Green Solutions China 10Q 2010 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_____________________

FORM 10-Q

_____________________

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2010

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______to______.

China Green, Inc.

(Exact name of registrant as specified in the Charter)

DELAWARE		000-53415		75-3269053
(State or other jurisdiction of incorporation or organization)		(Commission File No.)		(IRS Employee Identification No.)

Room 3601, the Centre, Queen’s Road no.99

Central, Hong Kong

(Address of Principal Executive Offices) (Zip Code)

(852) 3691-8831

(Registrants Telephone number including area code)

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

Yes x No o

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

Yes o No o

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

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

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes o No x

State the number of shares outstanding of each of the issuer’s classes of common equity, as of May 14, 2010: 6,514,750 shares of common stock.

CHINA GREEN, INC.

FORM 10-Q

March 31, 2010

TABLE OF CONTENTS

PART I— FINANCIAL INFORMATION

Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4T.	Controls and Procedures	32

PART II— OTHER INFORMATION

Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	(Removed and Reserved)	33
Item 5.	Other Information	33
Item 6.	Exhibits	33
		33
SIGNATURES

Item 1. Financial Statements

CHINA GREEN, INC.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(Stated in US dollars)

CHINA GREEN, INC.

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONTENTS

	Page(s)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME	3

CONDENSED CONSOLIDATED BALANCE SHEETS	4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	5

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	6-24

CHINA GREEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR THE NINE MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(Stated in US dollars)

			Three months			Three months			Nine months			Nine months
			ended			ended			ended			ended
			March 31,			March 31,			March 31,			March 31,
			2010			2009			2010			2009
			(unaudited)			(unaudited)			(unaudited)			(unaudited)
	Notes		$			$			$				$

Service income		11		3,134,563			3,097,696			10,583,682			8,647,436

Cost of services		12		(1,254,690	)		(1,516,141	)		(4,430,067	)		(3,906,102	)

Gross profit				1,879,873			1,581,555			6,153,615			4,741,334

General and administrative expenses		13		(56,134	)		(19,351	)		(107,452	)		(74,632	)

Income before taxation				1,823,739			1,562,204			6,046,163			4,666,702

Income tax		14		(11,782	)		(10,186	)		(60,448	)		(38,124	)

Net income				1,811,957			1,552,018			5,985,715			4,628,578

Other comprehensive income - Foreign currency translation adjustments				2,467			11,499			(17,416	)		805,371

Total comprehensive income				1,814,424			1,563,517			5,968,299			5,433,949

Net income per share – basic and diluted				0.14			0.15			0.48			0.44

Weighted average number of shares outstanding during the period – basic and diluted				12,676,167			10,455,000			12,368,111			10,455,000

The annexed notes form an integral part of these financial statements.

CHINA GREEN, INC.

CONDENSED CONSOLIATED BALANCE SHEETS

AS OF MARCH 31, 2010 AND JUNE 30, 2009

(UNAUDITED)

(Stated in US dollars)

			As of			As of
			March 31,			June 30,
	Notes		2010			2009
			(unaudited)			(audited)
ASSETS			$			$
Current assets
Cash and cash equivalents		4		1,666,504			849,457
Accounts receivables		5		5,785,839			5,036,977
Deposit paid for labour services				1,597,383			903,882
Deposit for contract procurements		6		2,629,499			2,538,710
Deposit paid for hotel investment negotiation		7		3,049,466			1,025,677

Total current assets				14,728,691			10,354,703

Plant and equipment, net		8		1,029,721			1,083,011

TOTAL ASSETS				15,758,412			11,437,714

LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities
Amount due to a director		9		-			64,499
Amount due to a shareholder		9		-			23,899
Accrued expenses				87,064			10,411
Tax payable		14		132,659			72,303

TOTAL LIABILITIES				219,723			171,112

STOCKHOLDERS’ EQUITY
Authorized : 500,000,000 shares;		10		130			105
Issued : 13,029,500 shares
Additional paid-in capital		10		497,997			-
Accumulated other comprehensive income				(17,416	)		836,560
Retained earnings				15,057,978			10,429,937

				15,538,689			11,266,602

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY				15,758,412			11,437,714

The annexed notes form an integral part of these financial statements.

CHINA GREEN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(Stated in US dollars)

	Three months			Three months			Nine months			Nine months
	ended			ended			ended			ended
	March 31,			March 31,			March 31,			March 31,
	2010			2009			2010			2009
	(unaudited)			(unaudited)			(unaudited)			(unaudited)

Cash flows from operating activities
Net income before taxation		1,823,739			1,562,204			6,046,163			4,666,702
Depreciation		150,423			132,008			415,616			395,773
Decrease / (increase) in accounts receivables		2,011,958			(1,873,039	)		(748,862	)		6,734
Increase in deposit for labour service		(695,145	)		(1,131	)		(695,145	)		(1,131	)
Increase in deposit for contract procurements		(95,406	)		(3,176	)		(95,406	)		(2,530,982	)
Increase in deposit paid for hotel investment		(127,450	)		(1,283	)		(2,023,789	)		(730,967	)
Negotiation
Increase in accrued expenses		37,503			-			87,064			-
Increase / (decrease) in amount due to a		-			1,287			(23,899	)		21,274
shareholder
Increase / (decrease) in amount due to a director		-			81			(64,499	)		81

Net cash from / (used in) operating activities		3,105,622			(183,049	)		2,897,243			1,827,484

Cash flows from investment activities
Investment in a subsidiary		-			-			-			(100	)
Purchases of plant and equipment		(346,877	)		-			(364,216	)		(11,088	)

Net cash used in investment activities		(346,877	)		-			(364,216	)		(11,188	)


Cash flows from financing activities
Issue of share		5			-			25			105
Additional paid-in capital		-			-			497,997			-
Dividend paid		(2,194,234	)		-			(2,194,234	)		(730,396	)

Net cash used in financing activities		(2,194,229	)		-			(1,696,212	)		(730,291	)


Net increase / (decrease) in		564,516			(183,049	)		836,815			1,086,005
cash and cash equivalents
Effect of foreign currency translation on cash and		2,351			9,871			(19,768	)		(744,188	)
cash equivalents
Cash and cash equivalents - beginning of period		1,099,637			879,480			849,457			364,485

Cash and cash equivalents - end of period		1,666,504			706,302			1,666,504			706,302

The annexed notes form an integral part of these financial statements.

CHINA GREEN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(Stated in US dollars)

1. BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with generally accepted accounting principles in the United States of America for interim consolidated financial information. Accordingly, they do not include all the information and notes necessary for comprehensive consolidated financial statements.

In connection with the reverse acquisition and recapitalization, all share and per share amounts will be retroactively restated.

The consolidated financial statements are prepared on the basis with assumption the reverse merger was undergone at the beginning of July 1, 2008. The historical consolidated financial statements of the Company will be those of China Green, Inc. and of the consolidated entities from the July 1, 2008, the date of merger, and subsequent. The consolidated financial statements for the company for the nine months ended March 31, 2010 and 2009, include the financial statements of China Green, Inc., its 100% owned subsidiary, Glorious Pie Limited, and its wholly owned subsidiary, Earn Bright Development Limited. Intercompany transactions and balances are eliminated in consolidation.

In the opinion of the management of the Company, all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the three-month periods have been made. Results for the periods presented are not necessarily indicative of the results that might be expected for the entire fiscal period. These condensed financial statements should be read in conjunction with the consolidated financial statements and the notes included in the 2008 and 2009 annual report filed with the Securities and Exchange Commission.

2. DESCRIPTION OF BUSINESS

China Green Group (the “Group”) consists of China Green, Inc. (the “China Green”), Glorious Pie Limited (the “Glorious Pie”) and Earn Bright Development Limited (the “Earn Bright”). China Green, Inc. was incorporated in the State of Delaware on July 11, 2008. Glorious Pie Limited was incorporated in the British Virgin Islands on 12 September, 2006, under the International Business Companies Act, British Virgin Islands. Earn Bright Development Limited was incorporated in Hong Kong on December 17, 2008.

On August 12, 2009, China Green, Inc. acquired all of the issued and outstanding common stock of Glorious Pie Limited by issuing 10,355,000 common shares to the Glorious Pie Limited Shareholder under a Share Exchange and Stock Purchase Agreement with Glorious Pie Limited.

The Group is engaged in developing its model in the areas of hospitality facilities and large scale landscape architecture and engineering. The Group is specialized on providing greenery services to greenery construction projects in China, including, but not limited to, design advice, trading and quality control service of seed, provision of seedling and performance arrangement of greenery engineering and plantation.

CHINA GREEN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(Stated in US dollars)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

a) Basis of presentation and consolidation (continued)

The accompanying consolidated financial statements of the Group have been prepared in accordance with generally accepted accounting principles in the United States of America.

The consolidated financial statements include the accounts of China Green, Inc. and its subsidiaries. Significant intercompany transactions have been elimination in consolidation.

The consolidated financial statements are prepared on the basis with assumption the reverse merger was undergone at the beginning of July 1, 2008.

As of March 31, 2010, the particulars of the subsidiaries are as follows:

Name of company	Place of incorporation	Date of incorporation	Attributable equity interest	Issued capital

Glorious Pie Limited	British Virgin Islands	September 12, 2006	100%	US$100

Earn Bright Development Limited	Hong Kong	December 17, 2008	100%	US$0.128 (HK$1)

b) Use of estimates

In preparing of the financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting year. These accounts and estimates include, but are not limited to, the valuation of accounts receivable, inventories, deferred income taxes and the estimation on useful lives of plant and machinery. Actual results could differ from those estimates.

c) Cash and Cash Equivalents

The Group considers all cash and other highly liquid investments with initial maturities of year or less to be cash equivalents. As of March 31, 2010 and June 30, 2009, there were cash and cash equivalents of $1,666,504 and $849,457.

CHINA GREEN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(Stated in US dollars)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

d) Accounts Receivable

Accounts receivable are recorded at the invoiced amount, net of allowances for doubtful accounts. The Group recognizes an allowance for doubtful accounts to ensure accounts receivable are not overstated due to uncollectibility. An allowance for doubtful accounts is maintained for all customers based on a variety of factors, including the length of time the receivables are past due, significant one-time events and historical experience. An additional reserve for individual accounts is recorded when the Group becomes aware of a customer’s inability to meet its financial obligations, such as in the case of bankruptcy filings or deterioration in the customer’s operating results or financial position. If circumstances related to customers change, estimates of the recoverability of rec eivables would be further adjusted.

e) Accounting for the Impairment of Long-Lived Assets

The Group adopted Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Live Assets” (“SFAS 144”), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The Group periodically evaluates the carrying value of long-lived assets to be held and used in accordance with SFAS 144. SFAS 144 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal. Based on its review, the Group believes that, as of March 31, 2010 and June 30, 2009, there were no significant impairments of its long-lived assets.

f) Plant and Equipment

Plant and equipment, other than construction in progress, are stated at cost less depreciation and amortization and accumulated impairment loss.

Plant and equipment are carried at cost less accumulated depreciation. Depreciation is provided over their estimated useful lives, using the straight-line method. Estimated useful lives of the plant and equipment are as follows:

Equipment and machinery	5 years
Furniture & fixtures	5 years

The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statement of income. The cost of maintenance and repairs is charged to income as incurred, whereas significant renewals and betterments are capitalized.

Management considers that we have no residual value for plant and equipment.

CHINA GREEN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(Stated in US dollars)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

g) Fair value of Financial Instruments

SFAS No. 107, “Disclosures about Fair Values of Financial Instruments”, requires disclosing fair value to the extent practicable for financial instruments that are recognized or unrecognized in the balance sheet. The fair value of the financial instruments disclosed herein is not necessarily representative of the amount that could be realized or settled, nor does the fair value amount consider the tax consequences of realization or settlement.

The carrying values of the financial instruments, including cash and cash equivalents, accounts and other receivables, approximate their fair values due to the short-term maturity of such instruments. The carrying amounts of borrowings approximate their fair values because the applicable interest rates approximate current market rates.

h) Foreign Currency Translation

The Group maintains its financial statements in the functional currency. The functional currency of the Group is the Renminbi (RMB). Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchanges rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective periods.

For financial reporting purposes, the financial statements of the Group which are prepared using the functional currency have been translated into United States dollars. Assets and liabilities are translated at the exchange rates at the balance sheet dates and revenue and expenses are translated at the average exchange rates and stockholders’ equity is translated at historical exchange rates. Any translation adjustments resulting are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income, a component of stockholders’ equity.

	2009	2008
Three Months end RMB : US$ exchange rate as of March 31	6.8361	6.8456
Three Months Average RMB : US$ exchange rate	6.8360	6.8466
Nine Months end RMB : US$ exchange rate as of March 31	6.8361	6.8456
Nine Months Average RMB : US$ exchange rate	6.8377	6.8509

RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation.

CHINA GREEN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(Stated in US dollars)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

i) Revenue Recognition

The Group revenue is generated from providing services in two aspects as follows:

i)	Designing and consultancy services in hotel facilities; and

ii)	Resource-efficient engineering business in greenery projects.

The revenue recognized by the Group is based on the Design and Consultancy agreement between the Group and the hotel where the Group has provided the design, consultancy to the hotel and even with certain fixtures and assets provided to that hotel and hence share a certain percentage of gross revenue generated by the hotel facilities for certain years as the consideration.

Revenue from fixed-price and modified fixed-price construction contracts are recognized on the percentage-of-completion method, measured by the percentage of actual cost incurred to date to estimated total cost for each contract. The Group would regularly and frequently reviews the estimated contract cost on each project being accepted and not yet finished to ensure the contract cost estimate is measured with the best knowledge of the personnel involved.

j) Cost of revenue

Regarding the design and consultancy services to the hotel facilities, the respective cost of revenue includes the consultancy expenses in professional staff involved and the design and consultancy fee with other third-party experts, and also the depreciation expenses on those fixtures and movable assets being placed with the hotel by the Group.

Regarding the trading of seeding and provision of greenery engineering projects, the respective cost of revenue consists primarily of material costs, labour cost, subcontracting expenses, and related expenses, which are directly attributable to the greenery construction projects.

k) Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the cons olidated statements of income and comprehensive income in the period that includes the enactment date.

CHINA GREEN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(Stated in US dollars)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

k) Income Taxes (Continued)

The China Green accounts for income taxes under the liability method in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" under this method, deferred income tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

The China Green adopted the provisions of FASB Interpretation No. 48; “Accounting for Uncertainty in Income Taxes-An Interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 contains a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not, that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount, which is more than 50% likely of being realized upon ultimate settlement. The China Green consider many factors when evaluating and estimating our tax po sitions and tax benefits, which may require periodic adjustments. At March 31, 2010, the China Green did not record any liabilities for uncertain tax position.

l) Comprehensive Income

SFAS No. 130, "Reporting Comprehensive Income", requires companies to classify items of other comprehensive income in a financial statement. Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. The Group's comprehensive net income is equal to its net income for all periods presented. The Group’s current component of other comprehensive income is the foreign currency translation adjustment.

m) Commitments and contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.

n) Share-based compensation

All share-based payments to employees is recorded and expensed in the statement of operations as applicable under SFAS No. 123R, “Share-Based Payment”. The Company has issued 254,166 shares of share-based compensation at par value USD0.00001 to its director on August 12, 2009 as compensation for services that he rendered.

CHINA GREEN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(Stated in US dollars)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

o) Non-employee stock based compensation

Stock-based compensation awards issued to non-employees for services are recorded at either the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in Emerging Issues Task Force Issue EITF No. 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services” (“EITF 96-18”). The Company has issued 1,458,334 shares of non-employee stock based compensation at par value USD0.0001 to third parties on August 12, 2009 as compensation for their consulting services rendered.

p) Segment reporting

The Group uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Group’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Group’s reportable segments. Management, including the chief operating decision maker, reviews monthly operating results derived from two types of services and therefore the Group has determined that the Group has two operating segments as defined by SFAS 131, “Disclosures about Segments of an Enterprise and Related Information”.

q) Earnings per share

The Group reports basic earnings per share in accordance with SFAS 128, “Earnings Per Share”. Basic earnings/(loss) per share is computed by dividing net income/(loss) by weighted average number of shares of common stock outstanding during the period. Diluted earnings 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 the period. At March 31, 2010, the Group had no common stock equivalents that could potentially dilute future earnings per share.

r) Additional paid-in captial

In connection with the China Green’s private placement completed in July 2009, the Company issued 332,000 shares of its common stock to 296 investors at USD$1.50 per share for an aggregate purchase price of USD$498,000. The Company issued these shares in reliance on the safe harbor provided by Regulation S promulgated under the Securities Act. These investors who received the securities represented and warranted that they are not “U.S. Person” as defined in Regulation D.

CHINA GREEN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(Stated in US dollars)

4. CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of the following:

	As of		As of
	March 31,		June 30,
	2010		2009
	(unaudited)		(audited)
	$		$

Cash at bank		1,282,582		458,729
Cash on hand		383,922		390,728
		1,666,504		849,457

5. ACCOUNTS RECEIVABLES

Accounts receivables consist of the following:

	As of		As of
	March 31,		June 30,
	2010		2009
	(unaudited)		(audited)
	$		$
Accounts receivables related to:

Hotel facilities		232,873		522,113
Greenery maintenance projects		1,199,833		605,479
Greenery construction projects		4,353,133		3,909,385
		5,785,839		5,036,977

At the balance sheet date, most of the accounts receivables were related to greenery construction projects and their credit period is usually ranged from 90 days to 180 days.

CHINA GREEN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(Stated in US dollars)

6. DEPOSIT PAID FOR CONTRACT PROCUREMENTS

Main contractors require the company to put escort money during negotiation of contract. Once the contract is successfully made, the escort money will be kept by the contractors until the contract has been completed. If the bid is fail, the escort money will be refunded immediately.

7. DEPOSIT PAID FOR HOTEL INVESTMENT NEGOTIATION

The Group has placed the following amount of deposit being held in escrow by the counter-party for the negotiation for acquiring certain equity interest of the hotel facilities located hereunder which gives comfort to the negotiating party that the Group shows its financial strength and capability to get the acquisition closed if the acquisition deal is reached:

	As of		As of
	March 31,		June 30,
Deposit for hotel investment negotiation	2010		2009
	(unaudited)		(audited)
	$		$
Location:
(1) Dongguan City, Changan Town,
Xin Min Administration Region,
Jianan Road Section		292,564		293,051

(2) Chang An Di Ying Hotel
Dongguan City, Changan Town,
Zhenan Road and Xiabian Road Section		-		293,051

(3) Jin Ye Hotel
Guangzhou City, Huan Shi Dong Road,
Section No. 422		-		439,575

(4) Shanghai Huaxun Holding Limited*
No. 258, Mei Yuen Road, Jia Ding Area,
Shanghai		1,338,392		-

(5) Kang Zu Yuan Hotel
Dongguan City, Changan Town,
Zhen An Zhong Road, Section No. 269		898,350		-

(6) Jiansu Dong’an Hotel
Jiansu Dong’an Technopark		520,160		-


		3,049,466		1,025,677

* Development in hotel and service apartment projects.

CHINA GREEN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(Stated in US dollars)

8. PLANT AND EQUIPMENT, NET

Plant and equipment and being part of hotel facilities and consist of the following:

	2010			2009
	(unaudited)			(audited)
At cost	$			$
Balance at beginning of period		2,648,609			2,624,306
Acquisition during the period		364,215			11,136
Exchange difference		(4,393	)		13,167

Balance at end of period		3,008,431			2,648,609
Less: Accumulated depreciation
Aggregated depreciation
Balance at beginning of period		1,565,598			1,030,705
Charge for the period		415,616			527,909
Exchange difference		(2,504	)		6,984

Balance at end of period		1,978,710			1,565,598

Net book value
As of March 31 and June 30		1,029,721			1,083,011

Management considers that there are no residual value for plant and equipment.

9. AMOUNT DUE TO A DIRECTOR / SHAREHOLDER

The amounts represent unsecured, interest free and have no fixed repayment terms.

CHINA GREEN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(Stated in US dollars)

10. STOCKHOLDERS’ EQUITY

On July 17, 2008, the China Green, Inc. issued it’s President and Director 100,000 shares of common stock at par value USD0.00001 as the founder shares as compensation for the services that he rendered in connection with the Company’s incorporation.

In connection with the Company’s private placement completed in July 2009, the Company issued 332,000 shares of its common stock to 296 investors at USD$1.50 per share for an aggregate purchase price of USD$498,000.

On August 12, 2009, the Company has issued 254,166 shares of share-based compensation at par value USD0.00001 to its director as compensation for services that he rendered. Furthermore, the Company also issued 1,458,334 shares of non-employee stock based compensation at par value USD0.00001 to third parties as compensation for their consulting services rendered.

On March 31, 2010, China Green, Inc. has newly issued 530,000 shares of common stock at par value.

Stockholders’ equity is as follows:

	Common Stock
	Number		Amount($)		Additional paid-in capital($)		Total($)

As of date of Inception		100,000		1		-		1
Share issued on July 2009		332,000		3		497,997		498,000
Share issued on August 2009		1,712,500		17		-		17
Share issued on March 2010		530,000		5				5
Share issued for takeover a subsidiary		10,355,000		104		-		104

As of March 31, 2010		13,029,500		130		497,997		498,127

As of March 31, 2010, the Company has 500,000,000 shares of common stock authorized and 13,029,500 shares of common stock issued and outstanding.

CHINA GREEN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(Stated in US dollars)

11. BUSINESS SEGMENT

The Group is engaged in provision of designing and consultancy services in hotel facilities and also involved in provision of engineering services to greenery construction projects, which include, but is not limited to, provision of seedling and skillful workers to those construction projects.

Segment information is disclosed in accordance to FAS 131, “Disclosures about Segments of an Enterprise and Related Information” as below:

	Greenery				Greenery				Hotel
	Construction				Maintenance				Consultancy &
	Consultancy				Consultancy				Facilities				Total
	3 months ended				3 months ended				3 months ended				3 months ended
	Mar 31,		Mar 31,		Mar 31,		Mar 31,		Mar 31,		Mar 31,		Mar 31,		Mar 31,
	2010		2009		2010		2009		2010		2009		2010		2009
	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
	$		$		$		$		$		$		$		$
Revenue from
external customers		1,840,796		1,812,508		604,482		603,548		689,285		681,640		3,134,563		3,097,696

Gross profit		1,024,637		675,060		332,465		371,468		522,771		535,027		1,879,873		1,581,555


	Greenery				Greenery				Hotel
	Construction				Maintenance				Consultancy &
	Consultancy				Consultancy				Facilities				Total
	9 months ended				9 months ended				9 months ended				9 months ended
	Mar 31,		Mar 31,		Mar 31,		Mar 31,		Mar 31,		Mar 31,		Mar 31,		Mar 31,
		2010		2009		2010		2009		2010		2009		2010		2009
	(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)		(unaudited)
		$		$		$		$		$		$		$		$
Revenue from
external customers		6,681,881		4,541,493		1,812,995		1,809,496		2,088,806		2,296,447		10,583,682		8,647,436

Gross profit		3,419,243		1,860,606		1,109,445		1,023,844		1,624,927		1,856,884		6,153,615		4,741,334


	Mar 31,		Jun 30,		Mar 31,		Jun 30,		Mar 31,		Jun 30,		Mar 31,		Jun 30,
		2010		2009		2010		2009		2010		2009		2010		2009
	(unaudited)		(audited)		(unaudited)		(audited)		(unaudited)		(audited)		(unaudited)		(audited)
		$		$		$		$		$		$		$		$
Segment non-
current assets		-		-		-		-		1,029,721		1,083,011		1,029,721		1,083,011

Segment
current assets
(excluding cash and
cash equivalents)		8,580,015		6,825,404		1,199,833		1,132,052		3,282,339		1,547,790		13,062,187		9,505,246

CHINA GREEN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(Stated in US dollars)

12. COST OF SERVICES

Details of cost of services are summarized as follows:


	Three months		Three months		Nine months		Nine months
	ended		ended		ended		ended
	March 31,		March 31,		March 31,		March 31,
	2010		2009		2010		2009
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
	$		$		$		$

Depreciation		150,423		132,008		415,616		395,773
Repair and maintenance		16,092		14,606		48,263		43,790
Sub-contracting charges		400,821		439,326		1,426,545		1,200,603
Material cost		567,654		823,267		2,099,230		1,945,151
Professionals and related costs		12,465		12,305		43,771		34,193
Other construction costs		107,235		94,629		396,642		286,592

		1,254,690		1,516,141		4,430,067		3,906,102

13. GENERAL AND ADMINISTRATIVE EXPENSES

Details of general and administrative expenses are summarized as follows:


	Three months		Three months		Nine months		Nine months
	ended		ended		ended		ended
	March 31,		March 31,		March 31,		March 31,
	2010		2009		2010		2009
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
	$		$		$		$

Audit fee		-		-		9,775		4,500
Computer expenses		1,017		959		2,976		2,834
Electricity and water		313		360		999		987
Filing fee		2,500		1,287		7,997		1,853
Legal and professional fee		44,582		8,355		62,978		25,530
Preliminary expenses		-		-		-		13,801
Sundry expenses		1,242		1,667		3,772		5,315
Travelling		980		1,481		2,823		4,399
Telephone		965		860		2,823		2,276
Wages and salaries		4,535		4,382		13,309		13,137

		56,134		19,351		107,452		74,632

CHINA GREEN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(Stated in US dollars)

14. INCOME TAXES

The enterprise income tax is reported on a separate entity basis.

United States Tax

SFAS 109 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carry forwards. SFAS 109 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets.

The China Green has a net operating loss carried forward at March 31, 2010 for tax purposes totaling $77,068, expiring through the year 2028. Internal Revenue Code Section 382 places a limitation on the amount of taxable income that can be offset by carry forwards after a change in control (generally greater than a 50% change in ownership). Temporary differences, which give rise to a net deferred tax asset, are as follows:

	As of
	March 31,
	2010
	(unaudited)
	$
Gross deferred tax assets:
Net operating loss carry forwards		26,203

Total deferred tax assets		26,203
Less: valuation allowance		(26,203	)

Net deferred tax asset recorded		-

The valuation allowance at December 31, 2009 was $11,786. The net change in valuation allowance during the period ended March 31, 2010, was an increase of $14,417. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on consideration of these items, management has determined that enough uncertainty exists relative to the realization of the deferred income tax asset balances to warrant the application of a full valuation allowance as of March 31, 2010.

CHINA GREEN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(Stated in US dollars)

14. INCOME TAXES (CONTINUED)

The actual tax benefit differs from the expected tax benefit for the period ended March 31, 2010 (computed by applying the U.S. Federal Corporate tax rate of 34% to income before taxes) as follows:

	As of
	March 31,
	2010
	(unaudited)
	$
Expected tax expense (benefit) – Federal		(26,203	)
Change in valuation allowance		26,203

Actual tax expense (benefit)		-

BVI Tax

Glorious Pie Limited is subjected to British Virgin Island (BVI) tax law. The Management of Glorious Pie Limited determined that the company did not operate in BVI and therefore is not subject to BVI tax. Therefore, Glorious Pie Limited did not incur any BVI tax during the year/period presented.

Hong Kong Tax

Earn Bright Development Limited has not been carrying out any business activity in Hong Kong and Earn Bright Development Limited is not subjected to Hong Kong profit tax as there is no assessable profit for the period ended March 31, 2010.

PRC Tax

PRC’s legislative body, the National People’s Congress, adopted the unified Enterprise Income Tax (“EIT”) Law on March 16, 2007. This new tax law replaces the existing separate income tax laws for domestic enterprises and foreign-invested enterprises and became effective on January 1, 2008. Under the new tax law, a unified income tax rate is set at 25% for both domestic enterprises and foreign-invested enterprises. However, there will be a transition period for enterprises, whether foreign-invested or domestic, that are currently receiving preferential tax treatments granted by relevant tax authorities. Enterprises that are subject to an enterprise income tax rate lower than 25% may continue to enjoy the lower rate and will transit into the new rate over a five year period beginning on the effective date of the EIT Law. Enterprises that are currently entitled to exemptions for a fixed term may continue to enjoy such treatment until the exemption term expires. Preferential tax treatments may continue to be granted to industries and projects that qualify for such preferential treatments under the new law.

CHINA GREEN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(Stated in US dollars)

14. INCOME TAXES (CONTINUED)

The Earn Bright Development Limited is subjected to PRC tax law. The Management of Earn Bright Limited considered that the Company did operate in PRC and is subject to PRC tax since 2 January 2009. As all the business are operated through Earn Bright Development Limited, under the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), the Company is entitled to 5% of business tax and 7% of profit tax.

Income tax at applicable tax rates of 5% of business tax and 7% of profit tax:

	Three months		Three months
	ended		ended
	March 31,		March 31,
	2010		2009
	(unaudited)		(unaudited)
	$		$

Tax for the period at the statutory tax rate of applicable in jurisdictions:
- Business tax at 5% of turnover		8,616		8,521
- Profit tax at 7% of profit		3,166		1,665
Income tax		11,782		10,186


	Nine months		Nine months
	Ended		Ended
	March 31,		March 31,
		2010		2009
	(unaudited)		(unaudited)
		$		$

Tax for the period at the statutory tax rate of applicable in jurisdictions:
- Business tax at 5% of turnover		38,092		28,706
- Profit tax at 7% of profit		22,356		9,418
Income tax		60,448		38,124

CHINA GREEN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(Stated in US dollars)

14. INCOME TAXES (CONTINUED)

Tax payable in the balance sheet represents:

	As of			As of
	March 31,			June 30,
	2010			2009
	(unaudited)			(audited)
	$			$

Tax at the statutory tax rate of applicable in jurisdictions:
jurisdictions:
- Business tax at 5% of turnover		38,092			38,737
- Profit tax at 7% of profit		22,356			33,319
		60,448			72,056
Balance brought forward		72,303			-
Foreign exchange translation		(92	)		247

Tax payable		132,659			72,303

The deferred tax asset and liability has not been recognized because no valuation allowance to be established for the period ended March 31, 2010 and June 30, 2009.

15. COMMITMENTS AND CONTINGENCIES

There is no foreseeable commitments or contingencies for the period ended March 31, 2010.

16. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In February 2010, the Financial Accounting Standards Board (“FASB”) issued an accounting pronouncement that amended the subsequent events pronouncement issued in May 2009. The amendment removed the requirement to disclose the date through which subsequent events have been evaluated. This pronouncement became effective immediately upon issuance and is to be applied prospectively. The adoption of this pronouncement did not have a material impact on Group’s consolidated financial statements.

In January 2010, the FASB issued ASU 2010-06, “Improving Disclosures about Fair Value Measurements,” which requires additional disclosures about transfers between Levels 1 and 2 of the fair value hierarchy and disclosures about purchases, sales, issuances and settlements in the roll forward of activity in Level 3 fair value measurements. This guidance was effective for the Company in the current quarter, except for the Level 3 activity disclosures, which are effective for fiscal years beginning after December 15, 2010. The adoption of this guidance, which is related to disclosure only, will not have a material impact on the Group’s consolidated financial position, results of operations or cash flows.

CHINA GREEN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(Stated in US dollars)

16. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (CONTINUED)

In December 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-17, “Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities” (“ASU 2009-17”). ASU 2009-17 changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a reporting entity is required to consolidate another entity is based on, among other things, the other entity’s purpose and design and the reporting entity’s ability to direct the activities of the other entity that most significantly impact the other entity’s economic performance. The new standard requires a number of new disclosures, including additional disclosures about th e reporting entity’s involvement with variable interest entities and any significant changes in risk exposure due to that involvement. A reporting entity is required to disclose how its involvement with a variable interest entity affects the reporting entity’s financial statements. ASU 2009-17 is effective at the start of a reporting entity’s first fiscal year beginning after November 15, 2009, or January 1, 2010, for a calendar year-end entity. Based on the Group’s evaluation of ASU 2009-17, the adoption of this statement did not impact the Group’s consolidated financial statements.

In October 2009, the FASB issued EITF 08-1, “Revenue Arrangements with Multiple Deliverables”, which is also known as Accounting Standards Update (ASU) No. 2009-13, “Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements (ASU 2009-13). ASU 2009-13 addresses the accounting for multiple-deliverable arrangements to enable vendors to account for products or services separately rather than as a combined unit and modifies the manner in which the transaction consideration is allocated across the separately identified deliverables. ASU 2009-13 significantly expands the disclosure requirements for multiple-deliverable revenue arrangements. ASU 2009-13 will be effective for the first annual reporting period beginning on or after June 15, 2010, and may be applied retrospectively for all p eriods presented or prospectively to arrangements entered into or materially modified after the adoption date. Early adoption is permitted, provided that the guidance is retroactively applied to the beginning of the year of adoption. The Group is currently evaluating the impact this update will have on the Group’s consolidated financial statements.

In September 2009, the EITF reached final consensus on a new revenue recognition standard, Issue No. 09-3, “Applicability of AICPA Statement of Position 97-2 to Certain Arrangements That Contain Software Elements”, as codified in FASB Accounting Standards Update (ASU) 985. ASU 985 amends the scope of AICPA Statement of Position 97-2, Software Revenue Recognition to exclude tangible products that include software and non-software components that function together to deliver the product’s essential functionality. This Issue shall be applied on a prospective basis for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted, provided that the guidance is retroactively applied at the beginning of the year of adoption. The Group is currently evaluating the potential impact of ASU 985 on the Group’s results of operations or financial condition.

CHINA GREEN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

(Stated in US dollars)

17. COMPARATIVE FIGURES

Certain comparative figures of last year have been reclassified to confirm with current’s year presentation.

18. SUBSEQUENT EVENTS

On May 3, 2010, China Green, Inc. has closed a 2-to-1 reverse stock split and has 6,514,750 outstanding common shares as at May 3, 2010.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation

The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto appearing elsewhere in this Form 10-Q. The following discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 relating to future events or our future performance. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this prospectus. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.

Overview

We are a development stage company incorporated in the State of Delaware on July 11, 2008 as a vehicle to pursue a business combination. On August 13, 2009, we closed a share exchange transaction with Glorious Pie, a British Virgin Islands company incorporated on June 12, 2006, pursuant to which we become the 100% holding company of Glorious Pie which in turn is the 100% holding company of Earn Bright, a Hong Kong corporation incorporated on December 17, 2008.

Operating through Glorious Pie and Earn Bright, our Hong Kong subsidiary, we engage in two interrelated business segments: (i) landscaping consultancy and project management, and (ii) eco-friendly hotel consultancy and development. We apply ecological engineering (or eco-engineering) concepts in landscaping projects and hospitality management to integrate human society with the natural environment. Our mission is to create an eco-friendly living environment that can benefit both humans and nature.

Our Services

Landscaping consultancy and Project Management

Our landscaping consultancy and project management business have mainly been offered to large-scale outdoor projects such as public infrastructure, social facilities development and private real estate development projects. Our consulting services generally include landscape planning and design, concept applications, selection and provision of seedling, performance targeting and benchmarking, plantation management and quality control. Based on our assessment of a potential project’s sophistication, we would either directly implement our project plans or outsource services to selected subcontractors.

As one of the industry leaders in Dongguan, Guangdong – China’s third largest exporting city and one of the fastest growing regions in China, we have led or co-led many notable public and private landscaping projects in the region, including Dongguan’s Songshan Lakes Science & Technology Industrial Park, a province-level development zone for new and high-tech industries. Our services have been extended to other locations in the Guangdong province, such as Guangzhou city. In addition, we have also expanded our landscaping services to private sector projects in recent years to diversify our source of business.

ECHOO

Our eco-friendly hotel consultancy and development business is also known as “ECHOO”, an acronym for eco-hospitality operations. Since our inception, we have applied eco-engineering concepts to renovate two hotels into eco-friendly hotels, also known as ECHOO hotels. Our consultancy plans generally include site assessment, energy optimization applications, resource efficiency planning, material selection and equipment installation. In return, we enter into fixed-term revenue-sharing agreements with hotels to receive a portion of the hotel’s future revenue as consulting fees for services we provided. The consulting fee shall be paid monthly within 5 days after the hotels’ monthly revenues are booked. The hotels are obligated to keep full and accurate books and records which shall be available to us and our agents for inspects and audits. We believe this business arrangement have benefited both our company and the hotels, with the ECHOO improving the hotels’ sales performance for and us obtaining a stable cash flow by acquiring a portion of the hotels’ revenues pursuant to the consulting agreement between us and the hotels.

Over the past year, we have completed five large-scale landscape consultancy and development projects and are working on two other large-scale landscape consultancy and development projects. We are also providing maintenance services to three projects that were completed by us in the past. We are seeking more large-scale landscaping projects stimulated by the RMB 4 trillion economic stimulus plan launched by the PRC government, and are working with existing customers to secure more maintenance services contracts. In our ECHOO business, we continue to receive recurring and growing revenues from two completed ECHOO hotels and are identifying suitable ECHOO hotel targets in Guangdong, Shanghai and other major cities.

In the future, we aim to become an industry leader in eco-engineering consultancy with a dual focus in landscaping and eco-hospitality development. We will develop our landscaping consultancy and project management business into a balanced portfolio that includes public sector projects, private sector projects, and landscape maintenance and services. In our ECHOO business, we will expand our ECHOO hotel network into other major cities and provinces as well as other property sectors such as service apartments and residential estates. Our goal is to develop the ECHOO into a well-recognized brand name in eco-hospitality.

Sales & Marketing

Landscaping consultancy and services

We primarily obtain our landscaping consultancy and services projects from twelve government prime contractor and several private contractors, which we have signed master agreements with. We also obtain a small proportion of our projects from other contractors. These contractors are based in Guangdong and other provinces. We submit proposals bids to our contractors which in turn bid for government and private landscaping projects. In certain cases, we obtain projects directly from municipal governments.

ECHOO

Our consultants constantly reach out to identify unprofitable and financially distressed hotels that can potentially be converted into ECHOO hotels. We mainly target hotels with scalable structures and located in visible and high traffic areas. We enter into multi-stage discussions with these hotel owners and offer them a turnaround opportunity through a future revenue-sharing fee model. Our consultants work alongside with the hotel owners throughout the ECHOO hotel conversion process from initial site assessment to identifying areas of improvement to development of green practices and other changes.

Our marketing strategy is focused on building our company as a leader in eco-engineering that specializes in landscaping and eco-hospitality development. We execute our strategy by further improving our reputation in landscaping consultancy and developing our “ECHOO” brand in eco-hospitality consultancy. At present, all our consultants are responsible for marketing our services through regional channels and industry events. We also leverage cross-selling opportunities between our two business segments. In the future, we plan to hire professional marketing and public relations staff and external agencies to increase awareness of our ‘ECHOO’ brand within the hospitality industry and the public. We will allocate resources on regional exhibitions, conferences, educational events, competitions and awards to broaden o ur brand exposure.

RESULTS OF OPERATIONS

The following tables set forth key components of our results of operations for the periods indicated, in U.S. dollars, and key components of our revenue for the period indicated, in dollars.

	Nine months			Nine month
	ended			ended
	March 31,			March 31,
	2010			2009
	(unaudited)			(unaudited)
	$			$

Service income		10,583,682			8,647,436
Cost of services		(4,430,067	)		(3,906,102	)
Gross profit		6,153,615			4,741,334
General and administrative expenses		(107,452	)		(74,632	)
Income before taxation		6,046,163			4,666,702
Income tax		(60,448	)		(38,124	)
Net income		5,985,715			4,628,578

Nine Months ended March 31, 2010 Compared to the Nine Months ended March 31, 2009

Service Income. Our service income for the nine months ended March 31, 2010 was $10,583,682 as compared to $8,647,436 for the nine months ended March 31, 2009, representing an increase of $1,936,246 or approximately 22.4%. Our service income increased because our service income generated by our greenery construction consultancy business increased by approximately $2,140,388 for the nine months ended March 31, 2010 compared to the same period in 2009. This was partially offset by a $207,641 decrease in our service income generated by our hotel consultancy and facilities for the nine months ended March 31, 2010 compared to the same period in 2009.

Cost of Services. Our cost of services for the nine months ended March 31, 2010 was $4,430,067 as compared to $3,906,102 for nine months ended March 31, 2009, an increase of $523,965 or approximately 13.4%. The increase of our cost of services was mainly attributable to the increase of our service income for the nine months ended March 31, 2010.

Gross Profit. For nine months ended March 31, 2010 as compared to the nine months ended March 31, 2009, we generated gross profit of $6,153,615 and $4,741,334, respectively, reflecting an increase of $1,412,281 or approximately 29.8%. Our gross profit margin (gross profit divided by service income) for the same period increase from approximately 58.1% for the nine months ended March 31, 2009 to approximately 54.8% for the same period ended 2009, representing an increase of 3.3%.

General and Administrative Expenses. We incurred general and administrative expenses of $107,452 for the nine months ended March 31, 2010, an increase of $32,820 or 44.0%, compared to $74,632 for the nine months ended March 31, 2009. Our general and administrative expenses increased because our legal and professional fee increased by $37,448 for the nine months ended March 31, 2010 compared to the same period in 2009.

Net Income. We had net income of $5,985,715 for the nine months ended March 31, 2010 as compared to net income $4,628,578 for the nine months ended March 31, 2009, representing an increase of $1,357,137 or approximately 29.3%. The increase in our net income was largely due to increase of our service income and gross profit margin improvement.

	Three months			Three months
	ended			ended
	March 31,			March 31,
	2010			2009
	(unaudited)			(unaudited)
	$			$

Service income		3,134,563			3,097,696
Cost of services		(1,254,690	)		(1,516,141	)
Gross profit		1,879,873			1,581,555
General and administrative expenses		(56,134	)		(19,351	)
Income before taxation		1,823,739			1,562,204
Income tax		(11,782	)		(10,186	)
Net income		1,811,957			1,552,018

Three Months ended March 31, 2010 Compared to the Three Months ended March 31, 2009

Service Income. Our service income for the three months ended March 31, 2010 was $3,134,563 as compared to $3,097,696 for the three months ended March 31, 2009, representing an increase of $36,867 or approximately 1.19%.

Cost of Services. Our cost of services for the three months ended March 31, 2010 was $1,254,690 as compared to $1,516,141 for three months ended March 31, 2009, a decrease of $261,451 or approximately 17.25%. The decrease of our cost of services was mainly attributable to lower material costs and subcontracting charges.

Gross Profit. For three months ended March 31, 2010 as compared to the three months ended March 31, 2009, we generated gross profit of $1,879,873 and $1,581,555, respectively, reflecting an increase of $298,318 or approximately 18.86%. Our gross profit margin (gross profit divided by service income) for the same period increase from approximately 51.06% for the three months ended March 31, 2009 to approximately 59.97% for the same period ended 2009, representing an increase of 3.3%.

General and Administrative Expenses. We incurred general and administrative expenses of $56,134 for the three months ended March 31, 2010, an increase of $36,783 or 190.08%, compared to $19,351 for the three months ended March 31, 2009. Our general and administrative expenses increased because our legal and professional fee increased by $37,448 for the three months ended March 31, 2010 compared to the same period in 2009.

Net Income. We had net income of $1,811,957 for the three months ended March 31, 2010 as compared to net income $1,552,018 for the three months ended March 31, 2009, representing an increase of $259,939 or approximately 16.75%. The increase in our net income was largely due to increase of our service income and gross profit margin improvement.

LIQUIDITY AND CAPITAL RESOURCES

We are a development stage company. As of March 31, 2010, we had incurred an accumulated net income of $5,985,715. At March 31, 2010, we had cash and cash equivalents of $1,666,504 as compared to cash and cash equivalents of $1,099,637 as of December 31, 2009. Management is trying to raise additional capital through sales of common stock, as well as seeking financing from third parties.

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

	For the nine months ended
	December 31, 2009		March 31, 2009
	(Unaudited)
Net Cash (used in)/from Operating Activities		2,897,243		1,827,484
Net Cash (used in)/from Investment Activities		(364,216)		(11,188)
Net Cash (used in)/generated in Financing Activities		(1,696,212)		(730,291)
Net (decrease)/increase in Cash and Cash Equivalents		836,815		1,086,005
Effect of Foreign Currency Transaction		(19,768)		(744,188)
Cash, Beginning of Period		849,457		364,485
Cash, End of Period	$	1,666,504		706,302

Comparison of the nine months ended March 31, 2010 to the nine months ended March 31, 2009

Net cash used in operating activities was $2,897,243 for the nine months ended March 31, 2010, compared to net cash from operations of $1,827,484 for nine months ended March 31, 2009. The $1,069,759 increase was primarily due to higher service income.

Net cash used in investment activities was $364,216 for the nine months ended March 31, 2010, compared to net cash used in investment activities of $11,188 for nine months ended March 31, 2009, representing an increase of $353,028, or 3155.4%. The increase of net cash used in investing activities because of increased purchases of plant and equipment.

Net cash generated in financing activities amounted to $1,696,212 for the nine months ended March 31, 2010, compared to net cash used in financing activities of $730,291 for the nine months March 31, 2009. The increase of net cash from financing activities was primarily due to an $1,463,838 increase in dividends paid for the nine months ended March 31, 2010 compared to the same period in 2009.

Critical Accounting Policies and Estimates

Revenue Recognition

The Company revenue is generated from providing services in two aspects as follows:

i)	Designing and consultancy services in hotel facilities; and

ii)	Resource-efficient engineering business in greenery projects.

The revenue recognized by the Company is based on the Design and Consultancy agreement between the Company and the hotel where the Company has provided the design, consultancy to the hotel and even with certain fixtures and assets provided to that hotel and hence share a certain percentage of gross revenue generated by the hotel facilities for certain years as the consideration.

Revenue from fixed-price and modified fixed-price construction contracts are recognized on the percentage-of-completion method, measured by the percentage of actual cost incurred to date to estimated total cost for each contract. The Company would regularly and frequently reviews the estimated contract cost on each project being accepted and not yet finished to ensure the contract cost estimate is measured with the best knowledge of the personnel involved.

Accounts Receivable

Plant and Equipment

Plant and equipment, other than construction in progress, are stated at cost less depreciation and amortization and accumulated impairment loss.

Equipment and machinery	5 years
Furniture & fixtures	5 years

Management considers that we have no residual value for plant and equipment.

Cost of revenue

Regarding the trading of seeding and provision of greenery engineering projects, the respective cost of revenue consists primarily of material costs, labor cost, subcontracting expenses, and related expenses, which are directly attributable to the greenery construction projects.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the conso lidated statements of income and comprehensive income in the period that includes the enactment date.

Recently Issued Accounting Pronouncements

In December 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-17, “Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities” (“ASU 2009-17”). ASU 2009-17 changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a reporting entity is required to consolidate another entity is based on, among other things, the other entity’s purpose and design and the reporting entity’s ability to direct the activities of the other entity that most significantly impact the other entity’s economic performance. The new standard requires a number of new disclosures, including additional disclosures about the reporting entity’s involvement with variable interest entities and any significant changes in risk exposure due to that involvement. A reporting entity is required to disclose how its involvement with a variable interest entity affects the reporting entity’s financial statements. ASU 2009-17 is effective at the start of a reporting entity’s first fiscal year beginning after November 15, 2009, or January 1, 2010, for a calendar year-end entity. Based on the Group’s evaluation of ASU 2009-17, the adoption of this statement did not impact the Group’s consolidated financial statements.

In October 2009, the FASB issued EITF 08-1, “Revenue Arrangements with Multiple Deliverables”, which is also known as Accounting Standards Update (ASU) No. 2009-13, “Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements (ASU 2009-13). ASU 2009-13 addresses the accounting for multiple-deliverable arrangements to enable vendors to account for products or services separately rather than as a combined unit and modifies the manner in which the transaction consideration is allocated across the separately identified deliverables. ASU 2009-13 significantly expands the disclosure requirements for multiple-deliverable revenue arrangements. ASU 2009-13 will be effective for the first annual reporting period beginning on or after June 15, 2010, and may be applied retrospectively for all pe riods presented or prospectively to arrangements entered into or materially modified after the adoption date. Early adoption is permitted, provided that the guidance is retroactively applied to the beginning of the year of adoption. The Group is currently evaluating the impact this update will have on the Group’s consolidated financial statements.

OFF-BALANCE SHEET ARRANGEMENTS

As of the date hereof, we do not have any off-balance sheet debt, nor do we have any transactions, arrangements or relationships with any special purpose entities.

Inflation and Seasonality

Inflation and seasonality have not had a significant impact on our operations during the last two fiscal years.

Item 3. Quantitative and Qualitative Disclosures about Market Risks

This item does not apply to smaller reporting company such as us.

Item 4T. Controls and Procedures

(a) Evaluation of disclosure controls and procedures. At the conclusion of the period ended March 31, 2010, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective and adeq uately designed to ensure that the information required to be disclosed by us in the reports we submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms and that such information was accumulated and communicated to our Chief Executive Officer and Chief Financial Officer, in a manner that allowed for timely decisions regarding required disclosure.

(b) Changes in internal controls. During the period covered by this report, there was no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 1A. Risk Factors

This item does not apply to smaller reporting companies such as us.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. (Removed and Reserved)

Item 5. Other Information.

None.

Item 6. Exhibits.

31.1	Certification of Tai Chip Yip pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	Certification of Tai Chip Yip pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	China Green, Inc.

Date: May 14, 2010	By:	/s/ Chi Yip Tai
		Chi YipTai Chief Executive Officer and Principal Accounting Officer

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Green Solutions China Inactive 10-Q2010 Q3 Quarterly report

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