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 March 31, 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)
  1 305 704 3174(Registrant’s Telephone Number,

Including Area Code)




29900 NE 30th Avenue Suite 842 Aventura Florida 33180Former Name and Address


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(d) of the act.  Yes   o   No   x









Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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 May 13, 2010 was 20,006,402.




2


TABLE OF CONTENTS


Page

NumberPART I

FINANCIAL INFORMATIONItem 1Condensed Consolidated Statements of Income and Comprehensive Income for the Three Months Ended March 31, 2010 and 2009 (Unaudited)

F-4Condensed Consolidated Balance Sheets as of March 31, 2010 (unaudited) and December 31, 2009

F-5Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2010 and 2009 (Unaudited)

F-6Notes to Condensed Consolidated Financial Statements

F-7-F-29Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

5Item 3

Quantitative and Qualitative Disclosures about Market Risk

14Item 4

Controls and Procedures

14PART II

OTHER INFORMATIONItem 1

Legal Proceedings

15Item 2

Market for Common Equity and Related Stockholder Matters

16Item 3

Defaults upon Senior Securities

16Item 4

Submission of Matters to a Vote of Security Holders

16Item 5

Other Information

16Item 6

Exhibits

16SIGNATURES

17
  3
  FORWARD-LOOKING STATEMENTS




This Annual 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.


4


Part I
FINANCIAL INFORMATION




Green Planet Bioengineering Co., Ltd.
  Condensed Consolidated Financial Statements
 For the three months ended March 31, 2010 and 2009
 (Stated in US dollars)
  
  Green Planet Bioengineering Co., Ltd.
 Condensed Consolidated Financial Statements
 (Unaudited)
 For the three months ended March 31, 2010 and 2009
  Index to Condensed Consolidated Financial Statements
  PagesCondensed Consolidated Statements of Income and Comprehensive Income

F-4Condensed Consolidated Balance Sheets

F-5Condensed Consolidated Statements of Cash Flows

F-6Notes to Condensed Consolidated Financial Statements

F-7-F-29
  F-3
 Green Planet Bioengineering Co., Ltd.
 Consolidated Statements of Income and Comprehensive Income
 (Unaudited)
 (Stated in US dollars)
 Three months ended March 31,2010


2009Sales revenue

$
3,259,429


$
2,297,621Cost of sales


(1,469,280
)


(852,686
)Gross profit


1,790,149



1,444,935Operating expensesAdministrative expenses


321,799



212,215Research and development expenses


60,388



36,466Selling expenses


174,311



56,031556,498



304,712Income from operations


1,233,651



1,140,223Interest income


1,569



249Other income


90



-Finance costs


(36,709
)


(88
)Income before income taxes


1,198,601



1,140,384Income taxes


(253,853
)


(297,659
)Net income

$
944,748


$
842,725Other comprehensive income (loss)Foreign currency translation adjustments


618



(19,500
)Total comprehensive income

$
945,366


$
823,225Earnings per share- Basic

$
0.05


$
0.05- Diluted

$
0.04


$
0.04Weighted average number of shares outstanding :- Basic


20,006,402



15,407,725- Diluted


25,260,001



19,951,204See Notes to Condensed Consolidated Financial Statements
 
 F-4
 Green Planet Bioengineering Co., Ltd.
 Consolidated Balance Sheets
 (Stated in US dollars)
 March 31, 2010


December 31, 2009(Unaudited)


(Audited)ASSETSCurrent assetsCash and cash equivalents

$
4,228,840


$
791,775Trade receivables


3,395,745



5,078,734Deferred taxes


85,492



76,772Prepaid expenses and other receivables


1,029,674



820,288Inventories


1,579,171



1,203,490Prepayments of operating lease


1,711,130



1,711,130Total current assets


12,030,052



9,682,189Intangible assets


655,138



681,315Deposit for acquisition of intangible assets


161,153



161,151Property, plant and equipment, net


3,648,968



3,507,538Land use rights


994,830



1,000,428Deferred taxes


22,770



22,770Available for sale securities


5,000,000



5,000,000Prepayments of operating lease


7,341,289



7,790,914TOTAL ASSETS

$
29,854,200


$
27,846,305LIABILITIES AND STOCKHOLDERS’ EQUITYLIABILITIESCurrent liabilitiesTrade payables

$
241,501


$
557,155Other payables and accrued expenses


437,014



541,371Amount due to a related party


17,317



16,189Amount due to a stockholder


42,236



34,528Deferred taxes


173,663



148,581Secured loans from a financial institution


1,860,588



1,860,561Convertible loan payable


190,000



190,000Short term loans payable


1,800,000



-Income tax payable


260,429



611,745Deferred revenue


62,996



62,995Total current liabilities


5,085,744



4,023,125TOTAL LIABILITIES


5,085,744



4,023,125COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS’ EQUITYPreferred stock : par value of $0.001 per share, Authorized: 10,000,000 shares as of March 31, 2010 and December 2009, 5,101 shares issued and outstanding as ofMarch 31, 2010 and December 2009.


5



5Common stock : par value $0.001 per share 250,000,000 shares authorized; 20,006,402 shares issued and outstanding as of March 31, 2010 and December 31, 2009


20,006



20,006Additional paid-in capital


10,293,896



10,293,896Statutory reserve


1,305,895



1,305,895Accumulated other comprehensive income


1,459,595



1,458,976Retained earnings


11,689,059



10,744,402TOTAL STOCKHOLDERS’ EQUITY


24,768,456



23,823,180TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$
29,854,200


$
27,846,305See Notes to Condensed Consolidated Financial Statements
 
 F-5
 Green Planet Bioengineering Co., Ltd.
 Consolidated Statements of Cash Flows
 (Unaudited)
 (Stated in US dollars)
 
 Three months ended March 31,2010


2009Cash flows from operating activitiesNet income

$
944,748


$
842,725Adjustments to reconcile net income to net cash provided by operating activities :Depreciation


75,219



52,491Amortization for intangible assets


26,187



12,880Amortization for land use rights


5,613



5,836Amortization for prepayment of operating lease


221,648



-Deferred taxes


16,362



(2,805
)Stock-based compensation


-



13,130Changes in operating assets and liabilities :Trade receivables


1,684,158



(607,357
)Other receivables


(187,414
)


-Inventories


(147,893
)


46,913Trade payables


(315,654
)


(79,857
)Other payables and accrued expenses


(104,357
)


108,974Amount due to a related party


1,178



879Amount due to a stockholder


7,708



-Income tax payable


(351,316
)


48,072Net cash flows provided by operating activities


1,876,187



441,881Cash flows from investing activitiesPayments to acquire property, plant and equipment


(238,694
)


-Net cash flows used in investing activities


(238,694
)


-Cash flows from financing activitiesIssue of common stock


-



764Repayments of other loans






(146,500
)Proceeds from a related party


1,800,000



-Net cash flows provided by (used in) financing activities


1,800,000



(145,736
)Effect of foreign currency translation on cash and cash equivalents


(428
)


(907
)Net increase in cash and cash equivalents


3,437,065



295,238Cash and cash equivalents - beginning of year


791,775



665,568Cash and cash equivalents - end of year

$
4,228,840


$
960,806Supplemental disclosures for cash flow information:Cash paid for interest

$
34,578


$
-Cash paid for income taxes

$
588,803


$
252,392See Notes to Condensed Consolidated Financial Statements
 
 F-6
  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 $300,000 to Fujian Green Planet as capital (representing 15% of Fujian Green Planet’s registered capital) before October 17, 2008.The Companyhas applied for an extension of the contribution period to December 31, 2009 with the relevant government bureau and contributed $300,000 to Fujian Green Planet Bioengineering Co., Ltd. on September 7, 2009 to satisfy the initial license payment requirement. The Company paid on February 19, 2010 $1,700,000 to fully satisfy the business license requirement.
  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.
  F-7
  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 4.7% 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 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.
  F-8
  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 March 31, 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.
  F-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)
  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.
  The following table summarizes the valuation of the Company’s investments by the above fair value hierarchy levels as of March 31, 2010:
  Assets

Level 1


Level 2


Level 3


TotalAvailable-for-sale securities

$
-


$
-


$
5,000,000


$
5,000,000
  The Company had the same investments measured at fair value as of December 31, 2009.
  Accumulated other comprehensive income
  Accumulated other comprehensive income in the consolidated balance sheet represents foreign currency translation adjustment.
  F-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)
  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.
  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:
  Three months endedMarch 312010(unaudited)


2009(unaudited)Customer A

$
456,51


$
-Customer B


326,800



-Customer C


271,269



-Customer D


251,223



-Customer E


231,483



-Customer F


215,863



346,136Customer G


199,235



-Customer H


186,497



181,622Customer I


179,853



-$
2,318,740


$
527,758
  F-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)
  Concentrations of credit risk (cont’d)
  Details of customers which represent the highest value of the Company’s trade receivables are:
  As of March 31


December 31,2010

(unaudited)


2009

(audited)Customer A

$
476,321


$
620,080Customer B


468,390



681,506Customer C


451,098



671,062Customer D


370,645



533,892Customer E


328,185



645,347Customer F


293,944



547,485Customer G


278,356



168,769Customer H


149,433



155,877Customer I


125,993



-$
2,942,365


$
4,024,018
  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 March 31, 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.
  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.
  F-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)
  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 three months ended March 31, 2010 and March 31, 2009, respectively.
  Inventories
  Inventories are 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 inventories, the 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 margins, the Company did not make any allowance for slow-moving or defective inventories.
  No allowance of obsolete inventories was provided for during the three months ended March 31, 2010 and 2009.
  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.
 
 F-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)
  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.
  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.
  F-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)
  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.
  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 carryforwards 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.
  F-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)
  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 year ended December 31, 2009 and period ended March 31, 2010, 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.
  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 exchange rates in effect as of March 31, 2010 and 2009 were 1USD for 6.84 and 6.85 RMB, respectively.
  F-16
  Green Planet Bioengineering Co., Ltd.
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US dollars)
  2.            Summary of significant accounting policies (Cont’d)
  Recently issued accounting pronouncements
  In August 2009, the FASB issued ASU 2009-05 which includes amendments to Subtopic 820-10, “Fair Value Measurements and Disclosures—Overall”. The update provides clarification that in circumstances, in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the techniques provided for in this update.
  The amendments in this ASU clarify that a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability and also clarifies that both a quoted price in an active market for the identical liability at the measurement date and the quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements. The guidance provided in this ASU is effective for the first reporting period, including interim periods, beginning after issuance. The adoption of this standard did not have a material impact on the Company’s consolidated financial position and results of operations.
  In September 2009, the FASB issued ASU 2009-06, Income Taxes (Topic 740), “Implementation Guidance on Accounting for Uncertainty in Income Taxes and Disclosure Amendments for Nonpublic Entities”, which provides implementation guidance on accounting for uncertainty in income taxes, as well as eliminates certain disclosure requirements for nonpublic entities.  For entities that are currently applying the standards for accounting for uncertainty in income taxes, this update shall be effective for interim and annual periods ending after September 15, 2009. For those entities that have deferred the application of accounting for uncertainty in income taxes in accordance with paragraph740-10-65-1(e), this update shall be effective upon adoption of those standards. The adoption of this standard is not expected to have an impact on the Company’s consolidated financial position and results of operations since this accounting standard update provides only implementation and disclosure amendments.
  In September 2009, the FASB has published ASU No. 2009-12, “Fair Value Measurements and Disclosures (Topic 820) - Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)”. This ASU amends Subtopic 820-10, “Fair Value Measurements and Disclosures – Overall”, to permit a reporting entity to measure the fair value of certain investments on the basis of the net asset value per share of the investment (or its equivalent). This ASU also requires new disclosures, by major category of investments including the attributes of investments within the scope of this amendment to the Codification. The guidance in this Update is effective for interim and annual periods ending after December 15, 2009. Early application is permitted.The adoption of this standard is not expected to have an impact on the Company’s consolidated financial position and results of operations.
  F-17
  Green Planet Bioengineering Co., Ltd.
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US dollars)
  2.            Summary of significant accounting policies (Cont’d)
 
 Recently issued accounting pronouncements (cont’d)
  In October 2009, the FASB has published ASU 2009-13, “Revenue Recognition (Topic 605)-Multiple Deliverable Revenue Arrangements”, which addresses the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. Specifically, this guidance amends the criteria in Subtopic 605-25, “Revenue Recognition-Multiple-Element Arrangements”, for separating consideration in multiple-deliverable arrangements. This guidance establishes a selling price hierarchy for determining the selling price of a deliverable, which is based on: (a) vendor-specific objective evidence; (b) third-party evidence; or (c) estimates. This guidance also eliminates the residual method of allocation and requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method and also requires expanded disclosures. The guidance in this update is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The adoption of this standard is not expected to have any impact on the Company’s consolidated financial position and results of operations
  In October 2009, the FASB has published ASU 2009-14, “Software (Topic 985)-Certain Revenue Arrangements that Include Software Elements” and changes the accounting model for revenue arrangements that include both tangible products and software elements. Under this guidance, tangible products containing software components and non software components that function together to deliver the tangible product’s essential functionality are excluded from the software revenue guidance in Subtopic 985-605, “Software-Revenue Recognition”. In addition, hardware components of a tangible product containing software components are always excluded from the software revenue guidance. The guidance in this ASU is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The adoption of this standard is not expected to have any impact on the Company’s consolidated financial position and results of operations.
  In December 2009, the FASB has published ASU 2010-16 ““Transfers and Servicing (Topic 860): Accounting for Transfers of Financial Assets.” ASU No. 2009-16 is a revision to ASC 860, “Transfers and Servicing,” and amends the guidance on accounting for transfers of financial assets, including securitization transactions, where entities have continued exposure to risks related to transferred financial assets. ASU No. 2009-16 also expands the disclosure requirements for such transactions. This ASU will become effective for us on April 1, 2010.The adoption of this standard is not expected to have any impact on the Company’s consolidated financial position and results of operations.
  In December 2009, the FASB has published ASU 2010-17 Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities.” ASU No. 2009-17 amends the guidance for consolidation of VIEs primarily related to the determination of the primary beneficiary of the VIE. The adoption of this standard is not expected to have any impact on the Company’s consolidated financial position and results of operations.
  F-18
  Green Planet Bioengineering Co., Ltd.
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US dollars)
  2.            Summary of significant accounting policies (Cont’d)
 
 Recently issued accounting pronouncements (cont’d)
  In January 2010, the FASB has published ASU 2010-01 “Equity (Topic 505) - Accounting for Distributions to Shareholders with Components of Stock and Cash—a consensus of the FASB Emerging Issues Task Force,” as codified in ASC 505, ASU No. 2010-01 clarifies the treatment of certain distributions to shareholders that have both stock and cash components. The stock portion of such distributions is considered a share issuance that is reflected in earnings per share prospectively and is not a stock dividend. The amendments in this Update are effective for interim and annual periods ending on or after December 15, 2009, and should be applied on a retrospective basis. Early adoption is permitted.The adoption of this standard did not have an impact on the Company’s consolidated financial position and results of operations.
  In January 2010, the FASB has published ASU 2010-02 “Consolidation (Topic 810) - Accounting and Reporting for Decreases in Ownership of a Subsidiary—a Scope Clarification,” as codified in ASC 810, “Consolidation.” ASU No. 2010-02 applies retrospectively to April 1, 2009. This ASU clarifies the applicable scope of ASC 810 for a decrease in ownership in a subsidiary or an exchange of a group of assets that is a business or nonprofit activity. The ASU also requires expanded disclosures. The amendments in this Update are effective for interim and annual periods ending on or after December 15, 2009, and shouldbe applied on a retrospective basis. The adoption of this standard is not expected to have any impact on the Company’s consolidated financial position and results of operations.
  In January 2010, the FASB has published ASU 2010-06 “Fair Value Measurements and Disclosures (Topic 820): - Improving Disclosures about Fair Value Measurements. ASU No. 2010-06 clarifies improve disclosure requirement related to fair value measurements and disclosures – Overall Subtopic (Subtopic 820-10) of the FASB Accounting Standards Codification. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosure about purchase, sales, issuances, and settlement in the roll forward of activity in Level 3 fair value measurements.  Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The amendments in this update are effective for interim and annual periods ending on or after December 15, 2009,and should be applied on a retrospective basis. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial position and results of operations.
  Other ASUs not effective until after December 31, 2009, are not expected to have a significant effect on the Company’s consolidated financial position or results of operations.
  F-19
 
 Green Planet Bioengineering Co., Ltd.
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US dollars)
  3.Finance costs
  Three months endedMarch 312010


2009(unaudited)


(unaudited)Bank loan interest

$
34,578


$
-Amortization of loan discount


41,250



-Interest on convertible loan


-



-Other loan interest


18,700



-Bank charges


1,075



88Exchange loss


1,056$
96,659


$
88
  During the three months ended March 31, 2010 and 2009, loan interest expenses payable to a related company were $Nil and $Nil, respectively.
  4.
Income taxes
  United States
  The Company is subject to the United States of America Tax law at tax rate of 40.7%.  Noprovision 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 March 31, 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 threemonth periods endedMarch 31, 2010 and 2009.
  F-20
  Green Planet Bioengineering Co., Ltd.
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US dollars)
  4.            Income taxes (Cont’d)
  The components of the provision for income taxes are:-
  Three months endedMarch 312010(unaudited)


2009(unaudited)Current taxes - PRC

$
237,490


$
224,623Deferred taxes


16,363



14,345$
253,853


$
238,968
  Deferred tax assets as of March 31, 2010 and December 31, 2009 composed of the following:-
  As of March 31


December 31,2010


2009The PRC

(unaudited)


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

$
-


$
-Decelerated amortization of intangible assets


4,395



4,395Provision of expenses


81,097



72,378$
85,492


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

$
18,679


$
18,679Provision of expenses


4,091



4,091$
22,770


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

$
(173,663
)

$
(148,581
)
   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 months ended March 31, 2010 is based on the net income for the period and the weighted average number of shares 25,260,001. This includes the adjustment for the 5,101 preferred shares outstanding convertible into common shares of 5,101,000 and the conversion of warrants into common stock.
  F-21
  Green Planet Bioengineering Co., Ltd.
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US dollars)
  6.
Inventories
  As of March 31


December 31,2010(unaudited)


2009(audited)Raw materials

$
146,108


$
124,131Work-in-progress


1,227,187



1,022,630Finished goods


205,876



56,728$
1,579,171


$
1,203,490
  7.
Intangible assets
  As of March 31


December 31,2010(unaudited)


2009(audited)Technologies

$
871,693


$
871,680Software


3,179



3,179874,872



874,859Accumulated amortization


(219,734
)


(193,544
)Net

$
655,138


$
681,315
  The technologies were purchased from third parties for producing products - Solanesol, Organic Green Barley Supplements (Paiqianshu) and Q10 Health Supplements. The application for related patent is in process and has been initially accepted by the relevant government department.
  During the three months ended March 31, 2010 and 2009, amortization charge was $26,191 and $12,880 respectively. The estimated aggregate amortization expenses for intangible assets for the five succeeding years are as follows:
  Year ending December 31,2010

$
90,7352011


69,5892012


69,5892013


69,5892014


69,589$
369,091
  F-22
  Green Planet Bioengineering Co., Ltd.
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US Dollars)
  8.
Property, plant and equipment
 As of March 31


December 31,2010

(unaudited)


2009

(audited)Cost:Buildings

$
1,926,303


$
1,926,273Plant and machinery


1,255,424



1,245,877Office equipment


136,011



110,816Motor vehicles


129,301



108,579Leasehold improvement


87,902



-3,534,941



3,391,545Accumulated depreciation


(844,981
)


(769,751
)2,689,960



2,621,794Construction in progress


959,008



885,744Net

$
3,648,968


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

March 312010unaudited)


2009(unaudited)Cost of sales

$
38,734


$
39,693Administrative and R&D expenses


25,494



22,983Total

$
64,228


$
62,676
  Certain property, plant and equipment of net book value of $2,667,326 have been pledged for the loans granted to the Company (Note 14).
  F-23
 
 Green Planet Bioengineering Co., Ltd.
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US Dollars)
  9.
Land use rights
  As of March 31


December 31,2010(unaudited)


2009(audited)Land use rights

$
1,122,557


$
1,122,540Accumulated amortization


(127,727
)


(122,112
)$
994,830


$
1,000,428
  The carrying amount of land use rights as of March 31, 2010 comprises of two land use rights, which were acquired for building factories and offices, with carrying amounts of $92,126 and $902,704 respectively.
  The legal title of the first land use right with carrying amount of $92,126 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 months ended March 31, 2010 and 2009, amortization charge was $5,613 and $1,008 respectively and was included in administrative expenses. The estimated amortization charges of land use rights for the five succeeding years are as follows:
  Year ending December 31,2010

$
22,4512011


22,4512012


22,4512013


22,4512014


22,451$
112,255
  10.
Prepayments of operating lease
  The prepayments represent the value of the land lease rights of $9,052,469, 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.
  F-24
 
 Green Planet Bioengineering Co., Ltd.
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US Dollars)
  11.
Available-for-sale securities
  The amount represents 1,004,807 shares(post split) of ONE’scommon stock (a 4.9% interest) issued to the Company pursuant to the Preferred Share Purchase Agreement, of which 35% of these share 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 March 31, 2010 was determined by the management. The inputs into the determination of fair value require significant management judgment and estimation.
  The management determined the fair values of the ONE’s shares as of March 31, 2010 approximated their carrying value and no fair value changes had therefore been recognized.
  12.
Other payables and accrued expenses
  As of March 31


December 31,2010

(unaudited)


2009

(audited)Rental payable

$
-


$
-Salaries payable


60,690



71,337Other accrued expenses


275,405



311,037Value-added tax payable


100,919



158,997Land use rights payable


-



-$
437,014


$
541,371
  13.
Amounts due and loan to a related party and a stockholder
  The amounts due to a stockholder are interest-free, unsecured and repayable on demand.
 
 In February 2010 the Company obtained from a related party a loan in the amount of $1,800,000, 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.
  14.
Secured loans from a financial institution
  The Company has negotiated two loans, both of which carry interest at the annual rate of 7.434%.
  The loan of $659,263 is secured by a guarantee put up by a guarantee company. In return, the Company has pledged its plant and equipment with carrying value of $725,334 and paid a counter guarantee of $146,503 to the guarantee company. The guarantee charges payable to the guarantee company are calculated at 1.8% per annum on the loan.
  The other loan of $1,201,325 is secured by the Company’s property with carrying value of $1,885,687.
  F-25
 
 Green Planet Bioengineering Co., Ltd.
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US Dollars)
  15.
Convertible loan payable
  On June 22, 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 commencing from September 1, 2009 and shall continue to accrue on a daily basis until payment in full has been reached. The unpaid balance together with all accrued and unpaid interest thereon shall be due and payable on September 1, 2010 or later with a minimum payment of 1.5 times of the loan. The settlement may be convertible at the election of ONE into shares of the Company common stock at a price of $0.5 per share.
  Since the convertible loan has beneficial conversion features, the conversion option of $165,000, valued separately by its intrinsic value, is recorded as an increase to additional paid-in capital and $135,000 is recognized as convertible loan. The conversion option will be amortized into interest expense over the loan term. $41,250 of the loan discount has been recognized as interest expense during the current period.
  16.          Common stock and preferred stock
  Common stock
  The Company did not issue any common stock or warrants for the three months ended March 31, 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.
  F-26
  Green Planet Bioengineering Co., Ltd.
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US Dollars)
  18.
Stock-based compensation
  Non-cash stock-based compensation was $Nil and $13,130 for the three months ended March 31, 2010 and March 31, 2009, respectively. 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.
  There was no warrants activity during the three months ended March 31, 2010. See below chart referencing outstanding warrants as of March 31, 2010.
  Number of warrantsOutstanding








Outstandingas of





Granted/


as ofExercise


January





forfeited/


MarchMonth of grant

price



1, 2010


Exercised


cancelled



31, 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 $21,878,and$11,547 to the scheme for the three months ended March 31, 2010 and 2009, respectively.
  F-27
   Green Planet Bioengineering Co., Ltd.
 Notes to Condensed Consolidated Financial Statements
 (Unaudited)
 (Stated in US Dollars)
  20.
Commitments and contingencies
  (a)           Capital commitments
  (i)
As of March 31, 2010 and March 31, 2009, the Company had capital commitments of $161,153 and $210,405, 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 March 31, 2010 and March 31, 2009, the Company had capital commitments of $161,153 and $160,150, 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 March 31, 2010, the Company had three non-cancelable operating leases for its office premises and lands. The leases will expire at various dates through year 2010 to 2039 and the expected payments over the life of the leases as of March 31, 2010 were $52,614,125. The main part of the 30 year payments, approximately $52,606,911, pertains to the Company’s use of the operating land lease for the new product portfolio.
  The lower cost of raw materials will fully or partially offset the cost for the new operating land lease.
  (c)           Escrow agreement
  The Company has deposited 35% of the ONE’s shares issued pursuant to the Preferred Share Purchase Agreement to an escrow account (Note 1). 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.
  F-28
  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 3, 13 and 15 to the condensed consolidated financial statements, during the three months ended March 31, 2010 and 2009, the Company paid rental expenses of $1,175 and $879, respectively to a related company in which a stockholder, who is also the director of the Company, has a beneficial interest.
  23.
Subsequent event
  On April 19, 2010 the Company announced (i) the cancellation of the amended and restated Green Planet preferred stock purchase agreement, (ii) One returned to us the 5,101 shares of our preferred stock, and (iii) we returned to One the 1,004,807 shares of One common stock that had been issued to us.
  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.
  F-29




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 applied for an extension of the contribution period to December 31, 2009 with the relevant government bureau and contributed $300,000 to Fujian Green Planet Bioengineering Co., Ltd. on September 7, 2009 to satisfy the initial license payment requirement. The Company paid $1,700,000 on February 19, 2010 to fully satisfy the business license requirement.




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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 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.




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 sale of various organic health and agricultural products originating from residues of tobacco leaves. The Company’s primary 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. The Company’s business involves R&D, manufacturing, sales, marketing, and distribution. The Company primarily sells its products in the PRC.




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Results of Operations and Financial Condition




In this Section, the Company will discuss the following: (i) results of operations and financial condition for the three months ended March 31, 2010 versus the three months ended March 31, 2009; (ii) liquidity and capital resources; (iii) a discussion of the Company’s risk factors; and (iv) Company’s critical accounting policies.




Three Months Ended March 31, 2010 versus March 31, 2009




Net Sales


The Company generated net sales of $3,259,429 for the three months ended March 31, 2010 compared to $2,297,621 for the three months ended March 31, 2009, an increase of $961,808 or 42%. The increase in sales is mainly due to a broader product line which caters to a higher number of customers. The company’s product 5-HTP sold very well during the quarter with sales in of $1,397,411. Additionally, the Company received the benefit of certain sales orders related to the new products which shipped in the current quarter. The Company anticipates demand for the broader product line to continue into the second quarter.




Cost of Sales


Cost of sales was $1,469,280 for the three months ended March 31, 2010 compared to $852,686 for the three months ended March 31, 2009, an increase of $616,594. The increase is due to a higher volume in sales and the change in product and customer mix. We experienced a stable raw material pricing on existing products during the two measuring periods. Furthermore, the Company continues to have strong relationships with its vendors.




Gross profit


The gross profit for the three months ended March 31, 2010 was $1,790,149 compared to $1,444,935 for the same period of last year, an increase of $345,214 (or 24%). The gross profit margin was 55% and 63% for the three months ended March 31, 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 lower gross profit is due to a change in customer and product mix. The higher sales volume has triggered certain volume discounts to a few customers.




Operating Income


The operating income amounted to $1,233,651 for the quarter ended March 31, 2010 compared to $1,140,223 for same quarter in 2009, which is an increase of 8%. The higher net sales and gross profit contributed to the increase in operating income.




Selling Expenses


Selling expenses totaled $174,311 and $56,031 for the three months ended March 31, 2010 and March 31, 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 mainly attributable to advertizing and trade show expenses which totaled $122,018 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.




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Administrative Expenses


Administrative expenses amounted to $321,799 and $221,215 for the three months ended March 31, 2010 and March 31, 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 and various administrative expenses related to the company’s trade show activities in the current quarter.




Research and Development Expenses


Research and development (R&D) expenses totaled $60,388 and $36,466 for the three months ended March 31, 2010 and March 31, 2009 respectively. The increase in R&D expenses is due to a broader product line. 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.




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 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.




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Net Income


The net income for the Company was $944,748 and $842,725 for the three months ended March 31, 2010 and March 31, 2009 respectively. The net profit margin was 29% and 37% for the three months ended March 31, 2010 and March 31, 2009, respectively. The increase in net income is mainly due to the higher sales volume. 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 increase in volume, the net profit margin will increase due to economies of scale. The net profit margin was also affected negatively by a onetime advertizing and trade show expense totaling $122,018 .




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 in operating activities amounted to $1,876,187 for the three months ended March 31, 2010 compared to net cash flow provided by operating activities of $441,881 for same period in 2009. The higher cash inflow is mainly due to $1,684,158 in reduced trade receivables and increased net income. The Company’s trade receivables totaled $3,395,745 as of March 31, 2010 compared to $5,078,734 as of December 31, 2009. No allowance for doubtful receivables was provided for the three months ended March 31, 2010. The Company believes it has a strong and loyal customer base. The inventory amounted to $1,579,171 and $1,490 as of March 31, 2010 and December 31, 2009 respectively. The higher inventory level is due to expected increased sales volumes. The main part of the inventory as of March 31, 2010 consists of work in progress and finished goods which totaled $353,705. Future operations are estimated to be funded by the Company’s net income. In addition, the Company is working 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.  The Company has negotiated two loans totaling $1,860,588, both of which carry interest at the annual rate of 7.434%. As further described in note 14 to the condensed consolidated financial statement, the loans are secured by the Company’s property, plant and equipment and a guarantee put up by a guarantee company. Additionally, the Company obtained $1,700,000 in financing from ONE to satisfy the WFOE requirement and the business license to operate the WFOE as well as for working capital purposes.  The financing, as further described in note 15 to the condensed consolidated financial statement, was in the form of a convertible loan that carries interest at a rate of 10% per annum. 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 9 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.




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Subsequent Event




On April 19, 2010 the Company announced (i) the cancellation of the amended and restated Green Planet preferred stock purchase agreement, (ii) One returned to us
 the 5,101 shares of our preferred stock, and (iii) we returned to One the 1,004,807 shares of One common stock that had been issued to us




On April 14, 2010, as described above in the Overview section, we granted to One Bio, Corp, (“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.




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.




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 source for the below exchange rate information is from Oanda.com





Exchange Rates

3/31/2010


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


6.84



6.84Average period/yearly RMB : US$ exchange rate


6.84



6.83




The RMB: US$ average exchange rate as of March 31, 2009 was 6.84.




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.




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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 August 2009, the FASB issued ASU 2009-05 which includes amendments to Subtopic 820-10, “Fair Value Measurements and Disclosures—Overall”. The update provides clarification that in circumstances, in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the techniques provided for in this update. The amendments in this ASU clarify that a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability and also clarifies  that both a quoted price in an active market for the identical liability at the measurement date and the quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements. The guidance provided in this ASU is effective for the first reporting period, including interim periods, beginning after issuance. The adoption of this standard did not have a material impact on the Company’s consolidated financial position and results of operations.




In September 2009, the FASB issued ASU 2009-06, Income Taxes (Topic 740), “Implementation Guidance on Accounting for Uncertainty in Income Taxes and Disclosure Amendments for Nonpublic Entities”, which provides implementation guidance on accounting for uncertainty in income taxes, as well as eliminates certain disclosure requirements for nonpublic entities.  For entities that are currently applying the standards for accounting for uncertainty in income taxes, this update shall be effective for interim and annual periods ending after September 15, 2009. For those entities that have deferred the application of accounting for uncertainty in income taxes in accordance with paragraph740-10-65-1(e), this update shall be effective upon adoption of those standards. The adoption of this standard is not expected to have an impact on the Company’s consolidated financial position and results of operations since this accounting standard update provides only implementation and disclosure amendments.




In September 2009, the FASB has published ASU No. 2009-12, “Fair Value Measurements and Disclosures (Topic 820) - Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)”. This ASU amends Subtopic 820-10, “Fair Value Measurements and Disclosures – Overall”, to permit a reporting entity to measure the fair value of certain investments on the basis of the net asset value per share of the investment (or its equivalent). This ASU also requires new disclosures, by major category of investments including the attributes of investments within the scope of this amendment to the Codification. The guidance in this Update is effective for interim and annual periods ending after December 15, 2009. Early application is permitted.The adoption of this standard is not expected to have an impact on the Company’s consolidated financial position and results of operations.




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In January 2010, the FASB has published ASU 2010-01 “Equity (Topic 505)- Accounting for Distributions to Shareholders with Components of Stock and Cash—a consensus of the FASB Emerging Issues Task Force,” as codified in ASC 505,. ASU No. 2010-01 clarifies the treatment of certain distributions to shareholders that have both stock and cash components. The stock portion of such distributions is considered a share issuance that is reflected in earnings per share prospectively and is not a stock dividend. The amendments in this Update are effective for interim and annual periods ending on or after December 15, 2009, and should be applied on a retrospective basis.  Early adoption is permitted.The adoption of this standard did not have an impact on the Company’s consolidated financial position and results of operations.




In January 2010, the FASB has published ASU 2010-02 “Consolidation (Topic 810)- Accounting and Reporting for Decreases in Ownership of a Subsidiary—a Scope Clarification,” as codified in ASC 810, “Consolidation.” ASU No. 2010-02 applies retrospectively to April 1, 2009, our adoption date for ASC 810-10-65-1 as previously discussed in this financial note. This ASU clarifies the applicable scope of ASC 810 for a decrease in ownership in a subsidiary or an exchange of a group of assets that is a business or nonprofit activity. The ASU also requires expanded disclosures. The amendments in this Update are effective for interim and annual periods ending on or after December 15, 2009, and shouldbe applied on a retrospective basis.  The adoption of this standard is not expected to have any impact on the Company’s consolidated financial position and results of operations




In October 2009, the FASB has published ASU 2009-13, “Revenue Recognition (Topic 605)-Multiple Deliverable Revenue Arrangements”, which addresses the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. Specifically, this guidance amends the criteria in Subtopic 605-25, “Revenue Recognition-Multiple-Element Arrangements”, for separating consideration in multiple-deliverable arrangements. This guidance establishes a selling price hierarchy for determining the selling price of a deliverable, which is based on: (a) vendor-specific objective evidence; (b) third-party evidence; or (c) estimates. This guidance also eliminates the residual method of allocation and requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method and also requires expanded disclosures. The guidance in this update is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The adoption of this standard is not expected to have any impact on the Company’s consolidated financial position and results of operations.




In October 2009, the FASB has published ASU 2009-14, “Software (Topic 985)-Certain Revenue Arrangements that Include Software Elements” and changes the accounting model for revenue arrangements that include both tangible products and software elements. Under this guidance, tangible products containing software components and nonsoftware components that function together to deliver the tangible product’s essential functionality are excluded from the software revenue guidance in Subtopic 985-605, “Software-Revenue Recognition”. In addition, hardware components of a tangible product containing software components are always excluded from the software revenue guidance.  The guidance in this ASU is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted.  The adoption of this standard is not expected to have any impact on the Company’s consolidated financial position and results of operations.




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In December 2009, the FASB has published ASU 2010-16 ““Transfers and Servicing (Topic 860): Accounting for Transfers of Financial Assets.” ASU No. 2009-16 is a revision to ASC 860, “Transfers and Servicing,” and amends the guidance on accounting for transfers of financial assets, including securitization transactions, where entities have continued exposure to risks related to transferred financial assets. ASU No. 2009-16 also expands the disclosure requirements for such transactions. This ASU will become effective for us on April 1, 2010.The adoption of this standard is not expected to have any impact on the Company’s consolidated financial position and results of operations.




In December 2009, the FASB has published ASU 2010-17 Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities.” ASU No. 2009-17 amends the guidance for consolidation of VIEs primarily related to the determination of the primary beneficiary of the VIE. The adoption of this standard is not expected to have any impact on the Company’s consolidated financial position and results of operations.




In January 2010, the FASB has published ASU 2010-06 “Fair Value Measurements and Disclosures (Topic 820): - Improving Disclosures about Fair Value Measurements. ASU No. 2010-06 clarifies improve disclosure requirement related to fair value measurements and disclosures – Overall Subtopic (Subtopic 820-10) of the FASB Accounting Standards Codification. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosure about purchase, sales, issuances, and settlement in the roll forward of activity in Level 3 fair value measurements.  Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The amendments in this Update are effective for interim and annual periods ending on or after December 15, 2009,and should be applied on a retrospective basis.  The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial position and results of operations.




Other ASUs not effective until after December 31, 2009, are not expected to have a significant effect on the Company’s consolidated financial position or results of operations.




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.




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Item 3
Quantitative and Qualitative Disclosures about Market RiskNot ApplicableItem 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 March 31, 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 effective and 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.




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 Chief Financial 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




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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 December 31, 2009 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 December 31, 2009 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 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.




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. The Company is seeking a permanent placement for the Chief Financial Officer position.




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 INFORMATIONItem 1
Legal ProceedingsNone  15
  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 March 31, 2010.


Item 3
Defaults upon Senior SecuritiesNoneItem 4
Submission of Matters to a Vote of Security HoldersNoneItem 5
Other InformationNoneItem 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





(b)
Reports on form 8-K


The Company filed the following report on Form 8-K during the quarter for which the report is filed.




1. Form 8-K filed on January 25, 2010 to announce that the Company dismissed the Company auditors PKF Hong Kong and retained on the same day Jewett, Schwartz, Wolf, and Associates (JSW) as the Company auditors.




2.  A. Form 8-K filed on April 19, 2010 announcing (i) the cancellation of the amended and restated Green Planet preferred stock purchase agreement was cancelled, (ii) One Bio returned to us the 5,101 shares of our preferred stock, and (iii) we returned to One Bio the 1,004,808 shares of One Bio common stock that had been issued to us.




2. BForm 8-K filed on April 19, 2010 announcing that we granted One Bio an option to acquire 100% of Elevated Throne Overseas, Ltd., our 100% owned BVI subsidiary. In the event One Bio exercises this option, the closing of the transaction will be subject to the approval of our stockholders.




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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 17th day of May, 2010.


GREEN PLANET BIOENGINEERING CO., LTD.Date: May 17, 2010
By:
/s/ Min ZhaoMin ZhaoChief Executive Officer(Principal Executive Officer and Principal

Financial Officer)