Sino Green Land Corp. 10-K/A

ITEM 9A . CONTROLS AND PROCEDURES Disclosure Controls and Procedures We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are designed to ensure that information that would be required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including to our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. As required by Rule 13a-15 under the Exchange Act, our management, including our chief executive officer and chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2009. Based on that evaluation, our chief executive officer and chief financial officer concluded that as of December 31, 2009, and as of the date that the evaluation of the effectiveness of our disclosure controls and procedures was completed, our disclosure controls and procedures were not effective to satisfy the objectives for which they are intended, as reflected in our need to restate our financial statements for the years ended December 31, 2009 and 2008 which are included in this annual report, and for each of the quarters in the year ended December 31, 2009. Internal Controls over Financial Reporting 38 Management’s Annual Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, our management concluded that our internal control over financial reporting are not effective as of December 31, 2009, as reflected by our need to restate our financial statements for the years ended December 31, 2009 and 2008 which are included in this annual report, and for each of the quarters in the year ended December 31, 2009. On August 23, 2010, we concluded, after a review of the pertinent facts, that the previously issued financial statements originally contained in our annual report on Form 10-K for the years ended December 31, 2009 should not be relied upon due to the following: · We improperly allocated, for financial statement purposes, the proceeds received in connection with the April 2008 debt financing transaction and the August and December 2009 preferred stock financing transactions (collectively, “the financings”). The restated financial statements include the effects of properly allocating the financing proceeds between (1) the debt or preferred stock, as applicable, (2) any derivative liabilities associated with warrants for the purchase of common stock, and (3) any beneficial conversion features (“BCF”), as a component of additional paid-in capital, which allow the debt and preferred stockholders to convert their investment into the Company’s common stock on favorable terms. · Due to the improper allocation of proceeds on the April 2008 debt financing which resulted in an incorrect basis for the debt, we improperly reported the loss on debt extinguishment upon its settlement in August 2009. The debt settlement is now reported in the 2009 income statement. · Certain warrants containing variable exercise terms associated with the financings were reported as a component of paid-in capital instead of properly reflecting them as a derivative liability at fair value, with changes in fair value reported in the income statement each period. The restated financial statements include the effects of reporting the derivative liabilities and their associated changes in value correctly. · A BCF was inappropriately recorded as a debt discount on the April 2008 financing in addition to being amortized over the subsequent 12 months with a charge to expense. Furthermore, separate BCFs associated with the December 2009 preferred stock financings were erroneously omitted due to a misallocation of proceeds for financial statement purposes. The restated financial statements include the effects of allocating financing proceeds to the applicable BCFs by recording a preferred stock discount with a credit to additional paid-in capital. The discounts were then charged immediately to retained earnings as deemed preferred stock dividends pursuant to the terms of the agreement which provide immediate conversion rights. · Earnings per share has been restated to include the effects of the restated financial statements We intend to take such steps as are necessary, including the engagement of accounting personnel with experience in US GAAP, in order that its financial controls and disclosure controls are effective. Changes in Internal Controls over Financial Reporting. During the fiscal year ended December 31, 2009, there were no changes in our internal control over financial reporting identified in connection with the evaluation performed during the fiscal year covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. However, subsequent to year end, we determined that we need to improve our internal controls relating to the issuance of equity and financial instruments to insure that such transactions are properly accounted for. 39 Attestation Report This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm. ITEM 9B. Other Information None. PART III Item 10. Directors and Executive Officers Item 11. Executive Compensation Item 12. Security Ownership of Certain Beneficial Owners and Management Item 13. Certain Relationships And Related Transactions, and Director Independence Item 14. Principal Accounting Fees and Services Information required under Part III (Items 10, 11, 12, 13 and 14) is contained in our definitive information statement which was filed with the SEC on May 27, 2010 and is incorporated herein by reference. 40 PART IV Item 15. Exhibits, Financial Statement Schedules (c) Exhibits 2.1 (1) Share Exchange Agreement, dated January 15, 2009, among the registrant, Organic Region Group Limited and its subsidiaries and stockholders. 3.1(2) Articles of Incorporation of the registrant, as amended. 3.2 (1) Bylaws of the registrant adopted on March 11, 2008. 3.3 (5) Certificate of Designation of the Series A Convertible Preferred Stock. 4.1 (1) Piggyback Registration Rights Agreement, dated January 15, 2009, by and among the registrant, Michael Friess and Sanford Schwartz. 4.2 (1) Redemption Agreement, dated January 15, 2009, by and among the registrant, Michael Friess and Sanford Schwartz. 4.3 (1) Form of Convertible Promissory Note issued by the registrant, dated January 15, 2009. 4.4 (1) Form of Convertible Promissory Note issued by Organic Region Group Limited, dated April 23, 2008. 4.5 (1) Form of Warrant issued by Organic Region Group Limited, dated April 23, 2008. 4.6 (4) Form of Warrant issued by Sino Green Land Corporation, dated August 3, 2009. 4.7 (5) Form of Series A Warrant issued by Sino Green Land Corporation, dated August 7, 2009. 4.8 (5) Form of Series B Warrant issued by Sino Green Land Corporation, dated August 7, 2009. 10.1 (1) Indemnification Agreement, dated January 15, 2009, by Michael Friess and Sanford Schwartz in favor of the registrant and Organic Region Group Limited and its subsidiaries and stockholders. 10.2 (1) Form of Securities Purchase Agreement, dated April 23, 2008. 10.3 (1) Consulting Services Agreement, dated January 1, 2005, between Organic Region Group Limited and Mr. Xiong Luo (English Translation). 10.4 (1) Director Agreement, dated February 15, 2008, between Organic Region Group Limited and Mr. Anson Yiu Ming Fong. 10.5 (1) Director Agreement, dated January 5, 2004, between Organic Region Group Limited and Mr. Xiong Luo. 10.6 (1) Director Agreement, dated November 22, 2007, between Organic Region Group Limited and Mr. Chi Ming Leung. 10.7 (1) Executive Employment Agreement, dated September 1, 2007, between Organic Region Group Limited and Mr. Chi Ming Leung. 10.8 (1) Executive Employment Agreement, dated September 1, 2007, between Organic Region Group Limited and Mr. Xiong Luo. 10.9 [omitted]. 10.10 (1) Luochuan Apple Land Lease and Joint Development Contract, dated May 4, 2004, between Guangzhou Organic Region Agriculture Ltd. and the Apple Association of Kuibai Town, Luochuan County (English Translation). 10.11 (1) Luochuan Apple Land Lease Cooperation Development Contract, dated October 29, 2007, between Guangzhou Organic Region Agriculture Ltd. and the Apple Association of Kuibai Town, Luochuan County (English Translation). 10.12 (1) Wanqingsha emperor Banana Land Lease Cooperation Development Contract, dated October 17, 2006, between Guangzhou Organic Region Agriculture Ltd. and the Fruits Association of Wanqingsha Town, Nansha District of Guangzhou (English Translation). 10.13 (1) Wanqingsha emperor Banana Land Lease Cooperation Development Contract, dated January 3, 2008, between Guangzhou Organic Region Agriculture Ltd. and the Fruits Association of Wanqingsha Town, Nansha District of Guangzhou (English Translation). 10.14 (1) Guangxi Tangerine Land Lease Cooperation Development Contract, dated October 12, 2005, between Guangzhou Organic Region Agriculture Ltd. and Guangxi Wanshanhong Fruits Co., Ltd. (English Translation). 10.15 (1) Guangzhou City Panyu District Premises Lease Contract, dated December 12, 2007, between Guangzhou Panyu District Guang Lv Industrial Co. Ltd. and Guangzhou Organic Region Agriculture Ltd. (English Translation). 10.16 (1) Supplementary Agreement to Premises Lease Agreement between Guangzhou Panyu District Guang Lv Industrial Co. Ltd. and Guangzhou Organic Region Agriculture Ltd. (English Translation). 41 10.17 (1) Transfer Agreement of Patent Application Right, January 10, 2009, by and among Guangzhou Organic Region Agriculture Ltd., Mr. Xiong Luo and Mr. Anson Yiu Ming Fong (English Translation). 10.18 (3) Director Agreement, between Sino Green Land Corporation and Jeremy Goodwin, dated February 2, 2009. 10.19 (4) Form of Common Stock and Warrant Purchase Agreement, dated as of August 3, 2009, between Sino Green Land Corporation and the investors. 10.20 (4) Form of Common Stock and Warrant Purchase Agreement, dated as of August 3, 2009, between Sino Green Land Corporation and the investors. 10.21 (5) Form of Common Stock and Warrant Purchase Agreement, dated as of August 7, 2009, between Sino Green Land Corporation and the investors. 16.1 (1) Letter from Schumacher & Associates, Inc., regarding change in certifying accountant. 21 (1) Subsidiaries of the registrant. 31.1 Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 * 31.2 Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 * 32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 * *Included herewith (1) Incorporated by reference to the exhibit of the same number to the Company’s Current Report on Form 8-K filed on January 21, 2009. (2) Incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form 8-K/A filed on April 21, 2009. (3) Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on February 5, 2009. (4) Incorporated by reference to Exhibits 4.1, 10.1, and 10.2 to the Company's Current Report on Form 8-K/A filed on August 7, 2009. (5) Incorporated by reference to Exhibits 3.1, 4.1, 4.2, and 10.1 to the Company's Current Report on Form 8-K filed on August 13, 2009. 42 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: November 24 , 2010 SINO GREEN LAND CORPORATION /s/ Xiong Luo Xiong Luo Chief Executive Officer and President Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities on the dates indicated. Signature Title Date /s/ Xiong Luo Chief Executive Officer and President November 24 , 2010 Xiong Luo (Principal Executive Officer) /s/ Huasong Sheena Shen * Chief Financial Officer November 24 , 2010 Huasong Sheena Shen (Principal Financial and Accounting Officer) /s/ Jeremy Goodwin * Director November 24 , 2010 Jeremy Goodwin /s/ Danvil Kin Hang Chan * Director November 24 , 2010 Danvil Kin Hang Chan /s/ Karen Tse * Director November 24 , 2010 Karen Tse *By Xiong Luo November 24, 2010 Xiong Luo, Attorney in fact 43 SINO GREEN LAND CORPORATION AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Accounting Firm F-2 Consolidated Balance Sheets for the years ended as at December 31, 2009 (Restated) and December 31, 2008 (Restated) F-3 Consolidated Statements of Income for the years ended as at December 31, 2009 (Restated) and 2008 (Restated) F-4 Consolidated Statements of Stockholders’ Equity for the year ended December 31, 2009 (Restated) and 2008 (Restated) F-5 Consolidated Statements of Cash Flows for the years ended as at December 31, 2009 (Restated) and 2008 (Restated) F-6 Notes to Consolidated Financial Statements (Restated) F-7 F-1 Report of Independent Registered Public Accounting Firm Board of Directors and Stockholders of Sino Green Land Corp and Subsidiaries We have audited the accompanying consolidated balance sheets of Sino Green Land Corp and Subsidiaries as of December 31, 2009 and 2008 (restated), and the related restated consolidated statements of income, stockholders' equity, and cash flows for the two years period ended December 31, 2009. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated 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 consolidated 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 consolidated financial position of Sino Green Land Corp and Subsidiaries as of December 31, 2009 and 2008, and the results of their operations and their cash flows for the two years period ended December 31, 2009, in conformity with U.S. generally accepted accounting principles. As discussed in Note 14 to the consolidated financial statements, the 2009 and 2008 consolidated financial statements have been restated to correct misstatements. /s/ Kabani & Company, Inc. Certified Public Accountants Los Angeles, California April 12, 2010 except for note 2, 7, 8, 9, 14 which is of October 27, 2010 F-2 SINO GREEN LAND CORP AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2009 AND 2008 2009 2008 (Restated) (Restated) ASSETS Current Assets Cash and cash equivalents $ 1,987,616 $ 544,860 Accounts receivable, net 171,143 200,731 Due from related parties 1,006 352,799 Inventories 9,934 16,931 Advances-current portion 256,225 - Other current assets 343,169 58,045 Total Current Assets 2,769,093 1,173,366 Property and Equipment, net 547,727 139,765 Deposit 365,647 - Advances 4,355,829 497,568 Long-term Prepayments 18,961,869 16,258,707 Total Assets $ 27,000,165 $ 18,069,406 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable and accrued expenses $ 1,186,923 $ 1,529,786 Advances from customers 48,690 56,443 Due to related parties 3,364 129,444 Convertible debentures - 360,710 Derivative liability 5,206,567 340,266 Total Current Liabilities 6,445,544 2,416,650 Stockholders' Equity Preferred stock, par value $.001 per share, 20,000,000 shares authorized, of which 2,000,000 and 0 shares are designated as series A convertible preferred stock, with 1,650,000 and 0 shares issued and outstanding as of December 31, 2009 and 2008, respectively 650 - Common stock, $0.001 par value, 780,000,000 shares authorized, 104,943,337 and 81,648,554 issued and outstanding as of December 31, 2009 and 2008, respectively 104,944 81,649 Additional Paid-in capital 7,736,406 4,919,351 Other comprehensive income 762,504 1,075,973 Retained earnings 11,950,117 9,575,783 Total stockholders' equity 20,544,621 15,652,756 Total Liabilities and Stockholders' Equity $ 27,000,165 $ 18,069,406 The accompanying notes are integral part of these consolidated financial statements. F-3 SINO GREEN LAND CORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 2009 2008 (Restated) (Restated) Sales $ 108,045,437 $ 73,562,759 Cost of goods sold 96,308,289 65,825,333 Gross profit 11,737,148 7,737,426 Operating expenses Selling expenses 2,581,330 1,630,781 General and administrative expenses 2,216,416 1,073,400 Total operating expenses 4,797,746 2,704,181 Operating income 6,939,402 5,033,245 Other income(expense) Interest expenses, net (63,882 ) (133,650 ) Loss on debt extinguishment (139,289 ) - Change in derivative liability (3,866,300 ) (200,977 ) Others, net 154,404 15,399 Total other expense (3,915,068 ) (319,228 ) Net income 3,024,334 4,714,017 Deemed preferred stock dividend (650,000 ) - Net income applicable to common stockholders 2,374,334 4,714,017 Comprehensive income: Net income 3,024,334 4,714,017 Other comprehensive income (loss) Foreign currency translation gain (loss) (313,469 ) 777,795 Comprehensive income $ 2,710,865 5,491,812 Net income per share Basic $ 0.03 $ 0.06 Diluted $ 0.02 $ 0.06 Weighted average number of shares outstanding Basic 89,772,302 81,648,554 Diluted 117,579,469 81,648,554 The accompanying notes are integral part of these consolidated financial statements. F-4 SINO GREEN LAND CORP AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2009 (RESTATED) AND 2008 (RESTATED) Preferred Stock Common Stock Shares Amount Shares Amount Additional Paid In Capital Other Comprehensive Income Retained Earnings Total Stockholders’ Equity Balance as of December 31, 2007 – $ – 81,648,554 81,649 $ 4,919,351 $ 298,178 $ 4,861,766 $ 10,160,944 Foreign currency translation gain – – – – – 777,795 – 777,795 Net income for the year ended December 31, 2008 – – – – – – 4,714,017 4,714,017 Balance as of December 31, 2008 (Restated) – – 81,648,554 81,649 4,919,351 1,075,973 9,575,783 15,652,756 Recapitalization due to reverse acquisition – – 5,832,039 5,832 (5,832 ) – – – Issuance of preferred stock 1,650,000.00 650 – – 554,350 – – 555,000 Issuance of common stock – – 17,462,744 17,463 1,618,537 – – 1,636,000 Foreign currency translation gain – – – – – (313,469 ) – (313,469 ) Deemed dividend for preferred stock – – 650,000 – (650,000 ) – Net income for the year ended December 31, 2009 – – – – – – 3,024,334 3,024,334 Balance as of December 31, 2009 (Restated) 1,650,000 $ 650 104,943,338 $ 104,944 $ 7,736,406 $ 762,504 $ 11,950,117 $ 20,554,621 The accompanying notes are integral part of these consolidated financial statements. F-5 SINO GREEN LAND CORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2009 (RESTATED) AND 2008 (RESTATED) 2009 (Restated) 2008 (Restated) Cash flows from operating activities Net income $ 3,024,334 $ 4,714,017 Adjustments to reconcile net income to net cash provided by operating activities Depreciation 79,178 83,694 Amortization 627,304 508,713 Loss on debt extinguishment 139,289 - Gain from debt forgiveness (162,949 ) Change in derivative liability 3,866,300 200,977 Debt discount (part of interest expense) (32,948 ) 71,266 Decrease / (Increase) in current assets Accounts receivable 29,140 5,893 Inventories 6,957 23,992 Other current assets (285,095 ) (8,160 ) Deposit (365,450 ) – Advances (4,113,619 ) (23,745 ) Long-term prepaid expense (3,363,950 ) (7,209,225 ) Increase in current liabilities -Accounts payable & accrued expense (367,118 ) 1,190,819 Advances from customer (7,629 ) (26,579 ) Tax payables 156 68 Other payables 128,410 558,905 Net cash (used in) provided by operating activities (797,689 ) 123,583 Cash flows from investing activities Acquisition of plant, property, and equipment (487,221 ) (4,276 ) Cash flows from financing activities Proceeds from (payment to) issuance of convertible notes (502,684 ) 500,000 Net proceeds from issuance of preferred stock and warrants 1,555,000 – Proceeds from issuance of common stock and warrants 1,636,000 – Proceeds from (payments to) related parties 226,405 (603,970 ) Net cash provided by (used in) financing activities 2,914,721 (103,970 ) Effect of exchange rate change on cash and cash equivalents (187,055 ) 86,477 Net increase in cash and cash equivalents 1,442,756 101,814 Cash and cash equivalents, beginning balance 544,860 443,046 Cash and cash equivalents, ending balance $ 1,987,616 $ 544,860 Supplement disclosure of cash flow information Interest expense paid $ 104,800 $ – Income taxes paid $ – $ – The accompanying notes are integral part of these consolidated financial statements. F-6 SINO GREEN LAND CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. ORGANIZATION AND DESCRIPTION OF BUSINESS Organization Sino Green Land Corporation (the “Company”) was incorporated in Nevada in March 2008 under the name of Henry County Plywood Corporation, as the successor by merger to a Virginia corporation organized in May 1948 under the same name. On March 23, 2009, the Company’s corporate name was changed to Sino Green Land Corporation. The Company, through its Chinese operating subsidiaries and a variable interest entity, is engaged in the wholesale distribution, marketing and sales of premium fruits through wholesale centers and to supermarkets in China. On January 15, 2009, the Company entered into a share exchange agreement with Organic Region Group Limited (“Organic Region”), its stockholders and its wholly owned subsidiaries, Zhuhai Organic Region Modern Agriculture Ltd. (“Zhuhai Organic”), Guangzhou Organic Region Agriculture Ltd. (“Guangzhou Organic”), Fuji Sunrise International Enterprises Limited (“Fuji Sunrise”), Southern International Develop Limited (“Southern International”) and HK Organic Region Limited (“HK Organic”). Pursuant to the share exchange agreement and a related agreement with the Company’s two former principal stockholders: · The Company issued to the former stockholders of Organic Region a total of 81,648,554 shares of common stock, constituting approximately 98% of our outstanding stock, in exchange for all of the capital stock of Organic Region; and · Our former majority stockholders sold to the Company 1,666,298 shares of common stock, representing 50% of the then outstanding shares, for $500,000 non-interest bearing convertible promissory notes. The Company cancelled these shares. As of April 27, 2009, the Company had paid the principal and accrued interest on the notes in full and had no further obligations to the former majority stockholders. Prior to the closing of these transactions, the Company, then known as Henry County Plywood Corporation, was not engaged in any business activity. The Company is the sole stockholder of Organic Region, a British Virgin Islands corporation which was incorporated on January 30, 2003. Organic Region is the sole stockholders of five limited liability companies organized under the laws of the People’s Republic of China, each of which is a wholly foreign-owned entity, known as a WFOE: Zhuhai Organic, Guangzhou Organic, Fuji Sunrise, Southern International and HK Organic. Under generally accepted accounting principles, the acquisition by the Company of Organic Region is equivalent to the acquisition by Organic Region of the Company, then known as Henry County Plywood Corporation, with the issuance of stock by Organic Region for the net monetary assets of the Company. This transaction is reflected as a recapitalization, and is accounted for as a change in capital structure. Accordingly, the accounting for the acquisition is identical to that resulting from a reverse acquisition. Under reverse acquisition accounting, the comparative historical financial statements of the Company, as the legal acquirer, are those of the accounting acquirer, Organic Region. The accompanying financial statements reflect the recapitalization of the stockholders’ equity as if the transactions occurred as of the beginning of the first period presented. Thus, only the 81,648,554 shares of common stock issued to the former Organic Region stockholders are deemed to be outstanding for all periods reported prior to the date of the reverse acquisition. As a result of the reverse acquisition effected by the share exchange agreement, the Company’s business has become the business of the Organic Region. The 1,666,297 shares of common stock that were outstanding on January 15, 2009, net of the 1,666,298 shares that were purchased by the Company and cancelled, are treated as if they were issued on January 15, 2009, as part of a recapitalization. Zhuhai Organic was formed by a British Virgin Islands corporation known as Nature Institution Group Ltd. (“NI Group”) on January 3, 2004, and Guangzhou Organic was formed by NI Group on September 24, 2004. On December 31, 2007, NI Group transferred to Organic Region all of the stock of Zhuhai Organic for $5,000,000 and all of the stock of Guangzhou Organic for no consideration since Guangzhou Organic had negative equity. At the time of the transfer, NI Group had made the required capital contributions to both Zhuhai Organic and Guangzhou Organic, the transfers were treated as transfers between related parties because, at the time of the transfer, one of NI Group’s stockholders, who held a 13.5% interest in NI Group, was also a 50% stockholder in Organic Region. Since the transfers were between related parties, the assets of the acquired companies were carried at their historical cost and the amount by which the total purchase price exceeded the value of the assets of Zhuhai Organic and Guangzhou Organic, which was $365,755, was recorded as deemed dividend to the stockholder on December 31, 2007. The Company has an exclusive agreement with Xiong Luo, who is one of the Company’s senior executive officers and the owner and holder of the business license for Guangzhou Greenland Co. Ltd. (“Guangzhou Greenland”). Pursuant to this agreement, Organic Region provides consulting services, including business operations, human resources and research and development services, to Mr. Luo with respect to Guangzhou Greenland to enable Guangzhou Greenland to operate the fruit trading business in China. In exchange for such services, Mr. Luo agreed to pay a consulting services fee to Organic Region equal to all of the revenues obtained by Guangzhou Greenland. The agreement gave the Company the ability to substantially influence Guangzhou Greenland’s daily operations and financial affairs, appoint its senior executives and approve all matters requiring stockholder approval. Mr. Luo also irrevocably granted the Company an exclusive option to purchase, to the extent permitted under PRC law, all or part of the equity interests in Guangzhou Greenland and agreed to entrust all the rights to exercise voting power to the person appointed by the Company. Guangzhou Greenland is considered a variable interest entity under ASC 810 (Originally issued as FIN 46R), and its financial statements are included in our consolidated financial statements. Substantially all of the Company’s revenue is derived from the business of Guangzhou Greenland. F-7 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Principle of consolidation The accompanying restated consolidated financial statements (See Note 14 for a description of the restatements) include the accounts of the Company and its wholly-owned subsidiaries, Zhuhai Organic and Guangzhou Organic, Fuji Sunrise, HK Organic and Southern International, together with its 100% Variable Interest Entity (VIE), Guangzhou Greenland. All significant inter-company accounts and transactions have been eliminated in consolidation. In accordance with ASC 810 (Originally issued as Financial Interpretation No. 46R, Consolidation of Variable Interest Entities “FIN 46R”), VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes. On January 1, 2005, Organic Region entered into exclusive arrangements with Mr. Xiong Luo, who was then the Company’s chief operating officer and has since become the Company’s chief executive officer and president, and who holds the business license for Guangzhou Greenland, that give the Company the ability to substantially influence Guangzhou Greenland’s daily operations and financial affairs, appoint its senior executives and approve all matters requiring stockholder approval. As a result, the Company consolidates the financial results of Guangzhou Greenland as variable interest entity pursuant to ASC 810 (Originally issued as Financial Interpretation No. 46R, Consolidation of Variable Interest Entities “FIN 46R”). a. Guangzhou Greenland holds the licenses necessary to operate its fruit trading business in China. b. The Company has the exclusive privilege to purchase the fruit and vegetables from and it provides other general business operation services to Guangzhou Greenland in return for a consulting services fee which is equal to Guangzhou Greenland’s revenue. c. Mr. Xiong Luo irrevocably granted the Company an exclusive option to purchase, to the extent permitted under PRC law, all or part of the equity interests in Guangzhou Greenland and agreed to entrust all the rights to exercise his voting power to the person appointed by the Company. b. 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. c. Cash and cash equivalents 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. d. 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 creditworthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. As of December 31, 2009 and December 31, 2008, the Company had accounts receivable, of $171,143 and $200,731, net of allowance for bad debts in the amount of $9,244 and $9,264, respectively. e. Other current assets Other current assets, valued at $343,169 as of December 31, 2009, represents an unsecured loan receivable in the amount of $292,517, at an interest rate of 5.31%, from an unrelated party. This loan was due in January 2010 and relates to a loan made to the local fruit association in connection with the construction of a seeding lab for emperor bananas. The loan was collected in March 2010. The interest income for the year ended December 31, 2009 was $15,524. As of December 31, 2008, the other current assets amounted to $58,045. f. Advances As of December 31, 2009, the Company advances amounted to $4,355,829. The Company provides advances to one unrelated party in return for 18 years lease starting 2010. The advances are required to be used to construct a multi level distribution center the Company intends to lease. As of December 31, 2008, the advances amounted to $497,568. F-8 g. Deposit As of December 31, 2009 and 2008, the Company has deposit amounted to $365,647 and $0, respectively. The deposit is to an unrelated party and refundable after the expiration of the term of the lease (described in note 1.f Advances). h. Inventories Inventories are valued at the lower of cost (determined on a weighted average basis) or market value. Management compares the cost of inventories with market value and an allowance is provided to reduce the value of inventories to their net market value. Inventories consisted of produce in the amount of $9,934 and $16,931 as of December 31, 2009 and 2008, respectively. i. Property and equipment Property 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: 5 to 10 years for manufacturing machinery, 5 years for office equipment, and 5 years for motor vehicles. j. Impairment The Company applies the provisions ASC 360-10 (Originally issued as FAS No. 144). ASC 360-10 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 December 31, 2009 and 2008. k. Derivative liability The derivative liability represents the value of warrants to purchase common stock that were issued in connection with certain debt and preferred stock offerings in 2008 and 2009. The warrants are reported at fair value using the Black-Scholes model with changes in value reflected in earnings for the period. l. Deemed Preferred Stock Dividend The Company records a deemed preferred stock dividend for the amortization of any discount arising from beneficial conversion features associated with its preferred shares. Upon issuance, this discount is offset by a credit to additional paid-in capital, and is generally amortized over its earliest conversion period. Due to the perpetual nature of the preferred shares and the immediate conversion rights, the full discount is reflected as a deemed preferred stock dividend upon issuance. m. Revenue recognition The Company’s revenue recognition policies are in compliance with ASC 605 (Originally issued as 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 collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue. Sales Revenues from the sale of products are recognized at the point of sale of the Company’s products. Discounts provided to customers by the Company at the time of sale are recognized as a reduction in sales as the products are sold. Sales taxes are not recorded as a component of sales. Cost of Goods Sold The “Cost of Goods Sold” line item of the Consolidated Statements of Income includes product costs and the amortization of the long-term leases on which the produce is grown and for which the full payment was made at the commencement of the lease. Discounts provided to the Company by vendors at the time of purchase are recognized as a reduction in inventory cost as the products are delivered. F-9 All other costs, including warehousing costs, transportation costs, salaries, rent expense and depreciation expense, are shown separately in Selling Expense or General and Administrative Expense in the Consolidated Statements of Income. n. Income taxes The Company utilizes ASC 740 (Originally issued as SFAS No. 109, “Accounting for Income Taxes”), which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. 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. o. Income per share of common stock Income per share of common stock is calculated in accordance with the ASC 260 (Originally issued as Statement of Financial Accounting standards No. 128, “Earnings per share”). Income per share for all periods presented has been restated to reflect the adoption of ASC 260. Basic income per share is based upon the weighted average number of common shares outstanding. Diluted income per share is based on the assumption that all dilutive convertible shares and stock options and warrants were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Basic net income per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted income per share is computed by dividing net income by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. Potentially dilutive common shares consist of common stock issuable upon the conversion of the outstanding shares of Series A preferred stock (using the if-converted method) and common stock warrants (using the treasury stock method). The following table presents a reconciliation of basic and diluted net income per share (in thousands, except per share amounts): Years Ended December 31, 2009 2008 Net income $ 3,024 $ 4,714 Weighted average shares of common stock outstanding 89,772 81,649 Diluted effect of warrants, options, and preferred stock 27,807 - Weighted average shares of common stock – diluted 117,579 81,649 Net income available per share of common stock – basic $ 0.03 $ 0.06 Net income per share of common stock – diluted $ 0.02 $ 0.06 p. Foreign currency translation The Company uses the United States dollar for financial reporting purposes. The Company’s subsidiaries maintain their books and records in their functional currency - Chinese Yuan Renminbi (RMB), being the primary currency of the economic environment in which their operations are conducted. Such financial statements were translated into United States dollars in accordance with ASC 830 (Originally issued as Statement of Financial Accounts Standards (“SFAS”) No. 52, “Foreign Currency Translation”). According to the Statement, all assets and liabilities are translated at the current exchange rate, stockholder’s equity are translated at the historical rates and income statement and statement of cash flows items are translated at the average exchange rate for the period. As a result, amounts related to assets and liabilities reported on the statement of cash flows may not necessarily agree with changes in the corresponding balances on the balance sheet. The resulting translation adjustments are reported under other comprehensive income in accordance with ASC 220 (Originally issued as SFAS No. 130, “Reporting Comprehensive Income”) as a component of stockholders’ equity. q. Fair values of financial instruments F-10 ASC 825 (Originally issued as 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 carrying amounts reported in the statements of financial position for assets and liabilities qualifying as financial instruments are a reasonable estimate of fair value. The Company’s financial instruments primarily consist of cash and cash equivalents, accounts receivable, other receivables, advances to suppliers, accounts payable and other payables. 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. r. Earning per share (EPS) Earnings per share is calculated in accordance with the ASC 260 (Originally issued as Statement of Financial Accounting standards No. 128, “Earnings per share”) superseded Accounting Principles Board Opinion No.15 (APB 15). Earnings per share for all periods presented has been restated to reflect the adoption of ASC 260 Basic earnings per share is based upon the weighted average number of common shares outstanding. Diluted earnings per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Basic and diluted earning per share was $0.03 and $0.02 for the year ended December 31, 2009, respectively. Basic and diluted earning per share was $0.06 and $0.06 for the year ended December 31, 2008, respectively. s. Segment reporting ASC 280 (Originally issued as 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. ASC 280 (Originally issued as SFAS No. 131) has no effect on the Company’s consolidated financial statements as the Company operates in one reportable business segment. t. Statement of cash flows In accordance with ASC 230 (Originally issued as SFAS No. 95), "Statement of Cash Flows," cash flows from the Company's operations is calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows may not necessarily agree with changes in the corresponding balances on the balance sheet. u. Subsequent Events. For purposes of determining whether a post-balance sheet event should be evaluated to determine whether it has an effect on the financial statements for the period ending December 31, 2009 pursuant to ASC 855(Originally issued as SFAS No. 165), subsequent events were evaluated by the Company as of October 21, 2010, the date on which the Form 10-K/A, which includes the restated consolidated financial statements at and for the year ended December 31, 2009, was available to be issued. v. Recent Accounting Pronouncements In June 2009, the FASB issued ASC 105 (previously SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles ("GAAP") - a replacement of FASB Statement No. 162 ), which will become the source of authoritative accounting principles generally accepted in the United States recognized by the FASB to be applied to nongovernmental entities. In June 2009, the FASB issued ASC 855 (previously SFAS No. 165, Subsequent Events ), which establishes general standards of accounting for and disclosures of events that occur after the balance sheet date but before the financial statements are issued or available to be issued. It is effective for interim and annual periods ending after June 15, 2009. There was no material impact upon the adoption of this standard on the Company’s consolidated financial statements. In June 2009, the FASB issued ASC 860 (previously SFAS No. 166, “Accounting for Transfers of Financial Assets”) , which requires additional information regarding transfers of financial assets, including securitization transactions, and where companies have continuing exposure to the risks related to transferred financial assets. SFAS 166 eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures. SFAS 166 is effective for fiscal years beginning after November 15, 2009. The Company does not believe this pronouncement will impact its financial statements. In June 2009, the FASB issued ASC 810 (previously SFAS No. 167) for determining whether to consolidate a variable interest entity. These amended standards eliminate a mandatory quantitative approach to determine whether a variable interest gives the entity a controlling financial interest in a variable interest entity in favor of a qualitatively focused analysis, and require an ongoing reassessment of whether an entity is the primary beneficiary. These amended standards were effective for the Company beginning in the first quarter of fiscal year 2010 and hav had no impact on our consolidated financial statements. F-11 In August 2009, the FASB issued Accounting Standards Update (“ASU”) 2009-05, which amends ASC Topic 820, Measuring Liabilities at Fair Value , which provides additional guidance on the measurement of liabilities at fair value. These amended standards clarify that in circumstances in which a quoted price in an active market for the identical liability is not available, we are required to use the quoted price of the identical liability when traded as an asset, quoted prices for similar liabilities, or quoted prices for similar liabilities when traded as assets. If these quoted prices are not available, we are required to use another valuation technique, such as an income approach or a market approach. These amended standards are effective for us beginning in the fourth quarter of fiscal year 2009 and are not expected to have a significant impact on our consolidated financial statements. w. Reclassifications Certain prior year amounts have been reclassified to conform with the current year's presentation, none of which had an impact on total assets, stockholders' equity (deficit), net loss, or net loss per share. 3. PROPERTY AND EQUIPMENT, NET Property and equipment consist of the following as of December 31, 2009 and December 31, 2008: 2009 2008 Manufacturing machinery $ 403,822 $ 411,299 Office equipment 40,591 38,037 Motor vehicle 24,143 17,589 Leasehold Improvement 484,848 - Less: Accumulated Depreciation (405,677 ) (327,160 ) Property & Equipment, net $ 547,727 $ 139,765 Depreciation expenses for the years ended December 31, 2009 and 2008 were 79,178 and $83,694 respectively. 4. DUE FROM/(TO) RELATED PARTIES Amounts due from related parties amounted to $1,006 and $352,799 as of December 31, 2009 and 2008, respectively. The Company has a balance due from one stockholder and director amounting to $1,006 as of December 31, 2009. The amount due is interest free, unsecured and due on demand. The Company had a balance due from one company which is under common control with the Company amounting to $352,799 as of December 31 2008 and $0 as of December 31, 2009. The amount due is interest free, unsecured and due on demand. Due to related parties amounted to $3,364 and $129,444 as of December 31, 2009 and 2008, respectively. The Company has a balance due to one stockholder and director of the Company amounting to $3,364 as of December 31, 2009. The amount due is interest free, unsecured and due on demand. The Company has a balance due to related parties amounting to $129,444 as of December 31, 2008 and $0 as of December 31, 2009. It was due to the companies which are under common control with the Company. The amounts due were interest free, unsecured and due on demand and were paid in 2009. On January 15, 2009, in connection with the reverse acquisition described in Note 1, the Company entered into a redemption agreement with Michael Friess and Sanford Schwartz, who were the Company’s majority stockholders, whereby these stockholders surrendered an aggregate of 1,666,298 shares of common stock for redemption in exchange for the issuance of non-interest bearing convertible promissory notes in the aggregate principal amount of $500,000. The principal and accrued interest of the notes were payable on March 31, 2009. On March 31, 2009, the Company entered into an oral agreement with these stockholders, pursuant to which the Company paid them $250,000 and agreed to pay them the remaining $250,000 on or before April 30, 2009, without penalty. The Company paid the remaining $250,000 on April 27, 2009. 5. LONG-TERM PREPAYMENTS There is no private ownership of land in the PRC. All land is owned by the government, which grants land use rights for a specified period of time. Guangzhou Greenland has entered into fourteen land lease and developing agreements with a number of farming cooperatives since 2005. The farming cooperatives are authorized to manage and plant the lands by Guangzhou Greenland who, during the term of the lease, has the priority right to purchase the agricultural products at fair market price. The agreements have terms of 25 years with various due dates. The payments for the entire 25-year term are payable, and were paid, in full at the inception of the agreements. The Company acquired two land leases during the year ended December 31, 2009 by paying approximately $3.4 million. Guangzhou Greenland uses the straight-line method to amortize the long-term prepayments over the life of the contracts. As of December 31, 2009 and 2008, the Company has long-term prepayments (net) in the amount of $18,961,869 and $16,258,707, respectively. F-12 The details of long-term prepayments are listed below as of December 31, 2009 and 2008: 2009 2008 Long-term prepayment –cost $ 20,996,380 $ 17,450,561 Accumulated amortization (2,034,511 ) (1,191,854 ) Net $ 18,961,869 $ 16,258,707 Amortization expenses for the years ended December 31, 2009 and 2008 were $627,304 and $508,713, respectively, and are included in cost of goods sold. Amortization expenses for the next five years after December 31, 2009 are approximately as follows: 2010 $ 886,181 2011 886,181 2012 886,181 2013 886,181 2014 886,181 After 14,530,964 Total $ 18,961,869 6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses comprised the following as of December 31, 2009 and 2008: 2009 2008 Accounts payable $ 385,726 $ 804,437 Accrued payroll 130,542 90,916 Accrued expenses 465,895 557,692 Advance subscription 180,526 - Other payable 24,234 76,741 $ 1,186, 923 $ 1,529,786 The Company had advance fund which against issuance of shares subsequent to the year end. 7. SHORT TERM CONVERTIBLE NOTES On April 23, 2008, Organic Region, which was then a privately-owned company, issued for $500,000 its one-year 18% convertible notes with common stock warrants in the total amount of $500,000. Upon the completion of the reverse acquisition the Company assumed the notes and related warrant obligations. . The warrant holder are entitled to purchase up to $500,000 of securities at a per share price equal to 115% of the lowest cash price paid in a financing, which is defined as the consummation of one or more equity financings by the Company. Upon issuance of the debt, the Company allocated the proceeds between the debt and warrants in the amount of $360,711 and $139,289, respectively. The warrants were classified as a derivative due to the variability in their exercise terms, and remain outstanding. In August 2009, the debt was repaid in full, with interest, and the Company recognized a $139,289 loss on debt extinguishment. 8. EQUITY TRANSACTIONS On January 15, 2009, the Company completed the reverse acquisition as described in Note 1. Pursuant to the share exchange agreement, the Company issued 81,648,554 shares of common stock in exchange for all of the outstanding common stock of Organic Region. Pursuant to an agreement with an independent director, the Company agreed to pay the director 12,500 shares of common stock every fiscal quarter. As of December 31, 2009, the Company accrued the value of 45,833 shares, reflecting the shares that were due through December 31, 2009 pursuant to his agreement. The shares were issued subsequent to December 31, 2009. In April 2009, the Company issued an aggregate of 4,165,742 shares in connection with the termination of two agreements which Organic Region had entered into on January 28, 2008. Following the issuance of the shares, the Company had no further obligations under either of these agreements except for the Company’s obligation to pay an amount equal to 2% of the gross proceeds of any sales of securities, convertible debentures, or any other financings, private or public, other than financings by commercial banks, by the Company of up to an aggregate of $15 million occurring after January 1, 2009. Sales of Securities During August 2009, the Company issued securities in the following transactions: a. Effective August 3, 2009, the Company entered into common stock and warrant purchase agreements with non-affiliated investors. Pursuant to these agreements, for an aggregate consideration of $1,636,000, the Company issued: (i) an aggregate of 13,129,410 shares at a stated purchase price of $0.085 per share and 4,333,334 shares at $0.12 per share; F-13 (ii) two-year warrants to purchase 10,145,454 shares of common stock at $0.11 per share and 3,466,666 shares of common stock at $0.15 per share; and (iii) an option to purchase up to 6,500,000 shares of common stock at a purchase price of $0.12 per share. The warrants may be exercised through August 3, 2011, are considered to be indexed to the company’s stock, and are all reflected as a component of equity in the accompanying financial statements. b.. Pursuant to a Series A Convertible Preferred Stock and Warrant Purchase Agreement dated August 7, 2009, for a total consideration of $1,000,000, the Company: (i) issued of an aggregate of 1,000,000 shares of series A convertible preferred stock; (ii) issued five-year warrants to purchase 10,000,000 shares of common stock at an exercise price of $0.14 per share and 10,000,000 shares of common stock at an exercise price of $0.25 per share, and ; (iii) granted these stockholders an option to purchase up to 1,000,000 additional shares of series A preferred stock at a purchase price of $1.00 per share through February 10, 2010. In December 2010, $650,000 of A Preferred Share options were exercised. The entire $1,000,000 of proceeds received on August 7, 2009 was allocated to the warrants and is reflected as a derivative liability due the variability in the exercise price, which was based upon the Company’s future operating results. The warrants may be exercised at any time prior to August 7, 2014. In the event that, prior to August 7, 2011, the Company issues common stock at a price less than the exercise price, the exercise price of the $0.14 warrants is reduced to the consideration received by us for the issuance of the shares. The December 2009 issuance of convertible preferred stock contained beneficial conversion terms and resulted in the recognition of a discount on preferred stock upon issuance, and a corresponding beneficial conversion feature. The discounts were charged to retained earnings as deemed preferred stock dividends pursuant to the terms of the agreement which provide immediate conversion rights. In the event of liquidation, dissolution or winding up, the holders of the Series A Preferred Stock are to receive a payment of $1.00 per share of Series A Preferred Stock before any distribution is made to the common stock or any securities junior to the Series A Preferred Stock upon liquidation, dissolution or winding up. The certificate of designation for the Series A Preferred Stock and the warrants provide that those securities may not be converted or exercised or converted if such conversion or exercise would result in the holder and its affiliates having beneficial ownership of more than 9.99% of the Company’s outstanding common stock. Beneficial ownership is determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Rule 13d-3 thereunder. Pursuant to the Series A Preferred Stock and warrant purchase agreement, in addition to the foregoing and other conditions, the Company agreed that: · The Company would maintain its listing on the OTC Bulletin Board or a national stock exchange; provided that if the Company is not so listed, as long as the investors owned Series A Preferred Stock, the Company would pay the investors, as liquidated damages, an amount equal to 1% of the purchase price per month, which is $10,000 per month if all of the shares of Series A Preferred Stock are then outstanding, until the stock is again listed on the OTC Bulletin Board or a national stock exchange. · The Company would cancel any outstanding preferred stock and, prior to August 7, 2012, not issue additional shares of preferred stock, other than pursuant to the purchase agreement or sales at a price of $0.135 per share on an as-converted basis. · The Company would have any outstanding convertible debt converted into either a straight loan with a reasonable payment schedule or converted into common stock at a price of not less than $0.085 per share. · With certain exceptions, if, prior to August 7, 2011, the Company issues stock at a price less than the conversion price of the Series A Preferred Stock, which is presently $0.088 per share, then the conversion price of the Series A Preferred Stock would be reduced to the lower price at which such shares were sold. · If the Company’s net income, as defined, is less than $0.045 per share on a fully-diluted basis, then the conversion price will be reduced by the percentage shortfall, subject to a maximum reduction of 40%. The Company’s net income for 2009, as defined, exceeded the target amount, and no adjustment was made in the conversion rate of the Series A Preferred Stock or in the exercise price of the warrants pursuant to similar provisions in the warrants. Pursuant to this provision, the proceeds received on financing transactions involving preferred shares issued with warrants were allocated to a warrant liability at fair value, and changes in value are reflected in the income statement for each period presented. F-14 Warrants Weighted Average Average Remaining Warrants Warrants Exercise Contractual Outstanding Exercisable Price Life Outstanding, December 31, 2007 - - $ - - Granted 5,115,090 5,115,090 0.098 4.6 Forfeited - - - - Exercised - - - - Outstanding, December 31, 2008 5,115,090 5,115,090 0.098 4.6 Granted 33,612,120 33,612,120 0.16 3.34 Forfeited - - - - Exercised - - - - Outstanding, December 31, 2009 38,727,210 38,727,210 $ 0.15 3.51 Stock options The preferred stock option activity was as follows: Weighted Average Aggregate Options Exercise Intrinsic outstanding Price Value Outstanding, December 31, 2008 - - - Granted 1,000,000 $ 1.00 $ 909,091 Forfeited - - - Exercised 650,000 1.00 590,909 Outstanding, December 31, 2009 350,000 $ 1.00 $ 318,182 Following is a summary of the status of preferred stock options outstanding at December 31, 2009: Outstanding Options Exercisable Options Average Outstanding Average Remaining Exercisable Exercise Price Options Contractual Life Exercise Price Options $ 1.00 350,000 0.22 $ 1.00 350,000 Since we only had 1,000,000 shares of series A preferred stock authorized at December 31, 2009, the exercise of the preferred stock option to purchase 650,000 shares of series A preferred stock was subject to the amendment to the certificate of designation which increased the number of authorized shares of series A preferred stock to 2,000,000 shares. Since there was no restriction on the use of the cash, the only consent to the amendment to the certificate of designation to increase the authorized shares of common stock was the consent of the three holders of the series A preferred stock who were also the option holders and the amendment to the certificate of designation was filed and the series A preferred stock was issued, the Company treated the option as having been exercised when the Company receive the option exercise proceeds in December 2009. Fair Value of Warrants ASC Topic 820, Fair Value Measurement and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy which requires classification based on observable and unobservable inputs when measuring fair value. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels: [ ] Level one — Quoted market prices in active markets for identical assets or liabilities; [ ] Level two — Inputs other than level one inputs that are either directly or indirectly observable; and [ ] Level three — Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use. Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter. Assets and liabilities measured at fair value on a recurring basis are summarized as follows: Fair value measurement using inputs Carrying amount at Financial instruments Level 1 Level 2 Level 3 12/31/2009 Liabilities: Derivative instruments - Warrants $ — $ 5,206,567 $ — $ 5,206,567 Total $ — $ 5,206,567 $ — $ 5,206,567 F-15 The fair value of warrants associated with the April 2008 debt issuance (Organic Region Warrants) and the August 2009 preferred share financing (Series A Warrants) that are reported as a liability was developed using the Black Scholes model using the following significant assumptions: Organic Region Warrants Series A Warrants $0.14 Series A Warrants $0.25 December 31, December 31, December 31, December 31, December 31, December 31, 2009 2008 2009 2008 2009 2008 Market price of common stock: $ 0.25 $ 0.09 $ 0.25 $ 0.09 $ 0.25 $ 0.09 Exercise price: $ 0.098 $ 0.098 0.14 $ 0.14 0.25 $ 0.25 Expected term (years): 4.6 5.0 4.6 5.0 4.6 5.0 Dividend yield: – – - - - - Expected volatility: 120.82 % 112.01 % 120.82 % 112.01 % 120.82 % 112.01 % Risk-free interest rate: 1.50 % 1.50 % 1.75 % 1.75 % 1.75 % 1.75 % As of December 31, 2009, none of the warrants had been exercised. The risk-free rate of return reflects the interest rate for United States Treasury Note with similar time-to-maturity to that of the warrants. None of the other warrants are treated as derivatives. 9. INCOME TAXES The Company’s operations are conducted solely in the PRC. It does not conduct any operations in the United States or The British Virgin Islands and is not subject to income tax in either jurisdiction. For certain entities in PRC, the Company has incurred net accumulated operating losses. The Company has net operating losses amounted of $22,443 and $53,522, respectively, as of December 31, 2009 and 2008 for these entities. The Company believes that it is more likely than not that these net accumulated operating losses generated in these entities will not be utilized in the future. Therefore, the Company has provided full valuation allowance for the deferred tax assets arising from the losses at these locations as of December 31, 2009 and 2008. Accordingly, the Company has no net deferred tax assets. Under the current PRC enterprise income tax law, which became effective January 1, 2008, there is a standard enterprise income tax rate of 25%. The tax holidays that were granted under the former tax law, will continue in effect until they expire. Guangzhou Greenland has a two year income tax exemption in 2008 and 2009 and will have a 50% tax reduction from 2010 to 2012. Therefore, the Company does not have a provision for income tax. The following is a reconciliation of the provision for income taxes at the tax rates of BVI and PRC to the income taxes reflected in the Statement of Operations for the years ended December 31, 2009 and 2008. 2009 2008 U.S. statutory rate 34 % 34 % Foreign income not recognized in U.S. (34 ) % (34 ) % PRC income tax 25 % 25 % Exempt from income tax (25 )% (25 )% Tax expense at actual rate 0 % 0 % Sino Green Land, Inc. was incorporated in the United States and has incurred estimated accumulated net operating losses of $15,164 and $350,670 as of December 31, 2009 and 2008 for the tax purposes, respectively. The estimated net operating loss carry forwards for United States income taxes amounted to $15,164 which may be available to reduce future years’ taxable income. These carry forwards will expire, if not utilized, in 2027. Management believes that the realization of the benefits from these losses appears uncertain due to the Company’s limited operating history and continuing losses for United States income tax purposes. Accordingly, the Company has provided a 100% valuation allowance on the deferred tax benefit to reduce the asset to zero. The net change in the valuation allowance for the period ended December 31, 2009 was $15,164 and the valuation allowance as of December 31, 2009 amounted to $15,164. The Company has cumulative undistributed earnings of foreign subsidiaries of approximately $11,950,117 as of December 31, 2009, included in consolidated retained earnings and will continue to be indefinitely reinvested in international operations. Accordingly, no provision has been made for U.S. deferred taxes related to future repatriation of these earnings, nor is it practicable to estimate the amount of income taxes that would have to be provided if the Company concluded that such earnings will be remitted in the future. F-16 10. CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS The Company’s operations are conducted exclusively in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC’s economy. Operations of the Company in the PRC are subject to specific considerations and significant risks. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. Results of operations of the company may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things. Since a significant amount of the company future revenues will be denominated in Renminbi, the existing and any future restrictions on currency exchange may limit the company’s ability to utilize revenues generated in Renminbi to fund any business activities outside China or fund expenditures denominated in foreign currencies. Almost all of the Company’s products are sold at the Guangdong Yun Cheng Wholesale Market and the Beijing Xin Fadi Agricultural Products Wholesale Market, two major markets for the sale of agricultural products in their respective areas where the Company leases space to sell its produce. No customers who accounted for more than 10% of the total net revenue for the years ended December 31, 2009 and 2008. The Company has long-term arrangements to purchase its produce from a limited number of farming cooperatives. If the Company is not able to purchase the produce from these farmers, in the event of a product shortage, and it is necessary for the Company to purchase from other suppliers, the costs may be greater due to this kind of short-term nature of arrangements. Two vendors provided 52% and 27% of the goods to the Company during the year ended December 31, 2009. Three vendors provided 91%, 3% and 6% of the goods to the Company during the year ended December 31, 2008. Accounts payable to these vendors amounted $0 and $804,438 on December 31, 2009 and 2008. The Company extends credit to its customers based upon its assessment of their credit worthiness and generally does not require collateral. Credit losses have not been significant. 11. COMMITMENT Operating Leases The Company leases various office facilities under operating leases that terminate on various dates. The Company incurred rent expenses of $114,040 and $107,531 for the years ended December 31, 2009 and 2008. The rent expenses for the five years after December 31, 2009 are as follows: 2010 $ 113,829 2011 111,687 2012 96,475 2013 89,758 2014 89,758 After 47,419 $ 435,097 12. SUBSEQUENT EVENTS On January 5, 2010, the outstanding options to purchase 350,000 shares of Series A Preferred Stock at an exercise price of $1.00 per share of Series A Preferred Stock were exercised. The Company received net proceeds, after deducting brokerage commissions, of $350,000. On January 15, 2010, an option to acquire 2,333,333 of Common Stock was exercised at a price per share of $0.12, which was granted on August 7, 2009 to acquire up to total 6,500,000 shares of Common Stock (See Note 8). In connection with such exercise, the Company issued to such investor warrants to purchase up to 1,866,667 shares of Common Stock at a price per share of $0.15 at any time for two years from the date of issuance On February 8, 2010, the Company sold to two of the investors in the August 7, 2009 financing (see Note 8) and their affiliates a total of 4,167,000 shares of common stock for a purchase price of $0.12 per share, for a total of $500,000 after brokerage commission. In connection with this financing, the holders of the $0.14 warrants issued in the August 7, 2009 financing waived any anti-dilution adjustment resulting for this issuance. On February 24, 2010, one investor in the Aug 7, 2009 financing (see Note 8) converted 44,000 shares of convertible preferred stock into 500,000 shares of Common Stock at a conversion price per share of $ 0.088. F-17 On May 14, 2010, the certificate of designation relating to the series A preferred stock was amended and restated to increase the number of authorized shares of series A preferred stock from 1,000,000 to 2,000,000 shares. The financial statements give retroactive effect to this amendment. 13. EVENTS SUBSEQUENT TO THE DATE OF THE REPORT OF INDEPENDENT AUDITORS (UNAUDITED) In May 2010, the Company raised $3.4 million from the sale of 17,000,000 shares of common stock at $0.20 per share pursuant to agreements with two sets of investors. One group of investors purchased a total of 3,375,000 shares for $675,000 (the “group A investors”) and the other group purchased 13, 625,000 shares of common stock for $2,725,000 (the “group B investors”). In connection with the May 2010 financing, we agreed with the investors that: · If, as any time as long as any of the group A investors holds any of the shares of common stock purchased in the financing, the Company sells shares of common stock or issue convertible securities with an exercise price or conversion price which is less than the price paid in the financing, which was $0.20 per share, the Company is to issue additional shares to the investors so that the effective price per share is equal to such lower price. The group B investors have no comparable provision. · The Company would hire a finance manager or chief financial officer with United States public company experience, within 45 days after the closing. If the Company fails to meet this covenant, the Company must pay the group A investors liquidated damages of 1% per month in cash or stock (based on the closing price of the transaction) to the investors until the position is filled. The Company satisfied this covenant. · Within 45 of closing, the Company shall have a majority of independent directors of which two are to be English-speaking and have prior experience with United States public companies. If the Company fails to meet this covenant, the Company must pay the group A investors liquidated damages of 1% per month in cash or stock (based on the closing price of the transaction) to the investors until the covenant is met. The Company has satisfied this requirement. · Within 120 days of closing with respect to the group A investors and 180 days of closing with respect to the group B investors, the Company must have sent in the necessary paperwork to apply for a listing on the American Stock Exchange. If the Company fails to meet this covenant, the Company must pay the investors liquidated damages of 1% per month in cash or stock (based on the closing price of the transaction) to the investors until the covenant is met. · Within 90 days of closing, the Company agreed with the group A investors to “conduct a minimum of an eight (8) for one (1) and maximum of ten (10) for one (1) reverse stock split” and the Company agreed with the group B investors to “conduct a minimum of a six (6) for one (1) and maximum of eight (8) for one (1) reverse stock split.” If the Company fails to meet this covenant, the Company must pay the group A investors liquidated damages of 1% per month in cash or stock (based on the closing price of the transaction) to the investors until the covenant is met. On September 24, 2010, the holders of the series A preferred stock and the warrants to purchase 20,000,000 shares of common stock that were issued in the August 2009 financing waived the provisions in the purchase agreement and the warrants that provided for a reduction in the conversion price of the series A preferred stock and the exercise price of the warrants if the Company did not meet certain earnings levels or if the Company sold shares of common stock or convertible securities at a conversion or exercise price that was less than the conversion price of the series A preferred stock and the exercise price of the warrants. On October 4, 2010, the Company sold 5,000,000 shares of common stock to two investors at $0.20 per share to two investors, for total gross proceeds of $1,000,000. In connection with the financing, the Company agreed with the investors that: · If, as any time as long as any investor holds any of the shares of common stock purchased in the financing, the Company sells shares of common stock or issues convertible notes or convertible preferred stock at a price or with a conversion price which is less than the $0.20 price paid in the financing, the Company is to issue additional shares to the investors so that the effective price per share is equal to such lower price. · Within 120 days of closing, the Company must have sent in the necessary paperwork to apply for a listing on the American Stock Exchange. If the Company fails to meet this covenant, the Company must pay the investors liquidated damages of 1% per month in cash or stock (based on the closing price of the transaction) to the investors until the covenant is met. · Within 90 days of closing, the Company agreed with to “conduct a minimum of an eight (8) for one (1) and maximum of ten (10) for one (1) reverse stock split.” If the Company fails to meet this covenant, the Company must pay the investors liquidated damages of 1% per month in cash or stock (based on the closing price of the transaction) to the investors until the covenant is met. 14. RESTATEMENT OF FINANCIAL STATEMENTS On August 23, 2010, the Company concluded, after a review of the pertinent facts, that the previously issued financial statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2009 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2010, September 30, June 30 and March 31, 2009, respectively, should not be relied upon due to the following: · The Company improperly allocated, for financial statement purposes, the proceeds received in connection with the April 2008 debt financing transaction and the August and December 2009 and January 2010 preferred stock financing transactions (collectively, “the financings”). The restated financial statements include the effects of properly allocating the financing proceeds between (1) the debt or preferred stock, as applicable, (2) any derivative liabilities associated with warrants for the purchase of common stock, and (3) any beneficial conversion features (“BCF”), as a component of additional paid-in capital, which allow the debt and preferred stockholders to convert their investment into the Company’s common stock on favorable terms. F-18 · Due to the improper allocation of proceeds on the April 2008 debt financing which resulted in an incorrect basis for the debt, the Company improperly reported the loss on debt extinguishment upon its settlement in August 2009. The restated financial statements include the effects of reporting the loss on debt extinguishment properly. · Certain warrants containing variable exercise terms associated with the financings were reported as a component of paid-in capital instead of properly reflecting them as a derivative liability at fair value, with changes in fair value reported in the income statement each period. The restated financial statements include the effects of reporting the derivative liabilities and their associated changes in value correctly. · A BCF was inappropriately recorded as a debt discount on the April 2008 financing in addition to being amortized over the subsequent 12 months with a charge to expense. Furthermore, separate BCFs associated with the December 2009 and January 2010 preferred stock financings were erroneously omitted due to a misallocation of proceeds for financial statement purposes. The restated financial statements include the effects of allocating financing proceeds to the applicable BCFs by recording a preferred stock discount with a credit to additional paid-in capital. The discounts were then charged immediately to retained earnings as deemed preferred stock dividends pursuant to the terms of the agreement which provide immediate conversion rights. · Earnings per share have been restated to include the effects of the restated financial statements. The Company’s management has determined that as a result of such accounting matters, its reported net income was overstated by $3,529,126 for the year ended December 31, 2009 and understated by $112,650 for the year ended December 31, 2008. Set forth below is a comparative presentation of the balance sheet and income statement as of and for the years ended December 31, 2009 and 2008 as restated and as initially reported in the Company’s Reports on Form 10-K previously filed with the Securities and Exchange Commission. These financial statements include the restated balance sheet as of December 31, 2009 and 2008. SINO GREEN LAND CORPORATION AND SUBSIDIARIES As Reported As Restated As Reported As Restated 12/31/2009 12/31/2009 12/31/2008 12/31/2008 BALANCE SHEET: Convertible debenture $ - $ - $ 313,627 $ 360,710 Derivative liability - 5,206,567 - 340,266 Additional Paid-in Capital 10,119,540 7,736,406 5,419,351 4,919,351 Retained earnings 14,772,550 11,950,117 9,463,133 9,575,783 INCOME STATEMENT: Other Income (Expense) Interest expense (353,973 ) (63,882 ) (133,650 ) (133,650 ) Loss on debt extinguishment - (139,289 ) - - Beneficial conversion feature expense (153,425 ) - (393,345 ) - Change in derivative liability - (3,866,300 ) 46,770 (200,977 ) Net income 6,553,460 3,024,334 4,601,367 4,714,017 Deemed preferred Stock dividend (1,244,043 ) (650,000 ) - - Net income applicable to common stockholders 5,309,417 2,374,334 4,601,367 4,714,017 Comprehensive income: Net income $ 5,309,417 $ 3,024,334 $ 4,601,367 $ 4,714,017 Other comprehensive loss: Foreign currency translation gain/(loss) (313,469 ) (313,469 ) 777,795 777,795 Comprehensive income $ 4,995,948 $ 2,710,865 $ 5,379,162 $ 5,491,812 Net income per share: Basic $ 0.07 $ 0.03 $ 0.06 $ 0.06 Diluted $ 0.06 $ 0.02 $ 0.06 $ 0.06 Weighted average number of shares outstanding Basic 89,772,302 89,772,302 81,648,554 81,648,554 Diluted 117,579,469 117,579,469 81,648,554 81,648,554 F-19