UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)
[X]  QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
     OF 1934 For the Quarterly Period Ended June 30, 2005

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
     OF 1934 For the Transition Period from _________ to _________

                         Commission file number: 0-49608

                              China Agritech, Inc.
             (Exact name of registrant as specified in its charter)

           Delaware                                         75-2955368
-------------------------------                  -------------------------------
(State or other jurisdiction of                  IRS Employer Identification No.
 incorporation or organization)

  Room 511, 5/F Wing on Plaza, 62 Mody Road, Tsim Sha Tsui, Kowloon, Hong Kong
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

                                  852-6555 1799
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

                                   Copies to:
                                   Charles Law
                                King and Wood LLP
                               650 Page Mill Road,
                               Palo Alto, CA 94304

                            Basic Empire Corporation
--------------------------------------------------------------------------------
                                  (Former name)

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

                                  Yes _X_ No___

The  number  of  shares  of Common  Stock  outstanding  as of June 30,  2005 was
14,108,099

Transitional Small Business Disclosure Format (check one): Yes ___ No _X_

<PAGE>

                              China Agritech, Inc.

                                   FORM 10-QSB



                                TABLE OF CONTENTS


                          PART I FINANCIAL INFORMATION

Item 1      Financial Statements                                            1-11

Item 2      Management's Discussion and Analysis of Financial Condition    11-15
            and Results of Operations

Item 3      Controls and Procedures                                           16

                            PART II OTHER INFORMATION

Item 1      Legal proceedings                                                 16

Item 2      Unregistered Sales of Equity Securities and Use of Proceeds       16

Item 3      Defaults Upon Senior Securities                                   16

Item 4      Submission of Matters to a Vote of Security Holders               17

Item 5      Other Information                                                 17

Item 6      Exhibits and Reports on Form 8-K                                  17

SIGNATURES                                                                    18

EXHIBITS











<PAGE>
<TABLE>
<CAPTION>

                         PART I - FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS

                      CHINA AGRITECH, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                               AS OF JUNE 30, 2005
                                   (UNAUDITED)

ASSETS
CURRENT ASSETS
<S>                                                                     <C>
Cash & cash equivalents                                                 $   897,180
Cash held in escrow account                                               1,350,000
Accounts receivable, net                                                 11,723,770
Prepayments and other receivables                                           341,302
Due from shareholders                                                       241,585
Due from related party                                                          530
Inventories                                                               1,673,577
                                                                        -----------

Total current assets                                                     16,227,944

PROPERTY, PLANT AND EQUIPMENT, net                                        1,079,213
                                                                        -----------

Total assets                                                            $17,307,157
                                                                        ===========

LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable                                                        $ 5,700,677
Accrued expenses and other payables                                       1,131,732
Taxes payable                                                             1,135,409
                                                                        -----------

Total current liabilities                                                 7,967,818
                                                                        -----------

MINORITY INTEREST                                                           933,439
                                                                        -----------

STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value, 10,000,000 shares authorized; none
     issued and outstanding                                                    --
Common stock, $0.001 par value; 100,000,000 shares authorized;
     14,108,099 shares issued and outstanding                                14,108
Additional paid-in capital                                                1,607,082
Accumulated other comprehensive income                                       20,260
Statutory reserves                                                        1,262,236
Retained earnings                                                         5,502,214
                                                                        -----------

Total stockholders' equity                                                8,405,900
                                                                        -----------

Total Liabilities and stockholder's equity                              $17,307,157
                                                                        ===========
</TABLE>


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


                                       1
<PAGE>
<TABLE>
<CAPTION>

                      CHINA AGRITECH, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
        FOR THE THREE AND SIX-MONTH PERIODS ENDED JUNE 30, 2005 AND 2004
                                   (UNAUDITED)

                                                  Three-month periods ended       Six-month periods ended
                                                          June 30,                        June 30,
                                                    2005            2004            2005            2004
                                                ------------    ------------    ------------    ------------
<S>                                             <C>             <C>             <C>             <C>
Net Sales                                       $ 10,184,925    $  5,519,830    $ 15,170,045    $  7,681,604
Cost of sales                                     (5,542,015)     (3,434,440)     (7,909,617)     (4,530,725)
                                                ------------    ------------    ------------    ------------

Gross profit                                       4,642,910       2,085,390       7,260,428       3,150,879
                                                ------------    ------------    ------------    ------------

Operating expenses
   Selling expenses                               (1,011,984)       (422,122)     (1,378,798)       (644,716)
   General and administrative expense               (461,298)       (124,919)       (979,635)       (224,785)
                                                ------------    ------------    ------------    ------------

   Total operating expense                        (1,473,282)       (547,041)     (2,358,433)       (869,501)
                                                ------------    ------------    ------------    ------------

Income from operations                             3,169,628       1,538,349       4,901,995       2,281,378

Other income (expenses)
   Merger cost                                          --              --          (640,000)           --
   Loss on disposal of plant and equipment              --              --              --           (35,756)
   Finance cost                                         --               (22)             (2)           --
   Others                                                  6            --                14            (997)
                                                ------------    ------------    ------------    ------------

   Total other income (expenses)                           6             (22)       (639,988)        (36,753)
                                                ------------    ------------    ------------    ------------

Income before income taxes                         3,169,634       1,538,327       4,262,007       2,244,625
Provision for income taxes                        (1,113,788)       (573,789)     (1,837,463)       (724,454)
                                                ------------    ------------    ------------    ------------

Income before minority interest                    2,055,846         964,538       2,424,544       1,520,171
Minority interest                                   (206,856)           --          (353,784)           --
                                                ------------    ------------    ------------    ------------

Net income                                      $  1,848,990    $    964,538    $  2,070,760    $  1,520,171
                                                ============    ============    ============    ============

Basic earnings per share                        $       0.13    $       0.08    $       0.15    $       0.13
                                                ============    ============    ============    ============

Weighted average number of shares outstanding     14,108,099      12,091,628      13,985,405      12,091,628
                                                ============    ============    ============    ============
</TABLE>


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


                                       2
<PAGE>
<TABLE>
<CAPTION>

                      CHINA AGRITECH, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOW
             FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2005 AND 2004
                                   (UNAUDITED)

                                                                                         2005           2004
                                                                                     -----------    -----------
<S>                                                                                  <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                           $ 2,070,760    $ 1,520,171
Adjustments  to reconcile net income to net cash  generated  from (used in)
   operating activities:
Depreciation                                                                              49,767         56,739
Minority interest                                                                        353,784           --
Loss on disposal of property, plant and equipment                                           --           35,756
(Increase) decrease in current assets:
Accounts receivable, net                                                              (6,164,333)    (5,114,896)
Prepayments and other receivables                                                        (43,356)       159,486
Inventories                                                                           (1,121,435)       807,156
Increase (decrease) in current liabilities:
Accounts payable                                                                       5,311,286      1,018,757
Accrued expenses and other payables                                                      878,149        223,947
Taxes payable                                                                            649,597         68,230
                                                                                     -----------    -----------

Net cash provided by (used in) operating activities                                    1,984,219     (1,224,654)
                                                                                     -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Due from shareholders                                                                   (234,656)        27,311
Due from related party                                                                      (530)        (7,833)
Loan repayment by related party                                                             --        2,320,084
Cash acquired from reverse acquisition                                                   185,635           --
Acquisition of plant and equipment                                                          (528)        (8,784)
Proceeds from disposal of property, plant and equipment                                     --              203
                                                                                     -----------    -----------

Net cash provided by (used in) investing activities                                      (50,079)     2,330,981
                                                                                     -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of loans                                                                          --          (67,814)
Due to shareholders                                                                     (499,031)       137,769
Due to related companies                                                                (575,994)    (1,166,552)
                                                                                     -----------    -----------

Net cash used in financing activities                                                 (1,075,025)    (1,096,597)
                                                                                     -----------    -----------

Net increase in cash and cash equivalents                                                859,115          9,730
Cash and cash equivalents at beginning of period                                          38,065         10,601
                                                                                     -----------    -----------

Cash and cash equivalents at end of period                                           $   897,180    $    20,331
                                                                                     ===========    ===========
Supplementary disclosures of cash flow information:
    Income taxes paid                                                                $ 1,140,254    $   735,922
                                                                                     ===========    ===========
Schedule of noncash financing activities:
    Cash from issue of common stock placed in escrow account                         $ 1,350,000    $      --
                                                                                     ===========    ===========
</TABLE>


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


                                       3
<PAGE>

                      CHINA AGRITECH, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                     FOR THE SIX MONTHS ENDED JUNE 30, 2005
                                   (UNAUDITED)

1.   ORGANIZATION AND DESCRIPTION OF BUSINESS

     China Agritech, Inc. (the "Company") was originally incorporated on January
     5, 1925 under the laws of the State of Nevada as Argyle Mining  Company for
     the development of mining claims.  Throughout our existence we have changed
     our business  model several times,  and conducted no  substantive  business
     from 1986 until February 2005 as discussed below.

     On August 10,  2004,  we merged with and into a newly  formed  wholly-owned
     Delaware  subsidiary  of the same  name for the  purpose  of  changing  our
     corporate domicile from Nevada to Delaware.

     We have  experienced  several  corporate  name  changes as follows:  Argyle
     Corporation in January 1960,  Basic Empire in November  1963,  Basic Empire
     Corp in December 1976 and China Agritech, Inc. in May 2005.

     On December 25, 2004, the Company,  China Tailong  Holdings Company Limited
     ("Tailong"),  and the stockholders of Tailong (the "Tailong  stockholders")
     entered  into the  Agreement  and Plan of  Reorganization  ("Reorganization
     Agreement"),  as  amended  and  such  Reorganization  became  effective  on
     February 3, 2005. The Reorganization Agreement provided for the acquisition
     by the  Company  from the  Tailong  stockholders  of all of the  issued and
     outstanding  Tailong  shares in  exchange  for  10,606,158  shares of newly
     issued  restricted  common  stock  of  the  Company,  whereby  the  Tailong
     stockholders  obtained control of the Company. In this connection,  Tailong
     became a wholly-owned subsidiary of the Company.

     As a result of the acquisition of Tailong,  the Company became a fertilizer
     manufacturer and conducts operations in the People's Republic of China (the
     "PRC") through its wholly-owned subsidiary, Tailong and Tailong's 90% owned
     subsidiary, Pacific Dragon Fertilizer Co., Ltd. ("Pacific Dragon").

     Tailong was  incorporated  on October 27, 2003 under the laws of Hong Kong.
     On October 9, 2004, Tailong acquired 90% of Pacific Dragon,  which conducts
     Tailong's only business  operation.  Pacific Dragon is a foreign investment
     joint  venture and was  incorporated  in the PRC on May 20,  1994.  Pacific
     Dragon is classified as a Foreign  Invested  Enterprise  ("FIE") in the PRC
     and is subject to the FIE laws of the PRC.  Its legal  structure is similar
     to a limited  liability  company  organized  under state laws in the United
     States.  The Articles of  Associations  provide for a term of 15 years with
     registered  capital of $500,000.  Pacific Dragon engages in the business of
     manufacturing   and   marketing  a  series  of  organic   liquid   compound
     fertilizers.  These  products  are  marketed  and  sold  to  farmers  in 11
     provinces  of  China.   Pacific  Dragon  conducts   on-going  research  and
     development  to  enhance  concentration  of  the  organic  liquid  compound
     fertilizer and lower the manufacturing  cost. The principal  researchers in
     Pacific  Dragon  are Liu  Shuhua  and Liu  Kangde.  The  annual  expense on
     research and  development  is around  RMB300,000 to 500,000  (approximately
     $36,276 to $60,460).  As of June 30, 2005,  we have an  approximate  annual
     production  capacity of 5000 metric tons ("MT") for organic liquid compound
     fertilizers.  Our major products include "LuLingBao II", LuLingBao III" and
     "Tailong I".

     Prior to the acquisition of Tailong, the Company was a non-operating public
     shell  corporation.  Pursuant to Securities and Exchange  Commission rules,
     the  merger  or  acquisition  of  a  private   operating   company  into  a
     non-operating   public  shell   corporation  with  nominal  net  assets  is
     considered  a capital  transaction  in  substance,  rather  than a business
     combination. Accordingly, for accounting purposes, the transaction has been
     treated as a reverse  acquisition  and a  recapitalization,  and  pro-forma
     information  is not  presented.  Transaction  costs incurred in the reverse
     acquisition have been charged to expense.

     On April 21, 2005,  the Company filed a Form  Definitive  14C - Information
     Statement pursuant to Section 14(c) of the Securities  Exchange Act of 1934


                                       4
<PAGE>

     giving  notice  that the  Company  received  written  consents in lieu of a
     meeting  from  the  holders  of a  majority  of the  Company's  issued  and
     outstanding  common stock of a proposal to amend and restate the  Company's
     Certificate of Incorporation  (the  "Restatement")  to effect,  among other
     things,  a forward stock split whereby each share of issued and outstanding
     common stock is converted  into 1.14 shares of the Company's  common stock.
     The Form  Definitive 14C became  effective on May 12, 2005 when the Company
     filed its  amended  and  restated  Certificate  of  Incorporation  with the
     Secretary of the State of Delaware.  The effect of this action is reflected
     in the  Company's  financial  statements  as of the  first day of the first
     period presented.

2.   BASIS OF PRESENTATION

     The Company  follows the accrual basis of  accounting  in  accordance  with
     accounting  principles  generally  accepted in the United States of America
     and has a year-end of December 31.

     The accompanying interim consolidated unaudited financial statements of the
     Company have been prepared in accordance with generally accepted accounting
     principles  for interim  financial  information.  Accordingly,  they do not
     include all of the information  required by generally  accepted  accounting
     principles  for complete  financial  statements.  All material  adjustments
     (consisting of normal recurring  adjustments)  which, in the opinion of the
     management,  are necessary for a fair  presentation  of the results for the
     periods  presented  have been  included.  The results of operations for the
     interim period presented are not necessarily indicative of the results that
     can be expected for the entire  year.  These  statements  should be read in
     conjunction  with the  Company's  audited  financial  statements  and notes
     thereto for the fiscal year ended December 31, 2004.

3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Basis of Consolidation
     ----------------------

     The condensed consolidated financial statements include the accounts of the
     Company,   its  wholly-owned   subsidiary,   Tailong,   and  its  90%-owned
     subsidiary,  Pacific  Dragon.  All  significant  intercompany  accounts and
     transactions have been eliminated.

     Use of Estimates
     ----------------

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

     Cash and cash equivalents
     -------------------------

     For  Statement of Cash Flows  purposes,  the Company  considers all cash on
     hand  and  in  banks,  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.

     Inventories
     -----------

     Inventories  are  valued at the  lower of cost  (determined  on a  first-in
     first-out basis) or net realizable value. The management  compares the cost
     of inventories  with the net realizable  value and an allowance is made for
     writing down the  inventories to their net realizable  value, if lower than
     the cost.


                                       5
<PAGE>

     Property , plant and equipment
     ------------------------------

     Property,  plant and  equipment  are  recorded at cost.  Gains or losses on
     disposals are  reflected as gain or loss in the year of disposal.  The cost
     of improvements that extend the life of plant,  property, and equipment are
     capitalized.  These capitalized costs may include structural  improvements,
     equipment,  and fixtures.  All ordinary  repair and  maintenance  costs are
     expensed as incurred.

     Depreciation  for  financial  reporting  purposes  is  provided  using  the
     straight-line method over the estimated useful lives of the assets: 5 to 10
     years for  plant and  machinery;  5 to 10 years for  equipment;  and 3 to 5
     years for motor vehicles.

     Impairment
     ----------

     The Company  applies the  provisions  of Statement of Financial  Accounting
     Standard No. 144,  "Accounting for the Impairment or Disposal of Long-Lived
     Assets" ("FAS No. 144"), issued by the Financial Accounting Standards Board
     ("FASB").  FAS No. 144  requires  that  long-lived  assets be reviewed  for
     impairment  whenever events or changes in  circumstances  indicate that the
     carrying  amount of an asset may not be  recoverable  through the estimated
     undiscounted  cash  flows  expected  to  result  from the use and  eventual
     disposition  of  the  assets.  Whenever  any  such  impairment  exists,  an
     impairment  loss will be  recognized  for the amount by which the  carrying
     value exceeds the fair value.

     The  Company  tests  long-lived  assets,   including  property,  plant  and
     equipment  and  intangible  assets  subject to periodic  amortization,  for
     recoverability  at least annually or more frequently upon the occurrence of
     an event or when  circumstances  indicate  that the net carrying  amount is
     greater than its fair value. Assets are grouped and evaluated at the lowest
     level for their identifiable cash flows that are largely independent of the
     cash flows of other  groups of assets.  The  Company  considers  historical
     performance  and future  estimated  results in its  evaluation of potential
     impairment and then compares the carrying amount of the asset to the future
     estimated cash flows  expected to result from the use of the asset.  If the
     carrying amount of the asset exceeds estimated expected undiscounted future
     cash flows,  the Company measures the amount of impairment by comparing the
     carrying  amount of the asset to its fair  value.  The  estimation  of fair
     value is generally  measured by discounting  expected  future cash flows as
     the rate the  Company  utilizes  to  evaluate  potential  investments.  The
     Company  estimates fair value based on the information  available in making
     whatever  estimates,  judgments and projections  are considered  necessary.
     There was no impairment of long-lived  assets in the periods ended June 30,
     2005 and 2004.

     Revenue Recognition
     -------------------

     The Company's  revenue  recognition  policies are in compliance  with Staff
     Accounting  Bulletin  (SAB) 104. Sales revenue is recognized at the date of
     shipment to customers when a formal arrangement  exists, the price is fixed
     or  determinable,   the  delivery  is  completed,   no  other   significant
     obligations of the Company exist and collectibility is reasonably  assured.
     Payments   received  before  all  of  the  relevant  criteria  for  revenue
     recognition are satisfied are recorded as unearned revenue.

     Advertising Costs
     -----------------

     The  Company   expenses  the  cost  of   advertising  as  incurred  or,  as
     appropriate,  the first time the advertising takes place. Advertising costs
     for the six and  three  months  ended  June  30,  2005  were  $238,554  and
     $156,627,  respectively,  and for the six and three  months  ended June 30,
     2004 were $120,482 and $60,241, respectively.

     Income Taxes
     ------------

     The Company accounts for income taxes using an asset and liability approach
     which allows for the  recognition  and  measurement  of deferred tax assets
     based upon the  likelihood of  realization of tax benefits in future years.
     Under the asset and liability approach, deferred taxes are provided for the
     net tax effects of temporary  differences  between the carrying  amounts of
     assets and  liabilities  for financial  reporting  purposes and the amounts


                                       6
<PAGE>

     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.

     Foreign currency translation
     ----------------------------

     The Company uses the United States  dollar  ("U.S.  dollars") for financial
     reporting  purposes.  The Company's  subsidiaries  maintain their books and
     records in their  functional  currency,  being the primary  currency of the
     economic  environment in which their operations are conducted.  In general,
     for consolidation purposes, the Company translates the subsidiaries' assets
     and  liabilities  into U.S.  dollars using the  applicable  exchange  rates
     prevailing  at the  balance  sheet  date,  and the  statement  of income is
     translated  at  average   exchange  rates  during  the  reporting   period.
     Adjustments  resulting from the translation of the subsidiaries'  financial
     statements are recorded as accumulated other comprehensive income.

     In  particular,  Renminbi  ("RMB"),  the PRC's  official  currency,  is the
     functional currency of Pacific Dragon. Translation of amounts of all items,
     except for the paid-up  capital,  from RMB to United States dollars ("US$")
     is made at the single rate of exchange of US$1.00 to RMB8.30.  The exchange
     rate was  consistent at this rate during the six months ended June 30, 2005
     and 2004. The paid-up capital was translated at a rate  US$1.00:RMB8.70  at
     the date of  payment.  The  result  was a  cumulative  translation  gain of
     $20,260 which was recorded as accumulated other comprehensive income in the
     consolidated financial statements.

     Before July 22, 2005, RMB had been pegged at 8.28 against the U.S. dollars.
     On July 22, 2005, the PRC government revalued RMB and announced a change in
     its currency  policy to allow RMB to float against a basket of  currencies.
     However,  it does not imply  free  convertibility  of RMB to other  foreign
     currencies. All foreign exchange transactions continue to take place either
     through the Bank of China or other banks authorized to buy and sell foreign
     currencies  at the exchange  rates  quoted by the  People's  Bank of China.
     Approval  of  foreign  currency  payments  by the  Bank of  China  or other
     institutions  requires  submitting a payment application form together with
     invoices, shipping documents and signed contracts.

     Fair values of financial instruments
     ------------------------------------

     Statement of Financial Accounting Standard No. 107, "Disclosures about Fair
     Value  of  Financial  Instruments",  requires  that  the  Company  disclose
     estimated fair values of financial instruments.

     The  Company's  financial  instruments  primarily  consist of cash and cash
     equivalents,  accounts receivable, other receivables,  accounts payable and
     accruals, and related party advances and borrowings.

     As of the balance sheet dates,  the estimated  fair values of the financial
     instruments  were not materially  different  from their carrying  values as
     presented on the balance sheet.  This is attributed to the short maturities
     of the  instruments  and that interest rates on the borrowings  approximate
     those  that  would  have  been  available  for loans of  similar  remaining
     maturity and risk profile at respective balance sheet dates.

     Earning per share (EPS)
     -----------------------

     Basic EPS is computed by dividing income  available to common  shareholders
     by the weighted average number of common shares outstanding for the period.
     Diluted EPS is not  presented as the Company has no potential  common stock
     outstanding.


                                       7
<PAGE>

     A stock dividend or split is accounted for retrospectively by considering
     it outstanding for the entirety of each period presented.

     Segment Reporting
     -----------------

     Statement of Financial  Accounting  Standard  No. 131,  "Disclosures  about
     Segments  of an  Enterprise  and  Related  Information"  ("FAS  No.  131"),
     requires certain financial and supplementary information to be disclosed on
     an annual and interim basis for each  reportable  segment of an enterprise.
     FAS  No.  131  has  no  effect  on  the  Company's  consolidated  financial
     statements as the Company  operates in one  reportable  business  segment -
     manufacture and marketing of fertilizers in China.

     Recent Accounting Pronouncements
     --------------------------------

     In November 2004,  the FASB has issued FASB  Statement No. 151,  "Inventory
     Costs,  an  Amendment  of ARB No.  43,  Chapter  4" ("FAS  No.  151").  The
     amendments made by FAS No. 151 are intended to improve financial  reporting
     by clarifying  that abnormal  amounts of idle  facility  expense,  freight,
     handling costs,  and wasted  materials  (spoilage)  should be recognized as
     current-period  charges and by requiring the allocation of fixed production
     overheads  to  inventory  based on the normal  capacity  of the  production
     facilities.  The guidance is effective for inventory  costs incurred during
     fiscal  years  beginning  after  June  15,  2005.  Earlier  application  is
     permitted for inventory  costs incurred during fiscal years beginning after
     November  23,  2004.  The  provisions  of  FAS  No.  151  will  be  applied
     prospectively.  The Company  does not expect the adoption of FAS No. 151 to
     have a material impact on its consolidated  financial position,  results of
     operations or cash flows.

     In December  2004,  the FASB issued FASB  Statement No. 123R,  "Share-Based
     Payment,  an Amendment of FASB Statement No. 123" ("FAS No. 123R"). FAS No.
     123R requires  companies to recognize in the  statement of  operations  the
     grant- date fair value of stock options and other equity-based compensation
     issued to employees.  FAS No. 123R is effective  beginning in the Company's
     second  quarter of fiscal 2006. The Company does not expect the adoption of
     FAS No.  123R to  have a  material  impact  on its  consolidated  financial
     position, results of operations or cash flows.

     In December  2004,  the FASB issued FASB  Statement No. 153,  "Exchanges of
     Nonmonetary  Assets." This  Statement is an amendment of APB Opinion No. 29
     to eliminate the exception for nonmonetary  exchanges of similar productive
     assets  and  replaces  it  with  a  general   exception  for  exchanges  of
     nonmonetary  assets  that do not have  commercial  substance.  The  Company
     believes that the adoption of this standard will have no material impact on
     its financial statements.

     In May 2005,  the FASB issued FASB Statement No. 154,  "Accounting  Changes
     and  Error  Corrections  - a  replacement  of APB  Opinion  No. 20 and FASB
     Statement No. 3". This statement  replaces APB Opinion No. 20,  "Accounting
     Changes",  and FASB  Statement  No. 3,  "Reporting  Accounting  Changes  in
     Interim  Financial  Statements",  and  changes  the  requirements  for  the
     accounting  for and  reporting of a change in  accounting  principle.  This
     statement applies to all voluntary changes in accounting principle. It also
     applies to changes  required by an accounting  pronouncement in the unusual
     instance  that the  pronouncement  does  not  include  specific  transition
     provisions.   This  statement  is  effective  for  accounting  changes  and
     correction  of errors made in fiscal  years  beginning  after  December 15,
     2005.  Management believes the adoption of this pronouncement will not have
     a material effect on our consolidated financial statements.

     In June 2005, the FASB ratified the EITF consensus to amend EITF No. 96-16,
     "Investor's  Accounting for an Investee When the Investor Has a Majority of
     the Voting Interest but the Minority  Shareholders Have Certain Approval or
     Veto Rights".  The EITF agreed to amend the  Protective  Rights  section of
     this consensus, as well as Example of Exhibit 96-16A, to be consistent with
     the  consensus  reached in Issue No. 04-5,  "Determining  Whether a General
     Partner, or the General Partners as a Group, Controls a Limited Partnership
     or Similarly  Entity When the Limited  Partners  Have Certain  Rights." The
     provisions  of this  amendments  should  be  applied  prospectively  to new
     investments  and to investment  agreements that are modified after June 29,


                                       8
<PAGE>

     2005.  Management believes the adoption of this pronouncement will not have
     a material effect on our consolidated financial statements.

     Other recent  accounting  pronouncements  issued by the FASB (including its
     Emerging  Issues  Task  Force),  the AICPA,  and the SEC did not or are not
     believed by management to have a material  impact on the Company's  present
     or future consolidated financial statements.

4.   DUE FROM SHAREHOLDERS / RELATED PARTIES

     The  amounts due from  shareholders  and  related  parties  was  unsecured,
     non-interest bearing and repayable on demand.

5.   INVENTORIES

     Inventories as of June 30, 2005 consist of:

     Raw materials                                               $     21,779
     Packing materials                                                 19,503
     Work-in-progress                                               1,569,400
     Finished goods                                                    62,895
                                                                 ------------

                                                                 $  1,673,577
                                                                 ============

6.   PLANT AND EQUIPMENT

     Plant and equipment as of June 30, 2005 consist of:

     Plant and machinery                                         $  1,130,439
     Leasehold improvements                                             1,461
     Equipment                                                         81,835
     Motor vehicles                                                   138,058
                                                                 ------------

                                                                    1,351,793
     Less: Accumulated depreciation                                  (272,580)
                                                                 ------------

                                                                 $  1,079,213
                                                                 ============

7.   COMMON STOCK

     Pursuant   to  the   Reorganization   Agreement   (as  defined  in  Note  1
     "Organization  and  Description  of Business"  above),  the Company  issued
     10,606,158  shares of newly issued  restricted common stock in exchange for
     all of the issued and outstanding common stock of Tailong.

     On February 3, 2005,  and  following  the  combination  with  Tailong,  the
     Company completed the sale of 590,283 shares of its restricted common stock
     ("Private  Placement  Shares")  for  $1.6941  per  share  for  a  total  of
     $1,000,000 to accredited investors pursuant to the stock purchase agreement
     dated February 3, 2005.

     On May 12, 2005,  the Company  effected a forward  stock split whereby each
     share of issued and outstanding  common stock is converted into 1.14 shares
     of the  Company's  common stock.  As a result,  the common stock amount has
     been increased  proportionately  based on the forward stock split ratio and
     the additional paid-in capital has been reduced by the same amount.

     On June 13, 2005, the Company  entered into a stock purchase  agreement for
     the sale of 230,516  shares of the  Company's  common stock for $1.4861 per
     share for a total of  $350,000.  As the shares  have not been  issued as of
     June 30, 2005,  the amount of $350,000  received in escrow account is fully
     credited to additional paid-in capital.


                                       9
<PAGE>

8.   STATUTORY RESERVES

     As stipulated by the PRC's Company Law, the Company's 90% owned subsidiary,
     Pacific  Dragon's net income  after  taxation  can only be  distributed  as
     dividends after appropriation has been made for the following:

     (i)      Making up cumulative prior years' losses, if any;
     (ii)     Allocations to the "Statutory surplus reserve" of at least 10%
              of income after tax, as determined  under PRC accounting rules
              and  regulations,  until the fund  amounts  to 50% of  Pacific
              Dragon's registered  capital,  which is restricted for set off
              against  losses,  expansion  of  production  and  operation or
              increase in registered capital;
     (iii)    Allocations of 5-10% of income after tax, as determined  under
              PRC  accounting  rules and  regulations,  to Pacific  Dragon's
              "Statutory  common  welfare  fund",  which is  restricted  for
              capital   expenditure  for  the  collective  benefits  of  the
              Company's employees; and
     (iv)     Allocations to the discretionary  surplus reserve, if approved
              in the shareholders' general meeting.

     During the six-month period ended June 30, 2005, Pacific Dragon transferred
     $530,675 from retained  earnings to statutory  reserves in compliance  with
     the above  regulations.  As of June 30, 2005,  statutory  reserves comprise
     $841,491 and $420,745 in respect of statutory surplus reserve and statutory
     common welfare fund,  respectively,  included in the  consolidated  balance
     sheet which are attributable to the Company.


9.   INCOME TAXES

     The Company is registered in the State of Delaware whereas its subsidiaries
     are in Hong Kong and the PRC,  respectively.  The Company and its Hong Kong
     subsidiary  have incurred net accumulated  operating  losses for income tax
     purposes and hence have not made any  provision  for current  income taxes.
     The  Company  believes  that it is more  likely  than  not that  these  net
     accumulated  operating  losses will not be utilized in the future and hence
     the  deferred  tax assets  consisting  of these net  accumulated  operating
     losses have been fully offset by a valuation allowance.

     Provision for income taxes for the six and three months ended June 30, 2005
     and 2004  represented  PRC income  taxes on the income from  operations  of
     Pacific Dragon.  Pursuant to PRC Income Tax Laws, Pacific Dragon is subject
     to Enterprise  Income Taxes at a statutory rate of 33%, which comprises 30%
     national income tax and 3% local income tax.

10.  BASIC EARNINGS PER SHARE

     Basic  earnings  per share for the six and three months ended June 31, 2005
     and 2004,  were  determined  by dividing  net income for the periods by the
     weighted average number of common shares outstanding.

     The Company accounts for the forward stock split of each outstanding common
     share into fourteen one  hundredths  (1.14) common shares on April 21, 2005
     on a retrospective  basis by considering it outstanding for the entirety of
     the six and three months ended both June 30, 2005 and 2004.

11.  RECLASSIFICATION OF PRIOR PERIOD AMOUNTS

     Certain  prior  period  amounts  have been  reclassified  to conform to the
     current period's presentation.


                                       10
<PAGE>

12.  RELATED PARTY TRANSACTIONS

     The Company's PRC subsidiary,  Pacific  Dragon,  has entered into a tenancy
     agreement with Harbin Yinlong  Enterprise Co. Ltd.  ("Yinlong"),  the joint
     venture partners holding 10% equity interest in Pacific Dragon to lease two
     factory plants and one office building with a total floor area of 7,018 sq.
     meters for a term of 10 years from  January 1, 2004 to December 31, 2013 at
     an annual rent of RMB1,200,000 (equivalent to $144,578). During the six and
     three  months  ended June 30,  2005,  the Company paid $72,289 and $36,145,
     respectively to Yinlong (see Note 13).

13.  CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS

     The Company's operations are all carried out in the PRC.  Accordingly,  the
     Company's  business,  financial  condition and results of operations may be
     influenced by the political,  economic and legal  environments  in the PRC,
     and by the general state of the PRC's economy.

     The Company's operations in the PRC are subject to specific  considerations
     and significant risks not typically  associated with companies in the North
     America and Western  Europe.  These include risks  associated  with,  among
     others, the political, economic and legal environments and foreign currency
     exchange.  The  Company's  results may be adversely  affected by changes in
     governmental    policies   with   respect   to   laws   and    regulations,
     anti-inflationary  measures, currency conversion and remittance abroad, and
     rates and methods of taxation, among other things.

14.  SUBSEQUENT EVENT

     On July  1,  2005,  Pacific  Dragon  entered  into a  supplemental  tenancy
     agreement with Harbin Yinlong Enterprise Co. Ltd. whereby the annual rental
     for the lease of two factory  plants and one office  building is  increased
     from RMB1,200,000  (equivalent to $144,578) to RMB1,800,000  (equivalent to
     $216,867) effective from July 1, 2005 (see Note 11).


             ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS

The  following  discussion  should  be read in  conjunction  with the  unaudited
condensed  consolidated financial statements and notes thereto set forth in Item
1of this Quarterly  Report. In addition to historical  information,  this report
contains  forward-looking  statements  within the  meaning of Section 27A of the
Securities Act of 1933, and Section 21E of the Securities  Exchange Act of 1934.
Forward-looking  statements include, without limitation,  any statement that may
predict,   forecast,   indicate,   or  imply  future  results,   performance  or
achievements,  and may contain the words "anticipates,"  "believes,"  "expects,"
"can," "continue," "could," estimates,"  "intends," "may," "plans," "potential,"
"predict," "should" or "will" or the negative of these terms or other comparable
terminology. All forward-looking statements included in this report are based on
information  available to us on the date hereof,  and we undertake no obligation
to update any such  forward-looking  statements.  Actual  results  could  differ
materially from those projected in the  forward-looking  statements.  We caution
you that our future business and financial  performance are subject to risks and
uncertainties that could cause actual results to differ materially from those in
the forward-looking statements.

The potential  risks and  uncertainties  include,  among others,  the following:
insufficient funds; short operating history;  governmental requirement; the loss
of significant  customers;  the Company's  dependency on only one factory, a few
suppliers;  the  ability of the  Company to  sustain or manage its  growth;  raw
material costs and availability;  the ability to protect technology; the ability
to attract and retain qualified personnel;  limited insurance coverage,  weather
conditions, business disruptions; safety risks; competition;  China's entry into
the World Trade Organization; new product development and introduction; existing
laws and  regulations  and changes in, or the failure to comply  with,  laws and
regulations;  change  in  China's  economic  reform  policies,  nationalization,
governmental  control on currency  conversion  and  fluctuation of the Renminbi;
downturn in the Chinese economy,  any occurrence of serious infectious diseases,
adverse publicity; fluctuations and difficulty in forecasting operating results;
changes in business strategy or development plans.


                                       11
<PAGE>

Given  these  uncertainties,  readers  of this Form  10-QSB  and  investors  are
cautioned not to place undue reliance on such  forward-looking  statements.  The
Company  disclaims  any  obligation  to update any such  factors or to  publicly
announce the result of any  revisions to any of the  forward-looking  statements
contained herein to reflect future events or developments.

Overview

The Company was originally incorporated on January 5, 1925 under the laws of the
State of Nevada for the  development of mining  claims.  In 1970, we changed our
business  activities to the  development  of properties in Southern  California.
These and similar  efforts to change the  business  were not  successful  and we
conducted no  substantive  business  since 1986 until we acquired  China Tailong
Holdings Company Limited ("Tailong") on February 3, 2005.

On August 10, 2004, we merged with and into a newly formed wholly-owned Delaware
subsidiary of the same name for the purpose of changing our  corporate  domicile
from Nevada to Delaware.

On February 3, 2005, we acquired all of the issued and outstanding securities of
Tailong from the Tailong  Stockholders in exchange for 10,606,158  shares of our
common stock.

Tailong was  incorporated  on October  27, 2003 under the laws of Hong Kong.  On
October 9, 2004,  Tailong acquired a 90% interest of Pacific Dragon  Fertilizers
Co. Ltd. ("Pacific Dragon"),  which conducted Tailong's only business operation.
Harbin Yinlong  Enterprise  Co. Ltd., a limited  company  established  under the
Company Law of China  ("Yinlong")  owns the remaining 10% of Pacific  Dragon and
has a 10% profit sharing right in Pacific  Dragon.  Mr. Yu Chang,  our President
and Ms.  Xiaorong Teng, one of our Vice  Presidents,  own 85% and 15% of Yinlong
respectively. Yinlong engages in wholesale and retail of construction materials,
automobile parts,  mechanical  equipment,  and wood products to companies in the
PRC.

Pacific Dragon is a foreign investment joint venture and was incorporated in the
PRC on May  20,  1994.  Pacific  Dragon  is  classified  as a  Foreign  Invested
Enterprises  ("FIE") in the PRC and is  subject to the FIE laws of the PRC.  Its
legal structure is similar to a limited  liability company organized under state
laws in the United States. The Articles of Association  provide for a term of 15
years  with  registered  capital  of  $500,000.  Pacific  Dragon  engages in the
business of  manufacturing  and  marketing a series of organic  liquid  compound
fertilizers.  These products are marketed and sold to farmers in 11 provinces of
the PRC.  Pacific Dragon conducts  on-going  research and development to enhance
concentration   of  the  organic  liquid  compound   fertilizer  and  lower  the
manufacturing  cost.  The principal  researchers  in Pacific  Dragon are Mr. Liu
Shuhua and Mr. Liu Kangde.  The annual  expense on research and  development  is
around RMB300,000 to RMB500,000  (approximately  $36,276 to $60,460). As of June
30, 2005, we have an approximate annual production  capacity of 5000 metric tons
("MT") for organic liquid compound fertilizers.

Immediately after the Acquisition on February 3, 2005, all existing officers and
directors of the Company  resigned and the management of Tailong was elected and
appointed to such  positions,  thereby  effecting a change of control.  Although
Tailong  became  a  wholly-owned   subsidiary  of  the  Company   following  the
transaction,  because  the  transaction  resulted  in a change of  control,  the
transaction was recorded as a "reverse merger" whereby Tailong was considered to
be the  accounting  acquirer  of the  Company  and the  continuing  entity.  The
comparative  financial  statements  for the six and three  months ended June 30,
2004 were those of Tailong and Pacific Dragon.

Critical accounting policies

The Securities and Exchange  Commission  ("SEC")  defines  "critical  accounting
policies" as those that require  application  of  management's  most  difficult,
subjective or complex judgments, 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.


                                       12
<PAGE>

The Company considers the following accounting policies to be critical within
SEC's definition:

Use of estimates
----------------

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States  requires  management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the financial
statements as well as the reported  amounts of revenues and expenses  during the
reporting  period.  Actual  results  could  differ from those  estimates.  These
estimates  and  assumptions  relate to  collectibility  of accounts  receivable,
accruals, income taxes, inventory realization,  long-lived assets impairment and
other  factors.  Management  makes these  estimates  using the best  information
available at the time the  estimates  are made.  However,  actual  results could
differ from these estimates.

Results of operations - Three-month period ended June 30, 2005

Net sales
---------

Our net sales represent sales of fertilizers,  net of value added tax (VAT). Net
sales increased by 85% from $5,519,830 for the three-month period ended June 30,
2004 to $10,184,925 for the same  corresponding  period in 2005. The increase in
sales amount  mainly  reflects the increase in sales  volume,  which was largely
attributable  to the  Company's  expanded  promotional  activities by developing
integrated  marketing  campaigns  through  traditional  media  and  the  Company
entering new markets in the southern regions of China. The Company has commenced
to enter the markets in the northern regions of China only from 2004.

Gross profit
------------

Gross profit was $4,642,910 and  $2,085,390,  respectively  for the  three-month
period ended June 30, 2005 and 2004,  representing  a gross profit margin of 46%
and 38%, respectively.  The increase in gross profit margin was mainly caused by
the increase in sales of the product,  "LuLingBao  III" which has higher margins
than the old formula  product which the Company has no longer sold since the end
of 2004.

Selling expenses
----------------

Total  selling  expenses  increased by 140% from  $422,122  for the  three-month
period ended June 30, 2004 to $1,011,984 for same corresponding  period in 2005.
The  increase  was  mainly  caused  by  the  combined  effect  of  increases  in
advertising  expenses of $96,386,  business trip expenses of $136,945,  delivery
and  transportation  expenses of $316,071,  and  commission to  salespersons  of
$57,071, which were in line with increase in sales, and the decreases in certain
other selling expenses.

General and administrative expenses
-----------------------------------

Total general and  administrative  expenses  increased by 269% from $124,919 for
the   three-month   period  ended  June  30,  2004  to  $461,298  for  the  same
corresponding  period in 2005.  The  increase  was  mainly  due to the  specific
provision for  uncollectible  trade receivable from a customer of $192,771,  and
the  increase  in  business  trip  expenses  in line with the  expansion  of the
Company's business.

Income From Operations
----------------------

Income from  operations  increased by 106% from  $1,538,349 for the  three-month
period ended June 30, 2004 to $3,169,628  for the same  corresponding  period in
2005.  The increase was mainly  attributable  to the  expansion of the Company's
business,  as reflected in the increase in gross profit and  operating  expenses
discussed in the above.


                                       13
<PAGE>

Provision for income taxes
--------------------------

Provision for income taxes represents the PRC Enterprise  Income Tax provided at
a rate of 33% on the income from operations of Pacific  Dragon.  The increase of
provision for income taxes by 94% from $573,789 for the three-month period ended
June 30, 2004 to  $1,113,788  for the same  corresponding  period in 2005 was in
line with the increase in income from operations of Pacific Dragon.

Minority interest
-----------------

For the three-month  period ended June 30, 2005,  minority interest  represented
the profit of Pacific Dragon  attributable  to the 10% equity interest not owned
by the  Company.  No minority  interest was recorded for three months ended June
30, 2004 as before the  acquisition of 90% equity  interest in Pacific Dragon by
Tailong on October  9,  2004,  Tailong  and  Pacific  Dragon  were under  common
control.

Results of operations - Six-month period ended June 30, 2005

Net sales
---------

Our net sales represent sales of fertilizers,  net of value added tax (VAT). Net
sales increased by 97.5% from $7,681,604 for the six-month period ended June 30,
2004 to $15,170,045 for the same  corresponding  period in 2005. The increase in
sales amount  mainly  reflects the increase in sales  volume,  which was largely
attributable  to the  Company's  expanded  promotional  activities by developing
integrated  marketing  campaigns  through  traditional  media  and  the  Company
entering new markets in the southern regions of China.  Before 2004, the Company
concentrated in the northern regions of China.

Gross profit
------------

Gross profit was  $7,260,428  and  $3,150,879,  respectively  for the  six-month
period ended June 30, 2005 and 2004,  representing  a gross profit margin of 48%
and 41%, respectively.  The increase in gross profit margin was mainly caused by
the increase in sales of the product,  "LuLingBao  III" which has higher margins
than the old formula  product which the Company has no longer sold since the end
of 2004.

Selling expenses
----------------

Total selling expenses  increased by 114% from $644,716 for the six-month period
ended June 30, 2004 to $1,378,798  for same  corresponding  period in 2005.  The
increase was mainly  caused by the combined  effect of increases in  advertising
expenses  of  $118,072,   business  trip  expenses  of  $159,058,  delivery  and
transportation  expenses of $354,738,  and sales  commission of $135,039,  which
were in line with  increase in sales,  and the  decreases in salaries of $17,699
due to the cut in the number of sales staff, and certain other selling expenses.

General and administrative expenses
-----------------------------------

Total general and  administrative  expenses  increased by 336% from $224,785 for
the six-month period ended June 30, 2004 to $979,635 for the same  corresponding
period in 2005.  The  increase  was mainly  due to the  specific  provision  for
uncollectible  trade  receivable from a customer of $192,771,  the  professional
fees of 452,210  incurred  after the reverse  acquisition  of  Tailong,  and the
increase in business  trip  expenses in line with the expansion of the Company's
business.

Income From Operations
----------------------

Income from  operations  increased  by 115% from  $2,281,378  for the  six-month
period ended June 30, 2004 to $4,901,995  for the same  corresponding  period in
2005.  The increase was mainly  attributable  to the  expansion of the Company's
business,  as reflected in the increase in gross profit and  operating  expenses
discussed in the above.


                                       14
<PAGE>

Other income (expenses)
-----------------------

For the six-month  period ended June 30, 2005, the Company  incurred merger cost
of  $640,000,  which  consisted  of  financial  advisory  fee,  for the  reverse
acquisition  of Tailong in February  2005.  No such expense was incurred for the
six months ended June 30, 2004.

For the six-month  period ended June 30, 2004,  the Company  disposed of certain
property,  plant and equipment  and recorded a loss on disposal of $35,756.  For
the six months ended June 30, 2005, the Company did not dispose of any property,
plant and equipment.

Provision for income taxes
--------------------------

Provision for income taxes represents the PRC Enterprise  Income Tax provided at
a rate of 33% on the income from operations of Pacific  Dragon.  The increase of
provision for income taxes by 154% from $724,454 for the six-month  period ended
June 30, 2004 to  $1,837,463  for the same  corresponding  period in 2005 was in
line with the increase in income from operations of Pacific Dragon.

Minority interest
-----------------

For the six-month period ended June 30, 2005, minority interest  represented the
profit of Pacific Dragon  attributable  to the 10% equity  interest not owned by
the  Company.  No minority  interest  was recorded for six months ended June 30,
2004 as before the  acquisition  of 90%  equity  interest  in Pacific  Dragon by
Tailong on October  9,  2004,  Tailong  and  Pacific  Dragon  were under  common
control.

Financial condition, liquidity, capital resources

For the  six-month  period ended June 30, 2005,  we  generated  $1,984,219  from
operating  activities,  used $50,079 in investing activities and used $1,075,025
to repay amounts owing to shareholders and related companies.

As of  June  30,  2005,  we had  cash  of  $897,180.  Our  current  assets  were
$16,227,944  and our current  liabilities  were  $7,967,818  which resulted in a
current ratio of 2.04.

As of June 30, 2005,  we had  $1,350,000 of cash held in escrow  account,  which
arose from the sale of 590,283 and 235,516  shares of our common stock  pursuant
to the stock  purchase  agreements  dated  February  3, 2005 and June 13,  2005,
respectively.  The funds shall be  released  subject to the  fulfillment  of the
conditions set out in the escrow agreements entered into by the Company pursuant
to the  stock  purchase  agreements.  Following  the  filing  of a  registration
statement on Form SB-2 on July 22, 2005, $1,000,000 has already been released to
the Company.

We anticipate, based on the scale of our existing operations, that our projected
cash flows from operations would be sufficient to support our planned operations
for the next  twelve  months.  Our  projection  of future cash  requirements  is
affected by numerous factors,  including but not limited to, changes in customer
receipts,   fertilizers  industry  trends,  operating  cost  fluctuations,   and
unplanned capital spending.

As of June 30,  2005,  we did not  have any  material  commitments  for  capital
expenditures.

The  Company's  need for  capital  may  change  dramatically  as a result of any
business acquisition or combination transaction.  There can be no assurance that
the Company will  identify any such  business,  product,  technology  or company
suitable for acquisition in the future.  Further, there can be no assurance that
the Company would be successful in  consummating  any  acquisition  on favorable
terms  or that it will be able  to  profitably  manage  the  business,  product,
technology or company it acquires.


                                       15
<PAGE>

                         ITEM 3. CONTROLS AND PROCEDURES

1)   Evaluation of Disclosure Controls and Procedures

     Disclosure  controls and procedures are designed to ensure that information
     required  to be  disclosed  in the  reports  filed or  submitted  under the
     Exchange  Act of 1934 is  recorded,  processed,  summarized  and  reported,
     within the time periods  specified in the rules and forms of the Securities
     and  Exchange  Commission.  Disclosure  controls  and  procedures  include,
     without  limitation,  controls  and  procedures  designed  to  ensure  that
     information include,  without limitation,  controls and procedures designed
     to ensure that  information  required to be disclosed in the reports  filed
     under the  Exchange  Act of 1934 is  accumulated  and  communicated  to the
     Company's  management,  including  its  principal  executive  and financial
     officers,  as appropriate,  to allow timely  decisions  regarding  required
     disclosure.

     Within the 90 days prior to the filing of this report,  the Company carried
     out an evaluation,  under the supervision and with the participation of the
     Company's  management,  including  its  principal  executive  and financial
     officer of the  effectiveness  of the design and operation of the Company's
     disclosure  controls and procedures.  Based upon and as of the date of that
     evaluation,   the  Company's  principal  executive  and  financial  officer
     concluded  that  the  Company's  disclosure  controls  and  procedures  are
     effective  to ensure  that  information  required  to be  disclosed  in the
     reports  that Company  files and submits  under the Exchange Act of 1934 is
     recorded, processed, summarized and reported as and when required.

2)   Changes in Internal Control

     There  were no  changes  in the  Company's  internal  controls  or in other
     factors that could have significantly affected those controls subsequent to
     the date of the Company's most recent evaluation.

                           PART II - OTHER INFORMATION

                           ITEM 1. LEAGAL PROCEEDINGS

From  time to time,  we may  become  involved  in  various  lawsuits  and  legal
proceedings which arise in the ordinary course of business.  However, litigation
is subject to inherent  uncertainties,  and an adverse  result in these or other
matters may arise from time to time that may harm our business. We are currently
not aware of any such legal  proceeding  or claims  that we  believe  will have,
individually  or in the  aggregate,  a material  adverse effect on our business,
financial condition or operating results.

       ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Pursuant to the  Reorganization  Agreement (as defined in Part I, Item 1, Note 1
"Organization  and  Description  of Business"  above),  on February 3, 2005, the
Company  issued  10,606,158  shares of newly issued  restricted  common stock in
exchange for all of the issued and outstanding common stock of Tailong.

On February 3, 2005,  and following the  combination  with Tailong,  the Company
completed  the sale of  590,283  shares of  restricted  common  stock  ("Private
Placement Shares") for $1.6941 per share for a total of $1,000,000 to accredited
investors pursuant to the stock purchase agreement dated February 3, 2005.

On June 13, 2005, the Company  entered into a stock  purchase  agreement for the
sale of 235,516  shares of its common stock for $1.4861 per share for a total of
$350,000.

                     ITEM 3 DEFAULTS UPON SENIOR SECURITIES

None.


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<PAGE>

           ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On April 21, 2005, the Company filed a Form Definitive 14C to effect the
following:

(1)  change the name of the Company to China Agritech,  Inc. in order to reflect
     its new business of manufacturing and marketing liquid fertilizer products;

(2)  allow the Board of Directors  to set the number of directors in  accordance
     with the Company's bylaws;

(3)  amend and restate the Certificate of Incorporation; and

(4)  effect a forward stock split  whereby each share of issued and  outstanding
     common stock is converted into 1.14 shares of the Company's common stock.

The definitive  14C became  effective on May 12, 2005 when the Company filed its
amended and restated  Certificate  of  Incorporation  with the  Secretary of the
State of Delaware.

                            ITEM 5 OTHER INFORMATION

On November 17, 2004, the Company's wholly owned  subsidiary,  Tailong,  entered
into a financial  advisory  agreement with HFG  International,  Limited ("HFG"),
under which  Tailong  retained  HFG to provide  certain  financial  advisory and
consulting  services.  Copies of this agreement and the first amendment thereto,
dated December 23, 2004, are filed as exhibits to this report.

On February 3, 2005 and March 1, 2005,  we filed a Form 8-K and an  amendment to
Form 8-K,  respectively,  announcing  that on December  25,  2004,  the Company,
Tailong,  and the Tailong  stockholders  entered into the  Agreement and Plan of
Reorganization,  as amended and such Reorganization became effective on February
3, 2005.  The  Reorganization  Agreement  provided  for the  acquisition  by the
Company  from the  Tailong  stockholders  of all of the issued  and  outstanding
Tailong  shares in exchange for  10,606,158  shares of newly  issued  restricted
common stock of the Company.

On March 10,  2005 and April 6, 2005,  we filed a Form 8-K and an  amendment  to
Form 8-K, respectively, announcing the dismissal of Weinberg & Co., P.A. and the
appointment of Kabani & Company,  Inc. as our principal accountants to audit our
financial statements, both effective March 5, 2005.

On May 23,  2005,  we filed a Form 8-K to disclose  that our  previously  issued
financial  statements  covering  the first  quarter of 2005  should no longer be
relied upon because of errors in such  financial  statements  and because of the
review  of  such  financial  statements  by  our  U.S.  independent   registered
accountant was incomplete at the time of filing.

                     ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

10.1 -    Financial Advisory Agreement entered into by and between China Tailong
          Holdings  Company  Limited and HFG  International  Limited dated as of
          November 17, 2004

31.1 -    Certification  of Chief Executive  Officer pursuant to Rule 13a-14 and
          Rule 15d-14(a) of the Exchange Act.

31.2 -    Certification  of Chief Financial  Officer pursuant to Rule 13a-14 and
          Rule 15d-14(a) of the Exchange Act.

32.1 -    Certification  of the Chief  Executive  Officer  pursuant to 18 U.S.C.
          Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
          Act of 2002.

32.2 -    Certification  of the Chief  Financial  Officer  pursuant to 18 U.S.C.
          Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
          Act of 2002.

(b)  Reports on Form 8-K

See Item 5.


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<PAGE>

                                   SIGNATURES


In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

                                                  China Agritech, Inc.



Date:  August 16, 2005                     /s/ Yu CHANG
                                           -------------------------------------
                                           Yu CHANG
                                           Chief Executive Officer and President



Date:  August 16, 2005                     /s/ Lijun PENG
                                           -------------------------------------
                                           Lijun PENG
                                           Chief Financial Officer












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