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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-QSB  (Mark One)  S QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2006  £ 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 small business issuer 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)  Issuers telephone number  86-0571-85802712  __________________________________________________________________ (Former name, former address and former fiscal year, if changed since last report)  Check whether the issues (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 shell company (as defined in Rule 13b-2 of the Exchange Act). Yes £   No S  APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS  Check whether the registrant filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.          Yes £     No £  APPLICABLE ONLY TO CORPORATE ISSUES  State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date:  As of November 10, 2006, there were 27,000,000 shares of $.001 par value common stock issued and outstanding.  Transitional Small Business Disclosure Format (Check one):  Yes £    No S  SEC2334(9-05) Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.   FORM 10-QSB AIDA PHARMACEUTICALS, INC. INDEX    PagePART I.Financial Information3Item 1.  Financial Statements (Unaudited)3Condensed Consolidated Balance Sheets as of September 30, 2006 (Unaudited)and December 31, 20054Condensed Consolidated Statements of Income and Comprehensive Income for theThree and Nine Months Ended September 30, 2006 and 2005 (Unaudited)6Condensed Consolidated Statements of Cash Flows for the Nine Months EndedSeptember 30, 2006 and 2005 (Unaudited)8Notes to Condensed Consolidated Financial Statements as of September 30, 2006(Unaudited)11Item 2.  Managements Discussion and Analysis of Financial Condition or Plan of Operation29Item 3.  Controls and Procedures41PART II.Other Information42Item 1.  Legal Proceedings42Item 6.  Exhibits and Reports on Form 8-K42Signatures43  (Inapplicable items have been omitted)  2      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-QSB 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.  3    AIDA PHARMACEUTICAL, INC. (FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS    ASSETSSeptember 30, 2006
(Unaudited)December 31,
2005CURRENT ASSETSCash and cash equivalents$4,934,553$3,129,450Restricted cash2,320,4461,903,487Accounts receivable, net of allowance for doubtful accounts of $386,688 and$386,688 as of September 30, 2006 and December 31, 2005, respectively12,861,5149,390,137Notes receivable4,183,8043,323,076Inventories3,783,6733,348,592Deferred tax assets16,054-Due from related parties68,28354,120Other receivables, prepaid expenses, and other assets378,103449,672Due from employees215,614497,486Prepayments for goods475,892316,960Total current assets29,237,93622,412,980LONG-TERM ASSETSPlant and equipment, net13,356,72911,987,572Land use rights, net2,162,9941,755,440Construction in progress118,441856,776Patents, net6,807,4721,788,014Due from employees100,601616,440Long term investments173,469218,605Deposits2,865,3912,817,391Deferred taxes265,757205,919Total long-term assets25,850,85420,246,157TOTAL ASSETS$55,088,790$42,659,137  See accompanying notes to condensed consolidated financial statements.  4    AIDA PHARMACEUTICAL, INC. (FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS    LIABILITIES AND SHAREHOLDERS EQUITYSeptember 30, 2006
(Unaudited)December 31,
2005CURRENT LIABILITIESAccounts payable$3,767,507$1,622,449Other payables and accrued liabilities2,073,2703,003,233Accrued expenses841,713-Short-term debt25,328,22221,450,710Due to related parties139,420159,492Taxes payable167,80738,722Customer deposits781,7861,390,526Due to employees128,060493,492Deferred taxes470,892106,279Total current liabilities33,698,67728,264,903LONG-TERM LIABILITIESLong-term bank loans3,793,2913,717,380Deferred taxes1,779,114387,316Notes payable2,149,532-Minority interests4,814,0583,565,431Total long-term liabilities12,535,9957,670,127TOTAL LIABILITIES46,234,67235,935,030SHAREHOLDERS EQUITYCommon stock, $0.006 par value; 75,000,000 shares authorized; 27,000,000  and
25,000,000 shares issued and outstanding  at September 30, 2006 and December 31,
2005, respectively162,000150,000Additional paid-in capital5,720,4623,293,323Deferred compensation(1,811,122)-Retained earnings (the restricted portion is $593,971 and $593,971 at
September 30, 2006 and December 31, 2005, respectively)4,477,7043,136,495Accumulated other comprehensive income305,074144,289Total Shareholders Equity8,854,1186,724,107TOTAL LIABILITIES AND SHAREHOLDERS EQUITY$55,088,790$42,659,137   See accompanying notes to condensed consolidated financial statements.  5    AIDA PHARMACEUTICALS, INC. (FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME  AND COMPREHENSIVE INCOME (UNAUDITED)    THREE MONTHS ENDED
SEPTEMBER 30,NINE MONTHS ENDED
SEPTEMBER 30,2006200520062005REVENUES$7,023,891$6,249,343$19,659,235$16,081,922COST OF GOODS SOLD(3,103,516)(1,543,179)(9,679,567)(4,170,601)GROSS PROFIT3,920,3754,706,1649,979,66811,911,321Research and development(45,323)(38,017)(45,111)(158,840)Selling and distribution(1,175,000)(2,517,041)(4,728,989)(6,874,814)General and administrative(1,306,226)(693,937)(2,896,205)(2,257,189)INCOME FROM OPERATIONS1,393,8261,457,1692,309,3632,620,478OTHER INCOME (EXPENSES)Interest expense, net(459,511)(297,809)(1,114,105)(779,686)Government grants551,42072,7461,097,724115,719Gain on sale of investment--12,490-Gain on non-monetary transactions---125,097Other expense, net(77,358)(92,059)(120,734)(8,352)INCOME BEFORE INCOME TAXES1,408,3771,140,0472,184,7382,073,256INCOME TAX (EXPENSE) BENEFIT(217,720)159,227(445,047)35,987INCOME FROM CONTINUING OPERATIONSBEFORE MINORITY INTERESTS1,190,6571,299,2741,739,6912,109,243MINORITY INTERESTS(271,372)(568,734)(413,018)(797,865)INCOME  FROM CONTINUING OPERATIONS919,285730,5401,326,6731,311,378DISCONTINUED OPERATIONGain from disposition of discontinued operation---26,068Income from discontinued operation---161,341GAIN FROM DISCONTINUED OPERATION---187,409NET INCOME919,285730,5401,326,6731,498,787OTHER COMPREHENSIVE INCOMEForeign Currency Translation gain73,643129,055160,785129,100OTHER COMPREHENSIVE INCOMEBEFORE INCOME TAXES3,643129,055160,785129,100INCOME TAXES RELATED TO OTHERCOMPREHENSIVE INCOME(24,302)(42,588)(54,012)(42,603)OTHER COMPREHENSIVE INCOME,NET OF INCOME TAXES49,34186,467106,77386,497COMPREHENSIVE INCOME$968,626$817,007$1,433,446$1,585,284WEIGHTED AVERAGE SHARESOUTSTANDING BASIC AND DILUTED26,782,60923,375,00025,600,73323,375,000   See accompanying notes to condensed consolidated financial statements.   6   AIDA PHARMACEUTICALS, INC. (FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME  AND COMPREHENSIVE INCOME (UNAUDITED)    THREE MONTHS ENDED
SEPTEMBER 30,NINE  MONTHS ENDED
SEPTEMBER 30,2006200520062005Income per  share from continuing operations,basic and diluted$0.03$0.03$0.05$0.06Income per share from gain from disposition of discontinuedoperations, basic and diluted$0.00$0.00$0.00$0.00Income per share from income from discontinuedoperations, basic and diluted$0.00$0.00$0.00$0.00Net income per share, basic and diluted$0.04$0.03$0.06$0.06   See accompanying notes to condensed consolidated financial statements.   7    AIDA PHARMACEUTICALS, INC. (FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)    For the Nine Months Ended September 30,20062005CASH FLOWS FROM OPERATING ACTIVITIES:Net income$1,326,673$1,498,787Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization1,281,280922,860Deferred taxes142,717(212,933)Gain from forgiveness of debt-(125,097)Minority interests share of net income413,018797,865Loss of disposal of fixed assets230-Amortization of deferred compensation356,878-Gain on disposal of discontinued operation-(26,068)Gain on sale of investment(12,490)-Changes in operating assets and liabilities, net of effects of acquisitions:(Increase) Decrease In:Accounts receivable(3,471,378)(1,300,134)Inventories(435,080)487,400Other receivables, prepaid expenses, and other assets97,309(1,148,934)Prepayments for goods(146,414)(42,312)Discontinued operation-423,351Increase (Decrease) In:Accounts payable2,145,059(136,190)Other payables and accrued liabilities(273,451)(98,839)Due to employees(365,431)50,386Taxes payable129,085101,812Customer deposits(608,739)956,890Discontinued operation-876,051Net cash provided by operating activities579,2663,024,895CASH FLOWS FROM INVESTING ACTIVITIES:Restricted cash(416,959)(1,414,497)Purchases of plant and equipment(1,178,141)(839,461)Purchases of construction in progress(43,612)-Proceeds from disposal of discontinued operation, net of cash sold-1,581,755Cash received from sale of plant and equipment820-Purchase of land use right(442,573)-Deposit for patent(125,069)-Deposit for land use right(1,005,737)-Notes receivable(860,728)(1,367,782)Due from related parties(14,163)-Due from employees797,710(1,271,287)Proceeds from disposal of investment137,559-Purchase of investment(79,933)-Purchase of subsidiaries, net of cash acquired(1,977,393)(936,707)Discontinued operation-224,141Net cash used in investing activities(5,208,219)(4,023,838)CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from short-term debt3,877,5111,044,139Proceeds from related parties-227,183Proceeds from capital contribution187,500-Proceeds from long-term debt75,911-Proceeds from notes payable2,149,5322,742,162Repayment to related parties(20,072)(1,274,986)Discontinued operation-(1,666,084)Net cash provided by financing activities6,270,3821,072,414NET INCREASE  IN CASH AND CASH EQUIVALENTS1,641,42973,471  See accompanying notes to the condensed consolidated financial statements.  8     AIDA PHARMACEUTICALS, INC. (FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)    For the Nine Months Ended September 30,20062005Effect of exchange rate changes on cash163,674129,100Cash and cash equivalents at beginning of period3,129,4502,810,050CASH AND CASH EQUIVALENTS AT END OF PERIOD$4,934,553$3,012,621SUPPLEMENTARY CASH FLOW INFORMATIONIncome taxes paid$172,644$912Interest paid$1,139,094$819,601  SUPPLEMENTAL NON-CASH DISCLOSURES:  1. On August 6, 2006, the Company acquired 77.5% interest of Shanghai Qiaer Bio-Technology Co., Ltd. for $2,943,594 in cash and
Qiaer became a 77.5% owned subsidiary of the Company.  The allocation of purchase price is net of negative goodwill applied to a patent. The following represents the assets purchased and liabilities assumed at
the acquisition date:Patents, net$5,016,152Plant and equipment, net61,898Cash and cash equivalents404,877Other receivables and prepayments18,343Other assets19,915Total assets purchased$5,521,185Other payable and accrued liabilities(182,799)Deferred taxes(1,537,799)Other liabilities(2,401)Total liabilities assumed$(1,722,999)Total net assets$3,798,186Share percentage77.5%Net assets acquired$2,943,594Total consideration paid (including the deposits of $561,324 paid in prior years)$2,943,5942. During the nine months ended September 30, 2006, $274,229 was transferred from deposits to patents.3. During the nine months ended September 30, 2006, $781,948 was transferred from construction in progress to plant and equipment.4. During the nine months ended September 30, 2006, $268,596 was transferred from deposits to plant and equipment.5. During the nine months ended September 30, 2006, a fixed asset with a net book value of $1,050 was disposed with cash received of
$820 resulting in a $230 loss.   See accompanying notes to condensed consolidated financial statements.  9     AIDA PHARMACEUTICALS, INC. (FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)   SUPPLEMENTAL NON-CASH DISCLOSURES (CONTINUED):  6. On February 1, 2005, the Company purchased an additional 52% interest in Changzhou Fangyuan Pharmaceutical Co., Ltd. for
$3,232,542.  Thereafter, Changzhou Fangyuan Pharmaceutical Co., Ltd. became a 66% owned subsidiary of the Company.
The following represents the assets purchased and liabilities assumed at the acquisition date:Land use right, net$1,182,180Patents, net1,868,534Construction in progress856,776Deposits1,603,483Plant and equipment, net8,354,078Cash and cash equivalents2,295,835Accounts receivable, net1,038,479Inventories, net467,223Other receivables and prepayments122,748Prepayments for goods380,554Due from related parties1,917,521Total assets purchased$20,087,411Short term bank loans(8,667,193)Accounts payable(370,371)Accrued expense(459,159)Other payable and accrued liabilities(1,007,904)Customer deposits(112,373)Deferred taxes(216,278)Long-term bank loans(3,717,380)Total liabilities assumed$(14,550,658)Total net assets$5,536,753Share percentage66%Net assets acquired$3,654,257Total consideration paid (including the investments of $421,715 in prior years)$3,654,2577. During the nine months ended September 30, 2005, a liability of $639,230 was settled by transferring equipment with a net book value
of $514,133 resulting in a $125,097 gain.  See accompanying notes to condensed consolidated financial statements.  10    AIDA PHARMACEUTICALS, INC. (FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2006 (UNAUDITED)   1. ORGANIZATION AND PRINCIPAL ACTIVITIES  The primary operations of Aida Pharmaceuticals, Inc. and subsidiaries (the Company) are the development, production and distribution of antibiotics, cardiovascular and anti cancer drugs, in the form of powder for injection, liquid for intravenous injection, capsule, tablet, ointment, etc., within the PRC.  On August 14, 2006, Hangzhou Aida Pharmaceutical Co., Ltd. (HAPC) purchased an additional 5% interest in Hainan Aike Pharmaceutical Co., Ltd. (Hainan) for $63,222 in cash. On August 14, 2006, HAPC increased its shares in Hainan through an additional direct investment of $568,994 into Hainan. Thereafter, Hainan became a 60.61% owned subsidiary of the Company.  On August 6, 2006, the Company acquired 77.5% interest of Shanghai Qiaer Bio-Technology Co., Ltd. (Qiaer) for $2,943,594 in cash and Qiaer became a 77.5% owned subsidiary of the Company.  On February 1, 2005, the Company purchased an additional 52% interest in Changzhou Fangyuan Pharmaceutical Co., Ltd. for $3,232,542 in cash. Thereafter, Changzhou Fangyuan Pharmaceutical Co., Ltd. became a 66% owned subsidiary of the Company.   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-QSB and Item 310(b) of Regulation S-B. 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, 2005 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.  Certain prior period amounts have been reclassified to conform to the current periods presentation.   3. PRINCIPLES OF CONSOLIDATION  The 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 Yangpu 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 significant inter-company accounts and transactions have been eliminated in consolidation.   11   AIDA PHARMACEUTICALS, INC. (FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2006 (UNAUDITED)   4. CONCENTRATIONS  The Company has four major customers who accounted for the following percentages of total sales and total accounts receivable in 2006 and 2005:  SalesMajor CustomersFor the Nine
Months Ended
September 30,
2006For the Nine
Months Ended
September 30,
2005Accounts ReceivableSeptember 30, 2006December 31, 2005Company A24%0%59%0%Company B7%3%2%11%Company C4%1%1%4%Company D3%12%3%7%  The Company has two major suppliers who accounted for the following percentages of total purchases and total accounts payable in 2006 and 2005:  PurchasesMajor SuppliersFor the Nine
Months Ended
September 30,
2006For the Nine
Months Ended
September 30,
2005Accounts PayableSeptember 30, 2006December 31, 2005Company E9%12%9%7%Company F6%8%3%6%   The sole market of the Company is the PRC for the periods ended September 30, 2006 and 2005.  Of the total revenue for the nine months ended September 30, 2006, 66% was fully dependent on the patent for Etimicin Sulfate owned by the Company.  The net book value of the patent is $99,460 at September 30, 2006.   5. USE OF ESTIMATES  The preparation of the consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.  Management makes these estimates using the best information available at the time the estimates are made. Actual results could differ materially from those estimates.   12   AIDA PHARMACEUTICALS, INC. (FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2006 (UNAUDITED)   6. FOREIGN CURRENCY TRANSLATION  The accompanying consolidated financial statements are presented in United States dollars.  The functional currency of the Company is the Renminbi (RMB).  The consolidated financial statements are translated into United States dollars from RMB at year-end exchange rates as to assets and liabilities and average exchange rates as to revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred.  September 30, 2006December 31, 2005Period end RMB:  US$ exchange rate7.90878.0702Average period RMB:  US$ exchange rate7.98958.1734   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 from/to employees, prepayments for goods, accounts payable, other payables 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 PER SHARE  Basic earning (loss) per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed similar to basic earnings 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.     13   AIDA PHARMACEUTICALS, INC. (FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2006 (UNAUDITED)   9. NOTES RECEIVABLE  Notes receivable at September 30, 2006 and December 31, 2005 consist of the following:  Bank acceptance notes :September 30, 2006
(Unaudited)December 31, 2005Due February 4, 2006  (subsequently settled)$-$8,674Due February 15, 2006 (subsequently settled)-136,864Due March 11, 2006  (subsequently settled)-6,196Due April 13, 2006 (subsequently settled)-49,566Subtotal-201,300Notes receivable from related companies:September 30, 2006
(Unaudited)December 31, 2005Due October 14, 2006 (subsequently settled)-319,951Due November 11, 2006 (subsequently settled)442,551371,738Due November 30, 2006-61,956Due December 2, 2006-123,913Due December 14, 2006448,201-Due December 31, 2006489,579-Subtotal1,380,331877,558Notes receivable from unrelated companies:September 30, 2006
(Unaudited)December 31, 2005Due May  20, 2006 (subsequently settled)-123,913Due November 30, 20061,713,014960,040Due December 1, 2006741,7151,160,265Due January 1, 2007252,886-Due July 30, 200783,214-Due September 28, 200712,644-Subtotal2,803,4732,244,218Total$4,183,804$3,323,076   Notes receivable are interest-free and unsecured.   14   AIDA PHARMACEUTICALS, INC. (FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2006 (UNAUDITED)   10. INVENTORIES  Inventories at September 30, 2006 and December 31, 2005 consist of the following:   September 30, 2006
(Unaudited)December 31, 2005Raw materials$1,210,180$735,017Work-in-progress908,382357,220Finished goods1,665,1111,788,025Processing materials-468,330Total$3,783,673$3,348,592   11. BUSINESS COMBINATIONS  a)On August 6, 2006, the Company purchased 77.5% interest in Qiaer for $2,943,594. Thereafter, Qiaer became a 77.5% owned subsidiary of the Company and the financial results of Qiaer have been consolidated in the accompanying consolidated financial statements of the Company.  The following summarizes the acquisition:  Total consideration paid$2,943,594Fair value of assets acquired(15,441,121)Fair value of liabilities assumed143,530Negative goodwill(12,353,997)Negative goodwill applied to a patent12,353,997Total$12,353,997  The following is the pro forma net income and basic and diluted net income per share of the Company for the nine months ended September 30, 2006 assuming the acquisition was completed on January 1, 2006:  Net income$1,404,709Net income per share, basic and diluted$0.05    15   AIDA PHARMACEUTICALS, INC. (FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2006 (UNAUDITED)   11. BUSINESS COMBINATIONS (CONTINUED)  b)On February 1, 2005, HAPC signed a purchase agreement with Jiangsu Sunshine Group Inc. to purchase an additional 52% interest in Changzhou Fangyuan Pharmaceutical Co., Ltd. for $3,232,542, and the acquisition was completed on February 1, 2005. The acquisition date for accounting purpose was February 1, 2005. Thereafter, Changzhou Fangyuan Pharmaceutical Co., Ltd. became a 66% owned subsidiary of the HAPC and the financial results of Changzhou Fangyuan Pharmaceutical Co., Ltd. have been consolidated in the accompanying condensed consolidated financial statements of the Company.  The following summarizes the acquisition:  Total consideration paid$3,654,257Fair value of assets acquired(18,309,680)Fair value of liabilities assumed9,603,434Negative goodwill(5,051,989)  Negative goodwill applied to a patent5,051,989Total$5,051,989  The following is the pro forma net income and basic and diluted net income per share of the Company for the nine months ended September 30, 2005 assuming the acquisition was completed on January 1, 2005:  Net income$1,719,446Net income per share, basic and diluted$0.07   12. PLANT AND EQUIPMENT  Plant and equipment consist of the following as of September 30, 2006 and December 31, 2005:  September 30, 2006
(Unaudited)December 31, 2005At cost:Buildings$8,275,718$6,944,082Machinery8,756,1547,832,139Motor vehicles736,358607,649Office equipment589,701573,220Leasehold improvements373,499366,02418,731,43016,323,114  16   AIDA PHARMACEUTICALS, INC. (FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2006 (UNAUDITED)   12. PLANT AND EQUIPMENT(CONTINUED)  September 30, 2006
(Unaudited)December 31, 2005Less:  Accumulated depreciationBuildings1,262,3821,089,490Machinery3,240,9872,582,907Motor vehicles426,515332,125Office equipment355,670293,561Leasehold improvements89,14737,4595,374,7014,335,542Plant and equipment, net$13,356,729$11,987,572  Depreciation and amortization expense for nine months ended September 30, 2006 and 2005 is $1,002,776 and $810,871, respectively.   13. LAND USE RIGHTS  September 30, 2006
(Unaudited)December 31, 2005Cost$2,338,665$1,896,091Less: Accumulated amortization(175,671)(140,651)Land use rights, net$2,162,994$1,755,440  Amortization expense for nine months ended September 30, 2006 and 2005 is $35,019 and $41,781 respectively.  Amortization expense for the remaining part of 2006 and for the next four years and thereafter is as follows:  2006$10,581200742,331200842,331200942,331201042,331Thereafter1,983,089Total$2,162,994   17   AIDA PHARMACEUTICALS, INC. (FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2006 (UNAUDITED)   14. PATENTS  September 30, 2006
(Unaudited)December 31, 2005Cost$7,457,020$2,194,078Less: Accumulated amortization(649,548)(406,064)Patents, net$6,807,472$1,788,014  In February 2005, the Company acquired a patent valued at $1,868,534 in connection with the acquisition of Changzhou Fangyuan Pharmaceutical Co., Ltd. In August 2006, the Company acquired a patent valued at $4,453,090 in connection with the acquisition of Qiaer. Amortization expense for nine months ended September 30, 2006 and 2005 is $243,484 and $70,209, respectively.  Amortization expense for the remaining part of 2006 and for the next four years and thereafter is as follows:  2006$128,6022007514,4062008490,6982009482,7952010482,795Thereafter4,708,176Total$6,807,472   15. DEPOSITS  Deposits at September 30, 2006 and December 31, 2005 consist of the following:   September 30, 2006
(Unaudited)December 31, 2005Deposits for patent$783,315$910,138Deposits for plant and equipment735,3341,003,930Deposits for land use right1,346,742341,999Deposits for acquisition-561,324Total$2,865,391$2,817,391  18   AIDA PHARMACEUTICALS, INC. (FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2006 (UNAUDITED)   16. LONG-TERM INVESTMENTS  As of September 30, 2006 and December 31, 2005, long-term investments consist of the following:  Ownership
InterestSeptember
30, 2006
(Unaudited)Ownership
InterestDecember 31,
2005At cost:Hangzhou Longde Medical Machinery Co., Ltd.10.6%$102,34510.6%$97,790Zhejiang Anglikang Pharmaceutical Co., Ltd.--8.33%120,815Hangzhou Jin'ou Medicine Co,. Ltd18.75%71,124-$173,469$218,605  In April 2006, the Fangyuan, 66% subsidiary of the HAPC, entered into an agreement with Jinou Group to set up Hangzhou Jinou Medicine Co., Ltd (Jinou Medicine).  Pursuant to the mutual agreement, Fangyuan invested $187,603 representing a 50% ownership through June 30, 2006. On August 31, 2006, Fangyuan entered an agreement with Jiangyin Hi-tech. Co., Ltd. to transfer 31.25% interest in Jinou Medicine for  the settlement of a $118,540 payable to Jiangyin Hi-tech Co., Ltd..Thereafter, Fangyuan owned 18.75% interest in Jinou Medicine. The investment is accounted for under the cost method.  On June 8, 2006, the Company entered into agreement with Wu Weihua to transfer its 8.33% interest in Zhejiang Angikang Pharmaceutical Co., Ltd. for $137,560 resulting in a gain of $12,490.   17. SHORT TERM DEBT  Short-term debt as of September 30, 2006 consists of the following:  September 30,
2006
(Unaudited)December 31,
2005Loans from Industrial and Commercial Bank of China Qingchun
Branch, due July 24, 2006,  monthly interest only payments at 5.115%
per annum, secured by assets owned by the Company. (subsequently
repaid on its due date)$-$743,476Loans from Industrial and Commercial Bank of China Qingchun
Branch, due August 1, 2006, monthly interest only payments at
5.115% per annum, secured by assets owned by the Company.
(subsequently repaid on its due date)-867,389Loans from Industrial and Commercial Bank of China Qingchun
Branch, due August 8, 2006, monthly interest only payments at
5.115% per annum, secured by assets owned by the Company.
(subsequently repaid on its due date)-774,454  19   AIDA PHARMACEUTICALS, INC. (FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2006 (UNAUDITED)   17. SHORT TERM DEBT (CONTINUED)  September 30,
2006
(Unaudited)December 31,
2005Loans from Industrial and Commercial Bank of China Qingchun
Branch, due August 21, 2006, monthly interest only payments at
5.115% per annum, secured by assets owned by the Company.
(subsequently repaid on its due date)-619,563Loans from Industrial and Commercial Bank of China Qingchun
Branch, due June 6, 2007, monthly interest only payments at 5.363%
per annum, secured by assets owned by the Company1,264,430-Loans from Industrial and Commercial Bank of China Qingchun
Branch, due June 27, 2007, monthly interest only payments at
5.363% per annum, secured by assets owned by the Company758,658-Loan from Hangzhou Commercial Bank Gaoxin Branch due
February 27, 2007, monthly interest only payments at 5.363% per
annum, guaranteed by Xinchang Guobang Chemicals Co., Ltd.1,264,430-Loan from Bank of China Kaiyuan Branch due April 17, 2006,
monthly interest only payments at 5.58% per annum, guaranteed by
Xinchang Guobang Chemicals Co., Ltd. And Qiu Jiajun & Jin Biao
(subsequently repaid on its due date)-1,239,127Loan from Hangzhou Commercial Bank Gaoxin Branch April 25,
2006, monthly interest only payments at 5.115% per annum,
guaranteed by Hangzhou Jinou And Xinchang Guobang Chemicals
Co., Ltd. (subsequently repaid on its due date)-1,239,127Loan from Industrial and Commercial Bank of China due April 10,
2006, monthly interest only payments at 4.575% per annum, secured
by assets owned by the Company. (subsequently repaid on its due
date)-1,115,214Loan from Bank of China Kaiyuan Branch due May 8, 2007,
monthly interest only payments at 5.606% per annum, guaranteed by
Xinchang Guobang Chemicals Co., Ltd.1,011,544-Loan from Bank of China Kaiyuan Branch due May  16, 2007,
monthly interest only payments at 5.606% per annum, guaranteed by
Xinchang Guobang Chemicals Co., Ltd.632,215-Loan from Bank of China Kaiyuan Branch due April 17, 2007,
monthly interest only payments at 5.348% per annum, guaranteed by
Xinchang Guobang Chemicals Co., Ltd.2,149,532-   20   AIDA PHARMACEUTICALS, INC. (FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2006 (UNAUDITED)   17. SHORT TERM DEBT (CONTINUED)  September 30,
2006
(Unaudited)December 31,
2005Loan from Industrial Bank due September 26, 2006, monthly interest
only payments at 5.115% per annum, respectively, guaranteed by
Jinou Group. (subsequently repaid on its due date)1,264,4301,239,127Loan from Huaxia Bank Wenhui Branch due April 3, 2007, monthly
interest only payments at 5.348% per annum,  guaranteed by Ningbo
Tianheng Co., Ltd.758,658-Loan from Bank of Communication Qingchun Branch, due June 5,
2007 monthly interest only payments at 5.363% per annum,
guaranteed by Nanwang Information Industry Group Co., Ltd.1,264,430-Loan from Bank of Communication Qingchun Branch, due June 19,
2007 monthly interest only payments at 5.363% per annum,
guaranteed by Nanwang Information Industry Group Co., Ltd.1,264,430-Loans from Industrial and Commercial Bank of China Qingchun
Branch, due June 26, 2007, monthly interest only payments at
5.115% per annum, secured by assets owned by the Company885,101-Loans from Industrial and Commercial Bank of China Qingchun
Branch, due August 15, 2007, monthly interest only payments at
5.115% per annum, secured by assets owned by the Company790,269-Loans from Industrial and Commercial Bank of China Qingchun
Branch, due August 20, 2007, monthly interest only payments at
5.115% per annum, secured by assets owned by the Company632,215-Loan from China Development Bank Haikou Branch, due November
24, 2006, monthly interest only payments at 5.115% per annum,
guaranteed by Haikou Assure Investment Ltd.75,866371,738Loan from Changzhou Commercial Bank, due January  1, 2006,
monthly interest only payments at 4.785% per annum, guaranteed by
Xinchang Guobang Chemicals Co. Ltd. (subsequently repaid on its
due date)-619,563Loan from Changzhou Commercial Bank, due February 15, 2006,
monthly interest only payments at 6.51% per annum, guaranteed by
Changzhou High-tech Development Co. Ltd. (subsequently repaid
on its due date)-619,563  21   AIDA PHARMACEUTICALS, INC. (FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2006 (UNAUDITED)   17. SHORT TERM DEBT (CONTINUED)  September 30,
2006
(Unaudited)December 31,
2005Loan from Huaxia Bank Wenhui Branch due March 16, 2006, monthly interest only payments at 4.8825% per annum, guaranteed by Xinchang Guobang Chemicals Co., Ltd. and Ningbo Tianheng Pharm. Co. Ltd. (subsequently repaid on its due date)-743,476Loan from China Citic Bank Hangzhou Branch, due January 22, 2006, monthly interest only payments at 4.785% per annum, guaranteed by Xinchang Guobang Chemicals Co., Ltd. (subsequently repaid on its due date)-495,651Loan from Changzhou Commercial Bank, due January 21, 2006, monthly interest only payments at 6.975% per annum, guaranteed by Changzhou High-tech Development Co. Ltd. (subsequently repaid on its due date)-3,097,817Loans from Changzhou Commercial Bank, due December 26, 2006, monthly interest only payments at 6.975% per annum, secured by assets owned by the Company.252,886-Loans from Changzhou Commercial Bank, due June 20, 2007, monthly interest only payments at 6.975% per annum, secured by assets owned by the Company.1,119,023-Loans from Changzhou Commercial Bank, due June 28, 2007, monthly interest only payments at 6.975% per annum, secured by assets owned by the Company.1,789,169-Total short-term bank loans17,177,28613,785,285Notes payable to unrelated companies:September 30,
2006
(Unaudited)December 31,
2005Due January 4, 2006 (subsequently repaid on its due date)$-$146,261Due April 29, 2006 (subsequently repaid on its due date)-743,476Due May 1, 2006 (subsequently repaid on its due date)-1,239,127Due May 9, 2006 (subsequently repaid on its due date)-146,361Due May 25, 2006 (subsequently repaid on its due date)-1,239,127Due August 31, 2006 (subsequently repaid on its due date)758,6581,363,039Due October 29, 2006 (subsequently repaid on its due date)1,507,303-Due November 30, 2006703,3392,168,472Due December 15, 20061,264,430-Due December 30, 20062,497,250-  22   AIDA PHARMACEUTICALS, INC. (FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2006 (UNAUDITED)   17. SHORT TERM DEBT (CONTINUED)  Notes payable to unrelated companies:September 30,
2006
(Unaudited)December 31,
2005Due April 5, 2007316,108309,781Due April 20, 2007316,108309,781Due August 31, 2007787,740-Total notes payable8,150,9367,665,425Total short-term debt$25,328,222$21,450,710   18. NOTES PAYABLE  Notes payable as of September 30, 2006 and December 31, 2005 consist of the following:  Unsecured notes payable to unrelated companies:September 30,
2006
(Unaudited)December 31,
2005Due December 31, 2009 (interest charged at 5.85% per annum)$885,102$-Due February 20, 2009 (interest charged at 5.85% per annum)1,264,430-Total$2,149,532$-   19. DISCONTINUED OPERATION  On April 1, 2005, HAPC entered into a disposition agreement with Zhejiang Guobang Veterinary Drug Co., Ltd., a company controlled by the director of the Company. Pursuant to the agreement HAPC agreed to sell all of its interest in the branch in Shangyu, PRC to Zhejiang Guobang Veterinary Drug Co., Ltd. for $1,603,533 resulting in a gain of $26,068. In association with the agreement, the branch in Shangyu, PRC was no longer a consolidated subsidiary of the HAPC. In accordance with SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the results of operations of the branch in Shangyu are removed from the detail line items in the companys financial statements and presented separately as discontinued operation. The income from discontinued operation of $0 and $161,341 for the nine months ended September 30, 2006 and 2005, respectively, and the gain from disposition of discontinued operation of $26,068 in 2005 are reflected in the Companys condensed consolidated statements of income for the nine months ended September 30, 2005.   23   AIDA PHARMACEUTICALS, INC. (FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2006 (UNAUDITED)   19. DISCONTINUED OPERATION (CONTINUED)  The condensed income statement for the three months ended March 31, 2005 of the branch in Shangyu is as follows:  For the three
Months Ended
March 31, 2005
(Unaudited)Revenue$3,776,980Cost of goods sold(3,544,336)Gross profit232,644Selling and distribution(37,254)General and administrative(26,679)Interest expense(7,370)Income tax expense-Net income$161,341   Net assets of the discontinued operation at March 31, 2005 are as follows:  March 31, 2005
(date of disposal)
(Unaudited)Cash and cash equivalents$21,778Other current assets3,601,410Non-current assets1,245,583Current liabilities(4,668,677)Total net assets of the discontinued operation$200,094   20. DEFERRED COMPENSATION  According to the executed consulting agreements signed on June 5, 2006, the Company issued 1,200,000 shares of common stock on July 11, 2006 to two consultants as compensation for their marketing consulting services from June 5, 2006 to June 5, 2008. The shares were valued at $1,320,000 using the closing share price of $1.10 at the date service commenced. The deferred compensation is amortized over the service period. For the nine months ended September 30, 2006, amortization expense is $316,833.   24   AIDA PHARMACEUTICALS, INC. (FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2006 (UNAUDITED)   20. DEFERRED COMPENSATION (CONTINUED)  On July 5, 2006, the Company issued 800,000 shares of common stock to employees as compensation for their services to the Company from July 6, 2006 to July 6, 2011. The shares were valued at $848,000 using the closing share price of $1.06 at the date service commenced. The deferred compensation is amortized over the service period. For the nine months ended September 30, 2006, amortization expense is $40,044.   21. ADDITIONAL PAID-IN CAPITAL  On August 14, 2006, HAPC purchased an additional 5% interest in Hainan Aike Pharmaceutical Co., Ltd. (Hainan) for $63,222. On August 14, 2006, HAPC increased its shares in Hainan through an additional direct investment of $568,994 into Hainan. Thereafter, Hainan became a 60.61% owned subsidiary of the Company.  This resulted in a contributed capital of $282,786 which has been reflected in the consolidated balance sheet as of September 30, 2006.   22. INCOME TAXES  (a)  Corporation Income Tax (CIT)  In accordance with the relevant tax laws and regulations of PRC, the corporation income tax (CIT) rate is 33% (Hangzhou Aida: 27%).  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 a high-tech company 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. Income tax expense/(benefit) for the nine months ended September 30, 2006 and 2005 are summarized as follows:  For the Nine Months Ended
September 30, (Unaudited)20062005Current:CIT$302,330$176,946Deferred:CIT142,717(212,933)Income tax expense/(benefit)$445,047$(35,987)  The Companys income tax expense differs from the expected tax expense for the nine months ended September 30, 2006 and 2005 (computed by applying the CIT rate of 33 percent to income before income taxes) as follows:  25   AIDA PHARMACEUTICALS, INC. (FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2006 (UNAUDITED)   22. INCOME TAXES (CONTINUED)  For the Nine Months Ended
September 30, (Unaudited)20062005Computed expected expense$764,658$726,640Effect of foreign tax rates(43,695)(42,466)Valuation allowance(12,167)-Time difference142,717(212,933)Tax exemptions(406,466)(507,228)Income tax expense/(benefit)$445,047$(35,987)  The tax effects of temporary differences that give rise to the Companys net deferred tax assets and liabilities as of September 30, 2006 and December 31, 2005 are as follows:  September 30,
2006
(Unaudited)December 31,
2005Deferred tax assetsCurrent portion:Advertising exp.$1,658$-Interest exp.3,306-Selling and distribution expenses11,090-Subtotal16,054-Non-current portion:Depreciation63,25455,797Impairment and amortization51,12964,243Bad debt provision30,17038,384Pre-operating expenses93,78418,914Research and development costs16,19413,112Other11,22627,636Less: Valuation allowance-(12,167)Subtotal265,757205,919Total deferred tax assets$281,811$205,919   26   AIDA PHARMACEUTICALS, INC. (FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2006 (UNAUDITED)   22. INCOME TAXES (CONTINUED)  September 30,
2006
(Unaudited)December 31,
2005Deferred tax liabilities:Current portion:Sales cut-off$86,110$51,974Other4,28254,305R&D cost52,916-Subsidy income281,653-Selling exp45,931-Subtotal470,892106,279Non-current portion:Subsidy income88,403206,864Depreciation30,87119,240Amortization14,853-Research and development costs-35,315Government grant62,84873,401Other44,34052,496Intangible assets of acquisition1,537,799-Subtotal1,779,114387,316Total deferred tax liabilities2,250,006493,595Net deferred (liabilities) assets$(1,968,195)$(287,676)  (b)  Value Added Tax (VAT)  In accordance with the relevant tax laws in the PRC, the VAT rate for export sales is 0% and domestic sales is 17%.  VAT is levied at 17% on the invoiced value of sales and is payable by the purchaser.  The Company is required to remit the VAT collected to the tax authority, but may deduct there from the VAT paid on eligible purchases.  The VAT payable of $268,000 and $142,050 at and September 30, 2006 and December 31, 2005, respectively, are included in other payables and accrued expenses in the accompanying consolidated balance sheets.   23. COMMITMENTS AND CONTINGENCIES  The Company occupies plant and office space leased from third parties.  Accordingly, for the nine months ended September 30, 2006 and 2005, the Company recognized rental expense for these spaces of $138,603 and $26,045 respectively.   27   AIDA PHARMACEUTICALS, INC. (FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2006 (UNAUDITED)   23. COMMITMENTS AND CONTINGENCIES (CONTINUED)  As of September 30, 2006, the Company has outstanding commitments with respect to non-cancelable operating leases for real estate and plant, which fall due as follows  Period Ending September 30,Amount2007$37,195200870,810200970,810201070,810201170,810Thereafter132,769Total$453,204    28     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). The Company attempted to operate as a consulting firm and was not successful.  The Company 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, the Company amended its 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 of AIDA Pharmaceuticals, Inc.  On July 5, 2006, the Company registered 2,500,000 shares of its common stock, $.001 par value on Form S-8 with the Securities and Exchange Commission. Pursuant to the registration statement, the Company issued 2,000,000 shares to employees and consultants.  OUR BUSINESS  AIDA Pharmaceuticals, Inc. has the following subsidiaries:  a) Earjoy Group Limited, (Earjoy) b) Hangzhou Aida Pharmaceutical Co., Ltd (Hangzhou Aida); c) Hangzhou Boda Medical Research and Development Co., Ltd. (Boda); d) Hainan Aike Pharmaceutical Co., Ltd. (Aike) and; e) Changzhou Fangyuan Pharmaceutical Co., Ltd. (Fangyuan) f) Shanghai Qiaer Bio-technology Co., Ltd (Qiaer)  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.  Aida (including its subsidiaries) has a total of nine production lines for the manufacturing of antibiotics, cardiovascular and anti-tumor drugs in various forms, including injectable powder, injectable liquid, capsules, tablets and ointments. 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. Hangzhou Aida sells its Category-A antibiotic(Etimicin), cardiovascular and anti-tumor products under the trademark “Aida”,“Aiyi” and “Chuangcheng”. All these products are prescription drugs that are sold mainly to the hospitals in Mainland China.   29     Hangzhou Aida’s strategy is to control all facets of its research and development efforts, including formulation development, clinical studies, regulatory submissions and manufacturing. In addition, the company markets its own branded products directly to health care professionals through its Mainland China sales operations. A key element of Hangzhou Aidas business is the development, manufacture and sale of branded pharmaceutical products that incorporate Hangzhou Aidas expertise in research and development and exclusive relationships with raw material suppliers, which provide significant therapeutic advantages over existing competing formulations.  Hangzhou Aida will also work to develop synergistic marketing partnerships in China and around the world in areas such as technology licensing, clinical research, product development, in-licensing and out-licensing of products, co-development and co-marketing agreements.  The headquarters of Hangzhou Aida is located in Hangzhou specializes in the production of Etimicin powder.  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 the Company. Hangzhou Aida exercises significant influence over Aike by controlling over 60.61% of the voting rights and Aike owns 95% of Yangpu Aike Pharmaceutical Co., Ltd. (Yangpu). Aike specializes in the production of transfusion type of Etimicin.  On February 1, 2005, Hangzhou Aida acquired an additional 52% equity interest in Fangyuan, and Fangyuan became a 66% owned subsidiary as a consequence. Fangyuan is sole supplier of the raw material of Etimicin and is also a major producer of the liquid type of Etimicin.  The Company is capable of producing all types of Etimicin namely, powder, liquid and transfusion and thus has achieved a significant influence in the industry. Its influence is further enhanced by the acquisition of Fangyuan, which is the sole supplier of the raw material of Etimicin. This is a significant and unique advantage of the Company.  On August 8, the Company completed and closed the Share Purchase Agreements with Zhejiang Pharmaceutical Co., Ltd , Shanghai Handsome Biotech Co., Ltd and Zhongtuo Times Investment Co., Ltd. respectively. With these agreements, the Company acquired 77.5% of the outstanding shares of Shanghai Qiaer Bio-Technology Co., Ltd collectively. Copies of those Agreements was previously filed as an Exhibit to our Current Report on Form 8-K dated April 14 and April 24 respectively as filed with the Securities and Exchange Commission.  At the closing of this transaction, the Company received the registration certificate in the name of the Company for the 77.5% of the outstanding shares of Shanghai Qiaer Bio-Technology Co., Ltd. The chairman of the Board and CEO of the Company, Mr. Jin Biao was elected as the Board Chairman of Shanghai Qiaer Bio-Technology Co., Ltd.; the Company has two positions including Mr.Jin of the total three in the Board of Directors of Shanghai Qiaer Bio-Technology Co., Ltd. Qiaer Bio-Tech was founded in 2001 and is located in the Zhangjiang Hi-tech development zone in Shanghai, China.  The key product of Qiaer Bio-Tech is rh-Apo21, a pioneering potential gene drug used for cancers. Qiaer Bio-Tech has applied for three patents from the Chinese 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.  30     Products  The table below illustrates the major products produced and marketed by Aida:  ProductProduced BySpecificationStandard/CategoryEtimicin Sulfate Injection PowderAida50mg, 100mg, 150mgNational Category-AEtimicin Sulfate Injection liquidFangyuan1ml, 2ml, 4mlNational Category-AEtimicin Sulfate for transfusionAike100ml(with 100mg/200mg)National Category-D  Etimicin Sulfate is the first antibiotic developed in China.  It is a new generation of the amino glycoside family of antibiotics.  Aida has the exclusive right to the production of this powder for injection and transfusion type and Aidas subsidiary, Fangyuan, is one of the two producers who exclusively produce the liquid for injection.  The patent is protected through 2013.  It also has patent certificates from six foreign countries, including USA, Russia and United Kingdom.  Etimicin sulfate is suitable for the treatment of various inflammations, such as:  (i) Respiratory infection, such as acute bronchitis, acute onset of chronic bronchitis and pulmonary infections; (ii) Kidney and urinogenital infection, such as acute pyelonephritis or acute onset of chronic cystitis; (iii) Soft skin tissue infection; and (iv) Trauma and operations (before and after) preventive uses.  In 2005, with the acquisition of Fangyuan, the Company has occupied more than 75% of the total market share of Etimicin in Mainland China. The Company is capable to produce a full series of Etimicin, namely, powder, transfusion and liquid. Emphasis will be placed to develop new products for the market.  Products Under Development  Major new products under developments by Aida include:  Ø 5-Deoxy-Fluorordine.Aida has developed a new liquid for injection type of drug generated from 5-fluroruacil that has displayed better anticancer results and fewer side effects. This new product has been under clinical testing since 1998. Test results showed that it has only nominal side effects, a broad spectrum and is highly effective. The Company will supplement clinical trials according to the instruction from State Food and Drug Administration in the PRC.  Ø Apoptotic Factor (rh-Apo2l). Rh-Apo2l is being evaluated in a Phase I trial as a potential cancer therapeutic. The Phase I clinical trials were completed at the end of June, 2006.  Shanghai Qiaer Bio-Technology, which is acquired by Hangzhou Aida, has applied for three patents from the Chinese government authority. One patent has been granted and the other two are currently in process. We plan to complete the second and third stage clinical trials in the second half of 2007 and get production approval in the first half of 2008.  Ø Methylcanthatidinimide for Injection. It is another new drug being developed by Fangyuan used for cancer treatment. It is supposed to be a Category B new drug. The clinical tests are expected to be completed by the first half of 2008 and the production is expected to begin by the end of 2009.  Ø SYO2. Hangzhou Aida has created one medicine extracted from herbal essence, called SYO2 that has exhibited bioactivity for brain anti-thrombosis. The drug, developed solely by an aligned research center of Hangzhou Aida, has shown to be safe, effective and without side effects.The Company believed that stroke patients treated by SYO2 would be significantly recovered after administration of the drug. Aida has completed SYO2s pharmacological study and has applied for a patent. The Company plans to apply for clinical tests within the next 15 months. Hangzhou Aida intends to apply for production approval by the end of 2010.  Ø Prodigiosin to Treat Pancreatic Cancer. Prodigiosin, a naturally occurring red pigment, is currently in pre-clinical trials for the treatment of pancreatic cancer. Aida Pharmaceuticals is developing a method to utilize the biochemical properties of Prodigiosin to create a non-invasive treatment for pancreatic cancer.  Ø Anti-CD86 Monoclonal Antibody to Treat Immunity Diseases.Certain immunity diseases activate T-cells (a type of white blood cell), causing them to unnecessarily attack healthy tissue. Aidas goal in developing the Anti-CD86 Monoclonal Antibody is to inhibit T-cells from harming healthy tissue.   31     Ø Anti-CTLA-4 Monoclonal Antibody to Inhibit Tumor Growth. In the case of certain cancers, tumors over-express self-proteins, essentially hiding the tumor from the immune system. Aida Pharmaceuticals is in the development stages of Anti-CTLA-4 Monoclonal Antibody which may relieve the inhibition of T-cells allowing them to identify the over-expressed proteins and in turn naturally attack cancer cells without harming healthy tissues.   Aida is optimistic about the market potential of its products for the following reasons:  Ø The demand for international quality drugs by the Chinese populace has historically increased as per capita income and the standard of living increase continually;  Ø The sales of Hangzhou Aidas Etimicin sulfate is estimated to grow continuously for the next three years after several years of market development;  Ø Aida is now planning to build up international business relationship with global players gradually in future. The international markets should increase the sales growth;  Ø Aida has achieved a monopoly status in this industry, with all types of Etimicin products and from the material chain to the final product chain. This is a significant and unique advantage of Aida and  Ø The Company is preparing for the production of several new drugs especially the commercialization of Shanghai Qiaer Bio-Technologys Rh-Apo2l within two years, which should boost the sales growth of Aida per annum.  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.  Collectibility is reasonably assured.  For fixed-priced refundable contracts, the Company recognizes 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 the Company's accounts receivable, long-lived assets and inventories, significant estimation judgments are made and actual results could differ materially from these estimates.  For the nine months ended September 30, 2006, management of the Company provided a reserve on its accounts receivable to reflect managements expectation on the collectibility of aged accounts receivable. Managements estimation of the reserve on accounts receivable at September 30, 2006 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.   32     For the third quarter ended September 30, 2006, the Company 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". The Company also periodically evaluates the amortization periods of its 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 their judgments, management made their estimations of the potential impairments based on the demand for their products in the future and the trends of turnover of the inventories.  While the Company's management currently believes that there is little likelihood that the actual results of their current estimates will differ materially from such current estimates, if the financial position of its customers deteriorates, if there is a significant reduction in the carrying value of its long-lived assets, or if, customer demand for its products decreases significantly in the near future, the Company could realize significant write downs for uncollectible accounts receivable, impairment of long-lived assets or slow moving inventories.  RESULTS OF OPERATIONS  THREE MONTHS ENDED SEPTEMBER 30, 2006 AS COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2005  The following table sets forth selected statements of income data as a percentage of revenues for the three months indicated.  Three Months Ended September 30,20062005Revenues100.00%100.00%Cost of goods sold(44.19)%(24.69)%Gross margin55.81%75.31%Research and development(0.65)%(0.61)%Selling and distribution(16.73)%(40.28)%General and administrative(18.60)%(11.10)%Other income (expense)0.21%(5.07)%Income taxes(3.10)%2.55%Minority interests(3.86)%(9.10)%Gain from discontinued operation0.00%0.00%Net income13.09%11.69%  Revenues, Cost of Goods Sold and Gross Profit Revenues for the three months ended September 30, 2006 were $7,023,891, an increase of $774,548 from $6,249,343 for the three months ended September 30, 2005. Sales revenues from our group of companies engaging in the production of different types of Etimicin for the third quarter of 2006 and 2005 were as follows:  Three Months Ended September 30,Companies20062005Increase/
(Decrease)Hangzhou Aida Pharmaceutical Co., Ltd (Hangzhou Aida)
specializes in the production of Etimicin powder$2,759,390$2,657,564$101,826Hainan Aike pharmaceutical Co., Ltd (Aike) specializes in
the production of Etimicin transfusion2,838,0642,365,096472,968Hangzhou Boda Medical Research and Development Co., Ltd.(Boda)---Shanghai Qiaer Bio-Technology Co., Ltd.(Qiaer)---Changzhou Fangyuan Pharmaceutical  Co., Ltd. (Fangyuan)
specializes in the production of Etimicin injection1,426,4371,226,683199,754TOTAL$7,023,891$6,249,343$774,548   33     For the three months ended September 30, 2006, the sales of Hangzhou Aida increased by $101,826 or 3.83% as compared to the same period in 2005. But the increase percentage of 3.83% has been improved remarkably as compared to the decrease percentage of 47.16% for the first quarter this year. This reason was that Hangzhou Aida has taken some new measures to adapt the new market environment and improve the operation result in sales since the second quarter this year.  For the three months ended September 30, 2006, the sales of Hainan Aike increased by $472,968 or 20.00% as compared to the same period in 2005. The increase in sales is the result of the intense marketing and promotion programs of a new Etimicin transfusion product, Aiyi. Another reason is that Hainan Aike has establishing several new sales offices in various regions.  For the three months ended September 30, 2006, the sales of Fangyuan increased by $199,754 or 16.28% as compared to the same period in 2005. The increase in sales is the result of the intense marketing and promotion programs of a new Etimicin injection product, Chuangcheng.  The cost of goods sold for the third quarter ended September 30, 2006 was $3,103,516, an increase of $1,560,337 from $1,543,179 for the same period in 2005. The increase in cost of goods sold can be analyzed as follows:   Three Months Ended September 30,Companies20062005Increase/
(Decrease)Hangzhou Aida Pharmaceutical Co. Ltd. (Hangzhou Aida)
specializes in the production of Etimicin powder$940,872$575,053$365,819Hainan Aike pharmaceutical Co. Ltd. (Aike) specializes in the
production of Etimicin transfusion1,724,307693,8831,030,424Hangzhou Boda Medical Research and Development Co.,Ltd. (Boda)---Shanghai Qiaer Bio-Technology Co., Ltd.(Qiaer)---Changzhou Fangyuan Pharmaceutical Co., Ltd. (Fangyuan)
specializes in the production of Etimicin injection438,337274,243164,094TOTAL$3,103,516$1,543,179$1,560,337  The cost of goods sold of Hangzhou Aida for the three months ended September 30, 2006 increased by $365,819, or 63.61% compared to $575,053 for the same period in 2005. The increase in the cost of goods sold can mainly be accounted for by an increase in sales by 3.83% and a slight decrease in the price of Etimicin by approximately 5% since the second half of 2005.  Despite the increase in sales of 20.00%, the cost of goods sold of Aike increased by 148.50% for the three months ended September 30, 2006 compared to for the same period in 2005. The increase can partially be explained by the increase in sales. Another reason is that among Aikes sale increase, the products with relatively low margin accounted for a larger portion. As a result, the increase rate of the cost of goods exceeded the increase rate of the sales.  The cost of goods sold of Fangyuan for the three months ended September 30, 2006 increased by $164,094, compared to $274,243 for the same period in 2005. The increase is mainly due to the increase in sales.  Despite the increase in total sales revenue of 12.39%, the cost of goods sold increased by 101.11% in the third quarter of 2006 compared to the same period in 2005. The Company has suffered a decrease in the gross profit margin.  Compared to the three months ended September 30, 2005, the percentage gross profit margin for our Company decreased from 75.31% to 55.81% for the third quarter ended September 30, 2006.  The decrease in gross profit margin percentage was mainly attributable to the following: among Aikes sales increase, the products with relatively low margin accounted for a larger portion, which lowered down the general margin percentage as Aike contributed over 50% of the companys total sales in the quarter.   34     Research and Developments Research and development expenses increased from $38,017 for the third quarter of 2005 to $45,323 for the same period this year. The increase was mainly due to $45,111 for the nine months ended September 30, 2006 representing costs incurred by Qiaer.   Selling and Distribution Selling and distribution expenses decreased from $2,517,041 for the three months ended September 30, 2005 to $1,175,000 for the same period this year, or a 53.32% decrease. Compared to the same period in 2005, our decrease in the expenses was because of the following:   Three Months Ended September 30,Breakdown of Expenses20062005Increase/
(Decrease)Traveling expenses$523,221$1,003,492$(480,271)Sale commissions-199,408(199,408)Office expenses210,595408,928(198,333)Payroll52,418148,285(95,867)Conference fees17,275273,942(256,667)Rent12,77414,859(2,085)Entertainment42,368100,101(57,733)Other expenses153,696368,026(214,330)Advertising expenses162,653-162,653TOTAL$1,175,000$2,517,041$(1,342,041)  For the three months ended September 30, 2006 advertising expenses of $162,653 increased by $162,653, compared with the same period last year. The increase can mainly be explained by the increase in sales of 12.39%. To increase the sales, the Company carried out more advertisements, which resulted in the increasing advertising expenses in the third quarter of 2006.  For the third quarter of 2006 traveling expenses, office expenses and conference fees decreased by $480,271, $198,333 and $256,667 respectively, compared with the same period last year. The decrease was mainly explained that the Company controlled the selling expenses by effective administration.  For the three months ended September 30, 2005 sale commissions of $199,408 represented the expenses occurred to Fangyuan. No such expense occurred for the same period this year.  General and Administrative General and administrative expenses increased from $693,937 for the three months ended September 30, 2005 to $1,306,226 for the same period this year, representing a 88.23% increase. The details of general and administrative expenses for the three months ended September 30, 2006 and 2005 were as follows:  Three Months Ended September 30,Breakdown of Expenses20062005Increase/
(Decrease)Amortization of deferred expense$311,044$-$311,044Traveling expenses49,64311,97537,668Office expenses46,02152,582(6,561)Payroll140,111112,71427,397Conference fees17,800-17,800Bad debt provision13,769210,279(196,510)Consultancy fees138,357-138,357Entertainment24,71639,188(14,472)Depreciation82,09254,56727,525Social compensation43,67531,57712,098Amortization of other intangible assets141,41967,45973,960Other expenses297,579113,596183,983TOTAL$1,306,226$693,937$612,289   35     Amortization of deferred expense was $311,044 for the three months ended September 30, 2006. On July 5, 2006, the Company issued 800,000 and 1,200,000 shares of common stock on Form S-8 with the Securities and Exchange Commission to employees and consultants, respectively. The deferred compensation is amortized over the service period. No such expense was occurred for the same period last year.  The consultancy fees which the company pays consultants for their consultation service increased from $0 for the three months ended September 30, 2005 to $138,357 for the same period this year. The increase was mainly attributable to $98,943 and $38,337 of the consultancy fees in the third quarter this year from Aida and Fangyuan, respectively.  Bad debt provision of $13,769 for the three months ended September 30, 2006 decreased by $196,510 from $210,279 for the same period last year. The decrease was attributable to the decrease in the bad debt provision of Fangyuan.  Amortization of other intangible assets of $141,419 for the three months ended September 30, 2006 increased by $73,960 from $67,459 for the same period last year. The increase was explained by that the increase in amortization of other intangible assets occurred to Fangyuan and Qiaer of $24,041 and $48,180, respectively.  Other Income (Expenses) Other income (expenses) changed from a net expense of $(317,122) for the three months ended September 30, 2005 to net income of $14,511 for the same period this year. The other income (expenses) for the three months Ended September 30, 2006 and 2005 were as follows:  Three Months Ended September 30,Breakdown of Other Income (Expenses)20062005Increase/
(Decrease)Interest expense, net$(459,511)$(297,809)$(161,702)Government grants551,42072,746478,674Gain on sale of investment---Gain from nonmonetary transaction---Other (loss) income, net(77,358)(92,059)14,701TOTAL$14,551$(317,122)$331,673  Interest expense for the three months ended September 30, 2006 increased by $161,702 from $297,809 for the same period last year. The increase is due to the increase in bank borrowings as a result of more requirements for working capital with the development of the Company.  Government grants for the three months ended September 30, 2006 increased by $478,674 from $72,746 for the same period last year. The increase is due to the increase in subsidies from the government.  Income Taxes Income tax (expense) benefit was $(217,720) for the three months ended September 30, 2006, as compared to $159,227 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 the first two years and is then entitled to a 50% tax reduction for the succeeding three years. And the foreign investment company income tax rate is 27% in Hangzhou, PRC. Since Hangzhou Aida Pharmaceutical Co., Ltd has been a foreign investment company since 2004, we are entitled to a 50% tax reduction in 2006.  Net Income In the third quarter of 2006, our net income increased by $188,745 to a net income of $919,285 from $730,540 in the same period in 2005.   36     RESULTS OF OPERATIONS  NINE MONTHS ENDED SEPTEMBER 30, 2006 AS COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2005  The following table sets forth selected statements of income data as a percentage of revenues for the nine months indicated.  Nine Months Ended September 30,20062005Revenues100.00%100.00%Cost of goods sold(49.24)%(25.93)%Gross margin50.76%74.07%Research and development(0.23)%(0.99)%Selling and distribution(24.05)%(42.75)%General and administrative(14.73)%(14.04)%Other income (expense)(0.64)%(3.40)%Income taxes(2.26)%0.22%Minority interests(2.10)%(4.96)%Gain from discontinued operation0.00%1.17%Net income6.75%9.32%  Revenues, Cost of Goods Sold and Gross Profit Revenues for the nine months ended September 30, 2006 were $19,659,235, an increase of $3,577,313 from $16,081,922 for the same period last year. Sales revenues from our group of companies engaging in the production of different types of Etimicin for the nine months ended September 30, 2006 and 2005 were as follows:  Nine Months Ended September 30,Companies20062005Increase/
(Decrease)Hangzhou Aida Pharmaceutical Co., Ltd (Hangzhou Aida)
specializes in the production of Etimicin powder$6,830,259$8,338,698$(1,508,439)Hainan Aike pharmaceutical Co., Ltd (Aike) specializes in
the production of Etimicin transfusion9,609,4845,987,7643,621,720Hangzhou Boda Medical Research and Development Co., Ltd. (Boda)---Shanghai Qiaer Bio-Technology Co., Ltd.(Qiaer)---Changzhou Fangyuan Pharmaceutical  Co., Ltd. (Fangyuan)
specializes in the production of Etimicin injection3,219,4921,755,4601,464,032TOTAL$19,659,235$16,081,922$3,577,313  For the nine months ended September 30, 2006, the sales of Hangzhou Aida decreased by $1,508,439 or 18.09% as compared to the same period in 2005.The decrease is mainly attributable to the new implementations of government regulations that imposed an adverse effect on the pharmaceutical distribution of some of our distributors. These regulations demand more strictly on the promotion means of the distributions. As a result, they reduced their orders from the Company. Hangzhou Aida has taken some new measures to adapt to the new market environment and improve the operation result in sales since the second quarter this year, and the decrease percentage has been improved remarkably.  For the nine months ended September 30, 2006, the sales of Hainan Aike increased by $3,621,720, or 60.49% as compared to the same period in 2005.The increase in sales is the result of the intense marketing and promotion programs of a new Etimicin transfusion product, Aiyi. Another reason is that Hainan Aike has established several new sales offices in various regions.  For the nine months ended September 30, 2006, the sales of Fangyuan increased by $1,464,032, or 83.40% as compared to the same period in 2005. The increase in sales is the result of the intense marketing and promotion programs of a new Etimicin injection product, Chuangcheng.   37     The cost of goods sold for the nine months ended September 30, 2006 was $9,679,567, an increase of $5,508,966 from $4,170,601, for the same period in 2005. The increase in cost of goods sold can be analyzed as follows:  Nine Months Ended September 30,Companies20062005Increase/
(Decrease)Hangzhou Aida Pharmaceutical Co., Ltd. (Hangzhou Aida) specializes
in the production of Etimicin powder$1,959,058$1,763,417$195,641Hainan Aike pharmaceutical Co., Ltd. (Aike) specializes in the
production of Etimicin transfusion5,955,8031,663,7704,292,033Hangzhou Boda Medical Research and Development Co., Ltd. (Boda)---Shanghai Qiaer Bio-Technology Co., Ltd. (Qiaer)---Changzhou Fangyuan Pharmaceutical Co., Ltd. (Fangyuan) specializes
in the production of Etimicin injection1,764,706743,4141,021,292TOTAL$9,679,567$4,170,601$5,508,966  Despite the increase in sales of 18.09%, the cost of goods sold of Hangzhou Aida for the nine months ended September 30, 2006 increased by $195,641, or 11.09% compared to $1,763,417 for the same period in 2005. It can mainly be accounted for by a slight decrease in the price of Etimicin by approximately 5% since the second half of 2005.  Despite the increase in sales of 60.49%, the cost of goods sold of Aike increased by 257.97% for the nine months ended September 30, 2006 compared to the same period in 2005. The increase can partially be explained by the increase in sales. Another reason is that among Aikes sales increase, the products with relatively low margin accounted for a larger portion. As a result, the increase rate of the cost of goods exceeded the increase rate of the sales.  The cost of goods sold of Fangyuan for the nine months ended September 30, 2006 increased by $1,021,292, compared to $743,414 for the same period in 2005.The increase is mainly due to the increase in sales.  Despite the increase in total sales revenue of 22.24%, the cost of goods sold increased by 132.09% in the nine months ended September 30, 2006 compared to the same period in 2005.The Company has suffered a decrease in the gross profit margin.  Compared to the nine months ended September 30, 2005, the percentage gross profit margin for our Company decreased from 74.07% to 50.76% for the nine months ended September 30, 2006.  The decrease in gross profit margin percentage was mainly attributable to the following factors: Firstly, among Aikes sales increase, the products with relatively low margin accounted for a larger portion, which lowered down the general margin percentage as Aike contributed over 50% of the companys total sales in the quarter. Secondly, the increase in the cost of C1a, a precursor of Etimicin raw materials. Thirdly, a slight decrease in the price of Etimicin by approximately 5% since the second half of 2005.  Research and Developments Research and development cost was $158,840 for the nine months ended September 30, 2005 representing costs incurred for toxicological tests for the Etimicin product with a view of improving the quality of the drugs. Research and development cost was $45,111 for the nine months ended September 30, 2006 representing costs incurred by Qiaer.  Selling and Distribution Selling and distribution expenses decreased from $6,874,814 for the nine months ended September 30, 2005 to $4,728,989 for the same period this year, or a 31.21% decrease. Compared to the same period in 2005, our decrease in the expenses was because of the following:  38        Nine Months Ended September 30,Breakdown of Expenses20062005Increase/
(Decrease)Traveling expenses$1,713,380$3,000,678$(1,287,298)Sale commissions431,207621,571(190,364)Office expenses799,6841,131,706(332,022)Payroll249,098578,485(329,387)Conference fees141,647523,852(382,205)Rent105,80781,68824,119Entertainment117,031256,585(139,554)Other expenses604,722606,053(1,331)Advertising expenses566,41374,196492,217TOTAL$4,728,989$6,874,814$(2,145,825)  For the nine months ended September 30, 2006 advertising expenses of $566,413 increased by $492,217, compared with the same period last year.The increase can mainly be explained by the increase in sales of 22.24%. To increase the sales, the Company carried out more advertisements, which resulted in the increasing advertising expenses in the past three quarters of 2006.  For the nine months ended September 30, 2006 traveling expenses, office expenses and entertainment expenses decreased by $1,287,298, $332,022 and $139,554 respectively, compared with the same period last year. The decrease was mainly explained that the Company controlled the selling expenses by effective administration.  General and Administrative General and administrative expenses increased from $2,257,189 for the nine months ended September 30, 2005 to $2,896,205 for the same period this year, representing a 28.31% increase. The details of general and administrative expenses for the nine months ended September 30, 2006 and 2005 were as follows:  Nine Months Ended September 30,Breakdown of Expenses20062005Increase/
(Decrease)Traveling expenses$188,765$163,823$24,942Office expenses133,073169,813(36,740)Payroll422,687379,56143,126Conference fees27,56426,836728Bad debt provision27,553240,826(213,273)Consultancy fees245,64634,879210,767Entertainment75,77077,128(1,358)Social compensation97,625102,592(4,967)Depreciation230,212149,39480,818Amortization of other intangible assets323,739197,543126,196Amortization of deferred expenses356,878-356,878Other expenses766,693714,79451,899TOTAL$2,896,205$2,257,189$639,016  Amortization of deferred expense was $356,878 for the nine months ended September 30, 2006.On July 5, 2006, the Company issued 800,000 and 1,200,000 shares of common stock on Form S-8 with the Securities and Exchange Commission to employees and consultants, respectively. The deferred compensation is amortized over the service period. No such expense was occurred for the same period last year.  The consultancy fees which the Company pays consultants for their consultation service increased from $34,879 for the nine months ended September 30, 2005 to $245,646 for the same period this year. The increase was mainly attributable to the increase in the consultancy fees of $209,142 and $99,028 from Aida and Fangyuan, respectively.   39     Bad debt provision of $27,553 for the nine months ended September 30, 2006 decreased by $213,273 from $240,826 for the same period last year. The decrease resulted from the decrease in the bad debt provision of $214,496 at Fangyuan for the nine months ended September 30, 2005.  Amortization of other intangible assets of $323,739 for the nine months ended September 30, 2006 increased by $126,196 from $197,543 for the same period last year. The increase was explained by that the increase in amortization of other intangible assets of $77,921 and $47,955 occurred by Fangyuan and Qiaer, respectively.  Other Income (Expenses) Other income (expenses) changed from a net expense of $(547,222) for the nine months ended September 30, 2005 to net expense $ (124,625) for the same period this year. The other income (expenses) for the nine months ended September 30, 2006 and 2005 were as follows:  Nine Months Ended September 30,Breakdown of other income /(expenses)20062005Increase/
(Decrease)Interest expense, net$(1,114,105)$(779,686)$(334,419)Government grants1,097,724115,719982,005Gain on sale of investment12,490-12,490Gain from nonmonetary transaction-125,097(125,097)Other (loss) income, net(120,734)(8,352)(112,382)TOTAL$(124,625)$(547,222)$422,597  Interest expense for the nine months ended September 30, 2006 increased by $334,419 from $779,686 for the same period last year. The increase is due to the increase in bank borrowings as a result of more requirements for working capital with the development of the Company.  Government grants for the nine months ended September 30, 2006 increased by $982,005 from $115,719 for the same period last year. The increase is due to the increase in subsidies from the government.  Gain on sale of investment of $12,490 for the nine months ended September 30, 2006 representing the sold income of 8.33% outstanding shares of Zhejiang Anglikang Pharmaceutical Co., Ltd at a price of $12,490 and no such income occurred for the same period of 2005.  Gain from nonmonetary transaction of $125,097 for the nine months ended September 30, 2005 resulted from that the Company transferred equipment with an aggregate net book value of $514,133 for settling a liability to Sunshine Group of $639,230. No such transaction occurred for the same period this year.  Income Taxes Income tax (expense) benefit was $(445,047) for the nine months ended September 30, 2006, as compared to $35,987 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 the first two years and is then entitled to a 50% tax reduction for the succeeding three years. And the foreign investment company income tax rate is 27% in Hangzhou, PRC. Since Hangzhou Aida Pharmaceutical Co., Ltd has been a foreign investment company since 2004, so we are entitled to a 50% tax reduction in 2006.  Net Income In the nine months ended September 30, 2006, our net income decreased by $172,114 to $1,326,673 from $1,498,787 in the same period in 2005.   40     LIQUIDITY AND CAPITAL RESOURCES  Cash Our cash balance increased by $1,805,103 to $4,934,553 as of September 30, 2006, as compared to $3,129,450 as of December 31, 2005.The increase was mainly attributable to cash in flow of financing activities and depreciation and amortization of $6,270,382 and $1,281,280, respectively, an increase in accounts payable of $2,145,059. The increase in cash flow was partially offset by cash out flow of investment activities of $5,208,219, an increase in accounts receivable and inventories of $3,471,378 and $435,080, respectivelyand a decrease in customer deposits, other payables and accrued liabilities and due to employees of $608,739, $273,451and $365,431, respectively. The net cash flow was $1,805,103 for the nine months ended September 30, 2006.  Our cash flow from operations amounted to $579,266 for the nine months ended September 30, 2006, compared to $3,024,895 for the same period last year.  Our cash flow used in investing activities amounted to $(5,208,219) of which $(14,163) was lent to related parties. The Company invested $1,005,737 in deposit for land use right, $1,178,141 and $1,977,393 in the purchase of plant and equipment and a subsidiary respectively.  The net cash used in financing activities amounted to $6,270,382 of which $3,877,511 and $2,149,532 were the proceeds from short-term debt and notes payable, respectively.  At September 30, 2006, the Company had short-term debt of $25,328,222 of which $17,177,286 was short-term bank borrowings and the remaining $8,150,936 represented notes payable to unrelated parties. The interest for the short-term borrowings varied from 4.575% to 6.975% 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 deficiency decreased by $1,391,182 to $(4,460,741) at September 30, 2006, as compared to $(5,851,923) at December 31, 2005.The decrease in working capital deficiency at September 30, 2006 was mainlyattributable to our increase in accounts receivable of $3,471,377, cash and cash equivalents of 1,805,103 and notes receivable of $860,728 and a decrease in other payables and accrued liabilities of $273,451 and customer deposits of $608,739offset by an decrease in due from employees of $797,710 and an increase in short term debts of $3,877,512, accounts payable of $2,145,059 and accrued expense of $841,713.  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. However, as of September 30, 2006, the Company had no solid plan for additional capital through external funding and financing.  Item 3.  Controls and Procedures.  (a) Evaluation of Disclosure Controls and Procedures.  Within the 90 days prior to the date of this Quarterly Report for the period ended September 30, 2006, we carried out an evaluation, under the supervision and with the participation of our management, including the Company's Chairman and Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-14 of the Securities Exchange Act of 1934 (the "Exchange Act"), which disclosure controls and procedures are designed to insure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within required time periods specified by the SEC's rules and forms. Based upon that evaluation, the Chairman and the Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information relating to the Company required to be included in the Company's period SEC filings.  (b) Changes in Internal Controls.  Subsequent to the date of such evaluation as described in subparagraph (a) above, there were no significant changes in our internal controls or other factors that could significantly affect these controls, including any corrective action with regard to significant deficiencies and material weaknesses.   41     PART II  OTHER INFORMATION  Item 1. Legal Proceedings.  In December of 2005, the Company filed a legal action against Hainan Haomai Pharmaceutical Co., Ltd for its infringement upon the patent of Etimicin transfusion. As the plaintiff, the Company has claimed compensation of approximately USD 60,000 for the infringement. The defendant applied with SIPO (State Intellectual Property Office of the Peoples Republic of China) for the invalidity of the Patent of Etimicin under which the company was granted the exclusive production right of Etimicin powder and transfusion form.SIPO has declared to refuse the request by the defendant and reconfirm the validity of the patent. The Company is still waiting for the court judgement.  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  None.  Item 6.  Exhibits and Reports on Form 8-K.  Reports on Form 8-K  Date Form Items Reported  7-14-06 8-K 1.01, 5.02 and 9.01  Exhibits   Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-B.  Exhibit No.SEC Ref. No.Title of DocumentLocation131.1Certification of the Principal Executive Officerpursuant to Section 302 of the Sarbanes-Oxley Act of 2002Attached2.31.2Certification of the Principal Financial Officerpursuant to Section 302 of the Sarbanes-Oxley Act of 2002Attached332.1Certification of the Principal Executive Officerpursuant to U.S.C. Section 1350 as adopted pursuantto Section 906 of the Sarbanes-Oxley Act of 2002*Attached432.2Certification of the Principal Financial Officerpursuant to U.S.C. Section 1350 as adopted pursuantto Section 906 of the Sarbanes-Oxley Act of 2002*Attached  *The Exhibit attached to this Form 10-QSB 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.   42     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: November 13, 2006 /s/ Biao Jin Mr. Biao Jin Chief Executive Officer       Date: November 13, 2006 /s/ Hui Lin Ms. Hui Lin Chief Financial Officer   43