UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549



FORM 10-K



xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934



For the fiscal year ended June 30, 2012



or



 ̈TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934



For the transition period
from _________ to _____________



Commission file number: 000-18606



CHINA
GREEN AGRICULTURE, INC.

(Exact name of registrant as specified
in its charter)



|Nevada                                                                 | 36-3526027                       
|---------------------------------------------------------------------- | ---------------------------------
|(State or other jurisdiction of
        incorporation or organization) | (IRS Employer Identification No.)



3rd Floor, Borough A, Block A. No.181

South Taibai Road, Xi’an, Shaanxi
Province,

People’s Republic of China 710065

(Address of Principal Executive
Offices, Including Zip Code)



Registrant’s telephone number:  
+86 29-88266368



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



|Title of each class                      |  | Name of each exchange on which registered
|---------------------------------------- |  | -----------------------------------------
|                                         |  |                                          
|Common Stock, $0.001 Par Value Per Share |  | NYSE                                     



Securities registered pursuant to Section
12(g) of the Act: None.



Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes ̈Nox



Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.  Yes ̈Nox



Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such report(s)),
and (2) has been subject to such filing requirements for the past 90 days.  YesxNo ̈



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YesxNo ̈



Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K. ̈



Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definitions
of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule
12b-2 of the Exchange Act.



| | Large accelerated filero                                                                   | Accelerated filerx        
| | ------------------------------------------------------------------------------------------ | --------------------------
| | Non-accelerated
        filero
        Do not check if a smaller reporting
        company | Smaller reporting companyo



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



The aggregate market value of the voting
and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold,
or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed
second fiscal quarter: $47,940,291 as of December 30, 2011, based on the closing price $3.00 of the Company’s common
stock on such date.



The number of outstanding shares of the
registrant’s common stock on September 10, 2012 was 27,455,721.



DOCUMENTS INCORPORATED BY REFERENCE



Portions of the registrant’s definitive
Proxy Statement for the 2012 Annual Meeting of Stockholders, which the registrant plans to file with the Securities and Exchange
Commission within 120 days after June 30, 2012 are incorporated by reference in Part III of this Form 10-K to the extent described
herein.











TABLE OF CONTENTS

TO ANNUAL REPORT ON FORM 10-K

FOR FISCAL YEAR ENDED JUNE 30, 2012



|                                            |  |                                                                                                                  |  | PAGE
|------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------- |  | ----
|                                            |  |                                                                                                                  |  |     
|PART I                                      |  |                                                                                                                  |  |     
|Item 1.                                     |  | Business                                                                                                         |  | 3   
|Item 1A.                                    |  | Risk Factors                                                                                                     |  | 28  
|Item 1B.                                    |  | Unresolved Staff Comments                                                                                        |  | 44  
|Item 2.                                     |  | Properties                                                                                                       |  | 44  
|Item 3.                                     |  | Legal Proceedings                                                                                                |  | 46  
|Item 4.                                     |  | Mine Safety Disclosures                                                                                          |  | 46  
|                                            |  |                                                                                                                  |  |     
|PART II                                     |  |                                                                                                                  |  |     
|Item 5.                                     |  | Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 47  
|Item 6.                                     |  | Selected Financial Data                                                                                          |  | 49  
|Item 7.                                     |  | Management’s Discussion and Analysis of Financial Condition and Results of Operations                            |  | 50  
|Item 7A.                                    |  | Quantitative and Qualitative Disclosures about Market Risk                                                       |  | 64  
|Item 8.                                     |  | Financial Statements and Supplementary Data                                                                      |  | 66  
|Item 9.                                     |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                             |  | 66  
|Item 9A.                                    |  | Controls and Procedures                                                                                          |  | 66  
|Item 9B.                                    |  | Other Information                                                                                                |  | 67  
|                                            |  |                                                                                                                  |  |     
|PART III                                    |  |                                                                                                                  |  |     
|Item 10.                                    |  | Directors, Executive Officers and Corporate Governance                                                           |  | 68  
|Item 11.                                    |  | Executive Compensation                                                                                           |  | 68  
|Item 12.                                    |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters                  |  | 68  
|Item 13.                                    |  | Certain Relationships and Related Transactions, and Director Independence                                        |  | 68  
|Item 14.                                    |  | Principal Accountant Fees and Services                                                                           |  | 68  
|                                            |  |                                                                                                                  |  |     
|PART IV                                     |  |                                                                                                                  |  |     
|Item 15.                                    |  | Exhibits and Financial Statement Schedules                                                                       |  | 68  
|                                            |  |                                                                                                                  |  |     
|SIGNATURES                                  |  | S-1                                                                                                             
|EXHIBIT INDEX                               |  | E-1                                                                                                             
|FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |  | F-1                                                                                                             



2







|ITEM 1. | BUSINESS
|------- | --------



FORWARD-LOOKING
STATEMENTS



Certain statements
in this Annual Report on Form 10-K (the “Report”), and the documents incorporated by reference herein, constitute
"forward-looking statements". Such forward-looking statements include statements, which involve risks and uncertainties,
regarding, among other things, (a) our projected sales, profitability, and cash flows, (b) our growth strategies, (c) anticipated
trends in our industries, (d) our future financing plans, and (e) our anticipated needs for, and use of, working capital. They
are generally identifiable by use of the words “may,” “will,” “should,” “anticipate,”
“estimate,” “plan,” “potential,” “project,” “continuing,” “ongoing,”
“expects,” “management believes,” “we believe,” “we intend,” or the negative
of these words or other variations on these words or comparable terminologies. These statements may be found under “Management’s
Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and “Risk Factors”
as well as in this Report generally. Actual events or results may differ materially from those discussed in forward-looking statements
as a result of various factors including risks described in “Risk Factors” in Item 1A of this Report and matters
described in this Report generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking
statements contained in this filing will in fact occur. You should not place undue reliance on these forward-looking statements.



The forward-looking
statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we
undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the
statement is made or to reflect the occurrence of unanticipated events.



Unless otherwise noted,
all currency figures in this filing are in U.S. dollars. References to "yuan" or "RMB" are to the Chinese
yuan (also known as the renminbi). According www.oanda.com, as of June 29, 2012, the average of bid and ask rates is US $1.00
= 6.3131 yuan.



Unless otherwise specified
in this Report, the "Company", "we," "us," "our," and the "Registrant" refer
to (i) China Green Agriculture, Inc. (“Green Nevada”), a corporation incorporated in the State of Nevada; (ii) Green
Agriculture Holding Corporation (“Green New Jersey”), a wholly-owned subsidiary of Green Nevada incorporated in the
State of New Jersey; (iii) Shaanxi TechTeam Jinong Humic Acid Product Co., Ltd. (“Jinong”), a wholly-owned subsidiary
of Green New Jersey organized under the laws of the PRC; (iv) Xi’an Jintai Agriculture Technology Development Company (“Jintai”),
wholly-owned subsidiary of Jinong in the PRC, (v) Xi’an Hu County Yuxing Agriculture Technology Development Co., Ltd. (“Yuxing”),
a wholly-owned subsidiary of Jinong in the PRC; (vi) Beijing Gufeng Chemical Products Co., Ltd., a wholly-owned subsidiary of
Jinong in the PRC (“Gufeng”), and (vii) Beijing Tianjuyuan Fertilizer Co., Ltd., Gufeng’s wholly-owned subsidiary
in the PRC (“Tianjuyuan”).



In this Report, references
to the “SEC” or the “Commission” shall refer to United States Securities and Exchange Commission.



3







PART I



ITEM 1.                BUSINESS



We are engaged in the
research, development, production and sale of various types of fertilizers and agricultural products in the PRC though our wholly-owned
Chinese subsidiaries, Jinong, Jintai, Yuxing, Gufeng.  Our primary business is fertilizer products, specifically humic acid-based
compound fertilizer produced through Jinong and compound fertilizer, blended fertilizer, organic compound fertilizer, slow-release
fertilizers, highly-concentrated water-soluble fertilizers and mixed organic-inorganic compound fertilizer produced through Gufeng. 
In addition, through Jintai and Yuxing, we develop and produce agricultural products, such as top-grade fruits, vegetables, flowers
and colored seedlings.



Fertilizer business
was our main business as Jinong produced approximately $88,168,740, $65,629,265 and $45,816,377, or 40.5 %, 36.5% and 88.0% of
our total revenues for the years ended June 30, 2012, 2011 and 2010, respectively. Such amounts do not include revenues and
net income from Gufeng, which we acquired on July 2, 2010.  Gufeng, a Beijing-based fertilizer producer, had sales revenues
of $121,480,943 and $107,081,018 for the years ended June 30, 2012 and 2011, accounting for 55.8% and 59.6% of our total revenue
for the years ended June 30, 2012 and 2011 respectively.  Through the acquisition of Gufeng and its direct, wholly-owned subsidiary,
Tianjuyuan, our total annual production capacity increased from 55,000 to 555,000 metric tons.



As of June 30, 2012,
we sold our products through a network of 943 regional distributors covering 22 provinces, 4 autonomous regions and 3 central government-controlled
municipalities in China.  We do not rely on any single distributor. Our top five distributors accounted for an approximately
27.3% of our fertilizer revenues for the fiscal year ended June 30, 2012, of which Sinoagri Holding Company Limited accounted for
14.9% of the total fertilizer revenues.



As of June 30,
2012, we developed 443 different fertilizer products. We conduct our research and development activities through Jintai and Yuxing,
Jinong’s direct, wholly-owned subsidiaries, which test new fertilizers and grow high quality flowers, vegetables and seedlings
for commercial sale. Due to the ongoing relocation, as described under Recent Developments section hereafter, Jintai had no
revenue for the quarter ended June 30, 2012.



During the fiscal years
ended June 30, 2012, 2011 and 2010, our revenues were $217,524,205, $179,717,966 and $52,090,752, respectively, and our net income
was $41,957,825, $32,914,101 and $21,289,758, respectively. The number for the fiscal year ended June 30, 2010 does not include
revenue and net income from Gufeng, which we acquired on July 2, 2010, the beginning of our fiscal 2011.



Recent Developments



We started to relocate
Jintai to the facilities of one of the Company’s other subsidiaries-Yuxing, located in Hu County, Xi’an, 18 kilometers
southeast of Xi’an city. Yuxing’s facilities are approximately one hour drive south of Jintai's current location in
the Economic and Technical Development Zone (the "Zone") in the metro area of the city of Xi'an. During the three
months ended June 30, 2012, Jintai had no sales revenue due to relocation. The entire relocation process is expected to complete
by the end of fiscal year 2013. We expect Jintai will likely remain unprofitable until the relocation gets completed. Further,
we may consider merging the subsidiaries of Yuxing and Jintai together to reduce operating cost and streamline management at appropriate
time in the future.



4







As mentioned in the
Company’s previous quarterly reports, with the rapid growth of urbanization in Xi'an, the Zone has been inhabited by
a large and dense population and the periphery of Jintai has bristled with various industrial factories and utility plants. The
Zone's concentrated industrial activities and dense population changed the micro bio environment for the growth of Jintai's agricultural
products and disturbed Jintai's normal fertilizer research and development. Recently such changes caused the death and obsolescence
of large amount of Jintai's flowers and seedlings. Additionally, the government recently introduced a new rezoning plan for the
Zone, and the land Jintai currently occupies is being converted from agriculture use to residential and commercial use. The rezoning
will prohibit the agricultural growth activities that Jintai currently conducts at the property. To continue Jintai's business,
the Company is in the process of relocating all of Jintai's operations, including greenhouses, inventories, growing seedlings,
flowers and parent plants, to Yuxing.



The relocation commenced
on March 1, 2012 and the entire relocation process is expected to complete by the end of fiscal year 2013. Further, we may
consider merging the subsidiaries of Yuxing and Jintai to reduce operating cost and streamline management at appropriate time in
the future.



Our History



The Company was incorporated
under the laws of the state of Kansas on February 6, 1987 under the name Videophone, Inc.  The Company had no operations from
December 1996 to December 2007.  In October 2007, the Company was reincorporated in the state of Nevada.  On December
26, 2007, the Company acquired all of the issued and outstanding capital stock of Green New Jersey, through a share exchange (the
“Share Exchange”).  As a result of the Share Exchange, the Company owns 100% of Green New Jersey.  The Share
Exchange occurred simultaneously with a private placement of $20,519,255 on December 26, 2007.



Green New Jersey
was incorporated on January 27, 2007 under the laws of the State of New Jersey.  On August 24, 2007, Green New Jersey acquired
100% of the outstanding shares of Jinong, a company incorporated in the PRC on June 19, 2000.  On January 19, 2007, Jinong
incorporated Jintai as its direct, wholly-owned subsidiary to be research and development base for fertilizer products manufactured
by Jinong.



After the acquisition
of Green New Jersey, the Company changed its name to China Green Agriculture, Inc., effective February 5, 2008. The trading symbol
changed from DCOV.OB to CGAG.OB on the same day.



On July 23, 2009, Yuxing
became a direct, wholly-owned subsidiary of Jinong to facilitate the research and development of agricultural products and fertilizers.



On March 9, 2009, the
Company’s common stock was listed on the NYSE Amex Equities under the trading symbol “CGA”.  On December
4, 2009, the Company voluntarily ceased trading its common stock on the NYSE Amex Equities and transferred its listing to the New
York Stock Exchange on December 7, 2009.  The Company’s ticker symbol remains “CGA”.



5







On
July 2, 2010, the Company, through Jinong, consummated a transaction to acquire all of the equity interests of Gufeng and its
subsidiary Tianjuyuan. As a result, Gufeng and Tianjuyuan are now wholly-owned subsidiaries of Jinong and indirect subsidiaries
of the Company.  Our principal executive offices are located at 3 rd Floor, Borough A, Block A. No. 181, South Taibai Road,
Xi’an, Shaanxi Province, People’s Republic of China  710065 and our telephone number is +86-29-88266368. 
Our website address iswww.cgagri.com. The Company routinely posts important information on
its website.



Our current corporate
structure is set forth in the following diagram:







Industry Analysis



Fertilizer Market in China



China is both the
world’s largest manufacturer and consumer of fertilizer. According to the China Statistical Year Book, China’s fertilizer
consumption grew at a compound annual growth rate of 2.5% from 1998 to 2007, reaching 51.1 million metric tons in 2007, as
compared to 40.8 million metric tons in 1998.  According to the Investment and Forecast Report on China Chemical Industry
2012-2016, based on the grain self-sufficiency ratios of 98%, the total demand for fertilizer in China will be 51 million tons
in 2015 and 53 million tons in 2020. The demand for fertilizer products is continuing to grow as arable land becomes scarce.



6







It is forecasted by
the Ministry of Agriculture that, based on the grain self-sufficiency ratios of 100% and 95% respectively, and chemical fertilizer
consumption in 2005, consumption of chemical fertilizer in the industries including grain and economic crops, forestry, grass and
breeding industries, will be increased by approximately 14.5 million tons, 11.0 million tons and 18.5 million tons, 14.9 million
tons in 2015 and 2020 respectively.



With the rapid development
in China’s agricultural economy recently, the structure of agricultural plantation has changed significantly.  The plantation
area for economic crops (oil plants, vegetable, fruits, tea and sugar crops) has increased year by year.  The statistics showed
that from 2000 to 2008 the plantation area for vegetables has increased by 17.31% to 268 million mu (44 million acres). The fertilizers
that economic crops consume are 1.2-2.6 times that of common field crops. Additionally, high quality fertilizers, like compound
fertilizers and controlled-release fertilizers, are commonly used on economic crops. The increasing plantation areas for economic
crops results in a larger demand for high quality fertilizers.



Along with the vigorous
promotion and application of soil testing and fertilizer recommendation technology, and also the increased awareness on scientific
fertilizer application, farmers’ recognition and acceptance level of compound fertilizers has increased. Scientific fertilizer
application and increasing application of compound fertilizers have become the trend for future agriculture development.



China devotes less
of its land to agricultural cultivation than most nations as reported in the October 3, 2008 article in China Daily, and arable
land, which is defined as land that is capable of being cultivated and supporting agricultural production, has been steadily reduced
in China due to factors such as increasing industrialization and urbanization, desertification, soil degradation and low availability
of water.  According to the figures provided by the PRC Ministry of Land and Resources, in 2008, per capita farmland in China
was only 1,400 square meters (15,070 square feet), which is approximately 48.6% of the world level. In addition, according to the
Food and Agriculture Organization of the United Nations, the Chinese population is expected to reach over 1.4 billion by 2050. 
There is an obvious and increasing demand on grains due to the population growth and improvement in people’s living standards.
China has set a target for grain production to increase by 50 billion kilograms by 2020.  As stated in a 2007 research report
by Renmin University of China, arable land in China is predicted to decrease by 20% by 2050.  The implication is that by the
middle of this century, per capita farmland in China may be only 16% of the world average level. Moreover, according to an article
dated December 1, 2009 from the China Meteorological Administration, it is estimated that by 2030, global warming may further reduce
China’s current grain production by 5-10%.



These statistics highlight
the fact that if China is to remain largely self sufficient on an agricultural basis, its farmers will have to substantially increase
crop yields to meet future demand. Fertilizer demand throughout China has continued to grow as a result of increased demand in
food volume, low crop yields compared to other producer nations and a decrease in arable land.



7







In addition to the
fertilizer market demand, governmental support on agricultural industry may serve as another factor to our business growth. According
to an article published in the Guangming Daily Newspaper, in 2009, China’s government budgeted RMB595.5 billion for spending
on agriculture, rural areas and farmers, an increase of 37.9% from the previous year. The newspaper article also reported that
the budget included RMB102.9 billion, twice the amount from the previous year, in direct subsidies for grain production and purchases
of agricultural materials. China’s government is planning additional farm subsidies and land reform initiatives, and to eliminate
certain agricultural taxes and promote the production of organically grown products by setting new standards. We believe that these
supportive government policies will encourage growth in China’s agricultural industry as well as drive the sale of our fertilizers
and agricultural products.



Organic versus Chemical
Fertilizers



In general, fertilizer
products are categorized as either organic or chemical fertilizers. Organic fertilizers can be natural or developed artificially.
Natural organic fertilizers include manure, slurry, worm castings, peat, seaweed, humic acid, brassin and guano. Artificial organic
fertilizers include compost, bloodmeal, bone meal, humic acid, and are typically supplemented with other nutrient ingredients. 
Chemical fertilizers normally are composed of synthetic chemicals such as phosphate and potassium compounds. The primary difference
between organic fertilizers and chemical fertilizers is in the sourcing process of ingredients as the nutrient contents are largely
the same.



Over the last 20 years,
the use of chemical fertilizers in China has substantially increased food production as ingredients in chemical fertilizers are
fully absorbed into crops as compared to organic fertilizers. However, years of chemical fertilizer use has created unintended
consequences for the Chinese agriculture industry.  Many chemical fertilizers lack minerals, which crops must absorb from
soil to the extent available.  The overall effect is that soil with insufficient natural resources will yield agricultural
products lacking certain minerals.



In addition, heavy
use of chemical fertilizers may create in "fertilizer burn", which is over-fertilization of a single nutrient such as
nitrogen.  The resulting imbalance in compound salts and soil acidification can dry roots and suspend crop growth.  Another
drawback of chemical fertilizers is that they are more easily depleted from soil by irrigation, rainfall and flooding as compared
to organic fertilizers.  The production of chemical fertilizers can be very intensive in energy consumption.  For example,
the production of synthetic ammonia, a common chemical fertilizer, currently consumes about 5% of the world’s natural gas
consumption.



Organic fertilizers,
on the other hand, can improve the biodiversity and long-term productivity of soil.  Organic nutrients increase the abundance
of soil organisms by providing organic matter and micronutrients.  Unlike chemical fertilizers, the content, solubility, and
release rates of organic fertilizer nutrients are typically more dilutive and much less readily available to plants. Organic fertilizers
provide nutrients for crops as well as improve physical and biological mechanisms for storing nutrients in soils, thus mitigating
the risk of over-fertilization.  In addition, unlike chemical fertilizers, organic fertilizers require less application to
maintain soil fertility, which averts the runoff caused by chemical fertilizers in components such as soluble nitrogen and phosphorus. 
However, the composition of organic fertilizer is more complex than a standardized chemical product, and thus more costly to manufacture. 
As an alternative to pure chemical fertilizer use, farmers can also use inorganic fertilizer supplemented with the application
of organic fertilizers.



8







Since the 1980s, China
has intensified the use of chemical fertilizers in order to increase crop yields.  While the increase in crop yield has slowed
in recent years, the overuse of chemical fertilizers also caused many environmental issues ranging from water pollution to soil
damage. As a result, the PRC government has been promoting the use of environmental friendly green fertilizers as an effective
alternative to chemical fertilizers.  Green fertilizers, including humic acid-based organic compound fertilizers and mixed
organic-inorganic compound fertilizers, assist crops to gain incremental yield by adding various nutrients essential to soil and
crops, as well as protecting the environment.  At present, green fertilizer products are less used than chemical fertilizers
in China, as they are relatively new to farmers.  However, the demand for these green fertilizers has been increasing and
we expect this trend to continue in the coming years.  Although we recently began to distribute our products into several
other Asian and Southeast Asian countries, the PRC is the principal market for our organic compound fertilizers and related agricultural
products.



The “Green Food” Industry
in the PRC



The rise of the PRC
industry for food that is free from pollutants or harmful chemicals, or “green food”, is also increasing demand for
organic fertilizers.  Green food is the certificate for agricultural products promoted by Chinese Government. It has two levels:
AA Green Food and A Green Food. The production standard of “AA Green Food” nearly equals to that of organic agriculture.
Green food is a kind of food existing between the ordinary agricultural food produced by the common farming practice and the organic
food. Organic food holds the highest standard in the food industry.  The market for organic agricultural products in China
has huge potential. It is forecasted that the increase of organic agricultural products consumption in China will be higher than
that of the average organic agricultural products consumption in the world in the next few years.  Additionally, the market
of Chinese organic agricultural products will reach between RMB 10.8 billion and RMB 16.0 billion in 2011 and between RMB 24.8
billion and 59.4 billion in 2015.



With the rapid development
of the organic food industry in China, an increasing number of companies have been entering into the green food sector to take
advantage of market opportunities. In 1990, the PRC Ministry of Agriculture began to encourage the production of green food. In
1992, the PRC Ministry of Agriculture established the CGFDC to oversee food quality and the development and management of green
food at the national and provincial levels in the PRC.  In 1993, the PRC Ministry of Agriculture established regulations on
the use of green food labeling. In 1996, an identifying trademark for green food was registered in the PRC and put into use.



Crops grown with the
use of our products are eligible to qualify for the “AA Green Food” rating administered by the CGFDC.  The green
food rating system consists of an “A” rating and a more stringent “AA” rating.  The “AA”
rating indicates that the crops contain minimal chemical residue from fertilizers.  Although our products themselves do not
bear the “AA green food” designation, they are (except for those produced by Gufeng) certified by the CGFDC as green
food production material.



According to
the statistics from the CGFDC, China's annual output of green food reached 15 million tons in 2008.  However, the domestic
consumption level remains relatively low, comprising approximately 3% of the market share of food commodities.  The low consumption
level is primarily due to: (i) small scale of production of green food; (ii) lack of consumer awareness of green food and (iii)
the presence of counterfeit green food products that adversely affect consumers’ purchases.



9







As described by the
CGFDC, the development strategy and goals of China’s green food industry are as follows: first, to assure the standards of
quality and focus on the development of key products; second, to accelerate the industry’s pace of development to promote
and facilitate the industrialization of green food; third, to implement an integrated development strategy emphasizing producers,
production base and farmers; fourth, to accelerate the pace of development with the aid of the government and the market; and fifth,
to carry out an international development strategy, aimed at promoting the export of agricultural products.



According to the Investment
and Forecast Report on China Green Food Industry 2012-2016 by Research in China, a Chinese market research company, the green food
industry is a high growth industry with significant investment potential.  According to the report, leading green food producers
will experience growth as they achieve national and provincial agricultural industrialization, because they are supported by favorable
government policies and tax breaks.



Growth Strategy



We believe that our
increased production capacity to produce diverse fertilizer products and our research and development capabilities, makes us well
positioned to benefit from the anticipated growth of the PRC fertilizer market.  We expect to expand sales and gain increased
revenues through the following strategies:



·     Expand
Capacity and Diversify Product Offerings. Through our acquisition of Gufeng, we increased our annual fertilizer production
capacity to 555,000 metric tons and our portfolio of fertilizers to 443 products. To meet the needs of farmers in the PRC, we will
expand our existing line of fertilizer products, develop new fertilizers and execute other strategic acquisitions of PRC fertilizer
manufacturers that complement our strategies and product lines.



·     Capitalize
on Synergies Created by Research and Development Efforts. In connection with the construction of Yuxing’s research and
development center, we have completed the construction of 100 sunlight greenhouses and six “intelligent” greenhouses.
We expect the Yuxing facility to help us shorten the fertilizer market cycle by providing an advanced testing field for new fertilizer
products manufactured by Jinong. In addition, through our research and development efforts on fertilizers, we expect to simultaneously
facilitate the production of superior agricultural products, such as flower bulbs, flowers, fruits and vegetables, resulting in
increased revenues.



Products



Our principal products
are our fertilizers, which consist of liquid, granular and powdered fertilizers and various kinds of compound fertilizers developed
to increase crop yields.  We manufacture and sell 443 fertilizer products from humic acid-based fertilizers to compound fertilizers. 
In addition, we produce high quality agricultural products such as fruits, vegetables and flowers for commercial sale.



10







Fertilizer Products



We expect that approximately
96.4% of our fertilizer business, which is our main business, will continue to be the production and sale of fertilizers through
Jinong and Gufeng. We believe that Jinong utilizes one of the most advanced automated humic acid production lines in China. 
Humic acid is a complex natural, organic ingredient that is essential for balanced, fertile soil. It is one of the major
constituents of organic matter in fertile soil, making a vital contribution to the quality of the soil’s composition. When
plant or animal matter decomposes, it naturally turns into a form of humic acid-rich material, such as peat, lignite or weathered
coal.



Humic acid exhibits
a high capacity for cation exchange (a chemical process in which cations of like charge are exchanged equally between a solid
and a solution), which serves to chelate plant nutrient elements and release them as the plant requires. The chelation process
prevents leaching of nutrients by holding them in the soil solution.  Moreover, humic acids can bind soil toxins along with
plant nutrients, thereby strongly stabilizing soils. The regular use of humic acid organic liquid compound fertilizer can effectively
reduce the use of fertilizer, insecticide, herbicide and water.  This mechanism is important to environmental protection,
because it can prevent contamination of water sources caused by runoff.



In nature, humic acid
improves soil structure and aeration, nutrient absorption and water retention.  It also increases soil’s buffering
capacity against fluctuations in pH levels, and reduces soil crusting and erosion problems from wind and water as well as radical
toxic pollutants.  Humic acid promotes the development of root systems, seed germination and overall plant development. 
It also enhances health, resistance to stress and overall appearance of plants.  We believe that there is no synthetic material
currently known to match humic acid's effectiveness and versatility.



The pure humic acid
used in our fertilizers is distilled and extracted from weathered coal by way of alkaline digestion and acid recrystallization.
Our Jinong fertilizers are dark brown to black in color, and principally used as a foliar fertilizer (a liquid, water soluble
fertilizer applied to a plant’s foliage by a fine spray so that the plant can absorb the nutrients through its leaves),
or sprayed directly on soil or injected into the irrigation systems.  Benefits of using our products are to stimulate growth,
yield, and protect plants from drought, disease and temperature damage while improving soil structure and enhancing soil fertility.



Gufeng and Tianjuyuan
produce compound fertilizer, blended fertilizer, organic compound fertilizer, slow-release fertilizers, highly-concentrated water-soluble
fertilizers and mixed organic-inorganic compound fertilizer. Gufeng sells its products under four brands, namely “KEBA”,
“Mei Er An”, “Huang Cheng Gen” and “SPR HOP”, which are all registered trademarks in the PRC. 
Tianjuyuan’s products are marketed under the brands “AGR GFJ” and “T.J.Y.” with AGR GFJ and T.J.Y.
as PRC registered trademarks.



We have a multi-tiered
product line of 443 fertilizer products, covering humic acid-based compound fertilizer produced through Jinong and compound fertilizer,
and organic/inorganic compound fertilizer through Gufeng.



During the fiscal
years ended June 30, 2012, 2011 and 2010, we earned $209,649,683,, $172,710,283 and $45,816,377, respectively, in gross revenues
from sales of our fertilizer products, representing 96.4%, 96.1% and 88.0 % of our total revenues for such periods.  The
gross revenues for the fiscal year ended June 30, 2010 do not include revenues from Gufeng, which we acquired on July 2, 2010,
which is the beginning of our fiscal 2011.



11







Gufeng and Tianjuyuan
manufacture a total of 317fertilizer products. 82% of Gufeng’s fertilzier revenue came from humic acid compound
fertilizers and 18% from compound fertilizer for the fiscal year ended June 30, 2012.



Agricultural Products



Our subsidiaries, Jintai
and Yuxing, produce top-grade fruits, vegetables, flowers and colored seedlings for commercial sale. Due to the ongoing relocation,
Jintai had no revenue for the quarter ended June 30, 2012.



The gross revenues
from the sale of our agricultural products for the fiscal years ended June 30, 2012, 2011 and 2010, were $7,874,522, $7,007,683
and $6,274,375, respectively, representing 3.6%, 3.9% and 12.0%, of our total revenues, respectively.



Jintai and Yuxing were
originally established to be the research and development base for humic acid fertilizers produced by Jinong.   By simulating
the various growing conditions and cycles of a variety of plants, such as flowers, vegetables and seedlings, Jintai and Yuxing
can conduct experimental testing to enhance the efficacy of our new fertilizers. During the three months ended June 30, 2012, Jintai
had no sales revenue due to relocation. The entire relocation process is expected to complete by the end of fiscal year 2013. Further,
we may consider merging the subsidiaries of Yuxing and Jintai to reduce operating cost and streamline management at appropriate
time in the future.



Fertilizer Manufacturing Process



Our production lines
employ scientifically-designed production procedures and strict quality control systems to ensure high quality in our products. 
Our production lines are fully automated and run by a central control system with minimal manual input by control technicians.
The machinery and vats for the line are supplied by a local medical machinery manufacturer and the automated control systems were
developed by us. Our access rights management system ensures that our proprietary ingredient mixes are protected at all times
from any unauthorized use.  Our computer server is connected to the electronic scales on each of the material input bins
to ensure that the exact quantity of each element or ingredient is delivered every time, thus maintaining our quality standards
and reducing waste.  Our production line that produces liquid fertilizer and powered fertilizer is centrally controlled with
a wireless panoramic audio and video monitoring system that allows connectivity with mobile terminals such as cell phones.



Through Jinong, we
operate a 6,495 square meters (69,911 square feet) production facility that manufactures liquid fertilizer products and a 13,803
square meter (148,576 square feet) production facility that produces liquid and highly concentrated (powdered) fertilizers. 
Jinong’s total annual production capacity of these facilities is 55,000 metric tons.



Through Gufeng and
Tianjuyuan, we operate eight manufacturing facilities located in No. 6 Mafang Logistics Park, Pinggu, Beijing.   These
facilities produce various kinds of fertilizers and have a total annual production capacity of 500,000 metric tons.



12







The manufacturing
techniques utilized by Gufeng include extruder granulation, rotary drum steam granulation, urea-based spraying granulation and
resin-coated sustained release, which enable Gufeng to effectively meet the production requirements of its different compound
fertilizers.  To ensure high standards of quality, Gufeng and Tianjuyuan employ strict quality controls on purchases of raw
materials to sales of products to end users.



We produced and sold
a total of approximately 318,208 metric tons of fertilizer products during the fiscal year ended June 30, 2012.



Raw Materials
and Suppliers



Fertilizer Products



Among the three materials
that can be utilized to produce humic acid (weathered coal, lignite and peat), we have chosen weathered coal as our principal
raw material because it is abundant with the price of approximately $81.4 per metric ton including the delivery expense. 
We have been using Inner Mongolia Tianlibao Fertilizer Co., Ltd. (“Tianlibao”) as our main supplier of weathered coal
because of abundance and high quality of weathered coal in Inner Mongolia Autonomous Region.   We do not have any purchase
volume commitment pursuant to our supply agreement with Tianlibao, which is renewable on a monthly basis.



In addition to weathered
coal, we also use approximately 50 different components in our production process, including elements such as sodium, calcium,
zinc, iron and potassium, all of which can be readily obtained from numerous sources in local markets.  We utilize spectral
analysis technology to select the raw materials with the best quality, and we have specially-trained buyers to ensure the quality
and consistency of the raw materials that we procure.



The fertilizer products
that Gufeng and Tianjuyuan manufacture incorporate over 50 different raw materials, including coal, sulfuric acid and NPK (nitrogen,
phosphorus and potassium) related compounds such as amide and hydronitrogen.    Beijing Baofengnian Agricultural Material
Co. Ltd and Inner Mogolia Chemical Products Co., Ltd. are the primary suppliers of raw materials to Gufeng, accounting for approximately
13.9% and 16.4%, respectively, of Gufeng’s total purchase for the fiscal year 2012.  The loss of any of these suppliers
would not have a material adverse effect on our business.  We do not believe there is any material risk of losing these suppliers
during the next 12 months.



Our products are packaged
in bottles, bags and boxes. Each type of packaging material, along with packaging labels, is readily available for purchase from
manufacturers in Shaanxi, Beijing, Shandong and Zhejiang provinces.



Agricultural Products



The plants that generate
our top-grade flowers and multi-colored seedlings are mainly planted and cultivated in research and development facilities maintained
by Jintai and Yuxing. We purchase the seeds of green vegetables and fruits from agricultural companies, such as Rijk Zwaan Company,
  that import the seeds from foreign markets including Holland.  We cultivate our agricultural products by applying fertilizers
produced by Jinong.



13







Inventory



For our fertilizer
products, our efficient production methods allow us to maintain low inventory levels, which keep inventory costs down.  We
purchase raw materials and packaging materials based on production demands.  The majority of sales orders we receive are shipped
directly to distributors after production.  We normally carry finished goods up to one week and do not maintain any work-in-process.



For our agricultural
products, we maintain about one month’s inventory because we need a significant amount of agricultural products to serve
as our product testing base for the research and development of our new fertilizers.



Return Policy



The Company only accepts
returns of defective fertilizer products. During the fiscal year ended June 30, 2012, the Company did not experience any significant
returns.



Backlog



As of June
30, 2012, we had a backlog of orders in the amount of $221,760 as compared to $211,540, and $125,885 in backlog orders as of
June 30, 2011 and 2010 respectively.



Seasonality



The peak selling season
for fertilizer products  was from January through June. However, during the fiscal year ended June 30, 2012, Jinong did
not have seasonality with respect to its fertilizer sales as approximately 63.5% of its annual fertilizer sales revenue occurred
in the third fiscal quarter (winter) and the fourth fiscal quarter (spring). Gufeng’s sales business of compound fertilizer
has significant seasonality in China. Correspondingly, the purchase of its raw material, basic fertilizers, is affected by the
supply and demand in the fertilizer market with seasonality. Over non-peak sales season, e.g., post to the peak sales season, when
the raw material price is low, Gufeng makes larger order to purchase raw material and pays advances. In addition to the sales in
China, to the extent the export tariff window for the types of fertilizers Gufeng produces is open, Gufeng’s export business
can offset the seasonality when the export destination is in the south of the north hemisphere, such as India, where the sales
season is the non-peak season in China for the same time in a year.



The peak selling season
for our agricultural products is from October through March the next calendar year during our second fiscal quarter (fall) and
the third fiscal quarter (winter). This was primarily due to the strong demand for our high-end fruits and decorative flowers during
the holiday seasons.  During the period from October 2011 through March 2012, Jintai and Yuxing generated approximately $5.8
million, or 73.1% of our annual sales of agricultural products.



14







Marketing, Distribution and Customers



Overview



We currently market
our fertilizer products to private wholesalers and retailers of agricultural farm products in 22 provinces, 4 autonomous regions
and 3 central government-controlled municipalities in China.   For the fiscal year 2012, the following five PRC provinces,
collectively accounted for 58.9% of our total fertilizer revenue: Beijing (24.2%), Hebei (16.3%), Jilin (9.0%), Liaoning (6.6%)
and Inner Mongolia (2.8%).  We believe this geographically diverse distribution greatly helps us to become a leader in the
compound fertilizer market as compared to regional competitors because we are not heavily dependent on any single geographic area
for sales and are able to raise our brand/product awareness over a broad geographic area.  We also manufacture our fertilizer
products for export to contracted distributors in foreign countries, including India and Ghana. Total revenues from exported products
currently account for approximately 15.0% of our total fertilizer revenues in fiscal 2012.



FY2012 Export Details

|Export to |  | Subsidiary |  | Type                                        |  | Amount ($)
|--------- |  | ---------- |  | ------------------------------------------- |  | ----------
|          |  |            |  |                                             |  |           
|India     |  | Gufeng     |  | 40% humic acid organic/inorganic fertilizer |  | 31,330,724
|India     |  | Jinong     |  | Liquid Fertilizer                           |  | 77,576    
|India     |  | Jinong     |  | Solid Fertilizer                            |  | 60,538    
|Ghana     |  | Jinong     |  | Liquid Fertilizer                           |  | 75,984    
|Total     |  |            |  |                                             |  | 31,544,822



Our agricultural products
are distributed through various distribution channels in Shaanxi Province and other provinces. Decorative flowers are usually sold
through our fertilizer distributors to end-users such as flower shops, luxury hotels and government agencies.  Fruits and
vegetables are sold to high-end supermarkets and upscale restaurants. Seedlings are sold primarily to city planning departments.



We utilize a multi-tiered
product strategy that allows us to tailor our fertilizer products to the needs and preferences of the various geographic regions
in China.   Our fertilizers can be tailored to different crops grown in varying climate and soil conditions.  For
example, climate and rainfall conditions in Southern and Eastern China allow farmers to grow high margin crops such as fruit and
seasonal vegetables.  As a result, these farmers can obtain more return on their investment by using more expensive and specialized
fertilizers.  In contrast, we market a broader spectrum, low-cost fertilizer to farmers in the Northwest areas of China because
climate conditions prevent them from investing in expensive fertilizers.



Our research and development
capabilities, which are described more fully below, allow us to develop products that are tailored to specific farming needs in
different regions, including different crops, humidity, weather and soil conditions.



Marketing



Our marketing staff
is trained to closely work with distributors and customers, including retailers and farmers, providing professional advice on customizing
our products to customer needs and offering agricultural knowledge and other extensive customer support. In addition, our employees
educate and inform our distributors and customers by regularly organizing training courses on new agricultural techniques.



15







By industry norms,
we believe that our product development cycle of three to nine months is relatively short.  Through our regular collection
of market data, including the growth records of a variety of plants cultivated in different soil and climate conditions, and feedback
from our end-users, we are able to conduct nationwide market analysis, ascertain new product needs, estimate demand and customer
demographics and develop new products that are tailored to current market needs.



Although we utilize
television advertisements and mass media, the majority of our marketing efforts are conducted through joint activities with our
distributors.  Our sales and marketing staff works with and trains distributors and retail clients through lectures and interactive
meetings.  We emphasize the technological components of our products to end-users to help them understand the differences
in products and how to effectively use them.  Word-of-mouth advertising and sample trials of new products in new areas are
also essential components of our marketing efforts.  In addition, we have established nationwide telephone hotlines to answer
customer questions and have constructed an SMS text message platform to have real-time interaction with our customers.



16







Our best-selling fertilizers,
based on revenues for the fiscal year ended June 30, 2012, are listed below:





|        |   |  |               |                                                           |        |  |        |          |  |  | Percent of | 
|------- | - |  | ------------- | --------------------------------------------------------- | ------ |  | ------ | -------- |  |  | ---------- | 
|        |   |  |               |                                                           | Volume |  |        | Revenues |  |  | Fertilizer | 
|Ranking |   |  | Product Names |                                                           | (Tons) |  |        | (USD)    |  |  | Sales      | 
|        |   |  |               |                                                           |        |  |        |          |  |  |            | 
|        | 1 |  |               | Organic/Inorganic Compound Fertilizer(humic acid) NPK≥40% |        |  | 75,688 |          |  |  | 32,377,341 | 
|        |   |  |               |                                                           |        |  |        |          |  |  |            | 
|        | 2 |  |               | Organic/Inorganic Compound Fertilizer(humic acid) NPK≥48% |        |  | 56,890 |          |  |  | 29,836,058 | 
|        |   |  |               |                                                           |        |  |        |          |  |  |            | 
|        | 3 |  |               | Organic/Inorganic Compound Fertilizer(humic acid) NPK≥45% |        |  | 45,631 |          |  |  | 22,873,973 | 
|        |   |  |               |                                                           |        |  |        |          |  |  |            | 
|        | 4 |  |               | Organic/Inorganic Compound Fertilizer(humic acid) NPK≥46% |        |  | 15,936 |          |  |  | 8,357,367  | 
|        |   |  |               |                                                           |        |  |        |          |  |  |            | 
|        | 5 |  |               | Compound Fertilizer NPK≥51%                               |        |  | 13,498 |          |  |  | 7,403,735  | 



Fertilizer Products



The fertilizer product
market in China is highly fragmented.  Our primary sales strategy is to establish contractual relationships with qualified
distributors throughout the country, who, in turn, will distribute our products to wholesalers and retailers, and ultimately,
the farmers.



As of June 30, 2012,
we sold our products through a carefully constructed network of about 943 distributors covering 22 provinces, 4 autonomous regions
and 3 central government-controlled municipalities in China.



The distributors sell
our products to the smaller, local wholesale and retail outlets who then sell to the end-users, typically farmers. We do not grant
provincial or regional exclusivity because there is currently no single distributor sufficiently strong enough to warrant exclusivity.
We enter into non-exclusive written distribution agreements with chosen distributors that demonstrate their ability in local business
experience and sufficient regional sales networks. The distribution agreements do not dictate distribution quantity because changes
in local market condition and weather changes can dramatically affect sales quotas.



17







For the fiscal year
ended June 30, 2012, sales to our top five distributors accounted for approximately 27.3% of our fertilizer product revenue. One
distributor accounted for over 5% of our fertilizer sales in fiscal year 2012 with Sinoagri Holding Company Limited accounting
for approximately 14.9%.  As we do not have a significant concentration of customers, we believe that the loss of any one
customer would not have any significant effect on our business.



Agricultural Products



We distribute our
agricultural products through several networks depending on the type of product. Our top-grade flowers are mainly distributed
through our fertilizer distribution network.   Our green vegetables and fruits are mainly distributed to a variety of
wholesale markets and supermarkets in Xi’an, while our multi-colored seedlings are distributed to the seedling centers and
planting companies in China with which we have had long-term cooperation. The following is a list of our top five customers in
terms of revenues for our agricultural products for the fiscal year ended June 30, 2012. Yuxing’s customers accounted for approximately
42.2% of the total revenues from Yuxing’s agricultural products.



|Ranking |   |  | Customer Name |                                                       | Amount (USD) |   |         | Percentage of Yuxing's sales | 
|------- | - |  | ------------- | ----------------------------------------------------- | ------------ | - | ------- | ---------------------------- | 
|        |   |  |               |                                                       |              |   |         |                              | 
|        | 1 |  |               | Hujiamiao Wanguohe                                    |              | $ | 246,639 |                              | 
|        | 2 |  |               | Xi’an Heyi Flower Co., Ltd.                           |              | $ | 214,034 |                              | 
|        | 3 |  |               | Xi’an Yanta Caomurenjia Gardening Co., Ltd            |              | $ | 170,450 |                              | 
|        | 4 |  |               | Yangling Xintiandi Industrialized AgricultureCo., Ltd |              | $ | 128,036 |                              | 
|        | 5 |  |               | Xi’an Zihe Yuanlin Jingguan Company                   |              | $ | 118,719 |                              | 



Retail Stores and Authorized Retailers



We have successfully
implemented two marketing programs in Shaanxi, Hebei, Anhui, Jiangsu and Guangzhou provinces.  These marketing programs consist
of the: (i) establishment of Company directly-owned retail stores to sell fertilizer products produced by Jinong and Gufeng through
the Company’s designated sales personnel (the “Pilot Program”) and (ii) selection of qualified retailers from
the Company's distributor base of retail customers to be designated "China Green Agriculture Authorized Retailers". 
Under the Pilot Program, we currently have 14 directly-owned stores operating in Shaanxi Province, with each store having an assigned
territory in order not to compete with any of the Company's existing distributors.  Since the launch of the Pilot Program
in January 2010, we have worked closely with our existing distributors to designate over 9741 retailers, who are outlets owned
or controlled by our distributers, as “China Green Agriculture Retailers” for fiscal year ended June 30, 2012. We have
entered into agreements with these retailers to prominently display "China Green Agriculture Authorized Retailer" on
their exhibits, and have well-positioned standardized shelf and product displays in their retail stores.  In addition, we
provide the retailers with educational materials on proper product use, and billboard ads with our product logo to target farmers.



18







Research and Development



We conduct the bulk
of our research and development activities through Jintai, with Yuxing providing certain research and development work as well. 
As mentioned elsewhere in this Report, Jintai is in the process of relocating to Yuxing’s site which may eventually merge
into Yuxing. Through these subsidiaries, we cultivate high-quality flowers, green vegetables and fruits in our own greenhouses
and sell them to various end-users, including airlines, hotels and restaurants.  Jintai and Yuxing operate advanced research
and development facilities that: (i) provide testing and an experimental data collection base for the function and feature of new
fertilizers produced by Jinong by simulating the growing conditions and development stages of a variety of plants, such as flowers,
vegetables and seedlings, which, in turn (ii) produce plants, flowers and vegetables that can be sold as commercial products to
generate sales.  In addition, our research and development capabilities allow us to develop products that are tailored to
specific farming needs, including those required by different crops, humidity, weather and soil conditions.   Flowers,
fruits and vegetables that are grown for experimental testing of Jinong’s humic acid compound fertilizers are of high quality
and value and are sold to local supermarkets and airline companies.



The
capital expenditure and other payments on Yuxing’s construction were approximately $ 3,948,849,
$10,107,079 and $12,956,621 for the fiscal year ended June 30, 2012, 2011 and 2010, respectively. Upon completion, we expect the
research and development center to expand our output of high quality agricultural products for commercial sale while providing
an advanced testing field for new fertilizer products.  The new facility will continue to increase our capability to produce
more products while shortening the new product development cycle, which allows us to get products to market quickly, thus increasing
revenues and market share. In addition to developing new humic acid-based fertilizer products, we are planning to develop other
agricultural derivatives from humic acid, such as humic-acid based organic pesticides, which can provide additional revenue sources
and increase profitability. For the fiscal year ended June 30, 2012, we sold approximately $7,874,522 of these agricultural products.



|                                   |  | Amount in FY2012 |            |   | Amount in FY2011 |   |            | Amount in FY2010 | 
|---------------------------------- |  | ---------------- | ---------- | - | ---------------- | - | ---------- | ---------------- | 
|                                   |  |                  |            |   |                  |   |            |                  | 
|Machines, Buildings and Equipments |  | $                | 8,695,269  |   |                  | $ | 6,343,443  |                  | 
|Land Use Right                     |  | $                | -          |   |                  | $ | -          |                  | 
|Advanced Payment                   |  | $                | -          |   |                  | $ | -          |                  | 
|Construction in Progress           |  | $                | (4,746,420 | ) |                  | $ | 3,763,636  |                  | 
|Total                              |  | $                | 3,948,849  |   |                  | $ | 10,107,079 |                  | 



19







The research and development
costs in Jinong for the fiscal year 2012, 2011, and 2010 are illustrated as the following:



|                             |  | FY2012 |         |  | FY2011 |   |        | FY2010 | 
|---------------------------- |  | ------ | ------- |  | ------ | - | ------ | ------ | 
|Freight Expense              |  | $      | 1,700   |  |        | $ | 3,916  |        | 
|Travel Expense               |  | $      | 7,753   |  |        | $ | 8,465  |        | 
|Salary                       |  | $      | 68,252  |  |        | $ | 42,516 |        | 
|Experiment and Testing       |  | $      | 231,777 |  |        | $ | 38,724 |        | 
|Other                        |  | $      | 3,915   |  |        | $ | 633    |        | 
|Total R&D Expense for Jinong |  | $      | 313,397 |  |        | $ | 94,253 |        | 



The research and development
costs in Gufeng for the fiscal year 2012 and 2011 are illustrated in the table below:



|Item                         |  | FY2012 |           |  | FY2011 |  
|---------------------------- |  | ------ | --------- |  | ------ | -
|Raw material                 |  | $      | 1,446,165 |  |        | $
|Manufacturing Cost           |  | $      | 25,988    |  |        | $
|Experiment and Testing       |  | $      | 2,363     |  |        | $
|Labor Cost                   |  | $      | 11,813    |  |        | $
|License fee                  |  | $      | 2,363     |  |        | $
|Total R&D Expense for Gufeng |  | $      | 1,488,690 |  |        | $



While Jintai and Yuxing
do not incur research and development cost directly from their production activities of agriculture products, they conduct field
tests in their field and experimenting facilities for Jinong and Gufeng’s trial fertilizer products. Thus, certain costs,
such as lease of the related facilities, depreciation of the related facilities and equipment for fertilizer research and development
use, and other miscellaneous expenses can be attributable to the research and development activities of fertilizer products for
the Company. Leases and depreciation of related facilities and equipment over past three fiscal years in Jintai and Yuxing, are
illustrated below:



|                         |  | FY2012 |           |  | FY2011 |   |           | FY2010 | 
|------------------------ |  | ------ | --------- |  | ------ | - | --------- | ------ | 
|Facility Lease in Jintai |  | $      | 1,291,834 |  |        | $ | 1,272,956 |        | 
|Depreciation in Jintai   |  | $      | 129,004   |  |        | $ | 127,143   |        | 
|Depreciation in Yuxing   |  | $      | 402,428   |  |        | $ | 5,065     |        | 



20







In
summary, as illustrated by the summary table below of the three tables above, for Jinong, Gufeng, Jintai and Yuxing, the Company
expenses research and development costs as incurred. For the years ended June 30, 2012, 2011 and 2010, research and development
costs were $3,625,352, $4,117,830 and $1,365,907, respectively.



|       |  | FY2012 |           |  | FY2011 |   |           | FY2010 | 
|------ |  | ------ | --------- |  | ------ | - | --------- | ------ | 
|Jintai |  | $      | 1,420,838 |  |        | $ | 1,400,099 |        | 
|Yuxing |  | $      | 402,428   |  |        | $ | 5,065     |        | 
|Jinong |  | $      | 313,397   |  |        | $ | 94,253    |        | 
|Gufeng |  | $      | 1,488,690 |  |        | $ | 2,618,412 |        | 
|Total  |  | $      | 3,625,352 |  |        | $ | 4,117,830 |        | 



New Products



With our strong and
advanced research and development capabilities, we have developed 443 products and continue to develop new products.  During
the fiscal year ended June 30, 2012, we developed 24 new products, which contributed $7,269,698 to our sales revenue for the period.



Among the new products
we introduced in fiscal year 2012, there are several powder fertilizers, liquid fertilizers, and compound fertilizers.



In addition to developing
new fertilizer products, we are also developing soilless seeding and breeding of colored-leaf plants, rare flowers and new species
of fruits and vegetables.



21







Intellectual Property



We hold the following
trademarks registered with the PRC Trademark Offices of National Industrial and Commerce Administrative Bureau (the “PRC
Trademark Offices”):



|Trademark       |  | Registration Number |  | Valid Term                          
|--------------- |  | ------------------- |  | ------------------------------------
|Jinong          |  | No.3906984          |  | May 7, 2007 to May 6, 2017          
|                |  |                     |  |                                     
|Mei Er An       |  | No. 1508004         |  | January 20, 2011 to January 20, 2021
|                |  |                     |  |                                     
|SPR HOP         |  | No. 3320282         |  | May 28, 2004 to May 27, 2014        
|                |  |                     |  |                                     
|科霸KEBA          |  | No. 760379          |  | August 14, 2005 to August 13, 2015  
|                |  |                     |  |                                     
|天聚缘T.J.Y        |  | No. 3320283         |  | May 28, 2004 to May 27, 2014        
|                |  |                     |  |                                     
|Huang Cheng Gen |  | No. 5219720         |  | June 28, 2009 to June 27, 2019      



A registered trademark
is protected in China for a term of 10 years, and renewable for another 10 year term under PRC trademark law, as long as the renewal
application is submitted to the PRC Trademark Offices within six months prior to the expiration of the initial term.



Below are Jinong’s
two patents for a fertilizer formulation and for the proprietary production line and manufacturing processes.



|Patent/Pending
        Patent
        Application                             |  | Type of Patent               |  | Patent No.
        /Application No.     |  | Inventor’s
        Name and
        Patent Holder      |  | Date of
        Application |  | Date of
        Publication and
        Term
|----------------------------------------------------------------------------- |  | ---------------------------- |  | --------------------------------------- |  | ------------------------------------------------------ |  | --------------------------- |  | --------------------------------------------
|                                                                              |  |                              |  |                                         |  |                                                        |  |                             |  |                                             
|Patent:
        Production facility of Humic Acid Products                    |  | Utility Model
        Patent |  | Patent No.: ZL
        2007 20031884.2  |  | Inventor: Tao Li
        Patent Holder:
        Jinong |  | May 29, 2007                |  | May 14, 2008;
        10 years              
|                                                                              |  |                              |  |                                         |  |                                                        |  |                             |  |                                             
|Patent:
        Method and recipe of the water soluble humic acid fertilizers |  | Utility Model
        Patent |  | Application No.:
        200710017334.x |  | Applicant:
        Jinong                              |  | February 1,
        2007    |  | November 24, 2010;                          



22







The PRC Patent Law
was adopted by the PRC National People's Congress in 1984 and was subsequently amended in 1992 and 2000.  Under the PRC Patent
Law, an invention patent is valid for a term of 20 years and a utility or design patent is valid for a term of 10 years. All of
our registered patents are all utility patents.  Any use of patent without consent or a proper license from the patent owner
constitutes an infringement of patent rights.



In addition to trademark
and patent protection law in China, we also rely on contractual confidentiality provisions to protect our intellectual property
rights and brand.  To help safeguard our intellectual property, our research and development personnel and executive officers
are subject to confidentiality agreements.  They are also subject to a non-compete covenant following the termination of employment
with us and they agree that any work product belongs to us.  Moreover, we also take steps to limit the number of people involved
in the production process and, instead of disclosing fertilizer ingredients to production employees, we refer to the ingredients
by numbers.



Competitive Strengths



We believe the following
competitive advantages of our fertilizer products enable us to compete in the PRC fertilizer market.



Nation-wide sales
network.  In the highly fragmented Chinese fertilizer market, we have established our own distribution channels with private
distributors that sell our products to retail stores and farmers throughout China.  We have over 943 distributors nationwide
across 22 provinces, 4 autonomous regions and 3 central government-controlled municipalities in China.  Most of our competitors,
including larger competitors, do not have a sales team as large as ours that specializes in the sale of compound fertilizer products. 
Moreover, we believe the regional strengths of Gufeng’s distribution network have expanded and will continue to expand our
sales coverage to certain cities and counties as well as foreign markets.



Strong Research
and Development. Our research and development is managed effectively. Typically, it takes only three to nine months
from the decision to develop a new product to mass production, which ensures product flow and helps to maintain market share. Our
strong research and development department is based at our intelligent greenhouse facilities. The advanced equipment and soil-free
techniques in such facilities simulate the natural environment in different areas and control selected factors. As a result, most
of Jinong’s experimental work is conducted in Jintai and Yuxing’s greenhouse facilities, thereby speeding up product
development cycles, and cutting costs without sacrificing accuracy of results.  During the fiscal year ended June 30, 2012,
we generated approximately $7,874,522 revenue from sales of Jintai and Yuxing’s agricultural products, and we anticipate
that this source of revenue will grow in the future.   We have built 100 sunlight greenhouses and six intelligence
greenhouses over an 88-acre parcel of land in connection with Yuxing's pending research and development center, which will expand
output of high quality agricultural products for commercial sale while providing an advanced testing field for new fertilizer products. 
Yuxing facility will continue to increase our capability to produce more products while shortening the new product development
cycle, which allows us to release products to market quickly, thus increasing revenues and market share.



23







While the relocation
will impact Jintai’s business growth temporarily, our normal research and development will not halt, due to the growing
development of agriculture products in our new fertilizer research and development subsidiary, Yuxing. In the long run, we believe
the consolidation of Yuxing and Jintai's facilities will centralize the management of fertilizer research and development and
decrease expenses by reducing redundancies. While the relocation will affect the segmental performance of Jintai during the relocation
period, we expect our R&D capability will remain strong.



Gufeng and Tianjuyuan
have a total of 25 employees in research and development.  They have independently developed seven technologies:



Drying fan for urea-based
compound fertilizer.  The drying fan for urea-based compound fertilizer is specially designed by our technical personnel
through numerous tests on different fertilizer products.



Heat balance control
system for flexible compound fertilizer.



Automatic control
system for the anti-block of compound fertilizer



Water control
technology for low nitrogen, low potassium and high phosphorus compound fertilizer



Manufacturing technology
for salt-alkaline resistance and soil improvement of compound fertilizer.  The company had won the third prize for progress
in science and technology in Pinggu District Beijing with this technology.



Manufacturing technology
for compound HA fertilizer with high density (NPK≥51%).



Manufacturing technology
for the sustained release of blending and compound fertilizer.  This technology has passed the inspection and approval of
expert panel of Beijing municipal committee.



While we believe that
our greenhouse facilities provide us with a competitive advantage over our competitors, our larger competitors may have better
understanding in certain local markets where they have successfully marketed products over a period of time and have specifically
formulated fertilizers for local plant, soil and climate conditions.  To increase our competitiveness, we will seek to diversify
our fertilizers to benefit a wider range of plants and soil conditions.



Well-known Brand.We believe that purchasing decisions of customers are often based on strong brand recognition. “Jinong”, “KEBA”
and “TJY” are registered trademarks and are well recognized by end users; in addition, certain large national fertilizer
traders, such as Sinoagri Holding Company Limited, one of the largest domestic fertilizer traders in China had strong brand recognition
of Gufeng’s fertilizer products. Gufeng sells its products under four brands, namely Keba, Meier’an, Huangchenggen
and SPR HOP. Tianjuyuan’s products are marketed under the brands AGR GFJ and T.J.Y. The primary products sold under the
Gufeng and Tianjuyuan brands, include orgainc/inorganic compound fertilizer (humic acid) with NPK≥40% and organic /inorganic
compound fertilizer (humic acid) with NPK≥48%.



24







Automated Production
Line and Process.  All of Jinong’s major production procedures are controlled by a centralized computer system
only accessible by authorized personnel. Jinong’s production lines are fully automated to ensure that content in each product
is measured exactly according to its recipe by linking the computer server with the electronic weights on each of the material
input bins.  In addition, spectral analysis is used to accurately check the composition of materials. During the fiscal year
2012, Jinong’s highly advanced production lines manufactured a multi-tiered line of 126 fertilizer products, and we believe
that Jinong’s production lines are among the few advanced lines in our industry in China.  We have patent protection
for Jinong’s two proprietary production lines, one of which has medical grade production equipment with precise quality
control, and the other capable of producing liquid, powder and granular fertilizers.  With the addition of Gufeng, we currently
have an annual production capacity of 555,000 metric tons.



Competition



Fertilizer Products



Based on our internal
estimates, there are approximately 2,000 organic fertilizer manufacturers in China with no discernable market leaders in the sector. 
We believe our competitors are currently comprised of approximately 90% numerous small-sized local manufacturers and 10% are larger
national competitors such as Yongye International, Inc. We believe we are among the larger national fertilizer manufacturers.



Gufeng’s primary
competitor is Stanley Fertilizer Co., Ltd. (“Stanley”), a compound fertilizer manufacturer based in Linyi, Shandong
Province, which was listed on Shenzhen Stock Exchange (China) in June 2011.  Stanley manufactures various kinds of compound
fertilizers and tailored fertilizers.  Compound fertilizers are Stanley’s products that compete with Gufeng.



We have smaller competitors
which are generally producers of amino acid compound fertilizers.  The products of these producers are very price competitive. 
However, these companies often lack adequate quality control or process control technologies which produces inconsistent quality
in their products.



The Chinese fertilizer
market has been fully opened to foreign companies since China’s entry into the World Trade Organization in December 2006. 
Accordingly, the PRC government has increased its fertilizer import quota and, since January 2007, has reduced the import tariffs
on foreign fertilizer to 1%.   However, foreign fertilizers are generally more expensive than PRC manufactured fertilizers
and are not customized to soil conditions presented by China’s diverse climate and terrains.



Agricultural Products



The competitive market
faced by our agriculture products varies depending on the categories and market of our three main products.



Top-grade flowers:   The
main competitor to our flowers and flower seedlings is Sanyi Agriculture Technology Co., Ltd.(Beijing). We believe that our flower
products have comparative advantages in terms of the advanced technologies they are based on, the superior species of the seedlings
we select and the efficiency and stability of our products.  In addition, unlike most of our competitors that lack adequate
greenhouses, our greenhouse facilities enable us to produce flower seedlings year-round.



25







Green Vegetables and
Fruits:  Our competitors are primarily the vegetable planting centers and planters in Shaanxi, Shandong and Gansu provinces
that produce vegetables such as cucumbers and peppers.  Our competitive advantage, which distinguishes us from other competitors,
are our advanced greenhouse facilities, which produce pollution-free green vegetables and fruits, with the aid of our green fertilizers
that improve soil conditions and limit bacterial growth.



Multi-colored
Seedlings:  One of our main competitors is Kunming Anthura horticulture Co.Ltd. 
Our multi-colored seedlings, primarily red photinia serrulata, are pure in species and are imported from other countries. 
These seedlings have high survival rates and we sell them at fair market prices.



Employees



We have a total of
634 full-time employees, of which 182 are employed by Jinong, 138 are employed by Jintai and Yuxing, 314 are employed by Gufeng
and Tianjuyuan.



None of our employees
are under collective bargaining agreements.  We believe that we maintain a satisfactory working relationship with our employees
and we have not experienced any significant labor disputes or any difficulty in retaining our employees or recruiting staff for
our operations.



Government Regulation



Our business operations
are subject to various laws, including environmental, health and safety laws, and regulation by governmental agencies on the provincial
and state levels.  Business and company registrations, along with the products, are certified on a regular basis and must
be in compliance with the laws and regulations of the PRC and provincial and local governments and industry agencies, which are
controlled and monitored through the issuance of licenses and certificates including the following:



·     “Green”
Certification. Except for those manufactured by Gufeng and Tianjuyuan, all of our fertilizer products are certified by the
CGFDC as green food production material. Our Green Food Production Material Certificate was issued to Jinong on March, 2012 and
will expire in March 2015. The certificate is renewable with an application within 90 days prior to its expiration. Currently,
the CGFDC provides two different certifications within the green food industry: namely, "Green Food Certification" which
is granted to edible foods and "Green Food Production Material Certification" which is granted to production materials
such as our fertilizer products that meet criteria such as standards that increase human safety and ecological protection of the
environmental, in addition to promoting non-polluting product growth and the use of non-genetically modified raw materials. Prior
to July 2007, the two categories mentioned above were in one category under which companies were issued a "Green Food Certificate."
In an effort to improve social sustainable development and optimize the regulation of policy for the PRC green food industry,
the CGFDC separated the certification system into two categories.



·     Operating
license.Our operating license enables us to undertake research and development, production, sales and services of humic-acid
liquid fertilizer, sales of pesticides, and export and import of products, technology and equipment. Jinong’s license (Registration
No. 610000100003655) is valid through August 8, 2057. Once the term has expired, the license is renewable. Gufeng and Tianjuyuan
maintain valid operating licenses, which expire on August 1, 2013 (for the license with Registration No. 110000008250498) and
August 7, 2021 (for the license with Registration No.110117003157142),
respectively.



26







·     Fertilizer
Registration. Fertilizer registration is required for the production of fertilizer and issued by the Ministry of Agriculture
of the PRC. The registration numbers held by Jinong are: Agriculture Fertilizer Numbers1085, 1083, 0467, 0700, 0701, and 0992.
There are two kinds of registrations: interim registration and formal registration. The interim registration is valid for one
year and applies to fertilizers in the stages of in-the-field testing and test selling. Our certificates No. 5531, No. 5557, No.
4081, No. 4082, No. 5682, No. 5471, No. 5530 and No. 5511 are interim fertilizer registration certificates. Fertilizers that have
completed in-the-field testing and test selling must obtain formal registration, which, if granted, is valid for five years, and
thereafter must be renewed every five years. Our formal fertilizer registration certificates are certificates No. 1085, 1083,
0467, 0700, 0701, and 0992. Gufeng and Tianjuyuan have 39 interim fertilizer certificates and over 300 formal certificates that
are current and valid for the production of their fertilizer products.



As of the date of
this Report,we believe we are in material compliance with all registrations and requirements for the issuance and
maintenance of all licenses required to conduct our businesses and operations.



27







|ITME 1A. | RISK FACTORS
|-------- | ------------



An investment in our common stock involves
a high degree of risk. You should carefully consider the following information about these risks, together with the other information
contained in this Report before investing in our common stock. If any of the events anticipated by the risks described below occur,
our results of operations and financial condition could be adversely affected which could result in a decline in the market price
of our common stock, causing you to lose all or part of your investment.



Risks Related to our Business



The industry in which we do business
is highly fragmented and competitive and we face competition from numerous fertilizer manufacturers in China and elsewhere.



We compete with numerous
local Chinese fertilizer manufacturers. Although we may have greater resources than many of our competitors, most of which are
small local fertilizer companies and it is possible that these competitors have better access in certain local markets to customers
and prospects, an enhanced ability to customize products to a particular region or locality and more established local distribution
channels within a small region. We also compete with a few large PRC national competitors, such as Yuntianhua Group Co., Ltd and
Yongye International, Inc. Although we have advanced automated humic acid-based fertilizer production lines and green house supported
research and development centers, we cannot assure you that such large competitors will not develop their own similar production
or research and development facilities. Further, China’s access into the World Trade Organization could lead to increased
foreign competition for us. International producers and traders import products into China that generally are of higher quality
than those produced in the local Chinese market. If they are localized and become familiar enough of the type of fertilizer we
produce, we may face additional competition. If we are not successful in our research, development and production of new products
and/or in our marketing and advertising efforts to increase awareness of our brands, our revenues could decline, which could have
a material adverse effect on our business, financial condition, results of operations and share price.



Our major competitors
may be able to endure downturns in our industrial sector more successfully than we are. In periods of reduced demand for our products,
we can either choose to maintain market share by reducing our selling prices to meet competition or maintain selling prices, which
would likely sacrifice market share. Sales and overall profitability would be reduced in either case. In addition, we cannot assure
you that additional competitors will not enter our existing markets, or that we will be able to compete successfully against existing
or new competitors.



If we are unable to design, manufacture,
and market fertilizer products in a timely and efficient manner, we may not remain as competitive.



Most of our fertilizer
products are characterized by short product development cycles and target the unique climate and soil conditions where our customers
are located.  Accordingly, we devote a substantial amount of resources to product development. To compete successfully,
we must develop and offer new and/or improved fertilizer products that are suitable to evolving customer needs.  New
fertilizers may be not widely proven. As a result, we may experience performance difficulties, which may result in delays, setbacks
and cost overruns.  Our inability to develop and offer new and/or improved fertilizer products or to achieve customer
acceptance of these products could limit our ability to compete in the market or to grow revenues at desired rates of growth.



28







Our proprietary fertilizer formula may
become obsolete or be illegally disclosed to competitors, which could materially adversely affect the competitiveness of our future
fertilizer products.



The production of our
fertilizer products is based on our proprietary fertilizer formula. Our future success will depend upon our ability to address
the increasingly sophisticated needs of our customers by supporting existing and emerging humic acid fertilizer products and by
developing and introducing enhancements to our existing products and new products on a timely basis that keep pace with evolving
industry standards and changing customer requirements. If our proprietary formula becomes obsolete as our competitors develop better
products than ours, our future business and financial results could be adversely affected. In addition, although we have entered
into confidentiality agreements with our key employees, we cannot assure you that if there is a breach of such agreement by an
employee, we would not be adversely affected and lose any competitive advantage that we currently have with respect to ourproprietary
fertilizer formula.  If we are forced to take legal action to protect our proprietary formula, we will incur significant
expense and further can not guarantee a favorable outcome.



Due to nearby environmental degradation
and government land use planning change, we may be forced to relocate Jintai’s operations, which could cause a significant
disruption to our business.



As a result of the
recent rapid development of residential areas, high-rise buildings and manufacturing factories in the surrounding areas of one
of our operating subsidiaries that is in the business of producing agricultural plants, Jintai’s planting base, the level
of air pollution and wastewater discharge has increased substantially causing the nearby environment unfavorable for the agricultural
products to grow. In addition, the land use for Jintai’s planting base has been changed to commercial use from agricultural
use recently.



To mitigate the environmental
impact on Jintai’s revenue and comply with relevant land use rules, we started relocating Jintai’s operations on March
1, 2012 to the facilities of Yuxing which are approximately one hour drive south of Jintai's current location in the Economic and
Technical Development Zone in the metro area of the city of Xi'an. Since the entire relocation process is expected to complete
by the end of fiscal year 2013, Jintai’s business may be interrupted and additional relocation costs may be incurred. However,
we are unable to estimate the incurred cost related to relocation and we can not assure you that the relocation will be completed
in a timely manner. Consequently, there may be material adverse impact on Jintai’s revenue.



The revenues generated from Gufeng’s
export contracts is subject to uncertainty which arises from the PRC fertilizer export policy. To the extent we are unable to export
our fertilizers due to tariff or quota restriction, our business and financial condition may be materially adversely affected



For the fiscal year
ended June 30, 2012, Gufeng contributed approximately 55.8% of our total net sales, among which, Gufeng’s export revenues
accounted for 25.8% of its total revenues for that period. For the six months ended December 31, 2011, Gufeng contributed approximately
55.5% of our total net sales, among which, Gufeng’s export revenues accounted for 56.0% of its total revenues for that period.
In 2011, no special tariff tax was imposed on the NP (Nitrogen, Phosphorous)-only Two-element Compound Fertilizer and nitrogen-phosphorate
compound fertilizer which were Gufeng’s main export products. Therefore Gufeng was subject to only 7% regular tariff tax
throughout the year of 2011.



On December 16, 2011,
the Chinese government announced the related tariff tax policy for 2012. Pursuant to the new policy, in 2012, the NP (Nitrogen,
Phosphorous)-only Two-element Compound Fertilizer, in addition to the regular tariff tax rate of 7% throughout the year, will be
subject to special tariff tax of 75% for any time other than the export window of a four-month period from June to September (the
“Export Window”). This policy change has a direct impact on the sale of Gufeng’s main export products.



The relevant PRC fertilizer
export policy is expected to be updated on an annual basis and it is anticipated that the Ministry of Finance under the supervision
of the State Council of the Central Government of the PRC, or the PRC authority, will continue to monitor and regulate the fertilizer
export market in connection with its overseeing the PRC domestic fertilizer market. While we always keep a balanced mix of our
domestic clients and oversea clients, since our export ability largely depends on the export tariff the PRC authority imposes on
different types of fertilizers, in the event any of our products to be exported are subject to unreasonably high export tariff
or quota restriction, we will have to rely on our domestic clients to fill in the orders that could be under the export contract
under which circumstance we cannot assure you that we will find the same demand or market domestically and our failure to do so
may cause material adverse impact on our business and financial condition.



29







If our warehouse selling and credit
sales of certain fertilizer products continue to increase and we fail to collect the accounts receivables that are due in a timely
manner, our financial condition and results of operation may be materially adversely affected.



We had accounts receivable
of $62,001,158 as of June 30, 2012, as compared to $17,517,625 and $15,571,888 as of June 30, 2011 and 2010, respectively, an increase
of $44,483,533 and $1,954,737, or 253.9% and 12.5%, year over year. The increase was primarily due to the increased credit sales
of Gufeng’s fertilizer products and Jinong’s humic acid fertilizer products including liquid and powder fertilizers
as a result of increased distributors and the aggressive marketing. We offer a tentative credit period up to 180 days to our customers.
Although we perform routine assessment of our customers’ creditworthiness, evaluate the structure and collectability of accounts
receivable and provide an allowance for doubtful accounts when necessary, we may not be able to receive or collect payment for
our products on time or at all if our customers encounter financial difficulties. Any such failure may have a material adverse
impact on our financial condition and results of operation.



If we fail to adequately protect or
enforce our intellectual property rights, we may be exposed to intellectual property infringement and the value of our intellectual
property rights could diminish.



Our success, competitive
position and future revenues will depend in part on our ability to obtain and maintain patent protection for our products, methods,
processes and other technologies, to preserve our trade secrets, to prevent third parties from infringing on our proprietary rights
and to operate without infringing the proprietary rights of third parties.



Jinong is the holder
of two registered patents. One patent is a fertilizer formulation called Method and Recipe of the Water Soluble Humic Acid Fertilizers.
The other patent is called Production Facility of Humic Acid Products and relates to our proprietary production line and manufacturing
processes in the PRC. Gufeng and Tianjuyuan do not have patents but currently possess seven proprietary technologies. However,
we cannot predict the degree and range of protection patents and confidentiality agreements with respect to proprietary technologies
will afford us against competitors. Third parties may find ways to invalidate or otherwise circumvent our patents and proprietary
technologies. Third parties may attempt to obtain patents claiming aspects similar to our patent applications. We cannot assure
you that our current or potential competitors do not have, and will not obtain, patents that will prevent, limit or interfere with
our ability to make, use or sell our products in the PRC.



If we need to initiate
litigation or administrative proceedings, such actions may be costly and may divert management attention as well as expend other
resources which could otherwise have been devoted to our business. An adverse determination in any such litigation will impair
our intellectual property rights and may harm our business, prospects and reputation. In addition, historically, implementation
of PRC intellectual property-related laws has been lacking, primarily because of ambiguities in the PRC laws and difficulties in
enforcement. Accordingly, intellectual property rights and confidentiality protections in China may not be as effective as in the
United States or other countries, which increases the risk that we may not be able to adequately protect our intellectual property.
Moreover, litigation may be necessary in the future to enforce our intellectual property rights. Future litigation could result
in substantial costs and diversion of our management’s attention and resources, and could disrupt our business, as well as
have a material adverse effect on our financial condition and results of operations. Given the relative unpredictability of China’s
legal system and potential difficulties enforcing a court judgment in China, there is no guarantee that we would be able to halt
any unauthorized use of our intellectual property through litigation.



30







If we infringe on the intellectual property
rights of third parties, we could be prevented from selling products, forced to pay damages and compelled to defend against claims
by third parties, which, if successful, could cause us to pay significant damage awards and incur other costs.



Our success also depends
in large part on our ability to use and develop our technology and know-how without infringing the intellectual property rights
of third parties. As litigation becomes more common in the PRC in resolving commercial disputes, we face a higher risk of being
the subject of intellectual property infringement claims. The validity and scope of claims relating to humic acid fertilizer production
technology and related devices and machine patents involve complex technical, legal and factual questions and analysis and, therefore,
may be highly uncertain. The defense and prosecution of intellectual property suits, patent opposition proceedings and related
legal and administrative proceedings can be both costly and time consuming and may significantly divert the efforts and resources
of our technical and management personnel. An adverse determination in any such litigation or proceedings to which we may become
a party could subject us to significant liability, including damage awards, to third parties, require us to seek licenses from
third parties (which may not be available on commercially reasonable terms, if at all), to pay ongoing royalties, or to redesign
our products or subject us to injunctions preventing the manufacture and sale of our products. Protracted litigation could also
result in our customers or potential customers deferring or limiting their purchase or use of our products until resolution of
such litigation.



Disruptions in the supply of raw materials
used in our products could cause us to be unable to meet customer demand in a timely manner, which could result in the loss of
customers and net sales or could result in a lower profit margin for us.



Jinong is supplied
with approximately 50 different types of raw materials, of which weathered coal is the primary one as it is the raw material from
which humic acid is extracted and used to manufacture our products.  Although there are numerous weathered coal suppliers
available to us, we have been using Inner Mongolia Tianlibao Fertilizer Co., Ltd. (“Tianlibao”) as our main supplier
of weathered coal because of the abundance and high quality of weathered coal in the Inner Mongolia Autonomous Region.  Our
supply agreement with Tianlibao is renewed on a monthly basis. If Tianlibao does not intend to renew the supply agreement with
us for any reason, or if there are any business interruptions at Tianlibao and we are unable to locate an alternative supplier
in a timely manner or on the same terms, we may not be able to meet customer demand of humic acid-based fertilizers in a timely
manner or maintain our standards of quality for humic acid-based fertilizers during the transition period, which may result in
the loss of customers and net sales or we may not be able to keep our profit margin on our humic acid-based fertilizers.



Gufeng and Tianjuyuan
are supplied with over fifty types of raw materials from a diversified pool of suppliers.  Neither Gufeng nor Tianjuyuan
are dependent on any single supplier for its raw materials; however, if we experience a significant increase in demand or if we
need to replace any of these suppliers, we cannot be assured that the adequate supply of raw materials or a replacement supplier
will be obtained in a timely manner to avoid any material adverse effect on our business operations and financial condition.



Any significant fluctuation in our production
costs may have a material adverse effect on our operating results.



The prices for the
raw materials and other inputs to manufacture our fertilizer products are subject to market forces largely beyond our control,
including the price of weathered coal, our energy costs, mineral and non-mineral elements, and freight costs. The costs for these
inputs may fluctuate significantly based upon changes in the economy and markets. Although we may pass any increase of such costs
through to our customers, in the event we are unable to do so, we could incur significant losses and a diminution of our share
price.



We do not presently maintain business
disruption insurance. Any disruption of the operations in our factories would damage our business.



Our operations could
be interrupted by fire, flood, earthquake and other events beyond our control for which we do not carry adequate insurance. While
we have property damage insurance and automobile insurance, we do not carry business disruption insurance, which is not readily
available in China. Any disruption of the operations in our factories would have a significant negative impact on our ability to
manufacture and deliver products, which would cause a potential diminution in sales, the cancellation of orders, damage to our
reputation and potential lawsuits.



We do not presently maintain product
liability insurance, and our property and equipment insurance does not cover the full value of our property and equipment, which
leaves us with exposure in the event of loss or damage to our properties or claims filed against us.



We currently do not
carry any product liability or other similar insurance. We cannot assure you that we would not face liability in the event of the
failure of any of our products. We cannot assure you that, especially as China’s domestic consumer economy and industrial
economy continues to expand, product liability exposure and litigation will not become more commonplace in the PRC, or that we
will not face product liability exposure or actual liability as we expand our sales into international markets where product liability
claims could be more prevalent.



31







The occurrence of any acts of God, war,
terrorist attacks and other emergencies which are beyond our control may have a material adverse effect on our business operations
and financial condition.



Acts of God, war, terrorist
attacks and other emergencies which are beyond our control may have a material adverse effect on the economy and infrastructure
in the PRC and on the livelihood of the Chinese population.  Our business operations and financial condition may be materially
and adversely affected should such events occur.  We cannot give assurance that any acts of God such as floods, earthquakes,
drought or any war, terrorist attack or other hostilities in any part of the PRC or even the world, potential or threatened, will
not, directly or indirectly, have a material adverse effect on our business, financial condition and operating results.



If we cannot renew our fertilizer registration
certificates, we will be unable to sell some or all of our products. If we do not receive the formal fertilizer registration certificates
for our new products, upon the expiration of the temporary registration certificates, we cannot continue to produce such new products.



All fertilizers produced
in China must be registered with the PRC Ministry of Agriculture. No fertilizer can be manufactured without such registration.
There are two kinds of registrations: interim registration and formal registration. The interim registration is valid for one year
and applies to fertilizers in the stages of in-the-field testing and test selling. Fertilizers that have completed in-the-field
testing and test selling must obtain formal registration, which is valid for five years, and thereafter must be renewed each five
years. Jinong has eight interim registration certificates, which have a one-year term, and four formal registration certificates.
Gufeng and Tianjuyuan have 22 interim fertilizer certificates and over 300 formal certificates that are current and valid for the
production of their fertilizer products. We will apply for formal certificates for each of our interim certificates before the
applicable expiration date.



Our belief is that
the PRC Ministry of Agriculture generally grants an application for renewal in the absence of illegal activity by the applicant.
However, there is no assurance that the PRC Ministry of Agriculture will grant renewal of our formal Fertilizer Registration Certificates.
If we cannot obtain the necessary renewal, we will not be able to manufacture and sell such fertilizer products without certificates
which will cause the termination of our commercial operations for such fertilizer products. With respect to the transformation
of the interim fertilizer registration certificates to formal fertilizer registration certificates, we believe that we can receive
formal fertilizer registration certificates for our 22 interim fertilizer registration certificates in due course; however, if
the government imposes additional burden on the application procedure or put temporary suspension on its certificate granting process
due to any unexpected incidents in China, we cannot assure you that our formal fertilizer registration certificates can be obtained
without delay or  can be obtained at all in which case our production could be adversely affected.



We may not possess all the licenses
required to operate our business, or may fail to maintain the licenses we currently hold. This could subject us to fines and other
penalties, which could have a material adverse effect on our results of operations.



In addition to a fertilizer
registration certificate, we are required to hold a variety of other permits, licenses and certificates to conduct our business
in China. We may not possess or receive all the permits, licenses and certificates required for our business or for which application
has been made. In addition, there may be circumstances under which the approvals, permits, licenses or certificates granted by
the governmental agencies are subject to change without substantial advance notice. If we fail to obtain or to maintain such permits,
licenses or certificates or renewals are granted with onerous conditions, we could be subject to fines and other penalties and
be limited in the number or the quality of the products that we would be able to offer. As a result, our business, result of operations
and financial condition could be materially and adversely affected.



32







Potential environmental liability could
have a material adverse effect on our operations and financial condition.



Our manufacturing operations
are subject to numerous laws, regulations, rules and specifications relating to the environment, including, among others, the Integrated
Emission Standard of Air Pollutants GB 16297-1996 and the Standard of Environmental Noise of Urban Area GB 3096-93.  Failure
to comply with any laws and regulations and future changes to them may result in significant consequences to us, including civil
and criminal penalties, liability for damages and negative publicity.  Our business and operating results may be materially
and adversely affected if we were to be held liable for violating existing environmental regulations or if we were to incur significant
expenditures to comply with environmental regulations affecting our operations.



Our success depends on our management
team and other key personnel, the loss of any of whom could disrupt our business operations.



We depend, to a large
extent, on the abilities and participation of our current management team, but have a particular reliance upon Mr. Tao Li, our
CEO, President and Chairman of the Board of Directors. The loss of the services of Mr. Li, for any reason, may have a material
adverse effect on our business and prospects. We cannot assure you that the services of Mr. Li will continue to be available to
us, or that we will be able to find a suitable replacement for him in the event his services are not available to us. We do not
carry key man life insurance for our key personnel.



The agricultural chemicals
business is specialized and requires the employment of personnel with significant scientific and operational experience in the
industry. Accordingly, we must attract, recruit and retain a sizeable workforce of technically and scientifically competent employees.
Our ability to effectively implement our business strategy will depend upon, among other factors, the successful recruitment and
retention of additional management and other key personnel that have the necessary scientific, technical and operational skills
and experience with the fertilizer industry. These individuals are difficult to find in the PRC and we may not be able to retain
such skilled employees. If we are unable to hire individuals with the requisite experience we may not be able to produce enough
products to optimize profits, research and development initiatives may be delayed and we may encounter disruptions in production
and research which will negatively impact our financial condition, results of operations and share price.



Mr. Tao Li, our Chairman, President
and CEO may not devote all of his time to our business.



Our Chairman, President
and CEO, Mr. Tao Li, also serves as Chairman of Xi’an Techteam Science & Technology Industry (Group) Co. Ltd., a company
that is engaged in hi-tech application fields in China, and Chairman of Kingtone Wirelessinfo Solution Holding Ltd, a publicly-traded,
China-based developer and provider of mobile enterprise solutions. This may give rise for Mr. Li in allocating his time to each
business.  While Mr. Li anticipates having sufficient time to devote to our business, a lack of adequate time spent by
him on our business may adversely affect our business, financial condition, results of operations and share price.



If we fail to maintain an effective
system of internal control over financial reporting, we may not be able to accurately report our financial results. As a result,
current and potential investors could lose confidence in our financial reporting, which could harm our business and have an adverse
effect on our stock price



Pursuant to Section
404 of the Sarbanes-Oxley Act of 2002, we are required to annually furnish a report by our management on our internal control over
financial reporting. Such report must contain, among other matters, an assessment by our principal executive officer and our principal
financial officer on the effectiveness of our internal control over financial reporting, including a statement as to whether or
not our internal control over financial reporting is effective as of the end of our fiscal year. This assessment must include disclosure
of any material weakness in our internal control over financial reporting identified by management. In addition, under current
SEC rules, we are required to obtain an attestation from our independent registered public accounting firm as to our internal control
over financial reporting and include such report in our annual reports on Form 10-K filed with the SEC. Performing the system and
process documentation and evaluation needed to comply with Section 404 are both costly and challenging. If we fail to maintain
the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be
able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance
with Section 404 of the Sarbanes-Oxley Act of 2002.   We engaged a consulting firm in 2009 to help us design and
implement effective internal controls; however we cannot provide assurance that we will not fail to achieve and maintain an effective
internal control environment on an ongoing basis, which may cause investors to lose confidence in our reported financial information
and have a material adverse effect on the price of our common stock.



33







We are responsible for the indemnification
of our officers and directors.



Our Bylaws provide
for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against costs and expenses
incurred by them in any litigation to which they become a party arising from their association with or activities on our behalf.
Consequently, we may be required to expend substantial funds to satisfy these indemnity obligations.



Our inability to effectively improve
the financial performance of Gufeng may have a material adverse effect on our business, financial condition and results of operations.



Although Gufeng had
sales revenues of $121,480,943 for its fiscal year ended June 30, 2012, Gufeng’s net income for such period was $12,335,102.  This
was primarily due to the lower profit margins on Gufeng’s products, inefficiencies in production and daily operations and
negative working capital.  In addition, rising transportation costs passed on by Gufeng’s distributors may further
erode margins on Gufeng’s products.  As Gufeng is based in Beijing, it is susceptible to rising costs of labor
common in large cities such as Beijing, which may make it difficult for us to expand the workforce of Gufeng and Tianjuyuan to
meet our production requirements and strategic goals.



Although we have made
progress in terms of integrating Gufeng’s employees, products and distribution network into our business during the past
12 months, there is no assurance that we will be able to continue effectively to do so, which may result in a material adverse
effect on our business, financial condition and results of operations.



We have not obtained the land use right
over the premises on which certain facilities of Gufeng, our indirect, wholly-owned subsidiary, is located.  As a result,
the lack of a proper title certificate may jeopardize our right to use the premises and our possession of the buildings we
built on such premises.



Through
Tianjuyuan, we lease approximately 47,333 square meters (509,488 square feet) of land in the Ping Gu District of Beijing (the “Premises”).  Under
the lease dated February 16, 2004 with the village committee of Dong Gao Village and Zhen Nan Zhang Dai Village in the Beijing
Ping Gu District (the “Lease”), Tianjuyuan leases the land at an annual rent of RMB35,500 (approximately $5,217).  The
term of the Lease is from February 1, 2004 to January 31, 2054.  We were informed by our PRC counsel that the Lease is
invalid and unenforceable pursuant to the PRC Land Administration Law and related regulations.  Therefore, we have been
in the process of applying for the proper land use right certificate from the relevant government authorities in order to legitimize
our right over the Premises.   However, there can be no assurance that such land use right certificate will be granted
to us.  Until we obtain the land use right certificate, there exists a risk that the PRC government may declare the Lease
invalid, evict our personnel from the Premises and tear down the buildings we built on the Premises.  As of the date
of this Report, we have no knowledge of any pending or threatened governmental actions relating to the Premises.



A severe or prolonged downturn in the
global economy could materially and adversely affect our business and results of operations.



The global market and
economic conditions during the years 2008 through 2010 were unprecedented and challenging, with recessions occurring in most major
economies. Continued concerns about the systemic impact of potential long-term and wide-spread recession, energy costs, geopolitical
issues, and the availability and cost of credit have contributed to increased market volatility and diminished expectations for
economic growth around the world. The difficult economic outlook has negatively affected businesses and consumer confidence and
contributed to volatility of unprecedented levels.



The PRC economy also
faces challenges. The PRC government has implemented various measures recently to curb inflation. If economic growth slows or an
economic downturn occurs, our business and results of operations may be materially and adversely affected.



34







Risks Related to Doing Business in the
PRC



Substantially all of
our assets and operations are located in the PRC, and substantially all of our revenue is sourced from the PRC.  Accordingly
our results of operations and financial position are subject to a significant degree to economic, political and legal developments
in the PRC, including the following risks:



Changes in the policies of the PRC government
could have a significant impact upon the business we may be able to conduct in the PRC and the profitability of such business.



The PRC’s economy
is in a transition from a planned economy to a market oriented economy subject to five-year and annual plans adopted by the government
that set national economic development goals (Source: President Hu’s Report at 17th Party Congress). Policies of the PRC
government can have significant effects on economic conditions in China. Our interests may be adversely affected by changes in
policies by the PRC government, including:



| | · | changes
in laws, regulations or their interpretation;
| | - | -----------------------------------------------------



| | · | confiscatory
taxation;
| | - | ----------------------



| | · | restrictions
on currency conversion, imports or sources of supplies and export tariff;
| | - | --------------------------------------------------------------------------------------



| | · | expropriation
or nationalization of private enterprises.
| | - | --------------------------------------------------------



Although the PRC government
has been pursuing economic reform policies for more than two decades, we cannot assure you that the government will continue to
pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership,
social or political disruption, or other circumstances affecting the PRC's political, economic and social life.



The PRC laws and regulations governing
our current business operations are sometimes vague and uncertain. Any changes in such PRC laws and regulations may have a material
and adverse effect on our business.



We and any future subsidiaries
are considered foreign persons or foreign funded enterprises under PRC laws, and as a result, we are required to comply with PRC
laws and regulations. These laws and regulations are sometimes vague and may be subject to future changes, and their official interpretation
and enforcement may involve substantial uncertainty. The effectiveness of newly enacted laws, regulations or amendments may be
delayed, resulting in detrimental reliance by foreign investors. New laws and regulations that affect existing and proposed future
businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing or new PRC laws or regulations
may have on our businesses.



We derive a substantial portion of our
revenues from sales in the PRC and any downturn in the Chinese economy could have a material adverse effect on our business
and financial condition.



Substantially all of
our operations are conducted in the PRC and substantially all of our revenues are generated from sales in the PRC.  We
anticipate that revenues from sales of our products in the PRC will continue to represent a substantial proportion of our total
revenues in the near future.  Any significant decline in the condition of the PRC economy could, among other things,
adversely affect consumer buying power and discourage consumption of our products, which in turn would have a material adverse
effect on our revenues and profitability.



Inflation in the PRC could negatively
affect our profitability and growth.



While the PRC economy
has experienced rapid growth, it has been uneven among various sectors of the economy and in different geographical areas of the
country. Rapid economic growth can lead to growth in the money supply and rising inflation. If prices for our products do not rise
at a rate that is sufficient to fully absorb inflation-driven increases in our costs of supplies, our profitability can be adversely
affected.



35







According to the International
Monetary Fund or IMF, the inflation rate in China fluctuated on an annual basis from a low rate of -1.4% in 1999 to the highest
rate of 5.9% in 2008. The inflation rate was 3.3% and 4.9% in 2010 and 2011, respectively.   These fluctuations
and economic factors have led to the adoption by the Chinese government, from time to time, of various corrective measures designed
to restrict the availability of credit or regulate growth and contain inflation. In order to control inflation in the past, the
PRC government has imposed controls on bank credits, limits on loans for fixed assets and restrictions on state bank lending.  The
implementation of these and other similar policies can impede economic growth and thereby harm the market for our products.



Our subsidiaries are subject to restrictions
on paying dividends and making other payments to our subsidiary, Green New Jersey; as a result, we might therefore, be unable to
pay dividends to you.



We are a holding company
incorporated in the State of Nevada and do not have any assets or conduct any business operations other than our investments in
our subsidiaries, Green New Jersey, Jinong and Jintai, Gufeng and Yuxing.  As a result of our holding company structure,
we rely entirely on dividends payments from our subsidiaries in PRC. PRC regulations currently permit payment of dividends only
out of accumulated profits, as determined in accordance with PRC accounting standards and regulations. Our subsidiaries are also
required to set aside a portion of its after-tax profits according to PRC accounting standards and regulations to fund certain
reserve funds. We may experience difficulties such as lengthy processing time from the foreign exchange administrative bureau’s
side and formality requirement on paperwork in completing the administrative procedures necessary to obtain and remit foreign currency.
Furthermore, if any of our subsidiaries incurs debt on its own in the future, the instruments governing the debt may restrict its
ability to pay dividends or make other payments. If we or Green New Jersey are unable to receive any profits from the operations
of our subsidiaries in the PRC, we may be unable to pay dividends on our common stock.



Governmental control of currency conversion
may affect the value of your investment.



The PRC government
imposes controls on the convertibility of Renminbi (“RMB”) into foreign currencies and, in certain cases, the remittance
of currency out of the PRC. We receive substantially all of our revenues in RMB, which is currently not a freely convertible currency.
Shortages in the availability of foreign currency may restrict our ability to remit sufficient foreign currency to pay dividends,
or otherwise satisfy foreign currency denominated obligations. Under existing PRC foreign exchange regulations, payments of current
account items, including profit distributions, interest payments and expenditures from the transaction, can be made in foreign
currencies without prior approval from the PRC State Administration of Foreign Exchange (“SAFE”) by complying with
certain procedural requirements. However, approval from appropriate governmental authorities is required where RMB is to be converted
into foreign currency and remitted out of PRC to pay capital expenses such as the repayment of bank loans denominated in foreign
currencies.



The PRC government
also may at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign
exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be able
to pay certain of our expenses as they come due.



The fluctuation of RMB may materially
and adversely affect your investment.



The value of the RMB
against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in the PRC's political
and economic conditions. As we rely entirely on revenues earned in the PRC, any significant revaluation of RMB may materially and
adversely affect our cash flows, revenues and financial condition. For example, to the extent that we need to convert U.S. dollars
we receive from an offering of our securities into RMB for our operations, appreciation of the RMB against the U.S. dollar could
lead the RMB equivalent of the U.S. dollars be reduced and therefore could have a material adverse effect on our business, financial
condition and results of operations. Conversely, if we decide to convert our RMB into U.S. dollars for the purpose of making dividend
payments on our common stock or for other business purposes and the U.S. dollar appreciates against the RMB, the U.S. dollar equivalent
of the RMB we convert would be reduced. In addition, the depreciation of significant U.S. dollar denominated assets could result
in a charge to our income statement and a reduction in the value of these assets.



36







Recent PRC regulations relating to the
establishment of offshore special purpose companies by PRC domestic residents may subject our PRC resident beneficial owners  to
personal liability, limit our ability to inject capital into our PRC subsidiaries, limit our subsidiaries’ ability to increase
their registered capital or distribute profits to us, or may otherwise adversely affect us.



SAFE issued a public
notice in October 2005 (“Circular 75”) requiring PRC domestic residents to register with the local SAFE branch before
establishing or controlling any company outside of China for the purpose of capital financing with assets or equities of PRC companies,
referred to in the notice as an “offshore special purpose company.” PRC domestic residents who are stockholders of
offshore special purpose companies and have completed round trip investments but did not make foreign exchange registrations for
overseas investments before November 1, 2005 were retroactively required to register with the local SAFE branch before March 31,
2006. PRC resident stockholders are also required to amend their registrations with the local SAFE in certain circumstances. Internal
implementing guidelines issued by SAFE, which became public in June 2007 (known as Circular 106), expanded the reach of Circular
75. After consultation with China counsel, we do not believe that any of our PRC domestic resident stockholders are subject to
the SAFE registration requirement, however, we cannot provide any assurances that all of our stockholders who are PRC residents
will not be required to make or obtain any applicable registrations or approvals required by these SAFE regulations in the future.
The failure or inability of our PRC resident stockholders to comply with the registration procedures set forth therein may subject
us to fines and legal sanctions, restrict our cross-border investment activities, or limit our PRC subsidiaries’ ability
to distribute dividends or obtain foreign-exchange-dominated loans to our company.



As it is uncertain
how the SAFE regulations will be interpreted or implemented, we cannot predict how these regulations will affect our business operations
or future strategy.  For example, we may be subject to more stringent review and approval process with respect to our
foreign exchange activities, such as remittance of dividends and foreign-currency-denominated borrowings, which may adversely affect
our results of operations and financial condition.  In addition, if we decide to acquire a PRC domestic company, we cannot
assure you that we or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete
the necessary filings and registrations required by the SAFE regulations.  This may restrict our ability to implement
our acquisition strategy and could adversely affect our business and prospects.



We may be subject to fines and legal
sanctions by SAFE or other PRC government authorities if we or our employees who are PRC citizens fail to comply with PRC regulations
relating to employee stock options granted by offshore listed companies to PRC citizens.



On March 28, 2007,
SAFE promulgated the Operating Procedures for Foreign Exchange Administration of Domestic Individuals Participating in Employee
Stock Ownership Plans and Stock Option Plans of Offshore Listed Companies, or Circular 78.  Under Circular 78, Chinese
citizens who are granted share options by an offshore listed company are required, through a Chinese agent or Chinese subsidiary
of the offshore listed company, to register with SAFE and complete certain other procedures, including applications for foreign
exchange purchase quotas and opening special bank accounts.  We and our Chinese employees who have been granted share
options are subject to Circular 78.  Failure to comply with these regulations may subject us or our Chinese employees
to fines and legal sanctions imposed by SAFE or other PRC government authorities and may prevent us from further granting options
under our share incentive plans to our employees. Such events could adversely affect our business operations.



Our business and financial performance
may be materially adversely affected if the PRC regulatory authorities determine that our acquisition of Jinong constitutes a Round-trip
Investment without the PRC Ministry of Commerce (“MOFCOM”) approval.



On August 8, 2006,
six PRC regulatory agencies promulgated the Regulation on Merger and Acquisition of Domestic Companies by Foreign Investors (the
“2006 M&A Rules”), which became effective on September 8, 2006. According to  the 2006 M&A Rules,
a “Round-trip Investment” is defined as having taken place when a PRC business that is owned, directly or indirectly,
by PRC individual(s) is sold to a non-PRC entity that is established or controlled, directly or indirectly, by those same PRC individual(s)
and their PRC affiliates. Under the 2006 M&A Rules, any Round-trip Investment must be approved by the MOFCOM.  The
application of the 2006 M&A Rules with respect to the definition of Round-trip Investment remains unclear with no consensus
currently existing among the leading PRC law firms regarding the definition, scope of the applicability of the MOFCOM approval.



37







We, through Green New
Jersey, acquired 100% capital stock of Jinong (the “Jinong Acquisition”), Jinong was a PRC business whose stockholders
were two PRC individuals and a PRC entity, of which Mr. Tao Li, our current Chairman, President and CEO was the controlling stockholder
holding 52% of its shares. The PRC regulatory authorities may take the view that the Jinong Acquisition could be part of a Round-trip
Investment. The PRC legal counsel of Jinong has opinioned that the Jinong Acquisition did not violate any PRC law, which would
include the 2006 M&A Rules.  We, however, cannot assure you that the PRC regulatory authorities, MOFCOM in particular,
may take the same view as the PRC legal counsel. If the PRC regulatory authorities take the view that the Jinong Acquisition constitutes
a Round-trip Investment under the 2006 M&A Rules, we cannot assure you we may be able to obtain the approval required from
MOFCOM.



If the PRC regulatory
authorities take the view that the Jinong Acquisition constitutes a Round-trip Investment without MOFCOM approval, they could invalidate
our acquisition and ownership of Jinong. Additionally, the PRC regulatory authorities may take the view that the Jinong Acquisition
constitutes a transaction which requires the prior approval of the China Securities Regulatory Commission, or CSRC, before MOFCOM
approval is obtained. We believe that if this takes place, we may be able to find a way to re-establish control of Jinong’s
business operations through a series of contractual arrangements rather than an outright purchase of Jinong. We cannot assure you
that such contractual arrangements will be protected by PRC law or that we can receive as complete or effective economic benefit
and overall control of Jinong’s business than if the Company had direct ownership of Jinong. In addition, we cannot assure
you that such contractual arrangements can be successfully effected under PRC law. If we cannot obtain MOFCOM or CSRC approval
if required by the PRC regulatory authorities to do so, and if we cannot put in place or enforce relevant contractual arrangements
as an alternative and equivalent means of control of Jinong, our corporate structure, in particular, the control asserted by the
shareholders in the United States will be materially adversely affected.



The PRC’s labor law restricts
our ability to reduce our workforce in the PRC in the event of an economic downturn and may increase our production costs.



In June 2007,
the National People’s Congress of the PRC enacted new labor law legislation called the Labor Contract Law, which became effective
on January 1, 2008. The legislation formalized workers’ rights concerning overtime hours, pensions, layoffs, employment
contracts and the role of trade unions. Considered one of the strictest labor laws in the world, among other things, this new law
provides for specific standards and procedures for the termination of an employment contract and places the burden of proof on
the employer. In addition, the law requires the payment of a statutory severance pay upon the termination of an employment contract
in most cases, including the case of the expiration of a fixed-term employment contract. Further, the law requires an employer
to conclude an “employment contract without a fixed-term” with any employee who either has worked for the same employer
for 10 consecutive years or more or has had two consecutive fixed-term contracts with the same employer. An “employment contract
without a fixed term” can no longer be terminated on the ground of the expiration of the contract, although it can still
be terminated pursuant to the standards and procedures set forth under the new law. Because of the lack of implementing rules for
the new law and the precedents for the enforcement of such a law, the standards and procedures set forth under the law in relation
to the termination of an employment contract have raised concerns among foreign investment enterprises in the PRC that such “employment
contract without a fixed term” might in fact become a “lifetime, permanent employment contract.” Finally, under
this law, downsizing of either more than 20 people or more than 10% of the workforce may occur only under specified circumstances,
such as a restructuring undertaken pursuant to the PRC’s Enterprise Bankruptcy Law, or where a company suffers serious difficulties
in production and/or business operations, or where there has been a material change in the objective economic circumstances relied
upon by the parties at the time of the conclusion of the employment contract, thereby making the performance of such employment
contract not possible.  To date, there has been very little guidance and precedents as to how such specified circumstances
for downsizing will be interpreted and enforced by the relevant PRC authorities. All of our employees working for us exclusively
within the PRC are covered by the new law and thus, our ability to adjust the size of our operations when necessary in periods
of recession or less severe economic downturns may be curtailed. Accordingly, if we face future periods of decline in business
activity generally or adverse economic periods specific to our business, this new law can be expected to exacerbate the adverse
effect of the economic environment on our results of operations and financial condition.



38







PRC regulation of loans and direct investment
by offshore holding companies to PRC entities may delay or prevent us from using the proceeds we received from any offerings to
make loans to our PRC subsidiaries or to make additional capital contributions to our PRC subsidiaries, which could materially
and adversely affect our liquidity and our ability to fund and expand our business.



We are a holding company
in the United States conducting our operations in China through our PRC subsidiaries. In utilizing the proceeds we received from
any offerings, we may make loans to our PRC subsidiaries, whether currently in existence or to be formed in the future, or make
additional capital contributions to our PRC subsidiaries.



Any loans we make to
our PRC subsidiaries cannot exceed statutory limits and must be registered with SAFE, or its local counterparts. Under applicable
PRC law, the government authorities must approve a foreign-invested enterprise’s registered capital amount, which represents
the total amount of capital contributions made by the stockholders that have registered with the registration authorities. In addition,
the authorities must also approve the foreign-invested enterprise’s total investment, which is equal to the company’s
registered capital plus the amount of stockholder loans it is permitted to borrow under the law. The ratio of registered capital
to total investment cannot be lower than the minimum statutory requirement. If we make loans to our operating subsidiaries in China
that does not exceed its current maximum amount of borrowings, we will have to register each loan with SAFE or its local counterpart
for the issuance of a registration certificate of foreign debts. In practice, it could be time-consuming to complete such SAFE
registration process. Alternatively or concurrently with the loans, we might make capital contributions to our operating subsidiaries
in China and such capital contributions involve uncertainties of their own. Further, SAFE promulgated a new circular (known as
Circular 142) in August 2008 with respect to the administration of conversion of foreign exchange capital contributions of a foreign
invested enterprise. The circular clarifies that RMB converted from foreign exchange capital contributions can only be used for
the activities within the approved business scope of such foreign invested enterprise and cannot be used for domestic equity investments
unless otherwise permitted.



While we do not foresee
this to happen in the near future, with respect to future loans by us to our PRC subsidiaries or with respect to future capital
contributions by us to our PRC subsidiaries, we cannot assure you that we will be able to complete the necessary government registrations
or obtain the necessary government approvals on a timely basis, if at all, when the need arises. If circumstances call and if we
fail to complete such registrations or obtain such approvals, our ability to use the proceeds we receive from this offering and
to capitalize or otherwise fund our PRC operations may be negatively affected, which could adversely and materially affect our
ability to fund and expand our business.



If we were deemed as a “resident
enterprise” by PRC tax authorities, we could be subject to tax on our global income at the rate of 25% under the new Enterprise
Income Tax Law (“2008 EIT Law”) in the PRC and our non-PRC shareholders could be subject to certain PRC taxes.



Under the 2008 EIT
Law and the implementing rules, both of which became effective January 1, 2008, an enterprise established outside of the PRC with
“de facto management bodies” within the PRC may be considered a PRC “resident enterprise” and will be subject
to the enterprise income tax at the rate of 25% on its global income as well as PRC enterprise income tax reporting obligations.
The implementing rules of the 2008 EIT Law define “de facto management” as “substantial and overall management
and control over the production and operations, personnel, accounting, and properties” of the enterprise. If we were to be
considered a “resident enterprise” by the PRC tax authorities, our global income would be taxable under the 2008 EIT
Law at the rate of 25% and, to the extent we were to generate a substantial amount of income outside of PRC in the future, we would
be subject to additional taxes. In addition, the dividends we pay to our non-PRC enterprise shareholders and gains derived by such
shareholders from the transfer of our shares may also be subject to PRC withholding tax at the rate up to 10%, if such income were
regarded as China-sourced income. In addition, the circular mentioned above details that certain Chinese-invested enterprises controlled
by Chinese enterprises or Chinese group enterprises will be classified as “resident enterprises” if the following are
located or resident in China: senior management personnel and departments that are responsible for daily production, operation
and management; financial and personnel decision making bodies; key properties, accounting books, company seal, and minutes of
board meetings and stockholders’ meetings; and half or more of the directors with voting rights or senior management. However,
as of the date hereof, no final interpretation on the implementation of the “resident enterprise” designation is available.
Moreover, any such designation, when made by PRC tax authorities, will be determined based on the facts and circumstances of individual
cases. As a result, we cannot determine the likelihood or consequences of our being designated a “resident enterprise”
as of the date hereof.



39







If the PRC tax authorities
determine that we are a “resident enterprise,” we may be subject to enterprise income tax at a rate of 25% on our worldwide
income and dividends paid by us to our non-PRC stockholders as well as capital gains recognized by them with respect to the sale
of our stock may be subject to a PRC withholding tax. This will have an impact on our effective tax rate, a material adverse effect
on our net income and results of operations, and may require us to withhold tax on our non-PRC stockholders.



Because our principal assets are located
outside of the United States and because almost all of our directors and officers reside outside of the United States, it may be
difficult for you to use the United States Federal securities laws to enforce your rights against us and our officers and most
of our directors or to enforce judgments of United States courts against us or most of our directors and officers in the PRC.



Almost all of our present
officers and directors reside outside of the United States. In addition, our operating subsidiaries are located in the PRC and
substantially all of their assets are located outside of the United States. It may therefore be difficult for investors in the
United States to enforce their legal rights based on the civil liability provisions of the United States Federal securities laws
against us and our officers and most of our directors in the courts of either the United States or the PRC and, even if civil judgments
are obtained in courts of the United States, to enforce such judgments in PRC courts. Further, it is unclear if extradition treaties
now in effect between the United States and the PRC would permit effective enforcement against us or most of our directors and
officers of criminal penalties, under the United States Federal securities laws or otherwise.



Failure to comply with the U.S. Foreign
Corrupt Practices Act could subject us to penalties and other adverse consequences.



We are required to
comply with the United States Foreign Corrupt Practices Act, which generally prohibits United States companies from engaging in
bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Foreign companies,
including some that may compete with us, are not subject to these prohibitions, and therefore may have a competitive advantage
over us. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices may occur in the PRC. If our competitors
engage in these practices they may receive preferential treatment, giving our competitors an advantage in securing business, which
would put us at a disadvantage. We can make no assurance that our employees or other agents will not engage in such conduct for
which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer
severe penalties and other consequences that may have a material adverse effect on our business, financial condition and results
of operations.



We may have difficulty managing the
risk associated with doing business in the Chinese fertilizer and agricultural products sectors.



In general, the fertilizer
and agricultural products sectors in China is affected by a series of factors, including, but not limited to, natural, economic
and social such as climate, market, technology, regulation, and globalization, which makes risk management difficult. Fertilizer
and agricultural products operations in China face similar risks as present in other countries, however, in the PRC these can either
be mitigated or exacerbated due to governmental intervention through policy promulgation and implementation either in the fertilizer
and agricultural products or sectors which provide critical inputs to fertilizer and agricultural products such as energy or outputs
such as transportation. While not an exhaustive list, the following factors could significantly affect our ability to do business:



·food,
feed, and energy demand including liquid fuels and crude oil;



·agricultural,
financial, energy and renewable energy and trade policies;



·input
and output pricing due to market factors and regulatory policies;



40







·production
and crop progress due to adverse weather conditions, equipment deliveries, and water and irrigation conditions; and



·infrastructure
conditions and policies.



Currently, we do not
hold and do not intend to purchase insurance policies to protect revenue in the case that the above conditions cause losses of
revenue.



Risks Related to an Investment in our
Stock.



Any unfavorable outcome of our pending
class action and the expenses we have to pay in connection with proceedings in such nature could have a material adverse effect
on our business.



A class action lawsuit
was filed in the Nevada Federal Court on behalf of purchasers of our common stock between May 12, 2009 and January 4, 2011, alleging
that we and certain of our current and former officers and directors violated the federal securities laws. This class action is
still pending. See “Item 3. – Legal Proceedings” of this Report. Although all of the four derivative suits have
been dismissed by the courts with no expenses paid to the plaintiffs or plaintiffs’ counsel by the Company as described under
Item 3 of this Report, the expense of defending the proceedings including the closed SEC investigation we have to pay, to the extent
not being covered by the Company’s D&O insurance policy, may be substantial and the time required to defend the actions
could divert management’s attention from the day-to-day operations of our business. In addition, an unfavorable outcome of
such an action could have a material adverse effect on our business, results of operations and cash flows.



We have not paid any cash dividends
and no cash dividends will be paid in the foreseeable future.



We do not anticipate
paying cash dividends on our common stock in the foreseeable future and we may not have sufficient funds legally available to pay
dividends.  Even if the funds are legally available for distribution, we may nevertheless decide not to pay, or may be
unable to pay, any dividends.  We intend to retain all earnings for our company’s operations.



The market price for our common stock
may be volatile and subject to wide fluctuations, which may adversely affect the price at which you can sell our shares.



The market price for
our common stock may be volatile and subject to wide fluctuations in response to factors including the following:



·actual
or anticipated fluctuations in our quarterly operations results;



·filing
of a class action lawsuit against us and certain of our current and former officers;



·changes
in financial estimates by securities research analysts;



·conditions
in foreign or domestic fertilizer and agricultural markets;



·changes
in the economic performance or market valuations of other companies in the same industry;



·announcements
by us or our competitors of new products, acquisitions, strategic partnerships, joint ventures or capital commitments;



·addition
or departure of key personnel;



·fluctuations
of exchange rates between the RMB and the U.S. dollar;



41







·intellectual
property litigation;



·general
economic or political conditions in the PRC; and



·Other
events or factors, many of which are beyond our control.



In addition, the securities
market has from time to time experienced significant price and volume fluctuations that are not related to the operating performance
of particular companies.  These market fluctuations may also materially and adversely affect the market price of our
stock, regardless of our actual operating performance.



Our officers, directors and affiliates
control us through their positions and stock ownership and their interests may differ from other stockholders.



Our Chairman, President
and CEO, Mr. Tao Li, had the voting rights on 7,926,145, or 28.9%, of our issued and outstanding common stock as of June 30, 2012.
As a result, he is able to influence the outcome of stockholder votes on various matters, including the election of directors and
extraordinary corporate transactions, including business combinations. The interests of Mr. Li may differ from other stockholders.



We may require additional financing
in the future and our operations could be curtailed if we are unable to obtain required additional financing when needed.



We may need to obtain
additional equity or debt financing to fund future capital expenditures. Additional equity may result in dilution to the holders
of our outstanding shares of capital stock. Additional debt financing may include conditions that would restrict our freedom to
operate our business, such as conditions that:



·limit
our ability to pay dividends or require us to seek consent for the payment of dividends;



·increase
our vulnerability to general adverse economic and industry conditions;



·require
us to dedicate a portion of our cash flow from operations to payments on our debt, thereby reducing the availability of our cash
flow to fund capital expenditures, working capital and other general corporate purposes; and



·limit
our flexibility in planning for, or reacting to, changes in our business and our industry.



We cannot guarantee
that we will be able to obtain any additional financing on terms that are acceptable to us, or at all.



Techniques employed by manipulative
short sellers in Chinese small cap stocks may drive down the market price of our common stock.



Short selling is the
practice of selling securities that the seller does not own but rather has, supposedly, borrowed from a third party with the intention
of buying identical securities back at a later date to return to the lender. The short seller hopes to profit from a decline in
the value of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as the short
seller expects to pay less in that purchase than it received in the sale. As it is therefore in the short seller’s best interests
for the price of the stock to decline, many short sellers (sometime known as “disclosed shorts”) publish, or arrange
for the publication of, negative opinions regarding the relevant issuer and its business prospects in order to create negative
market momentum and generate profits for themselves after selling a stock short. While traditionally these disclosed shorts were
limited in their ability to access mainstream business media or to otherwise create negative market rumors, the rise of the Internet
and technological advancements regarding document creation, videotaping and publication by weblog (“blogging”) have
allowed many disclosed shorts to publicly attack a company’s credibility, strategy and veracity by means of so-called research
reports that mimic the type of investment analysis performed by large Wall Street firm and independent research analysts. These
short attacks have, in the past, led to selling of shares in the market, on occasion in large scale and broad base. Issuers with
business operations based in China and who have limited trading volumes and are susceptible to higher volatility levels than U.S.
domestic large-cap stocks, can be particularly vulnerable to such short seller attacks.



42







These short seller
publications are not regulated by any governmental, self-regulatory organization or other official authority in the U.S., are not
subject to the certification requirements imposed by the Securities and Exchange Commission in Regulation AC (Regulation Analyst
Certification) and, accordingly, the opinions they express may be based on distortions of actual facts or, in some cases, fabrications
of facts. In light of the limited risks involved in publishing such information, and the enormous profit that can be made from
running just one successful short attack, unless the short sellers become subject to significant penalties, it is more likely than
not that disclosed short sellers will continue to issue such reports.



While we intend to
strongly defend our public filings against any such short seller attack, often times we are constrained, either by principles of
freedom of speech, applicable state law (often called “Anti-SLAPP statutes”), or issues of commercial confidentiality,
in the manner in which we can proceed against the relevant short seller. You should be aware that in light of the relative freedom
to operate that such persons enjoy – oftentimes blogging from outside the U.S. with little or no assets or identity requirements
– should we be targeted for such an attack, our stock will likely suffer from a temporary, or possibly long term, decline
in market price should the rumors created not be dismissed by market participants.



In August and September
of 2010, there were reports published by the International Financial Research & Analysis Group, Seeking Alpha website, analysts,
and other web-based publishers that contained misleading statements about us. Although we have responded in two press releases
dated September 13, 2010, it is likely that that there will be additional short seller attacks against Chinese companies. As a
result, the price of our stock remains vulnerable to any further attacks in this regard.



A SEC investor bulletin regarding reverse
mergers may drive down the market price of our common stock.



On June 9, 2011, the
SEC issued an investor bulletin in which it explained the process by which a company becomes a public company by means of a reverse
merger, described the potential risks of investing in a reverse merger company and detailed recent enforcement actions taken by
it against certain reverse merger companies. In particular the investor bulletin raised specific concerns with respect to foreign
companies that access the U.S. markets through the reverse merger process, as we did. The SEC investor bulletin could lead investors
in our common stock to sell their shares and may cause other investors not to invest in us, thus driving down the market price
of our common stock or making it more difficult for us to raise funds in the future.



If our common stock were delisted and
determined to be a “penny stock,” a broker-dealer may find it more difficult to trade our common stock and an investor
may find it more difficult to acquire or dispose of our common stock in the secondary market.



If our common stock
were removed from listing with the New York Stock Exchange, it may be subject to the so-called “penny stock” rules.
The SEC has adopted regulations that define a “penny stock” to be any equity security that has a market price per share
of less than $5.00, subject to certain exceptions, such as any securities listed on a national securities exchange. For any transaction
involving a “penny stock,” unless exempt, the rules impose additional sales practice requirements on broker-dealers,
subject to certain exceptions. If our common stock were delisted and determined to be a “penny stock,” a broker-dealer
may find it more difficult to trade our common stock and an investor may find it more difficult to acquire or dispose of our common
stock on the secondary market. Investors in penny stocks should be prepared for the possibility that they may lose their whole
investment.



43







ITEM 1B. Unresolved
Staff Comments



None.



ITEM 2.  PROPERTIES



There is no private
ownership of land in China.  All land is owned by the government of the PRC on behalf of all Chinese citizens or collectively
owned by farmers.Land use rights can be allocated for free, granted or transferred with consideration upon approval
by the PRC State Land Administration Bureau or its authorized branches.



Our
principal executive offices are located at 3rd floor, Borough A, Block A. No. 181, South Taibai Road, Xi’an, Shaanxi province,
PRC 710065. The office space is approximately 360 square meters in area (3,875 square feet).  It is leased from Xi’an
Kingtone Information Technology Co., Ltd. (“Kingtone Information”), which is controlled by Mr. Li, our Chairman, President
and CEO, for a term of two years from July 1, 2010 at an annual rent of $20,412 (RMB129,600), which is the market rate in that
area. On June 29, 2012, Jinong signed a new office lease with Kingtone Information. Pursuant to the new lease, Jinong rented 612
square meters (approximately 6,588 square feet) of office space from Kingtone Information. The lease provided for a two-year term
effective as of July 1, 2012 with monthly rent of RMB 24,480 (approximately $3,856).



Through Jinong, we
own an approximately 6,495 square meters (69,911 square feet) production facility that manufactures liquid fertilizer products
and a 13,803 square meter (148,576 square feet) production facility that produces liquid and highly concentrated (powdered) fertilizers
, located in the Yang Ling Agriculture High-tech Demonstration Zone, on No. 6 Guhua 5 Road, Yangling, Xi’an, Shaanxi province,
PRC 712100.  The production facilities are located on approximately 30,947 square meters (333,111 square feet) of land, which
also contains office buildings, warehouses and research laboratories. The production lines have a total annual production
capacity of 55,000 metric tons.  We own the land use rights for the land on which Jinong’s manufacturing facilities
are situated for a term of 50 years from 2001.



Jintai, Jinong’s
wholly-owned subsidiary, is located in the Caotan Modern Agriculture Development Zone in the northern suburb area of Xi’an.
Jintai has the right to use six intelligent greenhouses and six affiliated buildings, occupying approximately 137,000 square meters
(1,474,656 square feet) of land.  We lease the land used for Jintai’s operations from Xi’an Jinong Hi-tech Agriculture
Demonstration Zone (the “Agriculture Demonstration Zone”) for 10 years from January 2008 with an annual rent of approximately
$9,828. From March 2012, the Company commenced to relocate Jintai in the facilities of one of the Company’s other subsidiaries,
Yuxin, located in Hu County, 18 kilometers southeast of Xi’an city. The entire relocation process is expected to complete
by the end of fiscal year 2013. After the completion of the relocation, the lease with Agriculture Demonstration Zone will be automatically
ceased with no penalty to Jintai.



Yuxing, Jinong’s
wholly-owned subsidiary, has land use rights to over 353,000 square meters (3,799,660 square feet) of land located in Hu County,
Xi’an, Shaanxi Province on which we have built 100 sunlight greenhouses and six intelligent greenhouses as part of a research
and development center currently under construction.



Through Gufeng and
Tianjuyuan, we own an additional 17,930 square meters (approximately 192,997 square feet) of manufacturing, office and warehouse
space and 47,110 square meters (approximately 507,088 square feet) of auxiliary facilities of the building located on approximately
42,726 square meters (459,898 square feet) of land located in No. 6 Mafang Logistics Park, Pinggu, Beijing.  In addition,
the eight manufacturing facilities of Gufeng and Tianjuyuan collectively increased our total annual production capacity by another
500,000 metric tons.



Tianjuyuan leases approximately
47,333 square meters (509,488 square feet) of land in the Ping Gu District of Beijing.  Under the lease dated February 16,
2004 with the village committee of Dong Gao Village and Zhen Nan Zhang Dai Village in the Beijing Ping Gu District, Tianjuyuan
leases the land at an annual rent of RMB35,500 (approximately $5,591).  The lease term is from February 1, 2004 to January
31, 2054. However, according to our PRC counsel, such lease is invalid and unenforceable pursuant to the PRC Land Administration
Law and related regulations.  Therefore, we are in the process of applying for the proper land use right certificate from
the relevant government authority.  There can be no assurance such land use right certificate will be granted to us.



44







The details on our properties and manufacturing
facilities are described in the table below:



|Facility Location
        and Production
        Segment |  | Address                                                                                                     |  | Area (square meters
        / square feet) |  | Ownership Status and
        Term                                                                                                
|-------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------- |  | ------------------------------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------
|                                                         |  |                                                                                                             |  |                                            |  |                                                                                                                                  
|Xi’an  – Fertilizers
        (Jinong)                    |  | Yang Ling Agriculture High-tech Demonstration Zone, No. 6 Guhua 5 Road, Yangling, Xi’an, Shaanxi province   |  | 30,947 sq. m.
        (333,111 sq. ft.)    |  | Land use right (Certificate #006012633) expires in January 2051* (1)                                                             
|                                                         |  |                                                                                                             |  |                                            |  |                                                                                                                                  
|Xi’an – Fertilizers (Jinong)                             |  | Yang Ling Agriculture High-tech Demonstration Zone, No. 6 Guhua 5 Road, Yangling, Xi’an, Shaanxi province   |  | 6,495 sq. m.
        (69,911 sq. ft.)      |  | Building Ownership Certificate (Certificate # 20050722)*(1)                                                                      
|                                                         |  |                                                                                                             |  |                                            |  |                                                                                                                                  
|Xi’an – Agricultural Products  (Jintai)                  |  | Caotan Modern Agriculture Development Zone, Middle Section of Shangji Road, Caotan, Xi’an, Shaanxi Province |  | 137,000 sq. m.
        (1,474,656 sq. ft.) |  | Lease from January 2008 to January 2018, expect to terminate after the completion of the relocation around the end of fiscal 2013
|                                                         |  |                                                                                                             |  |                                            |  |                                                                                                                                  
|Xi’an – research and development center (Yuxing)         |  | North Xin’an Village, Weifeng, Hu County, Shaanxi Province                                                  |  | 353,000 sq. m.
        (3,799,660 sq. ft.) |  | Land use right (Certificate #006001700) expires in August 2059                                                                   
|                                                         |  |                                                                                                             |  |                                            |  |                                                                                                                                  
|Beijing – fertilizers (Tianjuyuan & Gufeng)              |  | South of Nanzhangdai Village, Donggaocun Town, Ping Gu District, Beijing                                    |  | 42,726 sq. m.
        (459,898 sq. ft.)    |  | Land use right (Certificate #2003189) expires in August 2053*(1)                                                                 
|                                                         |  |                                                                                                             |  |                                            |  |                                                                                                                                  
|Beijing – fertilizers (Tianjuyuan & Gufeng)              |  | South of Nanzhangdai Village, Donggaocun Town, Ping Gu District, Beijing                                    |  | 17,930 sq. m.
        (192,997 sq. ft.)    |  | Building Ownership Certificate# 33142*(1)                                                                                        
|                                                         |  |                                                                                                             |  |                                            |  |                                                                                                                                  
|Beijing – fertilizers (Tianjuyuan & Gufeng)              |  | South of Nanzhangdai Village, Donggaocun Town, Ping Gu District, Beijing                                    |  | 47,333 sq. m.
        (509,488 sq. ft.)    |  | Lease from February 2004 to January 2054*(2)                                                                                     



* (1) Gufeng entered
into several loan agreements with Agriculture Bank of China and China Minsheng Banking Corp., Ltd in 2012 and 2011 respectively.
As a condition for the loans, Gufeng mortgaged Tianjuyuan (its wholly owned subsidiary) and Jinong’s (its parent company)
land use right and building ownership. We summarize the major information in the table below:



45







|No. |  | Loan
        Amount               |  | Lending Institution                                         |  | Contract
        Period                  |  | Type of
        Guarantee |  | Interest
        Rate |  | Property under
        Mortgage                                                                             
|--- |  | --------------------------------- |  | ----------------------------------------------------------- |  | ---------------------------------------- |  | ------------------------- |  | --------------------- |  | ------------------------------------------------------------------------------------------------------------
|    |  |                                   |  |                                                             |  |                                          |  |                           |  |                       |  |                                                                                                             
|1   |  | RMB10.1 million ($1,599,840)      |  | Agriculture Bank of China - Beijing Ping Gu District Branch |  | April 23, 2012 to April 22, 2013         |  | Mortgage                  |  | 7.544% (year)         |  | Tianjuyuan’s land (Certificate #2003189) and building (Certificate #33142)                                  
|    |  |                                   |  |                                                             |  |                                          |  |                           |  |                       |  |                                                                                                             
|2   |  | RMB8.4 million ($1,330,560)       |  | Agriculture Bank of China - Beijing Ping Gu District Branch |  | January 1, 2012 to January 10, 2013      |  | Mortgage                  |  | 6.888% (year)         |  | Tianjuyuan’s land (Certificate #2003189) and building (Certificate #33142)                                  
|    |  |                                   |  |                                                             |  |                                          |  |                           |  |                       |  |                                                                                                             
|3   |  | RMB8 million ($1,267,200)         |  | Agriculture Bank of China - Beijing Ping Gu District Branch |  | March 23, 2012 to March 22, 2013         |  | Mortgage                  |  | 8.2% (year)           |  | Tianjuyuan’s land (Certificate # 2003189) and building (Certificate #33142)                                 
|    |  |                                   |  |                                                             |  |                                          |  |                           |  |                       |  |                                                                                                             
|4   |  | RMB 11,454,368
        ($1814372) |  | China Minsheng Banking Corp., Ltd.                          |  | September 8, 2011 to September 8, 2012   |  | Mortgage                  |  | 8.2%(year)            |  | Jinong’s Land use right (Certificate #006012633) and Building Ownership Certificate (Certificate # 20050722)
|    |  |                                   |  |                                                             |  |                                          |  |                           |  |                       |  |                                                                                                             
|5   |  | RMB3,545,632                      |  | China Minsheng Banking Corp., Ltd.                          |  | September 19, 2011 to September 19, 2012 |  | Mortgage                  |  | 8.2%(year)            |  | Jinong’s Land use right (Certificate #006012633) and Building Ownership Certificate (Certificate # 20050722)



*(2)The buildings and improvements built on the leased land had an area of 29,886 square meters, 46.0% of the total squaremeters
of all buildings and improvements at Gufeng. The historical cost of the buildings and improvements built on the leased land was
RMB41, 107,015 (approximately $6,511,351), being 47.8% of total cost for all building and improvements at Gufeng. The historical
cost of machines in the related land area where use right certificate is pending was RMB15, 397,205 (approximately $2,438,917),
being 23.7% of total cost for all machines and equipment at Gufeng.



ITEM 3.  LEGAL PROCEEDINGS



On October 15, 2010,
a class action lawsuit was filed against us and certain of our current and former officers in the United States District Court
for the District of Nevada (the "Nevada Federal Court") on behalf of purchasers of our common stock between November
12, 2009 and September 1, 2010. On April 27, 2011, the court appointed the lead plaintiff and lead plaintiff’s counsel. On
June 13, 2011, lead plaintiff filed an amended complaint, which adds several additional defendants and expands the class period
to include purchasers who purchased our common stock between May 12, 2009 and January 4, 2011. The amended complaint alleges that
we and certain of our current and former officers and directors violated Sections 10(b) and 20(a) of the Securities Exchange Act
of 1934 and Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, as amended, by making material misstatements and omissions
in our financial statements, securities offering documents, and related disclosures during the class period. The plaintiffs claim
that such allegedly misleading statements inflated the price of our common stock and seek monetary damages in an amount to be determined
at trial. Defendants moved to dismiss the amended complaint on October 7, 2011. Defendants’ motions are fully briefed and
the Nevada Federal Court has scheduled oral argument for October 2, 2012.



On September 5, 2012,
we received a letter from the staff of the U.S. Securities and Exchange Commission notifying us that the staff had completed its
investigation of the Company and that it did not intend  to recommend any enforcement action against the Company.



|ITEM 4. | Mine Safety Disclosures.
|------- | ------------------------



This item is not applicable to us.



46







PART II



|ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
|------- | -------------------------------------------------------------------------------------------------------------



Market Information



We have two classes of equity securities:
(i) common stock, par value $.001 per share, 27,455,721 shares of which were outstanding as of September 10, 2012, and (ii) preferred
stock, par value $.001 per share, of which no shares were outstanding as of September 10, 2012.   Since December
7, 2009, our common stock has been listed and traded on the NYSE under the symbol “CGA”.  From March 9, 2009
to December 4, 2009, our common stock was listed and traded on the NYSE Amex Equities.  From August 27, 2007 until March
9, 2009, our common stock was traded on the Over-the-Counter Bulletin Board.



The table below sets forth the high and
low sales prices for our common stock for each fiscal quarter during the past two fiscal years based on reports from Yahoo Finance.



|Quarter Ended |  | High |       |  | Low |  
|------------- |  | ---- | ----- |  | --- | -
|09/30/2010    |  | $    | 12.50 |  |     | $
|12/31/2010    |  | $    | 10.49 |  |     | $
|03/31/2011    |  | $    | 9.49  |  |     | $
|06/30/2011    |  | $    | 7.87  |  |     | $
|09/30/2011    |  | $    | 6.08  |  |     | $
|12/31/2011    |  | $    | 5.02  |  |     | $
|03/31/2012    |  | $    | 4.75  |  |     | $
|06/30/2012    |  | $    | 4.37  |  |     | $



Holders



As of September 10, 2012, there were approximately
619 shareholders of record of our common stock. This does not reflect the number of persons or entities who held stock in nominee
or "street" name through various brokerage firms.



Dividends



Our board of directors has not declared
a dividend on our common stock during the last two fiscal years or the subsequent interim period due to our business expansion
and integration in the last two fiscal years and in the subsequent interim period, which required and would require a high demand
on capital.



The payment of dividends, if any, is at
the discretion of the Board of Directors and is contingent on the Company’s revenues and earnings, capital requirements,
financial conditions and the ability of our operating subsidiaries to obtain approval to send monies out of the PRC. The PRC's
national currency, the Yuan, is not a freely convertible currency. Pleaser read “ Our subsidiaries are subject to restrictions
on paying dividends and making other payments to our subsidiary, Green New Jersey; as a result, we might therefore, be unable to
pay dividends to you. ” under Item 1A “Risk Factors” of this Report.



Securities Authorized for Issuance Under Equity Compensation
Plans



On October 27, 2009, our Board of Directors
adopted the Company’s 2009 Equity Incentive Plan (the “Incentive Plan”). On December 11, 2009, our stockholders
approved the Incentive Plan. The Incentive Plan gives us the ability to grant stock options, stock appreciation rights (SARs),
restricted stock and other stock-based awards to our employees, consultants and to non-employee members of our advisory board or
our Board of Directors or the board of directors of any of our subsidiaries.



As of June 30, 2012, options to purchase
an aggregate of shares of common stock had been granted under the Incentive Plan. Options granted in the future under the Incentive
Plan are within the discretion of our board of directors or our compensation committee. The following table summarizes the number
of shares of our common stock authorized for issuance under our equity compensation plans as of June 30, 2012.



47







Equity Compensation Plan Information



|Plan category                                              |  | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) |         |  | Weighted-average exercise price of outstanding options, warrants and rights (b) |   |       | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | 
|---------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------- | ------- |  | ------------------------------------------------------------------------------- | - | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------- | 
|Equity compensation plans approved by security holders     |  |                                                                                                 | 115,099 |  |                                                                                 | $ | 14.70 |                                                                                                                                                 | 
|Equity compensation plans not approved by security holders |  |                                                                                                 | —       |  |                                                                                 |   | —     |                                                                                                                                                 | 
|Total                                                      |  |                                                                                                 | 115,099 |  |                                                                                 | $ | 14.70 |                                                                                                                                                 | 



Performance Graph



The following graph compares the cumulative
total return on our common stock, the NYSE Composite Index and a peer group index consisting of companies reporting under the Standard
Industrial Classification Code 2870 over the period commencing on August 7, 2008 (the first date on which there was any significant
trading of our common stock after our registration statement on Form SB-2 was declared effective by the Commission) and ending
on June 30, 2012.







The performance graph in this Item 5 is not deemed to
be “soliciting material” or to be “filed” with the Commission or subject to Regulation 14A or 14C under
the Exchange Act or to the liabilities of Section 18 of the Exchange Act, and will not be deemed to be incorporated by reference
into any filings under the Securities Act or the Exchange Act, whether made before or after the date of this Report and irrespective
of any general incorporation language in such filings.



Recent Sales of Unregistered Securities; Use of Proceeds
from Unregistered Securities.



Sales of unregistered securities by the
Company have been previously disclosed in our Form 8-Ks and 10-Qs filed with the SEC.



48







Issuer Purchases of Equity Securities



None.



|ITEM 6. | SELECTED FINANCIAL DATA
|------- | -----------------------



The following selected consolidated income
statement data for the years ended June 30, 2012, 2011 and 2010 and the selected consolidated balance sheet data as of June
30, 2012 and 2011 have been derived from our audited consolidated financial statements included elsewhere in this Annual Report
on Form 10-K. These consolidated financial data should be read in conjunction with “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” and the financial statements and related notes included elsewhere in this
Report.  Our selected consolidated income statement data for the year ended June 30, 2009 and 2008 and the selected consolidated
balance sheet data as of June 30, 2010, 2009 and 2008 have been derived from our audited financial statements which are not included
in this Annual Report on Form 10-K. The historical results presented below are not necessarily indicative of the results that may
be expected in any future period.





|                                     |  | As of June 30, |            
|------------------------------------ |  | -------------- | -----------
|                                     |  | 2012           |            
|                                     |  |                |            
|Revenue                              |  | $              | 217,524,205
|Cost of goods sold                   |  |                | 138,248,972
|Gross profit                         |  |                | 79,275,233 
|Operating expenses                   |  |                | 25,350,223 
|Income from operations               |  |                | 53,925,010 
|Non-operating income (expense)       |  |                | (1,165,872 
|Provision for income taxes           |  |                | 10,801,313 
|Net income                           |  | $              | 41,957,825 
|                                     |  |                |            
|Weighted average shares outstanding: |  |                |            
|Basic                                |  |                | 26,943,530 
|Diluted                              |  |                | 26,943,530 
|                                     |  |                |            
|Earnings per share:                  |  |                |            
|Basic                                |  | $              | 1.56       
|Diluted                              |  | $              | 1.56       



|                           |  | As of June 30, |            
|-------------------------- |  | -------------- | -----------
|                           |  | 2012           |            
|                           |  |                |            
|Total current assets       |  | $              | 175,089,323
|Total assets               |  |                | 288,031,053
|Total current liabilities  |  |                | 45,774,399 
|Total liabilites           |  |                | 45,774,399 
|Total stockholders' equity |  | $              | 242,256,654



Note: We acquired Gufeng and its wholly owned subsidiary Tianjuyuan
on July 2, 2010.



49







|ITEM 7. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|------- | --------------------------------------------------------------------------------------



The following discussion and analysis
of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and
the notes to those financial statements appearing elsewhere in this report. This discussion and analysis contains forward-looking
statements that involve significant risks and uncertainties. As a result of many factors, such as the slow-down of the global financial
markets and its impact on economic growth in general, the competition in the fertilizer industry and the impact of such competition
on pricing, revenues and margins, the weather conditions in the areas where our customers are based, the cost of attracting and
retaining highly skilled personnel, the prospects for future acquisitions, and the factors set forth elsewhere in this report,
our actual results may differ materially from those anticipated in these forward-looking statements. In light of these risks and
uncertainties, there can be no assurance that the forward-looking statements contained in this report will in fact occur. You should
not place undue reliance on the forward-looking statements contained in this report.



The forward-looking statements speak
only as of the date on which they are made, and, except to the extent required by U.S. federal securities laws, we undertake no
obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is
made or to reflect the occurrence of unanticipated events.  Further, the information about our intentions contained in this
report is a statement of our intention as of the date of this report and is based upon, among other things, the existing regulatory
environment, industry conditions, market conditions and prices and our assumptions as of such date.  We may change our intentions,
at any time and without notice, based upon any changes in such factors, in our assumptions or otherwise.



Unless the context indicates otherwise,
as used in the following discussion, “Company”, “we,” “us,” and “our,” refer to
(i) China Green Agriculture, Inc. (“Green Nevada”), a corporation incorporated in the State of Nevada; (ii) Green Agriculture
Holding Corporation (“Green New Jersey”), a wholly-owned subsidiary of Green Nevada incorporated in the State of New
Jersey; (iii) Shaanxi TechTeam Jinong Humic Acid Product Co., Ltd. (“Jinong”), a wholly-owned subsidiary of Green New
Jersey organized under the laws of the PRC; (iv) Xi’an Jintai Agriculture Technology Development Company (“Jintai”),
wholly-owned subsidiary of Jinong in the PRC, (v) Xi’an Hu County Yuxing Agriculture Technology Development Co., Ltd. (“Yuxing”),
a wholly-owned subsidiary of Jinong in the PRC; (vi) Beijing Gufeng Chemical Products Co., Ltd., a wholly-owned subsidiary of Jinong
in the PRC (“Gufeng”), and (vii) Beijing Tianjuyuan Fertilizer Co., Ltd., Gufeng’s wholly-owned subsidiary in
the PRC (“Tianjuyuan”).



Unless the context otherwise requires,
all references to (i) “PRC” and “China” are to the People’s Republic of China; (ii) “U.S. dollar,”
“$” and “US$” are to United States dollars; and (iii) “RMB”, “Yuan” and Renminbi
are to the currency of the PRC or China.



Overview



We are engaged in the
research, development, production and sale of various types of fertilizers and agricultural products in the PRC through our wholly-owned
Chinese subsidiaries, Jinong, Jintai, Yuxing, Gufeng and Tianjuyuan. Our primary business is fertilizer products, specifically
humic-acid based compound fertilizer produced by Jinong and compound fertilizer, blended fertilizer, organic compound fertilizer,
slow-release fertilizers, highly-concentrated water-soluble fertilizers and mixed organic-inorganic compound fertilizer produced
by Gufeng. In addition, through Jintai and Yuxing, we develop and produce agricultural products, such as top-grade fruits, vegetables,
flowers and colored seedlings. For financial reporting purposes, our operations are organized into four business segments: fertilizer
products (Jinong), fertilizer products (Gufeng), agricultural products production (Jintai), and agricultural products production
(Yuxing).



Jintai and Yuxing also
serve as a research and development base for our fertilizer products. The fertilizer business conducted by Jinong and Gufeng generated
approximately 96.4%, 96.1% and 88.0% of our total revenues in the fiscal year ended June 30, 2012, 2011 and 2010, respectively.
It should be noted that our consolidated results for the 2010 period do not include the results of Gufeng and its subsidiary, Tianjuyuan,
which were acquired on July 2, 2010.



50







Fertilizer Products



As of June 30, 2012,
we had developed and produced a total of 443 different fertilizer products in use, of which 126 and 317 were developed and produced
by Jinong and Gufeng, respectively.



Below is a table that
shows the metric tons of fertilizer sold by Jinong and Gufeng and the revenue per ton for the periods indicated:



|   |  | For the years ended June 30, |  |               |  |        |  |            |   |            | 
|-- |  | ---------------------------- |  | ------------- |  | ------ |  | ---------- | - | ---------- | 
|   |  | 2012                         |  | 2011          |  | 2010   |  | YOY Change |   | YOY Change | 
|   |  |                              |  | (Metric tons) |  |        |  |            |   |            | 
|JN |  | 61,590                       |  | 48,038        |  | 22,834 |  | 13,552     |   | 25,204     | 
|GF |  | 256,618                      |  | 289,731       |  |        |  | (33,113    | ) | 289,731    | 
|   |  | 318,208                      |  | 337,769       |  | 22,834 |  | (19,561    | ) | 314,935    | 



|   |  | For the years ended June 30, |                     |  |   |       |  |   |       | 
|-- |  | ---------------------------- | ------------------- |  | - | ----- |  | - | ----- | 
|   |  |                              | 2012                |  |   | 2011  |  |   | 2010  | 
|   |  |                              | (Revenue per ton $) |  |   |       |  |   |       | 
|JN |  | $                            | 1,432               |  | $ | 1,366 |  | $ | 2,006 | 
|GF |  |                              | 473                 |  |   | 370   |  |   |       | 



|   |  | For the three months ended June 30, |  |               |  |       |  |            |   |            | 
|-- |  | ----------------------------------- |  | ------------- |  | ----- |  | ---------- | - | ---------- | 
|   |  | 2012                                |  | 2011          |  | 2010  |  | YOY Change |   | YOY Change | 
|   |  |                                     |  | (Metric tons) |  |       |  |            |   |            | 
|JN |  | 15,020                              |  | 14,254        |  | 9,314 |  | 766.15     |   | 4,940      | 
|GF |  | 63,712                              |  | 97,935        |  | 0     |  | (34,222    | ) | 97,935     | 
|   |  | 78,733                              |  | 112,189       |  | 9,314 |  | (33,456    | ) | 102,875    | 



|   |  | For the three months ended June 30, |                     |  |   |       |  |   |       | 
|-- |  | ----------------------------------- | ------------------- |  | - | ----- |  | - | ----- | 
|   |  |                                     | 2012                |  |   | 2011  |  |   | 2010  | 
|   |  |                                     | (Revenue per ton $) |  |   |       |  |   |       | 
|JN |  | $                                   | 1,640               |  | $ | 1,305 |  | $ | 1,639 | 
|GF |  |                                     | 499                 |  |   | 411   |  |   |       | 





For the fiscal year
ended June 30, 2012, we sold approximately 318,208 metric tons of fertilizer products, as compared to 337,769 metric tons and 22,834
metric tons for the fiscal year ended June 30, 2011 and 2010, respectively, which did not include sales of products by Gufeng with
respect to the number of metric tons we sold in 2010. For the fiscal year ended June 30, 2012, Jinong sold approximately 61,590
metric tons of fertilizer products, as compared to 48,038 metric tons and 22,834 for the fiscal year ended June 30, 2011 and 2010,
respectively. For the fiscal year ended June 30, 2012, Gufeng sold approximately 256,618 metric tons of fertilizer products, as
compared to 289,731 metric tons for the fiscal year ended June 30, 2011. Our sales of fertilizer products to five provinces accounted
for approximately 58.9% of our fertilizer revenue for the fiscal year ended June 30, 2012.  Specifically, the provinces and
their respective percentage contribution to our fertilizer revenues were Beijing (24.2%), Hebei (16.3%), Jilin (9.0%), Liaoning
(6.6%) and Inner Mongolia (2.8%).



As of June 30, 2012,
we had a total of 943 distributors covering 22 provinces, four autonomous regions and three central government-controlled municipalities
in China. Jinong had 758 distributors in China. Jinong’s sales are not dependent on any single distributor or any group of
distributors. Its top five distributors accounted for 2.1% of Jinong’s fertilizer revenues for the fiscal year ended June
30, 2012. Gufeng had 185 distributors, including some large state-owned enterprises. Gufeng’s top five distributors accounted
for 47.0% of its revenues for the fiscal year ended June 30, 2012, of which Sinoagri Holding Company Limited accounted for 25.8%
of Gufeng’s revenue for the fiscal year ended June 30, 2012.



Agricultural Products



Through Jintai, we
develop, produce and sell high-quality flowers, green vegetables and fruits to local marketplaces and various horticulture and
planting companies. We also use certain of Jintai’s and Yuxing’s greenhouse facilities to conduct research and development
activities for our fertilizer products. The three PRC provinces that accounted for 99.5% of our agricultural products revenue for
the fiscal year ended June 30, 2012 were Shaanxi (92.0%), Ningxia (6.5%) and Guangdong (0.9%).



51







Recent Developments



New Products



During the three months
ended June 30, 2012, Jinong launched seven new fertilizer products, which included five broad-spectrum and two powder fertilizer
products. Jinong’s new products generated approximately $115,256, or 0.5% of Jinong’s fertilizer revenues for the three
months ended June 30, 2012. Jinong also added 46 new distributors for the three months ended June 30, 2012. Jinong’s new
distributors accounted for approximately $1,706,005, or 6.9% of Jinong’s fertilizer revenues for the three months ended June
30, 2012. Jinong’s revenue attributable to the new products distributed by its new distributors was approximately $44,110,
or 0.2% of Jinong’s fertilizer revenues for the three months ended June 30, 2012. During the three months ended June 30,
2012, Gufeng launched no new fertilizer product. Gufeng added three new distributors during the three months ended June 30, 2012,
which accounted for approximately $475,410, or 1.5%, of Gufeng’s fertilizer revenues.



Jintai’s Relocation



We have started to
relocate Jintai to the facilities of one of the Company’s other subsidiaries-Yuxing, located in Hu County, Xi’an. Yuxing’s
facilities are approximately a one hour drive south of Jintai's current location in the Economic and Technical Development Zone
(the "Zone") in the metro area of the city of Xi'an.



As mentioned in the
Company's previous quarterly reports, with the rapid growth of urbanization in Xi'an, the Zone has been inhabited by a large
and dense population and the periphery of Jintai has bristled with various industrial factories and utility plants. The Zone's
concentrated industrial activities and dense population changed the micro bioenvironment for the growth of Jintai's agricultural
products and disturbed Jintai's normal fertilizer research and development. Recently such changes caused the death and obsolescence
of large amount of Jintai's flowers and seedlings. Additionally, the government recently introduced a new rezoning plan for the
Zone, and the land Jintai currently occupies is being converted from agriculture use to residential and commercial use. The rezoning
will prohibit the agricultural growth activities that Jintai currently conducts at the property. To continue Jintai's business,
the Company will relocate all of Jintai's operations, including greenhouses, inventories, growing seedlings, flowers and parent
plants, to Yuxing.



The relocation commenced
on March 1, 2012 and the entire relocation process is expected to complete by the end of fiscal year 2013. Further, we may
consider merging the subsidiaries of Yuxing and Jintai together to reduce operating cost and streamline management at appropriate
time in the future.





52









Results of Operations



The fiscal year ended June 30, 2012
compared to the fiscal year ended June 30, 2011.



The following table shows the operating
results of the Company on a consolidated basis for the fiscal years ended June 30, 2012 and 2011.





|                                            |  | For the Years Ended June 30, |             |   |      |   |             |        | 
|------------------------------------------- |  | ---------------------------- | ----------- | - | ---- | - | ----------- | ------ | 
|                                            |  | 2012                         |             |   | 2011 |   |             | Change | 
|Sales                                       |  |                              |             |   |      |   |             |        | 
|Jinong                                      |  | $                            | 88,168,740  |   |      | $ | 65,629,265  |        | 
|Gufeng                                      |  |                              | 121,480,943 |   |      |   | 107,081,018 |        | 
|Jintai                                      |  |                              | 5,792,002   |   |      |   | 6,826,933   |        | 
|Yuxing                                      |  |                              | 2,082,520   |   |      |   | 180,750     |        | 
|Net sales                                   |  |                              | 217,524,205 |   |      |   | 179,717,966 |        | 
|Cost of goods sold                          |  |                              |             |   |      |   |             |        | 
|Jinong                                      |  |                              | 34,129,304  |   |      |   | 26,449,117  |        | 
|Gufeng                                      |  |                              | 96,756,719  |   |      |   | 85,670,990  |        | 
|Jintai                                      |  |                              | 5,415,970   |   |      |   | 3,841,391   |        | 
|Yuxing                                      |  |                              | 1,946,979   |   |      |   | 136,433     |        | 
|Cost of goods sold                          |  |                              | 138,248,972 |   |      |   | 116,097,931 |        | 
|Gross profit                                |  |                              | 79,275,233  |   |      |   | 63,620,035  |        | 
|Operating expenses                          |  |                              |             |   |      |   |             |        | 
|Selling expenses                            |  |                              | 11,548,816  |   |      |   | 7,121,905   |        | 
|General and administrative expenses         |  |                              | 13,801,407  |   |      |   | 14,386,699  |        | 
|Total operating expenses                    |  |                              | 25,350,223  |   |      |   | 21,508,604  |        | 
|Income from operations                      |  |                              | 53,925,010  |   |      |   | 42,111,431  |        | 
|Other income (expense)                      |  |                              |             |   |      |   |             |        | 
|Other income (expense)                      |  |                              | 60,212      |   |      |   | 23,999      |        | 
|Interest income                             |  |                              | 364,536     |   |      |   | 282,727     |        | 
|Interest expense, net                       |  |                              | (1,590,620  | ) |      |   | (466,912    | )      | 
|Total other income (expense)                |  |                              | (1,165,872  | ) |      |   | (160,186    | )      | 
|Income before income taxes                  |  |                              | 52,759,138  |   |      |   | 41,951,245  |        | 
|Provision for income taxes                  |  |                              | 10,801,313  |   |      |   | 9,037,144   |        | 
|Net income                                  |  |                              | 41,957,825  |   |      |   | 32,914,101  |        | 
|Other comprehensive income                  |  |                              |             |   |      |   |             |        | 
|Foreign currency translation gain           |  |                              | 4,876,751   |   |      |   | 7,547,145   |        | 
|Comprehensive income                        |  | $                            | 46,834,576  |   |      | $ | 40,461,246  |        | 
|Basic weighted average shares outstanding   |  |                              | 26,943,530  |   |      |   | 25,929,517  |        | 
|Basic net earnings per share                |  | $                            | 1.56        |   |      | $ | 1.27        |        | 
|Diluted weighted average shares outstanding |  |                              | 26,943,530  |   |      |   | 25,929,517  |        | 
|Diluted net earnings per share              |  |                              | 1.56        |   |      |   | 1.27        |        | 







Net Sales



Total
net sales for the fiscal year ended June 30, 2012 were $217,524,205, an increase of $37,806,239,
or 21.0%, from $179,717,966 for the fiscal year ended June 30, 2011. This increase was largely due to the strong sales of humic
acid liquid and compound fertilizer products from Jinong and Gufeng respectively, which had higher selling prices.



For the fiscal year
ended June 30, 2012, Jinong’s net sales increased $22,539,475, or 34.3%, to $88,168,740 from $65,629,265 from the fiscal
year ended June 30, 2011. This increase was mainly attributable to the greater sales of humic acid fertilizer products including
our liquid and powder fertilizers during this period as a result of our increased distributors and the aggressive marketing.



53







For the fiscal year
ended June 30, 2012, net sales at Gufeng were $121,480,943, an increase of $14,399,925, or 13.4%, from $107,081,018 for the fiscal
year ended June 30, 2011. The increase was due to the increasing demand for the organic/inorganic humic acid compound fertilizer
products of Gufeng, higher average selling price per metric ton for the fiscal year ended June 30, 2012 than the price for the
fiscal year ended June 30, 2011, and higher percentage of more expensive humic acid-based fertilizers in Gufeng’s product
mix than in the same period in 2011. While with increase of 28% in the average unit price per metric ton at Gufeng from fiscal
year 2011 to fiscal year 2012, the total sales volume at Gufeng decreased by 11% in metric tons from the fiscal year ended June
30, 2011 to the fiscal year ended June 30, 2012. Such decrease in sales volume is mainly attributable to the decrease in Gufeng’s
export sales volume for the fiscal year ended June 30, 2012.



Jintai’s net
sales decreased by $1,034,931, or 15.2%, to $5,792,002 for the fiscal year ended June 30, 2012 from $6,826,933 for the same period
in 2011. The decrease was mainly attributable to Jintai’s nearby environmental degradation which resulted in its relocation
commenced on March 1, 2012 and is still on going. Therefore, Jintai did not generate any sales revenue since March 1, 2012.



For
the fiscal year ended June 30, 2012, Yuxing’s net sales were $2,082,520, an increase of $ 1,901,770,
from $180,750 during the fiscal year ended June 30, 2011. The increase was mainly attributable to the strong sales of Yuxing’s
top-grade flowers in the fiscal year 2012, while in the fiscal year 2011 Yuxing did not have commercialized top-grade flowers.



Cost of Goods Sold



Total cost of goods
sold for the fiscal year ended June 30, 2012 was $138,248,972, an increase of $22,151,041, or 19.1%, from $116,097,931 for the
fiscal year ended June 30, 2011. This increase was mainly due to the increase in sales and the increase in raw material and manufacturing
costs.



Cost of goods sold
by Jinong for the fiscal year ended June 30, 2012 was $34,129,304, an increase of $7,680,187, or 29.0%, from $26,449,117 for the
same period in 2011. The increase was primarily attributable to the increase in the cost of raw materials and packaging materials.



Cost of goods sold
by Gufeng for the fiscal year ended June 30, 2012 was $96,756,719, an increase of $11,085,729, or 12.9%, from $85,670,990 for the
same period in 2011. The increase was primarily due to the increase in Gufeng’s fertilizer sales, the increase in Gufeng’s
raw material cost and manufacturing costs.



Cost of goods sold
by Jintai for the fiscal year ended June 30, 2012 was $5,415,970, an increase of $1,574,579, or 41.0%, from $3,841,391 for fiscal
year 2011. The increase was primarily attributable to the obsolescence of Jintai’s butterfly orchids as the result of Jintai’s
relocation.



For fiscal year ended
June 30, 2012, cost of goods sold by Yuxing was $1,946,979, an increase of $1,810,546, from $136,433 for the fiscal year ended
June 30, 2011. The increase was proportional to Yuxing’s sales.



Gross Profit



Total
gross profit for the fiscal year ended June 30, 2012 increased by $ 15,655,198, or 24.6%, to
$79,275,233, as compared to $63,620,035 for the fiscal year ended June 30, 2011. Gross profit margin was approximately 36.4% and
35.4% for the fiscal year ended June 30, 2012 and 2011, respectively.



Gross profit generated
by Jinong increased by $14,859,288, or 37.9%, to $54,039,436 for the fiscal year ended June 30, 2012 from $39,180,148 for the fiscal
year ended June 30, 2011. Gross profit margin from Jinong’s sales was approximately 61.3% and 59.7% for the fiscal year ended
June 30, 2012 and 2011, respectively.



For
the fiscal year ended June 30, 2012, gross profit generated by Gufeng was $ 24,724,224, an increase
of $ 3,314,196, or 15.5%, from $21,410,028 for the fiscal year ended June 30, 2011. Gross profit
margin from Gufeng’s sales was approximately20.4% and20.0% for the fiscal year ended
June 30, 2012 and 2011, respectively.



Gross profit from Jintai
decreased by $2,609,510, or 87.4%, for the fiscal year ended June 30, 2012, to $376,032, as compared to $2,985,542 for the fiscal
year ended June 30, 2011. Gross profit margin from Jintai’s sales was approximately 6.5% and 43.7% for the fiscal years ended
June 30, 2012 and 2011, respectively.



54







For the fiscal year
ended June 30, 2012, gross profit from Yuxing was $135,541, an increase of $91,224 or 205.8%, from $44,317 for the fiscal years
ended June 30, 2011. Gross profit margin from Yuxing’s sales was approximately 6.5% and 24.5% for the fiscal years ended
June 30, 2012 and 2011, respectively.



Selling Expenses



Our selling expenses
consist primarily of salaries of sales personnel, advertising and promotion expenses, freight-out costs and related compensation.
Selling expenses were $11,548,816, or 5.3%, of net sales for the fiscal year ended June 30, 2012, as compared to $7,121,905, or
4.0% of net sales for the fiscal year ended June 30, 2011, an increase of $4,426,911, or 62.2%. The selling expenses of Gufeng
were $3,183,853, or 2.6% of Gufeng’s net sales for the fiscal year ended June 30, 2012, as compared to $ 2,834,005, or 2.6%
of Gufeng’s net sales for the fiscal year ended June 30, 2011. The selling expenses of Jinong for the fiscal year ended June
30, 2012 were $8,305,444, or 9.4% of Jinong’s net sales, as compared to selling expenses of $4,254,198, or 6.5% of Jinong’s
net sales in fiscal year 2011. Most of this increase was due to Jinong’s expanded marketing efforts and the increase in shipping
costs.



General and Administrative Expenses



General and administrative
expenses consisted primarily of related salaries, rental expenses, business development, depreciation and travel expenses incurred
by our general and administrative departments and legal and professional expenses including expenses incurred and accrued due to
pending litigations. General and administrative expenses were $13,801,407, or 6.3% of net sales, for the fiscal year ended June
30, 2012, as compared to $14,386,699, or 8.0%, of net sales for the fiscal year ended June 30 2011, a decrease of $585,292, or
4.1%. This decrease was primarily the result of the decrease of legal and investor relations fees incurred in connection with certain
pending litigations in 2011.



Total Other Income (Expenses)



Total other income
(expense) consisted of income from subsidies received from the PRC government, interest income, interest expenses and bank charges.
Total other expense for the fiscal year ended June 30, 2012 was $1,165,872, as compared to total other income of $160,186 for the
fiscal year ended June 30, 2011, an increase in expense of $1,005,686, or 627.8%. The increase was mainly attributable to the $1,590,620
interest expense from Gufeng’s outstanding short-term loans.



Income Taxes



Jinong is subject to
a preferred tax rate of 15% as a result of its business being classified as a High-Tech project under the PRC Enterprise Income
Tax Law (“EIT”) that became effective on January 1, 2008. Jinong incurred income tax expenses of $6,597,766 for
the fiscal year ended June 30, 2012, as compared to $5,157,184 for the fiscal year ended June 30, 2011, an increase of $1,440,582,
or 27.9%, which was primarily attributable to Jinong’s increased operating income.



Gufeng, subject to
a tax rate of 25%, incurred income tax expenses of $4,203,548 for the fiscal year ended June 30, 2012, as compared to $3,879,959
for the fiscal year ended June 30, 2011, an increase of $323,589, or 8.3%.



Jintai has been exempt
from paying income tax as its products fall into the tax exemption list set out in the EIT.



Yuxing has no income
tax for the fiscal year ended June 30, 2012 as a result of being exempted from paying income tax due to its products fall into
the tax exemption list set out in the EIT, the same treatment as Jintai receives.



Net Income



Net
income for the fiscal year ended June 30, 2012 was $41,957,825, an increase of $9,043,724,
or 27.5%, compared to $32,914,101 for the fiscal year ended June 30, 2011. The increase was attributable to the increase in gross
profit. Net income as a percentage of total net sales was approximately 19.3% and18.3 % for the fiscal year ended June 30, 2012
and 2011, respectively.



55







The fiscal year ended June 30, 2011
compared to the fiscal year ended June 30, 2010.



The following table shows the operating
results of the Company on a consolidated basis for the fiscal years ended June 30, 2011 and 2010.



|                                            |  | For the Years Ended June 30, |             |   |      |   |            |        | 
|------------------------------------------- |  | ---------------------------- | ----------- | - | ---- | - | ---------- | ------ | 
|                                            |  | 2011                         |             |   | 2010 |   |            | Change | 
|Sales                                       |  |                              |             |   |      |   |            |        | 
|Jinong                                      |  | $                            | 65,629,265  |   |      | $ | 45,816,377 |        | 
|Gufeng                                      |  |                              | 107,081,018 |   |      |   | -          |        | 
|Jintai                                      |  |                              | 6,826,933   |   |      |   | 6,274,375  |        | 
|Yuxing                                      |  |                              | 180,750     |   |      |   | -          |        | 
|Net sales                                   |  |                              | 179,717,966 |   |      |   | 52,090,752 |        | 
|Cost of goods sold                          |  |                              |             |   |      |   |            |        | 
|Jinong                                      |  |                              | 26,449,117  |   |      |   | 17,700,532 |        | 
|Gufeng                                      |  |                              | 85,670,990  |   |      |   | -          |        | 
|Jintai                                      |  |                              | 3,841,391   |   |      |   | 3,438,020  |        | 
|Yuxing                                      |  |                              | 136,433     |   |      |   | -          |        | 
|Cost of goods sold                          |  |                              | 116,097,931 |   |      |   | 21,138,552 |        | 
|Gross profit                                |  |                              | 63,620,035  |   |      |   | 30,952,200 |        | 
|Operating expenses                          |  |                              |             |   |      |   |            |        | 
|Selling expenses                            |  |                              | 7,121,905   |   |      |   | 2,203,345  |        | 
|General and administrative expenses         |  |                              | 14,386,699  |   |      |   | 3,822,234  |        | 
|Total operating expenses                    |  |                              | 21,508,604  |   |      |   | 6,025,579  |        | 
|Income from operations                      |  |                              | 42,111,431  |   |      |   | 24,926,621 |        | 
|Other income (expense)                      |  |                              |             |   |      |   |            |        | 
|Other income (expense)                      |  |                              | 23,999      |   |      |   | (5,321     | )      | 
|Interest income                             |  |                              | 282,727     |   |      |   | 275,449    |        | 
|Interest expense, net                       |  |                              | (466,912    | ) |      |   | (112,475   | )      | 
|Total other income (expense)                |  |                              | (160,186    | ) |      |   | 157,653    |        | 
|Income before income taxes                  |  |                              | 41,951,245  |   |      |   | 25,084,274 |        | 
|Provision for income taxes                  |  |                              | 9,037,144   |   |      |   | 3,794,516  |        | 
|Net income                                  |  |                              | 32,914,101  |   |      |   | 21,289,758 |        | 
|Other comprehensive income                  |  |                              |             |   |      |   |            |        | 
|Foreign currency translation gain           |  |                              | 7,547,145   |   |      |   | 899,481    |        | 
|Comprehensive income                        |  | $                            | 40,461,246  |   |      | $ | 22,189,239 |        | 
|                                            |  |                              |             |   |      |   |            |        | 
|Basic weighted average shares outstanding   |  |                              | 25,929,517  |   |      |   | 23,468,246 |        | 
|Basic net earnings per share                |  | $                            | 1.27        |   |      | $ | 0.91       |        | 
|Diluted weighted average shares outstanding |  |                              | 25,929,517  |   |      |   | 23,468,246 |        | 
|Diluted net earnings per share              |  |                              | 1.27        |   |      |   | 0.91       |        | 







Net Sales



Total net sales for
the fiscal year ended June 30, 2011 were $179,717,966, an increase of $127,627,214, or 245.0%, from $52,090,752 for the fiscal
year ended June 30, 2010. This increase was largely due to the inclusion of Gufeng’s net sales, which contributed $107,081,018,
or 59.6%, of our total net sales. Our total net sales without including Gufeng’s net sales for the fiscal year ended June
30, 2011 were $72,636,948, an increase of $20,546,196, or 39.4%, from $52.1 million for the fiscal year ended June 30, 2010.



56







For the fiscal year
ended June 30, 2011, Jinong’s net sales increased $19,812,888, or 43.2%, to $65,629,265 from $45,816,377 from the fiscal
year ended June 30, 2010. Sales volume increased 110.4% to 48,038 metric tons for the fiscal year ended June 30, 2011 from 22,835
metric tons for the fiscal year ended June 30, 2010. This increase was mainly attributable to greater sales of products including
our liquid fertilizers, powder fertilizers, and particularly, the lower-margin granular fertilizers released since our 40,000 metric-ton
production line began production in August 2009. In addition, Jinong launched more promotional activities to increase sales.



Net sales at Gufeng,
which included one quarter of production on the new 200,000 metric ton line, for the fiscal year ended June 30, 2011, were $107.1
million.



Jintai’s net
sales increased by $552,558, or 8.8%, to $6,826,933 for the fiscal year ended June 30, 2011 from $6,274,375 for the same period
in 2010.



Yuxing achieved net
sales of $180,750 during the fiscal year ended June 30, 2011. For fiscal year ended June 30, 2010, Yuxing segment had no revenues.



Cost of Goods Sold



Total cost of goods
sold for the fiscal year ended June 30, 2011 was $116,097,931, an increase of $94,959,379, or 449.2%, from $21,138,551 for the
fiscal year ended June 30, 2010. This significant increase was mainly due to the costs attributable to the production and sale
of Gufeng’s products, which accounted for 73.8% of our cost of goods sold. The total cost of goods sold without including
Gufeng’s cost of goods sold for the fiscal year ended June 30, 2011 was $30,426,941, an increase of $9,288,389, or 43.9%
from $21,138,551 for the fiscal year ended June 30, 2010.



Cost of goods sold
by Jinong for the fiscal year ended June 30, 2011 was $26,449,117, an increase of $8,748,585, or 49.4%, from $17,700,532 for the
same period in 2010. As a percentage of total net sales, cost of goods sold by Jinong accounted for approximately 14.7% and 34.0%
for the fiscal year ended June 30, 2011 and 2010, respectively. The increase in cost of goods sold was attributable to the increase
in sales of lower-margin granular fertilizers and the increase in raw materials and packaging materials used as a result of our
newly introduced powder and liquid fertilizer products.



Cost of goods sold
by Gufeng for the fiscal year ended June 30, 2011 was $85,670,990 which accounted for 73.8% of total cost of goods sold.



Cost of goods sold
by Jintai for the fiscal year ended June 30, 2011 was $3,841,391, an increase of $403,371, or 11.7%, from $3,438,020 for fiscal
year 2010. The increase in the price of raw materials was the main reason for the increase in Jintai’s cost of goods sold.



Cost of goods sold
by Yuxing was $136,433 for the fiscal year ended June 30, 2011. For fiscal year ended June 30, 2010, Yuxing segment had no cost
of goods sold.



Gross Profit



Total gross profit
for the fiscal year ended June 30, 2011 increased by $32,667,835, or 105.5%, to $63,620,035, as compared to $30,952,200 for the
fiscal year ended June 30, 2010. Gross profit margin was approximately 35.4% and 59.4% for the fiscal year ended June 30, 2011
and 2010, respectively. The decrease in gross profit margin was primarily due to the acquisition of Gufeng, which mainly sells
low-margin granular fertilizer products. The gross profit without including Gufeng’s gross profit was $42,210,007 with a
gross profit margin of 58.1%.



Gross profit
generated by Jinong increased by $11,064,303, or 39.4%, to $39,180,148 for the fiscal year ended June 30, 2011 from $28,115,845
for the fiscal year ended June 30 2010. Gross profit margin from Jinong’s sales was approximately 59.7% and 61.4% for the
fiscal year ended June 30, 2011 and 2010, respectively. The main reason for the decrease in Jinong’s gross profit margin
was primarily attributable to the strong sales of lower-margin granular fertilizers for the fiscal year ended June 30, 2011 compared
with a year ago. In addition, the increase in the price of raw materials also contributed to the lower margin than before.



57







Gross profit generated
by Gufeng was $21,410,028 with a gross profit margin of approximately 20.0% for the fiscal year ended June 30, 2011.



Gross profit from Jintai
increased by $149,187, or 5.3%, for the fiscal year ended June 30, 2011, to $2,985,542, as compared to $2,836,355 for the fiscal
year ended June 30, 2010. Gross profit margin from Jintai’s sales was approximately 43.7% and 45.2% for the fiscal years
ended June 30, 2011 and 2010, respectively.



Gross profit from Yuxing
was $44,317 with a gross profit margin of approximately 24.5% for the fiscal years ended June 30, 2011.



Selling Expenses



Our selling expenses
consist primarily of salaries of sales personnel, advertising and promotion expenses, freight-out costs and related compensation.
Selling expenses were $7,121,905, or 4.0%, of net sales for the fiscal year ended June 30, 2011 as compared to $2,203,345 or 4.2%
of net sales for the fiscal year ended June 30, 2010, an increase of $4,918,560, or 223.2%. This increase was primarily due to
the inclusion of Gufeng’s selling expenses for fiscal year 2011. The selling expenses of Gufeng were $ 2,834,005, or 2.6%
of Gufeng’s net sales. The total selling expenses for the fiscal year ended June 30, 2011 without including Gufeng’s
selling expenses was $4,287,900, or 5.9% of net sales excluding Gufeng’s net sales. The selling expenses of Jinong for the
fiscal year ended June 30, 2011 were $4,254,198, or 6.5% of Jinong’s net sales, compared to selling expenses of $2,176,881,
or 4.8% of Jinong’s net sales in fiscal year 2010. Most of this increase was due to Jinong’s expanded marketing efforts
such as promotional materials and the increase in shipping costs.



General and Administrative Expenses



General and administrative
expenses consisted primarily of related salaries, rental expenses, business development, depreciation and travel expenses incurred
by our general and administrative departments and legal and professional expenses including expenses incurred and accrued due to
pending litigations. General and administrative expenses were $14,386,699, or 8.0% of net sales, for the fiscal year ended June
30, 2011, as compared to $ 3,822,234, or 7.3%, of net sales for the fiscal year ended June 30 2010, an increase of $10,564,465.
This increase was primarily the result of the inclusion of Gufeng’s general and administrative expenses, stock compensation
expenses, Jintai’s photinia fraseri seedlings becoming obsolete and additional legal and investor relations fees incurred
in connection with certain pending litigations. The general and administrative expenses of Gufeng were $3,287,152 for the fiscal
year ended June 30, 2011. In addition, the non-cash stock compensation expense was $3,605,235 for the fiscal year ended June 30,
2011.



Total Other Income (Expenses)



Total other income
(expense) consisted of income from subsidies received from the PRC government, interest income, interest expenses and bank charges.
Total other expense for the fiscal year ended June 30, 2011 was $160,186, as compared to total other income of $157,653 for the
fiscal year ended June 30, 2010, an increase in expense of $317,839, or 201.6%. The increase was mainly attributable to the $466,912
interest expense from Gufeng’s outstanding short-term loans.



Income Taxes



Jinong is subject to
a preferred tax rate of 15% as a result of its business being classified as a High-Tech project under the PRC Enterprise Income
Tax Law (“EIT”) that became effective on January 1, 2008. Jinong incurred income tax expenses of $5,157,184 for
the fiscal year ended June 30, 2011, as compared to $3,794,515 for the fiscal year ended June 30, 2010, an increase of $1,362,669,
or 35.9%, which was primarily attributable to Jinong’s increased operating income.



Gufeng, subject to
a tax rate of 25%, incurred income tax expenses of $3,879,959 for the fiscal year ended June 30, 2011.



Jintai and Yuxing are
currently exempted under PRC regulations from paying income tax.



58







Net Income



Net income for the
fiscal year ended June 30, 2011 was $32,914,101, an increase of $11,624,343, or 54.6%, compared to $21,289,758 for the fiscal year
ended June 30, 2010. The increase was attributable to the increase in gross profit. Net income as a percentage of total net sales
was approximately 18.2% and 40.9% for the fiscal year ended June 30, 2011 and 2010, respectively.



Discussion of Segment Profitability
Measures



As of June 30, 2012,
we were engaged in the following businesses: the production and sale of fertilizers through Jinong and Gufeng and the production
and sale of high-quality agricultural products by Jintai and Yuxing. For financial reporting purposes, our operations were organized
into four main business segments based on location and product: Jinong (fertilizer production), Gufeng (fertilizer production),
Jintai (agricultural products production) and Yuxing (agricultural products production). Each of the segments has its own annual
budget with regard to development, production and sales.



Each of the four operating
segments referenced above has separate and distinct general ledgers. The chief operating decision maker (“CODM”) receives
financial information, including revenue, gross margin, operating income and net income produced from the various general ledger
systems to make decisions about allocating resources and assessing performance; however, the principal measure of segment profitability
or loss used by the CODM is net income by segment.



For Jinong, the net
income increased 28.2% by $8,224,216 to $37,363,673 for the fiscal year 2012 from $29,139,457 for the fiscal year 2011, while its
net income increased 35.5% by $7,637,205 to $29,139,457 for the fiscal year 2011 from $21,502,252 for the fiscal year 2010.



For Gufeng, the net
income increased 12.2% by $1,339,117 to $12,335,102 for the fiscal year 2012 from $10,995,984 for the fiscal year 2011.



For Yuxing, the net
loss decreased 41.8% by$122,918.00 to $170,996 for the fiscal year 2012 from $293,914 for the fiscal year 2011, while its net loss
increased 62.1% by $112,610 to a net loss of $293,914 for the fiscal year 2011 from a net loss of $181,304 for the fiscal year
2010.



For Jintai, the net
loss increased 1,835.9% by $1,766,991 to $1,863,235 for the fiscal year 2012 from the net loss of $96,244 for the fiscal year 2011,
while it net income decreased 103.6% by $2,736,477 to a net loss of $96,244 for the fiscal year 2011 from a net profit of $2,640,233
for the fiscal year 2010The loss incurred by Jintai in fiscal year 2012 was primarily due to its relocation.



Liquidity and Capital Resources



Our principal sources
of liquidity include cash from operations, borrowings from local commercial banks and net proceeds of offerings of our securities
consummated in July 2009 and November/December 2009 (collectively the “Public Offerings”).



As
of June 30, 2012, cash and cash equivalents were $71,978,630, an increase of $6,372,217and $3,270,976, or 9.7% and 5.2%, respectively, from $65,606,413 and $62,335,437 as of June 30, 2011 and 2010, respectively.



We intend to use some
of the remaining net proceeds from the Public Offerings (approximately $8.5 million), as well as other working capital if required,
to acquire new businesses, upgrade production lines and complete Yuxing’s new greenhouse facilities for agriculture products
located on 88 acres of land in Hu County, 18 kilometers southeast of Xi’an city. We believe that we have sufficient cash
on hand and positive projected cash flow from operations to support our business growth for the next twelve months to the extent
we do not have further significant acquisitions or expansions. However, if events or circumstances occur and we do not meet our
operating plan as expected, we may be required to seek additional capital and/or to reduce certain discretionary spending, which
could have a material adverse effect on our ability to achieve our business objectives.  Notwithstanding the foregoing, we
may seek additional financing as necessary for expansion purposes and when we believe market conditions are most advantageous,
which may include additional debt and/or equity financings. There can be no assurance that any additional financing will be available
on acceptable terms, if at all. Any equity financing may result in dilution to existing stockholders and any debt financing may
include restrictive covenants.



59







The following table sets forth a summary
of our cash flows for the periods indicated:



|                                                            |  | Fiscal Year Ended June 30, |             |   |      |  
|----------------------------------------------------------- |  | -------------------------- | ----------- | - | ---- | -
|                                                            |  | 2012                       |             |   | 2011 |  
|Net cash provided by operating activities                   |  | $                          | 6,400,398   |   |      | $
|Net cash used in investing activities                       |  |                            | (11,883,947 | ) |      |  
|Net cash provided by financing activities                   |  |                            | 10,278,376  |   |      |  
|Effect of exchange rate change on cash and cash equivalents |  |                            | 1,577,390   |   |      |  
|Net increase in cash and cash equivalents                   |  |                            | 6,372,217   |   |      |  
|Cash and cash equivalents, beginning balance                |  |                            | 65,606,413  |   |      |  
|Cash and cash equivalents, ending balance                   |  | $                          | 71,978,630  |   |      | $



Operating Activities



Net cash provided by
operating activities was $6,399,953 for the fiscal year ended June 30, 2012, a decrease of $27,247,516, or 81.0%, and an increase
of $21,415,434, or 175.1%%, respectively, from $33,647,469 and $12,232,035 net cash provided by operating activities for fiscal
years 2011 and 2010, respectively. The decrease was mainly due to the increased credit sales by Gufeng during the fiscal year ended
June 30, 2012, which was part of Gufeng’s warehouse selling. To retain and expand Gufeng’s market share, Gufeng enhanced
its warehouse selling and increased the credit sales for Gufeng’s fertilizer products. Credit sales by Jinong have also increased
during the fiscal year ended June 30, 2012 contributing to the decrease in cash provided by operations. In addition to an increase
in accounts receivables, our inventory has increased to keep up with the increase in our revenues which also results in a decrease
in cash provided by operations.



Investing Activities



Net cash used in investing
activities for the fiscal year ended June 30, 2012 was $11,883,947, a decrease of $21,082,755, or 64.0% from $32,966,702 for the
fiscal year ended June 30, 2011. The $11,883,947 used in investing activities in 2012 was on purchases of property plant and equipment.
In 2011 the $32,966,702 used in investing activities consisted of purchases of property, plant and equipment of $22,740,118, the
acquisition of Gufeng of $6,720,539 and an increase in construction in progress of $3,506,045.



Financing Activities



Net
cash provided by financing activities in the fiscal year ended June 30, 2012 totaled $10,278,376.
The net cash provided by financing activities for the same period in 2011 and 2010 was $0 and $48,451,548, mainly due to the Public
Offerings. The cash provided by financing activities in 2012 was primarily due to the proceeds of loans of $9,678,375.



At June 30, 2012, 2011 and 2010, our loans
payable were as follows:



|                          |  | June 30, 2012 |            |  | June 30, 2011 |   |           | June 30, 2010* | 
|------------------------- |  | ------------- | ---------- |  | ------------- | - | --------- | -------------- | 
|Short term loans payable: |  | $             | 13,931,280 |  |               | $ | 4,099,550 |                | 
|Total                     |  | $             | 13,931,280 |  |               | $ | 4,099,550 |                | 










*Excludes Gufeng, which was acquired in
July 2010.



60







Accounts Receivable



We
had accounts receivable of $62,001,158 as of June 30, 2012, as compared to $17,517,625 and $15,571,888
as of June 30, 2011 and 2010, respectively, an increase of $44,483,533and $1,954,737, or 253.9%
and 12.5%, respectively. To retain and expand its market share, Gufeng enhanced its warehouse selling and increased the credit
sales for Gufeng’s fertilizer products. Jinong has increased its sales of humic acid fertilizer products including liquid
and powder fertilizers as a result of increased distributors and the aggressive marketing. The significant increase in account
receivable is directly attributed to the significant increase in credit sales over the most recent fiscal year. Management continually
monitors and evaluates the structure and collectability of its accounts receivable balances, performs routine assessment of our
customers’ creditworthiness and provides an allowance for doubtful accounts when necessary.



Our
allowance for doubtful accounts was $679,268 as of June 30, 2012, as compared to $337,801 and $193,403 as of June 30, 2011 and
2010, respectively, an increase of $341,467and $144,398, or101.1%
and 74.7%, respectively. The increase of allowance for doubtful accounts was mainly due to the increased credit sales in Gufeng.



Inventories



We
had an inventory of $28,602,684as of June 30, 2012, as compared to $23,732,404 and $11,262,647
as of June 30, 2011 and 2010, an increase of $4,870,280 and $12,469,757 or 20.5% and110.7 %. The main reason for this increase
was that we increased our packing material reserves and our finished fertilizer products for sale to meet the anticipated large
order. Sales for the fiscal year ended June 30, 2012 have increased by approximately 34.3% and 43.2% over the comparable periods
in 2011 and 2010, respectively. We have had to increase our inventory to keep up with current demand for our products.



Advances to Suppliers



We
had advances to suppliers of $12,207,325as of June 30, 2012 as compared to $11,487,896 and $221,280
as of June 30, 2011 and 2010, respectively, representing an increase of $719,429 and $11,266,616,
or 6.3% and 5,091.6%, respectively.  The increase in the amount of advances to suppliers is mainly due to Gufeng’s seasonal
compound fertilizer business, which may result in carrying significant amounts of inventory and seasonal variations in working
capital. To ensure our ability to deliver compound fertilizer to the distributor timely prior to the planting season, we need to
have sufficient raw material in stock to feed the production. To build up the inventory, we typically make advance payment to the
supplier to secure the supply of raw material of basic fertilizer. Our inability to predict future seasonal fertilizer demand accurately
may result in excess inventory or product shortages.



Accounts Payable



We
had accounts payable of $6,881,748 as of June 30, 2012 as compared to $5,981,703 and $328,124
as of June 30, 2011 and 2010, representing an increase of $900,045 and 5,653,579, or 15.0% and 1, 723.0%. The increase was mainly
attributable to late payment on packing material due to late receipt of invoices.



Unearned Revenue



We
had unearned revenue of $2,625,014 as of June 30, 2012 as compared to $11,059,313 and $41,645
as of June 30, 2011 and 2010, respectively, representing a decrease of $8,434,299, or 76.3%and
an increase of $11,017,668, or 26,456.2%, respectively.  The decrease in unearned revenue results from the expanded credit
sales to selected distributors in Gufeng’s warehouse sales program. Such program is a customized marketing strategy that
requires less or few advanced deposit payment from the participating distributors prior to the delivery of fertilizer products.
With offering participating distributors certain sales credits in distributing the fertilizer products through the program, the
Company manages more account receivables and concurrently has less unearned revenue.



Tax Payable



We
had taxes payable of $17,675,389as of June 30, 2012 as compared to $7,004,865 and $2,304,382
as of June 30, 2011 and 2010, respectively, representing an increase of $10,670,524 and $4,845,891,
or152.3%and 210.3%, respectively.  This increase was mainly due to the growth and expansion
from Gufeng post to its acquisition, which had taxes payable of $8,267,924 as of June 30, 2012.



61







Contractual Obligations



At June 30, 2012, our contractual obligations
are as follows:



|                            |  |           |            |  | Payments Due by Period |   |        |            | 
|--------------------------- |  | --------- | ---------- |  | ---------------------- | - | ------ | ---------- | 
|                            |  | Less Than |            |  | One to                 |   |        | Three to   | 
|                            |  | One Year  |            |  | Three Years            |   |        | Five Years | 
|Short term loans            |  | $         | 13,931,280 |  |                        | $ | -      |            | 
|Operating lease obligations |  |           | 61,686     |  |                        |   | 61,686 |            | 
|Total                       |  | $         | 13,992,966 |  |                        | $ | 61,686 |            | 



Off-Balance Sheet Arrangements



We do not have any
off-balance sheet arrangements.



Critical Accounting Policies and Estimates



Management’s
discussion and analysis of its financial condition and results of operations are based upon our consolidated financial statements,
which have been prepared in accordance with United States generally accepted accounting principles. Our financial statements reflect
the selection and application of accounting policies which require management to make significant estimates and judgments. See
Note 2 to our consolidated financial statements, “Basis of Presentation and Summary of Significant Accounting Policies.”
We believe that the following paragraphs reflect the more critical accounting policies that currently affect our financial condition
and results of operations:



Use of estimates



The preparation of
consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the consolidated financial statements and the amount of revenues and expenses during the
reporting periods. Management makes these estimates using the best information available at the time the estimates are made. However,
actual results could differ materially from those estimates.



Revenue recognition



Sales revenue is recognized
at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed,
we have no other significant obligations and collectability is reasonably assured. Payments received before all of the relevant
criteria for revenue recognition are satisfied are recorded as unearned revenue.



Our revenue consists
of invoiced value of goods, net of a value-added tax (VAT). No product return or sales discount allowance is made as products delivered
and accepted by customers are not returnable and sales discounts are not granted after products are delivered.



Accounts receivable



Our policy is to maintain
reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes
historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment
patterns to evaluate the adequacy of these reserves. Any accounts receivable that is outstanding for more than three months will
be accounted as allowance for bad debts.



Inventories



Inventory is valued
at the lower of cost (determined on a weighted average basis) or market. Inventories consist of raw materials, work in process,
finished goods and packaging materials. The Company reviews its inventories regularly for possible obsolete goods and establishes
reserves when determined necessary.



62







Estimate
Impairment ofLong-Lived Assets



The Company tests long-lived
assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable
through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever
any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value.



Estimate
Impairment ofIntangible Assets



The Company records
intangible assets acquired individually or as part of a group at fair value. Intangible assets with definitive lives are amortized
over the useful life of the intangible asset, which is the period over which the asset is expected to contribute directly or indirectly
to the entity’s future cash flows. The Company evaluates intangible assets for impairment at least annually and more often
whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Whenever any such impairment
exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. The Company has
not recorded impairment of intangible assets as of June 30, 2012, 2011, and 2010, respectively.



Fair Value Measurement and Disclosures



Our accounting for
Fair Value Measurement and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to
transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction
between market participants on the measurement date. This topic also establishes a fair value hierarchy which requires classification
based on observable and unobservable inputs when measuring fair value. The fair value hierarchy distinguishes between assumptions
based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of
three levels:



Level one — Quoted
market prices in active markets for identical assets or liabilities;



Level two — Inputs
other than level one inputs that are either directly or indirectly observable; and



Level three —
Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions
that a market participant would use.



Determining which category
an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures
each quarter. The Company had no assets and liabilities measured at fair value at June 30, 2011.



The carrying values
of cash and cash equivalents, trade and other receivables, trade and other payables approximate their fair values due to the short
maturities of these instruments.



Stock-Based Compensation



The costs of all employee
stock options, as well as other equity-based compensation arrangements, are reflected in the consolidated financial statements
based on the estimated fair value of the awards on the grant date. That cost is recognized over the period during which an employee
is required to provide service in exchange for the award—the requisite service period (usually the vesting period). Stock
compensation for stock granted to non-employees is determined as the fair value of the consideration received or the fair value
of equity instruments issued, whichever is more reliably measured.



Income taxes



The Company accounts
for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets
based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes
are provided for 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. A valuation allowance is provided for deferred tax assets if it
is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility
is uncertain.



63







Under ASC 740, a tax
position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in
a tax examination, with a tax examination being presumed to occur. The evaluation of a tax position is a two-step process. The
first step is to determine whether it is more-likely-than-not that a tax position will be sustained upon examination, including
the resolution of any related appeals or litigations based on the technical merits of that position. The second step is to measure
a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial
statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized
upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be
recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet
the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold
is no longer met. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in
the year incurred. No significant penalties or interest relating to income taxes have been incurred during the years ended June
30, 2012, 2011 and 2010. GAAP also provides guidance on de-recognition, classification, interest and penalties, accounting in interim
periods, disclosures and transition.



Foreign currency translation



The reporting currency
of the Company is the US dollar. The functional currency of the Company and Green New Jersey is the US dollar. The functional currency
of the Chinese subsidiaries is the Chinese Yuan or Renminbi (“RMB”). For the subsidiaries whose functional currencies
are other than the US dollar, all asset and liability accounts were translated at the exchange rate on the balance sheet date;
stockholder's equity is translated at the historical rates and items in the cash flow statements are translated at the average
rate in each applicable period. Translation adjustments resulting from this process are included in accumulated other comprehensive
income in the statement of shareholders’ equity. The resulting translation gains and losses that arise from exchange rate
fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations
as incurred.



Segment reporting



FASB ASC 280, (previously
SFAS No. 131,Segment Reporting) requires use of the “management approach” model for segment reporting. The
management approach model is based on the way a company’s management organizes segments within the company for making operating
decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management
structure, or any other manner in which management disaggregates a company.



During the year
ended June 30, 2012, we were organized into four main business segments: Jinong (fertilizer production), Gufeng (fertilizer
production), Jintai (agricultural products production) and Yuxing (agricultural products production).



Recent Accounting
Pronouncements



For
information with respect to recent accounting pronouncements and the impact of these pronouncements on our consolidated financial
statements, see Note 2 of Notes to Consolidated Financial Statements included elsewhere in this Report.



| | ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISKS
| | -------- | -----------------------------------------------------------



Disclosures About Market Risk



We may be exposed to
changes in financial market conditions in the normal course of business. Market risk generally represents the risk that losses
may occur as a result of movements in interest rates and equity prices. We currently do not use financial instruments in the normal
course of business that are subject to changes in financial market conditions.





64









Currency Fluctuations and Foreign
Currency Risk



Substantially all of
our revenues and expenses are denominated in RMB. However, we use the U.S. dollar for financial reporting purposes. Conversion
of RMB into foreign currencies is regulated by the People’s Bank of China through a unified floating exchange rate system.
Although the PRC government has stated its intention to support the value of RMB, there can be no assurance that such exchange
rate will not again become volatile or that RMB will not devalue significantly against the U.S. dollar. Exchange rate fluctuations
may adversely affect the value, in U.S. dollar terms, of our net assets and income derived from our operations in the PRC.



Our reporting currency
is the U.S. dollar. Except for the U.S. holding companies, all of our consolidated revenues, consolidated costs and expenses, and
our assets are denominated in RMB. As a result, we are exposed to foreign exchange risk as our revenues and results of operations
may be affected by fluctuations in the exchange rate between U.S. dollars and RMB. If the RMB depreciates against the U.S. dollar,
the value of our RMB revenues, earnings and assets as expressed in our U.S. dollar financial statements will decline. Assets and
liabilities are translated at exchange rates at the balance sheet dates and revenue and expenses are translated at the average
exchange rates and shareholders’ equity is translated at historical exchange rates. Any resulting translation adjustments
are not included in determining net income but are included in determining other comprehensive income, a component of shareholders’
equity. As of June 30, 2012, our accumulated other comprehensive income was $15.8 million. We have not entered into any hedging
transactions in an effort to reduce our exposure to foreign exchange risk. The value of the Renminbi against the U.S. dollar and
other currencies is affected by, among other things, changes in China’s political and economic conditions. Since July 2005,
the Renminbi has not been pegged to the U.S. dollar. Although the People’s Bank of China regularly intervenes in the foreign
exchange market to prevent significant short-term fluctuations in the exchange rate, the Renminbi may appreciate or depreciate
significantly in value against the U.S. dollar in the medium to long term. Moreover, it is possible that in the future, PRC authorities
may lift restrictions on fluctuations in the Renminbi exchange rate and lessen intervention in the foreign exchange market.



Interest Rate Risk



We deposit surplus
funds with Chinese banks earning daily interest. We do not invest in any instruments for trading purposes. All of our outstanding
debt instruments carry fixed rates of interests. The amount of short-term debt outstanding as of June 30, 2011 and June 30, 2010
was $13.9 million and $4.1 million, respectively. We are exposed to interest rate risk primarily with respect to our short-term
bank loans. Although the interest rates, which are based on the banks’ prime rates with respect to our short-term loans are
fixed for the terms of the loans, the terms are typically three to twelve months for short-term bank loans and interest rates are
subject to change upon renewal. There were no material changes in interest rates for short-term bank loans renewed during the three
months ended June 30, 2012. The original loan term on average is one year, and the remaining average life of the short term-loans
is nine months.



Management monitors
the banks’ prime rates in conjunction with our cash requirements to determine the appropriate level of debt balances relative
to other sources of funds. We have not entered into any hedging transactions in an effort to reduce our exposure to interest rate
risk.



Credit Risk



We have not experienced
significant credit risk, as most of our customers are long-term customers with superior payment records. Our receivables are monitored
regularly by our credit managers.



Inflation Risk



Inflationary factors
such as increases in the cost of our product and overhead costs may adversely affect our operating results. Although we do not
believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation
in the future may have an adverse effect on our ability to maintain current levels of gross margin and selling, general and administrative
expenses as a percentage of net revenues if the selling prices of our products do not increase with these increased costs.



65







|ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|------- | -------------------------------------------



Balance sheets, as of June 30, 2012 and
2011, and statements of operations, stockholders’ equity and cash flows for each of the two years in the period ended June
30, 2012 and 2011, together with the related notes and the reports of independent registered public accounting firms, are set forth
on the “F” pages of this report.



|ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|------- | ------------------------------------------------------------------------------------



None.



|ITEM 9A. | CONTROLS AND PROCEDURES
|-------- | -----------------------



Disclosure Controls and Procedures



At the conclusion of
the fiscal year ended June 30, 2012 we carried out an evaluation, under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the
“Exchange Act”)). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that
as of the end of the period covered by this Report, our disclosure controls and procedures were effective and adequately designed
to ensure that the information required to be disclosed by us in the reports we submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the applicable rules and forms and that such information was accumulated
and communicated to our Chief Executive Officer and Chief Financial Officer, in a manner that allowed for timely decisions regarding
required disclosure.



Management Report on Internal Control Over Financial Reporting



Our management is responsible
for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the
reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with U.S.
generally accepted accounting principles. Internal control over financial reporting 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 the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of
the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s
assets that could have a material effect on the financial statements.



Any system of internal
control, no matter how well designed, has inherent limitations, including the possibility that a control can be circumvented or
overridden and misstatements due to error or fraud may occur and not be detected in a timely manner. Also, because of changes in
conditions, internal control effectiveness may vary over time. Accordingly, even an effective system of internal control will provide
only reasonable assurance with respect to financial statement preparation. In addition, the design of any system of controls is
based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because
of changes in conditions or deterioration in the degree of compliance with policies or procedures. Therefore, any current evaluation
of controls cannot and should not be projected to future periods.



Management assessed
our internal control over financial reporting as of the year ended June 30, 2011. In making this assessment, management used the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in the report entitled "Internal
Control-Integrated Framework." The COSO framework summarizes each of the components of a company’s internal control
system, including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication,
and (v) monitoring.



66







Based on management’s
assessment using the COSO criteria, management has concluded that the Company’s internal control over financial reporting
was effective as of June 30, 2012 to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.



The effectiveness of
our internal control over financial reporting as of June 30, 2012 has been audited by Kabani & Company, Inc., an independent
registered public accounting firm, as stated in their report which appears herein.



Changes in Internal Control over Financial Reporting



There were no changes in the Company’s
internal control over financial reporting that occurred during our fourth fiscal quarter ended June 30, 2012 that has materially
affected or is reasonably likely to materially affect our internal control over financial reporting.



REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM



To the Board of
Directors and Stockholders of

China Green Agriculture,
Inc. and its subsidiaries



We have audited
China Green Agriculture, Inc. and its subsidiaries’ (the “Company”) internal control over financial reporting
as of June 30, 2012, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included
in the accompanying Report of Management on Internal Control Over Financial Reporting. Our responsibility is to express an opinion
on the company’s internal control over financial reporting based on our audit.



We conducted our
audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding
of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the
design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.



A company’s
internal control over financial reporting is a process designed 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.
A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) 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 of the company are being made only in accordance
with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.



Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or procedures may deteriorate.



In our opinion, China Green Agriculture,
Inc. and its subsidiaries maintained, in all material respects, effective internal control over financial reporting as of June
30, 2012, based on the COSO criteria.



We have also audited,
in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets
and the related consolidated statements of income and comprehensive income, stockholders’ equity, and cash flows of China
Green Agriculture, Inc. and its subsidiaries, and our report dated September 13, 2012 expressed an unqualified opinion thereon.



/s/ KABANI
& COMPANY, INC

CERTIFIED PUBLIC
ACCOUNTANTS



Los Angeles, CA

September 13, 2012



ITEM 9B.      	OTHER INFORMATION



None.



67







PART III



|ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|-------- | ------------------------------------------------------



The information required
by this Item is incorporated herein by reference to the section entitled “Directors and Executive Officers and Corporate
Governance” of our 2012 Proxy Statement.



|ITEM 11. | EXECUTIVE COMPENSATION
|-------- | ----------------------



The information required
by this Item is incorporated herein by reference to the section entitled “Executive Compensation” of our 2012 Proxy
Statement.



|ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED  STOCKHOLDERS MATTERS
|-------- | ------------------------------------------------------------------------------------------------



The information required
by this Item is incorporated herein by reference to the section entitled “Security Ownership of Certain Beneficial Owners
and Management and Related Matters” of our 2012 Proxy Statement.



|ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|-------- | -------------------------------------------------------------------------



The information required
by this Item is incorporated herein by reference to the section entitled “Certain Relationship of Certain Beneficial Owners
and Management and Related Matters” of our 2012 Proxy Statement.



|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|-------- | --------------------------------------



The information required
by this Item is incorporated herein by reference to the section entitled "Principal Accounting Fees and Services" of
our 2012 Proxy Statement.



PART IV



|ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|-------- | ------------------------------------------



(a)      
The following documents are filed as part of this report:



Financial Statements



The following financial statements of China
Green Agriculture, Inc. and Report of Independent Registered Public Accounting Firm are presented in the “F” pages
of this Report:



|Report of Independent Registered Public Accounting Firm                                                       |  | F-1    
|------------------------------------------------------------------------------------------------------------- |  | -------
|                                                                                                              |  |        
|Consolidated Balance Sheets - as of June 30, 2012 and 2011                                                    |  | F-2    
|                                                                                                              |  |        
|Consolidated Statements of Income and Other Comprehensive Income - for the Years ended June 30, 2012 and 2011 |  | F-     
|                                                                                                              |  |        
|Consolidated Statements of Shareholders’ Equity - for the Years ended June 30, 2012 and 2011                  |  | F-     
|                                                                                                              |  |        
|Consolidated Statements of Cash Flows - for the Years ended June 30, 2012 and 2011                            |  | F-     
|                                                                                                              |  |        
|Notes to Consolidated Financial Statements                                                                    |  | F- - F-



68







(b)      Exhibits



See the Exhibit Index following the signature
page of this Report, which Index is incorporated herein by reference.



69







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.



|                         | China Green Agriculture, Inc.
|------------------------ | -----------------------------
|                         |                              
|Date: September 13, 2012 | By:                          
|                         |                              



Pursuant to the requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.



|September 13, 2012 |  | /s/ Tao Li                                                                                 
|------------------ |  | -------------------------------------------------------------------------------------------
|                   |  | Tao Li, Chairman of the Board of Directors, President and CEO (principal executive officer)
|                   |  |                                                                                            
|September 13, 2012 |  | /s/ Ken Ren                                                                                
|                   |  | Ken Ren, Chief Financial Officer                                                           
|                   |  | (principal financial officer and principal                                                 
|                   |  | accounting officer)                                                                        
|                   |  |                                                                                            
|September 13, 2012 |  | /s/ Yu Hao                                                                                 
|                   |  | Yu Hao, Director                                                                           
|                   |  |                                                                                            
|September 13, 2012 |  | /s/ Lianfu Liu                                                                             
|                   |  | Lianfu Liu, Director                                                                       
|                   |  |                                                                                            
|September 13, 2012 |  | /s/ Yizhao Zhang                                                                           
|                   |  | Yizhao Zhang, Director                                                                     
|                   |  |                                                                                            
|September 13, 2012 |  | /s/ Yiru Shi                                                                               
|                   |  | Yiru Shi, Director                                                                         



S-1







China Green Agriculture, Inc.

Exhibit Index to Annual Report on Form
10-K

For the Year Ended June 30, 2012



|3.1  | Articles of Incorporation (incorporated herein by reference to the Company’s Quarterly Report on Form 10-QSB, for the quarter ended September 30, 2007, filed with the SEC on November 9, 2007, Exhibit 3.1).                                           
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                         
|3.2  | Certificate of Change filed with the Secretary of State of the State of Nevada on December 18, 2007 (incorporated herein by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 2, 2008, Exhibit 4.2).                  
|     |                                                                                                                                                                                                                                                         
|3.3  | Certificate of Correction (incorporated herein by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on February 8, 2008, Exhibit 4.1).                                                                                   
|     |                                                                                                                                                                                                                                                         
|3.4  | Articles of Merger (incorporated herein by reference to the Company’s Current Report on Form 8-K, filed February 5, 2008, Exhibit 3.1).                                                                                                                 
|     |                                                                                                                                                                                                                                                         
|3.5  | Bylaws (incorporated herein by reference to the Company’s Quarterly Report on Form 10-QSB, for the quarter ended September 30, 2007, filed with the SEC on November 9, 2007, Exhibit 3.2).                                                              
|     |                                                                                                                                                                                                                                                         
|4.1  | Specimen Common Stock Certificate (incorporated herein by reference to the Company’s Registration Statement on Form S-3 filed with the SEC on June 8, 2009, Exhibit 4.1).                                                                               
|     |                                                                                                                                                                                                                                                         
|10.1 | Employment Agreement, dated January 16, 2008, by and between Shaanxi TechTeam Jinong Humic Acid Product Co., Ltd. and Mr. Tao Li (incorporated herein by reference to the Company’s Annual Report on Form 10-K filed with the SEC on September 7, 2010).
|     |                                                                                                                                                                                                                                                         
|10.2 | Employment Agreement, dated June 21, 2010, by and between the Company and Mr. Ken Ren (Incorporated herein by reference to our Current Report on Form 8-K filed with the SEC on June 25, 2010)                                                          
|     |                                                                                                                                                                                                                                                         
|10.3 | Share Transfer Agreement, dated July 1, 2010, by and between Shaanxi TechTeam Jinong Humic Acid Product Co., Ltd., Qing Xin Jiang and Qiong Jia (Incorporated herein by reference to the Current Report on Form 8-K filed with the SEC on July 7, 2010).
|     |                                                                                                                                                                                                                                                         
|10.4 | Supplementary Agreement, dated July 1, 2010, by and between Shaanxi TechTeam Jinong Humic Acid Product Co., Ltd., Qing Xin Jiang and Qiong Jia (Incorporated herein by reference to the Current Report on Form 8-K filed with the SEC on July 7, 2010). 
|     |                                                                                                                                                                                                                                                         
|10.5 | Employment Agreement by and between Beijing Gufeng Chemical Products Co., Ltd. and Qing Xin Jiang dated July 1, 2010. (Incorporated herein by reference to the Annual Report on Form 10-K filed with the SEC on September 12, 2011)                     
|     |                                                                                                                                                                                                                                                         
|10.6 | Form of Non-Competition Agreement by and between Beijing Gufeng Chemical Products Co., Ltd. and its two major former shareholders. (Incorporated herein by reference to the Annual Report on Form 10-K filed with the SEC on September 12, 2011)        
|     |                                                                                                                                                                                                                                                         
|10.7 | Form of Restricted Stock Grant Agreement (Incorporated herein by reference to the Current Report on Form 8-K filed with the SEC on January 11, 2010).                                                                                                   
|     |                                                                                                                                                                                                                                                         
|10.8 | Form of Non-Qualified Stock Option Grant Agreement (Incorporated herein by reference to the Current Report on Form 8-K filed with the SEC on January 11, 2010).                                                                                         
|     |                                                                                                                                                                                                                                                         
|10.9 | Offer Letter dated March 28, 2011 between China Green Agriculture, Inc. and Yizhao Zhang. (Incorporated herein by reference to the Quarterly Report on Form 10-Q filed with the SEC on May 10, 2011)                                                    



E-1







|10.10 | Offer Letter dated March 28, 2011 between China Green Agriculture, Inc. and Lianfu Liu. (Incorporated herein by reference to the Quarterly Report on Form 10-Q filed with the SEC on May 10, 2011)                                                                                               
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                  
|10.11 | Offer Letter dated October 25, 2011 between China Green Agriculture, Inc. and Yiru Shi                                                                                                                                                                                                           
|      |                                                                                                                                                                                                                                                                                                  
|10.12 | Project Construction Contract dated August 10, 2010 between Xi’an Hu County Yuxing Agriculture Science & Technology Co., Ltd. and Xi’an Kingtone Information Technology Co., Ltd. (Incorporated herein by reference to the Quarterly Report on Form 10-Q filed with the SEC on November 12, 2010)
|      |                                                                                                                                                                                                                                                                                                  
|14.1  | Amended and Restated Code of Ethics. (Incorporated herein by reference to the Quarterly Report on Form 10-Q filed with the SEC on November 12, 2010)                                                                                                                                             
|      |                                                                                                                                                                                                                                                                                                  
|21.1  | List of Subsidiaries of the Company.                                                                                                                                                                                                                                                             
|      |                                                                                                                                                                                                                                                                                                  
|23.1  | Consent of Kabani & Company, Inc., Independent Registered Public Accounting Firm.                                                                                                                                                                                                                
|      |                                                                                                                                                                                                                                                                                                  
|31.1  | Certification of CEO pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                               
|      |                                                                                                                                                                                                                                                                                                  
|31.2  | Certification of CFO pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                               
|      |                                                                                                                                                                                                                                                                                                  
|32.1  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                          



E-2









REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM





To the Board of
Directors and Stockholders of

China Green Agriculture
Inc. and its subsidiaries



We have audited
the accompanying consolidated balance sheets of China Green Agriculture, Inc. and its subsidiaries (the “Company”)
as of June 30, 2012 and 2011, and the related consolidated statements of income and comprehensive income, stockholders' equity,
and cash flows for each of the years in the three-year period ended June 30, 2012. Our audits also included the financial statement
schedule listed in the Index at Item 15(a) 2. The Company’s management is responsible for these financial statements
and schedules. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.



We conducted our
audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and schedules are free
of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.



In our opinion,
the financial statements referred to above present fairly, in all material respects, the financial position of China Green Agriculture,
Inc. and its subsidiaries as of June 30, 2012 and 2011, and the results of its operations and its cash flows for each of the years
in the three-year period ended June 30, 2012 in conformity with accounting principles generally accepted in the United States of
America.



We also have audited,
in accordance with the standards of the Public Company Accounting Oversight Board (United States), China Green Agriculture, Inc.
and subsidiaries’ internal control over financial reporting as of June 30, 2012, based on criteria established in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our
report dated September 13, 2012expressed an unqualified opinion thereon.



/s/ KABANI
& COMPANY, INC.

CERTIFIED PUBLIC
ACCOUNTANTS



Los Angeles, CA

September 13,
2012





F-1







CHINA GREEN AGRICULTURE
INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE
SHEETS

AS OF JUNE 30,
2012 AND 2011



|                                                                                                                                                                           |  | 2012 |             |  | 2011 |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----------- |  | ---- | -
|                                                                                                                                                                           |  |      |             |  |      |  
|ASSETS                                                                                                                                                                     |  |      |             |  |      |  
|Current Assets                                                                                                                                                             |  |      |             |  |      |  
|Cash and cash equivalents                                                                                                                                                  |  | $    | 71,978,630  |  |      | $
|Accounts receivable, net                                                                                                                                                   |  |      | 62,001,158  |  |      |  
|Inventories                                                                                                                                                                |  |      | 28,602,684  |  |      |  
|Other current assets                                                                                                                                                       |  |      | 299,526     |  |      |  
|Advances to suppliers                                                                                                                                                      |  |      | 12,207,325  |  |      |  
|Total Current Assets                                                                                                                                                       |  |      | 175,089,323 |  |      |  
|                                                                                                                                                                           |  |      |             |  |      |  
|Plant, Property and Equipment, Net                                                                                                                                         |  |      | 80,065,161  |  |      |  
|                                                                                                                                                                           |  |      |             |  |      |  
|Construction In Progress                                                                                                                                                   |  |      | -           |  |      |  
|                                                                                                                                                                           |  |      |             |  |      |  
|Other Assets - Non Current                                                                                                                                                 |  |      | 182,119     |  |      |  
|                                                                                                                                                                           |  |      |             |  |      |  
|Intangible Assets, Net                                                                                                                                                     |  |      | 27,618,641  |  |      |  
|                                                                                                                                                                           |  |      |             |  |      |  
|Goodwill                                                                                                                                                                   |  |      | 5,075,809   |  |      |  
|                                                                                                                                                                           |  |      |             |  |      |  
|Total Assets                                                                                                                                                               |  | $    | 288,031,053 |  |      | $
|                                                                                                                                                                           |  |      |             |  |      |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                       |  |      |             |  |      |  
|Current Liabilities                                                                                                                                                        |  |      |             |  |      |  
|Accounts payable                                                                                                                                                           |  | $    | 6,881,748   |  |      | $
|Unearned revenue                                                                                                                                                           |  |      | 2,625,014   |  |      |  
|Accrued expenses and other payables                                                                                                                                        |  |      | 4,290,249   |  |      |  
|Amount due to related parties                                                                                                                                              |  |      | 370,719     |  |      |  
|Taxes payable                                                                                                                                                              |  |      | 17,675,389  |  |      |  
|Short term loans                                                                                                                                                           |  |      | 13,931,280  |  |      |  
|Total Current Liabilities                                                                                                                                                  |  |      | 45,774,399  |  |      |  
|                                                                                                                                                                           |  |      |             |  |      |  
|Commitment and Contingencies                                                                                                                                               |  |      |             |  |      |  
|                                                                                                                                                                           |  |      |             |  |      |  
|Stockholders' Equity                                                                                                                                                       |  |      |             |  |      |  
|Preferred Stock, $.001 par value,  20,000,000 shares authorized, zero shares issued and outstanding                                                                        |  |      | -           |  |      |  
|Common stock, $.001 par value, 115,197,165 shares authorized,  27,455,722 and 26,845,860 shares issued and outstanding as of June 30, 2012 and June 30, 2011, respectively |  |      | 27,456      |  |      |  
|Additional paid-in capital                                                                                                                                                 |  |      | 102,175,709 |  |      |  
|Statutory reserve                                                                                                                                                          |  |      | 15,130,158  |  |      |  
|Retained earnings                                                                                                                                                          |  |      | 109,142,824 |  |      |  
|Accumulated other comprehensive income                                                                                                                                     |  |      | 15,780,507  |  |      |  
|Total Stockholders' Equity                                                                                                                                                 |  |      | 242,256,654 |  |      |  
|                                                                                                                                                                           |  |      |             |  |      |  
|Total Liabilities and Stockholders' Equity                                                                                                                                 |  | $    | 288,031,053 |  |      | $



The accompanying notes are an integral part of these consolidated financial statements.





F-2







CHINA GREEN AGRICULTURE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF  INCOME AND COMPREHENSIVE INCOME

FOR THE
YEARS ENDED JUNE 30, 2012, 2011, AND 2010



|                                            |  | For the Years Ended June 30, |            
|------------------------------------------- |  | ---------------------------- | -----------
|                                            |  | 2012                         |            
|Sales                                       |  |                              |            
|Jinong                                      |  | $                            | 88,168,740 
|Gufeng                                      |  |                              | 121,480,943
|Jintai                                      |  |                              | 5,792,002  
|Yuxing                                      |  |                              | 2,082,520  
|Net sales                                   |  |                              | 217,524,205
|Cost of goods sold                          |  |                              |            
|Jinong                                      |  |                              | 34,129,304 
|Gufeng                                      |  |                              | 96,756,719 
|Jintai                                      |  |                              | 5,415,970  
|Yuxing                                      |  |                              | 1,946,979  
|Cost of goods sold                          |  |                              | 138,248,972
|Gross profit                                |  |                              | 79,275,233 
|Operating expenses                          |  |                              |            
|Selling expenses                            |  |                              | 11,548,816 
|General and administrative expenses         |  |                              | 13,801,407 
|Total operating expenses                    |  |                              | 25,350,223 
|Income from operations                      |  |                              | 53,925,010 
|Other income (expense)                      |  |                              |            
|Other income (expense)                      |  |                              | 60,212     
|Interest income                             |  |                              | 364,536    
|Interest expense, net                       |  |                              | (1,590,620 
|Total other income (expense)                |  |                              | (1,165,872 
|Income before income taxes                  |  |                              | 52,759,138 
|Provision for income taxes                  |  |                              | 10,801,313 
|Net income                                  |  |                              | 41,957,825 
|Other comprehensive income                  |  |                              |            
|Foreign currency translation gain           |  |                              | 4,876,751  
|Comprehensive income                        |  | $                            | 46,834,576 
|                                            |  |                              |            
|Basic weighted average shares outstanding   |  |                              | 26,943,530 
|Basic net earnings per share                |  | $                            | 1.56       
|Diluted weighted average shares outstanding |  |                              | 26,943,530 
|Diluted net earnings per share              |  |                              | 1.56       



The accompanying notes are an integral part of these consolidated financial statements.





F-3







CHINA GREEN AGRICULTURE INC. AND SUBSIDIARIES

STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE YEARS
ENDED JUNE 30, 2012, 2011 AND 2010



|                                                  |  | Number
    Of Shares |            |   | Common
    Stock |   |        | Additional
    Paid In
    Capital |  |   | Statutory
    Reserve |   |  | Retained
    Earnings |            |  | Accumulated Other
    Comprehensive
    Income |   |             | Total
    Stockholders'
    Equity | 
|------------------------------------------------- |  | -------------------- | ---------- | - | ---------------- | - | ------ | ---------------------------------- |  | - | --------------------- | - |  | --------------------- | ---------- |  | ---------------------------------------------- | - | ----------- | ---------------------------------- | 
|BALANCE, JUNE 30, 2009                            |  |                      | 12,281,569 |   |                  | $ | 12,282 |                                    |  | $ | 2,060,162             |   |  | $                     | 3,468,530  |  |                                                | $ | 24,642,768  |                                    | 
|                                                  |  |                      |            |   |                  |   |        |                                    |  |   |                       |   |  |                       |            |  |                                                |   |             |                                    | 
|Net income for the year ended June 30, 2010       |  |                      | -          |   |                  |   | -      |                                    |  |   | -                     |   |  |                       | -          |  |                                                |   | 21,289,758  |                                    | 
|                                                  |  |                      |            |   |                  |   |        |                                    |  |   |                       |   |  |                       |            |  |                                                |   |             |                                    | 
|Reclass PIPE shares subject to redemption         |  |                      | 6,313,617  |   |                  |   | 6,314  |                                    |  |   | 20,512,941            |   |  |                       | -          |  |                                                |   | -           |                                    | 
|                                                  |  |                      |            |   |                  |   |        |                                    |  |   |                       |   |  |                       |            |  |                                                |   |             |                                    | 
|Stock issued in relation to fund raising          |  |                      | 5,627,564  |   |                  |   | 5,628  |                                    |  |   | 51,487,207            |   |  |                       | -          |  |                                                |   | -           |                                    | 
|                                                  |  |                      |            |   |                  |   |        |                                    |  |   |                       |   |  |                       |            |  |                                                |   |             |                                    | 
|Stock based compensation                          |  |                      | 272,161    |   |                  |   | 272    |                                    |  |   | 1,695,449             |   |  |                       | -          |  |                                                |   | -           |                                    | 
|                                                  |  |                      |            |   |                  |   |        |                                    |  |   |                       |   |  |                       |            |  |                                                |   |             |                                    | 
|Exercised of stock options-cashless               |  |                      | 77,418     |   |                  |   | 77     |                                    |  |   | (77                   | ) |  |                       | -          |  |                                                |   | -           |                                    | 
|                                                  |  |                      |            |   |                  |   |        |                                    |  |   |                       |   |  |                       |            |  |                                                |   |             |                                    | 
|Transfer to statutory reserve                     |  |                      | -          |   |                  |   | -      |                                    |  |   | -                     |   |  |                       | 2,396,118  |  |                                                |   | (2,396,118  | )                                  | 
|                                                  |  |                      |            |   |                  |   |        |                                    |  |   |                       |   |  |                       |            |  |                                                |   |             |                                    | 
|Accumulative other comprehensive
    income       |  |                      | -          |   |                  |   | -      |                                    |  |   | -                     |   |  |                       | -          |  |                                                |   | -           |                                    | 
|                                                  |  |                      |            |   |                  |   |        |                                    |  |   |                       |   |  |                       |            |  |                                                |   |             |                                    | 
|BALANCE, JUNE 30, 2010                            |  |                      | 24,572,329 |   |                  |   | 24,573 |                                    |  |   | 75,755,682            |   |  |                       | 5,864,648  |  |                                                |   | 43,536,408  |                                    | 
|                                                  |  |                      |            |   |                  |   |        |                                    |  |   |                       |   |  |                       |            |  |                                                |   |             |                                    | 
|Net income for the year ended ended June 30, 2011 |  |                      | -          |   |                  |   | -      |                                    |  |   | -                     |   |  |                       | -          |  |                                                |   | 32,914,101  |                                    | 
|                                                  |  |                      |            |   |                  |   |        |                                    |  |   |                       |   |  |                       |            |  |                                                |   |             |                                    | 
|Stock issued in relation to Acquisition           |  |                      | 2,275,931  |   |                  |   | 2,275  |                                    |  |   | 19,297,619            |   |  |                       | -          |  |                                                |   | -           |                                    | 
|                                                  |  |                      |            |   |                  |   |        |                                    |  |   |                       |   |  |                       |            |  |                                                |   |             |                                    | 
|Stock based compensation                          |  |                      | -          |   |                  |   | -      |                                    |  |   | 3,605,235             |   |  |                       | -          |  |                                                |   | -           |                                    | 
|                                                  |  |                      |            |   |                  |   |        |                                    |  |   |                       |   |  |                       |            |  |                                                |   |             |                                    | 
|Forefeiture of shares issued for services         |  |                      | (2,400     | ) |                  |   | (2     | )                                  |  |   | (31,054               | ) |  |                       | -          |  |                                                |   | -           |                                    | 
|                                                  |  |                      |            |   |                  |   |        |                                    |  |   |                       |   |  |                       |            |  |                                                |   |             |                                    | 
|Transfer to statutory reserve                     |  |                      | -          |   |                  |   | -      |                                    |  |   | -                     |   |  |                       | 4,163,073  |  |                                                |   | (4,163,073  | )                                  | 
|                                                  |  |                      |            |   |                  |   |        |                                    |  |   |                       |   |  |                       |            |  |                                                |   |             |                                    | 
|Accumulative other comprehensive
    income       |  |                      | -          |   |                  |   | -      |                                    |  |   | -                     |   |  |                       | -          |  |                                                |   | -           |                                    | 
|                                                  |  |                      |            |   |                  |   |        |                                    |  |   |                       |   |  |                       |            |  |                                                |   |             |                                    | 
|BALANCE, JUNE 30, 2011                            |  |                      | 26,845,860 |   |                  |   | 26,846 |                                    |  |   | 98,627,482            |   |  |                       | 10,027,721 |  |                                                |   | 72,287,436  |                                    | 
|                                                  |  |                      |            |   |                  |   |        |                                    |  |   |                       |   |  |                       |            |  |                                                |   |             |                                    | 
|Net income for the year ended June 30, 2012       |  |                      | -          |   |                  |   | -      |                                    |  |   | -                     |   |  |                       | -          |  |                                                |   | 41,957,825  |                                    | 
|                                                  |  |                      |            |   |                  |   |        |                                    |  |   |                       |   |  |                       |            |  |                                                |   |             |                                    | 
|Issuance of stock for cash                        |  |                      | 63,158     |   |                  |   | 63     |                                    |  |   | 299,938               |   |  |                       | -          |  |                                                |   | -           |                                    | 
|                                                  |  |                      |            |   |                  |   |        |                                    |  |   |                       |   |  |                       |            |  |                                                |   |             |                                    | 
|Issuance of stock for consulting services         |  |                      | 5,704      |   |                  |   | 6      |                                    |  |   | 23,994                |   |  |                       | -          |  |                                                |   | -           |                                    | 
|                                                  |  |                      |            |   |                  |   |        |                                    |  |   |                       |   |  |                       |            |  |                                                |   |             |                                    | 
|Stock based compensation                          |  |                      | 541,000    |   |                  |   | 541    |                                    |  |   | 3,224,295             |   |  |                       | -          |  |                                                |   | -           |                                    | 
|                                                  |  |                      |            |   |                  |   |        |                                    |  |   |                       |   |  |                       |            |  |                                                |   |             |                                    | 
|Transfer to statutory reserve                     |  |                      | -          |   |                  |   | -      |                                    |  |   | -                     |   |  |                       | 5,102,437  |  |                                                |   | (5,102,437  | )                                  | 
|                                                  |  |                      |            |   |                  |   |        |                                    |  |   |                       |   |  |                       |            |  |                                                |   |             |                                    | 
|Accumulative other comprehensive income           |  |                      | -          |   |                  |   | -      |                                    |  |   | -                     |   |  |                       | -          |  |                                                |   | -           |                                    | 
|                                                  |  |                      |            |   |                  |   |        |                                    |  |   |                       |   |  |                       |            |  |                                                |   |             |                                    | 
|BALANCE, JUNE 30, 2012                            |  |                      | 27,455,722 |   |                  | $ | 27,456 |                                    |  | $ | 102,175,709           |   |  | $                     | 15,130,158 |  |                                                | $ | 109,142,824 |                                    | 



The accompanying notes are an integral part of these consolidated financial statements.





F-4









CHINA GREEN AGRICULTURE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS
ENDED JUNE 30, 2012, 2011, AND 2010



|                                                                                 |  | For The Years Ended June 30, |            
|-------------------------------------------------------------------------------- |  | ---------------------------- | -----------
|                                                                                 |  | 2012                         |            
|Cash flows from operating activities                                             |  |                              |            
|Net income                                                                       |  | $                            | 41,957,825 
|Adjustments to reconcile net income to net cash provided by operating activities |  |                              |            
|Issuance of common stock and stock options for compensation                      |  |                              | 3,248,836  
|Cancelation of previously issued shares for services                             |  |                              | -          
|Depreciation                                                                     |  |                              | 4,429,960  
|Amortization                                                                     |  |                              | 1,562,906  
|Changes in operating assets, net of effects from acquisitions                    |  |                              |            
|Accounts receivable                                                              |  |                              | (43,814,193
|Other current assets                                                             |  |                              | 245,965    
|Inventories                                                                      |  |                              | (4,278,219 
|Advances to suppliers                                                            |  |                              | (442,144   
|Other assets                                                                     |  |                              | (28,198    
|Change in operating liabilities, net of effects from acquisitions                |  |                              |            
|Accounts payable                                                                 |  |                              | 755,931    
|Unearned revenue                                                                 |  |                              | (8,649,382 
|Tax payables                                                                     |  |                              | 10,443,311 
|Accrued expenses and other payables                                              |  |                              | 967,800    
|Net cash provided by operating activities                                        |  |                              | 6,400,398  
|                                                                                 |  |                              |            
|Cash flows from investing activities                                             |  |                              |            
|Purchase of plant, property, and equipment                                       |  |                              | (11,883,947
|Purchase of intangible assets                                                    |  |                              | -          
|Acquisition, net of cash acquired                                                |  |                              | -          
|Increase in construction in progress                                             |  |                              | -          
|Net cash used in investing activities                                            |  |                              | (11,883,947
|                                                                                 |  |                              |            
|Cash flows from financing activities                                             |  |                              |            
|Repayment of loan                                                                |  |                              | -          
|Proceeds from loans                                                              |  |                              | 9,678,375  
|Shares issuance cost                                                             |  |                              | -          
|Proceeds from issuance of shares                                                 |  |                              | 300,001    
|Advance from related party                                                       |  |                              | 300,000    
|Restricted cash                                                                  |  |                              | -          
|Net cash provided by financing activities                                        |  |                              | 10,278,376 
|                                                                                 |  |                              |            
|Effect of exchange rate change on cash and cash equivalents                      |  |                              | 1,577,390  
|Net increase in cash and cash equivalents                                        |  |                              | 6,372,217  
|                                                                                 |  |                              |            
|Cash and cash equivalents, beginning balance                                     |  |                              | 65,606,413 
|Cash and cash equivalents, ending balance                                        |  | $                            | 71,978,630 
|                                                                                 |  |                              |            
|Supplement disclosure of cash flow information                                   |  |                              |            
|Interest expense paid                                                            |  | $                            | 1,590,620  
|Income taxes paid                                                                |  | $                            | 337,872    
|                                                                                 |  |                              |            
|Supplement disclosure of non-cash investing and financing activities             |  |                              |            
|Issuance of 2,275,931 shares for acquisition of Gufeng                           |  | $                            | -          



The accompanying notes are an integral part of these consolidated financial statements.





F-5







CHINA GREEN AGRICULTURE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1 – ORGANIZATION AND DESCRIPTION
OF BUSINESS



China Green Agriculture, Inc. (the “Company”),
through its subsidiaries, is engaged in the research, development, production, distribution and sale of humic acid-based compound
fertilizer, compound fertilizer, blended fertilizer, organic compound fertilizer, slow-release fertilizers, highly-concentrated
water-soluble fertilizers and mixed organic-inorganic compound fertilizer and the development, production and distribution of agricultural
products.



The Company’s corporate structure as of June 30, 2012
is set forth in the diagram below:









NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES



Principle of consolidation



The accompanying consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries, Green New Jersey, Jinong, Jintai, Yuxing, Gufeng and Tianjuyuan. All
significant inter-company accounts and transactions have been eliminated in consolidation.



Use of estimates



The preparation of consolidated financial statements in conformity
with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
consolidated financial statements and the amount of revenues and expenses during the reporting periods. Management makes these
estimates using the best information available at the time the estimates are made. However, actual results could differ materially
from those results.



Cash and cash equivalents and concentration of cash



For statement of cash flows purposes, the Company considers
all cash on hand and in banks, certificates of deposit with state owned banks in the Peoples Republic of China (“PRC”)
and banks in the United States, and other highly-liquid investments with maturities of three months or less, when purchased, to
be cash and cash equivalents. The Company maintains large sums of cash in major banks in China. The aggregate cash in such accounts
and on hand as of June 30, 2012 was $71,701,092. There is no insurance securing these deposits in China. In addition, the Company
also had $280,445 in cash in two banks in the United States as of June 30, 2012, with $500,000 secured by the U.S. Federal Deposit
Insurance Corporation. Cash overdraft as of balance sheet date will be reflected as liabilities in the balance sheet. The Company
has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts.





F-6







Accounts receivable



The Company's policy is to maintain reserves for potential credit
losses on accounts receivable. Management regularly reviews the composition of accounts receivable and analyzes customer credit
worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves at each
year-end. Accounts considered uncollectible are written off through a charge to the valuation allowance. As of June 30, 2012 and
2011, the Company had accounts receivable of $62,001,158 and $17,517,625, net of allowance for doubtful accounts of $679,268 and
$337,801, respectively. The Company adopts no policy to accept product returns post to the sales delivery.



Inventories



Inventory is valued at the lower of cost (determined on a weighted
average basis) or market. Inventories consist of raw materials, work in process, finished goods and packaging materials. The Company
reviews its inventories regularly for possible obsolete goods and establishes reserves when determined necessary. At June 30, 2012
and 2011, the Company had no reserve for obsolete goods.



Property, plant and equipment



Property, plant and equipment are recorded at cost. Gains or
losses on disposals are reflected as gain or loss in the year of disposal. The cost of improvements that extend the life of plant,
property, and equipment are capitalized. These capitalized costs may include structural improvements, equipment, and fixtures.
All ordinary repair and maintenance costs are expensed as incurred.



Depreciation for financial reporting purposes is provided using
the straight-line method over the estimated useful lives of the assets:



|                        | Estimated Useful Life
|----------------------- | ---------------------
|Building                | 10-25 years          
|Agricultural assets     | 8 years              
|Machinery and equipment | 5-15 years           
|Vehicles                | 3-5 years            



Construction in Progress



Construction in progress represents the costs incurred in connection
with the construction of buildings or new additions to the Company’s plant facilities. Costs classified to construction in
progress include all costs of obtaining the asset and bringing it to the location and condition necessary for its intended use.
No depreciation is provided for construction in progress until such time as the assets are completed and are placed into service.
Interest incurred during construction is capitalized into construction in progress.



Long-Lived Assets



The Company tests long-lived assets for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted
cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment
loss will be recognized for the amount by which the carrying value exceeds the fair value. At June 30, 2012 and 2011, the Company
determined that there were no impairments of its long-lived assets.



Intangible Assets



The Company records intangible assets acquired individually
or as part of a group at fair value. Intangible assets with definitive lives are amortized over the useful life of the intangible
asset, which is the period over which the asset is expected to contribute directly or indirectly to the entity’s future cash
flows. The Company evaluates intangible assets for impairment at least annually and more often whenever events or changes in circumstances
indicate that the carrying value may not be recoverable. Whenever any such impairment exists, an impairment loss will be recognized
for the amount by which the carrying value exceeds the fair value. The Company has not recorded impairment of intangible assets
as of June 30, 2012, 2011, and 2010, respectively.





F-7







Goodwill



Goodwill represents the excess of purchase price over the underlying
net assets of businesses acquired. Under accounting requirements, goodwill is not amortized but is subject to annual impairment
tests. As of June 30, 2012, the Company performed the required impairment review which resulted in no impairment adjustment.



Summary of changes in goodwill by reporting segments is as follows:



|       |  |               |           |  | Foreign    |   |         |               | 
|------ |  | ------------- | --------- |  | ---------- | - | ------- | ------------- | 
|       |  | Balance at    |           |  | Currency   |   |         | Balance at    | 
|Entity |  | June 30, 2011 |           |  | Adjustment |   |         | June 30, 2012 | 
|Gufeng |  | $             | 4,957,245 |  |            | $ | 118,564 |               | 



Fair Value Measurement and Disclosures



Our accounting for Fair Value Measurement and Disclosures, defines
fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal
or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement
date. This topic also establishes a fair value hierarchy which requires classification based on observable and unobservable inputs
when measuring fair value. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs)
and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:



Level one — Quoted market prices in active markets for
identical assets or liabilities;



Level two — Inputs other than level one inputs that are
either directly or indirectly observable; and



Level three — Unobservable inputs developed using estimates
and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.



Determining which category an asset or liability falls within
the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter. The Company had no assets
and liabilities measured at fair value at June 30, 2012 and 2011.



The carrying values of cash and cash equivalents, trade and
other receivables, trade and other payables approximate their fair values due to the short maturities of these instruments.



Revenue recognition



Sales revenue is recognized on the date of shipment to customers
when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations
of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue
recognition are satisfied are recorded as unearned revenue. As of June 30, 2012 and 2011, the Company had unearned revenues of
$2,625,014 and $11,059,313, respectively.



The Company's revenue consists of invoiced value of goods, net
of a value-added tax (VAT). No product return or sales discount allowance are made as products delivered and accepted by customers
are not returnable and sales discounts are not granted after products are delivered.



Stock-Based Compensation



The costs of all employee stock options, as well as other equity-based
compensation arrangements, are reflected in the consolidated financial statements based on the estimated fair value of the awards
on the grant date. That cost is recognized over the period during which an employee is required to provide service in exchange
for the award—the requisite service period (usually the vesting period). Stock compensation for stock granted to non-employees
is determined as the fair value of the consideration received or the fair value of equity instruments issued, whichever is more
reliably measured.





F-8







Income taxes



The Company accounts for income taxes using an asset and liability
approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax
benefits in future years. Under the asset and liability approach, deferred taxes are provided for 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. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire
before the Company is able to realize their benefits, or that future deductibility is uncertain.



Under ASC 740, a tax position is recognized as a benefit only
if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination
being presumed to occur. The evaluation of a tax position is a two-step process. The first step is to determine whether it is more-likely-than-not
that a tax position will be sustained upon examination, including the resolution of any related appeals or litigations based on
the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold
to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount
of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Tax positions that previously failed
to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold
is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the
first subsequent financial reporting period in which the threshold is no longer met. Penalties and interest incurred related to
underpayment of income tax are classified as income tax expense in the year incurred. No significant penalties or interest relating
to income taxes have been incurred during the years ended June 30, 2012, 2011 and 2010. GAAP also provides guidance on de-recognition,
classification, interest and penalties, accounting in interim periods, disclosures and transition.



Foreign currency translation



The reporting currency of the Company is the US dollar. The
functional currency of the Company and Green New Jersey is the US dollar. The functional currency of the Chinese subsidiaries is
the Chinese Yuan or Renminbi (“RMB”). For the subsidiaries whose functional currencies are other than the US dollar,
all asset and liability accounts were translated at the exchange rate on the balance sheet date; stockholders’ equity is
translated at the historical rates and items in the income statement and cash flow statements are translated at the average rate
in each applicable period. Translation adjustments resulting from this process are included in accumulated other comprehensive
income in the statement of shareholders’ equity. The resulting translation gains and losses that arise from exchange rate
fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations
as incurred.



Segment reporting



The Company utilizes the "management approach" model
for segment reporting. The management approach model is based on the way a company's management organizes segments within the company
for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal
structure, management structure, or any other manner in which management disaggregates a company.



As of June 30, 2012, the Company, through its subsidiaries is
engaged into four main business segments based on location and product: Jinong (fertilizer production), Gufeng (fertilizer production),
Jintai (agricultural products production) and Yuxing (agricultural products production).



Fair values of financial instruments



Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities
measured at fair value are categorized based on whether or not the inputs are observable in the market and the degree that the
inputs are observable. The categorization of financial assets and liabilities within the valuation hierarchy is based upon the
lowest level of input that is significant to the fair value measurement.



The Company's financial instruments primarily consist of cash
and cash equivalents, accounts receivable, other receivables, advances to suppliers, accounts payable, other payables, tax payable,
and related party advances and borrowings.



As of the balance sheet dates, the estimated fair values of
the financial instruments were not materially different from their carrying values as presented on the balance sheets. This is
attributed to the short maturities of the instruments and that interest rates on the borrowings approximate those that would have
been available for loans of similar remaining maturity and risk profile at respective balance sheet dates.





F-9







Statement of cash flows



The Company's cash flows from operations are calculated based
on the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows may not
necessarily agree with changes in the corresponding balances on the balance sheets.



Earnings per share



Basic earnings per share is computed based on the weighted average
number of shares of common stock outstanding during the period. Diluted earnings per share is computed based on the weighted average
number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury
stock method. Dilutive potential common shares include outstanding stock options and stock awards.



The components of basic and diluted earnings per share consist
of the following:



|                                          |  | For the Years Ended June 30, |           
|----------------------------------------- |  | ---------------------------- | ----------
|                                          |  | 2012                         |           
|Net Income for Basic Earnings Per Share   |  | $                            | 41,957,825
|Basic Weighted Average Number of Shares   |  |                              | 26,943,530
|Net Income per Share – Basic              |  | $                            | 1.56      
|                                          |  |                              |           
|Net Income for Diluted Earnings Per Share |  | $                            | 41,957,825
|Diluted Weighted Average Number of Shares |  |                              | 26,943,530
|Net Income per Share – Diluted            |  | $                            | 1.56      



Reclassification



Certain reclassifications
have been made to the prior year consolidated financial statements to conform to the 2012 consolidated financial statement presentation.
Such reclassifications did not affect total revenues, operating income or net income or cash flows as previously reported.



Recent accounting pronouncements



In May 2011, the FASB issued guidance to amend certain measurement
and disclosure requirements related to fair value measurements to improve consistency with international reporting standards. This
guidance is effective prospectively for public entities for interim and annual reporting periods beginning after December 15, 2011,
with early adoption by public entities prohibited. The Company is currently evaluating this guidance, but does not expect its adoption
will have a material effect on its consolidated financial statements.



In June 2011, the FASB issued new guidance on the presentation
of comprehensive income that will require a company to present components of net income and other comprehensive income in one continuous
statement or in two separate, but consecutive statements. There are no changes to the components that are recognized in net income
or other comprehensive income under current GAAP. This guidance is effective for fiscal years, and interim periods within those
fiscal years, beginning after December 15, 2011, with early adoption permitted. The Company is currently evaluating this guidance,
but does not expect its adoption will have a material effect on its consolidated financial statements.



In September 2011, the FASB issued ASU 2011-08 which provides
an entity the option to first assess qualitative factors to determine whether it is necessary to perform the current two-step test
for goodwill impairment.  If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not
that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required.  Otherwise,
no further testing is required. The revised standard is effective for the Company for its annual and interim goodwill impairment
tests performed for fiscal years beginning after December 15, 2011.  The Company is currently evaluating this guidance,
but does not expect its adoption will have a material effect on its consolidated financial statements.





F-10







NOTE 3 – ACQUISITION



Beijing Gufeng Chemical Products Co., Ltd. (“Gufeng”)
was founded in 1993. Its wholly-owned subsidiary Beijing Tianjuyuan Fertilizer Co., Ltd. (“Tianjuyuan”) was founded
in 2001 and was acquired by Gufeng on May 4, 2010. Both companies are based in Beijing, and registered to produce compound fertilizer,
blended fertilizer, organic compound fertilizer and mixed, organic-inorganic compound fertilizer and sell their products throughout
China and abroad.



On July 2, 2010, the Company acquired Gufeng and its wholly-owned
subsidiary Tianjuyuan by purchasing all of Gufeng’s outstanding equity interests and delivering acquisition consideration
of approximately $8.8 million cash and approximately 1.4 million shares of the Company’s common stock (valued at approximately
$11.6 million) to the former shareholders of Gufeng or their designees (the “Gufeng Shareholders”). Additionally, the
Company may be required to deliver up to an additional 0.9 million shares of common stock, which are being held in escrow (the
“Escrowed Shares”), to be released based upon achievement of following conditions:



1) If Gufeng achieved certain sales revenue targets for its
fiscal year ending June 30, 2011 (the “Sales Target”), 341,390 of the Escrowed Shares would be released from escrow
to the Gufeng Shareholders, which is subject to adjustment based on a three-tier system. If Gufeng achieved at least 80% of the
Sales Target, then 227,593 of the Escrowed Shares would be released from escrow to the Gufeng Shareholder, and if Gufeng achieves
at least 60% of the Sales Target, then 113,797 of the Escrowed Shares would be released from escrow to the Gufeng Shareholders.
Gufeng had revenues of $107,081,108 for the year ended June 30, 2011, which met the Sales Target; therefore, 341,390 shares are
to be released from escrow.



2) If Gufeng achieved certain net profit after tax targets for
its fiscal year ending June 30, 2011 (the “Profit Target”), 341,390 of the Escrowed Shares would be released from escrow
to the Gufeng Shareholders, which is subject to adjustment based on a three-tier system. If Gufeng achieved at least 80% of the
Profit Target, then 227,593 of the Escrowed Shares would be released from escrow to the Gufeng Shareholders, and if Gufeng achieved
at least 60% of the Profit Target, then 113,797 of the Escrowed Shares would be released from escrow to the Gufeng Shareholders.
Gufeng met the Profit Target for the year ended June 30, 2011; therefore, 341,390 shares are to be released from escrow.



3) If Gufeng obtained a land use right with respect to certain
real property located in China, along with ownership of the buildings thereon, then 227,593 of the Escrowed Shares would be released
from escrow to the Gufeng Shareholders. As of June 30, 2011, Gufent had obtained the land use rights per the agreement; therefore,
227,593 shares are to be released from escrow.



The Company recognized a liability based on the acquisition
date fair value of the acquisition-related contingent consideration based on the probability of the achievement of the targets.
Based on the Company’s estimation, an initial liability of $2.9 million (341,390 shares) was recorded with adjustments made
at each quarter end during the period ended June 30, 2011. The total shares to be released from escrow and due to the Gufeng shareholders
at June 30, 2011 are 910,373 with a value of $7,719,963, which is recorded as “Common Stock” and “Additional
Paid in Capital” on the accompanying consolidated statement of stockholders’ equity as the shares were released shortly
after June 30, 2011.



The following table summarizes the fair values of the assets
acquired and liabilities assumed from the acquisition of Gufeng. Since the acquisition and the initial preliminary purchase price
allocation, net adjustments of $10.0 million were made to the fair values of the assets acquired and liabilities assumed with a
corresponding adjustment to goodwill. These adjustments are summarized in the table presented below.



|($ in millions)                   
|----------------------------------
|Purchase Price                    
|Fair Value of Assets Acquired:    
|Cash and cash equivalents         
|Inventories                       
|Other current assets              
|Fixed assets                      
|Intangible assets                 
|Total Assets Acquired             
|                                  
|Fair Value of Liabilities Assumed:
|Trade payables                    
|Short-term loans                  
|Deferred revenue                  
|Other current liabilities         
|Total Liabilities Assumed         
|                                  
|Goodwill (1)                      



(1) The goodwill of $4.7 million is non-deductible for tax purposes
in the United States.





F-11







The following table summarizes the preliminary fair value of
amortizable and indefinite-lived intangible assets as of their respective acquisition dates:



|Gufeng at July 2, 2010          
|--------------------------------
|($ in millions)                 
|Amortizable intangible assets:  
|Customer relationships          
|Proprietary technologies        
|Non-compete agreement           
|                                
|Indefinite-lived intangibles:   
|Trademarks                      
|                                
|Total intangible assets acquired



Acquisition related expenses consist of integration related
professional services, certain business combination adjustments after the measurement period or purchase price allocation period
has ended, and certain other operating expenses, net.



Pretax charges approximating $0.2 million were recorded for
acquisition and integration related costs in the period ended June 30, 2011. These charges were recorded as general and administrative
expenses. As the acquisition took place on July 2, 2010, the Company’s statement of operations for the year ended June 30,
2011 included the operations of the Company and Gufeng.



NOTE 4 – INVENTORIES



Inventories consist of the following:



|                               |  | June 30, |            |  | June 30, |  
|------------------------------ |  | -------- | ---------- |  | -------- | -
|                               |  | 2012     |            |  | 2011     |  
|Raw materials                  |  | $        | 6,009,686  |  |          | $
|Supplies and packing materials |  |          | 565,559    |  |          |  
|Work in progress               |  |          | 127,140    |  |          |  
|Finished goods                 |  |          | 21,900,299 |  |          |  
|Total                          |  | $        | 28,602,684 |  |          | $





F-12







NOTE 5 – OTHER CURRENT ASSETS



Other current assets consisted of the following:



|                  |  | June 30, |         |  | June 30, |  
|----------------- |  | -------- | ------- |  | -------- | -
|                  |  | 2012     |         |  | 2011     |  
|                  |  |          |         |  |          |  
|Advancement       |  | $        | 299,526 |  |          | $
|                  |  |          |         |  |          |  
|Prepaid insurance |  |          | -       |  |          |  
|                  |  |          |         |  |          |  
|Total             |  | $        | 299,526 |  |          | $



Advancement represents advances made to
non-related parties and employees. The amounts were unsecured, interest free, and due on demand. Prepaid insurance is related to
the underwriting of the Company’s directors and officers insurance policy.



NOTE 6 - PROPERTY, PLANT AND EQUIPMENT



Property, plant and equipment consist of the following:



|                                    |  | As of June 30, |            
|----------------------------------- |  | -------------- | -----------
|                                    |  | 2012           |            
|Building and improvements           |  | $              | 36,174,009 
|Auto                                |  |                | 835,412    
|Machinery and equipment             |  |                | 63,280,923 
|Agriculture assets                  |  |                | 3,163,286  
|Total property, plant and equipment |  |                | 103,453,630
|Less: accumulated depreciation      |  |                | (23,388,469
|Total                               |  | $              | 80,065,161 



Depreciation expenses for the years ended June 30, 2012, 2011
and 2010 were $4,429,960, $4,161,068 and $2,310,596, respectively.



Agriculture assets consist of reproductive trees that are expected
to be commercially productive for a period of eight years.



NOTE 7 – CONSTRUCTION IN PROGRESS



As of June 30, 2012 and 2011, construction in progress representing
construction for Yuxing greenhouses and supporting facilities, and improvement for Gufeng’s product lines amounted to $0
and 4,662,039, respectively. The construction of greenhouses and supporting facilities in Yuxing concluded in the fourth quarter
of fiscal year 2012.



NOTE 8 - INTANGIBLE ASSETS



Intangible assets consist of the following:



|                            |  | June 30, |            |  | June 30, |  
|--------------------------- |  | -------- | ---------- |  | -------- | -
|                            |  | 2012     |            |  | 2011     |  
|Land use rights, net        |  | $        | 11,014,591 |  |          | $
|Technology patent, net      |  |          | 1,902,131  |  |          |  
|Customer relationships, net |  |          | 8,253,368  |  |          |  
|Non-compete agreement, net  |  |          | 125,453    |  |          |  
|Trademarks                  |  |          | 6,323,098  |  |          |  
|Total                       |  | $        | 27,618,641 |  |          | $





F-13







LAND USE RIGHT



On September 25, 2009, Yuxing was granted a land use right for
approximately 88 acres (353,000 square meters or 3.8 million square feet) by the People’s Government and Land & Resources
Bureau of Hu County, Xi’an, Shaanxi Province. The fair value of the related intangible asset was determined to be the respective
cost of RMB 73,184,895 (or $11,102,149). The intangible asset is being amortized over the grant period of 50 years using the straight
line method.



On August 13, 2003, Tianjuyuan was granted
a certificate of Land Use Right for a parcel of land of approximately 11 acres (42,726 square meters or 459,898 square feet) at
Ping Gu District, Beijing. The purchase cost was recorded at RMB 1,045,950 (or $158,670). The intangible asset is being amortized
over the grant period of 50 years.



On August 16, 2001, Jinong received a land use right as a contribution
from a shareholder, which was granted by the People’s Government and Land & Resources Bureau of Yanling District, Shaanxi
Province. The fair value of the related intangible asset at the time of the contribution was determined to be RMB 7,285,099 (or $1,105,150).
The intangible asset is being amortized over the grant period of 50 years.



The Land Use Rights consist of the following:



|                               |  | As of June 30, |           
|------------------------------ |  | -------------- | ----------
|                               |  | 2012           |           
|Land use rights                |  | $              | 12,912,125
|Less: accumulated amortization |  |                | (1,897,534
|Total land use rights, net     |  | $              | 11,014,591



TECHNOLOGY PATENT



On August 16, 2001, Jinong was issued a
technology patent related to a proprietary formula used in the production of humid acid. The fair value of the related intangible
asset was determined to be the respective cost of RMB 5,875,068 (or $891,248) and is being amortized over the patent period of
10 years using the straight line method.



On July 2, 2010, the Company acquired Gufeng
and its wholly-owned subsidiary Tianjuyuan. The preliminary fair value on the acquired technology patent was estimated to be RMB
9,200,000 (or $1,375,084) and is amortized over the remaining useful life of six years using the straight line method. See Note
3.



The technology know-how consisted of the
following:



|                               |  | As of June 30, |           
|------------------------------ |  | -------------- | ----------
|                               |  | 2012           |           
|Technology know-how            |  | $              | 2,387,891,
|Less: accumulated amortization |  |                | (485,760  
|Total technology know-how, net |  | $              | 1,902,131 



CUSTOMER RELATIONSHIP



On July 2, 2010, the Company acquired Gufeng
and its wholly-owned subsidiary Tianjuyuan. The preliminary fair value on the acquired customer relationships was estimated to
be RMB 65,000,000 (or $9,715,268) and is amortized over the remaining useful life of ten years.





F-14







|                                  |  | As of June 30, |           
|--------------------------------- |  | -------------- | ----------
|                                  |  | 2012           |           
|Customer relationships            |  | $              | 10,296,000
|Less: accumulated amortization    |  |                | (2,042,632
|Total customer relationships, net |  | $              | 8,253,368 



NON-COMPETE AGREEMENT



On July 2, 2010, the Company acquired Gufeng
and its wholly-owned subsidiary Tianjuyuan. The preliminary fair value on the acquired non-compete agreement was estimated to be
RMB 1,320,000 (or $197,295) and is amortized over the remaining useful life of five years using the straight line method.



|                                 |  | June 30, |         |   | June 30, |  
|-------------------------------- |  | -------- | ------- | - | -------- | -
|                                 |  | 2012     |         |   | 2011     |  
|Non-compete agreement            |  | $        | 209,088 |   |          | $
|Less: accumulated amortization   |  |          | (83,635 | ) |          |  
|Total non-compete agreement, net |  | $        | 125,453 |   |          | $



TRADEMARKS



On July 2, 2010, the Company acquired Gufeng and its wholly-owned
subsidiary Tianjuyuan. The preliminary fair value on the acquired trademarks was estimated to be RMB 40,700,000 (or $6,083,252)
and is subject to an annual impairment test.



Total amortization expenses of intangible assets for the years
ended June 30, 2012, 2011 and 2010 amounted to $1,562,906, 1,587,190 and $287,521, respectively.



AMORTIZATION EXPENSE



Estimated amortization expenses of intangible assets for the
next five (5) years after June 30, 2012, are as follows:



|Year Ends     |  | Expense ($) |          
|------------- |  | ----------- | ---------
|June 30, 2013 |  |             | 1,665,601
|June 30, 2014 |  |             | 1,665,601
|June 30, 2015 |  |             | 1,665,601
|June 30, 2016 |  |             | 1,665,601
|June 30, 2017 |  |             | 1,665,601



NOTE 9 - ACCRUED EXPENSES AND OTHER
PAYABLES



Accrued expenses and other payables consist of the following:



|                   |  | As of June 30, |          
|------------------ |  | -------------- | ---------
|                   |  | 2012           |          
|Payroll payable    |  | $              | 127,149  
|Welfare payable    |  |                | 168,150  
|Accrued expenses   |  |                | 2,827,028
|Other payable      |  |                | 1,045,010
|Other levy payable |  |                | 122,912  
|Total              |  | $              | 4,290,249



NOTE 10 - AMOUNT DUE TO RELATED PARTIES



As of June 30, 2012 and 2011, the amount due to related parties
was $370,719 and $69,962, respectively.  These amounts represent unsecured, non-interest bearing loans that are due on
demand.  These loans are not subject to written agreements.





F-15







On August 10, 2010, Xi’an Hu County Yuxing Agriculture
Technology Development Co., Ltd (“Yuxing”) which is a subsidiary of the Company, entered into an agreement with Kingtone
Wirelessinfo Solution Holding Ltd (“Kingtone”) which was responsible for developing certain electronic control
systems for Yuxing. The total contracted value of this agreement, including value-added taxes and other taxes, is RMB3,030,000,
or approximately US$458,000. The related project is currently ongoing, and RMB 1,212,000 or $183,200 has been paid by the Yuxing
to Kingtone.



In July 2007, Jinong signed an office lease with Xi’an
Techteam Science and Technology Industry (Group) Co., Ltd. (the “Group Company”), which is controlled by Mr. Tao Li,
Green Nevada’s Chairman, President and CEO at a monthly rent of $954 (RMB 6,460) per month. On September 30, 2010, Jinong
cancelled this lease agreement with the Group Company without penalty and signed a two year lease effective as of July 1, 2010
directly with Xi’an Kingtone Information Technology Co., Ltd. (“Kingtone Information”), who owns the property.
Kingtone Information is a Variable Interest Entity (“VIE”) controlled by Kingtone Wirelessinfo Solution Holding Ltd.
(“Kingtone Wirelessinfo”), whose Chairman and majority shareholder is Mr. Tao Li. According to the new lease agreement,
the monthly rent is $1,596 (RMB10,800).



On June 29, 2012, Jinong signed a new office lease with
Kingtone Information. Pursuant to the new lease, Jinong rented 612 square meters (approximately 6,588 square feet) of office
space from Kingtone Information. The lease provided for a two-year term effective as of July 1, 2012 with monthly rent of RMB
24,480(approximately $3,856).



NOTE 11 - LOAN PAYABLES



The short-term loans payable consist of eight loans which mature
on dates ranging from July 23, 2012 through April 22, 2013 interest rates ranging from 6.89% to 8.87%. The loans are collateralized
by the Company’s land use rights.



|    |   |  |       |                                          |                           |                                         | Interest |  |      | June 30, | 
|--- | - |  | ----- | ---------------------------------------- | ------------------------- | --------------------------------------- | -------- |  | ---- | -------- | 
|No. |   |  | Payee |                                          | Loan period per agreement |                                         | Rate     |  |      | 2012     | 
|    | 1 |  |       | Agriculture Bank of China-Beijing Branch |                           | January 11, 2012 - January 10, 2013     |          |  | 6.89 | %        | 
|    | 2 |  |       | Agriculture Bank of China-Beijing Branch |                           | March 23, 2012 -  March 22, 2013        |          |  | 8.2  | %        | 
|    | 3 |  |       | Agriculture Bank of China-Beijing Branch |                           | April 23, 2012 - April 22, 2013         |          |  | 7.26 | %        | 
|    | 4 |  |       | Bank of Tianjin                          |                           | September 9, 2011 - July 23, 2012       |          |  | 7.54 | %        | 
|    | 5 |  |       | Minsheng Bank                            |                           | September 8, 2011 - September 8, 2012   |          |  | 8.2  | %        | 
|    | 6 |  |       | Minsheng Bank                            |                           | September 19, 2011 - September 19, 2012 |          |  | 8.2  | %        | 
|    | 7 |  |       | China Merchant Bank                      |                           | July 25, 2011 - July 26, 2012           |          |  | 8.53 | %        | 
|    | 8 |  |       | Industrial and Commercial Bank of China  |                           | October 17, 2011 - October 17,2012      |          |  | 8.87 | %        | 
|    |   |  |       |                                          |                           |                                         |          |  |      |          | 



The interest expense from short-term loans were $1,590,620,
$466,912 and $112,475 for the years ended June 30, 2012, 2011 and 2010, respectively.



NOTE 12 – TAXES PAYABLE



Enterprise Income Tax



Effective January 1, 2008, the new Enterprise Income Tax (“EIT”)
law of the PRC replaced the existing tax laws for Domestic Enterprises (“DES”) and Foreign Invested Enterprises (“FIEs”).
The new EIT rate of 25% replaced the 33% rate that was applicable to both DES and FIEs. The two year tax exemption and three year
50% tax reduction tax holiday for production-oriented FIEs was eliminated. Since January 1, 2008, Jinong became subject to income
tax in China at a rate of 15% as a high-tech company, as a result of the expiration of its tax exemption on December 31, 2007,
and accordingly, it made provision for income taxes for the years ended June 30, 2012, 2011, and 2010 of $6,597,765, $5,157,185
and, $3,794,516, respectively, which is mainly due to the operating income from Jinong. Gufeng is subject to 25% EIT rate and thus
it made provision for income taxes of $4,203,548, $3,879,959 and $0 for the years ended June 30, 2012, 2011 and 2010, respectively.
Jintai has been exempt from paying income tax since its formation as it produces products which fall into the tax exemption list
set out in the EIT. This exemption is expected to last as long as the applicable provisions of the EIT do not change.





F-16







Value-Added Tax



All of the Company’s fertilizer products that are produced
and sold in the PRC were subject to a Chinese Value-Added Tax (VAT) of 13% of the gross sales price. On April 29, 2008, the PRC
State of Administration of Taxation (SAT) released Notice #56, “Exemption of VAT for Organic Fertilizer Products”,
which allows certain fertilizer products to be exempt from VAT beginning June 1, 2008. The Company submitted the application for
exemption in May 2009, which was granted effective September 1, 2009, continuing through December 31, 2015. The VAT exemption applies
to all agricultural products sold by Jintai, and all but a nominal amount of agricultural products sold by Jinong.



Income Taxes and Related Payables



Taxes payable consist of the following:



|                       |  | June 30, |            |  | June 30, |  
|---------------------- |  | -------- | ---------- |  | -------- | -
|                       |  | 2012     |            |  | 2011     |  
|VAT provision (credit) |  | $        | 68,180     |  |          | $
|Income tax payable     |  |          | 17,274,817 |  |          |  
|Other levies           |  |          | 332,392    |  |          |  
|Total                  |  | $        | 17,675,389 |  |          | $



Income Taxes in the Consolidated Statements of Income and Comprehensive
Income



The provision for income taxes consists of the following:



|                      |  | June 30, |            |  | June 30, |   |           | June 30, | 
|--------------------- |  | -------- | ---------- |  | -------- | - | --------- | -------- | 
|                      |  | 2012     |            |  | 2011     |   |           | 2010     | 
|Current tax - foreign |  | $        | 10,801,313 |  |          | $ | 9,037,144 |          | 
|Deferred tax          |  |          | -          |  |          |   | -         |          | 
|Total                 |  | $        | 10,801,313 |  |          | $ | 9,037,144 |          | 



The components of deferred income tax assets and liabilities
as of June 30, 2012 and 2011 are as follows:



|                          |  | 2012 |            |   | 2011 |  
|------------------------- |  | ---- | ---------- | - | ---- | -
|                          |  |      |            |   |      |  
|Deferred tax assets:      |  |      |            |   |      |  
|Net operating loss        |  | $    | 5,171,183  |   |      | $
|Total deferred tax assets |  |      | 5,171,183  |   |      |  
|Less valuation allowance  |  |      | (5,171,183 | ) |      |  
|                          |  | $    | -          |   |      | $





F-17







Tax Rate Reconciliation



Oureffective tax rates were approximately
20.5%, 21.5% and 15.1% for the year ended June 30, 2012, 2011 and 2010, respectively.Substantially all of the Company’s
income before income taxes and related tax expense are from PRC sources. Actual income tax benefit reported in the consolidated
statements of income and comprehensive income differ from the amounts computed by applying the US statutory income tax rate of
34% to income before income taxes for the years ended June 30, 2012, 2011 and 2010 for the following reasons:



|FY2012                                                                  |  | China     |            |   | United States |  |      |       |  |   |            |  
|----------------------------------------------------------------------- |  | --------- | ---------- | - | ------------- |  | ---- | ----- |  | - | ---------- | -
|                                                                        |  | 15% - 25% |            |   | 34%           |  |      | Total |  |   |            |  
|                                                                        |  |           |            |   |               |  |      |       |  |   |            |  
|Pretax income (loss)                                                    |  | $         | 58,465,856 |   |               |  |      |       |  | $ | (5,706,718 | )
|                                                                        |  |           |            |   |               |  |      |       |  |   |            |  
|Expected income tax expense (benefit)                                   |  |           | 13,189,785 |   |               |  | 22.6 | %     |  |   | (1,940,284 | )
|High-tech income benefits on Jinong                                     |  |           | (4,439,873 | ) |               |  | (7.6 | )%    |  |   | -          |  
|Losses from subsidiaries in which no benefit is recognized              |  |           | 2,051,401  |   |               |  | 3.5  | %     |  |   | -          |  
|Change in valuation allowance on deferred tax asset from US tax benefit |  |           | -          |   |               |  |      |       |  |   | 1,940,284  |  
|Actual tax expense                                                      |  | $         | 10,801,313 |   |               |  | 18.5 | %     |  | $ | -          |  



|FY 2011                                                                 |  |           |            |   |               |  |      |       |  |   |            |   |  |  |       |    |  |  
|----------------------------------------------------------------------- |  | --------- | ---------- | - | ------------- |  | ---- | ----- |  | - | ---------- | - |  |  | ----- | -- |  | -
|                                                                        |  | China     |            |   | United States |  |      |       |  |   |            |  
|                                                                        |  | 15% - 25% |            |   | 34%           |  |      | Total |  |   |            |  
|                                                                        |  |           |            |   |               |  |      |       |  |   |            |   |  |  |       |    |  |  
|Pretax income (loss)                                                    |  | $         | 48,782,427 |   |               |  |      |       |  | $ | (6,831,182 | ) |  |  |       |    |  | $
|                                                                        |  |           |            |   |               |  |      |       |  |   |            |   |  |  |       |    |  |  
|Expected income tax expense (benefit)                                   |  |           | 12,195,607 |   |               |  | 25.0 | %     |  |   | (2,322,602 | ) |  |  | (34.0 | )% |  |  
|High-tech income benefits on Jinong                                     |  |           | (3,416,976 | ) |               |  | (7.0 | )%    |  |   | -          |   |  |  | -     |    |  |  
|Losses from subsidiaries in which no benefit is recognized              |  |           | 258,513    |   |               |  | 0.5  | %     |  |   | -          |   |  |  | -     |    |  |  
|Change in valuation allowance on deferred tax asset from US tax benefit |  |           | -          |   |               |  |      |       |  |   | 2,322,602  |   |  |  | 34.0  | %  |  |  
|Actual tax expense                                                      |  | $         | 9,037,144  |   |               |  | 18.5 | %     |  | $ | -          |   |  |  | -     | %  |  | $



|FY 2010                                                                 |  |           |            |   |               |  |      |       |  |   |            |   |  |  |       |    |  |  
|----------------------------------------------------------------------- |  | --------- | ---------- | - | ------------- |  | ---- | ----- |  | - | ---------- | - |  |  | ----- | -- |  | -
|                                                                        |  | China     |            |   | United States |  |      |       |  |   |            |  
|                                                                        |  | 15% - 25% |            |   | 34%           |  |      | Total |  |   |            |  
|                                                                        |  |           |            |   |               |  |      |       |  |   |            |   |  |  |       |    |  |  
|Pretax income (loss)                                                    |  | $         | 27,755,696 |   |               |  |      |       |  | $ | (2,671,463 | ) |  |  |       |    |  | $
|                                                                        |  |           |            |   |               |  |      |       |  |   |            |   |  |  |       |    |  |  
|Expected income tax expense (benefit)                                   |  |           | 4,163,354  |   |               |  | 15.0 | %     |  |   | (908,297   | ) |  |  | (34.0 | )% |  |  
|Income tax benefit of nontaxable income on Jintai                       |  |           | (396,034   | ) |               |  | (1.4 | )%    |  |   | -          |   |  |  | -     |    |  |  
|Income tax benefit of nontaxable income on Yuxing                       |  |           | 27,196     |   |               |  | 0.1  | %     |  |   | -          |   |  |  | -     |    |  |  
|Change in valuation allowance on deferred tax asset from US tax benefit |  |           | -          |   |               |  |      |       |  |   | 908,297    |   |  |  | 34.0  | %  |  |  
|Actual tax expense                                                      |  | $         | 3,794,516  |   |               |  | 13.7 | %     |  | $ | -          |   |  |  | -     | %  |  |  





F-18







NOTE 13 – STOCKHOLDERS’
EQUITY



Common Stock



On July 2, 1010, the Company issued a total of 2,275,931 shares
of common stock to Gufeng’s previous shareholders or their designees. Of the shares being issued in the acquisition, 40%
have been held in escrow pending satisfaction of certain conditions such as make good targets set for Gufeng for the fiscal year
ended June 30, 2011. See Note 3.



On March 31, 2011, the Company granted a total of 96,000 shares
of restricted common stock of the Company to certain directors and executive officers under its 2009 Equity Incentive Plan. Pursuant
to the terms of the grant, 8,000 shares of restricted common stock were vested on April 30, 2011, 44,000 shares vested on June
2, 2011, and 44,000 shares vested on December 31,2011. These shares were issued in September 2011.



On March 8, 2012, the Company issued 63,158 shares of common
stock in a private placement to Mr. Tao Li, the Company’s Chairman and Chief Executive Officer, at a purchase price of $4.75
per share, for an aggregate purchase price of $300,001 pursuant to and in accordance with the terms and provisions of a Securities
Purchase Agreement in a form previously presented to the Board of Directors of the Company.



On March 31, 2012, the Company issued 5,704 shares of Common
Stock valued at $24,000 of consulting services.



On June 14, 2012, the Company granted a total of 1,000,000 shares
of restricted common stock of the Company to certain directors, executive officers and key employees under its 2009 Equity Incentive
Plan. Pursuant to the terms of the grant, the stock grants vest in three installments on June 30, 2012, September 30, 2012 and
December 31, 2012. The Company has issued 445,000 shares of common stock related to these grants with 555,000 yet to be issued.



Preferred Stock



Under the Company’s articles of incorporation, the board
of directors has the authority, without further action by stockholders, to designate up to 20,000,000 shares of preferred stock
in one or more series and to fix the rights, preferences, privileges, qualifications and restrictions granted to or imposed upon
the preferred stock, including dividend rights, conversion rights, voting rights, rights and terms of redemption, liquidation preference
and sinking fund terms, any or all of which may be greater than the rights of the common stock. If the Company sells preferred
stock under its registration statement on Form S-3, it will fix the rights, preferences, privileges, qualifications and restrictions
of the preferred stock of each series in the certificate of designation relating to that series and will file the certificate of
designation that describes the terms of the series of preferred stock the Company offers before the issuance of the related series
of preferred stock.



As of June 30, 2012, the Company has 20,000,000 shares of preferred
stock authorized, with a par value of $.001 per share, of which no shares are issued or outstanding.



NOTE 14 – STOCK OPTIONS



On March 31, 2011, per
compensation board resolution, the Companyforfeited all those
outstanding unvested call options granted to current officers and directors and former officers on March, 1 2010 and February 7,
2010 according to the2009 Equity Incentive Plan.



There were no issuances of stock options during the year ended
June 30, 2012 and 2011.



Options outstanding as of June 30, 2012 and related weighted
average price and intrinsic value are as follows:



|                           |  |           |         |   | Weighted |   |       |                 | 
|-------------------------- |  | --------- | ------- | - | -------- | - | ----- | --------------- | 
|                           |  |           |         |   | Average  |   |       |                 | 
|                           |  | Number    |         |   | Exercise |   |       | Aggregate       | 
|                           |  | of Shares |         |   | Price    |   |       | Intrinsic Value | 
|Outstanding, June 30, 2010 |  |           | 195,291 |   |          | $ | 14.67 |                 | 
|Granted                    |  |           | -       |   |          |   | -     |                 | 
|Forfeited/Canceled         |  |           | (80,192 | ) |          | $ | 14.67 |                 | 
|Exercised                  |  |           | -       |   |          |   |       |                 | 
|Outstanding, June 30, 2011 |  |           | 115,099 |   |          | $ | 14.66 |                 | 
|Granted                    |  |           | -       |   |          |   |       |                 | 
|Forfeited/Canceled         |  |           | -       |   |          |   |       |                 | 
|Exercised                  |  |           | -       |   |          |   |       |                 | 
|Outstanding, June 30, 2012 |  |           | 115,099 |   |          | $ | 14.66 |                 | 
|Exercisable, June 30, 2012 |  |           | 115,099 |   |          | $ | 14.66 |                 | 





F-19







The following table summarizes the options outstanding and exercisable
as of June 30, 2012:



|Options Outstanding and Exercisable |            
|----------------------------------- | -----------
|                                    |            
|                                    |            
|                                    |            
|Range of                            |            
|Exercise Price                      |            
|$                                   | 14.02-14.70



NOTE 15 –CONCENTRATIONS AND LITIGIATION



Market Concentration



All of the Company's revenue-generating operations are conducted
in the PRC. Accordingly, the Company's business, financial condition and results of operations may be influenced by the political,
economic and legal environments in the PRC, and by the general state of the PRC's economy.



The Company's operations in the PRC are subject to specific
considerations and significant risks not typically associated with companies in North America and Western Europe. These include
risks associated with, among other things , the political, economic and legal environments and foreign currency exchange. The Company's
results may be adversely affected by, among other things, changes in governmental policies with respect to laws and regulations,
anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation.



Vendor and Customer Concentration



There was two vendors from which
the Company purchased 11.9% and 10.1% of its raw materials for the year ended June 30, 2012. Account payable toBeijing
BaofengnianAgricultural Material Co. Ltd. was $216,842 and advance payment to Inner Mongolia Shuangying
Chemical Products Co. Ltd. was $1,389,368.



One vendor accounted for approximately 11.5% of the
Company’s total purchases for the year ended June 30, 2011. Advance payment to Inner Mongolia Shuangying Chemical
Products Co. Ltd. was $900,070 as of June 30, 2011.



One vendor accounted for approximately 12.4% of the Company’s
total purchases of raw materials for the year ended June 30, 2010. There were no accounts payable to this vendor as of June 30,
2010.



One customer,Sinoagri Holding
CompanyLimited, accounted for $31,509,757, or 14.5% of the Company’s sales for the year
ended June 30, 2012. One customer,Sinoagri Holding CompanyLimited, accounted for $31,599,412,
or 17.6% of the Company’s sales for the year ended June 30, 2011. There was no customers which accounted for more than 10%
of the Company’s sales for the years ended June 30, 2010.





F-20







Litigation



On October 15, 2010, a class action lawsuit was filed against
the Company and certain of its current and former officers in the United States District Court for the District of Nevada (the
"Nevada Federal Court") on behalf of purchasers of the Company’s common stock between November 12, 2009 and September
1, 2010.  On April 27, 2011, the court appointed the lead plaintiff and lead plaintiff’s counsel. On June 13, 2011,
lead plaintiff filed an amended complaint, which adds several additional defendants and expands the class period to include purchasers
who purchased our common stock between May 12, 2009 and January 4, 2011. The amended complaint alleges that the Company and certain
of its current and former officers and directors violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Sections
11, 12(a)(2), and 15 of the Securities Act of 1933, as amended, by making material misstatements and omissions in the Company’s
financial statements, securities offering documents, and related disclosures during the class period..  The plaintiffs
claim that such allegedly misleading financial statements inflated the price of the Company’s common stock and seek monetary
damages in an amount to be determined at trial. Defendants moved to dismiss the amended complaint on October 7, 2011. Defendants’
motions are fully briefed and the Nevada Federal Court has scheduled oral argument for October 2, 2012.



On September 5, 2012, the Company received a letter from the
staff of the U.S. Securities and Exchange Commission notifying it that the staff had completed its investigation of the Company
and that it did not intend to recommend any enforcement action against the Company.



NOTE 16 – SEGMENT REPORTING



The Company was organized into four main business segments based
on location and product: Jinong (fertilizer production), Gufeng (fertilizer production), Jintai (agricultural products production)
and Yuxing (agricultural products production). Each of the four operating segments referenced above has separate and distinct general
ledgers. The chief operating decision maker (“CODM”) receives financial information, including revenue, gross margin,
operating income and net income produced from the various general ledger systems to make decisions about allocating resources and
assessing performance; however, the principal measure of segment profitability or loss used by the CODM is net income by segment.



The following tables present a summary of our businesses’
and operating segments’ results.



|                                         |  | For the Year Ended June 30, |            
|---------------------------------------- |  | --------------------------- | -----------
|                                         |  | 2012                        |            
|Revenues from unaffiliated customers:    |  |                             |            
|Jinong                                   |  | $                           | 88,168,740 
|Gufeng                                   |  |                             | 121,480,943
|Jintai                                   |  |                             | 5,792,002  
|Yuxing                                   |  |                             | 2,082,520  
|Consolidated                             |  | $                           | 217,524,205
|                                         |  |                             |            
|Operating income :                       |  |                             |            
|Jinong                                   |  | $                           | 43,636,915 
|Gufeng                                   |  |                             | 18,211,687 
|Jintai                                   |  |                             | (1,863,529 
|Yuxing                                   |  |                             | (352,996   
|Reconciling item (1)                     |  |                             | -          
|Reconciling item (2)                     |  |                             | (2,482,232 
|Reconciling item (2)--stock compensation |  |                             | (3,224,835 
|Consolidated                             |  | $                           | 53,925,010 
|                                         |  |                             |            
|Net income:                              |  |                             |            
|Jinong                                   |  | $                           | 37,363,672 
|Gufeng                                   |  |                             | 12,335,102 
|Jintai                                   |  |                             | (1,863,235 
|Yuxing                                   |  |                             | (170,996   
|Reconciling item (1)                     |  |                             | 347        
|Reconciling item (2)                     |  |                             | (5,707,065 
|Consolidated                             |  | $                           | 41,957,825 
|                                         |  |                             |            
|Depreciation and Amortization:           |  |                             |            
|Jinong                                   |  | $                           | 2,347,530  
|Gufeng                                   |  |                             | 2,878,037  
|Jintai                                   |  |                             | 128,563    
|Yuxing                                   |  |                             | 638,736    
|Consolidated                             |  | $                           | 5,992,866  
|                                         |  |                             |            
|Interest expense:                        |  |                             |            
|Jinong                                   |  | $                           | -          
|Gufeng                                   |  |                             | 1,590,620  
|Reconciling item (2)                     |  |                             | -          
|Consolidated                             |  | $                           | 1,590,620  
|                                         |  |                             |            
|Capital Expenditure:                     |  |                             |            
|Jinong                                   |  | $                           | 7,935,098  
|Gufeng                                   |  |                             | -          
|Jintai                                   |  |                             | -          
|Yuxing                                   |  |                             | 3,948,849  
|Consolidated                             |  | $                           | 11,883,947 
|                                         |  |                             |            
|Identifiable assets:                     |  |                             |            
|Jinong                                   |  | $                           | 221,575,406
|Gufeng                                   |  |                             | 57,657,305 
|Jintai                                   |  |                             | 6,670,058  
|Yuxing                                   |  |                             | 1,851,745  
|Reconciling item (1)                     |  |                             | 280,445    
|Reconciling item (2)                     |  |                             | (3,906     
|Consolidated                             |  | $                           | 288,031,053



(1) Reconciling amounts refer to the unallocated assets or expenses
of Green New Jersey.

(2) Reconciling amounts refer to the unallocated assets or
expenses of the Parent Company.



F-21







Total revenues from exported products currently
account for approximately 15.0% and 22% of our total fertilizer revenues in fiscal 2012 and 2011. Revenues generated from exported
products were less than 1% of the Company’s total fertilizer revenues in fiscal 2010, prior to the Company’s acquisition
of Gufeng.



FY2012 Export Details



|Export to |  | Subsidiary |  | Type                                        |  | Amount ($) |           
|--------- |  | ---------- |  | ------------------------------------------- |  | ---------- | ----------
|India     |  | Gufeng     |  | 40% humic acid organic/inorganic fertilizer |  |            | 31,330,724
|India     |  | Jinong     |  | Liquid Fertilizer                           |  |            | 77,576    
|India     |  | Jinong     |  | Solid Fertilizer                            |  |            | 60,538    
|Ghana     |  | Jinong     |  | Liquid Fertilizer                           |  |            | 75,984    
|Total     |  |            |  |                                             |  |            | 31,544,822





F-22







FY2011 Export Details



|Export to |  | Subsidiary |  | Type                        |  | Amount ($) |           
|--------- |  | ---------- |  | --------------------------- |  | ---------- | ----------
|India     |  | Gufeng     |  | Blended Compound Fertilizer |  |            | 40,835,834
|India     |  | Jinong     |  | Liquid Fertilizer           |  |            | 42,581    
|India     |  | Jinong     |  | Solid Fertilizer            |  |            | 38,479    
|Ecuador   |  | Jinong     |  | Liquid Fertilizer           |  |            | 3,740     
|Surinam   |  | Jinong     |  | Liquid Fertilizer           |  |            | 1,159     
|Total     |  |            |  |                             |  |            | 40,921,793



NOTE 17 - COMMITMENTS AND CONTINGENCIES



As mentioned under Note 10, in July 2007, Jinong signed an office
lease with the Group Company at a monthly rent of $954 (RMB 6,460) per month. On September 30, 2010, Jinong cancelled this lease
agreement with the Group Company without penalty and signed a two year lease effective as of July 1, 2010 directly with Kingtone
Information, who owns the property. According to the new lease agreement, the monthly rent is $1,596 (RMB 10,800).



On June 29, 2012, Jinong signed a new office lease with
Kingtone Information. Pursuant to the new lease, Jinong rented 612 square meters (approximately 6,588 square feet) of office
space from Kingtone Information. The lease provided for a two-year term effective as of July 1, 2012 with monthly rent of
$3,856 (RMB 24,480).



In January 2008, Jintai signed a ten year land lease with Xi’an
Jinong Hi-tech Agriculture Demonstration Zone for a monthly rent of $768 (RMB 5,200).



In February 2004, Tianjuyuan signed a fifty year lease with
the village committee of Dong Gao Village and Zhen Nan Zhang Dai Village in the Beijing Ping Gu District, at a monthly rent of
$437 (RMB 2,958).



Accordingly, the Company recorded an aggregate of $33,612, $54,869
and $20,494 as rent expenses for the years ended June 30, 2012, 2011 and 2010, respectively. Rent expenses for the next five years
ended June 30, are as follows:



|Years ending: |  |   |       
|------------- |  | - | ------
|June 30, 2013 |  | $ | 66,794
|June 30, 2014 |  |   | 61,691
|June 30, 2015 |  |   | 15,419
|June 30, 2016 |  |   | 15,419
|June 30, 2017 |  |   | 15,419





F-23







NOTE 18 – RESTRICTED NET ASSETS



The Company’s operations are primarily conducted through
its PRC subsidiaries, which can only pay dividends out of their retained earnings determined in accordance with the accounting
standards and regulations in the PRC and after it has met the PRC requirements for appropriation to statutory reserves. In addition,
the Company’s businesses and assets are primarily denominated in RMB, which is not freely convertible into foreign currencies.
All foreign exchange transactions take place either through the People’s Bank of China or other banks authorized to buy and
sell foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments
by the People’s Bank of China or other regulatory institutions requires submitting a payment application form together with
suppliers’ invoices, shipping documents and signed contracts. These currency exchange control procedures imposed by the PRC
government authorities may restrict the ability of the Company’s PRC subsidiaries to transfer their net assets to the Parent
Company through loans, advances or cash dividends.



The Company’s PRC subsidiaries net assets amounted to
$229,383,600 as of June 30, 2012, and thus exceeded 25% of the Company’s consolidated net assets. Accordingly, condensed
Parent Company financial statements have been prepared in accordance with Rule 5-04 and Rule 12-04 of SEC Regulation S-X, and are
as follows.



Parent Company Financial Statements



PARENT COMPANY FINANCIAL INFORMATION OF CHINA GREEN AGRICULTURE,
INC.



|Condensed Balance Sheets                                                                                                                                              |  | As of June 30, |            
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | -----------
|                                                                                                                                                                      |  | 2012           |            
|ASSETS                                                                                                                                                                |  |                |            
|Current Assets:                                                                                                                                                       |  |                |            
|Cash and cash equivalents                                                                                                                                             |  | $              | 277,538    
|Other current assets                                                                                                                                                  |  |                | 1,908      
|Total Current Assets                                                                                                                                                  |  |                | 279,446    
|                                                                                                                                                                      |  |                |            
|Long-term equity investment                                                                                                                                           |  |                | 243,711,250
|Total long term assets                                                                                                                                                |  |                | 243,711,250
|                                                                                                                                                                      |  |                |            
|Total Assets                                                                                                                                                          |  | $              | 243,990,696
|                                                                                                                                                                      |  |                |            
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                  |  |                |            
|Current Liabilities:                                                                                                                                                  |  |                |            
|Accounts payable                                                                                                                                                      |  | $              | 64,520     
|Amount due to related parties                                                                                                                                         |  |                | 38,343     
|Other payables and accrued expenses                                                                                                                                   |  |                | 1,631,179  
|Total Current Liabilities                                                                                                                                             |  |                | 1,734,042  
|                                                                                                                                                                      |  |                |            
|Stockholders' Equity                                                                                                                                                  |  |                |            
|Common stock, $.001 par value, 115,197,165 shares authorized, 27,455,722 and
    26,845,860, shares issued and outstanding as of June 30, 2012 and 2011, respectively |  |                | 27,456     
|Additional paid in capital                                                                                                                                            |  |                | 102,175,709
|Accumulated other comprehensive income                                                                                                                                |  |                | 15,780,507 
|Retained earnings                                                                                                                                                     |  |                | 124,272,982
|Total Stockholders' Equity                                                                                                                                            |  |                | 242,256,654
|                                                                                                                                                                      |  |                |            
|Total Liabilities and Stockholders' Equity                                                                                                                            |  | $              | 243,990,696





F-24







PARENT COMPANY FINANCIAL INFORMATION OF CHINA GREEN AGRICULTURE,
INC



|Condensed Statements of Operations  |  | Year ended June 30, |           
|----------------------------------- |  | ------------------- | ----------
|                                    |  | 2012                |           
|Revenue                             |  | $                   | -         
|General and administrative expenses |  |                     | 5,707,065 
|Interest income                     |  |                     | 347       
|Equity investment in subsidiaries   |  |                     | 47,664,543
|Net income                          |  | $                   | 41,957,825



|Condensed Statements of Cash Flows                  |  | Year ended June 30, |           
|--------------------------------------------------- |  | ------------------- | ----------
|                                                    |  | 2012                |           
|Net cash provided by (used in) operating activities |  | $                   | (1,286,612
|Net cash provided by (used in) investing activities |  |                     | -         
|Net cash provided by financing activities           |  |                     | 600,001   
|Cash and cash equivalents, beginning balance        |  |                     | 964,149   
|Cash and cash equivalents, ending balance           |  | $                   | 277,538   



Notes to Condensed Parent Company Financial Information



As of June 30, 2012, 2011 and 2010, there were no material contingencies,
significant provisions for long-term obligations, or guarantees of the Company, except as separately disclosed in the Consolidated
Financial Statements, if any. Certain information and footnote disclosures normally included in financial statements prepared in
accordance with U.S. GAAP have been condensed or omitted.



NOTE 19 – SELECTED QUARTERLY DATA (UNAUDITED)



|                              |  | Quarterly Periods Ended |           
|----------------------------- |  | ----------------------- | ----------
|                              |  | September 30,           |           
|                              |  | 2011                    |           
|Net Revenue                   |  | $                       | 53,102,594
|Gross Profit                  |  | $                       | 18,908,732
|Income from operation         |  | $                       | 13,279,563
|Other income (expense)        |  | $                       | (84,416   
|Net income                    |  | $                       | 10,731,636
|Earnings per shares - basic   |  | $                       | 0.40      
|Earnings per shares - diluted |  | $                       | 0.40      



|                               |  | Quarterly Periods Ended |           
|------------------------------ |  | ----------------------- | ----------
|                               |  | September 30,           |           
|                               |  | 2010                    |           
|Net Revenue                    |  | $                       | 39,482,921
|Gross Profit                   |  | $                       | 13,139,327
|Income from operation          |  | $                       | 9,625,155 
|Other income (expense)         |  | $                       | (123,627  
|Net income                     |  | $                       | 7,787,785 
|Earnings per shares - basic    |  | $                       | 0.30      
|Earnings  per shares - diluted |  | $                       | 0.30      





F-25