F-10 1 a2195234zf-10.htm FORM F-10
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As filed with the Securities and Exchange Commission on November 5, 2009.

Registration No. 333-[    •    ]

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



FORM F-10

REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933



GLG LIFE TECH CORPORATION
(Exact name of Registrant as specified in its charter)

British Columbia
(Province or other Jurisdiction of
Incorporation or Organization)
  2833
(Primary Standard Industrial
Classification Code Number)
  Not Applicable
(I.R.S. Employer Identification
Number, if applicable)

Suite 519 World Trade Centre, 999 Canada Place, Vancouver, BC, Canada V6C 3E1; telephone (604) 641-1368
(Address and telephone number of Registrant's principal executive offices)

Fairchild Record Search, Ltd. 3400 Capitol Boulevard S.E., Suite 101, Tumwater, Washington 98501-3308; telephone (360) 786-8775
(Name, address (including zip code) and telephone number (including area code) of agent for service in the United States)



Copies to:

Brian R. Meadows
GLG Life Tech Corporation
Suite 519 World Trade Centre
999 Canada Place
Vancouver, BC V6C 3E1
Canada
(604) 844-2840
  Georald Ingborg
Fasken Martineau DuMoulin LLP
2900 – 550 Burrard Street
Vancouver, BC V6C 0A3
Canada
(604) 631-3225
  Matthew D. Adler
DLA Piper LLP (US)
701 Fifth Ave, Suite 7000
Seattle, WA 98104
USA
(206) 839-4800
  R. Hector MacKay-Dunn, Q.C.
Farris, Vaughan, Wills & Murphy LLP
2500-700 West Georgia Street
Vancouver, BC V7Y 1B3
Canada
(604) 684-9151
  Frederick P. Callori
Choate Hall & Stewart LLP
Two International Place
Boston, MA 02110
USA
(617) 248-5000



Approximate date of commencement of proposed sale of the securities to the public:
As soon as practicable after this registration statement becomes effective

Province of British Columbia, Canada
(Principal jurisdiction regulating this offering)

It is proposed that this filing shall become effective (check appropriate box below):

A.   o   upon filing with the Commission, pursuant to Rule 467(a) (if in connection with an offering being made contemporaneously in the United States and Canada).
B.   ý   at some future date (check the appropriate box below)
    1.   o   pursuant to Rule 467(b) on (                        ) at (                        ) (designate a time not sooner than 7 calendar days after filing).
    2.   o   pursuant to Rule 467(b) on (                        ) at (                        ) (designate a time 7 calendar days or sooner after filing) because the securities regulatory authority in the review jurisdiction has issued a receipt or notification of clearance on (                        ).
    3.   o   pursuant to Rule 467(b) as soon as practicable after notification of the Commission by the Registrant or the Canadian securities regulatory authority of the review jurisdiction that a receipt or notification of clearance has been issued with respect hereto.
    4.   ý   after the filing of the next amendment to this Form (if preliminary material is being filed).

            If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to the home jurisdiction's shelf prospectus offering procedures, check the following box.            o

CALCULATION OF REGISTRATION FEE

               
 
Title of each class of securities to be
registered

  Amount to be
registered(1)

  Proposed maximum
offering
price per share(2)

  Proposed maximum
aggregate
offering price(2)

  Amount of
registration fee

 

Common Shares

  4,168,750   U.S.$10.00   U.S.$41,687,500   U.S.$2,326.16

 

(1)
After giving effect to the four-to-one (4:1) consolidation of the Registrant's common shares that was completed on November 5, 2009. Includes 543,750 common shares that the underwriters have the option to purchase to cover over-allotments, if any.

(2)
Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457 of the Securities Act of 1933, calculated after giving effect to the four-to-one (4:1) consolidation of the Registrant's common shares that was completed on November 5, 2009 based on the average of the high and low prices of the Registrant's common shares on the Toronto Stock Exchange on November 4, 2009 converted into U.S. dollars at the U.S.-Canadian dollar exchange rate of U.S.$1.00 = C$1.07 on November 4, 2009.

            The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registration Statement shall become effective as provided in Rule 467 under the Securities Act of 1933 or on such date as the Commission, acting pursuant to Section 8(a) of the Act, may determine.




PART I

INFORMATION REQUIRED TO BE DELIVERED TO OFFEREES OR PURCHASERS

EXPLANATORY NOTE RELATED TO CANADIAN PROSPECTUS ALTERNATIVE PAGES

        This registration statement contains two forms of prospectus: one to be used in connection with the offering of securities described herein in the United States (the "U.S. Prospectus") and one to be used connection with the offering of such securities in Canada (the "Canadian Prospectus"). The U.S. Prospectus and the Canadian Prospectus are identical except for the cover page, the table of contents, and the back page, and except that the Canadian Prospectus includes sections titled "Eligibility For Investment", "Statutory Rights of Withdrawal and Rescission" and "Purchasers' Contractual Right of Action" and auditors' consents, certificate of the corporation and certificate of the underwriters. The form of the U.S. Prospectus is included herein and is supplemented by the alternative pages to be used in the Canadian Prospectus. Each of the alternative pages for the Canadian Prospectus included herein is labeled "Alternative Page for Canadian Prospectus."

I-1



[ALTERNATIVE COVER PAGE FOR CANADIAN PROSPECTUS]

         A copy of this preliminary short form prospectus has been filed with the securities regulatory authorities in all of the Provinces of Canada, except the Province of Québec, but has not yet become final for the purpose of the sale of securities. Information contained in this preliminary short form prospectus may not be complete and may have to be amended. The securities may not be sold until a receipt for the preliminary short form prospectus is obtained from the securities regulatory authorities.

No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. This short form prospectus constitutes a public offering of these securities only in those jurisdictions where they may be lawfully offered for sale and therein only by persons permitted to sell such securities.

Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the United States Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

Information has been incorporated by reference in this short form prospectus from documents filed with securities commissions or similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge from the Corporate Secretary of GLG Life Tech Corporation at Suite 519 World Trade Centre, 999 Canada Place, Vancouver, British Columbia V6C 3E1, Telephone: (604) 641-1368, and are also available electronically at www.sedar.com.

PRELIMINARY SHORT FORM PROSPECTUS

New Issue   November 5, 2009

GRAPHIC

GLG LIFE TECH CORPORATION

US$    •    

3,625,000 Common Shares

This short form prospectus qualifies the distribution (the "Offering") of 3,625,000 common shares (the "Offered Shares") of GLG Life Tech Corporation ("GLG", "we", "us", "our" or the "Corporation") at a price of US$    •    per Offered Share (the "Offering Price"). The Offering is the initial public offering of our common shares ("Common Shares") in the United States and is a new issue of our Common Shares in Canada. The Offering is being made concurrently in Canada under the terms of this prospectus and in the United States under the terms of a registration statement on Form F-10 filed with the United States Securities and Exchange Commission (the "SEC"). Our Common Shares are listed for trading on the Toronto Stock Exchange (the "TSX") under the trading symbol "GLG". We have applied to have our Common Shares listed on The NASDAQ Global Market ("NASDAQ") under the symbol "GLGL", and for the additional listing of the Offered Shares on the TSX. Listing will be subject to our fulfillment of all of the listing requirements of NASDAQ and the TSX. On November 4, 2009, the closing price of the Common Shares on the TSX, after giving effect to our share consolidation discussed below, was $10.60 or US$9.96, based on the US-Canadian dollar noon exchange rate on November 4, 2009, as quoted by the Bank of Canada. We report our financial results in Canadian dollars.

On November 5, 2009 we completed a four-to-one (4:1) consolidation of our Common Shares. Except where otherwise noted, all information in this prospectus gives effect to this share consolidation.

The Offered Shares are being offered in Canada by Canaccord Capital Corporation, GMP Securities L.P., Desjardins Securities Inc. and Wellington West Capital Markets Inc. (the "Canadian Underwriters") and in the United States by Canaccord Adams Inc., GMP Securities L.P. and Roth Capital Partners, LLC (the "US Underwriters" and together with the Canadian Underwriters, the "Underwriters").


Price: US$    •    per Common Share



 
  Price to public(1)(2)   Underwriting discounts
or commissions(2)
  Proceeds to us(1)(2)(3)  

Per Offered Share

    US$    •         US$    •         US$    •      

Total

    US$    •         US$    •         US$    •      

Notes:

(1)
Before deduction of the legal, accounting and administrative expenses of this Offering payable by us and estimated to be US$    •    , which will be paid from the net proceeds of the sale of the Offered Shares. See "Use of Proceeds".

(2)
The Offering Price for investors in Canada will be payable in Canadian dollars and the Offering Price for investors in the United States will be payable in US dollars unless the Underwriters otherwise agree. All of the proceeds of the Offering will be paid to us by the Underwriters in US dollars based on the US dollar offering price. Totals are based on the US-Canadian dollar noon exchange rate on November     •    , 2009, as quoted by the Bank of Canada, being Cdn.$    •     = US$1.00. See "Exchange Rate Information". The Underwriters will receive a fee equal to US$    •    per Offered Share (or Cdn.$    •    ) from the sale of Offered Shares to the public. See "Underwriting".

(3)
We have granted the Underwriters an option (the "Over-Allotment Option") to purchase up to an additional 15% of the Offered Shares at the Offering Price, being 543,750 common shares (the "Additional Shares") during the period ending 30 days from the closing of the Offering. If the Over-Allotment Option is exercised in full, the total price to the public, underwriting discounts or commissions and net proceeds to us with respect to the total Offering will be US$    •    , US$    •    and US$    •    (or Cdn.$    •    , Cdn.$    •    , and Cdn.$    •    ), respectively. This prospectus qualifies the distribution of the Over-Allotment Option and the Additional Shares that may be offered upon the exercise of such option. See "Underwriting".

[ALTERNATIVE PAGE FOR CANADIAN PROSPECTUS]

The following table sets out the number of additional securities that are issuable by us in connection with the Offering:

Underwriters' Position   Maximum Size   Exercise Period   Exercise Price (per
Additional Share)

Over-Allotment Option

  543,750   30 days from the closing of the Offering   US$    •    

If a purchaser acquires Common Shares forming part of the Underwriters' over-allocation position, the purchaser acquires the Common Shares under this prospectus, regardless of whether the over-allocation position is ultimately filled through the exercise of the Over-Allotment Option to purchase the Additional Shares or secondary market purchases.

The Offering Price was determined by negotiation between us and the Underwriters. The Underwriters, as principals, conditionally offer the Offered Shares, subject to prior sale, if, as and when issued, sold and delivered by us to and accepted by the Underwriters in accordance with the conditions in the underwriting agreement referred to under "Underwriting". Certain legal matters relating to the Offering and the Offered Shares to be distributed pursuant hereto will be reviewed on our behalf by Fasken Martineau DuMoulin LLP, our Canadian counsel, and DLA Piper LLP (US), our United States counsel, and on behalf of the Underwriters by Farris, Vaughan, Wills & Murphy LLP, Canadian counsel to the Underwriters, and Choate, Hall & Stewart LLP, United States counsel to the Underwriters. Legal maters as to PRC law will be reviewed on our behalf by Shandong Jiuruntong Law Firm and on behalf of the Underwriters by Han Kun Law Offices. In connection with this Offering, the Underwriters may sell more Common Shares than they are required to purchase in this Offering or effect transactions that stabilize or maintain the market price of our Common Shares at levels other than those which might otherwise prevail on the open market. The Underwriters may decrease the price at which the Offered Shares are distributed from the Offering Price and in such event the compensation realized by the Underwriters will be decreased by the amount that the aggregate price paid by the purchasers for the Offered Shares is less than the gross proceeds paid by the Underwriters to us. See "Underwriting" for additional information.

Subscriptions will be received subject to rejection or allotment in whole or in part and the right is reserved to close the subscription books at any time without notice. The closing of the Offering is expected to be on or about    •    , 2009, or such later date as may be agreed to by us and the Underwriters. In any event, the Offered Shares are to be taken up by the Underwriters, if at all, on or before a date not later than 42 days after the date of the receipt for the final short form prospectus relating to the Offering.

An investment in the Offered Shares is speculative and involves a high degree of risk. Prospective investors should carefully review the risk factors referred to under "Risk Factors" before purchasing the Offered Shares.

In the United States, this Offering is made by a foreign issuer that is permitted, under the Multi-Jurisdictional Disclosure System ("MJDS") adopted by the United States and Canada, to prepare this prospectus in accordance with Canadian disclosure requirements. Prospective investors should be aware that such requirements are different from those of the United States. Financial statements and other financial information included or incorporated herein have been prepared in accordance with Canadian generally accepted accounting principles ("Canadian GAAP"), and may be subject to Canadian auditing and auditor independence standards, and thus may not be comparable to financial statements of United States companies. Information regarding the impact upon our consolidated financial statements of significant differences between Canadian GAAP and accounting principles generally accepted in the United States ("US GAAP") is contained in the Supplementary Notes (as defined herein) included at pages F-33 and F-60 of this prospectus.

Our Chief Executive Officer, Dr. Luke Zhang, resides outside of Canada. Although Dr. Luke Zhang has appointed GLG Life Tech Corporation as his agent for service of process in British Columbia, it may not be possible for investors to enforce judgments obtained in Canada against him.

Prospective investors should be aware that the acquisition of the Offered Shares may have tax consequences both in the United States and in Canada. Such consequences for investors who are resident in, or citizens of, the United States, Canada or elsewhere may not be described fully herein. Investors should read the tax discussion in this prospectus under the heading "Certain Material Income Tax Considerations" and consult their own tax advisor with respect to their own particular circumstances.

The enforcement by investors of civil liabilities under United States federal securities laws may be affected adversely by the fact that we are incorporated under the laws of British Columbia, Canada, that some of our officers and directors are residents of Canada, that some of the Underwriters and experts named in this prospectus and the registration statement are residents of Canada, and that a substantial portion of our assets, and those of such persons, are located outside the United States.

Unless the context otherwise requires, references to "Offered Shares" means all of the Common Shares offered hereunder, including the Additional Shares, and references to "Common Shares" means all of our common shares.

Our registered office is located at 700-625 Howe Street, Vancouver, British Columbia, Canada V6C 2T6 and our head office is located at Suite 519 World Trade Centre, 999 Canada Place, Vancouver, British Columbia, Canada V6C 3E1.


Table of Contents

[ALTERNATIVE PAGE FOR CANADIAN PROSPECTUS]


TABLE OF CONTENTS

 
  Page

ABOUT THIS PROSPECTUS

  ii

DOCUMENTS INCORPORATED BY REFERENCE

  ii

SPECIAL NOTICE REGARDING FORWARD-LOOKING STATEMENTS

  iii

INDUSTRY AND MARKET DATA

  iv

EXCHANGE RATE INFORMATION

  iv

EXPLANATORY NOTE RELATED TO SHARE CONSOLIDATION

  v

PROSPECTUS SUMMARY

  1

GLOSSARY

  5

RISK FACTORS

  7

DESCRIPTION OF THE BUSINESS

  23

SELECTED CONSOLIDATED FINANCIAL DATA

  45

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

  46

USE OF PROCEEDS

  62

PRICE RANGE AND TRADING VOLUME OF THE COMMON SHARES

  63

CONSOLIDATED CAPITALIZATION

  63

DILUTION

  64

PRIOR SALES

  65

PRINCIPAL HOLDERS OF SECURITIES

  66

DIRECTORS AND EXECUTIVE OFFICERS

  67

EXECUTIVE COMPENSATION

  70

RELATED PARTY TRANSACTIONS

  71

DESCRIPTION OF THE COMMON SHARES

  73

DIVIDEND POLICY

  73

CERTAIN MATERIAL INCOME TAX CONSIDERATIONS

  73

NASDAQ QUORUM REQUIREMENT

  81

UNDERWRITING

  81

LEGAL MATTERS

  85

INTERESTS OF EXPERTS

  85

AUDITORS, TRANSFER AGENT AND REGISTRAR

  85

WHERE YOU CAN FIND MORE INFORMATION

  85

DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT

  86

ENFORCEABILITY OF CIVIL LIABILITIES

  86

ELIGIBILITY FOR INVESTMENT

  87

STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION

  87

PURCHASERS' CONTRACTUAL RIGHT OF ACTION

  87

AUDITORS' CONSENT

  88

AUDITORS' CONSENT

  89

ANNUAL FINANCIAL STATEMENTS

  F-1

INTERIM FINANCIAL STATEMENTS

  F-45

CERTIFICATE OF THE CORPORATION

  C-1

CERTIFICATE OF THE UNDERWRITERS

  C-2

iii



Table of Contents

Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State.

SUBJECT TO COMPLETION, DATED NOVEMBER 5, 2009

GRAPHIC

3,625,000

GLG LIFE TECH CORPORATION

Common Shares

         We are offering 3,625,000 of our common shares. This is the initial public offering of our common shares in the United States. Our common shares are listed on the Toronto Stock Exchange under the trading symbol "GLG." We have applied to have our common shares listed on the Nasdaq Global Market under the symbol "GLGL." Listing will be subject to our fulfillment of all listing requirements of the Nasdaq Global Market. On November 4, 2009, the closing price of our common shares on the Toronto Stock Exchange was Cdn$10.60 per share or US$9.96, based on the U.S.-Canadian dollar noon exchange rate on November 4, 2009, as quoted by the Bank of Canada, and after giving effect to the four-to-one (4:1) consolidation of our common shares that we completed on November 5, 2009. Except where otherwise noted, all information in this prospectus gives effect to this share consolidation.

         Investing in our common shares involves a high degree of risk. Please read "Risk Factors" beginning on page 7.

         This offering is made by a foreign issuer that is permitted, under a multijurisdictional disclosure system adopted by the United States, to prepare this prospectus in accordance with the disclosure requirements of its home country. Prospective investors should be aware that such requirements are different from those of the United States. Financial statements included or incorporated herein have been prepared in accordance with Canadian generally accepted accounting principles, and may be subject to foreign auditing and auditor independence standards, and thus may not be comparable to financial statements of United States companies.

         Prospective investors should be aware that the acquisition of the securities described herein may have tax consequences both in the United States and in Canada. Such consequences for investors who are resident in, or citizens of, the United States may not be described fully herein.

         The enforcement by investors of civil liabilities under the federal securities laws may be affected adversely by the fact that we are incorporated under the laws of the Province of British Columbia, that some or all of our officers and directors are residents of a foreign country, that some or all of the underwriters or experts named in the registration statement may be residents of a foreign country, and that all or a substantial portion of our assets and those of said persons may be located outside the United States.

         THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 
  Per Share   Total  

Public Offering Price

    US$•     US$•  

Underwriting Discounts and Commissions

    US$•     US$•  

Proceeds to Us (Before Expenses)

    US$•     US$•  

         Delivery of the common shares is expected to be made on or about    •    , 2009. We have granted the underwriters an option for a period of 30 days to purchase, on the same terms and conditions set forth above, up to an additional 543,750 common shares. If the underwriters exercise the option in full, the total underwriting discounts and commissions payable by us will be US$    •    and the total proceeds to us, before expenses, will be US$    •    .

         The public offering price for our common shares offered in Canada is payable in Canadian dollars, and the public offering price for our common shares offered outside Canada is payable in Canadian or U.S. dollars. The U.S. dollar price is the equivalent of the Canadian dollar price for the common shares based on the prevailing exchange rate on the date of this prospectus.

Canaccord Adams   GMP Securities

 

 

 
              Roth Capital Partners
Desjardins Securities Inc.
Wellington West Capital Markets Inc.

The date of this prospectus is    •    , 2009.


 

(This page has been left blank intentionally.)

 


GRAPHIC




Table of Contents


TABLE OF CONTENTS

 
  Page

ABOUT THIS PROSPECTUS

  ii

DOCUMENTS INCORPORATED BY REFERENCE

  ii

SPECIAL NOTICE REGARDING FORWARD-LOOKING STATEMENTS

  iii

INDUSTRY AND MARKET DATA

  iv

EXCHANGE RATE INFORMATION

  iv

EXPLANATORY NOTE RELATED TO SHARE CONSOLIDATION

  v

PROSPECTUS SUMMARY

  1

GLOSSARY

  5

RISK FACTORS

  7

DESCRIPTION OF THE BUSINESS

  23

SELECTED CONSOLIDATED FINANCIAL DATA

  45

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

  46

USE OF PROCEEDS

  62

PRICE RANGE AND TRADING VOLUME OF COMMON SHARES

  63

CONSOLIDATED CAPITALIZATION

  63

DILUTION

  64

PRIOR SALES

  65

PRINCIPAL HOLDERS OF SECURITIES

  66

DIRECTORS AND EXECUTIVE OFFICERS

  67

EXECUTIVE COMPENSATION

  70

RELATED PARTY TRANSACTIONS

  71

DESCRIPTION OF THE COMMON SHARES

  73

DIVIDEND POLICY

  73

CERTAIN MATERIAL INCOME TAX CONSIDERATIONS

  73

NASDAQ QUORUM REQUIREMENT

  81

UNDERWRITING

  81

LEGAL MATTERS

  85

INTERESTS OF EXPERTS

  85

AUDITORS, TRANSFER AGENT AND REGISTRAR

  85

WHERE YOU CAN FIND MORE INFORMATION

  85

DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT

  86

ENFORCEABILITY OF CIVIL LIABILITIES

  86

ANNUAL FINANCIAL STATEMENTS

  F-1

INTERIM FINANCIAL STATEMENTS

  F-45

i


Table of Contents


ABOUT THIS PROSPECTUS

        You should rely only on the information contained in or incorporated by reference into this prospectus or in any free writing prospectus that we may provide to you. Neither GLG Life Tech Corporation ("GLG", "we", "us", "our", or the "Corporation") nor the Underwriters have authorized anyone to provide you with information different from that contained in this prospectus or in any free writing prospectus that we may provide to you. We are not making an offer to sell or seeking an offer to buy the Offered Shares in any jurisdiction where the offer or sale is not permitted. The information contained in or incorporated by reference into this prospectus is accurate only as of the date of this prospectus or the date of the document incorporated by reference, as applicable, regardless of the time of delivery of this prospectus or of any sale of the Offered Shares.

        All dollar amounts set forth in this prospectus are expressed in Canadian dollars, except where otherwise indicated.


DOCUMENTS INCORPORATED BY REFERENCE

        Information has been incorporated by reference in this prospectus from documents filed with the securities commissions or similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge from our Corporate Secretary at Suite 519 World Trade Centre, 999 Canada Place, Vancouver, British Columbia, Canada V6C 3E1, Telephone: (604) 641-1368, and are also available electronically at www.sedar.com. Our filings through the System for Electronic Document Analysis and Retrieval ("SEDAR") are not incorporated by reference in this prospectus except as specifically set out herein.

        The following documents, which we have filed with the various securities commissions or similar authorities in Canada, are specifically incorporated by reference into and form an integral part of, this prospectus:

    (a)
    our annual information form dated April 1, 2009 for the fiscal year ended December 31, 2008 (the "AIF");

    (b)
    our Management's Discussion and Analysis of the audited consolidated financial statements for the fiscal year ended December 31, 2008 (the "Annual MD&A");

    (c)
    our Management's Discussion and Analysis of the unaudited interim consolidated financial statements for the three and nine months ended September 30, 2009 (the "Interim MD&A");

    (d)
    the management proxy circular dated May 26, 2009 prepared in connection with the annual meeting of our shareholders held on June 25, 2009 (the "Management Proxy Circular"); and

    (e)
    the material change report dated January 28, 2009 with respect to the announcement of the United States Food and Drug Administration that it had no objection to the conclusion of an independent expert panel which reviewed research on rebiana (high-grade stevia extract containing 97% rebaudioside A) and concluded that it is generally recognized as safe ("GRAS") for use as a general purpose sweetener, including for use in food and beverages and with respect to our self-affirmation for our Rebpure™ product.

        Any document of the type referred to in Section 11.1 of Form 44-101F1-Short Form Prospectus filed by us with a securities commission or any similar authority in Canada after the date of this prospectus and prior to the termination of the distribution shall be deemed to be incorporated by reference in this prospectus.

        Any statement contained in this prospectus or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded, for purposes of this prospectus, to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was

ii


Table of Contents


made. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to form or constitute part of this prospectus.


SPECIAL NOTICE REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus and the documents incorporated herein by reference, contain forward-looking statements and forward-looking information within the meaning of applicable securities laws. Such forward-looking statements or forward-looking information include, but are not limited to statements with respect to:

    the market for stevia and our stevia-based products;

    our production capacity and availability of raw materials;

    use of proceeds;

    our customers;

    legal and regulatory matters;

    currency fluctuations;

    trends and consumer preferences in connection with dietary and health products;

    competitors;

    requirements for additional capital;

    potential expansion; and

    general economic conditions.

        Often, but not always, forward-looking statements and forward-looking information can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or the negatives thereof or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. With respect to forward-looking statements and information included in this prospectus and the documents incorporated herein by reference, we have made numerous assumptions including among other things, assumptions about consumer acceptance of stevia, anticipated costs and expenditures and our ability to achieve our goals. While we consider these assumptions to be reasonable, the assumptions are inherently subject to significant business, economic, competitive and social uncertainties and contingencies. However, there are also known and unknown risk factors which could cause our actual results, performance, achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements and forward-looking information. Known factors include, among others, the following:

    operational risks;

    the effects of general economic conditions;

    changing foreign exchange rates;

    actions by government and other regulatory authorities;

    uncertainties associated with legal proceedings and negotiations;

    industry supply levels; and

    competitive pricing pressures,

as well as those factors discussed in the section entitled "Risk Factors" in this prospectus and in the documents incorporated by reference herein.

        Although we have attempted to identify factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements and forward-looking information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Forward-

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looking statements and forward-looking information are based upon management's beliefs, estimates and opinions at the time they are made and we undertake no obligation to update forward-looking statements and forward-looking information if these beliefs, estimates and opinions or circumstances should change, except as required by applicable law. There can be no assurance that forward-looking statements and forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements and information. Accordingly, readers should not place undue reliance on forward-looking statements and forward-looking information.

        Specific reference is made to "Risk Factors" and Management's Discussion & Analysis included herein and to the "Risk Factors" contained in the AIF incorporated by reference herein for a discussion of the factors underlying forward-looking statements and forward-looking information. In light of these risks, uncertainties and assumptions, the forward looking events discussed in this prospectus and the documents incorporated herein by reference, including, without limitation, our published financial guidance, may not occur.


INDUSTRY AND MARKET DATA

        We have obtained the industry, market and competitive position data used throughout this prospectus from industry journals and publications, data on websites maintained by private and public entities, including independent industry associations, general publications and other publicly available information. We believe that all of these sources are reliable, but we have not independently verified any of this information and cannot guarantee its accuracy or completeness. In particular, we have based much of our discussion of the sweetener industry, the market for alternative sweeteners such as stevia and forecasted growth and demand, on information published by industry sources.

        Industry publications and surveys generally state that they have obtained information from sources believed to be reliable, but do not guarantee the accuracy and completeness of such information. Further, because certain of these organizations are trade organizations, they may present information in a manner that is more favorable to the industry than would be presented by an independent source. In addition, forecasts are particularly likely to be inaccurate, especially over long periods of time.

        References in this prospectus to research reports or articles should not be construed as depicting the complete findings of the entire referenced report or article. The information in each report or article is not incorporated by reference into this prospectus.

        Any logos or other trademarks mentioned in this prospectus are the property of their respective owners.


EXCHANGE RATE INFORMATION

        All dollar amounts set forth in this prospectus are expressed in Canadian dollars, except where otherwise indicated or where the context requires otherwise.

        Our revenue is derived primarily from the sale of stevia extract, denominated in United States dollars ("US$"). Our costs are incurred in a variety of currencies, including the Canadian dollar, the Chinese Renminbi ("RMB") and the US dollar. Our accounts are maintained in Canadian dollars.

Canadian Dollar to United States Dollar Exchange Rate Information

        The noon rate of exchange on November 4, 2009, as reported by the Bank of Canada, for the conversion of United States dollars into Canadian dollars was US$0.9392 per $1.00 (US$1.00 equals $1.0647).

        The following table sets forth (i) the rate of exchange in effect at the end of the periods indicated, (ii) the average of exchange rates in effect on the last day of each month during such periods, and (iii) the high and low

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exchange rates during such periods, each based on the noon rate of exchange as reported by the Bank of Canada for United States dollars per one Canadian dollar.

 
   
  Year Ended December 31,  
 
  Nine Months Ended
September 30, 2009
 
 
  2008   2007  

Rate at end of period

    US$0.9327     US$0.8166     US$1.0120  

Average rate for period

    US$0.8546     US$0.9381     US$0.9304  

High for Period

    US$0.9422     US$1.0289     US$1.0905  

Low for Period

    US$0.7692     US$0.7711     US$0.8437  

Canadian Dollar to Chinese Renminbi Exchange Rate Information

        The noon rate of exchange on November 4, 2009, as reported by the Bank of Canada, for the conversion of RMB into Canadian dollars was RMB 6.4103 per $1.00 (RMB 1 equals $0.1560).

        The following table sets forth (i) the rate of exchange in effect at the end of the periods indicated, (ii) the average of exchange rates in effect on the last day of each month during such periods, and (iii) the high and low exchange rates during such periods, each based on the noon rate of exchange as reported by the Bank of Canada for RMB per one Canadian dollar.

 
   
  Year Ended December 31,  
 
  Nine Months Ended
September 30, 2009
 
 
  2008   2007  

Rate at end of period

    RMB 6.3694     RMB 5.5710     RMB 7.3910  

Average rate for period

    RMB 5.8392     RMB 6.5122     RMB 7.0845  

High for Period

    RMB 6.4309     RMB 7.3475     RMB 8.1169  

Low for Period

    RMB 5.2632     RMB 5.2826     RMB 6.5359  


EXPLANATORY NOTE RELATED TO SHARE CONSOLIDATION

        On November 5, 2009, we effected a four-to-one (4:1) consolidation of our Common Shares. Each four Common Shares were consolidated to represent one Common Share as of such date with fractional shares rounded down to the nearest whole share. Issued and outstanding stock options, restricted shares and warrants were consolidated on a four-to-one basis and exercise prices were adjusted to give effect to the consolidation. All Common Share, Common Share price, stock option, restricted share, warrant, per share and exercise price data set forth in this prospectus have been adjusted to give retroactive effect to our proposed four-to-one share consolidation. For the purpose of giving retroactive effect to the proposed Common Share consolidation, we have rounded fractional shares down to the nearest whole share and rounded fractional dollar information to the nearest whole number with fractions of 0.5 or greater rounded up and fractions less than 0.5 rounded down. Actual amounts may differ.

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PROSPECTUS SUMMARY

        The following summary highlights basic information about us and this Offering. This summary does not contain all of the information you should consider before making a decision to invest in the Offered Shares. You should review this entire prospectus carefully, including the risks of investing in the Offered Shares discussed in the "Risk Factors" section, our consolidated financial statements and notes thereto and the documents incorporated herein by reference.

        GLG Life Tech Corporation is a vertically integrated producer of high-grade stevia extract, an all-natural sweetener extracted from the stevia plant. Through our vertically integrated business model, we specialize in the research and development, growing, refining, and production of high-grade stevia extract for distribution to the global food and beverage industry. We have current production capacity of 1,000 metric tons of high-grade stevia extract of rebaudioside A 80% purity ("high-grade stevia extract" or "RA 80") or 500 metric tons of stevia extract of rebaudioside A 97% purity ("rebiana" or "RA 97"). With corporate headquarters in Vancouver, British Columbia, and agricultural and processing assets in the People's Republic of China, we believe we are one of the world's leading producers of stevia.

        We sell our high-grade stevia extract to Cargill, Incorporated ("Cargill") an international provider of food, agricultural and risk management products and services with 158,000 employees in 66 countries. Cargill further refines our high-grade stevia extract to rebaudioside A 97% purity for use in its natural, zero-calorie sweetener brand called TRUVIA™ which launched in July 2008. On December 17, 2008, the United States Food and Drug Administration ("FDA") confirmed that it had no objection to generally recognized as safe ("GRAS") status for Cargill's rebiana and for Whole Earth Sweetener Company's Reb A, a rebaudioside A 95% product. Since December 2008, several of the largest global beverage companies have launched new products containing stevia. The Coca Cola Company's Sprite®, Odwalla® and Vitaminwater™ brands have all introduced natural, zero-calorie brand extensions containing Cargill's TRUVIA™.

        Under our Strategic Alliance Agreement with Cargill, we will provide at least 80% of Cargill's global stevia extract requirements for the first five years of the agreement commencing October 1, 2008, and we will serve as Cargill's exclusive Chinese supplier of stevia. To date we have received aggregate purchase orders from Cargill under the Strategic Alliance Agreement of US$65.7 million.

        With stevia products rebiana and Reb A being the first zero-calorie all-natural sweeteners approved for use in food and beverages in the United States, stevia is a fast-growing newcomer in the estimated US$50 billion global sweetener market. Given the early stage of new product launches, the level of interest among major food and beverage companies, and the compelling consumer proposition, we believe stevia products could capture a significant share of the zero-calorie sweetener market, in which high-intensity artificial sweeteners currently generate US$5 billion, or the majority of zero-calorie sweetener sales. We believe stevia sales will approach US$1.5 billion over the next three to five years.

        Stevia benefits from what we believe is the widespread consumer belief that all-natural products are healthier than artificial products, particularly in the sweetener industry where artificial high-intensity sweeteners have been subject to consumer health risk concerns. Growing consumer preference for all-natural products, together with increasing rates of obesity and diabetes, have created significant demand for an all-natural, zero-calorie sweetener alternative. We believe stevia extracts such as rebiana are positioned to become leading high-intensity sweeteners as a result of their appealing profile:

    zero calories

    100% natural and thus perceived as healthier than artificial sweeteners

    remains stable under heat and thus can be utilized in processed foods

    200 to 300 times sweeter than sugar

    measures zero on the glycemic index, which is important in the diabetic market and benefits from growing consumer understanding of the value of a low glycemic diet

        Our business is vertically integrated, from the development of proprietary seeds in our research and development facilities, to the processing and extraction of our high-grade stevia and rebiana. We believe one of

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our strongest competitive advantages lies in our relationships with the local Chinese provincial and central government agencies, which have allowed us to secure exclusive agreements in three of China's largest stevia growing areas, and have facilitated the construction of our manufacturing and processing facilities. Through our long-term agreements, we have a right of first refusal to purchase what we believe to be an estimated 80% of the current high-grade leaf supply in China. Our operations in China include three processing factories (a fourth facility is under construction), stevia growing areas across eight provinces and seed base operations with four research and development centers and over 400 greenhouses. Our processing facilities have a combined annual throughput of 41,000 metric tons of stevia leaf which is grown through contracts with over 200,000 farmers. Our primary campus locations are in the cities of Qingdao, Shandong Province (60-acre campus), Mingguang, Anhui Province (60-acre campus), and Dongtai, Jiangsu Province (80-acre campus). We are also exploring setting up operations for stevia growth and production in Paraguay. Our global sales and marketing teams are based in North America, currently the world's largest market for high intensity sweeteners.

Our Growth Strategy

        Our mission is to become the world's leading producer of high-grade stevia extract by developing and securing our own stevia leaf supply, establishing leaf refining facilities in key locations, and providing a consistent supply of high-grade stevia extract

        Our key business objectives include:

    jointly developing the high-grade stevia supply chain with our strategic alliance partner as its leading strategic supplier of high-grade stevia extract;

    maintaining low cost production of high-grade stevia extract through process innovation and vertical integration (from seedling development to high-grade stevia production);

    continuing to pursue research and development that will further improve the quality and yield of stevia seedlings;

    developing our seed research, development and growth operations to ensure an increasing percentage of stevia leaf comes from the highest quality stevia seeds and seedlings;

    developing the capacity needed to meet forecasted customer demand; and

    working effectively with provincial and county governments in China to develop key stevia growing areas to increase the annual harvest of high quality stevia leaf.

Share Consolidation

        On November 5, 2009 we consolidated our Common Shares on a four-to-one (4:1) basis. Trading in our Common Shares is expected to commence on a post-consolidation basis on the TSX on November 10, 2009. No fractional Common Shares were issued in connection with the consolidation, and all such fractional interests were rounded down to the nearest whole number of Common Shares.

Corporate Information

        Our principal executive offices are located at Suite 519 World Trade Centre, 999 Canada Place, Vancouver, British Columbia, Canada V6C 3E1, and our telephone number is (604) 641-1368. Our website address is www.glglifetech.com. The information on, or that can be accessed through, our website is not part of this prospectus.

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The Offering


Number of Offered Shares

 

3,625,000 Common Shares(1)

Common Shares to be outstanding immediately after this Offering

 

23,779,597 Common Shares(1)(2)

Over-Allotment Option

 

We have granted the Underwriters an option to purchase up to 543,750 Additional Shares at the Offering Price, less underwriting discounts and commissions, to cover over-allotments, if any. The Over-Allotment Option is exercisable, in whole or in part, for a period of 30 days from the closing of the Offering.

Use of proceeds

 

We expect to use the net proceeds from this Offering for registered capital payments for our Runhao subsidiary, debt repayment, working capital requirements and/or for other general corporate purposes. You should read the discussion under the heading "Use of Proceeds" for more information.

Risk Factors

 

You should carefully read and consider the information set forth in "Risk Factors" section of this prospectus before investing in the Offered Shares.

Toronto Stock Exchange symbol

 

GLG

Proposed NASDAQ symbol

 

GLGL


Notes:

(1)
Reflects our four-to-one (4:1) consolidation of our Common Shares effected on November 5, 2009. See "Explanatory Note Related to Share Consolidation".

(2)
The number of Common Shares to be outstanding immediately after this Offering is based on the number of Common Shares outstanding as of November 5, 2009. Unless we state otherwise, the information in this prospectus: assumes that the Over-Allotment Option to purchase up to 543,750 Additional Shares is not exercised; and excludes 1,236,283 Common Shares that are currently reserved for issuance upon the exercise of outstanding options under our stock option and restricted share plan, 62,500 Common Shares reserved for issuance in connection with a litigation matter involving Northern Securities Inc., 250,000 Common Shares reserved for issuance to International Biotechnology Group Ltd. in connection with the terms of our license agreement with them and 1,093,750 Common Shares that are currently reserved for potential issuance pursuant to the terms of our acquisition of Agricultural High Tech Developments Ltd. which was completed on December 27, 2007. See "Dilution".

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Summary Consolidated Financial Data

        The following summary consolidated financial data are derived from our audited consolidated annual balance sheets as of December 31, 2008 and 2007, our audited consolidated annual statements of operations and cash flows for the years ended December 31, 2008 and 2007, our unaudited consolidated interim balance sheet as of September 30, 2009 and our unaudited interim consolidated statements of operations and cash flows for the three and nine months ended September 30, 2009 and 2008, respectively, included elsewhere in this prospectus. We have prepared our unaudited consolidated financial statements on the same basis as our audited consolidated financial statements. In the opinion of management, our unaudited consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of our results of operations for such periods. Operating results for the three and nine months ended September 30, 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2009 or any other future period. This information is only a summary and should be read together with our consolidated financial statements and the related notes and other financial information, as well as "Management's Discussion and Analysis of Financial Condition and Results of Operations", included elsewhere and incorporated by reference in this prospectus.

        Our audited consolidated annual financial statements and unaudited consolidated interim financial statements have been prepared in Canadian dollars in accordance with Canadian GAAP. We have included, beginning on page F-1 of this prospectus, our audited consolidated annual financial statements including the Supplementary Notes included at pages F-33 and F-60 of this prospectus providing a reconciliation of the significant differences between Canadian GAAP and US GAAP. Our historical results from any prior period are not necessarily indicative of results to be expected for any future period.

 
  Fiscal Year Ended
December 31,
  Nine Months Ended
September 30,
   
 
 
  2008   2007   2009   2008    
 
 
   
  (restated)
   
   
   
 

Statement of Operating Data

                             

Total revenue

  $ 9,891,318   $ 9,157,050   $ 28,619,448   $ 5,234,730      

Cost of Sales

    7,650,490     6,499,954     21,463,160     3,842,766      

Cost of Sales %

    76%     71%     75%     73%      

Gross profit

    2,330,828     2,657,096     7,156,288     1,391,964      

Gross profit%

    24%     29%     25%     27%      

Net (loss) income

    (10,606,542 )   369,430     269,927     (3,491,503 )    

Net (loss) income per share (basic)(1)

    (0.59 )   0.03     0.01     (0.19 )    

Net (loss) income per share (diluted)(1)

    (0.59 )   0.01     0.01     (0.19 )    

Total comprehensive (loss) income

    11,397,392     (1,067,311 )   (12,209,845 )   4,396,247      

Weighted average number of shares outstanding(1)

    17,935,106     12,747,245     19,808,653     17,604,659      

Balance Sheet Data

                             

Total assets

    174,361,123     94,128,781     182,054,576     174,361,123      

Total liabilities

    57,531,649     17,230,418     75,373,870     57,364,438      

Total shareholders' equity

    116,829,474     76,898,363     106,633,330     116,829,474      

US GAAP

                             

Net (loss) income

    (8,596,904 )   658,180     848,270   $ (1,804,708 )    

Net (loss) income per share (basic)(1)

    (0.48 )   0.05     0.04     (0.10 )    

Net (loss) income per share (diluted)(1)

    (0.48 )   0.02     0.03     (0.10 )    

Total comprehensive (loss) income

    13,407,030     (778,561 )   (11,631,502 )   6,083,042      

Weighted average number of shares outstanding(1)

    17,935,106     12,747,245     19,808,653     17,604,659      

Note:

(1)
Adjusted for the four-to-one (4:1) share consolidation. See "Explanatory Note Related to Share Consolidation".

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GLOSSARY

        In this prospectus, unless the context otherwise requires, the following words and phrases have the meanings set forth below.

"Additional Shares" means the additional 543,750 Common Shares that the Underwriters may purchase pursuant to the Over-Allotment Option;

"AHTD" means our wholly owned subsidiary Agricultural High Tech Developments Limited;

"Annual MD&A" means our Management's Discussion and Analysis of the audited consolidated financial statements for the fiscal year ended December 31, 2008;

"Bengbu" means our wholly owned subsidiary Anhui Bengbu HN Stevia High Tech Development Company Limited;

"Canadian GAAP" means Canadian generally accepted accounting principles;

"Canadian Holder" has the meaning set forth in "Certain Material Income Tax Considerations — Certain Canadian Federal Income Tax Considerations for Canadian Holders";

"Canadian Jurisdictions" means each of the Provinces of Canada, except the Province of Québec;

"Canadian Underwriters" means Canaccord Capital Corporation, GMP Securities L.P., Desjardins Securities Inc. and Wellington West Capital Markets Inc.;

"Code" means the United States Internal Revenue Code of 1986, as amended;

"Common Shares" means our common shares;

"Exchange Act" means the United States Securities Exchange Act of 1934, as amended, and the related rules and regulations;

"FDA" means the United States Food and Drug Administration;

"GLG", "we", "us", "our" or the "Corporation" means GLG Life Tech Corporation;

"GRAS" means generally regarded as safe, an FDA designation that a chemical or substance added to food is considered safe by experts, and is therefore exempted from the usual Federal Food, Drug, and Cosmetic Act food additive tolerance requirements;

"HFCS" means high fructose corn syrup;

"high-grade stevia extract" means high-grade stevia extract of rebaudioside A 80% purity or greater;

"high intensity sweeteners" means sweeteners which provide a sweet taste but contain virtually no calories and do not have a nutritional role;

"IASB" means the International Accounting Standards Board;

"IFRS" means International Financial Reporting Standards as issued by the IASB;

"Interim MD&A" means our Management's Discussion and Analysis of the unaudited interim consolidated financial statements for the three and nine months ended September 30, 2009;

"IRS" means the United States Internal Revenue Service;

"JECFA" means the Joint Expert Committee on Food Additives;

"MJDS" means the Multi-Jurisdictional Disclosure System adopted by the United States and Canada;

"MT or metric ton" means 1,000 kilograms;

"NASDAQ" means the NASDAQ Global Market;

"Non-Canadian Holders" has the meaning set forth in "Certain Material Income Tax Considerations — Certain Canadian Federal Income Tax Considerations Taxation of Non-Canadian Holders";

"Offered Shares" means all of the Common Shares offered pursuant to this short form prospectus, including the Additional Shares;

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"Offering" means the offering of the Offered Shares pursuant to this short form prospectus;

"Over-Allotment Option" means the option granted to the Underwriters, exercisable for 30 days from the closing of the Offering, to purchase up to an aggregate of 543,750 Additional Shares at the Offering Price, less underwriting discounts and commissions, to cover over-allotments, if any;

"PFIC" has the meaning set forth in "Certain Material Income Tax Considerations — Certain United States Federal Income Tax Considerations";

"PRC" or "China" means the People's Republic of China and for the purposes of this prospectus only, excluding the territory of Taiwan, Macau and Hong Kong;

"QFC" has the meaning set forth in "Certain Material Income Tax Considerations — Certain United States Federal Income Tax Considerations";

"RA" means Rebaudioside A, a glycoside that is extracted from stevia leaves for the purpose of its sweet taste;

"Reb A" means Rebaudioside A of 95% purity which has received GRAS status in the United States;

"rebiana" means Rebaudioside A of 97% purity which has received GRAS status in the United States;

"registered capital" refers to the total capital contribution that is registered with the relevant government agency;

"Registration Statement" means the registration statement on Form F-10 under the US Securities Act in connection with this Offering, together with all amendments and supplements thereto;

"RMB" means the Renminbi, the lawful currency of China;

"Runde" means our wholly owned subsidiary Qingdao Runde Biotechnology Co., Ltd.;

"Runhai" means our wholly owned subsidiary Chuzhou Runhai Stevia High Tech Company Limited;

"Runhao" means our wholly owned subsidiary Qingdao Runhao Stevia High Tech Company Limited;

"Runyang" means our wholly owned subsidiary Dongtai Runyang Stevia High Tech Company Limited;

"SAFE" means the PRC State Administration of Foreign Exchange;

"SEC" means the United States Securities and Exchange Commission;

"SEDAR" means the System for Electronic Document Analysis and Retrieval in Canada which can be accessed at www.sedar.com;

"Strategic Alliance and Supply Agreement" means the long-term renewable supply agreement with Cargill, Incorporated dated April 30, 2008, as amended August 8, 2008 and as further amended on May 4, 2009;

"strategic alliance partner" means Cargill, Incorporated;

"Sweet Naturals" means our 55% owned subsidiary GLG Weider Sweet Naturals Corporation;

"STV" means Stevioside, a glycoside that is extracted from stevia leaves for the purpose of its sweet taste;

"Supplementary Notes" means the supplementary information regarding the reconciliation with US GAAP with respect to the audited consolidated financial statements for the year ended December 31, 2008, and with respect to the unaudited interim consolidated financial statements for the three and nine months ended September 30, 2009, included at pages F-33 and F-60 of this prospectus;

"taxable capital gain" has the meaning set forth in "Certain Material Income Tax Considerations — Certain Canadian Federal Income Tax Considerations — Disposition of Offered Shares";

"Tax Act" means the Income Tax Act (Canada);

"TSX" means the Toronto Stock Exchange;

"Underwriters" means, collectively, the Canadian Underwriters and the US Underwriters;

"US GAAP" means accounting principles generally accepted in the United States;

"US Securities Act" means the United States Securities Act of 1933, as amended;

"US Underwriters" means Canaccord Adams Inc., GMP Securities L.P.; and Roth Capital Partners, LLC; and

"YHT" means Shandong Yong He Tang Health Products Chain Stores Limited, a company that we formerly partnered with in the distribution of nutritional health products in China.

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RISK FACTORS

        This section describes the material risks affecting our business, financial condition, operating results and prospects. There may be other risks and uncertainties that are not known to us or that we currently believe are not material, but which also may have a material adverse effect on our business, financial condition, operating results or prospects. Prospective investors should carefully consider all of the information disclosed in this prospectus, including all documents incorporated by reference, and in particular the risk factors set out below and under the heading "Risk Factors" contained in the AIF incorporated herein by reference prior to making an investment in the Offered Shares. Such risk factors could materially affect our future financial results and could cause actual events to differ materially from those described in forward-looking statements and forward-looking information relating to us or our business, property or financial results, each of which could cause investors to lose part or all of their investment in the Offered Shares.

Risks Relating to GLG Life Tech Corporation and Our Business

We rely on a single product that may not gain sufficient market acceptance for us to achieve consistent profitability.

        Our revenue is derived exclusively from sales of stevia and stevia products, and we expect that stevia and stevia products will account for substantially all of our revenue for the foreseeable future. If the non-nutritive sweetener market declines or stevia fails to achieve substantially greater market acceptance than it currently enjoys, we will not be able to grow our revenues sufficiently for us to achieve consistent profitability.

        Even if products to be distributed by us conform to international safety and quality standards, sales could be adversely affected if consumers in target markets lose confidence in the safety, efficacy, and quality of stevia. Adverse publicity about stevia or stevia-based products that we sell may discourage consumers from buying products distributed by us.

The loss of our main customer would materially reduce our revenue.

        We have derived, and we believe that we will continue to derive, a significant portion of our revenue from Cargill, Incorporated ("Cargill") our largest customer. For the year ended December 31, 2008 and for the nine months ended September 30, 2009, Cargill accounted for 77% and 95%, respectively, of our revenue. We expect that a significant portion of our revenues over the next several years will continue to be derived from sales to Cargill pursuant to the Strategic Alliance and Supply Agreement between us. Moreover, we cannot provide any assurances that a material proportion of our revenue will be derived from other customers in the future.

        Under the Strategic Alliance and Supply Agreement with Cargill, we will provide at least 80% of Cargill's global stevia extract requirements for the first five years of the agreement commencing October 1, 2008. These commitments are subject to renegotiation at certain times throughout the term of the Strategic Alliance and Supply Agreement.

        If Cargill were to terminate its relationship with us, there would be a material adverse effect on our business operations and financial condition. Cargill may terminate the Strategic Alliance and Supply Agreement under certain circumstances, including by giving three years notice to us or in the event that Dr. Luke Zhang, our Chairman and Chief Executive Officer, ceases to be actively involved in the management and performance of our business during the first five years of the Strategic Alliance and Supply Agreement. See "Description of the Business — Our Strategic Alliance with Cargill".

If we are unable to acquire sufficient raw materials or produce sufficient finished product, we will not be able to meet the demands of our customers.

        We currently must acquire sufficient stevia leaf so that we can meet the demands of our customers. A stevia leaf shortage could result in loss of sales and damage to our reputation.

        If we and our subsidiaries become unable to produce the required commercial quantities of high-grade stevia extract on a timely basis and at commercially reasonable prices, and are unable to find one or more replacement manufacturers with the necessary expertise, regulatory approvals and facilities capable of production at a substantially equivalent cost, in substantially equivalent volumes and quality, and on a timely basis, we will likely be unable to meet customer demand. In addition, we have entered into agreements that provide for fixed price and quantity commitments. If there were a raw material shortage and we were unable to

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deliver the committed quantity under these purchase orders, we could be responsible for any amount paid by such customers to third parties, above what the customer would have paid if we were able to deliver their order at the agreed price.

The loss of key employees or the failure to attract qualified personnel could have a material adverse effect on our ability to run our business.

        The loss of any of our or our subsidiaries' current executives, key employees, or key advisors, and in particular, Dr. Luke Zhang, or the failure to attract, integrate, motivate, and retain additional key employees could have a material adverse effect on our business. In particular, Cargill may terminate the Strategic Alliance and Supply Agreement in the event that Dr. Luke Zhang ceases to be actively involved in the management and performance of our business. We do not have "key person" insurance on the lives of any of our management team. Also, as we develop additional capabilities we may require more skilled personnel. These personnel must be highly skilled and have a sound understanding of our industry, business or technology. Recruiting personnel is highly competitive. Although to date we have been successful in recruiting and retaining qualified personnel, there can be no assurance that we will continue to attract and retain the personnel needed for our business. The failure to attract or retain qualified personnel could have a material adverse effect on our business.

We do not have a history of consistent profitability and our ability to achieve consistent profitability in the future is subject to uncertainty.

        During the fiscal year ended December 31, 2008, we recorded a net loss of $10,606,542, compared with net income of $369,430 in 2007. During the nine months ended September 30, 2009, we had a net income of $269,927 compared with a net loss of $3,491,503 for the nine months ended September 30, 2008.

        Our ability to achieve consistent profitability is subject to uncertainty due to the nature of our business and the markets in which we operate. In particular, our revenues and operating results may fluctuate significantly in the future because of the following factors:

    volatility in the price we must pay for stevia and the stevia leaf quality, which varies from period to period;

    the price per kilogram for which we are able to sell our stevia extract;

    our ability to manage personnel, overhead and other expenses;

    our ability to effectively manage our capacity utilization;

    our water and power consumption, and the prevailing prices for water and power; and

    consumer acceptance of stevia and stevia-related products in the United States and other key markets.

If we fail to increase our production and manufacturing capacity, we will be unable to continue to grow and our ability to produce new products, expand within our existing markets and enter into new markets will be limited.

        Global growth and demand for our products has increased the utilization of our production and manufacturing facilities. If we are unable to successfully expand our production and manufacturing capacity, we will be unable to continue our growth and expand within our existing markets or enter into additional geographic markets or new product categories. In addition, failure to successfully expand our production and manufacturing capacity will limit our ability to introduce and distribute new products, or otherwise take advantage of opportunities in new and existing markets. Further, increasing our production and manufacturing facilities requires significant investment and build times. Delays in increasing capacity could also limit our ability to continue our growth and materially adversely affect our business.

We have limited financial resources. We had negative operating cash flow for the year ended December 31, 2008 and currently have negative working capital. If we are unable to raise additional capital, we may be unable to complete the planned expansion of our business on our preferred timeline.

        We have limited financial resources and had negative operating cash flow for the year ended December 31, 2008. We currently have negative working capital. Because of our working capital deficiency, as well as our negative cash flow from operations, our reliance on external sources of funding, and our cumulative deficit, we

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have noted in our financial statements for the period ended September 30, 2009, and for prior periods, that there is significant uncertainty about our ability to continue as a going concern.

        Our current working capital deficiency is driven by short term loans obtained in China at favorable interest rates for the purposes of financing our long term capital expenditures for our manufacturing facilities in China. These short term loans have been characterized as current liabilities. It is common practice in China to borrow on a short term basis, even in relation to financing long term assets. We do not intend to repay all of these short term loans from the proceeds of the Offering and will continue to utilize some of our available lines of credit in China and seek to renew such loans on maturity. However, there can be no assurance that we will continue to have access to these short term loans and if we are unable to find additional funding sources, we may be unable to complete the planned expansion of our business on our preferred timeline.

        Even if we complete the Offering, we may require additional funds in order to continue to develop our manufacturing capacity and fund our planned expansion on our preferred timeline. Additional funding may not be available on terms that are acceptable to us, or at all, or may require the issuance of additional Common Shares or other securities which would dilute our current investors. Our future capital requirements will depend on many factors, including:

    costs of manufacturing and supply;

    revenues from the sale of stevia; and

    our ability to obtain revolving debt facilities for stevia leaf purchases.

We may not be able to manage our expansion of operations effectively.

        We expect to continue to expand our business to meet the expected growth in demand for stevia. We have increased production output and expanded our employee base and we are in the process of establishing new and expanded facilities. If we are unable to manage our growth effectively, we may not be able to take advantage of market opportunities, execute our business strategies or respond to competitive pressures and we may have difficulties maintaining and updating the internal procedures and the controls necessary to meet the planned expansion of our overall business.

        Our management will also be required to maintain and expand our relationships with customers, suppliers and third parties as well as attract new customers and suppliers. We expect that our sales and marketing costs will increase as we grow our product lines and as we increase our sales efforts in new and existing markets.

        There is no assurance that our current and planned operations, personnel, systems, and internal procedures and controls will be adequate to support our future growth. We expect that our general and administrative costs will increase as our operations grow to meet existing sales orders for our products and for future growth as we increase our sales efforts in new and existing markets.

Our raw material supply can only be stored for approximately two years and could potentially be subject to natural disasters and adverse weather conditions. Any shortage of stevia leaf or any increase in the price we pay for stevia leaf may adversely affect our revenue growth and decrease our margins.

        Our raw material supply is perishable and, by nature, could potentially be subject to a high degree of exposure to the risks of natural disasters and adverse weather conditions such as droughts, floods, earthquakes, hailstorms, windstorms, pests, and diseases. The occurrence of a natural disaster in our growing areas could severely reduce our ability to procure the raw materials necessary to produce our products. Moreover, our production and manufacturing operations are, at present, all located in China which concentrates these risks.

        A shortage of available stevia leaf or increase in the price we pay for stevia leaf could adversely affect our revenue growth and decrease our margins. Any of these adverse consequences could have a material adverse effect on our business operations and financial condition.

We have not made certain investments required in our investment agreement with the government of Juancheng County relating to our exclusive growing area in that region.

        We have not made certain investments provided for in our investment agreement with the government of Juancheng County. We continue to enjoy the use of the exclusive growing area and have received verbal

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assurances from the government of Juancheng County that we will continue to do so but we have not executed formal documentation reflecting this arrangement.

We currently face, and will continue to face, significant competition. Additional competitors may enter the stevia business if the value of the market for stevia grows which may result in a decrease in the market price of stevia extract.

        Our major competitors for our core stevia business are existing stevia producers in Japan, Korea, China and Malaysia. These competitors include Blue California Inc., Corn Products International, Inc. and Pure Circle Limited. In addition, additional competitors may enter the stevia business if the value of the market for stevia grows which may result in a decrease in the market price of stevia extract.

        These competitors may have significantly greater financial, technical and marketing resources, and may have a more established customer base. There is no assurance that we will be able to compete successfully against our competitors or that such competition will not have a material adverse effect on our business operations or financial condition. See "Description of the Business — Competition".

We rely upon proprietary technology which is not patented in Canada, the United States or elsewhere outside of China and may not be protected under the Chinese legal system.

        Our ability to compete effectively is dependent upon the proprietary nature of the seeds, seedlings, processes, technologies and materials owned by, used by or licensed to us or our subsidiaries. Our intellectual property related to the production of stevia includes proprietary process technology for the manufacture of high-grade stevia that is not fully covered by patents or other intellectual property protection in Canada or the United States. If any competitors independently develop any technologies that substantially equal or surpass our patent pending process technology, it will adversely effect our competitive position. See "Description of the Business — Intellectual Property".

        The protection of our seed technology relies on patent-pending stevia seedlings. We have succeeded in the production of seed and seedling strains that cannot be used to grow other plants with high RA yielding stevia leaf (second generation plants grown from the seeds of our high yielding plants will only produce common stevia leaf with an average RA yield). However, the Chinese legal system in general, and the intellectual property regime in particular, are relatively weak compared to Canada and the United States and it may be difficult for us to enforce our intellectual property rights in China.

        In relation to the intellectual property used by or licensed to us and our subsidiaries, there can be no assurance that we will continue to be able to use such intellectual property on terms that are acceptable to us, or at all. If we are unable to agree to terms to use this technology in the future or are unable to obtain the right to use other similar technology, we may not be able to offer the products we currently offer.

If we do not adequately ensure our freedom to use certain technology, we may have to pay others for rights to use their intellectual property and there can be no assurance that we will be able to obtain licenses to use such technology on favorable terms or at all.

        We have not undertaken any studies as to whether our patents provide us with the freedom to use our technologies in China or any other jurisdictions.

        If we do not adequately ensure our freedom to use certain technology, we may have to pay others for rights to use their intellectual property, pay damages for infringement or misappropriation and/or be enjoined from using such intellectual property. Our Chinese patents may not guarantee us the right to use our technologies if other parties own intellectual property rights that we need in order to practice such technologies. Our patent position is subject to complex factual and legal issues that may give rise to uncertainty as to the validity, scope and enforceability of a particular patent. There can be no assurance that:

    any of the rights we have under patents owned by us or other patents that third parties license to us will not be curtailed, for example through invalidation, circumvention, challenge and being rendered unenforceable or prohibiting our licensed use;

    we were the first inventors of inventions covered by our issued patents or pending applications or that we were the first to file patent applications for such inventions;

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    any of our pending or future patent applications will be issued with the breadth of claim coverage sought by us or issued at all;

    our competitors have not or will not independently develop or patent technologies that are substantially equivalent or superior to our technologies;

    any of our trade secrets will not be learned independently by our competitors; or

    the steps we take to protect our intellectual property will be adequate.

        In addition, effective patent, trademark, copyright and trade secret protection may be unavailable, limited or not applied for in certain foreign countries. Any of these adverse consequences could have a material adverse effect on our business operations and financial condition.

        Claims by third parties that our technology or products, or those of our subsidiaries, infringe their intellectual property rights, may result in litigation which could be costly and time consuming and would divert the attention of management and key personnel from other business issues. The complexity of the technology involved and the uncertainty of intellectual property litigation increase these risks. In addition, if we or our subsidiaries are found to have infringed upon the intellectual property rights of another party, licenses for such intellectual property may not be available on favorable terms or at all.

Circumstances outside of our control could negatively affect consumer perception of and demand for our products.

        Even if stevia-based products distributed by us conform to international safety and quality standards, sales could be adversely affected if consumers in our target markets lose confidence in the safety, efficacy, and quality of nutritional supplement products. Adverse publicity about stevia or stevia-based products may discourage consumers from buying products distributed by us. We may not be able to overcome negative publicity within a reasonable period of time.

Exchange controls that exist in the PRC may limit our ability to utilize our cash flow effectively.

        We are subject to the PRC's rules and regulations on currency conversion. In the PRC, the State Administration for Foreign Exchange, or SAFE, regulates the conversion between RMB and foreign currencies. Currently, foreign investment enterprises, or FIEs are required to apply to the SAFE for "Foreign Exchange Registration Certificates for FIEs." With such registration certificates, which need to be renewed annually, FIEs are allowed to open foreign currency accounts including a "current account" and "capital account". Currency conversion within the scope of the "current account", such as remittance of foreign currencies for payment of dividends, can be effected without requiring the approval of the SAFE. However, conversion of currency in the "capital account," including capital items such as direct foreign investment, foreign currency loans and securities, still require approval of the SAFE. We cannot assure you that the PRC regulatory authorities will not impose further restrictions on the convertibility of the RMB. Any future restrictions on currency exchanges may limit our ability to use our cash flow for the distribution of dividends to our shareholders or to fund operations we may have outside of the PRC.

        In August 2008, SAFE promulgated Circular 142, a notice regulating the conversion by FIEs of foreign currency into RMB by restricting how the converted RBM may be used. Circular 142 requires that RBM converted from the foreign currency-dominated capital of an FIE may only be used for purposes within the business scope approved by the applicable government authority and may not be used for equity investments within the PRC unless specifically provided for otherwise. In addition, SAFE strengthened its oversight over the flow and use of RMB funds converted from the foreign currency-dominated capital of an FIE. The use of such RMB may not be changed without approval from SAFE, and may not be used to repay RMB loans if the proceeds of such loans have not yet been used. Violations of Circular 142 may result in severe penalties, including substantial fines as set forth in the SAFE rules.

Currency exchange rate and interest rate fluctuations could significantly increase our expenses.

        Our financial results will be affected by the foreign exchange rate between US dollars and RMB because, while our expenses are denominated in RMB, the majority of our sales are denominated in US dollars.

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        On July 21, 2005, the Chinese government changed its decade-old policy of pegging the value of the RMB to the US dollar. Under the new policy, the RMB is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies, including the Canadian dollar and the US dollar. This change in policy has resulted in approximately 18% appreciation of the RMB against the US dollar between July 21, 2005, when the policy was enacted, and September 30, 2009. The Chinese government may decide to adopt an even more flexible currency policy in the future, which could result in further and more significant appreciation of the RMB against the US dollar.

        As of September 30, 2009, assuming that all other variables remain constant, an increase of 1% in the Canadian dollar against the US dollar would have an effect on net income of approximately $258,666.

        As of September 30, 2009, assuming that all other variables remain constant, an increase of 1% in the Canadian dollar against the RMB would have an effect on other comprehensive income of approximately $954,530.

Our international operations subject us to additional risks.

        We are subject to the risks inherent in conducting business across national boundaries, any one of which could adversely impact our business. These risks include:

    currency exchange rate fluctuations;

    trade barriers;

    national and regional economic downturns;

    changes in governmental policy or regulation;

    restrictions on the transfer of funds into or out of particular countries;

    import and export duties and quotas;

    domestic and foreign customs and tariffs;

    political risks and nationalization of foreign assets;

    increases in duties, taxes and government royalties;

    protectionist measures enacted by the United States and/or other markets where our products are sold; and

    potentially negative consequences from changes in tax or other laws.

If we fail to obtain trademark protection for our brand names, we may not be able to protect our brand recognition.

        Currently, we are in the process of applying for trademark protection for our own branded stevia products and have filed nine trademark applications in the North American market; five for use in Canada and four for use in the United States. In addition, we have filed for the protection of our logo mark and our corporate name "GLG Life Tech" in both the United States and Canada. All applications are in various stages of the approval process and there can be no guarantee that approval will be received. Failure to obtain such approvals may prevent us from protecting our brand recognition. See "Description of the Business — Intellectual Property".

We may not be able to increase brand recognition necessary to materially increase revenues and may not be able to create an infrastructure necessary to support the increase in demand.

        We have established limited brand recognition in Canada, the United States and other international jurisdictions. We cannot be sure that we will successfully complete the development and introduction of current products, new products or product enhancements or that any products developed will achieve acceptance in the marketplace necessary to materially increase revenues and achieve consistent profitability. We may also fail to develop and deploy new products and product enhancements on a timely basis. There can be no assurance that we will be able to expand our production and distribution capabilities in the future to meet further market acceptance or that any such expansion will be successful. Furthermore, there can be no assurance that any expansion will not have a material adverse effect on our operating results, particularly while we are implementing such expansion and the costs associated with any expansion.

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        In addition, consumer preferences evolve over time and the success of our products depends on our ability to identify the tastes and nutritional needs of our customers and to offer products that appeal to their preferences. We introduce new products and improved products from time to time and we may incur significant development and marketing costs which may not lead to a product that is accepted by consumers. If our products fail to meet consumer preferences, then our sales and profits from new products will suffer.

We could become subject to product liability claims.

        As a manufacturer and distributor of products designed for human consumption, we may be subject to product liability claims if the use of our products is alleged to have resulted in injury. For example, we may be subject to allegations that our products include inadequate instructions for use or inadequate warnings concerning possible side effects and interactions with other substances. In addition, although we and our manufacturers maintain quality controls and procedures with respect to products that we sell, the substances that make up these products could become contaminated. We currently have not obtained indemnities from our raw material and product suppliers. We carry liability insurance to cover product recalls and worldwide product liabilities and also hold liability insurance in respect of Sweet Naturals. Such insurance, however, may not be available in the future at a reasonable cost, on favorable terms, or at all, and may not be adequate to cover liabilities.

Litigation may adversely effect our business.

        All industries, including the industry in which we operate, are subject to legal claims with and without merit. We may be or become involved in disputes with other parties, including the WGN claim described under "Legal Proceedings", which may result in litigation. The results of litigation cannot be predicted with certainty. If we are unable to resolve any material disputes favourably, it may have a material adverse impact on our business and results of operations.

We could become subject to environmental claims.

        We are subject to environmental regulations which require us to minimize impacts upon air, water, soil and vegetation. If our operations violate these regulations, government agencies will usually require us to conduct remedial actions to correct such negative effects. Such actions could substantially increase our costs and potentially prevent us from producing our products.

Recent global economic and financial market crisis could have a negative effect on our results of operations.

        Current global economic conditions could have a negative effect on our business and results of operations. Economic activity in China, Canada, the United States and throughout much of the world has undergone a sudden, sharp economic downturn following the recent housing downturn and subprime lending collapse in both the United States and Europe. Market disruptions have included extreme volatility in securities prices, as well as severely diminished liquidity and credit availability. The economic crisis may adversely affect us in a variety of ways. Access to lines of credit or the capital markets may be severely restricted, which may preclude us from raising funds required for operations and to fund continued expansion. It may be more difficult for us to complete strategic transactions with third parties. The financial and credit market turmoil could also negatively impact suppliers, customers and banks with whom we do business. Such developments could decrease our ability to source, produce and distribute our products or obtain financing and could expose us to risk that one of our suppliers, customers or banks will be unable to meet their obligations under our agreements with them.

        While it is not possible to predict with certainty the duration or severity of the current disruption in financial and credit markets, if economic conditions continue to worsen, it is possible these factors could significantly impact our financial condition.

We are not a party to certain agreements that are material to our operations.

        On August 16, 2007, American GLG Group, a private corporation of which our director Dr. Luke Zhang is the principal shareholder, signed preliminary investment agreements with the local government authorities in Mingguang and Dongtai relating to exclusive growing areas in these regions. See "Description of the Business — Sources, Pricing and Availability of Raw Materials".

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        American GLG Group was used to expedite the signing of the preliminary investment agreements with the two government authorities and American GLG Group has assigned these agreements to us. Since the time of these assignments, we have complied with all of the obligations of American GLG Group under the agreements, have registered all relevant land in our name and have operated with the full support of the Mingguang People's Government and the Dongtai People's Government. For the foregoing reasons, we believe that the governmental entities have recognized the assignment of these contracts from American GLG Group to us, however, there can be no assurance that this will be the case.

        Additionally, our subsidiary, AHTD, is the assignee of one pending patent related to stevia seedlings on which we are reliant. The patent application is registered in the name of Mr. Wang Qibin, a former shareholders of AHTD. The patent was formally assigned by Mr. Wang to AHTD on July 8, 2007, prior to our acquisition of AHTD. See "Description of the Business — Intellectual Property". While we believe that AHTD would be recognized as the holder of the rights to these patent-pending stevia seedlings, there can be no assurance that this will be the case and if we are not able to acquire these rights it could have a material adverse effect on our business operations and financial condition.

Industry Related Risks

If demand for stevia does not increase, there will be excess capacity which will decrease the market price of stevia and reduce our revenues.

        We and other stevia producers have developed a large manufacturing capacity in expectation of a large demand for stevia products and we expect that demand for stevia will increase significantly in the future, particularly in light of the fact that certain stevia products have received GRAS status in the United States. However, there can be no assurance that this will be the case and if demand for stevia does not increase, the stevia market may be subject to significant excess capacity, which would put downward pressure on the market price of stevia and reduce our revenues.

Stevia competes with sugar and other high intensity sweeteners in the global sweetener market and the success of stevia will largely depend on consumer perception of the positive health implications of stevia relative to other sweeteners.

        The continued growth of stevia's share of the global sweetener market depends upon consumer acceptance of stevia and stevia related products and the health implications of consuming stevia relative to other sweetener products. The publication of any studies or revelation of other information that has negative implications regarding the health impacts of consuming stevia may slow or reverse the growth in consumer acceptance of stevia, which may have a material adverse effect on our business operations and financial condition.

Government regulation of our products could increase our costs, prevent us from offering certain products or cause us to recall products.

        While stevia and/or stevia products have been approved for use in food and beverages in certain countries, including the United States, there are a number of major regions, where stevia has not been approved for use. While France has taken advantage of a provision that allows individual member states of the European Union to approve ingredients for a limited two year period, full European Union approval for stevia sweeteners will be dependent on a scientific opinion from the European Food Safety Authority. Global demand for stevia and stevia products may be limited if stevia is not approved for use in these and other regions.

        The processing, formulation, manufacturing, packaging, labeling, advertising and distribution of our products is subject to regulation by one or more federal agencies, and various agencies of the states and localities in which our products are sold. These government regulatory agencies may attempt to regulate any of our products that fall within their jurisdiction. Such regulatory agencies may not accept the evidence of safety for any new ingredients that we may want to market, may determine that a particular product or product ingredient presents an unacceptable health risk, may determine that a particular statement of nutritional support that we want to use is an unacceptable drug claim or an unauthorized version of a food "health claim," may determine that a particular product is an unapproved new drug, or may determine that particular claims are not adequately supported by available scientific evidence. Such a determination would prevent us from marketing particular products or using certain statements of nutritional support on our products. We also may be unable to

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disseminate third-party literature that supports our products if the third-party literature fails to satisfy certain requirements.

        In addition, a government regulatory agency could require us to remove a particular product from the market. Any future recall or removal would result in additional costs to us, including lost revenues from any products that we are required to remove from the market, any of which could be material. Any such product recalls or removals could lead to liability, substantial costs and reduced growth prospects.

        If any of our products contain plants, herbs or other substances not recognized as safe by a government regulatory agency, we may not be able to market or sell such products in that jurisdiction. Any such prohibition could materially adversely affect our results of operations and financial condition. Further, if more stringent statutes are enacted for dietary supplements, or if more stringent regulations are promulgated, we may not be able to comply with such statutes or regulations without incurring substantial expense, or at all.

        Government regulatory agencies may also adopt more stringent rules regarding the manufacturing of dietary supplements, which may apply to the products that we or our subsidiaries manufacture. In the future, such regulations may require dietary supplements to be prepared, packaged and held in compliance with strict rules, and may require quality control provisions similar to those in the Good Manufacturing Practice regulations for drugs. We may not be able to comply with such new rules without incurring additional expenses, which may be significant.

        We are not able to predict the nature of future laws, regulations, repeals or interpretations or to predict the effect additional governmental regulation, if and when it occurs, would have on our business in the future. Such developments could, however, require reformulation of certain products to meet new standards, recalls or discontinuance of certain products not able to be reformulated, additional record-keeping requirements, increased documentation of the properties of certain products, additional or different labeling, additional scientific substantiation, or other new requirements. Any such developments could have a material adverse effect on our business operations and financial condition.

Risks Relating to Our Operations in China

Our agricultural and processing assets are located in PRC and the Chinese government's involvement in the economic system could have a materially adverse effect on our operations and financial condition.

        The economy of the People's Republic of China differs from the economies of most developed countries in many respects, including the extent of government involvement. Over the past three decades, China's economy has been transitioning from a planned economy to a more market-oriented economy. Although in recent years the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of sound corporate governance in business enterprises, a substantial portion of productive assets in China are still owned by the Chinese government. In addition, the Chinese government continues to play a significant role in regulating industrial development. It also exercises significant control over China's economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. Economic control measures may be adjusted or modified without warning and may be applied differently from industry to industry. Economic controls and reforms are often adopted on an experimental basis and are subject to reversal or revocation with little or no warning. Because these economic reform measures may be inconsistent or ineffectual, there are no assurances that:

    we will be able to capitalize on economic reforms;

    stevia production will remain a priority for Chinese governments;

    the Chinese government will continue its pursuit of economic reform policies;

    the economic policies, even if pursued, will be successful;

    economic policies will not be significantly altered from time to time; and

    business operations in China will not become subject to the risk of nationalization.

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        Any negative impact from economic reform policies or nationalization could result in a total investment loss in the Common Shares.

        To date, reforms to China's economic system have not adversely impacted our operations. There can be no assurance, however, that China's economic reforms will continue or that we will not be adversely affected by changes in China's political, economic, and social conditions and by changes in policies of the Chinese government, such as changes in laws and regulations, measures which may be introduced to control inflation, changes in the rate or method of taxation, changes in employment restrictions, imposition of additional restrictions on currency conversion and remittance abroad, and reduction in tariff protection and other import restrictions.

Changes in the laws and regulations in the People's Republic of China may significantly impact our methods and costs of doing business.

        The Chinese legal system is based on written statutes. Prior court decisions may be cited for reference but are not binding on subsequent cases and have limited precedential value. Since 1979, China's legislative bodies have promulgated laws and regulations dealing with such economic matters as foreign investment, corporate organization and governance, commerce, taxation and trade. However, because these laws and regulations are relatively new, and because of the limited volume of published decisions and their non-binding nature, the interpretation and enforcement of these laws and regulations involve uncertainties. Additionally, Chinese laws are generally drafted in such a way as to allow interpretation to accord with changing policy demands and are implemented differently from region to region. The Chinese legal system has inherent uncertainties that can seriously limit legal protections to shareholders in companies with Chinese operations.

        Our subsidiaries are subject to corporate laws in the People's Republic of China. Additionally, as a food manufacturing corporation, we and our subsidiaries are subject to the laws and regulations governing food and health products in the People's Republic of China. Our processing facilities and products are subject to periodic inspection by national, provincial and local authorities in China. We believe that we are currently in substantial compliance with all material governmental laws and regulations and maintain all material permits and licenses relating to our operations. Nevertheless, we may fall out of substantial compliance with current laws and regulations or may be unable to comply with any future laws and regulations. To the extent that new regulations are adopted, we will be required, possibly at considerable expense, to adjust our activities in order to comply with such regulations. Our failure to comply with applicable laws and regulations could subject us to civil remedies, including fines, injunctions, recalls or seizures, as well as potential criminal sanctions, which could have a material adverse effect on our business, operations and finances.

The Chinese legal and accounting system may force us to incur additional costs and may not provide us with the same level of protection as United States and Canadian laws.

        The legal system in the People's Republic of China differs from those of the United States and Canada. Our subsidiaries in China are considered "Foreign Invested Enterprises" or "FIEs", and are subject to certain laws and regulations designed to regulate foreign investment in China. The Foreign Invested Enterprise laws provide certain protections from government interference. In addition, these laws guarantee the full enjoyment of the benefits of corporate articles and contracts to Foreign Invested Enterprise participants. These laws, however, do impose standards concerning corporate formation and governance. Similarly, our Chinese subsidiaries account for transactions in accordance with Chinese GAAP and the accounting laws of the People's Republic of China mandate accounting practices that are not entirely consistent with Canadian and US GAAP. Converting Chinese GAAP financial statements into Canadian GAAP can be complex, and there is a risk that material differences between the standards will not be identified. Chinese accounting laws require that an annual "statutory audit" be performed in accordance with the People's Republic of China accounting standards and that the books of account of Foreign Invested Enterprises be maintained in accordance with Chinese accounting laws. Article 14 of the PRC Wholly Foreign-Owned Enterprise Law requires Wholly Foreign-Owned Enterprises (such as our subsidiaries in China) to submit certain periodic fiscal reports and statements to designated financial and tax authorities, at the risk of business license revocation. There is no guarantee that we and our subsidiaries will be able to continue to comply with the legal and accounting systems in China without incurring additional expense, or at all, which would restrict our ability to do business and would have a material adverse affect on our business operations and financial condition.

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        The enforcement of substantive rights in China differs from Canadian and United States procedures. Foreign Invested Enterprises and Wholly Foreign-Owned Enterprises are Chinese registered companies and enjoy the same status as other Chinese registered companies in business-to-business dispute resolution. Although, as a practical matter, the Chinese legal infrastructure should not present any significant impediment to the operation of Foreign Invested Enterprises, there is no guarantee that we or our subsidiaries will be able to enforce our rights in the same manner and to the same extent as in Canada or the United States.

        In addition, the understanding of and respect for intellectual property rights in China is still developing, and there are uncertainties involved in their protection and the enforcement of such protection. Our failure to adequately protect our intellectual property could lead to the loss of a competitive advantage that could not likely be compensated by a damages award.

New Chinese tax laws may subject us to significant additional taxes in China.

        Under China's Enterprise Income Tax Law, or the New EIT Law, and its implementing rules, which became effective in 2008, an enterprise established outside of China may be considered a "resident enterprise" if its "place of actual management" is situated in China. If so, the enterprise would be treated in a manner similar to a local Chinese enterprise for enterprise income tax purposes. Under the implementing rules of the New EIT Law, "place of actual management" means the place where substantial and overall management and control over the production and operations, personnel, accounting, and properties of the enterprise are located. Because the New EIT Law and its implementing rules are new, it is unclear how tax authorities will determine tax residency based on the facts of each case.

        If the Chinese tax authorities determine that we are a "resident enterprise" for Chinese enterprise income tax purposes, unfavorable Chinese tax consequences could follow. First, we may be subject to enterprise income tax at a rate of 25% on our worldwide taxable income as well as Chinese enterprise income tax reporting obligations. Second, although under the New EIT Law and its implementing rules dividends paid to us from our Chinese subsidiaries would qualify as "tax-exempt income," such dividends may be subject to a 10% withholding tax, as the Chinese foreign exchange control authorities, which enforce the withholding tax, have not yet issued guidance with respect to the processing of outbound remittances to entities that are treated as resident enterprises for Chinese enterprise income tax purposes. Finally, it is possible that future guidance issued with respect to the new "resident enterprise" classification could result in a situation in which a 10% withholding tax is imposed on dividends we pay to our non-Chinese shareholders and with respect to gains derived by our non-Chinese shareholders from transferring our Common Shares. We are monitoring the possibility of "resident enterprise" treatment and are evaluating appropriate organizational changes to avoid this treatment, to the extent possible.

        If we were treated as a "resident enterprise" by Chinese tax authorities, we would be subject to tax in both Canada and China, and our Chinese tax may not be creditable against our Canadian tax. In addition, we have not accrued any tax liability associated with the possible payment of dividends from our Chinese subsidiaries. Such a tax would be an added expense appearing on our income statement, which would reduce our net income.

We may become subject to additional compliance costs in the People's Republic of China.

        Our operations in China are subject to laws and regulations in the People's Republic of China relating to the processing, packaging, storage, distribution, advertising, labeling, quality, and safety of food products. The failure by us and our subsidiaries to comply with applicable laws and regulations could subject us to administrative penalties, injunctive relief, civil remedies and even criminal responsibilities, including but not limited to fines, injunctions, recalls of our products suspension of operating activities and cancellation of our business license. It is possible that changes to such laws, more rigorous enforcement of such laws or our current or past practices could have a material adverse effect on our business, operating results and financial condition. Further, additional environmental, health or safety issues relating to matters that are not currently known to management may result in unanticipated liabilities and expenditures.

We may have difficulty establishing adequate management, legal and financial controls in the People's Republic of China.

        The People's Republic of China has historically not had the same standard as Canada and the United States in terms of management and financial reporting concepts and practices, as well as modern banking, computer and other control systems. Our subsidiaries may have difficulty in hiring and retaining a sufficient number of

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qualified employees to work in the People's Republic of China. As a result of these factors, we may experience difficulty in establishing management, legal and financial controls, collecting financial data, preparing financial statements, books of account and corporate records and instituting business practices that meet Canadian and United States standards which would adversely impact our ability to effectively manage our future growth.

We may be subject to regulations relating to acquisitions of Chinese companies by foreign entities and if we are unable to comply with such regulations we may be subject to fines or sanctions imposed by the Chinese government.

        On October 21, 2005, the China State Administration of Foreign Exchange, or SAFE, issued a notice, known as "Circular 75," which sets forth a regulatory framework for acquisitions of Chinese businesses involving offshore companies owned by Chinese residents or passport holders, known as "round-trip" investments or acquisitions. Among other things, Circular 75 provides that if a round-trip investment in a Chinese corporation by an offshore corporation controlled by Chinese residents occurred prior to the issuance of Circular 75, certain Chinese residents were required to submit a registration form to the local SAFE branch to register their ownership interests in the offshore corporation prior to March 31, 2006. Circular 75 also provides that, prior to establishing or assuming control of an offshore corporation for the purpose of obtaining financing for that offshore corporation using the assets or equity interests in an onshore enterprise in China, each Chinese resident or passport holder who is an ultimate controller of such offshore corporation, whether an individual or a legal entity, must complete certain registration procedures with the relevant local SAFE branch. Such Chinese residents must also amend the registration if there is a material event affecting the offshore corporation, such as, among other things, a change in share capital, a transfer of shares, or if such corporation is involved in a merger, acquisition or a spin-off transaction or uses its assets in China to guarantee offshore obligations.

        At present, it is unclear whether Circular 75 requires Chinese shareholders of our corporation to register. We will attempt to comply, and attempt to ensure that all of our shareholders subject to these rules comply, with the relevant requirements. We cannot, however, assure the compliance of all of our China-resident shareholders. Any failure to comply with the relevant requirements could subject us to fines or sanctions imposed by the Chinese government, including restrictions on certain of our subsidiaries' ability to pay dividends to us and our ability to increase our investment in those subsidiaries.

        In 2006, six Chinese regulatory authorities, including the Chinese Ministry of Commerce and the Chinese Securities Regulatory Commission, jointly promulgated regulations entitled Provisions Regarding Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the "M&A Rules"). The M&A Rules established additional procedures and requirements that make merger and acquisition activities by foreign investors more time-consuming and complex, including, in some circumstances, advance notice to the Ministry of Commerce of any change-of-control transaction in which a foreign investor takes control of a Chinese domestic enterprise. Compliance with the M&A Rules, and any related approval processes, including obtaining approval from the Ministry of Commerce, may delay or inhibit our ability to complete acquisitions of domestic Chinese companies, which could affect our ability to expand our business or maintain our market share.

We may be subject to Chinese regulations relating to employee stock options granted to Chinese citizens and if we are unable to comply with such regulations, we may be subject to fines and legal sanctions in China.

        On March 28, 2007, SAFE issued the Application Procedure for Foreign Exchange Administration for Domestic Individuals Participating in Employee Stock Holding Plans or Stock Option Plans of Overseas Listed Companies, also known as "Circular 78". Under Circular 78, Chinese individuals who participate in an employee stock option holding plan or a stock option plan of an overseas listed corporation are required, through a Chinese domestic agent or Chinese subsidiary of the overseas listed corporation, to register with SAFE and complete certain other procedures. We and our Chinese employees who have been granted restricted stock or stock options are subject to Circular 78 because we are an overseas listed corporation. However, in practice, significant uncertainties exist with respect to the interpretation and implementation of Circular 78. We cannot provide any assurance that we or our Chinese employees will be able to comply with, qualify under, or obtain any registration required by Circular 78. In particular, if we or our Chinese employees fail to comply with the provisions of Circular 78, we or such Chinese employees may be subject to fines and legal sanctions imposed by SAFE or other Chinese governmental authorities, which could result in a material adverse effect to our business operations.

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Our ability to provide loans or capital contributions to our Chinese subsidiaries may be limited by Chinese law.

        Chinese regulation of direct investment and loans by offshore holding companies to Chinese entities may delay or limit us from using the proceeds of the Offering to make additional capital contributions or loans to our Chinese subsidiaries. Any capital contributions or loans that we, as an offshore entity, make to our Chinese subsidiaries, including from the proceeds of the Offering, are subject to Chinese regulations. For example, any loans we make to our Chinese subsidiaries cannot exceed the difference between the total amount of investment our Chinese subsidiaries are approved to make under relevant Chinese laws and the respective registered capital of our Chinese subsidiaries, and must be registered with the local branch of the SAFE as a procedural matter. In addition, capital contributions from us to our Chinese subsidiaries must be approved by the PRC Ministry of Commerce or its local counterpart. There is no assurance that we will be able to obtain these approvals on a timely basis, or at all. If we fail to obtain such approvals, our ability to make equity contributions or provide loans to our Chinese subsidiaries or to fund our operations may be negatively affected, which could adversely affect their liquidity and our ability to fund our working capital and expansion projects and meet our obligations and commitments to local Chinese governments related to establishing our stevia operations.

Pursuing or enforcing shareholder actions against our Chinese subsidiaries may be limited.

        Because many of the directors and executive officers of our subsidiaries are Chinese citizens and reside in China, it may be difficult, if not impossible, to acquire jurisdiction over these persons in the event a lawsuit is initiated against our subsidiaries, or their directors and officers by a shareholder or group of shareholders. Furthermore, because the majority of our subsidiaries' assets are located in the People's Republic of China it would also be very difficult to access those assets to satisfy an award entered against us or our subsidiaries in a Canadian court.

Businesses operating in China may be subject to greater risk of violating US or other anti-corruption legislation.

        Upon consummation of the Offering, we will become subject to the United States Foreign Corrupt Practices Act, which generally prohibits US public companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Non-US companies, including some that may compete with our company, are not subject to these prohibitions. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices may occur in China. We can make no assurance, however, that our employees or other agents will not engage in such conduct for which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences, including adverse publicity and damage to our reputation that may have a material adverse effect on our business, financial condition and results of operations.

The Chinese government has been adopting increasingly stringent environmental protection and safety in production requirements which could hurt our business.

        The continuance of our operations depends upon compliance with the applicable environmental, safety in production and other regulations. Any change in the scope or application of these laws and regulations may limit our production capacity or increase our cost of operations and therefore have an adverse effect on our business operations, financial condition and operating results. Our failure to comply with these laws and regulations could result in fines, penalties or legal proceedings being commenced against us. There can be no assurance that the Chinese government will not impose additional or stricter laws or regulations, compliance with which may cause us to incur significant capital expenditures which we may not be able to pass on to our customers.

Risks related to the Common Shares and this Offering

Our Common Shares may experience price and volume fluctuations and the market price for our Common Shares after this Offering may drop below the price you pay.

        In recent years, the global securities markets have experienced a high level of price and volume volatility, and the market price of securities of many companies has experienced wide fluctuations which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. There can be no assurance that such fluctuations will not affect the price of our securities after this Offering, and our securities may decline below the Offering Price. As a result of this volatility, you may not be able to sell your Common Shares at or above the Offering Price.

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        Our Common Share trading price could be subject to significant fluctuations in response to numerous factors, including: reports of new information; changes in our financial situation; the sale of our Common Shares in the market; the addition or loss of customers; our failure to achieve financial results in line with the expectations of analysts or our published financial guidance; conditions or trends in our industry; additions or departures of key personnel and other events or factors, many of which may be beyond our control. As of November 4, 2009, the 52-week trading price of our Common Shares ranged from a low of $3.00 to a high of $13.92, after giving effect to the four-to-one (4:1) consolidation of our Common Shares. See "Price Range and Trading Volume of the Common Shares". There is no guarantee that the market price of the Common Shares will not be subject to any such fluctuations in the future.

        In the past, following periods of volatility in the market price of a company's securities, shareholders have often instituted class action securities litigation against those companies. Such litigation, if instituted against us, could result in substantial costs and diversion of our management's attention and resources, which could significantly harm our profitability and reputation.

Our actual financial results may vary from our publicly disclosed forecasts.

        Our actual financial results may vary from our publicly disclosed forecasts and these variations could be material and adverse. We periodically provide guidance on future financial results. Our forecasts reflect numerous assumptions concerning our expected performance, as well as other factors, which are beyond our control and which may not turn out to be correct. Although we believe that the assumptions underlying our guidance and other forward-looking statements were and are reasonable when we make such statements, actual results could be materially different. Our financial results are subject to numerous risks and uncertainties, including those identified throughout these risk factors and elsewhere in this prospectus and the incorporated documents. See "Special Notice Regarding Forward-Looking Statements". If our actual results vary from our announced guidance, the price of our Common Shares may decline, and such a decline could be substantial. We do not undertake to update any guidance or other forward-looking information we may provide.

We do not expect to pay dividends on the Common Shares in the foreseeable future.

        We have never paid cash dividends on our Common Shares. We currently intend to retain our future earnings, if any, to fund the development and growth of our business, and do not anticipate paying any cash dividends on the Common Shares for the foreseeable future. If we were to decide to pay dividends, foreign exchange and other regulations in China may restrict our ability to distribute retained earnings from China or convert those payments from RMB into foreign currencies. Furthermore, an agreement we have with a customer relating to their prepayment for stevia extract contains a provision preventing us from paying dividends during the term of the agreement. See "Dividend Policy". As a result, the return on investment in the Common Shares will likely depend upon any future appreciation in their value. There is no guarantee that the Common Shares will appreciate in value or even maintain the price at which shareholders have purchased their shares.

We have broad discretion in the use of the net proceeds from this Offering.

        Our management will have broad discretion in the actual application of the net proceeds from this Offering. We currently intend to allocate the net proceeds we will receive from this Offering as described below under "Use of Proceeds". However, we may elect to allocate proceeds differently from that described in "Use of Proceeds" if we believe it would be in our best interests to do so. Our shareholders may not agree with the manner in which management chooses to allocate and spend the net proceeds of the Offering. The failure by our management to apply these funds effectively could result in financial losses that could have a material adverse effect on our business and cause the price of our Common Shares to decline.

The availability of new Common Shares for sale, or future sales of a substantial number of our Common Shares, could materially adversely affect the market price of our Common Shares.

        Sales of substantial amounts of our securities, or the availability of such securities for sale, could adversely affect the prevailing market prices for our securities. A decline in the market prices of our securities could impair our ability to raise additional capital through the sale of securities should we desire to do so.

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Our Common Shares have no trading history in the United States.

        Our Common Shares currently trade on the TSX. Listing our Common Shares on NASDAQ in addition to the TSX may increase share price volatility on the TSX and also result in volatility of the trading price on NASDAQ because trading will be split between the two markets, resulting in less liquidity on both exchanges. In addition, different liquidity levels, volume of trading, currencies and market conditions on the two exchanges may result in different prevailing trading prices. Prior to the Offering, there has been no public market in the United States for our Common Shares, although our Common Shares have traded on a limited basis in the over-the counter markets in the United States such as Pink OTC Markets Inc., or the Pink Sheets. The Offering Price for our Common Shares may bear no relationship to the price at which our Common Shares will trade upon the completion of the Offering. The price at which our Common Shares will trade may be lower than the price at which they are sold in the Offering. In addition, because the liquidity and trading patterns of securities listed on the TSX may be substantially different from those of securities quoted on NASDAQ, historical trading prices may not be indicative of the prices at which our Common Shares will trade in the future on NASDAQ. Further, there can be no assurance regarding the trading prices that will prevail on the TSX following the consolidation of our Common Shares and our additional listing on NASDAQ.

If we are characterized as a passive foreign investment corporation ("PFIC"), US Holders may be subject to adverse United States federal income tax consequences.

        We must make an annual determination as to whether we are a PFIC based on the types of income we earn and the types and value of our assets from time to time, all of which are subject to change. Based in part on current operations and financial projections, we do not expect to be a PFIC for United States federal income tax purposes for our current taxable year or in the foreseeable future. However, there can be no assurance that we will not be a PFIC for our current taxable year or any future taxable year. A non-United States corporation generally will be considered a PFIC for any taxable year if either (1) at least 75% of its gross income is passive income or (2) at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income. The market value of our assets may be determined in large part by the market price of our Common Shares, which is likely to fluctuate. In addition, the composition of our income and assets will be affected by how, and how quickly, we use the cash we raise in this Offering. If we were to be treated as a PFIC for any taxable year during which you hold Common Shares, certain adverse United States federal income tax consequences could apply to US Holders. See "Certain Material Income Tax Considerations".

As a foreign private issuer, we are subject to different United States securities laws and rules than a domestic United States issuer, which may limit the information publicly available to our shareholders.

        We are a foreign private issuer under applicable United States federal securities laws and, therefore, we are not required to comply with all the periodic disclosure and current reporting requirements of the Exchange Act. As a result, we do not file the same reports that a United States domestic issuer would file with the SEC, although we will be required to file or furnish the SEC with the continuous disclosure documents that we are required to file in Canada under Canadian securities laws. In addition, our officers, directors, and principal shareholders are exempt from the reporting and "short swing" profit recovery provisions of Section 16 of the Exchange Act. Therefore, our shareholders may not know on as timely a basis when our officers, directors and principal shareholders purchase or sell our Common Shares, as the reporting periods under the corresponding Canadian insider reporting requirements are longer. In addition, as a foreign private issuer we are exempt from the proxy solicitation rules under the Exchange Act.

We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses to us.

        In order to maintain our current status as a foreign private issuer, a majority of our Common Shares must be either directly or indirectly owned by non-residents of the United States, unless we satisfy all of the additional requirements necessary to preserve this status. We may in the future lose our foreign private issuer status if a majority of our Common Shares are held in the United States and we fail to meet the additional requirements necessary to avoid loss of foreign private issuer status. The regulatory and compliance costs to us under United States federal securities laws as a United States domestic issuer may be significantly more than the costs

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we incur as a Canadian foreign private issuer eligible to use the MJDS. If we are not a foreign private issuer, we would not be eligible to use the MJDS or other foreign issuer forms and would be required to file periodic and current reports and registration statements on United States domestic issuer forms with the SEC, which are more detailed and extensive than the forms available to a foreign private issuer. We may also be required to prepare our financial statements in accordance with US GAAP. In addition, we may lose the ability to rely upon exemptions from NASDAQ corporate governance requirements that are available to foreign private issuers. Further, if we engage in capital raising activities after losing our foreign private issuer status, there is a higher likelihood that investors may require us to file resale registration statements with the SEC as a condition to any such financing.

United States investors may not be able to obtain enforcement of civil liabilities against us.

        The enforcement by investors of civil liabilities under the United States federal or state securities laws may be affected adversely by the fact that we are governed by the Business Corporations Act (British Columbia), a statute of British Columbia, that certain of our officers and directors and the experts named in this prospectus are resident outside of the United States and substantially all of our assets and the assets of such persons are located outside of the United States. It may not be possible for investors to effect service of process within the United States on certain of our directors and officers, the Underwriters and the experts named in this prospectus or enforce judgments obtained in the United States courts against us, certain of our directors and officers, the Underwriters and the experts named in this prospectus based upon the civil liability provisions of United States federal or state securities laws.

        There is some doubt as to whether a judgment of a United States court based solely upon the civil liability provisions of United States federal or state securities laws would be enforceable in Canada against us, our directors and officers, the Underwriters and the experts named in this prospectus. There is also doubt as to whether an original action could be brought in Canada against us or our directors and officers, the Underwriters or the experts named in this prospectus to enforce liabilities based solely upon United States federal or state securities laws. Therefore, it may not be possible to enforce those actions against us, certain of our directors and officers or the experts named in this prospectus.

The financial reporting obligations of being a public company in the US may be expensive and time consuming, and may place significant additional demands on our management.

        Prior to the consummation of the Offering, we have not been subject to public company reporting obligations in the United States. The additional obligations of being a public company in the United States may require significant additional expenditures and place additional demands on our management. In particular, Section 404 of the Sarbanes-Oxley Act of 2002 and the SEC rules and regulations implementing Section 404 require an annual evaluation of our internal controls over financial reporting to be attested to by an independent auditing firm. Under current rules, we will be subject to these requirements beginning with our fiscal year ending December 31, 2010. This process will increase our legal and financial compliance costs, and could make some activities more difficult, time-consuming or costly. If an independent auditing firm is unable to provide us with an attestation and an unqualified report as to the effectiveness of our internal controls, investors could lose confidence in the reliability of our financial statements, which could result in a decrease in the value of our Common Shares.

Certain Canadian laws could delay or deter a change of control.

        The Investment Canada Act (Canada) subjects an acquisition of control of GLG by a non-Canadian to government review if the value of our assets as calculated pursuant to the legislation exceeds a threshold amount. A reviewable acquisition may not proceed unless the relevant Minister is satisfied that the investment is likely to be a net benefit to Canada. This could prevent or delay a change of control and may eliminate or limit strategic opportunities for shareholders to sell their Common Shares.

        These risks, including those incorporated by reference, should be considered in the context of our business which is described under "Description of the Business" below. If any of the foregoing events, or other risk factor events as described in the AIF and incorporated by reference herein occur, our business, financial condition or results of operations could likely suffer. In that event, the market price of our securities could decline and investors could lose all or part of their investment.

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DESCRIPTION OF THE BUSINESS

        The following sections describing our business contain forward-looking information in respect of our operations. Readers are referred to the cautionary statements in the section entitled "Special Notice Regarding Forward Looking Statements" in this prospectus.

Company Overview

        GLG Life Tech Corporation is a vertically integrated producer of high-grade stevia extract, an all-natural sweetener extracted from the stevia plant. Through our vertically integrated business model, we specialize in the research and development, growing, refining, and production of high-grade stevia extract for distribution to the global food and beverage industry. We have current production capacity of 1,000 metric tons of high-grade stevia extract of rebaudioside A 80% purity ("high-grade stevia extract" or "RA 80") or 500 metric tons of stevia extract of rebaudioside A 97% purity ("rebiana" or "RA 97"). With corporate headquarters in Vancouver, British Columbia, and agricultural and processing assets in the People's Republic of China, we believe we are one of the world's leading producers of stevia.

        We sell our high-grade stevia extract to Cargill, Incorporated ("Cargill") an international provider of food, agricultural and risk management products and services with 158,000 employees in 66 countries. Cargill further refines our high-grade stevia extract to rebaudioside A 97% purity for use in its natural, zero-calorie sweetener brand called TRUVIA™ which launched in July 2008. On December 17, 2008, the United States Food and Drug Administration ("FDA") confirmed that it had no objection to generally recognized as safe ("GRAS") status for Cargill's rebiana and for Whole Earth Sweetener Company's Reb A, a rebaudioside A 95% product. Since December 2008, several of the largest global beverage companies have launched new products containing stevia. The Coca Cola Company's Sprite®, Odwalla® and Vitaminwater™ brands have all introduced natural, zero-calorie brand extensions containing Cargill's TRUVIA™.

        Under our Strategic Alliance and Supply Agreement with Cargill, we will provide at least 80% of Cargill's global stevia extract requirements for the first five years of the agreement commencing October 1, 2008, and we will serve as Cargill's exclusive Chinese supplier of stevia. These commitments are subject to renegotiation at certain times throughout the term of the Strategic Alliance and Supply Agreement. To date we have received aggregate purchase orders from Cargill under the Strategic Alliance and Supply Agreement of US$65.7 million.

        With stevia products rebiana and Reb A being the first zero-calorie all-natural sweeteners approved for use in food and beverages in the United States, stevia is a fast-growing newcomer in the estimated US$50 billion global sweetener market. Given the early stage of new product launches, the level of interest among major food and beverage companies, and the compelling consumer proposition, we believe stevia could capture a significant share of the zero-calorie sweetener market, in which high-intensity artificial sweeteners currently generate US$5 billion, or the majority of zero-calorie sweetener sales. We believe stevia sales will approach US$1.5 billion over the next three to five years.

        Our business is vertically integrated, from the development of proprietary seeds in our research and development facilities, to the processing and extraction of our high-grade stevia. We believe one of our strongest competitive advantages lies in our relationships with the local Chinese provincial and central government agencies, which have allowed us to secure exclusive agreements in three of China's largest stevia growing areas, and have facilitated the construction of our manufacturing and processing facilities. Through our long-term agreements, we have a right of first refusal to purchase what we believe to be an estimated 80% of the current high-grade leaf supply in China. Our operations in China include three processing factories (a fourth facility is under construction), stevia growing areas across eight provinces and seed base operations with four research and development centers and over 400 greenhouses. Our processing facilities have a combined annual throughput of 41,000 metric tons of stevia leaf which is grown through contracts with over 200,000 farmers. Our primary campus locations are in the cities of Qingdao, Shandong Province (60-acre campus), Mingguang, Anhui Province (60-acre campus), and Dongtai, Jiangsu Province (80-acre campus). We are also exploring setting up operations for stevia growth and production in Paraguay. Our global sales and marketing teams are based in North America, currently the world's largest market for high intensity sweeteners.

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        Our head office is located at Suite 519 World Trade Centre, 999 Canada Place, Vancouver, British Columbia, Canada V6C 3E1. We own our material assets through eight subsidiaries. Figure 1 below sets out the place of incorporation or continuance of each of these subsidiaries.

GRAPHIC

Figure 1 — GLG Life Tech Corporation and its subsidiaries.

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        Agricultural High Tech Developments Limited ("AHTD") — AHTD was acquired by us on December 27, 2007. AHTD is a seed base operation possessing high quality proprietary technology and patent-pending stevia seeds which are currently used by Bengbu.

        Anhui Bengbu HN Stevia High Tech Development Company Limited ("Bengbu") — Bengbu was established in November 2007 as a seed base and for our research and development operations in China. The seed base that was acquired from AHTD in December 2007 is part of the Bengbu subsidiary. Bengbu is a wholly-owned foreign enterprise under Chinese law.

        Chuzhou Runhai Stevia High Tech Company Limited ("Runhai") — Runhai was established in September 2007 for the purpose of processing stevia leaf grown and harvested in the Mingguang region of China. The Runhai facility can process 18,000 metric tons per year of stevia leaf. Runhai is a wholly-owned foreign enterprise under Chinese law.

        Dongtai Runyang Stevia High Tech Company Limited ("Runyang") — Runyang was established in November 2007 for the purpose of processing stevia leaf grown and harvested in Dongtai, China. The Runyang facility can process 18,000 metric tons per year of stevia leaf. Runyang is a wholly-owned foreign enterprise under Chinese law.

        GLG Weider Sweet Naturals Corporation ("GLG-Weider Sweet Naturals") — GLG-Weider Sweet Naturals is a joint venture with Weider Global Nutrition II LLC ("WGN") relating to the development and distribution of consumer stevia products that was established in August 2008. We own 55% of GLG-Weider Sweet Naturals and WGN owns the remaining 45%.

        GLG Life Tech US, Inc. ("GLG USA") — GLG USA was established in October 2009 to focus on direct sales and marketing opportunities for our products.

        Qingdao Runde Biotechnology Company Limited ("Runde") — Runde was acquired by us on December 18, 2006. Its primary business is the processing of stevia leaf into different grades of stevia extract for sale to customers worldwide.

        Qingdao Runhao Stevia High Tech Company Limited ("Runhao") — Runhao was established in May 2009 for the purpose of processing intermediate stevia extract into rebiana and other high grade stevia extract products. The first phase of its facility construction, expected to be completed by the end of 2009, is targeted to deliver 2,000 metric tons of high-grade stevia extract or 1,000 metric tons of RA 97.

Stevia Background

        The stevia plant is indigenous to the rain forests of Paraguay and Brazil, and has been used as a sweetener in its raw, unprocessed form for hundreds of years. In recent years, it has been grown commercially in Brazil, Paraguay, Uruguay, parts of Central America, Thailand, China and the United States. The majority of global commercial stevia production occurs in China where growing conditions are highly favorable and labor costs support what has historically been a labor-intensive activity.

        Stevia has been used broadly in Japan and with significant market penetration since the 1970s. Until recently, stevia has been sold in the United States as a supplement, primarily in the natural food industry. However, since the issuance of the FDA's no objection letter on December 17, 2008, rebiana (RA 97) and Reb A (RA 95) are now permitted for use in food and beverages in the United States.

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        Figure 2 shows a picture of the stevia plant, Figure 3 shows stevia growing fields in China and Figure 4 shows our packaged high-grade stevia extract.

    Stevia Plant, Field and Extract

GRAPHIC

 

GRAPHIC

 

GRAPHIC

Figure 2 — Stevia Plants

 

Figure 3 — Stevia Fields

 

Figure 4 — Packaged Stevia Extract

        The leaf of the stevia plant contains compounds called glycosides, which taste sweet and do not contain calories. The glycosides in the stevia leaf are 30 times sweeter than sugar when in raw form and once refined can reach sweetness levels of 200-300 times that of sugar. The two major glycosides in stevia are Stevioside ("STV") and Rebaudioside A ("RA"). RA is the sweetest component of the stevia plant and is extracted from the leaves and then purified for use in food and beverages.

        The RA content of a stevia leaf varies significantly depending on the stevia seedling. The RA content in typical raw stevia leaf in China is 24.2%. However, we have bred our own seedling that consistently produces a stevia plant with RA content levels of approximately 60% in the plant leaf and we currently have one patent application pending in China related to the production of these stevia strains. A stevia plant with a high amount of RA in its leaves is important as RA, the sweetest component of the stevia leaf, is the specific extract of the plant that has been approved for use in the United States. By having a specially bred stevia leaf with significantly higher RA content we are able to obtain larger volumes of high-grade stevia extract with lower raw material (leaf) costs. Furthermore, the higher the RA content of a raw stevia leaf, the less costly are the downstream processing activities required to increase its purity. Figure 5 provides a comparison of the RA content of our proprietary leaf to common stevia leaf found in China and to leaf samples found from different parts of the world.

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Comparable Leaves

   
GLG Proprietary Leaf (1)  
Item
  % Content
 
   

Rebaudioside A (RA)%

    56.90  

Rebaudioside C (RC)%

    8.20  

Stevioside (STV)%

    25.50  

Dulcoside A (DA)%

    0.30  

Steviolbioside (SX)%

    1.10  

Total Steviol Glycosides (TSG)%

    92.00  
   

RA/TSG %

    61.80%  
   
   
Canadian Leaf (2)  
Item
  % Content
 
   

Rebaudioside A (RA)%

    31.70  

Rebaudioside C (RC)%

    6.60  

Stevioside (STV)%

    44.80  

Dulcoside A (DA)%

    2.10  

Steviolbioside (SX)%

    3.60  

Total Steviol Glycosides (TSG)%

    88.80  
   

RA/TSG %

    35.70%  
   
   
China Common Leaf (3)  
Item
  % Content
 
   

Rebaudioside A (RA)%

    15.50  

Rebaudioside C (RC)%

    3.30  

Stevioside (STV)%

    36.30  

Dulcoside A (DA)%

    3.60  

Steviolbioside (SX)%

    5.40  

Total Steviol Glycosides (TSG)%

    64.10  
   

RA/TSG %

    24.20%  
   
   
Paraguay Leaf (2)  
Item
  % Content
 
   

Rebaudioside A (RA)%

    17.10  

Rebaudioside C (RC)%

    5.80  

Stevioside (STV)%

    29.40  

Dulcoside A (DA)%

    2.10  

Steviolbioside (SX)%

    6.20  

Total Steviol Glycosides (TSG)%

    60.60  
   

RA/TSG %

    28.20%  
   
   
Indian Leaf (2)  
Item
  % Content
 
   

Rebaudioside A (RA)%

    19.10  

Rebaudioside C (RC)%

    5.60  

Stevioside (STV)%

    54.70  

Dulcoside A (DA)%

    1.60  

Steviolbioside (SX)%

    2.30  

Total Steviol Glycosides (TSG)%

    83.30  
   

RA/TSG %

    22.90%  
   

Figure 5 — Sources:

(1)
Institute of Botany, Jiangsu Province and Chinese Academy of Science. Date of testing: June 26, 2009.

(2)
Institute of Botany, Jiangsu Province and Chinese Academy of Science. Date of testing: September 18, 2009.

(3)
Institute of Botany, Jiangsu Province and Chinese Academy of Science. Date of testing: September 10, 2009.

        Stevia leaf has historically accounted for approximately 70% of our cost of goods sold. Producing stevia leaf with a high RA content will allow us to purchase less stevia leaf which should improve our product margins and enable us to offer competitive prices for our RA extract. Our newest leaf strains are currently being grown in crops planted in our exclusive stevia growing areas in China. We have also developed six new seed strains that have reached in excess of 70% RA in the raw leaf which we expect to be used in our growing areas in the next 12 – 24 months.

        We believe that other technologies at the seed level will also result in cost efficiencies as the majority of our seedling processing infrastructure used to propagate high RA content seedlings will no longer be required. This technology will allow us to directly distribute seeds, rather than seedlings, to farmers. Efficiencies are expected to include the elimination of maintenance and operations costs for over 400 greenhouses used to grow seedlings, the labor intensive process of propagating seedlings by hand, and the transplantation process of seedling to field, a difficult process during which seedlings can often be damaged. Distributing seeds directly to farmers would also reduce the cost and labor requirement to the farmer. This seed technology is consistent with our strategy for

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protecting our intellectual property in that our seed and seedling strains cannot be used to grow other plants with high RA yielding stevia leaf (second generation plants grown from the seeds of our high yielding plants will only produce common stevia leaf with an average RA yield).

        At our processing facilities in China, we convert raw stevia leaf to high-grade stevia extract through the following process: (i) stevia leaves are dried, crushed and extracted with water; (ii) the resin is washed with food grade ethanol to release the glycosides; (iii) the glycosides are concentrated with an absorption resin and dried to formulate the primary extract (approximately 60% RA, or RA 60); (iv) the primary extract is dissolved in a water-ethanol solvent mixture and further processed by filtration, crystallization, and centrifugation steps; and (v) the resulting preparation of crystals is rinsed with food grade ethanol and vacuum-dried to yield the final high-grade Rebaudioside A product. The high-grade stevia extract and rebiana that we produce does not contain genetically modified organisms.

        Historically, stevia was not processed to a high extract purity level, and as a result suffered from aftertaste or bitterness, which some have described as a licorice-like taste. However, isolating the glycoside RA has decreased this aftertaste. The recent GRAS notification applies only to extracted and refined stevia of at least 95% RA. Our stevia processing capabilities enable the extraction of highly purified Rebaudioside A at 97% (RA 97). The ingredient name for this level of purity is rebiana.

Stevia Regulatory Environment

        2008 was an important year for stevia in the United States and globally. In May of 2008, Cargill published studies in the peer-reviewed scientific journal Food and Chemical Toxicology that established the safety of rebiana. On May 15, 2008 Cargill submitted an application to the FDA in addition to scientific data that included years of study and clinical trials that supported the use of rebiana as a safe food ingredient. On December 17, 2008, the FDA stated that it had no objection to the conclusion of an independent expert panel which reviewed research on rebiana and Reb A and concluded that they were GRAS for use as general purpose sweeteners, including for use in food and beverages. This was a significant milestone in the stevia industry and has enabled food and beverage companies to use stevia products containing rebiana and Reb A in their products. Previously, stevia had only been permitted as a dietary supplement thereby limiting its market.

        In June of 2008 the Joint Expert Committee on Food Additives (the "JECFA"), administered jointly by the World Health Organization and the Food and Agricultural Organization of the United Nations, raised the acceptable daily intake level for stevia. JECFA is an international scientific committee that was established in 1956 to evaluate food additives and is widely recognized as the leading authority in risk assessment of food hazards. The committee has evaluated more than 1,500 food additives and established the main principles and guidelines of safety assessment for chemicals in foods. After over a decade of study, JECFA published its approval of stevia stating that "95 percent steviol glycosides are safe for human use in the range of four milligrams per kilogram of body weight per day". This doubled the average daily intake level previously set by JECFA from earlier studies.

        In October 2008, the Australian and New Zealand food and safety regulatory body FSANZ also approved stevia for use in food and beverages as an ingredient. The approval was based on research and data published by JECFA as well as studies conducted by the Plant Science Group at Central Queensland University and Australian Stevia Mills.

        In September 2009, the government of France approved RA 97 for use as an ingredient in food and beverages. While full European Union approval for stevia sweeteners is still dependent on a scientific opinion from the European Food Safety Authority (EFSA), France has taken advantage of a provision that allows individual member states to approve ingredients for a limited two year period. This decision marked the first approval of RA 97 in the European Union. The European Food Safety Authority has received three petitions for stevia sweeteners from the European Stevia Association, Cargill and Morita Kagaku Kogyo Co., Ltd.

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        Some of the countries where stevia extracts have been approved for use in food and beverages include:

   
   
   
   
    United States of America     New Zealand
    China     Mexico
    Japan     Paraguay
    France     Switzerland
    Australia        

        We believe the petitions and subsequent approvals for the use of stevia in food and beverages in multiple markets around the world are part of a movement towards the development of healthier products in the food and beverage industry.

The Sweetener Industry

        High-grade stevia is a fast-growing newcomer in the estimated US$50 billion global sweetener market, which is still dominated by sugar. Sugar substitutes now account for more than US$5 billion of the global sweetener market. Figure 6 provides an estimate of the size of the global sweetener market, including the proportionate share of sugar and artificial sweeteners.

Global Sweetener Market

GRAPHIC

Figure 6 — Source: Global Industry Analysts, Artificial Sweeteners: A Global Strategic Business Report, July 2007; United States Department of Agriculture, Economic Research Service, World Sugar Reports. Market values have been derived through multiplying estimated annual production by average yearly prices.

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GRAPHIC

Figure 7 — Source: Tate & Lyle 2007, Global Sweetener Market (2007), Global High Intensity Sweetener Share by Value (2007) (percentages based on 182.5 million tons sugar equivalent).

Traditional Sweeteners

Sugar

        Sugar is a traditional nutritive sweetener. Sugar is generally considered a necessity and governments in most countries subsidize the farming of sugar cane or sugar beet and the related refinery costs. In Europe and the United States subsidies have been made available to farmers for producing either sugar cane or sugar beet. If sugar subsidies in many countries are reconsidered, stevia could present a major alternative to sugar if the production and quality of stevia leaves can be ensured.

        Sugar is ubiquitous throughout the world; however, it carries risks associated with over-consumption. According to a recent survey by the United States Department of Agriculture, the average American consumes the equivalent of 160 pounds of sugar a year or 35 teaspoons a day, a 30% increase over consumption in 1980. These consumption levels have contributed to increased rates of obesity, diabetes and other health related issues. In recent years, these concerns have stimulated a demand in the market for alternatives to sugar and especially non-nutritive sweeteners, a trend that is occurring globally.

High Fructose Corn Syrup

        High Fructose Corn Syrup ("HFCS") is a sweetener utilizing a modified form of corn syrup with an increased level of fructose. Its composition typically contains either 42 percent or 55 percent fructose, with the remaining sugars being primarily glucose and higher sugars. Because fructose is sweeter than glucose, the overall sweetness of the syrup can be increased resulting in more cost-effective use over sugar in food processing. Its caloric content is equivalent to sugar and thus it shares the same concerns from consumers and industry as that of sugar. Further, the human body metabolizes fructose differently than glucose (fructose does not trigger the

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release of appetite suppressing endorphins) and so high consumption of HFCS has also been attributed to increasing rates of obesity.

High-Intensity Sweeteners

        High-intensity sweeteners currently represent 9% of the global sweetener market. The category of high-intensity sweeteners has traditionally referred to artificial substitutes, which are synthesized by chemical processes and have a higher degree of sweetness compared to typical natural alternatives. High-intensity sweeteners have an estimated market in excess of US$5 billion annually and are expected to increase their amount of the global sweetener market annually. According to the 2007 report by Global Industry Analysts Artificial Sweeteners, the global artificial sweetener market is growing at an annual rate of 5.5%.

Global Market for Artificial Sweeteners

GRAPHIC

Figure 8 — Source: Global Industry Analysts, Artificial Sweeteners, July 2007.

        Applications of high-intensity sweeteners range from tabletop sweeteners, to confectionary, food and pharmaceuticals, with the beverage industry dominating the high-intensity sweetener market. Frost and Sullivan estimates as much as 65% of all artificial sweeteners consumed are in beverages. For example, The Coca Cola Company and PepsiCo are major purchasers and users of aspartame, a popular high-intensity sweetener, often used in diet sodas.

        Artificial high intensity sweeteners are used extensively in food and beverages to help reduce calories. According to the Calorie Control Council, 200 million Americans consume sugar-free or low-calorie products and half are frequent users, consuming an average of four products every day. Much of this is accounted for by diet soft drinks, which make up 39% of the US soft drink market and according to Beverage Digest, the percentage is rising.

Aspartame

        Aspartame is one of the most widely used high-intensity sweeteners in the food and beverage industry. It was discovered in 1967 and approved by the FDA in 1981. It is about 200 times sweeter than sugar but is not heat stable and therefore not suitable for baking or cooking. However, aspartame is found widely in diet colas

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and is also contained in some breakfast cereals, desserts and chewing gum. Aspartame is marketed in the United States under the brand names Equal™ and NutraSweet™.

Saccharin

        Saccharin is about 300 times sweeter than sugar and is marketed under the brand name Sweet 'N' Low®. It is heat stable, has a long shelf life and remains relatively cheap to produce. Saccharin has been known to have a bitter aftertaste and has been subject to controversy over possible carcinogenic side effects and has been banned in Canada since 1977.

Sucralose

        Sucralose has received the greatest recent consumer acceptance. Produced by Tate & Lyle plc under the brand name Splenda® and introduced in 1999, it accounted for an approximately 60% market share in the tabletop high intensity sweetener market in 2007. Sucralose was developed in the 1970s and is 600 times sweeter than sugar, heat stable and dissolvable in water. Sucralose is manufactured by chemically altering a sugar molecule and substituting three chlorine atoms for three hydrogen-oxygen groups. Sucralose can be found in more than 4,500 food and beverage products. Recently though concerns have been raised among consumers over its chemical composition, as chlorine molecules are used as the base of many pesticides.

        Figure 9 below depicts the market share of Splenda, Equal and Sweet 'n' Low in the tabletop sweetener market.

GRAPHIC

Figure 9 — Source: Information Resources, Inc. — May 25, 2008.

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Polyols

        Polyols, or sugar alcohols, are produced by hydrogenation or fermentation of different carbohydrates. Most polyols occur naturally in a variety of food products like vegetables, fruits and mushrooms. They are also regularly present in fermented foods like wine or soy sauces. They are commonly added to foods because of their lower caloric content than sugars; however, they are also, in general, less sweet and are often combined with high-intensity sweeteners. Maltitol, erythritol, sorbitol, isomalt and xylitol are a few of the more common types of polyols. Most polyols, other than erythritol, can cause digestive problems (laxative effect) and are used mostly in sugar-free gums in low doses.

Stevia

        We believe stevia is positioned to become a leading high-intensity sweetener. According to the research firm KnowGenix, stevia is estimated to be currently less than 1% of the global sweetener market, or US$500 million, with Japan accounting for US$200 million due to its early adoption and high acceptance rates. Following GRAS notification of certain stevia products in December 2008, we believe the stevia market is poised to grow considerably as illustrated by several high profile and rapid launches of products containing stevia, including: (i) The Coca Cola Company's launch of Sprite®, Vitaminwater10™ and Odwalla® juices; (ii) PepsiCo's launch of SoBe Life Water and Trop50 (Tropicana with 50 calories); and (iii) Dr. Pepper Snapple Group's launch of All Sport Naturally Zero. These products joined Cargill's tabletop sweetener TRUVIA™, Merisant Company's tabletop sweetener PureVia™ and ZEVIA™ Cola, the first commercially produced cola beverage sweetened with stevia.

        The artificial sweetener market is expected to grow 5.5% annually through 2015. Stevia benefits from what we believe is the widespread consumer belief that all-natural products are healthier than artificial products, particularly in the sweetener industry where artificial high-intensity sweeteners have been subject to consumer health risk concerns. According to an August 2009 report published by Mintel International Group Ltd., United States retail sales of products containing stevia, including tabletop sweeteners and food and beverage products, could reach US$2 billion by the end of 2011. Growing consumer preference for all-natural products, together with increasing rates of obesity and diabetes, have created significant demand for an all-natural, zero-calorie sweetener alternative. We believe stevia extracts such as rebiana are positioned to become leading high-intensity sweeteners as a result of their appealing profile:

    zero calories

    100% natural and thus perceived as healthier than artificial sweeteners

    remains stable under heat and thus can be utilized in processed foods

    200 to 300 times sweeter than sugar

    measures zero on the glycemic index, which is important in the diabetic market and benefits from growing consumer understanding of the value of a low glycemic diet

Market Drivers for Stevia

        According to a Harris Poll in 2008, three out of five Americans believe artificial sweeteners are only somewhat safe or not safe at all. Further, a survey by IFIC Food and Health (August 2008) reported that 43-45% of Americans said they wanted to use less aspartame, sucralose and saccharin. Stevia presents food and beverage companies with the opportunity to offer consumers a healthier, natural alternative.

        In the food and beverage industry, products catering to healthy lifestyles are one of the key drivers in sector growth. Increases in obesity, diabetes, and associated health risks have led consumers to pay more attention to diet. Global trends toward natural, healthy, organic and "green" products have been evident. Food and beverage companies are formulating and launching new products in response to consumer demand and we believe stevia provides a solution that fits within consumer expectations for taste and health benefits. According to Mintel's August 2009 report entitled Stevia and other Natural Sweeteners, over 115 new food and beverage products containing stevia have been launched in the United States in the first seven months of 2009 by leading global food and beverage companies such as The Coca Cola Company, Cargill, PepsiCo and Merisant Company. We

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believe that this support, coupled with underlying trends and key market drivers presents favorable conditions for stevia's wider global acceptance and potential in capturing significant market share in the near future.

        Figure 10 below provides comparison information for stevia as well as the major artificial sweeteners and sugar.

 
Sweetener
  Sweetness Factor
(x sucrose)

  Brand Names
  Properties
  Pricing
($/kg)

  Market Share
 
Sugar       High caloric content, natural   .50(1)   82%(2)
High Fructose Corn Syrup   Equivalent     High caloric content   .57-.73(1)   9%(2)
High Intensity Sweeteners                   9%(2)
    Acesulfame
    Potassium (Ace-K)
  200x(3),(4)   Sunett®, Sweet One®   Zero caloric content, artificial   17-25(3)   9%(2)
  Aspartame   180x(3),(4)   NutraSweet™, Equal™, others   Zero caloric content, artificial   22-40(6)   31%(2)
  Cyclamates   30x(5)   Sugar Twin®, others   Zero caloric content, artificial   n/a   11%(2)
  Neotame   7,000x(4)   n/a   Zero caloric content, artificial   n/a   1%(2)
  Saccharine   300x(3),(4)   Sweet 'N' Low®, others   Zero caloric content, artificial   2-5(3)   21%(2)
  Stevia   200-300x(4),(5)   Truvia™, Stevia in the Raw, PureVia™, others   Zero caloric content, natural   245-280(6)   4%(2)
  Sucralose   600x(3),(4)   Splenda®   Zero caloric content, artificial   170-210(3)   23%(2)

Figure 10 — Sources:

    (1)
    USDA Economic Research Service, World and US Sugar and Corn Sweetener Prices, 2004-2009.
    (2)
    Tate & Lyle, Global Sweetener Market, Global High Intensity Sweetener Share by Value, 2007.
    (3)
    The Intense Sweetener World, Ehrenberg Centre for Research in Marketing, 2008.
    (4)
    International Food Information Council, Food Insight, Stevia and Sweeteners, May 2009.
    (5)
    The Beverage Institute for Health and Wellness, Ingredient Profiles, Low Calorie Sweeteners 2009.
    (6)
    Management estimates based on competitive intelligence generated and feedback from potential customers.

        We anticipate that trends toward healthier living will continue to drive the market opportunity for stevia. According to a recent study by The Freedonia Group released in May of 2009, greater awareness of the relationship between diet and health will continue to support an increasing demand for products across all categories that offer nutritional and health benefits. The study valued the current United States demand for sweeteners at US$12 billion with alternative sweetener demand accounting for 9.5%. In particular, the food segment is expected to see a high percentage of growth in demand for alternative sweeteners in the United States with projected increases reaching 5.2% annually through 2013. For stevia, product launches are already visible in foods such as Blue Bunny Ice Cream's Sweet Freedom® Fudge and Vanilla Fudge Bars, Sweet Freedom® Raspberry and Orange Crème Bars and Sweet Freedom® Fudge Lites, all produced by Wells' Dairy.

        According to The Freedonia Group study, beverage production in the United States is forecast to increase to nearly 41 billion gallons by 2013, valuing this market segment at US$101 billion. Some of the largest growth in beverages is expected to occur from flavored and enhanced waters. Driven by a flurry of new product introductions and advancements, growth in traditional carbonated soft drink sales is expected to remain flat (or slightly in decline) while products such as enhanced beverages are expected to be on the rise. Stevia extracts have played a significant role in new product development in this category, including in products such as

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PepsiCo's SoBe Life Water (the fastest growing enhanced water brand) and The Coca Cola Company's Vitaminwater 10.

Obesity

        The World Health Organisation estimates that in 2005, at least 400 million adults worldwide were obese, with this figure expected to increase to 700 million by 2015 with 2.3 billion adults overall being classified as overweight. The US, the UK and Germany — three of the largest confectionery markets in the world — are among those countries with the largest numbers of people who are obese, overweight and suffering from cardiovascular disease.

Diabetes

        Globally, the number of cases of diabetes, heightened in recent years by increased rates of obesity and an aging population, has dramatically increased. Several contributing factors including diet and lifestyle have led to the rise of the disease that affects over 171 million people worldwide, a figure that according to the World Health Organization is expected to more than double to 366 million by 2030. In the United States where cases are more prevalent amongst all age groups, diabetes affects 7.8% of the population and the direct and indirect costs of diabetes are estimated by the United States Center for Disease Control and Prevention to account for US$174 billion in medical costs. Further, the Global Diabetes Foundation states that Type 2 diabetes is responsible for 90-95% of diabetes cases and that 80% of cases are preventable foremost by changing diet as well as increasing physical activity and improving the living environment.

Our Growth Strategy

        Our mission is to become the world's leading producer of high-grade stevia extract (RA 80) by developing and securing our own stevia leaf supply, establishing leaf refining facilities in key locations, and providing a consistent supply of high-grade stevia extract.

        Our key business objectives include:

    jointly developing the high-grade stevia supply chain with our strategic alliance partner as its leading strategic supplier of high-grade stevia extract;

    maintaining low cost production of high-grade stevia extract through process innovation and vertical integration (from seedling development to high-grade stevia production);

    continuing to pursue research and development that will further improve the quality and yield of stevia seedlings;

    developing our seed research, development and growth operations to ensure an increasing percentage of stevia leaf comes from the highest quality stevia seeds and seedlings;

    developing the capacity needed to meet forecasted customer demand; and

    working effectively with provincial and county governments in China to develop key stevia growing areas to increase the annual harvest of high quality stevia leaf.

Our Business Model

        We have pursued a strategy of vertical integration to achieve the following objectives:

    develop and control the highest quality seeds, seedlings and leaf supply in the industry;

    achieve low cost production (seed and seedling technology and extraction processing);

    exercise a high degree of control over supply chain to enable rapid scaling and quality of final product; and

    maintain ability to innovate across all key components of the supply chain to further reduce costs and improve quality.

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Seed and Seedling R&D, Seed base Operations

        Our seed and seedling research and development efforts are designed for the continuous improvement of the RA yield and size of our stevia plants (larger plants means more RA per plant and greater leaf tonnage yield per acre). Additional activities include commercial plant development and commercial plot testing of new seed and seedling strains. We have invested heavily in intellectual property in the area of plant breeding and currently hold one pending patent in China surrounding the proprietary breeding methodology of stevia plants. In addition, we have succeeded in the production of seed and seedling strains that cannot be used to grow other plants with high RA yielding stevia leaf (second generation plants grown from the seeds of our high yielding plants will only produce common stevia leaf with an average RA yield). Each year, farmers must sign new contracts with us to receive the high quality seedlings for the ensuing year's planting season. By doing this, we continually protect the genetics of our proprietary high quality and high yielding stevia plants and maintain control and security of our high quality leaf supply. A key competitive advantage for us is our ability to secure a high quality leaf supply, rich in RA. With RA levels in our proprietary leaf significantly exceeding that of common market leaf in China, we believe the protection of this intellectual property is important.

        Our seed base operations are designed for the propagation and growth of proprietary high RA content seed and seedlings to ensure sufficient seeds and seedlings are available for planting each year. Through our seed base operation, we will continue to control the development of breeding programs designed to produce improved strains of stevia that we believe will result in continually higher RA yield in our stevia leaf. These seeds will become the seedlings that we will use in our exclusive growing areas in Mingguang, Juancheng and Dongtai, China as well as new stevia growing areas.

Sources, Pricing and Availability of Raw Materials

        We believe one of our strongest competitive advantages lies in our relationships with the local Chinese provincial and central government agencies, which have allowed us to secure exclusive agreements in three of China's largest stevia growing areas. Our manufacturing operations are located in Dongtai, Jiangsu Province, Mingguang, Anhui Province and Qingdao, Shandong Province. We have ten-year agreements with the governments in Dongtai and Mingguang and a non-binding 20-year agreement with the government in Juancheng. During the term of these agreements, we will have a right of first refusal to purchase all stevia grown in these cities and we will be the only company allowed to process stevia in these cities. These agreements were secured by our Chairman and Chief Executive Officer, Dr. Luke Zhang, who has extensive relationships with government officials in various stevia-growing regions of China. With these long-term agreements in place, we have a right of first refusal to purchase a significant portion of the existing Chinese stevia leaf supply which we believe to be estimated at 80% of the current high-grade leaf supply in China, and should enjoy a sourcing advantage relative to other stevia processors in China in terms of price and product availability.

        We purchase our stevia leaf directly from local farmers in China. In recent years, the purchase of stevia leaf in China has been a process involving many buyers in the fields negotiating with thousands of farmers. This method to acquire the thousands of metric tons of necessary leaf is costly, involving a bidding process which resulted in higher prices and, in many cases, a poorer and lower RA yielding leaf.

        Our agreements with the local governments in Dongtai, Mingguang and the Juancheng have given us exclusive rights to purchase high quality stevia leaf, and build and operate stevia processing factories in these regions. We believe these agreements will play an important role in local government plans to help local farmers improve their quality of life, while at the same time providing us with high quality leaf. Our strategy is to continually improve the quality of the stevia leaf grown in our exclusive growing areas through the development of our own high quality seed and seedlings which will only be offered to farmers working in our exclusive growing areas.

        For 2009, there are an estimated 200,000 farmers involved in growing our proprietary stevia seeds and seedlings whom we have recruited, trained and organized with the cooperation of the local government agencies in China. Our plans include an increase in stevia growing areas with pre-agreed prices and leaf quality to be guaranteed to farmers who will grow stevia in place of lower value crops. This is a mutually beneficial arrangement since farmers can earn approximately two to three times more growing stevia as compared to crops such as wheat, corn or cotton.

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        The ability to exercise control over all aspects of our raw materials from the development of the high RA yielding seed, plants, planting, growth and harvest to final extraction is expected to result in a consistent, reliable quantity of high quality stevia leaf, at attractive prices. We also employ a recognized quality standard in our leaf purchases to ensure that the lowest content of moisture and foreign material are present in the raw stevia leaf purchased from farmers. The 2008 stevia harvest was the first year we employed these standards during the stevia leaf purchase process. The result was an improvement of quality of leaf purchased in 2008 and 2009 in terms of moisture and foreign material relative to the previous year's leaf purchase. We believe it will take approximately two-to-three years to train the local farmers to adapt to this quality standard throughout our growing regions.

        We are also continually developing additional growing areas in China and experimenting with our new strains to evaluate their adaptability in varying regions.

Mingguang Region

        The agricultural regions around Mingguang are one of the largest stevia growing areas in China. Pursuant to an investment agreement with the Mingguang People's Government signed in August 2007, we have, for the first ten years of the agreement, the exclusive right to purchase all stevia grown within the Mingguang agricultural region as well as the exclusive right to build stevia processing facilities, subject to our meeting certain obligations related to establishing our stevia business in Mingguang. These obligations include; (i) establishing an operating subsidiary in the city; (ii) over the course of the ten year agreement making an investment in fixed assets of US$30 million; (iii) and establishing of stevia processing facilities reaching 40,000 MT capacity. We have since constructed an 18,000 metric ton raw stevia leaf processing facility in the Mingguang region which commenced operations in January 2009, made fixed asset investments of US$28.6 million and we are on track to meet all of our obligations under this agreement.

Dongtai Region

        Pursuant to an investment agreement with the Dongtai People's Government signed in August 2007, we have, for the first ten years of the agreement, the exclusive right to purchase all stevia grown within the Dongtai agricultural region as well as the exclusive right to build stevia processing facilities, subject to our meeting certain obligations related to establishing our stevia business in Dongtai. These obligations include; (i) establishing an operating subsidiary in the city; (ii) over the course of the ten year agreement making an investment in fixed assets of US$15 million; and (iii) establishing stevia processing facilities reaching 20,000 MT capacity. We have since constructed an 18,000 metric ton raw stevia leaf processing facility in the Dongtai region which commenced operations in January 2009, made fixed asset investments of US$33 million and we are on track to meet all of our obligations under this agreement.

Juancheng County

        In April 2008, we signed a 20-year agreement with the government of Juancheng County in the western Shandong Province of China, which gave us exclusive rights to build and operate a stevia processing factory as well as the exclusive right to purchase high quality stevia leaf grown in that region, subject to our meeting certain obligations related to establishing our stevia business in the Juancheng region. This agreement provides for us to establish a processing facility in the region by September 30, 2009 and make a total investment in the Juancheng region of US$60 million over the course of the 20-year agreement in order to retain exclusive rights. As of September 30, 2009, we have not established a stevia processing facility or made any investment in the region. However, we continue to enjoy the benefit of the exclusive growing area and have received verbal assurances from the government of Juancheng County that this will not be affected by us not establishing a stevia processing facility within the timeframe set out in the investment agreement.

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GLG Processing Facility Locations and Exclusive Agricultural Areas in China

         GRAPHIC

Figure 11 — Our exclusive areas for growth of stevia and construction of stevia processing facilities are located in the Shandong, Jiangsu and Anhui Provinces of China.

        In addition to our existing growth and production operations in China, we are also exploring setting up operations for stevia growth and production in Paraguay. On September 28, 2009, we announced the signing of a non-binding Letter of Intent with the Paraguayan Export and Investment Promotion Agency to enter negotiations for the development of stevia growth and production in Paraguay and to create a mutually beneficial business relationship for economic development in the country related to the growth and production of stevia. The Letter of Intent is part of global strategy to geographically diversify our stevia growth and production operations outside of China.

Extraction and Refining

        Our extraction and refining operations consist of two components: primary processing of stevia leaf into intermediate stevia extract; and secondary processing into final high-grade stevia extract products. All of our extraction and refining operations are located in China and we have four wholly owned subsidiaries in China

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that undertake the primary and secondary extraction and refining operations. Figure 12 summarizes each facility's contribution to current and near-term production capacity.

 
Facility Name
  Location
  Primary Leaf
Processing Capacity

  Intermediate Product
Output Capacity

  Final Product
Output Capacity

  Employees
 
Runhai   Mingguang, Anhui
Province
  18,000 MT of raw leaf   1,800 MT of RA60   n/a   460
Runyang   Dongtai, Jiangsu
Province
  18,000 MT of raw leaf   1,800 MT of RA60   n/a   418
Runde   Qingdao, Shandong
Province
  5,000 MT of raw leaf   500 MT of RA60   1,000 MT RA80 or
500 MT RA97
  233
Runhao   Qingdao, Shandong
Province (expected
completion in
December 2009)
  n/a   n/a   2,000 MT RA80 or
1,000 MT RA97
  60
Total       41,000 MT of raw leaf   4,100 MT RA60   3,000 MT RA80 or
1,500 MT RA97
  1,171

Figure 12 — Production capacity at our stevia processing facilities.

Primary Processing Operations

        Our primary processing operations involve the conversion of raw stevia leaf to intermediate-grade stevia extract (RA 60). This generally follows the following process: (i) stevia leaves are dried, crushed and extracted with water; (ii) the resin is washed with food grade ethanol to release the glycosides; and (iii) the glycosides are concentrated with an absorption resin, and dried to formulate the primary extract.

        Primary processing operations are the more capital intensive of the two extract production processes. In order to meet our strategic alliance partner's requirements and expected market demand, we have invested $82.7 million over the period January 1, 2008 through September 30, 2009, to expand our manufacturing capabilities. Operations commenced in the first quarter of 2009 at our two new facilities in Dongtai and Mingguang, which increased our total potential raw leaf capacity by 720% to 41,000 metric tons ("MT"). The new facilities each have capacity of 18,000 MT per year, adding to our prior capacity of 5,000 MT.

        We have applied for two key patents in China to protect the intellectual property developed at our primary processing facilities involving water purification and stevia extract soaking technology.

        In addition to primary processing capacity and warehousing, our facilities in Dongtai and Mingguang include a significant research and development facility, office buildings and supporting infrastructure (water treatment facilities, etc.).

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Runhai Facilities

GRAPHIC   New Runhai
facilities located in
Mingguang City,
Anhui Province,
China

GRAPHIC

 

 

GRAPHIC

 

Runhai Leaf
Warehouse,
Mingguang City,
Anhui Province,
China

Figure 13 — Our stevia production facilities in Mingguang.

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Runyang Facilities

GRAPHIC   New Runyang
facilities located
in Dongtai City,
Jiangsu Province,
China

Figure 14 — Our stevia production facilities in Dongtai.

Secondary Processing and Refining of Stevia

        We have current production capacity of 1,000 metric tons of high-grade stevia (RA 80) or 500 metric tons of rebiana (RA 97) at our Qingdao facility (Runde). We own or have access to certain proprietary technology for producing high-grade stevia extract.

        Secondary processing of intermediate stevia extract to final product generally follows two steps:

    (a)
    the primary extract is dissolved in a water-ethanol solvent mixture and further processed by filtration, crystallization, and centrifugation steps; and

    (b)
    the resulting preparation of crystals is rinsed with food grade ethanol and vacuum-dried to yield the final high-grade Rebaudioside A product.

        In May 2009 we entered into a long term investment agreement with the Qingdao Export Refine Management Committee. Pursuant to this investment agreement, a total area of 215 acres of land will be made available to our subsidiary Runhao at a discount of approximately 80% from market values. The first phase of the development will occupy 60 acres of land where we are in the process of constructing a secondary processing facility with capacity of 2,000 metric tons of high-grade stevia (RA 80) or 1,000 metric tons of rebiana (RA 97). Our obligations under this investment agreement require us to invest an aggregate of US$30 million in registered capital by January of 2011. To date we have invested approximately US$4.5 million of registered capital. We expect that this facility will be completed in December 2009.

        In addition, we have entered into an agreement with International Biotechnology Group Ltd. ("International Biotechnology") which provides for the license to us of certain technology used to manufacture stevia products refined to the RA 97 level. Pursuant to the terms of the license agreement, we have a license to use this technology for a five year term ending December 31, 2014. As consideration for entering into the license agreement, International Biotechnology will receive, subject to applicable regulatory approval, 250,000 Common Shares as well as a basic royalty payable in connection with RA97 and STV 97 products produced at our Runhao facility during the five year term of the license. Following the five year term, the technology will be transferred to us and the obligation to pay a royalty to International Biotechnology will terminate.

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Sales and Marketing

        We sell our stevia extract to over 30 customers, including high-grade stevia extract (RA 80) to Cargill. Cargill further refines our high-grade stevia extract to rebaudioside A 97% purity for use in its natural, zero-calorie sweetener brand called TRUVIA™. Products launched with TRUVIA™ include:

    TRUVIA™ tabletop sweetener — A product of Cargill, was launched July 2008 in the United States.

    Sprite Green™ — launched by The Coca Cola Company in December 2008.

    Vitaminwater10™ — launched by The Coca Cola Company in the United States in December 2008 with an estimated US$40-$50 million advertising campaign. Additional flavours expected by the end of 2009.

    Odwalla® juices — Mojito Mambo™ and Pomegranate Strawberry flavors — launched in December 2008 with additional new expected flavors by the end of 2009.

    Blue Bunny® Ice Cream — First food application of rebiana. Products include Sweet Freedom® Fudge and Vanilla Fudge Bars, Sweet Freedom® Raspberry and Orange Crème Bars and Sweet Freedom® Fudge Lites.

    Nature's Splash® — A ready-to-go drink mixes product from Kraft.

        Through our Sweet Naturals joint venture with Weider Global Nutrition we sell RA 97. Products containing our RA 97 include the following:

    Zevia™ — The first cola introduced to the market made with stevia, launched in July 2008. Additional soda flavors include Black Cherry, Lemon Lime Twist and Root Beer. This product has nationwide distribution at Whole Foods and other retailers.

    Earthly Delights® — A flavored water beverage product from Global Juices & Fruits.

Our Strategic Alliance with Cargill

        On May 1, 2008, we announced the signing of a strategic alliance and long-term renewable supply agreement (the "Strategic Alliance and Supply Agreement") with Cargill, which replaced our original 2007 agreement. On July 17, 2008 we announced that Cargill had agreed to make certain revisions to the Strategic Alliance and Supply Agreement. The principal terms of the amendments were agreed and effective as of July 17, 2008, and were reflected in definitive documentation signed on August 8, 2008. The Strategic Alliance and Supply Agreement was further amended May 4, 2009 in connection with Cargill's purchase order announced May 5, 2009. The key terms of the Strategic Alliance and Supply Agreement, as amended, include:

    annual minimum quantities that we will supply and Cargill will purchase over the term of the agreement. Cargill will have a rolling twelve month commitment. For the period October 1, 2008 to September 30, 2009, the twelve month commitment revenue was US$25 million. For each of years two and three, once volume and price have been agreed (done on an annual basis), Cargill is required to either take the committed volume or pay the agreed price;

    an agreement by Cargill to purchase a minimum of 80% of its global stevia extract requirements from us for the first five years of the agreement commencing October 1, 2008;

    our being Cargill's exclusive Chinese supplier of stevia extract for the term of the Strategic Alliance and Supply Agreement and Cargill's agent in China for any additional stevia extract sourcing opportunities that arise; and

    our taking the lead role in arranging working capital financing for our stevia leaf purchasers each year beyond 2008, though Cargill may assist or participate in the financing of stevia leaf as it has done previously.

        As of November 5, 2009, we have received purchase orders from Cargill of US$65.7 million under the Strategic Alliance and Supply Agreement and have commenced delivery in 2009. For the year ended December 31, 2008 and for the nine months ended September 30, 2009, Cargill accounted for 77% and 95%, respectively, of our revenue. We expect that a significant portion of our revenues over the next several years will continue to be derived from sales to Cargill pursuant to the Strategic Alliance and Supply Agreement between us. These commitments are subject to renegotiation at certain times throughout the term of the Strategic Alliance and Supply Agreement. See "Risk Factors".

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Our GLG Direct Sales Program

        Through our wholly owned US subsidiary, GLG Life Tech US, Inc, we employ sales professionals to manage and develop relationships with large customers and potential customers in the food and beverage industry. On October 14, 2009 we announced the hiring of three new vice presidents to head up these efforts. These individuals bring in excess of 60 years' combined experience in the food and beverage industry involving experience with multinational food, beverage and sweetener companies including the Dr. Pepper Snapple Group, PepsiCo, Monsanto, NutraSweet, Kraft and Proctor & Gamble.

Our GLG-Weider Program ("Sweet Naturals")

        We have established a joint venture for the development and distribution of consumer stevia products with Weider Global Nutrition called GLG-Weider Sweet Naturals Corporation ("Sweet Naturals"). Sweet Naturals was established in September 2008. We own a controlling interest of 55% of the venture and Weider Global Nutrition ("WGN") owns the remaining 45%. Legal proceedings have been commenced by WGN against us with respect to the joint venture. See "Legal Proceedings" for further details regarding this claim.

Competition

        We are a leading producer in the high-grade stevia market and currently benefit from several competitive advantages. Within China, there are approximately 10 to 12 companies with stevia refining and extraction capabilities, and we are the largest of these companies in terms of production capacity. While there are two companies in Japan, one in Korea and one in Malaysia that are capable of producing high-grade stevia extract, we estimate that the manufacturing costs to produce high-grade stevia in these countries are significantly higher than the cost of producing the same product in China due to factors such as: (i) proximity of our manufacturing operations to stevia growing areas in China where the majority of the world's stevia leaf is grown; and (ii) lower manufacturing wages in China as compared to Japan, Korea and Malaysia.

        We believe these lower costs, combined with our current processing capabilities, provides us with a competitive advantage. Through our partnerships with local Chinese governments, as well as our proprietary seeds and seedlings, we expect to control a large percentage of the high quality stevia seeds and leaf grown in China. Leaf supply is one of the most important components of our business.

        Major global companies are expected to enter the market as demand for stevia grows, but we believe it will take competitors several years to reach our current stage of development. As an example, the seedling development process takes several years and is only the first phase of the vertically integrated process for developing a high quality finished product.

        Other market participants include Blue California, an ingredient company based in Southern California with extraction operations in China which is selling an RA 97 product marketed under the brand Good & Sweet™, and Pure Circle, a supplier of stevia based in Malaysia for the PureVia™ tabletop stevia brand developed jointly by Merisant Company and PepsiCo. Corn Products International entered into a long-term agreement with Morita Kagaku Kogyo Co., Ltd. of Japan for access to its strain of stevia. Morita has been growing stevia in Brazil since 2007 and marketing a high-grade RA product called Enliten. Corn Products International has not yet launched any stevia based products.

Intellectual Property

        Our ability to compete effectively is dependent upon our ability to protect the proprietary nature of the seeds, seedlings, processes, technologies and materials owned by, used by or licensed to us or our subsidiaries. However, our intellectual property related to the production of stevia includes proprietary process technology for the manufacture of high-grade stevia that is not fully covered by patents or other intellectual property protection in Canada, the US or China. In such cases, we rely on a combination of patents, trademarks, trade secret law and contracts with certain key personnel to protect our intellectual property rights. See "Risk Factors".

        As of September 30, 2009, we had three patent applications pending with the State Intellectual Property Office in China. These patents relate to our stevia breeding and processing technologies. All applications are in various stages of the approval process and there can be no guarantee that approvals will be received. Failure to

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obtain such approvals may prevent us from protecting our stevia plant strains and stevia processing methodologies.

        One pending patent relates to the proprietary breeding methodology of stevia plants that we have developed and protect our high-grade stevia plant strains. As an additional form of intellectual property protection, we have succeeded in the production of seed and seedling strains that cannot be used to grow other plants with high RA yielding stevia leaf (second generation plants grown from the seeds of our high yielding plants will only produce common stevia leaf with an average RA yield). Each year, farmers must sign new contracts with us to receive the high quality seedlings for the ensuing year's planting season. Because the plant strains cannot be used to recreate our high content RA stevia leaf, we protect the genetic characteristics of our proprietary high quality and high yielding stevia plants and maintain control and security of our high quality leaf supply.

        The pending patent was acquired through our acquisition of AHTD on December 27, 2007. The patent application is registered in the name of Mr. Wang Qibin, a former shareholders of AHTD. The patent was formally assigned by Mr. Wang to AHTD on July 8, 2007, prior to our acquisition of AHTD.

        We have also applied for two patents in China to protect the intellectual property developed at our primary processing facilities that involves water purification and stevia extract soaking technology.

        We are in the process of applying for trademark protection for our branded stevia products and have filed nine trademark applications in the North American market; five for use in Canada and four for use in the United States. In addition, we have filed for the protection of our logo mark and our corporate name "GLG Life Tech" in both the United States and Canada. All applications are in various stages of the approval process and there can be no guarantee that approval will be received. Failure to obtain such approvals may prevent us from protecting our brand recognition. See "Risk Factors".

        In addition, we have entered into an agreement with International Biotechnology Group Ltd. ("International Biotechnology") which provides for the license to us of certain technology used to manufacture stevia products refined to the RA 97 level. Pursuant to the terms of the license agreement, we have a license to use this technology for a five year term. As consideration for entering into the license agreement, International Biotechnology will receive, subject to applicable regulatory approval, 250,000 Common Shares as well as a basic royalty payable in connection with RA97 and STV 97 products produced at our Runhao facility during the five year term of the license. Following the five year term, the technology will be transferred to us and the obligation to pay a royalty to International Biotechnology will terminate.

Legal Proceedings

        On November 4, 2009, Weider Global Nutrition ("WGN") filed legal proceedings in the Supreme Court of British Columbia against us. WGN alleges that pursuant to the shareholder agreement between WGN and us, GLG Weider Sweet Naturals Corp. ("Sweet Naturals") became our exclusive marketing and sales arm, other than as provided under the Strategic Alliance and Supply Agreement. WGN also alleges misrepresentation and breach of fiduciary duty by us. WGN is claiming injunctive relief, an accounting and damages for alleged breaches of the shareholder agreement.

        We are of the view that the allegations are entirely without merit. The shareholder agreement contemplates our Strategic Alliance and Supply Agreement and in no way restricts our ability to perform that agreement and pursue any further opportunities arising from that agreement. Further, the shareholder agreement contemplates that marketing and distribution of wholesale stevia extract products through Sweet Naturals is subject to our permission and that nothing in the agreement prevents the shareholders of Sweet Naturals from competing with Sweet Naturals. The shareholder agreement contemplates that exclusivity for Sweet Naturals is limited to new business actually generated or customers secured by Sweet Naturals. Our position is that any claim by WGN for lost profits is expressly excluded under the shareholders' agreement. It is our view that the injunctions and accounting sought are not legally available and the other remedies would not, in any event, materially and adversely effect our business or operations. We will vigorously defend these allegations.

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SELECTED CONSOLIDATED FINANCIAL DATA

        The following selected consolidated financial data are derived from our audited consolidated annual balance sheets as of December 31, 2008 and 2007, our audited consolidated annual statements of operations and cash flows for the years ended December 31, 2008 and 2007, our unaudited consolidated interim balance sheet as of September 30, 2009 and our unaudited interim consolidated statements of operations and cash flows for the three and nine months ended September 30, 2009 and 2008, respectively, included elsewhere in this prospectus. We have prepared our unaudited consolidated financial statements on the same basis as our audited consolidated financial statements. In the opinion of management, our unaudited consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of our results of operations for such periods. Operating results for the three and nine months ended September 30, 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2009 or any other future period. This information is only a summary and should be read together with our consolidated financial statements and the related notes and other financial information, as well as "Management's Discussion and Analysis of Financial Condition and Results of Operations", included elsewhere and incorporated by reference in this prospectus.

        Our audited consolidated annual financial statements and unaudited consolidated interim financial statements have been prepared in Canadian dollars in accordance with Canadian GAAP. We have included, beginning on page F-1 of this prospectus, our audited consolidated annual financial statements including the Supplementary Notes included at pages F-33 and F-60 of this prospectus providing a reconciliation of the significant differences between Canadian GAAP and US GAAP. Our historical results from any prior period are not necessarily indicative of results to be expected for any future period.

 
  Fiscal Year Ended
December 31,
  Nine Months Ended
September 30,
   
 
 
  2008   2007   2009   2008    
 
 
   
  (restated)
   
   
   
 

Statement of Operating Data

                             

Total revenue

  $ 9,891,318   $ 9,157,050   $ 28,619,448   $ 5,234,730      

Cost of Sales

    7,650,490     6,499,954     21,463,160     3,842,766      

Cost of Sales %

    76%     71%     75%     73%      

Gross profit

    2,330,828     2,657,096     7,156,288     1,391,964      

Gross profit%

    24%     29%     25%     27%      

Net (loss) income

    (10,606,542 )   369,430     269,927     (3,491,503 )    

Net (loss) income per share (basic)(1)

    (0.59 )   0.03     0.01     (0.19 )    

Net (loss) income per share (diluted)(1)

    (0.59 )   0.01     0.01     (0.19 )    

Total comprehensive (loss) income

    11,397,392     (1,067,311 )   (12,209,845 )   4,396,247      

Weighted average number of shares outstanding(1)

    17,935,106     12,747,245     19,808,653     17,604,659      

Balance Sheet Data

                             

Total assets

    174,361,123     94,128,781     182,054,576     174,361,123      

Total liabilities

    57,531,649     17,230,418     75,373,870     57,364,438      

Total shareholders' equity

    116,829,474     76,898,363     106,633,330     116,829,474      

US GAAP

                             

Net (loss) income

    (8,596,904 )   658,180     848,270   $ (1,804,708 )    

Net (loss) income per share (basic)(1)

    (0.48 )   0.05     0.04     (0.10 )    

Net (loss) income per share (diluted)(1)

    (0.48 )   0.02     0.03     (0.10 )    

Total comprehensive (loss) income

    13,407,030     (778,561 )   (11,631,502 )   6,083,042      

Weighted average number of shares outstanding(1)

    17,935,106     12,747,245     19,808,653     17,604,659      

Note:

(1)
Adjusted for the four-to-one (4:1) share consolidation. See "Explanatory Note Related to Share Consolidation".

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

        The following is not a restatement of our Annual MD&A or our Interim MD&A and is qualified in its entirety by those documents. The Annual MD&A and the Interim MD&A are incorporated by reference in this prospectus and you should read the following in conjunction with the Annual MD&A and the Interim MD&A and with the audited consolidated financial statements and the unaudited interim financial statements appearing elsewhere in this prospectus.

        Our consolidated financial statements have been prepared in accordance with Canadian GAAP. We have included, beginning on page F-1 of this prospectus, our consolidated financial statements including the Supplementary Notes included at pages F-33 and F-60 of this prospectus providing a reconciliation of the significant differences between Canadian GAAP and U.S. GAAP.

        The forward-looking statements in this discussion include numerous risks and uncertainties, as described in the "Risk Factors" and "Special Notice Regarding Forward-Looking Statements" sections of this prospectus and are expressly qualified by these cautionary statements.

Overview

        We are a leading producer of high quality stevia extract. Stevia extracts, such as Rebaudioside A (or Reb A), are used as all natural, zero-calorie sweeteners in food and beverages. Our revenue is derived primarily through the sale of high-grade stevia extract to the food and beverage industry. We conduct our stevia development, refining, processing and manufacturing operations through our five wholly-owned subsidiaries in China. Our operations in China include three processing factories (a fourth factory is under construction), stevia growing areas across eight provinces, four research and development centers engaged in the development of high-yielding stevia seedlings and over 400 greenhouses. Our processing facilities have a combined annual throughput of 41,000 metric tons of stevia leaf.

        Our revenues were $28.6 million for the nine months ended September 30, 2009 and $9.9 million and $9.2 million, respectively, for 2008 and 2007. Our net income was $0.3 million for the nine months ended September 30, 2009. We had a net loss of $10.6 million for 2008 and net income of $0.4 million for 2007.

Factors Affecting Our Results of Operations

        Our operating results are primarily affected by the following factors:

    Relationship With Primary Customer.  We derive a majority of our revenue from Cargill, our largest customer. We currently have a Strategic Alliance Agreement with Cargill pursuant to which we will provide at least 80% of Cargill's global stevia extract requirements for the five year period beginning October 1, 2008. For the year ended December 31, 2008 and for the nine months ended September 30, 2009, Cargill accounted for 77% and 95%, respectively, of our revenue. Our ability to maintain and enhance our relationship with this important customer, while developing and enhancing our relationships with other customers, is a significant factor affecting our results of operations.

    Consumer Demand.  We believe that consumer demand for food and beverage products and tabletop sweeteners produced with stevia extracts will continue to expand. We believe rebiana, which is extracted from stevia leaf, is positioned to become a leading high-intensity sweetener because it has zero calories, is 100% natural, is 200-300 times sweeter than sugar and does not have the perception of potential health risks that may be associated with artificial sweeteners. Additionally, we believe that consumer acceptance of stevia will increase in connection with regulatory approval in the U.S. and elsewhere. Our results of operations will be affected by consumer acceptance of, and demand for, rebiana-sweetened products and our ability to increase our production capacity in order to meet any increased demand.

    Price of Stevia Extract.  We believe that we will be able to maintain a low cost of production of high-grade stevia extract through process innovation and vertical integration (from seedling development to high-grade stevia extract production). By maintaining a low cost of production, we believe we will be able

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      to reduce the price we charge for high-grade stevia extract, thereby strengthening the competitive position of high-grade stevia extract relative to other high-intensity sweeteners and sugar.

    Raw Material Supply and Prices; Cost of Sales.  The price that we must pay for stevia leaf and the quality of such stevia leaf affects our results of operations. The cost and quality of stevia leaf available is driven primarily by the rebaudioside A content contained in stevia leaf and the quality of the stevia harvested during a particular growing period. The key factors driving our cost of sales include the cost of stevia leaf (which accounted for 71% of cost of sales for the year ended December 31, 2008), stevia leaf quality, salaries and wages of our manufacturing labor, manufacturing overhead such as supplies, power and water used in the production of our high-grade stevia extract, and depreciation of our high-grade stevia extract processing plants.

        Unfavorable changes in any of these general conditions could negatively affect our ability to grow, source, produce, process and sell stevia and otherwise materially and adversely affect our results of operations.

Recent Developments

        On October 30, 2009, we announced our financial results for the third quarter of 2009. Revenue for the third quarter was $14.8 million, an increase of 349% over revenue of $3.3 million for the comparable period in 2008. Cost of sales was $10.7 million, an increase of 334% over cost of sales of $2.4 million over cost of sales for the comparable period in 2008. Net income for the third quarter was $1.4 million, compared to a net loss of $1.0 million for the comparable period in 2008. Basic income per share was $0.02 for the third quarter of 2009, compared with a loss per share of $0.01 for the comparable period in 2008. The increases to revenue, cost of sales, net income and earnings per share were attributable to higher demand and purchase orders, new production capacity coming on line, and greater shipments of higher value stevia extract against existing purchase orders.

Changes in Accounting Policies

        Effective January 1, 2009, we adopted Canadian Institute of Chartered Accountants ("CICA") Handbook Section 3064, "Goodwill and Intangible Assets." This new standard replaces Section 3062, "Goodwill and Other Intangible Assets" and Section 3450, "Research and Development Costs," and focuses on the criteria for asset recognition in the financial statements, including those internally developed. The adoption of this standard did not have an impact on our consolidated financial position or results of operations.

        Effective January 1, 2009, we adopted the Emerging Issues Committee ("EIC") Abstract EIC-173, "Credit Risk and the Fair Value of Financial Assets and Financial Liabilities," issued by CICA. This standard requires us to consider our own credit risk as well as the credit risk of counterparty when determining the fair value of financial assets and liabilities, including derivative instruments. The adoption of this standard did not have an impact on the valuation of our financial assets or liabilities.

Critical Accounting Policies and Estimates

        The preparation of financial statements in conformity with generally accepted accounting principles requires the appropriate application of certain accounting policies, many of which require us to make estimates and assumptions about future events and their impact on amounts reported in our financial statements, including our statement of operations, balance sheet, cash flow and related notes. Since future events and their impact cannot be determined with certainty, the actual results will inevitably differ from our estimates. Such differences could be material to our financial statements.

        We believe that our application of accounting policies, and the estimates inherently required therein, are reasonable. Our accounting policies and estimates are periodically re-evaluated, and adjustments are made when facts and circumstances dictate a change. Historically, we have found our application of accounting policies to be appropriate, and actual results have not differed materially from those determined using necessary estimates.

        Our accounting policies are more fully described in the notes to our financial statements. In reading our financial statements, you should be aware of the factors and trends that our management believes are important in understanding our financial performance.

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Inventory policy

        We measure our inventory at the lower of cost or net realizable value ("NRV") with respect to raw materials, finished goods and work-in-progress. NRV for finished goods and work-in-progress is generally considered to be the selling price in the ordinary course of business less the estimated costs of completion and estimated costs to make the sale.

        Provisions for excess, obsolete or slow moving inventory are recorded after periodic evaluation of historical sales, current economic trends, forecasted sales, estimated product lifecycles and estimated inventory levels. The accounting estimate related to valuation of inventories is considered a critical accounting estimate because it is susceptible to changes from period-to-period due to purchasing practices, accuracy of sales and production forecasts, introduction of new products, product lifecycles, product support, exchange rates, sales prices new competitive entrants and foreign regulations governing food safety. If actual results differ from our estimates, a reduction to the carrying value of inventory may be required, which will result in an increase in inventory write-offs and a decrease to gross margins.

Stock-based compensation

        Our accounting estimate related to stock-based compensation is considered a critical accounting estimate because estimates are made in calculating compensation expense including expected option lives, forfeiture rates and expected volatility. The fair market value of our common stock on the date of each option grant was determined based on the closing price of common stock on the grant date. Expected option lives are estimated using vesting terms and contractual lives. Expected forfeiture rates and volatility are calculated using historical information. Actual option lives and forfeiture rates may be different from estimates and may result in potential future adjustments which would impact the amount of stock-based compensation expense recorded in a particular period.

Income taxes

        In accordance with CICA recommendations, we recognize future income tax assets when it is more likely than not that the future income tax assets will be realized. This assumption is based on management's best estimate of future circumstances and events. If these estimates and assumptions are changed in the future, the value of the future income tax assets could be reduced or increased, resulting in an income tax expense or recovery. We re-evaluate our future income tax assets on a regular basis.

Recognition and impairment of goodwill and intangibles

        Goodwill is tested for impairment at least annually or when indicated by events or changes in circumstances, by comparing the fair value of a particular reporting unit to its carrying value. When the carrying value of a reporting unit exceeds its fair value, the fair value of the reporting unit's goodwill is compared with its carrying value to measure any impairment loss. We performed our last goodwill impairment test on December 31, 2008.

Property, plant and equipment and long-lived assets

        Costs and interest relating to property, plant and equipment in the course of construction are capitalized until facilities are substantially complete. When the facilities are in production, these costs and interest will be amortized over the useful life of the asset.

        Intangible assets include customer relationships, patents and technology. Intangible assets are amortized over the estimated useful life of each asset unless the life is determined to be indefinite.

        We evaluate the recoverability of long-lived assets and asset groups whenever events or changes in circumstances indicate that the carrying value may not be recoverable. When such a situation occurs, the estimated undiscounted future cash flows anticipated to be generated during the remaining life of the asset or asset group are compared to its net carrying value. When the net carrying amount of the asset or asset group is less than the undiscounted future cash flows, an impairment loss is recognized to the extent by which the carrying amount of long lived assets or asset group exceeds its fair value.

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        Management's estimates of product prices, foreign exchange, production levels and operating costs are subject to risk and uncertainties that may affect the determination of the recoverability of the long-lived asset groups. It is possible that material changes could occur that may adversely affect management's estimates.

Results of Operations

 
  Year Ended December 31,   Nine Months Ended September 30,  
 
  2008   2007   2009   2008  
 
   
  (restated)
   
   
 
 
  (In thousands Canadian dollars,
except per share amounts)

 

Revenue

  $ 9,891   $ 9,157   $ 28,619   $ 5,235  

Cost of Sales

  $ 7,560   $ 6,500   $ 21,463   $ 3,843  

Gross Profit

  $ 2,331   $ 2,657   $ 7,156   $ 1,392  

General and Administration Expenses

  $ 7,217   $ 1,607   $ 8,171   $ 3,828  

Income (loss) from Operations

  $ (4,886 ) $ 1,050   $ (1,015 ) $ (2,436 )

Other Income (Expenses)

  $ (7,216 ) $ (1,290 ) $ 1,314   $ (1,071 )

Net Income (loss) before Income Taxes and Non-Controlling Interests

  $ (12,103 ) $ (240 ) $ 299   $ (3,507 )

Net Income (loss)

  $ (10,607 ) $ 369   $ 270   $ (3,492 )

Net Income (loss) per share (Basic)

  $ (0.15 ) $ 0.01   $ 0.00   $ (0.05 )

Net Income (loss) per share (Diluted)

  $ (0.15 ) $ 0.00   $ 0.00   $ (0.05 )

Total Comprehensive (Loss) income

  $ 11,397   $ (1,067 ) $ (12,210 ) $ 4,396  

EBITDA(1)

  $ (1,032 ) $ 1,548   $ 5,951   $ (954 )

(1)
EBITDA is not a measure of operating performance or liquidity under Canadian GAAP or U.S. GAAP. For a discussion of EBITDA, and a reconciliation of EBITDA to net income (loss) before taxes and after minority interest under Canadian GAAP, please see "Non-GAAP Financial Information" below.

Comparison of Nine Months Ended September 30, 2009 to Nine Months Ended September 30, 2008

        The following results from operations have been derived from and should be read in conjunction with our unaudited interim consolidated financial statements and Interim MD&A.

Revenues

        Our revenue for the nine months ended September 30, 2009 was $28.6 million, an increase of 447% over $5.2 million in revenue for the comparable period in 2008. Revenues for the nine months ended September 30, 2009 were derived entirely from stevia sales. The increase in stevia revenues period-over-period was driven by new production capacity coming on line at our Mingguang and Dongtai plants during the first quarter, which materially improved our production throughput of final product, higher demand for our high-grade stevia extract products, and higher shipments of higher value stevia extract than in the previous period.

Cost of Sales

        Cost of sales for the nine months ended September 30, 2009 were $21.5 million, an increase of 459% over $3.8 million in cost of sales for the comparable period in 2008. The increase in cost of sales for the nine months ended September 30, 2009 can be directly attributed to the higher sales volume of stevia relative to the comparable period in 2008. The increase in cost of sales period-over-period was driven by:

    new production capacity coming on line at our plants at Mingguang and Dongtai during the first quarter, which materially improved our production throughput of final product (leaf processing capacity increased from 5,000 metric tons per year to 41,000 metric tons with the addition on Mingguang and Dongtai facilities). During the first nine months of 2009 we were not operating at full capacity at these facilities and the higher fixed costs increased our cost of sales and reduced our gross profit margin;

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    higher costs experienced at the start-up of these new facilities. We have seen production costs at our new facilities consistently decline from their start-up time during February and March as production management improves its efficiencies;

    larger shipments of higher value stevia extract than in the comparable period against existing purchase orders also increased our cost of sales; and

    the continued expensing of interest capitalized into inventory associated with a customer's order that continued delivery during the third quarter. Expensing of this interest accounted for approximately 4% of our cost of sales for the third quarter.

Gross Profit

        Gross profit for the nine months ended September 30, 2009 was $7.2 million, an increase of 414% over $1.4 million in gross profit for the comparable period in 2008. The absolute increase in our gross profit can be attributed to increased stevia extract sales. Our gross profit margin for the nine months ended September 30, 2009 was 25% compared to 27% gross profit margin achieved on sales for the comparable period in 2008. The gross profit margin decline was driven by the same factors as described under cost of sales for the nine month period.

General and Administrative Expenses

        General and administration ("G&A") expenses include sales, general and administration costs ("SG&A"), stock based compensation and depreciation and amortization expenses on G&A fixed assets. A breakdown of G&A expenses into these three components is presented below:

 
  Nine months ended
September 30, 2009
  Nine months ended
September 30, 2008
 
 
  (In thousands
of Canadian dollars)

 

SG&A

  $ 5,429   $ 3,181  

Stock based compensation

  $ 1,725   $ 92  

G&A amortization and depreciation

  $ 1,017   $ 555  
 

G&A expenses

  $ 8,171   $ 3,828  

    Sales, General and Administrative Expenses ("SG&A")

        SG&A expenses for the nine months ended September 30, 2009 were $5.4 million, an increase of 71% over $3.1 million in SG&A expenses for the comparable period in 2008. The key expense categories that increased were salaries, consulting fees, office and travel, which together accounted for 86% of the period-over-period increase. Our employee count at the end of September 30, 2009 was 1,186, a 46% increase of 808 people over the comparable period in 2008. Approximately 75% of employees work in our production function.

    Stock-Based Compensation

        Stock-based compensation for the nine months ended September 30, 2009, was $1.7 million, as compared to $92,000 in stock-based compensation for the comparable period in 2008. The majority of the stock compensation expenses for the nine months ended September 30, 2009 were associated with equity grants we made in 2008. An additional equity grant was made by the board of directors during the second quarter of 2009. This amounted to 1,500,000 compensation securities including both options and restricted shares. 81% of these grants have three-year vesting and performance criteria requirements set by the Compensation Committee of the board of directors in order to be fully earned by the recipients.

    G&A Depreciation and Amortization

        G&A related depreciation and amortization expenses for the nine months ended September 30, 2009 were $1.0 million, an increase of 83% over $0.6 million of G&A related depreciation and amortization for the

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comparable period in 2008. The main driver for the increase in amortization is related to the increase in intangible patent amortization related to our acquisition of AHTD.

Other Income (Expenses)

        Other income for the nine months ended September 30, 2009 was $1.3 million, an increase of 223% over $1.1 million of other expenses for the comparable period in 2008. There were two items that contributed the majority of the other income (expenses) for the nine months ended September 30, 2009: (1) $3.2 million of foreign exchange gains on U.S. dollar denominated liabilities that we were holding during the period; and (2) $1.9 million in interest expenses. The interest expenses were mainly related to: (1) US$20 million in advances from a customer associated with our Strategic Alliance Agreement with Cargill; and (2) bank loans in China. We anticipate that we will repay the US$20 million in advances from a customer and associated interest due as we ship product to Cargill during 2009.

Net Income (Loss)

        Net income for the nine months ended September 30, 2009 was $0.3 million as compared to a net loss of $3.5 million for the comparable period in 2008. This $3.7 million increase in net income was driven by $5.8 million in increased revenues and gross profit margin associated with increased production at our new facilities in Mingguang and Dongtai and $3.2 million in foreign exchange gains driven by an appreciation of the Canadian dollar relative to the U.S. dollar in the third quarter, which were offset by an increase in G&A expenses of $4.3 million and an increase of $0.9 million in net interest expense.

Comparison of Year Ended December 31, 2008 to Year Ended December 31, 2007

        The following results from operations have been derived from and should be read in conjunction with our audited consolidated financial statements and Annual MD&A. Certain 2007 comparative figures have been restated and/or reclassified to conform to the presentation of the audited consolidated financial statements.

Revenues

        Our revenue for the year ended December 31, 2008 was $9.9 million, an increase of 8% over $9.2 million in revenue for 2007. In 2008 our revenues were derived entirely from stevia sales and stevia revenues increased 21% from the previous year. The increase in stevia revenues year-over-year was driven by higher demand for our high-grade stevia extract products, and higher shipments of higher value stevia extract than in the comparable period.

        Our increase in revenue in 2008 did not result in an increase in accounts receivable, as accounts receivable decreased from $3.9 million as at December 31, 2007 to $2.7 million as at December 31, 2008.

        Inventory increased from $8.9 million as at December 31, 2007 to $33.0 million as at December 31, 2008. The key drivers for the increased inventory levels were:

    the purchase of new stevia leaf during the third and fourth quarters to meet 2009 orders;

    the increase in work in progress inventories to meet customer 2009 order commitments; and

    by-product inventories available for sale or further processing into final products.

        We expect to have our highest level of inventories at the end of our fiscal year due to agriculture cycles that result in a harvest of stevia leaf in the third and fourth quarters. Stevia leaf can be stored under proper conditions for approximately two years before it must be utilized. Refined products can be stored under proper conditions for approximately four to five years before they must be utilized.

        Beginning in 2005, we had been engaged in the distribution of stevia and other nutritional health products produced or sourced by or on our behalf in China through YHT. We extended loans to YHT in 2005 and 2006 to support the growth of their marketing efforts. The loans were not secured and were valued at $2,290,002 at December 31, 2008.

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        During 2008, we reduced our involvement with YHT and on September 8, 2008 entered into a Heads of Agreement with YHT. In accordance with the Heads of Agreement, which is non-binding, we will convert all amounts owing from YHT into a passive equity investment. As part of this Heads of Agreement, we extended the due date of the loans to June 30, 2009 and have further extended the due date to December 31, 2009. These changes have allowed us to focus exclusively on the development of our stevia business.

Cost of Sales

        Cost of sales for the year ended December 31, 2008 were $7.6 million, an increase of 16% over $6.5 million in cost of sales for 2007. The increase in 2008 cost of sales was attributable to higher sales volume of stevia in 2008 compared to 2007. Stevia sales increased 21% in 2008 against an increase in cost of sales of 16% for 2008.

Gross Profit

        Gross profit for the year ended December 31, 2008 was $2.3 million, a decrease of 12% compared to $2.7 million in gross profit for 2007. Gross profit reflects both margins from our stevia operations as well margin from procurement revenues related to the YHT chain stores business in 2007. The reduction in gross profit can be attributed to the lack of YHT related revenue in 2008 as compared to 2007, during which revenue from the procurement business segment contributed a gross profit of $0.8 million. Gross profit from the stevia business segment was $2.3 million in 2008, an increase of 27% over gross profit for the stevia business of $1.8 million in 2007. The increase in stevia gross profit was driven by increased stevia sales in 2008 as compared to 2007. The gross profit margin on stevia sales for 2008 was 24% compared to 22.4% gross profit margin achieved on stevia sales in 2007.

        Our production management saw a generally poorer quality stevia leaf crop collected in 2007 than seen in previous years which was processed mainly during the 2008 fiscal year. The poorer quality leaf has had a significant impact on gross profit during 2008.

General and Administrative Expenses

        General and administration ("G&A") expenses include sales, general and administration costs ("SG&A"), stock-based compensation and depreciation and amortization expenses on G&A fixed assets. A breakdown of G&A expenses into these three components is presented below:

 
  Year ended
December 31, 2008
  Year ended
December 31, 2007
 
 
  (In thousands
of Canadian dollars)

 

SG&A

  $ 5,121   $ 1,592  

Stock-based compensation

  $ 1,321   $  

G&A amortization and depreciation

  $ 775   $ 15  
 

G&A expenses

  $ 7,217   $ 1,607  
 

% of Revenue

    73%     18%  

Sales, General and Administrative Expenses ("SG&A")

        SG&A expenses for the year ended December 31, 2008 were $5.1 million, an increase of 222% over $1.6 million of SG&A for 2007. The key expense categories that increased were professional fees, salaries, consulting fees, office, travel and rental, which together accounted for 89% of the year-over-year increase. Our employee count at year end 2008 was 808, a 276% increase of 591 people over 2007. The majority of the headcount are based in China and work in production. We had an extensive recruiting and training program to hire these employees in advance of the new facilities at Mingguang and Dongtai coming in operation. As a result, the salary costs associated with the production employees are reflected in the SG&A expenses rather than production costs during 2008. As these new facilities begin production in 2009, a large proportion of these costs will be reflected in cost of sales or inventory. Approximately 38%, or $0.8 million, of the salaries, office and rental expenses during 2008 were either one-time in nature, pre-production expense related or salary related

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costs of production staff at the new subsidiaries (the total of these three SG&A categories was $2.2 million). There were additional start-up related expenses in China and Canada including office expenses, rent and business tax and licenses associated with the initial set-up of the new facilities in China as well as Sweet Naturals. The professional fees, legal and audit costs that we incurred increased by $0.5 million over 2007. The increase related to legal fees associated with our TSX listing as well as in connection with the material commercial agreements reached during 2008. Higher audit fees were driven primarily from the increased size of our operations as compared to 2007.

Stock-based Compensation

        Stock-based compensation was $1.3 million for 2008 compared with zero in 2007. Our amended stock compensation plan was approved by shareholders at our annual meeting in June 2008. Under the amended plan, the number of common shares available for issue is 10% of the issued and outstanding common shares. We did not grant stock options during the 2005-2007 fiscal years. Grants made during 2008 consisted of 1,474,480 compensation securities which were comprised of both options and restricted shares, with 84% of these grants having three-year vesting and performance criteria requirements to be fully earned by the recipients.

G&A Depreciation and Amortization

        G&A related depreciation and amortization expenses for the year ended December 31, 2008 was $0.8 million, an increase of 5015% over $0.01 million of G&A related depreciation and amortization expenses for 2007. The main driver for the increase in amortization was related to the intangible patent amortization at the beginning of 2008 from our acquisition of AHTD.

Other Income (Expenses)

        Other expense for 2008 was $7.2 million, an increase of 459% over $1.3 million of other expenses for 2007. There were two items that contributed 82% to other expenses for 2008:

    foreign exchanges losses on US$ denominated liabilities that we were holding at year-end ($2.8 million); and

    the $3.1 million provision that we took on amounts due from YHT.

        Both of these items are non-cash expenses. With respect to the U.S. dollar denominated liability, we had a customer order denominated in US$ that is matched against this liability so the real foreign exchange risk was managed. Interest expenses of $2.0 million for the 2008 twelve month period were generated by:

    an outstanding convertible debenture;

    interest on US$7 million advances from customers; and

    the US$20 million advances from a customer.

        The US$7 million customer prepayment was paid off as of November 30, 2008. As we ship product to this customer in 2009, the US$20 million customer prepayment balance and interest expense will also decrease.

Net Income (Loss)

        The net loss for 2008 was $10.6 million as compared to net income of $0.4 million for 2007. The basic loss per share was $0.15 for 2008, compared with earnings per share of $0.01 for 2007. Earnings were impacted by larger expenses driven by the following categories:

    higher corporate operating expenses associated with our move to the TSX in December 2007;

    start-up expenses in China associated with our Mingguang and Dongtai production facilities;

    expenses related to the development of Sweet Naturals in advance of material revenues commencing;

    a delay in the commencement of operations of our new leaf processing facilities until 2009;

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    stock-based compensation;

    unrealized foreign exchange losses driven by decline in the Canadian dollar relative to the U.S. dollar in the fourth quarter; and

    a 100% provision made on the amounts due to us from YHT due to the uncertainty of collection of these amounts.

Total Comprehensive Income

        We recorded total comprehensive loss of $12.2 million for the nine months ended September 30, 2009, consisting of $0.3 million of net income and $12.5 million of other comprehensive loss. Our other comprehensive loss was solely comprised of the currency translation adjustments recorded on our revaluation of our investments in self-sustaining Chinese subsidiaries due to the strengthening of the Canadian dollar against the RMB. We recorded total comprehensive income of $11.4 million for the twelve months ended December 31, 2008, consisting of $10.6 million of net loss and $22.0 million of other comprehensive income. Our other comprehensive income was solely comprised of the currency translation adjustments recorded on our revaluation of our investments in self-sustaining Chinese subsidiaries due to the strengthening of the RMB against the Canadian dollar. Total comprehensive gains and losses are held in accumulated other comprehensive income until they are realized, at which time they are included in net income.

Non-GAAP Financial Information

        We define EBITDA as earnings before interest, taxes, depreciation and amortization. EBITDA as defined above is not a measure of operating performance or liquidity under Canadian GAAP or U.S. GAAP. It is not intended to be regarded as an alternative to other financial operating performance measures or to the statement of cash flows as a measure of liquidity. It is not intended to represent funds available for debt service, dividends, reinvestment or other discretionary uses, and it should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. EBITDA is included in this Prospectus because we believe it is a meaningful measure of our performance. Our definition of EBITDA may not be identical to similarly titled measures reported by other companies. Our EBITDA is calculated from and reconciled to our net income, the most directly comparable Canadian GAAP measure, as follows:

 
  Year ended
December 31,
  Nine months ended
September 30,
 
 
  2008   2007   2009   2008  
 
   
  (restated)
   
   
 
 
  (In thousands of Canadian dollars)
 

Net income (loss) before taxes and after minority interest

  $ (12,035 ) $ (240 ) $ 421   $ (3,491 )

Add:

                         

Depreciation and amortization

  $ 2,540   $ 498   $ 4,213   $ 1,398  

Net interest expense (Income)

  $ 1,189   $ 981   $ 2,811   $ 1,050  

Foreign currency losses (gains)

  $ 2,842   $ 309   $ (3,219 )    

Provision on loans and receivables

  $ 3,111   $              

Non-cash share compensation expense

  $ 1,321   $   $ 1,725   $ 92  

EBITDA

  $ (1,032 ) $ 1,548   $ 5,951   $ (954 )
                   

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Quarterly Information

        The following selected financial information is derived from our unaudited quarterly financial statements for each of the last eight quarters, all of which cover periods of three months.

 
  Three Months Ended  
 
  September 30,
2009
  June 30,
2009
  March 31,
2009
  December 31,
2008
  September 30,
2008
  June 30,
2008
  March 31,
2008
  December 31,
2007
 
 
  (In thousands of Canadian dollars)
 

Revenue

  $ 14,814   $ 10,805   $ 3,001   $ 4,657   $ 3,302   $ 1,092   $ 841   $ 3,727  

Net income (loss)

  $ 1,399   $ 371   $ (1,500 ) $ (7,115 ) $ (952 ) $ (1,606 ) $ (934 ) $ 456  

Basic income (loss) per share

  $ 0.02   $ 0.00   $ (0.02 ) $ (0.10 ) $ (0.01 ) $ (0.02 ) $ (0.01 ) $ 0.01  

Diluted income (loss) per share

  $ 0.02   $ 0.00   $ (0.02 ) $ (0.10 ) $ (0.01 ) $ (0.02 ) $ (0.01 ) $ 0.00  

Liquidity and Capital Resources

 
  December 31, 2008   December 31, 2007   September 30, 2009   September 30, 2008  
 
   
  (restated)
   
   
 
 
  (In thousands of Canadian dollars)
 

Cash and cash equivalents

  $ 7,728   $ 28,253   $ 8,895   $ 30,190  

Working capital

  $ (2,562 ) $ 29,842   $ (8,396 ) $ 28,497  

Total assets

  $ 174,361   $ 94,129   $ 182,055   $ 138,737  

Total liabilities

  $ 57,364   $ 17,230   $ 75,374   $ 33,277  

Advances from customers

  $ 24,492   $ 6,549   $ 3,296   $ 24,214  

Loans payable

  $ 10,232   $ 6,000   $ 51,814   $  

Total equity

  $ 116,829   $ 76,898   $ 106,633   $ 105,231  
                   

        Our working capital and working capital requirements fluctuate from quarter to quarter depending on, among other factors, the annual stevia harvest in China (which occurs during the third and fourth quarters each year), production output, and the amount of sales during the period. The value of raw material in inventory is the highest in the fourth quarter due to the fact that we purchase leaf during the third and fourth quarters for the entire production year which runs October through September each year. Our principal working capital components include accounts receivable, taxes receivable, inventory, prepaid expenses, and other current assets, and accounts payable and interest payable.

Going Concern

        As at September 30, 2009, we had a negative working capital of $8.4 million compared to negative working capital of $2.6 million as at December 31, 2008. However, our current working capital deficiency is driven by short term loans obtained in China at favorable interest rates for the purposes of financing our long term capital expenditures for our manufacturing facilities in China. At September 30, 2009 we had $35.6 million in outstanding short term loans. These short term loans have been characterized as current liabilities. It is common practice in China to borrow on a short term basis, even in relation to financing long term assets. We intend to repay a portion of these short term loans from the proceeds of the offering, and will continue to utilize some of our available lines of credit in China, as well as seek to renew such loans on maturity. See "Use of Proceeds". Our Agricultural Bank of China debt facility allows us to borrow for periods up to a three year term. We have taken out a two-year term loan under this facility during the third quarter of 2009 for $9.4 million and it has reduced the size of the working capital deficiency from the end of the second quarter which was ($16.1) million. We expect that after repaying some of these short term loans from the offering proceeds we will no longer have a working capital deficiency. However, because of our working capital deficiency, as well as our negative cash flow from operations, our reliance on external sources of funding, and our cumulative deficit, we have noted in our financial statements for the period ended September 30, 2009, and for prior periods, that there is significant uncertainty about our ability to continue as a going concern.

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        Our short term loans as at September 30, 2009 have contractual maturities of less than 12 months and it is our intention to meet these obligations through the renewal of the loans and the repayment of some of the outstanding loans through the proceeds of the offering. See "Use of Proceeds". Additionally we intend to reduce these obligations through the collection of accounts receivable, receipts from future sales, current cash and cash equivalents, short-term investments, use of additional facilities on available lines of credit in China and the possible issuance of new equity or debt instruments.

        As at September 30, 2009 we had at our disposal bank credit facilities of approximately $39 million, of which $18.8 million had been drawn. In addition to the $18.8 million credit facility, we also have approximately $26.2 million in other loans outstanding. We also had $8.9 million of cash and cash equivalents. During the fourth quarter of fiscal 2009, $13.6 million in short term loans in China will mature and we anticipate that we will be able to renew these loan facilities for another year when they come due. See the discussion below under "— Financial and Other Instruments" for more information on the maturities of these loans. We successfully renewed one loan with a principal amount of $4.7 million (RMB 30 million) during the three month period ended September 30, 2009. This loan came due on September 30, 2009 and has been renewed until March 31, 2010.

        We are dependent on obtaining regular financings in order to continue our expansion programs. Despite previous success in acquiring these financings, there is no guarantee of obtaining future financings on terms acceptable to us. Our cash is invested in business accounts with different financial institutions, is available on demand for our programs, and is not invested in any asset backed commercial paper.

Cash and Cash Equivalents

        Cash and cash equivalents increased by $1.5 million during the first nine months of 2009. Working capital (unadjusted for foreign exchange impacts) decreased by $5.8 million from the year-end 2008 position. The working capital decrease can be attributed to a net increase in short term liabilities during the first nine months of $8.6 million combined with a net increase in current assets of $2.8 million during the same period. The increase in current liabilities during the first nine months of 2009 was driven by a number of factors. Short term loans increased during the nine month period by $25 million and loans from related parties increased by $6.7 million, which were offset by a decline in advances due to customers of $21.2 million, a decrease in interest payable of $1.0 million and a decrease in deferred revenue of $2.0 million. The factors that increased the current assets by $2.8 million include a net increase in cash of $1.5 million, an increase in prepaid expenses of $4.7 million and taxes receivable of $2.9 million, which were offset by a reduction in inventory of $4.3 million, and a reduction in accounts receivable of $1.6 million.

        Cash and cash equivalents as at December 31, 2008 decreased by $20.5 million from cash and cash equivalents of $28.2 million at December 31, 2007 to cash and cash equivalents of $7.7 million at December 31, 2008. Our working capital deficit for the year ended December 31, 2008 was $2.6 million, a decrease of $33.3 million compared to working capital of $31 million for the year ended December 31, 2007. The decrease in our working capital can be attributed to a net decrease in cash during the year of $21 million. This cash was used to fund property and equipment expenditures and a net increase in accounts payable related to plant, property and equipment expenditures of $12.7 million. Total liabilities include the advances from customer in the amount of $24.5 million that was used to fund the purchase of stevia leaf in 2008 required to fill the Cargill's 2008 and 2009 order. The increase in total equity from December 31, 2007 to December 31, 2008 reflects the exercise of $17.8 million in warrants, the exercise of 208,067 stock options and the conversion of a $6 million convertible debenture during 2008.

Operating Activities

        Cash generated by operating activities before changes in non-cash working capital items was $2.7 million during the nine months ended September 30, 2009, compared to $1.1 million of cash used in the comparable period of 2008. This increase in cash generated was attributable to an increase in cash generated by operating activities as shipments of stevia increased significantly over the comparable period in 2008. The largest uses of non-cash working capital (adjusted for foreign currency impacts) during the nine month period ended September 30, 2009 were an increase in the refundable value added tax accounts in China of $3.3 million, an

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increase in prepaid expenses of $6.0 million, a decrease in interest payable of $1.0 million, and a decrease in deferred revenue $2.0 million. These increases were offset by a decrease in accounts receivable of $1.3 million, a decrease in inventory of $1.9 million and an increase in accounts payable of $3.6 million. We anticipate that the $1.0 million reduction in interest payable will be a one-time item because it reflects the accrual of interest on the US$20 million advance from customer from mid-July 2008 to the third quarter of 2009 when stevia shipments against the related purchase order commenced and began to reduce the balance of the advance from customer. During the third quarter, we repaid $14 million of this advance.

        Cash used by operating activities was $19.8 million for the year ended December 31, 2008, compared to $10.1 million of cash used by operating activities in the year ended December 31, 2007. The largest use of non-cash working capital in the year ended December 31, 2008 was the purchase of raw materials for our 2009 stevia production year and prepayments to suppliers for equipment for our new facilities in Mingguang and Dongtai. The bulk of our stevia leaf purchases occur each year in the third and fourth quarters and the leaf purchases are used during our production year, which runs from October through September of each year.

Investing Activities

        Cash used by investing activities was $21.8 million in the nine months ended September 30, 2009, compared to $32.3 million of cash used by investing activities in the comparable period of 2008. This decrease in cash used by investing activities was attributable to a decrease in capital expenditures for the nine months ended September 30, 2009 of 25% from $32.1 million in the comparable period in 2008 to $24.2 million in the nine months ended September 30, 2009. Approximately $8 million of these capital expenditures were incurred in the first quarter of 2009 and were associated with the completion of the Runhai and Runyang leaf processing facilities. Approximately $16.2 million of our capital expenditures during the nine months ended September 30, 2009 were incurred in the construction of our new rebiana facility.

        Cash used by investing activities was $42.5 million in the year ended December 31, 2008, compared to $6.6 million of cash used by investing activities in the year ended December 31, 2007. The majority of the cash outflow was to finance the construction in progress in Dongtai and Mingguang for the new Greenfield stevia leaf processing plants.

Financing Activities

        Cash generated by financing activities was $27.1 million in the nine months ended September 30, 2009, compared to $35.1 million of cash generated in the comparable period of 2008. The increase in cash generated by financing activities during the nine months ended September 30, 2009 was attributable to a net increase in short-term and long-term bank loans in China of $38.5 million and a net increase in shareholder loans of $7.1 million. These increases were offset by the repayment of advances from customers of $18.9 million.

        Cash generated by financing activities was $38.3 million for the year ended December 31, 2008, compared to $44.4 million of cash generated by financing activities for the year ended December 31, 2007. The increase in cash generated by financing activities during the year was attributable to a net increase in short term bank loans of $8.4 million from two banks in China that we established credit facilities with during 2008.

Capital Expenditures

 
  Nine Months Ended
September 30,
  Year Ended
December 31,
 
 
  2009   2008   2008   2007  
 
  (In thousands of Canadian dollars)
 

Capital expenditures

  $ 24,222   $ 32,164   $ 57,790   $ 6,478  
                   

        Capital expenditures for the nine months ended September 30 2009 were $24.2 million, which was comprised of $22.2 million of cash flow used by investing activities less a decrease of $1.3 million in accounts payable decrease related to the purchase of property plants and equipment, and an increase of $3.3 million in prepaid expenses.

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        Our capital expenditures of $24.2 million for the nine months ended September 30, 2009, reflected a decrease of 25% compared to capital expenditures of $32.2 million for the comparable period in 2008. Approximately one third of these capital expenditures, approximately $8 million, were incurred in the first quarter of 2009 and were driven by the completion of the leaf processing facilities by Runhai and Runyang. The remaining two thirds of capital expenditures, approximately $16.2 million, were incurred during the first nine months of the fiscal year in connection with the set-up and construction of our new Runhao rebiana facility.

        Our capital expenditures were $57.8 million for the year ended December 31, 2008 compared to capital expenditures of $6.5 million in 2007. The increase in capital expenditures during 2008 was attributable to our efforts to increase our production capacity during 2008 to meet contracted requirements with customers and to address the growth of the stevia market.

Advances from Customers and Interest Payable

        In July 2008, we negotiated a new customer prepayment with our strategic alliance partner for the amount of US$20 million for the delivery of high grade stevia extract for the period October 1, 2008 through September 30, 2009. We received the US$20 million in July 2008 and this prepayment bears an interest rate of LIBOR plus 6% during the term of this prepayment financing. Under the original terms of the prepayment, we were to deliver product against this obligation over the period October 1, 2008 through September 30, 2009, however, the delivery period has been extended through November 30, 2009. The prepayment and accrued interest will be repaid by way of the sale of high grade stevia extract to our strategic alliance partner. The prepayment is collateralized by a general security agreement over all of our assets. The prepayment contains a covenant that at any time during which the advance remains outstanding, we cannot incur more than US$80 million of indebtedness for plant expenditure or additional leaf financing beyond the US$20 million associated with this prepayment. The principal balance of the advance as of September 30, 2009 was US$3.1 million, and interest accrued was US$786.

Contractual Obligations

        The following table sets forth our contractual obligations as of September 30, 2009:

 
  2009   2010   2011   2012   2013   Thereafter,   Total  
 
  (In thousands of Canadian dollars)
 

Customer prepayment(1)

  $ 3,296                       $ 3,296  

Operating leases

  $ 98   $ 183   $ 157           $ 248   $ 686  

Capital expenditure commitments

  $ 6,433                         $ 6,433  

Investment agreement commitments(2)(3)

          $ 27,300               $ 27,300  
 

Total

  $ 9,827   $ 183   $ 27,457           $ 248   $ 37,715  
                               

Notes:

(1)
This amount is expected to revolve each year and will renew in June of a fiscal year to finance the next leaf harvest payments to farmers.

(2)
In May 2009 we signed an investment agreement with the Qingdao Export Process zone to build a stevia processing facility. The investment agreement calls for us to invest US$30 million in registered capital within two years. The timetable for this investment can be extended by an additional year if we so request. As at September 30, 2009, we had invested approximately US$4.5 million, leaving approximately $25 million in outstanding commitments under this agreement.

(3)
In April 2008, we signed a 20-year agreement with the government of Juancheng County in the Shandong Province of China. This agreement requires us to make a total investment in the Juancheng region of US$60 million over the course of the 20-year agreement to retain our exclusive rights. However we have verbal confirmation from local officials that the agreement contains only non-binding commitments and, accordingly, the US$60 million investment by us provided for under this agreement has not been included as a contractual obligation. As of September 30, 2009, we had not made any investment in the region.

Off-Balance Sheet Arrangements

        We have no off-balance sheet arrangements.

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Financial and Other Instruments

        As at September 30, 2009, we were not party to any derivative or other similar instruments.

        Credit risk is the risk of loss associated with the counterparty's inability to fulfill its payment obligations. Our primary credit risk is on its cash and cash equivalents, restricted cash and accounts receivable. We have a high concentration of credit risk as the accounts receivable was owed by fewer than ten customers. Credit risk with respect to accounts receivable is concentrated as one customer accounted for 39% of total trade accounts receivable (December 31, 2008 — 71%). However, we believe that we do not require collateral to support the carrying value of these financial instruments. The carrying amount of financial assets represents the maximum credit exposure. We review financial assets, including past due accounts, on an ongoing basis with the objective of identifying potential events or circumstances which could delay or prevent the collection of funds on a timely basis. Based on historic default rates, we believe that there are minimal requirements for an allowance for doubtful accounts against our accounts receivable. To mitigate credit risk, we also request deposits from customers in certain circumstances.

        We purchase the majority of our raw materials, and incur expenses at prices denominated in RMB. Sales to U.S. customers are denominated in U.S. dollars. As a result, we are exposed to the financial risk related to the fluctuations of foreign currency exchange rates. To manage the foreign exchange risk, we obtain loans in RMB and U.S. dollars to offset the foreign exchange rate impacts from its daily operation.

Liquidity Risk

        Liquidity risk is the risk that we will not be able to meet our financial obligations as they fall due. Our short term loans as at September 30, 2009 have contractual maturities of less than 12 months and it is our intention to meet these obligations through the renewal of the loans and the repayment of some of the outstanding loans from the proceeds of the offering. See "Use of Proceeds". Additionally we will reduce these obligations through the collection of accounts receivable, receipts from future sales, current cash and cash equivalents, short-term investments, use of additional facilities on available lines of credit in China and the possible issuance of new equity or debt instruments.

        On June 22, 2009 we arranged secured a credit line in China with the Agricultural Bank of China totalling approximately $39.3 million. The term of this credit facility varies from one to three years for amounts drawn down and is open for use by all our Chinese subsidiaries as needed. Interest rates are to be set on each draw down of the facility based on the prevailing market rates. As at September 30, 2009, we had drawn $18.8 million against the line.

        We are dependent on obtaining regular financings in order to continue our expansion programs. Despite previous success in acquiring these financings, there is no guarantee of obtaining future financings on terms acceptable to us. Our cash is invested in business accounts with different financial institutions, is available on demand for our programs, and is not invested in any asset backed commercial paper.

        The following table provides due date information for our significant financial liabilities as of September 30, 2009:

Financial liabilities
  0 to 12 months   12 to 24 months   After 24 months  

Accounts payable and accruals

  $ 17,839,630   $   $  

Bank loans

    35,639,000     9,420,000      

Interest payable

    81,085          

Advance from a customer

    3,296,271          

Due to related party

    6,754,860          

Obligation under leases

    203,067     157,000     405,060  
               

Total

    63,813,913     9,577,000     405,060  
               

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Recent Accounting Pronouncements

        In January 2009, CICA issued the new handbook Section 1582, "Business Combinations," which requires that all assets and liabilities of an acquired business to be recorded at fair value at acquisition. Obligations for contingent considerations and contingencies will also be recorded at fair value at the acquisition date. The standard also states that acquisition-related costs will be expensed as incurred and that restructuring charges will be expensed in periods after the acquisition date. The new standard applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period on or after January 1, 2011. Although we are considering the impact of adopting this pronouncement on the consolidated financial statements, it will be limited to any future acquisitions beginning in fiscal 2011.

        In January 2009, the CICA issued section 1601, "Consolidated Financial Statements," which will replace CICA section 1600 of the same name. This guidance requires uniform accounting policies to be consistent throughout all consolidated entities and the difference between reporting dates of a parent and a subsidiary to be no longer than three months. These are not explicitly required under the current standard. Section 1601 is effective for us on January 1, 2011 with early adoption permitted. This standard will have no impact on us.

        In January 2009, the CICA issued section 1602, "Non-controlling Interests," which will replace CICA section 1600, "Consolidated Financial Statements." Under this new guidance, when there is a change in control the previously held interest is revalued at fair value. Currently a gain of control is accounted for using the purchase method and a loss of control is accounted for as a sale resulting in a gain or loss in earnings. In addition, non-controlling interests ("NCI") can be in a deficit position because it is recorded at fair value. Currently, NCI is recorded at the carrying amount and can only be in a deficit position if the NCI has an obligation to fund the losses. Section 1602 is effective for us on January 1, 2011 with early adoption permitted.

Disclosure Controls and Internal Controls over Financial Reporting

Disclosure Controls and Procedures

        Our disclosure controls and procedures were designed to provide reasonable assurance that material information relating to us, including our consolidated subsidiaries, is made known to management in a timely manner so that information required to be disclosed by us under applicable securities regulations is recorded, processed, summarized and reported within the time periods specified in applicable securities regulations.

        In March 2008, we adopted a Corporate Disclosure Policy. A Disclosure Committee has been established to oversee our corporate disclosures. The Corporate Disclosure Policy has been communicated to management and is being implemented accordingly.

        Our management, under the direction and supervision of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures and has concluded, based on this evaluation, that the disclosure controls and procedures were effective.

Internal Control over Financial Reporting

        Our management, under the direction and supervision of the Chief Executive Officer and Chief Financial Officer, are also responsible for establishing and maintaining internal control over financial reporting. These controls are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Canadian GAAP. There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

        Our management, under the direction and supervision of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our internal control over financial reporting as at September 30, 2009, and has concluded, based on this evaluation, that certain internal controls over financial reporting were not effective for the quarter ended September 30, 2009.

        We did not have sufficient accounting documentation, policies, procedures or segregation of duties for certain transaction cycles. Specifically, we did not have a significant number of staff in China that possesses an

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understanding of Canadian public capital market requirements and Canadian GAAP. Furthermore, effective controls over accounting for income taxes and the application of Canadian GAAP to certain complex transactions was not effective.

        We began addressing these issues in 2008, when we hired additional financial staff at our head office to oversee the financial reporting and consulted with tax advisors on various tax issues. We are seeing progress through these two initiatives which we believe will strengthen our controls over financial reporting. We continue to determine other appropriate remediation plans, such as reviewing the organizational structure of the accounting group to strengthen its resources to reflect our growth and we are executing a formal documented evaluation process to evaluate compliance of internal control over financial reporting for purposes of National Instrument 52-109. This evaluation process will be completed in 2009. In July 2009, we hired an experienced accountant in China with knowledge of Chinese GAAP and internal control over financial reporting to help address some of the issue related to having limited personnel in China who have public company reporting experience.

        Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, beginning with our Annual Report on Form 40-F for the fiscal year ended December 31, 2010, we will be required to furnish a report by our management on our internal control over financial reporting and our independent auditors will also be required to furnish an audit report on our internal control over financial reporting. We have not yet evaluated the effectiveness of our internal control over financial reporting pursuant to Section 404 of Sarbanes-Oxley.

        It should be noted that while our officers have certified the filing of our financial documents under National Instrument 52-109, they do not expect that the disclosure controls and procedures or internal controls over financial reporting will prevent all errors and fraud. A control system, no matter how well conceived or implemented, can only provide reasonable, not absolute, assurance that the objectives of the control system are met.

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USE OF PROCEEDS

        The estimated net proceeds to us from the sale of the Offered Shares will be approximately US$    •     after deducting the commission to the Underwriters and estimated expenses of the Offering.

        We currently plan to use the net proceeds from the Offering as follows:

Use of Proceeds
  Percentage of Proceeds
From Offering
 
Registered capital payments for our Runhao subsidiary     50%  
Debt repayment     25%  
Working capital requirements     15%  
General corporate purposes     10%  
       
Total     100%  
       

        In the event that the Over-Allotment Option is exercised in full, we estimate that our net proceeds will be approximately US$    •    and will be used for working capital requirements.

        The registered capital payments for our Runhao subsidiary are in relation to the long term investment agreement with the Qingdao Export Refine Management Committee. Pursuant to this investment agreement, a total area of 215 acres of land will be made available to our subsidiary Runhao at a discount of approximately 80% from market values. The first phase of the development will occupy 60 acres of land where we are in the process of constructing a secondary processing facility with capacity of 2,000 metric tons of high-grade stevia (RA 80) or 1,000 metric tons of rebiana (RA 97). Our obligations under this investment agreement require us to invest an aggregate of US$30 million in registered capital by January of 2011. To date we have invested approximately US$4.5 million of registered capital. See "Description of the Business — Secondary Processing and Refining of Stevia".

        The debt payment referenced above relates to repayments under our short term loans in China. We currently owe US$35,639,000 under our short term loans which was used in the previous two years for the purposes of financing stevia leaf purchases, expanding our stevia processing capabilities and for working capital.

        We expect to use US$    •    of the net proceeds for repayment of the short term loans.

        As at December 31, 2008, we had negative operating cash flow and we currently have negative working capital. Our current working capital deficiency is driven by short term loans obtained in China at favorable interest rates for the purposes of financing our long term capital expenditures for our manufacturing facilities in China. These short term loans have been characterized as current liabilities. It is common practice in China to borrow on a short term basis, even in relation to financing long term assets. We do not intend to repay all of these short term loans from the proceeds of the Offering and will continue to utilize some of our available lines of credit in China and seek to renew such loans on maturity.

        The key business objectives that we intend to accomplish with the use of proceeds are to expand our stevia manufacturing capacity and to reduce our short term debt. In order to accomplish this objective we intend to make the investments provided for in our investment agreement with the Qingdao Export Refine Management Committee. Our obligations under that investment agreement require us to invest an aggregate of US$30 million in registered capital by 2011. To date we have invested approximately US$4.5 million of registered capital and we will use US$25 million of the proceeds in furtherance of this obligation.

        Our investment policy is to invest our cash in highly liquid short term interest bearing investments, selected with regard to the expected timing of expenditures from continuing operations. The proceeds of the Offering allocated to working capital and general corporate purposes will be invested in accordance with our investment policy.

        We intend to spend the funds available to us as stated in this prospectus; however, there may be circumstances where, for sound business reasons, a reallocation of funds may be deemed prudent or necessary.

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Pending the use of proceeds as outlined in the table above, we intend to invest the net proceeds in investment grade, short-term, interest bearing securities. See "Risk Factors".


PRICE RANGE AND TRADING VOLUME OF THE COMMON SHARES

        The Common Shares are listed and posted for trading on the TSX under the symbol "GLG". The following table sets forth, for the periods indicated over the 12 months prior to the date of this prospectus, the price range and volumes traded or quoted on the TSX as adjusted to give effect to the November 5, 2009 consolidation of our Common Shares on a four-to-one (4:1) basis:

Month
  High   Low   Close   Volume  

November 2009(1)

  $ 11.60   $ 10.20   $ 10.60     241,913  

October 2009

  $ 12.96   $ 9.64   $ 11.40     5,155,458  

September 2009

  $ 12.00   $ 7.28   $ 10.80     2,090,213  

August 2009

  $ 9.40   $ 8.20   $ 8.64     1,090,566  

July 2009

  $ 9.68   $ 7,96   $ 9.08     705,109  

June 2009

  $ 11.00   $ 7.44   $ 8.60     1,072,662  

May 2009

  $ 9.00   $ 6.96   $ 7.44     339,775  

April 2009

  $ 9.96   $ 7.44   $ 9.40     154,625  

March 2009

  $ 10.20   $ 8.00   $ 9.60     119,837  

February 2009

  $ 12.48   $ 9.24   $ 10.00     165,250  

January 2009

  $ 13.92   $ 7.20   $ 12.40     677,525  

December 2008

  $ 7.96   $ 3.64   $ 7.20     577,350  

November 2008

  $ 4.40   $ 3.00   $ 4.00     193,625  

(1)
For the period November 1, 2009 to November 4, 2009.


CONSOLIDATED CAPITALIZATION

        The following table sets forth our consolidated cash and cash equivalents and capitalization as of September 30, 2009 on an actual basis and on an as adjusted basis to give effect to

    (a)
    the sale of our Common Shares in this Offering and the receipt of the net proceeds therefrom, based on the Offering Price of US$    •    per Common Share; and

    (b)
    the four-to-one (4:1) consolidation of our Common Shares effected on November 5, 2009.

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        This table should be read in conjunction with "Selected Consolidated Financial Data", "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes included elsewhere in this prospectus.

 
  As of September 30, 2009  
 
  Actual   As Adjusted  
 
  (expressed in Canadian dollars)
 

Cash and cash equivalents

  $ 8,894,543   $  
           

Debt

  $ 55,110,131        
           

Shareholders' equity:

             
 

Common Shares

  $ 95,388,996   $  

    (20,154,597 Common Shares)     (    •    Common Shares)  

Other equity instruments

    Nil     Nil  

Additional paid-in capital

    14,805,385      

Deficit

    (11,777,287 )   (• )

Accumulated other comprehensive income

    8,216,236      
           

Total shareholders' equity

  $ 106,633,330   $  
           

Total capitalization

  $ 182,054,576   $  
           


DILUTION

        Our net tangible book value as at September 30, 2009 was approximately $69,287,736 million (approximately US$65,075,042), or $3.44 (approximately US$3.23) per Common Share after giving effect to the four-to-one (4:1) consolidation of our Common Shares. Net tangible book value per share represents the total amount of our assets, less total liabilities, intangible assets, deferred financing costs and leasehold and building improvements, divided by the number of Common Shares outstanding. Dilution in net tangible book value per share represents the difference between the amount per share that you pay in this Offering and the net tangible book value per share after this Offering.

        After giving effect to the issuance and sale by us of 3,625,000 Common Shares in the Offering at the Offering Price of $    •    per Common Share (US$    •    per Common Share) and after deducting underwriting discounts and commissions and estimated offering expenses of $    •     million (approximately US$    •     million) payable by us and after giving effect to the four-to-one (4:1) consolidation of our Common Shares, our pro forma net tangible book value as at September 30, 2009 is $    •     million (approximately US$    •     million), or $    •    per share (approximately US$    •    per Common Share). This represents an immediate increase in the net tangible book value of $    •    per share (approximately US$    •    per Common Share) to existing shareholders and an immediate dilution of $    •    per share (approximately US$    •    per Common Share) to new investors. This dilution is illustrated by the following table:

 
  $   US$  

Offering Price

         

Net tangible book value per share as at September 30, 2009

  $ 3.44     3.23  

Increase per Common Share attributable to new investors

         

Pro forma net tangible book value per share after this Offering

         

Dilution per share to new investors

  $   $  
           

        Assuming the exercise in full of the Over-Allotment Option, our pro forma net tangible book value as at September 30, 2009 would have been $    •     million (approximately US$    •     million), or $    •    per Common Share (approximately US$    •    per Common Share). This represents an immediate increase in the net tangible book value of $    •    per Common Share (approximately US$    •    per Common Share) to existing shareholders and an immediate dilution of $    •    per Common Share (approximately US$    •    per Common Share) to new investors.

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        The foregoing discussion and tables assume no exercise of any stock options and no issuance of Common Shares reserved for future issuance. As at September 30, 2009, there were options outstanding to purchase 1,236,283 Common Shares at a weighted average exercise price of $1.64 (approximately US$1.75) per Common Share, 62,500 Common Shares reserved for issuance in connection with a litigation matter involving Northern Securities Inc., 250,000 Common Shares reserved for issuance to International Biotechnology Group Ltd in connection with the terms of our license agreement with them and 1,093,750 Common Shares reserved for issuance as final payment for the AHTD acquisition. We completed the acquisition of AHTD, a seed base operation possessing high quality proprietary technology and patent-pending stevia seeds, on December 27, 2007. A total of 3,125,000 Common Shares of the Company were allotted to pay the purchase price for AHTD and the final 1,093,750 Common Shares may be issued if AHTD provides seedlings for planting 9,880 acres of stevia yielding 8,000 metric tons of leaf in 2009.


PRIOR SALES

        The following table summarizes the issuance by us of Common Shares within the 12-month period before the date of this prospectus as adjusted to give effect to the November 5, 2009 consolidation of our Common Shares on a four-to-one (4:1) basis.

Date of Issue
  Number of Common
Shares Issued
  Issue Price
($)
 

June 30, 2009

    240,833 (1)   1.20  

June 30, 2009

    283,850 (2)   8.60  

November 25, 2008

    30,000 (2)   3.20  

November 26, 2008

    1,093,750 (3)   3.08  
             

Total

    1,648,433        
             

Notes:

(1)
Issued on the exercise of options pursuant to our stock option and restricted share plan.

(2)
Issuance of restricted shares under our stock option and restricted share plan.

(3)
Issued as the second instalment of the purchase price in connection with the AHTD acquisition.

        The following table summarizes the issuances by us of stock options within the 12-month period before the date of this prospectus as adjusted to give effect to the November 5, 2009 consolidation of our Common Shares on a four-to-one (4:1) basis.

Date of Issue
  Number of
Options Issued
  Option Exercise
Price
($)
 

June 30, 2009

    91,150     8.60  

November 25, 2008

    1,250     3.20  
             

Total

    92,400        
             

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PRINCIPAL HOLDERS OF SECURITIES

        The following table sets forth information regarding the beneficial ownership of our Common Shares as of November 5, 2009 as adjusted to give effect to the November 5, 2009 consolidation of our Common Shares on a four-to-one (4:1) basis and the sale of the Common Shares in this Offering by:

    each person known by us to be the beneficial owner of more than 5% of our issued and outstanding Common Shares;

    each of our directors and senior officers; and

    all of our directors and senior officers as a group.
 
   
  Percentage of Common Shares
Beneficially Owned
Name and Address of Beneficial Owner
  Number of Common Shares
Beneficially Owned
  Before Offering(1)
%
  After Offering(1)(2)
%

HZ Health Management Company Limited(3)

    2,303,238   11.4%   9.7%

Skyland International Investment Management Ltd.(4)

    3,248,555   16.1%   13.7%

Pacific Marketing Consultants Ltd.(5)

    1,964,819   9.7%   8.3%

David Beasley

    20,333   *   *

David Bishop

    41,293   *   *

He Fangzhen

    7,859   *   *

Sophia Leung

    72,858   *   *

Brian Meadows

    37,402   *   *

Brian Palmieri

    1,283,120   6.4%   5.4%

Liu Yingchun

    15,585   *   *

Jinduo Zhang

    262,884   *   *

Dr. Luke Zhang

    1,867,164 (6) 9.3%   7.9%

All directors and senior officers as a group (9 individuals)

    3,608,498   17.9%   15.2%

Notes:

(1)
Based on 20,154,597 Common Shares issued and outstanding as of the date of this prospectus.

(2)
Assuming the sale of 3,625,000 Common Shares pursuant to this Offering.

(3)
Ms. Shi Cuifen has voting and dispositive control over the Common Shares held by HZ Health Management Company Ltd. The beneficial owners of the common shares of HZ Health Management Company Limited are persons with whom we deal with at arm's length.

(4)
Mr. Xu Yeling has voting and dispositive control over the Common Shares held by Skyland International Investment Management Ltd. The beneficial owners of the common shares of Skyland International Investment Management Ltd. include persons that are family members and associates of Dr. Luke Zhang.

(5)
Mr. Zhu Jianhe has voting and dispositive control over the Common Shares held by Pacific Marketing Consultants Ltd.

(6)
This figure includes 503,576 restricted shares which have been awarded to Dr. Luke Zhang under our stock option and restricted share plan. The receipt of this award, in full or in part, is subject to the achievement of certain performance targets which have been established by our Compensation Committee.

*
Denotes less than 1%.

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DIRECTORS AND EXECUTIVE OFFICERS

        The following table sets forth the names and municipalities of residence of all of our directors and executive officers, as well as the positions and offices held by such persons, as of November 5, 2009:

Name and Municipality of Residence
 
Age
 
Position
David Beasley(1)(2)(3)
Society Hill, South Carolina
    52   Director
David Bishop
Atlanta, Georgia
    59   Executive Vice President — International Affairs
He Fangzhen(2)(3)
Jinan, Shangdong Province China
    80   Director
Sophia Leung(1)(2)(3)
Vancouver, British Columbia
    76   Director
Brian Meadows
Delta, British Columbia
    45   Chief Financial Officer and Corporate Secretary
Brian Palmieri
Cody, Wyoming
    56   President, Vice-Chairman and Director
Liu Yingchun(1)(2)(3)
Heze, Shangdong Province China
    46   Director
Jinduo Zhang
Burnaby, British Columbia
    80   Director
Dr. Luke Zhang
Heze, Shangdong Province, China
    54   Chief Executive Officer, Chairman and Director

Notes:

(1)
Member of the Audit Committee.

(2)
Member of the Compensation Committee.

(3)
Member of the Nominating and Corporate Governance Committee.

Directors and Executive Officers

David Beasley (Director)

        Mr. Beasley resides in Society Hill, South Carolina and was appointed as one of our directors on June 21, 2005. From 1999 to 2000, he worked as a consultant for Bingham Consulting Group, LLC, of Boston, Massachusetts, a consulting business that advises large national and international companies on public issues. For the past four years, Mr. Beasley, through his company Public Square Strategies, Inc., has continued to provide consulting services to various companies on public issues, his main client being Merrill Lynch & Co., Inc. Mr. Beasley was Governor of South Carolina from 1995 to 1999 and sat in the South Carolina House of Representatives from 1979 to 1992. Mr. Beasley is an independent director.

David Bishop (Executive Vice President, International Affairs)

        Mr. Bishop resides in Atlanta, Georgia and was appointed as our Chief Operating Officer on February 2, 2007. Mr. Bishop has more than 25 years' experience in a variety of personnel, educational, organizational and management responsibilities. For approximately 15 years, he lived and worked as an expatriate in a cross cultural/cross linguistic environment with a variety of project related duties. Mr. Bishop is also chairman of our subsidiary, Runde and has been a director of Maple Leaf Reforestation, Inc. (TSX-MPE Canada) since September 2006. On May 15, 2008, Mr. Bishop relinquished his role as our Chief Operating Officer and was named our Executive Vice President, International Affairs. We have not appointed a new Chief Operating Officer and these responsibilities are fulfilled by a number of people under the supervision of Dr. Luke Zhang.

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Mr. He Fangzhen (Director)

        Mr. Fangzhen was appointed as one of our directors on May 7, 2008. Mr. Fangzhen is a specialist in manufacturing and production. With over 40 years of experience, his expertise as a chief engineer lies in optimizing manufacturing plant and personnel, particularly in China. His specialties include planning, operational structure, maintenance, safety, quality control and risk management as well as the assignment, training and supervision of production and technology personnel. Mr. Fangzhen graduated from Taiyuan Polytech University in China.

Sophia Leung (Director)

        Madame Leung resides in Vancouver, British Columbia and was appointed as one of our directors on February 2, 2007. Madame Leung has served in political positions on a national level, including as special advisor in international trade to Canada's prime minister from 2004-2006, parliamentary secretary for National Revenue of Canada from 2000-2004 and Member of Parliament of Canada 1997-2004. Madame Leung is currently a consultant for Canada Vision Enterprise Group Inc. Madame Leung is an independent director.

Brian Meadows (Chief Financial Officer and Corporate Secretary)

        Mr. Meadows resides in Tsawwassen, British Columbia and was appointed as our Chief Financial Officer on October 9, 2007. Mr. Meadows has 20 years' experience in the telecommunications industry in both North America and Europe and prior to his engagement as our Chief Financial Officer Mr. Meadows worked for Telus Corporation. He has held senior financial and business development roles in several start-up companies in Europe earlier in his career (1996-2001) as well as having worked with large public companies in Canada in both financial and operational roles. Mr. Meadows holds both the Certified Financial Analyst (CFA) designation as well as the Certified Management Accountant (CMA) designation. He obtained his international MBA from the University of Glasgow in 1995 and a Bachelor of Business Administration from Wilfrid Laurier University in 1987. Mr. Meadows was appointed as our Corporate Secretary on May 19, 2009.

Brian Palmieri (Director, President and Vice-Chairman)

        Mr. Palmieri resides in Cody, Wyoming and was appointed as our Chief Executive Officer and a director on June 21, 2005. On May 15, 2008, Mr. Palmieri relinquished his role as our Chief Executive Officer and was named our President and Vice-Chairman. Mr. Palmieri is a non-independent director.

        Prior to his involvement with us, Mr. Palmieri's time has been divided between the following businesses in which he is a principal:

    (a)
    American Tool and Die Inc., the principal business of which is metals manufacturing and of which he is president;

    (b)
    Lee Livingston Outfitters, the principal business of which is outfitting; and

    (c)
    Palco International Inc. and AAFAB International Inc., the principal business of both being international trading and consulting and of which he serves as president.

Madame Liu Yingchun (Director)

        Madame Yingchun was elected as one of our directors on June 17, 2008. Madame Yingchun graduated from Shandong Economical College and has over 20 years of experience in finance and accounting. She has worked for several major banks and insurance companies in China including China Bank and the Industrial and Commercial Bank of China. She is a certified economist and financial analyst. Mrs. Liu is currently audit director and controller of HeZe Industrial and Commercial Bank. She also has experience in internal control and investment management.

Jinduo Zhang (Director)

        Mr. Jinduo Zhang is a retired professor, resides in Burnaby, British Columbia and was appointed as one of our directors on June 21, 2005. Professor Zhang was, before his retirement, a physics professor at Shandong

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Heze University. He was also involved with the financial management of the university and in the family jewelry and pharmacy business. In 1986, he retired from his professorship in China and moved to the United States and then Canada. Since retirement, Professor Zhang has been active in the development and expansion of his family business functioning as an advisor and financial consultant for various projects. Professor Zhang is a non-independent director due to his familial relationship with our Chairman Dr. Luke Zhang.

Dr. Luke Zhang (Director, Chief Executive Officer and Chairman)

        Dr. Zhang is a Canadian citizen and currently resides in China. He was appointed as our Chairman and as director on June 21, 2005 and as our President on September 6, 2007. On May 15, 2008, Dr. Zhang relinquished his role as our President and was named our Chief Executive Officer. Dr. Zhang received his PhD in Pharmacology from Vanderbilt University and has worked in international business for over 20 years. He is a non-independent director.

Committees of our Board of Directors

        We have three board committees, being the Audit Committee, the Compensation Committee and the Corporate Governance and Nominating Committee.

Audit Committee

        The Audit Committee assists the board of directors in fulfilling its responsibilities for oversight of financial and accounting matters. In addition to recommending the auditors to be nominated and reviewing the compensation of the auditors, the Committee is responsible for overseeing the work of the auditors and pre-approving non-audit services. The Committee also reviews our annual and interim financial statements and news releases containing information taken from our financial statements prior to their release. The Committee is responsible for reviewing the acceptability and quality of our financial reporting and accounting standards and principles and any proposed material changes to them or their application.

        The members of the Audit Committee are Mr. David Beasley, Madame Sophia Leung and Madame Liu Yingchun. Each member of the Audit Committee is "independent" within the meaning of Rule 10A-3 under the Exchange Act, the NASDAQ Marketplace Rules and Canadian Securities laws. The Audit Committee has a published charter which is attached to our AIF and is available at www.sedar.com and is also posted on our website, www.glglifetech.com.

Compensation Committee

        The Compensation Committee was established on March 18, 2008 and assists the board of directors in fulfilling its oversight responsibilities relating to compensation. The Committee's role includes establishing a remuneration and benefits plan for directors, executives and other key employees and reviewing the adequacy and form of compensation of directors and senior management. The Committee oversees the development and implementation of compensation programs in order to support our business objectives and attract and retain key executives. The Committee also reviews and makes recommendations to our board of directors regarding our incentive compensation equity-based plans.

        The members of the Compensation Committee are Mr. David Beasley, Madame Sophia Leung, Madame Liu Yingchun, and Mr. He Fangzhen. Each member of the Compensation Committee is "independent" within the meaning of the NASDAQ Marketplace Rules and Canadian Securities laws.

Corporate Governance and Nominating Committee

        The Corporate Governance and Nominating Committee was established on March 18, 2008 and assists the board of directors in fulfilling its oversight responsibilities relating the board of director's relationship with senior management. The Committee's role includes developing and monitoring the effectiveness of our system of corporate governance, assessing the effectiveness of individual directors, the board of directors, and various board committees, and is responsible for appropriate corporate governance and proper delineation of the roles, duties and responsibilities of management, the board of directors and its committees. The Committee is

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responsible for recommending to the board of directors a set of corporate governance principles and reviewing these principles at least once a year. The Committee oversees our investor relations and public relations activities. In addition, the Committee is responsible for identifying and recommending candidates qualified to become directors and board committee members and to ensure that an effective Chief Executive Officer succession plan is in place.

        The members of the Corporate Governance and Nominating Committee are Mr. David Beasley, Madame Sophia Leung, Madame Liu Yingchun and Mr. He Fangzhen. Each member of the Corporate Governance and Nominating Committee is "independent" within the meaning of the NASDAQ Marketplace Rules and Canadian Securities laws.


EXECUTIVE COMPENSATION

        Detailed information concerning the compensation of our executive officers and directors is contained at pages 7 to 13 of our Management Proxy Circular which is incorporated by reference in this short form prospectus. For ease of reference, we have set out below two tables relating to the compensation of our Chief Executive Officer (Dr. Luke Zhang), Chief Financial Officer (Brian Meadows) and our most highly compensated executive officers, other than the Chief Executive Officer and Chief Financial Officer, who were serving as executive officers or acting in a similar capacity and whose total compensation, individually, was in excess of $150,000 as at the end of the fiscal year ended December 31, 2008 (collectively, the "Named Executive Officers"). These table have been extracted from our Management Proxy Circular.

Summary Compensation Table

        The following sets forth compensation information for the fiscal year ended December 31, 2008 for our Named Executive Officers.

 
 
 
   
   
   
   
  Non-equity incentive
plan compensation
($)

   
   
   
 
Name and
Principal Position

  Year
  Salary
($)

  Share-
based
awards
($)(4)

  Option-
based
awards
($)(4)

  Annual
incentive
plans

  Long-term
incentive
plans

  Pension
value
($)

  All other
compensation
($)

  Total
compensation
($)

 
   
Brian Meadows(1)
Chief Financial Officer and Corporate Secretary
    2008
2007
  145,000
27,500
    117,744
Nil
    121,114
Nil
  41,250
Nil
  Nil
Nil
  Nil
Nil
    12,000
3,000
    437,108
30,500
 
Brian Palmieri(2)
President and Director
    2008
2007
2006
  Nil
Nil
Nil
    21,744
Nil
Nil
    68,951
Nil
Nil
  Nil
Nil
Nil
  Nil
Nil
Nil
  Nil
Nil
Nil
    120,107
70,000
70,000
(5)
(5)
(5)
  210,802
70,000
70,000
 
Dr. Luke Zhang(3)
Chairman, Chief Executive Officer and Director
    2008
2007
2006
  Nil
Nil
Nil
    4,457,224
Nil
Nil
    Nil
Nil
Nil
  Nil
Nil
Nil
  Nil
Nil
Nil
  Nil
Nil
Nil
    300,000
150,067
130,000
(6)
(6)
(6)
  4,757,224
150,067
130,000
 

Notes:

(1)
Mr. Meadows was appointed as the Chief Financial Officer on October 9, 2007 and Corporate Secretary on May 19, 2009.

(2)
On May 15, 2008, Brian Palmieri relinquished his role as our Chief Executive Officer and was named our President and Vice-Chairman.

(3)
Dr. Zhang did not serve in the capacity of a Named Executive Officer before August 29, 2007. On May 15, 2008, Dr. Zhang relinquished his role as our President and was named our Chief Executive Officer, in addition to his role as Chairman.

(4)
Grant date fair values for 2008 were determined using Black-Scholes method to determine grant date fair value using the following assumptions:
   
   
   
   
   
    Risk Free Interest Rate:     3%     Expected Volatility:     140%    
    Expected Dividend Yield:     0%     Expected Life:     5 years    
(5)
Amounts represent consulting fees paid to a corporation controlled by Mr. Palmieri for his executive services provided to us.

(6)
Amounts represent consulting fees paid to a corporation controlled by Dr. Zhang for his executive services provided to us.

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        Incentive plan awards — value vested or earned during the fiscal year ended December 31, 2008.

        The following table discloses incentive plan awards — value vested or earned for by the Named Executive Officers under our equity and non-equity incentive plans for the fiscal year ended December 31, 2008.

 
Name
  Option-based awards — Value
vested during the year
($)

  Share-based awards — Value
vested during the year
($)

  Non-equity incentive plan
compensation — Value earned
during the year
($)

 
Brian Meadows   Nil   Nil   41,250
Brian Palmieri   Nil   Nil   Nil
Dr. Luke Zhang   Nil   Nil   Nil

Option Based Awards

        Executive officers' compensation is designed in a manner to recognize and reward executive officers based upon individual and corporate performance, to be competitive with the compensation arrangements and programs established by other public companies with which we compare ourself, and to be consistent with the executive officers' respective overall contributions. At the end of each year, our Compensation Committee also reviews actual performance against corporate objectives.

        In establishing compensation objectives for executive officers, the Compensation Committee seeks to:

    (a)
    motivate executives to achieve corporate performance objectives and reward them when such objectives are met;

    (b)
    recruit and subsequently retain highly qualified executive officers by offering overall compensation which is competitive with that offered for comparable positions in similar companies; and

    (c)
    align the interest of executive officers with the long-term interests of shareholders through participation in our stock option and restricted share plan.

        In determining Mr. Meadows' compensation, particular factors that were considered included (i) rewarding his work on the successful completion of our listing on the TSX and the concurrent private placement; and (ii)rewarding his efforts in negotiating our Strategic Alliance and Supply Agreement with Cargill.

        In determining Dr. Zhang's compensation, particular factors that were considered included: (i) rewarding his efforts in negotiating the Strategic Alliance and Supply Agreement with Cargill; (ii) rewarding his work in developing exclusive growing regions in China; and (iii) providing Dr. Zhang with appropriate long term incentives to continue to provide his services to us.

        In determining Mr. Palmieri's compensation, particular factors that were considered included providing Mr. Palmieri with appropriate long term incentives to continue to provide his services to us.

Insurance

        We maintain liability insurance for our directors and officers. The annual premium for the policy is $42,000. No portion of the premium is directly paid by any of our directors or officers. The policy carries a limit of $10,000,000 and has a deductible of $50,000 deductible for each claim.


RELATED PARTY TRANSACTIONS

        During our three most recent fiscal years, and during the nine month period ended September 30, 2009, we have entered into the transactions with various related parties that are set forth below. Each of these transactions was entered in the normal course of our operations. The board has determined that each of these transactions, when taken as a whole, is no less favorable to us than would be reasonably obtainable from a person who is not affiliated with us in an arms-length transaction.

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        We are a party to consulting agreements with Dr. Luke Zhang, our Chairman, Chief Executive Officer and a member of our board of directors and PALCO International Inc., or "PALCO", which is controlled by Brian Palmieri, our President, Vice-Chairman and a member of our board of directors. These agreements relate to the provision of executive and management services. During our three most recent fiscal years, and during the nine month period ended September 30, 2009, we have paid or accrued the following consulting fees in connection with these agreements:

    During the fiscal year ended December 31, 2006, we paid consulting fees totaling $237,025, of which $130,000 was paid to Dr. Zhang, $70,000 was paid to PALCO, $22,625 was paid to Marco Chan, a former Chief Financial Officer, and $14,400 was paid to Tao Su, a former Chief Financial Officer.

    During the fiscal year ended December 31, 2007, we paid consulting fees totaling $294,681, of which $150,067 was paid to Dr. Zhang, $70,000 was paid to PALCO, $45,000 was paid to AAFAB, and $29,614 was paid to BISM.

    During the fiscal year ended December 31, 2008, we paid consulting fees totaling $476,098, of which $300,000 was paid to Dr. Zhang, $120,106 was paid to PALCO and $55,992 was paid to BISM.

    During the nine month period ended September 30, 2009, we expensed consulting fees totaling $528,356, of which $264,450 was paid to Dr. Zhang, $167,563 was paid to PALCO, $52,418 was paid to AAFAB and $43,925 to BISM.

        We are a party to a management services agreement with GLG International Development Company, which is controlled by Qian Wang, our Vice President Government Relations, Qibin Wang, our Vice President of Agriculture, Qingjun Yao our Vice President of Primary Processing Operations, Cunbiao Li, our Vice President of Technology, Huadou Sheng, our Vice President of Production, Dr. H Wimalaratane, our Vice President of Logistics, Jiwei Dong our Vice President of Finance and Jingwen Sun our Vice President of New Business Development as well as other general managers and division heads. Pursuant to the management services agreement, during the fiscal year ended December 31, 2008, we paid management fees of $365,475 to GLG International Development Company. During the nine months ended September 30, 2009, we paid management fees of $272,601 to GLG International Development Company.

        In the past, we have paid certain legal fees, disbursements and related provincial sales taxes to the law firm of Maitland & Company. Our former corporate secretary, Ron Paton, is associate counsel at Maitland & Company. During the fiscal years ended December 31, 2006, December 31, 2007 and December 31, 2008, we paid legal fees totaling $58,200, $100,099 and $22,085 respectively, to Maitland & Company. During the nine months ended September 30, 2009 we paid legal fees totalling $295 to Maitland & Company. Mr. Paton was replaced as our Corporate Secretary by Brian Meadows on May 19, 2009.

        On August 16, 2007, American GLG Group, a company in which Dr. Zhang is the principal shareholder, signed preliminary investment agreements with the local government authorities Mingguang, Anhui Province and Dongtai, Jiangsu Province relating to exclusive growing areas in these regions. American GLG Group was used to expedite the signing of the preliminary investment agreements with the two government authorities and American GLG Group has assigned these agreements to us. We did not make any payments to American GLG Group or to Dr. Zhang in connection with the assignment of these agreements. See "Risk Factors".

        YHT is a retail health store for which our Director, Mr. Jinduo Zhang, formerly served as a director. Mr. Zhang resigned as a director of YHT on April 14, 2006. During the fiscal years ended December 31, 2006 and December 31, 2007, we received income of $656,735 and $964,185, respectively, from YHT for the procurement of goods. We did not receive any income from YHT in the fiscal year ended December 31, 2008, or in the nine months ended September 30, 2009. During 2005 and 2006 we also extended loans to YHT to support the growth of their marketing efforts. The loans were not secured and were valued at $2,290,002 at December 31, 2008. Interest rates charged on these loans ranged from prime plus 1% to prime plus 2%. During 2008, we reduced our involvement with YHT and on September 8, 2008, we entered into a Heads of Agreement with YHT to convert all amounts owing from YHT into a passive equity investment. We took a provision of $3,111,351 against all amounts owing to us from YHT as of December 31, 2008. The arrangement with YHT is not a material part of our business and it is unrelated to the stevia business. As part of the Heads of Agreement, we extended the due date of the loans to June 30, 2009, and have further extended the due date to December 31, 2009.

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        During the nine month period ended September 30, 2009, we obtained US$6,100,000 non-secured loans from Dr. Zhang. The loans bear interest at the US dollar prime rate posted by HSBC Bank (Canada) plus 3% per annum and mature on June 29, 2010 in relation to US$2,000,000, July 14, 2010 in relation to US$1,600,000 and August 26, 2010 in relation to US$2,500,000. We have, and will continue to use, the proceeds of these loans for corporate working capital and to fund the required initial investment in our new Runhao subsidiary in China.

        On September 10, 2009, we obtained a US$200,000 non-secured loan from Madame Sophia Leung, a member of our board of directors. The loan bears interest at a rate of 8% per annum and matures on March 15, 2010. We will use the proceeds of this loan for corporate working capital.


DESCRIPTION OF THE COMMON SHARES

        We are authorized to issue an unlimited number of Common Shares, of which 20,154,597 Common Shares were issued and outstanding as of November 5, 2009 after giving effect to the consolidation of our Common Shares on a four-to-one (4:1) basis. All of the Common Shares rank equally as to voting rights, participation in a distribution of our assets on liquidation, dissolution or winding-up and the entitlement to dividends. The holders of the Common Shares are entitled to receive notice of all meetings of shareholders and to attend and vote the shares at the meetings. Each of the Common Shares carries with it the right to one vote. We have authorized no other class or series of our share capital.

        In the event of the liquidation, dissolution or winding-up of us or other distribution of our assets, the holders of the Common Shares will be entitled to receive, on a pro rata basis, all of the assets remaining after we have paid out our liabilities. Distributions in the form of dividends, if any, will be set by our board of directors.

        Provisions as to the modification, amendment or variation of the rights attached to the Common Shares are contained in our articles and the Business Corporations Act (British Columbia). Generally speaking, substantive changes to the share capital require the approval of the shareholders by special resolution (at least 2/3 of the votes cast).


DIVIDEND POLICY

        We have not declared or paid any dividends on the Common Shares since incorporation, and it is not anticipated that any dividends will be declared or paid in the immediate or foreseeable future. Any decision to pay dividends will be made by our board of directors on the basis of earnings, financial requirements and other conditions existing at such future time. An agreement we have with a customer relating to their prepayment for stevia extract contains a provision preventing us from paying dividends during the term of the agreement.


CERTAIN MATERIAL INCOME TAX CONSIDERATIONS

        The following discussion generally summarizes certain material Canadian and United States federal income tax considerations of the acquisition, ownership and disposition of the Offered Shares purchased pursuant to this prospectus.

Certain Canadian Federal Income Tax Considerations

        In the opinion of Fasken Martineau DuMoulin LLP, our legal counsel, and Farris, Vaughan, Wills & Murphy LLP, counsel to the Underwriters, the following is, as of the date hereof, a general summary of the principal Canadian federal income tax considerations under the Tax Act generally applicable to purchasers who acquire Offered Shares pursuant to this Offering and who, for the purposes of the Tax Act and at all relevant times, hold such Offered Shares as capital property and deal at arm's length and are not affiliated with us (each a "Holder"). Offered Shares will generally be considered to be capital property to a Holder unless such Offered Shares are held by such Holder in the course of carrying on a business, or were acquired by such Holder in a transaction or transactions considered to be an adventure in the nature of trade.

        This summary does not apply to a purchaser of Offered Shares (i) that is a "financial institution", as defined in the Tax Act for purposes of the mark-to-market rules; (ii) an interest in which is or would constitute a "tax shelter investment" as defined in the Tax Act; (iii) that is a "specified financial institution" as defined in the Tax Act; or (iv) that reports its Canadian tax results in a currency other than the Canadian currency. All such purchasers should consult their own tax advisors with respect to an investment in Offered Shares.

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        This summary is based on the current provisions of the Tax Act and the regulations thereunder, counsel's understanding of the current published administrative practices and assessing policies of the Canada Revenue Agency (the "CRA"), and all specific proposals to amend the Tax Act and the regulations thereunder announced by the Minister of Finance (Canada) prior to the date hereof ("Tax Proposals"). This summary assumes that the Tax Proposals will be enacted in their current form and does not otherwise take into account or anticipate any changes in the law or in the administrative practices and assessing policies of the CRA, whether by judicial, governmental or legislative decisions or action, and whether prospective or retroactive in effect, nor does it take into account tax legislation or considerations of any province or territory of Canada or any jurisdiction other than Canada.

        The summary is of a general nature only, is not exhaustive of all income tax considerations, and is not intended to be, and should not be construed to be, legal or tax advice to any particular Holder of the Offered Shares and no representation with respect to the Canadian tax consequences to any particular Holder is made. Holders should consult with their own tax advisors with respect to the income tax consequences to them of acquiring, holding or disposing of the Offered Shares.

Certain Canadian Federal Income Tax Considerations for Canadian Holders

        The following portion of the summary is applicable to a Holder who at all relevant times is resident or deemed to be resident in Canada for the purposes of the Tax Act and any applicable tax treaty or convention (a "Canadian Holder"). Certain Canadian Holders to whom Offered Shares might not constitute capital property may make the irrevocable election provided by subsection 39(4) of the Tax Act, in qualifying circumstances, to have the Offered Shares and every other "Canadian Security" (as defined in the Tax Act) owned by such Canadian Holder in the taxation year of the election and in all subsequent taxation years deemed to be capital property to the Holder. Canadian Holders should consult their own tax advisors for advice as to whether an election under subsection 39(4) of the Tax Act is available and/or advisable in their particular circumstances.

Dividends

        Dividends (including deemed dividends) received on Offered Shares by a Canadian Holder who is an individual (and certain trusts) will be included in the Canadian Holder's income and be subject to the gross-up and dividend tax credit rules applicable to taxable dividends received by an individual from taxable Canadian corporations, including the enhanced gross-up and dividend tax credit for "eligible dividends" properly designated as such by us. Taxable dividends received by such Canadian Holder may give rise to alternative minimum tax under the Tax Act.

        Dividends (including deemed dividends) received on Offered Shares by a Canadian Holder that is a corporation will be included in the Canadian Holder's income and will normally be deductible in computing such Canadian Holder's taxable income. A Canadian Holder that is a "private corporation" (as defined in the Tax Act) or any other corporation resident in Canada and controlled, whether by reason of a beneficial interest in one or more trusts or otherwise, by or for the benefit of an individual (other than a trust) or a related group of individuals (other than trusts), may be liable to pay a 331/3% refundable tax under Part IV of the Tax Act on dividends received on the Offered Shares to the extent that such dividends are deductible in computing the Canadian Holder's taxable income.

Disposition of Offered Shares

        A Canadian Holder who disposes of or is deemed to have disposed of an Offered Share will realize a capital gain (or capital loss) equal to the amount by which the proceeds of disposition in respect of the Offered Share exceeds (or is exceeded by) the aggregate of the adjusted cost base of such Offered Share to the Canadian Holder and any reasonable expenses associated with the disposition. The cost to a Canadian Holder of an Offered Share acquired pursuant to this Offering generally will be averaged with the adjusted cost base of any other Offered Shares owned by such Canadian Holder as capital property for the purposes of determining the adjusted cost base of each such Offered Share to such Canadian Holder. Generally, one-half of any capital gain (a "taxable capital gain") realized by a Canadian Holder must be included in the Canadian Holder's income for the taxation year in which the disposition occurs, and subject to and in accordance with the provisions of the Tax Act, one-half of any capital loss incurred by a Canadian Holder (an "allowable capital loss") may normally

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be deducted against taxable capital gains realized by the Canadian Holder in the taxation year of the disposition. Allowable capital losses in excess of taxable capital gains realized in a taxation year may ordinarily be deducted by the Canadian Holder against taxable capital gains realized in any of the three preceding taxation years or any subsequent taxation year, subject to detailed rules contained in the Tax Act in this regard. Capital gains realized by a Holder who is an individual (other than certain specified trusts) may be subject to alternative minimum tax.

        The amount of any capital loss realized on the disposition or deemed disposition of an Offered Share by a Canadian Holder that is a corporation may be reduced by the amount of dividends previously received or deemed to have been received by the Canadian Holder on such Offered Share to the extent and in the circumstances prescribed by the Tax Act. Similar rules may apply to a corporation that is a member of a partnership or beneficiary of a trust that owns Offered Shares or that is itself a member of a partnership or a beneficiary of a trust that owns Offered Shares. A Canadian Holder that is, throughout the relevant taxation year, a "Canadian-controlled private corporation" (as defined in the Tax Act) may be liable to pay an additional refundable tax of 62/3% on its "aggregate investment income" for the taxation year, which is defined to include an amount in respect of taxable capital gains.

Certain Canadian Federal Income Tax Considerations for Non-Canadian Holders

        The following portion of the summary is applicable to a Holder that, at all relevant times for the purposes of the Tax Act and any applicable tax treaty, is not a resident of Canada, and does not use or hold (and will not use or hold) and is not deemed to use or hold the Offered Shares in, or in the course of carrying on a business in Canada and does not carry on an insurance business in Canada and elsewhere (a "Non-Canadian Holder").

Dividends

        Dividends paid on the Offered Shares to a Non-Canadian Holder will be subject to withholding tax under the Tax Act at a rate of 25%, subject to a reduction under the provisions of an applicable tax treaty. For Non-Canadian Holders who are resident in the United States for purposes of and entitled to the benefits of the Convention Between Canada and the United States of America with Respect to Taxes on Income and on Capital, signed September 26, 1980, as amended (the "Canada-US Tax Treaty"), and are the beneficial owner of dividends on the Offered Shares, the Canadian withholding tax will generally be reduced to the rate of 15%.

Disposition of Offered Shares

        A Non-Canadian Holder will not be subject to tax under the Tax Act in respect of a capital gain realized upon the disposition of Offered Shares unless the Offered Shares are "taxable Canadian property" (as defined in the Tax Act) to the Non-Canadian Holder, and the gain is not otherwise exempt from tax in Canada pursuant to the terms of an applicable tax treaty. Provided the Offered Shares are listed on a designated stock exchange (which currently includes the TSX) at the time of disposition, the Offered Shares generally will not constitute taxable Canadian property to a Non-Canadian Holder unless the Non-Canadian Holder, together with persons with whom the Non-Canadian Holder does not deal at arm's length, owned at least 25% of the issued shares of any class or series of our capital stock at any time during the 60 month period preceding the disposition of the Offered Shares. For a Non-Canadian Holder who is resident in the United States for purposes of and entitled to the benefits of the Canada-US Tax Treaty, even if the Offered Shares are taxable Canadian property, no Canadian taxes will generally be payable on a capital gain realized on the disposition of the Offered Shares unless the value of the Offered Shares is derived principally from real property situated in Canada.

        In the event the Offered Shares are taxable Canadian property to a Non-Canadian Holder and a capital gain realized on the disposition of such Offered Shares is not exempt from tax under the Tax Act by virtue of the terms of an applicable tax treaty, such Non-Resident Holder will realize a capital gain (or capital loss) generally in the circumstances and computed in the manner described above under "Certain Canadian Federal Income Tax Considerations for Holders Resident in Canada — Disposition of Offered Shares". A Non-Canadian Holder whose Offered Shares are taxable Canadian property may be required to file a Canadian income tax return reporting the disposition of such Offered Shares. Non-Canadian Holders whose Offered Shares are taxable Canadian property should consult their own tax advisors for advice having regard to their particular circumstances.

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Certain United States Federal Income Tax Considerations

        The following is a general summary of certain material United States federal income tax consequences to a US Holder (as defined below) arising from and relating to the acquisition, ownership and disposition of Offered Shares acquired pursuant to this prospectus.

        This summary is for general information purposes only and does not purport to be a complete analysis or listing of all potential United States federal income tax consequences that may apply to a US Holder arising from and relating to the acquisition, ownership, and disposition of Offered Shares. In addition, this summary does not take into account the individual facts and circumstances of any particular US Holder that may affect the United States federal income tax consequences to such US Holder. Accordingly, this summary is not intended to be, and should not be construed as, legal or United States federal income tax advice with respect to any US Holder. Each US Holder should consult its own tax advisor regarding the United States federal, United States state and local, and foreign tax consequences of the acquisition, ownership and disposition of Offered Shares.

Scope of this Summary

Authorities

        This summary is based on the Internal Revenue Code of 1986, as amended (the "Code"), United States Treasury Regulations (whether final, temporary, or proposed), published rulings of the Internal Revenue Services (the "IRS"), published administrative positions of the IRS, the Canada-United States Tax Convention, and United States court decisions that are applicable and, in each case, as in effect and available, as of the date of this prospectus. Any of the authorities on which this summary is based could be changed in a material and adverse manner at any time, and any such change could be applied on a retroactive basis. This summary does not discuss the potential effects, whether adverse or beneficial, of any proposed legislation that, if enacted, could be applied on a retroactive basis.

US Holders

        For purposes of this summary, a "US Holder" is a beneficial owner of Offered Shares acquired pursuant to this prospectus that is (a) an individual who is a citizen or resident of the United States, (b) a corporation, or any other entity classified as a corporation for United States federal income tax purposes, that is created or organized in or under the laws of the United States, any state in the United States, or the District of Columbia, (c) an estate if the income of such estate is subject to United States federal income tax regardless of the source of such income, or (d) a trust if (i) such trust has validly elected to be treated as a United States person for United States federal income tax purposes or (ii) a United States court is able to exercise primary supervision over the administration of such trust and one or more United States persons have the authority to control all substantial decisions of such trust.

        If an entity that is classified as a partnership for United States federal income tax purposes holds Offered Shares, the United States federal income tax consequences to such partnership and the partners of such partnership generally will depend on the activities of the partnership and the status of such partners. Partners of entities that are classified as partnerships for United States federal income tax purposes should consult their own tax advisor regarding the United States federal income tax consequences arising from and relating to the acquisition, ownership and disposition of Offered Shares.

Non-US Holders

        For purposes of this summary, a "non-US Holder" is a beneficial owner of Offered Shares that is not a US Holder. This summary does not address the United States federal income tax consequences to non-US Holders arising from and relating to the acquisition, ownership, and disposition of Offered Shares. Accordingly, a non-US Holder should consult its own tax advisor regarding the United States federal income, United States state and local, and foreign tax consequences (including the potential application of and operation of any income tax treaties) arising from and relating to the acquisition, ownership, and disposition of Offered Shares.

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US Holders Subject to Special United States Federal Income Tax Rules Not Addressed

        This summary does not address the United States federal income tax consequences applicable to US Holders that are subject to special provisions under the Code, including the following US Holders: (a) US Holders that are tax-exempt organizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts; (b) US Holders that are financial institutions, insurance companies, real estate investment trusts, or regulated investment companies; (c) US Holders that are dealers in securities or currencies or US Holders that are traders in securities that elect to apply a mark-to-market accounting method; (d) US Holders that have a "functional currency" other than the United States dollar; (e) US Holders that own Offered Shares as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one position; (f) US Holders that acquired Offered Shares in connection with the exercise of employee stock options or otherwise as compensation for services; (g) US Holders that hold Offered Shares other than as a capital asset within the meaning of Section 1221 of the Code; (h) United States expatriates or former longer-term residents of the United States or (i) US Holders that own (directly, indirectly, or by attribution) 10% or more of the total combined voting power of the outstanding Common Shares. US Holders that are subject to special provisions under the Code, including US Holders described immediately above, should consult their own tax advisor regarding the United States federal, United States alternative minimum tax, United States state and local, and foreign tax consequences arising from and relating to the acquisition, ownership and disposition of Offered Shares.

Tax Consequences Other than United States Federal Income Tax Consequences Not Addressed

        This summary does not address the United States state and local, United States federal estate and gift, United States federal alternative minimum tax; or foreign tax consequences to US Holders of the acquisition, ownership, and disposition of Offered Shares. Each US Holder should consult its own tax advisor regarding the United States state and local, United States federal estate and gift, United States federal alternative minimum tax; and foreign tax consequences of the acquisition, ownership and disposition of Offered Shares.

United States Federal Income Tax Consequences of the Acquisition, Ownership and Disposition of Offered Shares

Taxation of Distributions

        A US Holder that receives a distribution, including a constructive distribution, with respect to an Offered Share will be required to include the amount of such distribution in gross income as a dividend (without reduction for any Canadian income tax withheld from such distribution) to the extent of our current or accumulated "earnings and profits", as computed for United States federal income tax purposes. To the extent that a distribution exceeds our current and accumulated "earnings and profits", such distribution will be treated first as a tax-free return of capital to the extent of a US Holder's tax basis in the Offered Shares and thereafter as capital gain from the sale or exchange of such Offered Shares. However we do not intend to maintain calculations of earnings and profits in accordance with United States federal income tax principles, and each US Holder should therefore assume that any distribution by us with respect to the Offered Shares will constitute ordinary dividend income. (See "Sale or Other Taxable Disposition of Offered Shares" below). Dividends received on Offered Shares generally will not be eligible for the "dividends received deduction" allowed to corporations.

        For taxable years beginning before January 1, 2011, a dividend paid to a US Holder who is an individual, estate or trust by us generally will be taxed at the preferential tax rates applicable to long-term capital gains if we are a "qualified foreign corporation" ("QFC") and certain holding period requirements for the Offered Shares are met. We generally will be a QFC if we are eligible for the benefits of the Canada United States Tax Convention or our shares are readily tradable on an established securities market in the United States within the meaning provided in the Code. However, even if we satisfy one or more of these requirements, we will not be treated as a QFC if we are a "passive foreign investment company" (or "PFIC," as discussed below) for the taxable year during which we pay a dividend or for the preceding taxable year. See the section under the heading "Passive Foreign Investment Company Rules" below.

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        As discussed below, we do not believe that we were a PFIC during the prior taxable year, and based on current business plans and financial expectations, we do not believe that we will be a PFIC for the current taxable year. However, PFIC classification is fundamentally factual in nature, generally cannot be determined until the close of the taxable year in question, and is determined annually. Consequently, there can be no assurance that we have never been and will not become a PFIC for any taxable year during which US Holders hold Offered Shares.

        If we are not a PFIC, but a dividend paid to a US Holder otherwise fails to qualify for the preferential tax rates discussed above, a dividend paid by us to a US Holder generally will be taxed at ordinary income tax rates (and not at the preferential tax rates applicable to long-term capital gains).

        The amount of a distribution paid to a US Holder in foreign currency generally will be equal to the United States dollar value of such distribution based on the exchange rate applicable on the date of receipt. A US Holder that does not convert foreign currency received into United States dollars on the date of receipt generally will have a tax basis in such foreign currency equal to the United States dollar value of such foreign currency on the date of receipt. A US Holder generally will recognize ordinary income or loss on the subsequent sale or other taxable disposition of such foreign currency (including an exchange for United States dollars) which generally would be United States source income or loss for foreign credit tax purposes.

Foreign Tax Credit

        A US Holder who pays (whether directly or through withholding) Canadian income tax with respect to dividends paid on the Offered Shares generally will be entitled, at the election of such US Holder, to receive either a deduction or a credit for such Canadian income tax paid. Generally, a credit will reduce a US Holder's United States federal income tax liability on a dollar-for-dollar basis, whereas a deduction will reduce a US Holder's income subject to United States federal income tax. This election is made on a year-by-year basis and applies to all foreign taxes paid (whether directly or through withholding) by a US Holder during a year.

        Complex limitations apply to the foreign tax credit, including the general limitation that the credit cannot exceed the proportionate share of a US Holder's United States federal income tax liability that such US Holder's "foreign source" taxable income bears to such US Holder's worldwide taxable income. In applying this limitation, a US Holder's various items of income and deduction must be classified, under complex rules, as either "foreign source" or "US source." In addition, this limitation is calculated separately with respect to specific categories of income. Dividends paid by us generally will constitute "foreign source" income and generally will be categorized as "passive category income." Gain or loss recognized by a US Holder on the sale or other taxable disposition of Offered Shares generally will be treated as "US source" for purposes of applying the United States foreign tax credit rules. The foreign tax credit rules are complex, and each US Holder should consult its own tax advisor regarding the foreign tax credit rules.

Sale or Other Taxable Disposition of Offered Shares

        Subject to the possible application of the PFIC rules described below, upon the sale or other taxable disposition of Offered Shares, a US Holder generally will recognize capital gain or loss in an amount equal to the difference between (i) the amount of cash plus the fair market value of any property received and (ii) such US Holder's adjusted tax basis in such Offered Shares sold or otherwise disposed of. Gain or loss recognized on such sale or other disposition generally will be long-term capital gain or loss if, at the time of the sale or other disposition, the Offered Shares have been held for more than one year.

        Preferential rates apply to long-term capital gains of a US Holder that is an individual, estate, or trust. There are currently no preferential tax rates for long-term capital gains of a US Holder that is a corporation. Deductions for capital losses are subject to significant limitations under the Code.

        The amount realized by a US Holder receiving foreign currency in connection with a disposition of Offered Shares generally will be equal to the United States dollar value of the proceeds received based on the exchange rate applicable on the date of receipt (regardless of whether such foreign currency is converted into US dollars at that time). A US Holder that does not convert foreign currency received into United States dollars on the date of receipt generally will have a tax basis in such foreign currency equal to the United States dollar value of such foreign currency on the date of receipt. Such a US Holder generally will recognize ordinary income or loss

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on the subsequent sale or other taxable disposition of such foreign currency (including an exchange for United States dollars) which generally would be treated as US source ordinary income or loss.

Passive Foreign Investment Company Rules

        If we were to constitute a PFIC (as defined below) for any year during a US Holder's holding period, then certain different and generally adverse tax consequences would apply to such US Holder's acquisition, ownership and disposition of Offered Shares.

        We generally will be a PFIC under Section 1297 of the Code if, for a taxable year, (a) 75% or more of our gross income for such taxable year is passive income or (b) on average for a taxable year, 50% or more of the assets held by us either produce passive income or are held for the production of passive income, based on the fair market value of such assets (or on the adjusted tax basis of such assets, if we are not publicly traded and either are a "controlled foreign corporation" or make an election). "Gross income" generally means all revenues less the cost of goods sold, and "passive income" includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions.

        In addition, for purposes of the PFIC income test and asset test described above, if we own, directly or indirectly, 25% or more of the total value of the outstanding shares of another foreign corporation, we will be treated as if we (a) held a proportionate share of the assets of such other foreign corporation and (b) received directly a proportionate share of the income of such other foreign corporation. In addition, for purposes of the PFIC income test and asset test described above, "passive income" does not include any interest, dividends, rents, or royalties that are received or accrued by us from a "related person" (as defined in Section 954(d)(3) of the Code), to the extent such items are properly allocable to the income of such related person that is not passive income.

        Under certain attribution rules, if we are a PFIC, US Holders will be deemed to own their proportionate share of any subsidiary of ours which is also a PFIC (a "Subsidiary PFIC"), and will be subject to United States federal income tax on (i) a distribution on the shares of a Subsidiary PFIC or (ii) a disposition of shares of a Subsidiary PFIC, both as if the holder directly held the shares of such Subsidiary PFIC.

        We do not believe that we were a PFIC during the prior taxable year, and based on current business plans and financial expectations, we do not believe that we will be a PFIC for the current taxable year. However, PFIC classification is fundamentally factual in nature, generally cannot be determined until the close of the taxable year in question, and is determined annually. Consequently, there can be no assurance that we have never been and will not become a PFIC for any taxable year during which US Holders hold Offered Shares.

        In any given taxable year for which we are classified as a PFIC, during which a US Holder holds Offered Shares, a US Holder would be subject to increased tax liability (possibly including an interest charge) upon the sale or other disposition of the Offered Shares or upon the receipt of certain distributions treated as "excess distributions," unless such US Holder elects to be taxed currently, as discussed in "Mark-to-Market and QEF Elections" below. An excess distribution generally would be any distribution to a US Holder with respect to Offered Shares during a single taxable year that is greater than 125% of the average annual distributions received by such US Holder with respect to the Offered Shares during the three preceding taxable years or, if shorter, the US Holder's holding period before the taxable year.

        In addition, certain special, generally adverse rules would apply to the Offered Shares if we are a PFIC. For example, a US holder that uses PFIC shares as security for a loan will, except as may be provided in regulations, be treated as having made a taxable disposition of such shares.

        If a US Holder owns the Offered Shares during any year in which we are a PFIC, such US Holder must also file Internal Revenue Service Form 8621 regardless of whether such holder makes a Mark-to-Market or QEF election.

Mark-to-Market and QEF Elections

        If the Offered Shares are "marketable stock" for purposes of the PFIC rules, a US Holder may make an election to include gain or loss on the Offered Shares as ordinary income or loss under a mark-to-market method of accounting. The Offered Shares would be marketable securities if they were regularly traded on a

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qualifying exchange that is either (i) a national securities exchange which is registered with the SEC or the national market system established pursuant to the Exchange Act, or (ii) any exchange or other market that the United States Treasury Department determines are adequate. The NASDAQ meets this test, and we believe that the TSX meets this test. Accordingly, so long as the Offered Shares are regularly traded on the TSX or the NASDAQ, a US Holder should be able to make a mark-to-market election with respect to the Offered Shares if we are classified as a PFIC.

        If a US Holder chooses to make a mark-to-market election, such US Holder must include in ordinary income for each taxable year for which the election is in effect, and during which we are a PFIC, an amount equal to the excess, if any, of the fair market value of its Offered Shares as of the close of the taxable year over its adjusted tax basis in the Offered Shares. In addition, the US Holder may claim an ordinary loss deduction for the excess, if any, of its adjusted tax basis in the Offered Shares over the fair market value of the Offered Shares at the close of the taxable year, but only to the extent of any prior net mark-to-market gains. A US Holder's adjusted tax basis in its Offered Shares will be increased by the income recognized under the mark-to-market election and decreased by deductions allowed under the election. Gain upon an actual sale or other disposition of the Offered Shares will be treated as ordinary income, and any losses incurred on a sale or other disposition of the Offered Shares will be treated as an ordinary loss to the extent of any prior net mark-to-market gains.

        A mark-to-market election applies to the taxable year in which the election is made and to each subsequent year, unless the Offered Shares cease to be marketable (as described above) or the United States Internal Revenue Service consents to revocation of the election. If a US Holder does not make a mark-to-market election for the first year in which such Holder owns Offered Shares and we are a PFIC, the interest charge imposed under the Internal Revenue Code as described above will apply to any mark-to-market gain recognized in the later year that the election is first made over the fair market value of the Offered Shares. US Holders are urged to consult their own tax advisors as to the consequences of making a mark-to-market election.

        Under the Internal Revenue Code, a holder of shares of a PFIC may also make a qualifying electing fund ("QEF") election with respect to shares of the PFIC. In such a case, the shareholder is generally subject to tax on its pro rata share of the income and gains of the PFIC on a current basis, without regard to whether or not actual distributions are made by the PFIC, rather than being subject to the treatment described above in "Passive Foreign Investment Company Rules." US Holders should consult with their tax advisor as to the availability and consequences of the QEF election. In particular, an election to treat us as a QEF will not be available if we do not provide the information necessary to make such an election.

        US Holders should be aware that, for each taxable year, if any, that we or any Subsidiary PFIC is a PFIC, we can provide no assurances that we will satisfy the record keeping requirements of a PFIC, or that we will make available to US Holders the information such US Holders require to make a QEF Election under Section 1295 of the Code with respect of us or any Subsidiary PFIC. Each US Holder should consult its own tax advisor regarding the availability of, and procedure for making, a QEF Election with respect to us and any Subsidiary PFIC.

Backup Withholding and United States Information Reporting

        Under United States federal income tax law and regulations, certain categories of US Holders must file information returns with respect to their investment in, or involvement in, a foreign corporation. Penalties for failure to file certain of these information returns are substantial. US Holders of the Offered Shares should consult with their own tax advisors regarding the requirements of filing information returns, and, if applicable, mark-to-market and QEF elections.

        Payments made within the United States of dividends on, and proceeds arising from the sale or other taxable disposition of, Offered Shares generally may be subject to information reporting and backup withholding (currently at the rate of 28%) if a US Holder (a) fails to furnish such US Holder's correct United States taxpayer identification number (generally on Form W-9), (b) furnishes an incorrect United States taxpayer identification number, (c) is notified by the IRS that such US Holder has previously failed to properly report items subject to backup withholding, or (d) fails to certify, under penalties of perjury, that such US Holder has furnished its correct United States taxpayer identification number and that the IRS has not notified such US Holder that it is subject to backup withholding. However, certain exempt persons, such as corporations, generally are excluded

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from these information reporting and backup withholding rules. Any amounts withheld under the United States backup withholding tax rules will be allowed as a credit against a US Holder's United States federal income tax liability, if any, or will be refunded, if such US Holder furnishes required information to the IRS. Each US Holder should consult its own tax advisor regarding application of the information reporting and backup withholding rules to them.


NASDAQ QUORUM REQUIREMENT

        NASDAQ Marketplace Rule 5615(a)(3) permits a foreign private issuer to follow its home country practice in lieu of certain of the requirements of the Rule 5600 Series. A foreign private issuer that follows a home country practice in lieu of one or more provisions of the Rule 5600 Series is required to disclose in its registration statement related to its initial public offering or first US listing on NASDAQ, or on its website, each requirement of the Rule 5600 Series that it does not follow and describe the home country practice followed by the issuer in lieu of those requirements.

        We do not follow Marketplace Rule 5620(c), but instead follow our home country practice. The NASDAQ minimum quorum requirement under Rule 5620(c) for a meeting of shareholders is 33.33% of the outstanding common shares. In addition, Rule 5620(c) requires that an issuer listed on NASDAQ state its quorum requirement in its governing documents. Our quorum requirement is set forth in our articles. A quorum for a meeting of our shareholders is one person who is, or who represents by proxy, one or more shareholders who, in the aggregate, hold at least 5% of the issued shares entitled to be voted at the meeting. The foregoing is consistent with the laws, customs and practices in Canada.


UNDERWRITING

        We have entered into an underwriting agreement dated    •    , 2009, with the Underwriters named below, for whom Canaccord Adams Inc., Canaccord Capital Corporation and GMP Securities L.P. are acting as lead underwriters. Subject to the terms and conditions of the underwriting agreement, each of the Underwriters has severally agreed to purchase, and we have agreed to sell to them, the number of Offered Shares indicated below:

Name
  Number of Shares(1)  

Canaccord Adams Inc.

     

Canaccord Capital Corporation

     

GMP Securities L.P.

     

Roth Capital Partners, LLC

     

Desjardins Securities Inc.

     

Wellington West Capital Markets Inc.

   
 

Note:

(1)
Adjusted to give effect to the November 5, 2009 consolidation of our Common Shares on a four-to-one (4:1) basis. See "Explanatory Note Related to Share Consolidation".

        The Offering Price was determined by negotiation between us and the Underwriters. The Underwriters, as principals, conditionally offer the Offered Shares, subject to prior sale, if, as and when issued, sold and delivered by us to and accepted by the Underwriters in accordance with the conditions in the underwriting agreement. The underwriting agreement provides that the obligations of the several Underwriters to pay for and accept delivery of the Offered Shares are subject to the receipt of legal opinions by the Underwriters and to certain other conditions contained in the underwriting agreement. The underwriting agreement provides that the Underwriters must buy all of the Offered Shares if they buy any of them. However, the Underwriters are not required to take or pay for the Offered Shares covered by the Over-Allotment Option. The obligations of the Underwriters under the underwriting agreement may be terminated at the discretion of the lead underwriters on the basis of its assessment of the effect that certain changes in the United States, Canada or international political, financial or economic conditions may have on the market for the Offered Shares. The obligations of the Underwriters may also be terminated upon the occurrence of certain stated events.

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        The Offering is being made concurrently in the United States and Canada pursuant to the MJDS. The Offered Shares will be offered in the United States and Canada through the Underwriters either directly or through their respective United States or Canadian broker-dealer affiliates or agents, as applicable. No securities will be offered or sold in any jurisdiction except by or through brokers or dealers duly registered under the applicable securities laws of that jurisdiction, or in circumstances where an exemption from such registered dealer requirements is available. Subject to applicable law, the Underwriters may offer the Offered Shares outside of the United States and Canada, pursuant to prospectus exemptions.

Discounts and Commissions

        The Underwriters have advised us that they propose to offer the Offered Shares to the public at the Offering Price set forth on the cover page of this prospectus and to certain dealers at that price less a concession not in excess of US$    •    per Offered Share. The Underwriters may allow, and certain dealers may reallow, a discount from the concession not in excess of US$    •    per Offered Share to certain brokers and dealers. After the Offering, the Offering Price, concession and reallowance to dealers may be reduced by the Underwriters' representative. No such reduction shall change the amount of proceeds to be received by us as set forth on the cover page of this prospectus. The Offered Shares are offered by the Underwriters as stated herein, subject to receipt and acceptance by them and subject to their right to reject any order in whole or in part. The Underwriters have informed us that they do not intend sales to discretionary accounts to exceed    •    % of the total number of Offered Shares offered by them.

        The following table shows the Offering Price, the underwriting discounts and commissions payable to the Underwriters by us and the proceeds, before expenses, to us. Such amounts are shown assuming both no exercise and full exercise of the Over-Allotment Option.

 
  Per Share   Total  
 
  Without Over-
Allotment Option(1)
  With Over-
Allotment Option(1)
  Without Over-
Allotment Option(1)
  With Over-
Allotment Option(1)
 

Offering Price

    US$•     US$•     US$•     US$•  

Underwriting discounts and commissions paid by us

    US$•     US$•     US$•     US$•  

Proceeds to us, before expenses

    US$•     US$•     US$•     US$•  

Note:

(1)
Adjusted to give effect to the November 5, 2009 consolidation of our Common Shares on a four-to-one (4:1) basis. See "Explanatory Note Related to Share Consolidation".

Over-Allotment Option

        We have granted to the Underwriters an option (the "Over-Allotment Option"), exercisable for 30 days from the closing of the Offering, to purchase up to an aggregate of 543,750 Additional Shares at the Offering Price, to cover over-allotments, if any. If the Underwriters exercise the Over-Allotment Option, each Underwriter has agreed, subject to some conditions, to purchase a number of Additional Shares proportionate to that Underwriter's initial purchase commitment as indicated in the table above.

Expenses

        We are responsible for all expenses related to the Offering, whether or not it is completed, including all filing fees and expenses incurred in connection with qualifying or registering all or any part of the Offered Shares and the fees and expenses of Underwriters' legal counsel up to US$100,000. The Underwriters are responsible for other fees and disbursements of Underwriters' legal counsel and the fees and disbursements of translators (as applicable). We have also agreed to reimburse the Underwriters reasonable costs and out-of-pocket expenses (including travel expenses in connection with due diligence and marketing activities) to a maximum, collectively, of $50,000, including taxes thereon.

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Indemnification

        We have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the US Securities Act and applicable Canadian securities legislation, or to contribute to payments that the Underwriters may be required to make in respect of those liabilities.

Lock-up Agreements

        Our officers, directors and certain shareholders including Pacific Marketing Consultants Ltd. (collectively, the "Locked-Up Shareholders"), in addition to Skyland International Investment Management Ltd, HZ Health Management Company Limited, Dr. Luke Zhang and Brian Palmieri (collectively, the "Extended Locked-Up Shareholders") have agreed, subject to specified exceptions, not to directly or indirectly:

    offer, sell, contract to sell, secure, pledge, grant or sell any option, right or warrant to purchase, or otherwise lend, transfer or dispose of, establish an open "put equivalent position" within the meaning of Rule 16a-1(h) under the Securities Exchange Act, or announce any intention to do so, any of our securities that they hold, or

    make any short sale, engage in any hedging transaction, or enter into any swap or other arrangement that transfers to another any of the economic consequences of ownership of Common Shares,

    with respect to the Locked-Up Shareholders, without the prior written consent of the lead underwriters, for the period commencing on the date of the lock-up agreement to 90 days after the closing of the Offering, and with respect to the Extended Locked-Up Shareholder, without the prior written consent of the lead underwriters, for the period commencing on the date of the lock-up agreement to the 12 month anniversary of the closing of the Offering 100% of the Common Shares held by the Extended Locked-Up Shareholders, with 1/3 of such Common Shares released from the above obligations on the 12 month anniversary of the closing of the Offering, an additional 1/3 of such Common Shares released from the above obligations on the 24 month anniversary of the closing of the Offering, and the remaining 1/3 of such Common Shares released from the above obligations on the 36 month anniversary of the closing of the Offering.

        Notwithstanding the termination of the locked-up period outlined above for the Locked-Up Shareholders and the Extended Locked-Up Shareholders (the "Lock-Up Period"), and subject to certain exceptions, in the event that either (i) during the last 17 days of the applicable Lock-Up Period, we issue an earnings release or material news or a material event relating to us occurs, or (ii) prior to the expiration of the applicable Lock-Up Period, we announce that we will release earnings results or we become aware that material news or a material event relating to us will occur during the 16-day period beginning on the last day of the applicable Lock-Up Period, then in either case the expiration of the applicable Lock-Up Period will be extended until the expiration of the 18-day period beginning on the date of the issuance of an earnings release or the occurrence of the material news or material event, as applicable, unless the lead underwriters waive, in writing, such extension.

        The lead underwriters may, in their sole discretion and at any time or from time to time before the termination of the applicable Lock-Up Period, without notice, release all or any portion of the securities subject to lock-up agreements. Aside from an agreement that Mr. Brian Palmieri may, with the consent of the Underwriters, sell up to 125,000 Common Shares held by Mr. Palmieri during his applicable Lock-Up Period, there are no existing agreements between the Underwriters and any of the persons who will execute a lock-up agreement providing consent to the sale of Common Shares prior to the expiration of the applicable Lock-Up Period.

Listing

        Our Common Shares are listed on the TSX under the trading symbol "GLG". We have applied to have our Common Shares listed on NASDAQ under the symbol "GLGL", and for the additional listing of the Offered Shares on the TSX. Listing will be subject to our fulfillment of all of the listing requirements of NASDAQ and the TSX.

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Electronic Distribution

        A prospectus in electronic format may be made available on websites or through other online services maintained by one or more of the Underwriters of the Offering, or by their affiliates. Other than the prospectus in electronic format, the information on any Underwriter's website and any information contained in any other website maintained by an Underwriter is not part of the prospectus or the registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or the Underwriter in its capacity as underwriter and should not be relied upon by investors.

Price Stabilization, Short Positions and Penalty Bids

        Until the distribution of the Offered Shares is completed, SEC rules may limit the Underwriters from bidding for and purchasing Offered Shares. However, the representative may engage in transactions that stabilize the market price of the Offered Shares, such as bids or purchases to peg, fix or maintain that price so long as stabilizing transactions do not exceed a specified maximum.

        Pursuant to rules of the Ontario Securities Commission and the Universal Market Integrity Rules for Canadian Marketplaces, the Underwriters may not, throughout the period of distribution, bid for or purchase Offered Shares except in accordance with certain permitted transactions, including market stabilization and passive market making activities. In connection with the sale of the Offered Shares, the Underwriters may sell more Common Shares than they are required to purchase in this Offering or effect transactions which stabilize or maintain the market price of the Common Shares at levels other than those which otherwise might prevail on the open market.

        In connection with this Offering, the Underwriters may engage in transactions that stabilize, maintain or otherwise make short sales of Common Shares and may purchase Common Shares on the open market to cover positions created by short sales. Short sales involve the sale by the Underwriters of a greater number of Common Shares than they are required to purchase in this Offering. "Covered" short sales are sales made in an amount not greater than the Over-Allotment Option. The Underwriters may close out any covered short position by either exercising the Over-Allotment Option or purchasing Common Shares in the open market. In determining the source of Common Shares to close out the covered short position, the Underwriters will consider, among other things, the price of Common Shares available for purchase in the open market as compared to the price at which they may purchase Common Shares through the exercise of the Over-Allotment Option. "Naked" short sales are sales in excess of the Over-Allotment Option. The Underwriters must close out any naked short position by purchasing Common Shares in the open market. A naked short position is more likely to be created if the Underwriters are concerned that there may be downward pressure on the price of the Common Shares in the open market after pricing that could adversely affect investors who purchase in this Offering. A "stabilizing bid" is a bid for or the purchase of Common Shares on behalf of an Underwriter in the open market prior to the completion of this Offering for the purpose of fixing or maintaining the price of the Common Shares. A "syndicate covering transaction" is the bid for or purchase of Common Shares on behalf of the Underwriters to reduce a short position incurred by the Underwriters in connection with the Offering.

        Similar to other purchase transactions, the Underwriters' purchases to cover the syndicate short sales may have the effect of raising or maintaining the market price of our Common Shares or preventing or retarding a decline in the market price of our Common Shares. As a result, the price of our Common Shares may be higher than the price that might otherwise exist in the open market.

        The representative may also impose a "penalty bid" on Underwriters. A "penalty bid" is an arrangement permitting the representative to reclaim the selling concession otherwise accruing to the Underwriters in connection with this Offering if the Offered Shares being sold by the Underwriters are purchased by the Underwriters in a syndicate covering transaction and have therefore not been effectively placed by the Underwriters. The imposition of a penalty bid may also affect the price of the Common Shares in that it discourages resales of those Common Shares.

        Neither we, nor any of the Underwriters makes any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of Common Shares. In

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addition, neither we nor any of the Underwriters makes any representation that the representative will engage in these transactions or that any transaction, if commenced, will not be discontinued without notice.

Affiliations

        The Underwriters and their affiliates have provided, or may in the future provide, various investment banking, commercial banking, financial advisory and other services to us and our affiliates for which services they have received, and may in the future receive, customary fees. In the course of their businesses, the Underwriters and their affiliates may actively trade our securities or loans for their own account or for the accounts of customers, and, accordingly, the Underwriters and their affiliates may at any time hold long or short positions in such securities or loans.


LEGAL MATTERS

        Certain legal matters relating to the Offering and to the Offered Shares to be distributed pursuant to this short form prospectus will be reviewed on our behalf by Fasken Martineau DuMoulin LLP and DLA Piper LLP (US) and on behalf of the Underwriters by Farris, Vaughan, Wills & Murphy LLP and Choate, Hall & Stewart LLP. Legal matters as to PRC law will be reviewed on our behalf by Shandong Jiuruntong Law Firm and on behalf of the Underwriters by Han Kun Law Offices.

        As at the date hereof, the partners and associates, as a group of each of Fasken Martineau DuMoulin LLP, DLA Piper LLP (US), Farris, Vaughan, Wills & Murphy LLP, Choate, Hall & Stewart LLP, Shandong Jiuruntong Law Firm and Han Kun Law Offices own less than 1% of the outstanding Common Shares.


INTERESTS OF EXPERTS

        Lo Porter Hetu, Certified General Accountants, have prepared an independent auditor's report in connection with our annual financial statements as of and for the fiscal year ended December 31, 2007, which is dated as of March 1, 2008 except as to note 1(b) to the December 31, 2008 consolidated financial statements, which is dated as of March 27, 2009, and except as to notes 32 and 33 to the December 31, 2008 consolidated financial statements, which are dated as of October 28, 2009. Lo Porter Hetu is independent of us within the meaning of the Rules of Professional Conduct of the British Columbia Institute of Chartered Accountants and is registered with the Canadian Public Accountability Board.

        Our auditors are PricewaterhouseCoopers LLP, Chartered Accountants, who have prepared an independent auditors' report dated April 1, 2009, except that notes 32 and 33 are dated October 28, 2009, in respect of our consolidated financial statements as at December 31, 2008 and for the year ended December 31, 2008. PricewaterhouseCoopers LLP has advised that they are independent with respect to the Corporation within the meaning of the Rules of Professional Conduct of the Institute of Chartered Accountants of British Columbia and the rules of the SEC.


AUDITORS, TRANSFER AGENT AND REGISTRAR

        Our auditors are PricewaterhouseCoopers LLP, Chartered Accountants, 250 Howe Street, Suite 700, Vancouver, British Columbia V6C 3S7.

        The registrar and transfer agent of the Common Shares is Computershare Trust Company of Canada, 510 Burrard Street, Second Floor, Vancouver, British Columbia V6C 3B9.


WHERE YOU CAN FIND MORE INFORMATION

        We have filed with the SEC under the US Securities Act, a registration statement on Form F-10 (which, together with all amendments and supplements thereto, we refer to as the "Registration Statement") with respect to the Common Shares offered hereby. This prospectus, which forms a part of the Registration Statement, does not contain all the information set forth in the Registration Statement, certain parts of which have been omitted in accordance with the rules and regulations of the SEC. For further information with respect to us, and the Common Shares offered hereby, reference is made to the Registration Statement and to the schedules and exhibits filed therewith. Statements contained or incorporated by reference in this prospectus as

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to the contents of certain documents are not necessarily complete and, in each instance, reference is made to the copy of the document filed as an exhibit to the Registration Statement. Each such statement is qualified in its entirety by such reference. The Registration Statement can be found on the SEC's website, www.sec.gov.

        Subsequent to the effectiveness of the Registration Statement, we will be subject to the information requirements of the Exchange Act, and in accordance therewith will file periodic reports and other information with the SEC. Under the MJDS, such reports and other information may be prepared in accordance with the disclosure requirements of Canada, which requirements are different from those of the United States. As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. Under the Exchange Act, we are not required to publish financial statements as frequently or as promptly as United States public companies. Any information filed with the SEC may be reviewed, printed and downloaded from the SEC's website (www.sec.gov) and inspected and copied at prescribed rates at the public reference room of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the public reference facilities may be obtained by calling the SEC at 1-800-SEC-0330.


DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT

        The following documents have been filed with the SEC as part of the Registration Statement of which this prospectus forms a part: the documents referred to under the heading "Documents Incorporated by Reference"; the consent of PricewaterhouseCoopers LLP; the consent of Fasken Martineau DuMoulin LLP; the consent of Farris, Vaughan, Wills & Murphy LLP; powers of attorney from certain of our directors and officers; and the underwriting agreement.


ENFORCEABILITY OF CIVIL LIABILITIES

        We are a corporation existing under the Business Corporations Act (British Columbia). Some of our directors and officers and some or all of the Underwriters and experts named in this prospectus are residents of Canada or otherwise reside outside the United States, and all or a substantial portion of their assets, and a substantial portion of our assets, are located outside the United States. We have appointed an agent for service of process in the United States, but it may be difficult for holders of Common Shares who reside in the United States to effect service within the United States upon those directors, officers, Underwriters and experts who are not residents of the United States. It may also be difficult for holders of Common Shares who reside in the United States to realize in the United States upon judgments of courts of the United States predicated upon our civil liability and the civil liability of our directors, officers and experts under the United States federal securities laws.

        We filed with the SEC, concurrently with the Registration Statement, an appointment of agent for service of process on Form F-X. Under the Form F-X, we appointed DL Services Inc. as our agent for service of process in the United States in connection with any investigation or administrative proceeding conducted by the SEC, and any civil suit or action brought against or involving us in a United States court arising out of or related to or concerning the Offering of the Common Shares under this prospectus.

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[ALTERNATIVE PAGE FOR CANADIAN PROSPECTUS]


ELIGIBILITY FOR INVESTMENT

        In the opinion of Fasken Martineau DuMoulin LLP, our legal counsel, and Farris, Vaughan, Wills & Murphy LLP, counsel to the Underwriters, provided that the Offered Shares are listed on a designated stock exchange, as defined in the Income Tax Act (Canada) (the "Tax Act") (which currently includes the TSX), the Offered Shares would, if issued on the date hereof, be qualified investments for trusts governed by registered retirement savings plans, registered retirement income funds, deferred profit sharing plans, registered education savings plans, registered disability savings plans and tax free savings accounts ("TFSA") under the Tax Act. Notwithstanding the forgoing, a holder of a TFSA will be subject to a penalty tax under the Tax Act if the holder does not deal at arm's length with us (within the meaning of the Tax Act) or if such holder has a significant interest in us or in any other corporation, trust or partnership with which we do not deal at arm's length. Generally, a holder will have a significant interest in us if the holder, together with persons with whom the holder does not deal at arm's length, directly or indirectly owns 10% or more of the issued shares of any class of our capital stock or a corporation related to us, within the meaning of the Tax Act.


STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION

        Securities legislation in certain of the provinces of Canada provides purchasers with the right to withdraw from an agreement to purchase securities. This right may be exercised within two business days after receipt or deemed receipt of a prospectus and any amendment. In several of the provinces, the securities legislation further provides a purchaser with remedies for rescission or, in some jurisdictions, revision of the price or damages if the prospectus and any amendment contains a misrepresentation or is not delivered to the purchaser, provided that such remedies for rescission, revision of price or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser's province. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser's province for the particulars of these rights or consult with a legal adviser.


PURCHASERS' CONTRACTUAL RIGHT OF ACTION

        We may make available certain materials describing the Offering (the "Website Materials") on the website of one or more commercial services such as www.retailroadshow.com and/or www.netroadshow.com under the heading "GLG Life Tech Corporation" in accordance with US federal securities laws during the period prior to obtaining a final receipt for the final short form prospectus relating to this offering (the "Final Prospectus") from the securities regulatory authorities in the Canadian Jurisdictions. In order to give purchasers in each of the Canadian Jurisdictions the same unrestricted access to the Website Materials as provided to US purchasers, we have applied for exemptive relief from the securities regulatory authorities in each of the Canadian Jurisdictions. Should we obtain such relief, we and each of the Canadian Underwriters signing the certificate contained in the Final Prospectus will agreed that, in the event that the Website Materials contain any untrue statement of a material fact or omit to state a material fact required to be stated or necessary in order to make any statement therein not misleading in light of the circumstances in which it was made (a "misrepresentation"), a purchaser resident in any of the Canadian Jurisdictions who purchases Offered Shares pursuant to the Final Prospectus during the period of distribution shall have, without regard to whether the purchaser relied on the misrepresentation, rights against us and each of the Canadian Underwriters with respect to such misrepresentation as are equivalent to the rights under section 131 of the Securities Act (British Columbia) or the comparable provision of the securities legislation of each of the other Canadian Jurisdictions, as if such misrepresentation was contained in the Final Prospectus.

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[ALTERNATIVE PAGE FOR CANADIAN PROSPECTUS]


AUDITORS' CONSENT

        We have read the short form prospectus of GLG Life Tech Corporation (the "Corporation") dated November     •    , 2009, relating to the qualification for distribution of Common Shares of the Corporation. We have complied with Canadian generally accepted standards for an auditor's involvement with offering documents.

        We consent to the inclusion in the above-mentioned short form prospectus of our report to the shareholders of the Corporation on the consolidated balance sheet as at December 31, 2008 and the consolidated statements of operations and deficit, changes in shareholder's equity, comprehensive income and loss and cash flows for the year ended December 31, 2008. Our report is dated April 1, 2009, except for Notes 32 and 33 which are dated October 28, 2009.

Vancouver, B.C., Canada
    •    , 2009
 
Chartered Accountants

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AUDITORS' CONSENT

        We have read the short form prospectus of GLG Life Tech Corporation (the "Corporation") dated November     •    , 2009, relating to the qualification for distribution of Common Shares of the Corporation. We have complied with Canadian generally accepted standards for an auditor's involvement with offering documents.

        We consent to the inclusion in the above-mentioned short form prospectus of our report to the shareholders of the Corporation on the consolidated balance sheet as at December 31, 2007 and the consolidated statements of operations and deficit, changes in shareholder's equity, comprehensive income and loss and cash flows for the year ended December 31, 2007. Our report is dated March 1, 2008 except as to note 1(b) which is dated as of March 27, 2009, and as for Notes 32 and 33, which are as of October 28, 2009.


Vancouver, B.C., Canada
November •, 2009

 


Certified General Accountants

89


GRAPHIC


AUDITORS' REPORT

To the Directors of
GLG Life Tech Corporation

        We have audited the consolidated balance sheet of GLG Life Tech Corporation as at December 31, 2008 and the consolidated statements of operations, changes in shareholders' equity and comprehensive income (loss) and cash flows for the year then ended. These consolidated financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

        We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

        In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the company as at December 31, 2008 and the results of its operations, changes in shareholders' equity and comprehensive income (loss) and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles.

        The consolidated financial statements of the company as of December 31, 2007 and for the year then ended were audited by other auditors whose report dated March 1, 2008, except as for note 1(b), which is at of March 27, 2009, and notes 32 and 33, which are as of October 28, 2009, expressed an unqualified opinion on those statements.

(Signed) PRICEWATERHOUSECOOPERS LLP
Chartered Accountants
Vancouver, BC
April 1, 2009, except as to notes 32 and 33, which are as of October 28, 2009

Comments by Independent Auditor on Canada — US reporting difference

        In the United States, reporting standards for auditors require the addition of an explanatory paragraph (following the opinion paragraph) when the financial statements are affected by conditions and events that cast substantial doubt on the company's ability to continue as going concern, such as those described in note 1 to the 2008 consolidated financial statements of GLG Life Tech Corporation. Our report to the shareholders on the consolidated financial statements dated April 1, 2009, except as to notes 32 and 33, which are as of October 28, 2009 is expressed in accordance with Canadian reporting standards which do not permit a reference to such events and conditions in the auditors' report when these are adequately disclosed in the financial statements.

(Signed) PRICEWATERHOUSECOOPERS LLP
Chartered Accountants
Vancouver, BC
April 1, 2009, except as to notes 32 and 33, which are as of October 28, 2009

"PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership, or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate and independent legal entity.

F-1


GRAPHIC


AUDITORS' REPORT

To the Directors of
GLG Life Tech Corporation

        We have audited the consolidated balance sheet of GLG Life Tech Corporation as at December 31, 2007 and the consolidated statements of operations, changes in shareholders' equity and comprehensive income (loss) and cash flows for the year then ended. These consolidated financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

        We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

        In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the company as at December 31, 2007 and the results of its operations, changes in shareholders' equity and comprehensive income (loss) and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles.

GRAPHIC

                          Certified General accountants

Calgary, Alberta, Canada
March 1, 2008, except as for Note 1(b), which is as of March 27, 2009,
and as for Note 32 and 33, which are as of October 28, 2009

F-2


              Amended Consolidated Financial Statements
              GLG LIFE TECH CORPORATION
              Years ended December 31, 2008 and 2007

F-3



GLG LIFE TECH CORPORATION

CONSOLIDATED BALANCE SHEETS

(In Canadian Dollars)

 
  December 31, 2008   December 31, 2007  
 
   
  Restated (Note 1(b))
 

ASSETS

             

Current Assets

             

Cash and cash equivalents

  $ 7,362,671   $ 28,253,580  

Short term investments (Note 5)

    365,785      

Accounts receivable (Notes 6 and 26)

    2,714,114     3,939,045  

Interest receivable (Notes 6 and 26)

    3,651     199,546  

Loans receivable (Notes 6 and 26)

        1,719,633  

Taxes recoverable (Note 7)

    1,504,000     1,061,450  

Inventory (Note 8)

    33,057,690     8,863,190  

Prepaid expenses (Note 9)

    7,380,086     67,679  
           

    52,387,997     44,104,123  

Property, Plant, and Equipment (Note 10)

    83,366,043     14,006,891  

Goodwill

    7,587,798     7,587,798  

Restricted Cash (Note 11)

    100,710      

Loans Receivable (Notes 6 and 26)

        144,549  

Deferred Charges

    125,261      

Intangible Assets (Note 12)

    30,793,314     28,285,420  
           

  $ 174,361,123   $ 94,128,781  
           

LIABILITIES

             

Current Liabilities

             

Short term loans (Note 13)

  $ 10,231,500   $  

Accounts payable and accruals (Note 14)

    17,167,567     1,246,330  

Due to related parties (Note 24)

        410,078  

Interest payable (Notes 15 and 18)

    1,063,729     395,568  

Advances from a customer (Note 15)

    24,492,000     6,549,100  

Deferred Revenue (Note 16)

    1,995,000      

Convertible debenture (Note 18)

        4,742,282  
           

    54,949,796     13,343,358  

FUTURE INCOME TAXES, NET (Note 25)

    2,414,642     3,887,060  

NON-CONTROLLING INTERESTS

    167,211      

SHAREHOLDERS' EQUITY

             

Share capital (Notes 19 and 20)

    93,355,149     61,052,731  

Warrants (Note 19)

    11,477,908     15,378,511  

Equity portion of convertible debenture (Note 18)

        1,513,003  

Contributed surplus

    3,347,623     1,702,716  

Accumulated other comprehensive income

    20,696,008     (1,307,926 )

Deficit (Note 21)

    (12,047,214 )   (1,440,672 )
           

    116,829,474     76,898,363  
           

  $ 174,361,123   $ 94,128,781  
           

Description of business, going concern and restatement (Note 1)
Commitments and Contingent Liability (Notes 29 and 30)
Subsequent events (Note 31)

        APPROVED ON BEHALF OF THE BOARD:


(Signed) "Brian Palmieri"
Director

 

(Signed) "Jinduo Zhang"
Director

See Accompanying Notes to the Consolidated Financial Statements

F-4



GLG LIFE TECH CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended December 31, 2008 and 2007
(In Canadian Dollars)

 
  Year ended December 31  
 
  2008   2007  
 
   
  Restated (Note 1(b))
 

REVENUE

             

Sales

  $ 9,891,318   $ 8,192,865  

Commissions

        964,185  
           

    9,891,318     9,157,050  

COST OF SALES

    7,560,490     6,499,954  
           

GROSS PROFIT

    2,330,828     2,657,096  

GENERAL AND ADMINISTRATIVE EXPENSES

    7,217,189     1,607,129  
           

(LOSS) INCOME BEFORE THE UNDERNOTED

    (4,886,361 )   1,049,967  

OTHER INCOME (EXPENSES)

             

Donation

    (73,337 )    

Interest on convertible debenture and advances (Notes 15 and 18)

    (2,009,638 )   (1,175,874 )

Provision on loans and receivables (Notes 6 and 26)

    (3,111,351 )    

Interest income

    820,765     194,288  

Realized foreign exchange loss

    (2,842,894 )   (308,812 )
           

    (7,216,455 )   (1,290,398 )
           

LOSS BEFORE INCOME TAXES AND
NON-CONTROLLING INTERESTS

    (12,102,816 )   (240,431 )

INCOME TAXES RECOVERY (Note 25)

    1,428,000     609,861  
           

NET (LOSS) INCOME BEFORE NON-CONTROLLING INTERESTS

    (10,674,816 )   369,430  

NON-CONTROLLING INTERESTS

    68,274      
           

NET (LOSS) INCOME

    (10,606,542 )   369,430  

DEFICIT, beginning of year

    (1,440,672 )   (1,810,102 )
           

DEFICIT, end of year

    (12,047,214 )   (1,440,672 )
           

NET (LOSS) INCOME PER SHARE

             
 

Basic

  $ (0.15 ) $ 0.01  
 

Diluted

    (0.15 )   0.00  
           

Weighted Average Number of Shares Outstanding

             
 

Basic

    71,740,424     50,988,982  
 

Diluted

    107,554,684     109,702,794  
           

See Accompanying Notes to the Consolidated Financial Statements

F-5



GLG LIFE TECH CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW

For the Years Ended December 31, 2008 and 2007
(In Canadian Dollars)

 
  2008   2007  
 
   
  Restated (Note 1(b))
 

Cash provided by (used in)

             

Operating activities

             

Net income (loss)

  $ (10,606,542 ) $ 369,430  

Items not affecting cash:

             
 

Accretion on convertible debenture

    1,257,718     697,925  
 

Stock-based compensation

    1,320,575      
 

Amortization of property, plant and equipment & intangibles

    2,539,869     497,726  
 

Provision on loan and receivables

    3,111,371      
 

Foreign exchange loss

    2,841,737     254,324  
 

Future income tax recovery

    (1,416,928 )   (609,861 )
 

Non-controlling interests

    (68,274 )    
           

    (1,020,474 )   1,209,544  

Changes in non-cash working capital items (Note 22)

    (18,744,065 )   (11,335,750 )
           

Cashflow used by operating activities

    (19,764,539 )   (10,126,206 )
           

Investing activities

             

(Increase) Decrease in short term investment

    (299,849 )   20,000  

Increase in loan receivable

        (155,843 )

Equity contribution by non-controlling interests

    253,007      

Increase in restricted cash

    (100,710 )    

Purchase of intangible assets

        (1 )

Purchase of property, plant and equipment

    (42,381,870 )   (6,478,389 )
           

Cash flow used by investing activities

    (42,529,422 )   (6,614,233 )
           

Financing activities

             

Reduction in subscriptions receivable

        380,492  

Increase in short term loan

    8,387,169      

Issuance of common shares

    17,844,394     32,251,588  

Share issuance costs

    (195,000 )    

Issuance of warrants

        1,025,297  

Repaid advance from a customer

    (7,122,367 )    

Increase in advance from a customer

    20,191,680     6,549,100  

Convertible debenture

        4,712,982  

Advances from related parties

    (846,630 )   410,078  

Convertible note payable

        (880,000 )
           

Cash flow from financing activities

    38,259,246     44,449,537  
           

Effect of foreign exchange rate changes on cash and cash equivalents

    3,143,806     (377,603 )
           

CHANGE IN CASH AND CASH EQUIVALENTS

    (20,890,909 )   27,331,495  

CASH AND CASH EQUIVALENTS, beginning of period

    28,253,580     922,085  
           

CASH AND CASH EQUIVALENTS, end of period

  $ 7,362,671   $ 28,253,580  
           

CASH FLOW SUPPLEMENTARY INFORMATION

             

Interest paid

  $ 654,056   $ 263,395  

Income taxes received

        5,000  

Increase in accounts payable and accruals related to the purchase of property, plant and equipment

    12,657,383    
 

See Accompanying Notes to the Consolidated Financial Statements

F-6



GLG LIFE TECH CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS)

For the Years Ended December 31, 2008 and 2007
(In Canadian Dollars)

 
  Share Capital   Warrants   Equity portion
of convertible debenture
  Contributed
Surplus
  Accumulated
Other
Comprehensive
Income ("AOCI")
  Deficit   Total
Comprehensive
Income (Loss)
 
 
  Restated
(Note 1(b))

  Restated
(Note 1(b))

  Restated
(Note 1(b))

   
  Restated
(Note 1(b))

  Restated
(Note 1(b))

  Restated
(Note 1(b))

 

Balance, December 31, 2006

  $ 19,179,824   $   $   $ 1,767,651   $ 128,815   $ (1,810,102 )      

Options exercised

    132,935             (64,935 )              

Shares issued for service

    300,000                            

Private Placement

    28,564,972     3,318,616                        

Shares issued for AHTD intangible

    12,875,000                            

Convertible debenture

        1,140,565     1,513,003                    

Warrants issued to a customer

        10,919,330                        

Change in foreign currency translation

                    (1,436,741 )       (1,436,741 )

Net income

                        369,430     369,430  
                               

Balance, December 31, 2007

  $ 61,052,731   $ 15,378,511   $ 1,513,003   $ 1,702,716   $ (1,307,926 ) $ (1,440,672 ) $ (1,067,311 )
                               

Warrant exercised by a customer

    20,235,133     (2,453,160 )                      

Warrant expired

        (1,447,443 )       1,447,443                

Options exercised

    125,527             (63,107 )              

Convertible debenture converted into common shares

    7,513,004         (1,513,003 )                  

Issurance of restricted shares

    1,060,004                            

Options granted

                260,571                

Common shares issued

    3,368,750                            

Change in foreign currency translation

                    22,003,934