SECURITIES AND EXCHANGE
COMMISSION
 Washington,D.C.20549
 
 Form 10-K
 
 [X]
              ANNUAL REPORT UNDER SECTION 13 OR
      15(d) OF THE SECURITIES EXCHANGE ACT OF
  1934
  For the fiscal year ended September 30,
2008
 
 [   ]
              TRANSITION REPORT UNDER SECTION 13
      OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
  1934
  For the transition period from _______________to________________
 
 Commission file
number:  000-49687
 
 China Agro Sciences
Corp.
 (Exact name of registrant as
specified in its charter)
 
 Florida
                (State or other jurisdiction
      of
                incorporation or
      organization)
              33-0961490
                (I.R.S.
      Employer
                Identification
      No.)101
      Xinanyao Street, Jinzhou District
                Dalian,
      Liaoning Province
                (Address of principal executive
      offices)
              PRC 116100
                (Zip Code)
 
 Issuer’s telephone
number    (212) 232-0120
 
 Securities
registered pursuant to Section 12(b) of the Act:
 
 Title
      of each class
                  Name
      of each exchange on which registeredNone
                  None
 
 Securities registered under Section
12(g) of the Exchange Act:
 
 Common stock, par value
$0.001
 (Title of class)
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes þ No o
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
  Large
      accelerated filer      o
                    Accelerated
      filer     o
                    Non-accelerated
      filer     þ
  Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
  Yes o No þ
  The
number of shares out standing of the issuer's common stock, as of January
13, 2009, was 20,050,000.
 
 
   TABLE
OF CONTENTS
 PagePart
      IITEM
      1.
                                DESCRIPTION
      OF BUSINESS
                                3ITEM
      1A.
                                RISK
      FACTORS
                                7ITEM
      1B.
                                UNRESOLVED
      STAFF COMMENTS
                                10ITEM
      2.
                                PROPERTIES
                                10ITEM
      3.
                                LEGAL
      PROCEEDINGS
                                10ITEM
      4.
                                SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
                                10Part
      IIITEM
      5.
                                MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
                                11ITEM
      6.
                                MANAGEMENT'S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
                                13ITEM
      6A.
                                QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK FACTORS
                                16ITEM
      7.
                                FINANCIAL
      STATEMENTS
                                F1-F12ITEM
      8.
                                CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
                                17ITEM
      8A.
                                CONTROLS
      AND PROCEDURES
                                17ITEM
      8B.
                                OTHER
      INFORMATION
                                17Part
      IIIITEM
      9.
                                DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERANCE;
      COMPLIANCE WITH SECTION 16(a)
                                18ITEM
      10.
                                EXECUTIVE
      COMPENSATION
                                19ITEM
      11.
                                SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
                                20ITEM
      12.
                                CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
      INDEPENDENCE
                                21ITEM
      13.
                                EXHIBITS
                                21ITEM
      14.
                                PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
                                21
 
  PART
I
 
 This Annual Report includes
forward-looking statements within the meaning of the Securities Exchange Act of
1934 (the “Exchange Act”). These statements are based on management’s beliefs
and assumptions, and on information currently available to
management.  Forward-looking statements include the information
concerning possible or assumed future results of operations of the Company set
forth under the heading  “Management’s Discussion and Analysis of
Financial Condition or Plan of Operation.??Forward-looking statements also
include statements in which words such as “expect,”
“anticipate,”  “intend,” “plan,” “believe,” “estimate,” “consider” or
similar expressions are used.
 
 Forward-looking statements are not
guarantees of future performance.  They involve risks, uncertainties
and assumptions. The Company’s future results and shareholder values may
differ materially from those expressed in these forward-looking
statements.  Readers are cautioned not to put undue reliance on any
forward-looking statements.
 
 ITEM
1 - DESCRIPTION OF BUSINESS AND PROPERTIES
  Business
Overview
  We were
incorporated under the name M-GAB Development Corporation in March
2001.  From inception through early 2003, our business was the
development, marketing, and distribution of an interactive travel
brochure.  On May 16, 2003, we filed an election to be treated as a
business development company (“BDC”) under the Investment Company Act of 1940
(the “1940 Act”), which became effective on the date of filing.  As a
BDC we never made any investments into eligible portfolio
companies.
  On March
17, 2006, China Agro Sciences Corp., a Florida corporation formerly known as
M-GAB Development Corporation (hereinafter “We” or “China Agro”) entered into an
Agreement and Plan of Merger (the “Agreement”) with Dalian Holding Corp., a
Florida corporation (formerly known as China Agro Sciences Corp.)
(“DHC”).  This transaction closed on May 1, 2006, at which time, in
accordance with the Agreement, DHC merged with DaLian Acquisition Corp, a
Florida corporation that was our wholly-owned subsidiary (“DaLian”) (the
“Merger”).  As a result of the merger, DaLian merged into DHC, with
DHC remaining as the surviving entity and our wholly-owned subsidiary, DaLian,
ceased to exist, and we issued 13,449,488 shares of our common stock to the
former shareholders of DHC.
  Prior to
DaLian’s merger with DHC, DHC had acquired all the outstanding common stock of
Ye Shun International (“Ye Shun”), a company that owns all the outstanding
common stock of DaLian Runze Chemurgy Co., Ltd. (“Runze”). In the
transaction in which Ye Shun purchased all the outstanding stock of Runze, Runze
was determined to be the accounting acquirer. In the transaction in which
DHC acquired all the outstanding common stock of Ye Shun, Ye Shun was determined
to be the accounting acquirer.  Ye Shun is a Hong Kong registered
enterprise.  Runze is classified by the Chinese government as an
enterprise entity with 100% of its capital coming from Hong Kong.  As
a result of the Merger, on April 28, 2006, we filed a Form N-54C and terminated
our status as a business development company and, through our wholly-owned
subsidiary, commenced operations, specializing in the sale and distribution of
pesticides and herbicides, and consequently ceased being a development stage
company.  Our only operations are conducted through our wholly-owned
subsidiary, which controls the assets of Runze.  The term “we” as used
throughout this document refers to China Agro Sciences Corp., DaLian, and the
operations of Runze, which are controlled by DHC.
  Our
subsidiary owns Runze, an entity that was originally formed by the current
management and principal shareholders of Dalian Raiser Chemurgy Co., Ltd.
(“DRC”) and subsequently sold to Ye Shun. DRC is a state-appointed
manufacturer located in the Peoples Republic of China.  Runze contains
all our operations and the majority of our assets.  We specialize in
low toxic pesticides and herbicides. Our primary product is the herbicide
known as Acetochlor.  Our other pesticide products include Razesor,
Emamectin benzoate, and Clethodim.  Our headquarters and manufacturing
facilities are located in the city of ZhuangHe, LiaoNing Province, Peoples
Republic of China.
  Mr.
Zhengquan Wang, our Chief Executive Officer, Chief Financial Officer and a
Director, is the President and Chairman of the Board of DRC.  After
the formation of Runze, we initially believed DRC would be one of our primary
competitors in the manufacturing and sale of herbicides and pesticides in China,
however, due to certain manufacturing standards in place at our sole customer to
date, Jilin Ruiye Pesticide Co., we manufactured all of the herbicides we sold
in fiscal year 2006 at DRC’s manufacturing plant.   During our
fiscal year, ended September 30, 2006, we only sold one product, Acetochlor, and
that was to one customer, Jilin Ruiye Pesticide Co.
    Currently,
we also do not believe we will be permitted to use DRC’s manufacturing
facilities to manufacture our product to sell to unrelated third parties because
their manufacturing facilities is also not in a “chemical zone” and they will be
forced to move their plant so we believe they will utilize their manufacturing
capacity until that time to manufacture their own
product.  Additionally, even if we were able to utilize DRC’s
manufacturing facilities to manufacture our product there is no guarantee we
will receive a discounted rate if we are allowed to use their facilities, and
currently, even with the discounted rate, we do not have the funds to pay DRC to
utilize their facility.
  3
 Due to
the new government regulations, there is a good chance that we will not continue
in the business of manufacturing and selling pesticide and herbicide products in
China.  If management makes the determination that we cannot continue
in the pesticide and herbicide business in China we will look for other business
alternatives. Based on the location of our current manufacturing plant, our
management has determined that our manufacturing equipment is of little or
no value and has been categorized as an impaired asset on our current audited
financial statements.
 
 The
Pesticide Industry
  According
to the projections of the Food and Agricultural Organization of the United
Nations and the United States Census Bureau, the global population is
experiencing increasing growth rates. The current world population of 6.1
billion is projected to increase to 7.2 billion in 2010, and 9.8 billion in
2050.  The urgent need of decent food supplies has become a global
issue. Under current predictions, only 1/3 of the increasing food demand
can be met by the expansion of cultivated land, which is limited. The
remaining 2/3 will largely depend on increasing agricultural
productivity. The successful implementation of pesticide programs is an
effective method for increasing agricultural productivity.  It is
estimated that every year about one third of the world. The potential
harvest is lost to damage caused by plant diseases and insect
pests.  In a typical case, the lack of pesticide or its improper usage
can reduce the productivity by 25-40% in one year (compared to proper pesticide
usage), and 40-60% the following year.  The unique nature among
growing population, food supply, and pesticide has created a large growing
market for the pesticide industry.
  China is
the largest agricultural country in the world.  Due to its population
the Chinese government is focused on its low income segment of the population,
including the development of agriculture as a means to provide for its
population.  China is also a developing country with a serious problem
of plant diseases and insect pests.  Other issues, such as the lack of
modern agricultural machinery and skills, low unit quality and productivity, and
the dispersed layout of its cultivated land, have created many
challenges.  The current population in China has reached a total of
1.3 billion, and the total cultivated land remains at 95 million hectares, which
is equal to 0.073 hectare per person.  As a nation, China is using 7%
of the world’s agricultural resources to support 22% of the world’s
population.  Therefore, there is a need to increase productivity in
the agricultural sector.  Advanced technologies, including the broader
use of pesticides, are needed.  According to the Chinese Agriculture
Ministry, each year the implementation of pesticides in China prevents the
losses of over 25 million tons of foodstuff, 400 thousand tons of cotton, 8
million tons of vegetables, and 3.3 million tons of fruit, which are equal to 30
billion Yuan Renminbi (“RMB” – the Chinese currency; 1 RMB equals approximately
0.1248 U.S. dollars) in fair market value.
  The
pesticide industry in China has experienced tremendous growth in the past 10
years, with its productivity almost doubled and over 100 new pesticide products
invented.  According to the Centre Bureau of Product & Quality
Control, the current pesticide production in China has reached an annual output
of 800 thousand tons with 20 billion RMB in value, ranking the second largest in
the world.  Export of pesticides plays an important role, which
returns $1.2 billion in revenue annually.  However, currently in
China, pesticides are only used on 60% of the cultivated wet land and 30%
of the cultivated dry land, compared to a full 100% in most developed
countries.  Among all pesticides, insecticides are the most common,
which are largely organic-phosphide-based (“OPB”)with high toxic
contents and residues.
  Outside
of China the global demand for pesticides is increasing
steadily.  With the current trend in many developed countries to
reduce or cease pesticide productions, the Chinese pesticide industry has a
great potential in its long-term development.
  According
to China’s National Agricultural Technology Centre, the annual sales of
Acetochlor in China will likely maintain an annual growth rate of 20-30%, and it
is currently projected that Acetochlor will remain in production for at least
another 20 years.  Currently there are over 100 different brands on
sale, which makes Acetochlor the most popular among all
herbicides.  Acetochlor has been successfully applied to the vast
cultivated wet land in China in recent years.
  In 2002,
the Chinese government issued a new guideline on toxic OPB
pesticides.  Its purpose was to reduce toxic OPB pesticide productions
and to ban sales and usage.  Pursuant to regulations, in 2003 toxic
OPB pesticides could only be applied to cotton; as of 2005 only two
manufacturers have production rights under license, with combined annual output
not exceeding 26,000 tons.  On 2008, both manufacture
and application of toxic OPB pesticides were banned, which will create a
sizeable supply shortfall.  Compared to toxic OPB pesticides, Razesor,
a pesticide we produce, is highly effective with identical results on insects,
and it is environmental-friendly with minimum toxic contents and
residues.  Razesor is expected to become the best alternative to toxic
OPB pesticides in China.  The manufacturing process of Razesor
generates a low amount of industrial wastes, which can be managed and creates no
pollution to the environment.  The potential market for Razesor is
growing in China with a total demand of 10,000 - 15,000 tons expected in the
next three years.  The future demand is expected to be even
higher.
  The
European Union (“EU”) has banned the usage of over 320 different pesticides,
germicides, and herbicides since December 31, 2003.  Agricultural
products contaminated by related chemical residues have been forbidden to enter
the EU market.  The United States and Japan are expected to pass
similar regulations, which will create a growing market for biological
pesticides.  The demand for the most common biological pesticide,
Abamectin, has been increasing over the years with its unit prices soaring from
900 RMB/kg to 2,300 RMB/kg since March, 2004.  To address these rising
prices, we have developed a substitute product for Abamectin called Emamectin
benzoate.  This pesticide, which we produce (in its solution and
emulsion forms), contains minimum impurities and causes no pollution to the
environment.  As noted above, it is anticipated that the Chinese
government will ban the production and usage of five most popular toxic OPB
pesticides by 2007, which will create an annual market shortfall of over 200,000
tons.  Emamectin benzoate has been appointed as one of the replacement
pesticides by the Chinese National Reform and Development Committee, and the
Chinese Green Food Program has approved Emamectin benzoate’s usage on its Green
Food product lines.  We believe these positive endorsements have
secured a promising future for Emamectin benzoate in the pesticide
industry.  We have signed an initial agreement with Sangenta of
Switzerland to cooperate in areas of Emamectin benzoate research and
development, sales, and rare material supplies.
  For many
years in China, there have always been shortages of post-sprout
herbicides.  Some of the common herbicides, such as Sulfonylurea,
cannot be dissolved naturally in the environment and thus become sources of
pollution.  The United States and other developed countries have
banned Sulfonylurea usage.  With its continuing commitment to
environmental protection, China is in the process of replacing
Sulfonylurea.  Sumitomo Chemical Co. Ltd of Japan has obtained the
temporary registration for its Clethodim product in China, and its Clethodim
product has been a great sales success.  The annual import of
Clethodim to China reaches a total of 200 tons, which is not sufficient for a
decent supply.  We believe the domestic production of our Clethodim in
China can replace a significant amount of imported Clethodim and has promise as
a successful export to other countries.
 
 4
 Principal
Products and Services
  We
operate through our subsidiary, Runze.  Our primary business is the
manufacturing, sale and distribution of herbicides and pesticides to reduce or
eliminate the amount of agricultural produce lost to plant diseases and
insects.  Although, in the past we have only produced Acetochlor, if
we ever start producing herbicides and pesticides again we hope to start
producing up to four different herbicides and pesticides:  Acetochlor,
Razesor, Emamectin benzoate, and Clethodim.
  Acetochlor
  Acetochlor
is currently the world’s eighth most popular herbicide in terms of
sales.  It is highly productive during the pre-sprout stage of
agricultural production and is currently the only product that we produce in
large industrial-use quantities.   Acetochlor is widely used
during the growing of soybeans, corn, peanuts, and
vegetables.  Acetochlor can eliminate most types of weeds with minimum
toxic contents and residues, and helps to stop weeds from growing in and around
the crop.  Acetochlor poses no threat to humans or
livestock.  Due to its effectiveness and relatively low cost,
Acetochlor has gained tremendous popularity in China.  The annual
output of Acetochlor in China has reached 20,000 tons, which provides protection
to over 12 million hectares of cultivated land.
  In
October, 2005, we completed construction on an Acetochlor manufacturing facility
with a 5,000-ton annual capacity.  However, during the fiscal year
ended September 30, 2006, due to the lack of certain environmental permits and
the failure of our manufacturing facility to meet the manufacturing standards of
our only customer, Jilin Ruiye Pesticide Co., a third-party located in China, we
manufactured all the Acetochlor we produced at the manufacturing plant of DRC, a
related third-party.  During the fiscal year 2008 we were not able to
negotiate the same discounted rate for the use of DRC’s manufacturing facilities
and, as a result, we did not manufacture any of our own
Acetochlor.  As a result of our inability to use DRC’s manufacturing
facilities and the inability to utilize our own facilities we did not produce
any Acetochlor for sale during our fiscal year ended September 30, 2008 and do
not know when, or if, we will ever be able to continue to manufacture pesticide
and herbicide products.
  Currently,
we also do not believe we will be permitted to use DRC’s manufacturing
facilities to manufacture our product to sell to unrelated third parties because
their manufacturing facilities is also not in a “chemical zone” and they will be
forced to move their plant so we believe they will utilize their manufacturing
capacity until that time to manufacture their own
product.  Additionally, even if we were able to utilize DRC’s
manufacturing facilities to manufacture our product there is no guarantee we
will receive a discounted rate if we are allowed to use their facilities, and
currently, even with the discounted rate, we do not have the funds to pay DRC to
utilize their facility.
  Razesor
  Razesor
is a pesticide introduced by DRC into the Chinese pesticide
market.  DRC has a Chinese patent and a PCT patent (PCT # 02128312.5),
which is a patent issued by the World Intellectual Property Organization
pursuant to the Patent Cooperation Treaty. The advanced technology
used to manufacture Razesor ensures stable output of the pesticide with high
product purity.  The manufacturing process used generates only a small
amount of waste and the raw materials used are easily obtainable in China,
keeping production costs low.  We hope to obtain a license from DRC to
manufacture and sell Razesor.
  Razesor
is a general pesticide that is highly effective against Coleoptera insects and
insects with developed resistance to some common pesticides.  Razesor
has been widely applied to rice, cotton, vegetable, tobacco, potato, tea and
corn.  Razesor eliminates the insects and their eggs by destroying the
insect’s central nervous system.
  Emamectin
benzoate
  Emamcetin
benzoate is a new half-synthesized antibiotic biological pesticide with low
toxic contents and no residue.  Emamectin benzoate intensifies the
functional activities of an insect’s nerve cells and undermines the insect’s
cellular active functions, causing irreversible paralysis, with most results
occurring 3-4 days from initial usage.  Emamcetin benzoate’s typical
usage is only 1 gram per hectare and remains 72-100% effective up to 15 days
after initially applied.  The pesticide poses no harm to useful
insects and bees, which is very helpful in quantitative insect
control.
  Clethodim
  Clethodim
is a post-sprout herbicide.  It is suitable for over 40 different
industrial crops such as soybeans, peanuts, and cotton.  As an
herbicide it effectively eliminates almost all types of weeds, both perpetual
and perennial.  Clethodim is environmentally-friendly with low toxic
contents and no cumulated residue.  The typical usage of Clethodim is
3.6-4.8 grams per hectare and can be used in conjunction with other more common
herbicides.
 
 5
 Sales
and Marketing Strategy
  Our
original sales and marketing strategy involved the use of a sophisticated sales
and marketing network in China developed by DRC.  We believed this
network would give us access to the vast rural areas of China and the ability to
provide products and supports to millions of agricultural producers and the land
they farm.  Due to our current inability to manufacture our products
we currently do not have a sales and marketing strategy.
 
 Research
and Development
  From our
inception we have emphasized recruiting and development of quality
employees.  Today we have a strong team of experts, specializing in
agriculture protection, fine chemical synthesis, and chemical
engineering.  We hope to obtain state-of­-the-art equipment and
form a strong coalition with many advanced research institutes, in order to
become one of the most technologically-advanced pesticide manufactures in the
China, setting industry standards in product research and
development.
 
 Distribution
  Due to
our current inability to manufacture our products we are not distributing any of
our products and will not until we either build a new facility in a “chemical
zone,” or contract with an approved facility for the manufacturing of our
products.  If we were able to manufacture our own products we would
likely distribute those products through Mr. Wang’s connections in the pesticide
and herbicide industry in China.
  As for
distribution abroad, we will face mandatory governmental and regulatory
regulations to distribute our products abroad. These stipulations can and may
include registering with the proper government boards, provincial and local
regulatory bodies, and other various groups which monitor the distribution of
pesticide products.
 
 Competition
  We
specialize in the sales and distribution of herbicides and
pesticides.  We compete with other herbicide and pesticide for
distributors and customers, primarily in China.  Our primary
competitors in China include Jiangsu Ludelai Co., Ltd., Hebei Xuanhua Pesticide
Co., Ltd., and Jiangsu Nantong Jiangshan Pesticide Co., Ltd.  As noted
above, we initially believed DRC would be one of our primary competitors in the
manufacturing and sale of herbicides and pesticides in China, however, due to
certain manufacturing standards in place at our sole customer to date, Jilin
Ruiye Pesticide Co., we manufactured all of the herbicides we sold in fiscal
year 2006 at DRC’s manufacturing plant and currently do not consider them to be
one of our competitors.Mr. Zhengquan
Wang, our Chief Executive Officer, Chief Financial Officer and a Director, is
the President and Chairman of the Board of DRC.  Many of the
herbicide/pesticide companies with whom we compete, including those listed
herein, have greater financial and technical resources than those available to
us.  Accordingly, these competitors may be able to spend greater
amounts on the manufacturing of pesticides and herbicides and also on research
and development of new products.  In addition, they may be able to
afford more technical expertise in the development of new
products.  This competition could result in competitors having
herbicides and pesticides of greater quality and interest to prospective
customers.  This competition could adversely impact our ability to
acquire additional customers.
 
 Sources
and Availability of Raw Materials
  Our raw
materials primarily consist of chemicals used to produce our various herbicides
and pesticides.  Our primary suppliers of these chemicals include
Dalian Huachang Trade Corporation, Zhipeng Chemistry Corp., Dongfeng Tianze
Chemistry Corp., and Liangyang Baita Commodity Corp.  All our products
are obtained domestically in China and are readily available.
 
 Dependence
on a Few Customers
  During
fiscal year of both 2008 and 2007, we did not sell any
products.  During fiscal year 2006, we only sold one product,
Acetochlor, and only sold that product to one customer, Jilin Ruiye Pesticide
Co.  We are not currently seeking additional customers for our
products until we determine if we will be able to manufacture products in the
future.  If we can start producing product in the future we hope to
sell to more than one customer and to sell more than one product, but this would
likely be contingent upon us either building a new manufacturing facility in an
approved “chemical zone,” or contracted with an approved facility to manufacture
our products.
 
 6
 Intellectual
Property
  We
previously reported that we own a Chinese patent and a PCT patent (PCT #
02128312.5), which is a patent issued by the World Intellectual Property
Organization pursuant to the Patent Cooperation Treaty,on the Razesor
pesticide.  This disclosure was in error.  This patent is
owned by DRC and not us.  We currently do not have any patents on our
products.
 
 Government
Approvals
  As noted
above, due to new regulations, only chemical manufacturers with facilities in
approved “chemical zones” may manufacture any herbicide and pesticide
products.  Our manufacturing facility if not in a “chemical zone” and,
therefore, we will not be able to utilize that facility to manufacture our
products.
  As for
distribution abroad, we will face mandatory governmental and regulatory
regulations to distribute our products abroad. These stipulations can and may
include registering with the proper government boards, provincial and local
regulatory bodies, and other various groups which monitor the distribution of
pesticide products.
 
 Government
Regulation
  The
herbicide and pesticide industry in China is regulated by the State
Environmental Protection Administration of China, but the current regulations
are not stringent.  As mentioned above, all companies in our industry
will undergo a GMP Assessment and we expect the regulation of our industry will
increase in the future, but we believe we will be able to meet these
requirements.  The expected additional costs of future compliance has
been factored in by management going forward.
  Environmental
Compliance
  Although
we are aware of the impact our products have on the environment and attempt to
make environmentally-friendly products, we had not been too heavily regulated in
the China in terms of environmental compliance.  However, with the
“chemical zone” regulation our environmental compliance has
increased.  We expect these regulations to further increase in the
future and we could have numerous issues meeting any new environmental
compliance regulations in the future.
 
 Employees
  As of
September 30, 2008, we employed a total of 13 full-time employees, 3 of which
were executives.  We no longer have employees engaged in manufacturing
our products, nor involved in sales. The remaining 10 are involved with human
resources and administration.
 
 ITEM
1A – RISK FACTORS
  On at
least an annual basis, we are required to provide our shareholders with a
statement of risk factors and other considerations for their
review.  These risk factors and other considerations
include:
  We
currently cannot manufacture products at our own manufacturing facility and do
not have any agreements in place to manufacture products at another
facility.
  We have
received a notice from the Chinese National Environmental Bureau in
2007 that all chemical manufacturing facilities must be located in
designated “chemical zones” going forward, and for manufacturing plants not
located there now will have to be relocated.  Our manufacturing
facility is not currently located in a “chemical zone” and, therefore, if we
wish to manufacture our products at our own manufacturing plant we will be
forced to build a new facility in an approved “chemical zone.”  If we
decide to build a new manufacturing plant the cost of building a new facility
would be substantial, but do not yet have an estimate as to the
cost.  Based on the location of our current manufacturing plant our
management has determined that our manufacturing plant is of little or no value
and has been categorized as an impaired asset on our current audited financial
statements.
  Therefore,
our only way to manufacture product is to contract with an approved
facility.  We currently do not have any such agreements in place and
do not know if we will able to manufacture product in the future.  As
a result of our inability to use DRC’s manufacturing facilities and the
inability to utilize our own facilities we did not produce any Acetochlor for
sale during our fiscal year ended September 30, 2008 and do not know when, or
if, we will ever be able to continue to manufacture pesticide and herbicide
products.  If we are not able to manufacture pesticide or herbicide
products for sale in China it would have a significant impact on our ability to
continue has an operating company.
  
 Our
manufacturing plants are located in China and our pesticide and herbicide
production, sale and distribution is subject to Chinese regulation.
  Economic
reforms adopted by the Chinese government have had a positive effect on the
economic development of the country, but the government could change these
economic reforms or any of the legal systems at any time.  This could
either benefit or damage our operations and profitability.  Some of
the things that could have this effect are:  i) level of government
involvement in the economy; ii) control of foreign exchange; methods of
allocating resources; iv) international trade restrictions; and v) international
conflict.  Additionally, as a pesticide and herbicide manufacturer
located in China, we are a state-licensed company and facility and subject to
Chinese regulation and environmental laws.  The Chinese government has
been active in regulating the pesticide industry, including the recent enactment
of the “chemical zones.”  If we were to lose our state-licensed status
we would no longer be able to manufacture herbicides or pesticides in China,
which is our sole operation.
  We
depend upon governmental laws and regulations that may be changed in ways that
hurt our business.
  Our
business and products are subject to government regulations mandating the use of
pesticides and herbicides in China and other countries.  Changes in
the laws or regulations in China, or other countries we sell into, that govern
or apply to our operations could have a materially adverse effect on our
business.  For example, the law could change so as to prohibit the use
of certain chemical agents in herbicides and pesticides.  If our
herbicides or pesticides contained that chemical agent then such a change would
reduce our productivity of that product.
  Recently,
the Chinese government implemented new regulations related to the manufacturing
of herbicides and pesticides.  Our current manufacturing facilities do
not meet these new stricter regulations and, therefore, we cannot use these
facilities to manufacture our products.  Therefore, our only way to
manufacture product is to contract with an approved facility.  We
currently do not have any such agreements in place and do not know if we will
able to manufacture product in the future.
  The
Chinese government exerts substantial influence over the manner in which we must
conduct our business activities.
  China
only recently has permitted provincial and local economic autonomy and private
economic activities.  Chinese government has exercised and continues
to exercise substantial control over virtually every sector of the Chinese
economy through regulation and state ownership.  Our ability to
operate in China may be harmed by changes in its laws and regulations, including
those relating to taxation, import and export tariffs, environmental
regulations, land use rights, property and other matters.  Currently,
our only manufacturing facility does not have current environmental permits and
is not operational, which has meant we could not manufacture any
product(s).  Additionally, with the new regulation that our plant must
be moved to a “chemical zone” we do not know if we will able to comply with this
regulation and therefore may not be able to manufacture products and may have to
cease doing business.
  Government
actions in the future, including any decision not to continue to support recent
economic reforms and to return to a more centrally planned economy or regional
or local variations in the implementation of economic policies, could have a
significant effect on economic conditions in China or particular regions
thereof, and could require us to divest ourselves of any interest we then hold
in Chinese properties or joint ventures.
  Future
inflation in China may inhibit our activity to conduct business in
China.
  In recent
years, the Chinese economy has experienced periods of rapid expansion and high
rates of inflation.  During the past ten years, the rate of inflation
in China has been as high as 20.7% and as low as -2.2%.  These factors
have led to the adoption by Chinese government, from time to time, of various
corrective measures designed to restrict the availability of credit or regulate
growth and contain inflation.  While inflation has been more moderate
since 1995, high inflation may in the future cause Chinese government to impose
controls on credit and/or prices, or to take other action, which could inhibit
economic activity in China, and thereby harm the market for our
products.
  Restrictions
on currency exchange may limit our ability to receive and use our revenues
effectively.
  The
majority of our revenues will be settled in Renminbi, and any future
restrictions on currency exchanges may limit our ability to use revenue
generated in Renminbi to fund any future business activities outside China or to
make dividend or other payments in U.S. dollars.  Although the Chinese
government introduced regulations in 1996 to allow greater convertibility of the
Renminbi for current account transactions, significant restrictions still
remain, including primarily the restriction that foreign-invested enterprises
may only buy, sell or remit foreign currencies after providing valid commercial
documents, at those banks in China authorized to conduct foreign exchange
business.  In addition, conversion of Renminbi for capital account
items, including direct investment and loans, is subject to governmental
approval in China, and companies are required to open and maintain separate
foreign exchange accounts for capital account items.  We cannot be
certain that the Chinese regulatory authorities will not impose more stringent
restrictions on the convertibility of the Renminbi.
  Currently,
since our primary operations are in the PRC, all of our revenues will be settled
in RMB, not U.S. Dollars.  Due to certain restrictions on currency
exchanges that exist in the PRC, our ability to use revenue generated in RMB to
pay any dividend payments to its shareholders may be limited.
  8
 The
value of our securities will be affected by the foreign exchange rate between
U.S. dollars and Renminbi.
  The value
of our common stock will be affected by the foreign exchange rate between U.S.
dollars and Renminbi, and between those currencies and other currencies in which
our sales may be denominated.  For example, to the extent that we need
to convert U.S. dollars into Renminbi for our operational needs and should the
Renminbi appreciate against the U.S. dollar at that time, our financial
position, the business of the Company, and the price of our common stock may be
harmed.  Conversely, if we decide to convert our Renminbi into U.S.
dollars for the purpose of declaring dividends on our common stock or for other
business purposes and the U.S. dollar appreciates against the Renminbi, the U.S.
dollar equivalent of our earnings from our subsidiaries in China would be
reduced.  Although, as noted above, due to currency restrictions in
the PRC we are precluded from paying dividends even if we were in a position to
do so.
  During our fiscal
year ended September 30, 2008, we did not sell any products and had no
revenues.
  During
our fiscal year ended September 30, 2008, we had no revenues.  Due to
the fact that we were not able to negotiate discounted rates to use the plant
and equipment of DRC and the new government regulations and standards on
herbicides and pesticides, which our own facilities could not meet for most of
the year, combined with the new “chemical zone” regulation, we did not sell any
products in the year ended September 30, 2008.   Because we have
no revuene created during both fiscal year of 2008 and 2007, we hope this will
not continue in the coming quarters and years, but if we are not able to use
DRC’s facilities and cannot contract with a third party to use their facilities
we will not be able to manufacture any product to sell.  If this
occurs it would have a significant impact on our ability to continue as an
operating company.  We are currently looking for additional
manufacturing and sales channels utilizing Mr. Wang’s connections in the
industry but there is no assurance we will be successful.
  We
give no assurances that any plans for manufacturing products will be
implemented.
  Currently,
we cannot manufacture any of our own product and will not be able to unless we
build a new manufacturing facility, at a substantial cost, or enter into an
agreement with another company to utilize their manufacturing
facilities.  If we cannot build a new facility or contract with an
approved manufacturing facility we may have to look for alternatives to
pesticide and herbicide production and sale as our primary
business.
  We
have a limited operating history and limited historical financial information
upon which you may evaluate our performance.
  We are in
our early stages of development and face risks associated with a new company in
a growth industry.  We may not successfully address these risks and
uncertainties or successfully implement our operating strategies.  If
we fail to do so, it could materially harm our business to the point of having
to cease operations and could impair the value of our common stock to the point
investors may lose their entire investment.  Even if we accomplish
these objectives, we may not generate positive cash flows or the profits we
anticipate in the future.
  We will face a lot of competition,
some of which may be better capitalized and more experienced than
us.
  We face
competition in the herbicide and pesticide industry.  Many of the
other herbicide and pesticide producing companies that sell into our markets may
be more successful than us and/or have more experience and money that we
do.  This additional experience and money may enable our competitors
to produce more effective herbicides and/or pesticides and be sell their product
with more success than we are able to, which would decrease our
sales.  We do not yet know the impact of the “chemical zone”
requirement on our competitors.
  Our
business is largely subject to the uncertain legal environment in China and your
legal protection could be limited.
  The
Chinese legal system is a civil law system based on written
statutes.  Unlike common law systems, it is a system in which
precedents set in earlier legal cases are not generally used.  The
overall effect of legislation enacted over the past 20 years has been to enhance
the protections afforded to foreign invested enterprises in
China.  However, these laws, regulations and legal requirements are
relatively recent and are evolving rapidly, and their interpretation and
enforcement involve uncertainties.  These uncertainties could limit
the legal protections available to foreign investors, such as the right of
foreign invested enterprises to hold licenses and permits such as requisite
business licenses.  In addition, some of our executive officers and
our directors may be residents of China and not of the United States, and
substantially all the assets of these persons are located outside the
U.S.  As a result, it could be difficult for investors to affect
service of process in the United States, or to enforce a judgment obtained in
the United States against us or any of these persons.
  9
 Our
business is largely seasonal and sales of our products are subject to changes in
the weather.
  Since we
are in the business of manufacturing and selling herbicide and pesticide
products our clients and end users are engaged in farming and crop production,
which is subject to changes in the seasons and weather.  Therefore,
the sales of our products will generally substantially decrease during the
autumn and winter months.  Unusual weather such as prolonged freezing
temperatures or particularly hot temperatures also effect crop production and,
therefore, could affect the sales of our products.
 
 ITEM
1B – UNRESOLVED STAFF COMMENTS
  None.
 
 ITEM
2 - PROPERTIES
  Our
executive offices in the United States are not yet open.  Currently
our operations are conducted out of the offices of our manufacturing facility
owned by Runze, our subsidiary, located in the city of ZhuangHe, LiaoNing
Province, China.  The manufacturing facility is approximately 128,291
square feet, with 2,000 square feet being used for our executive
offices.  We own this facility and therefore do not make any rent
payments on this facility.  Due to the new regulations in China, we
did not utilize our manufacturing facility to produce any of our products and
will not be able to do so in the future.
 
 ITEM
3 - LEGAL PROCEEDINGS
  None.
 
 ITEM
4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  None.
  
 PART
II
 
 ITEM
5 - MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
  During
the quarter ended March 31, 2005, a market maker filed an application to list
our securities on the OTC Bulletin Board of the National Association of
Securities Dealers, Inc. On October 10, 2005, we were informed by the NASD
that our common stock was approved by the NASD for trading on the OTC Bulletin
Board   Our original trading symbol was
MGBD.  Following the DHC merger transaction and our name change our
trading symbol changed to CHAS, which is our current trading
symbol.  Our common stock has traded very minimal amounts since we
were listed on the OTC Bulletin Board and there is no assurance that there will
be liquidity in the common stock.
  The
following table sets forth the high and low bid information for each quarter
within the two most recent fiscal years, as provided by the NASDAQ Stock
Markets, Inc.  The information reflects prices between dealers, and
does not include retail markup, markdown, or commission, and may not represent
actual transactions.
 
 Bid
      PricesFiscal
      Year
                          Ended
                          September
      30,
                        Period
                        
                        High
                        
                        
                        Low2005
                        First
      Quarter
                        
                        
                        N/A
                        
                        
                        
                        N/ASecond
      Quarter
                        
                        
                        N/A
                        
                        
                        
                        N/AThird
      Quarter
                        
                        
                        N/A
                        
                        
                        
                        N/AFourth
      Quarter
                        
                        $
                        -
                        
                        
                        $
                        -2006
                        First
      Quarter
                        
                        
                        N/A
                        
                        
                        
                        N/ASecond
      Quarter
                        
                        
                        N/A
                        
                        
                        
                        N/AThird
      Quarter
                        
                        $
                        2.30
                        
                        
                        $
                        0.50Fourth
      Quarter
                        
                        $
                        1.75
                        
                        
                        $
                        1.052007
                        First
      Quarter
                        
                        $
                        1.40
                        
                        
                        $
                        1.10Second
      Quarter
                        
                        $
                        1.18
                        
                        
                        $
                        0.55Third
      Quarter
                        
                        $
                        0.60
                        
                        
                        $
                        0.28Fourth
      Quarter
                        
                        $
                        0.31
                        
                        
                        $
                        0.062008
                        First
      Quarter
                        
                        $
                        0.20
                        
                        
                        $
                        0.05Second
      Quarter
                        
                        $
                        0.09
                        
                        
                        $
                        0.06Third
      Quarter
                        
                        $
                        0.09
                        
                        
                        $
                        0.06Forth
      Quarter
                        
                        $
                        0.09
                        
                        
                        $
                        0.06
  The
Securities Enforcement and Penny Stock Reform Act of 1990 requires additional
disclosure relating to the market for penny stocks in connection with trades in
any stock defined as a penny stock.  The Commission has adopted
regulations that generally define a penny stock to be any equity security that
has a market price of less than $5.00 per share, subject to a few exceptions
which we do not meet.  Unless an exception is available, the
regulations require the delivery, prior to any transaction involving a penny
stock, of a disclosure schedule explaining the penny stock market and the risks
associated therewith.
  There are
currently no outstanding options or warrants to purchase,
or securities convertible into, shares of our common stock.  The
warrants and stock options that were previously issued by us were cancelled
pursuant to the terms of the DHC transaction.
  11
 Holders
  The
number of holders of record of shares of our common stock is one hundred twenty
three (123).
  Dividends
 
 We have
never declared or paid any cash dividends on our common stock.  We do
not anticipate paying any cash dividends to stockholders in the foreseeable
future.  In addition, any future determination to pay cash dividends
will be at the discretion of the Board of Directors and will be dependent upon
our financial condition, results of operations, capital requirements, and such
other factors as the Board of Directors deem relevant.
  Securities
Authorized for Issuance under Equity Compensation Plans
  As noted above, our directors and
shareholders had approved the 2001 Plan and the 2004 Plan but both these Plans
were cancelled pursuant to the terms of the DHC merger
agreement.  There were no stock or options granted under these
Plans.  There have not been any other equity compensation plans
approved by our Board of Directors.
 
 Selected
Financials
 
 China
      Agro Sciences Corp.
                                                                                                    
                                                                                                    For
      the Years Ended September 30,2008
                                                                                                    
                                                                                                    2007Statement
      of Operations Data:Total
      revenues
                                                                                                    
                                                                                                    $
                                                                                                    -
                                                                                                    
                                                                                                    
                                                                                                    -Net
      income (loss)
                                                                                                    
                                                                                                    
                                                                                                    (487,073
                                                                                                    )
                                                                                                    
                                                                                                    (2,146,721
                                                                                                    )Balance
      Sheet Data:Current
      assets
                                                                                                    
                                                                                                    $
                                                                                                    313,439
                                                                                                    
                                                                                                    
                                                                                                    819,465Total
      assets
                                                                                                    
                                                                                                    
                                                                                                    4,573,225
                                                                                                    
                                                                                                    
                                                                                                    4,820,815Current
      liabilities
                                                                                                    
                                                                                                    
                                                                                                    915,850
                                                                                                    
                                                                                                    
                                                                                                    1,029,962Total
      liabilities
                                                                                                    
                                                                                                    
                                                                                                    1,290,378
                                                                                                    
                                                                                                    
                                                                                                    1,371,466Total
      stockholders’ equity
                                                                                                    
                                                                                                    
                                                                                                    3,282,847
                                                                                                    
                                                                                                    
                                                                                                    3,449,349Total
      dividends per common share
                                                                                                    
                                                                                                    
                                                                                                    -0-
                                                                                                    
                                                                                                    
                                                                                                    - 0
      -
  12
 ITEM 6
- MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
  Our
Management’s Discussion and Analysis contains not only statements that are
historical facts, but also statements that are forward-looking (within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934).  Forward-looking statements are, by
their very nature, uncertain and risky.   These risks and
uncertainties include international, national and local general economic and
market conditions; demographic changes; our ability to sustain, manage, or
forecast growth; our ability to successfully make and integrate acquisitions;
existing government regulations and changes in, or the failure to comply with,
government regulations; adverse publicity; competition; fluctuations and
difficulty in forecasting operating results; changes in business strategy or
development plans; business  disruptions; the ability to attract and
retain qualified personnel; the ability to protect technology; and other risks
that might be detailed from time to time in our filings with the Securities and
Exchange Commission.
  Although
the forward-looking statements in this Annual Report reflect the good faith
judgment of our management, such statements can only be based on facts and
factors currently known by them.  Consequently, and because
forward-looking statements are inherently subject to risks and uncertainties,
the actual results and outcomes may differ materially from the results and
outcomes discussed in the forward-looking statements.  You are urged
to carefully review and consider the various disclosures made by us in this
report and in our other reports as we attempt to advise interested parties of
the risks and factors that may affect our business, financial condition, and
results of operations and prospects.
 
 Summary
Overview
  We were
incorporated under the name M-GAB Development Corporation in March
2001.  From inception through early 2003, our business was the
development, marketing, and distribution of an interactive travel
brochure.  On May 16, 2003, we filed an election to be treated as a
business development company (“BDC”) under the Investment Company Act of 1940
(the “1940 Act”), which became effective on the date of filing.  As a
BDC we never made any investments into eligible portfolio
companies.
  On March
17, 2006, China Agro Sciences Corp., a Florida corporation formerly known as
M-GAB Development Corporation entered into an Agreement and Plan of Merger with
Dalian Holding Corp., a Florida corporation (formerly known as China Agro
Sciences Corp.) ("HC").  This transaction closed on May 1, 2006, at
which time, in accordance with the Agreement, DHC merged with DaLian Acquisition
Corp, a Florida corporation that was our wholly-owned subsidiary (“DaLian”) (the
“Merger”).  As a result of the merger, DaLian merged into DHC, with
DHC remaining as the surviving entity and our wholly-owned subsidiary, DaLian,
ceased to exist, and we issued 13,449,488 shares of our common stock to the
former shareholders of DHC.
  After the
merger transaction between our subsidiary, Dalian, and DHC, all of our
operations are conducted through our subsidiary, DHC, which conducts all of its
operations through its subsidiary, Ye Shun, and its wholly-owned subsidiary,
Runze.  Therefore, since our relevant operations post merger are
conducted through Ye Shun and Runze the discussion herein relates to the
operations of those two entities.
  Ye Shun
is a Hong Kong registered enterprise that has its ownership in Runze as its
primary asset.  Runze is a state-appointed pesticide manufacturer in
China.  Through Runze, we specialize in the manufacturing of various
pesticides and herbicides, particularly the herbicide
Acetochlor.  However, during the fiscal year ended September 30, 2008,
we did not sell any product or have any revenues as a result of not being able
to utilize DRC’s facilities and the new regulation regarding all manufacturing
plants being in “chemical zones.” Although
we hope to be able to manufacture product in 2009, we may not be able to do so
and would have to undertake a significant expense in building a new
manufacturing facility if we decided to continue with our current business plan
and manufacture herbicides and pesticides.
 
 13
 Results
of Operations
 
 Introduction
  Our
financial statements for the year ended September 30, 2008 and September 30,
2007 are consolidated with Runze’s since the only operations we have are Runze’s
operations.  During the year ended September 30, 2007 sales
of our products was $0. We did not sell any product in the year ended
September 30, 2008 and had no revenue.
 
 Year
ended September 30, 2008 compared to year ended September 30, 2007
  Revenues,
Expenses and Loss from Operations
  We had
revenue of $0 for the year ended September 30, 2008, compared to the same
situation for the year ended September 30, 2007.  Our revenues, cost
of sales, general and administrative expenses, and net loss for the years ended
September 30, 2008 and September 30, 2007, respectively, are as
follows:
 
 September
      30, 2008
                  
                  
                  September
      30, 2007Revenue
                  $
                  -
                  
                  $
                  -Cost
      of Sales
                  
                  -
                  
                  
                  -General
      and Administrative Expenses
                  
                  495,782
                  
                  
                  1,033,647Impairment
      Loss
                  
                  -
                  
                  
                  1,103,775Net
      Income (Loss)
                  $
                  (487,073)
                  
                  $
                  (2,146,721)
 
 Revenues and Income (Loss)
from Operations
  Our
revenues remained at $0 for the year ended September 30,
2008.  Going forward we will not be able to manufacture product at our
existing plant due to the new “chemical zone” regulation.  Therefore,
if we are not able to contract with a third party to utilize a qualified
manufacturing facility to produce our products, we do not know if we will be
able to manufacture product in the future.  If we do build a new
manufacturing facility in a “chemical zone” it will be at a substantial cost to
the company.
  Our cost
of sales for the year ended September 30, 2008 was also staying at $0. We
did not manufacture any products during this
period.
   
 Net Income
(Loss)
  Our net
loss for the year ended September 30, 2008 was $487,073, representing a decrease
of 340% or $1,659,648 compared to the loss of $2,146,721 for the year ended
September 30, 2007.  Of our net loss significantly dropped
down, for we incurred no impairment loss in 2008 compared to
an impairment loss of $1,103,775 in 2007.  The remainder of our net
loss was primarily attributable to our general and administrative
expenses.  In 2008, we had general and administrative expenses of
$495,782,  which represents a decrease of 108% or $537,865
compared with that of 2007.  We expect to continue at a significant
net loss until we are able to contract with a third party with an approved
manufacturing facility to manufacture our products, if we are able to do
so.
  Currently
we do not have any operations, income, or expenses in the United States, and,
therefore, we do not owe any income taxes in the United States and we are not
accruing for income taxes in the United States.  If this changes in
the future and we become subject to income taxes in the United States and either
pay or accrue such taxes it will have a negative impact on our net income
(loss).
  We did
not make a provision for income taxes in China, since we have not made
profits.
  14
 Liquidity
and Capital Resources
 
 Introduction
  During
the year ended September 30, 2008 we did not generate positive cash flows, the
same as the situation for the year ended September 30,
2007.
  Our cash, current assets, total assets,
current liabilities, and total liabilities as ofSeptember 30, 2008 and 2007,
respectively, are as follows:
 
 September
      30, 2008
                    
                    
                    September
      30, 2007
                    
                    
                    Increase
      (Decrease)
                    
                    Percent
      (Decrease)Cash
                    $
                    99,087
                    
                    $
                    114,271
                    
                    
                    (15,184)
                    
                    15.3%Total
      Current Assets
                    
                    313,439
                    
                    
                    819,465
                    
                    
                    (506,026)
                    
                    161.4%Total
      Assets
                    
                    4,573,225
                    
                    
                    4,820,815
                    
                    
                    (247,590)
                    
                    5.4%Total
      Current Liabilities
                    
                    915,850
                    
                    
                    1,029,962
                    
                    
                    (114,112)
                    
                    12.4%Total
      Liabilities
                    $
                    1,290,378
                    
                    $
                    1,371,466
                    
                    
                    (81,088)
                    
                    6.2%
  Sources and
Uses of Cash
 
 Operations
  Our net cash used in operating
activities for the year ended September 30, 2008 totaled ($464,217), representing a decrease of 1,151,736
or 248% compared to $687,519 for the same period one year
ago.  We anticipate that both our cash generated from operations and
used for operations will decrease significantly the longer we do not manufacture
or sell our products.
 
 Investments
  Our investing activities for the year
ended September 30, 2008 is$0.  During the year ended
September 30, 2007, our net cash provided by (used in) investing activities was
$0 as well.
 
 Financing
  During the year ended September 30,
2008, we had$459,480 net
cashprovided
byfinancing
activities, with $459,480  in loans from affiliated company.For the year ended September 30, 2007,
our financing activities totaled ($653,965),all of which consisted
of repayment to an affiliated company.
 
 Critical
Accounting Policies
  The
preparation of our financial statements in conformity with accounting principles
generally accepted in the United States of America requires our management to
make certain estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period.  As such, in accordance with the
use of accounting principles generally accepted in the United States of America,
our actual realized results may differ from management’s initial estimates as
reported.  A summary of our significant accounting policies are
located in the notes to the financial statements which are an integral component
of this filing.
 
 15
 Off-balance Sheet
Arrangements
  We have no off-balance sheet
arrangements that are reasonably likely to have a current or future effect on
our financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources that
is deemed by our management to be material to investors.
 
 Contractual
Obligations
 
 Payments due by period (in U.S.
      Dollars)Obligations
                Total
                
                1 Year
                
                1-3 Years
                
                3-5 Years
                
                5 YearsLong-Term Debt
      Obligations
                -0-
                
                -0-
                
                -0-
                
                -0-
                
                -0-Capital Lease
      Obligations
                -0-
                
                -0-
                
                -0-
                
                -0-
                
                -0-Operating Lease
      Obligations
                -0-
                
                -0-
                
                -0-
                
                -0-
                
                -0-Purchase
      Obligations
                -0-
                
                -0-
                
                -0-
                
                -0-
                
                -0-Other Long-Term
      Liabilities
                -0-
                
                -0-
                
                -0-
                
                -0-
                
                -0-Total Contractual
      Obligations
                -0-
                
                -0-
                
                -0-
                
                -0-
                
                -0-
 
 
 ITEM
6A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Our
primary operations are located in China.  As a result we are exposed
to gains and losses resulting from fluctuations in foreign currency exchange
rates relating to certain sales and product purchases.  We are also
exposed to foreign currency gains and losses resulting from domestic
transactions that are not denominated in U.S. dollars, and to fluctuations in
interest rates related to our variable rate debt. Furthermore, we are exposed to
gains and losses resulting from the effect that fluctuations in foreign currency
exchange rates have on the reported results in our consolidated financial
statements due to the translation of the operating results and financial
position.
  Our
primary financial instruments are cash in banks and money market
instruments.  We do not believe that these instruments are subject to
material potential near-term losses in future earnings from reasonably possible
near-term changes in market rates or prices.  We do not have
derivative financial instruments for speculative or trading
purposes.
 
 16
 ITEM 7
- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  CHINA
AGRO SCIENCES CORP.
  CONSOLIDATED
FINANCIAL STATEMENTS
  SEPTEMBER 30,
2008
 
 
 INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
 
 
 
 
 Reports
      of Independent Registered Public Accounting Firms
                  F-2Consolidated
      Balance Sheets as of September 30, 2008 and
2007
                  F-3Consolidated
      Statements of Operation for years ended September 30, 2008 and
      2007
                  F-4Consolidated
      Statements of Changes in Stockholders’ Equity for years
      ended September 30, 2008 and 2007
                  F-5Consolidated
      Statements of Cash Flows for years ended September 30, 2008 and
      2007
                  F-6Notes
      to Consolidated Financial Statements
                  F7-F12
 
  
 REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 
 
 Board of
Directors
 China
Agro Sciences Corp.
 
 
 We have
audited the accompanying consolidated balance sheets of China Agro Sciences
Corp. as of September 30, 2008 and 2007 and the related consolidated statements
of operations and other comprehensive income, changes in stockholders’ equity
and cash flows for the years then ended.  Our audits also included the
financial statement Schedule 1.These financial statements are the responsibility
of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audit.
 
 We
conducted our audit in accordance with auditing standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  The
Company is not required to have, nor were we engaged to perform an audit of is
internal control over financial reporting.  Our audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such
opinion.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.  We
believe that our audit provides a reasonable basis for our opinion.
 
 The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  As of September 30, 2008 the
Company had no operations and its current liabilities exceeded its current
assets by $602,411. These factors, among others, raise substantial doubt
about the Company’s ability to continue as a going concern.  The
accompanying financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of China Agro Sciences Corp. as of
September 30, 2008 and 2007, and the results of its operations and its cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
 
 /s/ Paritz & Company,
P.A.
 Hackensack,
New Jersey
 December
19, 2008
 
 
 
 CHINA
AGRO SCIENCES CORP.
 
 CONSOLIDATED
BALANCE SHEET
  (U.S.
$)
 SEPTEMBER
      30,2008
                  
                  2007ASSETSCURRENT
      ASSETS:Cash
                  
                  $
                  99,087
                  
                  $
                  114,271Prepaid
      financial consulting expenses
                  
                  
                  207,415
                  
                  
                  405,271Due
      from affiliated company
                  
                  
                  -
                  
                  
                  291,345Other
      current assets
                  
                  
                  6,937
                  
                  
                  8,578TOTAL
      CURRENT ASSETS
                  
                  
                  313,439
                  
                  
                  819,465Property
      and equipment, net of accumulated depreciation
                  
                  
                  4,259,786
                  
                  
                  4,001,350TOTAL
      ASSETS
                  
                  
                  4,573,225
                  
                  
                  4,820,815LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIES:Accounts
      payable
                  
                  $
                  427,335
                  
                  $
                  996,894Due
      to affiliated company
                  
                  
                  447,308
                  
                  
                  -Accrued
      expenses
                  
                  
                  41,207
                  
                  
                  33,068TOTAL
      CURRENT LIABILITIES
                  
                  
                  915,850
                  
                  
                  1,029,962LONG-TERM
      DEBT
                  
                  
                  374,528
                  
                  
                  341,504STOCKHOLDERS’
      EQUITY:Common
      stock, $0.001 par value100,000,000
      shares authorized20,050,000
      shares issued and outstanding
                  
                  
                  20,050
                  
                  
                  20,050Additional
      paid-in capital
                  
                  
                  3,751,900
                  
                  
                  3,738,900Accumulated
      deficit
                  
                  
                  (1,261,133
                  )
                  
                  (774,060
                  )Accumulated
      other comprehensive income
                  
                  
                  772,030
                  
                  
                  464,459TOTAL
      STOCKHOLDERS’ EQUITY
                  
                  
                  3,282,847
                  
                  
                  3,449,349TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                  
                  
                  4,573,225
                  
                  
                  4,820,815See notes to financial statements
 
 
 CHINA AGRO SCIENCES
CORP.
 
 CONSOLIDATED
STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME
  (U.S.$)
 For
      the year
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  For
      the yearended
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  endedSeptember
      30, 2008
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  September
      30, 2007REVENUES
                                                                                                                                                  
                                                                                                                                                  $
                                                                                                                                                  -
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  $
                                                                                                                                                  -COSTS
      AND EXPENSES:General and administrative
      expenses
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  495,782
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  1,033,647Impairment loss
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  -
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  1,103,775Other income
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  (36,673)
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  -Interest expense
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  27,964
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  9,299TOTAL
      COSTS AND EXPENSES
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  487,073
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  2,146,721NET
      (LOSS)
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  (487,073)
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  (2,146,721)OTHER
      COMPREHENSIVE INCOME:Foreign currency translation adjustment
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  307,571
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  235,561COMPREHENSIVE
      INCOME
                                                                                                                                                  
                                                                                                                                                  $
                                                                                                                                                  (179,502)
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  $
                                                                                                                                                  (1,911,160)BASIC
      AND DILUTED EARNINGS (LOSS) PER COMMON SHARE
                                                                                                                                                  
                                                                                                                                                  $
                                                                                                                                                  (0.02)
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  $
                                                                                                                                                  (0.11)WEIGHTED
      AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  20,050,000
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  
                                                                                                                                                  20,050,000See notes to Financial
      Statements
   
  
 CHINA
AGRO SCIENCES CORP.
 
 STATEMENT
OF CHANGES IN STOCKHOLDERS’ EQUITY
  (U.S.
$)
 Retained
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        Accumulated
      OtherCommon
      Stock
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        Additional
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        Earnings
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        ComprehensiveShares
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        Amount
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        Paid
      in Capital
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        (Deficit)
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        Income
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        TotalBalance
      - OCTOBER 1, 2006
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        20,050,000
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        $
                                                                                                                                        20,050
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        $
                                                                                                                                        3,738,900
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        $
                                                                                                                                        1,372,662
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        $
                                                                                                                                        228,898
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        $
                                                                                                                                        5,360,510Foreign
      currency translation ajustment
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        -
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        -
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        -
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        -
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        235,561
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        235,561Net
      (loss)
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        -
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        -
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        -
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        (2,146,722)
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        -
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        (2,146,722)Balance
      - September 30, 2007
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        20,
      050,000
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        20,050
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        3,738,900
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        (774,060)
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        464,459
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        3,449,349Imputed
      interest on amount due to affiliated company
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        -
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        -
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        13,000
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        -
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        -
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        13,000Foreign
      currency translation adjustment
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        -
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        -
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        -
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        -
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        307,571
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        307,571Net
      (loss)
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        -
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        -
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        -
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        (487,073)
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        -
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        (487,073)Balance
      September 30, 2008
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        20,050,000
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        $
                                                                                                                                        20,050
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        $
                                                                                                                                        3,751,900
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        $
                                                                                                                                        (1,261,133)
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        $
                                                                                                                                        772,030
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        $
                                                                                                                                        3,282,847See
      notes to Financial
Statements
 
   CHINA AGRO SCIENCES
CORP.
 
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
  (U.S.
$)
 YEAR
      ENDED SEPTEMBER 30,2008
                                    
                                    
                                    
                                    2007OPERATION
      ACTIVITIES:Net
      (loss)
                                    
                                    $
                                    (487,073
                                    )
                                    
                                    $
                                    (2,146,721)Adjustments
      to reconcile net (loss) to netcash
      (used in) provided by operating activities:Depreciation
                                    
                                    
                                    124,012
                                    
                                    
                                    
                                    462,749Income
      from sale of equipment exchanged for accounts payable
                                    
                                    
                                    (33,649
                                    )
                                    
                                    
                                    -Impairment
      loss
                                    
                                    
                                    -
                                    
                                    
                                    
                                    1,103,757Imputed
      interest
                                    
                                    
                                    13,000
                                    
                                    
                                    
                                    -Changes
      in operating assets and liabilities:Accounts
      receivable
                                    
                                    
                                    -
                                    
                                    
                                    
                                    2,121,681Prepaid
      expenses
                                    
                                    
                                    237,046
                                    
                                    
                                    
                                    (405,271)Other
      current assets
                                    
                                    
                                    2,470
                                    
                                    
                                    
                                    13,490Accounts
      payable
                                    
                                    
                                    (324,964
                                    )
                                    
                                    
                                    (495,251)Accrued
      expenses
                                    
                                    
                                    4,941
                                    
                                    
                                    
                                    33,067NET
      CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
                                    
                                    
                                    (464,217
                                    )
                                    
                                    
                                    687,519FINANCING
      ACTIVITIES:Loans
      from (repayment to) affiliated company
                                    
                                    
                                    459,480
                                    
                                    
                                    
                                    (653,965)NET
      CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
                                    
                                    
                                    459,480
                                    
                                    
                                    
                                    (653,965)EFFECT
      OF EXCHANGE RATE ON CASH
                                    
                                    
                                    (10,447
                                    )
                                    
                                    
                                    (23,100)DECREASE
      (INCREASE) IN CASH
                                    
                                    
                                    (15,184
                                    )
                                    
                                    
                                    10,454CASH  –
      BEGINNING OF YEAR
                                    
                                    
                                    114,271
                                    
                                    
                                    
                                    103,817CASH  –
      END OF YEAR
                                    
                                    $
                                    99,087
                                    
                                    
                                    $
                                    114,271Supplemental
      disclosures of cash flow information:Cash paid during the year
      for:Interest
                                    
                                    $
                                    13,710
                                    
                                    
                                    $
                                    3,911Non-cash operating
      activities:Repayment
      of accounts payable by inventory
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    421,101Transfer
      accounts payable to affiliated company
                                    
                                    $
                                    307,346
                                    
                                    
                                    $
                                    -See notes to Financial
      Statements
  F-6
 CHINA
AGRO SCIENCES CORP.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  SEPTEMBER
30, 2008
 
 1           NATURE
OF OPERATIONS AND ACCOUNTING POLICIES
 
  Business
description
  The
Company specializes in the manufacturing, sale and distribution of herbicides
and pesticides to reduce or eliminate the amount of agricultural produce lost to
plant diseases and insects.  Their manufacturing and distribution
operations are based in the PRC.  Production operations have been
suspended since the facility needs to be relocated.
 
 Accounting
methods
 
 The financial statements are prepared using the accrual method of
accounting.  The Company has elected a fiscal year ending on September
30th.
 
 Uses
of estimates in the preparation of financial statements
 
 The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of net revenue and expenses during each reporting
period.  Actual results could differ from those
estimates.
 
 Inventories
 
 Inventories,
consisting of raw materials, are valued at the lower of cost as determined by
the first-in, first-out method or market.
 
 Property
and equipment
 
 Property
and equipment are recorded at cost.  Depreciation is provided in
amounts sufficient to amortize the cost of the related assets over their useful
lives using the straight line method for financial reporting purposes, whereas
accelerated methods are used for tax purposes.
 
 Maintenance,
      repairs and minor renewals are charged to expense when
      incurred.  Replacements and major renewals are
      capitalized.
  Impairment
      of long-lived assets
  The
Company accounts for the impairment of long-lived assets in accordance with SFAS
No. 144, “Accounting for the
Impairment or Disposal of Long-Lived Assets”.  Long-lived
assets are reviewed for impairment when circumstances indicate the carrying
value of an asset may not be recoverable.  For assets that are to be
held and used, an impairment is recognized when the estimated undiscounted cash
flows associated with the asset or group of assets is less than their carrying
value.  If impairment exists, an adjustment is made to write the asset
down to its fair value, and a loss is recorded as the difference between the
carrying value and fair value.  Fair values are determined based on
quoted market values, discounted cash flows or internal and external appraisals,
as applicable.  Assets to be disposed of are carried at the lower of
carrying value or estimated net realizable value.
  
 CHINA
AGRO SCIENCES CORP.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  SEPTEMBER
30, 2008
 Deferred
income taxes
 
 The
Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109 (SFAS 109) which requires that deferred tax assets
and liabilities be recognized for future tax consequences attributable to
differences between financial statement carrying amounts of existing assets and
liabilities and their respective tax bases.  In addition, SFAS 109
requires recognition of future tax benefits, such as carryforwards, to the
extent that realization of such benefits is more likely than not and that a
valuation allowance be provided when it is more likely than not that some
portion of the deferred tax asset will not be realized.
  Currency
translation
 
 Since the
Company operates primarily in the PRC, the Company's functional currency is the
Chinese Yuan (RMB).  Revenue and expense accounts are translated at
the average rates during the period, and balance sheet items are translated at
year-end rates.  Translation adjustments arising from the use of
differing exchange rates from period to period are included as a component of
stockholders=
equity.  Gains and losses from foreign currency transactions are
recognized in current operations.
 
 2             
GOING CONCERN AND IMPAIRMENT LOSS
 
 The
financial statements have been prepared using accounting principles generally
accepted in the United States of America applicable for a going concern, which
assumes that the Company will realize its assets and discharge its liabilities
in the ordinary course of business.  The Company’s ability to continue
as a going concern is dependent on, among other things, its ability to achieve
profitable operations, to maintain its existing financing and to obtain
additional financing to meet its obligations and to pay its liabilities when
they come due.  The Company is currently pursuing new debt and equity
financing in conjunction with proposed future acquisitions and
operations.
 
 At the
present time, the Company does not have sufficient working capital to meet its
needs.  The Company intends to raise additional funds through the
issuance of equity or convertible debt securities.  There can be no
assurance that additional financing will be available on terms favorable to the
Company, or at all.  The inability to raise the additional funds could
cause the Company to cease all operations.
 
 In May
2007, the Company received a notice from the Chinese National Environmental
Bureau that all chemical manufacturing facilities must be located in designated
“chemical zones” going forward, and for manufacturing plants not located there
now will have to be relocated.  The Company’s manufacturing facility
is not currently located in a “chemical zone” and, therefore, it will be forced
to move the facility to a “chemical zone” at some point in the next one to two
years.  As a result, the Company has incurred an impairment loss
representing the net book value of equipment.
  
 CHINA
AGRO SCIENCES CORP.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  SEPTEMBER
30, 2008
 3
                PROPERTY
      AND EQUIPMENT
 
 A summary
of property and equipment and the estimated lives used in the computation of
depreciation and amortization is as follows:
   September
      30,2008
                
                
                
                2007Amount
                LifeFurniture,
      fixtures and office equipement
                
                $
                23,119
                
                
                $
                21,082
                
                5-7
      yearsBuilding and
      building improvements
                
                
                4,551,175
                
                
                
                4,247,499
                
                40
      yearsAutomobile
                
                
                31,168
                
                
                
                28,420
                
                5
      years4,605,462
                
                
                
                4,297,001Accumulated
      depreciation
                
                
                345,676
                
                
                
                295,651$
                4,259,786
                
                
                $
                4,001,350
  4           DUE
TO AFFILIATED COMPANY
  This
amount is non-interest bearing and due on demand.  The Company has
imputed interest of $13,000 for the year ended September 30, 2008.
 
 5           LONG-TERM
DEBT
 
 The
Company entered into a fifteen year loan agreement in July 2005.  This
obligation bears interest at 0.3% over the prime rate in effect in the PRC and
is payable interest only through July 2009, followed by annual principal
installments of approximately 233,000 RMB ($34,000) commencing in August 2010,
plus interest, with the final payment due in July 2020.
 
 Future
principal loan payments are as follows:
 
 Year
      ended September 30th
      (using current year exchange rates)2009
                  
                  $
                  -2010
                  
                  
                  34,0902011
                  
                  
                  34,0902012
                  
                  
                  34,0902013
                  
                  
                  34,090Thereafter
                  
                  
                  238,168$
                  374,528
  6           INCOME
TAXES
 
 The
Company has net operating loss carryforwards in China of approximately
$1,250,000 which expire between 2008 and 2013.
 
 The
Company has a deferred tax asset resulting from tax loss carryforwards of
approximately $300,000 for which the Company has provided a 100% valuation
allowance.
 
 
 CHINA
AGRO SCIENCES CORP.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  SEPTEMBER
30, 2008
 7           OTHER
INCOME
 
 Other
income results from the sale of equipment which has been previously written
off.
 
 
 8
              RISK
      FACTORS
 
 Vulnerability
due to Operations in PRC
 
 The operations may be adversely affected by significant political, economic and
social uncertainties in the PRC.  Although the PRC government has been
pursuing economic reform policies for more than 20 years, no assurance can be
given that the PRC government will continue to pursue such policies or that such
policies may not be significantly altered, especially in the event of a change
in leadership, social or political disruption or unforeseen circumstances
affecting the PRC=s
political, economic and social conditions.  There is also no guarantee
that the PRC government's pursuit of economic reforms will be consistent or
effective.
 
 Substantially
all of the Compant's businesses are transacted in RMB, which is not freely
convertible.  The People's Bank of China or other banks are authorized
to buy and sell foreign currencies at the exchange rates quoted by the People's
Bank of China.  Approval of foreign currency payments by the People's
Bank of China or other institutions requires submitting a payment application
form together with suppliers’ invoices, shipping documents and signed
contracts.
  Concentration
of Credit Risk
 
 Cash is
currently the only financial instrument that potentially subjects the Company to
significant concentration of credit risk is primarily cash.  The
Company maintains its cash with various banks and trust companies located in
China which are not insured or otherwise protected.  Should any of
these institutions holding the Company’s cash become insolvent, or if the
Company is unable to withdraw funds for any reason, the Company could lose the
cash on deposit with that institution.
  Environmental
issues
 
 The
Company conducts business in an industry that is subject to a broad array of
environmental laws and regulations.  The production of the products
the Company intends to produce will create pollutants.  The Company
will incur significant costs if additional government regulations are introduced
to protect the environment.
 
 
 CHINA
AGRO SCIENCES CORP.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  SEPTEMBER
30, 2008
 9           SUMMARY
OF QUARTERLY OPERATING RESULTS (UNAUDITED)
 
 
 
 
 2008
                QUARTERFirst
                Second
                Third
                Fourth
                Total
 Revenue
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -Operating
      loss
                  
                  
                  (71,428
                  )
                  
                  
                  (103,925
                  )
                  
                  
                  (99,250
                  )
                  
                  
                  (212,470
                  )
                  
                  
                  (487,073
                  )Net
      loss
                  
                  
                  (71,428
                  )
                  
                  
                  (103,925
                  )
                  
                  
                  (99,250
                  )
                  
                  
                  (212,470
                  )
                  
                  
                  (487,073
                  )Basic
      and diluted earnings per
                    common
      share (1)
                  
                  
                  (0.003)
                  
                  
                  
                  (0.01
                  )
                  
                  
                  (0.005
                  )
                  
                  
                  (0.01
                  )
                  
                  
                  (0.02
                  )
 
 2007
                QUARTERFirst
                Second
                Third
                Fourth
                Total
 Revenue
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  -Operating
      loss
                  
                  
                  (208,644
                  )
                  
                  
                  (218,490
                  )
                  
                  
                  (187,153
                  )
                  
                  
                  (1,532,434
                  )
                  
                  
                  (2,146,721
                  )Net
      loss
                  
                  
                  (208,644
                  )
                  
                  
                  (218,490
                  )
                  
                  
                  (187,153
                  )
                  
                  
                  (1,532,434
                  )
                  
                  
                  (2,146,721
                  )Basic
      and diluted earnings per
                    common
      share (1)
                  
                  
                  (0.01
                  )
                  
                  
                  (0.01
                  )
                  
                  
                  (0.01
                  )
                  
                  
                  (0.08
                  )
                  
                  
                  (0.11
                  )
 
 (1)           Earnings
per share were computed independently for each of the periods
presented.  Therefore, the sum of the earnings per share amounts for
the quarters may not equal the total for the year.
 
 F-11
 CHINA
AGRO SCIENCES CORP.
 
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
 SEPTEMBER
30, 2008
 Schedule
1 – Condensed Financial Information of Registrant
 
 
 CHINA
AGRO SCIENCES CORP.
 BALANCE
SHEET
 SEPTEMBER
30, 2008
 ASSETSINVESTMENT
      IN SUBSIDIARIES
                  
                  $
                  3,282,847TOTAL
      ASSETS
                  
                  $
                  3,282,847LIABILITIES
      AND STOCKHOLDERS’ EQUITYSTOCKHOLDERS’
      EQUITY
                  
                  $
                  3,272,847TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                  
                  $
                  3,272,847
 
 CHINA
AGRO SCIENCES CORP.
 STATEMENT
OF OPERATIONS
 YEAR
ENDED SEPTEMBER 30, 2008
 LOSS
      FROM EARNINGS OF SUBSIDIARIES
                  
                  $
                  (474,073
                  )NET
      LOSS BEFORE INCOME TAXES
                  
                  $
                  (474,073
                  )
 
 CHINA
AGRO SCIENCES CORP.
 STATEMENT
OF CASH FLOWS
 YEAR
ENDED SEPTEMBER 30, 2008
 OPERATING
      ACTIVITIES:Net
      loss
                  
                  $
                  (474,073
                  )Adjustments
      to reconcile net income to netcash
      provided by operating activities:Loss
      from earnings of subsidiaries
                  
                  
                  474,073NET
      CASH PROVIDED BY OPERATING ACTIVITIES
                  
                  
                  -CASH
      – BEGINNING OF YEAR
                  
                  
                  -CASH
      – END OF YEAR
                  
                  $
                  -
 
  F-12




ITEM 8
- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE




None.





ITEM
8A – CONTROLS AND PROCEDURES




We conducted an evaluation, with the
participation of our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures, as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended, or theExchange
Act, as of September 30,
2008, to ensure that
information required to be disclosed by us in the reports filed or submitted by
us under the Exchange Act
is recorded, processed, summarized and reported, within the time periods
specified in the Securities Exchange Commission’s rules and forms, including to ensure
that information required to be disclosed by us in the reports filed or
submitted by us under the Exchange Act is
accumulated and communicated to our management, including our principal
executive and principal financial officers, or persons performing similar
functions, as appropriate to allow timely decisions regarding required
disclosure.  Based on that
evaluation, our Chief Executive Officer and Chief Financial Officer have
concluded that as ofSeptember 30, 2008, our disclosure controls and procedures
were not effective at the reasonable assurance level due to the material
weaknesses described
below.




In light of the material weaknesses
described below, we performed additional analysis and other post-closing
procedures to ensure our consolidated financial statements were prepared in
accordance with generally accepted accountingprinciples.  Accordingly, we
believe that the consolidated financial statements included in this report
fairly present, in all material respects, our financial condition, results of
operations and cash flows for the periods presented.




A material weaknessis a control deficiency (within the
meaning of the Public Company Accounting Oversight Board (PCAOB) Auditing
Standard No. 2) or combination of control deficiencies, that results in more
than a remote likelihood that a material misstatement of the annualor interim financial statements will not
be prevented or detected.  Management has identified the following
three material weaknesses which have caused management to conclude that, as ofSeptember 30,
2008, our disclosure
controls and procedures were not effective at the reasonable assurance
level:




1.           
We do not have written
documentation of our internal control policies and
procedures.  Written documentation of key internal controls over
financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Actand will be applicable to us for the
year endingSeptember 30, 2008.  Management
evaluatedthe impact of our
failure to have written documentation of our internal controls and procedures on
our assessment of our disclosure controls and proceduresand has concluded that the control
deficiency that resulted represented a material weakness.




2.           
We do not have sufficient segregation of duties within accounting functions,
which is a basic internal control. Due to our size and nature, segregation of
all conflicting duties may not always be possible and may not be economically
feasible. However, to the extent possible, the initiation of transactions, the
custody of assets and the recording of transactions should be performed by
separate individuals. Management evaluated the impact of our failure to have
segregation of duties on our assessment of our disclosure controls and
procedures and has concluded that the control deficiency that resulted
represented a material weakness.




3.           
We have had a number of audit adjustments. Audit adjustments are the result of a
failure of the internal controls to prevent or detect misstatements of
accounting information. The failure could be due to inadequate design of the
internal controls or to a misapplication or override of controls. Management
evaluated the impact of our significant number of audit adjustments and has
concluded that the control deficiency that resulted represented a material
weakness.




To address these material weaknesses,
management performed additional analyses and other procedures to
ensure that the financial statements included herein fairly present, in all
material respects, our financial position, results of operations and cash flows
for the periods presented.





Remediation
of Material Weaknesses




We have attempted toremediate the material weaknesses in our
disclosure controls and procedures identified abovebyworking with our independentregistered public
accounting firm andrefiningour internal procedures.  To date, we have not been
successful in reducing the
number of audit adjustments, but will continue our efforts in the coming fiscal
year.




Changes in
Internal Control over Financial Reporting




Except as noted above, there were no
changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act, during our most recently completed fiscal
quarter that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.




ITEM
8B – OTHER INFORMATION




None.








PART
III





ITEM 9
– DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNACE




The
following table sets forth the names and ages of the current directors and
executive officers of the Company, the principal offices and positions with the
Company held by each person and the date such person became a director or
executive officer of the Company.  The executive officers of the
Company are elected annually by the Board of Directors.  The directors
serve one-year terms until their successors are elected.  The
executive officers serve terms of one year or until their death, resignation or
removal by the Board of Directors.  Unless described below, there are
no family relationships among any of the directors and officers.





Name
              
              Age
              
              Position(s)Zhengquan
      Wang
              
              66
              
              Chief
      Executive Officer, Chief Financial Officer, Secretary, and Director
      (2006)




Zhengquan Wangwas born on
July 18, 1942.  Mr. Wang is currently a professor emeritus at the
Shenyang Agricultural University.  From 1993 through 2002, he served
as chairman of the board of Dalian Ruize Pesticides, Inc.  From 2002
to the present, he has been serving as the president and chairman of Dalian
Runze Chemurgy Co., Ltd. (“DRC”).  His duties include overseeing day
to day operations along with being the chief research architect of new
products.  At Dalian University, he specialized in the research of
chemical and dye material production.  His research has lead to the
development of products and production processes that have been nationally
recognized as new technical products.  He has also been recognized by
the Liaoning province for “Outstanding New Product” awards, the office of
Liaoning province of Petrochemicals, and by other scientific and technology
profession journals and publications.  Mr. Wang currently acts as
senior level engineering advisor to the Dalian Municipal People’s Congress, the
Liaoning Provincial Party Committee, and other provincial government expert
advisory boards.  He serves also on the board of the China Institute
of Pesticides, the China Industrial Chemicals Association, and the China
Pesticide Professionals Committee.





Board Meetings and
Committees




During
the fiscal years ended September 30, 2008 and 2007, the Board of Directors did
not meet, but did take action by unanimous written consent on several
occasions.





Audit
Committee




We do not
currently have an audit committee or an audit committee financial
expert.





Compliance with Section
16(a) of the Securities Exchange Act of 1934




Section
16(a) of the Securities Exchange Act of 1934 requires the Company’s directors
and executive officers and persons who own more than ten percent of a registered
class of the Company’s equity securities to file with the SEC initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company.  Officers, directors and greater than ten
percent shareholders are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.




To the
Company’s knowledge, none of the required parties are delinquent in their 16(a)
filings.





Code of
Ethics




We have
not adopted a written code of ethics, primarily because we believe and
understand that our officers and directors adhere to and follow ethical
standards without the necessity of a written policy.





18


ITEM
10 - EXECUTIVE COMPENSATION




None of
our employees are subject to a written employment agreement.  Our sole
officer and director has elected to forego a salary during the early
developmental stages, and also provided office space.  As of September
30, 2008 we did not have any amounts owed to our president and director as he
elected to forego a salary until further notice.




On May
15, 2001, our directors and shareholders approved the M-GAB, Inc. 2001 Stock
Option Plan, effective June 1, 2001.  The plan offers selected
employees, directors, and consultants an opportunity to acquire our common
stock, and serves to encourage such persons to remain employed by us and to
attract new employees.  The plan allows for the award of stock and
options, up to 600,000 shares of our common stock.  In November 2003,
we agreed to issue options to acquire 600,000 shares under the Plan to our two
independent directors; however, in accordance with the rules governing business
development companies, these options could not be issued until approved by the
Commission.  We previously filed an Application For an Order Pursuant
to Section 61(a)(3)(B) of The Investment Company Act of 1940 to Permit the
Issuance of Stock Options to Non-Interested Directors.  With our
decision to terminate our status as a business development company we withdrew
this application.




The
Summary Compensation Table shows certain compensation information for services
rendered in all capacities for the fiscal years ended September 30, 2008, and
2007.  Other than as set forth herein, no executive officer’s salary
and bonus exceeded $100,000 in any of the applicable years.  The
following information includes the dollar value of base salaries, bonus awards,
the number of stock options granted and certain other compensation, if any,
whether paid or deferred.




Annual
      CompensationName
      and Principal Position
              
              Year
              
              Salary(USD)
              
              Bonus
              
              Other
      Annual
                CompensationZhengquan
      Wang, Chief Executive Officer, Chief Financial Officer, Secretary and
      Director
              
              
              2008
              
              $
              0
              
              
              0
              
              
              0Zhengquan
      Wang, Chief Executive Officer, Chief Financial Officer, Secretary and
      Director
              
              
              2007
              
              $
              0
              
              
              0
              
              
              0Zhengquan
      Wang, Chief Executive Officer, Chief Financial Officer, Secretary and
      Director
              
              
              2006
              
              $
              0
              
              
              0
              
              
              0




19


ITEM
11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS




The
following table sets forth, as of December 11, 2008, certain information
with respect to the Company’s equity securities owned of record or beneficially
by (i) each Officer and Director of the Company; (ii) each person who owns
beneficially more than 10% of each class of the Company’s outstanding equity
securities; and (iii) all Directors and Executive Officers as a
group.





Common StockTitle of Class
            Name and Address
              of Beneficial Owner
            Amount and Nature of
              Beneficial Ownership
            Percent
              of Class (1)Common
      Stock
            Zhengquan
      Wang (2)(3)
            16,000,000
      (4)
            80.0%
      (4)Common
      Stock
            All Directors and
      Officers
              As a Group (2
      persons)
            16,000,000
      (4)
            80.0%
      (4)





(1)
            Unless
      otherwise indicated, based on 20,000,000 shares of common stock issued and
      outstanding following the Merger. Shares of common stock subject to
      options or warrants currently exercisable, or exercisable within 60 days,
      are deemed outstanding for purposes of computing the percentage of the
      person holding such options or warrants, but are not deemed outstanding
      for the purposes of computing the percentage of any other person.





(2)
            Indicates
      one of our officers or directors.





(3)
            Unless
      indicated otherwise, the address of the shareholder is 101 Xinanyao
      Street, Jinzhou District, Dalian, Liaoning Province, PRC 116100.





(4)
            Includes
      3,000,000 shares held by Xiufen Bi, 3,000,000 shares held by Qiming Wang,
      2,000,000 shares held by Yinghua Wang, and 2,000,000 shares held by Feng
      Yang, Mr. Wang’s spouse, son, daughter, and son-in-law, respectively.




The
issuer is not aware of any person who owns of record, or is known to own
beneficially, five percent or more of the outstanding securities of any class of
the issuer, other than as set forth above.  There are no classes of
stock other than common stock issued or outstanding.  Other than as
set forth herein, there are no options, warrants, or other rights to acquire
common stock outstanding.




There are
no current arrangements which will result in a change in control.





20


ITEM
12 - CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE




On May 1,
2006, pursuant to the DHC merger transaction discussed herein, we issued an
aggregate of 13,449,488 shares of common stock of our common stock to the
shareholders of DHC, all restricted in accordance with Rule
144.


We had an
agreement with Dalian Raiser Chemurgy Co., Ltd. (“DRC”), a related-party that
our sole officer and Director is the President and Chairman of the
Board.  We manufactured all of our products at DRC’s manufacturing
facility during fiscal year ended September 30, 2006, but none for our most
recent fiscal year end.  Under our past agreement with DRC, we paid
DRC $100 per one ton of product we produced at their facility.  This
total cost was approximately $175,000 for the twelve months ended September 30,
2006.  We believe these costs would have been significantly higher if
we were forced to use an unrelated third party manufacturing facility to
manufacture our products, likely $1.5 million to $2 million higher based on the
amount of product we manufactured in the twelve months ended September 30,
2006.  We are no longer manufacturing any products under this
agreement.




ITEM 13. EXHIBITS
  Number
                                    
                                    Exhibit
                                    
                                    Location3.1
                                    
                                    Articles
      of Incorporation of China Agro Sciences Corp.
                                    
                                    Incorporated
      by reference to Exhibit 3.1 to Form SB-2 filed on August 31,
      20013.2
                                    
                                    Articles
      of Amendment to Articles of Incorporation Changing Name to China Agro
      Sciences Corp.
                                    
                                    Incorporated
      by reference to Form 8-K filed on May 5, 20063.3
                                    
                                    Articles
      of Merger Merging DaLian Acquisition Corp. into China Agro Sciences
      Corp.
                                    
                                    Incorporated
      by reference to Form 8-K filed on May 5, 20063.5
                                    
                                    Bylaws
      of China Agro Sciences Corp.
                                    
                                    Incorporated
      by reference to Exhibit 3.1 to Form SB-2 filed on August 31,
      200131.1
                                    
                                    Certification
      of CEO and CFO pursuant to Rule 13a-14(a)/15(d)-14(a).
                                    
                                    Filed
      within32.1
                                    
                                    Certification
      of CEO and CFO pursuant to Section 1350.
                                    
                                    Filed
      within


ITEM
14 – PRINCIPAL ACCOUNTING FEES AND SERVICES





Audit Fees




During the fiscal years ended September
30, 2008 and 2007, our current independent auditor, Paritz & Company, P.A.
billed us$17,500and $17,500, respectively,
in fees for professional services for the audit of our annual financial
statements and review of financial statements included in our Forms 10-K and
10-Q.





Audit
– Related Fees




During the fiscal years ended September
30, 2008 and 2007, our current independent auditor, Paritz & Company, P.A.
billed us $7,500and $7,500, respectively,
in fees for services related to the performance of the review of the
Company’s financial statements.





Tax
Fees




During the fiscal years ended September
30, 2008 and 2007, our current independent auditor, Paritz & Company, P.A.
billed us$0and $0, respectively, in fees for
professional services for tax planning and preparation.





All
Other Fees




During
the fiscal years ended September 30, 2008 and 2007, our current independent
auditor, Paritz & Company, P.A. billed us $0 and $0, respectively, for other
fees.




Of the
fees described above for the fiscal years ended September 30, 2008 and 2007,
100% were approved by our Board of Directors.  Of the fees described
above for the fiscal year ended December 31, 2005, 100% were approved by the by
the then Audit Committee of the Board of Directors of the Company.














SIGNATURES





In accordance with Section 13 or 15(d)
of the Exchange Act, the registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.








China Agro Sciences
      Corp.Dated:  January 13,
      2009
                /s/
      Zhengquan WangZhengquan WangPresident, Director, CEO,
CFO