UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 Amendment
No. 1 to FORM 10-K
 
 (Mark
One)
 
 x
              ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 For
the fiscal year ended June 30, 2009
 
 o
              TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 For the
transition period from ___________ to ___________
 
 Commission
File No. 000-26777
 
 China
Green, Inc.
 (Name
of small business issuer in its charter)
 
 DELAWARE
              75-3269053(State
      or other jurisdiction of
                incorporation
      or organization)
              (IRS
      Employer Identification No.)Room
      3601, the Centre, Queen’s Road no.99
                Central,
      Hong Kong(Address
      of principal executive offices)
              (Zip
      Code)
 
 (852)
3691-8831
 (Registrant’s
telephone number, including area code)
 
 Securities
      registered under Section 12(b) of the Exchange Act:Title
      of each class registered:
              Name
      of each exchange on which registered:None
              NoneSecurities
      registered under Section 12(g) of the Exchange Act:Common
      Stock, par value $0.00001
                (Title
      of class)
 
 Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.       
Yes o    No x
 
 Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.    Yes o     No x
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
 Yes x No o
 
 
 
 
 
 Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.   x
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
 
 
 Large
      accelerated filer
              o
              
              Accelerated
      filer
              oNon-accelerated
      filer
                (Do
      not check if a smaller reporting company)
              o
              
              Smaller
      reporting company
              x
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes o    No x
 
 Revenues
for year ended June 30, 2009: $11,676,141.
 
 State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter.  $0.
 
 As of
October 13, 2009, the registrant had 12,500,000 shares of its common stock
outstanding.
 
 Documents Incorporated by
Reference: None.
 
 
 
 
 
 
 
  TABLE
OF CONTENTS
 
 PAGEPART
      IITEM
      1.
              
              Business
              
              1ITEM
      1A.
              
              Risk
      Factors
              
              3ITEM
      2.
              
              Properties
              
              3ITEM
      3.
              
              Legal
      Proceedings
              
              3ITEM
      4.
              
              Submission
      of Matters to a Vote of Security Holders
              
              3PART
      IIITEM
      5.
              
              Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
              
              4ITEM
      6.
              
              Selected
      Financial Data
              
              4ITEM
      7.
              
              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operation
              
              4ITEM
      7A.
              
              Quantitative
      and Qualitative Disclosures About Market Risk
              
              13ITEM
      8.
              
              Financial
      Statements and Supplementary Data
              
              F-1ITEM
      9.
              
              Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
              
              14ITEM
      9A(T).
              
              Controls
      and Procedures
              
              14ITEM
      9B.
              
              Other
      InformationPART
      IIIITEM
      10.
              
              Directors,
      Executive Officers and Corporate Governance
              
              15ITEM
      11.
              
              Executive
      Compensation
              
              16ITEM
      12.
              
              Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
              
              16ITEM
      13.
              
              Certain
      Relationships and Related Transactions, and Director
      Independence
              
              17ITEM
      14.
              
              Principal
      Accounting Fees and Services
              
              1818PART
      IVITEM
      15.
              
              Exhibits,
      Financial Statement Schedules
              
              19SIGNATURES
              
              
              
              20
 
 
 i
  PART
I
 
 ITEM 1.      BUSINESS
 
 Corporate
History and Structure
 
 We were
incorporated in the State of Delaware on July 11, 2008, formed as a vehicle to
pursue a business combination. On August 13, 2009, we closed a share exchange
and stock purchase transaction with the shareholder of Glorious Pie Limited, a
British Virgin Islands corporation (“Glorious Pie”), and the representative of
the Investors in our private placement in reliance upon the exemption provided
by Regulation S promulgated under the Securities and Exchange Act of 1934, as
amended. As a result of the closing of the share exchange transaction, we became
the 100% holding company of Glorious Pie which in turn is the 100% holder
company of Earn Bright Development Limited, a Hong Kong
corporation.  Effective September 24, 2009, we changed our company
name from “China Eco-Hospitality Operations, Inc.” to “China Green,
Inc.”
 
 Business
Overview
 
 We
operate our eco-hospitality business through our Hong Kong subsidiary which
developed our business model – ECHOO (an acronym of Eco-Hospitality Operations)
in the areas of hospitality investment projects and large-scale landscape
architecture and engineering projects in China.  We are specialized on
providing greenery services to landscaping construction projects in China,
including, but not limited to, design advice, trading and quality control of
seeds, provision of seedling and performance management of landscaping
engineering and plantation.
 
 ECHOO is
a business model developed on the basis of Green Theory created by us. The Green
Theory is developed on the ground of two green philosophies, namely the Neo Tai Chi Concept and Magic of Duality, and is
applied in the form of our innovative approaches, Connected Environmental
Betterment Approach (CEBA) and Hospitality Investment and Management Approach
(HIMA). The two approaches represent two different ways to market our business
vision of building harmonious living environment with greenery services,
reflected by providing resource-efficient engineering design, and green hotel
investment and consultancy, respectively.
 
 Business
Model
 
 HIMA
Approach
 
 Our HIMA
approach focuses on cooperation with property owners, including hotel, housing
estate and commercial building, to construct green accommodation, such as indoor
eco-friendly living environment.
 
 Facing
strong competition in the hospitality industry in China, hotel owners are
actively se
 Landscaping
plantation absorbs CO2 and
improves environmental condition, which enhances the images of the districts
where the local governments are based. Better natural environment can attract
the flow-ins of investors and people with skills and talents, which are the
driving force of regional development.
 
 Marketing
Opportunities
 
 Current
development driving forces in China are characterized by steady population
growth, ongoing urbanization of the former agriculturally-based population,
aggressive economic growth and rapid motorization.  However, within
the backdrop of impetus to fast speed urbanization, there is no comprehensive
regional planning, nor national land development approach.
 
 The
consequence is a threat of a scattered low-density urbanization in the
countryside and fast, uncontrolled and uncoordinated growth of the large city
regions. The problem has caught the Chinese government's attention at the
highest levels. In order to build a suitable environment for inhabitants, garden
city construction is included in local government's agenda. It is also used as
one of the measurements to evaluate the local government's
performance.
   1
 
 We
operate our business in one of the biggest contributor to global warming where
has a great demand in environmental protection as the PRC government advocates
the importance of environmental protection and the citizen
wants  more  green area in their city. There is a huge
market potential in China for ECHOO business model to grow because management
believes we are among the few companies that are in meeting this continual
demand of cost-efficient environment services through the abovementioned
approaches – HIMA and CEBA approaches.
 
 With our
experience and expertise, management believes that we can satisfy the market
need in green accommodation construction or refurbishment demanded from private
sector and China government.
 
 Marketing
Strategy
 
 As the
Chinese government would increase its financial budget for environmental
projects in the coming decades, it is foreseeable that the demand for our
services would increases continually and widely spread out with the economic
development based on the ground of the environmental policy and the greenery
hospitality vision of the government.
 
 We
originate and develop our business model in China and aim to expand our business
internationally. Domestically, we will expand our market through our local
network. With respect to international development, in the near future our
management shall explore and develop the Asia-Pacific market, e.g. Japan and
Korea.
 
 We will
market our brand “ECHOO” as a leading industry benchmark in eco-living area
construction to attract business and explore our market potential.
 
 Competition
 
 We are
now positioned in a market with comparatively low competition as it is operating
in a start-up eco-business market. We are the first company in the industry
section engaged in assisting low ranking hotels in building eco-living
construction through the HIMA Approach.
 
 For
landscape engineering project, even though there are servicer vendors offering
similar services in the industry, we are favored by the local governments in the
Guangdong province because with years of cooperation, the local governments have
recognized our professional landscaping knowledge, international benchmarking
and initial investment on the resources and labor via the CEBA
approach.
 
 Government
Regulation
 
 Our
landscape design, construction and maintenance projects are subject to many
federal, state and local requirements relating to the protection of the
environment and we use environmentally sensitive materials in our maintenance
processes. For example, we employ chemical fertilizer to treat some of our
plants. We believe that eking partnership in green accommodation construction or
refurbishment to improve the quality of their services and the image of their
facilities, and to reduce pollution.
 
 We have
adopted flexible fee payment method. Instead of charging hotel owners a lump sum
upon engagement of our services, we charge monthly installment in an amount
equal to certain percentage of the hotel owner’s monthly revenue.
 
 CEBA
Approach
 
 Our CEBA
approach is related to outdoor eco-friendly landscaping projects financed by
various levels of Chinese governments. Since the central Chinese government
advocates (1) the importance of environmental protection and (2) CO2 emission
reduction after Kyoto Protocol, hence local municipal governments have taken the
initiative to improve landscaping in public infrastructure, such as highways.
For these government-funded outdoor landscaping projects, we provide
professional landscaping knowledge, international benchmarking and initial
investment on the resources and labor. The government is only required to pay
the full amount after the project is completed.
 
 2
 
 We
operate our business in material compliance with all environmental laws and
regulations, do not anticipate any material expenditure in order to meet
environmental requirements and do not believe that future compliance with such
laws and regulations will have a material adverse effect on our financial
condition or results of operations. However, we could incur operating costs or
capital expenditures in complying with more stringent environmental requirements
in the future or with current requirements if they are applied to our facilities
in a way we do not anticipate.
 
 Our
operations are also governed by many other laws and regulations covering our
labor relationships, the zoning of our facilities, our general business
practices and other matters. We believe that we are in material compliance with
these laws and regulations and do not believe that future compliance with such
laws and regulations will have a material adverse effect on our financial
condition or results of operations.
 
 ITEM
1A.   RISK FACTORS
 
 Not
applicable to smaller reporting companies.
 
 ITEM
1B. UNRESOLVED STAFF COMMENTS
 
 We
currently do not have any unresolved comments of issues with the Staff of the
Corporation Finance Division of the U.S. Securities and Exchange
Commission.
 
 ITEM 2.      PROPERTIES
 
 Our
executive office is located at Room 3601, the Centre, Queen’s Road no.99,
Central, Hong Kong. The rentable space in this office consists of approximately
198 square meters (approximately 2,130 square feet). The lease agreement has a
two year term which expires on July 31, 2011. The monthly rental payment is
approximately $72,700.
 
 ITEM
3.LEGAL PROCEEDINGS
 
 From time
to time, we may become involved in various lawsuits and legal proceedings which
arise in the ordinary course of 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. 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.
 
 ITEM
4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
 On August
21, 2009, pursuant to the written consent of our majority shareholders in lieu
of a special meeting, we authorized the change of our company name from “China
Eco-Hospitality Operations, Inc.” to “China Green, Inc.” (the “Name Change”)
Pursuant to Section 14C of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), we filed a preliminary statement and a definitive statement to
notify our shareholders on August 25, 2009 and September 4, 2009.  As
a result of the effectiveness of the Name Change, our company name has been
changed to “China Green, Inc.”
 
 On August
13, 2009 (the “Closing Date”), we received a written consent in lieu of a
special meeting of our shareholders from our shareholders holding 1,812,500
shares which represented 100% of our issued and outstanding voting stock, which
authorized us to enter into a share exchange and stock purchase agreement (the
“Share Exchange and Stock Purchase Agreement”) with Glorious Pie Limited
(“Glorious Pie”), a British Virgin Island company, the sole shareholder of
Glorious Pie (the “Glorious Pie Shareholder”) and the Representative of our
investors, approved the resignation of Mr. Anthony Wong Wa Kei from our board of
directors (the “Board”) and the appointment of Mr. Tai Chi Yip as a member of
our Board. On the Closing Date, pursuant to the terms of the Agreement, we
acquired all of the issued and outstanding common stock of Glorious Pie from the
Glorious Pie Shareholder. In exchange, we issued to the Glorious Pie
Shareholder, his designees or assigns, 10,355,000 shares of our common stock,
representing approximately 82.84% of our common stock issued and outstanding
after the closing of the share exchange transaction contemplated under the Share
Exchange and Stock Purchase Agreement (the “Share
Exchange”).
  3
 
 PART
II
 
 ITEM
5.   MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
 
 Market
Information
 
 There is
presently no public market for our shares of common stock. We anticipate
applying for trading of our common stock on a national stock exchange or a
national quotation system. However, we can provide no assurance that our shares
of common stock will be traded on a national stock exchange or a national
quotation system or, if traded, that a public market will
materialize.
 
 Holders
 
 As of
October 13, 2009, we had 300 record holders of our common stock.
 
 Dividends
 
 To date,
we have not declared or paid any dividends on our common stock. We currently do
not anticipate paying any cash dividends in the foreseeable future on our common
stock, when issued pursuant to this offering. Although we intend to retain our
earnings, if any, to finance the exploration and growth of our business, our
Board of Directors will have the discretion to declare and pay dividends in the
future.
 
 Payment
of dividends in the future will depend upon our earnings, capital requirements,
and other factors, which our Board of Directors may deem relevant.
 
 Stock
Option Grants
 
 To date,
we have not granted any stock options.
 
 ITEM
6.      SELECTED FIANANCIAL DATA
 
 Not
applicable because we are a smaller reporting company.
 
 ITEM 7.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS.
 
 The
following discussion should be read in conjunction with the Consolidated
Financial Statements and Notes thereto appearing elsewhere in this Form 10-K.
The following discussion contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 relating to future events or our future performance. Actual
results may materially differ from those projected in the forward-looking
statements as a result of certain risks and uncertainties set forth in this
prospectus. Although management believes that the assumptions made and
expectations reflected in the forward-looking statements are reasonable, there
is no assurance that the underlying assumptions will, in fact, prove to be
correct or that actual results will not be different from expectations expressed
in this report.
 
 Overview
 
 We
operate our eco-hospitality business through our business model – ECHOO (an
acronym of Eco-Hospitality Operations) in the areas of hospitality investment
projects and large-scale landscape architecture and engineering projects in
China.  We are specialized on providing greenery services to landscaping
construction projects in China, including, but not limited to, design advice,
trading and quality control of seeds, provision of seedling and performance
management of landscaping engineering and plantation.
 
 4
  ECHOO is
a business model developed on the basis of Green Theory created by us. The Green
Theory is developed on the ground of two green philosophies, namely the Neo Tai Chi Concept and Magic of Duality, and is
applied in the form of our innovative approaches, Connected Environmental
Betterment Approach (CEBA) and Hospitality Investment and Management Approach
(HIMA). The two approaches represent two different ways to market our business
vision of building harmonious living environment with greenery services,
reflected by providing resource-efficient engineering design, and green hotel
investment and consultancy, respectively.
 
 HIMA
Approach
 
 Our HIMA
approach focuses on cooperation with property owners, including hotel, housing
estate and commercial building, to construct green accommodation, such as indoor
eco-friendly living environment.
 
 Facing
strong competition in the hospitality industry in China, hotel owners are
actively seeking partnership in green accommodation construction or
refurbishment to improve the quality of their services and the image of their
facilities, and to reduce pollution.
 
 We have
adopted flexible fee payment method. Instead of charging hotel owners a lump sum
upon engagement of our services, we charge monthly installment in an amount
equal to certain percentage of the hotel owner’s monthly revenue.
 
 CEBA
Approach
 
 Our CEBA
approach is related to outdoor eco-friendly landscaping projects financed by
various levels of Chinese governments. Since the central Chinese government
advocates (1) the importance of environmental protection and (2) CO2 emission
reduction after Kyoto Protocol, hence local municipal governments have taken the
initiative to improve landscaping in public infrastructure, such as highways.
For these government-funded outdoor landscaping projects, we provide
professional landscaping knowledge, international benchmarking and initial
investment on the resources and labor. The government is only required to pay
the full amount after the project is completed.
 
 Landscaping
plantation absorbs CO2 and improves environmental condition, which enhances the
images of the districts where the local governments are based. Better natural
environment can attract the flow-ins of investors and people with skills and
talents, which are the driving force of regional development.
 
 Qualitative
and Quantitative Disclosure Regarding Market Risk
 
 Credit Risk.  We
are exposed to credit risk from our cash at bank, fixed deposits and contract
receivables. The credit risk on cash at bank and fixed deposits is limited
because the counterparts are recognized financial institutions. Contract
receivables are subject to credit evaluations. As we are getting more new
customers and offering credit terms, financial efficiency, we believe that cash
flow and controlling bad debt and late payment become more and more important.
We carry out thorough research through public filing records available on our
new customers, coupled with the employment of business intelligence information
provider, before extending any credit to new customers. Different levels of
credit periods and credit limits are granted to different customers according to
their size, financial position, business position and payment history, among
other factors, in order to offer the right credit terms to our customers to
enhance competitiveness yet manage the risk. We have not recorded bad debt since
inception.
 
 Country Risk.  The
substantial portion of our business, assets and operations are located and
conducted in Hong Kong and China. While these economies have experienced
significant growth in the past twenty years, growth has been uneven, both
geographically and among various sectors of the economy. The Chinese government
has implemented various measures to encourage economic growth and guide the
allocation of resources. Some of these measures benefit the overall economy of
Hong Kong and China, but may also have a negative effect on us. For example, our
operating results and financial condition may be adversely affected by
government control over capital investments or changes in tax regulations
applicable to us. If there are any changes in any policies by the Chinese
government and our business is negatively affected as a result, then our
financial results, including our ability to generate revenues and profits, will
also be negatively affected.
 
 5
 
 Critical
Accounting Policies and Estimates
 
 Basis of
presentation and consolidation: The accompanying consolidated financial
statements of the Company and its subsidiaries have been prepared in accordance
with generally accepted accounting principles in the United States of America
for consolidated financial information.
 
 The
consolidated financial statements are prepared on the basis with assumption the
reverse merger was undergone at the beginning of July 1, 2007.  The
historical consolidated financial statements of the Company will be those of
China Green, Inc. and of the consolidated entities from the July 1, 2007, the
date of merger, and subsequent.
 
 The
consolidated financial statements include the accounts of the Company and its
subsidiaries, Significant intercompany transactions have been eliminated in
consolidation.
 
 In
connection with the reverse acquisition and recapitalization, all share and per
share amounts will be retroactively restated.
 
 Use of
estimates:In preparing of the
financial statements in conformity with accounting principles generally accepted
in the United States of America, management makes estimates and assumptions that
affect the reported amount of assets and liabilities and disclosures of
contingent assets and liabilities at the dates of the financial statements, as
well as the reported amounts of revenues and expenses during the reporting year.
These accounts and estimates include, but are not limited to, the valuation of
accounts receivable, inventories, deferred income taxes and the estimation on
useful lives of plant and machinery. Actual results could differ from those
estimates.
 
 Cash and Cash
Equivalents: We consider all cash and other highly liquid investments
with initial maturities of three months or less to be cash equivalents. As of
June 30, 2008 and 2009, there were cash and cash equivalents of $364,485 and
$849,457, respectively.
 
 Revenue
Recognition: Our revenue is generated from providing services in two
aspects as follows:
 
 i)
              Designing
      and consultancy services in hotel facilities; andii)
              Resource-efficient
      engineering business in greenery
projects.
 
 The
revenue recognized by us is based on the Design and Consultancy agreement
between us and the hotel where we provided the design, consultancy to the hotel
and even with certain fixtures and assets provided to that hotel and hence share
a certain percentage of gross revenue generated by the hotel facilities for
certain years as the consideration.
 
 Revenue
from fixed-price and modified fixed-price construction contracts are recognized
on the percentage-of-completion method, measured by the percentage of actual
cost incurred to date for each contract. We would regularly and frequently
reviews the estimated contract cost on each project being accepted and not yet
finished to ensure the contract cost estimates is measured with the best
knowledge of the personnel involved.
 
 Accounts
Receivable:Accounts receivables are
recorded at the invoiced amount, net of allowances for doubtful accounts. We
recognize an allowance for doubtful accounts to ensure accounts receivable are
not overstated due to uncollectibility. An allowance for doubtful accounts is
maintained for all customers based on a variety of factors, including the length
of time the receivables are past due, significant one-time events and historical
experience. An additional reserve for individual accounts is recorded when we
become aware of a customer’s inability to meets its financial obligations, such
as in the case of bankruptcy filings pr deterioration in the customer’s
operating results of financial position. If circumstances related to customers
change, estimates of the recoverability of receivables would be further
adjusted.
 
 Accounting for
the Impairment of Long-Lived Assets: We adopted Statement of Financial
Accounting Standards No. 144, “Accounting for the Impairment or Disposal of
Long-Live Assets” (“SFAS 144”), which addresses financial accounting and
reporting for the impairment or disposal of long-lived assets. We periodically
evaluate the carrying value of long-lived assets to be held and used in
accordance with SFAS 144. SFAS 144 requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are
less than the assets’ carrying amounts. In that event, a loss is recognized
based on the amount by which the carrying amount exceeds the fair market value
of the long-lived assets. Loss on long-lived assets to be disposed of is
determined in a similar manner, except that fair market values are reduced for
the cost of disposal. Based on its review, we believe that, as of June 30, 2009,
there were no significant impairments of its long-lived assets.
  6
  Plant and
Equipment: Plant and equipment, other than construction in progress, are
stated at cost less depreciation and amortization and accumulated impairment
loss.
 
 Plant and
equipment are carried at cost less accumulated depreciation. Depreciation is
provided over their estimated useful lives, using the straight-line method.
Estimated useful lives of the plan and equipment are as follows:
 
 Equipment
      and
      machinery
              5
      yearsFurniture
      &
      fixtures
              5
      years
 
 The cost
and related accumulated depreciation of assets sold or otherwise retired are
eliminated from the accounts and any gain or loss is included in the statement
of income. The cost of maintenance and repairs is charged to income as incurred,
whereas significant renewable and betterments are capitalized.
 
 Management
considers that we have no residual value for plant and equipment.
 
 Fair Value of
Financial Instruments: SFAS No. 107, “Disclosures about Fair Values of
Financial Instruments”, requires disclosing fair value to the extent practicable
for financial instruments that are recognized or unrecognized in the balance
sheet. The fair value of the financial instruments disclosed herein is not
necessarily representative of the amount that could be realized or settled, nor
does the fair value amount consider the tax consequences of realization or
settlement.
 
 The
carrying values of the financial instruments, including cash and cash
equivalents, accounts and other receivables, approximate their fair values due
to the short-term maturity of such instruments. The carrying amounts of
borrowings approximate their fair values because the applicable interest rates
approximate current market rates.
 
 Cost of
Revenue: Regarding the design and consultancy services to the hotel
facilities, the respective cost of revenue includes the consultancy expenses in
professional staff involved and the design and consultancy fee with other
third-party experts, and also the depreciation expenses on those fixtures and
movables assets being placed with the hotel by the Company.
 
 Regarding
the trading of seeding and provision of greenery engineering projects, the
respective cost of revenue consists primarily of material costs, labor cost,
subcontracting expenses, and related expenses, which are directly attributable
to the greenery construction projects.
 
 Income
Taxes:  Income taxes are accounted for under the asset and
liability method. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax carry-forwards. Deferred tax
assets are reduced by a valuation allowance to the extent management concludes
it is more likely than not that the assets will not be realized. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in the consolidated statements of income and
comprehensive income in the period that includes the enactment
date.
 
 The China
Green accounts for income taxes under the liability method in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" under this method, deferred income tax assets and liabilities are
determined based on differences between the financial reporting and tax bases of
assets and liabilities and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to
reverse.
 
 7
 
 The China
Green adopted the provisions of FASB Interpretation No. 48; “Accounting for
Uncertainty in Income Taxes-An Interpretation of FASB Statement No. 109” (“FIN
48”). FIN 48 contains a two-step approach to recognizing and measuring uncertain
tax positions.  The first step is to evaluate the tax position for
recognition by determining if the weight of available evidence indicates it is
more likely than not, that the position will be sustained on audit, including
resolution of related appeals or litigation processes, if any. The second step
is to measure the tax benefit as the largest amount, which is more than 50%
likely of being realized upon ultimate settlement. The China Green consider many
factors when evaluating and estimating our tax positions and tax benefits, which
may require yearic adjustments.  At June 30, 2009, the China Green did
not record any liabilities for uncertain tax position.
 
 Foreign Currency
Translation:We maintain our
financial statements in the functional currency. The functionalcurrency of us is the
Renminbi (RMB). Monetary assets and liabilitiesdenominated in
currencies other than the functional currency are translated into thefunctional currency at
rates of exchange prevailing at the balance sheet dates.Transactions
denominated in currencies other than the functional currency are translatedinto the functional
currency at the exchanges rates prevailing at the dates of thetransaction. Exchange
gains or losses arising from foreign currency transactions areincluded in the
determination often income for the respective periods.
 
 For
financial reporting purposes, our financial statements which are prepared using
the functional currency have been translated into United States dollars. Assets
and liabilities are translated at the exchange rates at the balance sheet dates
and revenue and expenses are translated at the average exchange rates and
stockholders' equity is translated at historical exchange rates. Any translation
adjustments resulting are not included in determining net income but are
included in foreign exchange adjustment to other comprehensive income, a
component of stockholders' equity.
 
 2009
              2008Year
      end RMB: US$ exchange rate
              6.825
              6.859Average
      yearly RMB: US$ exchange rate
              6.848
              7.235
 
 RMB is
not freely convertible into foreign currency and all foreign exchange
transactions must take place through authorized institutions. No representation
is made that the RMB amounts could have been, or could be, converted into US$ at
the rates used in translation.
 
 Comprehensive
Income:SFAS No. 130, "Reporting Comprehensive Income", requires
companies to classify items of other comprehensive income in a financial
statement.  Comprehensive income is defined as the change in equity of
a business enterprise during a year from transactions and other events and
circumstances from non-owner sources.  The Group's comprehensive net
income is equal to its net income for all years presented.  The
Group’s current component of other comprehensive income is the foreign currency
translation adjustment.
 
 Commitments and
contingencies:Liabilities for loss contingencies arising from claims,
assessments, litigation, fines and penalties and other sources are recorded when
it is probable that a liability has been incurred and the amount of the
assessment can be reasonably estimated.
 
 Segment
reporting:The Group uses the “management approach” in determining
reportable operating segments.  The management approach considers the
internal organization and reporting used by the Group’s chief operating decision
maker for making operating decisions and assessing performance as the source for
determining the Group’s reportable segments. Management, including the chief
operating decision maker, reviews monthly operating results derived from two
types of services and therefore the Group has determined that the Group has two
operating segments as defined by SFAS 131, “Disclosures about Segments of an
Enterprise and Related Information”.
  Earnings per
share: The Group reports basic earnings per share in accordance with SFAS
128, “Earnings Per Share”.  Basic earnings (loss) per share is
computed by dividing net income (loss) by weighted average number of shares of
common stock outstanding during the year.  Diluted earnings (loss) per
share is computed by dividing net income (loss) by the weighted average number
of shares of common stock, common stock equivalents and potentially dilutive
securities outstanding during the year.  At June 30, 2009, the Group
had no common stock equivalents that could potentially dilute future earnings
per share.
  8
  Recently
Issued Accounting Pronouncements
 
 In June
2009, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 168, The FASB Accounting Standards
CodificationTM and the Hierarchy of Generally Accepted Accounting Principles – a
Replacement of FASB Statement No. 162. The Codification will become the source
of authoritative U.S. generally accounting principles (GAAP) recognized by the
FASB to be applied to nongovernmental entities.  Rules and
interpretive releases of the Securities and Exchange Commission (SEC) under
authority of federal securities laws are also sources of authoritative GAAP for
SEC registrants.  On the effective date of this Statement, the
Codification will supersede all then-existing non-SEC accounting and reporting
standards.  All other non-grandfathered non-SEC accounting literature
not included in the Codification will become nonauthoritative.  This
statement is effective for financial statements issued for interim and annual
years ending after June 15, 2009 (our year ended June 30, 2009).  We
are currently unable to determine what impact the future application of this
pronouncement may have on our financial statements.
 
 In June,
2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No.
46(R).  This statement is a revision to FASB Interpretation No. 46(R),
Consolidation of Variable Interest Entities, and changes how a company
determines when an entity that is insufficiently capitalized or is not
controlled through voting (or similar rights) should be
consolidated.  The determination of whether a company is required to
consolidate an entity is based on, among other things, an entity’s purpose and
design and a company’s ability to direct the activities of the entity that most
significantly impact the entity’s economic performance.  The statement
is effective at the start of a company’s first fiscal year beginning after
November 15, 2009 (our fiscal year beginning July 1, 2010), or January 1, 2010
for companies reporting on a calendar year basis.  We currently are
unable to determine what impact the future application of this pronouncement may
have on our financial statements.
 
 In June,
2009, the FASB issued SFAS No. 166, Accounting for Transfers of
Financial Assets – an Amendment of FASB Statement No.
140.  This statement is a revision to Statement No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities, and
will require more information about transfers of financial assets, including
securitization transactions, and where companies have continuing exposure to the
risks related to transferred financial assets.  It eliminates the
concept of a “qualifying special-purpose entity,” changes the requirements for
derecognizing financial assets, and requires additional
disclosures.  The statement is effective at the start of a company’s
first fiscal year beginning after November 15, 2009 (our fiscal year beginning
July 1, 2010), or January 1, 2010 for companies reporting on a calendar year
basis.  We currently are unable to determine what impact the future
application of this pronouncement may have on our financial
statements.
 
 In May
2009, the FASB issued SFAS No. 165, "Subsequent Events." This Statement sets
forth: 1) the period after the balance sheet date during which management of a
reporting entity should evaluate events or transactions that may occur for
potential recognition or disclosure in the financial statements; 2) the
circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements; and 3) the
disclosures that an entity should make about events or transactions that
occurred after the balance sheet date. This Statement is effective for interim
and annual periods ending after June 15, 2009. The Company adopted this
Statement in the quarter ended June 30, 2009. This Statement did not impact the
consolidated financial results.
 
 In May
2008, the FASB issued SFAS No 163, "Accounting for Financial Guarantee Insurance
Contracts" ("SFAS 163"), SFAS 163 is intended to correct the inconsistencies in
the recognition and measurement of claim liabilities by insurance enterprises.
This SFAS 163 statement requires that an insurance enterprise recognize a claim
liability prior to an event of default when there is evidence that credit
deterioration has occurred in an insured financial obligation. This will result
in increasing comparability in financial reporting of financial guarantee
insurance contracts by insurance enterprises. The provisions of SFAS 163 are
effective for fiscal years beginning after December 15, 2008. The Company does
not expect that the adoption will have a material impact on the Company's
consolidated financial position or results of operations.
  9
 
 In May
2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted
Accounting Principles" ("SFAS 162"). SFAS 162 identifies the sources of
accounting principles and the framework for selecting the principles used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (the GAAP
hierarchy). SFAS 162 will become effective 60 days following the SEC's approval
of the Public Group Accounting Oversight Board amendments to AU Section 411,
"The Meaning of Present Fairly in Conformity With Generally Accepted Accounting
Principles." We do not currently expect the adoption of SFAS 162 to have a
material effect on our consolidated results of operations and financial
condition.
 
 In May
2008, the FASB issued FSP Accounting Principles Board ('APB") 14-1 "Accounting
for Convertible Debt instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement)" ("FSP APB 14-1"). FSP APB 14-1 requires the
issuer of certain convertible debt instruments that may be settled in cash (or
other assets) on conversion to separately account for the liability (debt) and
equity (conversion option) components of the instrument in a manner that
reflects the issuer's non-convertible debt borrowing rate. FSP APB 14_1is effective for fiscal
years beginning after December 15, 2008 on a retroactive basis. As we do not
have convertible debt at this time, we currently believe the adoption of FSP APB
14-1 will have no effect on our consolidated results of operations and financial
condition.
 
 In March
2008, the FASB issued SFAS No.161, "Disclosures about Derivative Instruments and
Hedging Activities" (' SFAS 161"). SFAS 161 is intended to improve financial
reporting about derivative instruments and hedging activities by requiring
enhanced disclosures to enable investors to better understand their effects on
an entity's financial position, financial performance, and cash flows. The
provisions of SFAS 161 are effective for the quarter ending February 28, 2009.
The Group does not expect that the adoption will have a material impact on the
Group's consolidated financial position or results of operations.
 
 In
February 2008, the FASB issued FSP FAS 157-2, "Effective Date of FASB Statement
No. 157." FSP FAS 157-2 delayed the effective date of SFAS No. 157 "Fair Value
Measurements" from 2008 to 2009 for all nonfinancial assets and nonfinancial
liabilities, except those that are recognized or disclosed at fair value in the
financial statements on a recurring basis (at least annually). The adoption of
the provisions of SFAS No. 157 related to nonfinancial assets and nonfinancial
liabilities on January 1, 2009 did not have a material impact on the
Consolidated Financial Statements. See Note 3, "Fair Value," on pages 10 and 11
for SFAS No. 157 disclosures.
 
 In
December 2007, the FASB issued SFAS 160, Noncontrolling Interests in
Consolidated Financial Statements - an amendment of ARB No. 51. SFAS 160
requires that ownership interests in subsidiaries held by parties other than the
parent (previously referred to as minority interests), and the amount of
consolidated net income, be clearly identified, labeled and presented in the
consolidated financial statements. It also requires once a subsidiary is
deconsolidated, any retained noncontrolling equity investment in the former
subsidiary be initially measured at fair value. Sufficient disclosures are
required to clearly identify and distinguish between the interests of the parent
and the interests of the noncontrolling owners as components of equity. It is
effective for fiscal years beginning after December IS, 2008, and requires
retroactive adoption of the presentation and disclosure requirements for
existing minority interests. All other requirements are applied prospectively.
The Group is currently evaluating the impact of SFAS 160 on the Group's
consolidated financial statements.
 
 In
December 2007, the FASB issued SFAS 141 (revised 2007), Business Combinations,
("SFAS 141(R)"). SFAS 141(R) retains the fundamental requirements of the
original pronouncement requiring that the purchase method be used for all
business combinations, but also provides revised guidance for recognizing and
measuring identifiable assets and goodwill acquired and liabilities assumed
arising from contingencies, the capitalization of in-process research and
development at fair value, and the expensing of acquisition-related costs as
incurred. SFAS 141(R) is effective for fiscal years beginning after December 15,
2008. The Group will evaluate how the new requirements could impact the
accounting for any acquisitions completed beginning in fiscal 2009 and beyond,
and the potential impact on the Group's consolidated financial
statements.
 
 Results
of Operations
 
 Comparison
of the fiscal year ended June 30, 2009 to the fiscal year ended June 30,
2008
 
 The
following table sets forth our statement of operations for the periods
indicated:
 
 10
  For
      the year
                EndedJune
      30, 2009
              
              
              June
      30, 2008Service
      income
              
              $
              11,676,141
              
              
              $
              9,282,281Cost
      of services
              
              
              (5,416,156)
              
              
              
              (3,942,076)Gross
      profit
              
              
              6,259,985
              
              
              
              5,340,205General
      and administrative expenses
              
              
              (106,087)
              
              
              
              (28,611)Income
      before taxation
              
              
              6,153,898
              
              
              
              5,311,594Income
      tax
              
              
              (72,056)
              
              
              
              -Net
      income
              
              
              6,081,842
              
              
              
              5,311,594Other
      comprehensive income- Foreign currency translation adjustments
              
              
              46,766
              
              
              
              698,890Total
      comprehensive income
              
              
              6,128,608
              
              
              
              6,010,484
  Gross Profit. For the fiscal
year ended June 30, 2009 as compared to the fiscal year ended June 30, 2008, we
generated gross profit of $6,259,985 and $5,340,205, respectively, reflecting an
increase of approximately 17%. The increase in our gross profit was mainly due
to the significant increase of our revenue as a result of the increasing number
of greenery projects we were engaged in the fiscal year of 2009.
 
 Cost of Services. Our cost of
services for the fiscal year ended June 30, 2009 was $5,416,156 as compared to
$3,942,076 for the fiscal year ended June 30, 2008, representing an increase of
37%, which was the result of the increase in seedling costs and sub-contracting
charges.
  General and Administrative
Expenses. We incurred general and administrative expenses of
$106,087 for the fiscal year ended June 30, 2009, representing an
increase of $77,476 compared to $28,611 for the fiscal year ended June 30, 2008.
This increase was mainly due to the increase of legal and professional fees we
incurred in operations.
  Net Income. We had net
income of $6,081,842 for the fiscal year ended June 30, 2009 as compared to net
income $5,311,594 for the fiscal year ended June 30, 2008, representing an
increase of 15%. The increase in our net income was the result of the
significant increase of our revenue generated by the increasing number of
greenery projects we were engaged in the fiscal year of 2009.
  Liquidity and Capital
Resources
 
 We are a
development stage company. As of June 30, 2009, we have incurred an accumulated
net income of $10,429,937. At June 30, 2009, we had cash and cash equivalents of
$849,457 as compared to cash and cash equivalents of $364,485 as of June 30,
2008.  Management is trying to raise additional capital through sales
of common stock, as well as seeking financing from third parties.
 
 
 11
 
 
 For
      the year ended June 30, 2009
              
              
              For
      the year ended June 30, 2008Net
      Cash by Operating Activities
              
              
              1,952,828
              
              
              
              3,267,721Net
      Cash used in Investment Activities
              
              
              (11,098)
              
              
              
              (90,245)Net
      Cash used in Financing Activities
              
              
              (1,460,240)
              
              
              
              (3,177,476)Net
      Increase in Cash
              
              
              481,490
              
              
              
              -Effect
      of Foreign Currency Transaction
              
              
              3,482
              
              
              
              36,056Cash,
      Beginning of Period
              
              
              364,485
              
              
              
              328,429Cash,
      End of Period
              
              $
              849,457
              
              
              
              364,485
 
 Off-Balance
Sheet Arrangements
 
 As of the
date hereof, we do not have any off-balance sheet debt, nor do we have any
transactions, arrangements or relationships with any special purpose
entities.
 
 Inflation
and Seasonality
 
 Inflation
and seasonality have not had a significant impact on our operations during the
last two fiscal years.
 
 ITEM
7A.  QUANTITATIVE AND QUALITATIVE DISCLOUSURES ABOUT MARKET
RISK
 
 Credit Risk.  We
are exposed to credit risk from our cash at bank, fixed deposits and contract
receivables. The credit risk on cash at bank and fixed deposits is limited
because the counterparts are recognized financial institutions. Contract
receivables are subject to credit evaluations. As we are getting more new
customers and offering credit terms, financial efficiency, we believe that cash
flow and controlling bad debt and late payment become more and more important.
We carry out thorough research through public filing records available on our
new customers, coupled with the employment of business intelligence information
provider, before extending any credit to new customers. Different levels of
credit periods and credit limits are granted to different customers according to
their size, financial position, business position and payment history, among
other factors, in order to offer the right credit terms to our customers to
enhance competitiveness yet manage the risk. We have not recorded bad debt since
inception.
  12
  Country Risk.  The
substantial portion of our business, assets and operations are located and
conducted in Hong Kong and China. While these economies have experienced
significant growth in the past twenty years, growth has been uneven, both
geographically and among various sectors of the economy. The Chinese government
has implemented various measures to encourage economic growth and guide the
allocation of resources. Some of these measures benefit the overall economy of
Hong Kong and China, but may also have a negative effect on us. For example, our
operating results and financial condition may be adversely affected by
government control over capital investments or changes in tax regulations
applicable to us. If there are any changes in any policies by the Chinese
government and our business is negatively affected as a result, then our
financial results, including our ability to generate revenues and profits, will
also be negatively affected.
   13
 
 ITEM
8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA.
 
 CHINA
GREEN, INC.
 CONSOLIDATED
FINANCIAL STATEMENTS
 FOR
THE YEAR ENDED JUNE 30, 2009 AND 2008
 (Stated
in US dollars)
  
 CHINA GREEN,
INC.
  INDEX TO CONSOLIDATED
FINANCIAL STATEMENTS
 
 
 CONTENTS
 
 Page(s)
 REPORT
      OF INDEPENDENT REGISTERED PUBLIC
                F-2ACCOUNTING
      FIRMCONSOLIDATED
      STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
                F-3CONSOLIDATED
      BALANCE SHEETS
                F-4CONSOLIDATED
      STATEMENTS OF CASH FLOWS
                F-5CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS’ EQUITY
                F-
      6-7NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS
                F-8-F-29
    F-1
  
 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To: The
Board of Directors and Stockholders of China Green, Inc.
 
 We have
audited the accompanying consolidated balance sheets of China Green, Inc. (the
“Company”) and its subsidiaries as of June 30, 2009 and 2008, and the related
consolidated statements of income, stockholders' equity and cash flows for the
year ended June 30, 2009 and 2008.  These financial statements are the
responsibility of the Company's management.  Our responsibility is to
express an opinion on these consolidated financial statements based on our
audit.
 
 We
conducted our audit in accordance with auditing standards generally accepted in
the Public Company Accounting Oversight Board in the United States of
America.  Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. The Company is not required to have, nor
were we engaged to perform, an audit of its internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of Company’s internal control over financial
reporting.  Accordingly, we express no such opinion.  An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of the Company and its subsidiaries as
of June 30, 2009 and 2008 and the results of their operations and their cash
flows for the year ended June 30, 2009 and 2008 in conformity with accounting
principles generally accepted in the United States of America.
 
 /s/  Parker Randall CF
  Parker
Randall CF (H.K.) CPA Limited
 Certified
Public Accountants
 Hong
Kong
 October
13, 2009
 
 
 F-2
 
 CHINA
GREEN, INC.
 CONSOLIDATED
STATEMENTS OF INCOME AND
 OTHER
COMPREHENSIVE INCOME
 FOR
THE YEAR ENDED JUNE 30, 2009 AND 2008
 (Stated
in US dollars)
 
 Year
                
                
                Yearended
                
                
                endedJune
      30,
                
                
                June
      30,2009
                
                
                2008$
                
                
                $Service
      income
                
                11,676,141
                
                
                
                9,282,281Cost
      of services
                
                (5,416,156
                )
                
                
                (3,942,076
                )Gross
      profit
                
                6,259,985
                
                
                
                5,340,205General
      and administrative expenses
                
                (106,087
                )
                
                
                (28,611
                )Income
      before taxation
                
                6,153,898
                
                
                
                5,311,594Income
      tax
                
                (72,056
                )
                
                
                -Net
      income
                
                6,081,842
                
                
                
                5,311,594Other
      comprehensive income
                  -Foreign
      currency translation adjustments
                
                46,766
                
                
                
                698,890Total
      comprehensive income
                
                6,128,608
                
                
                
                6,010,484Net
      income per share – basic and diluted
                
                0.58
                
                
                
                0.51Weighted
      average number of shares outstanding during the year – basic and
      diluted
                
                10,455,000
                
                
                
                10,455,000
 The
annexed notes form an integral part of these financial statements.
 F-3
 
 CHINA
GREEN, INC.
 CONSOLIATED
BALANCE SHEETS
 AS
OF JUNE 30, 2009 AND 2008
 (Stated
in US dollars)
  As
      of
                
                
                As
      ofJune
      30,
                
                
                June
      30,2009
                
                
                2008ASSETS
                $
                
                
                $Current
      assetsCash
      and cash equivalents
                
                849,457
                
                
                
                364,485Accounts
      receivables
                
                5,036,977
                
                
                
                4,275,736Deposit
      paid for labour services
                
                2,028,713
                
                
                
                77,837Deposit
      for contract procurements
                
                1,413,879
                
                
                
                -Deposit
      paid for hotel investmentnegotiation
                
                1,025,677
                
                
                
                291,588Total
      current assets
                
                10,354,703
                
                
                
                5,009,646Plant
      and equipment, net
                
                1,083,011
                
                
                
                1,593,601TOTAL
      ASSETS
                
                11,437,714
                
                
                
                6,603,247LIABILITIES
      AND STOCKHOLDER’S EQUITYCurrent
      liabilitiesAmount
      due to a director
                
                64,499
                
                
                
                -Amount
      due to a shareholder
                
                23,899
                
                
                
                -Accrued
      expenses
                
                10,411
                
                
                
                -Tax
      payable
                
                72,303
                
                
                
                -TOTAL
      LIABILITIES
                
                171,112
                
                
                
                -STOCKHOLDERS’
      EQUITYPreferred
      stock ($0.00001 par value,  100,000,000 share
                
                -
                
                
                
                -shares
      authorized, none issued and outstanding)Common
      Stock ($0.00001 par value,  500,000,000 shares;
                
                105
                
                
                
                105shares
      authorized, 10,455,500 shares issued and outstanding)Accumulated other comprehensive income
                
                836,560
                
                
                
                789,794Retained
      earnings
                
                10,429,937
                
                
                
                5,813,34811,266,602
                
                
                
                6,603,247TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY11,437,714
                
                
                
                6,603,247
 
 The
annexed notes form an integral part of these financial statements.
 
 F-4
 
 CHINA
GREEN, INC.
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 FOR
THE YEAR ENDED JUNE 30, 2009 AND 2008
 (Stated
in US dollars)
 
 Year
              
              
              Yearended
              
              
              endedJune
      30,
              
              
              June
      30,2009
              
              
              2008Cash
      flows from operating activities
              
              $
              
              
              $Net
      income before taxation
              
              
              6,153,898
              
              
              
              5,311,594Depreciation
              
              
              527,909
              
              
              
              497,585Increase
      in accounts receivables
              
              
              (737,263
              )
              
              
              (1,332,143
              )Increase
      in deposit paid for labour service
              
              
              (3,360,155
              )
              
              
              (34,470
              )Increase
      in deposit paid for hotel investment negotiation
              
              
              (730,120
              )
              
              
              (276,434
              )Increase
      in accrued expenses
              
              
              10,411
              
              
              
              -Increase
      in amount due to a shareholder
              
              
              23,870
              
              
              
              -Increase
      / (decrease) in amount due to a director
              
              
              64,278
              
              
              
              (898,411
              )Net
      cash from operating activities
              
              
              1,952,828
              
              
              
              3,267,721Cash
      flows from investment activitiesInvestment
      in a subsidiary
              
              
              -
              
              
              
              (100
              )Purchase
      of plant and equipment
              
              
              (11,098
              )
              
              
              (90,145
              )Net
      cash used in investment activities
              
              
              (11,098
              )
              
              
              (90,245
              )Cash
      flows from financing activitiesProceeds
      from issuance of common stock
              
              
              -
              
              
              
              105Repayment
      of short-term loan
              
              
              -
              
              
              
              (218,694
              )Dividend
      paid
              
              
              (1,460,240
              )
              
              
              (2,958,887
              )Net
      cash used in financing activities
              
              
              (1,460,240
              )
              
              
              (3,177,476
              )
  Net
      increase in cash and cash equivalents
              
              
              481,490
              
              
              
              -Effect
      of foreign currency translation on cash andcash
      equivalents
              
              
              3,482
              
              
              
              36,056Cash
      and cash equivalents - beginning of year
              
              
              364,485
              
              
              
              328,429Cash
      and cash equivalents - end of year
              
              
              849,457
              
              
              
              364,485
 
 
 The
annexed notes form an integral part of these financial statements.
 
 F-5
 
 CHINA
GREEN, INC.
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY
 AS
OF JUNE 30, 2009 AND 2008
 (Stated
in US dollars)
  Year
                
                
                Yearended
                
                
                endedJune
      30,
                
                
                June
      30,2009
                
                
                2008Cash
      flows from operating activities
                
                $
                
                
                
                $Net
      income before taxation
                
                
                6,153,898
                
                
                
                5,311,594Depreciation
                
                
                527,909
                
                
                
                497,585Increase
      in accounts receivables
                
                
                (737,263
                )
                
                
                (1,332,143
                )Increase
      in deposit paid for labour service
                
                
                (3,360,155
                )
                
                
                (34,470
                )Increase
      in deposit paid for hotel investment negotiation
                
                
                (730,120
                )
                
                
                (276,434
                )Increase
      in accrued expenses
                
                
                10,411
                
                
                
                -Increase
      in amount due to a shareholder
                
                
                23,870
                
                
                
                -Increase
      / (decrease) in amount due to a director
                
                
                64,278
                
                
                
                (898,411
                )Net
      cash from operating activities
                
                
                1,952,828
                
                
                
                3,267,721Cash
      flows from investment activitiesInvestment
      in a subsidiary
                
                
                -
                
                
                
                (100
                )Purchase
      of plant and equipment
                
                
                (11,098
                )
                
                
                (90,145
                )Net
      cash used in investment activities
                
                
                (11,098
                )
                
                
                (90,245
                )Cash
      flows from financing activitiesProceeds
      from issuance of common stock
                
                
                -
                
                
                
                105Repayment
      of short-term loan
                
                
                -
                
                
                
                (218,694
                )Dividend
      paid
                
                
                (1,460,240
                )
                
                
                (2,958,887
                )Net
      cash used in financing activities
                
                
                (1,460,240
                )
                
                
                (3,177,476
                )Net
      increase in cash and cash equivalents
                
                
                481,490
                
                
                
                -Effect
      of foreign currency translation on cash andcash
      equivalents
                
                
                3,482
                
                
                
                36,056Cash
      and cash equivalents - beginning of year
                
                
                364,485
                
                
                
                328,429Cash
      and cash equivalents - end of year
                
                
                849,457
                
                
                
                364,485
  The annexed notes form an integral part
of these financial statements.
 
 F-6




CHINA GREEN, INC.
 CONSOLIDATED STATEMENTS OF
STOCKHOLDERS’ EQUITY
 AS OF JUNE 30, 2009 AND
2008
 (Stated in US dollars)
  Common
      Stock
              
              
              Accumulated
      other comprehensive
              
              
              RetainedShares
              
              
              
              Amount($)
              
              
              income($)
              
              
              earnings($)
              
              
              Total($)Balance,
      July 1, 2007
              
              
              100,000
              
              
              
              
              1
              
              
              
              -
              
              
              
              -
              
              
              
              1Share
      issued for takeover a subsidiary
              
              
              10,355,000
              
              
              
              
              104
              
              
              
              -
              
              
              
              -
              
              
              
              104Retained
      earnings contributed from a subsidiary
              
              
              -
              
              
              
              
              -
              
              
              
              -
              
              
              
              3,622,843
              
              
              
              3,622,843Net
      income
              
              
              -
              
              
              
              
              -
              
              
              
              -
              
              
              
              5,311,594
              
              
              
              5,311,594Accumulated
      other comprehensive income contributed from a subsidiary
              
              
              -
              
              
              
              
              -
              
              
              
              90,904
              
              
              
              -
              
              
              
              90,904Foreign
      currency translation adjustment
              
              
              -
              
              
              
              
              -
              
              
              
              698,890
              
              
              
              -
              
              
              
              698,89010,455,000
              
              
              
              
              105
              
              
              
              789,794
              
              
              
              8,934,437
              
              
              
              9,724,336Dividend
      paid
              
              
              -
              
              
              
              
              -
              
              
              
              -
              
              
              
              (3,121,089
              )
              
              
              (3,121,089
              )Balance,
      June 30, 2008
              
              
              10,455,000
              
              
              
              
              105
              
              
              
              789,794
              
              
              
              5,813,348
              
              
              
              6,603,247Balance,
      July 1, 2008
              
              
              10,455,000
              
              
              
              
              105
              
              
              
              789,794
              
              
              
              5,813,348
              
              
              
              6,603,247Net
      income
              
              
              -
              
              
              
              
              -
              
              
              
              -
              
              
              
              6,081,842
              
              
              
              6,081,842Foreign
      currency translation adjustment
              
              
              -
              
              
              
              
              -
              
              
              
              46,766
              
              
              
              -
              
              
              
              46,76610,455,000
              
              
              
              
              105
              
              
              
              836,560
              
              
              
              11,895,190
              
              
              
              12,731,855Dividend
      paid
              
              
              -
              
              
              
              
              -
              
              
              
              -
              
              
              
              (1,465,253
              )
              
              
              (1,465,253
              )Balance,
      June 30, 2009
              
              
              10,455,000
              
              
              
              
              105
              
              
              
              836,560
              
              
              
              10,429,937
              
              
              
              11,266,602
  The
annexed notes form an integral part of these financial statements.


F-7
  CHINA
GREEN, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEAR ENDED JUNE 30, 2009 AND 2008
 (Stated
in US dollars)
 
 
 1.
              ORGANIZATION
      AND DESCRIPTION OF BUSINESS
 
 China
Green Group (the “Group”) consists of China Green, Inc. (the “China Green” or
the “Company”), Glorious Pie Limited (the “Glorious Pie”) and Earn Bright
Development Limited (the “Earn Bright”).  China Green, Inc. was
incorporated in the State of Delaware on July 11, 2008. Glorious Pie Limited was
incorporated in the British Virgin Islands on 12 June, 2006, under the
International Business Companies Act, British Virgin Islands.  Earn
Bright Development Limited, a wholly owned subsidiary of Glorious Pie, was
incorporated in Hong Kong on December 17, 2008.
 
 On August
13, 2009, the Company closed a share exchange and stock purchase transaction by
issuing 10,355,000 shares of its common stock in exchange for 100% of the
outstanding common stock of Glorious Pie.  This transaction was
accounted for as a reverse acquisition and resulted in Glorious Pie becoming the
accounting acquirer, whereby the historical financial statements of China Green
have become those of Glorious Pie.
 
 In
conjunction with the merger and recapitalization of Glorious Pie, Glorious Pie’s
100 issued and outstanding common stock were reclassified into common stock of
China Green.
 
 The Group
is engaged in developing its model in the areas of hospitality facilities and
large scale landscape architecture and engineering.  The group is
specialized on providing greenery services to greenery construction projects in
China, including, but not limited to, design advice, trading and quality control
service of seed, provision of seedling and performance arrangement of greenery
engineering and plantation.
  2.
                SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
 a)     Basis
of presentation and consolidation
 
 The
accompanying consolidated financial statements of the Company and its
subsidiaries have been prepared in accordance with generally accepted accounting
principles in the United States of America for consolidated financial
information.
 
 The
consolidated financial statements are prepared on the basis with assumption the
reverse merger was undergone at the beginning of July 1, 2007.  The
historical consolidated financial statements of the Company will be those of
China Green, Inc. and of the consolidated entities from the July 1, 2007, the
date of merger, and subsequent.
 
 The
consolidated financial statements for the Company for the year ended June 30,
2009 and 2008, include the financial statements of China Green, Inc., its 100%
owned subsidiary, Glorious Pie Limited, and its wholly owned subsidiary, Earn
Bright Development Limited.  Intercompany transactions and balances
are eliminated in consolidation.
 
 F-8
 
 CHINA
GREEN, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEAR ENDED JUNE 30, 2009 AND 2008
 (Stated
in US dollars)
  2.
                SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
  (CONTINUED)
 a)     Basis
of presentation and consolidation (continued)
 
 In
connection with the reverse acquisition and recapitalization, all share and per
share amounts will be retroactively restated.
 
 In the
opinion of the management of the Company, all adjustments, which are of a normal
recurring nature, necessary for a fair statement of the results for the year
ended June 30, 2009 and 2008 have been made.  Results for the year
ended June 30, 2009 and 2008 presented are not necessarily indicative of the
results that might be expected for the entire fiscal year.  These
financial statements should be read in conjunction with the consolidated
financial statements and the notes included in the 2008 and 2009 annual report
filed with the Securities and Exchange Commission.
 
 As of
June 30, 2009, the particulars of the subsidiaries are as follows:
 
 Name
      of company
              Place
      of incorporation
              Date
      of incorporation
              Attributable
      equity interest
              Issued
      capitalGlorious
      Pie Limited
              British
      Virgin Islands
              June
      12, 2006
              100%
              US$100Earn
      Bright Development Limited
              Hong
      Kong
              December
      17, 2008
              100%
              US$0.128
                (HK$1)
 
 b)     Use
of estimates
 
 In
preparing of the financial statements in conformity with accounting principles
generally accepted in the United States of America, management makes estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the dates of the financial
statements, as well as the reported amounts of revenues and expenses during the
reporting year.  These accounts and estimates include, but are not
limited to, the valuation of accounts receivable, inventories, deferred income
taxes and the estimation on useful lives of plant and
machinery.  Actual results could differ from those
estimates.
   F-9
 
 CHINA
GREEN, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEAR ENDED JUNE 30, 2009 AND 2008
 (Stated
in US dollars)
 
 2.
                    SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
  (CONTINUED)
 c)     Cash
and Cash Equivalents
  The Group
considers all cash and other highly liquid investments with initial maturities
of year or less to be cash equivalents.  As of June 30, 2009 and 2008,
there were cash and cash equivalents of $849,457 and $364,485
respectively.
  d)     Accounts
Receivable
  Accounts
receivable are recorded at the invoiced amount, net of allowances for doubtful
accounts.  The Group recognizes an allowance for doubtful accounts to
ensure accounts receivable are not overstated due to
uncollectibility.  An allowance for doubtful accounts is maintained
for all customers based on a variety of factors, including the length of time
the receivables are past due, significant one-time events and historical
experience.  An additional reserve for individual accounts is recorded
when the Group becomes aware of a customer’s inability to meet its financial
obligations, such as in the case of bankruptcy filings or deterioration in the
customer’s operating results or financial position.  If circumstances
related to customers change, estimates of the recoverability of receivables
would be further adjusted.
  e)  Accounting
for the Impairment of Long-Lived Assets
 
 The Group
adopted Statement of Financial Accounting Standards No. 144, “Accounting for the
Impairment or Disposal of Long-Live Assets” (“SFAS 144”), which addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets.  The Group yearically evaluates the carrying value of
long-lived assets to be held and used in accordance with SFAS
144.  SFAS 144 requires impairment losses to be recorded on long-lived
assets used in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less than
the assets’ carrying amounts.  In that event, a loss is recognized
based on the amount by which the carrying amount exceeds the fair market value
of the long-lived assets.  Loss on long-lived assets to be disposed of
is determined in a similar manner, except that fair market values are reduced
for the cost of disposal.  Based on its review, the Group believes
that, as of June 30, 2009 and 2008, there were no significant impairments of its
long-lived assets.
 
 f)  Plant
and Equipment
 
 Plant and
equipment, other than construction in progress, are stated at cost less
depreciation and amortization and accumulated impairment loss.
 
 Plant and
equipment are carried at cost less accumulated
depreciation.  Depreciation is provided over their estimated useful
lives, using the straight-line method.  Estimated useful lives of the
plant and equipment are as follows:
 
 Equipment
      and machinery
              5
      yearsFurniture
      & fixtures
              5
      years
 
 
 F-10
 
 CHINA
GREEN, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEAR ENDED JUNE 30, 2009 AND 2008
 (Stated
in US dollars)
  2.
                    SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
  (CONTINUED)
 f)  Plant
and Equipment (continued)
 
 The cost
and related accumulated depreciation of assets sold or otherwise retired are
eliminated from the accounts and any gain or loss is included in the statement
of income.  The cost of maintenance and repairs is charged to income
as incurred, whereas significant renewals and betterments are
capitalized.
 
 Management
considers that we have no residual value for plant and equipment.
 
 g)  Fair
value of Financial Instruments
 
 SFAS No.
107, “Disclosures about Fair Values of Financial Instruments”, requires
disclosing fair value to the extent practicable for financial instruments that
are recognized or unrecognized in the balance sheet.  The fair value
of the financial instruments disclosed herein is not necessarily representative
of the amount that could be realized or settled, nor does the fair value amount
consider the tax consequences of realization or settlement.
 
 The
carrying values of the financial instruments, including cash and cash
equivalents, accounts and other receivables, approximate their fair values due
to the short-term maturity of such instruments.  The carrying amounts
of borrowings approximate their fair values because the applicable interest
rates approximate current market rates.
 
 h)  Foreign
Currency Translation
 
 The Group
maintains its financial statements in the functional currency.  The
functional currency of the Group is the Renminbi (RMB).  Monetary
assets and liabilities denominated in currencies other than the functional
currency are translated into the functional currency at rates of exchange
prevailing at the balance sheet dates.  Transactions denominated in
currencies other than the functional currency are translated into the functional
currency at the exchanges rates prevailing at the dates of the
transaction.  Exchange gains or losses arising from foreign currency
transactions are included in the determination of net income for the respective
years.
 
 For
financial reporting purposes, the financial statements of the Group which are
prepared using the functional currency have been translated into United States
dollars.  Assets and liabilities are translated at the exchange rates
at the balance sheet dates and revenue and expenses are translated at the
average exchange rates and stockholders’ equity is translated at historical
exchange rates.  Any translation adjustments resulting are not
included in determining net income but are included in foreign exchange
adjustment to other comprehensive income, a component of stockholders’
equity.
 
 2009
              
              
              2008Month
      end RMB : US$ exchange rate
              
              
              6.825
              
              
              
              6.859Average
      year RMB : US$ exchange rate
              
              
              6.848
              
              
              
              7.235
 
 
 F-11
 
 CHINA
GREEN, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEAR ENDED JUNE 30, 2009 AND 2008
 (Stated
in US dollars)
  2.
                    SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
  (CONTINUED)
 
 h)  Foreign
Currency Translation (continued)
 
 RMB is
not freely convertible into foreign currency and all foreign exchange
transactions must take place through authorized institutions.  No
representation is made that the RMB amounts could have been, or could be,
converted into US$ at the rates used in translation.
 
 i)  Revenue
Recognition
 
 The Group
revenue is generated from providing services in two aspects as
follows:
 
 i)
                ii)
              Designing
      and consultancy services in hotel facilities; and
                Resource-efficient engineering business in greenery
      projects.
  The
revenue recognized by the Group is based on the Design and Consultancy agreement
between the Group and the hotel where the Group has provided the design,
consultancy to the hotel and even with certain fixtures and assets provided to
that hotel and hence share a certain percentage of gross revenue generated by
the hotel facilities for certain years as the consideration.
 
 Revenue
from fixed-price and modified fixed-price construction contracts are recognized
on the percentage-of-completion method, measured by the percentage of actual
cost incurred to date to estimated total cost for each contract.  The
Group would regularly and frequently reviews the estimated contract cost on each
project being accepted and not yet finished to ensure the contract cost estimate
is measured with the best knowledge of the personnel involved.
 
 j)  Cost
of revenue
 
 Regarding
the design and consultancy services to the hotel facilities, the respective cost
of revenue includes the consultancy expenses in professional staff involved and
the design and consultancy fee with other third-party experts, and also the
depreciation expenses on those fixtures and movable assets being placed with the
hotel by the Group.
 
 Regarding
the trading of seeding and provision of greenery engineering projects, the
respective cost of revenue consists primarily of material costs, labour cost,
subcontracting expenses, and related expenses, which are directly attributable
to the greenery construction projects.
 
 
 
 F-12
 
 CHINA
GREEN, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEAR ENDED JUNE 30, 2009 AND 2008
 (Stated
in US dollars)
 
 2.
                  SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
  (CONTINUED)
 k)  Income
Taxes
 
 Income
taxes are accounted for under the asset and liability
method.  Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit
carry-forwards.  Deferred tax assets are reduced by a valuation
allowance to the extent management concludes it is more likely than not that the
assets will not be realized.  Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled.  The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in the consolidated statements of income and
comprehensive income in the year that includes the enactment date.
 
 The China
Green accounts for income taxes under the liability method in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes"
under this method, deferred income tax assets and liabilities are determined
based on differences between the financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse.
 
 The China
Green adopted the provisions of FASB Interpretation No. 48; “Accounting for Uncertainty in Income
Taxes-An Interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48
contains a two-step approach to recognizing and measuring uncertain tax
positions.  The first step is to evaluate the tax position for
recognition by determining if the weight of available evidence indicates it is
more likely than not, that the position will be sustained on audit, including
resolution of related appeals or litigation processes, if any. The second step
is to measure the tax benefit as the largest amount, which is more than 50%
likely of being realized upon ultimate settlement. The China Green consider many
factors when evaluating and estimating our tax positions and tax benefits, which
may require yearic adjustments.  At June 30, 2009, the China Green did
not record any liabilities for uncertain tax position.
 
 l)  Comprehensive
Income
 
 SFAS No.
130, "Reporting Comprehensive
Income", requires companies to classify items of other comprehensive
income in a financial statement.  Comprehensive income is defined as
the change in equity of a business enterprise during a year from transactions
and other events and circumstances from non-owner sources.  The
Group's comprehensive net income is equal to its net income for all years
presented.  The Group’s current component of other comprehensive
income is the foreign currency translation adjustment.
 
 
 
 F-13
 
 CHINA
GREEN, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEAR ENDED JUNE 30, 2009 AND 2008
 (Stated
in US dollars)
  2.
                    SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
  (CONTINUED)
 m)  Commitments
and contingencies
 
 Liabilities
for loss contingencies arising from claims, assessments, litigation, fines and
penalties and other sources are recorded when it is probable that a liability
has been incurred and the amount of the assessment can be reasonably
estimated.
 
 n)   Segment
reporting
 
 The Group
uses the “management approach” in determining reportable operating
segments.  The management approach considers the internal organization
and reporting used by the Group’s chief operating decision maker for making
operating decisions and assessing performance as the source for determining the
Group’s reportable segments. Management, including the chief operating decision
maker, reviews monthly operating results derived from two types of services and
therefore the Group has determined that the Group has two operating segments as
defined by SFAS 131, “Disclosures about Segments of an Enterprise and Related
Information”.
  o)  Earnings
per share
 
 The Group
reports basic earnings per share in accordance with SFAS 128, “Earnings Per
Share.” Basic earnings (loss) per share is computed by dividing net income
(loss) by weighted average number of shares of common stock outstanding during
the year.  Diluted earnings (loss) per share is computed by dividing
net income (loss) by the weighted average number of shares of common stock,
common stock equivalents and potentially dilutive securities outstanding during
the year.  At June 30, 2009, the Group had no common stock equivalents
that could potentially dilute future earnings per share.
  
 F-14
  CHINA
GREEN, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEAR ENDED JUNE 30, 2009 AND 2008
 (STATED
IN US DOLLARS)
  3.
                CASH
      AND CASH EQUIVALENTS
 Cash and
cash equivalents consist of the following:
 
 As
      of
              
              
              As
      ofJune
      30,
              
              
              June
      30,2009
              
              
              2008$
              
              
              $Cash
      at bank
              
              
              458,729
              
              
              
              -Cash
      on hand
              
              
              390,728
              
              
              
              364,485849,457
              
              
              
              364,485
  4.
                ACCOUNTS
      RECEIVABLES
 
 Accounts
receivables consist of the following:
 
 As
      of
              
              
              As
      ofJune
      30,
              
              
              June
      30,2009
              
              
              2008$
              
              
              $Accounts
      receivables related to:Hotel
      facilities
              
              
              522,113
              
              
              
              210,566Greenery
      construction projects
              
              
              3,909,385
              
              
              
              3,013,869Greenery
      maintenance projects
              
              
              605,479
              
              
              
              1,051,3015,036,977
              
              
              
              4,275,736
  At
      the balance sheet date, most of the accounts receivables were related to
      greenery construction projects and their credit year is usually ranged
      from 90 days to 180 days.
  5.
                DEPOSIT
      PAID FOR CONTRACT PROCUREMENTS
 Main
contractors require the company to put escort money during negotiation of
contract.  Once the contract is successfully bade, the escort money
will be kept by the contractors until the contract has been completed. If the
bid is fail, the escort money will be refunded immediately.
 
 
 F-15
 
 CHINA
GREEN, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEAR ENDED JUNE 30, 2009 AND 2008
 (STATED
IN US DOLLARS)
 
 6.
                DEPOSIT
      PAID FOR HOTEL INVESTMENT
NEGOTIATION
 The Group
has placed the following amount of deposit being held in escrow by the
counter-party for the negotiation for acquiring certain equity interest of the
hotel facilities located hereunder as at June 30, 2009 and 2008 which gives
comfort to the negotiating party that the Group shows its financial strength and
capability to get the acquisition closed if the acquisition deal is
reached:
  As of
              
              
              As ofJune 30,
              
              
              June 30,Deposit
      for hotel investment negotiation
              
              2009
              
              
              2008$
              
              
              $Location:(1)    
      Dongguan City, Changan Town,Xin
      Min Administration Region,
              
              
              293,051
              
              
              
              291,588Jianan
      Road Section(2)    
      Chang An Di Ying HotelDongguan
      City, Changan Town,Zhenan
      Road and Xiabian Road Section
              
              
              293,051
              
              
              
              -(3)    
      Jin Ye HotelGuangzhou
      City, Huan Shi Dong Road,Section
      No. 422
              
              
              439,575
              
              
              
              -1,025,677
              
              
              
              291,588
 F-16
 
 CHINA
GREEN, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEAR ENDED JUNE 30, 2009 AND 2008
 (Stated
in US dollars)
 
 7.
                PLANT
      AND EQUIPMENT, NET
 Plant and
equipment and being part of hotel facilities and consist of the
following:
  As
      of
                
                
                As
      ofJune
      30,
                
                
                June
      30,2009
                
                
                2008At
      cost
                
                $
                
                
                $Balance
      at beginning of year
                
                
                2,624,306
                
                
                
                2,279,023Acquisition
      during the year
                
                
                11,136
                
                
                
                90,145Exchange
      difference
                
                
                13,167
                
                
                
                255,138Balance
      at end of year
                
                
                2,648,609
                
                
                
                2,624,306Less:
      Accumulated depreciationBalance
      at beginning of year
                
                
                1,030,705
                
                
                
                455,805Charge
      for the year
                
                
                527,909
                
                
                
                497,585Exchange
      difference
                
                
                6,984
                
                
                
                77,315Balance
      at end of year
                
                
                1,565,598
                
                
                
                1,030,705Net
      book valueAs
      at June 30, 2009 and 2008
                
                
                1,083,011
                
                
                
                1,593,601
  Management
considers that there are no residual value for plant and
equipment.
 8.
                AMOUNT
      DUE TO A DIRECTOR / SHAREHOLDER
 The amounts represent unsecured,
interest free and have no fixed repayment terms.
 
 
 F-17
 
 CHINA
GREEN, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEAR ENDED JUNE 30, 2009 AND 2008
 (Stated
in US dollars)
 
 9.
                STOCKHOLDERS’
      EQUITY
 On the
date of inception, the China Green, Inc. issued its President and Director
100,000 shares of common stock at par value USD0.00001 as the founder shares as
compensation for the services that he rendered in connection with the Company’s
incorporation.
 
 On the
date of merger, China Green, Inc. acquired all of the issued and outstanding
common stock of Glorious Pie Limited by issuing 10,355,000 common shares at par
value USD0.00001 to the Glorious Pie Limited shareholder under a Share Exchange
and Stock Purchase Agreement with Glorious Pie Limited.
 
 Stockholders’
equity is as follows:
 Common
      StockShares
              Amount($)Total($)As
      of date of Inception
              
              
              100,000
              
              
              
              1
              
              
              
              1Share
      issued for takeover a subsidiary
              
              
              10,355,000
              
              
              
              104
              
              
              
              104As
      of June 30, 2009 and 2008
              
              
              10,455,000
              
              
              
              105
              
              
              
              105
 
 As of
June 30, 2009, the Company has 500,000,000 shares of common stock authorized and
10,455,000 shares of common stock issued and outstanding.
 
 
 
 F-18
 
 CHINA
GREEN, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEAR ENDED JUNE 30, 2009 AND 2008
 (Stated
in US dollars)
 
 10.
                BUSINESS
      SEGMENT
 The Group
is engaged in provision of designing and consultancy services in hotel
facilities and also involved in provision of engineering services to greenery
construction projects, which include, but is not limited to, provision of
seedling and skillful workers to those construction projects.
 
 Segment
information is disclosed in accordance to FAS 131, “Disclosures about Segments
of an Enterprise and Related Information” as below:
 
 
 Greenery
              
              GreeneryConstruction Project
              
              Maintenance Works
              
              Hotel Facilities
              
              TotalYear
      ended
              
              Year
      ended
              
              Year
      ended
              
              Year
      endedJun
      30,
              
              Jun
      30,
              
              Jun
      30,
              
              Jun
      30,2009
              2008
              
              2009
              2008
              
              2009
              2008
              
              2009
              2008$
              $
              
              $
              $
              
              $
              $
              
              $
              $Revenue
      fromexternal
      customers
              
              6,355,401
              4,420,439
              
              2,413,630
              2,029,751
              
              2,907,110
              2,832,091
              
              11,676,141
              9,282,281Gross
      profit
              
              2,554,433
              1,561,541
              
              1,384,761
              1,
      444,158
              
              2,320,791
              2,334,506
              
              6,259,985
              5,340,205As
      of
              
              As
      of
              
              As
      of
              
              As
      ofJun
      30,
              
              Jun
      30,
              
              Jun
      30,
              
              Jun
      30,2009
              2008
              
              2009
              2008
              
              2009
              2008
              
              2009
              2008$
              $
              
              $
              $
              
              $
              $
              
              $
              $Segment
      non-current
      assets
              
              -
              -
              
              -
              -
              
              1,083,011
              1,593,601
              
              1,083,011
              1,593,601Segment
      current assets(excluding
      cash andcash
      equivalents)
              
              6,825,404
              2,800,114
              
              1,132,052
              1,051,305
              
              1,547,790
              793,742
              
              9,505,246
              4,645,161
 
 
 F-19
 
 CHINA
GREEN, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEAR ENDED JUNE 30, 2009 AND 2008
 (Stated
in US dollars)
 
 11.
                COST
      OF SERVICES
 Details
of cost of services are summarized as follows:
 
 Year
              
              
              Yearended
              
              
              endedJune
      30,
              
              
              June
      30,2009
              
              
              2008$
              
              
              $Depreciation
              
              
              527,909
              
              
              
              497,585Repair
      and maintenance
              
              
              58,410
              
              
              
              -Sub-contracting
      charges
              
              
              1,640,308
              
              
              
              1,046,151Material
      cost
              
              
              2,769,008
              
              
              
              2,132,713Professionals
      and related costs
              
              
              39,208
              
              
              
              -Other
      construction costs
              
              
              381,313
              
              
              
              265,6275,416,156
              
              
              
              3,942,076
 
 12.
                GENERAL
      AND ADMINISTRATIVE EXPENSES
 Details of general and administrative
expenses are summarized as follows:
 
 Year
              
              
              Yearended
              
              
              endedJune
      30,
              
              
              June
      30,2009
              
              
              2008$
              
              
              $Audit
      fee
              
              
              16,500
              
              
              
              -Computer
      expenses
              
              
              3,780
              
              
              
              3,456Electricity
      and water
              
              
              1,506
              
              
              
              -Filing
      fee
              
              
              2,605
              
              
              
              968Legal
      and professional fee
              
              
              48,426
              
              
              
              -Preliminary
      expenses
              
              
              -
              
              
              
              2,764Sundry
      expenses
              
              
              6,967
              
              
              
              -Travelling
              
              
              5,672
              
              
              
              2,764Telephone
              
              
              3,108
              
              
              
              2,073Wages
      and salaries
              
              
              17,523
              
              
              
              16,586106,087
              
              
              
              28,611
 
 
 F-20
 
 CHINA
GREEN, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEAR ENDED JUNE 30, 2009 AND 2008
 (Stated
in US dollars)
 
 13.
                INCOME
      TAXES
 The
enterprise income tax is reported on a separate entity basis.
 
 United States
Tax
  SFAS 109
requires the recognition of deferred tax assets and liabilities for both the
expected impact of differences between the financial statements and the tax
basis of assets and liabilities, and for the expected future tax benefit to be
derived from tax losses and tax credit carry forwards.  SFAS 109
additionally requires the establishment of a valuation allowance to reflect the
likelihood of realization of deferred tax assets.
   The China
Green has a net operating loss carry forward at June 30, 2009 for tax purposes
totaling $24,281, expiring through the year 2028. Internal Revenue Code Section
382 places a limitation on the amount of taxable income that can be offset by
carry forwards after a change in control (generally greater than a 50% change in
ownership).  Temporary differences, which give rise to a net deferred
tax asset, are as follows:
  As
      of
              
              
              As
      ofJune
      30,
              
              
              June
      30,2009
              
              
              2008$
              
              
              $Gross
      deferred tax assets:Net
      operating loss carry forwards
              
              
              8,255
              
              
              
              -Total
      deferred tax assets
              
              
              8,255
              
              
              
              -Less:
      valuation allowance
              
              
              (8,255
              )
              
              
              -Net
      deferred tax asset recorded
              
              
              -
              
              
              
              -
  The
valuation allowance at June 30, 2008 was $Nil. The net change in valuation
allowance during the year ended June 30, 2009, was an increase of
$8,255.  In assessing the realizability of deferred tax assets,
management considers whether it is more likely than not that some portion or all
of the deferred income tax assets will not be realized.  The ultimate
realization of deferred income tax assets is dependent upon the generation of
future taxable income during the years in which those temporary differences
become deductible.  Management considers the scheduled reversal of
deferred income tax liabilities, projected future taxable income, and tax
planning strategies in making this assessment.  Based on consideration
of these items, management has determined that enough uncertainty exists
relative to the realization of the deferred income tax asset balances to warrant
the application of a full valuation allowance as of June 30, 2009.
   The
actual tax benefit differs from the expected tax benefit for the year ended June
30, 2009 (computed by applying the U.S. Federal Corporate tax rate of 34% to
income before taxes) as follows:
  
 F-21
 
 CHINA
GREEN, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEAR ENDED JUNE 30, 2009 AND 2008
 (Stated
in US dollars)
 
 13.
                INCOME
      TAXES (CONTINUED)
 Year
              
              
              Yearended
              
              
              endedJune
      30,
              
              
              June
      30,2009
              
              
              2008$
              
              
              $Expected
      tax expense (benefit) – Federal
              
              
              (8,255
              )
              
              
              -Change
      in valuation allowance
              
              
              8,255
              
              
              
              -Actual
      tax expense (benefit)
              
              
              -
              
              
              
              -
 
 BVI Tax
  Glorious
Pie Limited is subjected to British Virgin Island (BVI) tax law. The Management
of Glorious Pie Limited determined that the company did not operate in BVI and
therefore is not subject to BVI tax. Therefore, Glorious Pie Limited did not
incur any BVI tax during the years presented.
  Hong Kong
Tax
  Earn
Bright Development Limited has not been carrying out any business activity in
Hong Kong and Earn Bright Development Limited is not subjected to Hong Kong
profit tax as there is no assessable profit for the year ended June 30,
2009.
  PRC Tax
  PRC’s
legislative body, the National People’s Congress, adopted the unified Enterprise
Income Tax (“EIT”) Law on March 16, 2007. This new tax law replaces the existing
separate income tax laws for domestic enterprises and foreign-invested
enterprises and became effective on January 1, 2008. Under the new tax law, a
unified income tax rate is set at 25% for both domestic enterprises and
foreign-invested enterprises. However, there will be a transition year for
enterprises, whether foreign-invested or domestic, that are currently receiving
preferential tax treatments granted by relevant tax authorities. Enterprises
that are subject to an enterprise income tax rate lower than 25% may continue to
enjoy the lower rate and will transit into the new rate over a five year
beginning on the effective date of the EIT Law. Enterprises that are currently
entitled to exemptions for a fixed term may continue to enjoy such treatment
until the exemption term expires. Preferential tax treatments may continue to be
granted to industries and projects that qualify for such preferential treatments
under the new law.
  The Earn
Bright Development Limited is subjected to PRC tax law. The Management of Earn
Bright Limited considered that the Company did operate in PRC and is subject to
PRC tax since 2 January 2009. As all the business are operated through Earn
Bright Development Limited, under the Mainland and Hong Kong Closer Economic
Partnership Arrangement (CEPA), the Company is entitled to 5% of business tax
and 7% of profit tax.
   F-22
  CHINA
GREEN, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEAR ENDED JUNE 30, 2009 AND 2008
 (Stated
in US dollars)
 
 13.
                INCOME
      TAXES (CONTINUED)
 Income
tax at applicable tax rates of 5% of business tax and 7% of profit
tax:
 
 Year
              
              
              Yearended
              
              
              endedJune
      30,
              
              
              June
      30,2009
              
              
              2008$
              
              
              $Turnover
      from January 2, 2009 to June 30, 2009
              
              
              6,122,205
              
              
              
              -Deductable
      greenery consultancy turnover
              
              
              (4,830,984
              )
              
              
              -Deductable
      hotel consultancy turnover
              
              
              (516,488
              )
              
              
              -Chargeable
      turnover under business tax
              
              
              774,733
              
              
              
              -Income
      before tax from January 2, 2009 to June 30, 2009
              
              
              3,044,143
              
              
              
              -Deductible
      greenery consultancy income
              
              
              (2,092,570
              )
              
              
              -Deductable
      hotel consultancy income
              
              
              (516,489
              )
              
              
              -General
      and administrative expense
              
              
              40,902
              
              
              
              -Chargeable
      profit under profit tax
              
              
              475,986
              
              
              
              -Tax
      for the period from January 2, 2009 to June 30, 2009 at the statutory tax
      rate of applicable in jurisdictions:-Business
      tax at 5% of turnover
              
              
              38,737
              
              
              
              --Profit
      tax at 7% of profit
              
              
              33,319
              
              
              
              -Income
      tax
              
              
              72,056
              
              
              
              -
  
 
 
 F-23
 
 CHINA
GREEN, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEAR ENDED JUNE 30, 2009 AND 2008
 (Stated
in US dollars)
 
 13.
                  INCOME
      TAXES (CONTINUED)
 Tax
payable in the balance sheet represents:
 As
      of
              
              
              As
      ofJune
      30,
              
              
              June
      30,2009
              
              
              2008$
              
              
              $Tax
      for the period from January 1, 2009 to June 30, 2009 at the statutory tax
      rate of applicable injurisdictions:-Business
      tax at 5% of turnover
              
              
              38,737
              
              
              
              --Profit
      tax at 7% of profit
              
              
              33,319
              
              
              
              -72,056
              
              
              
              -Balance
      brought forward
              
              
              -
              
              
              
              -Foreign
      exchange translation
              
              
              247
              
              
              
              -Tax
      payable
              
              
              72,303
              
              
              
              -
 
 
 The
deferred tax asset and liability has not been recognized because no valuation
allowance to be established for the year ended June 30, 2009.
 14.
                COMMITMENTS
      AND CONTINGENCIES
 There is
no foreseeable commitments or contingencies for the year ended June 30,
2009.
 
 F-24
 
 CHINA
GREEN, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEAR ENDED JUNE 30, 2009 AND 2008
 (Stated
in US dollars)
 
 15.
                SIGNIFICANT
      CONCENTRATIONS
 Customers and credit
concentrations
  The
Group’s revenue derived from major customers for the year ended June 30, 2009
and 2008 are as follows:
  2009
              
              
              
              2008Note
              $
              
              %
              
              $
              
              %Dongguan
      Carnival City Hotel
              
              15a
              2,907,038
              
              25
              
              2,832,091
              
              30Note
      15a:The
      Group has a Design and Consultancy Agreement with the above hotel in June
      19, 2006 with a tenure of seven years, with sharing of 35% of its gross
      revenue which attributes to all the segmental revenue derived from its
      Hotel design and Consultancy Agreement. The Group is now negotiating with
      other hotels for potential business opportunities to further diversify
      this risk of overconcentration in one hotel.Dongguan
      City Xin Yue An Garden Greenery Co. Limited
              
              15b
              1,336,778
              
              11
              
              1,265,937
              
              14Dongguan
      City Bi Man Yuan Garden Greenery Engineering Co. Limited
              
              15b
              393,740
              
              3
              
              1,141,242
              
              12Dongguan
      City Lu Yi Garden Greenery Engineering Co. Limited
              
              15b
              222,275
              
              2
              
              834,377
              
              9Changan
      Town Construction Engineering Limited
              
              
              -
              
              -
              
              645,860
              
              7Dongguan
      City Jia Ye Garden Greenery Engineering Limited
              
              15b
              183,668
              
              2
              
              624,109
              
              7Dongguan
      City Urban District Garden Greenery Engineering Limited
              
              
              -
              
              -
              
              571,285
              
              6Dongguan
      City Garden Greenery Engineering Limited
              
              15b
              1,076,926
              
              9
              
              1,367,380
              
              15Henam
      District Huanghe River Garden Greenery Engineering Co. Ltd
              
              15b
              1,931,576
              
              17
              
              -
              
              -Mu
      Dan Jiang City Civil Engineering Contruction Co. Limited
              
              15b
              3,624,140
              
              31
              
              -
              
              -
 
 
 F-25
 
 CHINA
GREEN, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEAR ENDED JUNE 30, 2009 AND 2008
 (Stated
in US dollars)
 
 15.
                SIGNIFICANT
      CONCENTRATIONS (CONTINUED)
 Note
      15b:The
      whole list of top customers on greenery construction projects and seed
      trading has provided the Group with 9 contracts with an aggregate Contract
      Revenue of RMB60,051,992 (US$8,769,103) for year ended June 30, 2009. The
      Group has considered there is no single customer being dominant in the
      provision for such revenue to the Group and the Group would continue to
      diversify its greenery projects source from any other sources to mitigate
      any possible overconcentration risk in certain
  customers.11,676,141
              
              100
              
              9,282,281
              
              100
 
 16.
                RECENTLY
      ISSUED ACCOUNTING PRONOUNCEMENTS
 In June
2009, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 168, The FASB Accounting Standards
CodificationTM and the Hierarchy of Generally Accepted Accounting Principles – a
Replacement of FASB Statement No. 162. The Codification will become the source
of authoritative U.S. generally accounting principles (GAAP) recognized by the
FASB to be applied to nongovernmental entities.  Rules and
interpretive releases of the Securities and Exchange Commission (SEC) under
authority of federal securities laws are also sources of authoritative GAAP for
SEC registrants.  On the effective date of this Statement, the
Codification will supersede all then-existing non-SEC accounting and reporting
standards.  All other non-grandfathered non-SEC accounting literature
not included in the Codification will become nonauthoritative.  This
statement is effective for financial statements issued for interim and annual
years ending after June 15, 2009 (our year ended June 30, 2009).  We
are currently unable to determine what impact the future application of this
pronouncement may have on our financial statements.
 
 In June,
2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No.
46(R).  This statement is a revision to FASB Interpretation No. 46(R),
Consolidation of Variable Interest Entities, and changes how a company
determines when an entity that is insufficiently capitalized or is not
controlled through voting (or similar rights) should be
consolidated.  The determination of whether a company is required to
consolidate an entity is based on, among other things, an entity’s purpose and
design and a company’s ability to direct the activities of the entity that most
significantly impact the entity’s economic performance.  The statement
is effective at the start of a company’s first fiscal year beginning after
November 15, 2009 (our fiscal year beginning July 1, 2010), or January 1, 2010
for companies reporting on a calendar year basis.  We currently are
unable to determine what impact the future application of this pronouncement may
have on our financial statements.
 
 
 F-26
 
 
 CHINA
GREEN, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEAR ENDED JUNE 30, 2009 AND 2008
 (Stated
in US dollars)
 
 16.
                RECENTLY
      ISSUED ACCOUNTING PRONOUNCEMENTS
(CONTINUED)
 In June,
2009, the FASB issued SFAS No. 166, Accounting for Transfers of
Financial Assets – an Amendment of FASB Statement No.
140.  This statement is a revision to Statement No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities, and
will require more information about transfers of financial assets, including
securitization transactions, and where companies have continuing exposure to the
risks related to transferred financial assets.  It eliminates the
concept of a “qualifying special-purpose entity,” changes the requirements for
derecognizing financial assets, and requires additional
disclosures.  The statement is effective at the start of a company’s
first fiscal year beginning after November 15, 2009 (our fiscal year beginning
July 1, 2010), or January 1, 2010 for companies reporting on a calendar year
basis.  We currently are unable to determine what impact the future
application of this pronouncement may have on our financial
statements.
 
 In May
2009, the FASB issued SFAS No. 165, “Subsequent Events.”  This
Statement sets forth: 1) the year after the balance sheet date during which
management of a reporting entity should evaluate events or transactions that may
occur for potential recognition or disclosure in the financial statements; 2)
the circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements; and 3) the
disclosures that an entity should make about events or transactions that
occurred after the balance sheet date.  This Statement is effective
for interim and annual years ending after June 15, 2009.  The Group
adopted this Statement in the year ended June 30, 2009. This Statement did not
impact the consolidated financial results.
 
 In May
2008, the FASB issued SFAS No 163, “Accounting for Financial Guarantee Insurance
Contracts” (“SFAS 163”), SFAS 163 is intended to correct the inconsistencies in
the recognition and measurement of claim liabilities by insurance
enterprises.  This SFAS 163 statement requires that an insurance
enterprise recognize a claim liability prior to an event of default when there
is evidence that credit deterioration has occurred in an insured financial
obligation.  This will result in increasing comparability in financial
reporting of financial guarantee insurance contracts by insurance
enterprises.  The provisions of SFAS 163 are effective for fiscal
years beginning after December 15, 2008. The Group does not expect that the
adoption will have a material impact on the Group’s consolidated financial
position or results of operations.
 
 In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (“SFAS 162”). SFAS 162 identifies the sources of
accounting principles and the framework for selecting the principles used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (the GAAP
hierarchy). SFAS 162 will become effective 60 days following the SEC’s approval
of the Public Group Accounting Oversight Board amendments to AU Section 411,
“The Meaning of Present Fairly in Conformity With Generally Accepted Accounting
Principles.”  We do not currently expect the adoption of SFAS 162 to
have a material effect on our consolidated results of operations and financial
condition.
 
 
 F-27
 
 CHINA
GREEN, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEAR ENDED JUNE 30, 2009 AND 2008
 (Stated
in US dollars)
 
 16.
                    RECENTLY
      ISSUED ACCOUNTING PRONOUNCEMENTS
(CONTINUED)
 In May
2008, the FASB issued FSP Accounting Principles Board (‘APB”) 14-1 “Accounting
for Convertible Debt instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement)” (“FSP APB 14-1”). FSP APB 14-1 requires the
issuer of certain convertible debt instruments that may be settled in cash (or
other assets) on conversion to separately account for the liability (debt) and
equity (conversion option) components of the instrument in a manner that
reflects the issuer’s non-convertible debt borrowing rate. FSP APB 14-1 is
effective for fiscal years beginning after December 15, 2008 on a retroactive
basis.  As we do not have convertible debt at this time, we currently
believe the adoption of FSP APB 14-1 will have no effect on our consolidated
results of operations and financial condition.
 
 In March
2008, the FASB issued SFAS No.161, “Disclosures about Derivative Instruments and
Hedging Activities” (‘SFAS 161”).  SFAS 161 is intended to improve
financial reporting about derivative instruments and hedging activities by
requiring enhanced disclosures to enable investors to better understand their
effects on an entity’s financial position, financial performance, and cash
flows.  The provisions of SFAS 161 are effective for the quarter
ending February 28, 2009.  The Group does not expect that the adoption
will have a material impact on the Group’s consolidated financial position or
results of operations.
 
 In
February 2008, the FASB issued FSP FAS 157-2, “Effective Date of FASB Statement
No. 157.” FSP FAS 157-2 delayed the effective date of SFAS No. 157 “Fair Value
Measurements” from 2008 to 2009 for all nonfinancial assets and nonfinancial
liabilities, except those that are recognized or disclosed at fair value in the
financial statements on a recurring basis (at least annually).  The
adoption of the provisions of SFAS No. 157 related to nonfinancial assets and
nonfinancial liabilities on January 1, 2009 did not have a material impact on
the Consolidated Financial Statements. See Note 3, “Fair Value,” on pages 10 and
11 for SFAS No. 157 disclosures.
 
 In
December 2007, the FASB issued SFAS 160, Noncontrolling Interests in
Consolidated Financial Statements – an amendment of ARB No. 51. SFAS 160
requires that ownership interests in subsidiaries held by parties other than the
parent (previously referred to as minority interests), and the amount of
consolidated net income, be clearly identified, labeled and presented in the
consolidated financial statements.  It also requires once a subsidiary
is deconsolidated, any retained noncontrolling equity investment in the former
subsidiary be initially measured at fair value.  Sufficient
disclosures are required to clearly identify and distinguish between the
interests of the parent and the interests of the noncontrolling owners as
components of equity.  It is effective for fiscal years beginning
after December 15, 2008, and requires retroactive adoption of the presentation
and disclosure requirements for existing minority interests.  All
other requirements are applied prospectively.  The Group is currently
evaluating the impact of SFAS 160 on the Group’s consolidated financial
statements.
 
 
 F-28
 
 
 CHINA
GREEN, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEAR ENDED JUNE 30, 2009 AND 2008
 (Stated
in US dollars)
 
 16.
                    RECENTLY
      ISSUED ACCOUNTING PRONOUNCEMENTS
(CONTINUED)
 In
December 2007, the FASB issued SFAS 141 (revised 2007), Business Combinations,
(“SFAS 141(R)”). SFAS 141(R) retains the fundamental requirements of the
original pronouncement requiring that the purchase method be used for all
business combinations, but also provides revised guidance for recognizing and
measuring identifiable assets and goodwill acquired and liabilities assumed
arising from contingencies, the capitalization of in-process research and
development at fair value, and the expensing of acquisition-related costs as
incurred.  SFAS 141(R) is effective for fiscal years beginning after
December 15, 2008.  The Group will evaluate how the new requirements
could impact the accounting for any acquisitions completed beginning in fiscal
2009 and beyond, and the potential impact on the Group’s consolidated financial
statements.
 
  
 
 
 F-29
 
 ITEM 9.     CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 
 Our accountant is Parker Randall CF (H.K.) CPA Limited, independent
certified public accountants. We do not presently intend to change accountants.
At no time have there been any disagreements with such accountants regarding any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure.
 
 ITEM
9A (T).  CONTROLS AND PROCEDURES
 
 Evaluation of disclosure
controls and procedures
 
 Under the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an
evaluation of our disclosure controls and procedures, as such term is defined
under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities
Exchange Act of 1934, as amended (Exchange Act), as June 30, 2009. Based on this
evaluation, our principal executive officer and principal financial officers
have concluded that our disclosure controls and procedures are effective to
ensure that information required to be disclosed by us in the reports we file or
submit under the Exchange Act is recorded, processed, summarized, and reported
within the time periods specified in the Securities and Exchange Commission’s
rules.
 
 MANAGEMENT’S
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
 
 Management
of the Company is responsible for establishing and maintaining effective
internal control over financial reporting as defined in Rule
13a-15(f) under the Exchange Act over the registrant. The Company’s
internal control over financial reporting is designed to provide reasonable
assurance to the Company’s management and Board of Directors regarding the
preparation and fair presentation of published financial statements in
accordance with United State’s generally accepted accounting
principles (US GAAP), including those policies and procedures that: (i) pertain
to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of the
company, (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with US
GAAP and that receipts and expenditures are being made only in accordance with
authorizations of management and directors of the company, and (iii)
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company’s assets that
could have a material effect on the financial statements.  Management
conducted an evaluation of the effectiveness of internal control over financial
reporting based on the framework in Internal Control— Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Management’s assessment included an evaluation of the design of our
internal control over financial reporting and testing of the operational
effectiveness of our internal control over financial reporting. Based on this
assessment, Management concluded the Company maintained effective internal
control over financial reporting as of June 30, 2009.
 
 Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Therefore, even those
systems determined to be effective can provide only reasonable assurance
with respect to financial statement preparation and
presentation.  This annual report does not include an attestation
report of the Company’s registered public accounting firm regarding internal
control over financial reporting. Management’s report was not subject to
attestation by our registered public accounting firm pursuant to temporary rules
of the Securities and Exchange Commission that permit the Company to
provide only management’s report in this Annual Report.
 
 14
 
 PART
III
 
 ITEM
10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
 
 Set forth
below are the names of our directors, officers and significant employees, their
ages, all positions and offices that they hold with us, the period during which
they have served as such, and their business experience during at least the last
five years. The directors will serve until the next annual meeting of the
stockholders or until their successors are elected or appointed and qualified.
Executive officers will serve at the board's discretion.
 
 Name
              
              Age
              
              PositionTai
      Chi Yip
              
              27
              
              President,
      Chief Executive Officer, Chief   Financial Officer,
      Treasurer, Secretary and
Director
 
 The
following summarizes the occupation and business experience for our officers,
directors, key employees and advisory board:
 
 Tai
Chi Yip, 27, Director, Chief Executive Officer and Chief Financial
Officer
 
 Mr. Tai
is the Chief Executive Officer and founder of Glorious Pie. He is primarily in
charge of day to day corporate strategy, corporate planning and overall
management of Glorious Pie. Mr. Tai has profound experience in the finance
industry including experience in HSBC and Procter & Gamble (P&G) as a
Financial Analyst. He holds a bachelor’s degree in Economics and Finance from
the Hong Kong University of Science and Technology.
 
 Committees
 
 We do not
have a standing audit, nominating or compensation committee or any committee
performing a similar function, although we may form such committees in the near
future.
 
 Audit
Committee and Audit Committee Financial Expert
 
 We do not
currently have an audit committee financial expert, nor do we have an audit
committee. Our Board which is currently composed of only one member handles the
functions that would otherwise be handled by an audit committee. We are in the
process of searching for a qualified independent expert who would be willing to
serve on our board and who would be willing to act as an audit committee
financial expert. Before retaining any such expert, our board would make a
determination as to whether such person is independent.
 
 Independent
Directors
 
 No member
of our Board qualifies as an "independent director" under the listing
requirements of NASDAQ.
 
 As we
increase the membership of our Board of Directors, we may add directors who
qualified as "independent directors," establish Board committees on which such
independent directors may serve and adopt written Board committee charters, as
appropriate, to assist in corporate governance.
 
 Director
Compensation
 
 No cash
compensation was paid to any member of our Board of Directors for services as a
director during the fiscal year ended June 30, 2009 and 2008. We have no
standard arrangement pursuant to which our board of directors is compensated for
their services in their capacity as directors. The Board may award special
remuneration to any director undertaking any special services on behalf of our
company other than those services ordinarily required of a director. All
authorized out-of-pocket expenses incurred by a director on our behalf will be
subject to reimbursement upon our receipt of required supporting document of
such expenses. No director received and/or accrued any compensation for his
services as a director, including committee participation and/or special
assignments.
 
 15
  Family
Relationships
 
 There are
no family relationships among our directors or officers.
 
 Code
of Ethics
 
 On August
13, 2009, our Board adopted a Code of Ethics to which our Chief Executive
Officer, Chief Financial Officer, and any person who may perform similar
functions are subject. Currently, Mr. Tai is our only officer subject to the
Code of Ethics. If we retain additional officers in the future to act as our
principal financial officer, principal accounting officer, controller or persons
serving similar functions, they would become subject to our Code of
Ethics.
 
 The Code
of Ethics does not indicate the consequences of a breach of the code. If there
is a breach, the Board would review the facts and circumstances surrounding the
breach and take action that it deems appropriate, which action may include
dismissal of the employee who breached the code. Currently, since Mr. Tai serves
as a director and since he is a controlling stockholder, he is largely
responsible for evaluating his own conduct under the Code of Ethics and
determining what action to take in the event of his own breach of the Code of
Ethics.
 
 Item
11. Executive Compensation
 
 Summary
Compensation Table
 
 The
following table shows for the periods ended June 30, 2009 and June 30, 2008,
compensation awarded to or paid to, or earned by, our officer and
director.
 
 Name
              
              Year
              
              
              Salary
                ($)
              
              
              Bonus
                ($)
              
              
              Stock
                Awards
                ($)
              
              
              Option
                Awards
                ($)
              
              
              Non-Equity
                Incentive Plan
                Compensation
                ($)
              
              
              Nonqualified
                Deferred
                Compensation
                Earnings
                ($)
              
              
              All Other
                Compensation
                ($)
              
              
              Total
                ($)Tai
      Chi Yip
              
              
              2009
              
              
              
              1
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1Chief
      Executive Officer
              
              
              2008
              
              
              
              1
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1
 
 Outstanding
Equity Awards
 
 Our
officer and director do not have unexercised options, stock that has not vested,
or equity incentive plan awards.
 
 Compensation
of Directors
 
 Our
director does not receive compensation for their services as
directors.
 
 Employment
Contracts, Termination of Employment, Change-in-Control
Arrangements
 
 There is
no employment or other contracts or arrangements with officer or director. There
are no compensation plans or arrangements, including payments to be made by us,
with respect to our officers, directors or consultants that would result from
the resignation, retirement or any other termination of such directors, officers
or consultants from us. There are no arrangements for directors, officers,
employees or consultants that would result from a
change-in-control.
 
 Item
12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
 
 The
following table sets forth certain information regarding our common stock
beneficially owned on October 6, 2009, for (i) each stockholder known to be the
beneficial owner of 5% or more of our outstanding common stock, (ii) each
executive officer and director, and (iii) all executive officers and directors
as a group.
 
 16
  Name
              
              Number
      of Shares Beneficially Owned
              
              
              Percent
      of Shares (1)Tai
      Chi Yip
              
              
              10,355,000
              
              
              
              82.84
              %Wong
      Pak Fai, Phillip
              
              
              625,000
              
              
              
              5
              %Officer
      and Directors as a Group
              
              
              10,355,000
              
              
              
              82.84
              %
 
 (1)
              Based
      upon 12,500,000 shares of common stock issued and outstanding as of
      November 24, 2009
  Item
13. Certain Relationships and Related Transactions, and Director
Independence
 
 Related
Transactions
 
 On August
13, 2009, we entered into a Share Exchange and Stock Purchase Agreement with
Glorious Pie, the Glorious Pie shareholder (the “Glorious Pie Shareholder”) and
the representative of our investors. At the closing of the share exchange and
stock purchase (the “Share Exchange”), and pursuant to the terms of the Share
Exchange and Stock Purchase Agreement, we acquired all of the issued and
outstanding common stock of Glorious Pie from the Glorious Pie Shareholder in
exchange for our issuance of 10,355,000 common shares to the Glorious Pie
Shareholder (the “Exchange Shares”). The Exchange Shares represent approximately
82.84% of our common stock issued and outstanding after the closing of the Share
Exchange. Concurrently with the Share Exchange, we issued 332,000 shares of our
common stock to 296 Investors who purchased our shares in the Regulation S
Offering. The 332,000 common shares constitute 2.66% of our issued and
outstanding common stock at the Closing. As a result of the Share Exchange,
Glorious Pie became our wholly-owned subsidiary.
 
 On August
12, 2009, we issued Mr. Wong, our then President and Director, 254,166 shares of
our common stock, at par value $0.00001 per share, as compensation for services
that he rendered as our then President, Treasurer and Secretary.
 
 Director
Independence
 
 Our Board
has determined that the sole member of our Board does not qualify as an
"independent director" in accordance with the listing requirements of
NASDAQ.
 
 17
  Item 14. Principal Accounting Fees and Services.
 
 Effective
August 25, 2009, we changed our fiscal year end from July 31 to June 30. Berman
& Company, P.A. (“Berman”) was our independent registered public accounting
firm engaged to examine our consolidated financial statements for the fiscal
year ended July 31, 2008. Parker Randall CF (H.K.) CPA
Limited  (“Parker Randall”) was our independent registered public
accounting firm engaged to examine our financial statements for the fiscal years
ended June 30, 2009.
 
 Fees
for the fiscal years ended July 31, 2008 and June 30, 2009
 
 Audit Fees.Berman was
paid fees of approximately $Nil for the fiscal years ended July 31, 2008, for
professional services rendered for the audit of our annual financial statements.
Parker Randall was paid fees of approximately $16,500 for the fiscal years ended
June 30, 2009 for professional services rendered for the audit of our annual
financial statements and review of our quarterly financial
statements.
 
 
 Audit Related Fees.Berman was
not paid additional fees that are not reported under the paragraph captioned
“Audit Fees” above for the fiscal year ended July 31, 2008 for assurance and
related services reasonably related to the performance of the audit or review of
our financial statements. Parker Randall was not paid additional fees that are
not reported under the paragraph captioned “Audit Fees” above for the fiscal
year ended June 30, 2009 for assurance and related services reasonably related
to the performance of the audit and review of our financial
statements.
 
 Tax Fees.The aggregate fees
billed in the fiscal years ended July 31, 2008 and June 30, 2009 for
professional services rendered by the principal accountant for tax compliance,
tax advice and tax planning were approximately $2,764 and $10,000,
respectively.
 
 
 All Other
Fees: We did not incur any other fees related to services rendered
by our principal accountant for the fiscal years ended July 31, 2008 and June
30, 2008.
 
 18
 
 PART
IV
 
 ITEM 15.   EXHIBITS, FINANCIAL STATEMENT
SCHEDULES.
 
 a)
Documents filed as part of this Annual Report
 
 1.
Financial Statements
 
 2.
Financial Statement Schedules
 
 3.
Exhibits
 
 Exhibit No.
              Title
      of Document31.1
              Certification
      of Tai Chi Yip pursuant to 18 U.S.C. Section 1350 as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002.32.1
              Certification
      of Tai Chi Yip pursuant to 18 U.S.C. Section 1350 as adopted pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002.
 
  19
  SIGNATURES
 
 In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
 
 
 
 CHINA
      GREEN, INC.Date:
      November 30, 2009
              By:
              /s/ Tai Chi YipTai
      Chi Yip
                Chief
      Executive Officer
                Chief
      Financial Officer