Our Management's Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national and local general economic and market conditions; demographic changes; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.

Although the forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

Overview

As a result of the merger transaction between our subsidiary, Dalian Acquisition Corp. ("Dalian"), and Dalian Holding Corp. ("DHC"), all of our operations are conducted through our subsidiary, DHC, which conducts all of its operations through its subsidiary, Ye Shun, and its wholly-owned subsidiary, Runze. Therefore, since our relevant operations post merger are conducted through Runze the discussion herein relates to the operations of that entity as DHC and Ye Shun do not have any operations independent of Runze's operations.

Ye Shun is a Hong Kong registered enterprise that has its ownership in Runze as its primary asset and its only operating asset. Runze is a state-appointed pesticide manufacturer in China. In the past, through Runze, we specialized in the manufacturing of pesticides and herbicides, particularly the herbicide Acetochlor. However, during the fiscal year, which ended September 30, 2007, and continuing through the nine months ended June 30, 2008, we did not sell any product or have any revenues as a result of not being able to utilize DRC's facilities and the new regulation regarding all manufacturing plants being in "chemical zones." In Summer 2007, we received a notice from the Chinese National Environmental Bureau that all chemical manufacturing facilities must be located in designated "chemical zones" going forward, and manufacturing plants not currently located in a "chemical zone" will have to be relocated. Our manufacturing facility is not located in a "chemical zone" and, therefore, if we wish to manufacture products at our own manufacturing plant we will be forced to build a new facility in an approved "chemical zone." Currently, management does not believe we will attempt to build a new manufacturing plant in a designated chemical zone. Therefore, based on the location of our current manufacturing plant our management has determined that our manufacturing equipment is of little or no value and has been categorized as an impaired asset on our current audited financial statements.

In addition to not building a new plant, we also currently do not believe we will be permitted to use DRC's manufacturing facilities to manufacture our product to sell to unrelated third parties as we have in the past because their manufacturing facilities are also not located in a "chemical zone" and they will be forced to move their plant. We believe DRC will utilize their manufacturing capacity until the time they must move their plant, if they choose to do so, to manufacture their own product. Additionally, even if we were able to utilize DRC's manufacturing facilities to manufacture our product there is no guarantee we will receive a discounted rate if we are allowed to use their facilities, and currently, even with the discounted rate, do not have the funds to pay DRC to utilize their facility.

Although we hope to be able to manufacture product in 2008, based on the above factors our management does not believe that is likely and is contemplating discontinuing our current business plan of manufacturing herbicides and pesticides.

Background

We were incorporated under the name M-GAB Development Corporation in March 2001. From inception through early 2003, our business was the development, marketing, and distribution of an interactive travel brochure. On May 16, 2003, we filed an election to be treated as a business development company ("BDC") under the Investment Company Act of 1940 (the "1940 Act"), which became effective on the date of filing. As a BDC we never made any investments into eligible portfolio companies.

On March 17, 2006, China Agro Sciences Corp., a Florida corporation formerly known as M-GAB Development Corporation (hereinafter "We" or "China Agro") entered into an Agreement and Plan of Merger (the "Agreement") with Dalian Holding Corp., a Florida corporation (formerly known as China Agro Sciences Corp.) ("DHC"). This transaction closed on May 1, 2006, at which time, in accordance with the Agreement, DHC merged with DaLian Acquisition Corp, a Florida corporation that was our wholly-owned subsidiary ("DaLian") (the "Merger"). As a result of the merger, DaLian merged into DHC, with DHC remaining as the surviving entity and our wholly-owned subsidiary, DaLian, ceased to exist, and we issued 13,449,488 shares of our common stock to the former shareholders of DHC.

Prior to DaLian's merger with DHC, DHC had acquired all the outstanding common stock of Ye Shun International ("Ye Shun"), a company that owns all the outstanding common stock of DaLian Runze Chemurgy Co., Ltd. ("Runze"). In the transaction in which Ye Shun purchased all the outstanding stock of Runze, Runze was determined to be the accounting acquirer. In the transaction in which DHC acquired all the outstanding common stock of Ye Shun, Ye Shun was determined to be the accounting acquirer. Ye Shun is a Hong Kong registered enterprise. Runze is classified by the Chinese government as an enterprise entity with 100% of its capital coming from Hong Kong. As a result of the Merger, on April 28, 2006, we filed a Form N-54C and terminated our status as a business development company and, through our wholly-owned subsidiary, commenced operations, specializing in the sale and distribution of pesticides and herbicides, and consequently ceased being a development stage company. Our only operations are conducted through our wholly-owned subsidiary, which controls the assets of Runze. The term "we" as used throughout this document refers to China Agro Sciences Corp., DaLian, and the operations of Runze, which are controlled by DHC.

Our subsidiary owns Runze, an entity that was originally formed by the current management and principal shareholders of Dalian Raiser Chemurgy Co., Ltd. ("DRC") and subsequently sold to Ye Shun. DRC is a state-appointed manufacturer located in the Peoples Republic of China. Mr. Zhengquan Wang, our Chief Executive Officer, Chief Financial Officer and a Director, is the President and Chairman of the Board of DRC. Runze contains all our operations and the majority of our assets.

During the quarter ended June 30, 2005, a market maker filed an application to list our securities on the OTC Bulletin Board. On October 10, 2005, we were informed by the NASD that our common stock was approved by the NASD for trading on the OTC Bulletin Board. Our trading symbol is CHAS.

Our merger transaction closed on May 1, 2006. The merger transaction is accounted for using the reverse purchase method of accounting for financial reporting purposes since: (i) prior to this transaction China Agro had little or no substantial assets or business operations, (ii) post-closing, the former owners of DHC now own approximately 95% of China Agro and therefore control China Agro, and (iii) post-closing, the only continuing business operations of China Agro are those of DHC. In accordance with the reverse purchase method of accounting the historical financial numbers disclosed in this quarterly report are those historical numbers of DHC and Runze and does not cover our previous operations as a BDC.

Three Months Ended June 30, 2008 Compared to Three Months Ended June 30, 2007

Results of Operations

                           Three Months Ended      Three Months Ended
                              June 30, 2008           June 30, 2007

Revenues                   $                 -                       -
Cost of revenue                              -                       -
Gross Profit                                 -                       -
Total Costs and Expenses               116,638                 187,153
Net income (loss)          $          (116,638 )   $          (187,153 )

Revenues

We had no revenues for three months ended June 30, 2008, compared to no revenues for the same period one year ago. Going forward we will not be able to manufacture product at our existing plant due to the new "chemical zone" regulation. Therefore, if we are not able to contract with a third party to utilize a qualified manufacturing facility to produce our products we will be not be able to manufacture product in the future and we will not have any revenues during those periods. Building a new manufacturing facility in a "chemical zone" would be at a substantial cost to the company and our management does not believe that is likely to occur and we may seek an alternative business in the future.

Cost of Sales

Our cost of sales for the three months ended June 30, 2008, were $0 compared to $0 for the three months ended June 30, 2007. We did not have any cost of sales for the three-month periods ended June 30, 2008 and 2007 because we did not sell any products during these periods.

Gross Profit

We had no gross profit during the three-month periods ended June 30, 2008 or 2007 because we did not manufacture any products during these two periods.

Total Costs and Expenses

Our total costs and expenses were $116,638 for the three months ended June 30, 2008, compared to $187,153 for the same period one year ago. For the period ended June 30, 2008, our total costs and expenses consisted entirely of general and administrative expenses, which primarily consisted of amortized costs related to financial consulting expenses, which total approximately $58,285, and depreciation expense of $31,533, salaries and wages of $4,717, and other administrative expenses of approximately $21,758. For the three months ended June 30, 2007, our operating expenses of $187,153 consisted primarily of amortized costs related to financial consulting services which totaled approximately $52,217 and depreciation of $96,548.

We believe our total costs and expenses of $116,638 for the three months ended June 30, 2008 are fairly indicative of our total costs and expenses for a three-month period in which we do not manufacture any products.

Net Income (Loss)

Net loss for the three months ended June 30, 2008 totaled ($116,638) compared to net loss of ($187,153) for the comparable period one year ago. The difference is attributable to the difference in our general and administrative expenses. We anticipate this net loss to be fairly indicative of future quarters in which we do not manufacture our own products.

Nine Months Ended June 30, 2008 Compared to Nine Months Ended June 30, 2007

Results of Operations

                            Nine Months Ended       Nine Months Ended
                              June 30, 2008           June 30, 2007

Revenues                   $                 -                       -
Cost of revenue                              -                       -
Gross Profit                                 -                       -
Total Costs and Expenses               282,147                 613,719
Net income (loss)          $          (282,147 )   $          (613,719 )

For the reasons stated above, we did not have any revenues for nine months ended June 30, 2008, compared to no revenues for the same nine-month period one year ago. We do not expect to generate revenues unless we are able to begin producing products utilizing a third party's manufacturing facility. We do not have any arrangements to produce product at any third parties' facilities and do not believe it is likely that we will be able to make such an arrangement due to our current inability to pay for the use of such facilities.

Cost of Sales

Our cost of sales for the nine months ended June 30, 2008, were $0 compared to nil for the same period one year ago. As noted above, we did not have any cost of sales during these periods because we did not have any sales during these nine-month periods.

Gross Profit

Our gross profit was nil for the nine months ended June 30, 2008 and 2007 because we did not manufacture any products during these two periods.

Total Costs and Expenses

Our total operating expenses were $282,147 for the nine months ended June 30, 2008, compared to total operating expenses of $613,719 for the same period one year ago. All of our operating expenses for the nine months ended June 30, 2007 were attributable to general and administrative expenses. For the nine-month period ending June 30, 2008, our operating expenses of $318,376 consisted of amortized costs related to financial consulting expenses, which total approximately $169,460, and depreciation expense of $91,950, salaries and wages of $16,232,, and other administrative expenses of approximately $40,734. However, we also recorded other income of $36,229. Therefore, total operating expenses totaled $282,147.

We believe our total costs and expenses of $282,147 for the nine months ended June 30, 2008 are fairly indicative of our total costs and expenses for a nine-month period in which we do not manufacture any products.

Net Income (Loss)

Net loss for the nine months ended June 30, 2008 totaled ($282,147), compared to net loss of ($613,719) for the comparable period one year ago. The significant difference is largely attributable to higher general and administrative expenses for the nine-month period one year ago. We anticipate our net loss of ($282,147) for the most recent nine month period to be fairly indicative of future nine-month periods in which we do not manufacture our own products.

Liquidity and Capital Resources

Introduction

As of June 30, 2008, we had cash and cash equivalents totaling $101,376, no accounts receivable since we didn't manufacture any product, no inventory since we didn't manufacture any product, prepaid financial consulting expense of $265,947, and other current assets totaling $7,539. The prepaid financial consulting expense is an amount we prepaid to individual consultants for general advice and guidance. Our total current liabilities as of June 30, 2008, were $812,618 consisting of $482,357 in accounts payable, $303,093 in amount due to affiliated company, and $27,168 in accrued expenses. The amount due to an affiliated party is due to Dalian Ruize Pesticides, Inc., a company where our sole officer is also an officer, and is owed for money loaned to us to pay our bills and employees. Currently, we do not believe we will be able to fund operations out of our sales of herbicides and pesticides going forward since we are not currently manufacturing any products for sale. If we are not able to fund our operations from sales of products then we will likely fund operations through the sale of our stock and from loans.

Our significant balance sheet accounts as of June 30, 2008, compared to the end of our last fiscal year were:

                                             As of
                         As of           September 30,
                     June 30, 2008           2007              Change

Cash and cash
equivalents         $       101,376      $     114,271      $      (9,895 )
Accounts
receivable                        -                  -                  -
Inventories                       -                  -                  -
Prepaid expenses            265,947            405,271           (139,324 )
Due (to) from an
affiliated
company                    (303,093 )          291,345            (11,748 )
Accounts payable           (482,357 )         (996,894 )          514,537
Total current
liabilities         $      (812,618 )    $  (1,029,962 )    $     217,344

Cash Requirements

We believe that our available funds will provide us with adequate capital for at least the next six to twelve months; however, to the extent that we make acquisitions or are forced to move our manufacturing facility, we may require additional capital for the acquisition, for the operation of the combined companies, or the relocation of our manufacturing facility. We cannot assure that such funding will be available.

Sources and Uses of Cash

Operations

Net cash used in operating activities of $321,892 for the nine months ended June 30, 2008 was primarily a result of the net loss of $282,147, a reduction in accounts payable of $301,837, a reduction in accrued expenses of $8,999, offset by depreciation of $91,950, and a reduction of prepaid expenses and sundry current assets by $179,141. Our net cash provided by operating activities totaled $716,984 for the same nine-month period one year ago. The primary difference between the two periods is in the period ended June 30, 2007 we collected accounts receivable of $2,098,853, had prepaid financial consulting expenses of $78,048, prepaid expenses of $451,599, and accrued accounts payable of $567,542.

Investing

Net cash used in investing activities totaled $0 for the nine months ended June 30, 2008, as compared to $23,525 for the same period one year ago. We did not have investing activities for the three-month period ended June 30, 2008. During the same period in 2007, we had investing activities related to the disposition of property and equipment.

Financing

Net cash provided by financing activities totaled $315,627 for the nine months ended June 30, 2008, related to loans from an affiliated party. During the nine months ended June 30, 2007, we made payments of $337,166 to an affiliated company to pay off, in full, an outstanding loan from that affiliated company, and advanced $357,455 to the same affilated company, for a total of $694,621 in net cash used in financing activities.

Debt Instruments, Guarantees, and Related Covenants

Our related party debt is non-interest bearing and payable on demand. Our long term debt obligation bears interest at 0.3% over the prime rate in effect in the PRC and is payable interest only through July 2009, followed by annual installments of approximately 233,000 RMB ($33,000).

Critical Accounting Policies

The preparation of our financial statements that are in conformity with accounting principles generally accepted in the United States of America require our management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities as well as the disclosure of contingent assets and liabilities at the date of the financial statements. The same also applies for reported amounts of revenues and expenses during the reporting period. As such, in accordance with the use of accounting principles generally accepted in the United States of America, our actual realized results may differ from management's initial estimates as reported. A summary of our significant accounting policies are located in the notes to the financial statements which are an integral component of this filing.