UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549  FORM 10-Q  (Mark One)  S QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the quarterly period ended March 31, 2008  £ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT  For the transition period from ______________ to _____________  Commission file number: 000-50212  AIDA PHARMACEUTICALS, INC. (Exact name of registrant as specified in its charter)   Nevada81-0592184(State or other jurisdiction of
incorporation or organization)(I.R.S. Employer
Identification No.)   31 Dingjiang Road, Jianggan District, Hangzhou, China310016(Address of principal executive offices)(Zip Code)  86-0571-85802712 (Registrants telephone number, including area code)  __________________________________________________________________ (Former name, former address and former fiscal year, if changed since last report)  Indicate by check mark whether the registrant (1) has filed reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes S   No£  Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” ion Rule 12b-2 of the Exchange Act.  Large accelerated filer£ Accelerated filer£  Non-accelerated filer£ Smaller reporting companyS  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes£ NoS  APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS  Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes£ No £    APPLICABLE ONLY TO CORPORATE ISSUERS  Indicate the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date:  As of May 10, 2008, there were 27,000,000 shares of $0.001 par value common stock issued and outstanding.  2   FORM 10-Q AIDA PHARMACEUTICALS, INC. INDEX  PagePART I.Financial Information4Item 1. Financial Statements (Unaudited)4Condensed Consolidated Balance Sheets as of March 31, 2008 (Unaudited) and December 31, 20075Condensed Consolidated Statements of Operations and Comprehensive Income for the Three Months Ended March 31, 2008 and 2007 (Unaudited)6Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2008 and 2007 (Unaudited)7Notes to Condensed Consolidated Financial Statements as of March 31, 2008 (Unaudited)9Item 2.  Managements Discussion and Analysis of Financial Condition or Plan of Operation25Item 3.  Controls and Procedures34PART II.Other Information35Item 1. Legal Proceedings35Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds36Item 3.  Defaults Upon Senior Securities36Item 4.  Submission of Matters to a Vote of Security Holders.36Item 5.  Other Information36Item 6.  Exhibits36Signatures37  (Inapplicable items have been omitted)  3   PART I  FINANCIAL INFORMATION  Item 1. Financial Statements (Unaudited)  In the opinion of management, the accompanying unaudited condensed consolidated financial statements included in this Form 10-Q reflect all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of operations for the periods presented. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.  4   AIDA PHARMACEUTICAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS  ASSETSMarch 31, 2008December 31, 2007(Unaudited)CURRENT ASSETSCash and cash equivalents$4,596,942$8,399,306Restricted cash102,532885,743Accounts receivable, net of allowance for doubtful accounts of $801,470 and $817,762 as of March 31, 2008 and December 31, 2007, respectively9,992,6479,661,421Notes receivable, net of discount of $36,447 and $49,518 as of March 31, 2008 and December 31, 2007, respectively1,283,415987,489Inventories4,413,8313,837,659Due from related parties27,80919,889Receivable for secured guarantee6,995,516-Other receivables, prepaid expenses, and other assets388,025182,289Deposits11,291,97310,553,431Due from employees1,342,9271,014,395Prepayments for goods181,527324,370Deferred taxes411,713414,854Total current assets41,028,85736,280,846LONG-TERM ASSETSPlant and equipment, net17,401,42016,752,638Land use rights, net3,642,9553,664,715Construction in progress466,100269,552Patents, net5,200,7745,360,443Long-term investments205,350205,350Deferred assets81,299-Deferred taxes234,241197,627Total long-term assets27,232,13926,450,325TOTAL ASSETS$68,260,996$62,731,171LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIESAccounts payable$2,507,271$2,547,129Other payables and accrued liabilities2,866,2522,702,043Advances for research and development1,399,3871,029,657Short-term debt28,812,71730,352,106Current portion of long-term debt1,369,0001,369,000Due to related parties97,23742,140Taxes payable173,093129,810Customer deposits1,043,158467,889Due to employees66,74087,141Deferred taxes92,654144,455Total current liabilities38,427,50938,871,370LONG-TERM LIABILITIESNotes payable384,1871,647,134Advances for research and development-54,760Deferred taxes983,492970,055Long term debt6,835,465-Total long-term liabilities8,203,1442,671,949TOTAL LIABILITIES46,630,65341,543,319MINORITY INTERESTS8,407,6757,871,031COMMITMENTS AND CONTINGENCIESSHAREHOLDERS EQUITYCommon stock, $0.001 par value; 75,000,000 shares authorized; 27,000,000 shares issued and outstanding at March 31, 2007 and December 31, 200627,00027,000Additional paid-in capital5,204,3525,204,352Retained earnings (the restricted portion is $1,846,858 and $1,846,858 at March, 31, 2008 and at December 31, 2007, respectively)7,310,9247,329,904Accumulated other comprehensive income680,392755,565Total Shareholders Equity13,222,66813,316,821TOTAL LIABILITIES AND SHAREHOLDERS EQUITY$68,260,996$62,731,171  See accompanying notes to condensed consolidated financial statements.  5   AIDA PHARMACEUTICALS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)  For the Three Months Ended March  31,20082007REVENUES, NET$7,652,017$5,296,176COST OF GOODS SOLD(3,700,057)(2,972,516)GROSS PROFIT3,951,9602,323,660Research and development283,116132,198Selling and distribution1,878,847988,101General and administrative1,105,7951,176,049INCOME FROM OPERATIONS684,20227,312OTHER INCOME (EXPENSES)Interest expense, net(545,563)(342,948)Government grants2,79249,723Investment income-118,626Other income (expense), net171,509(29,968)INCOME (LOSS) FROM OPERATIONS BEFORE INCOME TAXES312,940(177,255)INCOME TAX (EXPENSE) BENEFIT(116,149)66,830INCOME (LOSS) FROM OPERATIONS BEFORE MINORITY INTERESTS196,791(110,425)MINORITY INTERESTS(215,771)(49,779)NET LOSS(18,980)(160,204)OTHER COMPREHENSIVE INCOMEForeign currency translation gain75,173275,513Income taxes related to other comprehensive income-(72,735)OTHER COMPREHENSIVE INCOME, NET OF INCOME TAXES75,173202,778COMPREHENSIVE  INCOME$56,193$42,574WEIGHTED AVERAGE SHARES OUTSTANDING BASIC AND DILUTED27,000,00027,000,000Net loss per common share, basic and diluted$0.00$0.00  See accompanying notes to condensed consolidated financial statements.  6   AIDA PHARMACEUTICALS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)  For the Three Months Ended March  31,20082007CASH FLOWS FROM OPERATING ACTIVITIES:Net loss$(18,980)$(160,204)Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation and amortization514,423533,463Provision for doubtful accounts-30,803Amortization of discount on notes receivable(13,071)(21,109)Deferred taxes(71,837)(120,177)Gain on sale of marketable securities-(118,626)Gain on disposal of fixed assets(761)-Deferred compensation(81,299)-Minority interests share of net income215,77149,779Changes in operating assets and liabilities, net of effects of acquisition:(Increase) Decrease In:Accounts receivable(331,225)4,303,968Inventories(576,171)(411,727)Other receivables, prepaid expenses, and other assets(205,736)(44,428)Prepayments for goods142,842(22,385)Increase (Decrease) In:Accounts payable(39,858)(811,377)Other payables and accrued liabilities164,206(257,024)Advances for research and development314,971667Due to employees(20,401)217,844Taxes payable43,282(204,440)Customer deposits575,269432,420Net cash provided by operating activities611,4253,397,447CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of plant and equipment(260,091)(274,144)Purchases of construction in progress(196,548)(8,358)Deposit for long term investment(380,980)(583,356)Deposit for plant and equipment(357,562)(160,420)Repayment of notes receivable51,960566,218Issuance of notes receivable(334,815)(3,886,201)Due from employees(328,532)(140,689)Payment of secured guarantee(6,995,516)-Proceeds from disposal of plant and equipment18,385-Proceeds from sale of marketable securities-374,751Net cash used in investing activities(8,783,699)(4,112,199)CASH FLOWS FROM FINANCING ACTIVITIES:Restricted cash783,211(19,104)Proceeds from short-term debt4,984,1931,292,959Repayments of short-term debt(7,786,529)(2,098,523)Proceeds from long-term bank loan6,835,465-Advances from related parties3,75977,952Repayment of advances to related parties43,417-Net cash provided by (used in) financing activities4,863,516(746,716)DECREASE IN CASH AND CASH EQUIVALENTS(3,308,758)(1,461,468)Effect of exchange rate changes on cash(493,606)275,366Cash and cash equivalents at beginning of period8,399,3066,116,816CASH AND CASH EQUIVALENTS AT END OF PERIOD$4,596,942$4,930,714SUPPLEMENTARY CASH FLOW INFORMATIONIncome taxes paid$167,501$76,913Interest paid$281,286$360,536  See accompanying notes to condensed consolidated financial statements.  7   AIDA PHARMACEUTICALS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)  SUPPLEMENTAL NON-CASH DISCLOSURES:  1. During the three months ended March 31, 2008 and 2007, deposit of $0 and $38,475 was transferred to patents.2. During the three months ended March 31, 2008 and 2007, deposit of $0 and $97,783 was transferred to plant and equipment.   8   AIDA PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007 (UNAUDITED)  1. ORGANIZATION AND PRINCIPAL ACTIVITIES  The primary operations of Aida Pharmaceuticals, Inc. and subsidiaries (the Company) are the development, production and distribution of cardiovascular and anti cancer drugs, in the form of powder for injection, liquid for intravenous injection, capsule, tablet, ointment, etc., within the Peoples Republic of China (PRC).  2. BASIS OF PRENTATION  The unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the consolidated financial position and the consolidated results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full year. The condensed consolidated balance sheet information as of December 31, 2007 was derived from the audited consolidated financial statements included in the Companys Annual Report Form 10-KSB.  These interim financial statements should be read in conjunction with that report.  3. PRINCIPLES OF CONSOLIDATION  The unaudited condensed consolidated financial statements include the accounts of Aida Pharmaceuticals, Inc. (Formerly BAS Consulting, Inc.) and the following subsidiaries:  (i) Earjoy Group Limited (Earjoy) (100% subsidiary of Aida);  (ii) Hangzhou Aida Pharmaceutical Co., Ltd. (HAPC) (100% Subsidiary of Earjoy);  (iii) Hangzhou Boda Medical Research and Development Co., (Boda) (100% Subsidiary of HAPC);  (iv) Hainan Aike Pharmaceutical Co., Ltd. (Hainan) (60.61%% subsidiary of HAPC) and Yang Pu Aike Pharmaceutical Co., Ltd. (Yangpu) (95% subsidiary of Hainan). HAPC exercise significant influence over Hainan by controlling over 50% of the voting rights;  (v) Changzhou Fangyuan Pharmaceutical Co., Ltd. (Fangyuan) (66% subsidiary of HAPC).  (vi) Shanghai Qiaer Bio-Technology Co., Ltd. (Qiaer) (77.5% subsidiary of HAPC)  All inter-company accounts and transactions have been eliminated in consolidation.   9   AIDA PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007 (UNAUDITED)  4. CONCENTRATIONS  The Company has major customers who accounted for the following percentages of total sales and total accounts receivable in 2008 and 2007:  SalesMajor CustomersFor the Three Months Ended March 31, 2008For the Three Months Ended March 31, 2007Accounts ReceivableMarch 31, 2008December 31, 2007Company A-26%-30%Company B-4%-2%Company C-2%-2%Company D14%-8%-Company E11%-5%-Company F4%-2%-Company G4%-4%-  The Company has major suppliers who accounted for the following percentage of total purchase and total accounts payable in 2008 and 2007:  PurchaseMajor SuppliersFor the Three Months Ended March 31, 2008For the Three Months Ended March 31, 2007Accounts PayableMarch 31, 2008December 31, 2007Company H11%11%30%12%Company I4%9%12%5%  The sole market of the Company is the PRC for the periods ended March 31, 2008 and 2007.  5. USE OF ESTIMATES  The preparation of the condensed consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.  Management makes these estimates using the best information available at the time the estimates are made. Actual results could differ materially from those estimates.   10   AIDA PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007 (UNAUDITED)  6. FOREIGN CURRENCY TRANSLATION  The accompanying condensed consolidated financial statements are presented in United States dollars. The functional currency of the Company is the Renminbi (RMB).  The condensed consolidated financial statements are translated into United States dollars from RMB at year-end exchange rates as to assets and liabilities and average exchange rates as to revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred.  March 31, 2008December 31, 2007March 31, 2007Period end RMB:         US$ exchange rate7.02227.30467.7342Average period RMB:  US$ exchange rate7.16347.55677.7715  7. FAIR VALUE OF FINANCIAL INSTRUMENTS  The Companys financial instruments include cash and cash equivalents, restricted cash, accounts receivable, notes receivable, due to/from related parties, other receivables and prepaid expenses, due to employees, prepayments for goods, accounts payable, other payable and accrued liabilities, accrued expenses, short-term debt, taxes payable and customer deposits.  Management has estimated that the carrying amount approximates fair value due to their short-term nature.  8. EARNINGS (LOSS) PER SHARE  Basic earning (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earning (loss) per share is computed similar to basic earning (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were no dilutive securities outstanding for the periods presented.  9. NEW ACCOUNTING PRONOUNCEMENTS  In September 2006, the Financial Accounting Standard Board (FASB) issued Statement of Accounting Standards (SFAS) No. 157, "Fair Value Measurements," which provides enhanced guidance for using fair value to measure assets and liabilities. SFAS No. 157 provides a common definition of fair value and establishes a framework to make the measurement of fair value in generally accepted accounting principles more consistent and comparable. SFAS No. 157 also requires expanded disclosures to provide information about the extent to which fair value is used to measure assets and liabilities, the methods and assumptions used to measure fair value, and the effect of fair value measures on earnings. SFAS No. 157 is effective for financial statements issued in fiscal years beginning after November 15, 2007 and to interim periods within those fiscal years. The adoption of SFAS No. 157 did not have an impact on the Companys financial statements.  11   AIDA PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007 (UNAUDITED)  9. NEW ACCOUNTING PRONOUNCEMENTS (CONTINUED)  In December 2007, the FASB issued SFAS No. 141 (R), Business Combinations, and SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements. SFAS No. 141 (R) requires an acquirer to measure the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at their fair values on the acquisition date, with goodwill being the excess value over the net identifiable assets acquired. SFAS No.160 (see more details below) clarifies that a noncontrolling interest in a subsidiary should be reported as equity in the consolidated financial statements. The calculation of earnings per share will continue to be based on income amounts attributable to the parent. SFAS No. 141 (R) and SFAS No. 160 are effective for financial statements issued for fiscal years beginning after December 15, 2008. Early adoption is prohibited. We have not yet determined the effect on our consolidated financial statements, if any, upon adoption of SFAS No. 141 (R) or SFAS No. 160. We are aware that our accounting for minority interest will change and we are considering those effects now but believe the effects will only be a reclassification of minority interest from mezzanine equity to our stockholders equity section in the balance sheet. In any case we do not believe the implementation of SFAS 160 will be material to our financial position. SFAS 141 (R) will significantly affect the accounting for future business combinations and the Company will determine the accounting as new combinations occur.  In February 2007, the FASB issued SFAS No. 159, The Fair Value for Financial Assets and Financial Liabilities. This Statement permits entities to choose to measure financial assets and liabilities, with certain exceptions, at fair value at specified election dates. A business entity shall report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. This Statement is effective as of the beginning of an entitys first fiscal year that begins after November 15, 2007. The adoption of SFAS No. 159 did not have an impact on the Companys financial statements.  In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements. This Statement establishes accounting and reporting standards that require the ownership interests in subsidiaries non-parent owners be clearly presented in the equity section of the balance sheet; requires the amount of consolidated net income attributable to the parent and to the noncontrolling interest be clearly identified and presented on the face of the consolidated statement of income; requires that changes in a parents ownership interest while the parent retains its controlling financial interest in its subsidiary be accounted for consistently; requires that when a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be initially measured at fair value and the gain or loss on the deconsolidation of the subsidiary be measured using the fair value of any noncontrolling equity; requires that entities provide disclosures that clearly identify the interests of the parent and the interests of the noncontrolling owners. This Statement is effective as of the beginning of an entitys first fiscal year that begins after December 15, 2008. The Company has not determined the impact, if any, SFAS No. 160 will have on its financial statements.  In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities" ("SFAS No. 161"), which amends SFAS No.133 and expands disclosures to include information about the fair value of derivatives, related credit risks and a company's strategies and objectives for using derivatives. SFAS No. 161 is effective for fiscal periods beginning on or after November 15, 2008. The Company is currently in the process of assessing the impact that SFAS No. 161 will have on the disclosures in its financial statements.  10. NOTES RECEIVABLE  Notes receivable consist of the following:  12   AIDA PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007 (UNAUDITED)  Notes receivable from unrelated companies:March 31, 2008
(Unaudited)December 31, 2007Due November 30, 2008$101,643$52,888Due January 29, 2008  (subsequently settled)-23,216Due January 9, 2008 (subsequently settled)-27,473Due October 31, 2008751,949724,094Due December 15, 200871,20368,450Due January 26, 2008  (subsequently settled)-20,535Due April 30, 2008 (subsequently settled)45,06113,691Due December 31, 200825,90923,796Due December 31, 2007 (subsequently settled)-24,907Due December 31, 2007 (subsequently settled)-7,589Due August 20, 200833,414-Due April 25, 2008 (subsequently settled)28,578-Due December 14, 200852,39450,368Due July 4, 20081,518-Due June 28, 200830,162-Due July 26, 200814,241-Due April 10, 2008 (subsequently settled)47,756-Due July 7, 200815,069-Due December 31, 2008100,965-Subtotal1,319,8621,037,007Less: Discount36,44749,518Total notes receivable, net$1,283,415$987,489  Notes receivable are interest-free and unsecured.  In 2007, interest-free notes were provided to companies for their assistance in developing distribution channels and new markets for the Company. The Company recorded selling and distribution expense and a discount on the notes receivable of $130,793 based on the present value of the notes receivable using a rate of 7% per annum.  For the three months ended March 31, 2008, $13,071 of interest income was recognized in the accompanying condensed consolidated statements of operations from the amortization of the discount.  11. INVENTORIES  Inventories consist of the following:  March 31, 2008
(Unaudited)December 31, 2007Raw materials$887,226$1,519,854Work-in-progress1,059,8031,036,717Finished goods2,466,8021,281,088Total$4,413,831$3,837,659   13   AIDA PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007 (UNAUDITED)  12. RECEIVABLE FOR SECURED GUARANTEE  On September 26 and November 9, 2007, HAPC entered into guarantee contracts to serve as guarantor of bank loans amounting to $2,848,110 and $2,136,083 respectively to a third-party, Nanwang Information Industry Group Co., Ltd. (Nanwang) from Bank of Communication Hangzhou Branch. Under the guarantee contract, HAPC shall perform all obligations of Nanwang under the loan contract if Nanwang fails to perform such obligations. On March 25, 2008, Bank of Communication Hangzhou Branch demanded Nanwang repay the loans and outstanding interest because Nanwang defaulted on its interest payments. Consequently, as its guarantor, HAPC had to repay $5,080,732 for Nanwang .  Also, on June 15, 2007, HAPC entered into a guarantee contract to serve as guarantor of a bank loan amounting to $2,136,083 to Nanwang from Union Bank Hangzhou Branch. Under the guarantee contract, HAPC shall perform all obligations of Nanwang under the loan contract if Nanwang fails to perform its obligations therein. On March 28, 2008, Union Bank Hangzhou Branch demanded Nanwang repay the loan and outstanding interest because Nanwang defaulted on its interest payments. Consequently, HAPC, as its guarantor, had to repay $1,914,784.  HAPC has commenced legal proceedings in the middle court of Hangzhou to recover all the amounts paid on behalf of Nanwang on April 15, 2008. According to the ruling of the local court dated April 22, 2008, assets of Nanwang with an estimated value of $6,995,516 have been seized and sequestered pending resolution of the said litigation proceeding. The Company anticipates that its claim will be fully recovered from the assets of Nanwang. The receivable for guarantees in the amount of $6,995,516 was reflected in the current assets section of the consolidated balance sheet as of March 31, 2008.  13. PLANT AND EQUIPMENT  Plant and equipment consist of the following:  March 31, 2008
(Unaudited)December 31, 2007At cost:Buildings$10,311,214$9,865,299Machinery13,191,02712,465,740Motor vehicles949,142912,448Office equipment985,813912,979Leasehold improvements495,861476,69125,933,05724,633,157Less:  Accumulated depreciationBuildings1,895,2791,758,316Machinery5,138,8824,748,325Motor vehicles499,535452,541Office equipment598,212542,518Leasehold improvements399,729378,8198,531,6377,880,519Plant and equipment, net$17,401,420$16,752,638  The net book value of buildings and machinery pledged for certain bank loans at March 31, 2008 and December 31, 2007 is $5,214,972 and $5,070,294, respectively.  Also see Note 17.  Depreciation expense for the three months ended March 31, 2008 and 2007 is $332,994 and $410,177, respectively.  14   AIDA PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007 (UNAUDITED)  14. LAND USE RIGHTS  Land use rights consist of the following:  March 31, 2008
(Unaudited)December 31, 2007Cost$3,945,385$3,945,385Less: Accumulated amortization302,430280,670Land use rights, net$3,642,955$3,664,715  Amortization expense for three months ended March 31, 2008 and 2007 is $21,760 and $19,797 respectively.  Amortization expense for the next five years and thereafter is as follows:  2008 within one year$65,279200987,039201087,039201187,039201287,039Thereafter3,229,520Total$3,642,955  The net book value of the land use rights pledged for certain bank loans at March 31, 2008 and December 31, 2007 is $2,394,269 and $2,314,771, respectively.  Also see Notes 17.  15. PATENTS  Patents consist of the following:  March 31, 2008
(Unaudited)December 31, 2007Cost$6,446,568$6,446,568Less: Accumulated amortization1,245,7941,086,125Patents, net$5,200,774$5,360,443  Amortization expense for three months ended March 31, 2008 and 2007 is $159,669 and $103,489, respectively.  Amortization expense for the next five years and thereafter is as follows:  2008 within one year$404,3342009531,4322010531,4322011531,4322012470,177Thereafter2,731,967Total$5,200,774  15   AIDA PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007 (UNAUDITED)  16. DEPOSITS  Deposits at March 31, 2008 and December 31, 2007 consist of the following:  March 31, 2008
(Unaudited)December 31, 2007Deposits for patent$648,222$648,222Deposits for plant and equipment770,062412,500Deposits for acquisition of JSIM9,873,6899,492,709Total$11,291,973$10,553,431  During the three months ended March 31, 2008, the Company paid $357,562 as deposits to acquire certain equipment.  During the three months ended March 31, 2008, the Company paid $380,980, as deposits to acquire 98% of the outstanding shares of Jiangsu Institute of Microbiology Co., Ltd. (JSIM) (Also see Note 22)  17. SHORT TERM DEBT  Short-term debt consists of the following:  March 31, 2008
(Unaudited)December 31, 2007Loans from Industrial and Commercial Bank of China Qingchun Branch, due August 15, 2008, monthly interest only payments at 7.524% per annum, secured by assets owned by the Company. Also see Notes 13 and 14.$712,028$684,501Loans from Industrial and Commercial Bank of China Qingchun Branch, due July 18, 2008, monthly interest only payments at 7.524% per annum, secured by assets owned by the Company. Also see Notes 13 and 14.996,839958,300Loans from Industrial and Commercial Bank of China Qingchun Branch, due August 8, 2008, monthly interest only payments at 7.524% per annum, secured by assets owned by the Company. Also see Notes 13 and 14.890,034855,625Loans from Industrial and Commercial Bank of China Qingchun Branch, due June 6, 2008, monthly interest only payments at 7.227% per annum, secured by assets owned by the Company. Also see Notes 13 and 14.1,424,0551,369,000Loans from Industrial and Commercial Bank of China Qingchun Branch, due June 18, 2008, monthly interest only payments at 7.227% per annum, secured by assets owned by the Company. Also see Notes 13 and 14.854,433821,400Loan from Bank of Communication Qingchun Branch, due March 29, 2008 monthly interest only payments at 6.7095% per annum, guaranteed by Nanwang Information Industry Group Co., Ltd.(subsequently repaid on its due date)-3,422,501  16   AIDA PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007 (UNAUDITED)  18. SHORT TERM DEBT (CONTINUED)  March 31, 2008
(Unaudited)December 31, 2007Loan from Bank of Communication Qingchun Branch, due March 5, 2008 monthly interest only payments at 6.8985% per annum, guaranteed by Nanwang Information Industry Group Co., Ltd. (subsequently repaid on its due date)-1,369,000Loan from Bank of Communication Qingchun Branch, due March 26, 2008 monthly interest only payments at 6.8985% per annum, guaranteed by Nanwang Information Industry Group Co., Ltd. (subsequently repaid on its due date)-1,369,000Loan from Hangzhou Commercial Bank Gaoxin Branch due February 1, 2008, monthly interest only payments at 6.732% per annum, guaranteed by Xinchang Guobang Chemicals Co., Ltd. (subsequently repaid on its due date)-1,369,000Loan from Bank of Communication Qingchun Branch due June 6, 2008, monthly interest only payments at 8.56% per annum, guaranteed by Nanwang Information Industry Group Co., Ltd.(subsequently guaranteed by Xinchag Changxin Investment Development Co., Ltd.)2,136,083-Loan Bank of Communication Qingchun Branch due March 25, 2009, monthly interest only payments at 7.56% per annum, guaranteed by Nanwang Information Industry Group Co., Ltd. (subsequently guaranteed by Xinchang Changxin Investment Development  Co., Ltd.1,424,055-Loan Bank of Communication Qingchun Branch due September 26, 2008, monthly interest only payments at 7.56% per annum, guaranteed by Nanwang Information Industry Group Co., Ltd. (subsequently guaranteed by Xinchag Changxin Investment Development Co., Ltd.)1,424,055-Loan from Bank of China Kaiyuan Branch due April 27, 2008, monthly interest only payments at 7.3485% per annum, guaranteed by Xinchang Guobang Chemicals Co., Ltd. (subsequently repaid on its due date)1,424,0551,369,000Loan from Bank of China Kaiyuan Branch due May 16, 2008, monthly interest only payments at 7.3485% per annum, guaranteed by Xinchang Guobang Chemicals Co., Ltd. (subsequently repaid on its due date)712,028684,501Loan from Bank of China Kaiyuan Branch due May 9, 2008, monthly interest only payments at 7.3485% per annum, guaranteed by Xinchang Guobang Chemicals Co., Ltd. (subsequently repaid on its due date)2,136,0832,053,501Loan from Evergrowing Bank Hangzhou Branch due June 4, 2008, monthly interest only payments at 7.3485% per annum, guaranteed by Xinchang Guobang Chemicals Co., Ltd.2,136,0832,053,501   17   AIDA PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007 (UNAUDITED)  18. SHORT TERM DEBT (CONTINUED)  March 31, 2008
(Unaudited)December 31, 2007Loans from Changzhou Commercial Bank, due May 28, 2008, monthly interest only payments at 8.541% per annum, secured by assets owned by the Company. Also see Notes 13 and 14.2,015,0381,937,136Loans from Changzhou Commercial Bank, due May 28, 2008, monthly interest only payments at 8.541% per annum, secured by assets owned by the Company. Also see Notes 13 and 14.1,260,2881,211,565Loans from Changzhou Communication Bank of China, due November 16, 2008, monthly interest only payments at 9.478% per annum, guaranteed by Changzhou High-Tech Development District Co., Ltd.1,586,3971,525,066Loans from Changzhou Communication Bank of China, due November 23, 2008, monthly interest only payments at 9.478% per annum, guaranteed by Changzhou High-Tech Development District Co., Ltd.405,856390,165Loans from Huaxia Bank, due October 17, 2008, monthly interest only payments at 8.020% per annum, guaranteed by Changzhou Huarun Material Co., Ltd.2,848,1102,738,001Total short-term bank loans24,385,52026,180,763  Notes payable to unrelated companies:Due March 14, 2008 (subsequently repaid on its due date)$-$102,675Due February 23, 2008 (subsequently repaid on its due date)-684,500Due June 27, 2008102,53298,568Due September 30, 2008, interest charged at 7.52% per annum569,622547,601Due December 30, 2008, interest charged at 9.00% per annum712,028684,500Due April 6, 2008, interest at 7.26% per annum (subsequently repaid on its due date)712,028684,500Due June 30, 2008, interest at 7.02% per annum498,418821,399Due December 31, 2007 (subsequently repaid)-273,800Due December 31, 2008284,811273,800Due December 31, 2008284,811-Due February 20, 20091,262,947-Total notes payable  unrelated companies4,427,1974,171,343Total short-term debt$28,812,717$30,352,106  All the notes payable are subject to bank charges of 0.05% of the principal as a commission on each loan transaction. Bank charges for notes payable were $905 and $3,005 for three months ended March 31, 2008 and 2007, respectively.  Restricted cash of $102,532 is held as collateral for the following notes payable at March, 31, 2008:  Due June 27, 2008$102,532Total$102,532  18   AIDA PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007 (UNAUDITED)  18. LONGTERM DEBT  Long-term debt consists of the following:  Bank loans:March 31, 2008
(Unaudited)December 31, 2007Loan from Bank of Communication Qingchun Branch due March 23, 2010, monthly interest only payments at 7.56% per annum, guaranteed by Chanxin Investment Development  Co., Ltd.$4,984,193$-Loan from Union Bank due March 27, 2010, monthly interest only payments at 7.56% per annum, guaranteed by Zhejiang Guobang Chemicals Co., Ltd.1,851,272-Loans from Communication Bank of China Changzhou Branch, due November 3, 2008, monthly interest only payments at 6.7272% per annum, guaranteed by Changzhou High-Tech Development District Co., Ltd.1,369,0001,369,000Total long-term bank loans8,204,4651,369,000Less: current portion(1,369,000)(1,369,000)Long-term portion$6,835,465$-Notes payable to unrelated companies:Due December 31, 2009, interest at 7.02% per annum, guaranteed by Donghong Taisheng Co., Ltd384,187384,187Due February 20, 2009, interest at 1% per annum and unsecured-1,262,947Total notes payable$384,187$1,647,134  19. INCOME TAXES  (a) Corporation Income Tax (CIT)  Effective January 1, 2007, the Company adopted Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48"), an interpretation of FASB statement No. 109, Accounting for Income Taxes. The interpretation addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under FIN 48, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. FIN 48 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of March 31, 2008, the Company does not have a liability for unrecognized tax benefits.  19   AIDA PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007 (UNAUDITED)  19. INCOME TAXES (CONTINUED)  The Company files income tax returns in the U.S. federal jurisdiction and various states. The Company is subject to U.S. federal or state income tax examinations by tax authorities for years after 2005. During the periods open to examination, the Company has net operating loss (NOL) carry forwards and tax credit carry forwards for U.S. federal and state tax purposes that have attributes from closed periods. Since these NOLs and tax credit carry forwards may be utilized in future periods, they remain subject to examination. The Company also files certain tax returns in the Peoples Republic of China. As of March 31, 2008 the Company was not aware of any pending income tax examinations by the Peoples Republic of China tax authorities.  The Company's policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of March 31, 2008, the Company has no accrued interest or penalties related to uncertain tax positions.  On March 16, 2007, the National Peoples Congress of China approved the Corporate Income Tax Law of the Peoples Republic of China (the new CIT law), which is effective from January 1, 2008.  Prior to January 1, 2008, the corporation income tax (CIT) rate applicable to subsidiaries of the Company in the PRC range from 15% to 33%.  In 2006, HAPC applied to the local tax authority for a favorable corporate income tax rate of 26.4% for companies registered in coastal economic zone of PRC, which was approved in October 2006. As a result, the corporate income tax rate applicable to HAPC was changed to 26.4% from 33%.  Hainan and Yangpu are subsidiaries registered in Hainan, PRC, and their corporate income tax rate of 15% is the tax rate for companies registered in Hainan, PRC in accordance with the relevant tax laws in PRC. Fangyuan is a subsidiary of HAPC and its applicable corporate income tax rate is 15%, since the company was recognized as high-tech companies by the PRC government.  However, in accordance with the relevant taxation laws in the PRC, from the time that a company has its first profitable tax year, a foreign investment company is exempt from corporate income tax for its first two years and is then entitled to a 50% tax reduction for the succeeding three years. For Hangzhou and Hainan, the first profitable year for income tax purposes as a foreign investment company was 2004.  Under the new CIT law, the corporate income tax rate applicable to the Company starting from January 1, 2008 is 25%. The Company believes some of the tax concession granted to eligible companies prior to the new CIT law will be grand fathered.  Income tax expense (benefit) is summarized as follows:  For the Three Months Ended March 31,(Unaudited)20082007Current:Provision for Corporation Income Tax$187,986$53,347187,98653,347Deferred:Provision for Corporation Income Tax(71,837)(120,177)(71,837)(120,177)Income tax expense (benefit)$116,149$(66,830)   20   AIDA PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007 (UNAUDITED)  19. INCOME TAXES (CONTINUED)  The Companys income tax expense (benefit) differs from the expected tax expense (benefit) for the three months ended March 31, 2008 and 2007 (computed by applying the CIT rate of 25 percent to income (loss) before income taxes) as follows:  For the Three Months Ended March 31, (Unaudited)20082007Computed expected expense (benefit)$78,235$(46,795)Effect of favorable tax rates(24,278)-Valuation allowance(11,535)(5,089)Permanent differences78,469-Tax exemptions(4,742)(14,946)Income tax expense (benefit)$116,149$(66,830)  The tax effects of temporary differences that give rise to the Companys net deferred tax assets and liabilities are as follows:  March 31, 2008 (Unaudited)December 31, 2007Deferred tax assets:Current portion:Consulting and audit expenses$99,768$96,384Selling and distribution expenses186,956174,608Bad debt provision100,031102,963Other29,70740,899Less: Valuation allowance(4,749)-Subtotal411,713414,854Non-current portion:Depreciation68,1905,875Impairment and amortization65,91060,844Bad debt provision411411Research and development costs105,567129,403Other42,16342,307Less: Valuation allowance(48,000)(41,213)Subtotal234,241197,627Total deferred tax assets645,954612,481Deferred tax liabilities:Current portion:Sales cut-off48,617101,992Other44,03742,463Subtotal92,654144,455  21   AIDA PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007 (UNAUDITED)  19. INCOME TAXES (CONTINUED)  March 31, 2008 (Unaudited)December 31, 2007Non-current portion:Subsidy income192,105192,105Depreciation68,16148,132Unrealized gains from foreign currency translation219,261219,261Intangible assets of acquisition481,546481,546Other22,41929,011Subtotal983,492970,055Total deferred tax liabilities1,076,1461,114,510Net deferred liabilities$430,192$502,029  (b)  Value Added Tax (VAT)  Enterprises or individuals, who sell commodities, engage in repair and maintenance or import or export goods in the PRC are subject to a value added tax in accordance with Chinese Laws.  The value added tax standard rate is 17% of the gross sale price. A credit is available whereby VAT paid on the purchases of semi-finished products or raw materials used in the production of the Companys finished products can be used to offset the VAT due on the sales of the finished products.  The VAT payable of $259,356 and $319,085 at and March 31, 2008 and December 31, 2007, respectively, are included in other payables and accrued expenses in the accompanying condensed consolidated balance sheets.  20. MARKETABLE SECURITIES  The Company purchased an investment fund at a cost of $256,125 on September 6, 2006. The fair market value of the fund as of December 31, 2006 was $362,758. The difference between the market value and the cost of $106,633 was recognized as other comprehensive income at December 31, 2006, and was included as a separate component of shareholders equity for year then ended.  The securities were classified as available-for-sale.  On January 28, 2007, the Company sold the marketable securities for $374,751 resulting in a gain of $118,626 which was included in the statement of operations and comprehensive income for the three months ended March 31, 2007.  21. COMMITMENTS AND CONTINGENCIES  (a) Lease Commitment  The Company occupies plant and office space leased from third parties.  Accordingly, for the three months ended March 31, 2008 and 2007, the Company recognized rental expense for these spaces of $78,656 and $187, 836, respectively.  22   AIDA PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007 (UNAUDITED) 21. COMMITMENTS AND CONTINGENCIES (CONTINUE)  As of March 31, 2008, the Company has outstanding commitments with respect to non-cancelable operating leases for real estate, which fall due as follows:  Period Ending March 31,Amount2008$228,3732009283,6682010283,6682011283,6682012283,668Thereafter1,068,041Total$2,431,086  (b) Contingencies  Legal proceeding  In January 2007, the Company was sued by Jiangying Xinqiao Construction Co., Ltd for an overdue construction payment of $243,318. The local judge held court in April, 2007and the case is still in progress.  The Company believes the claim is without merit and plans to vigorously defend the claim. As such, there is no contingent accrual at March 31, 2008.  Guarantee contracts-related party  On June 14, 2007, HAPC entered into a guarantee contract to serve as guarantor for all the bank loans borrowed during the period from June 14, 2007 to June 14, 2008 by Zhejiang Guobang Pharmaceuticals Co., Ltd. (ZGPC), a company which has a director who is also a director of the Company, from China Minsheng Banking Corporation Hangzhou Branch with a maximum guarantee amount of $1,424,055. As of May 20, 2008, the bank loan borrowed by ZGPC and secured by this guarantee contract is $1,424,055 and due on June 14, 2008. Under this guarantee contract, HAPC shall perform all obligations of ZGPC under the loan contract if ZGPC fails to perform its obligations as set forth in the loan contract.  On January 9, 2008, HAPC entered into a guarantee contract to serve as guarantor for all the bank loans borrowed during the period from January 9, 2008 to January 9, 2009 by ZGPC,  from Shanghai Pudong Development Bank with a maximum guarantee amount of $2,848,110. As of May 20, 2008, the bank loans borrowed by ZGPC and secured by this guarantee contract are $1,424,055 and $1,424,055, due on June 9, 2008 and November 21, 2008, respectively. Under this guarantee contract, HAPC shall perform all obligations of ZGPC under the loan contract if ZGPC fails to perform its obligations as set forth in the loan contract.  On July 6, 2007, HAPC entered into a guarantee contract to serve as guarantor for all the bank loans borrowed during the period from July 6, 2007 to December 31, 2008 by Xinchang Guobang Chemical Co., Ltd. (XGCC), a company which has a director who is also a director of the Company, from Bank of Communications with a maximum guarantee amount of $3,275,327. As of May 20, 2008, the bank loans borrowed by XGCC and secured by this guarantee contract are $427,216 and $427,216, and due on June 21, 2008 and June 25, 2008, respectively. Under this guarantee contract, HAPC shall perform all obligations of XGCC under the loan contract if XGCC fails to perform its obligations as set forth in the loan contract.  23   AIDA PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007 (UNAUDITED)  21. COMMITMENTS AND CONTINGENCIES (CONTINUE)  On September 30, 2007, HAPC entered into a guarantee contract to serve as guarantor of a bank loan amounting to $854,433 and due on August 29, 2008 borrowed by XGCC from Construction Bank of China Xinchang Branch. Under this guarantee contract, HAPC shall perform all obligations of XGCC under the loan contract if XGCC fails to perform its obligations as set forth in the loan contract.  On October 31, 2007, HAPC entered into a guarantee contract to serve as guarantor of a bank loan amounting to $2,848,110 and due on September 30, 2008 borrowed by XGCC from Construction Bank of China Xinchang Branch. Under this guarantee contract, HAPC shall perform all obligations of XGCC under the loan contract if XGCC fails to perform its obligations as set forth in the loan contract (Also see Note 12).  22. SUBSEQUENT EVENT  On April 24, 2008, the Company announced that it has completed the acquisition of a controlling interest in Jiangsu Institute of Microbiology Co., Ltd. (JSIM), one of the microbiology research institutes in the PRC. The controlling interest in JSIM was acquired through HAPC (which acquired a 43% equity interest) and Fangyuan (which acquired a 55% equity interest)for $11,291,973. Thereafter, JSIM became a 98% owned subsidiary of the Company.  The following unaudited pro forma combined condensed statement of income for the three months ended March 31, 2008 was prepared as if the acquisition had occurred on January 1, 2008. The pro forma information may not be indicative of the results that actually would have occurred if the acquisition had been in effect from and on the dates indicated or which may be obtained in the future.  Pro Forma Combined
(Unaudited)REVENUES$7,654,030GROSS PROFIT$3,954,474INCOME FROM OPERATIONS$172,883NET INCOME$56,735NET INCOME PER SHAREBASIC AND DILUTED$0.002   24   Item 2. Managements Discussion and Analysis or Plan of Operation.  FORWARD-LOOKING STATEMENTS  We have included forward-looking statements in this report. For this purpose, any statements contained in this report that are not statements of historical fact may be deemed to be forward looking statements. Without limiting the foregoing, words such as "may", "will", "expect", "believe", "anticipate", "estimate", "plan" or "continue" or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors. Factors that might cause forward-looking statements to differ materially from actual results include, among other things, overall economic and business conditions, demand for the Company's products, competitive factors in the industries in which we compete or intend to compete, natural gas availability and cost and timing, impact and other uncertainties of our future acquisition plans.  GENERAL  Aida Pharmaceuticals Inc. (formerly known as BAS Consulting, Inc.) (the Company) was incorporated in the State of Nevada on December 18, 2002 (inception). We attempted to operate as a consulting firm and were not successful. We then began to seek an acquisition candidate and on December 8, 2005, we completed and closed the Share Exchange Agreement (the Agreement) dated as of June 1, 2005 by and among BAS Consulting, Inc., Earjoy Group Limited, a British Virgin Islands international business company (Earjoy), and the shareholders of Earjoy (the Earjoy Shareholders). A copy of the Agreement was previously filed as an Exhibit to our Current Report on Form 8-K dated June 1, 2005 as filed with the Securities and Exchange Commission (the SEC) on June 15, 2005.  On March 6, 2006, we amended our Articles of Incorporation to change the name of the Company to Aida Pharmaceuticals, Inc. As a result of the acquisition, we now operate the business under the name of Aida Pharmaceuticals, Inc.  On July 5, 2006, we registered 2,500,000 shares of our common stock, $0.001 par value on Form S-8 with the SEC. Pursuant to the registration statement, we issued 2,000,000 shares to our employees and consultants.  On November 13, 2007, we filed a registration statement on Form SB-2 with the SEC to register an aggregate 1,300,000 shares of our common stock that have already been issued to the selling security holder, Panasia Strategy Investment Co., Ltd, in private placement transactions that were exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended and an additional 1,200,000 Units, each Unit consisting of one share of common stock, one Class A Redeemable Warrant and one Class B Redeemable Warrant that are being offered by us. The registration statement on Form SB-2 became effective on January 29, 2008.  Our headquarters are located in Hangzhou, the Peoples Republic of China.  Subsidiaries  We have the following subsidiaries:  · Earjoy Group Limited, (Earjoy)  · Hangzhou Aida Pharmaceutical Co., Ltd (Hangzhou Aida or HAPC);  · Hangzhou Boda Medical Research and Development Co., Ltd. (Boda);  · Hainan Aike Pharmaceutical Co., Ltd. (Aike);  · Changzhou Fangyuan Pharmaceutical Co., Ltd. (Fangyuan); and  · Shanghai Qiaer Bio-technology Co., Ltd (Qiaer)  25   Earjoy is an investment holding company.  Hangzhou Aida has been in operation since March 1999 and was established as a limited liability company under the laws of the Peoples Republic of China (PRC) on March 26, 1999. On December 23, 2004, Earjoy entered into a Share Purchase Agreement with Best Nation Investment Co., Ltd. for the acquisition by Earjoy of 100% of all interests in Hangzhou Aida.  Hangzhou Aida is a fully-integrated pharmaceutical company engaged in the development, manufacture, marketing, licensing, and distribution of pharmaceutical products primarily in mainland China. Hangzhou Aida (including its subsidiaries) has a total of nine production lines for the manufacture of antibiotics, cardiovascular and anti-tumor drugs in various forms, including injectable powder, injectable liquid, capsules, tablets and ointments. Hangzhou Aidas primary product is Etimicin Sulfate the injectable powder form. All of them have been certified according to the Good Manufacturing Practices (GMP) guidelines issued by the State Food and Drug Administration of the Peoples Republic of China (SFDA). Hangzhou Aida sells its Category-A antibiotic (Etimicin Sulphate under the trademark Aida and PanNuo etc. All these products are prescription drugs that are sold mainly to the hospitals in mainland China.  Boda is a wholly-owned subsidiary of Hangzhou Aida and engages itself in the research and development of new drugs.  Aike was once a 50% owned subsidiary of Hangzhou Aida. In August 2006, Hangzhou Aida increased its position through an additional direct investment of $568,994 into Hainan Aike and making a $63,222 purchase of the interests held by a third-party institutional shareholder Merlin Green Canada Inc. Thereafter, Hainan Aike became a 60.61% owned subsidiary of Hangzhou Aida. Hangzhou Aida exercises significant influence over Aike by controlling over 60.61% of its voting rights. Aike owns 95% of Yangpu Aike Pharmaceutical Co., Ltd. (Yangpu). Aike specializes in the production of transfusion type of Etimicin AiYi.  Fangyuan is a 66% owned subsidiary of Hangzhou Aida. Fangyuan is sole supplier of raw material for Etimicin and is also a major producer of the liquid type of Etimicin ChuangCheng.  On August 8, 2006, Hangzhou Aida purchased 77.5% of the outstanding shares of Qiaer collectively from Zhejiang Pharmaceutical Co., Ltd , Shanghai Handsome Biotech Co., Ltd and Zhongtuo Times Investment Co., Ltd.  Qiaer was founded in 2001 and is located in the Zhangjiang Hi-tech development zone in Shanghai, PRC. The key product of Qiaer is rh-Apo21, a pioneering potential biopharmaceutical therapy with genetic engineering techniques used for cancers. Qiaer has applied for three patents from the PRC government authority, one of which has been granted with the other two in process. The Phase I clinical trial of rh-Apo2l has been successfully completed and the Phase II clinical trial has been initiated.  On March 26, 2008, Hangzhou Aida signed a purchase agreement with Jinou Medicine Co., Ltd to acquire a 43% equity interest in Jiangsu Institute of Microbiology Co., Ltd. Also on the same day, Fangyuan signed a purchase agreement with Jiangyin Hi-tech Group to acquire 55% interest in Jiangsu Institute of Microbiology Co.,Ltd.  Jiangsu Institute of Microbiology Co., Ltd (JSIM) is located in Wuxi City of Jiangsu Province, which is about 320 km from Hangzhou, where our headquarters are located. It is a high level research institute in the field of microbiology. With over 30 years of research experience, JSIM has a team of more than 30 scientists and engineers. JSIM has completed more than 200 research projects with over 20 being national level key projects. JSIM owns more than 20 patents. Several new drugs and microbial strains are now undergoing research by JSIM. Among them is Wetimicin, a new generation Aminoglycoside antibiotic, which is now in Phase I clinical trial stage. The transaction closed on April 24, 2008.  As a result, Jiangsu Institute of Microbiology Co., Ltd became a subsidiary of us. Below is a diagram of our corporate structure upon consummation of the purchase of Jiangsu Institute of Microbiology Co., Ltd:  26   [aida10q033108002.gif] CRITICAL ACCOUNTING POLICIES AND ESTIMATES  We believe the following is among the most critical accounting policies that impact our consolidated financial statements. We suggest that our significant accounting policies, as described in our consolidated financial statements in the Summary of Significant Accounting Policies, be read in conjunction with this Management's Discussion and Analysis of Financial Condition and Results of Operations.  We recognize revenue in accordance with Staff Accounting Bulletin ("SAB") No. 104. All of the following criteria must exist in order for us to recognize revenue:  1. Persuasive evidence of an arrangement exists;  2. Delivery has occurred or services have been rendered;  3. The seller's price to the buyer is fixed or determinable; and  4. Collectability is reasonably assured.  For fixed-priced refundable contracts, we recognize revenue on a completion basis. Progress payments received/receivables are recognized as revenue only if the specified criteria is achieved, accepted by the customer, confirmed not refundable and continued performance of future research and development services related to the criteria are not required.  We have identified one policy area as critical to the understanding of our consolidated financial statements. The preparation of our consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of sales and expenses during the reporting periods. With respect to net realizable value of our accounts receivable, Long-lived assets and inventories, significant estimation judgments are made and actual results could differ materially from these estimates.  27   For the three months ended March 31, 2008, management of the Company provided a reserve on its accounts receivable to reflect managements expectation on the collectability of aged accounts receivable. Managements estimation of the reserve on accounts receivable at March 31, 2008 was based on the current facts that there are aged accounts receivable. Management has assessed the customers ability to continue to pay the outstanding invoices timely, and whether their financial position will deteriorate significantly in the future which would result in their inability to pay their debts to the Company.  For the three months ended March 31, 2008, we had made no impairments for long-lived assets. Long-lived assets of the Company are reviewed annually as to whether their carrying value has become impaired, pursuant to the guidelines established in SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". We also periodically evaluate the amortization periods of our depreciable assets to determine whether subsequent events and circumstances warrant revised estimates of the useful lives.  Management's estimation whether a provision is needed is based on managements analysis of the current facts of whether potential impairments on the current carrying value of the inventories due to potential obsolescence exist as a result of aged inventories. In making its judgment, management made its estimations of the potential impairments based on the demand for our products in the future and the trends of turnover of the inventory.  While we currently believe that there is little likelihood that the actual results of managements current estimates will differ materially from such current estimates, if the financial position of our customers deteriorates, if there is a significant reduction in the carrying value of our Long-lived assets, or if, customer demand for our products decreases significantly in the near future, we could realize significant write downs for uncollectible accounts receivable, impairment of Long-lived assets or slow moving inventory.  In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements," which provides enhanced guidance for using fair value to measure assets and liabilities. SFAS No. 157 provides a common definition of fair value and establishes a framework to make the measurement of fair value in generally accepted accounting principles more consistent and comparable. SFAS No. 157 also requires expanded disclosures to provide information about the extent to which fair value is used to measure assets and liabilities, the methods and assumptions used to measure fair value, and the effect of fair value measures on earnings. SFAS No. 157 is effective for financial statements issued in fiscal years beginning after November 15, 2007 and to interim periods within those fiscal years. The Company is currently in the process of evaluating the effect, if any, the adoption of SFAS No. 157 will have on its consolidated results of operations, financial position, or cash flows.  In December 2007, the FASB issued SFAS No. 141 (R), Business Combinations, and SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements. SFAS No. 141 (R) requires an acquirer to measure the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at their fair values on the acquisition date, with goodwill being the excess value over the net identifiable assets acquired. SFAS No.160 (see more details below) clarifies that a noncontrolling interest in a subsidiary should be reported as equity in the consolidated financial statements. The calculation of earnings per share will continue to be based on income amounts attributable to the parent. SFAS No. 141 (R) and SFAS No. 160 are effective for financial statements issued for fiscal years beginning after December 15, 2008. Early adoption is prohibited. We have not yet determined the effect on our consolidated financial statements, if any, upon adoption of SFAS No. 141 (R) or SFAS No. 160. We are aware that our accounting for minority interest will change and we are considering those effects now but believe the effects will only be a reclassification of minority interest from mezzanine equity to our stockholders equity section in the balance sheet. In any case we do not believe the implementation of SFAS 160 will be material to our financial position. SFAS 141 (R) will significantly affect the accounting for future business combinations and the Company will determine the accounting as new combinations occur.  In February 2007, the FASB issued SFAS No. 159, The Fair Value for Financial Assets and Financial Liabilities. This Statement permits entities to choose to measure financial assets and liabilities, with certain exceptions, at fair value at specified election dates. A business entity shall report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. This Statement is effective as of the beginning of an entitys first fiscal year that begins after November 15, 2007. The adoption of SFAS No. 159 did not have an impact on the Companys financial statements.  28   In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements. This Statement establishes accounting and reporting standards that require the ownership interests in subsidiaries non-parent owners be clearly presented in the equity section of the balance sheet; requires the amount of consolidated net income attributable to the parent and to the noncontrolling interest be clearly identified and presented on the face of the consolidated statement of income; requires that changes in a parents ownership interest while the parent retains its controlling financial interest in its subsidiary be accounted for consistently; requires that when a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be initially measured at fair value and the gain or loss on the deconsolidation of the subsidiary be measured using the fair value of any noncontrolling equity; requires that entities provide disclosures that clearly identify the interests of the parent and the interests of the noncontrolling owners. This Statement is effective as of the beginning of an entitys first fiscal year that begins after December 15, 2008. The Company has not determined the impact, if any, SFAS No. 160 will have on its financial statements.  In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities" ("SFAS No. 161"), which amends SFAS No.133 and expands disclosures to include information about the fair value of derivatives, related credit risks and a company's strategies and objectives for using derivatives. SFAS No. 161 is effective for fiscal periods beginning on or after November 15, 2008. The Company is currently in the process of assessing the impact that SFAS No. 161 will have on the disclosures in its financial statements.  RESULTS OF OPERATIONS  THREE MONTHS ENDED MARCH 31, 2008 AS COMPARED TO THREE MONTHS ENDED MARCH 31, 2007  The following table sets forth selected statements of income data as a percentage of revenues for the three months indicated.  Three months Ended March 31,20082007Revenues100.00%100.00%Cost of goods sold(48.35)%(56.13)%Gross margin51.65%43.87%Research and development(3.70)%(2.50)%Selling and distribution(24.55)%(18.66)%General and administrative(14.45)%(22.21)%Other income (expense)(4.85)%(3.86)%Income taxes(1.52)%1.26%Minority interests(2.82)%(0.94)%Net loss(0.24)%(3.04)%  Revenues, Cost of Goods Sold and Gross Profit  Revenues for the three months ended March 31, 2008 were $7,652,017 an increase of $2,355,841 from $5,296,176 for the three months ended March 31, 2007. The net increase in sales revenue from our group of companies engaging in the production of different types of Etimicin for the first quarter of 2008 and 2007 were as follows:  29    Three months ended March 31,Companies20082007Increase/
(Decrease)Hangzhou Aida Pharmaceutical Co., Ltd (Hangzhou Aida) specializes in the production of Etimicin powder$2,049,676$1,222,032$827,644Hainan Aike pharmaceutical Co., Ltd (Aike) specializes in the production of Etimicin transfusion3,793,1343,029,469763,665Changzhou Fangyuan Pharmaceutical Co., Ltd. (Fangyuan) specializes in the production of Etimicin injection1,809,2071,044,675764,532TOTAL$7,652,017$5,296,176$2,355,841  For the three months ended March 31, 2008, the sales of Hangzhou Aida was $2,049,676, an increase of $827,644 or approximately 67.73% from $1,222,032 for the same period in 2007. The increase is mainly attributable to an increase in sales of Etimicin powder product, Aida.  For the three months ended March 31, 2008, the sales of Hainan Aike increased by $763,665 or 25.21% as compared to the same period of 2007. The increase in sales can mainly be accounted for an increase in sales of the Etimicin transfusion product, Aiyi.  For the three months ended March 31, 2008, the sales of Fangyuan increased by $764,532 or 73.18% as compared to the same period of 2007. The increase in sales is the result of the intense marketing and promotion programs of the Etimicin injection product, Chuangcheng.  The cost of goods sold for the first quarter ended March 31, 2008 was $3,700,057 an increase of $727,541 from $2,972,516 for the year 2007. The increase in cost of goods sold can be analyzed as follows:  Three months ended March 31,Companies20082007Increase/
(Decrease)Hangzhou Aida Pharmaceutical Co., Ltd. (Hangzhou Aida) specializes in the production of Etimicin powder$769,376$364,001$405,375Hainan Aike pharmaceutical Co., Ltd. (Aike) specializes in the production of Etimicin transfusion2,062,0381,760,800301,238Changzhou Fangyuan Pharmaceutical Co., Ltd. (Fangyuan) specializes in the production of Etimicin injection868,643847,71520,928TOTAL$3,700,057$2,972,516$727,541  The cost of goods sold of Hangzhou Aida for the three months ended March 31, 2008 increased by $405,375, or approximately 111.37% compared to $364,001 for the same period in 2007. The increase in the cost of goods sold can mainly be accounted for by an increase in sales by 67.73%.  The cost of goods sold of Aike for the three months ended March 31, 2008 increased by $301,238, or approximately 17.11% compared to the same period in 2007. The increase can mainly be explained by the increase in sales.  30   The cost of goods sold of Fangyuan for the three months ended March 31, 2008 increased by $20,928, compared to $847,715 for the same period in 2007. The increase is mainly due to the increase in its sales.  Compared to the three months ended March 31, 2007, the percentage gross profit margin for our Company increased from 43.87% to 51.65% for the first quarter ended March 31, 2008.  Research and Developments  Compared with research and development cost of $132,198 for the first three months of 2007, research and development cost was $283,116 for the same period in 2008 and mainly represented costs incurred for the clinical trials for rh-Apo2l.  Selling and Distribution  Selling and distribution expenses increased from $988,101 for the three months ended March 31, 2007 to $1,878,847 for the same period this year. A breakdown of our expenses is set forth below:  Three months ended March 31,Breakdown of Expenses20082007Increase/
(Decrease)Traveling expenses$608,804386,021$222,783Office expenses377,501233,835143,666Payroll143,37967,94075,439Conference fees216,87438,386178,488Rent207,8179,007198,810Entertainment42,79779,802(37,005)Training expenses42,91112942,782Transportation expenses42,4854,82037,665Other expenses196,279168,16128,118TOTAL$1,878,847$988,101$890,746  For the three months ended March 31, 2008 traveling expenses and office expenses increased by $222,783 and $143,666 respectively, compared with the same period last year. The increase was mainly explained by the increase in sales of 44.48%.  Compared with the rent expenses of $9,007 for the three months ended March 31, 2007, the rent expenses for the three months ended March 31, 2008 was $207,817, of which $206,466 was the rent expense by the Beijing office of Aike.  For the three months ended March 31, 2008 conference expenses were $216,874, an increase of $178,488, compared with the same period last year. The increase was mainly due to our participation in several big business conferences in order to promote sales.  General and Administrative  General and administrative expenses decreased by $70,254 or approximately 5.97% from $1,176,049 for the three months ended March 31, 2007 to $1,105,795 for the same period this year. A breakdown of general and administrative expenses for the three months ended March 31, 2008 and 2007 were as follows:  31    Three months ended March 31,Breakdown of Expenses20082007Increase/
(Decrease)Traveling expenses$46,51738,683$7,834Office expenses61,61854,9496,669Payroll129,579216,356(86,777)Conference fees22,0376,17215,865Labor union & education & staff welfare200,854295,898(95,044)Amortization of intangible assets177,748159,44918,299Audit fees and consultancy fees75,726115,163(39,437)Entertainment86,54973,41513,134Depreciation169,16186,75582,406Other expenses136,006129,2096,797TOTAL$1,105,795$1,176,049$(70,254)  The labor union expenses, education and staff welfare expenses were $200,854 for the three months ended March 31, 2008, a decrease of $95,044 or 32.12% from $295,898 for the same period last year. The decrease is due to a decrease in our staff numbers. Consequently, the payroll expenses of $129,579 for the first quarter this year was a decrease of $86,777 from $216,356 for the same period last year.  Our audit and consultancy fees decreased from $115,163 for the three months ended March 31, 2007 to $75,726 for the same period this year. The decrease was mainly attributable to the decrease in consultancy fees of $39,437.  Amortization of intangible assets of $177,748 for the three months ended March 31, 2008 increased by $18,299 from $159,449 for the same period last year. The increase was due to an increase in the amortization of intangible assets of $4,771 incurred by Aike.  Other Income (Expenses)  Other expenses decreased from $204,567 for the three months ended March 31, 2007 to $371,262 for the same period this year. A breakdown of our other income (expenses) for the three months Ended March 31, 2008 and 2007 are as follows:  Three months Ended March 31,Breakdown of other income/(expenses)20082007Increase/
(Decrease)Interest expense, net$(545,563)$(342,948)$(202,615)Government grants2,79249,723(46,931)Gain on sale of marketable securities-118,626(118,626)Other (loss) income, net171,509(29,968)201,477TOTAL$(371,262)$(204,567)$(166,695)  Interest expense for the three months ended March 31, 2008 increased by $202,615 from $342,948 for the same period last year. The increase is mainly due to the increase both in the interest of borrowing and in the bank borrowings.  Government grants for the three months ended March 31, 2008 represented subsidies from the government was $2,792, as compared to $49,723 for the same period last year.  Gain on sale of marketable securities of $118,626 for the three months ended March 31, 2007 represented income from Chinese securities investment and no such income was incurred for the first quarter this year.  32   Income Tax  Income tax expense was $116,149 for the three months ended March 31, 2008, as compared to income tax benefit of $66,830 for the same period last year.  In accordance with the relevant tax laws and regulations of PRC, the corporation income tax rate is 33%. As a Company registered in Hainan, PRC, Aike is entitled a beneficial corporate income tax rate of 15% in accordance with the relevant tax laws in the PRC. Fangyuan enjoys a beneficial tax rate of 15% as it is registered in a national high-tech development zone. According to the relevant laws and regulations of PRC, the preferential tax rate of 15% is applied to companies established in the national high-tech development zone.  In accordance with the relevant taxation laws in the PRC, from the time that a company has its first profitable tax year, a foreign investment company is exempt from corporate income tax for its first two years and is then entitled to a 50% tax reduction for the succeeding three years. Since Hangzhou Aida Pharmaceutical Co., Ltd has been a foreign investment company since 2004, so we are entitled to a 50% tax reduction in 2008.  Net Loss  In the first three months of 2008, net loss was $18,980, a decrease of $141,224 from $160,204 for the same period in 2007.  LIQUIDITY AND CAPITAL RESOURCES  Cash  Our cash balance decreased by $3,802,364 to $4,596,942 as of March 31, 2008, as compared to $8,399,306 as of December 31, 2007. The decrease was mainly attributable to cash out flow of investing activities of $8,783,699 and deferred taxes of $71,837, the increase in receivable for secured guarantee of $6,995,516, in inventories of $576,171 and in accounts receivable of $331,225. The decrease in cash flow was partially offset by cash inflow of financing activities of 4,863,516 and an increase in customer deposits of $575,269. The net cash flow was a deficit $(3,802,364) for first quarter this year.  Our cash flow provided by operations amounted to $611,425 for the three months ended March 31, 2008, compared to $3,397,447 for the same period last year.  Our cash flow used in investing activities amounted to $8,783,699 of which $6,995,516 was used for the payment of guaranteed debt secured and $334,815 was used for the issuance of notes receivable. The Company invested $357,562 and $380,980 in the purchases of plant and equipment and deposit for long term investment respectively.  The net cash provided by financing activities amounted to $4,863,516 of which $6,835,465 was provided by the long-term bank loan and $4,984,193 was provided by the short-term debt.  At March 31, 2008, the Company had short-term debt of $28,812,717 of which $24,385,520 was short-term bank borrowings and the remaining $4,427,197 represented notes payable to unrelated parties. The interest for the short-term borrowings varied from 6.7095% to 9.478% per annum whereas the notes payable to unrelated parties is interest free. The Company believes that the cash generated from normal operation will be sufficient to pay off its liabilities as the short-term borrowings and commitments fall due.  Working Capital  Our working capital increased by $5,191,872 to $2,601,348 at March 31, 2008, as compared to $(2,590,524) at December 31, 2007. The increase in working capital at March 31, 2008 was mainly attributable to our increase in receivable for secured guarantee of $6,995,516 and a decrease in short-term debt of $1,539,389 offset by a decrease in cash and cash equivalents of $3,802,364 and in restricted cash of $783,211.  33   The Company currently generates its cash flow through operations and the Company believes that its cash flow generated from operations will be sufficient to sustain operations for the next twelve months. Also, from time to time, the Company may require extra funding through financing activities and investments for expansion. Also, from time to time, the Company may come up with new expansion opportunities for which our management may consider seeking external funding and financing.  Code of Ethics  The Company has adopted a code of ethics that applies to the Company's principle executive officer, principle financial officer, principle accounting officer or controller. The Company will provide, at no cost, a copy of the Code of Ethics to any shareholder of the Company upon receiving a written request sent to the Companys address shown on Page 1 of this report.  Item 3. Controls and Procedures.  Evaluation of our Disclosure Controls  Between June 2007 and 2008, we executed several guarantees to companies, some of which share a common director with us (please refer to Note 21(b) of our financial statements above under Guarantee contracts-related party)  As of the end of the period covered by this Quarterly Report on Form 10-Q, our principal executive officer and principal financial officer have evaluated the effectiveness of our disclosure controls and procedures (Disclosure Controls). Disclosure Controls, as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act), are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Quarterly Report, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms. Disclosure Controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Our management, including the CEO and CFO, does not expect that our Disclosure Controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.  Based upon their controls evaluation and upon consultation with our counsel, made at the end of the period, our CEO and CFO have concluded that our Disclosure Controls were ineffective in alerting us to a conceivable breach of Section 402(a) of the Sarbanes-Oxley Act, as amended, prohibiting the Company from making personal loans to directors and executives and making appropriate disclosures in our prior reports of the existence of such guarantees.  We are committed to improving our own internal controls and procedures and as a result of the evaluation described above, we have implemented additional controls and procedures. The additional controls and procedures include and are not limited to:  · Development of a more detailed internal system of control;  · Having management familiarize themselves with the rules and regulations of the SEC;  · Monthly analytical review of all financial activity and proposed financial activity by the operations and accounts department; and  · More frequent consultations with our legal and accounting advisors.  34   With the implementation of the above additional controls and procedures, we believe that we will substantially reduce the risks of a breach of similar nature as described above in the future.  Other than as described above, there have not been any changes in the Companys internal controls and procedures.  PART II  OTHER INFORMATION  Item 1. Legal Proceedings.  From time to time we may be a defendant and plaintiff in various legal proceedings arising in the normal course of our business. Other than what is mentioned below, we are currently not a party to any material pending legal proceedings or government actions, including any bankruptcy, receivership, or similar proceedings. In addition, management is not aware of any known litigation or liabilities involving the operators of our properties that could affect our operations. Should any liabilities incur in the future, they will be accrued based on managements best estimate of the potential loss. As such, there is no adverse effect on our consolidated financial position, results of operations or cash flow at this time. Furthermore, we do not believe that there are any proceedings to which any director, officer, or affiliate of the Company, any owner of record of the beneficially or more than five percent of the Common Stock of the Company, or any associate of any such director, officer, affiliate of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company.  In 2006, we brought a legal action against Jiangxi Pharmaceutical Co., Ltd. and Hainan Licheng Pharmaceuticals Co., Ltd. for their infringement upon the patent of Etimicin Sulphate transfusion. As the plaintiff, we claimed compensation of approximately $38,590 for the infringement. According to the judges report from the local court in Haikou, PRC, on December 30, 2006, we won the lawsuit and Hainan Haomai Pharmaceutical Co. Ltd. and Fuzhou Likang Pharmaceuticals Co., Ltd. were ordered to pay us $38,590 as compensation. However, Jiangxi Pharmaceutical Co., Ltd. and Hainan Licheng Pharmaceuticals Co., Ltd. appealed the ruling to a higher level court and we have not received the payment as of March 31, 2008.  In December of 2005, we sued Hainan Haomai Pharmaceutical Co., Ltd. and Fuzhou Likang Pharmaceuticals Co., Ltd. for their infringement upon the patent of Etimicin Sulphate transfusion. As the plaintiff, we claimed compensation of approximately $38,590 for the infringement. According to the judges report from the local court in Haikou, PRC, on January 18, 2007, we won the lawsuit and Hainan Haomai Pharmaceutical Co., Ltd. and Fuzhou Likang Pharmaceuticals Co., Ltd. were ordered to pay $38,590 as compensation for the infringement. However, Hainan Haomai Pharmaceutical Co., Ltd. and Fuzhou Likang Pharmaceuticals Co., Ltd. appealed the ruling to a higher level court and we have not received the payment as of March 7, 2008.   In January 2007, we were sued by Jiangying Xinqiao Construction Co., Ltd. for an overdue construction payment of $243,318. The local judge held court in April, 2007, but has not issued the judges report. We believe the claim is without merit and plan to vigorously contend the claim. Accordingly, there is no contingent accrual as at March 31, 2008.   Hangzhou Aida Pharmaceutical Co., Ltd. (Hangzhou Aida) is a wholly-owned subsidiary of Earjoy Group Limited, which is in turn a wholly-owned subsidiary of Aida Pharmaceutical, Inc.  Hangzhou Aida was a guarantor to Nanwang Information Industry Group Co., Ltd. (Nanwang) for certain bank loans and Nanwang was, in turn, a guarantor to Hangzhou Aida for some of its loans. The total amount of the mutual guarantee between Hangzhou Aida and Nanwang was RMB50 million (approximately, US$7,152,678 based on an exchange rate of 1US$ = RMB6.99).  Because Nanwang over-invested in real estate, Nanwang defaulted on two of its loans and as guarantor for the loans, Hangzhou Aida had to repay the loan amounting to RMB49,123,913.65 (approximately, US$7,027,340) to Nanwangs lenders under the current tight monetary policy of the Peoples Bank of China.  35   Hangzhou Aida, in turn, commenced a litigation proceeding against Nanwang in the middle level court of Hangzhou, the Peoples Republic of China on April 18, 2008 to recover the guaranteed loan amount that Hangzhou Aida had paid.  The litigation application has been accepted by the Hangzhou middle level court. Hangzhou Aida had also requested that the court sequester Nanwangs assets and such order was granted by the court. The sequestered assets include the Xinhuo Technology Building located in Bejing, some land use rights and 80% shareholding interest in Fengyuan Building Co.,Ltd.  We believe that we will be able to recover the amounts paid over on behalf of Nanwang based on the fair value of the sequestered assets. For example, the Xinghuo Technology Building located in Bejing alone has been valued by a certified agent to be worth more than RMB 300 million. There is presently a claim by three other creditors for about RMB205 million. Based on the fair appraised value of the Xinghuo Technology Building, even if the other creditors were to be successful in their claims, we would still be able to recover our claims fully.  Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds  None.  Item 3.  Defaults Upon Senior Securities  None.  Item 4.  Submission of Matters to a Vote of Security Holders.  None.  Item 5.  Other Information  Not applicable.  Item 6.  Exhibits  Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-K.  Exhibit No.SEC Ref. No.Title of Document131.1Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 20022.31.2Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002332.1Certification of the Principal Executive Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*432.2Certification of the Principal Financial Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*  *The Exhibit attached to this Form 10-Q shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to liability under that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.   36   SIGNATURES  In accordance with the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.   AIDA PHARMACEUTICALS, INC.    Date: May 19, 2008/s/ Biao JinMr. Biao JinChief Executive OfficerDate: May 19, 2008/s/ Hui LinMs. Hui LinChief Financial Officer   37