As filed with the Securities and Exchange Commission on February 8, 2008 
Registration No. 333-               

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

FORM S-1
REGISTRATION STATEMENT   UNDER THE SECURITIES ACT OF 1933

CHINA GREEN AGRICULTURE, INC.
(Exact Name of Registrant as Specified in Its Charter)
 
Nevada
 
2870
 
36-3526027
(State or Other Jurisdiction of
Incorporation or Organization)
 
(Primary Standard Industrial
Classification Code Number)
 
(I.R.S. 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
Tel: +86-29-88266386
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

United Corporate Services, Inc.
202 South Minnesota Street
Carson City, Nevada 89703
Tel: 1-800-899-8648
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)

Copies to:
Darren Ofsink, Esq.
GUZOV OFSINK LLC
600 Madison Avenue, 14th Floor
New York, NY 10022
 
Approximate date of commencement of proposed sale to the public:  From time to time after the effective date of this Registration Statement.
 
If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.   x



If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   o  
 
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   o  
 
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   o

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

o Large accelerated filer
o Accelerated filer
o Non-accelerated filer (Do not check if a smaller reporting company)
x Smaller reporting company
 

 
CALCULATION OF REGISTRATION FEE  
                   
Title of each
class of securities
to be registered
 
Amount to
be registered
(1)
 
Proposed
maximum
offering price
per unit(2)
 
Proposed
maximum
aggregate
offering price
 
Amount of
registration
fee
 
Common stock, par value $.001 per share
   
6,425,002
 
$
3.25
(3)
$
20,881,257
 
$
820.63
 
 

 
(1)
Pursuant to Rule 416 promulgated under the Securities Act of 1933, as amended, there are also registered hereunder such indeterminate number of additional shares as may be issued to the selling stockholders to prevent dilution resulting from stock splits, stock dividends or similar issuance.

 
(2)
Includes (i) 6,313,616 shares of common stock issued to 31 accredited investors (the “Investors”) in a private placement of our common stock that was completed on December 26, 2007, (ii) 111,386 shares of common stock issued to two of our former directors and executive officers on December 26, 2007.

 
(3)
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457. As of the date hereof, while our common stock is quoted on the over-the-counter Bulletin Board, there has been no trading. Accordingly, in determining the offering price, we selected $3.25 per share, the price the Investors paid in the private placement.

The Registrant amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall hereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.

2


THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION, DATED FEBRUARY 8, 2008

PRELIMINARY PROSPECTUS

CHINA GREEN AGRICULTURE, INC.

6,425,002   Shares of Common Stock
Offered by Selling Stockholders

This prospectus relates to the resale by the selling stockholders identified in this prospectus of up to 6,425,002 shares of our common stock, including (i) 6,313,616 shares of common stock issued to the investors in a private placement of our common stock that was completed on December 26, 2007 and (ii) 111,386 shares of common stock issued to two of our former directors and executive officers on December 26, 2007.
 
The selling stockholders may offer all or part of their shares for resale from time to time through public or private transactions, at either prevailing market prices or at privately negotiated prices. We will not receive any of the proceeds from the sale of the shares by the selling stockholders. We will pay all of the registration expenses incurred in connection with this offering (estimated to be approximately $268,820) but the selling stockholders will pay all of the selling commissions, brokerage fees and related expenses.

Our common stock is quoted on the Over-the-Counter Bulletin Board under the symbol “CGAG”.

There is a limited market for our common stock. The shares are being offered by the selling stockholders in anticipation of the continued development of a secondary trading market in our common stock. We cannot give you any assurance that an active trading market in our common stock will develop, or if an active market does develop, that it will continue.

Investing in our common stock involves a high degree of risk. See “Risk Factors” beginning on page 11 for a discussion of certain risk factors that you should consider. You should read the entire prospectus before making an investment decision.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is February 8, 2008

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TABLE OF CONTENTS

About This Prospectus
 
5
Cautionary Note Regarding Forward Looking Statements and Other Information Contained in this Prospectus
 
5
Prospectus Summary
 
7
Risk Factors
 
10
Selling Stockholders
 
20
Plan of Distribution
 
26
Use of Proceeds
 
28
Market For Common Equity And Related Stockholder Matters
 
28
Management's Discussion and Analysis of Financial Condition and Results of Operations
 
31
Business
 
39
Properties
 
54
Legal Proceedings
 
55
Directors, Executive Officers, Promoters and Control Persons
 
56
Executive Compensation
 
58
Security Ownership of Certain Beneficial Owners and Management
 
59
Transactions with Related Persons, Promoters and Certain Control Persons; Corporate Governance
 
61
Description of Securities to be Registered
 
62
Changes in and Disagreements with Accountants
 
63
Legal Matters
 
64
Experts
 
64
Where You Can Find More Information
 
64
Financial Statements
 
F-1
 
4


ABOUT THIS PROSPECTUS

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information other than that contained in this prospectus. The selling stockholders are offering to sell and seeking offers to buy shares of our common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of its delivery or of any sale of our common stock. This prospectus will be updated and, as updated, will be made available for delivery to the extent required by the federal securities laws.

No person is authorized in connection with this prospectus to give any information or to make any representations about us, the selling stockholders, the securities offered hereby or any matter discussed in this prospectus, other than the information and representations contained in this prospectus. If any other information or representation is given or made, such information or representation may not be relied upon as having been authorized by us or any selling stockholder. This prospectus does not constitute an offer to sell, or a solicitation of an offer to buy the securities in any circumstance under which the offer or solicitation is unlawful. Neither the delivery of this prospectus nor any distribution of securities in accordance with this prospectus shall, under any circumstances, imply that there has been no change in our affairs since the date of this prospectus. This prospectus will be updated and updated prospectuses made available for delivery to the extent required by the federal securities laws.
 
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION CONTAINED IN THIS PROSPECTUS

This prospectus contains some forward-looking statements. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Forward -looking statements involve risks and uncertainties. Forward-looking statements include statements regarding, among other things, (a) our projected sales, profitability, and cash flows, (b) our growth strategies, (c) anticipated trends in our industries, (d) our future financing plans and (e) our anticipated needs for working capital. They are generally identifiable by use of the words "may," "will," "should," "anticipate," "estimate," "plans," “potential," "projects," "continuing," "ongoing," "expects," "management believes," "we believe," "we intend" or the negative of these words or other variations on these words or comparable terminology. These statements may be found under "Management's Discussion and Analysis of Financial Condition and Plan of Operation" and "Business," as well as in this prospectus generally. In particular, these include statements relating to future actions, prospective products or product approvals, future performance or results of current and anticipated products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, and financial results.
 
Any or all of our forward-looking statements in this report may turn out to be inaccurate. They can be affected by inaccurate assumptions we might make or by known or unknown risks or uncertainties. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially as a result of various factors, including, without limitation, the risks outlined under "Risk Factors" and matters described in this prospectus generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. You should not place undue reliance on these forward-looking statements.

5


Currency

Unless otherwise noted, all currency figures in this filing are in U.S.dollars. References to "yuan" or "RMB" are to the Chinese yuan (also known as the Renminbi). According to xe.com, as of February 8, 2008, $1 = 7.1891 yuan.

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PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read the entire prospectus, including "Risk Factors” (beginning on page 11) and the consolidated financial statements (beginning on page F-1) and the related notes before making an investment decision. Except as otherwise specifically stated or unless the context otherwise requires, the terms “Company,” we," "our" and "us" refer collectively to China Green Agriculture, Inc. (“Green Nevada”, formerly known Discovery Technologies, Inc.), a corporation incorporated in the State of Nevada; Green Agriculture Holding Corporation (“Green New Jersey”), a wholly-owned subsidiary of Green Nevada incorporated in the State of New Jersey; Shaanxi TechTeam Jinong Humic Acid Product Co., Ltd. (“Techteam”), a wholly-owned subsidiary of Green New Jersey organized under the laws of the People’s Republic of China (the “PRC”) and Xi’an Jintai Agriculture Technology Development Company (“Jintai”), wholly-owned subsidiary of Techteam in the PRC.

The Company

The Company, through Techteam, researches, develops, manufactures and distributes 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.

The Company was incorporated under the laws of the state of Kansas in February 1987, but had no operations from December 1996 to December 2007. In October 2007, the Company was reincorporated in the state of Nevada, and, on December 26, 2007, acquired all of the issued and outstanding capital stock of Green New Jersey which owns 100% of the capital stock of Techteam simultaneous with a private placement of $20,519,255. Techteam also owns 100% capital stock of Jintai. After the acquisition of Green New Jersey, the Company changed its name from Discovery Technologies, Inc. to China Green Agriculture, Inc..

Our current structure is set forth in the diagram below:

7


CHINA GREEN AGRICULTURE, INC.
 
Our Contact Information

Our principal executive offices are located at 3 rd Floor, Borough A, Block A. No.181, South Taibai Road, Xi’an, Shaanxi Province, People’s Republic of China 710065. Our telephone number is +86-29-88266386.
 
The Offering

Offering by Selling Stockholders

This prospectus relates to the resale by the selling stockholders identified in this prospectus of up to 6,425,002 shares of our common stock including 6,313,616 shares issued to the investors in the private placement of our common stock that was consummated on December 26, 2007, and 111,386 shares of common stock issued to two of our former directors and executive officers on the same date. No shares are being offered for sale by the Company.
 
8

 
       
Total shares of common stock outstanding prior to the Offering
   
18,314,017
 
Common stock offered by the Company
   
0
 
Total shares of common stock offered by the selling stockholders
   
6,425,002
 
Total shares of common stock to be outstanding after the Offering
   
18,314,017
 
         
Use of Proceeds
   
We will not receive any of the proceeds from the sales of the shares by the selling stockholders.
 
         
Our OTC Bulletin Board Trading Symbol
   
CGAG
 
Risk Factors
   
See "Risk Factors" beginning on page 11 and other information included in this prospectus for a discussion of factors you should consider before deciding to invest in shares of our common stock.
 

Background

On December 26, 2007, we consummated with 31 accredited investors (the “Investors”) a private placement of our common stock for an aggregate purchase price of $20,519,255 (the “Private Placement”). We received approximately $18,602,723 as net proceeds from this financing, including $4,250,000 as holdback escrow (see our description in “Selling Stockholders - Background” ).

In connection with the private placement we entered into a registration rights agreement with the selling stockholders, which granted the selling stockholders registration rights with respect to the shares of common stock they purchased in the private placement. In addition, we granted “piggy-back” registration rights to Sanford Schwartz and Michael Friess, the Company’s former directors and executive officers, pursuant to which we included 111,386 shares of common stock in this registration statement.

Under the terms of the registration rights agreement we are required to cause our registration statement to be declared effective by the Commission on the earlier to occur of the following dates (the “Effective Date”):

 
o
May 24, 2008, or
 
o
the fifth trading day (i.e., the fifth day on which securities exchanges are open for business) following the day on which the Commission notifies us that the registration statement will not be reviewed or is no longer subject to further review and comments by the Commission.
 
9


Our failure to meet this schedule and other timetables provided in the registration rights agreement could result in the imposition of liquidated damages as follows: in the event the registration statement is not declared effective by the applicable Effective Date, an additional $181,538 for each whole or partial month after the Effective Date until the registration statement is effective. The aggregate of all such liquidated damages are subject to a cap of $1,815,384.

Please see “Selling Stockholders - Background” in this prospectus for disclosure of the material terms of the other agreements entered into by us on December 26, 2007 in connection with the Private Placement.
 
RISK FACTORS
 
An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information contained in this prospectus before deciding to invest in our common stock.

Risks Related to our Business

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

Our future success will depend in substantial part on the continued services of our senior management. The loss of the services of one or more of our key personnel could impede implementation of our business plan and result in reduced profitability. Our future success will also depend on the continued ability to attract, retain and motivate highly qualified technical sales and marketing customer support. Because of the rapid growth of the economy in the PRC, competition for qualified personnel is intense. We cannot guarantee that we will be able to retain our key personnel or that we will be able to attract, assimilate or retain qualified personnel in the future. If we are unsuccessful in our efforts in this regard, it could have an adverse effect on our business, financial condition and results of operations.

Any disruption of the operations in our factories would damage our business.

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

Any significant fluctuation in price of our raw materials may have a material adverse effect on the manufacturing cost of our products.

10


The prices for the raw materials that we use in the manufacture of our fertilizer products are subject to market forces largely beyond our control, including the price of coal, our energy costs, organic chemical feedstock costs, market demand, and freight costs. The prices for these raw materials may fluctuate significantly based upon changes in these forces. If we are unable to pass any raw material price increases through to our customers, we could incur significant losses and a diminution of the market price of our common stock.

Adverse weather conditions could reduce demand for our products.

The demand for our organic liquid compound fertilizer products fluctuates significantly with weather conditions, which may delay the application of the fertilizer or render it unnecessary at all. If any natural disasters, such as snowstorm, flood, drought, hail, tornadoes or earthquakes, occur, demand for our products would likely be reduced.

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

We compete with numerous local Chinese fertilizer manufacturers. Although we may have greater resources than many of our competitors, most of which are small local fertilizer companies, it is possible that these competitors have better access in certain local markets to customers and prospects, an enhanced ability to customize products to a particular region or locality and established local distribution channels within a small region. Furthermore, China’s access into the World Trade Organization could lead to increased foreign competition for us. International producers and traders import products into China that generally are of higher quality than those produced in the local Chinese market. If we are not successful in our marketing and advertising efforts to increase awareness of our brands, our revenues could decline and it could have a material adverse effect on our business, financial condition and results of operations.
 
We may encounter substantial competition in our business and our failure to compete effectively may adversely affect our ability to generate revenue.

We believe that existing and new competitors will continue to improve the design and performance of their products and to introduce new products with competitive price and performance characteristics. We expect that we will be required to continue to invest in product development and productivity improvements to compete effectively in our markets. Our competitors could develop a more efficient product or undertake more aggressive and costly marketing campaigns than ours, which may adversely affect our marketing strategies and could have a material adverse effect on our business, results of operations and financial condition.
 
Our major competitors may be better able than we to successfully endure downturns in our industrial sector. In periods of reduced demand for our products, we can either choose to maintain market share by reducing our selling prices to meet competition or maintain selling prices, which would likely sacrifice market share. Sales and overall profitability would be reduced in either case. In addition, we cannot assure you that additional competitors will not enter our existing markets, or that we will be able to compete successfully against existing or new competition.

11


We may not be able to obtain regulatory or governmental approvals for our products.

The manufacture and sale of our agricultural products in the PRC is regulated by the PRC and the Shaanxi Provincial Government. The legal and regulatory regime governing our industry is evolving, and we may become subject to different, including more stringent, requirements than those currently applicable to us. We may be vulnerable to local and national government agencies or other parties who wish to renegotiate the terms and conditions of, or terminate their agreements or other understandings with us, or implement new or more stringent requirements, which may require us to suspend or delay production of their products.

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

To the knowledge of our management team, neither the production nor the sale of our products constitutes activities, or generates materials that create any environmental hazards or requires our business operations to comply with PRC environmental laws. Although it has not been alleged by PRC government officials that we have violated any current environmental regulations, we cannot assure you that the PRC government will not amend the current PRC environmental protection laws and regulations. Our business and operating results may be materially and adversely affected if we were to be held liable for violating existing environmental regulations or if we were to increase expenditures to comply with environmental regulations affecting our operations.

We do not have key man insurance on our Chairman, President and CEO, on whom we rely for the management of our business.

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

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

We currently do not carry any product liability or other similar insurance. Unlike the U.S. and other countries, product liability claims and lawsuits are extremely rare in the PRC. However, we cannot assure you that we would not face liability in the event of the failure of any of our products. We cannot assure you that, especially as China’s domestic consumer economy and industrial economy continues to expand, product liability exposures and litigation will not become more commonplace in the PRC, or that we will not face product liability exposure or actual liability as we expand our sales into international markets, like the United States, where product liability claims are more prevalent.

12

 
Except for property and automobile insurance, we do not have other insurance such as business liability or disruption insurance coverage for our operations in the PRC.
 
Risks Related to Doing Business in the PRC .

We face the risk that changes in the policies of the PRC government could have a significant impact upon the business we may be able to conduct in the PRC and the profitability of such business.

The PRC’s economy is in a transition from a planned economy to a market oriented economy subject to five-year and annual plans adopted by the government that set national economic development goals. Policies of the PRC government can have significant effects on economic conditions in China. The PRC government has confirmed that economic development will follow the model of a market economy, such as the United States. Under this direction, we believe that the PRC will continue to strengthen its economic and trading relationships with foreign countries and business development in the PRC will follow market forces. While we believe that this trend will continue, we cannot assure you that this will be the case. Our interests may be adversely affected by changes in policies by the PRC government, including:

 
·
changes in laws, regulations or their interpretation
 
·
confiscatory taxation
 
·
restrictions on currency conversion, imports or sources of supplies
 
·
expropriation or nationalization of private enterprises.

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

The PRC laws and regulations governing our current business operations are sometimes vague and uncertain. Any changes in such PRC laws and regulations may have a material and adverse effect on our business.
 
There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including, but not limited to, the laws and regulations governing our business, and the enforcement and performance of our arrangements with customers in the event of the imposition of statutory liens, death, bankruptcy and criminal proceedings. We and any future subsidiaries are considered foreign persons or foreign funded enterprises under PRC laws, and as a result, we are required to comply with PRC laws and regulations. These laws and regulations are sometimes vague and may be subject to future changes, and their official interpretation and enforcement may involve substantial uncertainty. The effectiveness of newly enacted laws, regulations or amendments may be delayed, resulting in detrimental reliance by foreign investors. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our businesses.
 
13

 
A slowdown or other adverse developments in the PRC economy may materially and adversely affect our customers, demand for our services and our business.
 
All of our operations are conducted in the PRC and almost all of our revenues are generated from sales in the PRC. Although the PRC economy has grown significantly in recent years, we cannot assure you that such growth will continue. The environmental protection industry in the PRC is growing, but we do not know how sensitive we are to a slowdown in economic growth or other adverse changes in the PRC economy which may affect demand for our products. A slowdown in overall economic growth, an economic downturn or recession or other adverse economic developments in the PRC may materially reduce the demand for our products and materially and adversely affect our business.

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

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

In order to control inflation in the past, the PRC government has imposed controls on bank credits, limits on loans for fixed assets and restrictions on state bank lending. The implementation of these and other similar policies can impede economic growth. In October 2004, the People’s Bank of China, the PRC’s central bank, raised interest rates for the first time in nearly a decade and indicated in a statement that the measure was prompted by inflationary concerns in the Chinese economy. Repeated rises in interest rates by the central bank would likely slow economic activity in China which could, in turn, materially increase our costs and also reduce demand for our products.

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

We are a holding company incorporated in the State of Nevada and do not have any assets or conduct any business operations other than our investments in our subsidiaries, Green New Jersey, TechTeam and Jintai. As a result of our holding company structure, we rely entirely on dividends payments from TechTeam and Jintai, our subsidiaries in China. PRC regulations currently permit payment of dividends only out of accumulated profits, as determined in accordance with PRC accounting standards and regulations. Our subsidiaries are also required to set aside a portion of its after-tax profits according to PRC accounting standards and regulations to fund certain reserve funds. The PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. We may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency. Furthermore, if Green New Jersey, TechTeam or Jintai incurs debt on its own in the future, the instruments governing the debt may restrict its ability to pay dividends or make other payments. If we or Green New Jersey are unable to receive all of the revenues from TechTeam and Jintai’s operations, we may be unable to pay dividends on our common stock.
 
14

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

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

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

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

On July 21, 2005, the PRC government changed its policy of tying the value of the RMB to the U.S. dollar. Under the new policy, the RMB is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. This change in policy has resulted in an approximately 9% appreciation of the RMB against the U.S. dollar. There remains significant international pressure on the PRC government to adopt an even more flexible currency policy, which could result in a further and more significant appreciation of the RMB against the U.S. dollar.

15

 
Recent PRC regulations relating to the establishment of offshore special purpose companies by PRC domestic residents and registration requirements for employee stock ownership plans or share option plans may subject our PRC resident beneficial owners or the plan participants to personal liability, limit our ability to inject capital into our PRC subsidiaries, limit our subsidiaries’ ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us.
 
The China State Administration of Foreign Exchange (“SAFE”) issued a public notice in October 2005 requiring PRC domestic residents to register with the local SAFE branch before establishing or controlling any company outside of China for the purpose of capital financing with assets or equities of PRC companies, referred to in the notice as an “offshore special purpose company.” PRC domestic residents who are shareholders of offshore special purpose companies and have completed round trip investments but did not make foreign exchange registrations for overseas investments before November 1, 2005 were retroactively required to register with the local SAFE branch before March 31, 2006. PRC resident shareholders are also required to amend their registrations with the local SAFE in certain circumstances. After consultation with China counsel, we do not believe that any of our PRC domestic resident shareholders are subject to the SAFE registration requirement, however, we cannot provide any assurances that all of our shareholders who are PRC residents will not be required to make or obtain any applicable registrations or approvals required by these SAFE regulations in the future. The failure or inability of our PRC resident shareholders to comply with the registration procedures set forth therein may subject us to fines and legal sanctions, restrict our cross-border investment activities, or limit our PRC subsidiaries’ ability to distribute dividends or obtain foreign-exchange-dominated loans to our company.
 
As it is uncertain how the SAFE regulations will be interpreted or implemented, we cannot predict how these regulations will affect our business operations or future strategy. For example, we may be subject to more stringent review and approval process with respect to our foreign exchange activities, such as remittance of dividends and foreign-currency-denominated borrowings, which may adversely affect our results of operations and financial condition. In addition, if we decide to acquire a PRC domestic company, we cannot assure you that we or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete the necessary filings and registrations required by the SAFE regulations. This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects.
 
16

 
In December 2006, the People’s Bank of China promulgated the Implementation Rules of the Administrative Measures for Individual Foreign Exchange, or the Individual Foreign Exchange Rules, setting forth the respective requirements for foreign exchange transactions by PRC individuals under either the current account or the capital account. In January 2007, SAFE issued implementing rules for the Individual Foreign Exchange Rules, which, among other things, specified approval requirements for certain capital account transactions such as a PRC citizen’s participation in the employee stock ownership plans or stock option plans of an overseas publicly-listed company. On March 28, 2007, SAFE promulgated the Application Procedure of Foreign Exchange Administration for Domestic Individuals Participating in Employee Stock Holding Plan or Stock Option Plan of Overseas-Listed Company, or the Stock Option Rule. Under the Stock Option Rule, PRC citizens who are granted stock options by an overseas publicly-listed company are required, through a PRC agent or PRC subsidiary of such overseas publicly-listed company, to register with SAFE and complete certain other procedures. We and our PRC employees who may be granted stock options are subject to the Stock Option Rule. If we or our PRC optionees fail to comply with these regulations, we or our PRC optionees may be subject to fines and legal sanctions.

Regulations on Employee Share Options may subject us and/or our PRC employees to regulatory liability.
 
Under the Implementation Rules of the Administrative Measures for Individual Foreign Exchange, or the Individual Foreign Exchange Rules, issued on January 5, 2007 by the SAFE, PRC citizens who are granted shares or share options by an overseas listed company according to its employee share option or share incentive plan are required, through the PRC subsidiary of such overseas listed company or any other qualified PRC agent, to register with the SAFE and complete certain other procedures related to the share option or other share incentive plan. Foreign exchange income received from the sale of shares or dividends distributed by the overseas listed company may be remitted into a foreign currency account of such PRC citizen or be exchanged into Renminbi. Our PRC citizen employees who have been granted share options, or PRC option holders, are subject to the Individual Foreign Exchange Rules. If we or our PRC citizen employees fail to comply with these regulations, we or our PRC option holders may be subject to fines and legal sanctions.
 
Any recurrence of severe acute respiratory syndrome, or SARS, or another widespread public health problem, could adversely affect our operations.

A renewed outbreak of SARS or another widespread public health problem in the PRC, where all of our revenue is derived, could have an adverse effect on our operations. Our operations may be impacted by a number of health-related factors, including quarantines or closures of some of our offices that would adversely disrupt our operations.

Any of the foregoing events or other unforeseen consequences of public health problems could adversely affect our operations.

Because our principal assets are located outside of the United States and because all of our directors and all our officers reside outside of the United States, it may be difficult for you to use the United States Federal securities laws to enforce your rights against us and our officers or to enforce judgments of United States courts against us or them in the PRC.
 
17

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

Foreign companies conducting operations in PRC face significant political, economic and legal risks. The Communist regime in the PRC, which includes a cumbersome bureaucracy, may hinder western investment.

We may have difficulty establishing adequate management, legal and financial controls in the PRC.

The PRC historically has not adopted a western style of management and financial reporting concepts and practices, as in modern banking, computer and other control systems. We may have difficulty in hiring and retaining a sufficient number of qualified employees to work in the PRC. As a result of these factors, we may experience difficulty in establishing management, legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices that meet western standards. Therefore, we may, in turn, experience difficulties in implementing and maintaining adequate internal controls as will be required under Section 404 of the Sarbanes Oxley Act of 2002.
 
Risks Related to an Investment in our Common Stock .

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

Our Chairman, President and CEO, Mr. Tao Li, has the voting rights on 6,535,676, or 36% of our common stock . As a result, he is able to influence the outcome of stockholder votes on various matters, including the election of directors and extraordinary corporate transactions, including business combinations. The interests of Mr. Li may differ from other stockholders. Furthermore, the current ratios of ownership of our common stock reduce the public float and liquidity of our common stock which can in turn affect the market price of our common stock.
 
We are unlikely to pay cash dividends in the foreseeable future.

We currently intend to retain any future earnings for use in the operation and expansion of our business. We do not expect to pay any cash dividends in the foreseeable future but will review this policy as circumstances dictate. Should we decide in the future to do so, as a holding company, our ability to pay dividends and meet other obligations depends upon the receipt of dividends or other payments from our operating subsidiary. In addition, our operating subsidiaries, from time to time, may be subject to restrictions on its ability to make distributions to us, including as a result of restrictions on the conversion of local currency into U.S. dollars or other hard currency and other regulatory restrictions. See “Market for Our Common Stock - Dividends.”
 
18

 
There is currently a limited trading market for our Common Stock.

Our common stock was added to the OTC Bulletin Board (the “OTC-BB”) daily list on August 28, 2007. Since that time there has been only sporadic trading in shares of our common stock.

There is no established trading market for our common stock and our common stock may never be included for trading on any stock exchange or through any other quotation system (including, without limitation, the NASDAQ Stock Market) other than the OTC-BB. You may not be able to sell your shares due to the absence of a trading market.

Our common stock may be also subject to the "penny stock" rules to the extent that the price drops below $5.00 per share, which require delivery of a schedule explaining the penny stock market and the associated risks before any sale. These requirements may further limit your ability to sell your shares. For more information, please see MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. – Penny Stock Regulations of this prospectus.  

Our Common Stock is illiquid and subject to price volatility unrelated to our operations.

The market price of our common stock could fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned growth, quarterly operating results of other companies in the same industry, trading volume in our common stock, changes in general conditions in the economy and the financial markets or other developments affecting our competitors or us. In addition, the stock market is subject to extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect on our common stock.

A large number of shares will be eligible for future sale and may depress our stock price.

Following the registration for resale of the shares of our common stock we issued in the Private Placement, we could have up to 6,425,002 shares that are freely tradable.

Sales of substantial amounts of common stock, or the perception that such sales could occur, could adversely affect the market price of our common stock and could impair our ability to raise capital through the sale of our equity securities.

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

Our Bylaws provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against costs and expenses incurred by them in any litigation to which they become a party arising from their association with or activities on our behalf. Consequently, we may be required to expend substantial funds to satisfy these indemnity obligations.
 
19

 
SELLING STOCKHOLDERS

This prospectus relates to the resale by the selling stockholders identified in the table below from time to time of up to a total of 6,425,002 shares of common stock . Other than Michael Friess and Sanford Schwartz , each of the selling stockholders acquired his or its common stock as an investor in our private placement transaction consummated on December 26, 2007. Michael Friess and Sanford Schwartz were issued an aggregate of 111,386 shares of our common stock in connection with the redemption of an aggregate of 246,148 shares of common stock they held prior to December 26, 2007 . All of the selling stockholders are “accredited investors” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act.  

Except for Michael Friess and Sanford Schwartz , who had been the Company’s directors and executive officers from June 2006 to December 26, 2007, none of the selling stockholders has held a position as an officer or director of the Company, nor has any selling stockholder had a material relationship of any kind with the Company.

The table set forth below lists the names of the selling stockholders as well as (i) the number of shares of common stock acquired by the selling stockholders in the Private Placement (all of which are being registered for resale), and (ii) the number of shares of common stock being registered on behalf of Michael Friess and Sanford Schwartz pursuant to the “piggy-back” registration rights that we granted to them.

Each selling stockholder may offer for sale all or part of the shares from time to time. The table below assumes that the selling stockholders will sell all of the shares offered for sale and that they beneficially own no other shares other than those (i) acquired in the Private Placement, and (ii) in the case of Michael Friess and Sanford Schwartz, those being registered on their behalf. Accordingly, it is being assumed that they will beneficially own no shares of common stock upon completion of the offering. A selling stockholder is under no obligation, however, to sell any shares immediately pursuant to this prospectus, nor is a selling stockholder obligated to sell all or any portion of his or its shares at any time.
 
20


Name of Selling Stockholder
(20)
 
Number of
Shares of
Common
Stock
Owned
Prior to the
Offering 
 
Percentage
Of Shares
Beneficially
Owned
Prior to the
Offering
(1)
 
Maximum
Number of
Shares to be
Sold 
 
Percentage
Ownership
After the
Offering
(%) (2) 
 
Investors in the December 26, 2007 Private Placement
                 
Alder Capital Partners I, L.P. (3)
   
215,385
   
1.2
%
 
215,385
   
0
%
Alder Offshore Master Fund, L.P. (3)
   
92,308
   
0.5
%
 
92,308
   
0
%
Ancora Greater China Fund, LP (4)
   
200,000
   
1.1
%
 
200,000
   
0
%
Ardsley Offshore Fund, Ltd.(5)
   
312,000
   
1.7
%
 
312,000
   
0
%
Ardsley Partners Fund II, LP (5)
   
463,000
   
2.5
%
 
463,000
   
0
%
Ardsley Partners Institutional Fund, L.P. (5)
   
288,500
   
1.6
%
 
288,500
   
0
%
Bai Ye Feng
   
92,308
   
0.5
%
 
92,308
   
0
%
Bruce A. Shear
   
10,270
   
0.1
%
 
10,270
   
0
%
Chestnut Ridge Partners, LP (6)
   
153,846
   
0.8
%
 
153,846
   
0
%
Dennis Jason Wong, Sole Trustee of the Dennis & Shannon Wong Family Trust
   
61,538
   
0.3
%
 
61,538
   
0
%
Eric E. Shear
   
10,250
   
0.1
%
 
10,250
   
0
%
Gary R. Hawkins
   
154,000
   
0.8
%
 
154,000
   
0
%
Guerrilla Partners LP (7)
   
141,538
   
0.8
%
 
141,538
   
0
%
Heller Capital Investments, LLC (8)
   
200,000
   
1.1
%
 
200,000
   
0
%
Hua – Mei 21 st Century Partners, LP (7)
   
320,000
   
1.7
%
 
320,000
   
0
%
Jayhawk Private Equity Co-Invest Fund, L.P. (9)
   
9,113
   
0.05
%
 
9,113
   
0
%
Jayhawk Private Equity Fund, L.P. (9)
   
144,733
   
0.8
%
 
144,733
   
0
%
Keyrock Partners L.P. (10)
   
75,000
   
0.4
%
 
75,000
   
0
%
Lumen Capital Limited Partnership (11)
   
41,923
   
0.2
%
 
41,923
   
0
%
 
21

 
Marion Lynton (12)
   
11,500
   
0.1
%
 
11,500
   
0
%
Matthew Hayden
   
46,154
   
0.3
%
 
46,154
   
0
%
MidSouth Investor Fund L.P. (13)
   
153,846
   
0.8
%
 
153,846
   
0
%
Pinnacle China Fund LP (14)
   
907,692
   
4.9
%
 
907,692
   
0
%
Professional Offshore Opportunity Fund, Ltd. (15)
   
307,692
   
1.7
%
 
307,692
   
0
%
Richard D. Squires
   
33,846
   
0.2
%
 
33,846
   
0
%
Sandor Capital Master Fund, L.P. (16)
   
185,000
   
1.0
%
 
185,000
   
0
%
Silver Rock I, Ltd. (17)
   
75,000
   
0.4
%
 
75,000
   
0
%
Squires Family, L.P. (18)
   
73,846
   
0.4
%
 
73,846
   
0
%
Steven Shear
   
10,250
   
0.1
%
 
10,250
   
0
%
The Pinnacle Fund LP (14)
   
907,693
   
4.9
%
 
907,693
   
0
%
Whitebox Intermarket Partners, L.P. (19)
   
615,385
   
3.4
%
 
615,385
   
0
%
Subtotal
   
6,313,616
   
34.5
%
 
6,313,616
   
0
%
Former Directors and Officers
                         
Michael Friess
   
55,693
   
0.3
%
 
55,693
   
0
%
Sanford Schwartz
   
55,693
   
0.3
%
 
55,693
   
0
%
Subtotal
   
111,386
   
0.6
%
 
111,386
   
0
%
Total
   
6,425,002
   
35.1
%
 
6,425,002
   
0
%
 

 
(1)
Based on 18,314,017 shares of common stock issued and outstanding as of the date of this prospectus.
 
22

 
 
(2)
Assumes the sale of all shares offered by the selling stockholders.

 
(3)
Mike Licosati has the voting and investment powers over the shares held by Alder Capital Partners I, L.P. and Alder Offshore Master Fund, L.P..

 
(4)
John P. Micklitsch has the voting and investment powers over the shares held by Ancora Greater China Fund, LP..

 
(5)
Philip J. Hempleman has the voting and investment powers over the shares held by Ardsley Offshore Fund, Ltd., Ardsley Partners Fund II, LP and Ardsley Partners Institutional Fund, L.P..

 
(6)
Kenneth Pasternak has the voting and investment powers over the shares held by Chestnut Ridge Partners, LP.

 
(7)
Peter Siris and Leigh S. Curry has the shared voting and investment powers over the shares held by Guerrilla Partners LP and Hua - Mei 21st Century Partners, LP.

 
(8)
Ronald Heller has the voting and investment powers over the shares held by Heller Capital Investments, LLC.

 
(9)
Kent C. McCarthy has the voting and investment powers over the shares held by Jayhawk Private Equity Co-Invest Fund, L.P. and Jayhawk Private Equity Fund, L.P..

 
(10)
Stephen J. Carter has the voting and investment powers over the shares held by Keyrock Partners L.P..

 
(11)
Allan Lichtenberg has the voting and investment powers over the shares held by Lumen Capital Limited Partnership.

 
(12)
Ardsley Advisory Partners, a registered investment advisor, is the advisor to the Marion Lynton’s account and therefore has voting and investment powers over the shares held by Marion Lynton.

 
(13)
Lyman O. Heidtke has the voting and investment powers over the shares held by MidSouth Investor Fund L.P..

 
(14)
Barry M. Kitt exercises investment discretion and control over the shares of common stock of the issuer held by The Pinnacle Fund, L.P., a Texas limited partnership ("Pinnacle") and Pinnacle China Fund, L.P., a Texas limited partnership ("Pinnacle China"). Mr. Kitt may be deemed to be the beneficial owner of the shares of common stock beneficially owned by Pinnacle and Pinnacle China, but hereby disclaims beneficial ownership of the shares of common stock reported herein to the extent of his direct or indirect pecuniary interest therein. Each of The Pinnacle Fund, L.P. and Pinnacle China Fund, L.P. owns 4.96% of the total outstanding shares of common stock prior to the offering.
 
23

 
 
(15)
Howard Berger has the voting and investment powers over the shares held by Professional Offshore Opportunity Fund, Ltd..

 
(16)
John S. Lemak has the voting and investment powers over the shares held by Sandor Capital Master Fund, L.P..

 
(17)
Rima Salam has the voting and investment powers over the shares held by Silver Rock I, Ltd..

 
(18)
Richard D. Squires has the voting and investment powers over the shares held by Squires Family, L.P..

 
(19)
Andrew J Redleaf is the managing member of the general partner and has the voting and investment powers over the shares held by Whitebox Intermarket Partners, L.P..

 
(20)
None of the Selling Stockholders are broker-dealers or affiliates of broker-dealers.
 
Background

On December 26, 2007, we consummated with 31 accredited investors (the “Investors”) a private placement of our common stock for an aggregate purchase price of $20,519,255 (the “Private Placement” as defined under “The Offering - Background” of this prospectus). These securities were offered and sold in the Private Placement without registration under the Securities Act of 1933 (the “Securities Act”), in reliance on an exemption from registration under Regulation D, Section 506, and Section 4(2) of the Securities Act.
 
The agreements we entered into with the Investors includes a Securities Purchase Agreement, a Registration Rights Agreement , a Lockup Agreement and various ancillary agreements and certificates, disclosure schedules and exhibits in connection therewith. The following is a summary of their material terms.
 
Securities Purchase Agreement.
 
Among other things, the Securities Purchase Agreement: (i) establishes targets for after tax net income and earnings per share for our fiscal year ending June 30, 2009 at not less than $12,000,000 and $0.609, respectively (the “2009 Targets”); (ii) provides for liquidated damages in the event that PRC governmental policies or actions have a material adverse effect on the transactions contemplated by the Share Exchange Agreement (a “Material Adverse Effect”); and (iii) requires us to hire a new, fully qualified chief financial officer (“CFO”) satisfactory to the Investors. In order to secure our obligation to meet the 2009 Targets, Mr. To has placed 3,156,808 shares of common stock (“2009 Make Good Shares”) into an escrow account pursuant to the terms of the Make Good Escrow Agreement by and among us, Mr. To, the Investors and the escrow agent named therein. In the event we do not achieve either of the 2009 Targets, the 3,156,808 shares of common stock will be conveyed to the Investors pro-rata in accordance with their respective investment amount for no additional consideration. In the event that we meet the 2009 Targets, the 3,156,808 shares will be transferred to Mr. Tao Li. If PRC governmental actions or policies result in a Material Adverse Effect, as defined in the Securities Purchase Agreement, that cannot be reversed or cured to the Investors’ reasonable satisfaction, we will be obligated to pay to the Investors as liquidated damages the entire principal amount of their investment, with interest at 10% per annum.
 
24

 
Covenants: The Securities Purchase Agreement contains certain covenants on our part, including the following:

(a).   Board of Directors. Within 120 days following the closing, the Company is required to nominate a five-member Board of Directors of the Company, a majority of which shall be independent, as defined under the Nasdaq Marketplace Rules, and to take all actions and obtain all authorizations, consents and approvals as are required to be obtained in order to effect the election of those nominees. As of the date of this prospectus, the Company has three directors among whom there is one independent director. The Company shall appoint an additional two independent directors within 120 days following the closing.

(b).   Chief Financial Officer. Within three months following the closing, the Company is required to hire a chief financial officer (“CFO”) who is a certified public accountant, fluent in English and an expert in US GAAP and auditing procedures and compliance for US public companies or who is reasonably approved by the lead investor’s approval.

(c).   Investor Relations Firm. Within thirty days following the closing, the Company is required to hire either of CCG Elite, Hayden Communications, or Integrated Corporate Relations. On January 23, 2008, the Company has retained CCG Elite to provide the investor relations service.

In connection with the above three post-closing covenants, the Company has deposited an aggregate of $4,250,000 from the gross proceeds of the Private Placement in the escrow account pursuant to the Holdback Escrow Agreement by and among the Company, the Investors and the escrow agent named therein. In the event the Company fails to comply with any of the above convents in a timely fashion, it is to incur liquidated damages of 1% per month of the gross proceeds of the Private Placement, to be subtracted from the holdback escrow fund, until its compliance with such covenants.
 
Registration Rights Agreement.
 
Within 45 days of the closing of the Private Placement (the “Filing Date”), the Company is obligated to file a registration statement with the Commission covering and registering for re-sale all of the common stock offered and sold in the Private Placement. If a registration statement is not filed by the Filing Date, we will be obligated to pay the Investors liquidated damages equal in amount to one percent (1%) of the principal amount subscribed for by the Investors for each month (or part thereof) after the Filing Date until the registration statement is filed (“Filing Damages”).

25

If the registration statement is not declared effective by the Commission within 150 days after the closing of the Private Placement (the “Effective Date”), we will be obligated to pay further liquidated damages to the Investors equal in amount to one percent (1%) of the principal amount subscribed for by the Investors for each month (or part thereof) after the Effective Date until the registration statement is effective (“Effectiveness Damages”).

The aggregate of Filing Damages and Effectiveness Damages is subject to a cap of ten percent (10%).

Lock-Up Agreement.  

Under the Lockup Agreement, Yinshing David To and Mr. Tao Li, agree not to offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, sell short, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of any shares of common stock, or enter into any swap or other arrangement that transfers any economic consequences of ownership of common stock until the one year anniversary of the earlier of (i) the effective date of the registration statement resulting not less than seventy-five (75%) of the Investors’ shares and the 2009 Make Good Shares (collectively, the “Registrable Shares”), or (ii) the date on which all of the Registrable Shares can be sold without volume restrictions under Rule 144.

Plan of Distribution

The Selling Stockholders and any of their pledgees, donees, transferees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on any stock exchange, market or trading facility on which the shares are traded or quoted or in private transactions. These sales may be at fixed or negotiated prices. The Selling Stockholders may use any one or more of the following methods when selling shares:
 
·
ordinary brokerage transactions and transactions in which the broker-dealer solicits investors;
 
·
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
 
·
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
 
·
an exchange distribution in accordance with the rules of the applicable exchange;
 
·
privately negotiated transactions;
 
·
to cover short sales made after the date that this Registration Statement is declared effective by the Commission;
 
·
broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share;
 
26

 
·
a combination of any such methods of sale; and
 
·
any other method permitted pursuant to applicable law.
 
The Selling Stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.
 
Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The Selling Stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved.
 
The Selling Stockholders may from time to time pledge or grant a security interest in some or all of the Shares owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell shares of Common Stock from time to time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.
 
Upon the Company being notified in writing by a Selling Stockholder that any material arrangement has been entered into with a broker-dealer for the sale of Common Stock through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of each such Selling Stockholder and of the participating broker-dealer(s), (ii) the number of shares involved, (iii) the price at which such the shares of Common Stock were sold, (iv)the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus, and (vi) other facts material to the transaction. In addition, upon the Company being notified in writing by a Selling Stockholder that a donee or pledgee intends to sell more than 500 shares of Common Stock, a supplement to this prospectus will be filed if then required in accordance with applicable securities law.
 
The Selling Stockholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
 
The Selling Stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any, that can be attributed to the sale of Securities will be paid by the Selling Stockholder and/or the purchasers. Each Selling Stockholder has represented and warranted to the Company that it acquired the securities subject to this Registration Statement in the ordinary course of such Selling Stockholder’s business and, at the time of its purchase of such securities such Selling Stockholder had no agreements or understandings, directly or indirectly, with any person to distribute any such securities.
 
27

 
The Company has advised each Selling Stockholder that it may not use shares registered on this Registration Statement to cover short sales of common stock made prior to the date on which this Registration Statement shall have been declared effective by the Commission. If a Selling Stockholder uses this prospectus for any sale of the common stock, it will be subject to the prospectus delivery requirements of the Securities Act. The Selling Stockholders will be responsible to comply with the applicable provisions of the Securities Act and Exchange Act, and the rules and regulations thereunder promulgated, including, without limitation, Regulation M, as applicable to such Selling Stockholders in connection with resales of their respective shares under this Registration Statement.
 
The Company is required to pay all fees and expenses incident to the registration of the shares, but the Company will not receive any proceeds from the sale of the common stock. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
 
USE OF PROCEEDS
 
We will not receive any of the proceeds from the sales of the shares by the selling stockholders.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

We have two classes of equity securities: (i) common stock, par value $.001 per share, 18,314,017 shares of which are outstanding as of the date of this prospectus, held by approximately 646 shareholders of record, which does not reflect the number of persons or entities who held stock in nominee or "street" name through various brokerage firms, and (ii) preferred stock, par value $.001 per share, of which no shares are outstanding. Our common stock is quoted on the Over-the-Counter Bulletin Board ("OTC-BB") under the symbol “CGAG”.

Our common stock was approved for quotation on the over-the-counter Bulletin Board on August 28, 2007. Since that time there has been no trading in shares of our common stock.

Dividends

Our board of directors has not declared a dividend on our common stock during the last two fiscal years or the subsequent interim period and we do not anticipate the payments of dividends in the near future as we intend to reinvest our profits to grow our business.
 
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The payment of dividends, if any, is at the discretion of the Board of Directors and is contingent on the Company's revenues and earnings, capital requirements, financial conditions and the ability of our operating subsidiary, Techteam, to obtain approval to send monies out of the PRC. The PRC's national currency, the Yuan, is not a freely convertible currency. Please refer to the risk factors "Governmental control of currency conversion may affect the value of your investment," "The fluctuation of the Renminbi may harm your investment;" and "Recent PRC regulations relating to the establishment of offshore special purpose companies.”

Securities Authorized for Issuance Pursuant to Option Agreement

On January 31, 2008, our Board of Directors authorized the Company to grant each of the persons listed in the following table (the “Grantees”) an aggregate of 123,000 options to purchase our common stock (the “Options”). Such Options have a term of three years and are exercisable at $3.25.

Name
 
Number of Common Stock
Underlying the Options
 
       
Chuanbo Zhao
   
20,000
 
Yu Hao
   
20,000
 
Jie Ma
   
20,000
 
Xilong Wang
   
10,000
 
Ale Fan
   
6,000
 
Heng Song
   
6,000
 
Yufan Zhang
   
5,000
 
Jun Xu
   
5,000
 
Wanjiao Wang
   
5,000
 
Qiong Li
   
5,000
 
Zhi Li
   
5,000
 
Juan Liu
   
2,000
 
Lixiang Chen
   
2,000
 
Yingxia Ma
   
2,000
 
Yong Liu
   
2,000
 
Xiaoyan Huang
   
2,000
 
Yan Zhuang
   
2,000
 
Wei Pu
   
2,000
 
Mingli Wang
   
2,000
 
Total:
   
123,000
 

Penny Stock Regulations

The Securities Enforcement and Penny Stock Reform Act of 1990

The Commission has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system).
 
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A purchaser is purchasing penny stock which limits the ability to sell the stock. The shares offered by this prospectus constitute penny stock under the Securities and Exchange Act. The shares will remain penny stocks for the foreseeable future. The classification of penny stock makes it more difficult for a broker-dealer to sell the stock into a secondary market, which makes it more difficult for a purchaser to liquidate his/her investment. Any broker-dealer engaged by the purchaser for the purpose of selling his or her shares in us will be subject to Rules 15g-1 through 15g-10 of the Securities and Exchange Act. Rather than creating a need to comply with those rules, some broker-dealers will refuse to attempt to sell penny stock.

The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the Commission, which:
 
· contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;

· contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of the Securities Act of 1934, as amended;

· contains a brief, clear, narrative description of a dealer market, including "bid" and "ask" prices for penny stocks and the significance of the spread between the bid and ask price;

· contains a toll-free telephone number for inquiries on disciplinary actions;

· defines significant terms in the disclosure document or in the conduct of trading penny stocks; and

· contains such other information and is in such form (including language, type, size and format) as the Commission shall require by rule or regulation;

The broker-dealer also must provide, prior to effecting any transaction in a penny stock, to the customer:

· the bid and offer quotations for the penny stock;

· the compensation of the broker-dealer and its salesperson in the transaction;

· the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and

· monthly account statements showing the market value of each penny stock held in the customer's account.
 
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In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements will have the effect of reducing the trading activity in the secondary market for our stock because it will be subject to these penny stock rules. Therefore, stockholders may have difficulty selling their securities.

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 prospectus. 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 prospectus.

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.
 
31


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 6,313,616 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
 
 
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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.

Net 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 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.
 
33


LOANS

As of September 30, 2007, our loans payable were as follows:

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

As of September 30, 2007, we had a loan payable of $2,001,923 to Xi’an City Commercial Bank in China, with an annual interest rate of 9.585%, and due on April 1, 2008. The loan is secured by land use rights and buildings owned by us.

As of September 30, 2007, we had a loan payable of $507,153 to Xi’an Agriculture Credit Union, with an annual interest rate of 9.216%, and due on September 26, 2007. The loan has been extended to September 16, 2008 with an annual interest rate of 11,795%. The loan is guaranteed by a former shareholder. Our former shareholder paid interest expenses of $12,393 and $10,991 as of September 30, 2007 and 2006 for this loan. We recorded the interest expense paid by the former shareholder as contributed capital.

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

Interest expense was $92,569 and $91,369 for three months ended September 30, 2007 and 2006, respectively.

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.
 
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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.
 
35


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.
 
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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 loan payables are as followed:
 
Short term loans payable:
     
Xi’an City Commercial Branch
 
$
1,970,580
 
Xi’an Agriculture Credit Union
   
499,214
 
Agriculture Bank
   
1,773,522
 
Total
 
$
4,243,316
 

As of June 30, 2007, we had a loan payable of $1,970,580 to Xi’an City Commercial Bank in China, with an annual interest rate of 9.585%, and due on April 1, 2008. The loan is secured by our land use rights and buildings.
 
37


As of June 30, 2007, we had a loan payable of $499,214 to Xi’an 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. Our former shareholder paid interest expenses of $45,439 and $27,737 as of June 30, 2007, and 2006 for this loan. We recorded the interest expenses paid by the shareholder as contributed capital.

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

The interest expense was $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
 
 
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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.

BUSINESS

Our History

We were incorporated under the laws of the state of Kansas in February 1987. We were formed to design, manufacture and market video products that transmit pictures over standard voice-grade telephone lines.

In December, 1996 the Company ceased operations. The State of Kansas involuntarily dissolved the Company effective December 1996. On December 4, 2006 the State of Kansas reinstated the Company's corporate charter. On June 30, 2006, Craig T. Rogers, the sole remaining director, appointed new directors, Michael Friess, Sanford Schwartz and John Venette, and then resigned as an officer and director of the Company. Our Board of Directors then appointed Michael Friess as President and CEO and John Venette as Secretary, Treasurer and Chief Financial Officer. We then opted to become a "blank check" company and to further engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions.

On February 15, 2007 we held a shareholder meeting to amend the Articles of Incorporation and to increase our authorized capital stock to eight hundred million (800,000,000) shares, to change the par value of our common stock to "no par value" and to elect Michael Friess, Sanford Schwartz and John Venette to serve on our Board of Directors.
 
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On March 15, 2007, we issued 15,000,000 shares of common stock to two individuals (Sanford Schwartz and Michael Friess), for a $10,000 cash payment.

On October 16, 2007, we reincorporated in the state of Nevada by merging with a newly formed Nevada corporation. On the same date, the outstanding shares of our common stock were reduced from 18,746,196 shares to approximately 2,082,910 shares through a 9 for 1 reverse split.

From December 1996 until December 26, 2007, we did not engage in any operations and were dormant.

On December 18, 2007, the Company filed a Certificate of Change with the Secretary of State of the State of Nevada whereby it effected a 6.771 for 1 reverse split of its Common Stock which reduced the authorized shares of common stock from 780,000,000 shares to 115,197,165 and the issued and outstanding shares of common stock from 2,082,910 shares to 307,627 shares.
 
On December 26, 2007, we acquired 100% capital stock of Green New Jersey, through a share exchange in which we issued a controlling number of shares of our common stock to Green New Jersey’s shareholders in exchange for 100% of Green New Jersey’s shares of common stock (the “Share Exchange”). Immediately prior to the Share Exchange, we redeemed 246,148 shares of common stock held by Michael Friess and Sanford Schwartz (the “Redemption”) for $550,000 and issued 111,386 new shares of common stock to Messrs. Schwartz and Friess, who then appointed Tao Li as our Director and Chief Executive Officer and who proceeded to effect the Share Exchange.

The funds used to consummate the Redemption were provided from the proceeds of a private placement of our common stock to 31 accredited investors (the “Investors”)(the “Private Placement”) that closed on December 26, 2007, in connection with the Share Exchange. The Private Placement resulted in gross proceeds of $20,519,255 from the sale of 6,313,616 shares of common stock.

As a result of the above transactions, we ceased being a shell company as such term is defined in Rule 12b-2 under the Securities Exchange Act and own 100% of Green New Jersey which is a holding company for Techteam. Techteam is engaged in the research, development, production and distribution of humic acid organic liquid compound fertilizer and owns 100% capital stock of Jintai, which conducts fertilizer research and development activities and sells high quality fruits and vegetables grown in its research greenhouses.

Effective February 5, 2008, the Company changed its name from Discovery Technologies, Inc. to China Green Agriculture, Inc. to better reflect its business. Related to the name change, the trading symbol changed from DCOV.OB to CGAG.OB on the same day.

40

 
Organizational History of Green Agriculture Holding Corporation

Green New Jersey was incorporated under the laws of New Jersey on January 27, 2007. Until the consummation of the Share Exchange, Yinshing David To, Paul Hickey and Greg Freihofner, (collectively, the “Green Stockholders”) owned 100% of the outstanding capital stock of Green New Jersey. Paul Hickey and Greg Freihofner are registered representatives of Hickey Freihofner Capital, a Division of Brill Securities, Inc., a member of FINRA, MSRB, SIPC, and the Company’s placement agent for the Private Placement and they each owned 2.45% of Green New Jersey.

Organizational History of Shaanxi TechTeam Jinong Humic Acid Product Co., Ltd.
 
TechTeam was formed on July 28, 1998, under PRC law under the original name of Yangling Jinong Humic Acid Product Co., Ltd. In October 2006 the name of TechTeam was changed to its current name, Shaanxi TechTeam Jinong Humic Acid Product Co., Ltd. On August 24, 2007, TechTeam converted from a PRC domestic company status to a wholly foreign owned enterprise status by obtaining the approval from Shaanxi Department of Commerce dated August 3, 2007 approving Green New Jersey’s purchase of 100% of the capital stock of Techteam from Techteam’s shareholders for a price of approximately $4.09 million and the approval of Xi’an Administration for Industry and Commerce dated August 24, 2007. On January 2, 2008, we paid the purchase price by using part of the proceeds from the Private Placement. Techteam’s shareholders agreed to, and caused the purchase price to be delivered to Techteam for use as working capital as required by the Securities Purchase Agreement entered into in connection with the Private Placement.

Since its founding, TechTeam has been engaged in the business of developing, producing and distributing humic acid liquid compound fertilizer throughout most of the PRC.
 
Overview of the Business
     
Products

TechTeam is engaged in the research, development, production and distribution of humic acid organic liquid compound fertilizer (“humic acid organic liquid compound fertilizer”). We believe that TechTeam has one of the most advanced automated humic acid production lines in China.

Humic acid is an essential natural, organic ingredient for a balanced, fertile soil. Humic acid is one of the major constituents of organic matter in fertile soil, making a vital contribution to the quality of the soil’s composition. When plant or animal matter decomposes, it naturally turns into a form of humic acid-rich material, such as peat, lignite or weathered coal. In nature, this complex organic element, humic acid, improves soil structure and aeration, nutrient absorption, water retention, increases the soil’s buffering capacity against fluctuations in pH levels, reduces soil crusting problems and erosion from wind and water and radical toxic pollutants. Humic acid promotes the development of root systems, seed germination, overall plant development, health, resistance to stress, and overall appearance. We believe that no known synthetic material can match humic acid's effectiveness and versatility.
 
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The pure humic acid used in TechTeam’s fertilizer is distilled and extracted from weathered coal by way of alkaline digestion and acid recrystallization. Benefits of using TechTeam’s products are to stimulate growth, yield, protect plants from drought, disease and temperature damage while improving soil structure and enhancing soil fertility. TechTeam has a multi-tiered line of 106 products, covering three product categories: Broad Spectrum (general use), Functional (enhances certain characteristics) and Tailored (for very specific crops).

“Green” Certification

All of our fertilizer products are certified by the PRC government as green products for growing Grade AA “Green” foods. Green food certified by the China Green Food Research Center can be divided into 2 groups: grade A (allowed to use certain amount of chemical materials) and Grade AA (containing little or no chemical materials - also know as organic food). The Green food certification came about in response to the overuse of fertilizers and pesticides in China, as well as the use of unsafe fertilizers and pesticides, which led to the sale of products with dangerous and high concentrations of harmful chemicals and several publicized incidents of food-caused illness. In addition to creating a dangerous situation for domestic consumers, it also created problems for China’s food exporters which, in many cases, were barred from exporting to certain countries which have minimum acceptable standards for pesticide and chemical use.

In 1990, the PRC Ministry of Agriculture began to encourage the production of Green foods, which are foods that are safe, free from pollutants and harmful chemicals, and of good quality. In 1992, the PRC Ministry of Agriculture established the China Green Food Research Center with a number of branches charged with inspecting food quality and provincial level centers to monitor local food quality in each province. The China Green Food Research Center is a private, for profit entity. In 1993, the Ministry of Agriculture established regulations on the use of Green food labeling. In 1994, the PRC government issued an "Agenda in the 21st Century", in which there was specific discussion over the development of a Green food industry. In 1996, an identifying trademark for Green foods was registered in the PRC and put into use.

In 1997, the PRC State Council approved the "Plan to Improve Nutrition in Chinese People's Diets," which called for more Green foods to protect people's heath and well being.

Today, with the rapid growth of PRC's economy and per capita income, people have become more health conscious. As a result, there is a growing market demand for Green food products. Fruits and vegetables labeled as Green are generally available in supermarkets throughout the PRC and are typically sold at higher prices.

According to the Journal of Organic Systems, a scientific journal particular to organic systems published by a group of professors in Australia and New Zealand, China may be at the onset of an organic agriculture revolution. From 2000 to 2006, China has moved from 45th to second position in the world in number of hectares under organic management. China now has more land under organic horticulture than any other country. In the year 2005/2006, China added 12% to the world's organic area. This accounted for 63% of the world's annual increase in organic land, and China now has 11% of the world's organically managed land.
 
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According to the People's Daily Online, by 2003, there were 2,047 Green food producers in China which sold approximately 72.3 billion RMB of food to the domestic market and more than $1 billion to the overseas market.

Our products have quickly gained market share and general acceptance due to their high, consistent quality and tailored advantages. We believe that we are one of the top producers and suppliers of humic acid organic liquid compound fertilizer in the PRC with an annual production capacity of 10,000 metric tons (1 metric ton=1,000kg). We currently produce a total of 106 different organic fertilizer products.

Industry and Principal Markets

We currently market our fertilizer products to private wholesalers and retailers of agricultural farm products in 27 provinces in the PRC. The leading five provinces by revenue for the fiscal year ended June 30, 2007 were Heilongjiang (9.99%), Guangdong (7.81%), Xinjiang (6.59%), Shandong (5.81%), and Henan (5.80%). Their geographically diverse distribution protects our leading national market position from regional competitors.

We utilize a multi-tiered product strategy pursuant to which we tailor our products to different needs and preferences of the Chinese fertilizer market, which vary 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. Therefore, they can gain more return on investment from more expensive, specialized fertilizers. In the Northwest areas, however, farmers’ low profit margin crops prevent them from investing too much in fertilizer and therefore, we market a broader spectrum, low-cost fertilizer in that area.

We produce and sell approximately 10,000 metric tons of organic fertilizer products per year. Our fertilizers are very concentrated liquids which require an application of approximately 120 milliliter (“ml”) per mu, per time with the consideration of the different crops and regions if a farmer has 4 mu of land in China (1 mu = .165 acres).

Our research and development capabilities, described more fully below, 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. For example, our “Red Medlar” product is specially designed for medlar ( a small, brown, apple like fruit, hard and bitter when ripe and eaten only when partly decayed) in the Ningxia Autonomous Region. This product can effectively increase medlar yield and protect it from foliar disease (the most common culprit for decreased yields of medlar) and at the same time increase the quality of the fruit.

China is both the world’s largest manufacturer and consumer of fertilizer. As of 2005, Chinese fertilizer accounted for 33% of the total world output and 35% of the total world consumption (Source: China National Agricultural Means of Production Circulation Association). In the future, we believe a greater emphasis will be put on the development of organic compound fertilizers for the following reasons:
 
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Shrinking Arable land and Exploding Population in the PRC
 
In 2005, per capita farmland in China was only 940 square meters, which is approximately 40% of the world level (Source: The Ministry of Land and Resource, PRC). It is predicted that by the middle of the 21 st century, the Chinese population will reach 1.6 billion (Source: News Office of the State Council, PRC) and assuming that the current decreasing trend of farmland in China continues, arable land has been predicted to decrease by half (Lester R Brown, Who Will Feed China?, World Watch). This implies that by the middle of this century, per capita farmland in China may be only 16% of the world average level. Moreover, it is estimated that by 2030, global warming may further reduce China’s current grain production by 5-10% (Source: State Meteorological Administration). Faced with shrinking arable land resources, an exploding population and global warming effects, we believe that high yielding and environmentally sustainable fertilizers will be crucial to China’s agricultural production.

Environmental Concerns
 
In 2005, Chinese farmers used approximately 47.66 million metric tons of chemical fertilizers (Source: Chinese Statistic Bureau 2006 Yearbook), or about 400 kg per hectare (1 hectare=10,000m 2 ) of farmland, which is far above the acceptable safe limit of 225 kg per hectare in developed countries (Source: Chinese Environmental Science Research Institution).

After a long period of chemical fertilizer overuse on China’s farmland, accumulated heavy metals have hardened the soil and reduced its fertility. Surface water has, and is being eutrophicated (nutrient-enriched, meaning an increase in chemicals resulting in severe reductions in water quality and in fish and other animal populations). However, balanced Green fertilizers which contain humic acid, by increasing nutrient uptake, not only reduce the amount of traditional chemical fertilizers needed per hectare, but also cleanse the soil of the existing chemical residue and stimulate crop growth, thus further improving the stability of the soil’s ecosystem. Also, today, we believe people are more aware of the need for high-quality Green agricultural products, consequently, non-polluting, residueless Green fertilizer is in growing demand in order to satisfy the market for safe and Green food.

Trend

In 2003, only 25% of the fertilizers used in China’s agricultural industry were organic (Source: Agriculture Technology Promotion Centre). However, agriculture specialists suggest that the optimal ratio of organic versus chemical fertilizer should be around 50% as it is in developed countries (Source: Chinese Chemical & Industrial Technology Research Institute). In 2005, compound fertilizer accounted for 27% of the total fertilizer consumed in China. However, the quality of such fertilizer 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, thus ensuring significant room for its future development in the Chinese agricultural production system.

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Principal products and services

Our core product is humic acid organic liquid compound fertilizer. The principal raw material used in this product is weathered coal, which is primarily identified by its well-developed “oxidation rims” along boundaries and fissures of the coal. humic acid organic liquid compound fertilizer is made when weathered coal has been processed by extraction, filtering and condensation. The resulting material is then chelated (to combine a metal ion with a chemical compound to form a ring) with inorganic nutrient elements (such as nitrogen, phosphorus and potassium) and microelements nutrient (such as cuprum, iron, zinc, manganese, boron, and molybdenum.) by adding active and catalytic agents.

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

Our fertilizers perform the following functions:

1.   Stimulate seed germination and viability, root respiration, formation and growth.

2.   Produce thicker, greener, and healthier foliage.  

3.   Produce more, larger, longer lasting, and more beautiful flowers.

4.   Increase significantly the protein, vitamin, and mineral contents of most fruits and vegetables.

5.   Help retain water-soluble inorganic fertilizers in soils releasing them as needed to the growing plants to make soil more fertile and productive.

6.   Increase the water retention of soil to help plants to resist drought.

7.   Reduce fertilizer requirements and increase yields in most crops.

8.   Increase aeration of the soil.

Our 106 products can be divided into three main functional types:

1.   Broad Spectrum Type: Can be applied to all kinds of crops.

2.   Functional Type: Has certain special effects on crops. Examples are growth regulation fertilizer and fertilizer for promoting blooming and fruiting.
 
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3.   Tailored Type: Target specific crops. Examples are specific fertilizers for strawberries and specific fertilizer for gourd vegetables.

Our products are dark brown to black in color, and principally used as a foliar fertilizer (a liquid, water soluble fertilizer applied to a plant’s foliage by a fine spray so that the plant can absorb the nutrients through its leaves), or sprayed directly on soil or injected into the irrigation systems.

Marketing

Our sales staff is trained to knowledgeably work with distributors and customers providing the right product and after-sales support. In addition, the sales staff shares its knowledge base by organizing training courses about agricultural techniques that are offered to the public on a regular basis.

The Chinese fertilizer market is generally a commoditized industry. We use our multi-tiered branding strategy to target different market segments with tailored products. Currently, “JINONG” is our high end product, “ZHIMEIZI,” “LEPUSHI” and: LIBANGNONG” are our middle tier products and “WEIYINONG” is our lower tier product. The JINONG line has a total of 50 products, and accounted for approximately 70% and 62% of our sales revenue and net income, respectively, for the fiscal year ended June 30, 2007.

We have a team of five marketing personnel in our principal office who collect and correlate marketing data from across the 27 provinces. By industry norms, we believe that our product development cycle of 3 to 9 months is relatively short. Due to our comprehensive data gathering network, we are able to assemble nationwide market analyses, ascertain new product needs, estimate demand and customer demographics and develop new products.

Although we utilize television advertisements and mass media, the majority of our marketing efforts are conducted through joint activities with our distributors. Through our distributors, TechTeam has contracted approximately 100 local personnel, who do on-site marketing using pamphlets, brochures and posters at the point of sale outlets and do after sales services. Techteam itself has a staff of 85 marketing personnel. Our staff works with and trains distributors and retail clients through lectures and interactive meetings. Our staff emphasizes the technological components of our products to help end users understand the differences in products available and how to use them. Word-of-mouth advertising and sample trials of new products in new areas are essential. Also, we have has set up nation-wide hotlines to answer customer questions and has constructed an SMS text message platform to have real-time interaction with farmers. We have recently commenced use of this platform which is currently available only in certain areas.

Raw Materials and Suppliers

Among all the three materials that can be utilized to produce humic acid (weathered coal, lignite and peat), we have chosen weathered coal as our principal raw material because it is abundant and relatively cheap (about $50/metric ton). Although there are numerous weathered coal suppliers, our principal supplier is the Lupoling Coal Mine Industry and Trade Company of Jinzhong City located in the Shaanxi Province. We utilize spectral analysis technology to select the raw material with the best quality, and we have specially trained buyers to make sure the quality and consistency of the raw materials are maintained.
 
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In addition to weathered coal, we also utilize up to 60 different components in our production process, all of which can be readily obtained from numerous sources in local markets.

Our products are packaged in bottles, bags and boxes. Each type of packaging material, along with packaging labels, are purchased from 3 to 4 manufacturers. These materials are readily available.

Distribution, Sales Network, Customers
 
In 1978, the “supply and marketing cooperative” system, a state-owned distribution network from national, provincial level down to township and village level, was replaced by private wholesalers and retailers who became the principal distributors of agricultural materials. In this highly fragmented market, we were able to set up our own sales network by establishing our distribution through strategic relationships with private wholesalers or distributors.

Currently, we sell our products through a carefully constructed network of about 450 regional distributors covering 27 provinces in China. The distributors in turn sell the products to the smaller, local retail outlets who then sell to the end users (typically farmers). We do not grant provincial or regional exclusivity because there is currently no single distributor sufficiently strong enough to warrant exclusivity. We enter into non-exclusive written distribution agreements with chosen distributors who demonstrate their ability in local business experience and sufficient regional sales networks. The distribution agreements do not dictate distribution quantity because changes in local market condition and weather changes can dramatically affect sales quotas.

We have established representative offices and sales outlets in Beijing, Tianjin, Shanghai and Chongqing. These regional offices allow us to more effectively coordinate national sales and marketing teams. In addition, our sales department works closely with distributors in various provinces to promote our products, maintain our profile and to continue to cultivate relationships.

We also manufacture humic acid organic liquid compound fertilizer for export to foreign countries, including India, Ecuador, Pakistan and Lebanon through contracted distributors. Total revenues from exported products currently account for approximately 1% of TechTeam’s sales revenue. We anticipate that this amount can increase significantly as we have recently contracted with foreign distributors to sell our products.

For the fiscal year ended June 30, 2007, sales through our top 10 distributors accounted for approximately 10% of our annual revenue, with the highest proportion of sales that any one customer represented accounting for approximately 1.32% of sales revenue. As we do not have a significant concentration of customers, we believe that the loss of any one customer would not have any significant effect on our business.

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Competition

The Chinese fertilizer industry is highly fragmented. In 2005, there were approximately 1,924 manufacturers, of which approximately 80% were small local, regional manufacturers (Source: Chinese Fertilizer Net). Currently, our competitors are numerous small-sized local manufacturers, 3-4 larger national competitors, and 2-3 international companies.

Small competitors are generally amino acid compound fertilizer producers, who are very price competitive. The smaller companies, however, tend to lack sufficient quality control or process control technologies which lead to inconsistent quality.  

Currently, TechTeam is competing with following larger national or regional competitors:

1. Agritech (China) Fertilizer Co., Ltd.
 
As a wholly-owned Chinese subsidiary of China Agritech Inc, a U.S. listed company (OTCBB:CAGC), Agritech is engaged in the research and development, manufacture, sales and technical support of hi-tech Green agricultural resources with green organic high-effect liquid compound fertilizer as its core product. Its production was approximately 9000 metric tons in 2006.

2. Qiqihaer Fuer Agriculture Co., Ltd, Heilongjiang Province

Established in 1986, Fuer Agriculture Co., Ltd. is engaged in research and development, manufacture and sales of high-tech foliar fertilizers, compound fertilizers, biological pesticide and improved seeds. Its annual production volume is approximately 1,500 metric tons for foliar fertilizers and 10,000 metric tons for compound fertilizers. We are competing with this company principally in the Heilongjiang province.

3. Heze Exploitation Region Caozhou Chamurgy Co., Ltd.

The Heze Exploitation Region Caozhou Chamurgy Co., Ltd. is an agricultural products company. Its principal products include foliar, water flush, compound, organic fertilizer and pesticides. Its products are sold in 30 provinces in China.

4. Guangxi Beihai Penshibao Co., Ltd.
 
Founded in 1985, Guangxi Beihai Penshibao Co., Ltd. is a wholly foreign owned enterprise engaged in research, production, and promotion of foliar fertilizer. Its total assets in 2004 were $14.4 million, and its total revenue in 2006 was $33.3 million.

In December 2006, the Chinese fertilizer market was fully opened to foreign companies, meaning foreign fertilizer companies could set up manufacturing bases in China and compete directly with domestic companies in the Chinese fertilizer market. According to its WTO commitment, in January 2007, the PRC has increased its fertilizer import quota and reduced the import tariffs on foreign fertilizer to 1%.

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Foreign fertilizers are subject to import quotas as follows: carbamide 3.3 million metric tons, phosphor 6.9 million metric tons, and compound fertilizer 3.45 million metric tons. Foreign fertilizer brands are generally more expensive than domestic fertilizer brands, and as a result, as of 2005, only 4.1 million metric tons of fertilizer were imported, out of total consumption of 47.66 million metric tons, or 8.6% (Source: China Customs). Therefore, we do not consider foreign competition to be significant at this time.

Our principal foreign competitors are:

1. Cuikang (Hong Kong) Co., Ltd.
 
Cuikang (Hong Kong) Co., Ltd. Is the China distributor and manufacturer of plant nutrition products in Southern and Northern China for Yara Phosyn Ltd, which was established in 1967 in Pocklington, England. The company is engaged in research and development, manufacturing, processing and marketing for nutrition products for plants. As global market leader, Yara Phosyn today controls a truly international business with over 90% of sales coming from overseas markets.

2. Beihai Komix activated liquid fertilizer Co., Ltd.

Beihai Komix activated liquid fertilizer company is a wholly foreign owned company authorized to produce and sell Komix liquid fertilizer which is broad spectrum liquid compound type, and a tailored liquid compound type of fertilizer.

Competitive Advantages

We believe that we have the following five competitive advantages:

1. Nation-wide sales network

Under the PRC planned economy before 1978, all agricultural production material was purchased and distributed by a “supply and marketing cooperative” system, which was a network of state-owned distributors from national and provincial level down to the township and village level. However, after reforms, all “supply and marketing cooperatives” became private wholesalers or retailers. In this highly fragmented market, we were able to set up our own distribution channels with private distributors and link them together. We have over 450 distributors nation-wide across 27 provinces which sell its products to retail stores scattered in villages and townships across China.

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2. Strong research and development

Our research and development is managed effectively. Typically, it takes only three to nine months from the decision to develop a new product to mass production, which ensures product flow and helps to maintain market share. Our strong research and development department is based at our intelligent greenhouse facilities. The advanced equipment and soil-free techniques in such facilities simulate the natural environment in different areas and control selected factors. As a result, 60%-70% of TechTeam’s experimental work can be done in the greenhouse, thereby speeding up product development cycles, and cutting costs without sacrificing accuracy of results. Moreover, the agricultural products grown in the greenhouse facility are sold to high end supermarkets and airline companies, making our research and development activities a profit center. During the fiscal year ended June 30, 2006, we generated revenue of $2 million from our research and development   base and we anticipate that this source of revenue can grow in the future. For more information on our research and development activities, please refer to “Research and Development; Growth Strategy” on page 23 of this Current Report.

3. Well known brand

As a result of TechTeam’s high quality products, strong research and development force, a nation—wide sales network and effective marketing efforts, our Jinong and other four brands are enjoying higher market exposure and bigger market share. TechTeam believes that its customers’ purchasing decisions are often based on strong brand recognition.

4. Automated Production Line and Process

All of our major production procedures are controlled by a centralized computer system with access rights management, and our 47,000 square meter production facility’s production line is fully automated. Our automated systems ensure that content in each product is measured exactly according to its recipe by linking the computer server with the electronic weights on each of the material input bins. In addition, spectral analysis is used to accurately check the composition of materials.

5. After sales services

We have contracted with more than 100 local sales people to do on-site marketing for our products. The sales personnel speak local dialects and are familiar with local farmers’ needs. We have one district manager responsible for all the marketing personnel and services in each region.

Intellectual Property

Xi’an Techteam Science and Technology Industry (Group) Co., Ltd. (the “Group Company”), a company in which Mr. Tao Li has a controlling interest, is the registered owner of the following trademark. The application for the transfer of the registered owner from the Group Company to Techteam was submitted to the PRC Trademark Office on October 15, 2007. During the interim period from the date of the transfer application through the date the transfer is effective, pursuant to a Trademark License Agreement by and between the Group Company and Techteam dated December 19, 2007, Techteam received an irrevocable, royalty free, exclusive license on the trademark.
 
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Jinong (“Farmers’ Helper”)   Registration number: No. 1357523  
 
The following three trademarks are held under the name of Techteam’s predecessor, Yanglin Techteam Jinong Humic Acid Product Co., Ltd. (“Yanglin”). Yanglin and Techteam have applied with the PRC State Trademark Offices for the update of registered owner’s information to reflect Techteam’s company name and address.
 
Libangnong (“Farmer’s Mighty Helper”)   Registration number: No.1503
Zhimeizi (“Make Plants Grow with Luster”)   Registration number: No. 1504
Lepushi (“Make Farming Pleasant”)   Registration number: No. 1428

Techteam has also applied for two patents: one for a fertilizer formulation and one for our proprietary production line and manufacturing processes.
 
In addition to trademark and patent protection law in China, we also rely on contractual confidentiality provisions to protect our intellectual property rights and brand. Our research and development personnel and executive officers are subject to confidentiality agreements to keep our proprietary information confidential. In addition, they are subject to a covenant not to compete following the termination of employment with our Company and they agree that any work product belongs to our Company. We also take the further steps of limiting the number of people involved in production and, instead, of making available lists of ingredients in fertilizers to production employees, we refer to them by numbers.

Employees

TechTeam has 123 full-time employees. Of that amount, 27 are in administration, finance and research and development, 11 in production and 85 in marketing and sales.

Research and Development; Growth Strategy

In 2006, we invested approximately $10 million to purchase and construct an advanced intelligent greenhouse to serve as our research and development base. We believe it has quickly become one of the leading green fertilizer research facilities in China. Flowers, fruits and vegetables that are grown for experimental testing of TechTeam’s humic acid organic liquid compound fertilizers in the greenhouses are of high quality and value and are sold to local supermarkets and airline companies. We sold approximately $2 million of these products during the first two quarters of fiscal 2007 and we believe these sales, which make our research and development facility a profit center, provide us with a significant strategic advantage.

Our research and development center covers approximately 137,000 square meters, and consists of six intelligent greenhouses, made by ACM-China Greenhouse Engineering (Shanghai) Co., Ltd., the China branch of the Spanish manufacturer of greenhouse facilities. In addition, the facility is equipped with an advanced drip irrigation system supplied by Eldar-Shany Technology Co., Ltd. of Israel. We also have water purification equipment supplied by Beijing Nuobaijing Science & Technology Development Co., Ltd., a professional supplier of water purification facilities, which allow us to perform tests with different pH levels of water.
 
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We have six technicians running and overseeing the research and development center. We also cooperate with the Shanghai Academy of Agricultural Science and contract with experts in the humic acid fertilizer industry as technical consultants to provide support for our research and development, quality inspection and staff training.

The Company’s current research and development facilities are separated into two parts. In one part, design and analysis is performed. At the second part, testing is conducted. The locations are about a 60 minute drive apart. We plan to further enhance our research and development capabilities by using part of the capital raised in the Private Placement to construct and equip an improved facility on the same grounds as our greenhouses.

New Product Development Process

Quickly developing new products and reducing the product development cycles are the principal purposes of our research and development facilities. There are eight distinct phases in our product develop cycle:

1.   Market Research: Front line staff continually collects new field data relating to changes in market demand such as new product market size, price sensitivity and competition.

2.   Feasibility Study Report: A team of five staff members correlate the data from across China and compile a written feasibility study report on the basis of the information collected detailing the product, expected market size, pricing, segmentation, competition.

3.   Research and Development Budget: A budget is calculated for the potential revenue and cost of developing the new product.

4.   Research and Development Approval: The budget report is presented for the CEO’s approval.

5.   Laboratory Sample and Test: Samples are made and tested in the laboratory using advanced spectral analysis equipment.

6.   Field Experiments: Field experiments are carried out, usually in the greenhouse.

7.   Trial Sales.

8.   Mass Production.

New Products Developed in 2007
 
With our strong and advanced research and development, we have developed more than 106 products. In early 2007, six new products were developed:
 
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1.   Guokangmei Green Nutriment Fertilizer: Supplies nutrients to strength and enhance fruit size and sugar content.

2.   Jinong Shizhuang: Balances the nutrients, stimulates the activity of plant enzymes and improves the quality and accelerates the growth of plants.

3.   Libangnong Humic Acid Potassium Fertilizer: Supplies potassium for the plants to improve the quality, and increases the vitamin and sugar content.

4.   Zhimeizi Organic Liquid Compound Fertilizer: Meets the overall needs for nitrogen, phosphor and potassium of plants.

5.   Yichongwang No.1: Used by irrigating to the soil to stimulate seed germination and viability, and root respiration and formation.

6.   Citrus Fertilizer: a tailored fertilizer for citrus, to quickly supply elements to promote blooming and prevent shattering, to enhance orange size and increase sugar and vitamin content.

In addition to developing new humic acid based fertilizer products, we are carrying out some projects to develop derivatives from humic acid; examples are humic acid liquid film mulch and humic acid sodium fodder additives. Also, some soil-less seeding and breeding of colored-leaf plants, rare-flowers and new species of fruits and vegetables are in the research stages.

Manufacturing Process

Our production procedure is scientifically designed and its automated production line and strict quality control system ensures consistent high quality. Our fully-automated production line is run by a central control system and only needs the input of control technicians. The machinery and vats for the line have been supplied by a local medical machinery manufacturer and the automated control systems were developed by us. Our access rights management system ensures that our proprietary ingredient mixes are protected at all times. Also, by linking the computer server with the electronic weights on each of the material input bins, the exact quantity of each element is delivered every time, thus maintaining quality and reducing waste.

The production facility is housed in a 47,000 sq. meter building. This facility contains a total of 21 vats, 9 of which have a volume of 8 metric tons (1,000 kg), 2 with a volume of 12 metric tons, 8 with volume of 2 metric tons and 2 with volume of 1 metric ton. Eleven employees are dedicated to production.

Inventory

Our efficient production methods allow for low inventory levels, which are typically less than one week’s finished stock, with the majority of orders being shipped directly to the client after production. We typically carry an inventory of six months of weathered coal.
 
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Government Regulation

Our products and services are subject to regulation by governmental agencies in the PRC and Shaanxi Province. Business and company registrations, along with the products, are certified on a regular basis and must be in compliance with the laws and regulations of the PRC and provincial and local governments and industry agencies, which are controlled and monitored through the issuance of licenses. Our licenses include:

Operating license

Our operating license enables us to undertake research and development, production, sales and services of humic acid liquid fertilizer, sales of pesticides, and export and import of products, technology and equipment. The registration No. is 6100001020488, and it is valid between March 7, 2006 and March 6, 2010. Once the term has expired, the license is renewable.
 
Fertilizer Registration

Fertilizer registration is required for the production of liquid fertilizer and issued by the Ministry of Agriculture of the PRC. The registration numbers are: Agriculture Fertilizer No. 467 (2004) No.1053, (2004) No.1054, (2004) No. 1427, and (2004) No.1428.

PROPERTIES

Principal Office and Manufacturing Facilities

Our principal executive offices are located at 3rd floor, Borough A, Block A. No. 181, South Taibai Road, Xi’an, Shaanxi province, PRC, 710065, and the telephone number is 011-86-29-88266386. The office space is approximately 800 square meters in area.

We also own a factory in Yang Ling Agriculture High-tech Demonstration Zone, situated in No. 6 Guhua 5 Road, Yangling Xi’an, Shaanxi province, PRC, 712100. The factory occupies an aggregate of approximately 47,081 square meters of land and contains our production lines, office buildings, warehouses and research laboratories.

TechTeam’s wholly owned subsidiary, Xi’an Jintai Agriculture Technology Development Company, is located in Caotan Modern Agriculture Development Zone in the northern suburb area of Xi’an. The Company has nine intelligent greenhouses and six affiliated buildings, occupying a total area of approximately137,000 square meters.

There is no private ownership of land in China. All land ownership is held by the government of the PRC, its agencies and collectives. Land use rights can be transferred upon approval by the land administrative authorities of the PRC (State Land Administration Bureau) upon payment of the required land transfer fee. We own the land use rights for the land on which our manufacturing facility is situated, which have a term of 50 years from 2001. We lease the 137,000 square meters of land used for our research and development facility from Xi’an Jinong Hi-tech Agriculture Demonstration Zone for 10 years with an annual rent of approximately $13,690.
 
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LEGAL PROCEEDINGS

We know of no material, active, pending or threatened proceeding against us, Green New Jersey, TechTeam or Jintai, nor are we involved as a plaintiff in any material proceeding or pending litigation.

DIRECTORS AND EXECUTIVE OFFICERS

The Company’s Directors and Executive Officers

Each of our current executive officers and each of our directors is a resident of the PRC. As a result, it may be difficult for investors to affect service of process within the United States upon them or to enforce court judgments obtained against them in the United States courts.

Directors and Executive Officers
 
Position/Title
 
 Age
Tao Li
 
Chairman, Chief Executive Officer and President
 
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Hao Yu
 
Director and Chief Financial Officer
 
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Lian Fu Liu
 
Director
 
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The following sets forth biographical information regarding the above Officers and Directors. In addition, it is anticipated that an additional two independent directors will be appointed within 120 days of the closing of the Private Placement pursuant to the requirements of the Securities Purchase Agreement.

Tao Li, Chairman of the Board of Directors, Chief Executive Officer and President. Mr. Li has served as the President and CEO of TechTeam since 2000. Mr. Li established Xi’an TechTeam Industry (Group) Co., Ltd. in 1996 and established TechTeam in 2000. He graduated from Northwest Polytechnic University and obtained his Master’s degree in heat and metal treatment. Mr. Li is the current Vice Chairman of the China Green Food Association. Previously, he has held positions at the World Bank Loan Office of China Education Commission, National Key Laboratory for Low Temperature Technology, and Northwest Polytechnic University. Mr. Li is active in Shaanxi Province business and trade organizations including as a member of the CPPCC Shaanxi Committee, the Shaanxi Provincial Decision-Making Consultation Committee, Vice Chairman of the Shaanxi Provincial Federation of Industry and Commerce, Vice President of the Shaanxi Overseas Friendship Association, Vice Chairman of the Shaanxi Provincial Credit Association, Vice Chairman of the Shaanxi Provincial Youth Entrepreneurs Association, Vice Chairman of the Xi’an Municipal Federation of Industry and Commerce and Vice Chairman of the Xi’an Municipal Youth Entrepreneurs Association.

55

 
Yu Hao, Director and Chief Financial Officer. Mr. Hao has served as its Director of Finance at TechTeam since 2002. Prior to that, he was a financial manager for Shaanxi Fengxiang Automobile Repair Plant, and Shaanxi Baoji Xinsanwei Import & Export Trading Co., Ltd. Mr. Hao holds a degree in Accounting from Northwest Institute of Light Industry.

Lian Fu Liu, Director. Mr. Liu has served as the Chairman of the China Green Food Association since 1998. From 1992 to 1998, Mr. Liu was a Director and Senior Engineer for the China Green Food Development Center. Prior to that, Mr. Liu was a Vice Director of the PRC Ministry of Agriculture. Mr. Li graduated from Beijing Forestry University and studied soil conservation.

Directors and Executive Officers of TechTeam
 
TechTeam’s current executive officers and Directors are as follows:

Directors and Executive Officers
 
Position/Title 
 
 Age
Tao Li
 
Director and Chief Executive Officer and President
 
42
Xianglan Li
 
General Engineer
 
68
Yumin Liu
 
Technical Director
 
69
Yu Hao
 
Financial Manager
 
41
Feng Wang
 
Sales Director
 
31
XiuPing Ren
 
Director
 
32
HaiHong Xu
 
Director
 
34
WanJiao Wang
 
Director
 
27
Xue Tao Chen
 
Director
 
37

Xianglan Li, General Engineer . Professor Li has served as general engineer at TechTeam since 2000. Professor Li graduated from Northwest A&F University and is an expert in Chinese soil organic content.

Yumin Liu, Technical Director . Professor Liu has served as Technical Director at TechTeam since 2000. Professor Liu graduated from Northwest A&F University and is a well-known expert in Agriculture, Geography and Soil & Water Conservation.
 
Wang Feng, Sales Director . Mr. Wang is the Director of Sales at TechTeam and has been with us since August 2002. Mr. Wang previously was our sales manager in the Guangdong and Gansu areas.

XiuPing Ren, Director. Mr. Ren is the Deputy Director of the Group Office of TechTeam and has been with us since 2004. From 1999 to 2004 Mr. Ren held positions as Director of Human Resources and Director of Market Planning of Xi’an Minsheng Group.

56

HaiHong Xu, Director. Mr. Xu has served as the Director of the Administrative Group of TechTeam since 2007. He previously held positions with Xi'an Techteam Engineering & Industry (Group) Co., Ltd., Shaanxi Tongli Information Technology Co., Ltd and Xi'an Minsheng Group.

WanJiao Wang, Director. Mr. Wang has served as the Director of the Administrative Group of TechTeam since 2006. He previously held the position of Deputy Director of the Administration Office at Yangling Jinong Humic Acid Product Co., Ltd.

XueTao Chen, Director. Mr. Chen has served as the General Manger of Shaanxi Tongli Computer System Co., Ltd since 2002. He previously held a position as Vice General Manger at Xi'an Yuansheng Investment Co., Ltd.
 
There are no family relationships among our directors or executive officers. To our knowledge, none of our directors and executive officers (including the directors   and executive officers of our subsidiaries) has been involved in any of the following proceeding during the past five years:

1.  
any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
2.  
any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
3.  
being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or
4.  
being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

Audit Committee Financial Expert

Our board of directors currently acts as our audit committee. We currently do not have a member who qualifies as an “audit committee financial expert” as defined in Item 401(e) of Regulation S-B and is “independent” as the term is used in Item 7(d) (3) (iv) of Schedule 14A under the Securities Exchange Act. Our board of directors is in the process of searching for a suitable candidate for this position.

Audit Committee

We have not yet appointed an audit committee. At the present time, we believe that the members of board of directors are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting.

57

EXECUTIVE COMPENSATION

The Company’s executive officers hold the same position with Green New Jersey and TechTeam. The Company’s executive officers currently do not receive any compensation for serving as executive officers of the Company or Green New Jersey, but are compensated by and through TechTeam. The following table sets forth information concerning cash and non-cash compensation paid by TechTeam to its Chief Executive Officer, Chief Financial Officer and Chief Operating Officer for each of the two fiscal years ended June 30, 2007 and June 30, 2006. No executive officer of the Company, Green New Jersey or TechTeam received compensation in excess of $100,000 for any of those two years.

Name and
Principal
Position
 
Year Ended
 
Salary ($)
 
Bonus
($)
 
Stock
Awards 
 
Non-Equity
Incentive Plan
Compensation
(S)
 
Non-
Qualified
Deferred
Compensation
Earnings   ($)
 
All Other
Compensation   ($)
 
Total ($)
 
Tao Li
CEO and President
   
06/30/2006
 
$
4863.24
   
-
   
-
   
-
   
-
 
$
2763.94
 
$
7627.18
 
(PEO)
   
06/30/2007
 
$
4863.24
   
-
   
-
   
-
   
-
 
$
2963.94
 
$
7627.18
 
                                                   
Yu Hao
CFO
   
06/30/2006
 
$
8105.40
   
-
   
-
   
-
   
-
 
$
939.38
 
$
9044.78
 
(PFO)
   
06/30/2007
 
$
8105.40
   
-
   
-
   
-
   
-
 
$
939.38
 
$
9044.78
 
 
Outstanding Equity Awards at Fiscal Year-End. There were no individual grants of stock options to purchase our common stock made to the named executive officers in the Summary Compensation Table above during the fiscal year ended June 30, 2007.

On January 31, 2008, we granted 20,000 stock options to our CFO, Mr. Yu Hao with a term of three years with an exercise price of $3.25.

The following table provides information on all restricted stock and stock option awards held by our named executive officer as of the date of this prospectus.

 
 
Option Awards
 
Stock Awards
 
Name
 
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
 
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercis-able
 
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
 
Option
Exercise
Price
($)
 
Option
Expiration
Date
 
Number
of
Shares
or Units
of Stock
That
Have
Not
Vested
(#)
 
Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
($)
 
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)
 
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
($)
 
Yu Hao
CFO
(PFO)
   
20,000
   
   
0
   
3.25
   
01/29/2011
   
   
   
   
 
 
58

 
Employment Agreements

Tao Li. Pursuant to an employment agreement between Techteam and Mr. Tao Li dated March 22, 2007, Tao Li is employed by Techteam as its Chief Executive Officer. The term of the agreement is from March 22, 2007 to March 21, 2009. The agreement is terminable by either party with 30 day prior written notice.

Hao Yu. Pursuant to an employment agreement between Techteam and Mr. Yu Hao dated October 15, 2006, Mr. Yu Hao is employed by Techteam as its Chief Financial Officer. The term of the agreement is from October 15, 2006 to October 14, 2008. The agreement is terminable by either party with 30 day prior written notice.

Director Compensation

We have no formal or informal arrangements or agreements to compensate our directors for services they provide as directors. We plan to implement a compensation program for our independent directors, which we anticipate will include such elements as an annual retainer, meeting attendance fees and stock options. The details of such compensation program will be negotiated with each such director.
 
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
 
The following table sets forth certain information as of the date of this prospectus with respect to the beneficial ownership of our common stock, the sole outstanding class of our voting securities, by (i) any person or group owning more than 5% of each class of voting securities, (ii) each director, (iii) each executive officer named in the Summary Compensation Table in the section entitled “Executive Compensation” below and (iv) all executive officers and directors as a group.

As of the date of this prospectus, an aggregate of 18,314,017 shares of our common stock were outstanding.
 
In determining the percent of common stock owned by a person as of the date of this prospectus, we divided (a) the number of shares of common stock beneficially owned by such person, by (b) the sum of the total shares of common stock outstanding on the date of this prospectus, plus the number of shares of common stock beneficially owned by such person which were not outstanding, but which could be acquired by the person within 60 days after the date herein upon exercise of options, if any.
 
59


Title of Class
 
Name and Address of Beneficial
Owners (1) (2)
 
Amount and
Nature of
Beneficial
Ownership
 
Percent of
Class
 
               
   
Greater Than 5% Shareholders
         
Common Stock
 
Yinshing David To
 
10,241,893
(3)
55.6
%
               
   
Directors and Executive Officers
         
Common Stock
 
Tao Li
 
0
(4)
0
%
Common Stock
 
Yu Hao
 
20,000
(5)
1
%
Common Stock
 
Lian Fu Liu
 
0
 
0
%
               
   
All executive officers and directors as a group
 
20,000
 
1
%

(1)  
Pursuant to Rule 13d-3 under the Exchange Act, a person has beneficial ownership of any securities as to which such person, directly or indirectly, through any contract, arrangement, undertaking, relationship or otherwise has or shares voting power and/or investment power or as to which such person has the right to acquire such voting and/or investment power within 60 days.
 
(2)  
Unless otherwise stated, each beneficial owner has sole power to vote and dispose of the shares and the address of such person is c/o Shaanxi TechTeam Jinong Humic Acid Product Co., Ltd., at 3rd Floor, Borough A, Block A. No.181, South Taibai Road, Xian, Shaanxi Province, People’s Republic of China 710065.

(3)  
Among the 10,241,893 shares of the common stock: (i) 6,535,676 shares of Common Stock are Earn In Shares pursuant to an agreement between Mr. Li and Mr. To as more fully described under footnote (4) below; (ii) 3,156,808 shares of common stock are placed in an escrow account pursuant to the Make Good Escrow Agreement by and among the Company, Mr. To, the Investors and the escrow agent named therein. In the event that the Company does not achieve not less than $12,000,000 for after tax net income and $0.609 for earnings per share for our fiscal year ending June 30, 2009, respectively (the “2009 Targets”), the 3,156,808 shares of common stock will be conveyed to the Investors for no additional consideration. In the event that the Company meets the 2009 Targets, the 3,156,808 shares will be transferred to Mr. Li; and (iii) Mr. To is the beneficial owner 549,409 shares of common stock.

(4)  
Pursuant to an agreement entered into between our Chairman, President and Chief Executive Officer, Tao Li, and Yinshing David To, Mr. Li has the opportunity to acquire up to 6,535,676 shares of our common stock (the “Earn In Shares”), from Mr. To, upon the occurrence of the conditions described below.
   
 
60

 
 
Condition
 
Number of Mr.
To's Shares
which may be
acquired
 
Entry by Mr. Li and TechTeam into a new binding employment agreement for a term of not less than five years for Mr. Li to serve as TechTeam's Chief Executive Officer and Chairman of its Board of Directors.
   
3,267,838
 
         
The U.S. Securities and Exchange Commission declaring a registration statement filed by the Company under the Securities Act of 1933 effective, or, investors who purchased common stock from the Company pursuant to the Securities Purchase Agreement dated as of December 24, 2007 being able to sell their common stock under Rule 144, as then effective under the U.S. Securities Act of 1933, as amended.
   
1,089,279
 
         
TechTeam achieving not less than $7,000,000 in pre tax profits, as determined under United States Generally Accepted Accounting Principles consistently applied (“US GAAP”) for the fiscal year ending June 30, 2008.
   
1,089,279
 
         
TechTeam achieving not less than $4,000,000 in pre tax profits, as determined under United States Generally Accepted Accounting Principles consistently applied (“US GAAP”) for the six months ended December 31, 2008.
   
1,089,280
 
 
The purposes of the arrangement between Mr. Li and Mr. To are: (i) to incentivize Mr. Li in connection with TechTeam’s business and (ii) to comply with PRC laws and rules which regulate the acquisition of PRC companies by non-PRC entities.

Mr. Li and Mr. To have also entered into a voting trust agreement, pursuant to which Mr. Li has the right to vote the Earn In Shares on all matters.

(5)  
On January 31, 2008, we granted 20,000 shares of stock options to our CFO, Mr. Yu Hao for a term of three years with an exercise price of $3.25.

TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS; CORPORATE GOVERNANCE

During the fiscal years ended June 30, 2006 and June 30, 2007, the former shareholders of TechTeam advanced a total of $666,618 to TechTeam as unsecured, non-interest bearing loans which are due on demand.
 
61

 
As the date of this prospectus, Techteam owes $135,947 to its officers and shareholders. Such advance from the officers and shareholders to Techteam was unsecured, non-interest bearing and due on demand.

Issuance of Common Stock to Former Majority Shareholder

On December 26, 2007, we acquired 100% capital stock of Green New Jersey, through a share exchange in which we issued 10,770,668 shares of our common stock to Green New Jersey’s shareholders in exchange for 100% of Green New Jersey’s shares of common stock (the “Share Exchange”). Immediately prior to the Share Exchange, we redeemed 246,148 shares of common stock held by Michael Friess and Sanford Schwartz (the “Redemption”) for $550,000 and issued 111,386 new shares of common stock to Michael Friess and Sanford Schwartz.

Procedures for Approval of Related Party Transactions
 
Our policy is that our board of directors is charged with reviewing and approving all potential related party transactions.   All such related party transactions are then required to be reported under applicable SEC rules. Otherwise, we have not adopted procedures for review of, or standards for approval of, these transactions, but instead review such transactions on a case-by-case basis.

DESCRIPTION OF SECURITIES TO BE REGISTERED

Authorized Capital Stock .  

Our authorized capital stock consists of: (i) 115,197,165 shares of common stock, par value $0.001 per share, of which there are 18,314,017 shares issued and outstanding as of the date of this prospectus; and (ii) 20,000,000 shares of “blank check” preferred stock, par value $0.001 per share, of which no shares are issued and outstanding.

The following is a summary of the material terms of our capital stock. This summary is subject to and is qualified in its entirety by the Company’s Articles of Incorporation, By-laws and the applicable provisions of Nevada law.

Holders of shares of common stock are entitled to one vote for each share on all matters to be voted on by the stockholders. According to our charter documents, holders of our common stock do not have preemptive rights, and are not entitled to cumulative voting rights. There are no conversion or redemption rights or sinking funds provided for our stockholders. Shares of common stock share ratably in dividends, if any, as may be declared from time to time by the Board of Directors in its discretion from funds legally available for distribution as dividends. In the event of a liquidation, dissolution or winding up of the Company, the holders of common stock are entitled to share pro rata all assets remaining after payment in full of all liabilities. All of the outstanding shares of common stock are fully paid and non-assessable.

62

 
The preferred stock may be issued from time to in one or more series, each series having such voting, dividend and other rights and preferences as the Company’s board of directors establish in the resolutions providing for their issuance. All shares of preferred stock in any one series shall be identical with each other in all respects.

Transfer Agent and Registrar
 
Our independent stock transfer agent is Corporate Stock Transfer, Inc., located in Denver, Colorado. Their mailing address is 3200 Cherry Creek Dr. South, Suite 430, Denver, CO 80209. Their phone number is 303-282-4800 and fax number is 303-282-5800.
 
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
 
On January 28, 2008, our Board of Directors approved the termination of Schumacher & Associates, Inc. (“Schumacher”) as our independent certified public accounting firm.
 
Concurrent with this action, our Board of Directors appointed Kabani & Company, Inc. (“Kabani”) as our new independent certified public accounting firm. Kabani is located at 6033 West Century Blvd., Suite 810, Los Angeles, CA 90045, and has been auditing the financial statements of Green New Jersey and its wholly owned subsidiary Techteam. Accordingly, management elected to continue this existing relationship with Kabani and engage it as the Company’s independent auditors.

Our financial statements for the years ended June 30, 2007 and 2006 were audited by Schumacher. Schumacher’s reports on our financial statements for the two most recent fiscal years did not contain an adverse opinion or a disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles, except for the addition of an explanatory paragraph regarding the Company’s ability to continue as a going concern.

During the years ended June 30, 2007 and 2006, the interim period ended September 30, 2007, and through the date of the discontinuance of Schumacher’s engagement as the Company’s independent accountant, there were no disagreements with Schumacher on any matter of accounting principles or practices, financial statement disclosure, auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Schumacher, would have caused it to make reference to the subject matter of the disagreement in its report on our financial statements for such periods.

During the fiscal years ended June 30, 2007 and 2006, the interim period ended September 30,2007, and through the date of the discontinuance of Schumacher’s engagement, there were no reportable events as defined under Item 304(a)(1)(v) of Regulation S-K adopted by the Commission.

The Company has provided Schumacher with a copy of this registration statement prior to its filing with the Commission and requested them to furnish a letter addressed to the SEC stating whether it agrees with the statements made above. A copy of such letter from Schumacher to the Commission dated January 28, 2008 is herein attached as Exhibit 16.1.

63

 
During the period the Company engaged Schumacher, neither the Company nor anyone on the Company's behalf consulted with Kabani regarding either (i) the application of accounting principles to a specified transaction, either contemplated or proposed, or the type of audit opinion that might be rendered on the Company's financial statements or (ii) any matter that was either the subject of a disagreement or a reportable event.
 
L EGAL MATTERS

Our counsel, Guzov Ofsink, LLC, located at 600 Madison Avenue, 14th Floor, New York, New York 10022, is passing upon the validity of the issuance of the common stock that we are offering under this prospectus.

EXPERTS

Kabani & Company, Inc. , independent public accountants located at 6033 West Century Blvd., Suite 810, Los Angeles, CA 90045 , have audited the financial statements of Green New Jersey, Techteam included in this registration statement, and Schumacher & Associates, Inc. , independent certified public accountants, located at 2525 15th Street, Suite 3H Denver, CO 80211, have audited the financial statements of Discovery Technologies, Inc., the predecessor of the Company, included in this registration statement, each to the extent, and for the periods set forth in their respective reports. We have relied upon such reports, given upon the authority of such firms as experts in accounting and auditing.
 
FINANCIAL STATEMENTS

Green New Jersey’s unaudited consolidated financial statements for the three months ended September 30, 2007 and the notes thereto, Green New Jersey’s audited consolidated financial statements for the period from January 27, 2007 (inception) to June 30, 2007 and the notes thereto, Techteam’s audited financial statements for the fiscal years ended June 30, 2007 and 2006, and Discovery Technologies, Inc.’s audited financial statements for the fiscal years ended June 30, 2007 and 2006, together with the report of the independent certified public accounting firm thereon and the notes thereto, are presented beginning at page F-1.
 
WHERE YOU CAN FIND MORE INFORMATION

We have filed with the U.S. Securities and Exchange Commission (the “SEC”), located on 100 F Street NE, Washington, D.C. 20549, Current Reports on Form 8-K, Quarterly Reports on form 10-QSB, Annual Reports on Form 10-KSB, and other reports, statements and information as required under the Securities Exchange Act of 1934, as amended.

64

 
The reports, statements and other information that we have filed with the SEC may be read and copied at the Commission's Public Reference Room at 100 F Street NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330.

The SEC maintains a web site (HTTP://WWW.SEC.GOV.) that contains the registration statements, reports, proxy and information statements and other information regarding registrants that file electronically with the SEC such as us. You may access our SEC filings electronically at this SEC website. These SEC filings are also available to the public from commercial document retrieval services.
 
65

 
 
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

 
SHA ANXI 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

 
SHA ANXI 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
 

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

 
SHA ANXI 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

 
SHA ANXI 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

 
SHA ANXI 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