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UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION

FORM 10

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 
For the quarterly period ended: March 31, 2006

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to _____________

Commission File No. 0-49608

|CHINA AGRITECH, INC.                                                          
|------------------------------------------------------------------------------
|(Exact name of small business
    issuer as specified in its charter)         
|                                                                              
|                                                                              
|Delaware                                                                      
|(State or other jurisdiction of                                               
|incorporation or organization)                                                
|                                                                              
|A# Room 0706-0707, The Spaces
    International Center, No. 8 Dongdaqiao Road,
|Chaoyang District, Beijing, China 100020                                      
|(Address of principal executive
    offices)                                  
|                                                                              
|(86)10-58702123                                                               
|(Issuers telephone number)                                                   

Check whether the issuer (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 __

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

The number of shares outstanding of each of the
issuers classes of common equity, as of May 15, 2006 are as follows:

|Class of Securities            | Shares Outstanding
|------------------------------ | ------------------
|Common Stock, $0.001 par value | 19,143,615        

Transitional Small Business Disclosure Format (check
one): Yes ____         No X

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ITEM 1. Financial StatementsCHINA
AGRITECH, INC. AND SUBSIDIARIES 
CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2006
(UNAUDITED)

|ASSETS                                                                                                           |   |           
|---------------------------------------------------------------------------------------------------------------- | - | ----------
|Current Assets                                                                                                   |   |           
|Cash and cash
    equivalents                                                                                    | $ | 9,460,307 
|Restricted cash                                                                                                  |   | 275,000   
|Accounts
    receivable, net                                                                                     |   | 11,108,662
|Inventories                                                                                                      |   | 615,739   
|Advances to
    suppliers                                                                                        |   | 1,669,620 
|Prepayments and
    other receivables                                                                            |   | 1,757,854 
|                                                                                                                 |   |           
|Total Current
    Assets                                                                                         |   | 24,887,182
|                                                                                                                 |   |           
|Property, plant
    and equipment, net                                                                           |   | 1,221,645 
|                                                                                                                 |   |           
|Total Assets                                                                                                     | $ | 26,108,827
|                                                                                                                 |   |           
|LIABILITIES AND SHAREHOLDERS' EQUITY                                                                             |   |           
|                                                                                                                 |   |           
|Current
    Liabilities                                                                                          |   |           
|Accounts payable                                                                                                 | $ | 1,028,752 
|Accrued
    liabilities and other payables                                                                       |   | 538,025   
|Income taxes
    payable                                                                                         |   | 929,400   
|                                                                                                                 |   |           
|Total Current
    Liabilities                                                                                    |   | 2,496,177 
|                                                                                                                 |   |           
|Minority
    Interests                                                                                           |   | 1,392,591 
|                                                                                                                 |   |           
|Commitments                                                                                                      |   |           
|                                                                                                                 |   |           
|Stockholders'
    Equity                                                                                         |   |           
|Common stocks;
    $0.001 par value, 100,000,000 shares authorized, 19,143,615 shares issued
    and outstanding |   | 19,144    
|Additional paid-in
    capital                                                                                   |   | 12,620,929
|Statutory reserves                                                                                               |   | 1,951,262 
|Accumulated other
    comprehensive income                                                                       |   | 298,358   
|Retained earnings                                                                                                |   | 7,330,366 
|                                                                                                                 |   |           
|Total
    Stockholders' Equity                                                                                   |   | 22,220,059
|                                                                                                                 |   |           
|Total
    Liabilities and Stockholders' Equity                                                                   | $ | 26,108,827
|                                                                                                                 |   |           
|The accompanying notes are an integral part of these
    condensed consolidated financial statements.           

1

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CHINA AGRITECH, INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF OPERATIONS 
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2006 AND 2005
(UNAUDITED)

|                                                                                                      |   |             |   |            
|----------------------------------------------------------------------------------------------------- | - | ----------- | - | -----------
|                                                                                                      |   | 2006        |   | 2005       
|                                                                                                      |   |             |   |            
|Net Sales                                                                                             | $ | 5,685,397   | $ | 4,985,120  
|                                                                                                      |   |             |   |            
|Cost of goods sold                                                                                    |   | (2,865,315) |   | (2,367,602)
|                                                                                                      |   |             |   |            
|Gross profit                                                                                          |   | 2,820,082   |   | 2,617,518  
|                                                                                                      |   |             |   |            
|Operating expenses                                                                                    |   |             |   |            
|Selling expenses                                                                                      |   | (473,508)   |   | (366,814)  
|Operating and administrative expenses                                                                 |   | (411,465)   |   | (1,158,337)
|                                                                                                      |   |             |   |            
|Total operating expenses                                                                              |   | (884,973)   |   | (1,525,151)
|                                                                                                      |   |             |   |            
|Income from operations                                                                                |   | 1,935,109   |   | 1,092,367  
|                                                                                                      |   |             |   |            
|Other income (expense)                                                                                |   | (6,110)     |   | 9          
|Finance costs                                                                                         |   | 119         |   | (3)        
|                                                                                                      |   |             |   |            
|Total other income (expense)                                                                          |   | (5,991)     |   | 6          
|                                                                                                      |   |             |   |            
|Income before income taxes and minority
    interests                                                 |   | 1,929,118   |   | 1,092,373  
|                                                                                                      |   |             |   |            
|Provision for income taxes                                                                            |   | (768,041)   |   | (723,675)  
|                                                                                                      |   |             |   |            
|Income before minority interests                                                                      |   | 1,161,077   |   | 368,698    
|                                                                                                      |   |             |   |            
|Minority interests                                                                                    |   | (146,749)   |   | (146,928)  
|                                                                                                      |   |             |   |            
|Net income                                                                                            |   | 1,014,328   |   | 221,770    
|                                                                                                      |   |             |   |            
|Other comprehensive income                                                                            |   |             |   |            
|Foreign currency translation adjustment                                                               |   | 74,292      |   | -          
|                                                                                                      |   |             |   |            
|Comprehensive income                                                                                  | $ | 1,088,620   | $ | 221,770    
|                                                                                                      |   |             |   |            
|Basic and diluted weighted average shares
    outstanding                                             |   | 18,503,615  |   | 12,158,466 
|                                                                                                      |   |             |   |            
|Basic and diluted net earnings per share                                                              |   | 0.05        |   | 0.02       
|                                                                                                      |   |             |   |            
|The accompanying notes are an integral part of these
    condensed consolidated financial statements.

2

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CHINA AGRITECH, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS
OF CASH FLOW 
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2006 AND 2005
(UNAUDITED)

|                                                                                 |   | 2 0 0 6     |   | 2 0 0 5    
|-------------------------------------------------------------------------------- | - | ----------- | - | -----------
|Cash flows from
    operating activities                                         |   |             |   |            
|Net income                                                                       | $ | 1,014,328   | $ | 221,770    
|Adjustment to
    reconcile net income to net cash used in operating activities: |   |             |   |            
|Minority interest                                                                |   | 146,749     |   | 146,928    
|Depreciation                                                                     |   | 25,420      |   | 25,152     
|Changes in
    operating assets and liabilities:                                 |   |             |   |            
|(Increase) decrease in current assets                                            |   |             |   |            
|Due from shareholders                                                            |   | -           |   | (233,461)  
|Due from a related party                                                         |   | -           |   | (530)      
|Accounts receivable, net                                                         |   | (2,524,073) |   | (2,067,144)
|Prepayment and other receivable                                                  |   | (1,385,464) |   | 67,777     
|Inventories                                                                      |   | (540,650)   |   | 401,860    
|Advances to suppliers                                                            |   | 417,611     |   | -          
|(Decrease) increase in:                                                          |   |             |   |            
|Accounts payable                                                                 |   | 909,967     |   | 218,810    
|Accrued liabilities and other payables                                           |   | (9,303)     |   | 768,522    
|Income tax payable                                                               |   | 290,525     |   | 469,890    
|Due to shareholders                                                              |   | -           |   | 171,159    
|Due to related parties                                                           |   | -           |   | (403,236)  
|                                                                                 |   |             |   |            
|Net cash used in operating activities                                            |   | (1,654,890) |   | (212,503)  
|                                                                                 |   |             |   |            
|Cash flows from
    investing activities                                         |   |             |   |            
|Cash acquired from reverse acquisition of Tailong                                |   | -           |   | 38,065     
|Purchase of property, plant and equipment                                        |   | (175,668)   |   | (528)      
|                                                                                 |   |             |   |            
|Net cash used in
    investing activities                                        |   | (175,668)   |   | 37,537     
|                                                                                 |   |             |   |            
|Cash flows from
    financing activities                                         |   |             |   |            
|Advance/repayment from/to related parties                                        |   | (51,251)    |   | -          
|Capital contributed                                                              |   | 11,019,849  |   | 1,000,000  
|                                                                                 |   |             |   |            
|Net cash provided
    by financing activities                                    |   | 10,968,598  |   | 1,000,000  

3

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CHINA AGRITECH, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS
OF CASH FLOW 
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2006 AND 2005
(UNAUDITED)

|                                                                                                      |   | 2006      |   | 2005     
|----------------------------------------------------------------------------------------------------- | - | --------- | - | ---------
|                                                                                                      |   |           |   |          
|Effect of exchange rate change on cash and
    cash equivalent                                        |   | 66,436    |   | -        
|                                                                                                      |   |           |   |          
|Net increase in cash and cash equivalents                                                             |   | 9,138,040 |   | 825,034  
|                                                                                                      |   |           |   |          
|Cash and cash equivalents at beginning of
    period                                                  |   | 255,831   |   | 198,340  
|                                                                                                      |   |           |   |          
|Cash and cash equivalents at end of period                                                            | $ | 9,460,307 | $ | 1,023,374
|                                                                                                      |   |           |   |          
|Supplementary disclosures of cash flow
    information:                                               |   |           |   |          
|Interest expense paid                                                                                 | $ | 12        | $ | 1        
|Income taxes paid                                                                                     | $ | 565,712   | $ | 416,579  
|                                                                                                      |   |           |   |          
|The accompanying notes are an integral part of these
    condensed consolidated financial statements.



4

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CHINA AGRITECH, INC. AND SUBSIDIARIES 
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND DESCRIPTION OF BUSINESS

China Agritech, Inc. (the "Company"
or "We")
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 Fertilizers 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 ongoing 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 March 31, 2005, we
have an approximate annual production capacity of 5000 metric tons ("MT") for
organic liquid compound fertilizers. Our major products include "LvLingBao II",
LvLingBao 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 nonoperating 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.

5

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1. ORGANIZATION AND DESCRIPTION OF BUSINESS
(CONTD)
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 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.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a.      Principle of consolidation
The accompanying consolidated
financial statements include the accounts of the Company and its wholly-owned
subsidiary, Tailong, and its 90% owned subsidiary, Pacific Dragon (collectively
"the Company"). All significant inter-company accounts and transactions have
been eliminated in consolidation.
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
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.
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 credit worthiness, current economic trends and
changes in customer payment patterns to evaluate the adequacy of these reserves.
The Company had accounts receivable of $11,108,662, net of allowance of $165,802
as of March 31, 2006.
e.     Advances to suppliers
The Company advances to certain vendors for purchase
of its material. The advances to suppliers amounted to $1,669,620 as of March
31, 2006.

6

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2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTD)

f.      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 3-month periods ended March 31, 2006 and 2005.

g.     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.

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

7

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2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTD)h.    
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 3-month periods ended March 31, 2006 and 2005
were $164,289 and $81,926, respectively.

i.     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. Gain or
loss on foreign currency transactions are reflected on the income statement.
Gain or loss on financial statement translation from foreign currency are
recorded as a separate component in the equity section of the balance sheet, as
component of comprehensive income. The functional currency of the Company is
Chinese Renminbi .

In particular, Renminbi ("RMB"), the
PRC's official currency, is the functional currency of Pacific Dragon. Until
July 21, 2005, RMB had been pegged to US$ at the rate of RMB8.28: US$1.00. On
July 21, 2005, the PRC government reformed the exchange rate system into a
managed floating exchange rate system based on market supply and demand with
reference to a basket of currencies. In addition, the exchange rate of RMB to
US$ was adjusted to RMB8.11: US$1.00 as of July 21, 2005. The People's Bank of
China announces the closing price of a foreign currency such as US$ traded
against RMB in the inter-bank foreign exchange market after the closing of the
market on each working day, which will become the unified exchange rate for the
trading against RMB on the following working day. The daily trading price of US$
against RMB in the inter-bank foreign exchange market is allowed to float within
a band of 0.3% around the unified exchange rate published by the People's Bank
of China. This quotation of exchange rates does not imply free convertibility of
RMB to other foreign currencies. All foreign exchange transactions continue to
take place either through the Bank of China or other banks authorized to buy and
sell foreign currencies at the exchange rates quoted by the People's Bank of
China. Approval of foreign currency payments by the Bank of China or other
institutions required submitting a payment application form together with
invoices, shipping documents and signed contracts.

The rates used to translate Pacific
Dragon's assets and liabilities at March 31, 2006 and its statement of income
are RMB1:US$0.12474 and RMB1:US$0.1242, respectively. No representation is made
that RMB amounts have been, or could be, converted into US$ at these rates.

8

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2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTD)

j.     Fair
values of financial instruments

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

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

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

k.     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 dilutive shares outstanding.

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

l.     Segment Reporting

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

SFAS 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.

m.     Statement of Cash Flows

In accordance with Statement of
Financial Accounting Standards No. 95, "Statement of Cash Flows," cash flows
from the Company's operations is calculated based upon the local currencies. As
a result, amounts related to assets and liabilities reported on the statement of
cash flows may not necessarily agree with changes in the corresponding balances
on the balance sheet.

n.     Stock-Based Compensation

The Company accounts for its
stock-based compensation in accordance with SFAS No. 123R, "Share-Based Payment,
an Amendment of FASB Statement No. 123." The Company recognizes in the statement
of operations the grant- date fair value of stock options and other equity-based
compensation issued to employees and non-employees. At March 31, 2006 and
December 31, 2005, there were no stock options outstanding nor were any issued
during the three months ended March 31, 2006.

9

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2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTD)o.    
Recent Accounting Pronouncements

In February 2006, FASB issued SFAS
No. 155, "Accounting for Certain Hybrid Financial Instruments". SFAS No. 155
amends SFAS No 133, "Accounting for Derivative Instruments and Hedging
Activities", and SFAF No. 140, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities". SFAS No. 155, permits fair
value remeasurement for any hybrid financial instrument that contains an
embedded derivative that otherwise would require bifurcation, clarifies which
interest-only strips and principal-only strips are not subject to the
requirements of SFAS No. 133, establishes a requirement to evaluate interest in
securitized financial assets to identify interests that are freestanding
derivatives or that are hybrid financial instruments that contain an embedded
derivative requiring bifurcation, clarifies that concentrations of credit risk
in the form of subordination are not embedded derivatives, and amends SFAS No.
140 to eliminate the prohibition on the qualifying special-purpose entity from
holding a derivative financial instrument that pertains to a beneficial interest
other than another derivative financial instrument. This statement is effective
for all financial instruments acquired or issued after the beginning of the
Company's first fiscal year that begins after September 15, 2006. The Company
has not evaluated the impact of this pronouncement its financial statements.

In March 2006 FASB issued SFAS 156
'Accounting for Servicing of Financial Assets' this Statement amends FASB
Statement No. 140, Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities, with respect to the accounting for
separately recognized servicing assets and servicing liabilities. This
Statement:

10

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2.     SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTD)

o.    
Recent Accounting Pronouncements (contd)

1.    
Requires an entity to recognize a servicing asset or servicing liability each
time it undertakes an obligation to service a financial asset by entering into a
servicing contract.

2.    
Requires all separately recognized servicing assets and servicing liabilities to
be initially measured at fair value, if practicable.

3.    
Permits an entity to choose 'Amortization method' or Fair value measurement
method' for each class of separately recognized servicing assets and servicing
liabilities.

4.    
At its initial adoption, permits a one-time reclassification of
available-for-sale securities to trading securities by entities with recognized
servicing rights, without calling into question the treatment of other
available-for-sale securities under Statement 115, provided that the
available-for-sale securities are identified in some manner as offsetting the
entity's exposure to changes in fair value of servicing assets or servicing
liabilities that a servicer elects to subsequently measure at fair value.

5.    
Requires separate presentation of servicing assets and servicing liabilities
subsequently measured at fair value in the statement of financial position and
additional disclosures for all separately recognized servicing assets and
servicing liabilities. An entity should adopt this Statement as of the beginning
of its first fiscal year that begins after September 15, 2006. Management
believes that this statement will not have a significant impact on the financial
statement.

3.

Proceeds amounting $1,350,000 from
the issuance of shares during the year were deposited in an escrow account. Upon
filing of the registration statement covering the shares issued, the purchase
price was to be released from escrow. In accordance with the terms of the stock
purchase agreement, $600,000 of the proceeds was kept in a trust account for
certain corporate communication program. At March 31, 2006, the Company had
$275,000 in this account for the corporate communication program.

4.

Inventories consist of the following
as of March 31, 2006:

|Raw materials     | $ | 140,306
|----------------- | - | -------
|Packing materials |   | 404,573
|Finished goods    |   | 70,860 
|                  | $ | 615,739

5.

Prepayments and other receivable consist of the
following as of March 31, 2006:

|Deposit for establishment of a joint venture                | $ | 1,249,688
|----------------------------------------------------------- | - | ---------
|Advance to unrelated third party                            |   | 252,812  
|Prepaid expenses and others for normal business
    purpose |   | 255,354  
|                                                            | $ | 1,757,854

During the three month periods ended
March 31, 2006, the Company paid RMB 9,687,500 (US $1,294,688) as an earnest
money deposit for a potential investment, the terms of which are still being
negotiated. The earnest money deposit was made under the terms of a nonbinding
letter of intent, and fully refundable unless the failure to complete the
investment is caused by the Company

Advance to unrelated third party is interest-free,
unsecured and repaid in April 2006.

11

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6. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the
following as of March 31, 2006:

|Manufacturing machinery        | $ | 1,178,265
|------------------------------ | - | ---------
|Leasehold improvements         |   | 57,496   
|Office equipment               |   | 68,270   
|Motor vehicles                 |   | 278,944  
|                               |   | 1,582,975
|                               |   |          
|Less: Accumulated depreciation |   | (361,330)
|                               |   |          
|                               | $ | 1,221,645

Depreciation expense for the three month periods
ended March 31, 2006 and 2005 was $25,420 and $25,152, respectively.

7.

The Company utilizes SFAS No. 109,
"Accounting for Income Taxes," which requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that
have been included in the financial statements or tax returns. Under this
method, deferred income taxes are recognized for the tax consequences in future
years of differences between the tax bases of assets and liabilities and their
financial reporting amounts at each period end based on enacted tax laws and
statutory tax rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are established, when
necessary, to reduce deferred tax assets to the amount expected to be realized.

The Company is subject to PRC Enterprise Income Tax
at a rate of 33% on the net income.

The provision for taxes on earnings for the 3-month
periods March 31, 2006 and 2005 consisted of:

|                                                                                  | 2006 |  | 2005
|--------------------------------------------------------------------------------- | ---- |  | ----
|                                                                                  |      |  |     
|Tax at statutory rate                                                             | 34%  |  | 34% 
|Foreign tax rate difference                                                       | -1%  |  | -1% 
|Non-deductible expenses                                                           | -    |  | 24% 
|Net operating loss in other tax jurisdiction for
    where no benefit is realized | 7%   |  | 9%  
|                                                                                  |      |  |     
|                                                                                  | 40%  |  | 66% 
|                                                                                  |      |  |     

No provision for deferred tax
(benefit) has been made for the PRC tax jurisdiction as no significant deferred
tax liabilities or assets existed as of either March 31, 2006 or 2005.

Net operating loss carry forward for
the US and Hong Kong tax jurisdiction amounted to $1,364,000 and $881,000,
respectively. A 100% valuation allowance has been recorded for the deferred tax
asset of $755,000 due to the uncertainty of its realization. There were no other
significant book and tax basis differences.

12

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8.     RELATED PARTY TRANSACTIONSOn January 6, 2005, Pacific Dragon
entered into a License Agreement with Mr. Chang Yu, director of the Company.
Under this License Agreement, Mr. Chang Yu authorized Pacific Dragon to use the
know-how in manufacturing organic liquid compound fertilizer owned by him for
free until December 31, 2009.
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).
The tenancy agreement was revised by increasing the annual rent to RMB3,600,000
(equivalent to $442,800) effective from July 1, 2005. During the period ended
March 31, 2006, the Company paid RMB 1,800,000 (equivalent to $224,532) to
Yinlong.9.    MINORITY INTERESTThe amount represents the minority shareholder,
Harbin Yinlong Enterprise Co., Ltd., a related party of the Company, interest in
Pacific Dragon, a 90% subsidiary.10.   CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONSPacific Dragon's operations are all
carried out in the PRC. Accordingly, Pacific Dragon'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.
Pacific Dragon'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. Pacific Dragon'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.11.    COMMON STOCK AND ADDITIONAL PAID-IN CAPITALOn January 13, 2006, the Company
entered into a stock purchase agreement for the sale of 4,800,000 shares of the
Company's common stock for $2.50 per share for a total of $12,000,000. The
proceeds have been received in March, 2006.The direct costs related
to this stock sale, including legal and professional fees, were deducted from
the related proceeds and the net amount in excess of par value was recorded as
additional paid-in capital.

13

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12.    STATUTORY RESERVESAs stipulated by the Company Law of the People's
Republic of China (PRC), net income after taxation can only be distributed as
dividends after appropriation has been made for the following:
i)     Making
up cumulative prior years' losses, if any;
ii)    
Allocations to the "Statutory surplus reserve" of at least 10% of income after
tax, as determined under PRC accounting rules and regulations, until the fund
amounts to 50% of the Company's registered capital;
iii)   
Allocations of 5-10% of income after tax, as determined under PRC accounting
rules and regulations, to the Company's "Statutory common welfare fund", which
is established for the purpose of providing employee facilities and other
collective benefits to the Company's employees; and
iv)    Allocations
to the discretionary surplus reserve, if approved in the shareholders' general
meeting.
In accordance with the Chinese
Company Law, the company has allocated 10% of its net income to surplus in 2005.
The amount included in the statutory reserves for three month periods ended
March 31, 2006 and 2005 amounted to $146,749 and $86,177, respectively.
The Company established a reserve for
the annual contribution of 5% of net income to the common welfare fund in 2005.
The amount included in the statutory reserves for three month periods ended
March 31, 2006 and 2005 amounted to $73,446 and 43,088, respectively.

14

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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Special Note Regarding Forward Looking StatementsThis Quarterly Report on Form 10-QSB, including the following "Managements
Discussion and Analysis of Financial Condition and Results of Operations,"
contains forward-looking statements that are based on the beliefs of the China
Agritechs management and involve risks and uncertainties, as well as
assumptions that, if they ever materialize or prove incorrect, could cause the
results of the Company to differ materially from those expressed or implied by
such forward-looking statements. The words "believe," "expect," "anticipate,"
"projects," "targets," "optimistic," "intend," "aim," "will" or similar
expressions are intended to identify forward-looking statements. All statements
other than statements of historical fact are statements that could be deemed
forward-looking statements, including statements regarding new and existing
products, technologies and opportunities; statements regarding market and
industry segment growth and demand and acceptance of new and existing products;
any projections of sales, earnings, revenue, margins or other financial items;
any statements of the plans, strategies and objectives of management for future
operations; any statements regarding future economic conditions or performance;
uncertainties related to conducting business in China; any statements of belief
or intention; any of the factors mentioned in the "Risk Factors" section of this
Form 10-QSB; and any statements of assumptions underlying any of the foregoing.
Except as otherwise indicated by the context, references in this report to
"China Agritech," "we," "us," or "our," are references to the combined business
of China Agritech, Inc. and its wholly-owned subsidiary, China Tailong Holdings
Company Limited, along with China Tailong Holdings Company Limiteds 90% owned
subsidiary Pacific Dragon Fertilizers Co., Ltd. References to "Tailong" are
references to China Tailong Holdings Company Limited and references to "Pacific
Dragon" are references to Pacific Dragon Fertilizers Co. Ltd. References to
"China" or "PRC" are references to "Peoples Republic of China." References to
"Security Act" are references to "Securities Act of 1933."
OverviewChina Agritech is a holding company whose direct and indirect
subsidiaries, primarily Tailong Holdings and its subsidiary, Pacific Dragon,
manufacture and sell organic liquid compound fertilizers and related products
which are made from the combination of organic elements, inorganic elements,
microelements and other active and stimulative agents.
Our main products include "LvLingBao II," "LvLingBao III," "Tailong
I" and other customized crop special fertilizers which are tailored to
customers' specific requirements. Our products are promote photosynthesis, root
system growth and transmission of nutrients to seeds; equilibrate absorption of
nutrients and speed a plant's maturity; eliminate the damage of harmful radicals
to plants and increase protein and vitamin content levels; accelerate the
accumulation of photosynthesis materials and cell concentration; increase
reservation ability, resistance and the utilization rate of basic fertility; and
increase efficacy along with neutral or acidic pesticides. Our products can be
applied by our customers on a widespread basis through large scale spraying
operation by machine or aircraft.

15

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China is the principal market for our products. Our products are primarily
sold to farmers in 12 provinces in China, including Heilongjiang, Hebei,
Liaoning, Jilin, Shandong, Inner Mongolia, Henan, Sichuan, Guangdong, Xinjiang,
Yunnan and Guizhou. In 2005, we had annual production capacity of approximately
5,000 metric tons of organic liquid compound fertilizers. Our revenues are
derived primarily from the sale of our organic liquid compound fertilizer
products to our customers.
Our Company History

We were originally incorporated on January 5, 1925 in the State of Nevada
under the name Argyle Mining Company. Our name has been changed several times
over the years and our current name is China Agritech, Inc. We had no active
operations during the period from 1986 until February 3, 2005, at which time we
completed a reverse acquisition transaction with Tailong in which we acquired
all of the issued and outstanding securities of Tailong from its stockholders in
exchange for 10,606,158 shares of our common stock.
Industry Wide Trends that are Relevant to Our BusinessThe fertilizer industry in China is in the process of rapid
and continuous development. China is the largest producer, importer and consumer
of fertilizers in the world. In 2004, the total consumption of fertilizers in
China amounted to approximately 46.4 million tons, an increase of 11.8% from
2000. The total consumption of fertilizers is expected to increase to 51 million
tons by 2010 and 56 millions by 2020. We believe this trend will impact
favorably on the demand for our products and will result in growth in sales of
fertilizers and increased revenue for us.
Another trend that affects our industry is the growing demand
for compound fertilizers. The percentage of compound fertilizer consumption to
the total fertilizer consumption in China rose from 2% in 1980 to 26% in 2004.
We believe our revenue will grow as a result of the continuing increase of the
demand of compound fertilizers.
The Chinese government is providing legal and economic
incentives to foster the development of the agriculture industry and encourage
companies in the agriculture sector to become bigger and build name recognition.
We plan to utilize the policy support to expand our operations in various parts
of China and to improve our name recognition in the market.CompetitionChina is the world's largest consumer of fertilizers and we
believe that the prospects for continued growth are positive. Our experience is
that the compound fertilizer industry in China is highly fragmented consisting
of numerous smaller regional manufacturers  and larger, domestic and
international competitors.

16

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We compete with approximately 300 small-sized Chinese
fertilizer manufacturers. The number of small fertilizer manufacturers and
companies selling fertilizer products increases and decreases from time to time.
The smaller competitors in the fertilizer industry with whom we compete
typically manufacture and market liquid compound fertilizers with annual output
of less than 1,000 MT. We believe that most of the smaller fertilizer producers
in China do not utilize the national brand name recognition as a basis for
promoting their products. Also, due to economies of scale, we believe that these
smaller producers are generally less cost effective, have lower quality control
and minimal product development capabilities. In addition, most of their
products consist of single or dual chemical nutrients, which we believe are
generally less effective at boosting the growth of plants as compared to our
organic liquid compound fertilizers.
Another group of competitors consists of international
fertilizer producers and trading companies that import fertilizers into China.
Imported fertilizer products range from fertilizers with single chemical
element, such as urea, phosphate and potash, to standard Nitrogen, phosphor and
kalium compound fertilizers. Qualities of imported fertilizers are generally
higher and more stable than fertilizers, like ours, which are produced in China.
Due to tariffs, duties and license fees imposed on imported fertilizer products
and high shipping and transportation expenses, however, we believe that imported
fertilizers are generally less price competitive than Chinese fertilizer
products. In addition, Chinese government imposes an annual quota on fertilizer
products that can be imported into China. China is expected to open its retail
and wholesale fertilizer markets to non-Chinese companies by December 11, 2006.
Because fertilizer products usually need to be specifically formulated for local
plant, soil and climate conditions, we believe that there are not many foreign
competitors in our selected markets that are capable of producing customized
fertilizers that compete with our products. Nevertheless as a result of the
opening of the fertilizer market to foreign producers, the amount of fertilizer
imported to China will rise significantly and we expect to face more
competitions from non-Chinese fertilizer manufacturers.Results of operations

The following table summarizes the results of our operations during the three
month period ended March 31, 2006 and 2005 and provides information regarding
the dollar and percentage increase or (decrease) from the 2005 fiscal period to
the 2006 fiscal period:



17

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|                                                                     |            |              |            |             
|-------------------------------------------------------------------- | ---------- | ------------ | ---------- | ------------
|All amounts, other than percentages, in millions of U.S.
    dollars
|                                                                     | 3 Month    |              |            |             
|                                                                     | Period     | 3 Month      |            |             
|                                                                     | Ended      | Period Ended | Increase   | % Increase  
|Item                                                                 | on 3/31/06 | on 3/31/05   | (Decrease) | (% Decrease)
|Sales Revenue                                                        | 5.7        | 5.0          | 0.7        | 14%         
|Costs of Goods Sold                                                  | (2.9)      | (2.4)        | 0.5        | 21%         
|Selling Expenses                                                     | (0.5)      | (0.4)        | 0.1        | 29%         
|Operating and Administrative Expenses                                | (0.4)      | (1.2)        | (0.7)      | (64%)       
|Income from Operations                                               | 1.9        | 1.1          | 0.8        | 77%         
|Other income (expenses)                                              | (0)        | 0            | 0          | N/A         
|Income tax                                                           | (0.8)      | (0.7)        | 0          | 6%          
|Minority interest                                                    | (0.1)      | (0.1)        | 0          | 0%          
|Net income                                                           | 1.0        | 0.2          | 0.8        | 357%        

Sales Revenue

Our sales revenue for the three months ended March 31, 2006
amounted to $5,685,397, which is approximately $700,277 or 14% more than that of
the same period ended on March 31, 2005, where we had revenue of $4,985,120. The
increase in sales revenue is mainly attribute to the expansion of our customer
base.

Cost of Goods Sold

Cost of goods sold, which consist of raw materials, direct
labor and manufacturing overhead expenses, was $2,865,315 for the three month
period ended March 31, 2006, an increase of $497,713 or 21%, as compared to
$2,367,602 for the three month period ended March 31, 2005. We believe the
increase is generally in line with the increase of our sales revenue.  The
proportions of cost of sales to total revenues are 50.9% and 48% for the three
month periods ended on March 31, 2006 and 2005, respectively, an increase of
approximately 3%.  This was primarily a result of increased lease expenses
on factory buildings, increased shipping expense on raw materials and equipment
maintenance.

Selling expenses

Selling expenses, which consist primarily of sales commission,
advertising and promotion expenses, freight charges and related compensation,
were $473,508 for the three month period ended March 31, 2006, as compared to
$366,814 for the same period ended March 31, 2005, an increase of $106,694 or
approximately 29%. The increase was primarily attributable to an additional
advertising spending of $164,289 during the 3-month period ended March 31, 2006,
compared to $81,926 during the same period last year.

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Operating and administrative expenses
Our general and administrative expenses, which consist
primarily of rental expenses, related salaries, business development,
depreciation and traveling expenses, legal and professional expenses, were
$411,465 for the three month period ended March 31, 2006, as compared to
$1,158,337 for the same period ended March 31, 2005, a decrease of $746,872 or
approximately 64%. The decrease was mainly attributable to the higher financial
advisory fees, attorneys fees and other costs in connection with the reverse
acquisition of Tailong in February 2005.
Environmental Laws Compliance Costs
We incurred no cost for environmental compliance for the three
month period ended March 31, 2006 and 2005.
Income From Operations
Income from operations was $1,935,109 for the three month
period ended March 31, 2006, as compared to $1,092,367 for the same period ended
March 31, 2005, an increase of $842,742 or approximately 77%. The increase was
mainly attributable to the increased sales revenue as well as reduced general
and administrative expenses.
Other income (expenses)
Total other income (expenses) was ($5,991) for
the three month period ended March 31, 2006, as compared to $6 for the same
period ended March 31, 2005. We had minimal financial expenses for the three
month period ended on March 31, 2006 and 2005.
Income taxes
Our Chinese subsidiaries are taxed at a rate of 33% of
assessable profit. We incurred income taxes of $768,041 for the three month
period ended on March 31, 2006. This is an increase of $44,366 or 6% from the
taxes we incurred in the same 2005 period, which were $723,675. We paid more
taxes in the three months ended March 31, 2006 mostly because of the higher
income in the three month period ended on March 31, 2006 compared to 2005.
Minority interest
Our financial statements reflect an adjustment to our
consolidated group net income equal to $146,749 and $146,928 for the three month
period ended March 31, 2006 and 2005, respectively, reflecting the minority
interest held by Yinlong Industrial Co. Ltd. in our subsidiary Pacific Dragon.
Net Income
We earned net income of $1,014,328 for the three month period
ended March 31, 2006. This is an increase of $792,558 or approximately 357% from
the same period ended March 31, 2005 which had a net income of $221,770. This
increase is mainly attributable to the increase of our sales revenue, and
reduced operating and administrative expenses.

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Foreign Currency Translation GainsWe had a foreign currency translation gain of $74,292for the three month
period ended March 31, 2006 as compared with no foreign currency translation
gain in the same period ended March 31, 2005. In July 21, 2005, China reformed
its foreign currency exchange policy, revalued the Renminbi by 2.1 percent and
allowed Renminbi to appreciate as much as 0.3 percent per day against the U.S.
dollar. As a result, we implemented different exchange rates in translating
Renminbi into U.S. dollar in our financial statements for the three month period
ended March 31, 2006, the exchange rates of RMB1:US$0.1247 and RMB1:US$0.1242
were implemented in calculating the total assets/liabilities and statement of
income, respectively, which results in a $74,292 increase in the foreign
currency translation gain from $0 in the three month period ended on March 31,
2005.

Liquidity and capital resources

As of March 31, 2006, we had cash and cash equivalents of
$9,460,307. Our current assets were $24,887,182 and our current liabilities were
$2,496,177 as of March 31, 2006, which results in a current ratio of
approximately 10. Our total stockholders equity as of March 31, 2006 was
$22,220,059. We had no bank loans or other interest bearing borrowings as of
March 31, 2006.

In fiscal year 2005, we raised a total of $1,350,000 from the
sale of 590,283 (before the 1-for-1.14 forward stock split) and 235,516 (after
the 1-for-1.14 forward stock split) shares of our common stock through private
placement transactions. The proceeds from these private placement transactions
were initially placed in an escrow account and are to be released upon the
satisfaction of the conditions set out in certain Escrow Agreement we entered
into pursuant to the stock purchase agreements with the private placement
investors. In accordance with the terms of the stock purchase agreement,
$600,000 of the proceeds was kept in a trust account for certain corporate
communication program. As of March 31, 2006, the Company still had $275,000 in
this account for the corporate communication program.

On January 13, 2006, we further sold 4,800,000 shares of our
common stock to 22 investors for a total of $12,000,000. The shares were offered
and sold to investors in reliance upon exemptions from the registration
requirements of the Securities Act pursuant to Section 4(2) and Rule 506
thereunder.

We believe that our currently available working capital will
be sufficient to maintain our operations at our current levels for the next
twelve months. As of March 31, 2006, we did not have any material commitments
for capital expenditures.

Critical accounting policies

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 in the financial statements, including the notes thereto, and related
disclosures of commitments and contingencies, if any. We consider our

20

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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.

> 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 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, 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. There was no impairment of long-lived
>   assets in the 3 months ended March 31, 2006 and 2005.

21

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- 

> In particular, Renminbi ("RMB"),
>   the PRCs official currency, is the functional currency of our operating
>   subsidiary Pacific Dragon. Until July 21, 2005, RMB had been pegged to US$ at
>   the rate of RMB8.28: US$1.00. On July 21, 2005, the PRC government reformed
>   the exchange rate system into a managed floating exchange rate system based on
>   market supply and demand with reference to a basket of currencies. In
>   addition, the exchange rate of RMB to US$ was adjusted to RMB8.11: US$1.00 as
>   of July 21, 2005. The Peoples Bank of China announces the closing price of a
>   foreign currency such as US$ traded against RMB in the inter-bank foreign
>   exchange market after the closing of the market on each working day, which
>   will become the unified exchange rate for the trading against RMB on the
>   following working day. The daily trading price of US$ against RMB in the
>   inter-bank foreign exchange market is allowed to float within a band of (0.3%
>   around the unified exchange rate published by the Peoples Bank of China. This
>   quotation of exchange rates does not imply free convertibility of RMB to other
>   foreign currencies. All foreign exchange transactions continue to take place
>   either through the Bank of China or other banks authorized to buy and sell
>   foreign currencies at the exchange rates quoted by the Peoples Bank of China.
>   Approval of foreign currency payments by the Bank of China or other
>   institutions required submitting a payment application form together with
>   invoices, shipping documents and signed contracts.

22

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> The rates used to translate Pacific Dragons assets and
>   liabilities at March 31, 2006 and its statement of income are RMB1:US$0.1247
>   and RMB1:US$0.1242, respectively. No representation is made that RMB amounts
>   have been, or could be, converted into US$ at these rates.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangement.

Inflation

We believe that inflation has not had a material impact on our results of
operations for the three month period ended March 31, 2006 and 2005.

Seasonality

We may experience seasonal variations in our future revenues and our
operating costs due to seasonality. Our sales revenue is generally higher from
March to September than the rest of the season.

Risk Factors

There are several material risks associated with China
Agritech, Incs business and an investment in our stock.. You should carefully
consider the risks and uncertainties described below. If any of the following
risks are realized, our business, operating results and financial condition
could be harmed and the value of our stock could go down.

RISKS RELATED TO OUR FINANCIAL CONDITION

We may need to raise additional capital in the foreseeable future and may not
be able to do so on terms favorable to us or you or at all. Raising additional
capital will dilute our current stockholder interest.

As of March 31, 2006, we had approximately $9.5 million in cash. Based on
current reserves and anticipated cash flow from our operations, we anticipate
that the available funds will be sufficient to meet our anticipated needs for
working capital, capital expenditures, and business expansion for the next
twelve months. Thereafter, we may need to raise additional funds if cash flows
from operations are inadequate for our capital needs. We may seek to satisfy our
future funding requirements through revenues generated through our operations,
the proceeds of public or private offerings of our securities, or through loans
from financial institutions or our controlling stockholders. Adequate funds may
not be available when needed or on terms satisfactory to us. A lack of funds may
cause us to delay, reduce and/or abandon certain or all
aspects of our organic liquid compound
fertilizer product development programs, close facilities and/or lay-off
employees which, in turn, will likely result in decreased sales and profits.

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If additional funds are raised through the issuance of equity or convertible
debt securities, the percentage ownership of our stockholders will be reduced,
you may experience additional dilution and such securities may have rights,
preferences and privileges senior to those of our common stock. This may reduce
a stockholders return on investment or cause a complete loss in the investment.

Our holding company structure may limit the payment of dividends.

We have no direct business operations, other than the ownership of our
subsidiaries Tailong and Pacific Dragon. We have no current intention of paying
dividends. If we decide to pay dividends in the future, as a holding company,
our ability to do so depends upon the receipt of dividends or other payments
from our operating subsidiaries and other holdings and investments. Our
operating subsidiaries, from time to time, may be subject to restrictions on
their ability to make distributions to us due to Chinese law, restrictive
covenants in loan agreements, restrictions on the conversion of local currency
into U.S. dollars or other hard currency and other regulatory restrictions as
discussed below. If future dividends are paid in Renminbi, fluctuations in the
exchange rate for the conversion of Renminbi into U.S. dollars may reduce the
amount received by U.S. stockholders upon conversion of the dividend payment
into U.S. dollars.

Chinese regulations currently permit the payment of dividends only out of
accumulated profits as determined in accordance with Chinese accounting
standards and regulations. Our subsidiaries in China are also required to set
aside a portion of their after tax profits according to Chinese accounting
standards and regulations to fund certain reserve funds. Currently, our
subsidiaries in China are the only sources of revenues or investment holdings
for the payment of dividends. If they do not accumulate sufficient profits under
Chinese accounting standards and regulations to first fund certain reserve funds
as required by Chinese accounting standards, we will not receive any dividends
and will be unable to pay any dividends.

RISK RELATED TO OUR BUSINESS

We rely on a few major distributors and our business will be harmed if our
distributors reduce their orders or discontinue doing business with us.

Currently, we sell approximately 46% of our fertilizer products through ten
major distributors, including Chengdu Liteng Industry Company, Shunda
Agricultural Products Distributing Company and Shenyang Biochemical Co. Ltd. If
any one of these distributors reduces its orders or discontinues business with
us, we may encounter difficulties finding new distributors to distribute our
products and our revenues and net income would decline considerably. Our
reliance on these major distributors could also affect our bargaining power in
getting favorable prices for our products. In addition, untimely payment and
failure to pay by these major distributors would negatively affect our cash
flow.

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We depend heavily on Mr. Yu Chang, our CEO, President, Secretary and director
and, without his services, our prospects would be severely limited.

Our future business and results of operations depend in significant part upon
the continuing contribution of Mr. Yu Chang, our CEO, President, Secretary and
director. Mr. Chang has extensive experience in the liquid compound fertilizer
industry and is directly involved in all of our business operations. Mr. Chang
has a 3-year employment agreement with our subsidiary, Pacific Dragon, which
expires on January 5, 2008. There can be no assurance that we will be able to
retain Mr. Chang after the expiration of his employment agreement. If Mr. Chang,
ceases to be employed by us, we may have difficulty finding a suitable
replacement with equal leadership and industry experience, and our business
would suffer.

We depend heavily on skilled personnel, and any loss of and failure to
attract such personnel could harm our business.

The agricultural products business is specialized and requires the employment
of personnel with significant scientific and operational experience in the
industry. Accordingly, we must attract, recruit and retain a sizeable workforce
of technically competent employees. Our ability to effectively implement our
business strategy will depend upon, among other factors, the successful
recruitment and retention of additional management and other key personnel that
have the necessary scientific, technical and operational skills and experience
with the liquid compound fertilizer industry. These individuals are difficult to
find in the PRC and we may not be able to retain such skilled employees.

Our products are manufactured at a single factory and any disruption of the
operations in this factory would damage our business.

All of our products are manufactured in a single factory in Harbin, China. We
currently maintain insurance covering this manufacturing facility, machinery and
other leasehold improvements. However, we do not carry sufficient business
interruption insurance. Our operations could be interrupted by fire, flood,
earthquake and other events beyond our control. Any disruption of the operations
in this factory would have a significant negative impact on our ability to
deliver products, which would cause a potential diminution on sales, the
cancellation of orders, damage to our reputation and potential lawsuits.

We currently rely on a small number of third parties to supply the key war
materials we used to produce our products.

Our business depends upon the availability of key raw materials, including
humic acid, chemical raw materials and plastic goods. We rely on only a few
external suppliers for these raw materials. In fiscal year 2005, we purchased
approximately 90% of our humic acid from Inner-Mongolia Humic Acid Factory,
approximately 77% of chemical raw materials from Beijing Zhongxin Chemical
Technology Development Co., and approximately 84% of plastic goods from Harbin
Huangyan Plastic Manufacturing Company. We have entered into written agreements
with all of these main suppliers. If any of our major suppliers were to default
or become unable to deliver the raw materials in sufficient quantities, we may
be unable to purchase these raw materials from alternative sources on the same
terms which may result in a significant increase in our operating costs. In
addition, any disruption in the supply of our raw materials could cause delay in
the delivery of our products which would be harmful to our sales reputation and
business.

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Our inability to protect the proprietary formula and manufacturing processes
for our concentrated compound liquid compound fertilizer may increase our
competition and cause our operating results to suffer.Our success will depend in part on our ability to protect our proprietary
formula and manufacturing process for highly concentrated organic liquid
compound fertilizer. We rely on trade secrets to protect our proprietary
formulas and manufacturing processes. We have not applied for patents for our
technology and formulas because we believe an application for such patents would
result in public knowledge of our proprietary technology and formulas and the
potential for increased competition. This may result in a decrease of our market
share and hurt our operating results. We have entered into a license agreement
with Mr. Yu Chang, our CEO, President, Secretary and director, under which Mr.
Chang granted us a permanent exclusive license to use his know-how in
manufacturing organic liquid compound fertilizer on a royalty-free basis. Under
the license agreement, Mr. Chang has the obligation to keep the confidentiality
of this technology and cannot license this technology to any third party or use
the technology for his own benefit. In addition, only certain of our key
executives have knowledge of our proprietary technology and formulas.
If our proprietary trade secrets are not afforded adequate legal protection
or if our employees unintentionally or willfully disclose our confidential
technology to competitors we may lose any competitive advantage that we
currently have. If we are forced to take legal action to protect our proprietary
formula and processes, we will incur significant expense and may incur an
unfavorable outcome.
In addition, our competitors may counterfeit our products and use our
trademark. These counterfeit products could damage our reputation and create
confusion to our customers.Certain of our officers and directors involvement with and participation in
other businesses enterprises could impede their ability to devote ample time to
our business and could pose conflict of interest.Mr. Yu Chang, our CEO, President, Secretary and director, and Ms. Xiaorong
Teng, our Vice President of Sales and director, serve as the chairman and
director of Yinlong Industrial Co. Ltd., respectively. As a result, conflicts of
interest may arise from time to time. We will attempt to resolve any such
conflicts of interest in our favor. Our officers and directors are accountable
to us and our shareholders as fiduciaries, which requires that such officers and
directors exercise good faith and integrity in handling our affairs. However,
their existing responsibilities to other entities may limit the amount of times
they can spend on our affairs. Mr. Chang currently spends about 90% of his time
on our affairs and about 10% of his time on the affairs of Yinlong. Ms. Teng
currently spends about 95% of her time on our affairs and about 5% of her time
on the affairs of Yinlong.

26

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We may be exposed to potential risks relating to our internal controls over
financial reporting and our ability to have those controls attested to by our
independent auditors.

As directed by Section 404 of the Sarbanes-Oxley Act of 2002 or SOX 404, the
Securities and Exchange Commission adopted rules requiring public companies to
include a report of management on the companys internal controls over financial
reporting in their annual reports, including Form 10-KSB. In addition, the
independent registered public accounting firm auditing a companys financial
statements must also attest to and report on managements assessment of the
effectiveness of the companys internal controls over financial reporting as
well as the operating effectiveness of the companys internal controls. We are
not subject to these requirements for our current fiscal year ending December
31, 2005, accordingly we have not evaluated our internal control systems in
order to allow our management to report on, and our independent auditors to
attest to, our internal controls as required by these requirements of SOX 404.
Under current law, we will be subject to these requirements beginning with our
annual report for the fiscal year ending December 31, 2006. We can provide no
assurance that we will comply with all of the requirements imposed thereby.
There can be no positive assurance that we will receive a positive attestation
from our independent auditors. In the event we identify significant deficiencies
or material weaknesses in our internal controls that we cannot remediate in a
timely manner or we are unable to receive a positive attestation from our
independent auditors with respect to our internal controls, investors and others
may lose confidence in the reliability of our financial statements.

RISKS RELATED WITH OUR INDUSTRY

Our operating results will suffer if the price of raw materials increases and
we cannot pass the increased cost on to our customers.

The main raw materials of our products are humic acid, chemical raw materials
and plastic goods. The prices for these raw materials are subject to market
forces largely beyond our control, including energy costs, organic chemical
feedstock, market demand, and freight costs. The prices for these raw materials
may fluctuate significantly based upon changes in these factors. Prices of our
organic liquid compound fertilizer products may not increase in response to raw
material price increases. Our operating results may be seriously harmed if we
are unable to pass any raw material price increases through to our customers.

The nature of the products that we manufacture could expose us to product
liability claims.

Defects in or unknown harmful effects caused by our organic liquid compound
fertilizer products and other products could subject us to potential product
liability claims that our products are ineffective or cause some harm to the
human body or to property. We have obtained product liability insurance to cover
claims from personal injuries or property damage caused by our products for the
period from June 28, 2005 to June 27, 2006. However, such insurance coverage is
limited to approximately $500,000 (RMB 4,000,000) and may not be sufficient to
cover future claims. A successful claim against us that is in excess of our
insurance coverage could significantly harm our business and financial
condition. As of April 11, 2006, no product liability claim has ever been
brought against us.

27

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Our fertilizer products pose certain safety risks that may expose us to
liability to person harmed by our products.The manufacture of fertilizers poses certain safety risks and may cause
physical injury and sickness. Although we have adopted safety measures in our
research, development and manufacturing processes, accidents may still occur.
Any accident, whether at the manufacturing facilities or from the use of our
products, may subject us to significant liabilities to persons harmed by our
products.If we cannot renew our fertilizer registration certificate, which expires in
December 2007, we will be unable to sell come of our products causing our sales
revenues to significantly decrease.All fertilizers produced in China must be registered with the PRC Ministry of
Agriculture. No fertilizer can be manufactured without such registration. There
are two kinds of registrations: interim registration and formal registration.
The interim registration is valid for one year and applies to fertilizers in the
stage of so-called in-the-field test and test selling. All other fertilizers
that have completed the in-the-field test and test selling must obtain the
formal registration which, once obtained, is valid for five years. We have
obtained the necessary Formal Fertilizer Registration Certificate for all of our
fertilizer products from the PRC Ministry of Agriculture. Such certificate was
issued on September 3, 2002 and will expire on December 2007.
Our belief is that the PRC Ministry of Agriculture generally will grant an
application for renewal in the absence of illegal activity by the applicant.
However, there is no guarantee that the PRC Ministry of Agriculture will grant
renewal to our Formal Fertilizer Registration Certificate. If we cannot obtain
the necessary renewal, we will not be able to manufacture and sell our
fertilizer products in China which will cause the termination of our commercial
operations.Adverse weather conditions could reduce demand for our products.The demand for our organic liquid compound fertilizer products fluctuates
significantly with weather conditions, which may delay the application of the
fertilizer or render it unnecessary at all. If any natural disasters, such as
flood, drought, hail, tornado or earthquake, occur, demands for our products
will be reduced. In addition, in some cases, we allow our distributors to
purchase our products partially on credit. The distributors, in turn, may sell
the fertilizer to farmers on credit. If any natural disaster occurs, reduced
crops yield may cause farmer to default on their payments which could harm our
cash flow and result of operations.We face competition from numerous fertilizer manufacturers in China and
elsewhere.We compete with approximately 300 small-sized Chinese fertilizer
manufacturers. The number of these small companies varies from time to time.
Furthermore, we face competition from international fertilizer producers and
traders who import fertilizers into China. These imported products range from
fertilizers with single chemical elements, such as urea, phosphate and potash,
to standard nitrogen phosphate, potassium compound fertilizers. The quality of
the imported products is generally higher and more stable than fertilizers, like
ours, which are produced in China. Currently, imported fertilizers are subject
to tariffs, duties and quota imposed by Chinese Government. China is expected to
open its retail and wholesale fertilizer markets to non-Chinese companies by
December 11, 2006. As a result, the amount of fertilizer imported to China will
rise significantly and we will face more competitions from non-Chinese
fertilizer manufacturers.

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RISKS RELATED TO DOING BUSINESS IN CHINA

The constantly evolving legal system in China is unpredictable and may afford
you and us inadequate legal protections.

We conduct most of our business in China which utilizes a civil law system
based on written statutes. Unlike common law systems, it is a system in which
precedents set in earlier legal cases are not generally used. The overall effect
of legislation enacted over the past 20 years has been to enhance the
protections afforded to foreign invested enterprises in China. However, these
laws, regulations and legal requirements are relatively recent and are evolving
rapidly, and their interpretation and enforcement involve uncertainties. These
uncertainties could limit the legal protections available to foreign investors,
such as the right of foreign invested enterprises to hold licenses and permits
such as requisite business licenses. In addition, all of our executive officers
and our directors are residents of China and not of the U.S., and substantially
all the assets of these persons are located outside the U.S. As a result, it
could be difficult for investors to effect service of process in the U.S., or to
enforce a judgment obtained in the U.S. against us or any of these persons.

Accounting laws in China mandate accounting practices which
may not be consistent with U.S. generally accepted accounting principles and
therefore our financials and their interpretation involve uncertainties.

The PRC accounting laws require an annual "statutory audit" to be performed
in accordance with PRC accounting standards and the books of Foreign Invested
Enterprises to be maintained in accordance with Chinese accounting laws. These
Chinese accounting practices which may not be consistent with U.S. Generally
Accepted Accounting Principles. Article 14 of the PRC Wholly Foreign-Owned
Enterprise Law requires a Wholly Foreign-Owned Enterprise to submit certain
periodic fiscal reports and statements to designated financial and tax
authorities. Noncompliance with such requirements may cause revocation of our
business license. The translation of the financial statements from the
requirements of the PRC to US GAAP, requires interpretation and exercise of
judgment.

Changes in Chinas political and economic situation could harm us and our
operating results.

Economic reforms adopted by the Chinese government have had a positive effect
on its economic development, but the government could change these economic
reforms or any of the legal systems at any time. Changes could either benefit or
damage our operations and profitability. Some of the things that could have this
effect are:

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- Level of government involvement in the
  economy;
- Control of foreign exchange;
- Methods of allocating resources;
- Balance of payments position;
- International trade restrictions; and
- International conflict.

The Chinese economy differs from the economies of most countries belonging to
the Organization for Economic Cooperation and Development, or OECD, in many
ways. As a result of these differences, we may not develop in the same way or at
the same rate as might be expected if the Chinese economy were similar to those
of the OECD member countries and the value of your investment in our stock may
not appreciate in a manner that is acceptable to you, if at all.

The Chinese government exerts substantial influence over the manner in which
we conduct our business activities.

China only recently has permitted provincial and local economic autonomy and
private economic activities. Chinese government has exercised and continues to
exercise substantial control over virtually every sector of the Chinese economy
through regulation and state ownership of business enterprises. Our ability to
operate profitably in China may be harmed by changes in its laws and
regulations, including those relating to taxation, import and export tariffs,
environmental regulations, land use rights, property and other matters. We
believe that our operations in China are in material compliance with all
applicable legal and regulatory requirements. However, the central or local
governments of these jurisdictions may impose new, stricter regulations or
interpretations of existing regulations, including stricter environmental laws
and regulations on the manufacture, storage, use and disposal of fertilizer
and/or of certain chemicals used in the manufacture of fertilizer, that would
require additional expenditures and efforts on our part to ensure our compliance
with such regulations or interpretations. Accordingly, government actions in the
future, including any decision not to continue to support recent economic
reforms and to return to a more centrally planned economy or regional or local
variations in the implementation of economic policies, could have a significant
effect on economic conditions in China or particular regions thereof, and could
require us to divest ourselves of any interest we then hold in Chinese
properties or joint ventures.

Future inflation in China may inhibit our activity to conduct business in
China.

In recent years, the Chinese economy has experienced periods of rapid
expansion and widely fluctuating rates of inflation. During the past ten years,
the rate of inflation in China has been as high as 20.7% and as low as -2.2%.
These factors have led to the adoption by Chinese government, from time to time,
of various corrective measures designed to restrict the availability of credit
or regulate growth and contain inflation. High inflation may in the future cause
Chinese government to impose controls on credit and/or prices, or to take other
action, which could inhibit economic activity in China, and thereby harm the
market for our products.

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Any recurrence of severe acute respiratory syndrome, or SARS,
or another widespread public health widespread public health problem could harm
our operations.A renewed outbreak of SARS or another widespread public
health problem in China, where our operations are conducted, could have a
negative effect on our operations. As a result of these widespread public health
problems, our operations may be impacted by a number of health-related
consequences, including the following:
quarantines or closures of some of our offices which would
  severely disrupt our operations;
  the sickness or death of our key officers and employees;
  and
  a general slowdown in the Chinese economy.Any of the foregoing events or other unforeseen consequences
of public health problems could damage our operations.Restrictions on currency exchange may limit our ability to
receive and use our revenue effectively.The majority of our revenues will be settled in Renminbi, and
any future restrictions on currency exchanges may limit our ability to use
revenue generated in Renminbi to fund any future business activities outside
China or to make dividend or other payments in U.S. dollars. Although the
Chinese government introduced regulations in 1996 to allow greater
convertibility of the Renminbi for current account transactions, significant
restrictions still remain, including primarily the restriction that
foreign-invested enterprises may only buy, sell or remit foreign currencies
after providing valid commercial documents, at those banks in China authorized
to conduct foreign exchange business. In addition, conversion of Renminbi for
capital account items, including direct investment and loans, is subject to
governmental approval in China, and companies are required to open and maintain
separate foreign exchange accounts for capital account items. We cannot be
certain that the Chinese regulatory authorities will not impose more stringent
restrictions on the convertibility of the Renminbi.The value of our securities will be affected by the foreign
exchange rate between the U.S. Dollar and Renminbi.

The value of our common stock will be affected by the foreign
exchange rate between the U.S. dollar and Renminbi, and between those currencies
and other currencies in which our sales may be denominated. For example, if we
need to convert U.S. dollars into Renminbi for our operational needs and the
Renminbi has appreciated against the U.S. dollar at that time, our financial
position and business, and the price of our common stock may be harmed.
Conversely, if we decide to convert our Renminbi into U.S. dollars for the
purpose of declaring dividends on our common stock or for other business
purposes and the U.S. dollar appreciates against the Renminbi, the U.S. dollar
equivalent of our earnings from our subsidiaries in China would be reduced.

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RISKS RELATED TO OUR COMMON STOCK

The market price for our common stock may be volatile which could result in a
complete loss of your investment.

Our stock is not widely traded or traded in great volume so
the market price for our common stock is likely to be highly volatile and
subject to wide fluctuations in response to factors including the following:

- actual or anticipated fluctuations in our quarterly
  operating results;
- announcements of new products by us or our competitors;
- changes in financial estimates by securities analysts;
- conditions in the fertilizer market;
- changes in the economic performance or market valuations of
  other companies involved in fertilizer production;
- announcements by our competitors of significant
  acquisitions;
- additions or departures of key personnel; and
- potential litigation.

Certain of our stockholders hold a significant percentage of
our outstanding voting securities.

Mr. Yu Chang is the beneficiary owner of approximately 56.84% of our
outstanding common stock. As a result, he possesses significant influence,
giving him the ability, among other things, to elect a majority of our Board of
Directors and to authorize or prevent significant corporate transactions. His
ownership and control may also have the effect of delaying or preventing a
future change in control, impeding a merger, consolidation, takeover or other
business combination or discourage a potential acquirer from making a tender
offer. This might result in limitations on, or a decrease in the price of, our
common 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 under the symbol "CAGC.OB."
The OTC Bulletin Board is a significantly more limited market than the New York
Stock Exchange or Nasdaq system. 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.

We are subject to penny stock regulations and restrictions.

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. As of May 12, 2006, the closing bid and asked prices for
our common stock were $3.90 per share and therefore, it is designated a "penny
stock." Although since February 3, 2005, we have met the net worth exemption
from the "penny stock" definition, no assurance can be given that such exemption
will be maintained. As a "penny stock," our common stock may become subject to
Rule 15g-9 under the Exchange Act of 1934, or the "Penny Stock Rule."

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This rule imposes additional sales practice requirements on
broker-dealers that sell such securities to persons other than established
customers and "accredited investors" (generally, individuals with a net worth in
excess of $1,000,000 or annual incomes exceeding $200,000, or $300,000 together
with their spouses). For transactions covered by Rule 15g-9, a broker-dealer
must make a special suitability determination for the purchaser and have
received the purchasers written consent to the transaction prior to sale. As a
result, this rule may affect the ability of broker-dealers to sell our
securities and may affect the ability of purchasers to sell any of our
securities in the secondary market.
For any transaction involving a penny stock, unless exempt,
the rules require delivery, prior to any transaction in a penny stock, of a
disclosure schedule prepared by the SEC relating to the penny stock market.
Disclosure is also required to be made about sales commissions payable to both
the broker-dealer and the registered representative and current quotations for
the securities. Finally, monthly statements are required to be sent disclosing
recent price information for the penny stock held in the account and information
on the limited market in penny stock.
There can be no assurance that our common stock will qualify
for exemption from the Penny Stock Rule. In any event, even if our common stock
were exempt from the Penny Stock Rule, we would remain subject to Section
15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any
person from participating in a distribution of penny stock, if the SEC finds
that such a restriction would be in the public interest.
ITEM 3.            
CONTROLS AND PROCEDURES

Our management, with the participation of our Chief Executive
Officer and President, Yu Chang, and our chief financial officer, Lijun Peng,
evaluated the effectiveness of our disclosure controls and procedures. The term
"disclosure controls and procedures," as defined in Rules 13a-15(e) and
15d-15(e) under the Exchange Act, means controls and other procedures of a
company that are designed to ensure that information required to be disclosed by
a company in the reports, such as this 10-QSB, that it files or submits under
the Exchange Act is recorded, processed, summarized and reported, within the
time periods specified in the SECs rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by a company in the reports
that it files or submits under the Exchange Act is accumulated and communicated
to the companys management, including its principal executive and principal
financial officers, as appropriate to allow timely decisions regarding required
disclosure. Management recognizes that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance of
achieving their objectives and management necessarily applies its judgment in
evaluating the cost-benefit relationship of possible controls and procedures
Based on that evaluation, Mr. Chang and Ms. Peng concluded that as of March 31,
2006, 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 effective to satisfy the objectives for which they are intended.

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There were no changes in our internal control over financial
reporting identified in connection with the evaluation performed that occurred
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.

PART II 
OTHER INFORMATION

ITEM 1.            
LEGAL PROCEEDINGS

None

ITEM 4.            
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5.            
OTHER INFORMATION

In order to meet the increasing demand of our products, we
recently started the construction of four new manufacturing facilities in
Chongqing, Anhui, Xinjiang and Beijing.  We expect that the news
manufacturing facilities will significantly increase our total manufacturing
capacity by the end of this year..

ITEM 6.            
EXHIBITS

EXHIBITS.

|31.1 | Certification of Principal Executive Officer filed pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.                                                                                      
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                        
|31.2 | Certification of Principal Financial Officer filed pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.                                                                                      
|     |                                                                                                                                                                                                        
|32   | Certification of Principal Executive Officer and Principal Financial Officer
    furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
    906 of the Sarbanes-Oxley Act of 2002



34

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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.
DATED: May 22, 2006CHINA AGRITECH, INC.By:
      /s/ Yu ChangChief Executive Officer and
      President(Principal Executive Officer
      and Principal Financial or Accounting Officer)

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EXHIBIT INDEX

|Exhibit |                                                                                                                                                                                                         
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description                                                                                                                                                                                             
|        |                                                                                                                                                                                                         
|31.1    | Certification of Principal Executive Officer filed pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.                                                                                       
|        |                                                                                                                                                                                                         
|31.2    | Certification of Principal Financial Officer filed pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.                                                                                       
|        |                                                                                                                                                                                                         
|32      | Certification of Principal Executive Officer and Principal Financial Officer
    furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
    906 of the Sarbanes-Oxley Act of 2002.

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