferred stock


27,807



-Weighted average shares of common stock – diluted


117,579



81,649Net income available per share of common stock – basic

$
0.03


$
0.06Net income per share of common stock – diluted

$
0.02


$
0.06
  p. Foreign currency translation
  The Company uses the United States dollar for financial reporting purposes. The Company’s subsidiaries maintain their books and records in their functional currency - Chinese Yuan Renminbi (RMB), being the primary currency of the economic environment in which their operations are conducted. Such financial statements were translated into United States dollars in accordance with ASC 830 (Originally issued as Statement of Financial Accounts Standards (“SFAS”) No. 52, “Foreign Currency Translation”). According to the Statement, all assets and liabilities are translated at the current exchange rate, stockholder’s equity are translated at the historical rates and income statement and statement of cash flows items are translated at the average exchange rate for the period. As a result, amounts related to assets and liabilities reported on the statement of cash flows may not necessarily agree with changes in the corresponding balances on the balance sheet. The resulting translation adjustments are reported under other comprehensive income in accordance with ASC 220 (Originally issued as SFAS No. 130, “Reporting Comprehensive Income”) as a component of stockholders’ equity.
  q. Fair values of financial instruments
  F-10
  ASC 825 (Originally issued as Statement of Financial Accounting Standard No. 107, “Disclosures about Fair Value of Financial Instruments”) requires that the Company disclose estimated fair values of financial instruments. The carrying amounts reported in the statements of financial position for assets and liabilities qualifying as financial instruments are a reasonable estimate of fair value.
  The Company’s financial instruments primarily consist of cash and cash equivalents, accounts receivable, other receivables, advances to suppliers, accounts payable and other payables.
  As of the balance sheet dates, the estimated fair values of the financial instruments were not materially different from their carrying values as presented on the balance sheet. This is attributed to the short maturities of the instruments and that interest rates on the borrowings approximate those that would have been available for loans of similar remaining maturity and risk profile at respective balance sheet dates.
  r. Earning per share (EPS)
 
 Earnings per share is calculated in accordance with the ASC 260 (Originally issued as Statement of Financial Accounting standards No. 128, “Earnings per share”) superseded Accounting Principles Board Opinion No.15 (APB 15). Earnings per share for all periods presented has been restated to reflect the adoption of ASC 260 Basic earnings per share is based upon the weighted average number of common shares outstanding. Diluted earnings per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.
  Basic and diluted earning per share was $0.03 and $0.02 for the year ended December 31, 2009, respectively. Basic and diluted earning per share was $0.06 and $0.06 for the year ended December 31, 2008, respectively.
  s. Segment reporting
  ASC 280 (Originally issued as Statement of Financial Accounting Standards No. 131, “SFAS 131”), “Disclosure about Segments of an Enterprise and Related Information” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company.
  ASC 280 (Originally issued as SFAS No. 131) has no effect on the Company’s consolidated financial statements as the Company operates in one reportable business segment.
  t.Statement of cash flows
  In accordance with ASC 230 (Originally issued as SFAS No. 95), "Statement of Cash Flows," cash flows from the Company's operations is calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows may not necessarily agree with changes in the corresponding balances on the balance sheet.
  u. Subsequent Events.
  For purposes of determining whether a post-balance sheet event should be evaluated to determine whether it has an effect on the financial statements for the period ending December 31, 2009 pursuant to ASC 855(Originally issued as SFAS No. 165), subsequent events were evaluated by the Company as of October 21, 2010, the date on which the Form 10-K/A, which includes the restated consolidated financial statements at and for the year ended December 31, 2009, was available to be issued.
  v. Recent Accounting Pronouncements
  In June 2009, the FASB issued ASC 105 (previously SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles ("GAAP") - a replacement of FASB Statement No. 162), which will become the source of authoritative accounting principles generally accepted in the United States recognized by the FASB to be applied to nongovernmental entities.
  In June 2009, the FASB issued ASC 855 (previously SFAS No. 165, Subsequent Events), which establishes general standards of accounting for and disclosures of events that occur after the balance sheet date but before the financial statements are issued or available to be issued. It is effective for interim and annual periods ending after June 15, 2009. There was no material impact upon the adoption of this standard on the Company’s consolidated financial statements.
  In June 2009, the FASB issued ASC 860 (previously SFAS No. 166, “Accounting for Transfers of Financial Assets”) , which requires additional information regarding transfers of financial assets, including securitization transactions, and where companies have continuing exposure to the risks related to transferred financial assets. SFAS 166 eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures. SFAS 166 is effective for fiscal years beginning after November 15, 2009. The Company does not believe this pronouncement will impact its financial statements.
  In June 2009, the FASB issued ASC 810 (previously SFAS No. 167) for determining whether to consolidate a variable interest entity. These amended standards eliminate a mandatory quantitative approach to determine whether a variable interest gives the entity a controlling financial interest in a variable interest entity in favor of a qualitatively focused analysis, and require an ongoing reassessment of whether an entity is the primary beneficiary. These amended standards were effective for the Company beginning in the first quarter of fiscal year 2010 and hav had no impact on our consolidated financial statements.
  F-11
  In August 2009, the FASB issued Accounting Standards Update (“ASU”) 2009-05, which amends ASC Topic 820, Measuring Liabilities at Fair Value, which provides additional guidance on the measurement of liabilities at fair value. These amended standards clarify that in circumstances in which a quoted price in an active market for the identical liability is not available, we are required to use the quoted price of the identical liability when traded as an asset, quoted prices for similar liabilities, or quoted prices for similar liabilities when traded as assets. If these quoted prices are not available, we are required to use another valuation technique, such as an income approach or a market approach. These amended standards are effective for us beginning in the fourth quarter of fiscal year 2009 and are not expected to have a significant impact on our consolidated financial statements.
 
 w.Reclassifications
 
 Certain prior year amounts have been reclassified to conform with the current year's presentation, none of which had an impact on total assets, stockholders' equity (deficit), net loss, or net loss per share.
  3. PROPERTY AND EQUIPMENT, NET
  Property and equipment consist of the following as of December 31, 2009 and December 31, 2008:
  2009


2008Manufacturing machinery

$
403,822


$
411,299Office equipment


40,591



38,037Motor vehicle


24,143



17,589Leasehold Improvement


484,848



-Less: Accumulated Depreciation


(405,677
)


(327,160
)Property & Equipment, net

$
547,727


$
139,765
  Depreciation expenses for the years ended December 31, 2009 and 2008 were 79,178 and $83,694 respectively.
  4. DUE FROM/(TO) RELATED PARTIES
  Amounts due from related parties amounted to $1,006 and $352,799 as of December 31, 2009 and 2008, respectively. The Company has a balance due from one stockholder and director amounting to $1,006 as of December 31, 2009. The amount due is interest free, unsecured and due on demand. The Company had a balance due from one company which is under common control with the Company amounting to $352,799 as of December 31 2008 and $0 as of December 31, 2009. The amount due is interest free, unsecured and due on demand.
   Due to related parties amounted to $3,364 and $129,444 as of December 31, 2009 and 2008, respectively. The Company has a balance due to one stockholder and director of the Company amounting to $3,364 as of December 31, 2009. The amount due is interest free, unsecured and due on demand. The Company has a balance due to related parties amounting to $129,444 as of December 31, 2008 and $0 as of December 31, 2009. It was due to the companies which are under common control with the Company. The amounts due were interest free, unsecured and due on demand and were paid in 2009.
  On January 15, 2009, in connection with the reverse acquisition described in Note 1, the Company entered into a redemption agreement with Michael Friess and Sanford Schwartz, who were the Company’s majority stockholders, whereby these stockholders surrendered an aggregate of 1,666,298 shares of common stock for redemption in exchange for the issuance of non-interest bearing convertible promissory notes in the aggregate principal amount of $500,000. The principal and accrued interest of the notes were payable on March 31, 2009. On March 31, 2009, the Company entered into an oral agreement with these stockholders, pursuant to which the Company paid them $250,000 and agreed to pay them the remaining $250,000 on or before April 30, 2009, without penalty. The Company paid the remaining $250,000 on April 27, 2009.
  5. LONG-TERM PREPAYMENTS
  There is no private ownership of land in the PRC. All land is owned by the government, which grants land use rights for a specified period of time. Guangzhou Greenland has entered into fourteen land lease and developing agreements with a number of farming cooperatives since 2005. The farming cooperatives are authorized to manage and plant the lands by Guangzhou Greenland who, during the term of the lease, has the priority right to purchase the agricultural products at fair market price. The agreements have terms of 25 years with various due dates. The payments for the entire 25-year term are payable, and were paid, in full at the inception of the agreements.
 
 The Company acquired two land leases during the year ended December 31, 2009 by paying approximately $3.4 million.
 
 Guangzhou Greenland uses the straight-line method to amortize the long-term prepayments over the life of the contracts. As of December 31, 2009 and 2008, the Company has long-term prepayments (net) in the amount of $18,961,869 and $16,258,707, respectively.
 
 F-12
  The details of long-term prepayments are listed below as of December 31, 2009 and 2008:
  2009


2008Long-term prepayment –cost

$
20,996,380


$
17,450,561Accumulated amortization


(2,034,511
)


(1,191,854
)Net

$
18,961,869


$
16,258,707
  Amortization expenses for the years ended December 31, 2009 and 2008 were $627,304 and $508,713, respectively, and are included in cost of goods sold.
  Amortization expenses for the next five years after December 31, 2009 are approximately as follows:
  2010

$
886,1812011


886,1812012


886,1812013


886,1812014


886,181After


14,530,964Total

$
18,961,869
  6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
  Accounts payable and accrued expenses comprised the following as of December 31, 2009 and 2008:
  2009


2008Accounts payable

$
385,726


$
804,437Accrued payroll


130,542



90,916Accrued expenses


465,895



557,692Advance  subscription


180,526



-Other payable


24,234



76,741$
1,186, 923


$
1,529,786
  The Company had advance fund which against issuance of shares subsequent to the year end.
  7. SHORT TERM CONVERTIBLE NOTES
  On April 23, 2008, Organic Region, which was then a privately-owned company, issued for $500,000 its one-year 18% convertible notes with common stock warrants in the total amount of $500,000.  Upon the completion of the reverse acquisition the Company assumed the notes and related warrant obligations. . The warrant holder are entitled to purchase up to $500,000 of securities at a per share price equal to 115% of the lowest cash price paid in a financing, which is defined as the consummation of one or more equity financings by the Company.
 
 Upon issuance of the debt, the Company allocated the proceeds between the debt and warrants in the amount of $360,711 and $139,289, respectively.  The warrants were classified as a derivative due to the variability in their exercise terms, and remain outstanding. In August 2009, the debt was repaid in full, with interest, and the Company recognized a $139,289 loss on debt extinguishment.
  8. EQUITY TRANSACTIONS
  On January 15, 2009, the Company completed the reverse acquisition as described in Note 1. Pursuant to the share exchange agreement, the Company issued 81,648,554 shares of common stock in exchange for all of the outstanding common stock of Organic Region.
  Pursuant to an agreement with an independent director, the Company agreed to pay the director 12,500 shares of common stock every fiscal quarter. As of December 31, 2009, the Company accrued the value of 45,833 shares, reflecting the shares that were due through December 31, 2009 pursuant to his agreement. The shares were issued subsequent to December 31, 2009.
  In April 2009, the Company issued an aggregate of 4,165,742 shares in connection with the termination of two agreements which Organic Region had entered into on January 28, 2008. Following the issuance of the shares, the Company had no further obligations under either of these agreements except for the Company’s obligation to pay an amount equal to 2% of the gross proceeds of any sales of securities, convertible debentures, or any other financings, private or public, other than financings by commercial banks, by the Company of up to an aggregate of $15 million occurring after January 1, 2009.
  Sales of Securities
  During August 2009, the Company issued securities in the following transactions:
  a. Effective August 3, 2009, the Company entered into common stock and warrant purchase agreements with non-affiliated investors. Pursuant to these agreements, for an aggregate consideration of $1,636,000, the Company issued:
  (i) an aggregate of 13,129,410 shares at a stated purchase price of $0.085 per share and 4,333,334 shares at $0.12 per share;
  F-13
  (ii) two-year warrants to purchase 10,145,454 shares of common stock at $0.11 per share and 3,466,666 shares of common stock at $0.15 per share; and
  (iii) an option to purchase up to 6,500,000 shares of common stock at a purchase price of $0.12 per share. The warrants may be exercised through August 3, 2011, are considered to be indexed to the company’s stock, and are all reflected as a component of equity in the accompanying financial statements.
  b.. Pursuant to a Series A Convertible Preferred Stock and Warrant Purchase Agreement dated August 7, 2009, for a total consideration of $1,000,000, the Company:
  (i) issued of an aggregate of 1,000,000 shares of series A convertible preferred stock;
  (ii) issued five-year warrants to purchase 10,000,000 shares of common stock at an exercise price of $0.14 per share and 10,000,000 shares of common stock at an exercise price of $0.25 per share, and ;
  (iii) granted these stockholders an option to purchase up to 1,000,000 additional shares of series A preferred stock at a purchase price of $1.00 per share through February 10, 2010.  In December 2010, $650,000 of A Preferred Share options were exercised.
  The entire $1,000,000 of proceeds received on August 7, 2009 was allocated to the warrants and is reflected as a derivative liability due the variability in the exercise price, which was based upon the Company’s future operating results. The warrants may be exercised at any time prior to August 7, 2014. In the event that, prior to August 7, 2011, the Company issues common stock at a price less than the exercise price, the exercise price of the $0.14 warrants is reduced to the consideration received by us for the issuance of the shares.
  The December 2009 issuance of convertible preferred stock contained beneficial conversion terms and resulted in the recognition of a discount on preferred stock upon issuance, and a corresponding beneficial conversion feature. The discounts were charged to retained earnings as deemed preferred stock dividends pursuant to the terms of the agreement which provide immediate conversion rights.
  In the event of liquidation, dissolution or winding up, the holders of the Series A Preferred Stock are to receive a payment of $1.00 per share of Series A Preferred Stock before any distribution is made to the common stock or any securities junior to the Series A Preferred Stock upon liquidation, dissolution or winding up.
  The certificate of designation for the Series A Preferred Stock and the warrants provide that those securities may not be converted or exercised or converted if such conversion or exercise would result in the holder and its affiliates having beneficial ownership of more than 9.99% of the Company’s outstanding common stock. Beneficial ownership is determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Rule 13d-3 thereunder.
  Pursuant to the Series A Preferred Stock and warrant purchase agreement, in addition to the foregoing and other conditions, the Company agreed that:
  ·
The Company would maintain its listing on the OTC Bulletin Board or a national stock exchange; provided that if the Company is not so listed, as long as the investors owned Series A Preferred Stock, the Company would pay the investors, as liquidated damages, an amount equal to 1% of the purchase price per month, which is $10,000 per month if all of the shares of Series A Preferred Stock are then outstanding, until the stock is again listed on the OTC Bulletin Board or a national stock exchange.
  ·
The Company would cancel any outstanding preferred stock and, prior to August 7, 2012, not issue additional shares of preferred stock, other than pursuant to the purchase agreement or sales at a price of $0.135 per share on an as-converted basis.
  ·
The Company would have any outstanding convertible debt converted into either a straight loan with a reasonable payment schedule or converted into common stock at a price of not less than $0.085 per share.
  ·
With certain exceptions, if, prior to August 7, 2011, the Company issues stock at a price less than the conversion price of the Series A Preferred Stock, which is presently $0.088 per share, then the conversion price of the Series A Preferred Stock would be reduced to the lower price at which such shares were sold.
  ·
If the Company’s net income, as defined, is less than $0.045 per share on a fully-diluted basis, then the conversion price will be reduced by the percentage shortfall, subject to a maximum reduction of 40%. The Company’s net income for 2009, as defined, exceeded the target amount, and no adjustment was made in the conversion rate of the Series A Preferred Stock or in the exercise price of the warrants pursuant to similar provisions in the warrants. Pursuant to this provision, the proceeds received on financing transactions involving preferred shares issued with warrants were allocated to a warrant liability at fair value, and changes in value are reflected in the income statement for each period presented.
  F-14
  Warrants
  Weighted


AverageAverage


RemainingWarrants


Warrants


Exercise


ContractualOutstanding


Exercisable


Price


LifeOutstanding, December 31, 2007


-



-


$
-



-Granted


5,115,090



5,115,090



0.098



4.6Forfeited


-



-



-



-Exercised


-



-



-



-Outstanding, December 31, 2008


5,115,090



5,115,090



0.098



4.6Granted


33,612,120



33,612,120



0.16



3.34Forfeited


-



-



-



-Exercised


-



-



-



-Outstanding, December 31, 2009


38,727,210



38,727,210


$
0.15



3.51
  Stock options
  The preferred stock option activity was as follows:
  WeightedAverage


AggregateOptions


Exercise


Intrinsicoutstanding


Price


ValueOutstanding, December 31, 2008


-



-



-Granted


1,000,000


$
1.00


$
909,091Forfeited


-



-



-Exercised


650,000



1.00



590,909Outstanding, December 31, 2009


350,000


$
1.00


$
318,182
  Following is a summary of the status of preferred stock options outstanding at December 31, 2009:
  Outstanding Options


Exercisable OptionsAverage


Outstanding


Average Remaining





ExercisableExercise Price


Options


Contractual Life


Exercise Price


Options$
1.00



350,000



0.22


$
1.00



350,000
  Since we only had 1,000,000 shares of series A preferred stock authorized at December 31, 2009, the exercise of the preferred stock option to purchase 650,000 shares of series A preferred stock was subject to the amendment to the certificate of designation which increased the number of authorized shares of series A preferred stock to 2,000,000 shares.  Since there was no restriction on the use of the cash, the only consent to the amendment to the certificate of designation to increase the authorized shares of common stock was the consent of the three holders of the series A preferred stock who were also the option holders and the amendment to the certificate of designation was filed and the series A preferred stock was issued, the Company treated the option as having been exercised when the Company receive the option exercise proceeds in December 2009.
  Fair Value of Warrants
  ASC Topic 820, Fair Value Measurement and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy which requires classification based on observable and unobservable inputs when measuring fair value. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:
  [ ]
Level one — Quoted market prices in active markets for identical assets or liabilities;[ ]
Level two — Inputs other than level one inputs that are either directly or indirectly observable; and[ ]
Level three — Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.
  Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter.
  Assets and liabilities measured at fair value on a recurring basis are summarized as follows:
  Fair value measurement using inputs





Carrying amount atFinancial instruments

Level 1


Level 2


Level 3


12/31/2009Liabilities:Derivative instruments - Warrants

$
—


$
5,206,567


$
—


$
5,206,567Total

$
—


$
5,206,567


$
—


$
5,206,567
  F-15
  The fair value of warrants associated with the April 2008 debt issuance (Organic Region Warrants) and the August 2009 preferred share financing (Series A Warrants) that are reported as a liability was developed using the Black Scholes model using the following significant assumptions:
  Organic Region Warrants


Series A Warrants $0.14


Series A Warrants  $0.25December 31,


December 31,


December 31,


December 31,


December 31,


December 31,2009


2008


2009


2008


2009


2008Market price of common stock:

$
0.25


$
0.09


$
0.25


$
0.09


$
0.25


$
0.09Exercise price:

$
0.098


$
0.098



0.14


$
0.14



0.25


$
0.25Expected term (years):


4.6



5.0



4.6



5.0



4.6



5.0Dividend yield:


–



–



-



-



-



-Expected volatility:


120.82
%


112.01
%


120.82
%


112.01
%


120.82
%


112.01
%Risk-free interest rate:


1.50
%


1.50
%


1.75
%


1.75
%


1.75
%


1.75
%
  As of December 31, 2009, none of the warrants had been exercised.
  The risk-free rate of return reflects the interest rate for United States Treasury Note with similar time-to-maturity to that of the warrants.
  None of the other warrants are treated as derivatives.
  9. INCOME TAXES
  The Company’s operations are conducted solely in the PRC. It does not conduct any operations in the United States or The British Virgin Islands and is not subject to income tax in either jurisdiction. For certain entities in PRC, the Company has incurred net accumulated operating losses. The Company has net operating losses amounted of $22,443 and $53,522, respectively, as of December 31, 2009 and 2008 for these entities.  The Company believes that it is more likely than not that these net accumulated operating losses generated in these entities will not be utilized in the future. Therefore, the Company has provided full valuation allowance for the deferred tax assets arising from the losses at these locations as of December 31, 2009 and 2008. Accordingly, the Company has no net deferred tax assets.
  Under the current PRC enterprise income tax law, which became effective January 1, 2008, there is a standard enterprise income tax rate of 25%. The tax holidays that were granted under the former tax law, will continue in effect until they expire. Guangzhou Greenland has a two year income tax exemption in 2008 and 2009 and will have a 50% tax reduction from 2010 to 2012. Therefore, the Company does not have a provision for income tax.
  The following is a reconciliation of the provision for income taxes at the tax rates of BVI and PRC to the income taxes reflected in the Statement of Operations for the years ended December 31, 2009 and 2008.
  2009


2008U.S. statutory rate


34
%


34
%Foreign income not recognized in U.S.


(34
) %


(34
) %PRC income tax


25
%


25
%Exempt from income tax


(25
)%


(25
)%Tax expense at actual rate


0
%


0
%
 
 Sino Green Land, Inc. was incorporated in the United States and has incurred estimated accumulated net operating losses of $15,164 and $350,670 as of December 31, 2009 and 2008 for the tax purposes, respectively.  The estimated net operating loss carry forwards for United States income taxes amounted to $15,164 which may be available to reduce future years’ taxable income. These carry forwards will expire, if not utilized, in 2027.  Management believes that the realization of the benefits from these losses appears uncertain due to the Company’s limited operating history and continuing losses for United States income tax purposes.  Accordingly, the Company has provided a 100% valuation allowance on the deferred tax benefit to reduce the asset to zero. The net change in the valuation allowance for the period ended December 31, 2009 was $15,164 and the valuation allowance as of December 31, 2009 amounted to $15,164.
 
 The Company has cumulative undistributed earnings of foreign subsidiaries of approximately $11,950,117 as of December 31, 2009, included in consolidated retained earnings and will continue to be indefinitely reinvested in international operations. Accordingly, no provision has been made for U.S. deferred taxes related to future repatriation of these earnings, nor is it practicable to estimate the amount of income taxes that would have to be provided if the Company concluded that such earnings will be remitted in the future.
  F-16
  10. CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS
  The Company’s operations are conducted exclusively in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC’s economy.
  Operations of the Company in the PRC are subject to specific considerations and significant risks. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. Results of operations of the company may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.
  Since a significant amount of the company future  revenues will be  denominated in Renminbi,  the existing  and any future  restrictions  on currency  exchange may limit the company’s ability to utilize revenues generated in Renminbi to fund any business activities outside China or fund expenditures denominated in foreign currencies.
  Almost all of the Company’s products are sold at the Guangdong Yun Cheng Wholesale Market and the Beijing Xin Fadi Agricultural Products Wholesale Market, two major markets for the sale of agricultural products in their respective areas where the Company leases space to sell its produce.
  No customers who accounted for more than 10% of the total net revenue for the years ended December 31, 2009 and 2008.
  The Company has long-term arrangements to purchase its produce from a limited number of farming cooperatives. If the Company is not able to purchase the produce from these farmers, in the event of a product shortage, and it is necessary for the Company to purchase from other suppliers, the costs may be greater due to this kind of short-term nature of arrangements.
  Two vendors provided 52% and 27% of the goods to the Company during the year ended December 31, 2009. Three vendors provided 91%, 3% and 6% of the goods to the Company during the year ended December 31, 2008. Accounts payable to these vendors amounted $0 and $804,438 on December 31, 2009 and 2008.
  The Company extends credit to its customers based upon its assessment of their credit worthiness and generally does not require collateral. Credit losses have not been significant.
  11. COMMITMENT
  Operating Leases
  The Company leases various office facilities under operating leases that terminate on various dates.
  The Company incurred rent expenses of $114,040 and $107,531 for the years ended December 31, 2009 and 2008.
  The rent expenses for the five years after December 31, 2009 are as follows:
  2010

$
113,8292011


111,6872012


96,4752013


89,7582014


89,758After


47,419$
435,097
  12. SUBSEQUENT EVENTS
  On January 5, 2010, the outstanding options to purchase 350,000 shares of Series A Preferred Stock at an exercise price of $1.00 per share of Series A Preferred Stock were exercised. The Company received net proceeds, after deducting brokerage commissions, of $350,000.
 
 On January 15, 2010, an option to acquire 2,333,333 of Common Stock was exercised at a price per share of $0.12, which was granted on August 7, 2009 to acquire up to total 6,500,000 shares of Common Stock (See Note 8). In connection with such exercise, the Company issued to such investor warrants to purchase up to 1,866,667 shares of Common Stock at a price per share of $0.15 at any time for two years from the date of issuance
 
 On February 8, 2010, the Company sold to two of the investors in the August 7, 2009 financing (see Note 8) and their affiliates a total of 4,167,000 shares of common stock for a purchase price of $0.12 per share, for a total of $500,000 after brokerage commission.Inconnection with this financing, the holders of the $0.14 warrants issued in the August 7, 2009 financing waived any anti-dilution adjustment resulting for this issuance.
 
 On February 24, 2010, one investor in the Aug 7, 2009 financing (see Note 8) converted 44,000 shares of convertible preferred stock into 500,000 shares of Common Stock at a conversion price per share of $ 0.088.
 
 F-17
  On May 14, 2010, the certificate of designation relating to the series A preferred stock was amended and restated to increase the number of authorized shares of series A preferred stock from 1,000,000 to 2,000,000 shares.  The financial statements give retroactive effect to this amendment.
  13. EVENTS SUBSEQUENT TO THE DATE OF THE REPORT OF INDEPENDENT AUDITORS (UNAUDITED)
  In May 2010, the Company raised $3.4 million from the sale of 17,000,000 shares of common stock at $0.20 per share pursuant to agreements with two sets of investors.  One group of investors purchased a total of 3,375,000 shares for $675,000 (the “group A investors”) and the other group purchased 13, 625,000 shares of common stock for $2,725,000 (the “group B investors”).  In connection with the May 2010 financing, we agreed with the investors that:
  ·
If, as any time as long as any of the group A investors holds any of the shares of common stock purchased in the financing, the Company sells shares of common stock or issue convertible securities with an exercise price or conversion price which is less than the price paid in the financing, which was $0.20 per share, the Company is to issue additional shares to the investors so that the effective price per share is equal to such lower price.  The group B investors have no comparable provision.
  ·
The Company would hire a finance manager or chief financial officer with United States public company experience, within 45 days after the closing.  If the Company fails to meet this covenant, the Company must pay the group A investors liquidated damages of 1% per month in cash or stock (based on the closing price of the transaction) to the investors until the position is filled.  The Company satisfied this covenant.
  ·
Within 45 of closing, the Company shall have a majority of independent directors of which two are to be English-speaking and have prior experience with United States public companies.  If the Company fails to meet this covenant, the Company must pay the group A investors liquidated damages of 1% per month in cash or stock (based on the closing price of the transaction) to the investors until the covenant is met.  The Company has satisfied this requirement.
  ·
Within 120 days of closing with respect to the group A investors and 180 days of closing with respect to the group B investors, the Company must have sent in the necessary paperwork to apply for a listing on the American Stock Exchange.  If the Company fails to meet this covenant, the Company must pay the investors liquidated damages of 1% per month in cash or stock (based on the closing price of the transaction) to the investors until the covenant is met.
  ·
Within 90 days of closing, the Company agreed with the group A investors to “conduct a minimum of an eight (8) for one (1) and maximum of ten (10) for one (1) reverse stock split” and the Company agreed with the group B investors to “conduct a minimum of a six (6) for one (1) and maximum of eight (8) for one (1) reverse stock split.” If the Company fails to meet this covenant, the Company must pay the group A investors liquidated damages of 1% per month in cash or stock (based on the closing price of the transaction) to the investors until the covenant is met.
  On September 24, 2010, the holders of the series A preferred stock and the warrants to purchase 20,000,000 shares of common stock that were issued in the August 2009 financing waived the provisions in the purchase agreement and the warrants that provided for a reduction in the conversion price of the series A preferred stock and the exercise price of the warrants if the Company did not meet certain earnings levels or if the Company sold shares of common stock or convertible securities at a conversion or exercise price that was less than the conversion price of the series A preferred stock and the exercise price of the warrants.
  On October 4, 2010, the Company sold 5,000,000 shares of common stock to two investors at $0.20 per share to two investors, for total gross proceeds of $1,000,000.  In connection with the financing, the Company agreed with the investors that:
  ·
If, as any time as long as any investor holds any of the shares of common stock purchased in the financing, the Company sells shares of common stock or issues convertible notes or convertible preferred stock at a price or with a conversion price which is less than the $0.20 price paid in the financing, the Company is to issue additional shares to the investors so that the effective price per share is equal to such lower price.
  ·
Within 120 days of closing, the Company must have sent in the necessary paperwork to apply for a listing on the American Stock Exchange.  If the Company fails to meet this covenant, the Company must pay the investors liquidated damages of 1% per month in cash or stock (based on the closing price of the transaction) to the investors until the covenant is met.
  ·
Within 90 days of closing, the Company agreed with to “conduct a minimum of an eight (8) for one (1) and maximum of ten (10) for one (1) reverse stock split.” If the Company fails to meet this covenant, the Company must pay the investors liquidated damages of 1% per month in cash or stock (based on the closing price of the transaction) to the investors until the covenant is met.
  14. RESTATEMENT OF FINANCIAL STATEMENTS
  On August 23, 2010, the Company concluded, after a review of the pertinent facts, that the previously issued financial statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2009 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2010, September 30, June 30 and March 31, 2009, respectively, should not be relied upon due to the following:
  ·
The Company improperly allocated, for financial statement purposes, the proceeds received in connection with the April 2008 debt financing transaction and the August and December 2009 and January 2010 preferred stock financing transactions (collectively, “the financings”). The restated financial statements include the effects of properly allocating the financing proceeds between (1) the debt or preferred stock, as applicable, (2) any derivative liabilities associated with warrants for the purchase of common stock, and (3) any beneficial conversion features (“BCF”), as a component of additional paid-in capital, which allow the debt and preferred stockholders to convert their investment into the Company’s common stock on favorable terms.
  F-18
  ·
Due to the improper allocation of proceeds on the April 2008 debt financing which resulted in an incorrect basis for the debt, the Company improperly reported the loss on debt extinguishment upon its settlement in August 2009. The restated financial statements include the effects of reporting the loss on debt extinguishment properly.
  ·
Certain warrants containing variable exercise terms associated with the financings were reported as a component of paid-in capital instead of properly reflecting them as a derivative liability at fair value, with changes in fair value reported in the income statement each period. The restated financial statements include the effects of reporting the derivative liabilities and their associated changes in value correctly.
  ·
A BCF was inappropriately recorded as a debt discount on the April 2008 financing in addition to being amortized over the subsequent 12 months with a charge to expense. Furthermore, separate BCFs associated with the December 2009 and January 2010 preferred stock financings were erroneously omitted due to a misallocation of proceeds for financial statement purposes. The restated financial statements include the effects of allocating financing proceeds to the applicable BCFs by recording a preferred stock discount with a credit to additional paid-in capital. The discounts were then charged immediately to retained earnings as deemed preferred stock dividends pursuant to the terms of the agreement which provide immediate conversion rights.
  ·
Earnings per share have been restated to include the effects of the restated financial statements.
  The Company’s management has determined that as a result of such accounting matters, its reported net income was overstated by $3,529,126 for the year ended December 31, 2009 and understated by $112,650 for the year ended December 31, 2008.
  Set forth below is a comparative presentation of the balance sheet and income statement as of and for the years ended December 31, 2009 and 2008 as restated and as initially reported in the Company’s Reports on Form 10-K previously filed with the Securities and Exchange Commission. These financial statements include the restated balance sheet as of December 31, 2009 and 2008.
  SINO GREEN LAND CORPORATION AND SUBSIDIARIES
  As Reported


As Restated


As Reported


As Restated12/31/2009


12/31/2009


12/31/2008


12/31/2008BALANCE SHEET:Convertible debenture

$
-


$
-


$
313,627


$
360,710Derivative liability


-



5,206,567



-



340,266Additional Paid-in Capital


10,119,540



7,736,406



5,419,351



4,919,351Retained earnings


14,772,550



11,950,117



9,463,133



9,575,783INCOME STATEMENT:Other Income (Expense)Interest expense


(353,973
)


(63,882
)


(133,650
)


(133,650
)Loss on debt extinguishment


-



(139,289
)


-



-Beneficial conversion feature expense


(153,425
)


-



(393,345
)


-Change in derivative liability


-



(3,866,300
)


46,770



(200,977
)Net income


6,553,460



3,024,334



4,601,367



4,714,017Deemed preferred Stock dividend


(1,244,043
)


(650,000
)


-



-Net income applicable to common stockholders


5,309,417



2,374,334



4,601,367



4,714,017Comprehensive income:Net income

$
5,309,417


$
3,024,334


$
4,601,367


$
4,714,017Other comprehensive loss:Foreign currency translation gain/(loss)


(313,469
)


(313,469
)


777,795



777,795Comprehensive income

$
4,995,948


$
2,710,865


$
5,379,162


$
5,491,812Net income per share:Basic

$
0.07


$
0.03


$
0.06


$
0.06Diluted

$
0.06


$
0.02


$
0.06


$
0.06Weighted average number of shares outstandingBasic


89,772,302



89,772,302



81,648,554



81,648,554Diluted


117,579,469



117,579,469



81,648,554



81,648,554