UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, DC 20549




FORM 10-Q




QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF


THE SECURITIES EXCHANGE ACT OF 1934




For the fiscal Quarter ended September 30, 2010


Commission file number 000-52622




GREEN PLANET BIOENGINEERING CO. LIMITED(Exact Name of Registrant as Specified In Its Charter)
  DELAWARE

37-1532842(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer Identification No.)
  19950 W. Country Club Drive, Suite 100, Aventura, FL 33180(Address of Principal Executive Offices)
(Zip Code)
  1 305 328 8662(Registrant’s Telephone Number,

Including Area Code)




Securities registered under Section 12(b) of the Act




NONE




Securities registered pursuant to Section 12(g) of the Act:




NONE




(Title of Class)









Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes   o   No   x




Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d0 of the act.  Yes   o   No   x




Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Yes: x
No: 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 12-b-2 of the Exchange Act.  (Check One):




Large Accelerated Filer   o   Accelerated Filer   o   Non-accelerated Filer   o   Smaller Reporting Company x




Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).


Yes: o
No: x




The number of shares of common stock outstanding as of November 9, 2010 was 20,006,402.







TABLE OF CONTENTS
  Page

NumberPART I
FINANCIAL INFORMATIONItem 1Condensed Consolidated Statements of Income and Comprehensive Income for the Three and Nine Months Ended September 30, 2010 and 2009 (Unaudited)

F-1Condensed Consolidated Balance Sheets as of September 30, 2010 (Unaudited) and December 31, 2009 (Audited)

F-2Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2010 and 2009 (Unaudited)

F-3Notes to Condensed Consolidated Financial Statements

F-4-F-24Item 2
Management’s Discussion and Analysis of Financial Condition and Results of Operations

4Item 3
Quantitative and Qualitative Disclosures about Market Risk

17Item 4
Controls and Procedures

17PART II
OTHER INFORMATIONItem 1
Legal Proceedings

19Item 2
Market for Common Equity and Related Stockholder Matters

19Item 3
Defaults upon Senior Securities

19Item 4
Submission of Matters to a Vote of Security Holders

19Item 5
Other Information

19Item 6
Exhibits

19SIGNATURES

21
  2




FORWARD-LOOKING STATEMENTS




This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934.  These statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses.  Such forward-looking statements include, among others, those statements including the words “expects,” “anticipates,” “intends,” “believes,” “may,” “will,” “should,” “could,” “plans,” “estimates,” and similar language or negative of such terms.  Our actual results may differ significantly from those projected in the forward-looking statements.  Factors that might cause or contribute to such differences include, but are not limited to, those discussed in Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”  You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report.  Although we believe that the expectations reflected in the forward-looking statements are reasonable, we do not know whether we can achieve positive future results, levels of activity, performance, or goals.  Actual events or results may differ materially.  We undertake no obligation to publicly release any revisions to the   forward-looking statements or reflect events or circumstances taking place after the date of this document.




3




Green Planet Bioengineering Co., Ltd.




Condensed Consolidated Financial Statements


For the three and nine months ended


September 30, 2010 and 2009




(Stated in US dollars)










Green Planet Bioengineering Co., Ltd.


Condensed Consolidated Financial Statements


For the three and nine months ended September 30, 2010 and 2009




Index to Condensed Consolidated Financial Statements




PagesCondensed Consolidated Statements of Income and Comprehensive Income

1Condensed Consolidated Balance Sheets

2Condensed Consolidated Statements of Cash Flows

3Notes to Condensed Consolidated Financial Statements

4 - 24









Green Planet Bioengineering Co Limited


Consolidated Statements of Income and Comprehensive Income


(Stated in US dollars)


Three Months ended September 30,


Nine Months ended September 30,2010


2009


2010


2009Revenues

$
4,860,799


$
3,462,341


$
13,332,565


$
7,929,710Cost of sales


2,395,721



1,578,081



6,628,612



3,419,354Gross profits


2,465,078



1,884,260



6,703,953



4,510,356Operating expensesGeneral and administrative expenses


420,452



213,855



1,109,160



708,666Research and development expenses


73,248



126,625



186,856



199,664Selling and marketing expenses


285,469



42,577



571,568



119,134779,169



383,057



1,867,584



1,027,464Income from operations


1,685,909



1,501,203



4,836,369



3,482,892Interest and financing expense


(188,986
)


1,693



(256,687
)


3,365Interest income


4,137



-



9,709



-Other income/(expense)


(50,448
)


(58,919
)


(45,961
)


(67,325
)Income before income taxes


1,450,612



1,443,977



4,543,430



3,418,932Provision for income taxes


(308,072
)


(369,778
)


(921,268
)


(886,151
)Net income


1,142,540



1,074,199



3,622,162



2,532,781Earnings per share- Basic

$
0.06


$
0.07


$
0.18


$
0.16- Diluted

$
0.06


$
0.04


$
0.18


$
0.12Weighted average number of shares outstanding :- Basic


20,006,402



15,589,367



20,006,402



15,529,265- Diluted


20,159,001



24,149,997



20,159,001



21,388,128STATEMENT OF COMPREHENSIVE INCOMENet Income

$
1,142,540


$
1,074,199


$
3,622,162


$
2,532,781Other comprehensive incomeUnrealized foreign currency gain (loss)


306,785



22,857



457,127



2,963Comprehensive income


1,449,325



1,097,056



4,079,289



2,535,744





See Notes to Consolidated Financial Statements




- 1 -





Green Planet Bioengineering Co Limited


Consolidated Balance Sheets


(Stated in US dollars)


September 30, 2010


December 31, 2009ASSETSCurrent assetsCash and cash equivalents

$
4,209,167


$
791,775Receivables - net


4,663,043



5,078,734Inventory


2,768,590



1,203,490Deferred taxes


78,909



76,772Prepaid expense and other receivables


889,273



820,288Prepayments of operating leases


1,711,130



1,711,130Total current assets


14,320,112



9,682,189Property, plant and equipment, net


4,035,941



3,507,538Land use rights


1,002,357



1,000,428Intangible assets


836,706



681,315Deposits for acquisition of intangible assets


350,846



161,151Deferred taxes


23,204



22,770Prepayments of operating leases


8,687,341



7,790,914Available for sale securities


-



5,000,000TOTAL ASSETS

$
29,256,507


$
27,846,305LIABILITIES AND SHAREHOLDERS’ EQUITYLIABILITIESCurrent liabilitiesAccounts payable

$
783,360


$
557,155Other payables and accrued liabilities


642,061



541,371Amounts due to related parties


79,887



16,189Amount due to stockholder - note 13


68,547



34,528Deferred taxes


164,226



148,581Secured loans from financial institution - note 14


2,388,737



1,860,561Convertible loan payable - note 15


300,000



190,000Loan from a related party - note 13


1,700,000



-Income tax payable


328,021



611,745Deferred revenue


64,197



62,995Total current liabilities


6,519,036



4,023,125TOTAL LIABILITIES

$
6,519,036


$
4,023,125COMMITMENTS AND CONTINGENCIESSHAREHOLDERS’ EQUITYPreferred stock : par value $0.001 per share Authorized : 10,000,000 shares

Issued and outstanding : 0 shares and 5,101 shares at September 30, 2010 and December 31, 2009


-



5Common stock : par value $0.001 per shareAuthorized : 250,000,000 shares

Issued and outstanding : 20,006,402 shares at September 30, 2010 and December 31, 2009


20,006



20,006Additional paid-in capital


5,128,901



10,293,896Statutory reserve


1,305,895



1,305,895Accumulated other comprehensive income


1,916,104



1,458,976Retained earnings


14,366,565



10,744,402Total shareholders’ equity of the company


22,737,471



23,823,180TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$
29,256,507


$
27,846,305





See Notes to Consolidated Financial Statements




- 2 -




Green Planet Bioengineering Co. Limited


Consolidated Statements of Cash Flows


(Stated in US dollars)


Nine Months ended September 30,2010


2009Cash flows from operating activitiesNet Income

$
3,622,162


$
2,532,781Adjustments to reconcile net income to net cash provided by operating activities :Depreciation


237,981



165,980Amortization of intangible assets


81,552



51,364Amortization of land use rights


17,159



17,517Amortization of lease prepayments


1,673,609



-Deferred taxes


13,508



92,958Share-based compensation


-



13,130Amortization of loan discount


110,000



-Convertible loan interest


30,000



14,000Changes in operating assets and liabilities :Receivables - net


572,729



522,143Prepaid expense and other receivables


(68,985
)


(180,938
)Inventory


(1,526,443
)


(204,612
)Prepayments of operating leases


-



(4,376,185
)Trade payables


226,205



71,397Other payables and accrued liabilities


(64,310
)


(72,050
)Amounts due to related parties


33,698



2,639Amount due to a stockholder


(48,584
)


4,986Income tax payable


(283,724
)


(24,220
)Net cash flows provided by (used in) operating activities


4,626,557



(1,369,110
)Cash flows from investing activitiesPayments to acquire property, plant and equipment


(696,767
)


(213,783
)Payments made for acquisition of intangible assets


(189,695
)


(73,305
)Deposits paid for plantation base leases


(2,388,737
)


(439,800
)Proceeds on sale of equipment


76,895



-Purchase of intangible assets


(223,944
)


-Net cash flows used in investing activities


(3,422,248
)


(726,888
)Cash flows from financing activitiesIssue of Common Stock


-



764Proceeds from bank loans


2,388,737



1,861,902Loan from inter-company


1,700,000



-Convertible loan from major shareholder


-



300,000Repayments of loans from government


-



(146,500
)Repayments of bank loans


(1,860,561
)


-Net cash flows provided by financing activities


2,228,176



2,016,166Effect of foreign currency translation on cash and cash equivalents


(15,093
)


642Net increase in cash and cash equivalents


3,417,392



(79,190
)Cash and cash equivalents - beginning of period


791,775



665,568Cash and cash equivalents - end of period

$
4,209,167


$
586,378Supplemental disclosures for cash flow information:Cash paid for interest

$
138,390


$
39,327Cash paid for Income taxes

$
1,223,800


$
817,568Supplemental disclosures of non cash activity:Acquisition of available for sale securities

$
-


$
5,000,000Issue of preferred stock

$
-


$
5,000,000Transfer of land use right

$
-


$
5,831,325




See Notes to Consolidated Financial Statements
  - 3 -
  Green Planet Bioengineering Co., Ltd
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US Dollars)
 
 1.            General information
 
 Green Planet Bioengineering Co., Ltd, (the “Company”), formerly known as Mondo Acquisition II, Inc, was incorporated in the State of Delaware on October 30, 2006.
 
 On October 24, 2008, the Company entered into an agreement with the shareholders of Elevated Throne Overseas Ltd. (“Elevated Throne”) to acquire their issued and outstanding common stocks in Elevated Throne by issuing 14,141,667 shares of its common stock. The acquisition, which was consummated on the same day, constituted a reverse takeover transaction (“RTO”) and thereafter Elevated Throne became a wholly-owned subsidiary of the Company.
 
 Elevated Throne was incorporated in the British Virgin Islands (the “BVI”) on May 8, 2008 as a limited liability company with registered share capital of $50,000, divided into 50,000 common shares of $1 par value each. Elevated Throne formed Fujian Green Planet Bioengineering Co., Ltd. (“Fujian Green Planet”) as a wholly foreign-owned enterprise under the laws of the People’s Republic of China (the “PRC”) on July 25, 2008. Fujian Green Planet has a registered capital of $2,000,000. Pursuant to Fujian Green Planet’s articles of association, Elevated Throne is required to contribute $2,000,000 to Fujian Green Planet as capital. The Company paid $300,000 and $1,700,000 on September 7, 2009 and February 19, 2010, respectively, to fully satisfy the business license requirement according to the articles of association.
 
 PRC law places certain restrictions on roundtrip investments through the acquisition of a PRC entity by PRC residents.  To comply with these restrictions, in conjunction with the RTO, the Company, via Fujian Green Planet, entered into and consummated certain contractual arrangements with Sanming Huajian Bio-Engineering Co., Ltd (“Sanming Huajian”) and their respective stockholders pursuant to which the Company provides Sanming Huajian with technology consulting and management services and appoints its senior executives and approves all matters requiring shareholders’ approval.  As a result of these contractual arrangements, which obligates Fujian Green Planet to absorb a majority of the risk of loss from the activities of Sanming Huajian and enables Fujian Green Planet to receive a majority of its expected residual returns, the Company accounts for Sanming Huajian as a variable interest entity (“VIE”) under FASB Interpretation No. 46R, “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51” (the “VIE Arrangement”).
 
 Sanming Huajian was organized under the laws of the PRC on April 16, 2004 under the name of Sanming Zhonjian Biological Technology Industry Co., Ltd as a domestic corporation.  It is classified as a non-joint capital stock corporation and therefore the capital stock, consistent with most of the PRC corporations, are not divided into a specific number of shares having a stated nominal amount. Sanming Huajian is owned by Mr. Zhao Min, Ms. Zheng Minyan and Jiangle Jianlong Mineral Industry Co., Ltd with equity interest of 35%, 36% and 29% respectively. Mr. Zhao and Ms. Zheng collectively own more than 90% of the Company’s issued and outstanding common stock after the RTO.
 
 The reverse takeover accounting was used to account for the RTO and the VIE Arrangement as Sanming Huajian was under common control of Mr. Zhao and Ms. Zheng before and after the VIE Arrangement. These financial statements, issued under the name of the Company, represent the continuation of the financial statements of Sanming Huajian.
  - 4 -
 Green Planet Bioengineering Co., Ltd
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US Dollars)
 
 1.
General information (Cont’d)
 
 Following the RTO and the VIE Arrangement, the Company is primarily engaged in the manufacture, marketing and sale of extracts from tobacco leaves residues.  The Company’s products include Solanesol, Nicotine Sulphate, organic pesticides, organic fertilizers, CoQ10 (raw format) and a patented organic health supplement called “Paiqianshu”. Paiqianshu comes in both liquid and pill forms and it is made from natural green barley shoot extraction.  The Company operates manufacturing and distribution primarily in the PRC.
 
 On June 17, 2009, the Company entered into a Preferred Share Purchase Agreement with ONE Bio Corp. (“ONE”) pursuant to which the Company agreed to sell and ONE agreed to acquire 5,101 shares of the Company’s preferred stock (“Preferred Stock”), with par value $0.001 per share. Each share of the Preferred Stock shall (a) provide ONE with the right to vote 1,000 votes on all matters submitted to a vote of the Company’s shareholders and (b) be convertible into 1,000 shares of the Company’s common stock. ONE paid to the Company for the said shares of Preferred Stock $5,000,000 which was paid by ONE through the issuance to the Company of 1,004,807 common shares (post split), representing 4.9% of ONE’s issued and outstanding common stock. The transaction closed on July 22, 2009 upon receipt of all required documents and stock certificates.
 
 As part of the transaction, the Company has also agreed that 35% of the ONE’s shares issued to the Company shall be deposited into an escrow account in the event the Company’s EBITDA for fiscal year 2009 is less than the Company’s EBITDA for fiscal 2008, the number of shares of ONE’s stock issued to the Company shall be proportionately reduced as provided for in the Preferred Stock Purchase Agreement. The Company is also subject to a lockup and leak out period and has one Piggy-Back Registration right as further defined in the Preferred Stock Purchase Agreement.
 
 On April 14, 2010, we entered into an agreement with ONE Bio, Corp. pursuant to which, among other things, (i) that certain Amended and Restated Green Planet Preferred Stock Purchase Agreement made effective as of June 17, 2009, between us and ONE Bio Corp. (“Amended and Restated GP Preferred Stock Agreement”) was cancelled, (ii) we returned to ONE Bio Corp the 1,004,808 shares of ONE Bio, Corp. common stock that were issued to us pursuant to the Amended and Restated GP Preferred Stock Agreement, and (iii) ONE Bio Corp returned to us the 5,101 preferred  shares of our stock that we issued to ONE Bio, Corp pursuant to the Amended and Restated GP Preferred Stock Agreement.
 
 On April 14, 2010, we granted to ONE an option to acquire 100% of the stock of Elevated Throne Overseas Ltd. (“Elevated Throne”), our 100% owned BVI subsidiary. In the event ONE exercises this option, the closing of the transaction will be subject to the approval of our stockholders. Furthermore, as a result of this event and if the transaction is fully consummated, ONE will own 100% of Elevated Throne and its subsidiaries which constitutes essentially all former operations of Green Planet. Green Planet, in the event ONE exercises this option, will remain a subsidiary of ONE and operate as a public shell corporation with the business purpose to acquire or merge with an existing business operation.
  - 5 -
 Green Planet Bioengineering Co., Ltd
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US Dollars)
 
 2.
Summary of significant accounting policies
 
 Principles of consolidation and basis of presentation
 
 The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
 
 The consolidated financial statements include the accounts of the Company, its subsidiaries and its 100% VIE Sanming Huajian. All significant intercompany accounts and transactions have been eliminated.
 
 In the opinion of the management of the Company, all adjustments, which are of a normal recurring nature and necessary for a fair presentation of the results for the period ended September 30, 2010, have been made. These consolidated financial statements should be read in conjunction with the financial foot notes thereto and the Company’s Form 10K for the year ended December 31, 2009.
 
 Use of estimates
 
 In preparing the consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. These estimates and assumptions include, but are not limited to, the valuation of trade receivables, inventories, fair value of available-for-sale securities, deferred taxes and stock-based compensation, and the estimation on useful lives and realizability of intangible assets and property, plant and equipment. Actual results could differ from those estimates.
 
 Fair Value Measurements
 
 In April 2009, the Financial Accounting Standard Board (“FASB”) released ASC 820, Fair Value Measurements and Disclosures,(formerly SFAS No. 157 “Fair Value Measurements”) that defines fair value, establishes a framework for measuring fair value in accordance with U.S. GAAP, and expands disclosures about fair value measurements.
 
 According to ASC 820, investment measured and reported at fair value are classified and disclosed in one of the following hierarchy:
 
 Level 1 -
Quoted prices are available in active markets for identical investments as of the reporting date. The type of investments included in Level 1 included listed equities and listed derivatives.
 
 Level 2 -
Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies.  Investments that are generally included in this category include corporate bonds and loans, less liquid and restricted equity securities and certain over-the-counter derivatives.
  - 6 -
  Green Planet Bioengineering Co., Ltd
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US Dollars)
 
 2.
Summary of significant accounting policies (Cont’d)
  Level 3 -
Pricing inputs are unobservable for the investment and included situations where there is little, if any, market activity for the investment.  The inputs into the determination of fair value require significant management judgment or estimation.
 
 On April 14, 2010, we entered into an agreement with ONE Bio, Corp. pursuant to which, among other things, (i) that certain Amended and Restated Green Planet Preferred Stock Purchase Agreement made effective as of June 17, 2009, between us and ONE Bio Corp. (“Amended and Restated GP Preferred Stock Agreement”) was cancelled.
 
 The Company had no investments according to the fair value hierarchy levels as of September 30, 2010.
  Accumulated other comprehensive income
 
 Accumulated other comprehensive income in the consolidated balance sheet represents foreign currency translation adjustment.
  Available-for-sale securities
 
 Available-for-sale securities include securities held for indefinite periods of time that are not classified either as trading securities or as held-to-maturity securities. Available-for-sale securities are recognized at cost and carried at fair value in the balance sheet. Unrealized holding gains and losses are excluded from earnings and recognized in a separate component of other comprehensive income, net of the related tax effects, until realized.
 
 Convertible loan
 
 The Company’s convertible loan has non-detachable conversion feature, that were in-the-money with a beneficial conversion feature as of the commitment date. At issuance, the Company values separately the beneficial conversion features in convertible loan. Beneficial conversion feature is recognized by allocating to additional paid-in capital of the net proceeds from the sale of the convertible loan equal to the intrinsic value of the beneficial conversion feature.  Intrinsic value is calculated as the difference, as of the commitment date, between the conversion price of the convertible loan and the closing price of the Company’s common stock on the OTCBB, multiplied by the number of shares of the Company’s common stock into which the convertible loan is convertible. If the intrinsic value of the beneficial conversion feature is greater than the net proceeds allocated to the convertible loan, the amount of the discount assigned to the beneficial conversion feature is limited to the amount of the proceeds.  Interest expense is recognized using the effective interest method, meaning that any premium or discount upon issuance is amortized over the life of the instrument.
  - 7 -
  Green Planet Bioengineering Co., Ltd
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US Dollars)
  2.
Summary of significant accounting policies (Cont’d)
 
 Concentrations of credit risk
 
 The Company has slightly broadened and changed its product portfolio and as a result, the Company has experienced a higher number of customers and less concentration of credit risk.
 During the reporting periods, customers representing the highest sales revenue of the Company are as follows:
  September 30,2010


2009(unaudited)


(unaudited)Customer A

$
2,713,582


$
-Customer B


2,207,231



-Customer C


1,100,032



369,750Customer D


974,519



-Customer E


854,136



856,991Customer F


778,730



-Customer G


732,833



615,595Customer H


635,600



-Customer I


627,843



-Customer J


555,037



-$
11,179,543


$
1,842,336
 
 Details of customers which represent the highest value of the Company’s trade receivables are:
  September 30


December 31,2010


2009(unaudited)


(audited)Customer A

$
1,099,273


$
-Customer B


1,038,429



-Customer C


597,652



-Customer D


366,425



300,199Customer E


329,519



547,485Customer F


232,036



25,931Customer G


219,540



168,767Customer H


194,272



-Customer I


121,467



-$
4,198,613


$
1,042,382
 
 Cash and cash equivalents
 
 Cash and cash equivalents include all cash, deposits in banks and other highly liquid investments with initial maturities of three months or less to be cash equivalents. As of September 30, 2010 and December 31, 2009 almost all the cash and cash equivalents were denominated in Renminbi (“RMB”) and were placed with banks in the PRC. They are not freely convertible into foreign currencies and the remittance of these funds out of the PRC is subject to exchange control restrictions imposed by the PRC government.
  - 8 -




Green Planet Bioengineering Co., Ltd
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US Dollars)
 2.        Summary of significant accounting policies (Cont’d)
  Allowance for doubtful accounts
  The Company establishes an allowance for doubtful accounts based on management’s assessment of the collectability of trade and other receivables.  A considerable amount of judgment is required in assessing the amount of the allowance; the Company considers the historical level of credit losses and applies percentages to aged receivable categories. The Company makes judgments about the creditworthiness of each customer based on ongoing credit evaluations, and monitors current economic trends that might impact the level of credit losses in the future. If the financial condition of the customers were to deteriorate, resulting in their inability to make payments, a larger allowance may be required.
  Based on the above assessment, during the reporting periods, the management establishes the following rates of general provision provided on gross amount of trade and other receivables:
  RateAged within 1/2 year


0
%Aged over 1/2 year but within 1 year


5
%Aged over 1 year but within 3 years


20
%More than 3 years


100
%
  Additional specific provision is made against trade and other receivables aged less than 1 year to the extent which they are considered to be doubtful.
  Bad debts are written off when identified. The Company extends unsecured credit to customers ranging from three to six months in the normal course of business. The Company does not accrue interest on trade accounts receivable.
  No allowance for doubtful debts was provided for the nine months ended September 30, 2010 and September 30, 2009, respectively.
  Inventory
  Inventory is stated at the lower of cost or market value. Cost is determined on a weighted-average basis and includes all expenditures incurred in bringing the goods to the point of sale and putting them in a saleable condition.  In assessing the ultimate realization of inventory, management makes judgments as to future demand requirements compared to current or committed inventory levels. The Company’s reserve requirements generally increase with its projected demand requirements; decrease due to market conditions, product life cycle changes. During the reporting periods, all of the Company’s products are saleable with high profit margin, therefore, the Company did not make any allowance for slow-moving or defective inventory.
  No allowance for obsolete inventory was provided for during the nine months ended September 30, 2010 and 2009.
  - 9 -
  Green Planet Bioengineering Co., Ltd
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US Dollars)
 2.
Summary of significant accounting policies (Cont’d)
  Intangible assets
  Intangible assets are stated at cost less accumulated amortization. Amortization is provided on a straight-line basis over their estimated useful lives. The principal amortization periods are as follows:-
  Amortization periodTechnologies
5 to 10 yearsSoftware
5 years
  The Company periodically reviews the original estimated useful lives of long-lived assets and makes adjustments when appropriate. Intangible assets with finite useful lives are tested for impairment whenever events or changes in circumstances indicate that an asset’s carrying amount may not be recoverable. The Company evaluates its intangible assets for impairment by comparing the future undiscounted cash flows of the underlying assets to their respective carrying amounts.
  Property, plant and equipment
  Property, plant and equipment are stated at cost less accumulated depreciation. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its existing use.
  Depreciation is provided on straight-line basis over their estimated useful lives. The principal depreciable periods are as follows:
  Depreciable periodBuildings
20 yearsPlant and machinery
10 yearsOffice equipment
5 yearsMotor vehicles
5 years
  Construction in progress represents buildings and machinery under construction, which is stated at cost less any impairment losses, and is not depreciated. Cost comprises the direct costs of construction. Construction in progress is reclassified to the appropriate category of property, plant and equipment when completed and ready for use.
  Maintenance or repairs are charged to expense as incurred.  Upon sale or disposition, the applicable amounts of asset cost and accumulated depreciation are removed from the accounts and the net amount less proceeds from disposal is charged or credited to income.
  Land use rights
  Land use rights are stated at cost less accumulated amortization. Amortization is provided using the straight-line method over the terms of the lease of 50 years obtained from the relevant PRC land authority.
  - 10 -
  Green Planet Bioengineering Co., Ltd
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US Dollars)
 2.        Summary of significant accounting policies (Cont’d)
  Impairment of long-lived assets
  Long-lived assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. The Company recognizes impairment of long-lived assets in the event that the net book values of such assets exceed the future undiscounted cash flows attributable to such assets.  During the reporting periods, the Company has not identified any indicators that would require testing for impairment.
  Revenue recognition
  The Company generates revenue from sales of extracts from tobacco leaves residues. Revenue is recognized when products are delivered and the customer takes ownership and assumes risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists and the sales price is fixed or determinable.
  Deferred revenue
  Deferred revenue represents subsidy income received from the government. It mainly consisted of receipt of granted funds to subsidize the Company’s research and development activities and recognized as income when the relevant criteria are met.
  Cost of sales
  Cost of sales consists primarily of materials costs, freight charges, purchasing and receiving costs, inspection costs, wages, employee compensation, depreciation and related costs, which are directly attributable to the production of products.
  Selling expenses
  Selling expenses mainly consist of advertising, commission, entertainment, salaries, and traveling expense which are incurred during the selling activities.
  Advertising and research and development expenses
  Advertising and research and development expenses are charged to expense as incurred.
  Stock-based compensation
  The Company follows the provisions of ASC Topic 718 formerly SFAS No. 123R, “Share-Based Payment”, which requires the use of the fair value method of accounting for share-based compensation. Under the fair value based method, compensation cost related to employee stock options or similar equity instruments which are equity-classified awards, is measured at the grant date based on the value of the award and is recognized over the requisite service period, which is usually the vesting period. ASC Topic 718 also requires measurement of cost of a liability-classified award based on its current fair value.
  - 11 -
  Green Planet Bioengineering Co., Ltd
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US Dollars)
 2.        Summary of significant accounting policies (Cont’d)
  The fair value of warrants granted is determined using the Black-Scholes model. Under this model, certain assumptions, including the risk-free interest rate, the expected life of the warrants and the estimated fair value of the Company’s common stock and the expected volatility, are required to determine the fair value of the warrants. If different assumptions had been used, the fair value of the warrants would have been different from the amount the Company computed and recorded, which would have resulted in either an increase or decrease in the compensation expense.
  Income taxes
  The Company uses the asset and liability method of accounting for income taxes pursuant to ASC Topic 740 formerly SFAS No. 109, “Accounting for Income Taxes”. Under the asset and liability method of SFAS 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and loss carry forwards and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
  Off-balance sheet arrangements
  The Company does not have any off-balance sheet arrangements.
  Basic and diluted earnings per share
  The Company reports basic earnings per share in accordance with ASC Topic 260 formerly SFAS No. 128, “Earnings Per Share”. Basic Earnings Per Share is computed using the weighted average number of shares outstanding during the periods presented. The weighted average number of shares of the Company represents the common stock outstanding during the reporting periods.
  Diluted earnings per share are computed using the sum of weighted average number of shares outstanding and dilutive potential shares outstanding during the periods presented. During the nine months ended September 30, 2010 and 2009, dilutive potential shares included warrants issued to consultants.
  Comprehensive income
  The Company has adopted ASC Topic 220 formerly SFAS No. 130, “Reporting Comprehensive Income”, which establishes standards for reporting and display of comprehensive income, its components and accumulated balances.  Components of comprehensive income include net income and foreign currency translation adjustments.
  Foreign currency translation
  The functional currency of the Company is Renminbi (“RMB”) and RMB is not freely convertible into foreign currencies. The Company maintains its financial statements in the functional currency.  Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates.  Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchanges rates prevailing at the dates of the transactions. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income/loss for the respective periods.
  - 12 -
 
 Green Planet Bioengineering Co., Ltd
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US Dollars)
  2.        Summary of significant accounting policies (Cont’d)
  For financial reporting purposes, the financial statements of the Company which are prepared using the functional currency have been translated into United States dollars.  Assets and liabilities are translated at the exchange rates at the balance sheet dates and revenue and expenses are translated at the average exchange rates and stockholders’ equity is translated at historical exchange rates. Any translation adjustments resulting from the above are not included in determining net income but are included in accumulated other comprehensive income, a component of stockholders’ equity. The average exchange rates in effect as of September 30, 2010 and September 30, 2009 were 1USD for 6.78 RMB and 6.82 RMB, respectively. The exchange rate in effect as of December 31, 2009 was 1USD for 6.83 RMB. The source for the above exchange rate information is from Oanda.com.
  Recently issued accounting pronouncements
  In March 2010, the FASB issued Accounting Standard Update No. 2010-11 “Derivatives and Hedging” (Topic 815). ASU No. 2010-11 update provides amendments to subtopic 815-15, Derivatives and hedging. The amendments clarify about the scope exception in paragraph 815-10-15-11 and section 815-15-25 as applicable to the embedded credit derivatives. The ASU is effective on the first day of the first fiscal quarter beginning after June 15, 2010. Therefore, for a calendar-year-end entity, the ASU becomes effective on July 1, 2010. Early application is permitted at the beginning of the first fiscal quarter beginning after March 5, 2010. The adoption of this guidance has not had and is not expected to have a material impact on the Company’s consolidated financial statements.
  In April 2010, the FASB issued Accounting Standard Update No. 2010-12. “Income Taxes” (Topic 740). ASU No.2010-12 amends FASB Accounting Standard Codification subtopic 740-10 Income Taxes to include paragraph 740-10-S99-4. On March 30, 2010 The President signed the Health Care & Education Affordable Care Act reconciliation bill that amends its previous Act signed on March 23, 2010. FASB Codification topic 740, Income Taxes, requires the measurement of current and deferred tax liabilities and assets to be based on provisions of enacted tax law. The effects of future changes in tax laws are not anticipated.” Therefore, the different enactment dates of the Act and reconciliation measure may affect registrants with a period-end that falls between March 23, 2010 (enactment date of the Act), and March 30, 2010 (enactment date of the reconciliation measure). However, the announcement states that the SEC would not object if such registrants were to account for the enactment of both the Act and the reconciliation measure in a period ending on or after March 23, 2010, but notes that the SEC staff “does not believe that it would be appropriate for registrants to analogize to this view in any other fact patterns.” The adoption of this guidance has not had and is not expected to have a material impact on the Company’s consolidated financial statements.
  In April 2010, the FASB issued Accounting Standard Update No. 2010-13 “Stock Compensation” (Topic 718). ASU No.2010-13 provides amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The amendments in this Update should be applied by recording a cumulative-effect adjustment to the opening balance of retained earnings. The cumulative-effect adjustment should be calculated for all awards outstanding as of the beginning of the fiscal year in which the amendments are initially applied, as if the amendments had been applied consistently since the inception of the award. The cumulative-effect adjustment should be presented separately. Earlier application is permitted. The adoption of this guidance has not had and is not expected to have a material impact on the Company’s consolidated financial statements.
  - 13 -
 
 Green Planet Bioengineering Co., Ltd
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US Dollars)
  2.        Summary of significant accounting policies (Cont’d)
  In April 2010, the FASB issued Accounting Standards Update No.2010-14, “Accounting for Extractive Activities – Oil & Gas” (Topic 932). ASU No. 2010-14 amends FASB accounting Standard paragraph 932-10-S99-1 due to SEC release no. 33-8995 [FR 78], Modernization of Oil and Gas Reporting and provides update as to amendments to SEC Regulation S-X, Rule 4-10. The adoption of this guidance has not had and is not expected to have a material impact on the Company’s consolidated financial statements.
  In April 2010, the FASB issued Accounting Standard Update No. 2010-15. “Financial Services-Insurance” (Topic 944) ASU No.2010-15 gives direction on how investments through separate accounts affect an insurer’s consolidation analysis of those investments. Under the ASU: an insurance entity should not consider any separate account interests held for the benefit of policy holders in an investment to be the insurer’s interests and should not combine those interests with its general account interest in the same investment when assessing the investment for consolidation, unless the separate account interests are held for the benefit of a related party policy holder as defined in the Variable Interest Entities Subsections of Subtopic 810-10 and those Subsections require the consideration of related parties. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2010. Early adoption is permitted. The amendments in this Update should be applied retrospectively to all prior periods upon the date of adoption. The adoption of this guidance has not had and is not expected to have a material impact on the Company’s consolidated financial statements.
  In April 2010, the FASB issued Accounting Standard Update No. 2010-16. “Entertainment-Casinos” (Topic 924). ASU No.2010-16 addresses diversity in practice regarding whether an entity accrues liabilities for a base jackpot before it is won because they could avoid the payment. The amendments in this update clarify that an entity should not accrue jackpot liabilities (or portions thereof) before a jackpot is won if the entity can avoid paying that jackpot. Jackpots should be accrued and charged to revenue when an entity has the obligation to pay the jackpot. This guidance applies to both base and progressive jackpots. The ASU amendments are effective for fiscal years, and the interim periods within those fiscal years, beginning on or after December 15, 2010.  The adoption of this guidance has not had and is not expected to have a material impact on the Company’s consolidated financial statements.
  In April 2010, the FASB issued Accounting Standard Update No. 2010-17. “Revenue Recognition-Milestone Method” (Topic 605) ASU No.2010-17 provides guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research or development transactions. An entity often recognizes these milestone payments as revenue in their entirety upon achieving a specific result from the research or development efforts. A vendor can recognize consideration that is contingent upon achievement of a milestone in its entirety as revenue in the period in which the milestone is achieved only if the milestone meets all criteria to be considered substantive. Determining whether a milestone is substantive is a matter of judgment made at the inception of the arrangement. The ASU is effective for fiscal years and interim periods within those fiscal years beginning on or after June 15, 2010. Early application is permitted. Entities can apply this guidance prospectively to milestones achieved after adoption. However, retrospective application to all prior periods is also permitted. The adoption of this guidance has not had and is not expected to have a material impact on the Company’s consolidated financial statements.
  - 14 -
  Green Planet Bioengineering Co., Ltd
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US Dollars)
  2.        Summary of significant accounting policies (Cont’d)
  In April 2010, the FASB issued Accounting Standard Update No. 2010-18. “Receivables” (Topic 310). ASU No.2010-18 provides guidance on accounting for acquired loans that have evidence of credit deterioration upon acquisition. Paragraph 310-30-15-6 allows acquired assets with common risk characteristics to be accounted for in the aggregated as a pool. Upon establishment of the pool, the pool becomes the unit of accounting. When loans are accounted for as a pool, the purchase discount is not allocated to individual loans; thus all of the loans in the pool accrete at a single pool rate (based on cash flow projections for the pool). Under subtopic 310-30, the impairment analysis also is performed on the pool as a whole as opposed to each individual loan. Paragraphs 310-40-15-4 through 15-12 establish the criteria for evaluating whether a loan modification should be classified as a troubled debt restructuring. Specifically paragraph 310-40-15-5 states that “a restructuring of a debt constitutes a troubled debt restructuring for purposes of this subtopic if the creditor for economic or legal reasons related to the debtor’s financial difficulties grants a concession to the debtor that it would not otherwise consider.” The ASU is effective for modification of loans accounted for within pools under subtopic 310-30 occurring in the first interim or annual period ending on or after July 15, 2010. The amendments are to be applied prospectively. Early application is permitted. The adoption of this guidance has not had and is not expected to have a material impact on the Company’s consolidated financial statements.
  In May 2010, the FASB issued Accounting Standard Update No. 2010-19 “Foreign Currency”. (“ASU No. 2010-19”). ASU 2010-19, codifies the SEC staff announcement made at the March 18, 2010, EITF meeting. The ASU “provides the SEC staff’s views on certain foreign currency issues related to investments in Venezuela.” These issues relate to Venezuela’s highly inflationary status. The ASU became effective on March 18, 2010. The adoption of this guidance has not had and is not expected to have a material impact on the Company’s consolidated financial statements.
  In July 2010, the FASB issued Accounting Standard Update No. 2010-20 (ASU No. 2010-20) “Receivables” (Topic 310).  ASU No. 2010-20 provides financial statement users with greater transparency about an entity’s allowance for credit losses and the credit quality of its financing receivables.  This update is intended to provide additional information to assist financial statement users in assessing an entity’s credit risk exposures and evaluating the adequacy of its allowance for credit losses.  The amendments in this update apply to both public and nonpublic entities with financing receivables, excluding short-term trade accounts receivable or receivables measured at fair value or lower of cost or fair value.  The objective of the amendments in ASU No. 2010-20 is for an entity to provide disclosures that facilitate financial statement users’ evaluation of (1) the nature of credit risk inherent in the entity’s portfolio of financing receivables, (2) How that risk is analyzed and assessed in arriving at the allowance for credit losses and (3) The changes and reasons for those changes in the allowance for credit losses.  The entity must provide disclosures about its financing receivables on a disaggregated basis.  For public entities ASU No. 2010-20 is effective for interim and annual reporting periods ending on or after December 15, 2010.  For nonpublic entities ASU No. 2010-20 will become effective for annual reporting periods ending on or after December 15, 2011.  The Company is evaluating the impact ASU No. 2010-20 will have on the financial statements.
  - 15 -
  Green Planet Bioengineering Co., Ltd
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US Dollars)
  2.        Summary of significant accounting policies (Cont’d)
  In August 2010, the FASB issued Accounting Standard Updates No. 2010-21 (ASU No. 2010-21) “Accounting for Technical Amendments to Various SEC Rules and Schedules” and No. 2010-22 (ASU No. 2010-22) “Accounting for Various Topics – Technical Corrections to SEC Paragraphs”.  ASU No 2010-21 amends various SEC paragraphs pursuant to the issuance of Release no. 33-9026: Technical Amendments to Rules, Forms, Schedules and Codification of Financial Reporting Policies.  ASU No. 2010-22 amends various SEC paragraphs based on external comments received and the issuance of SAB 112, which amends or rescinds portions of certain SAB topics.  Both ASU No. 2010-21 and ASU No. 2010-22 are effective upon issuance.  The amendments in ASU No. 2010-21 and No. 2010-22 will not have a material impact on the Company’s financial statements.
  In September 2010, the FASB issued Accounting Standard Update No. 2010-25 (ASU No. 2010-25) “Defined Contribution Pension Plans” (Topic 962).  ASU No. 2010-25 clarifies how loans to participants should be classified and measured by defined contribution pension benefits.  The amendments in ASU No. 2010-25 affect any defined contribution pension plan that allows participant loans.  The amendments in ASU No. 2010-25 require that participant loans be classified as notes receivable from participants, which are segregated from plan investments and measured at their unpaid principal balance plus any accrued but unpaid interest.  ASU No. 2010-25 is effective for fiscal years ending after December 15, 2010 and should be applied retrospectively to all prior periods presented.  Early adoption is permitted. The adoption of this guidance has not had and is not expected to have a material impact on the Company’s consolidated financial statements.
  3.         Finance costs
 Three months ended

September 30


Nine months ended

September 302010


2009


2010


2009(unaudited)


(unaudited)


(unaudited)


(Unaudited)Bank loan interest

$
38,806


$
-


$
100,967


$
-Amortization of loan discount


110,000



13,750



110,000



13,750Interest on convertible loan


30,000



250



30,000



250Other loan interest


9,292



31,153



9.292



39,327Bank charges


410



13,766



1,810



13,998Exchange loss


478



-



4,134



-$
188,986


$
58,919


$
256,203


$
67,325
 
 During the three months ended September 30, 2010 and 2009, loan interest expenses payable to a related company were $30,000 and $0, respectively. For the nine months ended September 30, 2010 and 2009, loan interest expenses payable to a related company were $30,000 and $0, respectively.
  - 16 -
 
 Green Planet Bioengineering Co., Ltd
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US Dollars)
  4.        Income taxes
  United States
  The Company is subject to the United States of America Tax law at tax rate of 40.7%.  No provision for the US federal income taxes has been made as the Company had no taxable income in this jurisdiction for the reporting periods. The Company has not provided deferred taxes on undistributed earnings of its non-U.S. subsidiaries or VIE as of September 30, 2010 as it was the Company’s current policy to reinvest these earnings in non-U.S. operations.
  BVI
  Elevated Throne was incorporated in the BVI and, under the current laws of the BVI, is not subject to income taxes.
  PRC
  The PRC’s legislative body, the National People’s Congress, adopted the unified Corporate Income Tax Law on March 16, 2007. This new tax law replaces the existing separate income tax laws for domestic enterprises and foreign-invested enterprises and became effective on January 1, 2008.  Under the new tax law, a unified income tax rate is set at 25% for both domestic enterprises and foreign-invested enterprises.
  Accordingly, Fujian Green Planet and Sanming Huajian, both of which are established in the PRC, are subject to PRC enterprise income tax at the rate of 25% on their assessable profits during the nine month periods ended September 30, 2010 and 2009.
  The components of the provision for income taxes are:
  Nine months ended

September 302010

(unaudited)


2009

(unaudited)Current taxes - PRC

$
909,366


$
793,193Deferred taxes


11,902



92,958$
921,268


$
886,151
  Deferred tax assets as of September 30, 2010 and December 31, 2009 composed of the following:-
  September 30


December 31,2010


2009The PRC

(unaudited)


(audited)Current deferred tax assets :Decelerated amortization of land use rights

$
-


$
-Decelerated amortization of intangible assets


4,479



4,395Provision of expenses


74,430



72,377$
78,909


$
76,772Non-current deferred tax assets :Accelerated amortization of intangible assets

$
19,035


$
18,679Provision of expenses


4,169



4,091$
23,204


$
22,770Current deferred tax liabilitiesRental expenses capitalized in inventory

$
-


$
(148,581
)Cost to be adjusted due to tax exemption


(164,226
)
  - 17 -
 
 Green Planet Bioengineering Co., Ltd
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US Dollars)
  5.
Earnings per share
  The basic and diluted earnings per share are calculated using the net income and the weighted average number of shares outstanding during the reporting periods. All share and per share data have been adjusted to reflect the recapitalization of the Company in the RTO.
  The diluted earnings per share for the three and nine months ended September 30, 2010 is based on the net income for the periods and the weighted average number of shares of 20,159,000 after adjusting for the number of 152,598 dilutive potential common shares. This includes the conversion of warrants into common stock.
  6.
Inventory
  September 30


December 31,2010


2009(unaudited)


(audited)Raw materials

$
375,861


$
124,132Work-in-progress


2,143,203



1,022,630Finished goods


249,526



56,728$
2,768,590


$
1,203,490
 7.
Intangible assets
  September 30


December 31,2010


2009(unaudited)


(audited)Technologies

$
1,112,256


$
871,680Software


3,240



3,1791,115,496



874,859Accumulated amortization


(278,790
)


(193,544
)Net

$
836,706


$
681,315
 
 The technologies were purchased from third parties for producing products - Solanesol, Organic Green Barley Supplements (Paiqianshu), Resveratrol, 5-HTP, Tanshinone and Q10 Health Supplements. The application for related patent is in process and has been initially accepted by the relevant government department.
  - 18 -
  Green Planet Bioengineering Co., Ltd
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US Dollars)
  During the nine months ended September 30, 2010 and 2009, amortization charge was $81,552 and $51,364 respectively. The additional estimated aggregate amortization expenses for intangible assets for the five succeeding years are as follows:
  Year ending December 31,2010

$
23,9762011


93,3102012


93,3102013


93,3102014


93,310Thereafter


439,490$
836,706
  8.
Property, plant and equipment
  September 30


December 31,2010


2009(unaudited)


(audited)Cost:Buildings

$
1,914,057


$
1,926,273Plant and machinery


1,296,520



1,245,877Office equipment


169,588



110,816Motor vehicles


197,207



108,579Leasehold improvement


89,578



-3,666,950



3,391,545Accumulated depreciation


(929,287
)


(769,751
)2,737,663



2,621,794Construction in progress


1,298,278



885,744Net

$
4,035,941


$
3,507,538
 
 Construction in progress mainly comprises capital expenditure for construction of the Company’s new office and machinery.
  During the reporting periods, depreciation is included in:
 Three Months Ended


Nine Months EndedSeptember

2010


September

2009


September

2010


September

2009Cost of Sales

$
39,497


$
34,436


$
117,909


$
96,727Administrative and R&D Expenses


43,014



23,273



120,072



69,253Total

$
82,511


$
57,709


$
237,981


$
165,980
  - 19 -
  Green Planet Bioengineering Co., Ltd
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US Dollars)
  9.
Land use rights
  September 30


December 31,2010

(unaudited)


2009

(audited)Land use rights

$
1,143,958


$
1,122,540Accumulated amortization


(141,601
)


(122,112
)$
1,002,357


$
1,000,428
 
 The carrying amount of land use rights as of September 30, 2010 comprises of two land use rights, which were acquired for building factories and offices, with carrying amounts of $92,837 and $909,520 respectively.
  The legal title of the first land use right with carrying amount of $92,837 has not yet been transferred to the Company. The application of legal title is in the process and the management expects there will be no legal hindrance in obtaining the legal titles and no extra costs will be incurred.
  During the three and nine months ended September 30, 2010 amortization charge was $5,651 and $17,159, respectively and was included in administrative expenses. The amortization charge for the same periods last year was $5,841 and $12,689, respectively. The additional estimated amortization charges of land use rights for the balance of current year and four succeeding years are as follows:
  Year ending December 31,2010

$
5,7202011


22,8792012


22,8792013


22,8792014


22,879$
97,236
  10.
Prepayments of operating lease
  The prepayments represent the value of the land lease rights of $8,687,341, which are associated with the lease obligation of the Company for land to promote the Company’s newer product portfolio such as fertilizers and pesticides. The lower cost of raw materials will fully or partially offset the cost for the new operating leases.
  11.
Available-for-sale securities
  The amount represents 1,004,807 shares (post split) of ONE’s common stock (a 4.9% interest) issued to the Company pursuant to the Preferred Share Purchase Agreement, of which 35% of these shares were deposited in an escrow (Note 1).
  There were limited trading transactions of ONE’s shares in the market during the past months and the fair value of ONE’s common stock held by the Company as of September 30, 2010 was determined by the management. The inputs into the determination of fair value require significant management judgment and estimation.
  - 20 -
  Green Planet Bioengineering Co., Ltd
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US Dollars)
  The management determined the fair values of the ONE’s shares as of September 30, 2010 approximated their carrying value and no fair value changes had therefore been recognized.
  On April 14, 2010, we entered into an agreement with ONE Bio, Corp. pursuant to which, among other things, that certain Amended and Restated Green Planet Preferred Stock Purchase Agreement made effective as of June 17, 2009, between us and ONE Bio Corp. (“Amended and Restated GP Preferred Stock Agreement”) was cancelled.
  12.          Other payables and accrued liabilities
  September 30


December 31,2010

(unaudited)


2009

(audited)Rental payable

$
-


$
-Salaries payable


70,799



71,337Other accrued liabilities


460,160



311,037Value-added tax payable


111,102



158,997$
642,061


$
541,371
  13.
Amount due and loan to a related party and a stockholder
  The amount due to a stockholder is interest-free, unsecured and repayable on demand.
  In February 2010 the Company obtained from a related party a loan in the amount of $1,700,000, which carries an interest rate of 10% per annum. The unpaid balance together with all accrued and unpaid interest thereon shall be due and payable in January 2011. However, the parties have agreed that all accrued and unpaid interest will be waived.
  14.
Secured loans from a financial institution
  The Company’s two loans in the total amount of $1,860,561 as of December 31, 2009, both of which carried interest at the annual rate of 7.434% have been duly paid off during the three months ended June 30, 2010. As a result, the Company’s pledged plant, equipment, and land use rights are no longer in effect.
  In June 2010, the Company entered into a short term loan agreement in the amount of $589,840 with a financial institution. The loan is secured by a guarantee put up by a guarantee company. In return, the Company has paid a counter guarantee of 20% of the loan amount, which is $117,968 to the guarantee company. The guarantee company does not require any collateral. The service fee charged by the guarantee company is $9,244 in total.
  On July 7, 2010, the Company entered into a 2 year revolving loan facility agreement with a financial institution in the amount of $1,791,553, which carries an interest rate of 85% of the rate stipulated by the People’s Bank of China. Under the terms of the loan facility, usage of the funds is limited to the purchase of certain inventory items. The financial institution charged a commission fee of $33,293. The Company pledged buildings, construction in progress and land use rights with a carrying value of $2,749,484 as collateral for the revolving loan facility.
  - 21 -
  Green Planet Bioengineering Co., Ltd
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US Dollars)
  15.
Convertible loan payable
  On September 1, 2009, the Company obtained $300,000 financing from ONE for general corporate and working capital purposes. The financing was in the form of convertible loan that carries interest at a rate of 10% per annum. Interest was accrued until September 1, 2010, and subsequent to that date, ONE waived all future interest on the loan. The settlement of the loan may be convertible at the election of ONE into shares of the Company’s common stock at a price of $0.50 per share.
  Since the convertible loan has beneficial conversion features, the conversion option of $165,000, valued separately by its intrinsic value. The loan discount has been fully accrued and $110,000 has been amortized as interest expense during the nine months ended September 30, 2010.
  16.          Common stock and preferred stock
  Common stock
  The Company did not issue any common stock or warrants for the nine months ended September 30, 2010. In addition, the Company did not exercise any warrants during the same period. The par value of the Company’s common stock is $0.001 per share.
  Series A preferred stock
  The Company is authorized under its Articles of Incorporation to issue 10,000,000 shares of Series A preferred stock with a par value of $0.001 per share. Each share of the Company’s preferred stock provided the holder with the right to vote 1,000 votes on all matters submitted to a vote of the shareholders of the Company and be convertible into 1,000 shares of the Company’s common stock. The preferred stock is non-participating and carries no dividend.
  17.
Statutory reserve
  The Company’s statutory reserve comprise statutory reserve fund of Sanming Huajian. In accordance with the relevant laws and regulations of the PRC, Sanming Huajian and Fujian Green Planet are required to set aside at least 10% of their after-tax net profit each year, if any, to fund the statutory reserve until the balance of the reserve reaches 50% of their respective registered capital. The statutory reserve is not distributable in the form of cash dividends and can be used to make up cumulative prior year losses.
  18.
Stock-based compensation
  There were no non-cash stock-based compensation recognized for the three and nine months ended September 30, 2010. For the same respective periods ended September 30, 2009, $13,130 was recognized During the twelve months period endedDecember 31, 2009, the Company recognized total non-cash stock-based compensation of $13,130 in connection with 404,000 shares of common stocks issued to several management personnel of the Company in return for their services rendered. $12,318, $487 and $325 of the stock-based compensation were charged to the statement of income and comprehensive income as administrative expenses, research and development expenses and selling expenses respectively.
  - 22 -
  Green Planet Bioengineering Co., Ltd
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US Dollars)
  There was no warrants activity during the nine months ended September 30, 2010. See below chart referencing outstanding warrants as of September 30, 2010.
  Number of warrantsOutstanding








Outstandingas of





Granted/


as ofExercise


January





forfeited/


SeptemberMonth of grant

price



1, 2010


Exercised


cancelled



30, 2010October 2008

$
0.001



152,599



-



-



152,599152,599



-



-



152,599
  19.
Defined contribution plan
  Pursuant to the relevant PRC regulations, the Company is required to make contributions at a rate of 29% of the average salaries for the latest fiscal year-end of Fujian Province to a defined contribution retirement scheme organized by a state-sponsored social insurance plan in respect of the retirement benefits for the Company’s employees in the PRC. The only obligation of the Company with respect to retirement scheme is to make the required contributions under the plan. No forfeited contribution is available to reduce the contribution payable in the future years. The defined contribution plan contributions were charged to the statement of income and comprehensive income.
  The Company contributed $14,427 and $64,020 to the scheme for the three and nine months ended September 30, 2010, respectively, compared to $12,173 and $35,811 for the three and nine months ended September 30, 2009, respectively.
  20.
Commitments and contingencies
  (a)           Capital commitments
  (i)
As of September 30, 2010 and December 31, 2009, the Company had capital commitments of $365,775 and $261,117, respectively, in respect of the acquisition of property, plant and equipment that were contracted but not provided for in the financial statements.
  (ii)
As of September 30, 2010 and December 31, 2009, the Company had capital commitments of $343,381 and $161,151, respectively, in regard to the acquisition of intangible assets that were contracted but not provided for in the financial statements.
  The deposits for the acquisition of intangible assets represent prepayments to certain academic institutions to acquire new technologies, which are still in progress and not ready for use at the respective balance sheet dates. The amounts will be transferred to intangible assets for amortization upon completion of the development.
  (b)           Operating lease arrangements
  As of September 30, 2010, the Company had three non-cancelable operating leases for its office premises and lands. The leases will expire at various dates through year 2011 to 2039 and the expected payments over the life of the leases as of September 30, 2010 were $59,927,442. The main part of the lease payments, approximately $59,927,442, pertains to the Company’s use of the operating land leases for the new product portfolio.
 The lower cost of raw materials will fully or partially offset the cost for the new operating land lease.
  - 23 -
  Green Planet Bioengineering Co., Ltd
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US Dollars)
  21.
Segment information
  The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments.  The Company is solely engaged in the manufacture, marketing, sale and distribution of extracts from tobacco leaves residues. Since the nature of the products, their production processes, the type of their customers and their distribution methods are substantially similar, management considers they are as a single reportable segment under ASC Topic 280-10-05 “Disclosures about Segments of an Enterprise and Related Information”.
  All of the Company’s long-lived assets and revenues are classified based on customers located in the PRC.
  22.
Related party transactions
  Apart from the transactions as disclosed in notes 13 and 15 to the condensed consolidated financial statements, during the three and nine months ended September 30, 2010, the Company recorded rental and motor vehicle expenses of $885 and $98,381, respectively to a related company and a stockholder, who is also a director of the Company, has a beneficial interest. The recorded expenses for the same periods last year were $880 and $1,758, respectively.
  23.
Subsequent event
  The Company has evaluated all other subsequent events through November 10, 2010, the date these financial statements are issued, and determined that there were no subsequent events or transactions that require recognition or disclosure in the financial statements.
  - 24 -




Part I
FINANCIAL INFORMATION
  Item 2
Management’s Discussion and Analysis of Financial Condition and Results of Operations
  Overview
  Green Planet Bioengineering Co., Limited (“Green Planet”) (formally Mondo Acquisition II, Inc.) was incorporated in the State of Delaware on October 30, 2006. Since inception, we have been engaged in organizational efforts to obtain initial financing. We were formed as a vehicle to pursue a business combination through the acquisition of, or merger with, an operating business. We filed a registration statement on Form 10-SB with the U.S. Securities and Exchange Commission (the “SEC”) on May 2, 2007, and since its effectiveness, we have focused our efforts to identify a possible business combination. On October 2, 2008, we changed our name to Green Planet.
  On October 24, 2008 (“Closing Date”), we executed and consummated a Share Exchange Agreement by and among (i) Elevated Throne Overseas Ltd., a British Virgin Islands limited liability company which is the parent company of FuJian Green Planet Bioengineering Co., Ltd., a wholly foreign-owned enterprise (“WFOE”) organized under the laws of the People’s Republic of China (“PRC”); (ii) the stockholders of 100% of Elevated Throne Overseas Ltd.’s common stock (the “Elevated Throne Overseas Ltd.’s Shareholders”); and (iii) our then-controlling stockholder, Cris Neely (who owned 93.5%). Prior to the Share Exchange Agreement, Mr. Min Zhao and Ms. Min Yan Zheng were the controlling persons of Elevated Throne Overseas Ltd. (100%).  At closing, we acquired control of Elevated Throne Overseas Ltd., by issuing to the Elevated Throne Overseas Ltd.’s Shareholders (Mr. Zhao and Ms. Zheng) 14,141,667 shares of our Common Stock in exchange for all of the outstanding capital stock of Elevated Throne Overseas Ltd. (the “Transaction”). Immediately after the Closing Date of this transaction, we had a total of 15,141,667 shares of common stock outstanding, with the Elevated Throne Overseas Ltd.’s Shareholders owning approximately 93.40% of our outstanding common stock, and the balance held by those who held the common stock prior to the Closing Date. Upon closing of the Transaction, Mr. Min Zhao and Ms. Min Yan Zheng became our controlling shareholders and we no longer were a “blank check” company.
  Elevated Throne Overseas Ltd. owns 100% of FuJian Green Planet Bioengineering Co., Ltd., which is a WFOE under the laws of the PRC. WFOE has entered into a series of contractual arrangements with Sanming Huajian Bio-Engineering Co., Ltd., a limited liability company headquartered in, and organized under the laws of, the PRC. The PRC restructuring transaction closed as of October 24, 2008. Fujian Green Planet Bioengineering Co., Ltd. is required under the agreements to complete additional post-closing steps required in order to maintain its good standing under PRC law. These steps include Fujian Green Planet Bioengineering Co., Ltd. making required regulatory filings and giving proof to regulatory authorities that it has received the required portion of its registered capital as of the deadline required under PRC law. The Company paid $300,000 and $1,700,000 on September 7, 2009 and February 19, 2010, respectively, to fully satisfy the business license requirement according to the Company’s articles of association and to comply with PRC law.
  5
  As a result of the Reverse Merger Transaction, we acquired 100% of the capital stock of Elevated Throne Overseas Ltd. and consequently, control of the business and operations of Elevated Throne Overseas Ltd., FuJian Green Planet Bioengineering Co., Ltd., and Sanming Huajian Bio-Engineering Co., Ltd. Prior to the Reverse Merger Transaction, we were a public reporting “blank check” company in the development stage. From and after the Closing Date of the Share Exchange Agreement, we are no longer a “blank check” company and our primary operations consist of the business and operations of Sanming Huajian Bio-Engineering Co., Ltd., which are conducted in China.
  On July 22, 2009, Green Planet announced that majority control of the Company had been acquired by ONE Bio, Corp. (“ONE”). ONE acquired in a series of transactions approximately 80% of the outstanding shares of common stock of Green Planet on a fully diluted basis. The transactions involved the acquisition of common shares and warrants from the majority shareholders of Green Planet and the acquisition by ONE of 5,101 Class A Preferred Shares of Green Planet. As a result of these transactions, ONE has become the majority shareholder of Green Planet and based upon the number of shares outstanding and assuming conversion of the Green Planet preferred stock into common stock, ONE would own approximately 83% of Green Planet’s shares.  Green Planet owns 100% of FuJian Green Planet Bioengineering Co., Ltd., a WFOE, that through a series of contractual arrangements has effective control of the business and operations of and has an irrevocable option to purchase the equity and/or assets of Sanming Huajian Bio-Engineering Co., Ltd. (a PRC company), a green process manufacturer of high quality health supplements, organic fertilizers and pesticides.  Consequently, Green Planet effectively controls the business and operations of Sanming Huajian Bio-Engineering Co., Ltd.
  On April 14, 2010, we entered into an agreement with ONE Bio, Corp. pursuant to which, among other things, (i) that certain Amended and Restated Green Planet Preferred Stock Purchase Agreement made effective as of June 17, 2009, between us and ONE Bio Corp. (“Amended and Restated GP Preferred Stock Agreement”) was cancelled, (ii) we returned to ONE Bio Corp the 1,004,808 shares of ONE Bio, Corp. common stock that were issued to us pursuant to the Amended and Restated GP Preferred Stock Agreement, and (iii) ONE Bio Corp returned to us the 5,101 preferred  shares of our stock that we issued to ONE Bio, Corp pursuant to the Amended and Restated GP Preferred Stock Agreement.
  On April 14, 2010, we granted to ONE an option to acquire 100% of the stock of Elevated Throne Overseas Ltd. (“Elevated Throne”), our 100% owned BVI subsidiary. In the event ONE exercises this option, the closing of the transaction will be subject to the approval of our stockholders. Furthermore, as a result of this event and if the transaction is fully consummated, ONE will own 100% of Elevated Throne and its subsidiaries which constitutes essentially all former operations of Green Planet. Green Planet will remain a subsidiary of ONE and operate as a public shell corporation with the business purpose to acquire or merge with an existing business operation.
  6
  Business Overview
  Green Planet headquartered in Aventura, FL with its main operations located in Sanming and Fuzhou, China, is a high-tech bioengineering enterprise that engages in research, development, production and marketing and sales of various organic health and agricultural products originating, among other sources, from residues of tobacco leaves. The Company’s products are Coenzyme Q10 (“CoQ10”), a health supplement that supports the cardiovascular system and a patented organic health supplement called “Paiqianshu”. Paiqianshu comes in both liquid and tablet forms and it’s made from natural green barley shoot extraction. Furthermore, the Company has added 5-HTP and Sarcandra to its product portfolio, which currently are large sellers of the Company’s portfolio. In addition, the Company sells Resveratrol and Genoderma tea. The Company’s business involves activities covering the entire supply chain such as R&D, manufacturing, sales, marketing, and distribution. The Company primarily sells its products in the PRC (China).
  Results of Operations and Financial Condition
  In this Section, the Company will discuss the following: (i) results of operations and financial condition for the nine months ended September 30, 2010 versus the nine months ended September 30, 2009 and the three months ended September 30, 2010 versus the three months ended September 30, 2009; (ii) liquidity and capital resources; (iii) a discussion of the Company’s risk factors; and (iv) the Company’s critical accounting policies.
  Nine Months Ended September 30, 2010 versus September 30, 2009
  Net Sales
 The Company generated net sales of $13,332,565 for the nine months ended September 30, 2010 compared to $7,929,710 for the nine months ended September 30, 2009, an increase of $5,402,855 or 68%. The increase in sales is mainly due to the Company’s broadened product portfolio and the Company’s increased sales focus with its additional sales staff compared to last year’s activities. The broader product line caters to a higher number of customers. The Company’s two new products Sarcandra and Ganoderma Tea together with the existing popular selling items contributed to 86% of the sales during the nine months ended September 30, 2010. These products were not part of the Company’s product portfolio last year. The Company anticipates the new products supported by marketing initiatives to continue to contribute sales growth.
  Cost of Sales
 The cost of sales was $6,628,612 for the nine months ended September 30, 2010 compared to $3,419,354 for the nine months ended September 30, 2009, an increase of $3,209,258. The increase is mainly due to the significantly higher net sales. In addition, the change in customer and product mix has attributed to the higher cost of sales. We experienced a relatively stable raw material pricing during the three measuring periods. Furthermore, the Company continues to have strong relationships with its vendors.
  7
  Gross profit
 The gross profit for the nine months ended September 30, 2010 was $6,703,953 compared to $4,510,356 for the same period of last year, an increase of $2,193,597 or 49%. The gross profit margin was 50% and 57% for the nine months ended September 30, 2010 and 2009, respectively.The Companycontinues to show stability in its market pricing as well as continuity in its manufacturing operations. The main reason for the higher gross profit is due to the Company’s broader product portfolio catering to a larger number of customers, as a result driving higher net sales. The main reason for the lower gross profit percentage is due to that the higher sales volume has triggered certain volume discounts to a few customers. The Company anticipates continuing to have a solid gross margin percentage.
  Selling Expenses
 Selling expenses totaled $571,568 and $119,134 for the nine months ended September 30, 2010 and September 30, 2009, respectively. The main cost drivers were personnel costs, travel and costs related to various marketing campaigns. The increase in the selling expenses is mainly attributable to advertizing and trade show expenses which totaled $381,662 for the nine months ended September 30, 2010 in order to successfully drive future sales and sales of new products. The Company has added sales staff compared to the same period of last year with the intention of increasing sales and to continue providing excellent customer service and retention.
  Administrative Expenses
 Administrative expenses amounted to $1,109,160 and $708,666 for the nine months ended September 30, 2010 and September 30, 2009, respectively. The main expenses were attributable to management and staff, accounting, audit fees and facilities expenses. The main reasons for the increase are attributable to higher personnel costs due to the increased number of employees that supports the overall growing business and various administrative expenses related to the company’s trade show activities. In addition, the Company reported non-cash impacting amortization and depreciation costs of $173,143 for the nine months ended September 30, 2010 compared to $130,550 the same period last year.
  Research and Development Expenses
 Research and development (R&D) expenses totaled $186,856 and $199,664 for the nine months ended September 30, 2010 and September 30, 2009 respectively. The decrease in R&D expenses is due to the ramp up in 2009 due to the Company’s broader product line which is decreasing as the products mature. The Company’s efforts to broaden and strengthen its product portfolio will continue, however, at a pace that is consistent with the economy and the increasing sales activities.
  Operating Income
 The operating income amounted to $4,836,369 for nine months ended September 30, 2010 compared to $3,482,892 for same period in 2009, which is an increase of 39%. The main reason for the increase is due to the improved net sales and gross profit resulting from the Company’s broader product portfolio and focused sales activities.
  8
  Income Taxes
 Income tax is accounted for using the tax effect accounting method, whereby the income tax expense of the current period is determined based on the total amount of the income tax payable for the period and the amount of the tax effect of timing differences. The liability method is used in determining the tax effect of the timing differences. The Company records its income taxes based on the requirements of ASC 740, previously SFAS No. 109, “Accounting for Income Taxes,” which includes an estimate of taxes payable or refundable for the current period and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in our financial statements or tax returns.
  Deferred tax assets and liabilities reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The management periodically assesses the deferred tax assets and the adequacy of deferred tax liabilities, including the results of local, state, federal tax audits or estimates and judgments used.
  The Company operates in the People’s Republic of China and is subject to its tax laws. In accordance with the relevant tax laws and regulations of the People’s Republic of China, the corporation income tax rate has been revised to 25% across the board for all enterprises, whether domestic or foreign-owned from 33% with effect from January 1, 2008. The Company is subject to the United States of America Tax law at a tax rate of approximately 40%. No provision for the US federal income taxes has been made as the Company had no taxable income in this jurisdiction for the reporting periods.
  Net Income
 The net income for the Company was $3,622,162 and $2,532,781 for the nine months ended September 30, 2010 and September 30, 2009 respectively. The net profit margin was 27% and 32% for the same periods, respectively. The increase in net income of $1,089,381 is mainly due to the higher sales volume and increased gross profit. However, the decrease in net profit margin is mainly due to a shift in the product mix in order to drive higher sales. The Company’s belief is that when the new products continue to increase in volume, the net profit margin will increase due to economies of scale. The Company continues to show a strong net income despite a global financial down turn.
  Three Months Ended September 30, 2010 versus September 30, 2009
  Net Sales
 The Company generated net sales of $4,860,799 for the three months ended September 30, 2010 compared to $3,462,341 for the three months ended September 30, 2009, an increase of $1,398,458 or 40%. The increase in net sales is mainly due to a broader product line which caters to a higher number of customers. The company’s newer products Sarcandra and Ganoderma Tea sold very well during the quarter with net sales of $2,729,449. Additionally, the Company’s improved sales focus with its additional sales staff compared to the last year’s activities contributed to the increased net sales. The Company anticipates the new and broader product line supported by marketing initiatives to continue the growth in sales.
  9
  Cost of Sales
 Cost of sales was $2,395,721 for the three months ended September 30, 2010 compared to $1,578,081 for the three months ended September 30, 2009, an increase of $817,640. The increase is due to a higher volume in sales and the change in product and customer mix. We experienced a relatively stable raw material pricing on existing products during the three measuring periods. Furthermore, the Company continues to have strong relationships with its vendors.
  Gross profit
 The gross profit for the three months ended September 30, 2010 was $2,465,078 compared to $1,884,260 for the same period of last year, an increase of $580,818 or 31%. The gross profit margin was 51% and 54% for the three months ended September 30, 2010 and 2009, respectively. The Companycontinues to show stability in its market pricing as well as continuity in its manufacturing operations. The main reason for the higher gross profit is due to the Company’s broader product portfolio catering to a larger number of customers, as a result driving higher net sales and gross profit. The main reason for the lower gross profit percentage is due to the fact that the higher sales volume has triggered certain volume discounts to a few customers. The Company anticipates continuing to have a solid gross margin percentage.
  Selling Expenses
 Selling expenses totaled $285,469 and $42,577 for the three months ended September 30, 2010 and September 30, 2009, respectively. The main cost drivers were personnel costs, travel costs, and costs related to various marketing campaigns. The increase in the selling expenses is partly attributable to advertizing and trade show expenses which totaled $229,763 for the three months ended September 30, 2010 in order to drive future sales and sales of new products. The Company has added sales staff compared to the same period of last year with the intention of increasing sales and providing excellent customer service, as a consequence the selling expenses have increased.
  Administrative Expenses
 Administrative expenses amounted to $420,452 and $213,855 for the three months ended September 30, 2010 and September 30, 2009, respectively. The main expenses were attributable to management and staff, accounting, audit fees and facilities expenses. The main reasons for the increase are attributable to higher personnel costs due to the increased number of employees that supports the overall growing business and various administrative expenses related to the company’s trade show activities in the current quarter. In addition, the Company reported non-cash impacting amortization and depreciation costs of $58,503 for the three months ended September 30, 2010 compared to $49,500 the same period last year.
  Research and Development Expenses
 Research and development (R&D) expenses totaled $73,248 and $126,625 for the three months ended September 30, 2010 and September 30, 2009 respectively. The decrease in R&D expenses is due to the Company’s broader product portfolio which required increased R&D in 2009 but will decrease as product line matures. The Company’s efforts to broaden and strengthen its product portfolio will continue, however, at a pace that is consistent with the economy and the increasing sales activities.
  10
  Operating Income
 The operating income amounted to $1,685,909 for the quarter ended September 30, 2010 compared to $1,501,203 for same quarter in 2009, which is an increase of $184,706 or 12%. The higher net sales and gross profit contributed to the increase in operating income mainly resulting from the Company’s broader product line and increased sales focus. The operating income margin was 35% compared to 43% the same period last year.
  Income Taxes
 Income tax is accounted for using the tax effect accounting method, whereby the income tax expense of the current period is determined based on the total amount of the income tax payable for the period and the amount of the tax effect of timing differences. The liability method is used in determining the tax effect of the timing differences. The Company records its income taxes based on the requirements of ASC 740, previously SFAS No. 109, “Accounting for Income Taxes,” which includes an estimate of taxes payable or refundable for the current period and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in our financial statements or tax returns.
  Deferred tax assets and liabilities reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The management periodically assesses the deferred tax assets and the adequacy of deferred tax liabilities, including the results of local, state, federal tax audits or estimates and judgments used.
  The Company operates in the People’s Republic of China and is subject to its tax laws. In accordance with the relevant tax laws and regulations of the People’s Republic of China, the enterprise income tax rate has been revised to 25% across the board for all enterprises, whether domestic or foreign-owned from 33% with effect from January 1, 2008. The Company is subject to the United States of America Tax law at a tax rate of approximately 40%.  No provision for the US federal income taxes has been made as the Company had no taxable income in this jurisdiction for the reporting periods.
  Net Income
 The net income for the Company was $1,142,540 and $1,074,199 for the three months ended September 30, 2010 and September 30, 2009 respectively. The net profit margin was 24% and 31% for the three months ended September 30, 2010 and September 30, 2009, respectively. The increase in net income of $68,341 or 6% is mainly due to the higher sales volume and the increased gross profit. The decrease in net profit margin is mainly due to the Company’s marketing initiatives associated to the newer product line and large sellers, especially Sarcandra and Ganoderma Tea. The Company’s belief is that as the new products continue to increase in volume, the net profit margin will increase due to economies of scale.
  11
  Liquidity and Capital Resources
 The Company’s working capital and long-term funding primarily comes from operating cash flow and loans, while the financial resources are used in capital expenditures, operating activities and repayment of loans. Net cash flow provided by operating activities amounted to $4,626,557 for the nine months ended September 30, 2010 compared to net cash outflow absorbed by operating activities of $1,369,110 for same period in 2009. The significantly higher cash inflow is mainly due to reduced trade receivables, operating lease prepayments and increased net income of $1,089,381. The customers buying the Company’s newer product portfolio are given shorter credit terms than compared to the older product portfolio and customers and thereby providing a stronger cash flow. The Company’s trade receivables totaled $4,663,043 as of September 30, 2010 compared to $5,078,734 as of December 31, 2009. No allowance for doubtful receivables was provided for the nine months ended September 30, 2010. The Company believes it has a strong and loyal customer base. The total inventory amounted to $2,768,590 and $1,203,490 as of September 30, 2010 and December 31, 2009 respectively. The higher inventory level is due to the Company’s overall increasing business and the expected increased sales volumes. The main part of the inventory as of September 30, 2010 consists of work in progress and raw material, which totaled $2,519,064. Future operations are estimated to be funded mainly by the Company’s strong net income. In addition, the Company is continuing to work aggressively to reduce its accounts receivables to further strengthen its cash position. The main part of the Company’s cash outflow is estimated to pertain to R&D and administrative expenses. In addition, based on the demand for the Company’s products, the Company plans to add necessary equipment to its manufacturing facility to match the market demand. However, this will be in strong correlation with the product demand factor and the Company’s cash inflow and net income. During the quarter ended June 30, 2010 the Company repaid two loans totaling $1,860,561. Furthermore, the Company entered into a short term loan agreement in the amount of $589,840with a financial institution during the quarter ended June 30, 2010. As further described in note 14 to the condensed consolidated financial statement, the loanis secured by a guarantee put up by a guarantee company. In return, the Company has paid a counter guarantee of 20% of the loan amount, which is $117,968 to the guarantee company. The guarantee company does not require any collateral. On July 7, 2010, the Company entered into a 2 year revolving loan facility agreement with a financial institution in the amount of $1,791,553, which carries an interest rate of 85% of the rate stipulated by the People’s Bank of China. Under the terms of the loan facility, usage of the funds is limited to the purchase of certain inventory items. The financial institution charged a commission fee of $33,293. The Company pledged buildings, construction in progress and land use rights with a carrying value of $2,749,484 as collateral for the revolving loan facility. During last year, the Company made an arrangement with the government to move part of the land use rights to operating leases for other pieces of land to promote its newer product portfolio. The carrying value was transferred to prepayments for the new land leases. As further described in note 10 to the condensed consolidated financial statement, the new operating leases commenced on July 1, 2009 and will be paid over 30 years.  The lower cost of raw materials will fully or partially offset the cost for the new operating leases.
  Subsequent Event
  The Company has evaluated all other subsequent events through November 10, 2010, the date these financial statements are issued, and determined that there were no subsequent events or transactions that require recognition or disclosure in the financial statements
  Foreign Currency Translation
 The Company’s operating entity, Sanming Huajian Bio-Engineering Co., Ltd.maintains its financial statements in the functional currency of the People’s Republic of China, which is the “Renminbi” (RMB). Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchanges rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective periods.
  12
  For financial reporting purposes, the financial statements are prepared using the functional currency Renminbi, which have been translated into United States dollars. Assets and liabilities are translated at the exchange rates at the balance sheet dates, revenue and expenses are translated at the average exchange rates and stockholders’ equity is translated at historical exchange rates. Any translation adjustments resulting are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income, a component of stockholders’ equity.
  The exchange rate information below is based on the Federal Reserve rates obtained from Oanda.com
  Exchange Rates

9/30/2010


12/31/2009Fiscal period/year end RMB: US$ exchange rate


6.70



6.83Average period/yearly RMB: US$ exchange rate


6.78



6.83
  The RMB: US$ average exchange rate as of September 30, 2009 was 6.82.
  RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at the rates used in translation.
  Significant Estimates
  Critical accounting polices include the areas where we have made what we consider to be particularly subjective or complex judgments in making estimates and where these estimates can significantly impact our financial results under different assumptions and conditions.
  We prepare our financial statements in conformity with accounting principles generally accepted in the United States of America. As such, we are required to make certain estimates, judgments and assumptions that we believe are reasonable based upon the information available. These estimates, judgments and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the periods presented. Actual results could be different than those estimates.
  Recent Accounting Pronouncements
  In March 2010, the FASB issued Accounting Standard Update No. 2010-11 “Derivatives and Hedging” (Topic 815). ASU No. 2010-11 update provides amendments to subtopic 815-15, Derivatives and hedging. The amendments clarify about the scope exception in paragraph 815-10-15-11 and section 815-15-25 as applicable to the embedded credit derivatives. The ASU is effective on the first day of the first fiscal quarter beginning after June 15, 2010. Therefore, for a calendar-year-end entity, the ASU becomes effective on July 1, 2010. Early application is permitted at the beginning of the first fiscal quarter beginning after March 5, 2010. The adoption of this guidance has not had and is not expected to have a material impact on the Company’s consolidated financial statements.
  13
  In April 2010, the FASB issued Accounting Standard Update No. 2010-12. “Income Taxes” (Topic 740). ASU No.2010-12 amends FASB Accounting Standard Codification subtopic 740-10 Income Taxes to include paragraph 740-10-S99-4. On March 30, 2010 The President signed the Health Care & Education Affordable Care Act reconciliation bill that amends its previous Act signed on March 23, 2010. FASB Codification topic 740, Income Taxes, requires the measurement of current and deferred tax liabilities and assets to be based on provisions of enacted tax law. The effects of future changes in tax laws are not anticipated.” Therefore, the different enactment dates of the Act and reconciliation measure may affect registrants with a period-end that falls between March 23, 2010 (enactment date of the Act), and March 30, 2010 (enactment date of the reconciliation measure). However, the announcement states that the SEC would not object if such registrants were to account for the enactment of both the Act and the reconciliation measure in a period ending on or after March 23, 2010, but notes that the SEC staff “does not believe that it would be appropriate for registrants to analogize to this view in any other fact patterns.” The adoption of this guidance has not had and is not expected to have a material impact on the Company’s consolidated financial statements.
  In April 2010, the FASB issued Accounting Standard Update No. 2010-13 “Stock Compensation” (Topic 718). ASU No.2010-13 provides amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The amendments in this Update should be applied by recording a cumulative-effect adjustment to the opening balance of retained earnings. The cumulative-effect adjustment should be calculated for all awards outstanding as of the beginning of the fiscal year in which the amendments are initially applied, as if the amendments had been applied consistently since the inception of the award. The cumulative-effect adjustment should be presented separately. Earlier application is permitted. The adoption of this guidance has not had and is not expected to have a material impact on the Company’s consolidated financial statements.
  In April 2010, the FASB issued Accounting Standards Update No.2010-14, “Accounting for Extractive Activities – Oil & Gas” (Topic 932). ASU No. 2010-14 amends FASB accounting Standard paragraph 932-10-S99-1 due to SEC release no. 33-8995 [FR 78], Modernization of Oil and Gas Reporting and provides update as to amendments to SEC Regulation S-X, Rule 4-10. The adoption of this guidance has not had and is not expected to have a material impact on the Company’s consolidated financial statements.
  14
  In April 2010, the FASB issued Accounting Standard Update No. 2010-15. “Financial Services-Insurance” (Topic 944) ASU No.2010-15 gives direction on how investments through separate accounts affect an insurer’s consolidation analysis of those investments. Under the ASU: an insurance entity should not consider any separate account interests held for the benefit of policy holders in an investment to be the insurer’s interests and should not combine those interests with its general account interest in the same investment when assessing the investment for consolidation, unless the separate account interests are held for the benefit of a related party policy holder as defined in the Variable Interest Entities Subsections of Subtopic 810-10 and those Subsections require the consideration of related parties. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2010. Early adoption is permitted. The amendments in this Update should be applied retrospectively to all prior periods upon the date of adoption. The adoption of this guidance has not had and is not expected to have a material impact on the Company’s consolidated financial statements.
 
 In April 2010, the FASB issued Accounting Standard Update No. 2010-16. “Entertainment-Casinos” (Topic 924). ASU No.2010-16 addresses diversity in practice regarding whether an entity accrues liabilities for a base jackpot before it is won because they could avoid the payment. The amendments in this update clarify that an entity should not accrue jackpot liabilities (or portions thereof) before a jackpot is won if the entity can avoid paying that jackpot. Jackpots should be accrued and charged to revenue when an entity has the obligation to pay the jackpot. This guidance applies to both base and progressive jackpots. The ASU amendments are effective for fiscal years, and the interim periods within those fiscal years, beginning on or after December 15, 2010.  The adoption of this guidance has not had and is not expected to have a material impact on the Company’s consolidated financial statements.
  In April 2010, the FASB issued Accounting Standard Update No. 2010-17. “Revenue Recognition-Milestone Method” (Topic 605) ASU No.2010-17 provides guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research or development transactions. An entity often recognizes these milestone payments as revenue in their entirety upon achieving a specific result from the research or development efforts. A vendor can recognize consideration that is contingent upon achievement of a milestone in its entirety as revenue in the period in which the milestone is achieved only if the milestone meets all criteria to be considered substantive. Determining whether a milestone is substantive is a matter of judgment made at the inception of the arrangement. The ASU is effective for fiscal years and interim periods within those fiscal years beginning on or after June 15, 2010. Early application is permitted. Entities can apply this guidance prospectively to milestones achieved after adoption. However, retrospective application to all prior periods is also permitted. The adoption of this guidance has not had and is not expected to have a material impact on the Company’s consolidated financial statements.
  In April 2010, the FASB issued Accounting Standard Update No. 2010-18. “Receivables” (Topic 310). ASU No.2010-18 provides guidance on accounting for acquired loans that have evidence of credit deterioration upon acquisition. Paragraph 310-30-15-6 allows acquired assets with common risk characteristics to be accounted for in the aggregated as a pool. Upon establishment of the pool, the pool becomes the unit of accounting. When loans are accounted for as a pool, the purchase discount is not allocated to individual loans; thus all of the loans in the pool accrete at a single pool rate (based on cash flow projections for the pool). Under subtopic 310-30, the impairment analysis also is performed on the pool as a whole as opposed to each individual loan. Paragraphs 310-40-15-4 through 15-12 establish the criteria for evaluating whether a loan modification should be classified as a troubled debt restructuring. Specifically paragraph 310-40-15-5 states that “a restructuring of a debt constitutes a troubled debt restructuring for purposes of this subtopic if the creditor for economic or legal reasons related to the debtor’s financial difficulties grants a concession to the debtor that it would not otherwise consider.” The ASU is effective for modification of loans accounted for within pools under subtopic 310-30 occurring in the first interim or annual period ending on or after July 15, 2010. The amendments are to be applied prospectively. Early application is permitted. The adoption of this guidance has not had and is not expected to have a material impact on the Company’s consolidated financial statements.
  15
  In May 2010, the FASB issued Accounting Standard Update No. 2010-19 “Foreign Currency”. (“ASU No. 2010-19”). ASU 2010-19, codifies the SEC staff announcement made at the March 18, 2010, EITF meeting. The ASU “provides the SEC staff’s views on certain foreign currency issues related to investments in Venezuela.” These issues relate to Venezuela’s highly inflationary status. The ASU became effective on March 18, 2010. The adoption of this guidance has not had and is not expected to have a material impact on the Company’s consolidated financial statements.
  In July 2010, the FASB issued Accounting Standard Update No. 2010-20 (ASU No. 2010-20) “Receivables” (Topic 310).  ASU No. 2010-20 provides financial statement users with greater transparency about an entity’s allowance for credit losses and the credit quality of its financing receivables.  This update is intended to provide additional information to assist financial statement users in assessing an entity’s credit risk exposures and evaluating the adequacy of its allowance for credit losses.  The amendments in this update apply to both public and nonpublic entities with financing receivables, excluding short-term trade accounts receivable or receivables measured at fair value or lower of cost or fair value.  The objective of the amendments in ASU No. 2010-20 is for an entity to provide disclosures that facilitate financial statement users’ evaluation of (1) the nature of credit risk inherent in the entity’s portfolio of financing receivables, (2) How that risk is analyzed and assessed in arriving at the allowance for credit losses and (3) The changes and reasons for those changes in the allowance for credit losses.  The entity must provide disclosures about its financing receivables on a disaggregated basis.  For public entities ASU No. 2010-20 is effective for interim and annual reporting periods ending on or after December 15, 2010.  For nonpublic entities ASU No. 2010-20 will become effective for annual reporting periods ending on or after December 15, 2011.  The Company is evaluating the impact ASU No. 2010-20 will have on the financial statements.
  In August 2010, the FASB issued Accounting Standard Updates No. 2010-21 (ASU No. 2010-21) “Accounting for Technical Amendments to Various SEC Rules and Schedules” and No. 2010-22 (ASU No. 2010-22) “Accounting for Various Topics – Technical Corrections to SEC Paragraphs”.  ASU No 2010-21 amends various SEC paragraphs pursuant to the issuance of Release no. 33-9026: Technical Amendments to Rules, Forms, Schedules and Codification of Financial Reporting Policies.  ASU No. 2010-22 amends various SEC paragraphs based on external comments received and the issuance of SAB 112, which amends or rescinds portions of certain SAB topics.  Both ASU No. 2010-21 and ASU No. 2010-22 are effective upon issuance.  The amendments in ASU No. 2010-21 and No. 2010-22 will not have a material impact on the Company’s financial statements.
  16
  In September 2010, the FASB issued Accounting Standard Update No. 2010-25 (ASU No. 2010-25) “Defined Contribution Pension Plans” (Topic 962).  ASU No. 2010-25 clarifies how loans to participants should be classified and measured by defined contribution pension benefits.  The amendments in ASU No. 2010-25 affect any defined contribution pension plan that allows participant loans.  The amendments in ASU No. 2010-25 require that participant loans be classified as notes receivable from participants, which are segregated from plan investments and measured at their unpaid principal balance plus any accrued but unpaid interest.  ASU No. 2010-25 is effective for fiscal years ending after December 15, 2010 and should be applied retrospectively to all prior periods presented.  Early adoption is permitted. The adoption of this guidance has not had and is not expected to have a material impact on the Company’s consolidated financial statements.
  Off-Balance Sheet Arrangements
  We do not have any off-balance sheet arrangements that have or 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 material to investors.
  Market Risks
  The Company operates in the People’s Republic of China, of which has its own currency.  This may cause the Company to experience and be exposed to different market risks such as changes in interest rates and currency deviations.
  Item 3
Quantitative and Qualitative Disclosures about Market Risk
 Not Applicable
 Item 4
Controls and Procedures
 Disclosure Control and Procedures
  Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in company reports filed or submitted under the Securities Exchange Act of 1934, or the “Exchange Act,” is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.  Disclosure controls and procedures include without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding disclosure.
  The Company’s management with the participation of the Company’s Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the Company’s disclosure controls and procedures as of September 30, 2010.  Based upon this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as designed to ensure that material information required to be disclosed by the Company in the reports that if files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and regulations and accumulated and communicated to them as appropriate to allow timely decisions regarding required disclosure.
  17
  Management’s Report on Internal Control over Financial Reporting
  Management is responsible for establishing and maintaining adequate “internal control over financial reporting” as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.  Internal control over financial reporting refers to the process designed by, or under the supervision of, our Chief Executive Officer and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:
  i.
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
  ii.
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
  iii.
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
  As of September 30, 2010 and as reported in our 10-K filing, management used the framework set forth in the report entitled “Internal Control – Integrated Framework” published by the Committee of Sponsoring Organizations of the Tread way commission to evaluate the effectiveness of our internal control over financial reporting. Based on its evaluation, our management concluded that at September 30, 2010 there is a material weakness in internal control over financial reporting.  A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
  The Company’s material weakness in its internal control over financial reporting relates to the monitoring and review of work performed in the preparation of audit and financial statements, footnotes, and financial data provided to the Company’s registered public accounting firm in connection with the annual audit.  All of our financial reporting is carried out by the finance manager and experienced outside consultants. The lack of accounting staff results in a lack of segregation of duties necessary for an effective system of internal control.  The material weakness identified did not result in the restatement of any previously reported financial statements for 2009 and up to September 30, 2010 or any other related financial disclosure, nor does management believe that it had any effect on the accuracy of the Company’s financial statements for the current reporting period.
  18
  In order to mitigate this material weakness to the fullest extent possible, all quarterly and annual financial reports are reviewed by the Chief Executive Officer and the Board of Directors for reasonableness.  All unexpected results are investigated.  At any time, if it appears that any control can be implemented to continue to mitigate such weakness, it is immediately implemented. We intend to implement appropriate procedures for monitoring and review the work performed by our finance manager and outside consultants.
  During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting that has materially affected or is reasonably likely to materially affect, our internal control over financial reporting.
  Part II
OTHER INFORMATION
 
 Item 1
Legal Proceedings
 
 None
 Item 2
Market for Common Equity and Related Stockholder Matters
 The Company’s common stock trades on OTC Bulletin Board’s (OTCBB) quotation system. There has not been any sale of any unregistered securities for the period ended September 30, 2010.
 Item 3
Defaults upon Senior Securities
 
 None
 Item 4
Submission of Matters to a Vote of Security Holders
 
 None
 
 Item 5
Other Information
 
 None
 Item 6
Exhibits
  (a)
Exhibits
  31
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  19
  (b)                      Reports on form 8-K
  The Company filed the following reports on Form 8-K during the quarter for which the report is filed.
  NONE
  20
  SIGNATURES
  Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned; thereunto duly authorized this 10th day of November, 2010.
  GREEN PLANET BIOENGINEERING CO., LTD.Date: November 10, 2010
By:
/s/ Min ZhaoMin ZhaoChief Executive Officer(Principal Executive Officer and Principal

Financial Officer)