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

                                    FORM 10-Q
     (Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
ACT OF 1934
                  For the quarterly period ended: June 30, 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 Number: 000-49608

                              CHINA AGRITECH, INC.
                              --------------------
        (Exact name of small business issuer as specified in its charter)


          Delaware                                             75-2955368
-------------------------------                        -------------------------
(State or other jurisdiction of                        (I.R.S. Empl. Ident. No.)
incorporation or organization)

               A# Room 0706-0707, The Spaces International Center,
                             No. 8 Dongdaqiao Road,
                           Chaoyang District, Beijing
                       People's Republic of China, 100020
--------------------------------------------------------------------------------
               (Address of principal executive offices, Zip Code)

                                (86) 10-58702123
               --------------------------------------------------
              (Registrant's telephone number, including area code)

                                       N/A
               --------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Exchange Act during the past
12 months (or for such shorter  period that the  registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes X  No
            ---   ---

         Indicate by check mark whether the  registrant is a larger  accelerated
filer,  an accelerated  filer,  or a  non-accelerated  filer.  See definition of
"accelerated  filer and large  accelerated  filer" in Rule 12b-2 of the Exchange
Act. (Check one)

Large accelerated filer     Accelerated filer     Non-accelerated filer X
                       ---                   ---                       ---

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 August 4, 2006 is as follows:

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


<PAGE>

                                     PART I
                              FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.


























                                       1
<PAGE>

                      CHINA AGRITECH, INC. AND SUBSIDIARIES
                 CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2006
                                   (UNAUDITED)




                                     ASSETS
Current Assets
Cash and cash equivalents                                           $ 8,410,408
Restricted cash                                                         219,755
Accounts receivable, net                                             13,972,862
Inventories                                                             787,667
Advances to suppliers                                                 1,898,115
Prepayments and other receivables                                     1,616,193
Amount due a related party                                              117,130
                                                                    -----------

Total Current Assets                                                 27,022,130

Property, plant and equipment, net                                    1,679,532
                                                                    -----------

Total Assets                                                        $28,701,662
                                                                    ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities
Accounts payable                                                    $   486,421
Accrued liabilities and other payables                                  545,709
Income taxes payable                                                  1,599,181
                                                                    -----------

Total Current Liabilities                                             2,631,311

Minority Interests                                                    1,707,944


Stockholders' Equity
Common stocks; $0.001 par value, 100,000,000 shares authorized,          19,144
   19,143,615 shares issued and outstanding
Additional paid-in capital                                           12,619,054
Statutory reserves                                                    2,239,833
Accumulated other comprehensive income                                  368,993
Retained earnings                                                     9,115,383
                                                                    -----------

Total Stockholders' Equity                                           24,362,407
                                                                    -----------

Total Liabilities and Stockholders' Equity                          $28,701,662
                                                                    ===========




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


                                       2
<PAGE>
<TABLE>
<CAPTION>

                      CHINA AGRITECH, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
        FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2006 AND 2005
                                   (UNAUDITED)




                                 Three month period ended         Six month period ended
                                         June 30,                        June 30,
                                   2006            2005            2006            2005
                               ------------    ------------    ------------    ------------
<S>                            <C>             <C>             <C>             <C>

Net revenue                    $ 10,235,393    $ 10,184,925    $ 15,920,790    $ 15,170,045

Cost of revenue                  (4,852,452)     (5,542,015)     (7,717,767)     (7,909,617)
                               ------------    ------------    ------------    ------------
Gross profit                      5,382,941       4,642,910       8,203,023       7,260,428

Operating expenses
Selling expenses                   (688,021)     (1,011,984)     (1,161,529)     (1,378,798)
Operating and administrative
expenses                           (797,978)       (461,298)     (1,209,443)     (1,619,635)
                               ------------    ------------    ------------    ------------

Total operating expenses         (1,485,999)     (1,473,282)     (2,370,972)     (2,998,433)
                               ------------    ------------    ------------    ------------

Income from operations            3,896,942       3,169,628       5,832,051       4,261,995
Other income (expense)
Merger costs                           --              --              --              --
Other (expense) income              (26,179)              6         (32,289)             14
Finance costs                         9,722            --             9,841              (2)
                               ------------    ------------    ------------    ------------

Total other income
(expense)                           (16,457)              6         (22,448)             12
                               ------------    ------------    ------------    ------------

Income before income taxes        3,880,485       3,169,634       5,809,603       4,262,007

Provision for income taxes       (1,482,294)     (1,113,788)     (2,250,335)     (1,837,463)
                               ------------    ------------    ------------    ------------

Income before minority
interests                         2,398,191       2,055,846       3,559,268       2,424,544

Minority interests                 (310,389)       (206,856)       (457,138)       (353,784)
                               ------------    ------------    ------------    ------------

Net income                        2,087,802       1,848,990       3,102,130       2,070,760

Other comprehensive income
Foreign currency translation
adjustment                           70,635            --           140,427            --
                               ------------    ------------    ------------    ------------

Comprehensive income           $  2,158,437    $  1,848,990    $  3,242,557    $  2,070,760
                               ============    ============    ============    ============
Basic weighted average
shares outstanding               19,143,615      14,108,099      18,343,615      13,985,405
                               ============    ============    ============    ============
Basic net earnings per
share                          $       0.11    $       0.13    $       0.17    $       0.15
                               ============    ============    ============    ============
Diluted weighted average
shares outstanding               19,144,301      14,108,099      18,343,806      13,985,405
                               ============    ============    ============    ============
Diluted net earnings per
share                          $       0.11    $       0.13    $       0.17    $       0.15
                               ============    ============    ============    ============
</TABLE>


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


                                       3
<PAGE>
<TABLE>
<CAPTION>

                      CHINA AGRITECH, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOW
             FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2006 AND 2005
                                   (UNAUDITED)

                                                                 2006            2005
                                                             ------------    ------------
<S>                                                          <C>             <C>
Cash flows from operating activities
Net income                                                   $  3,102,130    $  2,070,760
Adjustment to reconcile net income to net cash
    provided by (used in) operating activities:
    Stock compensation expenses                                     1,817            --
    Minority interest                                             457,138         353,784
    Depreciation                                                   54,776          49,767
Changes in operating assets and liabilities:
    (Increase) decrease in:current assets
    Due from shareholders                                        (130,616)       (234,656)
    Advance/repayment from/to related parties                     (57,956)           (530)
    Accounts receivable, net                                   (5,349,097)     (6,164,333)
    Prepayment and other receivable                            (1,243,333)        (43,356)
    Inventories                                                  (711,048)     (1,121,435)
    Advances to suppliers                                         195,504            --
    (Decrease) increase in:
    Accounts payable                                              368,752       5,311,286
    Accrued liabilities and other payables                         (2,687)        878,149
    Income tax payable                                            955,269         649,597
    Due to shareholders                                              --          (499,031)
    Due to related parties                                           --          (575,994)
                                                             ------------    ------------

    Net cash (used in) provided by operating activities        (2,359,351)        674,008
                                                             ------------    ------------

Cash flows from investing activities
   Cash acquired from reverse acquisition of Tailong                 --           185,635
   Purchase of property, plant and equipment                     (657,138)           (528)
                                                             ------------    ------------

    Net cash provided by (used in) investing activities          (657,138)        185,107

Cash flows from financing activities
    Capital contributed                                        11,079,705            --
                                                             ------------    ------------

Net cash provided by  financing activities                     11,079,705            --
                                                             ------------    ------------
</TABLE>



                                       4
<PAGE>
<TABLE>
<CAPTION>

                      CHINA AGRITECH, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOW
             FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2006 AND 2005
                                   (UNAUDITED)

                                                                 2006           2005
                                                             ------------   ------------
<S>                                                          <C>            <C>
Effect of exchange rate change on cash and cash equivalent         36,116           --

Net increase in cash and cash equivalents                       8,063,216        859,115

Cash and cash equivalents at beginning of period                  530,831         38,065
                                                             ------------   ------------

Cash and cash equivalents at end of period                   $  8,630,163   $    897,180
                                                             ============   ============

Supplementary disclosures of cash flow information:
Income taxes paid                                            $  1,333,678   $  1,140,254
                                                             ============   ============
Cash from issue of common stock placed in escrow account     $       --     $  1,350,000
                                                             ============   ============
</TABLE>




















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

                                       5
<PAGE>

                      CHINA AGRITECH, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)


1.   ORGANIZATION AND DESCRIPTION OF BUSINESS
     ----------------------------------------

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

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

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

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

     As a result of the acquisition of Tailong,  the Company became a fertilizer
     manufacturer and conducts operations in the People's Republic of China (the
     "PRC") through its wholly-owned subsidiary, Tailong and Tailong's 90% owned
     subsidiary, Pacific Dragon 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.  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
     non-operating   public  shell   corporation  with  nominal  net  assets  is
     considered  a capital  transaction  in  substance,  rather  than a business
     combination. Accordingly, for accounting purposes, the transaction has been
     treated as a reverse  acquisition  and a  recapitalization,  and  pro-forma
     information  is not  presented.  Transaction  costs incurred in the reverse
     acquisition have been charged to expense.



                                       6
<PAGE>

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.   BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     --------------------------------------------------------------------

     The accompanying  unaudited  financial  statements of the Company have been
     prepared in accordance with generally  accepted  accounting  principles for
     interim financial information.  Accordingly, they do not include all of the
     information  required  by  generally  accepted  accounting  principles  for
     complete  financial   statements.   In  the  opinion  of  management,   all
     adjustments   (consisting  of  normal  recurring  adjustments)   considered
     necessary for a fair presentation have been included. Operating results for
     the interim periods are not  necessarily  indicative of the results for any
     future period.  These  statements  should be read in  conjunction  with the
     Company's  audited  financial  statements  and notes thereto for the fiscal
     year ended  December  31,  2005.  The results of the six month period ended
     June 30, 2006 are not necessarily  indicative of the results to be expected
     for the full fiscal year ending December 31, 2006.


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 $14,139,048,  net of allowance of $166,186 as of
     June 30, 2006.

e.   Advances to suppliers
     ---------------------

     The Company  advances to certain vendors for purchase of its material.  The
     advances to suppliers amounted to $1,898,115 as of June 30, 2006.



                                       7
<PAGE>

f.   Inventories
     -----------

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

g.   Property, plant and equipment
     -----------------------------

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

     Depreciation  for  financial  reporting  purposes  is  provided  using  the
     straight-line method over the estimated useful lives of the assets: 5 to 10
     years for plant and machinery; 5 to 7 years for office equipment;  and 3 to
     5 years for motor vehicles.

h.   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 six month periods ended
     June 30, 2006 and 2005.

i.   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.





                                       8
<PAGE>

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
     ------------------------------------------

j.   Advertising costs
     -----------------

     The  Company   expenses  the  cost  of   advertising  as  incurred  or,  as
     appropriate,  the first time the advertising takes place. Advertising costs
     for the six month  periods  ended June 30, 2006 and 2005 were  $327,377 and
     $238,554, respectively.

k.   Income taxes
     ------------

     The Company accounts for income taxes using an asset and liability approach
     which allows for the  recognition  and  measurement  of deferred tax assets
     based upon the  likelihood of  realization of tax benefits in future years.
     Under the asset and liability approach, deferred taxes are provided for the
     net tax effects of temporary  differences  between the carrying  amounts of
     assets and  liabilities  for financial  reporting  purposes and the amounts
     used for income  tax  purposes.  A  valuation  allowance  is  provided  for
     deferred  tax assets if it is more  likely than not these items will either
     expire before the Company is able to realize their benefits, or that future
     deductibility is uncertain.

     The Company records a valuation  allowance for deferred tax assets, if any,
     based on its  estimates  of its  future  taxable  income as well as its tax
     planning  strategies  when it is more likely than not that a portion or all
     of its deferred tax assets will not be realized.  If the Company is able to
     utilize  more of its  deferred  tax assets  than the net amount  previously
     recorded when  unanticipated  events  occur,  an adjustment to deferred tax
     assets would  increase the Company net income when those events occur.  The
     Company does not have any significant  deferred tax asset or liabilities in
     the PRC tax jurisdiction.

l.   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 June
     30,   2006  and  its   statement   of  income  are   RMB1:US$0.125089   and
     RMB1:US$0.124537,  respectively. No representation is made that RMB amounts
     have been, or could be, converted into US$ at these rates.





                                       9
<PAGE>

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
     ------------------------------------------

m.   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.

n.   Earning per share (EPS)
     -----------------------

     Earnings  per share is  calculated  in  accordance  with the  Statement  of
     financial  accounting  standards  No.  128 (SFAS No.  128),  "Earnings  per
     share". SFAS No. 128 superseded  Accounting  Principles Board Opinion No.15
     (APB 15). Earnings per share for all periods presented has been restated to
     reflect the  adoption of SFAS No. 128.  Basic  earnings  per share is based
     upon the weighted  average  number of common  shares  outstanding.  Diluted
     earnings per share is based on the assumption that all dilutive convertible
     shares and stock options were converted or exercised.  Dilution is computed
     by applying  the treasury  stock  method.  Under this  method,  options and
     warrants are assumed to be exercised at the  beginning of the period (or at
     the time of issuance, if later), and as if funds obtained thereby were used
     to purchase common stock at the average market price during the period.

o.   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.

p.   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.




                                       10
<PAGE>

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
     ------------------------------------------

q.   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:

















                                       11
<PAGE>

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
     ------------------------------------------

q.   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.


r.   Reclassifications
     -----------------

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

3.   RESTRICTED CASH
     ---------------

     Proceeds  amounting  $1,350,000 from the issuance of shares during the year
     2005 were  deposited in an escrow  account.  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 June 30, 2006, the Company had $219,755
     in this account for the corporate communication program.


4.   INVENTORIES
     -----------

     Inventories consist of the following as of June 30, 2006:

     Raw materials                                                    $  639,350
     Packing materials                                                    80,854
     Finished goods                                                       67,463
                                                                      ----------
                                                                      $  787,667
                                                                      ==========

5.   PREPAYMENTS AND OTHER RECEIVABLE


     Prepayments  and other  receivable  consist of the following as of June 30,
     2006:

     Deposit for establishment of a joint venture                     $1,247,328
     Prepaid expense and others for normal business purpose              368,865
                                                                      ----------
                                                                      $1,616,193
                                                                      ==========




                                       12
<PAGE>

     Deposit for  establishment of a joint venture was returned in July 2006 due
     to the cancellation of the deal.

   6.   AMOUNT DUE FROM RELATED PARTIES

     The amount due from related  parties were the advance to the  Company's CEO
     and an officer, which were unsecured, non-interest bearing and had no fixed
     repayment date. As of June 30, 2006, due from related  parties  amounted to
     $117,130.

   7.   PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment consist of the following as of June 30, 2006:


     Manufacturing machinery                                        $ 1,614,382
     Leasehold improvements                                                 163
     Office equipment                                                   154,967
     Motor vehicles                                                     281,131
     Construction-in-progress                                            20,630
                                                                    -----------
                                                                      2,071,273
     Less: Accumulated depreciation                                    (391,741)
                                                                    -----------
                                                                    $ 1,679,532
                                                                    ===========

     Depreciation expense for the six month periods ended June 30, 2006 and 2005
     were $54,776 and $49,767, respectively.


8.   INCOME TAXES
     ------------

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


     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 six month periods June 30, 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 June 30, 2006 or 2005.


     Net operating loss  carryforward  for the US and Hong Kong tax jurisdiction
     amounted to  $1,414,420  and  $1,290,998,  respectively.  A 100%  valuation
     allowance  has been  recorded for the deferred tax asset of $906,932 due to
     the uncertainty of its  realization.  There were no other  significant book
     and tax basis differences.



                                       13
<PAGE>

9.   EARNINGS PER SHARE
     ------------------

     Basic and diluted earnings per share for the 6 month periods ended June 30,
     2006 and 2005 were  determined  by dividing net income for the years by the
     basic and diluted weighted average number of common shares outstanding.

10.  RELATED PARTY TRANSACTIONS
     --------------------------
     On 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 six month
     period ended June 30, 2006,  the Company paid RMB 1,800,000  (equivalent to
     $224,532) to Yinlong.

11.  MINORITY INTEREST
     -----------------

     The amount represents the minority  shareholder,  Harbin Yinlong Enterprise
     Co., Ltd., a related party of the Company,  interest in Pacific  Dragon,  a
     90% subsidiary.

12.  CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS
     ---------------------------------------------------

     Pacific  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.

13.  COMMON STOCK AND ADDITIONAL PAID-IN CAPITAL
     -------------------------------------------

     On 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.

14.  STOCK OPTIONS
     -------------

     The Company adopted SFAS No. 123 (Revised 2004), Share Based Payment ("SFAS
     No. 123R"), under the modified-prospective  transition method on January 1,
     20066.  SFAS No. 123R requires  companies to measure and recognize the cost
     of  employee   services  received  in  exchange  for  an  award  of  equity
     instruments  based on the grant-date fair value.  Share-based  compensation
     recognized  under the  modified-prospective  transition  method of SFAS No.
     123R includes  share-based  compensation based on the grant-date fair value
     determined  in  accordance  with the original  provisions  of SFAS No. 123,
     Accounting  for  Stock-Based  Compensation,  for all  share-based  payments
     granted  prior to and not yet vested as of January 1, 2006 and  share-based
     compensation  based on the grant-date  fair-value  determined in accordance
     with SFAS No. 123R for all  share-based  payments  granted after January 1,
     2006.  SFAS No.  123R  eliminates  the  ability to account for the award of
     these instruments under the intrinsic value method proscribed by Accounting



                                       14
<PAGE>
<TABLE>
<CAPTION>

     Principles  Board ("APB")  Opinion No. 25,  Accounting  for Stock Issued to
     Employees, and allowed under the original provisions of SFAS No. 123. Prior
     to the  adoption  of SFAS No.  123R,  the Company  accounted  for our stock
     option  plans  using the  intrinsic  value  method in  accordance  with the
     provisions of APB Opinion No. 25 and related interpretations.

     Primarily  as a result of adopting  SFAS No. 123R,  the Company  recognized
     $1,817 in share-based  compensation  expense for the six month period ended
     June 30, 2006 and $0 for the twelve month period ended December 31, 2005 as
     there  was no  stock  options  issued  in year  2005.  The  impact  of this
     share-based  compensation  expense  on  the  Company's  basic  and  diluted
     earnings per share was $0.00 per share. The fair value of our stock options
     was estimated using the Black-Scholes option pricing model.

     On May 10, 2006,  the Company  granted an  unrelated  party  125,000  stock
     options vesting over 5 years proportionately.  The option exercise price is
     $3.50.  The fair value of the shares at the time of granting of the options
     was $3.00. Following is a summary of the stock option activity:




                                                           Weighted Average    Aggregate Intrinsic
                                     Options outstanding    Exercise Price           Value
     <S>                             <C>                    <C>                <C>
     Outstanding, December 31, 2005                    0             $0.00                   $0.00
     Granted                                                         $3.50-                  $0.00
                                                 125,000
     Forfeited                                         -                  -                      -
     Exercised                                         -                  -                      -
                                     -------------------   ----------------    -------------------
     Outstanding, June 30, 2006                  125,000              $3.50                  $0.00
                                     ===================   ================    ===================

     Following  is a summary of the status of  options  outstanding  at June 30,
     2006:

       Outstanding Options                                               Exercisable Options
                                      Average
                                     Remaining          Average                  Average Exercise
     Exercise Price    Number     Contractual Life   Exercise Price    Number          Price
                      125,000              4.75         $3.50         125,000          $3.50
         $3.50
</TABLE>

     The assumptions used in calculating the fair value of options granted using
     the Black-Scholes option- pricing model are as follows:


          Risk-free interest rate                                           6.0%
          Expected life of the options                                5.00 years
          Expected volatility                                               479%
          Expected dividend yield                                              0


15.  STATUTORY RESERVES
     ------------------

     As stipulated  by the Company Law of the People's  Republic of China (PRC),
     net income  after  taxation  can only be  distributed  as  dividends  after
     appropriation has been made for the following:

     i)   Making up cumulative prior years' losses, if any;

     ii)  Allocations  to the  "Statutory  surplus  reserve"  of at least 10% of
          income  after  tax,  as  determined  under  PRC  accounting  rules and
          regulations, until the fund amounts to 50% of the Company's registered
          capital;

     iii) Allocations  of 5-10% of income  after tax,  as  determined  under PRC
          accounting rules and regulations,  to the Company's  "Statutory common
          welfare  fund",  which is  established  for the  purpose of  providing
          employee  facilities  and other  collective  benefits to the Company's
          employees; and




                                       15
<PAGE>


     iv)  Allocations to the discretionary  surplus reserve,  if approved in the
          shareholders' general meeting.


     In accordance  with the Chinese  Company Law, the company has allocated 10%
     of its net income to surplus. The amount included in the statutory reserves
     as of June 30, 2006 amounted to $1,493,222..


     The Company  established a reserve for the annual contribution of 5% of net
     income to the common  welfare  fund.  The amount  included in the statutory
     reserves as of June 30, 2006 amounted to $746,611.




















                                       16
<PAGE>

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

Special Note Regarding Forward Looking Statements

This  Quarterly  Report on Form  10-Q,  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  involves  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-Q; and any  statements of  assumptions  underlying any of the foregoing.
The  Company  assumes  no  obligation  and  does  not  intend  to  update  these
forward-looking statements, except as required by law.


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
"RMB" are to Renminbi,  the legal  currency of China,  and all references to "$"
are to the legal currency of the United States.


OVERVIEW

China  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  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



                                       17
<PAGE>

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.

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.

On July 6,  our new  factory  in  Anhui  province  started  production.  The new
facility  serves  the Anhui,  Hubei,  and Henan  provinces,  which  account  for
approximately 15% of total arable land and 23% of total annual fertilizer use in
China.  The China Agritech has already  established 10 regional sales centers in
these three provinces. The Anhui factory has an initial capacity of 2,000 metric
tons. Construction of a new factory in Hebei province is also under way.

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  business
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 Business

The  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. 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
anticipate  continued  growth in demand  for  liquid  compound  fertilizers  and
believe our revenue will grow as a result of the continuing increase in demand.

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.



                                       18
<PAGE>

Competition

China 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.

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

Three Months Ended June 30, 2006 Compared to Three Months Ended June 30, 2005.

The following  table  summarizes the results of our operations  during the three
month period ended June 30, 2006 and 2005 and provides information regarding the
dollar and percentage  increase or (decrease) from the 2005 fiscal period to the
2006 fiscal period:



                                       19
<PAGE>

        All amounts, other than percentages, in millions of U.S. dollars
                            3 Month     3 Month Period
                         Period Ended        Ended       Increase    % Increase
Item                      on 6/30/06      on 6/30/05    (Decrease)  (% Decrease)
--------------------------------------------------------------------------------
Net Revenue                     10.235        10.185         0.050          0.5%
Costs of Revenue               (4.852)       (5.542)       (0.690)       (12.4%)
Selling Expenses               (0.688)       (1.012)       (0.324)       (32.0%)
Operating and
Administrative Expenses        (0.798)       (0.461)         0.337         73.0%
Income From Operations           3.897         3.170         0.727         22.9%
Other income (expenses)          0.026         0.000         0.026          0.0%
Income tax                     (1.482)       (1.114)         0.368         33.1%
Minority interest              (0.310)       (0.207)         0.104         50.1%
Net income                       2.088         1.849         0.238         12.9%

Net Revenue
-----------

Our  net  revenue  for  the  three  months  ended  June  30,  2006  amounted  to
$10,235,393,  which is approximately  $50,468 or 0.5% more than that of the same
period ended on June 30, 2005, where we had revenue of $10,184,925. The increase
in net revenue is mainly attributable to the expansion of our customer base.

Cost of Revenue
---------------

Our  cost  of  revenue,  which  consists  of raw  materials,  direct  labor  and
manufacturing overhead expenses, was $4,852,452 for the three month period ended
June 30, 2006, a decrease of $689,563 or 12.4%,  as compared to  $5,542,015  for
the three  month  period  ended June 30,  2005.  The  percentage  of the cost of
revenue to the total  revenues  was 47.4% and 54.4% for the three month  periods
ended on June 30, 2006 and 2005,  respectively,  a decrease of approximately 7%.
This  was  primarily  due to  reduced  material  cost as a  result  of  improved
production cost control measures, as well as reduced outsourcing of packaging as
compared to same period 2005.

Selling Expenses
----------------

Our selling expenses,  which consist primarily of sales commission,  advertising
and promotion expenses,  freight charges and related compensation,  was $688,021
for the three month period ended June 30, 2006,  as compared to  $1,011,984  for
the same period  ended June 30,  2005,  a decrease of $323,963 or  approximately
32.0%.  The decrease was primarily  attributable to reduced sales related travel
and promotion expenses, when the market is getting mature.



                                       20
<PAGE>

Operating and Administrative Expenses
-------------------------------------

Our operating and  administrative  expenses,  which consist  primarily of rental
expenses,  related salaries,  business  development,  depreciation and traveling
expenses,  legal and  professional  expenses,  were $797,978 for the three month
period  ended June 30,  2006,  as compared to $461,298 for the same period ended
June 30, 2005,  an increase of $336,680 or  approximately  73%. The increase was
mainly attributable to the start up cost associated with our new branch offices.

Environmental Laws Compliance Costs
-----------------------------------

We incurred no cost for  environmental  compliance  for the three month  periods
ended June 30, 2006 and 2005.

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

Income from  operations was $3,896,942 for the three month period ended June 30,
2006,  as compared to  $3,169,628  for the same period ended June 30,  2005,  an
increase  of  $727,314  or   approximately   22.9%.   The  increase  was  mainly
attributable to the reduced cost of revenue.

Other Income and Expenses
-------------------------

Total other  expenses  were  $16,451 for the three month  period  ended June 30,
2006, as compared to other income of $6 for the same period ended June 30, 2005.

Income taxes
------------

Our Chinese  subsidiaries  are taxed at a rate of 33% of assessable  profit.  We
incurred income taxes of $1,482,294 for the three month period ended on June 30,
2006. This is an increase of $368,506 or 33.1% from the taxes we incurred in the
three month period ended June 30, 2005,  which was $1,113,788.  We incurred more
taxes in the three  months  ended  June 30,  2006  mostly  because of the higher
income in the three month period ended on June 30, 2006 compared to 2005.

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

Our financial  statements  reflect an adjustment to our  consolidated  group net
income  equal to $310,389 and $206,856 for the three month period ended June 30,
2006 and 2005,  respectively,  reflecting the minority  interest held by Yinlong
Industrial Co. Ltd. in our subsidiary Pacific Dragon.

Foreign Currency Translation Gains
----------------------------------

We had a foreign currency translation gain of $70,635 for the three month period
ended June 30, 2006 as compared with no foreign  currency  translation  gain for
the three month period ended June 30, 2005. On 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



                                       21
<PAGE>

Renminbi into U.S. dollar in our financial statements for the three month period
ended June 30, 2006. The exchange rates of RMB1: US$ 0.1251 and RMB1:US$  0.1245
were  implemented in calculating the total  assets/liabilities  and statement of
income, respectively. This results in a $70,635 increase in the foreign currency
translation gain for the three month period ended June 30, 2006 as compared with
$0 for the three month period ended June 30, 2005.

Net Income
----------

We earned net income of  $2,087,802  for the three month  period  ended June 30,
2006.  This is an  increase of  $238,812  or  approximately  12.9% from the same
period ended June 30, 2005 which had a net income of  $1,848,990.  This increase
is mainly attributable to reduced cost of revenue.

Six Months Ended June 30, 2006 Compared to Six Months Ended June 30, 2005.

The following  table  summarizes  the results of our  operations  during the six
month period ended June 30, 2006 and 2005 and provides information regarding the
dollar and percentage  increase or (decrease) from the 2005 fiscal period to the
2006 fiscal period:

        All amounts, other than percentages, in millions of U.S. dollars
                           6 Month      6 Month Period
                         Period Ended       Ended       Increase    % Increase
Item                      on 6/30/06      on 6/30/05   (Decrease)   (% Decrease)
--------------------------------------------------------------------------------
Net Revenue                     15.921         15.170       0.751           4.9%
Costs of Revenue               (7.718)        (7.910)     (0.192)         (2.4%)
Selling Expenses               (1.161)        (1.378)     (0.217)        (15.8%)
Operating and
Administrative Expenses        (1.209)        (1.619)     (0.410)         (25.9)
Income from Operations           5.832          4.262       1.570          36.8%
Other income (expenses)        (0.022)          0.000       0.022           0.0%
Income tax                     (2.250)        (1.837)       0.413          22.5%
Minority interest              (0.457)        (0.354)       0.103          29.2%
Foreign Currency
Translation Gains                0.140          0.000       0.140           N.A.
Net income                       3.102          2.071       1.031          49.8%

Net Revenue
-----------

Our net revenue for the six months ended June 30, 2006 amounted to  $15,920,790,
which is approximately  $750,745 or 4.9% more than that of the same period ended
on June 30,  2005,  where we had  revenue of  $15,170,045.  The  increase in net
revenue is mainly attribute to the expansion of our customer base.



                                       22
<PAGE>

Cost of revenue
---------------

Our  cost  of  revenue,  which  consists  of raw  materials,  direct  labor  and
manufacturing  overhead expenses,  was $7,717,767 for the six month period ended
June 30, 2006, a decrease of $191,850 or 2.4%, as compared to $7,909,617 for the
six month period ended June 30, 2005. The percentage of the cost of sales to the
total  revenues are 48.5% and 52.1% for the six month  periods ended on June 30,
2006  and  2005,  respectively,  a  decrease  of  approximately  3.6%.  This was
primarily due to reduced  material cost as a result of improved  production cost
control  measures,  as well as reduced  outsourcing  of packaging as compared to
same period 2005.

Selling Expenses
----------------

Our selling expenses,  which consist primarily of sales commission,  advertising
and  promotion  expenses,   freight  charges  and  related  compensation,   were
$1,161,529  for the six  month  period  ended  June 30,  2006,  as  compared  to
$1,378,798  for the same period  ended June 30,  2005, a decrease of $217,269 or
approximately  15.8%.  We  incurred  less sales  related  travel  and  promotion
expenses, as a result of having a more stable and established customer base.

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 $1,209,443 for the six month
period ended June 30, 2006, as compared to $1,619,635  for the same period ended
June 30, 2005, a decrease of $410,192 or  approximately  25.3%. 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 six month periods ended
June 30, 2006 and 2005.

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

Income from  operations  was  $5,832,052 for the six month period ended June 30,
2006,  as compared to  $4,261,995  for the same period ended June 30,  2005,  an
increase  of  $1,570,057  or  approximately   36.8%.  The  increase  was  mainly
attributable  to the increased  sales revenue,  more efficient  production  cost
control,  reduced selling  expenses in established  markets,  as well as reduced
general and administrative expenses.

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

Total other  expenses were $22,448 for the six month period ended June 30, 2006,
as compared to the total income of $12 for the same period ended June 30, 2005.



                                       23
<PAGE>

Income taxes
------------

Our Chinese  subsidiaries  are taxed at a rate of 33% of assessable  profit.  We
incurred  income taxes of $2,250,335  for the six month period ended on June 30,
2006.  This is an increase  of $412,872 or 22.5% from the taxes we incurred  for
the same period in 2005,  which were  $1,837,463.  We paid more taxes in the six
months ended June 30, 2006 mostly  because of the higher income in the six month
period ended on June 30, 2006 compared to 2005.

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

Our financial  statements  reflect an adjustment to our  consolidated  group net
income equal to $457,138 and $353,784 for the six month  periods  ended June 30,
2006 and 2005,  respectively,  reflecting the minority  interest held by Yinlong
Industrial Co. Ltd. in our subsidiary Pacific Dragon.

Foreign Currency Translation Gains
----------------------------------

We had a foreign currency  translation gain of $140,427 for the six month period
ended June 30, 2006 as compared with no foreign currency translation gain in the
same period ended June 30, 2005.  On July 21, 2005,  China  reformed its foreign
currency  exchange  policy,  revalued  the  Renminbi  by 2.1 percent and allowed
Renminbi to appreciate  as much as 0.3 percent per day against the U.S.  dollar.
As a result,  we implemented  different  exchange rates in translating  Renminbi
into U.S. dollar in our financial statements for the six month period ended June
30,  2006.  The  exchange  rates of  RMB1:US$  0.1251 and  RMB1:US$  0.1245 were
implemented in calculating the total assets/liabilities and statement of income,
respectively.  This  results  in a $140,427  increase  in the  foreign  currency
translation  gain for the six month  period  ended June 30,  2006 from $0 in the
same periods in 2005.

Net Income
----------

We earned net income of $3,102,130 for the six month period ended June 30, 2006.
This is an increase of  $1,031,370 or  approximately  49.8% from the same period
ended June 30, 2005 in which we had net income of  $2,070,760.  The increase was
mainly  attributable to the increased sales revenue,  more efficient  production
cost  control,  reduced  selling  expenses in  established  markets,  as well as
reduced general and administrative expenses.

Liquidity and capital resources
-------------------------------

As of June 30, 2006, we had cash and cash equivalents of $8,630,163, among which
$219,755 is restricted cash. Our current assets were $27,022,130 and our current
liabilities  were  $2,631,311  as of June 30, 2006,  which  results in a current
ratio of approximately 10.3. Our total stockholders'  equity as of June 30, 2006
was $24,362,407. We had no bank loans or other interest bearing borrowings as of
June 30, 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



                                       24
<PAGE>

transactions.  In  accordance  with the terms of the stock  purchase  agreement,
$600,000 of the proceeds from the private  placement  transactions was kept in a
trust account and been earmarked for certain corporate communication program. As
of June 30,  2006,  the  Company  still had  $219,755  in this  account  for the
corporate communication program.

On  January  13,  2006,  we sold  4,800,000  shares  of our  common  stock to 22
investors for a total of $12,000,000 in a private placement transaction.

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
June  30,  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  critical  accounting
policies to be those that require the more  significant  judgments and estimates
in the preparation of financial statements, including the following:

     o    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.

     o    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
          $14,139,048, net of allowance of $166,186 as of June 30, 2006.

     o    Advances to  suppliers:  The Company  advances to certain  vendors for
          purchase  of its  material.  The  advances  to  suppliers  amounted to
          $1,898,115 as of June 30, 2006.

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




                                       25
<PAGE>

     o    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 six
          month periods ended June 30, 2006 and 2005.

     o    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.

     o    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




                                       26
<PAGE>

          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
          June 30, 2006 and its  statement  of income are  RMB1:US$0.125089  and
          RMB1:US$0.124537,  respectively.  No  representation  is made that RMB
          amounts have been, or could be, converted into US$ 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 June 30, 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.



















                                       27
<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Interest Rate Risk

We had no bank loans or other interest  bearing  borrowings as of June 30, 2006,
therefore, we are not exposed to interest rate risk.

Foreign Exchange Risk

While  our  reporting  currency  is the  U.S.  Dollar,  all of our  consolidated
revenues and consolidated costs and expenses are denominated in Renminbi. All of
our assets are  denominated in RMB except for cash. As a result,  we are exposed
to foreign  exchange  risk as our  revenues  and  results of  operations  may be
affected by fluctuations  in the exchange rate between U.S.  Dollars and RMB. If
the RMB  depreciates  against the U.S.  Dollar,  the value of our RMB  revenues,
earnings and assets as expressed in our U.S.  Dollar  financial  statements will
decline.  We have not  entered  into any  hedging  transactions  in an effort to
reduce our exposure to foreign exchange risk.

Inflation

Inflationary  factors  such as increases in the cost of our product and overhead
costs may  adversely  affect our operating  results.  Although we do not believe
that inflation has had a material impact on our financial position or results of
operations  to date,  a high rate of inflation in the future may have an adverse
effect on our ability to maintain  current  levels of gross  margin and selling,
general and  administrative  expenses  as a  percentage  of net  revenues if the
selling prices of our products do not increase with these increased costs.





















                                       28
<PAGE>

ITEM 4. 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 form 10-Q,  that what 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 June 30, 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.

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

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


ITEM 1A.  RISK FACTORS

There are no material changes from the risk factors previously  disclosed in our
Annual Report on Form 10-KSB for the year ended December 31, 2005.






                                       29
<PAGE>

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5.  OTHER INFORMATION

None.

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.


















                                       30
<PAGE>

                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

DATED:  August 14, 2006

                                          CHINA AGRITECH, INC.



                                          By: /s/ Lijun Peng
                                             -----------------------------------
                                             Chief Financial Officer
                                             (On behalf of the Registrant and as
                                             Principal Financial Officer)


























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<PAGE>

                                  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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