GLG
LIFE TECH CORPORATION






Suite 519
World Trade Centre




999
Canada Place




Vancouver,
BC V6C 3E1






Telephone:
604 641 1368




Facsimile:
604 844 2830




Website:
www.glglifetech.com








Annual
Information Form






For
The Fiscal Year Ended December 31, 2009








March
31, 2010







Table
of Contents




Preliminary
      Notes
                1Currency
      and Exchange Rate
                1Date
      of Information
                1Forward-Looking
      Statements
                1Industry
      and Market Data
                3GLOSSARY
      OF TERMS
                3Corporate
      Structure And Development of the Business
                5Name
      and Corporate History
                5Company
      Overview
                5Stevia
      Background
                8Our
      Growth Strategy
                11Our
      Business Model
                12Seed
      and Seedling R&D, Seed base Operations
                12Sources,
      Pricing and Availability of Raw Materials
                12Extraction
      and Refining
                14Primary
      Processing Operations
                15Secondary
      Processing and Refining of Stevia
                16Sales
      and Marketing
                17Our
      Strategic Alliance with Cargill
                17Our
      GLG Direct Sales Program
                18Our
      GLG-Weider Program (“Sweet Naturals”)
                18Significant
      Acquisitions
                19Specialized
      Skill and Knowledge
                19New
      Products
                19Intellectual
      Property
                19Seasonal
      or Cyclical Business
                20Economic
      Dependence
                20Financial
      and Operational Effects of Environmental Protection
                20Employees
                20Foreign
      Operations
                20Industry
      Information
                21The
      Sweetener Industry
                21Traditional
      Sweeteners
                22High-Intensity
      Sweeteners
                23Market
      Drivers for stevia
                26Competition
                27Stevia
      Regulatory Environment
                28Risk
      Factors
                29Risks
      Relating to GLG Life Tech Corporation and Our Business
                29Industry
      Related Risks
                36Risks
      Relating to Our Operations in China
                38Dividend
      Policy
                44Description
      of Share Capital
                44Market
      for Securities
                45Prior
      Sales
                45Escrowed
      Securities and Securities Subject to Contractual Restrictions on
      Transfer
                46Directors
      and Officers
                47Cease
      Trade Orders
                50Individual
      Bankruptcies
                50Penalties
      and Sanctions
                50Conflicts
      of Interest
                50Corporate
      Governance
                50Legal
      Proceedings and Regulatory Actions
                53Interests
      of Management and Others in Material Transactions
                54Auditors,
      Registrar and Transfer Agent
                54Interest
      of Experts
                55Material
      Contracts
                55Additional
      Information
                55Appendix
      A
                56







Preliminary
Notes




Currency
and Exchange Rate




Except
where otherwise indicated, all references to currency in this Annual Information
Form are to Canadian dollars.




The
noon rate of exchange on March 30, 2010, as quoted by the Bank of Canada for the
conversion of one China Yuan Renminbi (“RMB”) into Canadian dollars was
Cdn$0.1493 (Cdn$0.1493 equals RMB 1)




The
following tables set forth the high closing and low closing exchange rates for
one RMB expressed in Canadian dollars for the years 2006 to 2009, the average of
such exchange rates during such periods, and the exchange rate at the end of
such periods based upon the noon rate quoted by the Bank of
Canada.  Such rates are set forth as Canadian dollars per one
RMB.




Year
                  
                  High
                  
                  
                  Low
                  
                  
                  Average
                  
                  
                  End of Period2009
                  
                  
                  .1900
                  
                  
                  
                  .1508
                  
                  
                  
                  .1672
                  
                  
                  
                  .15332008
                  
                  
                  .1893
                  
                  
                  
                  .1361
                  
                  
                  
                  .1536
                  
                  
                  
                  .17952007
                  
                  
                  .1530
                  
                  
                  
                  .1232
                  
                  
                  
                  .1412
                  
                  
                  
                  .1353




The
noon rate of exchange on March 30, 2010, as quoted by the Bank of Canada for the
conversion of one United States Dollar (“US$” or “US dollar”) into Canadian
dollars was Cdn$1.0188 (Cdn$1.0188 equals US$1)




The
following tables set forth the high closing and low closing exchange rates for
one US dollar expressed in Canadian dollars for the years 2006 to 2009, the
average of such exchange rates during such periods, and the exchange rate at the
end of such periods based upon the noon rate quoted by the Bank of
Canada.  Such rates are set forth as Canadian dollars per one US
dollar.




Year
                  
                  High
                  
                  
                  Low
                  
                  
                  Average
                  
                  
                  End of Period2009
                  
                  
                  1.2991
                  
                  
                  
                  1.0259
                  
                  
                  
                  1.1419
                  
                  
                  
                  1.05102008
                  
                  
                  1.2969
                  
                  
                  
                  0.9719
                  
                  
                  
                  1.0660
                  
                  
                  
                  1.22462007
                  
                  
                  1.1853
                  
                  
                  
                  0.9170
                  
                  
                  
                  1.0748
                  
                  
                  
                  0.9881




Date of
Information




All
information in this Annual Information Form is as of March 31, 2010, unless
otherwise indicated.




Forward-Looking
Statements




This
Annual Information Form contains forward-looking statements and forward-looking
information within the meaning of applicable securities laws.  Such
forward-looking statements or forward-looking information include, but are not
limited to statements with respect to:




·
            the
      market for stevia and our stevia-based
products;




·
            our
      production capacity and availability of raw
  materials;




·
            our
      customers;




·
            legal
      and regulatory matters;




1




·
            currency
      fluctuations;




·
            trends
      and consumer preferences in connection with dietary and health
      products;




·
            competitors;




·
            requirements
      for additional capital;




·
            potential
      expansion; and




·
            general
      economic conditions.




Often,
but not always, forward-looking statements and forward-looking information can
be identified by the use of words such as “plans”, “expects”, “is expected”,
“budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or
“believes” or the negatives thereof or variations of such words and phrases or
statements that certain actions, events or results “may”, “could”, “would”,
“might” or “will” be taken, occur or be achieved.  With respect to
forward-looking statements and information included in this Annual Information
Form we have made numerous assumptions including, among other things,
assumptions about consumer acceptance of stevia, anticipated costs and
expenditures and our ability to achieve our goals.  While we consider
these assumptions to be reasonable, the assumptions are inherently subject to
significant business, economic, competitive and social uncertainties and
contingencies.  However, there are also known and unknown risk factors
which could cause our actual results, performance, achievements or industry
results to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements and
forward-looking information.  Known factors include, among others, the
following:




·
            operational
      risks;




·
            the
      effects of general economic
conditions;




·
            changing
      foreign exchange rates;




·
            actions
      by government and other regulatory
authorities;




·
            uncertainties
      associated with legal proceedings and
  negotiations;




·
            industry
      supply levels; and




·
            competitive
      pricing pressures.




Although
we have attempted to identify factors that could cause actual actions, events or
results to differ materially from those described in forward-looking statements
and forward-looking information, there may be other factors that cause actions,
events or results not to be as anticipated, estimated or
intended.  Forward-looking statements and forward-looking information
are based upon management’s beliefs, estimates and opinions at the time they are
made and we undertake no obligation to update forward-looking statements and
forward-looking information if these beliefs, estimates and opinions or
circumstances should change, except as required by applicable
law.  There can be no assurance that forward-looking statements and
forward-looking information will prove to be accurate, as actual results and
future events could differ materially from those anticipated in such statements
and information.  Accordingly, readers should not place undue reliance
on forward-looking statements and forward-looking information.




Specific
reference is made to the risks described herein under the heading “Risk Factors” and to the
MD&A incorporated by reference in this Annual Information Form for a
discussion of these and other sources of factors underlying forward-looking
statements.  In light of these factors, the forward-looking events
discussed in this Annual Information Form might not occur.




2




Industry
and Market Data




We have
obtained the industry, market and competitive position data used throughout this
Annual Information Form from industry journals and publications, data on
websites maintained by private and public entities, including independent
industry associations, general publications and other publicly available
information. We believe that all of these sources are reliable, but we have not
independently verified any of this information and cannot guarantee its accuracy
or completeness. In particular, we have based much of our discussion of the
sweetener industry, the market for alternative sweeteners such as stevia and
forecasted growth and demand, on information published by industry
sources.




Industry
publications and surveys generally state that they have obtained information
from sources believed to be reliable, but do not guarantee the accuracy and
completeness of such information. Further, because certain of these
organizations are trade organizations, they may present information in a manner
that is more favorable to the industry than would be presented by an independent
source. In addition, forecasts are particularly likely to be inaccurate,
especially over long periods of time.




References
in this Annual Information Form to research reports or articles should not be
construed as depicting the complete findings of the entire referenced report or
article. The information in each report or article is not incorporated by
reference into this Annual Information Form.




Any logos
or other trademarks mentioned in this Annual Information Form are the property
of their respective owners.




GLOSSARY
OF TERMS




The
following is a glossary of certain terms used in this Annual Information
Form:




“AHTD” means our wholly owned
subsidiary Agricultural High Tech Developments Limited;




“Bengbu” means our wholly
owned subsidiary Anhui Bengbu HN Stevia High Tech Development Company
Limited;




“Canadian GAAP” means Canadian
generally accepted accounting principles;




“Common Shares” means our
common shares;




“Exchange Act” means the United
States Securities Exchange Act of 1934, as amended, and the related rules and
regulations;




“FDA” means the United Stated
Food and Drug Administration;




“GLG”, “we”, “us”, “our” or the “Company” means GLG Life Tech
Corporation and its direct and indirect subsidiaries;




“GRAS”means generally regarded
as safe, an FDA designation that a chemical or substance added to food is
considered safe by experts, and is therefore exempted from the usual Federal
Food, Drug, and Cosmetic Act food additive tolerance requirements;




“HFCS” means high fructose
corn syrup;




“high-grade stevia extract”
means high-grade stevia extract of rebaudioside A 80% purity or
greater;




“high intensity sweeteners”
means sweeteners which provide a sweet taste but contain virtually no calories
and do not have a nutritional role;




“JECFA”means theJoint Expert Committee
on Food Additives;




“MJDS” means the
Multi-Jurisdictional Disclosure System adopted by the United States and
Canada;




“MT or metric ton” means 1,000
kilograms;




3




“NASDAQ” means the NASDAQ
Global Market;




“PFIC” has the meaning set
forth in “Certain Material Income Tax Considerations – Certain United States
Federal Income Tax Considerations”;




“PRC” or “China” means the People’s
Republic of China and for the purposes hereof, excluding the territory of
Taiwan, Macau and Hong Kong;




“RA” means Rebaudioside A, a
glycoside that is extracted from stevia leaves for the purpose of its sweet
taste;




“Reb A”means Rebaudioside A
of 95% purity which has received GRAS status in the United States;




“rebiana” means Rebaudioside A
of 97% purity which has received GRAS status in the United States;




“registered capital” refers to
the total capital contribution that is registered with the relevant government
agency;




“RMB”means the Renminbi, the
lawful currency of China;




“Runde” means our wholly owned
subsidiary Qingdao Runde Biotechnology Co., Ltd.;




“Runhai” means our wholly
owned subsidiary Chuzhou Runhai Stevia High Tech Company Limited;




“Runhao” means our wholly
owned subsidiary Qingdao Runhao Stevia High Tech Company Limited;




“Runyang” means our wholly
owned subsidiary Dongtai Runyang Stevia High Tech Company Limited;




“SAFE”means the PRC State
Administration of Foreign Exchange;




“SEC” means the United States
Securities and Exchange Commission;




“SEDAR”means the System for
Electronic Document Analysis and Retrieval in Canada which can be accessed at
www.sedar.com;




“Strategic Alliance and Supply
Agreement” means the long-term renewable supply agreement with Cargill,
Incorporated dated April 30, 2008, as amended August 8, 2008 and as further
amended on May 4, 2009;




“strategic alliance partner”
means Cargill, Incorporated;




“Sweet Naturals”means our 55%
owned subsidiary GLG Weider Sweet Naturals Corporation;




“STV” means Stevioside, a
glycoside that is extracted from stevia leaves for the purpose of its sweet
taste;




“Tax Act” means the Income Tax Act
(Canada);




“TSX” means the Toronto Stock
Exchange;




“US GAAP” means accounting
principles generally accepted in the United States; and




“US Securities Act” means the
United States Securities Act of 1933, as amended.




4




Corporate
Structure And Development of the Business




Name and
Corporate History




The
Company was incorporated on June 5, 1998 as Cheng Tai Panoramic Mirror Inc.,
under the Company Act
(British Columbia).  On January 25, 1999, the Company amended its
memorandum to increase its authorized capital to 100,000,000 common shares
(“Common Shares”) without par value.  On March 1, 1999, the Company
amended its articles to remove, in advance of the Company’s initial public
offering of Common Shares, restrictions on the issuance of securities and on
share transfers.  On June 18, 1999, the Company changed its name to
Panoramic Mirrors Inc. and amended its memorandum accordingly.




On June
23, 2004, the Company filed a transition application to effect its transition
under the Business
Corporations Act (British Columbia) (the “BCA”) and on July 9, 2004, the
Company filed a notice of alteration to reflect the removal of the pre-existing
company provisions and the adoption of new articles.




On June
16, 2005, the Company’s authorized share structure was altered from 100,000,000
Common Shares to an unlimited number of Common Shares and the Company changed
its name to GLG Life Tech Limited and amended its articles
accordingly.




On March
14, 2007, the Company changed its name to GLG Life Tech Corporation and amended
its notice of articles accordingly, and consolidated its issued share capital on
the basis of three Common Shares of GLG Life Tech Limited for every one Common
Share of GLG Life Tech Corporation.




On
November 5, 2009, the Company consolidated its issued share capital on a
four-to-one (4:1) basis.




Our
registered office is located at 700-625 Howe Street, Vancouver, British
Columbia, Canada V6C 2T6 and our head office is located at Suite 519 World Trade
Centre, 999 Canada Place, Vancouver, British Columbia, Canada V6C
3E1.




Company
Overview




GLG Life
Tech Corporation is a vertically integrated producer of high-grade stevia
extract, an all-natural sweetener extracted from the stevia
plant.  Through our vertically integrated business model, we
specialize in the research and development, growing, refining, and production of
high-grade stevia extract for distribution to the global food and beverage
industry. We have current production capacity of 1,000 metric tons of high-grade
stevia extract of rebaudioside A 80% purity (“high-grade stevia extract” or “RA
80”) or 500 metric tons of stevia extract of rebaudioside A 97% purity
(“rebiana” or “RA 97”).  With corporate headquarters in Vancouver,
British Columbia, and agricultural and processing assets in the People’s
Republic of China, we believe we are one of the world’s leading producers of
stevia.




We sell
our high-grade stevia extract to Cargill, Incorporated (“Cargill”) an
international provider of food, agricultural and risk management products and
services with 158,000 employees in 66 countries.  Cargill further
refines our high-grade stevia extract to rebaudioside A 97% purity for use in
its natural, zero-calorie sweetener brand called TRUVIATM which launched in July
2008.  On December 17, 2008, the United States Food and Drug
Administration (“FDA”) confirmed that it had no objection to generally
recognized as safe (“GRAS”) status for Cargill’s rebiana and for Whole Earth
Sweetener Company’s Reb A, a rebaudioside A 95% product.  Since
December 2008, several of the largest global beverage companies have launched
new products containing stevia.  The Coca Cola Company’s Sprite®,
Odwalla® and VitaminwaterTM brands have all introduced natural, zero-calorie
brand extensions containing Cargill’s TRUVIATM.




Under our
Strategic Alliance and Supply Agreement with Cargill, we will provide at least
80% of Cargill’s global stevia extract requirements for the first five years of
the agreement commencing October 1, 2008, and we will serve as Cargill’s
exclusive Chinese supplier of stevia.  These commitments are subject
to renegotiation at certain times throughout the term of the Strategic Alliance
and Supply Agreement.  To date we have received aggregate purchase
orders from Cargill under the Strategic Alliance and Supply Agreement of US$65.7
million.




5




With
stevia products rebiana and Reb A being the first zero-calorie all-natural
sweeteners approved for use in food and beverages in the United States, stevia
is a fast-growing newcomer in the estimated US$50 billion global sweetener
market.  Given the early stage of new product launches, the level of
interest among major food and beverage companies, and the compelling consumer
proposition, we believe stevia could capture a significant share of the
zero-calorie sweetener market, in which high-intensity artificial sweeteners
currently generate US$5 billion, or the majority of zero-calorie sweetener
sales.  We believe stevia sales will approach US$1.5 billion over the
next three to five years.




Our
business is vertically integrated, from the development of proprietary seeds in
our research and development facilities, to the processing and extraction of our
high-grade stevia.  We believe one of our strongest competitive
advantages lies in our relationships with the local Chinese provincial and
central government agencies, which have allowed us to secure exclusive
agreements in three of China’s largest stevia growing areas, and have
facilitated the construction of our manufacturing and processing
facilities.  Through our long-term agreements, we have a right of
first refusal to purchase what we believe to be an estimated 80% of the current
high-grade leaf supply in China.  Our operations in China include four
processing factories, stevia growing areas across eight provinces and seed base
operations with four research and development centers and over 400
greenhouses.  Our processing facilities have a combined annual
throughput of 41,000 metric tons of stevia leaf which is grown through contracts
with over 200,000 farmers.  Our primary campus locations are in the
cities of Qingdao, Shandong Province (60-acre campus and 70-acre campus),
Mingguang, Anhui Province (60-acre campus), and Dongtai, Jiangsu Province
(80-acre campus).




We are
also exploring setting up operations for stevia growth and production in
Paraguay.  Our global sales and marketing teams are based in North
America, currently the world’s largest market for high intensity
sweeteners.




Our head
office is located at Suite 519 World Trade Centre, 999 Canada Place, Vancouver,
British Columbia, Canada V6C 3E1.  We own our material assets through
eight subsidiaries. Figure 1 below sets out the place of incorporation or
continuance of each of these subsidiaries.




6









Figure 1
– GLG Life Tech Corporation and its subsidiaries.




Agricultural
High Tech Developments Limited (“AHTD”) – AHTD was acquired by us on December
27, 2007.  AHTD is a seed base operation possessing high quality
proprietary technology and patent-pending stevia seeds which are currently used
by Bengbu.




7




Anhui
Bengbu HN Stevia High Tech Development Company Limited (“Bengbu”) – Bengbu was
established in November 2007 as a seed base and for our research and development
operations in China.  The seed base that was acquired from AHTD in
December 2007 is part of the Bengbu subsidiary.  Bengbu is a
wholly-owned foreign enterprise under Chinese law.




Chuzhou
Runhai Stevia High Tech Company Limited (“Runhai”) – Runhai was established in
September 2007 for the purpose of processing stevia leaf grown and harvested in
the Mingguang region of China.  The Runhai facility can process 18,000
metric tons per year of stevia leaf.  Runhai is a wholly-owned foreign
enterprise under Chinese law.




Dongtai
Runyang Stevia High Tech Company Limited (“Runyang”) – Runyang was established
in November 2007 for the purpose of processing stevia leaf grown and harvested
in Dongtai, China.  The Runyang facility can process 18,000 metric
tons per year of stevia leaf.  Runyang is a wholly-owned foreign
enterprise under Chinese law.




GLG
Weider Sweet Naturals Corporation (“GLG-Weider Sweet Naturals”) – GLG-Weider
Sweet Naturals is a joint venture with Weider Global Nutrition II LLC (“WGN”)
relating to the development and distribution of consumer stevia products that
was established in August 2008.  We own 55% of GLG-Weider Sweet
Naturals and WGN owns the remaining 45%.




GLG Life
Tech US, Inc. (“GLG USA”) – GLG USA was established in October 2009 to focus on
direct sales and marketing opportunities for our products.




Qingdao
Runde Biotechnology Company Limited (“Runde”) – Runde was acquired by us on
December 18, 2006.  Its primary business is the processing of stevia
leaf into different grades of stevia extract for sale to customers
worldwide.




Qingdao
Runhao Stevia High Tech Company Limited (“Runhao”) – Runhao was established in
May 2009 for the purpose of processing intermediate stevia extract into rebiana
and other high grade stevia extract products.   The first phase
of its facility construction was completed in December 2009 and delivered 2,000
metric tons of high-grade stevia extract annual capacity or 1,000 MT of RA 97
annual capacity in its first phase of construction.




This new
facility is expected to enhance the Company’s capability to meet growing market
demand for high quality stevia products.




Stevia
Background




The
stevia plant is indigenous to the rain forests of Paraguay and Brazil, and has
been used as a sweetener in its raw, unprocessed form for hundreds of
years.  In recent years, it has been grown commercially in Brazil,
Paraguay, Uruguay, parts of Central America, Thailand, China and the United
States.  The majority of global commercial stevia production occurs in
China where growing conditions are highly favorable and labor costs support what
has historically been a labor-intensive activity.




Stevia
has been used broadly in Japan and with significant market penetration since the
1970s.  Until recently, stevia has been sold in the United States as a
supplement, primarily in the natural food industry.  However, since
the issuance of the FDA’s no objection letter on December 17, 2008, rebiana (RA
97) and Reb A (RA 95) are now permitted for use in food and beverages in the
United States.




Figure 2
shows a picture of the stevia plant, Figure 3 shows stevia growing fields in
China and Figure 4 shows our packaged high-grade stevia extract.




8









Figure 2–
Stevia
Plants                                        Figure
3- Stevia
Fields                                      Figure
4 – Packaged Stevia Extract




The leaf
of the stevia plant contains compounds called glycosides, which taste sweet and
do not contain calories. The glycosides in the stevia leaf are 30 times sweeter
than sugar when in raw form and once refined can reach sweetness levels of
200-300 times that of sugar.  The two major glycosides in stevia are
Stevioside (“STV”) and Rebaudioside A (“RA”).  RA is the sweetest
component of the stevia plant and is extracted from the leaves and then purified
for use in food and beverages.




The RA
content of a stevia leaf varies significantly depending on the stevia
seedling.  The RA content in typical raw stevia leaf in China is
24.2%.  However, we have bred our own seedling that consistently
produces a stevia plant with RA content levels of approximately 60% in the plant
leaf and we currently have one patent application pending in China related to
the production of these stevia strains.  A stevia plant with a high
amount of RA in its leaves is important as RA, the sweetest component of the
stevia leaf, is the specific extract of the plant that has been approved for use
in the United States.  By having a specially bred stevia leaf with
significantly higher RA content we are able to obtain larger volumes of
high-grade stevia extract with lower raw material (leaf) costs. Furthermore, the
higher the RA content of a raw stevia leaf, the less costly are the downstream
processing activities required to increase its purity.  Figure 5
provides a comparison of the RA content of our proprietary leaf to common stevia
leaf found in China and to leaf samples found from different parts of the
world.




9




Comparable LeavesGLG Proprietary Leaf1
              
              
              
              
              
              Paraguay Leaf2Item
              
              % Content
              
              
              
              Item
              
              % ContentRebaudioside
      A (RA) %
              
              5.69
              
              
              
              Rebaudioside
      A (RA) %
              
              1.71Rebaudioside
      C (RC) %
              
              0.82
              
              
              
              Rebaudioside
      C (RC) %
              
              0.58Stevioside
      (STV) %
              
              2.55
              
              
              
              Stevioside
      (STV) %
              
              2.94Dulcoside
      A (DA) %
              
              0.03
              
              
              
              Dulcoside
      A (DA) %
              
              0.21Steviolbioside
      (SX) %
              
              0.11
              
              
              
              Steviolbioside
      (SX) %
              
              0.62Total Steviol Glycosides (TSG) %
              
              9.20
              
              
              
              Total Steviol Glycosides (TSG) %
              
              6.06RA/TSG
      %
              
              61.8
              %
              
              
              RA/TSG
      %
              
              28.2
              %Canadian Leaf2
              
              
              
              
              
              Indian Leaf2Item
              
              % Content
              
              
              
              Item
              
              % ContentRebaudioside
      A (RA) %
              
              3.17
              
              
              
              Rebaudioside
      A (RA) %
              
              1.91Rebaudioside
      C (RC) %
              
              0.66
              
              
              
              Rebaudioside
      C (RC) %
              
              0.56Stevioside
      (STV) %
              
              4.48
              
              
              
              Stevioside
      (STV) %
              
              5.47Dulcoside
      A (DA) %
              
              0.21
              
              
              
              Dulcoside
      A (DA) %
              
              0.16Steviolbioside
      (SX) %
              
              0.36
              
              
              
              Steviolbioside
      (SX) %
              
              0.23Total Steviol Glycosides (TSG) %
              
              8.88
              
              
              
              Total Steviol Glycosides (TSG) %
              
              8.33RA/TSG
      %
              
              35.7
              %
              
              
              RA/TSG
      %
              
              22.9
              %China Common Leaf3Item
              
              % ContentRebaudioside
      A (RA) %
              
              1.55Rebaudioside
      C (RC) %
              
              0.33Stevioside
      (STV) %
              
              3.63Dulcoside
      A (DA) %
              
              0.36Steviolbioside
      (SX) %
              
              0.54Total Steviol Glycosides (TSG) %
              
              6.41RA/TSG
      %
              
              24.2
              %




Figure 5
– Sources:


(1)
            Institute
      of Botany, Jiangsu Province and Chinese Academy of
      Science.  Date of testing: June 26,
  2009.


(2)
            Institute
      of Botany, Jiangsu Province and Chinese Academy of
      Science.  Date of testing: September 18,
  2009.


(3)
            Institute
      of Botany, Jiangsu Province and Chinese Academy of
      Science.  Date of testing: September 10,
  2009.




Stevia
leaf has historically accounted for approximately 70% of our cost of goods
sold.  Producing stevia leaf with a high RA content will allow us to
purchase less stevia leaf which should improve our product margins and enable us
to offer competitive prices for our RA extract.  Our newest leaf
strains are currently being grown in crops planted in our exclusive stevia
growing areas in China.  We have also developed six new seed strains
that have reached in excess of 70% RA in the raw leaf which we expect to be used
in our growing areas in the next 12 – 24 months.




10




We
believe that other technologies at the seed level will also result in cost
efficiencies as the majority of our seedling processing infrastructure used to
propagate high RA content seedlings will no longer be required.  This
technology will allow us to directly distribute seeds, rather than seedlings, to
farmers.  Efficiencies are expected to include the elimination of
maintenance and operations costs for over 400 greenhouses used to grow
seedlings, the labor intensive process of propagating seedlings by hand, and the
transplantation process of seedling to field, a difficult process during which
seedlings can often be damaged.  Distributing seeds directly to
farmers would also reduce the cost and labor requirement to the
farmer.  This seed technology is consistent with our strategy for
protecting our intellectual property in that our seed and seedling strains
cannot be used to grow other plants with high RA yielding stevia leaf (second
generation plants grown from the seeds of our high yielding plants will only
produce common stevia leaf with an average RA yield).




At our
processing facilities in China, we convert raw stevia leaf to high-grade stevia
extract through the following process: (i) stevia leaves are dried, crushed and
extracted with water; (ii) the resin is washed with food grade ethanol to
release the glycosides; (iii) the glycosides are concentrated with an absorption
resin and dried to formulate the primary extract (approximately 60% RA, or RA
60); (iv) the primary extract is dissolved in a water-ethanol solvent mixture
and further processed by filtration, crystallization, and centrifugation steps;
and (v) the resulting preparation of crystals is rinsed with food grade ethanol
and vacuum-dried to yield the final high-grade Rebaudioside A
product.  The high-grade stevia extract and rebiana that we produce
does not contain genetically modified organisms.




Historically,
stevia was not processed to a high extract purity level, and as a result
suffered from aftertaste or bitterness, which some have described as a
licorice-like taste. However, isolating the glycoside RA has decreased this
aftertaste.  The recent GRAS notification applies only to extracted
and refined stevia of at least 95% RA. Our stevia processing capabilities enable
the extraction of highly purified Rebaudioside A at 97% (RA 97). The ingredient
name for this level of purity is rebiana.




Our
Growth Strategy




Our
mission is to become the world’s leading producer of high-grade stevia extract
(RA 80) by developing and securing our own stevia leaf supply, establishing leaf
refining facilities in key locations, and providing a consistent supply of
high-grade stevia extract.




Our key
business objectives include:




·
            jointly
      developing the high-grade stevia supply chain with our strategic alliance
      partner as its leading strategic supplier of high-grade stevia
      extract;




·
            maintaining
      low cost production of high-grade stevia extract through process
      innovation and vertical integration (from seedling development to
      high-grade stevia production);




·
            continuing
      to pursue research and development that will further improve the quality
      and yield of stevia seeds and
seedlings;




·
            developing
      our seed research, development and growth operations to ensure an
      increasing percentage of stevia leaf comes from the highest quality stevia
      seeds and seedlings;




·
            developing
      the capacity needed to meet forecasted customer
  demand;




·
            working
      effectively with provincial and county governments in China to develop key
      stevia growing areas to increase the annual harvest of high quality stevia
      leaf; and




·
            focusing
      on being an environmentally conscious corporate citizen in
      China.




11




Our
Business Model




We have
pursued a strategy of vertical integration to achieve the following
objectives:




·
            develop
      and control the highest quality seeds, seedlings and leaf supply in the
      industry;




·
            achieve
      low cost production (seed and seedling technology and extraction
      processing);




·
            exercise
      a high degree of control over supply chain to enable rapid scaling and
      quality of final product; and




·
            maintain
      ability to innovate across all key components of the supply chain to
      further reduce costs and improve
quality.




Seed and
Seedling R&D, Seed base Operations




Our seed
and seedling research and development efforts are designed for the continuous
improvement of the RA yield and size of our stevia plants (larger plants means
more RA per plant and greater leaf tonnage yield per acre). Additional
activities include commercial plant development and commercial plot testing of
new seed and seedling strains. We have invested heavily in intellectual property
in the area of plant breeding and currently hold one pending patent in China
surrounding the proprietary breeding methodology of stevia plants. In addition,
we have succeeded in the production of seed and seedling strains that cannot be
used to grow other plants with high RA yielding stevia leaf (second generation
plants grown from the seeds of our high yielding plants will only produce common
stevia leaf with an average RA yield).  Each year, farmers must sign
new contracts with us to receive the high quality seedlings for the ensuing
year’s planting season. By doing this, we continually protect the genetics of
our proprietary high quality and high yielding stevia plants and maintain
control and security of our high quality leaf supply.  A key
competitive advantage for us is our ability to secure a high quality leaf
supply, rich in RA.  With RA levels in our proprietary leaf
significantly exceeding that of common market leaf in China, we believe the
protection of this intellectual property is important.




Our seed
base operations are designed for the propagation and growth of proprietary high
RA content seed and seedlings to ensure sufficient seeds and seedlings are
available for planting each year. Through our seed base operation, we will
continue to control the development of breeding programs designed to produce
improved strains of stevia that we believe will result in continually higher RA
yield in our stevia leaf.  These seeds will become the seedlings that
we will use in our exclusive growing areas in Mingguang, Juancheng and Dongtai,
China as well as new stevia growing areas.




Sources,
Pricing and Availability of Raw Materials




We
believe one of our strongest competitive advantages lies in our relationships
with the local Chinese provincial and central government agencies, which have
allowed us to secure exclusive agreements in three of China’s largest stevia
growing areas.  Our manufacturing operations are located in Dongtai,
Jiangsu Province, Mingguang, Anhui Province and Qingdao, Shandong Province. We
have ten-year agreements with the governments in Dongtai and Mingguang and a
non-binding 20-year agreement with the government in
Juancheng.  During the term of these agreements, we will have a right
of first refusal to purchase all stevia grown in these cities and we will be the
only company allowed to process stevia in these cities. These agreements were
secured by our Chairman and Chief Executive Officer, Dr. Luke Zhang, who has
extensive relationships with government officials in various stevia-growing
regions of China. With these long-term agreements in place, we have a right of
first refusal to purchase a significant portion of the existing Chinese stevia
leaf supply which we believe to be estimated at 80% of the current high-grade
leaf supply in China, and should enjoy a sourcing advantage relative to other
stevia processors in China in terms of price and product
availability.




We
purchase our stevia leaf directly from local farmers in China.  In
recent years, the purchase of stevia leaf in China has been a process involving
many buyers in the fields negotiating with thousands of farmers.  This
method to acquire the thousands of metric tons of necessary leaf is costly,
involving a bidding process which resulted in higher prices and, in many cases,
a poorer and lower RA yielding leaf.




12




Our
agreements with the local governments in Dongtai, Mingguang and the Juancheng
have given us exclusive rights to purchase high quality stevia leaf, and build
and operate stevia processing factories in these regions.  We believe
these agreements will play an important role in local government plans to help
local farmers improve their quality of life, while at the same time providing us
with high quality leaf.  Our strategy is to continually improve the
quality of the stevia leaf grown in our exclusive growing areas through the
development of our own high quality seed and seedlings which will only be
offered to farmers working in our exclusive growing areas.




For 2009,
there are an estimated 200,000 farmers involved in growing our proprietary
stevia seeds and seedlings whom we have recruited, trained and organized with
the cooperation of the local government agencies in China.  Our plans
include an increase in stevia growing areas with pre-agreed prices and leaf
quality to be guaranteed to farmers who will grow stevia in place of lower value
crops. This is a mutually beneficial arrangement since farmers can earn
approximately two to three times more growing stevia as compared to crops such
as wheat, corn or cotton.




The
ability to exercise control over all aspects of our raw materials from the
development of the high RA yielding seed, plants, planting, growth and harvest
to final extraction is expected to result in a consistent, reliable quantity of
high quality stevia leaf, at attractive prices.  We also employ a
recognized quality standard in our leaf purchases to ensure that the lowest
content of moisture and foreign material are present in the raw stevia leaf
purchased from farmers.  The 2008 stevia harvest was the first year we
employed these standards during the stevia leaf purchase process. The result was
an improvement of quality of leaf purchased in 2008 and 2009 in terms of
moisture and foreign material relative to the previous year’s leaf
purchase.  We believe it will take approximately two-to-three years to
train the local farmers to adapt to this quality standard throughout our growing
regions.




We are
also continually developing additional growing areas in China and experimenting
with our new strains to evaluate their adaptability in varying
regions.




Mingguang
Region




The
agricultural regions around Mingguang are one of the largest stevia growing
areas in China. Pursuant to an investment agreement with the Mingguang People’s
Government signed in August 2007, we have, for the first ten years of the
agreement, the exclusive right to purchase all stevia grown within the Mingguang
agricultural region as well as the exclusive right to build stevia processing
facilities, subject to our meeting certain obligations related to establishing
our stevia business in Mingguang.  These obligations include: (i)
establishing an operating subsidiary in the city; (ii) over the course of the
ten year agreement making an investment in fixed assets of US$30 million; (iii)
and establishing of stevia processing facilities reaching 40,000 MT capacity. We
have since constructed an 18,000 MT raw stevia leaf processing facility in the
Mingguang region which commenced operations in January 2009, made fixed asset
investments of US$27.7 million and we are on track to meet all of our
obligations under this agreement.




Dongtai
Region




Pursuant
to an investment agreement with the Dongtai People’s Government signed in August
2007, we have, for the first ten years of the agreement, the exclusive right to
purchase all stevia grown within the Dongtai agricultural region as well as the
exclusive right to build stevia processing facilities, subject to our meeting
certain obligations related to establishing our stevia business in
Dongtai.  These obligations include: (i) establishing an operating
subsidiary in the city; (ii) over the course of the ten year agreement making an
investment in fixed assets of US$15 million; and (iii) establishing stevia
processing facilities reaching 20,000 MT capacity. We have since constructed an
18,000 MT raw stevia leaf processing facility in the Dongtai region which
commenced operations in January 2009, made fixed asset investments of US$33
million and we are on track to meet all of our obligations under this
agreement.




13




Juancheng
County




In April
2008, we signed a 20-year agreement with the government of Juancheng County in
the western Shandong Province of China, which gave us exclusive rights to build
and operate a stevia processing factory as well as the exclusive right to
purchase high quality stevia leaf grown in that region, subject to our meeting
certain obligations related to establishing our stevia business in the Juancheng
region.  This agreement provides for us to establish a processing
facility in the region by September 30, 2009 and make a total investment in the
Juancheng region of US$60 million over the course of the 20-year agreement in
order to retain exclusive rights.  As of March 31, 2010 we have not
established a stevia processing facility or made any investment in the
region.  However, we continue to enjoy the benefit of the exclusive
growing area and have received verbal assurances from the government of
Juancheng County that this will not be affected by us not establishing a stevia
processing facility within the timeframe set out in the investment
agreement.









Figure
6  – Our exclusive areas for growth of stevia and construction of
stevia processing facilities are located in the Shandong, Jiangsu and Anhui
Provinces of China.




In
addition to our existing growth and production operations in China, we are also
exploring setting up operations for stevia growth and production in
Paraguay.  On September 28, 2009, we announced the signing of a
non-binding Letter of Intent with the Paraguayan Export and Investment Promotion
Agency to enter negotiations for the development of stevia growth and production
in Paraguay and to create a mutually beneficial business relationship for
economic development in the country related to the growth and production of
stevia.  The Letter of Intent is part of global strategy to
geographically diversify our stevia growth and production operations outside of
China.




Extraction
and Refining




Our
extraction and refining operations consist of two components: primary processing
of stevia leaf into intermediate stevia extract; and secondary processing into
final high-grade stevia extract products. All of our extraction and refining
operations are located in China and we have four wholly owned subsidiaries in
China that undertake the primary and secondary extraction and refining
operations.




14




Primary
Processing Operations




Our
primary processing operations involve the conversion of raw stevia leaf to
intermediate-grade stevia extract (RA 60). This generally follows the following
process: (i) stevia leaves are dried, crushed and extracted with water; (ii) the
resin is washed with food grade ethanol to release the glycosides; and (iii) the
glycosides are concentrated with an absorption resin, and dried to formulate the
primary extract.




Primary
processing operations are the more capital intensive of the two extract
production processes. In order to meet our strategic alliance partner’s
requirements and expected market demand, we have invested $82.7 million over the
period January 1, 2008 through December 31, 2009, to expand our manufacturing
capabilities.  Operations commenced in the first quarter of 2009 at
our two new facilities in Dongtai and Mingguang, which increased our total
potential raw leaf capacity by 720% to 41,000 MT.  The new facilities
each have capacity of 18,000 MT per year, adding to our prior capacity of 5,000
MT.




We have
applied for two key patents in China to protect the intellectual property
developed at our primary processing facilities involving water purification and
stevia extract soaking technology.




In
addition to primary processing capacity and warehousing, our facilities in
Dongtai and Mingguang include a significant research and development facility,
office buildings and supporting infrastructure (water treatment facilities,
etc.).




Runhai
      FacilitiesNew
      Runhai facilities located in
                                Mingguang
      City,
                                Anhui
      Province,
                                China
  15
  Runhai
      Leaf Warehouse,
                          Mingguang
      City,
                          Anhui
      Province,
                          China




Figure 7
– Our stevia production facilities in Mingguang.





Runyang
      FacilitiesNew
      Runyang facilities located in
                  Dongtai
      City, Jiangsu Province,
                  China




Figure 8-
Our stevia production facilities in Dongtai.




Secondary
Processing and Refining of Stevia




We have
current production capacity of 1,000 metric tons of high-grade stevia (RA 80) or
500 MT of rebiana (RA 97) at our Qingdao facility (Runde) and we have current
production capacity of 2,000 MT of high-grade stevia (RA 80) or 1,000 MT of
rebiana (RA 97) at our other Qingdao facility (Runhao). We own or have access to
certain proprietary technology for producing high-grade stevia
extract.




Secondary
processing of intermediate stevia extract to final product generally follows two
steps:




16




(a)
            the
      primary extract is dissolved in a water-ethanol solvent mixture and
      further processed by filtration, crystallization, and centrifugation
      steps; and




(b)
            the
      resulting preparation of crystals is rinsed with food grade ethanol and
      vacuum-dried to yield the final high-grade Rebaudioside A
      product.




In May
2009 we entered into a long term investment agreement with the Qingdao Export
Refine Management Committee.  Pursuant to this investment agreement, a
total area of 215 acres of land will be made available to our subsidiary Runhao
at a discount of approximately 80% from market values.  The first
phase of the development occupies 60 acres of land where a secondary processing
facility with capacity of 2,000 metric tons of high-grade stevia (RA 80) or
1,000 metric tons of rebiana (RA 97) was constructed and started operations in
December 2009.  Our obligations under this investment agreement
require us to invest an aggregate of US$30 million in registered capital by
January of 2011 and as of December 31, 2009 we have invested US$30 million of
registered capital to meet the investment agreement commitment.




Sales
and Marketing




We sell
our stevia extract to over 30 customers, including high-grade stevia extract (RA
80) to Cargill.  Cargill further refines our high-grade stevia extract
to rebaudioside A 97% purity for use in its natural, zero-calorie sweetener
brand called TRUVIATM.  Products launched with TRUVIATM
include:




·
            TRUVIATM tabletop sweetener - A
      product of Cargill, was launched July 2008 in the United
      States.




·
            Sprite GreenTM - launched by The
      Coca Cola Company in December
2008.




·
            Vitaminwater10TM
      - launched by The Coca Cola Company in the United States in December 2008
      with an estimated US$40-$50 million advertising
  campaign.




·
            Odwalla®
      juices - Mojito MamboTM
      and Pomegranate Strawberry flavors – launched in December 2008 with
      additional new flavors during 2009.




·
            Blue
      Bunny® Ice Cream - First food application of rebiana.  Products
      include Sweet Freedom® Fudge and Vanilla Fudge Bars, Sweet Freedom®
      Raspberry and Orange Crème Bars and Sweet Freedom® Fudge
      Lites.




·
            Nature’s
      Splash® - A ready-to-go drink mixes product from
  Kraft.




Our
Strategic Alliance with Cargill




On May 1,
2008, we announced the signing of a strategic alliance and long-term renewable
supply agreement (the “Strategic Alliance and Supply Agreement”) with Cargill,
which replaced our original 2007 agreement. On July 17, 2008 we announced that
Cargill had agreed to make certain revisions to the Strategic Alliance and
Supply Agreement.  The principal terms of the amendments were agreed
and effective as of July 17, 2008, and were reflected in definitive
documentation signed on August 8, 2008.  The Strategic Alliance and
Supply Agreement was further amended May 4, 2009 in connection with Cargill’s
purchase order announced May 5, 2009. The key terms of the Strategic Alliance
and Supply Agreement, as amended, include:




·
            annual
      minimum quantities that we will supply and Cargill will purchase over the
      term of the agreement. Cargill will have a rolling twelve month
      commitment. For each of years two and three, once volume and price have
      been agreed (done on an annual basis), Cargill is required to either take
      the committed volume or pay the agreed
price;




·
            an
      agreement by Cargill to purchase a minimum of 80% of its global stevia
      extract requirements from us for the first five years of the agreement
      commencing October 1, 2008;


17




·
            our
      being Cargill's exclusive Chinese supplier of stevia extract for the term
      of the Strategic Alliance and Supply Agreement and Cargill's agent in
      China for any additional stevia extract sourcing opportunities that
      arise;




·
            our
      taking the lead role in arranging working capital financing for our stevia
      leaf purchasers each year beyond 2008, though Cargill may assist or
      participate in the financing of stevia leaf as it has done
      previously;




·
            new
      product opportunities from GLG will be offered to Cargill on a right of
      first refusal basis;




·
            Cargill
      has the ability to terminate in certain circumstances, including during
      the first five years if Dr. Luke Zhang, the Chairman and Chief Executive
      Officer of GLG, is no longer employed by GLG;
  and




·
            should
      Cargill wish to terminate the agreement early, it may do so on three years
      notice.




In
addition, GLG and Cargill entered into a loan facility in the amount of US$20
million for the supply of Rebaudioside A extract as part of the amendment to the
Strategic Alliance Agreement in 2008.  As security for that financing,
GLG provided Cargill with a general security agreement securing all the assets
of GLG, which includes provisions for accommodation of other leaf financing
lenders as well as term lenders for capital expenditure and working capital
purposes. The term of this financing was for fifteen months due October 15, 2009
at a floating rate based on LIBOR + 6%.  This loan facility was paid
off during fiscal 2009 and the general security agreement has since been
terminated since the $20 million loan had been repaid in full by
GLG.




As of
December 31, 2009, we have received purchase orders from Cargill of US$65.7
million under the Strategic Alliance and Supply Agreement and commenced delivery
for these purchase orders in 2009.  For the year ended December 31,
2008 and for the year ended December 31, 2009, Cargill accounted for 77% and
90%, respectively, of our revenue.  We expect that a significant
portion of our revenues over the next several years will continue to be derived
from sales to Cargill pursuant to the Strategic Alliance and Supply Agreement
between us.  These commitments are subject to renegotiation at certain
times throughout the term of the Strategic Alliance and Supply
Agreement.  See “Risk Factors”.




Our GLG
Direct Sales Program




Through
our wholly owned US subsidiary, GLG Life Tech US, Inc, we employ sales
professionals to manage and develop relationships with large customers and
potential customers in the food and beverage industry.  On October 14,
2009 we announced the hiring of three new vice presidents to head up these
efforts.  These individuals bring in excess of 60 years’ combined
experience in the food and beverage industry involving experience with
multinational food, beverage and sweetener companies including the Dr. Pepper
Snapple Group, PepsiCo, Monsanto, NutraSweet, Kraft and Proctor &
Gamble.




Our
GLG-Weider Program (“Sweet Naturals”)




We
established a joint venture for the development and distribution of consumer
stevia products with Weider Global Nutrition called GLG-Weider Sweet Naturals
Corporation ("Sweet Naturals") in September 2008.  We own a
controlling interest of 55% of the venture and Weider Global Nutrition ("WGN")
owns the remaining 45%.   Legal proceedings had been commenced by
WGN against us with respect to the joint venture.  See “Legal Proceedings and Regulatory
Actions” for further details regarding this claim.




In March
2010, Weider offered to drop its claim against the Company without any payment
to Weider if the Company would drop its counterclaim against Weider. We agreed
to this offer and agreed to wind up Sweet Naturals.  We will now be
marketing all of our products ourselves.  Weider will carry on
marketing activities in stevia related products independently.




18




Significant
Acquisitions




The
Company has not completed any significant acquisitions during the fiscal year
ended December 31, 2009.




Specialized
Skill and Knowledge




The
production of high grade stevia by the Company’s subsidiaries, Runde, Runhai and
Runyang, requires specialized skill and technical know-how; the Company
currently employs a technically advanced and diversified management team and
technical staff.  In addition to proprietary technology licensed from
third parties, GLG has developed and owns proprietary manufacturing technology
to produce high quality stevia with extremely high RA readings that meet and/or
exceed the quality requirements used in its customers’ products.  GLG
has not yet patented this proprietary manufacturing technology though the
Company may elect to do so at some point in the future.  Currently,
the Company relies upon confidentiality agreements that have been entered into
between the Company and its personnel who have access to the proprietary
information.




New
Products




The
Company is currently working on new products for a variety
applications.  These products will utilize stevia based formulations
and will include such products as tabletop sweeteners and wholesale products for
the global food and beverage industry.  These products will be
developed for several markets including but not limited to Japan, Korea, China,
and the United States in 2010.




Intellectual
Property




Our
ability to compete effectively is dependent upon our ability to protect the
proprietary nature of the seeds, seedlings, processes, technologies and
materials owned by, used by or licensed to us or our
subsidiaries.  However, our intellectual property related to the
production of stevia includes proprietary process technology for the manufacture
of high-grade stevia that is not fully covered by patents or other intellectual
property protection in Canada, the US or China. In such cases, we rely on a
combination of patents, trademarks, trade secret law and contracts with certain
key personnel to protect our intellectual property rights.  See “Risk Factors”.




We have
three patent applications pending with the State Intellectual Property Office in
China. These patents relate to our stevia breeding and processing technologies.
All applications are in various stages of the approval process and there can be
no guarantee that approvals will be received.  Failure to obtain such
approvals may prevent us from protecting our stevia plant strains and stevia
processing methodologies.




One
pending patent relates to the proprietary breeding methodology of stevia plants
that we have developed and protect our high-grade stevia plant strains. As an
additional form of intellectual property protection, we have succeeded in the
production of seed and seedling strains that cannot be used to grow other plants
with high RA yielding stevia leaf (second generation plants grown from the seeds
of our high yielding plants will only produce common stevia leaf with an average
RA yield).  Each year, farmers must sign new contracts with us to
receive the high quality seedlings for the ensuing year’s planting season.
Because the plant strains cannot be used to recreate our high content RA stevia
leaf, we protect the genetic characteristics of our proprietary high quality and
high yielding stevia plants and maintain control and security of our high
quality leaf supply.




The
pending patent was acquired through our acquisition of AHTD on December 27,
2007. The patent application is registered in the name of Mr. Wang Qibin, a
former shareholder of AHTD.  The patent was formally assigned by Mr.
Wang to AHTD on July 8, 2007, prior to our acquisition of AHTD.




We have
also applied for two patents in China to protect the intellectual property
developed at our primary processing facilities that involves water purification
and stevia extract soaking technology.




We are in
the process of applying for trademark protection for our branded stevia products
and have filed nine trademark applications in the North American market; five
for use in Canada and four for use in the United States.  In addition,
we have filed for the protection of our logo mark and our corporate name “GLG
Life Tech” in both the United States and Canada.  All applications are
in various stages of the approval process and there can be no guarantee that
approval will be received.  Failure to obtain such approvals may
prevent us from protecting our brand recognition. See “Risk Factors”.




19




In
addition, we have entered into an agreement with International Biotechnology
Group Ltd. (“International Biotechnology”) which provides for the license to us
of certain technology used to manufacture stevia products refined to the RA 97
level.  Pursuant to the terms of the license agreement, we have a
license to use this technology for a five year term.  As consideration
for entering into the license agreement, International Biotechnology will
receive, subject to applicable regulatory approval, 250,000 Common Shares as
well as a basic royalty payable in connection with RA97 and STV 97 products
produced at our Runhao facility during the five year term of the
license.  Following the five year term, the technology will be
transferred to us and the obligation to pay a royalty to International
Biotechnology will terminate.




The
Company expects that it will continue to file patent and trademark applications
on an ongoing basis to protect its intellectual property.




Seasonal
or Cyclical Business




The
stevia manufacturing business is seasonal only to the extent that the leaf for
the next year needs to be purchased, or funds for the purchase of stevia leaf
confirmed available, in June of a given year with harvest taking place during
late July and August.  The processing operations can therefore slow
down significantly before a new harvest is completed during the months of July
and August each year.  This situation is currently extremely
competitive but the Company has taken steps to conduct its own stevia seed,
growth and harvesting operations to allow the Company’s growing demands for raw
product to be met. See “Sources, Pricing and Availability of
Raw Materials”.




Economic
Dependence




The
Company has a significant economic relationship with its strategic partner
Cargill.  If Cargill were to terminate the relationship with the
Company, there could be a material negative impact on the Company’s operations,
financial results, and current business and/or future prospects. See “Risk Factors”.




Financial
and Operational Effects of Environmental Protection




The
Company carefully adheres to environmental requirements and the cost of such
adherence is factored into the manufacturing costs.  The Company does
not foresee any increases in compliance that cannot be offset with an increase
in the sale price which will allow existing margins to continue.




There are
no environmental protection requirements affecting the other segments of the
Company’s business.




Employees




As at
December 31, 2009, the Company employed 1,411 people.




Foreign
Operations




The
Company conducts business internationally and in particular in China where the
Company’s production of stevia is centered.  International operations
are subject to a number of special risks, including currency exchange rate
fluctuations, trade barriers, exchange controls, national and regional labour
strikes, political risks and risks of increases in duties, taxes and
governmental royalties, as well as changes in laws and policies governing
operations of foreign based companies, including subsidiaries of the
Company.  See “Risk
Factors”.




20




Industry
Information




The
Sweetener Industry




High-grade
stevia is a fast-growing newcomer in the estimated US$50 billion global
sweetener market, which is still dominated by sugar.  Sugar
substitutes now account for more than US$5 billion of the global sweetener
market.  Figure 9 provides an estimate of the size of the global
sweetener market, including the proportionate share of sugar and artificial
sweeteners.









Figure 9
– Source: Global Industry Analysts, Artificial Sweeteners: A Global Strategic
Business Report, July 2007; United States Department of Agriculture, Economic
Research Service, World Sugar Reports.  Market values have been
derived through multiplying estimated annual production by average yearly
prices.




21









Figure 10
– Source: Tate & Lyle 2007, Global Sweetener Market (2007), Global High
Intensity Sweetener Share by Value (2007) (percentages based on 182.5 million
tons sugar equivalent).




Traditional
Sweeteners




Sugar




Sugar is
a traditional nutritive sweetener. Sugar is generally considered a necessity and
governments in most countries subsidize the farming of sugar cane or sugar beet
and the related refinery costs.  In Europe and the United States
subsidies have been made available to farmers for producing either sugar cane or
sugar beet.  If sugar subsidies in many countries are reconsidered,
stevia could present a major alternative to sugar if the production and quality
of stevia leaves can be ensured.




Sugar is
ubiquitous throughout the world; however, it carries risks associated with
over-consumption. According to a recent survey by the United States Department
of Agriculture, the average American consumes the equivalent of 160 pounds of
sugar a year or 35 teaspoons a day, a 30% increase over consumption in 1980.
These consumption levels have contributed to increased rates of obesity,
diabetes and other health related issues. In recent years, these concerns have
stimulated a demand in the market for alternatives to sugar and especially
non-nutritive sweeteners, a trend that is occurring globally.




High
Fructose Corn Syrup




High
Fructose Corn Syrup (“HFCS”) is a sweetener utilizing a modified form of corn
syrup with an increased level of fructose. Its composition typically contains
either 42 percent or 55 percent fructose, with the remaining sugars being
primarily glucose and higher sugars. Because fructose is sweeter than glucose,
the overall sweetness of the syrup can be increased resulting in more
cost-effective use over sugar in food processing. Its caloric content is
equivalent to sugar and thus it shares the same concerns from consumers and
industry as that of sugar. Further, the human body metabolizes fructose
differently than glucose (fructose does not trigger the release of appetite
suppressing endorphins) and so high consumption of HFCS has also been attributed
to increasing rates of obesity.




22




High-Intensity
Sweeteners




High-intensity
sweeteners currently represent 9% of the global sweetener market. The category
of high-intensity sweeteners has traditionally referred to artificial
substitutes, which are synthesized by chemical processes and have a higher
degree of sweetness compared to typical natural
alternatives.  High-intensity sweeteners have an estimated market in
excess of US$5 billion annually and are expected to increase their amount of the
global sweetener market annually.  According to the 2007 report by
Global Industry Analysts Artificial Sweeteners, the global artificial sweetener
market is growing at an annual rate of 5.5%.









Figure 11
- Source: Global Industry Analysts, Artificial Sweeteners, July
2007.




Applications
of high-intensity sweeteners range from tabletop sweeteners, to confectionary,
food and pharmaceuticals, with the beverage industry dominating the
high-intensity sweetener market. Frost and Sullivan estimates as much as 65% of
all artificial sweeteners consumed are in beverages. For example, The Coca Cola
Company and PepsiCo are major purchasers and users of aspartame, a popular
high-intensity sweetener, often used in diet sodas.




Artificial
high intensity sweeteners are used extensively in food and beverages to help
reduce calories. According to the Calorie Control Council, 200 million Americans
consume sugar-free or low-calorie products and half are frequent users,
consuming an average of four products every day. Much of this is accounted for
by diet soft drinks, which make up 39% of the US soft drink market and according
to Beverage Digest, the percentage is rising.




23




Aspartame




Aspartame
is one of the most widely used high-intensity sweeteners in the food and
beverage industry. It was discovered in 1967 and approved by the FDA in 1981. It
is about 200 times sweeter than sugar but is not heat stable and therefore not
suitable for baking or cooking. However, aspartame is found widely in diet colas
and is also contained in some breakfast cereals, desserts and chewing gum.
Aspartame is marketed in the United States under the brand names EqualTM and
NutraSweetTM.




Saccharin




Saccharin
is about 300 times sweeter than sugar and is marketed under the brand name Sweet
‘N’ Low®.  It is heat stable, has a long shelf life and remains
relatively cheap to produce. Saccharin has been known to have a bitter
aftertaste and has been subject to controversy over possible carcinogenic side
effects and has been banned in Canada since 1977.




Sucralose




Sucralose
has received the greatest recent consumer acceptance.  Produced by
Tate & Lyle plc under the brand name Splenda® and introduced in 1999, it
accounted for an approximately 60% market share in the tabletop high intensity
sweetener market in 2007. Sucralose was developed in the 1970s and is 600 times
sweeter than sugar, heat stable and dissolvable in water.  Sucralose
is manufactured by chemically altering a sugar molecule and substituting three
chlorine atoms for three hydrogen-oxygen groups.  Sucralose can be
found in more than 4,500 food and beverage products. Recently though concerns
have been raised among consumers over its chemical composition, as chlorine
molecules are used as the base of many pesticides.




24




Figure
below depicts the market share of Splenda, Equal and Sweet ‘n’ Low in the
tabletop sweetener market.









Figure 12
– Source: Information Resources, Inc. – May 25, 2008.




Polyols




Polyols,
or sugar alcohols, are produced by hydrogenation or fermentation of different
carbohydrates. Most polyols occur naturally in a variety of food products like
vegetables, fruits and mushrooms. They are also regularly present in fermented
foods like wine or soy sauces. They are commonly added to foods because of their
lower caloric content than sugars; however, they are also, in general, less
sweet and are often combined with high-intensity sweeteners. Maltitol,
erythritol, sorbitol, isomalt and xylitol are a few of the more common types of
polyols. Most polyols, other than erythritol, can cause digestive problems
(laxative effect) and are used mostly in sugar-free gums in low
doses.




Stevia




We
believe stevia is positioned to become a leading high-intensity sweetener.
According to the research firm KnowGenix, stevia is estimated to be currently
less than 1% of the global sweetener market, or US$500 million, with Japan
accounting for US$200 million due to its early adoption and high acceptance
rates.  Following GRAS notification of certain stevia products in
December 2008, we believe the stevia market is poised to grow considerably as
illustrated by several high profile and rapid launches of products containing
stevia, including: (i) The Coca Cola Company’s launch of Sprite®,
Vitaminwater10TM and Odwalla® juices; (ii) PepsiCo’s launch of SoBe Life Water
and Trop50 (Tropicana with 50 calories); and (iii) Dr. Pepper Snapple Group’s
launch of All Sport Naturally Zero. These products joined Cargill’s tabletop
sweetener TRUVIATM, Merisant Company’s tabletop sweetener PureViaTM and
ZEVIATM Cola, the first commercially produced cola beverage sweetened with
stevia.




25




The
artificial sweetener market is expected to grow 5.5% annually through
2015.  Stevia benefits from what we believe is the widespread consumer
belief that all-natural products are healthier than artificial products,
particularly in the sweetener industry where artificial high-intensity
sweeteners have been subject to consumer health risk
concerns.  According to an August 2009 report published by Mintel
International Group Ltd., United States retail sales of products containing
stevia, including tabletop sweeteners and food and beverage products, could
reach US$2 billion by the end of 2011.  Growing consumer preference
for all-natural products, together with increasing rates of obesity and
diabetes, have created significant demand for an all-natural, zero-calorie
sweetener alternative.  We believe stevia extracts such as rebiana are
positioned to become leading high-intensity sweeteners as a result of their
appealing profile:




-
              zero
      calories




-
            100%
      natural and thus perceived as healthier than artificial
      sweeteners




-
            remains
      stable under heat and thus can be utilized in processed
    foods




-
            200
      to 300 times sweeter than sugar




-
            measures
      zero on the glycemic index, which is important in the diabetic market and
      benefits from growing consumer understanding of the value of a low
      glycemic diet




Market
Drivers for Stevia




According
to a Harris Poll in 2008, three out of five Americans believe artificial
sweeteners are only somewhat safe or not safe at all. Further, a survey by IFIC
Food and Health (August 2008) reported that 43-45% of Americans said they wanted
to use less aspartame, sucralose and saccharin.  Stevia presents food
and beverage companies with the opportunity to offer consumers a healthier,
natural alternative.




In the
food and beverage industry, products catering to healthy lifestyles are one of
the key drivers in sector growth. Increases in obesity, diabetes, and associated
health risks have led consumers to pay more attention to diet. Global trends
toward natural, healthy, organic and “green” products have been evident. Food
and beverage companies are formulating and launching new products in response to
consumer demand and we believe stevia provides a solution that fits within
consumer expectations for taste and health benefits. According to Mintel’s
August 2009 report entitled Stevia and other Natural Sweeteners, over 115 new
food and beverage products containing stevia have been launched in the United
States in the first seven months of 2009 by leading global food and beverage
companies such as The Coca Cola Company, Cargill, PepsiCo and Merisant
Company.  We believe that this support, coupled with underlying trends
and key market drivers presents favorable conditions for stevia’s wider global
acceptance and potential in capturing significant market share in the near
future.




We
anticipate that trends toward healthier living will continue to drive the market
opportunity for stevia. According to a recent study by The Freedonia Group
released in May of 2009, greater awareness of the relationship between diet and
health will continue to support an increasing demand for products across all
categories that offer nutritional and health benefits. The study valued the
current United States demand for sweeteners at US$12 billion with alternative
sweetener demand accounting for 9.5%. In particular, the food segment is
expected to see a high percentage of growth in demand for alternative sweeteners
in the United States with projected increases reaching 5.2% annually through
2013. For stevia, product launches are already visible in foods such as Blue
Bunny Ice Cream’s Sweet Freedom® Fudge and Vanilla Fudge Bars, Sweet Freedom®
Raspberry and Orange Crème Bars and Sweet Freedom® Fudge Lites, all produced by
Wells’ Dairy.




26




According
to The Freedonia Group study, beverage production in the United States is
forecast to increase to nearly 41 billion gallons by 2013, valuing this market
segment at US$101 billion.  Some of the largest growth in beverages is
expected to occur from flavored and enhanced waters. Driven by a flurry of new
product introductions and advancements, growth in traditional carbonated soft
drink sales is expected to remain flat (or slightly in decline) while products
such as enhanced beverages are expected to be on the rise. Stevia extracts have
played a significant role in new product development in this category, including
in products such as PepsiCo’s SoBe Life Water and The Coca Cola Company’s
Vitaminwater 10.




Obesity




The World
Health Organisation estimates that in 2005, at least 400 million adults
worldwide were obese, with this figure expected to increase to 700 million by
2015 with 2.3 billion adults overall being classified as overweight. The US, the
UK and Germany – three of the largest confectionery markets in the world – are
among those countries with the largest numbers of people who are obese,
overweight and suffering from cardiovascular disease.




Diabetes




Globally,
the number of cases of diabetes, heightened in recent years by increased rates
of obesity and an aging population, has dramatically
increased.  Several contributing factors including diet and lifestyle
have led to the rise of the disease that affects over 171 million people
worldwide, a figure that according to the World Health Organization is expected
to more than double to 366 million by 2030. In the United States where cases are
more prevalent amongst all age groups, diabetes affects 7.8% of the population
and the direct and indirect costs of diabetes are estimated by the United States
Center for Disease Control and Prevention to account for US$174 billion in
medical costs. Further, the Global Diabetes Foundation states that Type 2
diabetes is responsible for 90-95% of diabetes cases and that 80% of cases are
preventable foremost by changing diet as well as increasing physical activity
and improving the living environment.




Competition




We are a
leading producer in the high-grade stevia market and currently benefit from
several competitive advantages. Within China, there are approximately 10 to 12
companies with stevia refining and extraction capabilities, and we are the
largest of these companies in terms of production capacity. While there are two
companies in Japan, one in Korea and one in Malaysia that are capable of
producing high-grade stevia extract, we estimate that the manufacturing costs to
produce high-grade stevia in these countries are significantly higher than the
cost of producing the same product in China due to factors such as: (i)
proximity of our manufacturing operations to stevia growing areas in China where
the majority of the world’s stevia leaf is grown; and (ii) lower manufacturing
wages in China as compared to Japan, Korea and Malaysia.




We
believe these lower costs, combined with our current processing capabilities,
provides us with a competitive advantage.  Through our partnerships
with local Chinese governments, as well as our proprietary seeds and seedlings,
we expect to control a large percentage of the high quality stevia seeds and
leaf grown in China.  Leaf supply is one of the most important
components of our business.




Major
global companies are expected to enter the market as demand for stevia grows,
but we believe it will take competitors several years to reach our current stage
of development.  As an example, the seedling development process takes
several years and is only the first phase of the vertically integrated process
for developing a high quality finished product.




Other
market participants include Blue California, an ingredient company based in
Southern California with extraction operations in China which is selling an RA
97 product marketed under the brand Good & SweetTM , and
Pure Circle, a supplier of stevia based in Malaysia for the PureViaTM
tabletop stevia brand developed jointly by Merisant Company and
PepsiCo.  Corn Products International entered into a long-term
agreement with Morita Kagaku Kogyo Co., Ltd. of Japan for access to its strain
of stevia. Morita has been growing stevia in Brazil since 2007 and marketing a
high-grade RA product called Enliten. Corn Products International has not yet
launched any stevia based products.




27




Stevia
Regulatory Environment




In May of
2008, Cargill published studies in the peer-reviewed scientific journal Food and
Chemical Toxicology that established the safety of rebiana.  On May
15, 2008 Cargill submitted an application to the FDA in addition to scientific
data that included years of study and clinical trials that supported the use of
rebiana as a safe food ingredient.  On December 17, 2008, the FDA
stated that it had no objection to the conclusion of an independent expert panel
which reviewed research on rebiana and Reb A and concluded that they were GRAS
for use as general purpose sweeteners, including for use in food and beverages.
This was a significant milestone in the stevia industry and has enabled food and
beverage companies to use stevia products containing rebiana and Reb A in their
products.  Previously, stevia had only been permitted as a dietary
supplement thereby limiting its market.




In June
of 2008 the Joint Expert Committee on Food Additives (the “JECFA”), administered
jointly by the World Health Organization and the Food and Agricultural
Organization of the United Nations, raised the acceptable daily intake level for
stevia. JECFA is an international scientific committee that was established in
1956 to evaluate food additives and is widely recognized as the leading
authority in risk assessment of food hazards. The committee has evaluated more
than 1,500 food additives and established the main principles and guidelines of
safety assessment for chemicals in foods. After over a decade of study, JECFA
published its approval of stevia stating that "95 percent steviol glycosides are
safe for human use in the range of four milligrams per kilogram of body weight
per day". This doubled the average daily intake level previously set by JECFA
from earlier studies.




In
October 2008, the Australian and New Zealand food and safety regulatory body
FSANZ also approved stevia for use in food and beverages as an ingredient. The
approval was based on research and data published by JECFA as well as studies
conducted by the Plant Science Group at Central Queensland University and
Australian Stevia Mills.




In
September 2009, the government of France approved RA 97 for use as an ingredient
in food and beverages.  While full European Union approval for stevia
sweeteners is still dependent on a scientific opinion from the European Food
Safety Authority (EFSA), France has taken advantage of a provision that allows
individual member states to approve ingredients for a limited two year
period.  This decision marked the first approval of RA 97 in the
European Union.  The European Food Safety Authority has received three
petitions for stevia sweeteners from the European Stevia Association, Cargill
and Morita Kagaku Kogyo Co., Ltd.




Some of
the countries where stevia extracts have been approved for use in food and
beverages include:




·          United States of
      America
                          ·          New
      Zealand·          China
                          ·          Mexico·          Japan
                          ·          Paraguay·          France
                          ·          Switzerland·          Australia




We
believe the petitions and subsequent approvals for the use of stevia in food and
beverages in multiple markets around the world are part of a movement towards
the development of healthier products in the food and beverage
industry.




28




Risk
Factors




This
section describes the material risks affecting the Company’s business, financial
condition, operating results and prospects.  There may be other risks
and uncertainties that are not known to the Company or that the Company
currently believes are not material, but which also may have a material adverse
effect on the Company’s business, financial condition, operating results or
prospects. In addition to the other information set forth elsewhere in this
Annual Information Form, prospective investors should carefully review the
following risk factors:




Risks
Relating to GLG Life Tech Corporation and Our Business




We
rely on a single product that may not gain sufficient market acceptance for us
to achieve consistent profitability.




Our
revenue is derived exclusively from sales of stevia and stevia products, and we
expect that stevia and stevia products will account for substantially all of our
revenue for the foreseeable future. If the non-nutritive sweetener market
declines or stevia fails to achieve substantially greater market acceptance than
it currently enjoys, we will not be able to grow our revenues sufficiently for
us to achieve consistent profitability.




Even if
products to be distributed by us conform to international safety and quality
standards, sales could be adversely affected if consumers in target markets lose
confidence in the safety, efficacy, and quality of stevia.  Adverse
publicity about stevia or stevia-based products that we sell may discourage
consumers from buying products distributed by us.




The
loss of our main customer would materially reduce our revenue.




We have
derived, and we believe that we will continue to derive, a significant portion
of our revenue from Cargill, Incorporated (“Cargill”) our largest
customer.  For the year ended December 31, 2008 and for the year ended
December 31, 2009, Cargill accounted for 77% and 90%, respectively, of our
revenue.  We expect that a significant portion of our revenues over
the next several years will continue to be derived from sales to Cargill
pursuant to the Strategic Alliance and Supply Agreement between
us.  Moreover, we cannot provide any assurances that a material
proportion of our revenue will be derived from other customers in the
future.




Under the
Strategic Alliance and Supply Agreement with Cargill, we will provide at least
80% of Cargill’s global stevia extract requirements for the first five years of
the agreement commencing October 1, 2008.  These commitments are
subject to renegotiation at certain times throughout the term of the Strategic
Alliance and Supply Agreement.




If
Cargill were to terminate its relationship with us, there would be a material
adverse effect on our business operations and financial
condition.  Cargill may terminate the Strategic Alliance and Supply
Agreement under certain circumstances, including by giving three years notice to
us or in the event that Dr. Luke Zhang, our Chairman and Chief Executive
Officer, ceases to be actively involved in the management and performance of our
business during the first five years of the Strategic Alliance and Supply
Agreement.  See “Corporate Structure and Development
of the Business – Our Strategic Alliance with Cargill”.




If
we are unable to acquire sufficient raw materials or produce sufficient finished
product, we will not be able to meet the demands of our customers.




We
currently must acquire sufficient stevia leaf so that we can meet the demands of
our customers.  A stevia leaf shortage could result in loss of sales
and damage to our reputation.




If we and
our subsidiaries become unable to produce the required commercial quantities of
high-grade stevia extract on a timely basis and at commercially reasonable
prices, and are unable to find one or more replacement manufacturers with the
necessary expertise, regulatory approvals and facilities capable of production
at a substantially equivalent cost, in substantially equivalent volumes and
quality, and on a timely basis, we will likely be unable to meet customer
demand.  In addition, we have entered into agreements that provide for
fixed price and quantity commitments.  If there were a raw material
shortage and we were unable to deliver the committed quantity under these
purchase orders, we could be responsible for any amount paid by such customers
to third parties, above what the customer would have paid if we were able to
deliver their order at the agreed price.




29




The
loss of key employees or the failure to attract qualified personnel could have a
material adverse effect on our ability to run our business.




The loss
of any of our or our subsidiaries’ current executives, key employees, or key
advisors, and in particular, Dr. Luke Zhang, or the failure to attract,
integrate, motivate, and retain additional key employees could have a material
adverse effect on our business.  In particular, Cargill may terminate
the Strategic Alliance and Supply Agreement in the event that Dr. Luke Zhang
ceases to be actively involved in the management and performance of our
business.  We do not have “key person” insurance on the lives of any
of our management team.  Also, as we develop additional capabilities
we may require more skilled personnel.  These personnel must be highly
skilled and have a sound understanding of our industry, business or
technology.  Recruiting personnel is highly
competitive.  Although to date we have been successful in recruiting
and retaining qualified personnel, there can be no assurance that we will
continue to attract and retain the personnel needed for our
business.  The failure to attract or retain qualified personnel could
have a material adverse effect on our business.




We
do not have a history of consistent profitability and our ability to achieve
consistent profitability in the future is subject to uncertainty.




During
the fiscal year ended December 31, 2009, we had a net income of $0.8 million
compared to a net loss for fiscal 2008 of $10.6 million. Our revenue increased
to $41.9 million in 2009 compared with $9.9 million in 2008.




Our
ability to achieve consistent profitability is subject to uncertainty due to the
nature of our business and the markets in which we operate. In particular, our
revenues and operating results may fluctuate significantly in the future because
of the following factors:




·
            volatility
      in the price we must pay for stevia and the stevia leaf quality, which
      varies from period to period;




·
            the
      price per kilogram for which we are able to sell our stevia
      extract;




·
            our
      ability to manage personnel, overhead and other
  expenses;




·
            our
      ability to effectively manage our capacity
  utilization;




·
            our
      water and power consumption, and the prevailing prices for water and
      power; and




·
            consumer
      acceptance of stevia and stevia-related products in the United States and
      other key markets.




If
we fail to increase our production and manufacturing capacity, we will be unable
to continue to grow and our ability to produce new products, expand within our
existing markets and enter into new markets will be limited.




Global
growth and demand for our products has increased the utilization of our
production and manufacturing facilities.  If we are unable to
successfully expand our production and manufacturing capacity, we will be unable
to continue our growth and expand within our existing markets or enter into
additional geographic markets or new product categories. In addition, failure to
successfully expand our production and manufacturing capacity will limit our
ability to introduce and distribute new products, or otherwise take advantage of
opportunities in new and existing markets. Further, increasing our production
and manufacturing facilities requires significant investment and build times.
Delays in increasing capacity could also limit our ability to continue our
growth and materially adversely affect our business.




30




We
have limited financial resources. We had negative operating cash flow for the
year ended December 31, 2009. If we are unable to raise additional capital, we
may be unable to complete the planned expansion of our business on our preferred
timeline.




We have
limited financial resources and had negative operating cash flow for the year
ended December 31, 2009.  Because of our negative cash flow from
operations, our reliance on external sources of funding, and our cumulative
deficit, we have noted in our audited consolidated financial statements for the
fiscal year ended December 31, 2009, and for prior periods, that there is
uncertainty about our ability to continue as a going concern.




We will
continue to utilize some of our available lines of credit in China and seek to
renew such loans on maturity and there can be no assurance that we will continue
to have access to these short term loans and if we are unable to find additional
funding sources, we may be unable to complete the planned expansion of our
business on our preferred timeline.




We may
require additional funds in order to continue to develop our manufacturing
capacity and fund our planned expansion on our preferred
timeline.  Additional funding may not be available on terms that are
acceptable to us, or at all, or may require the issuance of additional Common
Shares or other securities which would dilute our current
investors.  Our future capital requirements will depend on many
factors, including:




Ÿ
            costs
      of manufacturing and supply;




Ÿ
            revenues
      from the sale of stevia; and




Ÿ
            our
      ability to obtain revolving debt facilities for stevia leaf
      purchases




We
may not be able to manage our expansion of operations effectively.




We expect
to continue to expand our business to meet the expected growth in demand for
stevia.  We have increased production output and expanded our employee
base and we are in the process of establishing new and expanded
facilities.  If we are unable to manage our growth effectively, we may
not be able to take advantage of market opportunities, execute our business
strategies or respond to competitive pressures and we may have difficulties
maintaining and updating the internal procedures and the controls necessary to
meet the planned expansion of our overall business.




Our
management will also be required to maintain and expand our relationships with
customers, suppliers and third parties as well as attract new customers and
suppliers. We expect that our sales and marketing costs will increase as we grow
our product lines and as we increase our sales efforts in new and existing
markets.




There is
no assurance that our current and planned operations, personnel, systems, and
internal procedures and controls will be adequate to support our future
growth.  We expect that our general and administrative costs will
increase as our operations grow to meet existing sales orders for our products
and for future growth as we increase our sales efforts in new and existing
markets.




31




Our
raw material supply can only be stored for approximately two years and could
potentially be subject to natural disasters and adverse weather
conditions.  Any shortage of stevia leaf or any increase in the price
we pay for stevia leaf may adversely affect our revenue growth and decrease our
margins.




Our raw
material supply is perishable and, by nature, could potentially be subject to a
high degree of exposure to the risks of natural disasters and adverse weather
conditions such as droughts, floods, earthquakes, hailstorms, windstorms, pests,
and diseases.  The occurrence of a natural disaster in our growing
areas could severely reduce our ability to procure the raw materials necessary
to produce our products. Moreover, our production and manufacturing operations
are, at present, all located in China which concentrates these
risks.




A
shortage of available stevia leaf or increase in the price we pay for stevia
leaf could adversely affect our revenue growth and decrease our margins. Any of
these adverse consequences could have a material adverse effect on our business
operations and financial condition.




We
currently face, and will continue to face, significant
competition.  Additional competitors may enter the stevia business if
the value of the market for stevia grows which may result in a decrease in the
market price of stevia extract.




Our major
competitors for our core stevia business are existing stevia producers in Japan,
Korea, China and Malaysia.  These competitors include Blue California
Inc., Corn Products International, Inc. and Pure Circle Limited.  In
addition, additional competitors may enter the stevia business if the value of
the market for stevia grows which may result in a decrease in the market price
of stevia extract.




These
competitors may have significantly greater financial, technical and marketing
resources, and may have a more established customer base.  There is no
assurance that we will be able to compete successfully against our competitors
or that such competition will not have a material adverse effect on our business
operations or financial condition.  See “Industry Information– Competition”.




We
rely upon proprietary technology which is not patented in Canada, the United
States or elsewhere outside of China and may not be protected under the Chinese
legal system.




Our
ability to compete effectively is dependent upon the proprietary nature of the
seeds, seedlings, processes, technologies and materials owned by, used by or
licensed to us or our subsidiaries.  Our intellectual property related
to the production of stevia includes proprietary process technology for the
manufacture of high-grade stevia that is not fully covered by patents or other
intellectual property protection in Canada or the United States.  If
any competitors independently develop any technologies that substantially equal
or surpass our patent pending process technology, it will adversely affect our
competitive position.  See “Corporate Structure and Development
of the Business– Intellectual
Property”.




The
protection of our seed technology relies on patent-pending stevia
seedlings.  We have succeeded in the production of seed and seedling
strains that cannot be used to grow other plants with high RA yielding stevia
leaf (second generation plants grown from the seeds of our high yielding plants
will only produce common stevia leaf with an average RA
yield).  However, the Chinese legal system in general, and the
intellectual property regime in particular, are relatively weak compared to
Canada and the United States and it may be difficult for us to enforce our
intellectual property rights in China.




In
relation to the intellectual property used by or licensed to us and our
subsidiaries, there can be no assurance that we will continue to be able to use
such intellectual property on terms that are acceptable to us, or at
all.  If we are unable to agree to terms to use this technology in the
future or are unable to obtain the right to use other similar technology, we may
not be able to offer the products we currently offer.




32




If
we do not adequately ensure our freedom to use certain technology, we may have
to pay others for rights to use their intellectual property and there can be no
assurance that we will be able to obtain licenses to use such technology on
favorable terms or at all.




We have
not undertaken any studies as to whether our patents provide us with the freedom
to use our technologies in China or any other jurisdictions.




If we do
not adequately ensure our freedom to use certain technology, we may have to pay
others for rights to use their intellectual property, pay damages for
infringement or misappropriation and/or be enjoined from using such intellectual
property.  Our Chinese patents may not guarantee us the right to use
our technologies if other parties own intellectual property rights that we need
in order to practice such technologies.  Our patent position is
subject to complex factual and legal issues that may give rise to uncertainty as
to the validity, scope and enforceability of a particular
patent.  There can be no assurance that:




·
            any
      of the rights we have under patents owned by us or other patents that
      third parties license to us will not be curtailed, for example through
      invalidation, circumvention, challenge and being rendered unenforceable or
      prohibiting our licensed use;




·
            we
      were the first inventors of inventions covered by our issued patents or
      pending applications or that we were the first to file patent applications
      for such inventions;




·
            any
      of our pending or future patent applications will be issued with the
      breadth of claim coverage sought by us or issued at
  all;




·
            our
      competitors have not or will not independently develop or patent
      technologies that are substantially equivalent or superior to our
      technologies;




·
            any
      of our trade secrets will not be learned independently by our competitors;
      or




·
            the
      steps we take to protect our intellectual property will be
      adequate.




In
addition, effective patent, trademark, copyright and trade secret protection may
be unavailable, limited or not applied for in certain foreign
countries.  Any of these adverse consequences could have a material
adverse effect on our business operations and financial condition.




Claims by
third parties that our technology or products, or those of our subsidiaries,
infringe their intellectual property rights, may result in litigation which
could be costly and time consuming and would divert the attention of management
and key personnel from other business issues.  The complexity of the
technology involved and the uncertainty of intellectual property litigation
increase these risks.  In addition, if we or our subsidiaries are
found to have infringed upon the intellectual property rights of another party,
licenses for such intellectual property may not be available on favorable terms
or at all.




Circumstances
outside of our control could negatively affect consumer perception of and demand
for our products.




Even if
stevia-based products distributed by us conform to international safety and
quality standards, sales could be adversely affected if consumers in our target
markets lose confidence in the safety, efficacy, and quality of nutritional
supplement products.  Adverse publicity about stevia or stevia-based
products may discourage consumers from buying products distributed by
us.  We may not be able to overcome negative publicity within a
reasonable period of time.




Exchange
controls that exist in the PRC may limit our ability to utilize our cash flow
effectively.




We are
subject to the PRC’s rules and regulations on currency conversion. In the PRC,
the State Administration for Foreign Exchange, or SAFE, regulates the conversion
between RMB and foreign currencies.  Currently, foreign investment
enterprises, or FIEs are required to apply to the SAFE for “Foreign Exchange
Registration Certificates for FIEs.” With such registration certificates, which
need to be renewed annually, FIEs are allowed to open foreign currency accounts
including a “current account” and “capital account”.  Currency
conversion within the scope of the “current account”, such as remittance of
foreign currencies for payment of dividends, can be effected without requiring
the approval of the SAFE. However, conversion of currency in the “capital
account,” including capital items such as direct foreign investment, foreign
currency loans and securities, still require approval of the SAFE. We cannot
assure you that the PRC regulatory authorities will not impose further
restrictions on the convertibility of the RMB. Any future restrictions on
currency exchanges may limit our ability to use our cash flow for the
distribution of dividends to our shareholders or to fund operations we may have
outside of the PRC.




33


In August
2008, SAFE promulgated Circular 142, a notice regulating the conversion by FIEs
of foreign currency into RMB by restricting how the converted RBM may be used.
Circular 142 requires that RBM converted from the foreign currency-dominated
capital of an FIE may only be used for purposes within the business scope
approved by the applicable government authority and may not be used for equity
investments within the PRC unless specifically provided for otherwise. In
addition, SAFE strengthened its oversight over the flow and use of RMB funds
converted from the foreign currency-dominated capital of an FIE. The use of such
RMB may not be changed without approval from SAFE, and may not be used to repay
RMB loans if the proceeds of such loans have not yet been used. Violations of
Circular 142 may result in severe penalties, including substantial fines as set
forth in the SAFE rules.




Currency
exchange rate and interest rate fluctuations could significantly increase our
expenses.




Our
financial results will be affected by the foreign exchange rate between US
dollars and RMB because, while our expenses are denominated in RMB, the majority
of our sales are denominated in US dollars.  On July 21, 2005, the
Chinese government changed its decade-old policy of pegging the value of the RMB
to the US dollar. Under the new policy, the RMB is permitted to fluctuate
within a narrow and managed band against a basket of certain foreign currencies,
including the Canadian dollar and the US dollar. This change in policy has
resulted in approximately 18% appreciation of the RMB against the US dollar
between July 21, 2005, when the policy was enacted, and December 31, 2009. The
Chinese government may decide to adopt an even more flexible currency policy in
the future, which could result in further and more significant appreciation of
the RMB against the US dollar.




Our
international operations subject us to additional risks.




We are
subject to the risks inherent in conducting business across national boundaries,
any one of which could adversely impact our business. These risks
include:




·
            currency
      exchange rate fluctuations;




·
            trade
      barriers;




·
            national
      and regional economic downturns;




·
            changes
      in governmental policy or
regulation;




·
            restrictions
      on the transfer of funds into or out of particular
    countries;




·
            import
      and export duties and quotas;




·
            domestic
      and foreign customs and tariffs;




·
            political
      risks and nationalization of foreign
assets;




·
            increases
      in duties, taxes and government
royalties;




·
            protectionist
      measures enacted by the United States and/or other markets where our
      products are sold; and




·
            potentially
      negative consequences from changes in tax or other
  laws.




34




If
we fail to obtain trademark protection for our brand names, we may not be able
to protect our brand recognition.




Currently,
we are in the process of applying for trademark protection for our own branded
stevia products and have filed nine trademark applications in the North American
market; five for use in Canada and four for use in the United
States.  In addition, we have filed for the protection of our logo
mark and our corporate name “GLG Life Tech” in both the United States and
Canada.  All applications are in various stages of the approval
process and there can be no guarantee that approval will be
received.  Failure to obtain such approvals may prevent us from
protecting our brand recognition.  See “Corporate Structure and Development
of the Business– Intellectual
Property”.




We
may not be able to increase brand recognition necessary to materially increase
revenues and may not be able to create an infrastructure necessary to support
the increase in demand.




We have
established limited brand recognition in Canada, the United States and other
international jurisdictions.  We cannot be sure that we will
successfully complete the development and introduction of current products, new
products or product enhancements or that any products developed will achieve
acceptance in the marketplace necessary to materially increase revenues and
achieve consistent profitability.  We may also fail to develop and
deploy new products and product enhancements on a timely basis.  There
can be no assurance that we will be able to expand our production and
distribution capabilities in the future to meet further market acceptance or
that any such expansion will be successful.  Furthermore, there can be
no assurance that any expansion will not have a material adverse effect on our
operating results, particularly while we are implementing such expansion and the
costs associated with any expansion.




In
addition, consumer preferences evolve over time and the success of our products
depends on our ability to identify the tastes and nutritional needs of our
customers and to offer products that appeal to their preferences.  We
introduce new products and improved products from time to time and we may incur
significant development and marketing costs which may not lead to a product that
is accepted by consumers.  If our products fail to meet consumer
preferences, then our sales and profits from new products will
suffer.




We
could become subject to product liability claims.




As a
manufacturer and distributor of products designed for human consumption, we may
be subject to product liability claims if the use of our products is alleged to
have resulted in injury.  For example, we may be subject to
allegations that our products include inadequate instructions for use or
inadequate warnings concerning possible side effects and interactions with other
substances.  In addition, although we and our manufacturers maintain
quality controls and procedures with respect to products that we sell, the
substances that make up these products could become contaminated.  We
currently have not obtained indemnities from our raw material and product
suppliers.  We carry liability insurance to cover product recalls and
worldwide product liabilities and also hold liability insurance in respect of
Sweet Naturals.  Such insurance, however, may not be available in the
future at a reasonable cost, on favorable terms, or at all, and may not be
adequate to cover liabilities.




Litigation
may adversely affect our business.




All
industries, including the industry in which we operate, are subject to legal
claims with and without merit.  We may be or become involved in
disputes with other parties which may result in litigation.  The
results of litigation cannot be predicted with certainty.  If we are
unable to resolve any material disputes favourably, it may have a material
adverse impact on our business and results of operations.




We
could become subject to environmental claims.




We are
subject to environmental regulations which require us to minimize impacts upon
air, water, soil and vegetation.  If our operations violate these
regulations, government agencies will usually require us to conduct remedial
actions to correct such negative effects.  Such actions could
substantially increase our costs and potentially prevent us from producing our
products.




35




Recent
global economic and financial market crisis could have a negative effect on our
results of operations.




Current
global economic conditions could have a negative effect on our business and
results of operations. Economic activity in China, Canada, the United States and
throughout much of the world has undergone a sudden, sharp economic downturn
following the recent housing downturn and subprime lending collapse in both the
United States and Europe.  Market disruptions have included extreme
volatility in securities prices, as well as severely diminished liquidity and
credit availability.  The economic crisis may adversely affect us in a
variety of ways.  Access to lines of credit or the capital markets may
be severely restricted, which may preclude us from raising funds required for
operations and to fund continued expansion.  It may be more difficult
for us to complete strategic transactions with third parties.  The
financial and credit market turmoil could also negatively impact suppliers,
customers and banks with whom we do business.  Such developments could
decrease our ability to source, produce and distribute our products or obtain
financing and could expose us to risk that one of our suppliers, customers or
banks will be unable to meet their obligations under our agreements with
them.




While it
is not possible to predict with certainty the duration or severity of the
current disruption in financial and credit markets, if economic conditions
continue to worsen, it is possible these factors could significantly impact our
financial condition.




We
are not a party to certain agreements that are material to our
operations.




Our
subsidiary, AHTD, is the assignee of one pending patent related to stevia
seedlings on which we are reliant.  The patent application is
registered in the name of Mr. Wang Qibin, a former shareholders of
AHTD.  The patent was formally assigned by Mr. Wang to AHTD on July 8,
2007, prior to our acquisition of AHTD.  See “Corporate Structure and Development
of the Business– Intellectual
Property”.  While we believe that AHTD would be recognized as
the holder of the rights to these patent-pending stevia seedlings, there can be
no assurance that this will be the case and if we are not able to acquire these
rights it could have a material adverse effect on our business operations and
financial condition.




Industry
Related Risks




If
demand for stevia does not increase, there will be excess capacity which will
decrease the market price of stevia and reduce our revenues.




We and
other stevia producers have developed a large manufacturing capacity in
expectation of a large demand for stevia products and we expect that demand for
stevia will increase significantly in the future, particularly in light of the
fact that certain stevia products have received GRAS status in the United
States.  However, there can be no assurance that this will be the case
and if demand for stevia does not increase, the stevia market may be subject to
significant excess capacity, which would put downward pressure on the market
price of stevia and reduce our revenues.




Stevia
competes with sugar and other high intensity sweeteners in the global sweetener
market and the success of stevia will largely depend on consumer perception of
the positive health implications of stevia relative to other
sweeteners.




The
continued growth of stevia’s share of the global sweetener market depends upon
consumer acceptance of stevia and stevia related products and the health
implications of consuming stevia relative to other sweetener
products.  The publication of any studies or revelation of other
information that has negative implications regarding the health impacts of
consuming stevia may slow or reverse the growth in consumer acceptance of
stevia, which may have a material adverse effect on our business operations and
financial condition.




36




Government
regulation of our products could increase our costs, prevent us from offering
certain products or cause us to recall products.




While
stevia and/or stevia products have been approved for use in food and beverages
in certain countries, including the United States, there are a number of major
regions, where stevia has not been approved for use.  While France has
taken advantage of a provision that allows individual member states of the
European Union to approve ingredients for a limited two year period, full
European Union approval for stevia sweeteners will be dependent on a scientific
opinion from the European Food Safety Authority. Global demand for stevia and
stevia products may be limited if stevia is not approved for use in these and
other regions.




The
processing, formulation, manufacturing, packaging, labeling, advertising and
distribution of our products is subject to regulation by one or more federal
agencies, and various agencies of the states and localities in which our
products are sold.  These government regulatory agencies may attempt
to regulate any of our products that fall within their
jurisdiction.  Such regulatory agencies may not accept the evidence of
safety for any new ingredients that we may want to market, may determine that a
particular product or product ingredient presents an unacceptable health risk,
may determine that a particular statement of nutritional support that we want to
use is an unacceptable drug claim or an unauthorized version of a food “health
claim,” may determine that a particular product is an unapproved new drug, or
may determine that particular claims are not adequately supported by available
scientific evidence.  Such a determination would prevent us from
marketing particular products or using certain statements of nutritional support
on our products.  We also may be unable to disseminate third-party
literature that supports our products if the third-party literature fails to
satisfy certain requirements.




In
addition, a government regulatory agency could require us to remove a particular
product from the market.  Any future recall or removal would result in
additional costs to us, including lost revenues from any products that we are
required to remove from the market, any of which could be
material.  Any such product recalls or removals could lead to
liability, substantial costs and reduced growth prospects.




If any of
our products contain plants, herbs or other substances not recognized as safe by
a government regulatory agency, we may not be able to market or sell such
products in that jurisdiction.  Any such prohibition could materially
adversely affect our results of operations and financial
condition.  Further, if more stringent statutes are enacted for
dietary supplements, or if more stringent regulations are promulgated, we may
not be able to comply with such statutes or regulations without incurring
substantial expense, or at all.




Government
regulatory agencies may also adopt more stringent rules regarding the
manufacturing of dietary supplements, which may apply to the products that we or
our subsidiaries manufacture.  In the future, such regulations may
require dietary supplements to be prepared, packaged and held in compliance with
strict rules, and may require quality control provisions similar to those in the
Good Manufacturing Practice regulations for drugs.  We may not be able
to comply with such new rules without incurring additional expenses, which may
be significant.




We are
not able to predict the nature of future laws, regulations, repeals or
interpretations or to predict the effect additional governmental regulation, if
and when it occurs, would have on our business in the future.  Such
developments could, however, require reformulation of certain products to meet
new standards, recalls or discontinuance of certain products not able to be
reformulated, additional record-keeping requirements, increased documentation of
the properties of certain products, additional or different labeling, additional
scientific substantiation, or other new requirements.  Any such
developments could have a material adverse effect on our business operations and
financial condition.




37




Risks
Relating to Our Operations in China




Our
agricultural and processing assets are located in PRC and the Chinese
government’s involvement in the economic system could have a materially adverse
effect on our operations and financial condition.




The
economy of the People’s Republic of China differs from the economies of most
developed countries in many respects, including the extent of government
involvement.  Over the past three decades, China’s economy has been
transitioning from a planned economy to a more market-oriented
economy.  Although in recent years the Chinese government has
implemented measures emphasizing the utilization of market forces for economic
reform, the reduction of state ownership of productive assets and the
establishment of sound corporate governance in business enterprises, a
substantial portion of productive assets in China are still owned by the Chinese
government.  In addition, the Chinese government continues to play a
significant role in regulating industrial development.  It also
exercises significant control over China’s economic growth through the
allocation of resources, controlling payment of foreign currency-denominated
obligations, setting monetary policy and providing preferential treatment to
particular industries or companies.  Economic control measures may be
adjusted or modified without warning and may be applied differently from
industry to industry.  Economic controls and reforms are often adopted
on an experimental basis and are subject to reversal or revocation with little
or no warning.  Because these economic reform measures may be
inconsistent or ineffectual, there are no assurances that:




·
            we
      will be able to capitalize on economic
reforms;




·
            stevia
      production will remain a priority for Chinese
  governments;




·
            the
      Chinese government will continue its pursuit of economic reform
      policies;




·
            the
      economic policies, even if pursued, will be
  successful;




·
            economic
      policies will not be significantly altered from time to time;
      and




·
            business
      operations in China will not become subject to the risk of
      nationalization.




Any
negative impact from economic reform policies or nationalization could result in
a total investment loss in the Common Shares.




To date,
reforms to China’s economic system have not adversely impacted our
operations.  There can be no assurance, however, that China’s economic
reforms will continue or that we will not be adversely affected by changes in
China’s political, economic, and social conditions and by changes in policies of
the Chinese government, such as changes in laws and regulations, measures which
may be introduced to control inflation, changes in the rate or method of
taxation, changes in employment restrictions, imposition of additional
restrictions on currency conversion and remittance abroad, and reduction in
tariff protection and other import restrictions.




Changes
in the laws and regulations in the People’s Republic of China may significantly
impact our methods and costs of doing business.




The
Chinese legal system is based on written statutes.  Prior court
decisions may be cited for reference but are not binding on subsequent cases and
have limited precedential value.  Since 1979, China’s legislative
bodies have promulgated laws and regulations dealing with such economic matters
as foreign investment, corporate organization and governance, commerce, taxation
and trade.  However, because these laws and regulations are relatively
new, and because of the limited volume of published decisions and their
non-binding nature, the interpretation and enforcement of these laws and
regulations involve uncertainties.  Additionally, Chinese laws are
generally drafted in such a way as to allow interpretation to accord with
changing policy demands and are implemented differently from region to
region.  The Chinese legal system has inherent uncertainties that can
seriously limit legal protections to shareholders in companies with Chinese
operations.




Our
subsidiaries are subject to corporate laws in the People’s Republic of
China.  Additionally, as a food manufacturing corporation, we and our
subsidiaries are subject to the laws and regulations governing food and health
products in the People’s Republic of China.  Our processing facilities
and products are subject to periodic inspection by national, provincial and
local authorities in China.  We believe that we are currently in
substantial compliance with all material governmental laws and regulations and
maintain all material permits and licenses relating to our
operations.  Nevertheless, we may fall out of substantial compliance
with current laws and regulations or may be unable to comply with any future
laws and regulations.  To the extent that new regulations are adopted,
we will be required, possibly at considerable expense, to adjust our activities
in order to comply with such regulations. Our failure to comply with applicable
laws and regulations could subject us to civil remedies, including fines,
injunctions, recalls or seizures, as well as potential criminal sanctions, which
could have a material adverse effect on our business, operations and
finances.




38




The
Chinese legal and accounting system may force us to incur additional costs and
may not provide us with the same level of protection as United States and
Canadian laws.




The legal
system in the People’s Republic of China differs from those of the United States
and Canada.  Our subsidiaries in China are considered “Foreign
Invested Enterprises” or “FIEs”, and are subject to certain laws and regulations
designed to regulate foreign investment in China.  The Foreign
Invested Enterprise laws provide certain protections from government
interference.  In addition, these laws guarantee the full enjoyment of
the benefits of corporate articles and contracts to Foreign Invested Enterprise
participants.  These laws, however, do impose standards concerning
corporate formation and governance.  Similarly, our Chinese
subsidiaries account for transactions in accordance with Chinese GAAP and the
accounting laws of the People’s Republic of China mandate accounting practices
that are not entirely consistent with Canadian and US
GAAP.  Converting Chinese GAAP financial statements into Canadian GAAP
can be complex, and there is a risk that material differences between the
standards will not be identified.  Chinese accounting laws require
that an annual “statutory audit” be performed in accordance with the People’s
Republic of China accounting standards and that the books of account of Foreign
Invested Enterprises be maintained in accordance with Chinese accounting
laws.  Article 14 of the PRC Wholly Foreign-Owned Enterprise Law
requires Wholly Foreign-Owned Enterprises (such as our subsidiaries in China) to
submit certain periodic fiscal reports and statements to designated financial
and tax authorities, at the risk of business license
revocation.  There is no guarantee that we and our subsidiaries will
be able to continue to comply with the legal and accounting systems in China
without incurring additional expense, or at all, which would restrict our
ability to do business and would have a material adverse affect on our business
operations and financial condition.




The
enforcement of substantive rights in China differs from Canadian and United
States procedures.  Foreign Invested Enterprises and Wholly
Foreign-Owned Enterprises are Chinese registered companies and enjoy the same
status as other Chinese registered companies in business-to-business dispute
resolution.  Although, as a practical matter, the Chinese legal
infrastructure should not present any significant impediment to the operation of
Foreign Invested Enterprises, there is no guarantee that we or our subsidiaries
will be able to enforce our rights in the same manner and to the same extent as
in Canada or the United States.




In
addition, the understanding of and respect for intellectual property rights in
China is still developing, and there are uncertainties involved in their
protection and the enforcement of such protection. Our failure to adequately
protect our intellectual property could lead to the loss of a competitive
advantage that could not likely be compensated by a damages award.




New
Chinese tax laws may subject us to significant additional taxes in
China.




Under
China’s Enterprise Income Tax Law, or the New EIT Law, and its implementing
rules, which became effective in 2008, an enterprise established outside of
China may be considered a “resident enterprise” if its “place of actual
management” is situated in China.  If so, the enterprise would be
treated in a manner similar to a local Chinese enterprise for enterprise income
tax purposes.  Under the implementing rules of the New EIT Law, “place
of actual management” means the place where substantial and overall management
and control over the production and operations, personnel, accounting, and
properties of the enterprise are located.  Because the New EIT Law and
its implementing rules are new, it is unclear how tax authorities will determine
tax residency based on the facts of each case.




If the
Chinese tax authorities determine that we are a “resident enterprise” for
Chinese enterprise income tax purposes, unfavorable Chinese tax consequences
could follow. First, we may be subject to enterprise income tax at a rate of 25%
on our worldwide taxable income as well as Chinese enterprise income tax
reporting obligations. Second, although under the New EIT Law and its
implementing rules dividends paid to us from our Chinese subsidiaries would
qualify as “tax-exempt income,” such dividends may be subject to a 10%
withholding tax, as the Chinese foreign exchange control authorities, which
enforce the withholding tax, have not yet issued guidance with respect to the
processing of outbound remittances to entities that are treated as resident
enterprises for Chinese enterprise income tax purposes.  Finally, it
is possible that future guidance issued with respect to the new “resident
enterprise” classification could result in a situation in which a 10%
withholding tax is imposed on dividends we pay to our non-Chinese shareholders
and with respect to gains derived by our non-Chinese shareholders from
transferring our Common Shares. We are monitoring the possibility of “resident
enterprise” treatment and are evaluating appropriate organizational changes to
avoid this treatment, to the extent possible.




39




If we
were treated as a “resident enterprise” by Chinese tax authorities, we would be
subject to tax in both Canada and China, and our Chinese tax may not be
creditable against our Canadian tax.  In addition, we have not accrued
any tax liability associated with the possible payment of dividends from our
Chinese subsidiaries. Such a tax would be an added expense appearing on our
income statement, which would reduce our net income.




We
may become subject to additional compliance costs in the People’s Republic of
China.




Our
operations in China are subject to laws and regulations in the People’s Republic
of China relating to the processing, packaging, storage, distribution,
advertising, labeling, quality, and safety of food products.  The
failure by us and our subsidiaries to comply with applicable laws and
regulations could subject us to administrative penalties, injunctive relief,
civil remedies and even criminal responsibilities, including but not limited to
fines, injunctions, recalls of our products suspension of operating activities
and cancellation of our business license.  It is possible that changes
to such laws, more rigorous enforcement of such laws or our current or past
practices could have a material adverse effect on our business, operating
results and financial condition.  Further, additional environmental,
health or safety issues relating to matters that are not currently known to
management may result in unanticipated liabilities and
expenditures.




We
may have difficulty establishing adequate management, legal and financial
controls in the People’s Republic of China.




The
People’s Republic of China has historically not had the same standard as Canada
and the United States in terms of management and financial reporting concepts
and practices, as well as modern banking, computer and other control
systems.  Our subsidiaries may have difficulty in hiring and retaining
a sufficient number of qualified employees to work in the People’s Republic of
China.  As a result of these factors, we may experience difficulty in
establishing management, legal and financial controls, collecting financial
data, preparing financial statements, books of account and corporate records and
instituting business practices that meet Canadian and United States standards
which would adversely impact our ability to effectively manage our future
growth.




We
may be subject to regulations relating to acquisitions of Chinese companies by
foreign entities and if we are unable to comply with such regulations we may be
subject to fines or sanctions imposed by the Chinese government.




On
October 21, 2005, the China State Administration of Foreign Exchange, or SAFE,
issued a notice, known as “Circular 75,” which sets forth a regulatory framework
for acquisitions of Chinese businesses involving offshore companies owned by
Chinese residents or passport holders, known as “round-trip” investments or
acquisitions. Among other things, Circular 75 provides that if a round-trip
investment in a Chinese corporation by an offshore corporation controlled by
Chinese residents occurred prior to the issuance of Circular 75, certain Chinese
residents were required to submit a registration form to the local SAFE branch
to register their ownership interests in the offshore corporation prior to
March 31, 2006. Circular 75 also provides that, prior to establishing or
assuming control of an offshore corporation for the purpose of obtaining
financing for that offshore corporation using the assets or equity interests in
an onshore enterprise in China, each Chinese resident or passport holder who is
an ultimate controller of such offshore corporation, whether an individual or a
legal entity, must complete certain registration procedures with the relevant
local SAFE branch.  Such Chinese residents must also amend the
registration if there is a material event affecting the offshore corporation,
such as, among other things, a change in share capital, a transfer of shares, or
if such corporation is involved in a merger, acquisition or a spin-off
transaction or uses its assets in China to guarantee offshore
obligations.




40




At
present, it is unclear whether Circular 75 requires Chinese shareholders of our
corporation to register.  We will attempt to comply, and attempt to
ensure that all of our shareholders subject to these rules comply, with the
relevant requirements. We cannot, however, assure the compliance of all of our
China-resident shareholders. Any failure to comply with the relevant
requirements could subject us to fines or sanctions imposed by the Chinese
government, including restrictions on certain of our subsidiaries’ ability to
pay dividends to us and our ability to increase our investment in those
subsidiaries.




In 2006,
six Chinese regulatory authorities, including the Chinese Ministry of Commerce
and the Chinese Securities Regulatory Commission, jointly promulgated
regulations entitled Provisions Regarding Mergers and Acquisitions of Domestic
Enterprises by Foreign Investors (the “M&A Rules”). The M&A Rules
established additional procedures and requirements that make merger and
acquisition activities by foreign investors more time-consuming and complex,
including, in some circumstances, advance notice to the Ministry of Commerce of
any change-of-control transaction in which a foreign investor takes control of a
Chinese domestic enterprise. Compliance with the M&A Rules, and any related
approval processes, including obtaining approval from the Ministry of Commerce,
may delay or inhibit our ability to complete acquisitions of domestic Chinese
companies, which could affect our ability to expand our business or maintain our
market share.




We may be subject to Chinese
regulations relating to employee stock options granted to Chinese citizens and
if we are unable to comply with such regulations, we may be subject to fines and
legal sanctions in China.




On March
28, 2007, SAFE issued the Application Procedure for Foreign Exchange
Administration for Domestic Individuals Participating in Employee Stock Holding
Plans or Stock Option Plans of Overseas Listed Companies, also known as
“Circular 78”. Under Circular 78, Chinese individuals who participate in an
employee stock option holding plan or a stock option plan of an overseas listed
corporation are required, through a Chinese domestic agent or Chinese subsidiary
of the overseas listed corporation, to register with SAFE and complete certain
other procedures.  We and our Chinese employees who have been granted
restricted stock or stock options are subject to Circular 78 because we are an
overseas listed corporation.  However, in practice, significant
uncertainties exist with respect to the interpretation and implementation of
Circular 78.  We cannot provide any assurance that we or our Chinese
employees will be able to comply with, qualify under, or obtain any registration
required by Circular 78.  In particular, if we or our Chinese
employees fail to comply with the provisions of Circular 78, we or such Chinese
employees may be subject to fines and legal sanctions imposed by SAFE or other
Chinese governmental authorities, which could result in a material adverse
effect to our business operations.




Our
ability to provide loans or capital contributions to our Chinese subsidiaries
may be limited by Chinese law.




Chinese
regulation of direct investment and loans by offshore holding companies to
Chinese entities may delay or limit us from making capital contributions or
loans to our Chinese subsidiaries.  Any capital contributions or loans
that we, as an offshore entity, make to our Chinese subsidiaries are subject to
Chinese regulations. For example, any loans we make to our Chinese subsidiaries
cannot exceed the difference between the total amount of investment our Chinese
subsidiaries are approved to make under relevant Chinese laws and the respective
registered capital of our Chinese subsidiaries, and must be registered with the
local branch of the SAFE as a procedural matter.  In addition, capital
contributions from us to our Chinese subsidiaries must be approved by the PRC
Ministry of Commerce or its local counterpart. There is no assurance that we
will be able to obtain these approvals on a timely basis, or at
all.  If we fail to obtain such approvals, our ability to make equity
contributions or provide loans to our Chinese subsidiaries or to fund our
operations may be negatively affected, which could adversely affect their
liquidity and our ability to fund our working capital and expansion projects and
meet our obligations and commitments to local Chinese governments related to
establishing our stevia operations.




Pursuing
or enforcing shareholder actions against our Chinese subsidiaries may be
limited.




Because
many of the directors and executive officers of our subsidiaries are Chinese
citizens and reside in China, it may be difficult, if not impossible, to acquire
jurisdiction over these persons in the event a lawsuit is initiated against our
subsidiaries, or their directors and officers by a shareholder or group of
shareholders.  Furthermore, because the majority of our subsidiaries’
assets are located in the People’s Republic of China it would also be very
difficult to access those assets to satisfy an award entered against us or our
subsidiaries in a Canadian court.




41




Businesses
operating in China may be subject to greater risk of violating US or other
anti-corruption legislation.




We are
subject to the United States Foreign Corrupt Practices Act, which generally
prohibits US public companies from engaging in bribery or other prohibited
payments to foreign officials for the purpose of obtaining or retaining
business. Non-US companies, including some that may compete with our company,
are not subject to these prohibitions. Corruption, extortion, bribery, pay-offs,
theft and other fraudulent practices may occur in China. We can make no
assurance, however, that our employees or other agents will not engage in such
conduct for which we might be held responsible.  If our employees or
other agents are found to have engaged in such practices, we could suffer severe
penalties and other consequences, including adverse publicity and damage to our
reputation that may have a material adverse effect on our business, financial
condition and results of operations.




The
Chinese government has been adopting increasingly stringent environmental
protection and safety in production requirements which could hurt our
business.




The
continuance of our operations depends upon compliance with the applicable
environmental, safety in production and other regulations.  Any change
in the scope or application of these laws and regulations may limit our
production capacity or increase our cost of operations and could therefore have
an adverse effect on our business operations, financial condition and operating
results.  Our failure to comply with these laws and regulations could
result in fines, penalties or legal proceedings being commenced against
us.  There can be no assurance that the Chinese government will not
impose additional or stricter laws or regulations, compliance with which may
cause us to incur significant capital expenditures which we may not be able to
pass on to our customers.




Risks
related to the Common Shares




Our
Common Shares may experience price and volume fluctuations.




In recent
years, the global securities markets have experienced a high level of price and
volume volatility, and the market price of securities of many companies has
experienced wide fluctuations which have not necessarily been related to the
operating performance, underlying asset values or prospects of such
companies.




Our
Common Share trading price could be subject to significant fluctuations in
response to numerous factors, including: reports of new information; changes in
our financial situation; the sale of our Common Shares in the market; the
addition or loss of customers; our failure to achieve financial results in line
with the expectations of analysts or our published financial guidance;
conditions or trends in our industry; additions or departures of key personnel
and other events or factors, many of which may be beyond our
control.  As of December 31, 2009, the 52-week trading price of our
Common Shares ranged from a low of $3.64 to a high of $13.92, after giving
effect to the four-to-one (4:1) consolidation of our Common Shares on November
5, 2009.  See “Market for
Securities”.  There is no guarantee that the market price of
the Common Shares will not be subject to any such fluctuations in the
future.




In the
past, following periods of volatility in the market price of a company’s
securities, shareholders have often instituted class action securities
litigation against those companies.  Such litigation, if instituted
against us, could result in substantial costs and diversion of our management’s
attention and resources, which could significantly harm our profitability and
reputation.




Our
actual financial results may vary from our publicly disclosed
forecasts.




Our
actual financial results may vary from our publicly disclosed forecasts and
these variations could be material and adverse. We periodically provide guidance
on future financial results. Our forecasts reflect numerous assumptions
concerning our expected performance, as well as other factors, which are beyond
our control and which may not turn out to be correct. Although we believe that
the assumptions underlying our guidance and other forward-looking statements
were and are reasonable when we make such statements, actual results could be
materially different. Our financial results are subject to numerous risks and
uncertainties, including those identified throughout these risk factors. If our
actual results vary from our announced guidance, the price of our Common Shares
may decline, and such a decline could be substantial. We do not undertake to
update any guidance or other forward-looking information we may
provide.




42




We
do not expect to pay dividends on the Common Shares in the foreseeable
future.




We have
never paid cash dividends on our Common Shares.  We currently intend
to retain our future earnings, if any, to fund the development and growth of our
business, and do not anticipate paying any cash dividends on the Common Shares
for the foreseeable future.  If we were to decide to pay dividends,
foreign exchange and other regulations in China may restrict our ability to
distribute retained earnings from China or convert those payments from RMB into
foreign currencies.  Furthermore, an agreement we have with a customer
relating to their prepayment for stevia extract contains a provision preventing
us from paying dividends during the term of the agreement.  See “Dividend
Policy”.  As a result, the return on investment in the Common
Shares will likely depend upon any future appreciation in their
value.  There is no guarantee that the Common Shares will appreciate
in value or even maintain the price at which shareholders have purchased their
shares.




The
availability of new Common Shares for sale, or future sales of a substantial
number of our Common Shares, could materially adversely affect the market price
of our Common Shares.




Sales of
substantial amounts of our securities, or the availability of such securities
for sale, could adversely affect the prevailing market prices for our
securities.  A decline in the market prices of our securities could
impair our ability to raise additional capital through the sale of securities
should we desire to do so.




If
we are characterized as a passive foreign investment corporation (“PFIC”), US
Holders may be subject to adverse United States federal income tax
consequences.




We must
make an annual determination as to whether we are a PFIC based on the types of
income we earn and the types and value of our assets from time to time, all of
which are subject to change.  Based in part on current operations and
financial projections, we do not expect to be a PFIC for United States federal
income tax purposes for our current taxable year or in the foreseeable
future.  However, there can be no assurance that we will not be a PFIC
for our current taxable year or any future taxable year.  A non-United
States corporation generally will be considered a PFIC for any taxable year if
either (1) at least 75% of its gross income is passive income or
(2) at least 50% of the value of its assets (based on an average of the
quarterly values of the assets during a taxable year) is attributable to assets
that produce or are held for the production of passive income.  The
market value of our assets may be determined in large part by the market price
of our Common Shares, which is likely to fluctuate.  If we were to be
treated as a PFIC for any taxable year during which you hold Common Shares,
certain adverse United States federal income tax consequences could apply to US
Holders.




As
a foreign private issuer, we are subject to different United States securities
laws and rules than a domestic United States issuer, which may limit the
information publicly available to our shareholders.




We are a
foreign private issuer under applicable United States federal securities laws
and, therefore, we are not required to comply with all the periodic disclosure
and current reporting requirements of the Exchange Act. As a result, we do not
file the same reports that a United States domestic issuer would file with the
SEC, although we will be required to file or furnish the SEC with the continuous
disclosure documents that we are required to file in Canada under Canadian
securities laws.  In addition, our officers, directors, and principal
shareholders are exempt from the reporting and “short swing” profit recovery
provisions of Section 16 of the Exchange Act.  Therefore, our
shareholders may not know on as timely a basis when our officers, directors and
principal shareholders purchase or sell our Common Shares, as the reporting
periods under the corresponding Canadian insider reporting requirements are
longer.  In addition, as a foreign private issuer we are exempt from
the proxy solicitation rules under the Exchange Act.




43




We
may lose our foreign private issuer status in the future, which could result in
significant additional costs and expenses to us.




In order
to maintain our current status as a foreign private issuer, a majority of our
Common Shares must be either directly or indirectly owned by non-residents of
the United States, unless we satisfy all of the additional requirements
necessary to preserve this status.  We may in the future lose our
foreign private issuer status if a majority of our Common Shares is held in the
United States and we fail to meet the additional requirements necessary to avoid
loss of foreign private issuer status.  The regulatory and compliance
costs to us under United States federal securities laws as a United States
domestic issuer may be significantly more than the costs we incur as a Canadian
foreign private issuer eligible to use the MJDS.  If we are not a
foreign private issuer, we would not be eligible to use the MJDS or other
foreign issuer forms and would be required to file periodic and current reports
and registration statements on United States domestic issuer forms with the SEC,
which are more detailed and extensive than the forms available to a foreign
private issuer.  We may also be required to prepare our consolidated
financial statements in accordance with US GAAP.  In addition, we may
lose the ability to rely upon exemptions from NASDAQ corporate governance
requirements that are available to foreign private issuers.  Further,
if we engage in capital raising activities after losing our foreign private
issuer status, there is a higher likelihood that investors may require us to
file resale registration statements with the SEC as a condition to any such
financing.




Certain
Canadian laws could delay or deter a change of control.




The Investment Canada Act(Canada) subjects an acquisition of control of GLG by a non-Canadian to
government review if the value of our assets as calculated pursuant to the
legislation exceeds a threshold amount. A reviewable acquisition may not proceed
unless the relevant Minister is satisfied that the investment is likely to be a
net benefit to Canada. This could prevent or delay a change of control and may
eliminate or limit strategic opportunities for shareholders to sell their Common
Shares.




Dividend
Policy




We have
not declared or paid any dividends on the Common Shares since incorporation, and
it is not anticipated that any dividends will be declared or paid in the
immediate or foreseeable future.  Any decision to pay dividends will
be made by our board of directors on the basis of earnings, financial
requirements and other conditions existing at such future time.  An
agreement we have with a customer relating to their prepayment for stevia
extract contains a provision preventing us from paying dividends during the term
of the agreement.




Description
of Share Capital




The
Company is authorized to issue an unlimited number of Common Shares, of which
25,417,723 Common Shares were issued and outstanding as at the date of this
Annual Information Form.




All of
the Common Shares rank equally as to voting rights, participation in a
distribution of our assets on liquidation, dissolution or winding-up and the
entitlement to dividends.  The holders of the Common Shares are
entitled to receive notice of all meetings of shareholders and to attend and
vote the shares at the meetings.  Each of the Common Shares carries
with it the right to one vote.  We have authorized no other class or
series of our share capital.




In the
event of the liquidation, dissolution or winding-up of us or other distribution
of our assets, the holders of the Common Shares will be entitled to receive, on
a pro rata basis, all of the assets remaining after we have paid out our
liabilities.  Distributions in the form of dividends, if any, will be
set by our board of directors.




Provisions
as to the modification, amendment or variation of the rights attached to the
Common Shares are contained in our articles and the Business Corporations Act
(British Columbia).  Generally speaking, substantive changes to the
share capital require the approval of the shareholders by special resolution (at
least 2/3 of the votes cast).




44




Market
for Securities




As of the
date hereof, GLG Life Tech’s Common Shares are listed and posted for trading on
the TSX under the symbol “GLG” and on the NASDAQ under the symbol
“GLGL”.  The following sets out the price range and volumes traded or
quoted on the TSX on a monthly basis for each month of 2009.  The
price range and volumes traded or quoted on the TSX are as adjusted to give
effect to the November 5, 2009 consolidation of our Common Shares on a
four-to-one (4:1) basis:




Month
                  
                  High
                  
                  
                  Low
                  
                  
                  Close
                  
                  
                  VolumeDecember
      2009
                  
                  $
                  8.35
                  
                  
                  $
                  6.55
                  
                  
                  $
                  8.15
                  
                  
                  
                  703,355November
      2009
                  
                  $
                  11.60
                  
                  
                  $
                  8.05
                  
                  
                  $
                  8.26
                  
                  
                  
                  1,961,738October
      2009
                  
                  $
                  12.96
                  
                  
                  $
                  9.64
                  
                  
                  $
                  11.40
                  
                  
                  
                  5,155,458September
      2009
                  
                  $
                  12.00
                  
                  
                  $
                  7.28
                  
                  
                  $
                  10.80
                  
                  
                  
                  2,090,213August
      2009
                  
                  $
                  9.40
                  
                  
                  $
                  8.20
                  
                  
                  $
                  8.64
                  
                  
                  
                  1,090,566July
      2009
                  
                  $
                  9.68
                  
                  
                  $
                  7.96
                  
                  
                  $
                  9.08
                  
                  
                  
                  705,109June
      2009
                  
                  $
                  11.00
                  
                  
                  $
                  7.44
                  
                  
                  $
                  8.60
                  
                  
                  
                  1,072,662May
      2009
                  
                  $
                  9.00
                  
                  
                  $
                  6.96
                  
                  
                  $
                  7.44
                  
                  
                  
                  339,775April
      2009
                  
                  $
                  9.96
                  
                  
                  $
                  7.44
                  
                  
                  $
                  9.40
                  
                  
                  
                  154,625March
      2009
                  
                  $
                  10.20
                  
                  
                  $
                  8.00
                  
                  
                  $
                  9.60
                  
                  
                  
                  119,837February
      2009
                  
                  $
                  12.48
                  
                  
                  $
                  9.24
                  
                  
                  $
                  10.00
                  
                  
                  
                  165,250January
      2009
                  
                  $
                  13.92
                  
                  
                  $
                  7.20
                  
                  
                  $
                  12.40
                  
                  
                  
                  677,525




The
following table provides the price range and volumes traded or quoted on
NASDAQ.  Our shares began trading on NASDAQ on November 20,
2009.




Month
                  
                  High
                  
                  
                  Low
                  
                  
                  Close
                  
                  
                  VolumeDecember
      2009
                  
                  $
                  7.92
                  
                  
                  $
                  6.23
                  
                  
                  $
                  7.73
                  
                  
                  
                  296,742November
      2009(1)
                  
                  $
                  8.80
                  
                  
                  $
                  7.57
                  
                  
                  $
                  7.70
                  
                  
                  
                  480,629




Notes:




(1)
            For
      the period November 20, 2009 to November 30,
  2009.




Prior
Sales




The
following table summarizes the issuance by us of Common Shares within the
12-month period before the date of this Annual Information Form as adjusted to
give effect to the November 5, 2009 consolidation of our Common Shares on a
four-to-one (4:1) basis.




45




Date of Issue
                        
                        Number of Common Shares
                          Issued
                        
                        
                        Issue Price
                          ($)December
      8, 2009
                        
                        
                        1,093,750
                        (1)
                        
                        
                        7.60December
      1, 2009
                        
                        
                        625
                        (2)
                        
                        
                        3.20December
      1, 2009
                        
                        
                        543,750
                        (3)
                        
                        
                        8.08November
      25, 2009
                        
                        
                        3,625,000
                        (3)
                        
                        
                        8.08June
      30, 2009
                        
                        
                        240,833
                        (4)
                        
                        
                        1.20June
      30, 2009
                        
                        
                        283,850
                        (5)
                        
                        
                        8.60Total
                        
                        
                        5,787,808




Notes:


(1)
            Issued
      as the final installment of the purchase price in connection with the AHTD
      acquisition.


(2)
            Issued
      on the exercise of options pursuant to our stock option and restricted
      share plan.


(3)
            Issued
      in connection with the Offering.


(4)
            Issued
      on the exercise of options pursuant to our stock option and restricted
      share plan.


(5)
            Issuance
      of restricted shares under our stock option and restricted share
      plan.




The
following table summarizes the issuances by us of stock options within the
12-month period before the date of this Annual Information Form as adjusted to
give effect to the November 5, 2009 consolidation of our Common Shares on a
four-to-one (4:1) basis.




Date of Issue
                      
                      Number of Options
                        Issued
                      
                      
                      Option Exercise
                        Price
                        ($)December
      2, 2009
                      
                      
                      18,750
                      
                      
                      
                      8.25June
      30, 2009
                      
                      
                      91,150
                      
                      
                      
                      8.60Total
                      
                      
                      109,900




Escrowed
Securities and Securities Subject to


Contractual
Restrictions on Transfer




To the
knowledge of the Company, the securities in the table below are the only
securities of the Company that are in escrow or subject to contractual
restriction:




Designation
      of Class
                    
                    Number
      of securities held in escrow or
                      that
      are subject to a contractual
                      restriction
      on transfer
                    
                    
                    Percentage
      of ClassCommon
      Shares
                    
                    
                    8,692,293
                    (1)
                    
                    
                    34.2
                    %




Note:


(1)
            In
      connection with the Company’s public offering of Common Shares of November
      25, 2009 (the “Offering”), certain directors, officers and significant
      shareholders entered into lock-up agreements with the Underwriters of that
      Offering.  As of the date of this Annual Information Form, the
      lock-up agreements of Dr. Luke Zhang, Mr. Brian Palmieri, Skyland
      International Investment Management Ltd. and HZ Health Management Company
      Limited (the “Extended Locked -up Shareholders”) are still in
      effect.  The Extended Locked-Up Shareholders have agreed,
      subject to specified exceptions, not to directly or
      indirectly:




·
            offer,
      sell, contract to sell, secure, pledge, grant or sell any option, right or
      warrant to purchase, or otherwise lend, transfer or dispose of, establish
      an open “put equivalent position” within the meaning of Rule 16a-1(h)
      under the Securities Exchange Act, or announce any intention to do so, any
      of our securities that they hold,
or




·
            make
      any short sale, engage in any hedging transaction, or enter into any swap
      or other arrangement that transfers to another any of the economic
      consequences of ownership of Common
Shares,




46




without
the prior written consent of the lead underwriters, for the period commencing on
the date of the lock-up agreement to the 12 month anniversary of the closing of
the Offering 100% of the Common Shares held by the Extended Locked-Up
Shareholders, with 1/3 of such Common Shares released from the above obligations
on the 12 month anniversary of the closing of the Offering, an additional 1/3 of
such Common Shares released from the above obligations on the 24 month
anniversary of the closing of the Offering and the remaining 1/3 of such Common
Shares released from the above obligations on the 36 month anniversary of the
closing of the Offering.




Directors
and Officers




The
directors are elected by the shareholders at each annual general meeting and
typically hold office until the next annual general meeting at which time they
may be re-elected or replaced.  Casual vacancies on the Board are
filled by the remaining directors and the persons filling those vacancies hold
office until the next annual general meeting at which time they may be
re-elected or replaced.  The officers are appointed by the Board and
hold office at the pleasure of the Board.




Collectively,
as at the date of this Annual Information Form, the directors and executive
officers of GLG Life Tech, as a group, own 3,247,610 Common Shares, representing
approximately 12.8% (12.2% on a fully diluted basis) of the issued and
outstanding Common Shares.




The
following table sets forth the names and municipalities of residence of all the
directors and executive officers of the Company, as well as the positions and
offices held by such persons and their principal occupations.




Name
      and Municipality of
                                            Residence
                                          
                                          Position
      with GLG Life Tech
                                          
                                          Principal Occupations for the
                                            past
      5 years
                                          
                                          Director
      SinceDavid
      Beasley(1)(2)(3)(4)
                                            Society
      Hill, South Carolina
                                            United
      States
                                          
                                          Director
                                          
                                          Consultant
      for Public Square Strategies Inc.
                                          
                                          June
      21, 2005David
      Bishop
                                            Atlanta,
      Georgia,
                                            United
      States
                                          
                                          Executive
      Vice President – International Affairs
                                          
                                          Executive
      Vice President – International Affairs of GLG
                                          
                                          N/AHe
      Fangzhen (1)(3)(4)
                                            Jinan,
      Shangdong Province,
                                            China
                                          
                                          Director
                                          
                                          Retired
      Chief Engineer
                                          
                                          May
      7, 2008Sophia
      Leung(1)(2)(3)(4)
                                            Vancouver,
      British Columbia
                                            Canada
                                          
                                          Director
                                          
                                          Consultant
      for Canada Vision Enterprise Group Inc.
                                          
                                          February
      2, 2007Brian
      Meadows
                                            Tsawwassen,
                                            British
      Columbia, Canada
                                          
                                          Chief
      Financial Officer and Corporate Secretary
                                          
                                          Chief
      Financial Officer of GLG Life Tech Corporation
                                          
                                          N/ABrian
      Palmieri
                                            Cody,
      Wyoming
                                            United
      States
                                          
                                          President,
      Vice Chairman and Director
                                          
                                          President,
      Vice Chairman and Director of GLG Life Tech Corporation
                                          
                                          June
      21, 2005Liu
      Yingchun(1)(2)(3)(4)
                                            Heze,
      Shangdong Province
                                            China
                                          
                                          Director
                                          
                                          Credit
      Director, Heze Industrial and Commercial Bank (1997 –
2000)
                                          
                                          June
      17, 2008Jinduo
      Zhang
                                            Burnaby,
      British Columbia
                                            Canada
                                          
                                          Director
                                          
                                          Retired
      Professor
                                          
                                          June
      21, 2005Dr.
      Luke Zhang
                                            Heze,
      Shangdong Province
                                            China
                                          
                                          Chief
      Executive Officer, Chairman and Director
                                          
                                          Chief
      Executive Officer, Chairman and Director of GLG Life Tech
      Corporation
                                          
                                          June
      21,
2005




47




Notes:


(1)
            Independent
      Director




(2)
            Member
      of the Audit Committee




(3)
            Member
      of Compensation Committee.




(4)
            Member
      of Corporate Governance and Nominating
  Committee.




The
following is a brief description of the background of the directors and
executive officers of GLG Life Tech Corporation.




Directors
and Executive Officers





David
Beasley (Director)




Mr.
Beasley resides in Society Hill, South Carolina and was appointed as one of our
directors on June 21, 2005.  From 1999 to 2000, he worked as a
consultant for Bingham Consulting Group, LLC, of Boston, Massachusetts, a
consulting business that advises large national and international companies on
public issues.  For the past four years, Mr. Beasley, through his
company Public Square Strategies, Inc., has continued to provide consulting
services to various companies on public issues, his main client being Merrill
Lynch & Co., Inc.  Mr. Beasley was Governor of South Carolina from
1995 to 1999 and sat in the South Carolina House of Representatives from 1979 to
1992.  Mr. Beasley is an independent director.




David
Bishop (Executive Vice President, International Affairs)




Mr.
Bishop resides in Atlanta, Georgia and was appointed as our Chief Operating
Officer on February 2, 2007.  Mr. Bishop has more than 25 years’
experience in a variety of personnel, educational, organizational and management
responsibilities.  For approximately 15 years, he lived and worked as
an expatriate in a cross cultural/cross linguistic environment with a variety of
project related duties.  Mr. Bishop is also Chairman of our
subsidiary, Runde and has been a director of Maple Leaf Reforestation, Inc.
(TSX-MPE Canada) since September 2006.  On May 15, 2008, Mr. Bishop
relinquished his role as our Chief Operating Officer and was named our Executive
Vice President, International Affairs.  We have not appointed a new
Chief Operating Officer and these responsibilities are fulfilled by a number of
people under the supervision of Dr. Luke Zhang.




He
Fangzhen (Director)




Mr.
Fangzhen was appointed as one of our directors on May 7, 2008.  Mr.
Fangzhen is a specialist in manufacturing and production.  With over
40 years of experience, his expertise as a chief engineer lies in optimizing
manufacturing plant and personnel, particularly in China. His specialties
include planning, operational structure, maintenance, safety, quality control
and risk management as well as the assignment, training and supervision of
production and technology personnel. Mr. Fangzhen graduated from Taiyuan
Polytech University in China.  Mr. He is an independent
director.




Sophia
Leung (Director)




Madame
Leung resides in Vancouver, British Columbia and was appointed as one of our
directors on February 2, 2007.  Madame Leung has served in political
positions on a national level, including as special advisor in international
trade to Canada’s prime minister from 2004-2006, parliamentary secretary for
National Revenue of Canada from 2000-2004 and Member of Parliament of Canada
1997–2004.  Madame Leung is currently a consultant for Canada Vision
Enterprise Group Inc.  Madame Leung is an independent
director.




48




Brian
Meadows (Chief Financial Officer and Corporate Secretary)




Mr.
Meadows resides in Tsawwassen, British Columbia and was appointed as our Chief
Financial Officer on October 9, 2007.  Mr. Meadows has 20 years’
experience in the telecommunications industry in both North America and Europe
and prior to his engagement as our Chief Financial Officer Mr. Meadows worked
for Telus Corporation.  He has held senior financial and business
development roles in several start-up companies in Europe earlier in his career
(1996-2001) as well as having worked with large public companies in Canada in
both financial and operational roles.  Mr. Meadows holds both the
Certified Financial Analyst (CFA) designation as well as the Certified
Management Accountant (CMA) designation.  He obtained his
international MBA from the University of Glasgow in 1995 and a Bachelor of
Business Administration from Wilfrid Laurier University in 1987.  Mr.
Meadows was appointed as our Corporate Secretary on May 19, 2009.




Brian
Palmieri (Director, President and Vice-Chairman)




Mr.
Palmieri resides in Cody, Wyoming and was appointed as our Chief Executive
Officer and a director on June 21, 2005. On May 15, 2008, Mr. Palmieri
relinquished his role as our Chief Executive Officer and was named our President
and Vice-Chairman.  Mr. Palmieri is a non-independent
director.




Prior to
his involvement with us, Mr. Palmieri’s time has been divided between the
following businesses in which he is a principal:




American
Tool and Die Inc., the principal business of which is metals manufacturing and
of which he is president;




Lee
Livingston Outfitters, the principal business of which is outfitting;
and




Palco
International Inc. and AAFAB International Inc., the principal business of both
being international trading and consulting and of which he serves as
president.




Liu
Yingchun (Director)




Madame
Yingchun was elected as one of our directors on June 17, 2008.  Madame
Yingchun graduated from Shandong Economical College and has over 20 years of
experience in finance and accounting. She has worked for several major banks and
insurance companies in China including China Bank and the Industrial and
Commercial Bank of China. She is a certified economist and financial analyst.
Mrs. Liu is currently audit director and controller of HeZe Industrial and
Commercial Bank. She also has experience in internal control and investment
management.Madame Yingchun is an independent
director.




Jinduo
Zhang (Director)




Mr.
Jinduo Zhang is a retired professor, resides in Burnaby, British Columbia and
was appointed as one of our directors on June 21, 2005.  Professor
Zhang was, before his retirement, a physics professor at Shandong Heze
University.  He was also involved with the financial management of the
university and in the family jewelry and pharmacy business.  In 1986,
he retired from his professorship in China and moved to the United States and
then Canada.  Since retirement, Professor Zhang has been active in the
development and expansion of his family business functioning as an advisor and
financial consultant for various projects.  Professor Zhang is a
non-independent director due to his familial relationship with our Chairman Dr.
Luke Zhang.




Dr.
Luke Zhang (Director, Chief Executive Officer and Chairman)




Dr. Zhang
is a Canadian citizen and currently resides in China.  He was
appointed as our Chairman and as director on June 21, 2005 and as our President
on September 6, 2007.  On May 15, 2008, Dr. Zhang relinquished his
role as our President and was named our Chief Executive Officer.  Dr.
Zhang received his PhD in Pharmacology from Vanderbilt University and has worked
in international business for over 20 years.  He is a non-independent
director.




49




Cease
Trade Orders




No
director or executive officer of the Company is, or within ten years prior to
the date hereof has been, a director, chief executive officer or chief financial
officer of any company (including the Company) that, (i) was subject to a cease
trade order, an order similar to a cease trade order or an order that denied the
relevant company access to any exemption under securities legislation, that was
in effect for a period of more than 30 consecutive days, that was issued while
the director or executive officer was acting in the capacity as director, chief
executive officer or chief financial officer; or (ii) was subject to a cease
trade order, an order similar to a cease trade order or an order that denied the
relevant company access to any exemption under securities legislation, that was
in effect for a period of more than 30 consecutive days, that was issued after
the director or executive officer ceased to be a director, chief executive
officer or chief financial officer and which resulted from an event that
occurred while that person was acting in the capacity as director, chief
executive officer or chief financial officer.




Individual
Bankruptcies




No
director or executive officer of the Company, or a shareholder holding a
sufficient number of securities of the Company to affect materially control of
the Company, (i) is, or within ten years prior to the date hereof has been, a
director or executive officer of any company (including the Company) that, while
that person was acting in that capacity, or within a year of that person ceasing
to act in that capacity, became bankrupt, made a proposal under any legislation
relating to bankruptcy or insolvency or was subject to or instituted any
proceedings, arrangement or compromise with creditors or had a receiver,
receiver manager or trustee appointed to hold its assets; or (ii) has, within
ten years prior to the date hereof, become bankrupt, made a proposal under any
legislation relating to bankruptcy or insolvency, or become subject to or
instituted any proceedings, arrangement or compromise with creditors, or had a
receiver, receiver manager or trustee appointed to hold the assets of the
director, executive officer or shareholder.




Penalties
and Sanctions




No
director or executive officer of the Company, or a shareholder holding a
sufficient number of securities of the Company to affect materially the control
of the Company, has been subject to (i) any penalties or sanctions imposed by a
court relating to securities legislation or by a securities regulatory authority
or has entered into a settlement agreement with a securities regulatory
authority; or (ii) any other penalties or sanctions imposed by a court or
regulatory body that would likely be considered important to a reasonable
investor in making an investment decision.




Conflicts
of Interest




There are
potential conflicts of interest to which the directors and officers of GLG will
be subject with respect to the operations of GLG.  Certain of the
directors and officers of GLG also serve as directors and officers of other
companies.  Situations may arise where the directors and officers will
be engaged in direct competition with GLG.  Any conflicts of interest
will be subject to and governed by the law applicable to directors and officers
conflicts of interest, including the procedures prescribed by the Business Corporations Act
(British Columbia).




If a
conflict of interest arises at a meeting of the Board of Directors of GLG, any
director in a conflict will disclose his interest and abstain from voting on
such matter.




Corporate
Governance




The Board
of Directors of the Company is responsible for the supervision of the management
of the Company’s business and affairs.  The Board of Directors is
currently composed of seven directors, four of whom the Company considers to be
independent as set out below.  The Board of Directors considers a
member to be independent if he has no direct or indirect material relationship
with the Company which, in the view of the Board of Directors, would reasonably
be perceived to materially interfere with the exercise of the director’s
independent judgment.  The Board’s current composition is as
follows:




50




David
Beasley – independent




Sophia
Leung – independent




He
Fangzhen – independent




Liu
Yingchun - independent




Brian
Palmieri – non-independent




Jinduo
Zhang – non-independent




Dr. Luke
Zhang – non-independent




Brian
Palmieri and Dr. Luke Zhang are executive officers and significant shareholders
of the Company, hence they are not considered to be independent of
management.  Jinduo Zhang is deemed to be non-independent by virtue of
his family relationship with Dr. Luke Zhang.




Committees
of our  Board of Directors




We have
three board committees, being the Audit Committee, the Compensation Committee
and the Corporate Governance and Nominating Committee.




Audit
Committee




The Audit
Committee assists the board of directors in fulfilling its responsibilities for
oversight of financial and accounting matters.  In addition to
recommending the auditors to be nominated and reviewing the compensation of the
auditors, the Committee is responsible for overseeing the work of the auditors
and pre-approving non-audit services.  The Committee also reviews our
annual and interim financial statements and news releases containing information
taken from our financial statements prior to their release.  The
Committee is responsible for reviewing the acceptability and quality of our
financial reporting and accounting standards and principles and any proposed
material changes to them or their application.




The
members of the Audit Committee are Mr. David Beasley, Madame Sophia Leung and
Madame Liu Yingchun.  Each member of the Audit Committee is
“independent” within the meaning of Rule 10A-3 under the Exchange Act, the
NASDAQ Marketplace Rules and Canadian Securities laws.  The Audit
Committee has a published charter which is attached to our AIF and is attached
as Appendix A to this Annual Information Form.  The Charter is
available at www.sedar.com and is
also posted on our website, www.glglifetech.com.




The Audit
Committee is currently composed of the following directors: David Beasley,
Madame Sophia Leung and Madame Liu Yingchun.




Education
and Experience of Members of the Audit Committee




The Audit
Committee reports to the Board of Directors, and is responsible for assisting in
the Board of Directors’ oversight of the reliability and integrity of the
accounting principles and practices, financial statements, other financial
reporting, and disclosure practices followed by management of the Company and
its subsidiaries.




All
members of the Audit Committee members are independent.




All of
the members of the Audit Committee is financially literate based on their
experience as a chief executive, financial officer or officers and directors of
public and/or private organizations.




51




Pre-Approval
Policies and Procedures of Non-Audit Services




The Audit
Committee’s Charter sets out responsibilities regarding the provision of
non-audit services by the Company’s external auditors.  As a matter of
practice the Audit Committee, and or the audit committee chairman acting on
behalf of the Audit Committee, will generally pre-approve all audit and
permitted non-audit services to be performed by the external auditors and
identifies and reviews the types of non-audit services or mandates that it
considers to be incompatible with the principles underlying the independence of
the external auditors.




Change
of External Auditor




The
Company changed its auditor in the fourth quarter of 2008.
PricewaterhouseCoopers LLP was engaged as the Company’s new auditor, replacing
Lo Porter Hetu Certified General Accountants. The termination of Lo Porter Hetu
Certified General Accountants and the appointment of PricewaterhouseCoopers LLP
were approved by the Audit Committee and there were no reportable events in
connection with this change in auditor.




External
Auditor Service Fees




The
aggregate fees for professional services rendered by the Company’s auditors for
the years ended December 31, 2008 and December 31, 2009 as follows:




Fiscal years ended December
    31
                      
                      2009
                      
                      
                      2008Audit
      Fees
                      
                      $
                      320,305
                      (2)
                      
                      $
                      143,390
                      (2)Audit-Related
      Fees
                      
                      $
                        $
                      153,000
                        14,272
                      (2)
                        (1)
                      
                      $
                      8,000
                      (1)Total
      Audit and Audit-Related Fees
                      
                      $
                      487,577
                      
                      
                      $
                      151,390Tax
      Fees
                      
                      $
                      27,676
                      (2)
                      
                      $
                      3,000
                      (1)All
      Other Fees
                      
                      
                      -
                      
                      
                      $
                      6,718
                      (1)Total
      Fees
                      
                      $
                      515,252
                      
                      
                      $
                      161,108


(1)
            This
      represents fees paid to Lo Porter
Hetu.




(2)
            This
      represents fees paid to PricewaterhouseCoopers
  LLP.




Audit
Fees




Audit
fees were for professional services rendered by PricewaterhouseCoopers LLP for
the audit of the Company’s annual financial statements, assistance with the
Company’s quarterly financial statements and services provided in connection
with statutory and regulatory filings or engagements related to prospectuses and
other offering documents.




Audit-Related
Fees




Audit-related
fees were for assurance and related services reasonably related to the
performance of the audit or review of the financial statements and are not
included under the heading “Audit Fees” above.




Tax
Fees




Tax fees
were for tax compliance, including the preparation of tax returns, and tax
advice.




52




Other
Fees




Other
fees were for the continuous disclosure review services.




Compensation
Committee




The
Compensation Committee was established on March 18, 2008 and assists the board
of directors in fulfilling its oversight responsibilities relating to
compensation.  The Committee’s role includes establishing a
remuneration and benefits plan for directors, executives and other key employees
and reviewing the adequacy and form of compensation of directors and senior
management.  The Committee oversees the development and implementation
of compensation programs in order to support our business objectives and attract
and retain key executives.  The Committee also reviews and makes
recommendations to our board of directors regarding our incentive compensation
equity-based plans.




The
members of the Compensation Committee are Mr. David Beasley, Madame Sophia
Leung, Madame Liu Yingchun, and Mr. He Fangzhen.  Each member of the
Compensation Committee is “independent” within the meaning of the NASDAQ
Marketplace Rules and Canadian Securities laws.




Corporate
Governance and Nominating Committee




The
Corporate Governance and Nominating Committee was established on March 18, 2008
and assists the board of directors in fulfilling its oversight responsibilities
relating the board of director’s relationship with senior
management.  The Committee’s role includes developing and monitoring
the effectiveness of our system of corporate governance, assessing the
effectiveness of individual directors, the board of directors, and various board
committees, and is responsible for appropriate corporate governance and proper
delineation of the roles, duties and responsibilities of management, the board
of directors and its committees.  The Committee is responsible for
recommending to the board of directors a set of corporate governance principles
and reviewing these principles at least once a year.  The Committee
oversees our investor relations and public relations activities.  In
addition, the Committee is responsible for identifying and recommending
candidates qualified to become directors and board committee members and to
ensure that an effective Chief Executive Officer succession plan is in
place.




The
members of the Corporate Governance and Nominating Committee are Mr. David
Beasley, Madame Sophia Leung, Madame Liu Yingchun and Mr. He
Fangzhen.  Each member of the Corporate Governance and Nominating
Committee is “independent” within the meaning of the NASDAQ Marketplace Rules
and Canadian Securities laws.




Legal
Proceedings and Regulatory Actions




The
Company is currently working through a contract issue with Northern Securities
Inc. (“Northern”) over $38,664 in cash and 250,000 Common Shares of GLG that
Northern is claiming it is owed by the Company in connection with the parties
sponsorship agreement dated January 24, 2007 (the “Sponsorship
Agreement”).  The issue centres on the performance of Northern under
the Sponsorship Agreement and the resulting payment for services
rendered.  On May 27, 2008, Northern filed its statement of claim in
the B.C. Supreme Court.  The Company has filed its defence and has
also filed a counter claim against Northern Securities.  There is no
certainty over the outcome of this lawsuit.  The Company is confident
in its position taken with respect to not paying Northern any additional fees
due to failure of Northern to perform against the contract.  However,
should the issue be resolved in Northern's favour, the Company would be required
to pay $38,664 in cash and to issue 62,500 Common Shares to
Northern.  Total contingent consideration would amount to $548,039
based on the year-end 2009 closing share price.  The Company has
already paid to Northern an initial sponsorship fee of $10,000 and issued to
Northern 62,500 Common Shares at a price of $4.80 per Common Share for total
consideration of $310,000 as is reflected in Shareholder's Equity in 2007 under
share issue costs.  A court date has been scheduled for November 29,
2010.




53




On
November 4, 2009, Weider Global Nutrition ("WGN") filed legal proceedings in the
Supreme Court of British Columbia against us.  WGN alleged that
pursuant to the shareholder agreement between WGN and us, GLG Weider Sweet
Naturals Corp. (“Sweet Naturals”) became our exclusive marketing and sales arm,
other than as provided under the Strategic Alliance and Supply
Agreement.  WGN also alleged misrepresentation and breach of fiduciary
duty by us. WGN was claiming injunctive relief, an accounting and damages for
alleged breaches of the shareholder agreement.




On
November 11, 2009, we filed a statement of defence and counterclaim in
connection with the claim against us by WGN in the Supreme Court of British
Columbia.




Our
statement of defence stated, that WGN’s claim that Sweet Naturals was entitled
to a larger share of our stevia business was contrary to the express provisions
of the shareholder agreement.  The statement of defence also stated
that other claims by WGN fall outside the terms of the shareholder agreement and
are inconsistent with it.  We had also instituted a counterclaim for
damages against WGN as a result of the commencement of the action.




On March
29, 2010, the Company and Weider Global Nutrition LLC (“Weider”) announced that
the proceedings commenced by Weider against the Company in the Supreme Court of
British Columbia will be dismissed by consent of the parties.  The
dismissal was the result of Weider’s offer to drop its claim against the Company
without any payment to Weider if the Company would drop its counterclaim against
Weider and agree to wind up GLG and Weider’s joint venture company, GLG Weider
Sweet Naturals Corporation.  The Company will now be marketing all of
its products itself.  Weider will carry on marketing activities in
Stevia related products independently.




Interests
of Management and Others in Material Transactions




Other
than as disclosed herein, the Company is not aware of any material interest,
direct or indirect, of (i) any shareholder that is a direct or indirect
beneficial owner of, or who exercises control or direction over, more than 10%
of the voting rights attached to the Common Shares, (ii) any of our directors or
executive officers or our subsidiaries’ directors or executive officers, or
(iii) any associate or affiliate of any of the foregoing, in any transaction
which has been entered into within the three most recently completed financial
years or during the current financial year, that has materially affected or will
materially affect the Company.




Auditors,
Registrar and Transfer Agent




Auditors




The
Company’s auditors are PricewaterhouseCoopers LLP at their offices at 250 Howe
Street, Suite 700, Vancouver, BC V6C 3S7




Transfer
Agent and Registrar




The
Company’s transfer agent and registrar is Computershare Trust Company of Canada
at its principal offices at 510 Burrard Street, Second Floor, Vancouver, British
Columbia V6C 3B9.




54




Interest
of Experts




The
Corporation’s auditors are PricewaterhouseCoopers LLP, Chartered Accountants,
who have prepared an independent auditors’ report dated March 31, 2010 in
respect of the Corporation’s consolidated financial statements as at December
31, 2009 and 2008 and for each of the two years ended December 31,
2009.  PricewaterhouseCoopers LLP has advised that they are
independent with respect to the Corporation within the meaning of the Rules of
Professional Conduct of the Institute of Chartered Accountants of British
Columbia and the rules of the US Securities and Exchange
Commission.




Material
Contracts




Except
for contracts entered into in the ordinary course of business or as otherwise
disclosed herein, there are no other material contracts entered into within the
most recently completed financial year or before the most recently completed
financial year that are still in effect.




The
material contracts disclosed herein are: the Strategic Alliance Agreement dated
April 30, 2008, as amended on August 8, 2008 and May 4, 2009, between the
Company and Cargill.




Additional
Information




Additional
information, including directors’ and officers’ remuneration and indebtedness,
principal holders of the Company’s securities, options to purchase securities
and interests of insiders in material transactions, where applicable, is
contained in the most recent Management Proxy Circular dated May 26, 2009 for
the Company’s annual general meeting of shareholders that involves the election
of directors held on June 25, 2009.  Additional financial information
is provided in the Company’s most recent audited financial
statements.  A copy of these documents may be obtained upon request
from the Chief Financial Officer or may be obtained from SEDAR at www.sedar.com
under the company name, GLG Life Tech Corporation.




55




Appendix
A




AUDIT COMMITTEE
CHARTER




GLG
LIFE TECH CORPORATION


(the
“Company”)




The Audit
Committee (the “Committee”) is a committee of the board of directors (the
“Board”) of the Company.  The role of the Committee is to provide
oversight of the Company’s financial management and of the design and
implementation of an effective system of internal financial controls as well as
to review and report to the Board on the integrity of the financial statements
of the Company, its subsidiaries and associated companies.  This
includes helping directors meet their responsibilities, facilitating better
communication between directors and the external auditor, enhancing the
independence of the external auditor, increasing the credibility and objectivity
of financial reports and strengthening the role of the directors by facilitating
in-depth discussions among directors, management and the external
auditor.  Management is responsible for establishing and maintaining
those controls, procedures and processes and the Committee is appointed by the
Board to review and monitor them.  The Company’s external auditor is
ultimately accountable to the Board and the Committee as representatives of the
Company’s shareholders.




The
Company shall provide appropriate funding, as determined by the Committee, to
permit the Committee to perform its duties under this Charter, to compensate its
advisors and to compensate any registered public accounting firm engaged for the
purpose of rendering or issuing an audit report or related work or performing
other audit, review or attest services for the Company.  The
Committee, at its discretion, has the authority to initiate investigations, and
hire legal, accounting or other outside advisors or experts to assist the
Committee, as it deems necessary to fulfill its duties under this
Charter.




Duties and Responsibilities
of the Audit Committee




External
Auditor




·
            To
      be directly and solely responsible, subject to shareholder approval,for the
      appointment, compensation, retention and oversight of any independent
      auditor (including resolution of disagreements between management and the
      independent auditor regarding financial reporting) engaged by the Company
      for the purpose of preparing or issuing an audit report or related work,
      with each such auditor reporting directly to the
  Committee.




·
            To
      obtain and review annually a report from the independent auditor
      describing (i) the independent auditor’s internal quality-control
      procedures, (ii) any material issues raised by the most recent internal
      quality-control review or peer reviews or by any inquiry or investigation
      by governmental or professional authorities within the preceding five
      years respecting one or more independent audits carried out by the firm,
      and any steps taken to deal with such issues, and (iii) all relationships
      between the independent auditor and the
Company.




·
            To
      review with the independent auditor any accounting adjustments that were
      noted or proposed by the independent auditor but that were “passed” (as
      immaterial or otherwise), and communications between the audit team and
      the independent auditor’s national office respecting auditing or
      accounting issues presented by the engagement, and any “management” or
      “internal control” letter or schedule of unadjusted differences issued, or
      proposed to be issued, by the independent auditor to the Company, or any
      other material written communication provided by the independent auditor
      to the Company’s management.


56




·
            To
      oversee the work of the external auditor engaged for the purpose of
      preparing or issuing an auditor’s report or performing other audit, review
      or attest services for the Company, including the resolution of
      disagreements between management and the external auditor regarding
      financial reporting.




·
            To
      evaluate the audit services provided by the external auditor, pre-approve
      all audit fees and recommend to the Board, if necessary, the replacement
      of the external auditor.




·
            To
      pre-approve any non-audit services to be provided to the Company by the
      external auditor and the fees for those
  services.




·
            To
      review and approve the Company’s hiring policies regarding partners,
      employees and former partners and employees of the present and former
      external auditor of the Company.  The Committee has
      adopted the following guidelines regarding the hiring of any partner,
      employee, reviewing tax professional or other person providing audit
      assurance to the external auditor of the Company on any aspect of its
      certification of the Company’s financial
  statements:




(a)
            No
      member of the audit team that is auditing a business of the Company can be
      hired into that business or into a position to which that business reports
      for a period of three years after the
audit;




(b)
            No
      former partner or employee of the external auditor may be made an officer
      of the Company or any of its subsidiaries for three years following the
      end of the individual’s association with the external
    auditor;




(c)
            The
      CFO must approve all office hires from the external auditor;
      and




(d)
            The
      CFO must report annually to the Committee on any hires within these
      guidelines during the preceding
year.




·
            To
      ensure that the head audit partner assigned by the external auditor to the
      Company, as well as the audit partner charged with reviewing the audit of
      the Company, are changed at least every five years, to consider issues
      related to the timing of such rotation and the transition to new lead and
      reviewing partners, and to consider whether, in order to assure continuing
      auditor independence, there should be regular rotation of the audit firm,
      and report any conclusions on these issues to the
  Board.




·
            To
      review with the independent auditor the critical accounting policies and
      practices used by the Company, all alternative treatments of financial
      information within generally accepted accounting principles that the
      independent auditor has discussed with management, the ramifications of
      the use of such alternative disclosures and treatments and the treatment
      preferred by the independent
auditor.




·
            To
      review, at least annually, the relationships between the Company and the
      external auditor in order to establish the independence of the external
      auditor.




Financial
Information and Reporting




·
            To
      review the Company’s annual audited financial statements with the CEO and
      CFO and then the full Board.




·
            To
      review the interim financial statements with the CEO and
    CFO.




·
            To
      review and discuss with management and the external auditor, as
      appropriate:


57




(a)
            The
      annual audited financial statements and the interim financial statements,
      including the accompanying management discussion and analysis;
      and,




(b)
            Earnings
      guidance and other releases containing information taken from the
      Company’s financial statements prior to their
  release.




·
            To
      review the quality and not just the acceptability of the Company’s
      financial reporting and accounting standards and principles and any
      proposed material changes to them or their
  application.




·
            To
      review with the CFO any earnings guidance to be issued by the Company and
      any news release containing financial information taken from the Company’s
      financial statements prior to the release of the financial statements to
      the public.  In addition, the CFO must review with the Committee
      the substance of any presentations to analysts or rating agencies that
      contain a change in strategy or
outlook.




Oversight




·
            To
      review the internal audit staff functions,
  including:




(a)
            The
      purpose, authority and organizational reporting
  lines;




(b)
            The
      annual audit plan, budget and staffing;
and




(c)
            The
      appointment and compensation of the controller, if
  any.




·
            To
      review with management its assessment of the effectiveness of and adequacy
      of the Company’s internal control structure and procedures for financial
      reporting (the “Internal Controls”), review with the independent auditor
      the attestation to and report on the assessment made by management, and
      consider with management and the independent auditor whether any changes
      to the Internal Controls are appropriate in light of management’s
      assessment or the independent auditor’s
  attestation.




·
            To
      review and monitor the Company’s major financial risks and risk management
      policies and the steps taken by management to mitigate those
      risks.




·
            To
      meet at least annually with management (including the CFO), the internal
      audit staff, and the external auditor in separate executive sessions and
      review issues and matters of concern respecting audits and financial
      reporting.




·
            To
      review with the CEO and CFO of the Company any report on significant
      deficiencies in the design or operation of the Internal Controls that
      could adversely affect the Company’s ability to record, process, summarize
      or report financial data, any material weaknesses in Internal Controls
      identified to the auditors, and any fraud, whether or not material, that
      involves management or other employees who have a significant role in the
      Company’s Internal Controls.




·
            To
      review and approve any related-party transactions, after reviewing each
      such transaction for potential conflicts of interest and other
      improprieties.




·
            To
      establish procedures for the receipt, retention and treatment of
      complaints received by the Company regarding accounting, internal
      accounting controls or auditing matters, and the confidential, anonymous
      submission by employees of the Company of concerns regarding questionable
      accounting or auditing matters. To adopt, as necessary, appropriate
      remedial measures or actions with respect to such complaints or
      concerns.


58




·
            In
      connection with its review of the annual audited financial statements and
      interim financial statements, the Committee will also review the process
      for the CEO and CFO certifications (if required by law or regulation) with
      respect to the financial statements and the Company’s disclosure and
      internal controls, including any material deficiencies or changes in those
      controls.




Membership




·
            The
      Committee shall consist solely of three or more members of the Board, each
      of whom the Board has determined has no material relationship with the
      Company and is otherwise “unrelated” or “independent” as required under
      applicable securities rules or applicable stock exchange
      rules.




·
            Any
      member may be removed from office or replaced at any time by the Board and
      shall cease to be a member upon ceasing to be a director.  Each
      member of the Committee shall hold office until the close of the next
      annual meeting of shareholders of the Company or until the member ceases
      to be a director, resigns or is replaced, whichever first
      occurs.




·
            The
      members of the Committee shall be entitled to receive such remuneration
      for acting as members of the Committee as the Board may from time to time
      determine.




·
            All
      members of the Committee must be “financially literate” (i.e., have the
      ability to read and understand a set of financial statements such as a
      balance sheet, an income statement and a cash flow statement). In
      addition, if required by applicable additional securities regulators or
      stock exchange rules, at least one member of the Committee shall qualify
      as a “financial expert” within the meaning of such rules and
      regulations.




Procedures




·
            The
      Board shall appoint one of the directors elected to the Committee as the
      Chair of the Committee (the “Chair”).  In the absence of the
      appointed Chair from any meeting of the Committee, the members shall elect
      a Chair from those in attendance to act as Chair of the
      meeting.




·
            The
      Chair will appoint a secretary (the “Secretary”) who will keep minutes of
      all meetings.  The Secretary does not have to be a member of the
      Committee or a director and can be changed by simple notice from the
      Chair.




·
            No
      business may be transacted by the Committee except at a meeting of its
      members at which a quorum of the Committee is present or by resolution in
      writing signed by all the members of the Committee.  A majority
      of the members of the Committee shall constitute a quorum, provided that
      if the number of members of the Committee is an even number, one-half of
      the number of members plus one shall constitute a
  quorum.




·
            The
      Committee will meet as many times as is necessary to carry out its
      responsibilities.   Any member of the Committee or the
      external auditor may call meetings.




·
            The
      time and place of the meetings of the Committee, the calling of meetings
      and the procedure in all respects of such meetings shall be determined by
      the Committee, unless otherwise provided for in the bylaws of the Company
      or otherwise determined by resolution of the
  Board.




·
            The
      Committee shall have the resources and authority necessary to discharge
      its duties and responsibilities, including the authority to select,
      retain, terminate, and approve the fees and other retention terms
      (including termination) of special counsel, advisors or other experts or
      consultants, as it deems
appropriate.


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·
            The
      Committee shall have access to any and all books and records of the
      Company necessary for the execution of the Committee’s obligations and
      shall discuss with the CEO or the CFO such records and other matters
      considered appropriate.




·
            The
      Committee has the authority to communicate directly with the internal and
      external auditors.




Policy for Reporting
Violations and Complaints




The
Company’s policy for reporting violations and complaints is attached as Annex
A.




Reports






·
            The
      Committee shall produce the following reports and provide them to the
      Board:




(d)
            An
      annual performance evaluation of the Committee, which evaluation must
      compare the performance of the Committee with the requirements of this
      Charter.  The performance evaluation should also recommend to
      the Board any improvements to this Charter deemed necessary or desirable
      by the Committee.  The performance evaluation by the Committee
      shall be conducted in such manner as the Committee deems
      appropriate.  The report to the Board may take the form of an
      oral report by the Chair or any other member of the Committee designated
      by the Committee to make this
report.




(c)
            A
      summary of the actions taken at each Committee meeting, which shall be
      presented to the Board at the next Board
  meeting.


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ANNEX A




GLG
LIFE TECH CORPORATION


POLICY
FOR REPORTING VIOLATIONS AND COMPLAINTS





I.  Introduction





One of
our Company's most valuable assets is its integrity. Protecting this asset is
the job of everyone in the Company. We have established the GLG Life Tech
Corporation Code of Ethics to help our employees understand and comply with the
laws and regulations applicable to our business and to maintain the highest
standards of ethical conduct. This policy is meant to supplement our Code of
Ethics by encouraging employees to report any suspected violations or
concerns as to compliance with laws, regulations, public disclosure
requirements, our Code of Ethics or other Company policies, or any complaints or
concerns regarding the Company's accounting, internal accounting controls, or
auditing matters.





II.
Obligation to Report Suspected or Actual Violations; Anonymous
Reporting





A.
Reporting Generally





It is
every employee's obligation to report suspected or actual violations of laws,
government rules and regulations, the Company's Code of Ethics or other Company
policies. You should also report any suspected violations of the laws and rules
that govern the reporting of the Company's financial performance, and any
complaint or concern regarding the Company's accounting, internal accounting
controls, public disclosure requirements, or auditing matters.





You may
report any such matters directly to your supervisor or manager or by the
procedures set forth below. As noted below, supervisors and managers are
required to report to a Compliance Officer any time they receive a report of a
concern about our compliance with laws, the Code of Ethics or other Company
policy, any notice of any suspected wrong-doing by any Company employee, officer
or director, or any complaint or concern about the Company's accounting,
internal accounting controls, public disclosure or auditing matters. The
Compliance Officers who should be notified are either of the
following:





Brian
Meadows


Chief
Financial Officer


GLG Life
Tech Corporation


Suite 519
World Trade Centre


999
Canada Place


Vancouver,
B.C., V6C 3E1


Canada





Georald
Ingborg


Legal
Counsel of the Company


Fasken
Martineau DuMoulin LLP


#2900 –
550 Burrard Street


Vancouver,
B.C., V6C 0A3


Canada


61


B.
Anonymous Reporting





Alternatively,
if you wish to report any such matters anonymously, you may do so by mailing a
description of the suspected violation or other complaint or concern to the
Company’s Audit Committee at:





auditcom@glglifetech.com





III.
Treatment and Retention of Complaints and Reports





Each
supervisor and manager shall report any suspected violation, concern or
complaint reported to such person by employees or other sources to a Compliance
Officer to assure proper treatment and retention of complaints, concerns or
notices of potential violations. In addition, employees should take note that
persons outside the Company may report complaints or concerns about suspected
violations, or concerns regarding internal accounting controls, accounting or
auditing matters. Any such concerns or complaints should be reported immediately
on receipt to a Compliance Officer.





Supervisors
and managers as well as the Compliance Officers shall promptly consider the
information, reports or notices received by them under this policy or otherwise.
The Compliance Officers shall take appropriate action, including investigation,
if appropriate, in accordance with the law, governmental rules and regulations,
the Company's Code of Ethics and otherwise consistent with good business
practice.





Upon a
report to a Compliance Officer, all notices or reports of suspected violations,
complaints or concerns received pursuant to this policy shall be recorded in a
log, indicating the description of the matter reported, the date of the report
and the disposition thereof, and the log shall be retained for five years. The
log shall be maintained by the Compliance Officers.





IV.
Statement of Non-Retaliation





It is a
federal crime for anyone to retaliate intentionally against any person who
provides truthful information to a law enforcement official concerning a
possible violation of any federal law. Moreover, the Company will not permit any
form of intimidation or retaliation by any officer, employee, contractor,
subcontractor or agent of the Company against any employee because of any lawful
act done by that employee to:





·
            provide
      information or assist in an investigation regarding any conduct which the
      employee reasonably believes constitutes a violation of laws, rules,
      regulations, the Company's Code of Ethics, or any Company policies;
      or


·
            file,
      testify, participate in, or otherwise assist in a proceeding relating to a
      violation of any law, rule or
regulation.





Any such
action is a violation of Company policy and should be reported immediately under
this policy.





V.  Statement
of Confidentiality





The
Company will, to the extent reasonably possible, keep confidential both the
information and concerns reported under this policy, and its discussions and
actions in response to those reports and concerns. In the course of its
investigation, however, the Company may find it necessary to share information
with others on a "need to know" basis.


62