Unassociated Document

0001144204-08-001542.txt : 20080110 0001144204-08-001542.hdr.sgml : 20080110 20080110154556 ACCESSION NUMBER: 0001144204-08-001542 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20080102 ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20080110 DATE AS OF CHANGE: 20080110 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DISCOVERY TECHNOLOGIES INC CENTRAL INDEX KEY: 0000857949 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 363526027 STATE OF INCORPORATION: NV FISCAL YEAR END: 1218 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-18606 FILM NUMBER: 08523540 BUSINESS ADDRESS: STREET 1: 5353 MANHATTAN CIRCLE STREET 2: SUITE 101 CITY: BOULDER STATE: CO ZIP: 80303 BUSINESS PHONE: 3034996000 MAIL ADDRESS: STREET 1: 5353 MANHATTAN CIRCLE STREET 2: SUITE 101 CITY: BOULDER STATE: CO ZIP: 80303 FORMER COMPANY: FORMER CONFORMED NAME: DISCOVERY TECHNOLOGIES INC /KS/ DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: DISCOVERY SYSTEMS INC DATE OF NAME CHANGE: 19900613 8-K/A 1 v099238_8ka.htm Unassociated Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 2, 2008

DISCOVERY TECHNOLOGIES, INC.

(Exact name of Registrant as specified in charter)

Nevada		000-18606		36-3526027
(State of Incorporation)		(Commission File No.)		(IRS Employer Identification Number)

3^rd 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) (Zip Code)

Registrant's telephone number, including area code: (011)-86-29-88266386

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17CFR230.425)

o Soliciting material pursuant to Rule14a-12 under the Exchange Act (17CFR240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFR240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17CFR240.13e-4(c))

Explanatory Note

Discovery Technologies, Inc. (the “Company”) is filing this amendment on Form 8-K/A to its Current Report on Form 8-K, as filed with the Securities and Exchange Commission on January 2, 2008 (File No. 000-18606)(the “Original 8-K”), to (i) file amended financial statements which were annexed to the Original 8-K, (ii) file an updated version of Exhibit 10.2 of the Original 8-K and (iii) to file an amended Management’s Discussion and Analysis conforming to the changes in the financial statements. No other changes or items are being effected by this filing.

Item 2.01 Completion of Acquisition or Disposition of Assets

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the consolidated financial condition and results of operations should be read with our consolidated financial statements and related notes appearing elsewhere in this Current Report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under “Risk Factors” and elsewhere in this Current Report.

Overview

We research, develop, manufacture and distribute humic acid based liquid compound fertilizer in 27 provinces in China. Humic acid is an essential natural, organic ingredient for a balanced, fertile soil, and it is one of the major constituents of organic matter. China is both the world’s largest manufacturer and consumer of fertilizer. As of 2005, the Chinese fertilizer market accounted for 33% of the total world output and 35% of the total world consumption. We estimate that by the middle of this century, per capita farmland in China will be only 16% of world average levels.

In 2005, compound fertilizer accounted for 27% of the total fertilizer consumed in China; however the quality is generally very low leading to ecosystem degradation. (Source: Ministry of Agriculture of the PRC). Organic compound fertilizer comprises a balance of both organic and inorganic substances, thereby combining the speedy effectiveness of chemical fertilizers with the environmental benefits of the organic ones, hence ensuring vast room for its future development in the Chinese agricultural production system.

Our multi-tiered product strategy allows us to tailor our products to different needs and preferences of the Chinese fertilizer market, which varies greatly across the country. For example, in Southern and Eastern China, farmers are able to grow high margin crops such as fruit and seasonal vegetables where climate and rainfall permits, hence they can gain more return on investment from more expensive, specialized fertilizers whereas in Northwest areas, farmers’ low profit margin crops prevent farmers from investing too much on fertilizer thereby necessitating a more broad spectrum, low cost fertilizer.

Roughly 20 million farmers are using our products. We produce and sell 10,000 metric tons per year, with average per mu usage of 120 ml per year, per time (the liquid fertilizer is in very concentrated form, and is mixed with water).

We conduct our research and development activities through our wholly owned subsidiary, Xi’an Jintai Agriculture Technology Development Company through which we also sell high quality fruits and vegetables which are grown in our research greenhouses to airlines, hotels and restaurants. The Company owns its 137,000 square meter research and development facility. Our research and development capabilities allow us to develop products that are tailored to farmers’ specific needs in different regions, different crops, humidity, weather and soil conditions that require special fertilizers.

We have developed more than 100 different fertilizer products. The leading five provinces by revenue are Heilongjiang, Guangdong, Xinjiang, Shandong, and Henan.

Recent Development

On December 26, 2007, we completed our Private Placement of 6,313,617 shares of our common stock for $20,519,255 in gross proceeds. We intend to use the proceeds of the Private Placement to buy capital equipment and expand our production and facilities.

THREE MONTHS ENDED SEPTEMBER 30, 2007 COMPARED WITH THREE MONTHS ENDED SEPTEMBER 30, 2006.

Results of Operations:

The following table shows our operating results for the three months ended September 30, 2007 and September 30, 2006.

	Three Months ended September 30, 2007			Three Months ended September 30, 2006
Sales Revenue	$	7,191,021		$	4,791,313
Cost of goods sold	$	2,773,762		$	1,781,291
Gross profit	$	4,417,259		$	3,010,022
Selling, General and Administrative Expenses	$	302,323		$	428,806
Operating Income	$	4,114,937		$	2,581,216
Other Net Income (expense)		($83,165	)		($90,162	)
Income Before Income Taxes	$	4,031,772		$	2,491,055
Provision for Income Taxes		-		$	199,880
Foreign currency translation gain (loss)	$	174,461		$	35,266
Net Income	$	4,206,233		$	2,326,441

Sales revenue for the three months ended September 30, 2007 was $7,191,021, an increase of $2,399,708, or 50.1%, compared with the corresponding period in 2006. This increase was the result of an increase in sales volume due to expansion of our sales network, the launch of new products and the addition of our newly acquired greenhouse facility which contributed $1,602,264 of sales over the same period.

Cost of goods sold for the three months ended September 30, 2007 was $2,773,762, an increase of $992,471, or 55.7%, compared with the corresponding period in 2006. The increase in cost of goods sold was primarily due to the increase in our sales volume. The incremental increase in cost of goods sold was due to an increase in the price of packaging materials for this period. We intend to use a portion of the proceeds from the Private Placement to produce packaging materials internally. We believe that in-house production of packaging materials will result in lowering cost of goods sold, assuming that all other costs remain the same.

Gross profit for the three months ended September 30, 2007 was $4,417,259, an increase of $1,407,237, or 46.7%, compared with the corresponding period in 2006. The increase in our gross profit was due to the increase in our sales revenue.

Selling, general and administrative expenses for the three months ended September 30, 2007 was $302,323, a decrease of $126,483 or 29.5% compared with the corresponding period in 2006. The decrease in selling, general and administrative expenses was due to the shift of part of the advertising, product promotion and logistic costs from us to our distributors.

Comprehensive income for the three months ended September 30, 2007 was $4,206,233, an increase of $1,879,792, or 80.8%, compared with the corresponding period in 2006. This increase was the result of an increase in sales revenue due to expansion of our sales network, the launch of new products, a contribution of $983,624 of net income from our newly acquired greenhouse facility and a decrease in our expenses. The increase in net income was also due to an exemption from tax for 2007 according to the Preferential Tax for Foreign Invested Enterprises, resulting in a relative gain of $322,542 and a foreign currency translation relative gain of $139,195. If these two factors are deducted from net income the resulting increase would be 61% instead of 80.8%.

Liquidity and Capital Resources

We have historically financed our operations and capital expenditures principally through bank loans, and cash provided by operations. We are using the net proceeds of the Private Placement, approximately $13.7 million, to finance the purchase of capital equipment and an expansion of our facilities and production. We believe that our existing cash, cash equivalents and cash flows from operations and from the Private Placement will be sufficient to meet our presently anticipated future cash needs for at least the next 12 months. We may, however, require additional cash resources due to changing business conditions or other future developments, including any investments or acquisitions we may decide to pursue. There can be no assurance that such additional investment will be available to us, or if available, that it will be available on terms acceptable to us.

LOANS

As of September 30, 2007, the loans payable are as follows:

Short term loans payable:
Xian City Commercial Branch	$	2,001,923
Xian Agriculture Credit Union		507,153
Agriculture Bank		1,801,729
Total	$	4,310,805

As of September 30, 2007, the Company had a loan payable of $2,001,923 to Xian City Commercial Bank in China, with an annual interest rate of 9.585%, and due on April 1, 2008. The loan is pledge by the land use right and property of the Company.

As of September 30, 2007, the Company had a loan payable of $507,153 to Xian Agriculture Credit Union, with an annual interest rate of 9.216%, and due on September 26, 2007. On September 10, 2007, the loan was extended to September 16, 2008 with an annual interest rate of 11.795%. The loan is guaranteed by a former shareholder. The Company’s shareholder paid interest expenses of $12,393 and $10,991 as of September 30, 2007 and 2006 for this loan. The Company has recorded the interest expenses paid by the shareholder as contributed capital.

As of September 30, 2007, the Company had a loan payable of $1,801,729 to Agriculture Bank in China, with an annual interest rate of 7.488%, and due on September 26, 2007. On March 28, 2007, the loan is extended to March 27, 2008. The loan is guaranteed by the former shareholder.

The interest expenses are $92,569 and $91,369 for three months ended September 30, 2007 and 2006.

Cash and cash equivalents

For statement of cash flows purposes, we consider all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents. As of September 30, 2007, cash and cash equivalents amounted to $107,400.

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. As of September 30, 2007, we had accounts receivable of $6,046,270, net of allowance for doubtful accounts of $ 222,276. This is an increase of 126% compared to the same period in 2006. This increase resulted form the following factors: (i) sales increased by approximately 50%, the Chinese central government implemented policies to support agriculture and farmers and encourage the use of “green” products and (iii) China experienced unusually inclement weather in 2007 which resulted in an increase in demand for fertilizer products to increase yields. We believe that these factors present the opportunity to encourage farmers to use our products and we therefore, decided to implement two types of payment terms. For the first, we require 50% payment in advance, and 50% payment after delivery. For the second, we require one payment collected after the autumn harvest from October to December. Distributors are required to guarantee payments.

Inventories

Inventories consist of the following as of September 30, 2007:

Supplies, packing and raw materials	$	244,039
Finished goods		1,710,152
Totals	$	1,954,191

Tax payables

Tax payables consist of the following as of September 30, 2007

VAT payable	$	2,547,065
Income tax payable		308,657
Other levies		221,235
Total	$	3,076,957

Property, plant and equipment

Property, plant and equipment consist of the following as of September 30, 2007

Building and improvements	$	7,338,102
Vehicle		21,728
Machinery and equipments		5,247,490
Totals		12,607,320
Less: accumulated depreciation		(873,090	)
	$	11,734,230

Depreciation expenses for the three months ended September 30, 2006 and 2007 were $31,304 and $208,898, respectively.

THE FISCAL YEAR ENDED JUNE 30, 2007 COMPARED WITH THE FISCAL YEAR ENDED JUNE 30, 2006

Results of Operations:

The following table shows the operating results of TechTeam for the fiscal years ended June 30, 2007 and June 30, 2006.

	Fiscal Year ended June 30, 2007			Fiscal Year ended June 30, 2006
Sales Revenue	$	15,184,343		$	7,888,763
Cost of goods sold		6,556,524			3,515.022
Gross profit		8,627,820			4,373,741
Selling, General and Administrative Expenses		1,011,686			1,464,466
Operating Income		7,616,133			2,909,275
Other Net Income (expense)		(402,379	)		(187,075	)
Income Before Income Taxes		7,213,754			2,722,200
Provision for Income Taxes		(295,012	)		-
Foreign currency translation gain (loss)		261,432			(17,669	)
Net Income	$	7,180,173		$	2,704,531

Sales revenue for fiscal 2007 was $15,184,343, an increase of $7,295,580 which represents a 92.5% increase compared with fiscal 2006. The reason for the increase was the increase of sales volume due to the expansion of our sales network the launch of new products and a contribution of $1,853,717 in revenue from our newly acquired greenhouse facility.

Cost of goods sold for fiscal 2007 was $6,556,524 an increase of $3,041,502 which represents an increase of 86.5% compared with 2006. The increase in the cost of goods was due to increase in sales volume.

Gross profit for fiscal 2007 was $8,627,820, an increase of $4,254,079 which represents an increase of 97.3% compared with fiscal 2006. The increase in gross profit was due to increase in sales revenue.

Our Selling, General and Administrative expenses for fiscal 2007 were $1,011,686, a decrease of $452, 780, which represents a decrease of 30.9%, compared with fiscal 2006. The reason for this was due to decrease in research and development expense. There was previously a concentration of expenditures for outsourced research and development in the years of 2003 to 2005. In the fiscal year ending June 30, 2007, our greenhouse facility was acquired hence reducing research and development expenses that were outsourced.

The other expenses for fiscal 2007 and 2006 were $402,379 and $187,075 respectively. The 115% increase was due to increased interest expense and inventory count loss due to returns of goods damaged in transit, primarily damaged packaging. We believe this inventory count loss is a controllable non-recurring expense.

Net income for fiscal 2007 was $7,180,173, an increase of $4,475,642 which represents an increase of 165.5% compared with fiscal 2006. The reason for this was an increase in sales revenue, a contribution of $682,905 in net income from our newly acquired greenhouse facility and decrease in expenses.

Operating Activities

Net cash provided by operating activities for fiscal 2007 was $8,783,528, compared to $2,349,077 provided by operating activities for fiscal 2006. The increase in net cash provided by operating activities was due to an increase in our sales revenue.

Investing Activities

Net cash used in investing activities for fiscal 2007 was $9,768,909 compared to $32,975 used in investing activities for fiscal 2006. The cash was spent on the acquisition of our research and development and greenhouse facilities. This research and development is essential to our production of over 100 types of special purpose fertilizers. Because the resulting vegetables and plants cultivated for research purposes are sold, our greenhouse research and development facility is a profit center.

Financing Activities

Net cash provided by financing activities for fiscal 2007 was $1,018,301 compared with net cash used by financing activities for fiscal 2006 of ($2,294,907). The cash inflow was due to short term borrowing from related parties to make up a shortfall in working capital resulting from the purchase of the greenhouse buildings. This borrowing was paid off entirely in September 2007.

Loans

As of June 30, 2007, the loans payable are as follows:

Short term loans payable:
Xian City Commercial Branch	$	1,970,580
Xian Agriculture Credit Union		499,214
Agriculture Bank		1,773,522
Total	$	4,243,316

As of June 30, 2007, the Company had a loan payable of $1,970,580 to Xian City Commercial Bank in China, with an annual interest rate of 9.585%, and due on April 1, 2008. The loan is pledge by the land use right and property of the Company.

As of June 30, 2007, the Company had a loan payable of $499,214 to Xian Agriculture Credit Union, with an annual interest rate of 9.216%, and due on September 26, 2007. The loan is guaranteed by a former shareholder. The Company’s shareholder paid interest expenses of $45,439 and $27,737 as of June 30, 2007 and 2006 for this loan. The Company has recorded the interest expenses paid by the shareholder as contributed capital.

As of June 30, 2007, the Company had a loan payable of $1,773,522 to Agriculture Bank in China, with an annual interest rate of 7.488%, and on March 28, 2007, the loan is extended to March 27, 2008. The loan is guaranteed by the former shareholder.

The interest expenses are $361,254 and $229,115 for the years ended June 30, 2007 and 2006.

Accounts receivable

As of June 30, 2007, we had accounts receivable of $1,885,351, net of allowance of $218,796. The accounts receivable as of June 30, 2007 includes a receivable from a related party amounting $43,363.

INVENTORIES

Inventories consist of the following as of June, 2007:

Supplies, packing and raw materials	$	153,498
Finished goods		1,620,303
Totals	$	1,773,802

The supplies, packing and raw materials of the company consists of supplies, packing and chemicals in the amount of $148,467 and supplies, packing and seeds for in the amount of $5,031 as of June 30, 2007. The finished goods consist of flowers and vegetables.

TAX PAYABLES

Tax payables consist of the following as of June 30, 2007:

VAT payable	$	1,824,259
Income tax payable		302,907
Other levies		149,554
Total	$	2,276,720

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following as of June 30, 2007:

Building and improvements	$	7,223,219
Vehicle		21,387
Machinery and equipments		5,165,338
Construction in progress		42,707
Total property, plant and equipment		12,452,651
Less: accumulated depreciation		(652,013	)
Net property plant and equipment	$	11,800,638

Depreciation expenses for the years ended June 30, 2007 and 2006 were $372,862 and $149,092, respectively.

Foreign currency translation

The reporting currency of the Company is the US dollar. We use our local currency, Renminbi (RMB), as our functional currency. Results of operations and cash flow are translated at average exchange rates during the period, and assets and liabilities are translated at the unified exchange rate at the end of the period. Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statement of shareholders' equity.

Transaction 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.

Item 9.01 Financial Statements and Exhibits.

(a) FINANCIAL STATEMENT

The financial statements of TechTeam and Green Agriculture are being filed with this Current Report.

(d) The following exhibit is filed with this Current Report:

10.2	Securities Purchase Agreement by and among the Company, Green Agriculture Holding Corporation, Shaanxi TechTeam Jinong Humic Acid Product Co., Ltd., and the investors named therein, dated December 24, 2007.

SHAANXI TECHTEAM JINONG HUMIC ACID PRODUCT CO., LTD

AND SUBSIDIARY CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2007

SHAANXI TECHTEAM JINONG HUMIC ACID PRODUCT CO., LTD AND

SUBSIDIARY CONSOLIDATED FINANCIAL STATEMENTS

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

CONTENTS

Report of Independent Registered Public Accounting Firm		F-2

Consolidated Financial Statements:

Consolidated Balance Sheet		F-3

Consolidated Income Statements		F-4

Consolidated Statement of Stockholders’ Equity		F-5

Consolidated Statements of Cash Flows		F-6

Notes to Consolidated Financial Statements		F-7 to F-19

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

SHANXI TECHTEAM JINONG HUMIC ACID PRODUCT CO., LTD

AND SUBSIDIARY

Xian, China

We have audited the accompanying combined balance sheet of Shanxi Techteam Jinong Humic Acid Product Co., Ltd and Subsidiary, as of June 30, 2007 and the related consolidated statements of income, members' equity and cash flows for the years ended June 30, 2007 and 2006. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Techteam Jinong Humic Acid Product Co., Ltd and Subsidiary, as of June 30, 2007, and the results of their operations and their cash flows for the years ended June 30, 2007 and 2006, in conformity with accounting principles generally accepted in the United States of America.

Certified Public Accountants

Los Angeles, California

September 17, 2007

F-2

SHAANXI TECHTEAM JINONG HUMIC ACID PRODUCT CO., LTD AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2007

ASSETS

Current Assets
Cash and cash equivalents	$	81,716
Accounts receivable, net		1,885,351
Other assets		187,164
Advances to suppliers		208,026
Inventories		1,773,802

Total Current Assets		4,136,059

Plant, Property and Equipment, net		11,800,638

Intangible Assets		1,163,078
Total Assets	$	17,099,775

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities
Accounts payable	$	221,592
Other payables and accrued expenses		844,835
Amount due to related parties		666,618
Taxes payable		2,276,720
Unearned revenue		81,341
Short term loans		4,243,316
Total Current Liabilities		8,334,420

Stockholders' Equity
Share capital		2,653,287
Statutory reserve		880,252
Retained earning		4,988,097
Accumulated other comprehensive income		243,718
Total Stockholders' Equity		8,765,355

Total Liabilities and Stockholders' Equity	$	17,099,775

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

F-3

SHAANXI TECHTEAM JINONG HUMIC ACID PRODUCT CO., LTD AND SUBSIDIARY
CONSOLIDATED INCOME STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2007 AND 2006

	June 30,
	2007			2006

Net sales
Jinong	$	13,330,626		$	7,888,763
Jintai		1,853,717			-
Total Net Sales		15,184,343			7,888,763
Cost of goods sold
Jinong		5,413,524			(3,515,022	)
Jintai		1,143,000			-
Total Cost of goods sold		(6,556,524	)		(3,515,022	)
Gross profit		8,627,820			4,373,741
Operating expenses
Selling expenses		(616,479	)		(653,628	)
Operating and administrative expenses		(395,207	)		(810,837	)
Total operating expenses		(1,011,686	)		(1,464,466	)
Income from operations		7,616,133			2,909,275
Other income (expense)
Miscellenous (expense) income		(41,125	)		42,040
Interest expense		(361,254	)		(229,115	)
Total other income (expense)		(402,379	)		(187,075	)
Income before income taxes		7,213,754			2,722,200
Provision for income taxes		(295,012	)		-
Net income		6,918,742			2,722,200
Other comprehensive income (loss)
Foreign currency translation gain (loss)		261,432			(17,669	)
Comprehensive income	$	7,180,173		$	2,704,531

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

F-4

SHAANXI TECHTEAM JINONG HUMIC ACID PRODUCT CO., LTD AND SUBSIDIARY
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30, 2007 AND 2006

								Accumulated Other			Total
	Share		Statutory		Retained			Comprehensive			Stockholders'
	Capital		Reserve		Earning			Income			Equity

BALANCE, JULY 1, 2005	$	2,539,673	$	-	$	(3,772,593	)	$	(44.00	)	$	(1,232,965	)

Net income for the year ended June 30, 2006		-		-		2,722,200			-			2,722,200

Contribution by related parties		46,013		-		-			-			46,013

Accumulative other comprehensive loss		-		-		-			(17,669	)		-17,669

BALANCE, JUNE 30, 2006		2,585,686		-		(1,050,393	)		(17,713	)		1,517,579

Net income for the year ended June 30, 2007		-		-		6,918,742			-			6,918,742

Contribution by related parties		67,602		-		-			-			67,602

Transfer to statutory reserve		-		880,252		(880,252	)		-			-

Accumulative other comprehensive income		-		-		-			261,432			261,432

BALANCE, JUNE 30, 2007	$	2,653,287	$	880,252	$	4,988,097		$	243,718		$	8,765,355

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

F-5

SHAANXI TECHTEAM JINONG HUMIC ACID PRODUCT CO., LTD AND SUBSIDIARY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2007 AND 2006

	2007			2006
Cash flows from operating activities
Net income	$	6,918,742		$	2,722,200
Adjustments to reconcile net income to net cash
provided by operating activities
Share capital contribution - rental and interest paid by shareholders		65,894			45,580
Depreciation		372,862			149,092
Amortization		93,813			90,854
Decrease / (Increase) in current assets:
Accounts receivable		69,879			(1,096,160	)
Accounts receivable-related party		1,571			(30,150	)
Other receivables		93,115			(181,819	)
Inventories		(578,072	)		(134,625	)
Advances to suppliers		(35,068	)		(106,648	)
Other assets		(8,038	)		(1,535	)
(Decrease) / Increase in current liabilities:
Accounts payable		(169,063	)		174,522
Unearned revenue		(42,983	)		118,349
Tax payables		1,602,499			471,540
Accrued expenses		49,575			163,157
Other payables		348,802			(35,279	)
Net cash provided by operating activities		8,783,528			2,349,077

Cash flows from investing activities
Acquisition of plant, property, and equipment		(9,739,708	)		(21,345	)
Additions to construction in progress		(29,201	)		(11,630	)
Net cash used in investing activities		(9,768,909	)		(32,975	)

Cash flows from financing activities
Proceeds from (repayment of) installment loan		(191,922	)		2,329,549
Proceeds from (payments to) related parties		1,210,223			(4,624,456	)
Net cash provided by (used in) financing activities		1,018,301			(2,294,907	)

Effect of exchange rate change on cash and cash equivalents		3,173			1,027
Net increase in cash and cash equivalents		36,092			22,222
Cash and cash equivalents, beginning balance		45,623			23,402
Cash and cash equivalents, ending balance	$	81,716		$	45,623

Supplement disclosure of cash flow information
Interest expense paid	$	322,734		$	155,161
Income taxes paid	$	-		$	-

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

F-6

SHAANXI TECHTEAM JINONG HUMIC ACID PRODUCT CO., LTD AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.	ORGANIZATION AND DESCRIPTION OF BUSINESS

Yangling Techteam Jinong Humic Acid Product Co., Ltd. was founded in the People’s Republic of China on June 19, 2000. On Febuary 28, 2006, Yangling Techteam Jinong Humic Acid Product Co., Ltd changed name to be Shaanxi Techteam Jinong Humic Acid Product Co., Ltd. (“Techteam Jinong”, “the Company”).

On January 19, 2007, Techteam Jinong incorporated X’an Jintai Agriculture Technology Development Company (hereinafter as “Xi’an Jintai”), as the Experimental Base and green fertilizer Research Institute of Techteam Jinong.

The Company and its subsidiary are engaged in the research and development, manufacture, distribution and technique support of green organic fertilizer. Xian Jonong’s main business is to produce and sell fertilizers, and Xi’an Jintai’s main business is to sell the product which are the by- product (fruit and vegetables) from the experiments of developing the fertilizers.

2.	BASIS OF PRESETATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principle of consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary-- Xi’an Jintai. 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

For Statement of Cash Flows purposes, the Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents. As of June 30, 2007, cash and cash equivalents amounted to $81,716.

F-7

SHAANXI TECHTEAM JINONG HUMIC ACID PRODUCT CO., LTD AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accounts receivable

The Company's 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. As of June 30, 2007, the Company had accounts receivable of $1,885,351, net of allowance of $218,796. The accounts receivable as of June 30, 2007 includes receivable from a related party amounting $43,363.

Advances to suppliers

The Company advances to certain vendors for purchase of its material. As of June, 2006, the advances to suppliers amounted to $208,026. Advances to suppliers are current, non interest bearing and unsecured.

Inventories

Inventories are valued at the lower of cost (determined on a weighted average basis) or net realizable value. The management compares the cost of inventories with the net realizable value and an allowance is made for writing down the inventories to their net realizable value, if lower than the cost.

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 and improvements		10-40 years
Machinery and equipments		5-15 years
Vehicle		12 years

Financial instruments

Statement of Financial Accounting Standard No. 107, "Disclosures about Fair Value of Financial Instruments", requires that the Company disclose estimated fair values of financial instruments.

The Company's financial instruments primarily consist of cash and cash equivalents, accounts receivable, other receivables, advances to suppliers, accounts payable, other payable, 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 sheet. 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-8

SHAANXI TECHTEAM JINONG HUMIC ACID PRODUCT CO., LTD AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Impairment

The Company applies the provisions of Statement of Financial Accounting Standard No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("FAS No. 144"), issued by the Financial Accounting Standards Board ("FASB"). FAS No. 144 requires that long-lived assets be reviewed 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.

The Company tests long-lived assets, including property, plant and equipment and intangible assets subject to periodic amortization, for recoverability at least annually or more frequently upon the occurrence of an event or when circumstances indicate that the net carrying amount is greater than its fair value. Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally measured by discounting expected future cash flows as the rate the Company utilizes to evaluate potential investments. The Company estimates fair value based on the information available in making whatever estimates, judgments and projections are considered necessary. There was no impairment of long-lived assets for the years ended June 30, 2007 and 2006.

Revenue recognition

The Company's revenue recognition policies are in compliance with Staff accounting bulletin (SAB) 104. 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, no other significant obligations of the Company exist and collectibility 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, 2007, unearned revenue amounted to $81,341.Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

The Company's 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 normally not returnable and sales discount is normally not granted after products are delivered.

Advertising costs

The Company expenses the cost of advertising as incurred or, as appropriate, the first time the advertising takes place. Advertising costs for the years ended June 30, 2007, and 2006 were $333,913 and $398,228, respectively.

F-9

SHAANXI TECHTEAM JINONG HUMIC ACID PRODUCT CO., LTD AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

The Company records a valuation allowance for deferred tax assets, if any, based on its estimates of its future taxable income as well as its tax planning strategies when it is more likely than not that a portion or all of its deferred tax assets will not be realized. If the Company is able to utilize more of its deferred tax assets than the net amount previously recorded when unanticipated events occur, an adjustment to deferred tax assets would increase the Company net income when those events occur. The Company does not have any significant deferred tax asset or liabilities in the PRC tax jurisdiction.

Beginning January 1, 2008, the new Enterprise Income Tax (“EIT”) law will replace the existing laws for Domestic Enterprises (“DES”) and Foreign Invested Enterprises (“FIEs”). The new standard EIT rate of 25% will replace the 33% rate currently applicable to both DES and FIEs. The two years tax exemption, three years 50% tax reduction tax holiday for production-oriented FIEs will be eliminated. The Company is currently evaluating the effect of the new EIT law will have on its financial position.

Foreign currency translation

The reporting currency of the Company is the US dollar. The Company uses their local currency, Renminbi (RMB), as their functional currency. Results of operations and cash flow are translated at average exchange rates during the period, and assets and liabilities are translated at the unified exchange rate at the end of the period. Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statement of shareholders' equity. Transaction 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.

Translation adjustments resulting from this process are included in accumulated other comprehensive income in the consolidated statement of shareholders' equity and amounted to $243,718 as of June 30, 2007. Translation gain (loss) for the year ended June 30, 2007 and 2006 amounted to $261,432 and $(17,669), respectively.

Segment reporting

Statement of Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosure About Segments of an Enterprise and Related Information" 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.

F-10

SHAANXI TECHTEAM JINONG HUMIC ACID PRODUCT CO., LTD AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the year ended June 30, 2006, the company was organized in one segment. During the year ended June 30, 2007, the Company was organized into two main business segments: fertilizer production (Jinong) and sale of fruits and vegetables (Jintai). The following table presents a summary of operating information and certain year-end balance sheet information for the years ended June 30, 2007


Revenues from unaffiliated customers:
Jinong	$	13,330,626
Jintai		1,853,716
Consolidated	$	15,184,343

COGS from unaffiliated customers:
Jinong	$	5,413,523.31
Jintai		1,143,000.19
Consolidated	$	6,556,523.50

Operating income (loss):
Jinong	$	6,933,283
Jintai		682,849
Consolidated	$	7,616,133

Identifiable assets:
Jinong	$	15,627,864
Jintai		1,471,910
Consolidated	$	17,099,774

Depreciation and amortization:
Jinong	$	466,674
Jintai		-
Consolidated	$	466,674

Capital expenditures:
Jinong	$	9,768,909
Jintai		-
Consolidated	$	9,768,909

F-11

SHAANXI TECHTEAM JINONG HUMIC ACID PRODUCT CO., LTD AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Statement of cash flows

In accordance with Statement of Financial Accounting Standards No. 95, "Statement of Cash Flows," cash flows from the Company's operations is calculated based upon 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 sheet.

Recent accounting pronouncements

In September 2006, FASB issued SFAS 157 ‘Fair Value Measurements’. This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (“GAAP”), and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. However, for some entities, the application of this Statement will change current practice. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The management is currently evaluating the effect of this pronouncement on the consolidated financial statements.

In September 2006, FASB issued SFAS 158 ‘Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R)’ This Statement improves financial reporting by requiring an employer to recognize the over funded or under funded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business entity or changes in unrestricted net assets of a not-for-profit organization. This Statement also improves financial reporting by requiring an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. An employer with publicly traded equity securities is required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006. An employer without publicly traded equity securities is required to recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after June 15, 2007. However, an employer without publicly traded equity securities is required to disclose the following information in the notes to financial statements for a fiscal year ending after December 15, 2006, but before June 16, 2007, unless it has applied the recognition provisions of this Statement in preparing those financial statements:

1. A brief description of the provisions of this Statement

F-12

SHAANXI TECHTEAM JINONG HUMIC ACID PRODUCT CO., LTD AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. The date that adoption is required

3. The date the employer plans to adopt the recognition provisions of this Statement, if earlier.

The requirement to measure plan assets and benefit obligations as of the date of the employer’s fiscal year-end statement of financial position is effective for fiscal years ending after December 15, 2008. The management is currently evaluating the effect of this pronouncement on the consolidated financial statements.

In February 2007, FASB issued FASB Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. FAS 159 is effective for fiscal years beginning after November 15, 2007. Early adoption is permitted subject to specific requirements outlined in the new Statement. Therefore, calendar-year companies may be able to adopt FAS 159 for their first quarter 2007 financial statements.

The new Statement allows entities to choose, at specified election dates, to measure eligible financial assets and liabilities at fair value that are not otherwise required to be measured at fair value. If a company elects the fair value option for an eligible item, changes in that item's fair value in subsequent reporting periods must be recognized in current earnings. FAS 159 also establishes presentation and disclosure requirements designed to draw comparison between entities that elect different measurement attributes for similar assets and liabilities.

3.	OTHER ASSETS

As of June 30, 2007, other assets comprised of following:

Other receivable	$	157,132
Promotion samples		30,032
Total	$	187,164

Other receivables represent advances made to non-related companies and employees. The amounts were unsecured, interest free, and due on demand.

F-13

SHAANXI TECHTEAM JINONG HUMIC ACID PRODUCT CO., LTD AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4.	INVENTORIES

Inventories consist of the following as of June, 2007:

Supplies, packing and raw materials	$	153,498
Finished goods		1,620,303
Totals	$	1,773,802

The supplies, packing and raw materials of the company consists of supplies, packing and chemicals for Jinong in the amount of $148,467 and supplies, packing and seeds for Jintai in the amount of $5,031 as of June 30, 2007. The finished goods of the company consist of finished goods for Jinong in the amount of $223,785 and finished goods for Jintai, which are flowers and vegetables, in the amount of $1,396,518.

5.	PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following as of June 30, 2007:

Building and improvements	$	7,223,219
Vehicle		21,387
Machinery and equipments		5,165,338
Construction in progress		42,707
Total property, plant and equipment		12,452,651
Less: accumulated depreciation		(652,013	)
Net property plant and equipment	$	11,800,638

Depreciation expenses for the years ended June 30, 2007 and 2006 were $372,862 and $149,092, respectively.

6.	INTAGIBLE ASSETS

The intangible assets comprised of following at June 30, 2007:

Land use right, net	$	844,623
Technology know-how, net		318,455
Total	$	1,163,078,

LAND USE RIGHT

Per the People's Republic of China's governmental regulations, the Government owns all land. However, the government grants the user a “land use right” (the Right) to use the land. The Company has recognized the amounts paid for the acquisition of rights to use land as intangible asset and amortizing over a period of fifty years.

F-14

SHAANXI TECHTEAM JINONG HUMIC ACID PRODUCT CO., LTD AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The shareholder contributed the land use rights on August 16^th, 2001. The land use right was recorded at cost of $881,497. The land use right is for fifty years. The land use right consist of the followings as of June 30, 2007:

Land use right	$	881,497
Less: accumulated amortization		(36,874	)
	$	844,623

TECHNOLOGY KNOW-HOW

The shareholder contributed the technology know-how on August 16, 2001. The technology know-how is recorded at cost of $710,883. This technology is the special formula to produce humid acid. The technology know-how is valid for 10 years. The technology know-how consists of the following as of June 30, 2007:

Technology Know-how	$	710,883
Less: accumulated amortization		(392, 428	)
	$	318,455

Total amortization expenses of intangible assets for the years ended June 30, 2007 and 2006 amounted to $93,813 and $90,854 respectively. Amortization expenses of intangible assets for next five years after June 30, 2007 are as follows:

June 30, 2008	$	93,813
June 30, 2009		93,813
June 30, 2010		93,813
June 30, 2011		93,813
June 30, 2012		93,813
Total	$	469,065

7.	RELATED PARTY TRANSACTIONS

AMOUNTS DUE TO RELATED PARTIES

The amounts due to related parties were the advances from the Company’s shareholders and subsidiaries owned by the same major shareholders, and were unsecured, non-interest bearing and due on demand. As of June 30, 2007, amount due to related parties amounted to $666,618.

COMMITMENTS AND LEASES

The Company’s shareholder provided free building space for the Company. The Company has recorded the rent expenses at the rent based on Xian house rental market of $20,455 and $17,843 for the years ended June 30, 2007 and 2006, as contributed capital.

F-15

SHAANXI TECHTEAM JINONG HUMIC ACID PRODUCT CO., LTD AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8.	ACCRUED EXPENSES AND OTHER PAYABLES

Accrued expenses and other payables comprised of following at June 30, 2007:

Payroll payable	$	30,081
Welfare payable		173,376
Interest and other accrued expenses		61,315
Other levy payable		36,853
Employee advance		53,573
Advances to other unrelated companies- Due on demand, interest free and unsecured		489,637
Total	$	844,835

All other payables are due in demand, and interest free.

9.	LOAN PAYABLES

As of June 30, 2007, the loans payable are as follows:

Short term loans payable:
Xian City Commercial Branch	$	1,970,580
Xian Agriculture Credit Union		499,214
Agriculture Bank		1,773,522
Total	$	4,243,316

The interest expenses are $361,254 and $229,115 for the years ended June 30, 2007 and 2006.

F-16

SHAANXI TECHTEAM JINONG HUMIC ACID PRODUCT CO., LTD AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10.

TAX PAYABLES

Tax payables consist of the following as of June 30, 2007:

VAT payable	$	1,824,259
Income tax payable		302,907
Other levies		149,554
Total	$	2,276,720

11.

INCOME TAXES

The Company utilizes SFAS No. 109, "Accounting for Income Taxes," which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. At June 30, 2007 and 2006, there was no significant book to tax differences.

Local PRC income tax

The Company is governed by the Income Tax Law of the PRC concerning Chinese registered limited liability companies. Under the Income Tax Laws of the PRC, Chinese enterprises are generally subject to an income tax at an effective rate of 33% (30% state income taxes plus 3% local income taxes) on income reported in the statutory financial statements after appropriate tax adjustments, unless the enterprise is located in a specially designated region for which more favorable effective tax rates are applicable. The provision for income taxes for years ended June 30, 2007 and 2006 are $295,012 and $0 respectively. The Company utilized its net operating loss from prior years, in the year ended June 30, 2006.

The following table reconciles the U.S. statutory rates to the Company’s effective tax rate at June 30, 2007 and 2006

	2007			2006
Tax at statutory rate		34	%		34	%
Foreign tax rate difference		-19	%		-19	%
Net operating loss in other tax jurisdiction for where no benefit is realized		-2	%		-15	%

		13	%		0	%

F-17

SHAANXI TECHTEAM JINONG HUMIC ACID PRODUCT CO., LTD AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12.

OTHER INCOME (EXPENSES)

Other income (expenses) mainly consists of inventory count loss and interest expenses and are as follows for the year ended June 30, 2007 and 2006.

	June 30,
	2007			2006
Other (expense) income	$	(41,125	)	$	42,040
Interest expense		(361,254	)		(229,115	)
Total other income (expense)	$	(402,379	)	$	(187,075	)

13.

CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS

The Company's operations are all carried out 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 the North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company's results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

14.

STATUTORY RESERVES

As stipulated by the Company Law of the People's Republic of China (PRC), net income after taxation can only be distributed as dividends after appropriation has been made for the following:

Making up cumulative prior years' losses, if any;

ii)

Allocations to the "Statutory surplus reserve" of at least 10% of income after tax, as determined under PRC accounting rules and regulations, until the fund amounts to 50% of the Company's registered capital;

iii)

Allocations of 5-10% of income after tax, as determined under PRC accounting rules and regulations, to the Company's "Statutory common welfare fund", which is established for the purpose of providing employee facilities and other collective benefits to the Company's employees; and

F-18

SHAANXI TECHTEAM JINONG HUMIC ACID PRODUCT CO., LTD AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

iv)

Allocations to the discretionary surplus reserve, if approved in the shareholders' general meeting.

In accordance with the Chinese Company Law, the company has allocated 10% of its net income to surplus. The amount included in the statutory reserves as of June 30, 2007 and 2006 amounted to $586,834 and $0, respectively.

The Company established a reserve for the annual contribution of 5% of net income to the common welfare fund. The amount included in the statutory reserves as of June 30, 2007 and 2006 amounted to $293,418 and $0, respectively.

15.

SUBSEQUENT EVENTS

Green Agriculture Holding Corporation (Green Holding) acquired 100% outstanding shares of the Company on August 3, 2007.Green Holding was incorporated on January 27, 2007 under the laws of the State of New Jersey with two shareholders owning 89% and 11% of stock equity of the Company. Green Holding, through its Chinese subsidiaries Techteam Jinong and Xi’an Jintai is engaged in the research and development, manufacture, distribution and technique support of green organic fertilizer.

F-19

GREEN AGRICULTURE HOLDING CORPORATION AND SUBSIDIARY

INDEX TO CONSOLIDATED FINANCIAL INFORMATION

ANNUAL FINANCIAL STATEMENTS		Page
Report of Independent Registered Public Accounting Firm		F-2
Balance Sheet at June 30, 2007		F-3
Statement of Operations for the period January 27, 2007 (Inception) to June 30, 2007		F-4
Statement of Stockholders' Deficit for the period January 27, 2007 (Inception) to June 30, 2007		F-5
Statement of Cash Flows for the period January 27, 2007 (Inception) to June 30, 2007		F-6
Notes to Financial Statements		F-7

QUARTERLY FINANCIAL STATEMENTS		Page
Unaudited Consolidated Balance Sheet at September 30, 2007		F-10
Unaudited Consolidated Income Statements for the three-months ended September 30, 2007 and 2006		F-11
Unaudited Consolidated Statements of Cash Flows for the three-months ended September 30, 2007 and 2006		F-12
Notes to Unaudited Consolidated Financial Statements		F-13

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Green Agriculture Holding Corporation

We have audited the accompanying balance sheet of Green Agriculture Holding Corporation (a New Jersey Corporation), a development stage entity, as of June 30, 2007 and the related statement of operations, stockholders' deficit, and cash flows for the period from January 27, 2007 (inception) through June 30, 2007. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit of these statements 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 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 audit 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 Green Agriculture Holding Corporation as of June 30, 2007, and the results of its operations and its cash flows for the period from January 27, 2007 (inception), to June 30, 2007, in conformity with accounting principles generally accepted in the United States of America..

The Company’s financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company’s has not earned any revenue since its inception. This factor as discussed in Note 3 to the financial statements raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

KABANI & COMPANY, INC.

CERTIFIED PUBLIC ACCOUNTANTS

Los Angeles, California

October 3, 2007

F-2

GREEN AGRICULTURE HOLDING CORPORTAION
(A development stage company)
BALANCE SHEET
June 30, 2007

ASSETS
CURRENT ASSETS:
Cash & cash equivalents	$	-

Total assets	$	-


LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:	$	-

STOCKHOLDERS' DEFICIT
Common stock, no par value; Authorized
shares 100,000; Issued and outstanding shares 100		10
Deficit accumulated during the development stage		(10	)
Total stockholders' deficit		-

Total liabilities and stockholders' deficit	$	-

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

F-3

GREEN AGRICULTURE HOLDING CORPORTAION
(A development stage company)
STATEMENT OF OPERATIONS
FOR THE PERIOD JANUARY 27, 2007 (INCEPTION) TO JUNE 30, 2007


Net revenue	$	-

Operating expenses		10

Operating loss		(10	)

Provision for income tax		-

Net loss	$	(10	)

Basic and diluted net loss per share	$	(0.10	)

Basic and diluted weighted average shares outstanding		100

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

F-4

GREEN AGRICULTURE HOLDING CORPORTAION

(A development stage company)

STATEMENT OF STOCKHOLDERS' DEFICIT

FOR THE PERIOD JANUARY 27, 2007 (INCEPTION) TO JUNE 30, 2007

					Deficit
	Common stock				accumulated			Total
	Number of				during develop-			stockholders'
	shares		Amount		ment stage			deficit

Balance at January 27, 2007 (inception)		-	$	-	$	-		$	-

Issuance of common stock		100		10		-			10

Net loss for the period January 27, 2007 (inception)
through June 30, 2007		-		-		(10	)		(10	)

Balance at June 30, 2007		100	$	10	$	(10	)	$	0

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

F-5

GREEN AGRICULTURE HOLDING CORPORTAION
(A development stage company)
STATEMENT OF CASH FLOWS
FOR THE PERIOD JANUARY 27, 2007 (INCEPTION) TO JUNE 30, 2007

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(10	)

Net cash used in operating activities		(10	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Common Stocks for cash		10

Net cash provided by financing activities		10

NET INCREASE IN CASH & CASH EQUIVALENTS		-

CASH & CASH EQUIVALENTS, BEGINNING BALANCE		-

CASH & CASH EQUIVALENTS, ENDING BALANCE	$	-

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

F-6

GREEN AGRICULTURE HOLDING CORPORTAION

(A development stage company)

NOTES TO FINANCIAL STATEMENTS

1.	DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Green Agriculture Holding Corporation. (“the Company”) is a development stage enterprise incorporated in the State of New Jersey on January 27, 2007. The Company has had no significant operations since its inception. The Company is authorized to do any legal business activity as controlled by New Jersey law.

The accounting policies of the Company are in accordance with generally accepted accounting principles and conform to the standards applicable to development stage companies. The Company’s fiscal year ends on June 30, 2007.

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and cash equivalents

The Company considers all liquid investments with a maturity of three months or less from the date of purchase that are readily convertible into cash to be cash equivalents.

Revenue Recognition

The Company's revenue recognition policies are in compliance with Staff accounting bulletin (SAB) 104. Revenue will be recognized when services are rendered. Generally, the Company will extend credit to its customers/clients and would not require collateral. The Company will perform ongoing credit evaluations of its customers/clients.

Income taxes

Deferred income tax assets and liabilities are computed annually for differences between the financial statements and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted laws and rates applicable to the periods in which the differences are expected to affect taxable income (loss). Valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

Basic and diluted net loss per share

Net loss per share is calculated in accordance with the Statement of financial accounting standards No. 128 (SFAS No. 128), “Earnings per share”. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

F-7

GREEN AGRICULTURE HOLDING CORPORTAION

(A development stage company)

NOTES TO FINANCIAL STATEMENTS

Development Stage Enterprise

The Company is a development stage enterprise, as defined in Financial Accounting Standards Board No. 7. The Company‘s planned principal operations have not commenced, and, accordingly, no revenue has been derived during this period.

3.	GOING CONCERN

As of June 30, 2007, the Company has no operating history under its current structure, which raises substantial doubt about the Company’s ability to continue as a going concern. The Company’s has not earned any revenue from operations since its inception. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Management has taken the following steps to revise its operating and financial requirements, which it believes are sufficient to provide the Company with the ability to continue as a going concern. On August 3, 2007, the Company acquired 100% outstanding shares of Shaanxi Techteam Jinong Humic Acid Product Co., Ltd from its shareholders. Shaanxi Techteam Jinong Humic Acid Product Co., Ltd is a fertilizer producer company which is located at Xian, Shaanxi Province of the People’s Republic of China

4.	SHAREHOLDERS’ EQUITY

The Company has authorized 10,000 shares of common stock, no par value. On the formation of the Company, the Company issued 100 shares representing the initial capitalization of the Company to founders for $10.

5.	INCOME TAXES

As the Company has not generated taxable income since its inception, no provision for income taxes has been made. At June 30, 2007, the Company did not have any significant net operating loss carry forwards, deferred tax liabilities or deferred tax assets.

6.	SUPPLEMENTAL DISCLOSURE OF CASH FLOWS

The Company prepares its statements of cash flows using the indirect method as defined under the Financial Accounting Standard No. 95.

The Company has paid $0 for income tax and none for interest, since its inception through June 30, 2007.

7.	SUBSEQUENT EVENTS

On August 3, 2007, the Company acquired 100% outstanding shares of Shaanxi Techteam Jinong Humic Acid Product Co., Ltd from its shareholders.

Shaanxi Techteam Jinong Humic Acid Product Co., Ltd (Techteam Jinong) was incorporated on June 19, 2000. Techteam Jinong is primarily engaged in the research and development, manufacture, distribution and technique support of green organic fertilizer in the People’s Republic of China.

The exchange of shares with Techteam Jinong will be accounted for as a reverse acquisition under the purchase method of accounting since the shareholders of Techteam Jinong obtained the control of the Combined Company. Accordingly, the merger of the two companies will be recorded as a recapitalization of Techteam Jinong, with the Techteam Jinong being treated as the continuing entity.

F-8

GREEN AGRICULTURE HOLDING CORPORTAION

(A development stage company)

NOTES TO FINANCIAL STATEMENTS

The condensed financial statements of Techteam Jinong, as on June 30, 2007, are as follows:

Balance Sheet:


Total current assets	$	4,136,059
Property & equipment		11,800,638
Deposits		1,163,078

Total assets	$	17, 099,775

Current liabilities	$	8,334,420
Stockholders’ equity		8,765,355

Total liabilities and stockholders’ equity	$	17,099,775

Income Statement:

Net Revenue	$	15,184,343
Cost of revenue		6,556,524
Gross profit		8,627,820

Total Operating expenses		1,011,686
Income from operations		7,616,133

Miscellaneous expense		41,125
Interest expenses		361,254
Provision for income		295,012

Net income	$	6,918,742

F-9

GREEN AGRICULTURE HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2007
(UNAUDITED)

ASSETS

Current Assets
Cash and cash equivalents	$	107,400
Accounts receivable, net		6,046,270
Other assets		122,721
Advances to suppliers		533,084
Inventories		1,954,191
Total Current Assets		8,763,666

Plant, Property and Equipment, net		11,734,230

Construction In Progress		43,387

Intangible Assets, net		1,157,113

Total Assets	$	21,698,396

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities
Accounts payable	$	514,785
Unearned revenue		177,485
Other payables and accrued expenses		496,469
Amount due to related parties		135,947
Taxes payable		3,076,957
Short term loans		4,310,805
Total Current Liabilities		8,712,448

Commitment		-
Stockholders' Equity
Share capital		2,667,648
Statutory reserve		1,485,018
Retained earning		8,415,102
Accumulated other comprehensive income		418,179
Total Stockholders' Equity		12,985,948

Total Liabilities and Stockholders' Equity	$	21,698,396

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

F-10

GREEN AGRICULTURE HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
(UNAUDITED)

	Three Months Ended September 30,
	2007			2006

Net sales		7,191,021			4,791,313
Cost of goods sold		2,773,762			1,781,291
Gross profit		4,417,259			3,010,022
Operating expenses
Selling expenses		151,705			209,681
Operating and administrative expenses		150,618			219,125
Total operating expenses		302,323			428,806
Income from operations		4,114,937			2,581,216
Other income (expense)
Other income		9,301			1,302
Interest income		125			-
Interest expense		(92,569	)		(91,369	)
Bank charges		(22	)		(94	)
Total other income (expense)		(83,165	)		(90,162	)
Income before income taxes		4,031,772			2,491,055
Provision for income taxes		-			199,880
Net income		4,031,772			2,291,175
Other comprehensive income
Foreign currency translation gain		174,461			35,266
Comprehensive income	$	4,206,233		$	2,326,441

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

F-11

GREEN AGRICULTURE HOLDING CORPORATION AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
(UNAUDITED)

	Three Months Ended September 30,
	2007			2006
Cash flows from operating activities
Net income	$	4,031,772		$	2,291,175
Adjustments to reconcile net income to net cash
provided by operating activities
Share capital contribution - rental and interest paid by shareholders		14,337			15,511
Depreciation		208,898			31,304
Amortization		24,253			19,271
Decrease / (Increase) in current assets
Accounts receivable		(4,095,432	)		(831,613	)
Other receivables		69,214			236,846
Inventories		(150,870	)		358,768
Advances to suppliers		(318,984	)		141,979
Other assets		(2,374	)		29,819
(Decrease) / Increase in current liabilities
Accounts payable		287,180			(152,909	)
Unearned revenue		94,036			(40,931	)
Tax payables		757,460			491,391
Accrued expenses		(341,719	)		39,307
Other payables		(16,974	)		(40,234	)
Net cash provided by operating activities		560,796			2,589,683

Cash flows from investing activities
Acquisation of plant, property, and equipment		-			(869	)
Additions to construction in progress		-			(22,237	)
Net cash used in investing activities		-			(23,105	)

Cash flows from financing activities
Payments to related parties		(536,621	)		(2,443,916	)

Effect of exchange rate change on cash and cash equivalents		1,509			1,475
Net increase in cash and cash equivalents		25,684			124,136

Cash and cash equivalents, beginning balance		81,716			45,623
Cash and cash equivalents, ending balance	$	107,400		$	169,759

Supplement disclosure of cash flow information
Interest expense paid	$	(92,674	)	$	(88,035	)
Income taxes paid	$	-		$	-

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

F-12

GREEN AGRICULTURE HOLDING CORPORTAION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

Green Agriculture Holding Corporation (“Green Holding”, “the Company”) acquired 100% outstanding shares of Techteam Jinong on August 3, 2007. Green Holding was incorporated on January 27, 2007 under the laws of the State of New Jersey with two shareholders owning 89% and 11% of stock equity of the Company. Green Holding, through its Chinese subsidiaries Techteam Jinong and Xi’an Jintai is engaged in the research and development, manufacture, distribution and technique support of green organic fertilizer.

On January 19, 2007, Techteam Jinong incorporated X’an Jintai Agriculture Technology Development Company(hereinafter as “Xi’an Jintai”), as the Experimental Base and green fertilizer Research Institute of Techteam Jinong.

The Company and its subsidiaries are engaged in the research and development, manufacture, distribution and technique support of green organic fertilizer. Xian Jonong’s main business is to produce and sell fertilizers, and Xi’an Jintai’s main business is to sell the product which are the by- product (fruit and vegetables) from the experiments of developing the fertilizers.

NOTE 2 - BASIS OF PRESETATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the interim periods are not necessarily indicative of the results for any future period. These statements should be read in conjunction with the Company's audited financial statements and notes thereto for the fiscal year ended June 30, 2007. The results of the three month period ended September 30, 2007 are not necessarily indicative of the results to be expected for the full fiscal year ending June 30, 2008.

Principle of consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries — Techteam Jinong and Xi’an Jintai. All significant inter-company accounts and transactions have been eliminated in consolidation.

F-13

GREEN AGRICULTURE HOLDING CORPORTAION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Use of estimates

Cash and cash equivalents

For statement of cash flows purposes, the Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents. As of September 30, 2007, cash and cash equivalents amounted to $ 107,400.

Accounts receivable

The Company's 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. As of September 30, 2007, the Company had accounts receivable of $6,046,270, net of allowance of $ 222,276.

Advances to suppliers

The Company advances to certain vendors for purchase of its material. As of September, 2007, the advances to suppliers amounted to $533,084.

Inventories

Property, plant and equipment

F-14

GREEN AGRICULTURE HOLDING CORPORTAION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets: 5 to 15 years for machinery; 3 to 5 years for leasehold improvement, 5 to 10 years for office equipment; and 3 to 5 years for motor vehicles.

Impairment

Revenue recognition

F-15

GREEN AGRICULTURE HOLDING CORPORTAION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Advertising costs

The Company expenses the cost of advertising as incurred or, as appropriate, the first time the advertising takes place. Advertising costs for the three months ended September 30, 2007 and 2006, were $ 23,125 and $ 142,427, respectively.

Income taxes

Foreign currency translation

The functional currency of the Company is RMB. The Company uses the United States dollar ("U.S. dollars") for financial reporting purposes. The Company's subsidiaries maintain their books and records in their functional currency, being the primary currency of the economic environment in which their operations are conducted. In general, for consolidation purposes, the Company translates the subsidiaries' assets and liabilities into U.S. dollars using the applicable exchange rates prevailing at the balance sheet date, and the statement of income is translated at average exchange rates during the reporting period. Gain or loss on foreign currency transactions are reflected on the income statement. Gain or loss on financial statement translation from foreign currency are recorded as a separate component in the equity section of the balance sheet, as component of comprehensive income. The functional currency of the Company is Chinese Renminbi. In particular, Renminbi ("RMB"), the PRC's official currency, is the functional currency of the Company. Until July 21, 2005, RMB had been pegged to US$ at the rate of RMB8.28: US$1.00. On July 21, 2005, the PRC government reformed the exchange rate system into a managed floating exchange rate system based on market supply and demand with reference to a basket of currencies. In addition, the exchange rate of RMB to US$ was adjusted to RMB8.11: US$1.00 as of July 21, 2005. The People's Bank of China announces the closing price of a foreign currency such as US$ traded against RMB in the inter-bank foreign exchange market after the closing of the market on each working day, which will become the unified exchange rate for the trading against RMB on the following working day. The daily trading price of US$ against RMB in the inter-bank foreign exchange market is allowed to float within a band of 0.3% around the unified exchange rate published by the People's Bank of China. This quotation of exchange rates does not imply free convertibility of RMB to other foreign currencies. All foreign exchange transactions continue to take place either through the 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 Bank of China or other institutions required submitting a payment application form together with invoices, shipping documents and signed contracts.

F-16

GREEN AGRICULTURE HOLDING CORPORTAION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Fair values of financial instruments

Statement of Financial Accounting Standard No. 107, "Disclosures about Fair Value of Financial Instruments", requires that the Company disclose estimated fair values of financial instruments.

Segment reporting

During the three month ended September 30, 2006, the company was organized in one segment. During the three month ended September 30, 2007, the Company was organized into two main business segments: produce fertilizer (Jinong) and agricultural products (Jintai). The following table presents a summary of operating information and certain year-end balance sheet information for the three month ended September 30, 2007.

F-17

GREEN AGRICULTURE HOLDING CORPORTAION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

	Three months ended September 30,
	2007			2006
	(Unaudited)			(Unaudited)
Revenues from unaffiliated customers:
Fertilizer	$	5,588,757		$	4,791,313
Agricultural products		1,602,264			-
Consolidated	$	7,191,021		$	4,791,313

Operating income :
Fertilizer	$	3,131,416		$	2,581,216
Agricultural products		983,521			-
Consolidated	$	4,114,937		$	2,581,216

Identifiable assets:
Fertilizer	$	19,913,001		$	11,470,487
Agricultural products		2,325,120			-
Reconciling item (1)		(406,264	)		-
Reconciling item (2)		(133,461	)		-
Consolidated	$	21,698,396		$	11,470,487

Net income
Fertilizer	$	3,048,148		$	2,491,055
Agricultural products		983,624			-
Consolidated	$	4,031,772		$	2,491,055

Interest expense:
Fertilizer	$	92,569		$	91,369
Agricultural products		-			-
Consolidated	$	92,569		$	91,369

(1) Reconciling amounts include adjustments to eliminate inter company transactions.

(2) Reconciling amounts include adjustments to eliminate inter company investment.

F-18

GREEN AGRICULTURE HOLDING CORPORTAION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Statement of cash flows

Recent accounting pronouncements

1. A brief description of the provisions of this Statement

F-19

GREEN AGRICULTURE HOLDING CORPORTAION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

2. The date that adoption is required

3. The date the employer plans to adopt the recognition provisions of this Statement, if earlier.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation.

F-20

GREEN AGRICULTURE HOLDING CORPORTAION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - INVENTORIES

Inventories consist of the following as of September 30, 2007 :

Supplies, packing and raw materials	$	244,039
Finished goods		1,710,152
Totals	$	1,954,191

NOTE 4 - OTHER ASSETS

As of September 30, 2007, other assets comprised of following:

Other receivable	$	89,816
Promotion samples		32,905
Total	$	122,721

Other receivables represent advances made to non-related companies and employees. The amounts were unsecured, interest free, and due on demand.

NOTE 5 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following as of September 30, 2007

Building and improvements	$	7,338,102
Vehicle		21,728
Machinery and equipments		5,247,490
Totals		12,607,320
Less: accumulated depreciation		(873,090	)
	$	11,734,230

Depreciation expenses for the three months ended September 30, 2006 and 2007 were $31,304 and $208,898, respectively.

NOTE 6 - INTAGIBLE ASSETS

The intangible assets comprised of following at September 30, 2007:

Land use right, net	$	853,196
Technology know-how, net		303,917
Total	$	1,157,113

F-21

GREEN AGRICULTURE HOLDING CORPORTAION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

LAND USE RIGHT

The shareholder contributed the land use rights on August 16^th, 2001. The land use right was recorded at cost of $972,280. The land use right is for fifty years. The land use right consist of the followings as of September 30, 2007:

Land use right	$	972,280
Less: accumulated amortization		(119,084	)
	$	853,196

TECHNOLOGY KNOW-HOW

The shareholder contributed the technology know-how on August 16, 2001. The technology know-how is recorded at cost of $784,095. This technology is the special formula to produce humid acid. The technology know-how is valid for 10 years. The technology know-how consists of the following as of September 30, 2007:

Technology Know-how	$	784,095
Less: accumulated amortization		(480,178	)
	$	303,917

Total amortization expenses of intangible assets for the years ended September 30, 2007 and 2006 amounted to $24,253 and $19,271 respectively. Amortization expenses of intangible assets for next five years after September 30, 2007 are as follows:

September 30, 2008	$	93,813
September 30, 2009		93,813
September 30, 2010		93,813
September 30, 2011		93,813
September 30, 2012		93,813
Total	$	469,065

NOTE 7 - AMOUNT DUE TO RELATED PARTIES

The amount due to related parties were the advances from the Company’s officers and shareholders, and was unsecured, non-interest bearing and due on demand. As of September 30, 2007, amount due to related parties amounted to $135,947.

F-22

GREEN AGRICULTURE HOLDING CORPORTAION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - ACCRUED EXPENSES AND OTHER PAYABLES

Accrued expenses and other payables of the following as of September 30, 2007:

Payroll payable	$	32,527
Welfare payable		201,421
Interest and other accrued expenses		58,167
Other levy payable		55,962
Employee advance		69,361
Advances to other unrelated companies- Due on demand, interest free and unsecured		79,031
Total	$	496,469

NOTE 9 - LOAN PAYABLES

As of September 30, 2007, the loans payable are as follows:

Short term loans payable:
Xian City Commercial Branch	$	2,001,923
Xian Agriculture Credit Union		507,153
Agriculture Bank		1,801,729
Total	$	4,310,805

The interest expenses are $92,569 and $91,369 for three months ended September 30, 2007 and 2006.

F-23

GREEN AGRICULTURE HOLDING CORPORTAION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - TAX PAYABLES

Tax payables consist of the following as of September 30, 2007


VAT payable	$	2,547,065
Income tax payable		308,657
Other levies		221,235
Total	$	3,076,957

NOTE 11 - OTHER INCOME (EXPENSES)

Other income (expenses) mainly consist of interest expenses and subsidy income from government.

NOTE 12 - INCOME TAXES

The Company is subject to PRC Enterprise Income Tax at a rate of 33% on the net income. For the year 2007, the company can enjoy tax-free benefit because it becomes a foreign invested company according to the PRC tax law. The income tax expenses for the three month ended September 30, 2007 and 2006 are $0 and $199,880 respectively.

The following table reconciles the U.S. statutory rates to the Company’s effective tax rate at September 30, 2007 and 2006:

	2007			2006
Tax at statutory rate		34	%		34	%
Foreign tax rate difference		-19	%		-19	%
Net operating loss in other tax jurisdiction for where no benefit is realized		-15	%		-7	%

		0	%		8	%

F-24

GREEN AGRICULTURE HOLDING CORPORTAION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Due to non-operation in U.S. and tax free status in China, the Company had no deferred tax for the three months ended September 30, 2007 and 2006.

NOTE 13 - CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS

MAJOR CUSTOMERS AND VENDORS

There are two vendors that are over 10% of the total purchase for the three months ended September 30, 2007 with each vendor individually accounting for about 14% and 10%. There are two vendors that are over 10% of the total purchase for the three months ended September 30, 2006 with each vendor individually accounting for about 13% and 12%.

There is no customer that is accounted over 10% of the total sales as of three months ended September 30, 2007 and 2006.

NOTE 14 - STATUTORY RESERVES

As stipulated by the Company Law of the People's Republic of China (PRC), net income after taxation can only be distributed as dividends after appropriation has been made for the following:

Making up cumulative prior years' losses, if any;

ii)

F-25

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SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”) is dated as of December 24, 2007, by and among Discovery Technologies, Inc. a Nevada corporation, and all predecessors thereof (the “Company”), Green Agriculture Holding Corporation, a New Jersey corporation (“Green”), Shaanxi TechTeam Jinong Humic Acid Product Co., Ltd., a company organized under the laws of the People’s Republic of China, and all predecessors thereof (“WOFE”), and the investors identified on the signature pages hereto (each, an “Investor” and collectively, the “Investors”).

RECITALS:

WHEREAS, as of the Closing Date the Company is entering into a Share Exchange Agreement, dated as of the date hereof (the “Exchange Agreement”) with Green and the owners of 100% of the outstanding capital stock of Green (“Green Shareholders”), pursuant to which the Company will, subject to the terms and conditions thereof, acquire all of the outstanding capital stock of Green, in exchange for Common Stock (as defined below) under the Exchange Agreement and immediately prior to the Closing under this Agreement (the “Exchange”).

WHEREAS, the closing of the Exchange is conditioned, among other things, on the consummation of the financing contemplated by this Agreement immediately thereafter.

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to exemptions from registration under the Securities Act (as defined below), the Company desires to issue and sell to each Investor, and each Investor, severally and not jointly, desires to purchase from the Company, shares of the Company’s Common Stock, as more fully described in this Agreement.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and the Investors agree as follows:

ARTICLE 1.

DEFINITIONS

1.1. Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms shall have the meanings indicated in this Section 1.1:

“2009 Guaranteed ATNI” has the meaning set forth in Section 4.11.

“2009 Make Good Shares” means the following, as equitably adjusted for any stock splits, stock combinations, stock dividends or similar transactions: the Shares times 50%.

“2009 Annual Report” means the Annual Report on Form 10-KSB or appropriate form pursuant to the then effective rules under the Exchange Act of the Company for the fiscal year ending June 30, 2009, as filed with the Commission.

“2009 Guaranteed EPS” means ninety three percent of the 2009 Guaranteed ATNI divided by the Closing Outstanding Shares (as may be equitably adjusted for any stock splits, stock combinations, stock dividends or similar transactions):

2009 Guaranteed ATNI × 93%

Closing Outstanding Shares

“Action” means any action, suit, inquiry, notice of violation, proceeding (including any partial proceeding such as a deposition) or investigation pending or threatened in writing against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency, regulatory or self regulatory authority (federal, state, county, local or foreign), stock market, stock exchange or trading facility.

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

“After Tax Net Income” shall have the meaning set forth in Section 4.11.

“Available Undersubscription Amount” has the meaning set forth in Section 4.15(c).

“Basic Amount” has the meaning set forth in Section 4.15(b).

“Board Holdback Escrow Amount” has the meaning set forth in section 4.12.

“Business Day” means any day except Saturday, Sunday and any day which is a federal legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

“Buy-In” has the meaning set forth in Section 4.1(c).

“CFO Holdback Escrow Amount” has the meaning set forth in section 4.16.

“Circular 75” means Notice on Relevant Issues of PRC State Administration of Foreign Exchange (“SAFE”) concerning Foreign Exchange Administration for Domestic Residents to Engage in Financing and Round-trip Investment via Overseas Special Purpose Companies promulgated by SAFE on October 21, 2005 and effective from November 1, 2005.

“Circular 106” means the implementation guidance to Circular 75 promulgated by SAFE on May 29, 2007 and effective from June 11, 2007.

“Closing” means the closing of the purchase and sale of the Shares pursuant to Article II.

“Closing Date” means the Business Day on which all of the conditions set forth in Sections 5.1 and 5.2 hereof are satisfied, or such other date as the parties may agree.

"Closing Escrow Agreement" means the Escrow Agreement, dated as of the date hereof, by and among the Company, the Investors and Escrow Agent in the form of Exhibit A hereto.

“Closing Outstanding Shares” means the number of shares of Common Stock outstanding immediately following the Closing.

“Commission” means the Securities and Exchange Commission.

“Common Stock” means the common stock of the Company, par value $0.001 per share, and any securities into which such common stock may hereafter be reclassified or for which it may be exchanged as a class.

“Common Stock Equivalents” means any securities of the Company or any Subsidiary which entitle the holder thereof to acquire Common Stock at any time, including without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock or other securities that entitle the holder to receive, directly or indirectly, Common Stock.

“Company” has the meaning set forth in the preamble to this Agreement.

“Company Entities” means the Company, Green and WOFE and all existing Subsidiaries of any such entities and any other entities which hereafter become Subsidiaries of any such entities.

“Company U.S. Counsel” means Guzov Ofsink, LLC.

“Company Deliverables” has the meaning set forth in Section 2.2(a).

“Compliance Notice Date” has the meaning set forth in Section 4.21.

“Compliance Period” has the meaning set forth in Section 4.21.

“Disclosure Materials” has the meaning set forth in Section 3.1(h).

“Earnings Per Share” shall have the meaning set forth in Section 4.11.

“Effective Date” means the date that the initial Registration Statement required by Section 2(a) of the Registration Rights Agreement is first declared effective by the Commission.

“Escrow Agent” shall mean Tri-State Title & Escrow, LLC and any successor thereto or replacement thereof.

“Evaluation Date” has the meaning set forth in Section 3.1(s).

“Exchange” has the meaning set forth in the recitals to this Agreement.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Exchange Agreement” has the meaning set forth in the recitals to this Agreement.

“Existing Company Entities” means the Company, Green and WOFE and their respective Subsidiaries.

“FCPA” shall have the meaning set forth in Section 3.1(cc).

“GAAP” means U.S. generally accepted accounting principles.

“Green” has the meaning set forth in the preamble to this Agreement.

“Holdback Escrow Agreement” means Holdback Escrow Agreement, dated as of the date hereof, by and among the Company, the Investors and Escrow Agent in the form of Exhibit B hereto.

“Intellectual Property Rights” has the meaning set forth in Section 3.1(p).

“Intellectual Property Right Licensing Agreements” has the meaning set forth in Section 3.1(p).

“Investment Amount” means, with respect to each Investor, the Investment Amount indicated on such Investor’s signature page to this Agreement.

“Investor Deliverables” has the meaning set forth in Section 2.2(b).

“Investor Party” has the meaning set forth in Section 4.7.

“IR Holdback Escrow Amount” has the meaning set forth in Section 4.13.

“Lien” means any lien, charge, encumbrance, security interest, pre-emptive right, right of first refusal, right of participation or any other restrictions of any kind.

“Lockup Agreement” means the Lockup Agreement, dated as of the date hereof, by and between the Company and each person listed as a signatory thereto, in the form attached as Exhibit C hereto.

“Losses” means any loss, liability, obligation, claim, contingency, damage, cost or expense, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation related thereto.

“Make Good Escrow Agreement” means the Make Good Escrow Agreement, dated as of the date hereof, among the Company, the Make Good Escrow Agent, the Make Good Pledgor and the Investors, in the form of Exhibit D hereto.

“Make Good Escrow Agent” shall mean Tri-State Title & Escrow, LLC and any successor thereto or replacement thereof.

“Make Good Pledgor” means Mr. Yinshing David To.

“Material Adverse Effect” means any of (i) a material and adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material and adverse effect on the results of operations, assets, properties, prospects, business or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) an adverse impairment to the Company’s ability to perform on a timely basis its obligations under any Transaction Document, or the Exchange Agreement.

“Money Laundering Laws” has the meaning set forth in Section 3.1(ff).

“New York Courts” means the state and federal courts sitting in the City of New York, Borough of Manhattan.

“Notice of Acceptance” has the meaning set forth in Section 4.15(c).

“Notice” has the meaning set forth in Section 4.21.

“OFAC” has the meaning set forth in Section 3.1(ee).

“Offer” has the meaning set forth in Section 4.15(b).

“Offer Notice” has the meaning set forth in Section 4.15(b).

“Offer Period” has the meaning set forth in Section 4.15(c).

“Offered Securities” has the meaning set forth in Section 4.15(b).

“Outside Date” means the fifteenth calendar day (if such calendar day is a Trading Day and if not, then the first Trading Day following such fifteenth calendar day) following the date of this Agreement.

“Per Share Purchase Price” means $3.25.

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Pinnacle” means Pinnacle China Fund, L.P.

“PRC” means the People’s Republic of China, not including Taiwan, Hong Kong and Macau.

“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.

“Refused Securities” has the meaning set forth in Section 4.15(d).

“Registration Rights Agreement” means the Registration Rights Agreement, dated as of the date hereof, among the Company and the Investors, in the form of Exhibit E hereto.

“Registration Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale by the Investors of the Shares.

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such rule.

“SEC Reports” has the meaning set forth in Section 3.1(h).

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

“September 8 Merger and Acquisition Rules” means Rules on Acquisition of Domestic Enterprises by Foreign Investors jointly promulgated by six ministries in PRC including PRC Ministry of Commerce and SAFE on August 8, 2006 and effective from September 8, 2006.

“Share Delivery Date” has the meaning set forth in Section 4.1(c).

“Shares” means the shares of Common Stock being offered and sold to the Investors by the Company hereunder.

“Short Sales” include, without limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act and all types of direct and indirect stock pledges, forward sale contracts, options, puts, calls, swaps and similar arrangements (including on a total return basis), and sales and other transactions through non-US broker dealers or foreign regulated brokers.

“Subsequent Placement” has the meaning set forth in Section 4.15(a).

“Subsequent Placement Agreement” has the meaning set forth in Section 4.15(d).

“Subsidiary” of any Person means any “significant subsidiary” as defined in Rule 1-02(w) of the Regulation S-X promulgated by the Commission under the Exchange Act of such Person. The term “Subsidiaries” shall be deemed to include Green and WOFE and their respective subsidiaries as if the Exchange shall have been consummated as of the time of the execution of this Agreement, with the effect that all references to Subsidiaries of the Company in this Agreement shall also refer to Green, WOFE and their respective subsidiaries.

“Trading Day” means (i) a day on which the Common Stock is traded on a Trading Market (other than the OTC Bulletin Board), or (ii) if the Common Stock is not listed on a Trading Market (other than the OTC Bulletin Board), a day on which the Common Stock is traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock is not quoted on any Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported by the Pink Sheets LLC (or any similar organization or agency succeeding to its functions of reporting prices); provided, that in the event that the Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day.

“Trading Market” means whichever of the New York Stock Exchange, the American Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or OTC Bulletin Board on which the Common Stock is listed or quoted for trading on the date in question.

“Transaction Documents” means this Agreement, the Registration Rights Agreement, the Closing Escrow Agreement, the Holdback Escrow Agreement, the Lockup Agreements, the Make Good Escrow Agreement and any other documents or agreements executed in connection with the transactions contemplated hereunder.

“Undersubscription Amount” has the meaning set forth in Section 4.15(b).

“WOFE” has the meaning specified in the preamble of this Agreement.

“WOFE Financial Statements” has the meaning set forth in Section 5.1(e).

ARTICLE 2.

PURCHASE AND SALE

2.1. Closing. Subject to the terms and conditions set forth in this Agreement, at the Closing the Company shall issue and sell to each Investor, and each Investor shall, severally and not jointly, purchase from the Company, the Shares representing such Investor’s Investment Amount. The Closing shall take place at the offices of Guzov Ofsink, LLC, 600 Madison, 14^th Floor, New York, NY 10022 on the Closing Date or at such other location or time as the parties may agree.

2.2. Closing Deliveries. (a) At the Closing, the Company shall deliver or cause to be delivered to each Investor the following (the “Company Deliverables”):

(i) a single certificate representing that number of aggregate Shares to be issued and sold at Closing to such Investor, determined under Section 2.1(a), registered in the name of such Investor;

(ii) the Closing Escrow Agreement, duly executed by the Company and the Escrow Agent;

(iii) the Holdback Escrow Agreement, duly executed by the Company and the Escrow Agent;

(iv) the Make Good Escrow Agreement, duly executed by the Company and the Escrow Agent;

(v) the legal opinion of Company U.S. Counsel, in agreed form, addressed to the Investors;

(vi) the legal opinion of special PRC counsel to WOFE, in agreed form, addressed to the Investors;

(vii) the Registration Rights Agreement, duly executed by the Company;

(viii) the Lockup Agreement, duly executed by each party thereto.

(b) At the Closing, each Investor shall deliver or cause to be delivered the following (collectively, the “Investors Deliverables”):

(i) to the Company, the Closing Escrow Agreement, duly executed by such Investor;

(ii) to the Company, the Holdback Escrow Agreement, duly executed by such Investor;

(iii) to the Company, the Registration Rights Agreement, duly executed by such Investor; and

(iv) to the Company, the Make Good Escrow Agreement, duly executed by such Investor.

(c) Within one Business Day following the date of this Agreement, each Investor shall cause to be delivered to the Escrow Agent, its Investment Amount, in United States dollars and in immediately available funds, by wire transfer to an account designated for such purpose in accordance with the terms of the Closing Escrow Agreement.

ARTICLE 3.

REPRESENTATIONS AND WARRANTIES

3.1. Representations and Warranties of the Existing Company Entities. The Company, Green and WOFE hereby jointly and severally make the following representations and warranties to each Investor:

(a) Subsidiaries. Except as disclosed on Schedule 3.1 (a) none of the Existing Company Entities have any direct or indirect Subsidiaries. Except as disclosed in Schedule 3.1(a), (i) the Company owns, directly or indirectly, all of the capital stock of each other Existing Company Entity, and each other Existing Company Entity owns, directly or indirectly, all of the capital stock of its respective Subsidiaries, in each case free and clear of any and all Liens, and (ii) all the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of any and all Liens. As of the Closing, the Company shall own 100% of the capital stock of Green and Green shall own 100% of the capital stock of WOFE, in each case free and clear of all Liens. Prior to the Closing Green Shareholders own 100% of the capital stock of Green free and clear of all Liens. Prior to the Closing Green is the owner of 100% of the capital stock of WOFE, subject to the full payment of the purchase price of the WOFE.

(b) Organization and Qualification. Each Existing Company Entity is duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its respective properties and assets and to carry on its respective business as currently conducted and as to be conducted as specified in the Exchange Agreement, and Current Report on Form 8-K to be filed in accordance with Section 4.5 herein. No Existing Company Entity is in violation of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each Existing Company Entity is duly qualified to conduct its respective businesses and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.

(c) Authorization; Enforcement. Each Existing Company Entity which is or is to become party to any Transaction Document and the Exchange Agreement has the requisite corporate and other power and authority to enter into and to consummate the transactions contemplated by each such Transaction Document and the Exchange Agreement to which it is a party and otherwise to carry out its obligations thereunder. The execution and delivery of the Transaction Documents, by each Existing Company Entity to be party thereto and the consummation by each of them of the transactions contemplated thereby have been duly authorized by all necessary action on the part of such Existing Company Entity, and no further action is required by any of them in connection with such authorization. Each Transaction Document and the Exchange Agreement has been (or upon delivery will have been) duly executed by the Company, each other Existing Company Entity required to execute the same and each Subsidiary (to the extent any of them is a party thereto) and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company, such Existing Company Entity and such Subsidiary, enforceable against each in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application. The execution and delivery of the Exchange Agreement by each party thereto and the consummation by each of them of the transactions contemplated thereby have been duly authorized by all necessary action on the part of each such party thereto, and no further action is required by any of them in connection with such authorization. The Exchange Agreement has been (or upon delivery will have been) duly executed by each party thereto and will constitute the valid and binding obligation of each party thereto enforceable against each party thereto in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application.

(d) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company, and each other Existing Company Entity and Subsidiary (to the extent a party thereto) and the consummation by the Company, and such other Existing Company Entities and Subsidiaries, of the transactions contemplated thereby do not and will not (i) conflict with or violate any provision of the Company’s, such Existing Company Entity’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing an Existing Company Entity or Subsidiary debt or otherwise) or other understanding to which any Existing Company Entity or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any United States or PRC court or governmental authority to which the Company or a Subsidiary is subject (including United States federal and state and PRC national and provincial securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.

(e) Filings, Consents and Approvals. No Existing Company Entity is required to obtain any consent, waiver, authorization, approval or order of, give any notice to, or make any filing or registration with, any United States or PRC court or other federal, provincial, state, local or other governmental authority or any other Person in connection with the execution, delivery and performance by the Company and each Subsidiary to the extent a party thereto of the Transaction Documents, other than (i) the filing with the Commission of one or more Registration Statements in accordance with the requirements of the Registration Rights Agreement, (ii) filings required by state securities laws, (iii) the filing of a Notice of Sale of Securities on Form D with the Commission under Regulation D of the Securities Act, (iv) the filings required in accordance with Section 4.5, (v) filings, consents and approvals required by the rules and regulations of the applicable Trading Market and (vi) those that have been made or obtained prior to the date of this Agreement.

(f) Issuance of the Shares. The Shares have been duly authorized and, when issued and paid for in accordance with the Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of any and all Liens. The Company has reserved from its duly authorized capital stock the shares of Common Stock issuable pursuant to this Agreement in order to issue the Shares.

(g) Capitalization. The number of shares of all authorized, issued and outstanding capital stock of the Company, and all shares of Common Stock reserved for issuance under the Company’s various option and incentive plans is specified in Schedule 3.1(g). No securities of any Existing Company Entity are entitled to preemptive or similar rights, and no Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. There are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock. The issue and sale of the Shares hereunder will not, immediately or with the passage of time, obligate the Company or any Subsidiary to issue shares of Common Stock or other securities to any Person (other than the Investors) and will not result in a right of any holder of Company or Subsidiary securities to adjust the exercise, conversion, exchange or reset price under such securities. No Existing Company Entity has issued any capital stock in a private placement transaction, including, without limitation, in a transaction commonly referred to in the PRC as a “1 ½ transaction.”

(h) SEC Reports; Financial Statements. The Company has filed all reports required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the twelve months preceding the date hereof (or such shorter period as the Company was required by law to file such reports), including, for this purpose, the current report on Form 8-K that is being filed by the Company on or about the date hereof to disclose the transactions contemplated hereby and by the Exchange Agreement (the foregoing materials being collectively referred to herein as the “SEC Reports” and, together with the Schedules to this Agreement (if any), the “Disclosure Materials”) on a timely basis or has timely filed a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company and each Subsidiary included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with GAAP applied on a consistent basis during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. The WOFE Financial Statements comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. The WOFE Financial Statements have been prepared in accordance with GAAP applied on a consistent basis during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto, and fairly present in all material respects the financial position of WOFE and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

(i) Press Releases. The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading.

(j) Material Changes. Since the date of latest audited financial statements included in the Company’s SEC Reports (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) no Existing Company Entity has incurred any liabilities (contingent or otherwise) other than (A) trade payables, accrued expenses and other liabilities incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s or its Subsidiaries’ financial statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (iii) no Existing Company Entity has altered its method of accounting or the identity of its auditors, (iv) no Existing Company Entity has declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, and (v) no Existing Company Entity has issued any equity securities to any officer, director or Affiliate. The Company does not have pending before the Commission any request for confidential treatment of information.

(k) Litigation. There is no Action which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents, the Exchange Agreement or the Shares or (ii) except as specifically disclosed in the SEC Reports, could, if there were an unfavorable decision, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect. No Existing Company Entity, nor any director or officer thereof (in his or her capacity as such), is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty, except as specifically disclosed in the SEC Reports. There has not been, and to the knowledge of the Existing Company Entities, there is not any pending investigation by or before the Commission or any other court, arbitrator, governmental or administrative agency, regulatory or self regulatory authority (federal, state, county, local or foreign), stock market, stock exchange or trading facility involving any Existing Company Entity or any of their respective current or former directors or officers (in his or her capacity as such). The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.

(l) Labor Relations. No material labor dispute exists or, to the knowledge of the Existing Company Entities, is imminent with respect to any of the employees of any Existing Company Entity. No Existing Company Entity has any employment or labor contracts, agreements or other understandings with any Person.

(m) Indebtedness; Compliance. Except as disclosed on Schedule 3.1(m), no Existing Company Entity is a party to any indenture, debt, loan or credit agreement by which it or any of its properties is bound. WOFE has no and as of the Closing will not have any liabilities of any nature, contingent or otherwise. No Existing Company Entity (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by such Existing Company Entity under), nor has any Existing Company Entity received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any court, arbitrator, governmental or administrative agency, regulatory or self regulatory authority (federal, state, county, local or foreign), stock market, stock exchange or trading facility, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including, without limitation, all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as could not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect. The Exchange Agreement complies with all applicable laws, rules and regulations of the United States. The Company is in compliance with all effective requirements of the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations thereunder, that are applicable to it, except where such noncompliance could not have or reasonably be expected to result in a Material Adverse Effect.

(n) Regulatory Permits. The Existing Company Entities possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits could not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, and no Existing Company Entity has received any notice of proceedings relating to the revocation or modification of any such permits.

(o) Title to Assets. Except as set forth in Schedule 3.1(o), the Existing Company Entities have valid land use rights for all real property that is material to their respective businesses and good and marketable title in all personal property owned by them that is material to their respective businesses, in each case, free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by such Existing Company Entity. Any real property and facilities held under lease by any Existing Company Entity are held by them under valid, subsisting and enforceable leases of which such Existing Company Entity is in compliance, except as could not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.

(p) Patents and Trademarks. Schedule 3.1(p) sets forth all of the patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar rights that the Existing Company Entities own or have the rights to use (collectively, the “Intellectual Property Rights”). The Intellectual Property Rights constitute all of the patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar rights that are necessary for use by the Existing Company Entities in connection with their respective businesses as described in the SEC Reports. No Existing Company Entity has received a written or oral notice that the Intellectual Property Rights used by any of them violates or infringes upon the rights of any Person. Except as set forth in Schedule 3.1(p), all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights. To the knowledge of the Existing Company Entities, no former or current employee, no former or current consultant, and no third-party joint developer of any Existing Company Entity has any Intellectual Property Rights made, developed, conceived, created or written by the aforesaid employee, consultant or third-party joint developer during the period of his or her retention by, or joint venture with, such Existing Company Entity which can be asserted against any Existing Company Entity. The Intellectual Property Rights and the owner thereof or agreement through which they are licensed to any of the Existing Company are set forth on Schedule 3.1(p). By the Closing, the WOFE shall have entered into agreements by which it is granted irrevocable, exclusive, royalty-free licenses on all Intellectual Property Rights that are registered to or owned by any Person other than the WOFE or its predecessor. Such agreements together with the agreements referenced in Schedule 3.1(p) are collectively the “Intellectual Property Right Licensing Agreements.” The Existing Company Entities will take such action as may be required, including making and maintaining the filings set forth in Schedule 3.1(p) and shall cause any such transfers of Intellectual Property Rights to the WOFE to be granted as is required in order for the WOFE to become the registered owner (in its current name) of all such Intellectual Property Rights (including, without limitation, the entering into of any Intellectual Property Right Licensing Agreements as may be necessary and the filing and maintaining of any information with the relevant PRC authority which relate to the change of name for those Intellectual Property Rights currently in the name of the WOFE’s predecessor).

(q) Insurance. Schedule 3.1(q) sets forth a list of all the insurance policies held by each Existing Company Entity. The Company has no reason to believe that it or any Existing Company Entity will not be able to renew its existing respective insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business on terms consistent with market for the Company’s and such other Existing Company Entity’s respective lines of business.

(r) Transactions With Affiliates and Employees; Customers. Except as set forth in the Schedule 3.1(r), none of the officers or directors of any Existing Company Entity, and, to the knowledge of the Existing Company Entities, none of the employees of any Existing Company Entity, is presently a party to any transaction with any Existing Company Entity (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Existing Company Entities, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner. None of the Existing Company Entities owes any money or other compensation to any of their respective officers or directors or shareholders, except to the extent of ordinary course compensation arrangements specified in Schedule 3.1(r). No material customer of any Existing Company Entity has indicated its intention to diminish its relationship with any Existing Company Entity and no Existing Company Entity has any knowledge from which it could reasonably conclude that any such customer relationship may be adversely affected.

(s) Internal Accounting Controls. Except as set forth on Schedule 3.1(s), the Company Entities maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company Entities and designed such disclosure controls and procedures to ensure that material information relating to the Company Entities is made known to the certifying officers by others within those entities, particularly during the period in which the Company’s Form 10-KSB or 10-QSB, as the case may be, is being prepared. The Company’s certifying officers have evaluated the effectiveness of the Company’s controls and procedures in accordance with Item 307 of Regulation S-B under the Exchange Act for the Company’s most recently ended fiscal quarter or fiscal year-end (such date, the “Evaluation Date”). The Company presented in its most recently filed Form 10-KSB or Form 10-QSB the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no significant changes in the Existing Company Entities’ internal controls (as such term is defined in Item 308(c) of Regulation S-B under the Exchange Act) or, to the Company’s knowledge, in other factors that could significantly affect any Company Entity’s internal controls.

(t) Solvency. Based on the financial condition of the Company, including the Existing Company Entities, as of the Closing Date (and assuming that the Closing shall have occurred), (i) the Existing Company Entity’s fair saleable value of their respective assets exceeds the amount that will be required to be paid on or in respect of the Existing Company Entity’s existing debts and other liabilities (including known contingent liabilities) as they mature, (ii) the Existing Company Entity’s assets do not constitute unreasonably small capital to carry on their respective business for the current fiscal year as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Existing Company Entities, and projected capital requirements and capital availability thereof, and (iii) the current cash flow of the Existing Company Entities, together with the proceeds the Existing Company Entities would receive, were they to liquidate all of their respective assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its debt when such amounts are required to be paid. The Existing Company Entities do not intend to incur debts beyond their respective ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).

(u) Certain Fees. Except as described in Schedule 3.1(u), no brokerage or finder’s fees or commissions are or will be payable by any Existing Company Entity to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. The Investors shall have no obligation with respect to any fees or with respect to any claims (other than such fees or commissions owed by an Investor pursuant to written agreements executed by such Investor which fees or commissions shall be the sole responsibility of such Investor) made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by this Agreement.

(v) Certain Registration Matters. Assuming the accuracy of the Investors’ representations and warranties set forth in Sections 3.2(b)-(e), no registration under the Securities Act is required for the offer and sale of the Shares by the Company to the Investors hereunder. The Company is eligible to register its Common Stock for resale by the Investors under Form SB-2 (or under any successor form thereof) promulgated under the Securities Act. Except as specified in Schedule 3.1(v), no Existing Company Entity has granted or agreed to grant to any Person any rights (including “piggy-back” registration rights) to have any securities of the Company registered with the Commission or any other governmental authority that have not been satisfied.

(w) Listing and Maintenance Requirements. Except as specified in the SEC Reports, the Company has not, in the two years preceding the date hereof, received notice from any Trading Market to the effect that the Company is not in compliance with the listing or maintenance requirements thereof. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with the listing and maintenance requirements for continued listing of the Common Stock on the Trading Market on which the Common Stock is currently listed or quoted. The issuance and sale of the Shares under the Transaction Documents does not contravene the rules and regulations of the Trading Market on which the Common Stock is currently listed or quoted, and no approval of the stockholders of the Company thereunder is required for the Company to issue and deliver to the Investors the Shares as contemplated by the Transaction Documents.

(x) Investment Company. The Company is not, and is not an Affiliate of, and immediately following the Closing will not have become, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

(y) Application of Takeover Protections. The Company has taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s Articles of Incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Investors as a result of the Investors and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including, without limitation, the Company’s issuance of the Shares and the Investors’ ownership of the Shares.

(z) No Additional Agreements. No Existing Company Entity has any agreement or understanding with any Investor with respect to the transactions contemplated by the Transaction Documents other than as specified in the Transaction Documents.

(aa) Consultation with Auditors. The Company has consulted its independent auditors concerning the accounting treatment of the transactions contemplated by the Transaction Documents, and in connection therewith has furnished such auditors complete copies of the Transaction Documents.

(bb) Make Good Shares. The Make Good Pledgor is the sole record and beneficial owners of the 2009 Make Good Shares and hold such shares free and clear of all Liens.

(cc) Foreign Corrupt Practices Act. No Existing Company Entity, nor to the knowledge of the Existing Company Entities, any agent or other person acting on behalf of any Existing Company Entity, has, directly or indirectly, (i) used any funds, or will use any proceeds from the sale of the Shares, for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any Person acting on their behalf of which the Company is aware) which is in violation of law, or (iv) except as set forth in Schedule 3.1(cc), has violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the “FCPA”).

(dd) PFIC. No Existing Company Entity is or intends to become a “passive foreign investment company” within the meaning of Section 1297 of the U.S. Internal Revenue Code of 1986, as amended.

(ee) OFAC. No Existing Company Entity nor, to the knowledge of the Existing Company Entities, any director, officer, agent, employee, Affiliate or Person acting on behalf of any Existing Company Entity, is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not directly or indirectly use the proceeds of the sale of the Shares, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other Person or entity, towards any sales or operations in Cuba, Iran, Syria, Sudan, Myanmar or any other country sanctioned by OFAC or for the purpose of financing the activities of any Person currently subject to any U.S. sanctions administered by OFAC.

(ff) Money Laundering Laws. The operations of each Existing Company Entity are and have been conducted at all times in compliance with the money laundering statutes of applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any applicable governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving any Existing Company Entity with respect to the Money Laundering Laws is pending or, to the best knowledge of the Company, threatened.

(gg) Other Representations and Warranties Relating to WOFE.

(i) All material consents, approvals, registrations, authorizations or licenses requisite under PRC law for the due and proper establishment and operation of WOFE have been duly obtained from the relevant PRC governmental authorities and are in full force and effect.

(ii) All filings and registrations with the PRC governmental authorities required in respect of WOFE and its capital structure and operations including, without limitation, the registration with the Ministry of Commerce, the China Securities Regulatory Commission, the State Administration of Industry and Commerce, the State Administration for Foreign Exchange, tax bureau and customs authorities, if necessary under current PRC laws and regulations as of the date of this Agreement, have been duly completed in accordance with the relevant PRC laws, rules and regulations, except where, the failure to complete such filings and registrations does not, and would not, individually or in the aggregate, have a Material Adverse Effect.

(iii) WOFE has complied with all relevant PRC laws and regulations regarding the contribution and payment of its registered capital, the payment schedule of which has been approved by the relevant PRC governmental authorities. There are no outstanding rights of, or commitments made by the Company or any Subsidiary to sell any equity interest in WOFE.

(iv) WOFE is not in receipt of any letter or notice from any relevant PRC governmental or quasi-governmental authority notifying it of revocation of any licenses or qualifications issued to it or any subsidy granted to it by any PRC governmental or quasi-governmental authority for non-compliance with the terms thereof or with applicable PRC laws, or the need for compliance or remedial actions in respect of the activities carried out by WOFE, except such revocation does not, and would not, individually or in the aggregate, have a Material Adverse Effect.

(v) WOFE has conducted its business activities within the permitted scope of business or has otherwise operated its business in compliance with all relevant legal requirements and with all requisite licenses and approvals granted by competent PRC governmental authorities other than such non-compliance that do not, and would not, individually or in the aggregate, have a Material Adverse Effect. As to licenses, approvals and government grants and concessions requisite or material for the conduct of any part of WOFE’s business which is subject to periodic renewal, the Company has no knowledge of any grounds on which such requisite renewals will not be granted by the relevant PRC governmental authorities.

With regard to employment and staff or labor, WOFE has complied with all applicable PRC laws and regulations in all material respects, including without limitation, laws and regulations pertaining to welfare funds, social benefits, medical benefits, insurance, retirement benefits, pensions or the like, other than such non-compliance that do not, and would not, individually or in the aggregate, have a Material Adverse Effect.

(hh) Disclosure. Neither any Existing Company Entity nor any Person acting on its behalf has provided any Investor or its respective agents or counsel with any information that any Existing Company Entity believes constitutes material, non-public information concerning the Company, the Subsidiaries or their respective businesses, except insofar as the existence and terms of the proposed transactions contemplated hereunder may constitute such information. Each of the Existing Company Entities understands and confirms that the Investors will rely on the foregoing representations and covenants in effecting transactions in securities of the Existing Company Entities. All disclosure provided to the Investors regarding the Existing Company Entities and their respective businesses and the transactions contemplated hereby, furnished by or on behalf of the Existing Company Entities (including their respective representations and warranties set forth in this Agreement) are true and correct and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. Each Investor acknowledges and agrees that the Existing Company Entities make no representations or warranties with respect to their respective businesses or the transactions contemplated hereby other than those specifically set forth in this Section 3.1 and each of the Investors have relied solely on those representations and review of the SEC Reports in making its investment decision.

3.2. Representations and Warranties of the Investors. Each Investor hereby, for itself and for no other Investor, represents and warrants to the Company as follows:

(a) Organization; Authority. Such Investor is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite corporate or partnership power and authority to enter into and to consummate the transactions contemplated by the applicable Transaction Documents and otherwise to carry out its obligations thereunder. The execution, delivery and performance by such Investor of the transactions contemplated by this Agreement has been duly authorized by all necessary corporate or, if such Investor is not a corporation, such partnership, limited liability company or other applicable like action, on the part of such Investor. Each of this Agreement and the Registration Rights Agreement has been duly executed by such Investor, and when delivered by such Investor in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Investor, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application.

(b) Investment Intent. Such Investor is acquiring the Shares as principal for its own account for investment purposes only and not with a view to or for distributing or reselling such Shares or any part thereof, without prejudice, however, to such Investor’s right at all times to sell or otherwise dispose of all or any part of such Shares in compliance with applicable federal and state securities laws. Subject to the immediately preceding sentence, nothing contained herein shall be deemed a representation or warranty by such Investor to hold the Shares for any period of time. Such Investor is acquiring the Shares hereunder in the ordinary course of its business. Such Investor does not have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Shares.

(c) Investor Status. At the time such Investor was offered the Shares, it was, and at the date hereof and the time of sale it is, an “accredited investor” as defined in Rule 501(a) under the Securities Act. Such Investor is not a registered broker-dealer under Section 15 of the Exchange Act. Each Investor has such sophistication, knowledge and skill to be able to fully evaluate the risks of investing in the Company.

(d) General Solicitation. Such Investor is not purchasing the Shares as a result of any advertisement, article, notice or other communication regarding the Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

(e) Access to Information. Such Investor acknowledges that it has reviewed the Disclosure Materials and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Shares and the merits and risks of investing in the Shares; (ii) access to information about the Company and the Subsidiaries and their respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Neither such inquiries nor any other investigation conducted by or on behalf of such Investor or its representatives or counsel shall modify, amend or affect such Investor’s right to rely on the truth, accuracy and completeness of the Disclosure Materials and the Company’s representations and warranties contained in the Transaction Documents.

(f) Certain Trading Activities. Such Investor has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Investor, engaged in any transactions in the securities of the Company (including, without limitation, any Short Sales involving the Company’s securities) since the earlier to occur of (1) the time that such Investor was first contacted by the Company or the placement agent regarding an investment in the Company and (2) the 30^th day prior to the date of this Agreement. Such Investor covenants that neither it nor any Person acting on its behalf or pursuant to any understanding with it will engage in any transactions in the securities of the Company (including Short Sales) prior to the time that the transactions contemplated by this Agreement are publicly disclosed.

(g) Independent Investment Decision. Such Investor has independently evaluated the merits of its decision to purchase the Shares pursuant to the Transaction Documents, and such Investor confirms that it has not relied on the advice of any other Investor’s business and/or legal counsel in making such decision. Such Investor has not relied on the business or legal advice of the Company or any of its agents, counsel or Affiliates in making its investment decision hereunder, and confirms that none of such Persons has made any representations or warranties to such Investor in connection with the transactions contemplated by the Transaction Documents.

The Company Entities acknowledge and agree that no Investor has made or makes any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Section 3.2.

ARTICLE 4.

OTHER AGREEMENTS OF THE PARTIES

4.1. (a) Shares may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of the Shares other than pursuant to an effective registration statement, to the Company, to an Affiliate of an Investor or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Shares under the Securities Act.

(b) Certificates evidencing the Shares will contain the following legend, until such time as they are not required under Section 4.1(c):

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. NOTWITHSTANDING THE FOREGOING, THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.

The Company acknowledges and agrees that an Investor may from time to time pledge, and/or grant a security interest in some or all of the Shares pursuant to a bona fide margin agreement in connection with a bona fide margin account and, if required under the terms of such agreement or account, such Investor may transfer pledged or secured Shares to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval or consent of the Company and no legal opinion of legal counsel to the pledgee, secured party or pledgors shall be required in connection with the pledge, but such legal opinion may be required in connection with a subsequent transfer following default by the Investor transferee of the pledge. No notice shall be required of such pledge. At the appropriate Investor’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Shares may reasonably request in connection with a pledge or transfer of the Shares, including the preparation and filing of any required prospectus supplement under Rule 424(b) under the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of selling stockholders thereunder. Except as otherwise provided in Section 4.1(c), any Shares subject to a pledge or security interest as contemplated by this Section 4.1(b) shall continue to bear the legend set forth in this Section 4.1(b) and be subject to the restrictions on transfer set forth in Section 4.1(a).

(c) Certificates evidencing Shares and 2009 Make Good Shares, if 2009 Make Good Shares are due to be delivered to Investors or their transferees pursuant to the Transaction Documents (collectively, the “Securities”), shall not contain any legend (including the legend set forth in Section 4.1(b)): (i) while a registration statement (including the Registration Statement) covering such Securities is then effective (provided, however, that the Company reserves the right to issue stop transfer instructions to the transfer agent (with a copy to the Investors) with respect to the Securities in the event that the Registration Statement with respect to the Securities is no longer current) or (ii) following a sale or transfer of such Securities pursuant to Rule 144 (assuming the transferee is not an Affiliate of the Company), or (iii) while such Securities are eligible for sale by the selling Investor without volume restrictions under Rule 144. The Company agrees that following the Effective Date or such other time as legends are no longer required to be set forth on certificates representing Securities under this Section 4.1(c), it will, no longer than three Trading Days following the delivery by an Investor to the Company or the Transfer Agent of a certificate representing such Securities containing a restrictive legend, deliver or cause to be delivered to such investor Securities which are free of all restrictive and other legends. If the Company is then eligible, certificates for Securities subject to legend removal hereunder shall be transmitted by the Transfer to an Investor by crediting the prime brokerage account of such Investor with the Depository Trust Company System as directed by such Investor. If an Investor shall make a sale or transfer of Securities either (x) pursuant to Rule 144 or (y) pursuant to a registration statement and in each case shall have delivered to the Company or the Company’s transfer agent the certificate representing Securities containing a restrictive legend which are the subject of such sale or transfer and a representation letter in customary form (the date of such sale or transfer and Securities delivery being the “Share Delivery Date”) and (1) the Company shall fail to deliver or cause to be delivered to such Investor a certificate representing such Securities that is free from all restrictive or other legends by the third Trading Day following the Share Delivery Date and (2) following such third Trading Day after the Share Delivery Date and prior to the time such Securities are received free from restrictive legends, the Investor, or any third party on behalf of such Investor, purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Investor of such Shares (a "Buy-In"), then the Company shall pay in cash to the Investor (for costs incurred either directly by such Investor or on behalf of a third party) the amount by which the total purchase price paid for Common Stock as a result of the Buy-In (including brokerage commissions, if any) exceed the proceeds received by such Investor as a result of the sale to which such Buy-In relates. The Investor shall provide the Company written notice indicating the amounts payable to the Investor in respect of the Buy-In. The Company may not make any notation on its records or give instructions to any transfer agent of the Company that enlarge the restrictions on transfer set forth in this Section.

4.2. Furnishing of Information. As long as any Investor owns the Securities, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. As long as any Investor owns Securities, if the Company is not required to file reports pursuant to such laws, it will prepare and furnish to the Investors and make publicly available in accordance with Rule 144(c) such information as is required for the Investors to sell the Securities under Rule 144. The Company further covenants that it will take such further action as any holder of Securities may reasonably request, all to the extent required from time to time to enable such Person to sell the Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144.

4.3. Integration. The Company shall not, and shall use its best efforts to ensure that no Affiliate of the Company shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities to the Investors, or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market in a manner that would require stockholder approval of the sale of the Securities to the Investors.

4.4. Subsequent Registrations. Except as set forth on Schedule 4.4, the Company may not file any registration statement (other than on Form S-8 and Form S-4) with the Commission with respect to any securities of the Company prior to the time that all Shares are registered pursuant to one or more effective Registration Statement(s), and the prospectuses forming a portion of such Registration Statement(s) is available for the resale of all Shares.

4.5. Securities Laws Disclosure; Publicity. By 9:00 a.m. (New York time) on the Trading Day following the Closing Date, the Company shall issue a press release disclosing the transactions contemplated hereby and the Closing (including, without limitation, details with respect to the make good provision and thresholds contained in Section 4.11 herein). Within four Trading Days following the Closing Date the Company will file a Current Report on Form 8-K disclosing the material terms of the Transaction Documents, including details with respect to the make good provision and thresholds contained in Section 4.11 herein (and attach as exhibits thereto the Transaction Documents) and the Closing. The Company shall make the foregoing disclosure such that following such disclosure, the Investors shall no longer be in possession of any material, non-public information with respect to the Company. In addition, the Company will make such other filings and notices in the manner and time required by the Commission and the Trading Market on which the Common Stock is listed. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Investor, or include the name of any Investor in any filing with the Commission (other than the Registration Statement and any exhibits to filings made in respect of this transaction in accordance with periodic filing requirements under the Exchange Act) or any regulatory agency or Trading Market, without the prior written consent of such Investor, except to the extent such disclosure is required by law or Trading Market regulations.

4.6. Limitation on Issuance of Future Priced Securities. During the six months following the Closing Date, the Company shall not issue any “Future Priced Securities” as such term is described by NASD IM-4350-1.

4.7. Indemnification of Investors. In addition to the indemnity provided in the Registration Rights Agreement, the Company Entities will jointly and severally, indemnify and hold the Investors and their directors, officers, shareholders, members, partners, employees and agents (each, an “Investor Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs, disbursements and expenses, including all judgments, arbitral awards, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation (collectively, “Losses”) that any such Investor Party may suffer or incur as a result of or relating to any misrepresentation, breach or inaccuracy of any representation, warranty, covenant or agreement made by any Company Entities in any Transaction Document. In addition to the indemnity contained herein, the Company Entities will jointly and severally, reimburse each Investor Party for its reasonable legal and other expenses (including the cost of any investigation, preparation and travel in connection therewith) incurred in connection therewith, as such expenses are incurred. Except as otherwise set forth herein, the mechanics and procedures with respect to the rights and obligations under this Section 4.7 shall be the same as those set forth in Section 5 of the Registration Rights Agreement.

4.8. Non-Public Information. The Company covenants and agrees that neither it, any Company Entity nor any other Person acting on its or their behalf will provide any Investor or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto such Investor shall have executed a written agreement regarding the confidentiality and use of such information. The Company understands and confirms that each Investor shall be relying on the foregoing representations in effecting transactions in securities of the Company.

4.9. Listing of Securities. The Company agrees (i) if the Company applies to have the Common Stock traded on any other Trading Market, it will include in such application the Securities, and will take such other action as is necessary or desirable to cause the Securities to be listed on such other Trading Market as promptly as possible, and (ii) the Company will take all action reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market and will comply in all material respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market.

4.10. Use of Proceeds. The Company will use the net proceeds from the sale of the Shares hereunder for working capital purposes and not for the satisfaction of any portion of the Company’s debt (other than payment of trade payables and accrued expenses in the ordinary course of the Company’s business and consistent with prior practices and the WOFE Purchase Price as referred to in Article 4.20 below), or to redeem any Common Stock or Common Stock Equivalents (other than a redemption of 246,148 shares of Common Stock for $550,000 in connection with the closing under the Exchange Agreement).

4.11. Make Good Shares.

(a) The Make Good Pledgor agrees that in the event that either (i) the Earnings Per Share (as defined below) reported in the 2009 Annual Report is less than 2009 Guaranteed EPS or (ii) the After Tax Net Income (as defined below) reported in the 2009 Annual Report is less than $12,000,000 (the “2009 Guaranteed ATNI”), the Make Good Pledgor will transfer (in accordance with the Make Good Escrow Agreement) to the Investors on a pro-rata basis (determined by dividing each Investor’s Investment Amount by the aggregate of all Investment Amounts delivered to the Company by the Investors hereunder) for no consideration other than payment of their respective Investment Amount paid at Closing, the 2009 Make Good Shares. “After Tax Net Income” shall mean the Company’s income after taxes for the fiscal year ending June 30, 2009 determined in accordance with GAAP as reported in the 2009 Annual Report. “Earnings Per Share” shall mean the Company’s After Tax Net Income divided by the number of shares of common stock of the Company outstanding on a fully diluted basis. In the event that the After Tax Net Income reported in the 2009 Annual Report is equal to or greater than the 2009 Guaranteed ATNI and the Earnings Per Share is greater than the 2009 Guaranteed EPS, no transfer of the 2009 Make Good Shares shall be required by the Make Good Pledgor to the Investors and such 2009 Make Good Shares shall be returned in accordance with the Make Good Escrow Agreement. Any such transfer of the 2009 Make Good Shares shall be made within ten (10) Business Days after the date which the 2009 Annual Report is filed. Notwithstanding anything to the contrary contained herein, in determining whether the Company has achieved the 2009 Guaranteed ATNI or 2009 Guaranteed EPS, the Company may disregard any compensation charge or expense required to be recognized by the Company under GAAP resulting from the release of the 2009 Make Good Shares to Make Good Pledgor if and to the extent such charge or expense is specified in the Company’s independent auditor’s report for the relevant year, as filed with the Commission. No other exclusions shall be made for any non-recurring expenses of the Company, including liquidated damages under the Transaction Documents, in determining whether 2009 Guaranteed ATNI or 2009 Guaranteed EPS have been achieved. If prior to the second anniversary of the filing of the 2009 Annual Report, the Company or their auditors report or recognize that the financial statements contained in such report are subject to amendment or restatement such that the Company would recognize or report adjusted after tax net income of less than the 2009 Guaranteed ATNI or Earnings Per Share of less than the 2009 Guaranteed EPS, as applicable, then notwithstanding any prior return of 2009 Make Good Shares to the Make Good Pledgor, the Make Good Pledgor will, within 10 Business Days following the earlier of the filing of such amendment or restatement or recognition, deliver the 2009 Make Good Shares to the Investors.

(b) In connection with the foregoing, the Make Good Pledgor agrees that within three Trading Days following the Closing, the Make Good Pledgor will deposit all potential 2009 Make Good Shares into escrow in accordance with the Make Good Escrow Agreement along with bank signature stamped stock powers executed in blank (or such other signed instrument of transfer acceptable to the Company’s transfer agent), and the handling and disposition of the 2009 Make Good Shares shall be governed by this Section 4.11 and the Make Good Escrow Agreement. The Company shall notify the Investors as soon as the 2009 Make Good Shares have been deposited with the Make Good Escrow Agent. The Make Good Pledgor hereby agrees that his obligation to transfer shares of Common Stock to Investors pursuant to this Section 4.11 and the Make Good Escrow Agreement shall continue to run to the benefit of each Investor even if such Investor shall have transferred or sold all or any portion of its Shares, and that each Investor shall have the right to assign its rights to receive all or any such shares of Common Stock to other Persons in conjunction with negotiated sales or transfers of any of its Shares.

(c) The Company covenants and agrees that upon any transfer of 2009 Make Good Shares to the Investors in accordance with the Make Good Escrow Agreement, the Company shall promptly instruct its transfer agent to reissue such 2009 Make Good Shares in the applicable Investor’s name and deliver the same as directed by such Investor.

(d) If any term or provision of this Section 4.11 is in contradiction of or conflicts with any term or provision of the Make Good Escrow Agreement, the terms of the Make Good Escrow Agreement shall control.

4.12. Independent Board of Directors. The Company covenants and agrees that no later than 120 days following the Closing Date, the Board of Directors of the Company shall be comprised of a minimum of five members, a majority of which shall be “independent directors” as such term is defined in NASDAQ Marketplace Rule 4200(a)(15). The Company agrees that $2,000,000 (the “Board Holdback Escrow Amount”) shall be held in escrow pursuant to the Holdback Escrow Agreement until such time as the Company complies with its obligations under this Section 4.12. If for any reason or for no reason whatsoever, the Escrow Agent does not receive the written notice contemplated by the Holdback Escrow Agreement from the Company and the Investors then holding a majority of the Shares relating to either the release of (i) the Board Holdback Escrow Amount prior to 125 calendar days following the Closing Date or (ii) CFO Holdback Escrow Amount prior to 95 calendar days following the Closing Date (each such failure or breach being referred to as an “Event,” and for purposes of this section the date such Event occurs being referred to as “Event Date”), then in addition to any other rights the Investors may have hereunder or under applicable law, on each such Event Date and on each monthly anniversary of such Event Date (if the applicable Event shall not have been cured by such date) until the applicable Event is cured, the Company shall pay to each Investor by wire transfer an amount in immediately available funds, as partial liquidated damages and not as a penalty, equal to 1% of the aggregate Investment Amount paid by such Investor for Shares pursuant to this Agreement. The partial liquidated damages payable under this Section 4.12 shall be independent of any other damages payable under this Agreement or any other Transaction Document and shall apply on a daily pro-rata basis for any portion of a month prior to the cure of an Event. In no event will the Company be liable for partial liquidated damages in excess of 1% of the aggregate Investment Amount of the Investors in any 30-day period in respect of any single Event (it being understood that if the Company suffers an Event relating to its failure to comply with this Section 4.12 and an Event relating to its failure to comply with Section 4.15 in a 30-day period it will be responsible for 2% of liquidated damages in a 30-day period). It is further understood that the partial liquidated damages contemplated hereby are limited to the Board Holdback Escrow Amount as to that Event and the CFO Holdback Escrow Amount as to that Event; provided that the Investors are entitled to all other remedies available under applicable law. On any Event Date, the Company will deliver to each Investor a written notice which shall set forth the relevant Event. If any term or provision of this Section 4.12 as to the Board Holdback Escrow Amount and/or partial liquidated damages is in contradiction of or conflicts with any term or provision of the Holdback Escrow Agreement relating thereto, the terms of the Holdback Escrow Agreement shall control.

4.13. Third Party Hiring. By the thirtieth day following the Closing Date, the Company shall hire either of CCG Elite, Hayden Communications, or Integrated Corporate Relations as the Company’s investor relations firm. The Company agrees that $250,000 (the “IR Holdback Escrow Amount”) shall be held in escrow pursuant to the Holdback Escrow Agreement until such time as the Company complies with its obligations under this Section 4.13. If any term or provision of this Section 4.13 as to the IR Holdback Escrow Amount is in contradiction of or conflicts with any term or provision of the Holdback Escrow Agreement relating thereto, the terms of the Holdback Escrow Agreement shall control.

4.14. Right of First Refusal.

(a) From the date hereof until the first anniversary of the effective date of the Registration Statement (plus one additional day for each Trading Day following the Effective Date of any Registration Statement during which either (1) the Registration Statement is not effective or (2) the prospectus forming a portion of the Registration Statement is not available for the resale of all Registrable Securities (as defined in the Registration Rights Agreement)), the Company will not, directly or indirectly, offer, sell, grant any option to purchase, or otherwise dispose of (or announce any offer, sale, grant or any option to purchase or other disposition of) any of its or its Subsidiaries' equity or equity equivalent securities, including, without limitation, any debt, preferred stock or other instrument or security that is, at any time during its life and under any circumstances, convertible into or exchangeable or exercisable for shares of Common Stock or Common Stock Equivalents (any such offer, sale, grant, disposition or announcement being referred to as a "Subsequent Placement") unless the Company shall have first complied with this Section 4.14. If the Company desires to sell any securities it shall deliver to each of the Investors a written notice to such effect specifying the general terms of the offering the Company desires to make and for a period of at least twenty Business Days after the giving of such notice the Company agrees to negotiate in good faith with any Investors responding to such notice the terms of a sale of the Company’s securities to such responding Investors.

(b) In the event that the Company shall receive an unsolicited offer regarding the purchase of the Company’s securities, the Company shall deliver to each Investor hereunder a written notice (the "Offer Notice") of any proposed or intended issuance or sale or exchange (the "Offer") of the securities being offered (the "Offered Securities") in a Subsequent Placement, which Offer Notice shall (v) identify and describe the Offered Securities, (w) specify the price and other terms upon which the Offered Securities are to be issued, sold or exchanged, and the number or amount of the Offered Securities to be issued, sold or exchanged, (x) identify the persons or entities (to the extent known) to which or with which the Offered Securities are to be offered, issued, sold or exchanged and (y) offer to issue and sell to or exchange with such Investors all of the Offered Securities, allocated among such Investors (i) based on such Investor's pro rata portion of the total Investment Amount hereunder (the "Basic Amount"), and (ii) with respect to each Investor that elects to purchase its Basic Amount, any additional portion of the Offered Securities attributable to the Basic Amounts of other Investors as such Investor shall indicate it will purchase or acquire should the other Investors subscribe for less than their Basic Amounts (the "Undersubscription Amount"), which process shall be repeated until the Investors shall have an opportunity to subscribe for any remaining Undersubscription Amount.

(c) To accept an Offer, in whole or in part, such Investor must deliver a written notice to the Company prior to the end of the fifth Business Day after such Investor's receipt of the Offer Notice (the "Offer Period"), setting forth the portion of such Investor's Basic Amount that such Investor elects to purchase and, if such Investor shall elect to purchase all of its Basic Amount, the Undersubscription Amount, if any, that such Investor elects to purchase (in either case, the "Notice of Acceptance"). If the Basic Amounts subscribed for by all Investors are less than the total of all of the Basic Amounts, then each Investor who has set forth an Undersubscription Amount in its Notice of Acceptance shall be entitled to purchase, in addition to the Basic Amounts subscribed for, the Undersubscription Amount it has subscribed for; provided, however, that if the Undersubscription Amounts subscribed for exceed the difference between the total of all the Basic Amounts and the Basic Amounts subscribed for (the "Available Undersubscription Amount"), each Investor who has subscribed for any Undersubscription Amount shall be entitled to purchase only that portion of the Available Undersubscription Amount as the Basic Amount of such Investor bears to the total Basic Amounts of all Investors that have subscribed for Undersubscription Amounts, subject to rounding by the Company to the extent its deems reasonably necessary.

(d) The Company shall have twenty Business Days from the expiration of the Offer Period above to (i) offer, issue, sell or exchange the Offered Securities as to which a Notice of Acceptance has not been given by the Investors (the “Refused Securities”) but only to the offerees described in the Offer Notice (if so described therein) and only upon terms and conditions (including, without limitation, unit prices and interest rates) that are not more favorable to the acquiring person or persons or less favorable to the Company than those set forth in the Offer Notice and (ii) to publicly announce (a) the execution of such Subsequent Placement Agreement (as defined below), and (b) either (x) the consummation of the transactions contemplated by such Subsequent Placement Agreement or (y) the termination of such Subsequent Placement Agreement, which shall be filed with the Commission on a Current Report on Form 8-K with such Subsequent Placement Agreement and any documents contemplated therein filed as exhibits thereto. If no disclosure has been made by the Company by the end of the twenty Business Day period referred to in this subsection (d), the Subsequent Placement shall be deemed to have been abandoned and the Investors shall no longer be deemed to be in possession of any non-public information with respect to the Company. The purchase by the Investors of any Offeree Securities is subject in all cases to the preparation, execution and delivery by the Company and the Investors of a purchase agreement relating to such Offered Securities reasonably satisfactory in form and substance to the Investors and their respective counsel (such agreement, the “Subsequent Placement Agreement.”)

(e) In the event the Company shall propose to sell less than all the Refused Securities (any such sale to be in the manner and on the terms specified in this Section 4.15), then each Investor may, at its sole option and in its sole discretion, reduce the number or amount of the Offered Securities specified in its Notice of Acceptance to an amount that shall be not less than the number or amount of the Offered Securities that such Investor elected to purchase pursuant to Section 4.15(c) above multiplied by a fraction, (i) the numerator of which shall be the number or amount of Offered Securities the Company actually proposes to issue, sell or exchange (including Offered Securities to be issued or sold to Investors pursuant to Section 4.15(c) above prior to such reduction) and (ii) the denominator of which shall be the original amount of the Offered Securities. In the event that any Investor so elects to reduce the number or amount of Offered Securities specified in its Notice of Acceptance, the Company may not issue, sell or exchange more than the reduced number or amount of the Offered Securities unless and until such securities have again been offered to the Investors in accordance with Section 4.15(b) above.

(f) Upon the closing of the issuance, sale or exchange of all or less than all of the Refused Securities, the Investors shall acquire from the Company, and the Company shall issue to the Investors, the number or amount of Offered Securities specified in the Notices of Acceptance, as reduced pursuant to Section 4.15(e) above if the Investors have so elected, upon the terms and conditions specified in the Offer.

(g) Any Offered Securities not acquired by the Investors or other persons in accordance with Section 4.15(d) above may not be issued, sold or exchanged until they are again offered to the Investors under the procedures specified in this Agreement.

(h) In exchange for the Company’s willingness to agree to these procedures, each Investor hereby irrevocably agrees that it will hold in strict confidence any and all Offer Notices, the information contained therein, and the fact that the Company is contemplating a Subsequent Placement, until such time as the Company is obligated to make the disclosures required by Section 4.15(d), or unless it notifies the Company in writing that it no longer desires to receive Offer Notices.

4.15. Chief Financial Officer. No later than three months following the Closing Date, the Company will hire a chief financial officer (“CFO”) who is a certified public accountant or possesses experience such that he or she can reasonably serve as a chief financial officer, fluent in English, and who has a working familiarity with (i) US GAAP and (ii) auditing procedures and compliance for United States public companies. In the event that the proposed CFO is not a certified public accountant, who is fluent in English and an expert in GAAP and auditing procedures and compliance for United States public companies, then such proposed CFO shall be subject to Pinnacle’s reasonable approval. The Company shall enter into an employment agreement with the CFO for a term of no less than two years. Should the CFO be dismissed at any time prior to two years from the Closing Date, the Company shall replace the CFO with a Chief Financial Officer who fits the criteria set forth herein as soon as practicable. By 9:00 a.m. (New York time) on the fourth Trading Day following the hiring of such chief financial officer, the Company will file a Current Report on Form 8-K disclosing the information required by Item 5.02 of Form 8-K. The Company shall deposit $2,000,000 to be held in escrow (the “CFO Holdback Escrow Amount”) in accordance with the terms of the Holdback Escrow Agreement pending compliance with this provision. If any term or provision of this Section 4.15 as to the CFO Holdback Escrow Amount is in contradiction of or conflicts with any term or provision of the Holdback Escrow Agreement relating thereto, the terms of the Holdback Escrow Agreement shall control.

4.16. Liquidated Damages for Governmental Rescission of the Transaction. If any governmental agency in the PRC challenges or otherwise takes any action that adversely affects the transactions contemplated by the Exchange Agreement, and the Company cannot undo such governmental action or otherwise address the material adverse effect to the reasonable satisfaction of the Investors within sixty (60) days of the occurrence of such governmental action, then, upon written demand from an Investor, the Company shall promptly, and in any event within thirty (30) days from the date of such written demand, pay to that Investor, as liquidated damages, an amount equal to that Investor’s entire Investment Amount with interest thereon from the Closing date until the date paid at the rate of 10% per annum. As a condition to the receipt of such payment, the Investor shall return to the Company for cancellation the certificates evidencing the Shares acquired by the Investor under the Agreement.

4.17. Further Assurances. The Company will, and will cause all of the Company Entities and their management to, use their best efforts to satisfy all of the closing conditions under Section 5.1, and will not take any action which could frustrate or delay the satisfaction of such conditions. In addition, either prior to or following the Closing, each Existing Company Entity signatory hereto will, and will cause each other Company Entity and its management to, perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

4.19 Insurance. Within sixty (60) days following the Closing Date, each Existing Company Entity shall become insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which it is engaged and as may be necessary to continue its business on terms consistent with market for the Company’s and such other Existing Company Entity’s respective lines of business.

4.20 Completion of WOFE Purchase and Increase of WOFE’s Registered Capital.

(a) Completion of WOFE Purchase. By the 20^th day following the Closing Date, the Company shall complete the WOFE Purchase. In order to complete the WOFE Purchase, the Company and Green agree to transmit approximately $4,000,000 (“WOFE Purchase Price”) to the accounts of the former WOFE shareholders and complete additional filings and registrations, including obtaining a new business license and certificate from the PRC State Administration of Foreign Exchange reflecting the completion of the payment of the Purchase Price. The Company Entities represent and warrant that the former WOFE shareholders have agreed that they will not retain the WOFE Purchase Price and have issued an instruction that the PRC State Administration of Foreign Exchange, Xi’An branch, transmit the WOFE Purchase Price, when received, to the WOFE. In furtherance of the Company’s obligations under this Section, by the 20^th day following the Closing Date, the Company shall provide the Investors with evidence reasonably acceptable to them that the aggregate registered capital deficit (the WOFE Purchase Price) has been paid by providing a copy of the new business license evidencing that the aggregate capital deficit (the WOFE Purchase Price) has been paid as described above.

(b) Completion of the Increase of WOFE’s Registered Capital. By the 65^th day following the Closing Date, the Company shall complete the increase of WOFE’s registered capital from approximately $4,000,000 to such amount as necessary to accommodate the net proceeds of the sale of Shares under this Agreement. The WOFE is to receive all necessary documentation evidencing the completion of the registered capital increase including the approval from provincial commercial bureau, a new business license from the local State Administration of Industrial and Commerce and an updated certificate from PRC State Administration of Foreign Exchange, Xi’An branch.

4.21 The Trademarks of the WOFE. For any Intellectual Property Rights that are owned in the name of any predecessor of the WOFE, the WOFE shall complete the change of the registered owner from that of the WOFE’s predecessor to the WOFE’s current name, address and other related updates which is required by PRC Trademark Offices within 18 months of the Closing Date (the“Compliance Period”) as evidenced by a written notice certifying the completion of the change of registered owner information (the “Notice”) from the PRC Trademark Offices (the date which is 18 months following the Closing Date, the “Compliance Notice Date”). A copy of the Notice shall be promptly provided to the Investors. If for any reason or for no reason whatsoever, the WOFE does not receive the Notice from the PRC Trademark Offices and provide such evidence to the Investors within the Compliance Period, then on the Compliance Notice Date and on each monthly anniversary thereof (until the WOFE provides a copy of the Notice to the Investors) the Company shall pay to each Investor by wire transfer an amount in immediately available funds, as partial liquidated damages and not as a penaltyequal to 0.5% of the aggregate Investment Amount paid by such Investor for Shares pursuant to this Agreement. The partial liquidated damages pursuant to the terms of this Section 4.21 shall be independent of any other damages payable under this Agreement or any other Transaction Document and shall apply on a daily pro-rata basis for any portion of a month prior to the time the Investors are provided a copy of the Notice.

ARTICLE 5.

CONDITIONS PRECEDENT TO CLOSING

5.1. Conditions Precedent to the Obligations of the Investors to Purchase Shares. The obligation of each Investor to acquire Shares at the Closing is subject to the satisfaction or waiver by such Investor, at or before the Closing, of each of the following conditions:

(a) Representations and Warranties. The representations and warranties of the Existing Company Entities contained herein shall be true and correct in all material respects as of the date when made and as of the Closing as though made on and as of such date;

(b) Performance. The Existing Company Entities shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents and the Exchange Agreement to be performed, satisfied or complied with by it at or prior to the Closing;

(c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents and the Exchange Agreement;

(d) Adverse Changes. Since the date of execution of this Agreement, no event or series of events shall have occurred that reasonably could have or result in a Material Adverse Effect or a material adverse change with respect to the Subsidiaries;

(e) WOFE Financial Statements. WOFE shall have completed and delivered audited consolidated financial statements for the fiscal years ended June 30, 2006 and 2007 to the Company and the Investors and shall have received an audit report from an independent audit firm that is registered with the Public Company Accounting Oversight Board relating to the fiscal years ended June 30, 2006 and 2007, a copy of which shall be promptly provided to the Investors (collectively, the “WOFE Financial Statements”);

(f) WOFE Intellectual Property Rights. The WOFE shall provide to the Investors evidence acceptable to the Investors that all Intellectual Property Rights are either (i) validly owned by the WOFE, or (ii) (a) if owned by any Person other than the WOFE or its predecessor, subject to valid and binding Intellectual Property Right Licensing Agreements which may not be terminated for any reason until any such Intellectual Property Right covered thereby is validly owned by the WOFE, or (b) if owned by the predecessor of the WOFE, the application for the change of the registered owner information from that of the WOFE’s predecessor to the WOFE’s current name, address and other related updates which is or may be required by relevant PRC authorities in charge of such Intellectual Property is submitted by the WOFE to the relevant PRC authority on or before the Closing.

(g) PRC Opinion. The Company shall have delivered to the Investors, and the Investors shall be able to rely upon, the legal opinions that the Company shall have received from its legal counsel in the PRC (which, among other things, shall confirm the legality under applicable PRC law of the WOFE and the applicability of SAFE Circular 75, Circular 106 and the September 8 Merger and Acquisition Rules) with such legal opinions being in a form acceptable to the Investors in their sole discretion.

(h) Exchange Agreement and Form 8-K. Concurrently with or immediately prior to the Closing, (i) the Company shall have completed the acquisition of all of the outstanding capital stock of Green pursuant to the Exchange Agreement, and (ii) the Company shall have provided the Investors with the Current Report on Form 8-K to be filed in accordance with the Exchange Agreement, containing the audited financial statements of Green and other required disclosure with respect to Green and WOFE, provided that, prior to the filing of such Current Report, the Company shall give the Investors a meaningful opportunity to review and comment on the draft thereof and incorporate in good faith any comments from the Investors reasonably acceptable to the Company;

(i) Derivative Securities. Any issued and outstanding options, convertible notes or other securities of the Company that are exercisable or exchangeable for or convertible into Common Stock shall have been exercised, converted or exchanged for Common Stock in a manner satisfactory to the Investors;

(j) Closing Officer’s Certificate. At the Closing, the Company shall have delivered to each Investor an officer’s certificate to the effect that each of the conditions specified in Sections 5.1(a) - 5.1(i) is satisfied in all respects.

(k) Company Deliverables. The Company shall have delivered the Company Deliverables in accordance with Section 2.2(a); and

(l) Termination. This Agreement shall not have been terminated as to such Investor in accordance with Section 6.5.

(m) Minimum/Maximum. The Company shall have delivered to each Investor signature pages to this Agreement indicating that the aggregate Investment Amount payable to the Company hereunder on the Closing Date is not less than $20,000,000 and no more than $26,000,000.

5.2. Conditions Precedent to the Obligations of the Company to Sell Shares. The obligation of the Company to sell Shares at the Closing is subject to the satisfaction or waiver by the Company, at or before the Closing, of each of the following conditions:

(a) Representations and Warranties. The representations and warranties of each Investor contained herein shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made on and as of such date;

(b) Performance. Each Investor shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by such Investor at or prior to the Closing;

(d) Exchange Agreement. Concurrently with or immediately prior to the Closing, the Company shall have acquired all of the outstanding capital stock of Green pursuant to the Exchange Agreement.

(e) Investors Deliverables. Each Investor shall have delivered its Investors Deliverables in accordance with Section 2.2(b); and

(f) Termination. This Agreement shall not have been terminated as to such Investor in accordance with Section 6.5.

ARTICLE 6.

MISCELLANEOUS

6.1. Fees and Expenses. At the Closing, the Company shall reimburse Pinnacle upon presentation to the Company of a summary invoice therefor which is addressed to Pinnacle by its counsel, up to $60,000 for Pinnacle’s legal fees in connection with the transactions contemplated by the Transaction Documents (Pinnacle may deduct such amount from the Investment Amount deliverable to the Company at Closing), it being understood that Bryan Cave LLP has only rendered legal advice to Pinnacle, and not to the Company or any other Investor in connection with the transactions contemplated hereby, and that each of the Company and the other Investors has relied for such matters on the advice of its own respective counsel. In addition, the Company shall at the Closing pay to Pinnacle, upon presentation to the Company of reasonable documentation therefor, not more than $7,500 to reimburse Pinnacle for its out-of-pocket due diligence expenses in connection with the transactions contemplated by the Transaction Documents. Except as specified in the immediately preceding two sentences and as described in Section 6.4, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of the Transaction Documents. The Company shall pay all stamp and other taxes and duties levied in connection with the sale of the Shares. In the event that any waivers or amendments are required with respect to any Transaction Document or the transactions contemplated thereby, the Company covenants to reimburse Pinnacle for reasonable legal expenses incurred in connection therewith.

6.2. Entire Agreement. The Transaction Documents, together with the Exhibits and Schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements, understandings, discussions and representations, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

6.3. Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile (provided the sender receives a machine-generated confirmation of successful transmission) at the facsimile number specified in this Section prior to 6:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, or (c) upon actual receipt by the party to whom such notice is required to be given, if sent by any means other than facsimile transmission. The address for such notices and communications shall be as follows:

	If to the Company:		Discovery Technologies, Inc
			45 Old Millstone Drive, Unit 6,
			East Windsor, NJ 08520
			Attn: Mr. Yinshing David To

	With a copy to:		Guzov Ofsink, LLC
			600 Madison Avenue, 14^th Floor
			New York, New York 10022
			Facsimile: (212) 688-7273
			Attn.: Darren L. Ofsink, Esq.

	If to an Investor:		To the address set forth under such Investor’s name on the signature pages hereof;

	With a copy to:		Bryan Cave LLP
	(only for notices		1290 Avenue of the Americas
	to investors)		New York, New York 10104
			Facsimile: (212) 541-4630
			Email: elcohen@bryancave.com
			Attn.: Eric L. Cohen, Esq.

or such other address as may be designated in writing hereafter, in the same manner, by such Person.

6.4. Amendments; Waivers; No Additional Consideration. No provision of this Agreement may be waived or amended except in a written instrument signed by the Company and the Investors holding a majority of the Shares. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right. No consideration shall be offered or paid to any Investor to amend or consent to a waiver or modification of any provision of any Transaction Document unless the same consideration is also offered to all Investors who then hold Shares. The Company shall pay for any fees, including reasonable attorney’s fees for one counsel representing the Investors, incurred by the Investors in connection with any amendment to a Transaction Document.

6.5. Termination. This Agreement may be terminated prior to Closing:

(a) by written agreement of the Investors holding a majority of the Shares to be issued at Closing pursuant to the terms hereof and the Company; and

(b) by an Investor (as to itself but no other Investor) upon written notice to the Company, if the Closing shall not have taken place by 6:30 p.m. Eastern time on the Closing Date; provided, that the right to terminate this Agreement under this Section 6.5(b) shall not be available to any Person whose failure to comply with its obligations under this Agreement has been the cause of or resulted in the failure of the Closing to occur on or before such time.

In the event of a termination pursuant to Section 6.5(a) upon delivery of a joint written notice from the Company and the Investors to the Escrow Agent or in the event of a termination pursuant to Section 6.5(b) upon delivery of written notice by an Investor to the Escrow Agent, such Investor shall have the right to a return of up to its entire Investment Amount deposited with the Escrow Agent pursuant to Section 2.2(b)(i), without interest or deduction. The Company covenants and agrees to cooperate with such Investor in obtaining the return of its Investment Amount, and shall not communicate any instructions to the contrary to the Escrow Agent.

In the event of a termination pursuant to this Section, the Company shall promptly notify all non-terminating Investors. Upon a termination in accordance with this Section 6.5, the Company and the terminating Investor(s) shall not have any further obligation or liability (including as arising from such termination) to the other and no Investor will have any liability to any other Investor under the Transaction Documents as a result therefrom.

6.6. Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. This Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement or any of the Transaction Documents.

6.7. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Investors. Any Investor may assign any or all of its rights under this Agreement to any Person to whom such Investor assigns or transfers any Shares, provided such transferee agrees in writing to be bound, with respect to the transferred Shares, by the provisions hereof that apply to the “Investors.” Notwithstanding anything to the contrary herein, for the avoidance of doubt, each Investor may freely transfer any Shares to any Person (including its Affiliates or any investment fund sponsored or advised by such Investor) without the consent of any of the Existing Company Entities or any other Investor.

6.8. No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.7 (as to each Investor Party).

6.9. Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective Affiliates, employees or agents) shall be commenced exclusively in the New York Courts. Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of the any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Proceeding, any claim that it is not personally subject to the jurisdiction of any such New York Court, or that such Proceeding has been commenced in an improper or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence a Proceeding to enforce any provisions of a Transaction Document, then the prevailing party in such Proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Proceeding.

6.10. Survival. The representations, warranties, agreements and covenants contained herein shall survive the Closing and the delivery of the Shares.

6.11. Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof.

6.12. Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.

6.13. Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents, whenever any Investor exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Investor may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.

6.14. Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity, if requested. The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Securities. If a replacement certificate or instrument evidencing any Securities is requested due to a mutilation thereof, the Company may require delivery of such mutilated certificate or instrument as a condition precedent to any issuance of a replacement.

6.15. Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Investors and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing sentence and hereby agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

6.16. Payment Set Aside. To the extent that the Company makes a payment or payments to any Investor pursuant to any Transaction Document or an Investor enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

6.17. Independent Nature of Investors’ Obligations and Rights. The obligations of each Investor under any Transaction Document are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under any Transaction Document. The decision of each Investor to purchase Shares pursuant to the Transaction Documents has been made by such Investor independently of any other Investor. Nothing contained herein or in any Transaction Document, and no action taken by any Investor pursuant thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Investor acknowledges that no other Investor has acted as agent for such Investor in connection with making its investment hereunder and that no Investor will be acting as agent of such Investor in connection with monitoring its investment in the Shares or enforcing its rights under the Transaction Documents. Each Investor shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Investor to be joined as an additional party in any proceeding for such purpose. The Company acknowledges that each of the Investors has been provided with the same Transaction Documents for the purpose of closing a transaction with multiple Investors and not because it was required or requested to do so by any Investor.

6.18. Limitation of Liability. Notwithstanding anything herein to the contrary, the Company acknowledges and agrees that the liability of an Investor arising directly or indirectly, under any Transaction Document of any and every nature whatsoever shall be satisfied solely out of the assets of such Investor, and that no trustee, officer, other investment vehicle or any other Affiliate of such Investor or any investor, shareholder or holder of shares of beneficial interest of such a Investor shall be personally liable for any liabilities of such Investor.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGES FOLLOW]

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of December 24, 2007.


	DISCOVERY TECHNOLOGIES, INC.

	By:	/s/ Tao Li
		Name: Tao Li
		Title: Chairman of the Board, President and Chief Executive Officer


	GREEN AGRICULTURE HOLDING CORPORATION

	By:	/s/ Yinshing David To
		Name: Yinshing David To
		Title: Director


	SHAANXI TECHTEAM JINONG HUMIC ACID PRODUCT CO., LTD.

	By:	/s/ Tao Li
		Name: Tao Li
		Title: Chairman of the Board, President and Chief Executive Officer


	Only as to Sections 3.1(bb), 4.11, 4.16 and 4.17 and Article 6 herein:

		/s/ Yinshing David To
		Yinshing David To


		/s/ Tao Li
		Tao Li

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as the date set forth above.

NAME OF INVESTOR

By:

Name:

Title:

Investment Amount: $

Tax ID No.:

ADDRESS FOR NOTICE

Attention:

Tel:

Fax: _____________________________________

Email: ____________________________________

DELIVERY INSTRUCTIONS

(if different from above)

c/o:

Street:

City/State/Zip:

Attention:

Tel:

Schedules to

Securities Purchase Agreement

dated as of December 24, 2007, by and among Discovery Technologies, Inc. a Nevada corporation, and all predecessors thereof (the “Company”), Green Agriculture Holding Corporation, a New Jersey corporation (“Green”), Shaanxi TechTeam Jinong Humic Acid Product Co., Ltd., a company organized under the laws of the People’s Republic of China (“WOFE”), and the investors identified on the signature pages hereto (each, an “Investor” and collectively, the “Investors”).

Schedule 3.1 (a) Subsidiary

Xi’an Jintai Agriculture Technology Development Company, a company incorporated in January 19, 2007 in the PRC is the wholly owned subsidiary of the WOFE, it serves as the WOFE’s research and development and experimental base. Its registered capital is RMB 1 million (approximately US$135,000)

Schedule 3.1 (g) Capitalization

Please refer to the Cap table in excel format.

Schedule 3.1(k) Litigation

Xi’an Techteam Science and Technology Industry (Group) Co., Ltd. (the “Group Company”), the former parent company of WOFE was a former 20% shareholder of Shanghai Li Ao Hi-Tech Investment Co., Ltd. (“Shanghai Li Ao”) as a nominee. The Group Company is substantially owned and controlled by Tao Li, the Chairman and CEO of WOFE.

Shanghai Li Ao invested monies in Xinjiang Delong Group. Some of the top management of Xinjiang Delong Group was convicted in the PRC in 2006 of illegally taking deposit accounts from investors and stock manipulation. At no time has the Group Company, Shanghai Li Ao, Tao Li, WOFE or any employee, officer or director thereof been charged with any wrongdoing in connection with this matter.

Schedule 3.1 (m) Indebtedness

Loan No.

Borrower

Amount

(million in RMB)

Dated

Term

Gurantee

Secured Property

Xi Shang Yin Xincheng Jie

Zi [2007] No. 010

Xi’an City Commercial Bank, Xincheng Branch

4/29/2007

4/29/2007~4/01/2008

Xishangyin Xincheng Bao Zi [2007] No. 010

Property Certificate No. Yang Guo Yong (2006) No.06

Building Certificate No. Yang Fang Quan Zheng Zi No. 20060030

Yang Nong Yin Jie Zi [2007] No. 001

Agricultural Bank of China, Yangling Branch

13.5

3/28/2007

3/28/2007~3/27/2008

Yang Nong Yin Bao Zi [2007] No. 001

None

Shannong Xin Jie Zi Beiwen No. [2007] No. 620

Xi’an Beilin District Country Credit Union North Wenyi Road Branch

3.8

9/18/2007

9/18/2007~9/16/2008

None

Mortgage of Building of another company Xi’an Xiansheng Info. Technology Co., Ltd., which is majority owned by Mr. Tao Li

Schedule 3.1 (o) Title to Assets

There is a mortgage over the following land use right and building owned by the WFOE for a loan of RMB15million with Xincheng Branch of Commercial Bank of Xi’an City as referred to under Schedule 3.1 (m).

	License No.	Area	Term

Property at Yangling	Yangguan Guo Yong [2006] No. 06	30,946.65 m²	Land use right valid through 01/2001-01/2051

Building at Yangling	No. 20060030	6494.91 m²	---

Schedule 3.1 (p) Patents and Trademarks

The following patents are in the process of application by the WFOE:

SN	Application Number	Date of Application	Applicant	Contents

1	200720031884.2	5/29/2007	Shaanxi Techteam Jinong Humici Acid Product Co.,Ltd	Production facility of Humic Acid Products

2	200710017334.x	2/1/2007	Shaanxi Techteam Jinong Humici Acid Product Co.,Ltd	Method and recipe of the water solube humic acid fertilizers

A. Xi’an Techteam Science and Technology Industry (Group) Co., Ltd. (the “Group Company”), a company Mr. Tao Li has controlling shares is the registered owner of the following trademark:

Jinong (“Farmers’ Helper”)

Registration number: No. 1357523

The Group Company is in the process of transferring the trademark to the WOFE. The application of the transfer with the PRC State Trademark Offices is dated October 15, 2007. There is a licensing agreement between the Group Company and the WOFE dated December 19, 2007 pursuant to which the Group Company granted an irrevocable, royalty free, exclusive license to the WOFE on the trademark of Jinong for the period from the date of the licensing agreement to the date on which the WOFE is transferred the trademark.

B. Yanglin Techteam Jinong Humic Acid Product Co., Ltd. (“Yanglin”), the predecessor of the WOFE, is the registered owner of the following trademark:

Libangnong (“Farmer’s Mighty Helper”)

Registration number: No.1503

Yanglin is in the process of updating the owner information records with the PRC State Trademark Offices. The application is dated August 23, 2007.

C. Yanglin is the registered owner of the following trademarks:

Zhimeizi (“Make Plants Grow with Luster”)		Registration number: No. 1504

Lepushi (“Make Farming Pleasant”)		Registration number: No. 1428

Yanglin is in preparing the application for the owner information records updating and expect to file the application by the Closing.

Schedule 3.1 (q) Insurance

SN	Insurance Category		Policy Number	Premium (RMB)	Insured Property Value (RMB)	Insurance Carrier	Term of the Policy
1	Social Insurance	Endowment Insurance	N/A	54.5.4/m/19 Persons	N/A	It is different with each employee when they contracted with the Insurance company at the beginning.	N/A
		Medical Insurance	N/A	1640.52/m/19 Persons	N/A
		Unemployment Insurance	N/A	696.83/m/19 Persons	N/A
		Maternity Insurance	N/A	106.25/m/19 Persons	N/A
		Industrial Injury Insurance	N/A	193.05/m/19 Persons	N/A
2	Assets Comprehensive Insurance	Fixed Assets	6005745	6,800.00	1,360,000.00	PICC Property and Causalty Company Limited,Shaanxi Branch	Expires on 12/29/2008
		Finished Products		2,000.00	400,000.00
		Packing Materials		1,000.00	200,000.00

Schedule 3.1 (r)

As of the date of this Agreement, the WOFE owes $135,947 to its officers and shareholders. Such advance from the officers and shareholders to the WOFE was unsecured, non-interest bearing and due on demand. The WOFE plans to pay the amount off by December 31, 2007.

Schedule 3.1 (s)

The Company intends to hire a chief financial officer who has experience with public accounting, the requirements of GAAP and the United States securities laws. The Company has not yet evaluated its internal controls over financial reporting in order to allow management to report on, and the independent auditors to attest to, its internal controls over financial reporting, as will be required by Section 404 of the Sarbanes-Oxley Act of 2002 and the rules and regulations of the SEC. The Company has never performed the system and process evaluation and testing required in an effort to comply with the management assessment and auditor certification requirements of Section 404, which will initially apply to us as of December 31, 2007.

Schedule 3.1 (u) Certain Fees

In connection with the financing contemplated under the Securities Purchase Agreement, Hickey Freihofner Capital, a Division of Brill Securities, Inc., member of FINRA, MSRB, SIPC, as placement agent, is to receive a cash fee of 6% of the monies raised comprised of a 5% placement agent fee and 1% for non-accountable expenses and foreign finders received 2%.

Schedule 3.1 (v) Certain Registration Matters

Michael Friess and Sanford Schwartz (the “Shell Sellers”), the directors and controlling owners of the Company before the Closing, has piggy-back registration rights on 111,386 shares of common stock for the period that they hold those shares, pursuant to Redemption Agreement by and among the Shell Sellers and the Company dated the Closing Date. The piggy-back registration rights are conditioned on Rule 415 cutback.

Schedule 3.1 (cc) Foreign Corrupt Practices Act

Under the FCPA, companies that have a class of securities registered under Section 12 of the Exchange Act, or that are required to file reports under Section 15(d) of the Exchange Act, are required to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that:

·	transactions are executed in accordance with management's general or specific authorization;

·	transactions are recorded as necessary (1) to permit preparation of financial statements in conformity with generally accepted accounting principles or any other criteria applicable to such statements, and (2) to maintain accountability for assets;

·	access to assets is permitted only in accordance with management's general or specific authorization; and

·	the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

Reference is made to Schedule 3.1(s).

Schedule 4.4

Reference is made to Schedule 3.1 (v).