UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.  20549





Form
10-K





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





For
the fiscal year ended March 31,
2009





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





Commission
file number 33-61892





GAMMA
PHARMACEUTICALS INC.








Delaware
            
            72-1235452(State
      or other jurisdiction of
              incorporation
      or organization)
            
            (I.R.S.
      Employer
              Identification
      No.)





7477
      W. Lake Mead Blvd., Suite 170Las
      Vegas, NV
            
            89128(Address
      of principal executive offices)
            
            (Zip
      Code)





Registrant’s
telephone number, including area code      (702)
989-5262





Copies of
Communications to:


Stoecklein
Law Group


402 West
Broadway, Suite 690


San
Diego, CA 92101


(619)
704-1310


Fax (619)
704-0556





Securities
registered pursuant to Section 12(b) of the Exchange Act:


None





Securities
registered pursuant to Section 12(g) of the Exchange Act:


Common
Stock





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.


Yes  ̈  No x





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.


Yes  ̈  No x





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


Yes x  No  ̈





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405) is not contained in herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.


 ̈





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





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








Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).


Yes  ̈  No x





The
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked price of such common equity, as of September
30, 2008 (the last business day of the registrant's most recently completed
second fiscal quarter) was $7,227,177 based on a share value of
$0.60.





The
number of shares of Common Stock, $0.001 par value, outstanding on July 13, 2009
was 27,020,876 shares.













GAMMA
PHARMACEUTICALS INC.


FOR
THE FISCAL YEAR ENDED


MARCH
31, 2009





Index
to Report


on
Form 10-K











PART
      I
              
              PageItem
      1.
              Business
              2Item
      1A.
              Risk
      Factors
              14Item
      1B.
              Unresolved
      Staff Comments
              15Item
      2.
              Properties
              25Item
      3.
              Legal
      Proceedings
              26Item
      4.
              Submission
      of Matters to a Vote of Security Holders
              26PART
      II


Item
      5.
              Market
      for Registrant’s Common Equity, Related Stockholder Matters and Purchases
      of Equity Securities
              27Item
      6.
              Selected
      Financial Data
              32Item
      7.
              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
              32Item
      7A.
              Quantitative
      and Qualitative Disclosures about Market Risk
              41Item
      8.
              Financial
      Statements and Supplementary Data
              41Item
      9.
              Changes
      in and Disagreements With Accountants on Accounting and Financial
      Disclosure
              41Item
      9A(T).
              Controls
      and Procedures
              42Item
      9B.
              Other
      Information
              43PART
      III


Item
      10.
            Directors,
      Executive Officers and Corporate Governance
            43Item
      11.
            Executive
      Compensation
            47Item
      12.
            Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
            51Item
      13.
            Certain
      Relationships and Related Transactions, and Director
      Independence
            52Item
      14.
            Principal
      Accounting Fees and Services
            53Item
      15.
            Exhibits,
      Financial Statement Schedules
            54





FORWARD-LOOKING
STATEMENTS





This document contains “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act
of 1995.  All statements other than statements of historical fact are
“forward-looking statements” for purposes of federal and state securities laws,
including, but not limited to, any projections of earnings, revenue or other
financial items; any statements of the plans, strategies and objections of
management for future operations; any statements concerning proposed new
services or developments; any statements regarding future economic conditions or
performance; any statements or belief; and any statements of assumptions
underlying any of the foregoing.





Forward-looking statements may include
the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect”
or “anticipate” or other similar words.  These forward-looking
statements present our estimates and assumptions only as of the date of this
report.  Except for our ongoing securities laws, we do not intend, and
undertake no obligation, to update any forward-looking statement.





Although we believe that the
expectations reflected in any of our forward-looking statements are reasonable,
actual results could differ materially from those projected or assumed in any or
our forward-looking statements.  Our future financial condition and
results of operations, as well as any forward-looking statements, are subject to
change and inherent risks and uncertainties.  The factors impacting
these risks and uncertainties include, but are not limited to:





o
            increased
      competitive pressures from existing competitors and new
      entrants;




o
            increases
      in interest rates or our cost of borrowing or a default under any material
      debt agreements;




o
            our
      ability to efficiently and effectively finance our operations, and/or
      purchase orders;




o
            deterioration
      in general or regional economic
conditions;




o
            adverse
      state or federal legislation or regulation that increases the costs of
      compliance, or adverse findings by a regulator with respect to existing
      operations;




o
            inability
      to achieve future sales levels or other operating
  results;




o
            the
      unavailability of funds for capital expenditures and/or general working
      capital;




o
            operational
      inefficiencies in distribution or other
systems;




o
            the
      fact that our accounting policies and methods are fundamental to how we
      report our financial condition and results of operations, and they may
      require management to make estimates about matters that are inherently
      uncertain;




o
            adverse
      state or federal legislation or regulation that increases the costs of
      compliance, or adverse findings by a regulator with respect to existing
      operations;




o
            changes
      in U.S. GAAP or in the legal, regulatory and legislative environments in
      the markets in which we operate;




o
            inability
      to efficiently manage our
operations;




o
            the
      inability of management to effectively implement our strategies and
      business plans; and




o
            the
      other risks and uncertainties detailed in this
  report.







1


For a detailed description of these and
other factors that could cause actual results to differ materially from those
expressed in any forward-looking statement, please see “Factors That May Affect
Our Plan of Operation” in this document.





Throughout
this Annual Report references to “we”, “our”, “us”, “Gamma”, “the Company”, and
similar terms refer to Gamma Pharmaceuticals Inc.





PART
I





ITEM
1.                      BUSINESS





General
Development of Business





Gamma
Pharmaceuticals Inc. was incorporated in the State of Delaware on February 10,
1993 as Emerging Gamma Corporation for the purpose of seeking business
opportunities, including acquisitions that the Board of Directors, in its
discretion, believed to be good opportunities.  In 2002, after a
tender offer, a new Board of Directors succeeded the original Board, but
maintained the same goal of seeking out new business
opportunities.  The pursuit of this goal led to the acquisition of the
Transferred Technology pursuant to the Technology Transfer Agreement on April 7,
2006 and new business described below.  Following the effectiveness of
the Technology Transfer Agreement, the name of the Company was changed from
Emerging Gamma Corporation to Sunburst Pharmaceuticals, Inc. and, on July 14,
2006, was changed again to Gamma Pharmaceuticals, Inc.





Technology Transfer
Agreement





On April
7, 2006, we entered into a Technology Transfer Agreement (the "Technology
Transfer Agreement") with Mr. Peter Cunningham, Mr. Joseph Cunningham and Mr.
Hao Zhang, our current officers and directors ("Assignors" or " Management"),
pursuant to which we obtained all copyrights, trademarks, and know-how
(collectively, "Transferred Technology") to a portfolio of vitamin and
nutriceutical products and personal care products.  The Transferred
Technology is based on proprietary formulation technology, and we believe such
technology represents improved versions of branded products currently being
marketed by other companies.  Assignors have developed a
proprietary-marketing platform for (i) the Greater China (Peoples Republic of
China [China], Hong Kong and Republic of China [Taiwan]) healthcare, vitamins
and nutriceutical markets, over-the-counter ("OTC") pharmaceutical markets, and
personal care markets and (ii) the United States vitamins and nutriceutical
markets, OTC pharmaceutical markets, and personal care markets. We believe that
the products, technologies and marketing platform will enable us to pursue a
specialized business model for succeeding in these Greater China and United
States markets.





2


Under the
Technology Transfer Agreement, we acquired all copyrights, trademarks, trade
secrets and know-how for a product line of 10 vitamins and nutriceuticals, and a
product line of personal care products including IceDrops, an alcohol based hand
sanitizer (collectively "New Products").  The products have been
formulated to be in compliance with prevailing regulations of the appropriate
government regulatory agencies in China, Taiwan, Hong Kong and the
U.S.  Final submission of labeling and product performance claims, to
the same regulatory agencies, is pending.  We intend to take the
necessary steps to market the products in these jurisdictions and will undertake
manufacturing through qualified third party sources.  In all of these
major markets, Management has experience marketing and selling similar
products.





As per
the agreement, we have an up-scale suite of consumer products
including:





·
            Hand
      Sanitizer Lotion, water free


·
            Hand
      Sanitizer Lotion with Aloe, water
free


·
            Supplement
      multivitamins, 4 fruit flavors (for
children)


·
            Supplement
      Calcium, 4 fruit flavors


·
            Supplement
      Vitamin C, orange flavor


·
            Adjunctive
      supplement Immune booster


·
            Adjunctive
      supplement energy booster


·
            Adjunctive
      supplement for improved cognition


·
            Adjunctive
      supplement for reducing the side effects of
  chemotherapy


·
            Adjunctive
      supplement for symptoms of type II diabetes and
    pre-diabetes


·
            Adjunctive
      supplement for the symptoms of
menopause


·
            Adjunctive
      supplement for stress reduction





Copyright
protection is secured for all of the New Products' formulations except for the
adjunctive supplement for the symptoms of menopause, for which an application
for copyright is being submitted and awaiting receipt of a copyright
registration number.





In August
2006, we completed negotiations with Jugular Inc., a brand management company,
for a contract to license the Jugular brand name, logo and other graphic
applications for a range of the energy products.  The 5-year term of
the contract includes exclusive worldwide rights to the brand, proprietary
ownership of any improvements and an obligation for Jugular to provide support
and resources to co-enable cross-brand promotional activities and resource
activities at favorable market rates to the Company.





During May 2008, the Company amended
its articles in increased its authorized capital from 500,000 shares of $0.001
preferred stock to 2,000,000 shares of $0.001 preferred stock and from
20,000,000 shares of $0.001 common stock to 100,000,000 shares of $0.001 common
stock.





Our
Business





We are a
marketing and product formulation company selling our own branded products
through wholesalers and direct to retailers both in the US and
internationally.  We are headquartered in Las Vegas, Nevada with a
wholly-owned subsidiary company in Hong Kong and a Representative Office in
Beijing the Peoples Republic of China (“PRC”).  We have created,
registered and branded innovative product lines of nutritional supplements,
personal care products and Over-the-Counter (OTC)
pharmaceuticals.  Currently, our products are produced by third party
manufactures and distributed in North America and Greater China.  Our
initial success is based on adapting our proprietary “Gel Delivery Technology®” for
selected wellness products.





3


Through
the Technology Transfer Agreement we acquired a new line of consumer goods in
the vitamin and nutriceutical sector focused mainly on the greater China
healthcare, vitamins and nutriceutical goods, OTC pharmaceutical, and personal
care product markets and in the United States vitamins and nutriceuticals and
personal care product markets.  Our Management is experienced
operating in the greater China and US markets and has a marketing platform and
proprietary technologies that we believe will provide us with a specialized
business model for use in developing a greater China consumer goods and OTC
pharmaceutical business.





Products





We have
developed and are continuing to expand our product lines in vitamins and
nutriceuticals, personal care and OTC pharmaceutical products suitable for both
the Greater China market and the United States market. All of our formulations
are or will be copyright protected and we have undertaken the process to seek US
patent protection on certain product application patents.  We
formulate and market unique digestible product forms including gel strips, gel
liquids and gel solid forms.  The products we intend to sell will be
tailored to the targeted market segments by age group, purchasing power,
lifestyle, medical condition or therapeutic objective.  The product
mix will then be segmented again by package size so as to meet price points in
major retail channels such as convenience stores (small  pack),
pharmacy and supermarket (standard pack), and hypermarkets (large
pack).





We
shipped our first products in the three month period ended December 31, 2007.
 Sales have been made to a major national retail account for a product
utilizing our proprietary Gel Technology, in a gumdrop product
form.  We have signed Agreements with wholesalers and with retail
outlets for our branded products and have put in place a national network of
product brokers in the United States. During fiscal year ending March 31, 2009,
we began selling our branded products in China for distribution to retails
stores in four major Chinese cities.  We view this aspect of our
business as critical to our future growth and expect the size and frequency of
shipment to increase.





We have
had ongoing and substantive discussions with several other large retailers in
the United States and in China.  Certain government organizations have
expressed a strong desire to purchase our suite of energy
products.  We market our products under four Master Brands and also
manufacture House Brands for major retail accounts.  Our four brands
include the following:





·
            BrilliantChoiceTM


·
            SavvyTM


·
            Jugular
      Energy ProductsTM


·
            House
      Brands





4


We market
unique product forms including gel strips and gummy gels and crystal gels with
each Master Brand targeting a defined consumer profile.  For example,
our BrilliantChoiceTM brand consists of mainly children’s health supplements but
is targeted to complement the mother, whom we have defined as the “multi-mom”,
and the person mainly responsible for the buying of children’s supplements –
“Mom you’ve made a brilliant choice.”  Our tagline "Go for the
Jugular" is used for our Jugular Energy ProductsTM which are targeted towards the
youth oriented market including action sports and has resonated with several
other sub markets which we intend to exploit.





Our
products formulation, pack sizes and other product characteristics are gaining
acceptance amongst our targeted consumers.  We conducted a product
survey in May 2007 with over 800 prospective purchasers of our
products.  The study demonstrated a 90% acceptance rate amongst survey
participants for product form, taste and texture with nearly all participants
expressing a willingness to buy the products.







A large
part of our initial product line of nutritional supplements, personal care
products and OTC pharmaceutical products is based on proprietary uses of
plant-based Gel technology to create innovative products.  Products
based on our “Gel Delivery Technology” offer, management believes, a highly
desirable innovation over the typical tablets and capsules to which consumers
have grown accustomed.  The Gel products are the latest product forms
consumers desire in the healthcare and supplement industries.  Our Gel
Delivery Technology will be a significant part of our marketing strategy,
complete with an easily identified logo across product categories and lines to
create consistent product message. Our products and Gel Delivery Technology have
evolved through years of formulation and the global marketing experience of our
Management.





Intellectual
Property





Our
performance and ability to compete depends to a significant degree on our
proprietary knowledge.  We rely or intend to rely on a combination of
patent, copyright and trade secret laws, non-disclosure agreements and other
contractual provisions to establish, maintain and protect our proprietary
rights.





On April
7, 2006, we entered into a Technology Transfer Agreement pursuant to which we
have obtained all copyrights, trademarks, and know-how to a portfolio of vitamin
and nutriceutical products and personal care products. This Transferred
Technology is based on proprietary formulation technology that we believe
represents improved versions of certain current branded products now being
marketed by other companies.





In August
of 2006 we undertook an independent intangible asset valuation by BCC Capital
Partners of Irvine, California.  The purpose of the independent asset
valuation was to satisfy our audit requirement with respect to FASB Statement
141 and 142.  BCC was engaged specifically to estimate the fair value
of the intangible assets transferred as a result of our April 7, 2006 Technology
Transfer Agreement.  BCC affirmed our intangible asset valuation at
the time of the transaction for an aggregate $5.95 million.





Since
that time, we have undertaken a concentrated effort to add to our intellectual
property portfolio including in-licensing of the Jugular brand, on-going
development of several new products and new product forms, and development of
dossiers to support product patent applications.





5


On August
30, 2006, we successfully completed negotiations with Jugular Inc., a brand
management company, for a contract to license the Jugular brand name, logo and
other graphic applications for a range of the energy products.  The
5-year term of the contract includes exclusive worldwide rights to the brand,
proprietary ownership of any improvements and an obligation for Jugular to
provide support and resources to co-enable cross-brand promotional activities
and resource activities at favorable market rates to the Company.





On July
2, 2007, we amended our license agreement with Jugular, Inc. to expand the scope
of product lines.  Additionally, on August 29, 2007, we amended the license
agreement to increase the term to 15 years with an automatic renewal for 5 year
terms if we meet the minimum sales requirements.





On February 14, 2008, we entered into a
letter agreement to acknowledge certain facts as they pertain to the License
Agreement and amendments (collectively the “Agreement”) with
Jugular.  Pursuant to the letter agreement we agreed that the Payments
of the Annual Gaurantee portion of the Agreement will be made on a quarterly
basis and the payment amounts (listed in the letter agreement) will be made to
Jugular regardless as to wheather or not the sales (listed in the Agreement)
have been achieved.





We filed
one patent application for liquid gells and gel strips and we are currently in
the process of preparing applications for US patant protection for certain other
product applications and evaluating certain other products and certain
additional manufacturing methods for US patent protection.





On May 4,
2007, we purchased intellectual property from Peter Cunningham, an officer and
director of the Company for $17,000.  Additionally, Mr. Cunningham
will be eligible to participate in any additional management compensation
structure.  We view the intellectual property as a core component of
certain pending patent application.





Manufacturing





At this
time, we intend to contract to manufacture our products with leading supply
manufacturers in mainly North America and may consider qualified manufactures in
greater China.  We believe that this is a lower-risk strategy and will
preserve capital investment particularly during the next 12-18 month
period.  We believe that there is a surplus of manufacturing capacity
for our products in China and in the United States and as such, pricing pressure
may result in manufacturers allowing for price concessions, providing us
additional support for managing our gross margins. We will aim to diversify our
manufacturing where possible so not to become overly dependent on any one
manufacturing group.  Our Management has worked with several
manufacturing groups in the past and we believe the relationship with these
groups will help us to quickly organize our manufacturing
resources.





Raw
materials





The
principal raw materials required in our operations are vitamins, minerals,
herbs, confectionary base and packaging components. We purchase the majority of
our vitamins, minerals and herbs from raw material manufacturers and
distributors in North America and Asia.  We believe that there are
adequate sources of supply for all of our principal raw materials.  We
also believe that our strong relationships with our suppliers will yield
improved quality, pricing and overall service to our
customers.  Although there can be no assurance that our sources of
supply for our principal raw materials will be adequate in all circumstances, in
the event that such sources are not adequate, we believe that alternate sources
can be developed in a timely and cost-effective manner.





Distribution





We are
focusing our distribution channels and networks in an attempt to focus our sales
network coverage in the United States and in all major provinces and cities of
Asia, including Greater China.  We believe these distribution networks
will enable us to introduce our new products into target markets more
effectively.  We use exclusive and non-exclusive third party
distributors for specific products and specific distribution
territories.





We are
seeking to hire regional sales representatives and embed certain specialists
with our distribution partners on a full time equivalent basis.  We
also plan to use commission-based sales specialists.  Although there
can be no assurance of our success, our objective is to expand into
approximately 10,000 retail outlets in Asia and the United States over the next
18 months.  By diversifying our distribution base we will not have to
rely on any single group for the bulk of our sales.





Marketing
and Promotions





The
Company has developed a series of innovative marketing and brand promotional
programs designed to stimulate end purchaser demand and to support our wholesale
and retail partners.  The Company views the effective use of its
marketing programs as a key value driver when presenting our brands and products
to wholesalers and retailers alike.  In effect, the Company is not
just sell innovative product forms and noteworthy brands but also the Company’s
ability to drive consumer demand to named retail outlets using the Company’s
marketing and promotional activities.  The Company uses a variety of
promotional techniques including product sampling to drive the consumer's
initial purchase but then relies on other activities to reinforce the purchase
decision and to encourage additional product purchases.








6








Competition





The
market for vitamins and nutritional supplement products is highly
competitive.  Competition is based primarily on price, quality and
assortment of products, customer service, marketing support, and availability of
new products.  We believe that we are well positioned to compete in
the fast-developing North American and Greater China vitamin and nutraceutical
market with a potentially strong brand identity, diverse product portfolio,
research and development capabilities, established sales and marketing know-how
and favorable cost structure. We believe that competition and leadership in our
industry are based on managerial and technological expertise, and the ability to
identify and exploit commercially viable products.





Our
direct competition consists primarily of publicly and privately owned companies,
which tend to be highly fragmented in terms of both geographical market coverage
and product categories.  We also compete with companies that may have
broader product lines and/or larger sales volumes.  Our products will
also compete with nationally advertised brand name products.  Most of
the national brand companies have resources greater than our
resources.





There are
numerous companies in the vitamin and nutritional supplement industry selling
products to retailers, including mass merchandisers, drug store chains,
independent drug stores, supermarkets and health food stores.  Many
companies within the industry are privately held.  Therefore, we are
unable to precisely assess the size of all of our competitors or where we rank
in comparison to such privately held competitors with respect to sales to
retailers.





Industry
Overview





China





China is
one of the world's major producers of ingredients for pharmaceuticals, herbal
supplements, nutritional supplements and personal care
products.  According to a recent ISI Emerging Markets report, the
pharmaceutical industry in China was approximately $27.7 billion in 2005 and
China is forecast to become the world’s fifth largest pharmaceutical market by
2010.





Due in
part to the relaxation of trade barriers following China's accession to the
World Trade Organization ("WTO") in January 2002, we believe China will become
one of the world's largest pharmaceutical markets by the middle of the
twenty-first century.  As a result, we believe the Chinese market
presents a significant opportunity for both domestic and foreign drug
manufacturers.  With the Chinese accession to the WTO, the Chinese
pharmaceutical industry is gearing up to face the new patent regime that is
required by WTO regulation, and the Chinese government has begun to reduce its
average tariff on pharmaceuticals.  China has also agreed that foreign
companies will be allowed to import most products, including pharmaceuticals,
into any part of China.





Foreign
companies are expected to benefit from China’s WTO accession in four significant
areas.  First, they will be able to acquire a larger share of the
Chinese market.  Second, they may be able to gain increased control
over their distribution networks and may not have to rely on the complex and
sometimes costly Chinese supply network. Third, open competition will give
foreign drug companies a better chance of having their products included on
China's provincial and municipal lists of drugs that are subject to state
reimbursement.  Finally, the intellectual property rights of foreign
drug companies will be accorded enhanced protection. However, given China's past
performance in adhering to international agreements, there can be no assurance
that any or all of these benefits will be achieved.





The
development of the retail drugstore sector in China since the most recent round
of healthcare reforms began in 1998 has been rapid.  Chain drugstores
soon followed; since the promulgation of Chain Drugstores Regulations in 1998,
more than 260 companies have been approved by the State Drug Administration
("SDA") as chain drugstores.  Of the roughly 120,000 Chinese retail
pharmacies as of December 2002, 260 were chain drugstore enterprises that
managed in the aggregate 5,096 retail outlets.  According to recent
industry figures, there is an average of 26 retail drugstores for each chain;
and the largest chain had a total of 231 interregional retail
outlets.  As of December 2002, the largest retail sales of a chain
drugstore in China amounted to RMB300.0 million, or US$36.59
million.





7


United
States





In the
United States, Lifestyle of Health & Sustainability (“LOHAS”) marketplace is
the fastest growing market in the nutritional supplement category, and according
to research reports from the LOHAS Market Review, the U.S. LOHAS market grew by
approximately 1% new joiners and 10% new spending per year to reach $355 billion
in 2004.  The Natural Marketing Institute for the American Botanical
Council reports that the LOHAS market now includes more than 14% of the
population in the U.S., or conservatively 40 million persons. The Hartman Group,
a market research company, classifies certain vitamins, nutriceuticals and OTC
pharmaceutical products as "wellness products."  They report that
nearly $66 billion was spent on wellness products in 2004.  At that
level of spending, the wellness products category accounts for approximately 25%
of the spending amongst the LOHAS consumer category.





Government
Regulation





China





Our
principal sales market initially will be in the People's Republic of China. For
certain products we will be subject to China's (OTC) Pharmaceutical
Administrative Law, which governs the licensing, manufacturing, marketing and
distribution of pharmaceutical products in China and sets penalties for
violations of the law.  We will also be subject to China's Food
Sanitation Law, which provides the food sanitation standards to be followed by
manufacturers and distributors.  Our products are subject to
registration as foods with the Food and Drug Administration ("FDA") and their
equivalent organizations in all countries.  In China, the equivalent
organization is the SFDA (State Food & Drug Administration).  We
currently use a representative office located in Beijing PRC to represent our
commercial activities in the PRC and to direct contracting to our US
headquarters through our Hong Kong subsidiary, Gamma Pharmaceuticals (HK)
Ltd.  For such an organization arrangement we will be subject to the
foreign company provisions of the Company Law of China, which governs the
conduct of representative offices and their appointed
representatives.  Additionally, we will also be subject in varying
degrees to regulations and the permit system administered by the Chinese
government.





8


United
States





The
formulation, manufacturing, packaging, labeling, advertising, distribution and
sale of our products are subject to regulation by federal agencies, including
the FDA, the Federal Trade Commission, or FTC, the Postal Service, the Consumer
Product Safety Commission, the Department of Agriculture, the Environmental
Protection Agency, and also by various agencies of the states and localities in
which our products are sold.  In particular, the FDA, pursuant to the
Federal Food, Drug, and Cosmetic Act, or FDCA, regulates the formulation,
manufacturing, packaging, labeling, distribution and sale of dietary
supplements, including vitamins, minerals and herbs, and of over-the-counter, or
OTC, drugs, while the FTC regulates the advertising of these products, and the
Postal Service regulates advertising claims with respect to such products sold
by mail order.





Federal
agencies, primarily the FDA and FTC, have a variety of procedures and
enforcement remedies available to them, including the following:




·
            initiating
      investigations,




·
            issuing
      warning letters and cease and desist
orders,




·
            requiring
      corrective labeling or advertising,




·
            requiring
      consumer redress, such as requiring that a company offer to repurchase
      products previously sold to
consumers,




·
            seeking
      injunctive relief or product
seizures,




·
            imposing
      civil penalties, or




·
            commencing
      civil procedures or criminal
prosecution.




In
addition, certain state agencies have similar authority. These federal and state
agencies have in the past used these remedies in regulating participants in the
dietary supplements industry, including the imposition by federal agencies of
civil penalties in the millions of dollars against industry participants. We
cannot assure you that the regulatory environment in which we operate will not
change or that such regulatory environment, or any specific action taken against
us, will not result in a material adverse effect on our operations. In addition,
increased sales of, and publicity about, dietary supplements may result in
increased regulatory scrutiny of the dietary supplements industry.





9


The
Dietary Supplement Health and Education Act, or DSHEA, was enacted in 1994,
amending the Federal Food, Drug, and Cosmetic Act, or FFD&CA. We believe the
DSHEA is generally favorable to consumers and to the dietary supplement
industry. DSHEA establishes a statutory class of "dietary supplements," which
includes vitamins, minerals, herbs, amino acids, and other dietary ingredients
for human use to supplement the diet. Dietary ingredients on the market as of
October 15, 1994 do not require the submission by the manufacturer or
distributor to the FDA of evidence of a history of use or other evidence of
safety establishing that the ingredient will reasonably be expected to be safe,
but a dietary ingredient that was not on the market as of October 15, 1994 may
need to be the subject of such a submission to FDA at least 75 days before
marketing. Among other things, the DSHEA prevents the FDA from regulating
dietary ingredients in dietary supplements as "food additives" and allows the
use of statements of nutritional support on product labels. The FDA has issued
proposed and final regulations in this area and indicates that further guidance
and regulations are forthcoming. We cannot assure you that the FDA will accept
the evidence of safety for any new dietary ingredient that we may decide to use
and the FDA's refusal to accept such evidence could result in regulation of such
dietary ingredients as food additives, requiring FDA pre-approval based on newly
conducted, costly safety testing. In addition, while the DSHEA authorizes the
use of statements of nutritional support or "structure/function claims in the
labels and labeling of dietary supplements, the FDA is required to be notified
of such statements. We cannot assure you that the FDA will not consider
particular labeling statements used by us to be drug claims rather than
acceptable statements of nutritional support, thereby necessitating approval of
a costly new drug application, or re-labeling to delete such statements. We do
believe, however, that we substantially comply with the regulations promulgated
under DSHEA with regard to labels and labeling of our dietary
supplements.





In
November 1998, the FTC announced new advertising guidelines specifically for the
dietary supplement industry, entitled "Dietary Supplements: An Advertising Guide
for Industry." These guidelines reiterate many of the policies the FTC has
previously announced over the years, including requirements for substantiation
of claims made in advertising about dietary supplements. We make every effort to
ensure we are in compliance with FTC advertising standards.





The
FFD&CA also authorizes the FDA to promulgate good manufacturing practices,
or GMP, standards for dietary supplements, which require special quality
controls for the manufacture, packaging, storage, and distribution of
supplements. The final version of FDA's GMP regulation has not been published.
We believe however, that we will be in substantial compliance with the
regulations once they are issued. We contractually require that any independent
third party manufacturers doing business with us comply with all existing, or to
be promulgated, regulations. The FFD&CA further authorizes the FDA to
promulgate regulations governing the labeling of dietary supplements, including
claims for supplements pursuant to recommendations made by the Presidential
Commission on Dietary Supplement Labels. These rules, which were issued on or
after September 23, 1997, entail specific requirements relative to the labeling
of our dietary supplements. The rules also require additional record keeping and
claim substantiation, reformulation, or discontinuance of certain products,
which would be a material expense to us.





10


We cannot
predict the nature of any future laws, regulations, interpretations, or
applications, nor can we determine what effect such additional regulation, when
and if it occurs, would have on our business in the future. Such additional
regulation could require, however, any of the following:





·
            the
      reformulation of certain products to meet new
  standards,




·
            the
      recall or discontinuance of certain
products,




·
            additional
      record keeping,




·
            expanded
      documentation of the properties of certain
  products,




·
            revised,
      expanded or different labeling, or




·
            additional
      scientific substantiation.





Employees





We have
six full-time employees and utilize a varying number of contracted consultant
and professional service organizations to fulfill certain functional
undertakings and to support the development and commercialization of our various
product lines.  We intend to hire additional full time employees to
fill specific functions in our organization as our operations
expand.  We will also hire part-time or independent contractors in
connection with certain projects in Greater China and the United
States.  We expect to have full-time-equivalent employees working
directly for our distributors, manufacturers, and advertising and public
relations agencies.  We will vary employment as product demand
dictates.





Consulting
Agreements





CEOcast, Inc.  On
June 2, 2008, we entered into a Consulting Agreement with CEOcast, Inc., wherein
CEOcast agreed to provide the Company with investor relations
services.  We agreed to pay CEOcast $6,000 for first month’s payment
and 150,000 shares of restricted common stock (issued on July 14,
2008).  In addition, we agreed to pay CEOcast $6,000 on or before the
2nd
day of each of July and August and commencing on September 2, 2008, we will pay
CEOcast $9,000 per month for September, October and November.  The
term of the agreement was for six (6) months terminating on December 2,
2008.  As of March 31, 2009, the Company owes CEOcast $33,000 in
compensation.





Black Cat Consulting,
Inc.  On July 1, 2008, we entered into a Consulting Agreement
with Black Cat Consulting, Inc., wherein Black Cat agreed to provide the Company
with strategic and financial consulting services.  We agreed to
compensate Black Cat 150,499 shares of our restricted common stock (issued on
July 14, 2008).  The term of the agreement was for six (6) months
terminating on January 1, 2009.





11


Affiliated Business Services,
Inc.  On September 10, 2008, we entered into a Consulting
Agreement with Affiliated Services, Inc., wherein Affiliated Business agreed to
provide the Company with management consultant and senior advisor services on a
non-exclusive basis.  The term of the agreement is for one (1) year
commencing on September 10, 2008 and shall continue on a month-to-month basis
until terminated by either party with a notice of thirty days.  We
agreed to compensate the Consultant as follows: 1) a fee of 10 percent (10%) of
any direct introduction which leads to an equity related investment; 2) a fee of
five percent (5%) of any funds raised in cashless warrants in the same terms as
those negotiated and agreed to by the Company and the Investor for any funds
raised for the Company by an investor directly introduced by Consultant; 3) a
fee of two percent (2%) of the aggregate consideration paid in a transaction and
capped at $500,000 for any merger or acquisition directly introduced by
Consultant; 4) a fee of five percent (5%), paid in arrears, of the total value
of any contracts brought to the Company by Consultant for a period of not more
than one year; and 5) a fee of three percent (3%) for any debt financing
arranged by a direct introduced party.





HNO Management
LLC.  On October 1, 2008, we entered into a Consulting
Agreement with HNO Management LLC, wherein HNO agreed to provide investor
relations services to the Company for a term of six (6) months commencing on
October 1, 2008.  We agreed to compensate the HNO with $25,000 due
upon execution of the agreement, 50,000 shares of free trading common stock due
ten (10) days from the signing of the agreement and 200,000 shares of common
stock due ten (10) days from the signing of the agreement.  On October
30, 2008, the Company and HNO mutually terminated the agreement and we
compensated the consultant $0 in cash and 24,000 shares of common stock (19,000
shares issued on October 24, 2008 and 5,000 shares issued on November 11,
2008).





New Castle Consulting,
LLC. On November 3, 2008, we entered into a consulting agreement
with New Castle Consulting for investor relations services for a period of six
months commencing on November 3, 2008 and terminating on May 3,
2009.  We agreed to issue 250,000 shares of common stock to New Castle
Consulting as a commencement bonus which will vest at 42,000 shares per month
beginning May 1, 2009 and will be 100% vested by October 1, 2009.  The
shares were issued on November 11, 2008.





Sandy Lang/Marty
Goldrod.  On January 21, 2009, we entered into an investor
relations and representation agreement with Sandy Lang/Marty Goldrod (the
“Consultant”), wherein the Consultant agreed to provide investor relations
services to the Company for a period of thirty days with an automatic renewal of
additional forty-five day periods up to one year.  We agreed to
compensate the Consultant with 1,000,000 shares of our restricted common stock
which by mutual agreement was later reduced to 500,000 shares which were issued
on February 27, 2009.





Allen Campbell.  On
January 2, 2009, we entered into an Agreement regarding Compensation for
Consulting Services with Allen Campbell.  Mr. Campbell provided the
Company with consulting services since June 30, 2008 and has not been
compensated for his services.  We agreed to issue 200,000 shares of
our restricted common stock to compensate Mr. Campbell for his past
service.  The 200,000 shares were issued to Mr. Campbell on February
27, 2009.





First National Partners,
LLC.On March 20, 2009, we entered into an agreement with
First National Partners, LLC (“FNP”), wherein the FNP agreed to provide the
Company with services in securing a loan.  FNP will advise the Company
about the structuring of our financing request.  FNP shall perform its
best efforts in originating and processing a loan application. FNP will present
the project to its direct lending affiliates for the purpose of the Company
receiving funding for our project.  We agreed to pay a processing fee
of $2,000 to FNP.  Additionally, upon funding we agreed to pay FNP a
fee based upon the total funding amount.





12


Marketing Support
Agreement





On October 11, 2007, we entered into a
Marketing Support Agreement with Innovative Health Solutions, Inc. (the
“Consultants”), wherein the Consultants agreed to provide the Company with
services sufficient to achieve our target sales by selling certain of our
products within the Territory (which includes all military connected
installations and activities including all U.S. military ports and ships at
sea).  Pursuant to the agreement we agreed to pay the Consultants: (1)
5% commission payable on collection of receivables from the buyers in the
Territory, payable quarterly; (2) 1% commission (finders fee) payable on
collection of receivables from referred buyers in the Territory for a period of
no more than 6 months from the start of sales to the referred buyers; and (3) 1%
commission payable upon achievement of the sales forecast for each quarter,
payable quarterly.  The 1% finders fee may be replaced with 100,000
shares of common stock (100,000 shares were issued to the Consultants on April
9, 2008 and were registered on Form S-8 filed with the SEC on June 16,
2008).  Additionally, the Consultants have the option of receiving
payment of the 5% commission and the 1% performance bonus in cash or as shares
or as a combination of cash and shares up to the value of 5% plus 1% of
quarterly sales value.  The term of the agreement is for 2 years,
beginning on October 11, 2007 and terminating on October 10, 2010.





Advisory
Agreements





On May 30, 2007, we entered into an
Advisory Agreement with Ezra Cummings, wherein Mr. Cummings agreed to be a
member of the Company’s Corporate Advisory Board.  Pursuant to the
agreement we agreed to issue 20,000 shares of our common stock and an option to
purchase 20,000 shares of our common stock to Mr. Cummings as compensation for
his services.  The 20,000 shares of common stock were issued to Mr.
Cummings on April 9, 2008 and were registered on Form S-8 filed with the SEC on
June 16, 2008.  As of September 30, 2008, the 20,000 options have not
been granted to Mr. Cummings.  The term of the agreement began on May
30, 2007 and terminated on May 29, 2009.





On June
30, 2008, the Company entered into a professional advisory agreement with John
Cunningham for the period commencing on June 30, 2008 and concluding on
September 15, 2008.  We agreed to compensate Mr. John Cunningham with
a performance bonus of 20,000 shares of common stock (issued on October 24,
2008) and $5,000 a month.





On
November 19, 2008, we entered into a professional advisory agreement with
Sherman Lazrus, wherein Mr. Lazrus agreed to introduce the Company to new
financing sources that directly fund transactions including debt, equity, and
equity related.  Upon completion of a funding from a directly
introduced source, the Company has agreed to pay no more than 5% of the gross
proceeds.  For introductions to other financial intermediary and
successful closing of funding, the Company shall pay a one-time finders’ fee of
2% in cash.  If the consultant assists the Company with securing an
equity line of credit, then the Company will pay the consultant a one-time fee
equal to 1.30% in cash and 1.30% in shares of common stock.  The term
of the agreement was for one year from the date of November 19,
2008.  As of December 31, 2008, the agreement was mutually terminated
by both parties.





13


On April
6, 2009, we entered into a Non Exclusive Corporate Advisory Agreement with
Atlanta Capital Partners, LLC (“ACP”), wherein we engaged ACP as our Strategic
Corporate Advisor.  In the event ACP is involved in advising,
introducing and/or consulting to the Company on any financing accepted by the
Company, we will compensate ACP as follows: 1) a bonus consulting fee equal to
4% of any non-subordinated debt financing; 2) a bonus consulting fee equal to
10% of any subordinated debt financing; and 3) a $500 an hour consulting fee
will be paid to ACP if an equity financing or any other type of financing that
is handled by a broker/dealer and where ACP assists in the coordination of such
activity.  The term of the agreement will last until the Company
provides ACP a written notification of termination of the
agreement.





Finder
Agreement





On May 7, 2008, we entered into a
Finder Agreement with Knute Alger, wherein Mr. Alger agreed to introduce the
Company to certain financing sources known to or identified by Mr. Alger
relating to a potential financing (“transaction”) involving the
Company.  If we close on a Transaction wherein Mr. Alger identified
the source of financing, we will pay Mr. Alger, upon closing of the Transaction,
20,000 shares of our restricted common stock per $100,000 raised.  The
agreement may be terminated at any time by either party.  During the
three months ended June 30, 2008, Mr. Alger earned 10,000 shares of our common
stock.  The 10,000 shares were issued to Mr. Alger on July 14,
2008.





On October 15, 2008, we entered into a
Finder Agreement with Cody Camarote, wherein Mr. Camarote agreed to introduce
the Company to certain financing sources known to or identified by Mr. Camarote
relating to potential financing (“transaction”) involving the
Company.  If we close on a transaction wherein Mr. Camarote identified
the source of financing, we will pay Mr. Camarote, upon closing of the
transaction, 8% cash fee and 10,000 shares of our restricted common stock per
$100,000 raised through a direct equity investment and a 2% cash fee if an
introduction results in the successful closing of a transaction.  The
agreement may be terminated at any time by either party.  In the
fourth quarter ended March 31, 2009, Mr. Camarote assisted the Company in
raising $25,000.





Marketing Support
Agreement





On April 1, 2008, we entered into a
Marketing Support Agreement with Gary Reeves, wherein Mr. Reeves agreed to
provide the Company with services to achieve our target sales by selling certain
of our products within the Territory (territory to be agreed between the parties
from time to time).  Pursuant to the agreement we agreed to pay Mr.
Reeves: (1) 5% commission payable on collection of receivables from the buyers
in the Territory, payable quarterly; (2) 1% commission (finder fee) payable on
collection of receivables from referred buyers in the Territory for a period of
no more than 6 months from the start of sales to the referred buyers; and (3) 1%
commission payable upon achievement of the sales forecast for each quarter,
payable quarterly.  The 1% finder fee may be replaced with 100,000
shares of common stock (issued to Mr. Reeves on April 9, 2008 and were
registered on Form S-8 filed with the SEC on June 16, 2008).  We will
pay Mr. Reeves on a limited basis as follows: (a) not to exceed $4,000 monthly,
(b) monthly payments will be made until commission structure on the incremental
net sales generates a payment to Mr. Reeves of $4,000 in a period first day of
month until last day of month, and (c) As incremental net sales generate
commission higher than zero but not yet achieving $4,000, compensation will be
paid using the formula $4,000 less commission earned and or attributable to a
month defined as a period first day of month until last day of month =
compensation due and payable.  Additionally, Mr. Reeves has the option
of receiving payment of the 5% commission and the 1% performance bonus in cash
or as shares or as a combination of cash and shares up to the value of 5% plus
1% of quarterly sales value.  The term of the agreement is for 2
years, beginning on April 1, 2008 and terminating on March 30,
2010.





14


Consignment
Agreements





On December 1, 2008, we entered into an
inventory consignment agreement with Bridgeland Trading Ltd., wherein Gamma
hereby grants to Bridgeland, upon and subject to the terms and conditions of the
agreement, an exclusive license under the rights to develop, manufacture,
market, distribute and sell, and have manufactured, marketed, distributed and
sold, certain products.  Pursuant to the agreement Gamma and
Bridgeland desire that Bridgeland sell the consigned merchandise pursuant to a
consignment arrangement, the terms of which are set forth in the
agreement.  The consignment payment shall be equal to 10% of
Bridgeland’s net sales of consigned merchandise, plus such additional amount, if
any, as may be necessary for Bridgeland to pay the minimum consignment
payment.





In connection with the consignment
agreement mentioned above between Gamma and Bridgeland, on December 1, 2008,
Bridgeland entered into an inventory consignment agreement with Parco Sino-Can
Science Technology Inc.  Bridgeland is engaged in the supply of
pharmaceutical products as a result of its inventory consignment agreement with
Gamma (mentioned above) and wishes to provide Parco with rights to package,
promote, sell and distribute certain of its products in the Territory on a
Consignment basis. Parco is in the business of packaging, marketing and
distributing a number of products, for companies doing business in China and
elsewhere, including pharmaceutical products.  Pursuant to the
agreement, Parco will market and sell certain of Bridgeland's products as
consigned to Bridgeland pursuant to the terms and conditions of the Gamma
Agreement, on a consignment basis, the “Consigned Merchandise,” which includes,
but is not limited to various pharmaceutical products including but not limited
to Multi-Flavored Gumdrops, Swirl Gummy Bears, Multi-Flavored gummy Bears, and
Orange Gumdrops.  The consignment payment shall be equal to 10% of
Parco’s net sales of consigned merchandise, plus such additional amount, if any,
as may be necessary for Parco to pay the minimum consignment
payment.





AVAILABLE
INFORMATION





We file
annual, quarterly and special reports and other information with the SEC that
can be inspected and copied at the public reference facility maintained by the
SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549-0405. Information
regarding the public reference facilities may be obtained from the SEC by
telephoning 1-800-SEC-0330. The Company's filings are also available through the
SEC's Electronic Data Gathering Analysis and Retrieval System which is publicly
available through the SEC's website (www.sec.gov). Copies of such materials may
also be obtained by mail from the public reference section of the SEC at 100 F
Street, N.E., Room 1580, Washington, D.C. 20549-0405 at prescribed
rates.





15


ITEM
1A.                                RISK
FACTORS





Our
business, financial condition and operating results could be adversely affected
by any of the following factors, in which case the value of our equity
securities could decline, and investors could lose part or all of their
investment.  The risks and uncertainties described below are not the
only ones that the Company faces.  Additional risks and uncertainties
not presently known to management, or that management currently thinks are
immaterial, may also impair future business operations.





RISKS
RELATING TO OUR COMPANY.





We
are required to make accounting estimates and judgments in preparing our
consolidated financial statements.





In preparing our consolidated financial
statements in accordance with accounting principles generally accepted in the
United States, we make certain estimates and assumptions that affect the
accounting for and recognition of assets, liabilities, revenues and
expenses.  These estimates and assumptions must be made because
certain information that is used in the preparation of our consolidated
financial statements is dependent on future events, or cannot be calculated with
a high degree of precision from data available.  In some cases, these
estimates are particularly difficult to determine and we must exercise
significant judgment.  The estimates and the assumptions having the
greatest amount of uncertainty, subjectivity and complexity are related to our
accounting for bad debts, returns and allowances, warranty and repair costs,
derivatives, and asset impairments.  Actual results could differ
materially from the estimates and assumptions that we use, which could have a
material adverse effect on our financial condition and results of
operations.





Our
auditor’s report reflects the fact that without realization of additional
capital, it would be unlikely for us to continue as a going
concern.





As a
result of our deficiency in working capital at March 31, 2009, our auditors have
included a paragraph in their report regarding substantial doubt about our
ability to continue as a going concern.  Our plans in this regard are
to seek additional funding through future equity private placements, with
traditional financing firms and/or with an industry partner, or debt
facilities.





16


Our
limited operating history makes it difficult to evaluate our future prospects
and results of operations.





We have a
limited operating history.  We were established in 1993, for the
purpose of seeking out business opportunities, including acquisitions that the
Board of Directors, in its discretion, believes to be good
opportunities.  Pursuant to the Technology Transfer Agreement and the
Employment Agreements with our management the Company is poised to begin
operations in the field of OTC pharmaceuticals, vitamins, and
supplements.  We will be heavily dependent on the skills, talents, and
abilities of our management to successfully implement our business
plan.  The marketing and sale of vitamins, nutriceuticals, OTC
pharmaceutical and personal care products is highly risky and speculative. Our
current cash balance will not be adequate for us to continue our operations for
this fiscal year; and, in order to compete in this new business opportunity an
additional cash infusion will be required and without such additional cash
infusion we will very rapidly deplete our current cash reserve.  In
such event, we may be forced to cease operations and investors' shares would
become worthless.





Accordingly,
you should consider our future prospects in light of the risks and uncertainties
experienced by early stage companies in evolving markets such as the growing
market for vitamins and nutriceuticals in Greater China and the United States.
Some of these risks and uncertainties relate to our ability to:





·
            offer
      products to attract and retain a larger customer
  base;


·
            attract
      additional customers and increased spending per
  customer;


·
            increase
      awareness of our brands and continue to develop customer
      loyalty;


·
            respond
      to competitive market conditions;


·
            respond
      to changes in our regulatory
environment;


·
            manage
      risks associated with intellectual property
  rights;


·
            maintain
      effective control of our costs and
expenses;


·
            raise
      sufficient capital to sustain and expand our
  business;


·
            attract,
      retain and motivate qualified personnel;
and


·
            upgrade
      our technology to support additional research and development of new
      products.





If we are
unsuccessful in addressing any of these risks and uncertainties, our business
may be materially and adversely affected.





We
will need additional capital to fund our operations, and we may not be able to
obtain sufficient capital and may be forced to limit the scope of our
operations.





As of
March 31, 2009, we had $116,669 in cash.  Our management plans to
raise additional equity capital to begin executing our business plan, but there
can be no assurance that we will be able to raise such funds.  Even if
we are able to raise additional capital to begin to execute our business plan,
as we continue to implement our plan to expand into additional markets, we will
experience increased capital needs and we will not have enough capital to fund
our future operations without additional capital investments.  Our
capital needs will depend on numerous factors, including (1) our profitability;
(2) the release of competitive products by our competition; (3) the level of our
investment in research and development; and (4) the amount of our capital
expenditures. We cannot assure you that we will be able to obtain capital in the
future to meet our needs.





17


If we
cannot obtain initial or additional funding, we may be required to:





·
            limit
      our marketing efforts; and


·
            decrease
      or eliminate capital expenditures.





Such
reductions could materially adversely affect our business and our ability to
compete.





Even if
we do find a source of initial and additional capital, we may not be able to
negotiate terms and conditions for receiving the additional capital that are
acceptable to us.  Any future capital investments could dilute or
otherwise materially and adversely affect the holdings or rights of our existing
stockholders.  In addition, new equity or convertible debt securities
issued by us to obtain financing could have rights, preferences and privileges
senior to our common stock.  We cannot give you any assurance that any
additional financing will be available to us, or if available, will be on terms
favorable to us.





We
need to manage growth in operations to maximize our potential growth and achieve
our expected revenues.





In order
to maximize potential growth in our current and potential markets, we believe
that we must expand our marketing operations.  To fund our anticipated
expansion, we need an increased amount of working capital.  This
expansion will place a significant strain on our management and our operational,
accounting, and information systems.  We expect that we will need to
continue to improve our financial controls, operating procedures, and management
information systems. We will also need to effectively train, motivate, and
manage our employees.  Our failure to manage our growth could disrupt
our operations and ultimately prevent us from generating the revenues we
expect.





If
we are not able to implement our strategies in achieving our business
objectives, our business operations and financial performance may be adversely
affected.





Our
business plan is based on circumstances currently prevailing and the bases and
assumptions that certain circumstances will or will not occur, as well as the
inherent risks and uncertainties involved in various stages of
development.  However, there is no assurance that we will be
successful in implementing our strategies or that our strategies, even if
implemented, will lead to the successful achievement of our
objectives.  If we are not able to successfully implement our
strategies, our business operations and financial performance may be adversely
affected.





We
may have difficulty defending our intellectual property rights from
infringement.





We regard
our service marks, trademarks, copyrights, trade secrets, pending patent
applications and similar intellectual property as critical to our
success.  We will rely on trademark, copyright, patent and trade
secret law, as well as confidentiality and license agreements with our
employees, customers, partners and others to protect our proprietary
rights.  We have registered a trademark in the United States and will
seek to utilize our US trademark approval in all markets of interest including
the People's Republic of China.  No assurance can be given that our
copyrights, trademarks or other intellectual property will not be challenged,
invalidated, infringed or circumvented, or that our intellectual property rights
will provide competitive advantage to us.  There can be no assurance
that we will be able to obtain a license from a third-party technology that we
may need to conduct our business or that such technology can be licensed at a
reasonable cost.





18


We intend
to sell our products mainly in China, the United States and other significant
territories in the greater China area including Hong Kong, Macau, Taiwan,
(Greater China) and South Korea.  Asia including Greater China will
remain our primary market for the foreseeable future.  We are looking
at other markets, but we do not have immediate plans to market our products into
any other countries or regions.  Other than the United States, China
and Hong Kong we have not applied for any trademark or patent protection in any
other countries but intend to do so in the near future.  Therefore,
the measures we take to protect our proprietary rights may be inadequate and we
cannot give you any assurance that our competitors will not independently
develop formulations and processes that are substantially equivalent or superior
to our own or copy our products.





Intense
competition from existing and new entities may adversely affect our revenues and
profitability.





We
compete with other companies, many of whom are developing or can be expected to
develop products similar to ours.  Our market is a large market with
many competitors.  Many of our competitors are more established than
we are, and have significantly greater financial, technical, marketing and other
resources than we presently possess.  Some of our competitors have
greater name recognition and a larger customer base.  These
competitors may be able to respond more quickly to new or changing opportunities
and customer requirements and may be able to undertake more extensive
promotional activities, offer more attractive terms to customers, and adopt more
aggressive pricing policies.  We intend to brand our products and
create brand awareness for our brands so that we can successfully compete with
our competitors.  We cannot assure you that we will be able to compete
effectively with current or future competitors or that the competitive pressures
we face will not harm our business.





The
products and the processes we use could expose us to substantial
liability.





We face
an inherent business risk of exposure to product liability claims in the event
that the use of our technologies or products is alleged to have resulted in
adverse side effects.  Side effects or marketing or manufacturing
problems pertaining to any of our products could result in product liability
claims or adverse publicity.  These risks will exist for those
products in clinical development and with respect to those products that have
received regulatory approval for commercial sale. We plan to carry insurance
policies which are customary for enterprises in our industry.  We do
not expect any special restrictions or exceptions attached to this coverage
other than fraudulent or criminal conducts on part of the claimant.





19


Our
failure to comply with current or future governmental regulations could
adversely affect our business.





The
formulation, manufacturing, packaging, labeling, advertising, distribution, and
sale of nutriceuticals, such as those sold by us, are subject to regulation by a
number of federal, state and local agencies, principally, the FDA, and the FTC,
as well as foreign agencies in areas where we may operate. Among other matters,
this regulation is concerned with product safety and claims made with respect to
a product's ability to provide health-related benefits. These agencies have a
variety of procedures and enforcement remedies available to them, including the
following:





·
            initiating
      investigations;




·
            issuing
      warning letters and cease and desist
orders;




·
            requiring
      corrective labeling or advertising;




·
            requiring
      consumer redress, such as requiring that a company offer to repurchase
      products previously sold to
consumers;




·
            seeking
      injunctive relief or product seizures;
and




·
            imposing
      civil penalties or commencing criminal
  prosecution.





Federal
and state agencies have in the past used these remedies in regulating
participants in the nutriceuticals industry, including the imposition by federal
agencies of civil penalties in the millions of dollars against a few industry
participants. In addition, publicity related to nutriceuticals may result in
increased regulatory scrutiny of the nutriceuticals industry.





Our
failure to comply with applicable laws could subject us to severe legal
sanctions, which could have a material adverse effect on our business and
results of operations. The regulatory environment in which we operate could
change and such regulatory environment, or any specific action taken against us,
could result in a material adverse effect on our business and operations. A
state could interpret claims presumptively valid under federal law as illegal
under that state's regulations, and future FDA regulations or FTC decisions
could restrict the permissible scope of such claims. Any such proceedings or
investigations or any future proceedings or investigations could have a material
adverse effect on our business or operations.





We
depend on our key management personnel and the loss of their services could
adversely affect our business.





We will
place substantial reliance upon the efforts and abilities of our executive
officers: Peter Cunningham, our Chief Executive Officer; Joseph Cunningham, our
Chief Financial Officer; and Hao Zhang, our Chief Marketing
Officer.  The loss of the services of any of our executive officers
could have a material adverse effect on our business, operations, revenues or
prospects. We do not maintain key man life insurance on the lives of these
individuals.





20


We
may never pay any dividends to our stockholders.





Our board
of directors does not intend to distribute dividends in the near future. The
declaration, payment and amount of any future dividends will be made at the
discretion of the board of directors, and will depend upon, among other things,
the results of our operations, cash flows and financial condition, operating and
capital requirements, and other factors as the board of directors considers
relevant.  There is no assurance that future dividends will be paid,
and if dividends are paid, there is no assurance with respect to the amount of
any such dividend.





Our
future success will depend on our ability to anticipate and respond in a timely
manner to changing consumer demands.





Our
future success will depend on our products’ appeal to a broad range of consumers
whose preferences cannot be predicted with certainty and are subject to change.
If our products do not meet consumer demands, our sales may
decline.  In addition, our growth depends upon our ability to develop
new products through product line extensions and product modifications, which
involve numerous risks.  We may not be able to accurately identify
consumer preferences and translate our
knowledge  into  customer-accepted products
or  successfully integrate  these
products  with  our  existing  product  platform  or  operations.  We
may also experience increased expenses incurred in connection with product
development, marketing and advertising that are not subsequently supported by a
sufficient level of sales, which would negatively affect our margins.
Furthermore, product development may divert management’s attention from other
business concerns, which could cause sales of our existing products to
suffer.  We cannot assure you that newly developed products will
contribute favorably to our operating results.





If
our products fail to perform properly, our business could suffer with increased
costs and reduced income.





Our
products may fail to meet consumer expectations.  Failure of our
products to meet expectations could:





·
            damage
      our reputation;


·
            decrease
      sales;


·
            incur
      costs related to returns;


·
            delay
      market acceptance of our products;


·
            result
      in unpaid accounts receivable; and


·
            divert
      our resources to reformulation or alternative
  products.





21


International
unrest or foreign currency fluctuations could adversely affect the Company’s
results.





There are a number of risks arising
from the Company's international business, including:





- foreign
currencies it receives for sales outside the U.S. could be subject to
unfavorable exchange rates with the U.S. dollar and reduce the amount of revenue
that the Company recognizes;





- the
possibility that unfriendly nations or groups could boycott its
products;





- general
economic and political conditions in the markets in which it
operate;





-
potential increased costs associated with overlapping tax
structures;





- more
limited protection for intellectual property rights in some
countries;





-
unexpected changes in regulatory requirements;





- the
difficulties of compliance with a wide variety of foreign laws and
regulations;





- longer
accounts receivable cycles in certain foreign countries; and





- import
and export licensing requirements.





A significant portion of the Company's
business is conducted in currencies other than the U.S. dollar, which is its
reporting currency. The Company recognizes foreign currency gains or losses
arising from its operations in the period incurred. As a result, currency
fluctuations between the U.S. dollar and the currencies in which the Company
does business have caused, and will continue to cause, foreign currency
transaction gains and losses. The Company cannot predict the effects of exchange
rate fluctuations upon our future operating results because of the number of
currencies involved, the variability of currency exposures, and the potential
volatility of currency exchange rates. The Company engages in limited foreign
exchange hedging transactions to mitigate the impact of this volatility on its
operations, but its strategies are short-term in nature and may not adequately
protect its operating results from the full effects of exchange rate
fluctuations.





RISKS
RELATING TO THE PEOPLE'S REPUBLIC OF CHINA





There
could be changes in government regulations towards the pharmaceutical, health
supplement and food industries that may adversely affect our
business.





The
import, manufacture and sale of food products, supplements, and personal care
products in the PRC is heavily regulated by many state, provincial and local
authorities.  These regulations significantly increase the difficulty
and costs involved in obtaining and maintaining regulatory approvals for
marketing new and existing products.  Our future growth and
profitability will depend to a large extent on our ability to obtain regulatory
approvals.





The State
Food and Drug Administration of China recently implemented new guidelines for
licensing of food and supplement products.  All manufacturers,
importers and marketers are subject to business license approval and achievement
of quality standards for consumer protection as outlined in the
regulations.





22


Moreover,
the laws and regulations regarding acquisitions of any of food, personal care,
supplement or pharmaceutical industries in the PRC may also change and may
significantly impact our ability to grow through acquisitions.





There
are risks associated with the Chinese economy that is in transition from a
command economy to a market economy.





A
substantial amount of our business will be located in the PRC, and much of our
revenue will likely be sourced from the PRC.  Accordingly, our results
of operations and financial position are subject to a significant degree to
economic, political and legal developments in the PRC, including the following
risks:





Economic,
political and social conditions and government policies in China could have a
material adverse effect on our business, financial condition and results of
operations.





The
economy of China differs from the economies of most developed countries in many
respects, including, but not limited to:





·
            structure


·
            capital
      re-investment


·
            government
      involvement


·
            allocation
      of resources


·
            level
      of development


·
            control
      of foreign exchange


·
            growth
      rate


·
            rate
      of inflation





The economy of China has been
transitioning from a planned economy to a more market-oriented
economy.  Although in recent years the PRC government has implemented
measures emphasizing the utilization of market forces for economic reform, a
substantial portion of productive assets in China is still owned by the PRC
government.  In addition, the PRC government continues to play a
significant role in regulating industries by imposing industrial
policies.  It also exercises significant control over Chinese economic
growth through allocation of resources, controlling payment of foreign
currency-denominated obligations, setting monetary policy and providing
preferential treatment to particular industries or companies.





Policies
and other measures taken by the PRC government to regulate the economy could
have a significant negative impact on economic conditions in China, with a
resulting negative impact on our business.  For example, our financial
condition and results of operations may be materially and adversely affected
by:





23


·
            new
      laws and regulations and the interpretation of those laws and
      regulations;


·
            the
      introduction of measures to control inflation or stimulate
      growth;


·
            changes
      in the rate or method of taxation;


·
            the
      imposition of additional restrictions on currency conversion and
      remittances abroad; or


·
            any
      actions which limit our ability to develop, produce, import or sell our
      products in China, or to finance and operate our business in
      China.





Further
movements in exchange rates may have a material adverse effect on our financial
condition and results of operations.





We expect
that the majority of our China sales will be denominated in Renminbi and our
domestic sales will be denominated primarily in U.S. dollars.  In
addition, we expect to incur a portion of our cost of sales in Euros, U.S.
dollars, Australian Dollars and Canadian Dollars in the course of our purchase
of imported production equipment and raw materials.  Since 1994, the
conversion of the Renminbi into foreign currencies has been based on rates set
by the People's Bank of China, and the exchange rate for the conversion of the
Renminbi to U.S. dollars had generally been stable.  However, starting
from July 21, 2005, the PRC government moved the Renminbi to a managed floating
exchange rate regime based on market supply and demand with reference to a
basket of currencies.  As a result, the Renminbi is no longer directly
pegged to the U.S. dollar.  The exchange rate of the U.S. dollar
against the Renminbi was adjusted from approximately RMB8.28 per U.S. dollar on
July 20, 2005 to RMB6.83 per U.S. dollar on November 22, 2008.  The
exchange rate may become volatile, the Renminbi may be revalued further against
the U.S. dollar or other currencies or the Renminbi may be permitted to enter
into a full or limited free float, which may result in an appreciation or
depreciation in the value of the Renminbi against the U.S. dollar or other
currencies, any of which could have a material adverse effect on our financial
condition and results of operations.





Governmental
control of currency conversion may affect the value of your
investment.





The PRC
government imposes controls on the convertibility of Renminbi into foreign
currencies and, in certain cases, the remittance of currency outside of
China.  We expect to receive the majority of our revenues in
Renminbi.  Shortages in the availability of foreign currency may
restrict our ability to remit sufficient foreign currency to pay dividends or
other payments to us, or otherwise satisfy its foreign currency denominated
obligations.  Under existing PRC foreign exchange regulations,
payments of current account items, including profit distributions, interest
payments and expenditures from trade-related transactions, can be made in
foreign currencies without prior approval from the PRC State Administration of
Foreign Exchange by complying with certain procedural
requirements.  However, approval from appropriate government
authorities is required in those cases in which Renminbi is to be converted into
foreign currency and remitted out of China to pay capital expenses, such as the
repayment of bank loans denominated in foreign currencies.  The PRC
government may also at is discretion restrict access in the future to foreign
currencies for current account transactions.  If the foreign exchange
control system prevents us from obtaining sufficient foreign currency to satisfy
our currency demands, we may not be able to pay dividends in foreign currencies
to our stockholders.





24


We
will be subject to restrictions on making payments from China.





We are
incorporated in the State of Delaware and at present do not have any assets or
conduct any business operations, but our plan is for our initial business to be
conducted in China.  As a result, we will rely on payments or
dividends from our China cash flow to fund our corporate overhead and regulatory
obligations.  The PRC government also imposes controls on the
conversion of Renminibi into foreign currencies and the remittance of currencies
out of China.  We may experience difficulties in completing the
administrative procedures necessary to obtain and remit foreign
currency.  If we are unable to receive all of the revenues from our
operations through contractual or dividend arrangements, we may be unable to pay
dividends on our shares of common stock.





Uncertainties
with respect to the PRC legal system could adversely affect us.





We
conduct our business in China primarily through a representative office in the
PRC.  A representative office in China is limited in its commercial
activities.  We use our representative office for marketing and sales
administration for sales conducted between China and our parent company or
designate.  Our operations in China will be governed by PRC laws and
regulations.  We are generally subject to laws and regulations
applicable to foreign investments in China.  The PRC legal system is
based on written statutes.  Prior court decisions may be cited for
reference but have limited precedential value.





Since
1979, PRC legislation and regulations have significantly enhanced the
protections afforded to various forms of foreign investments in
China.  However, China has not developed a fully-integrated legal
system and recently-enacted laws and regulations may not sufficiently cover all
aspects of economic activities in China.  In particular, because these
laws and regulations are relatively new, and because of the limited volume of
published decisions and their nonbinding nature, the interpretation and
enforcement of these laws and regulations involve uncertainties.  In
addition, the PRC legal system is based in part on government policies and
internal rules (some of which are not published on a timely basis or at all)
that may have a retroactive effect.  As a result, we may not be aware
of our violation of these policies and rules until sometime after the
violation.  In addition, any litigation in China may be protracted and
result in substantial costs and diversion of resources and management
attention.





It
may be difficult to effect service of process upon us or our directors or senior
management who live in the PRC or to enforce any judgments obtained from non-PRC
courts.





Initially,
the majority of our operations will be conducted within the PRC.  In
addition, one of our Directors and executive officers resides in
China.  You may experience difficulties in effecting service of
process upon us, our Director or our senior management as it may not be possible
to effect such service of process inside China.  In addition, we are
advised that China does not have treaties with the United States and many other
countries providing for reciprocal recognition and enforcement of court
judgments.  Therefore, recognition and enforcement in China of
judgments of a court in the United States or certain other jurisdictions may be
difficult or impossible.





25


RISKS
RELATING TO OUR STOCK





Our
Certificate of incorporation authorizes the issuance of shares of preferred
stock, the rights, preferences, designations and limitations of which may be set
by the board of directors.





Our
certificate of incorporation has authorized issuance of up to 2,000,000 shares
of preferred stock ("Preferred Stock") in the discretion of its board of
directors.  Any undesignated shares of Preferred Stock may be issued
by our board of directors; no further stockholder action is
required.  If issued, the rights, preferences, designations and
limitations of such Preferred Stock would be set by the board of directors and
could operate to the disadvantage of the outstanding common
stock.  Such terms could include, among others, preferences as to
dividends and distributions on liquidation, or could be used to prevent possible
corporate takeovers.





Because
our common stock is deemed a low-priced “Penny” stock, an investment in our
common stock should be considered high risk and subject to marketability
restrictions.





Since our
common stock is a penny stock, as defined in Rule 3a51-1 under the Securities
Exchange Act, it will be more difficult for investors to liquidate their
investment even if and when a market develops for the common stock. Until the
trading price of the common stock rises above $5.00 per share, if ever, trading
in the common stock is subject to the penny stock rules of the Securities
Exchange Act specified in rules 15g-1 through 15g-10. Those rules require
broker-dealers, before effecting transactions in any penny stock,
to:





·
            Deliver
      to the customer, and obtain a written receipt for, a disclosure
      document;


·
            Disclose
      certain price information about the
stock;


·
            Disclose
      the amount of compensation received by the broker-dealer or any associated
      person of the broker-dealer;


·
            Send
      monthly statements to customers with market and price information about
      the penny stock; and


·
            In
      some circumstances, approve the purchaser’s account under certain
      standards and deliver written statements to the customer with information
      specified in the rules.





Consequently,
the penny stock rules may restrict the ability or willingness of broker-dealers
to sell the common stock and may affect the ability of holders to sell their
common stock in the secondary market and the price at which such holders can
sell any such securities. These additional
procedures could also limit our ability to raise additional capital in the
future.





FINRA
sales practice requirements may also limit a stockholder's ability to buy and
sell our stock.





In
addition to the “penny stock” rules described above, FINRA has adopted rules
that require that in recommending an investment to a customer, a broker-dealer
must have reasonable grounds for believing that the investment is suitable for
that customer. Prior to recommending speculative low priced securities to their
non-institutional customers, broker-dealers must make reasonable efforts to
obtain information about the customer's financial status, tax status, investment
objectives and other information. Under interpretations of these rules, the
FINRA believes that there is a high probability that speculative low priced
securities will not be suitable for at least some customers. The FINRA
requirements make it more difficult for broker-dealers to recommend that their
customers buy our common stock, which may limit your ability to buy and sell our
stock and have an adverse effect on the market for our shares.





26


If
we fail to remain current on our reporting requirements, we could be removed
from the OTC Bulletin Board, which would limit the ability of broker-dealers to
sell our securities and the ability of stockholders to sell their securities in
the secondary market.





Companies
trading on the OTC Bulletin Board, such as us, generally must be reporting
issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and
must be current in their reports under Section 13, in order to maintain price
quotation privileges on the OTC Bulletin Board. More specifically, FINRA has
enacted Rule 6530, which determines eligibility of issuers quoted on the OTC
Bulletin Board by requiring an issuer to be current in its filings with the
Commission. Pursuant to Rule 6530(e), if we file our reports late with the
Commission three times in a two-year period or our securities are removed from
the OTC Bulletin Board for failure to timely file twice in a two-year period,
then we will be ineligible for quotation on the OTC Bulletin Board. As a result,
the market liquidity for our securities could be severely adversely affected by
limiting the ability of broker-dealers to sell our securities and the ability of
stockholders to sell their securities in the secondary market.  As of
the date of this filing, we have two late filings reported by
FINRA.





Our
internal controls may be inadequate, which could cause our financial reporting
to be unreliable and lead to misinformation being disseminated to the
public.





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting. As defined in Exchange Act Rule 13a-15(f),
internal control over financial reporting is a process designed by, or under the
supervision of, the principal executive and principal financial officer and
effected by the board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles and includes those policies and
procedures that: (i) pertain to the maintenance of records that in reasonable
detail accurately and fairly reflect the transactions and dispositions of the
assets of Gamma; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and
expenditures of Gamma are being made only in accordance with authorizations of
management and directors of Gamma, and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use or
disposition of Gamma's assets that could have a material effect on the financial
statements.





We have a
limited number of personnel that are required to perform various roles and
duties as well as be responsible for monitoring and ensuring compliance with our
internal control procedures.  As a result, our internal controls may
be inadequate or ineffective, which could cause our financial reporting to be
unreliable and lead to misinformation being disseminated to the
public.  Investors relying upon this misinformation may make an
uninformed investment decision.





27


ITEM
2.                      PROPERTIES





Our
principal office of record is located at 7477 W. Lake Mead Blvd., Las Vegas,
Nevada 89128.  We pay a resident agent fee of approximately $400 for
this office.  We currently maintain our corporate office at 2569 E.
Washburn Rd., North Las Vegas, NV 89081, for which we have executed a 12 month
lease on an office suite that is approximately 4,000 square feet for which we
pay rent of $3,200 per month.  Our registered office for our Hong Kong
subsidiary is located at 3705 Bank of America Tower, 12 Harcourt Road, Central,
Hong Kong.  Our annual rent for this office is $1,500.  Our
Beijing Representative Office, Gamma Pharmaceuticals (HK) Ltd. Representative
office is located at Suite 909, Everlasting Plaza, 39 Anding Road Beijing,
100029, P.R.C. and we pay $2,000 monthly.As our
business develops we plan to move to larger space as merited.





ITEM
3.                      LEGAL
PROCEEDINGS





From time
to time, we may become involved in various lawsuits and legal proceedings, which
arise in the ordinary course of business.  However, litigation is
subject to inherent uncertainties, and an adverse result in these or other
matters may arise from time to time that may harm our business. We are not
presently a party to any material litigation, nor to the knowledge of management
is any litigation threatened against us.





ITEM
4.                      SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS





None.





PART
II





ITEM
      5.
            MARKET
      FOR REGISTRANT’S COMMON EQUITY, RELATED
      STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
    SECURITIES





(a)
Market Information





Our
Common Stock is traded in the over-the-counter securities market through the
Financial Industry Regulatory Authority ("FINRA") Automated Quotation Bulletin
Board System, under the symbol “GMPM”. We have been eligible to participate in
the OTC Bulletin Board since December 24, 2007.  The following table
sets forth the quarterly high and low bid prices for our Common Stock during our
last fiscal year, as reported by a Quarterly Trade and Quote Summary Report of
the OTC Bulletin Board.  The quotations reflect inter-dealer prices,
without retail mark-up, markdown or commission, and may not necessarily
represent actual transactions.





2009High
            
            
            Low1st
      Quarter
            
            
            7.50
            
            
            
            0.552nd
      Quarter
            
            
            1.70
            
            
            
            0.533rd
      Quarter
            
            
            0.65
            
            
            
            0.074th
      Quarter
            
            
            0.45
            
            
            
            0.02





(b)
Holders of Common Stock


28





As of
July 13, 2009, we had approximately 413 stockholders of record of the 27,020,876
shares outstanding.





(c)
Dividends





We intend
to follow a policy of retaining earnings, if any, to finance the growth of the
business and do not anticipate paying any cash dividends in the foreseeable
future. The declaration and payment of future dividends on our Common Stock will
be at the sole discretion of the Board of Directors and will depend on our
profitability and financial condition, capital requirements, statutory and
contractual restrictions, future prospects and other factors deemed
relevant.





(d)
Securities Authorized for Issuance under Equity Compensation Plans





2006 Long Term Incentive
Plan





The
following description applies to the 2006 Long Term Incentive Plan which we
adopted on April 21, 2006; to date no options have been granted under this
plan.





We have
reserved for issuance an aggregate of 2,500,000 shares of common stock under our
2006 Long Term Incentive Plan.  This plan is intended to encourage
directors, officers, employees and consultants to acquire ownership of common
stock.  The opportunity so provided is intended to foster in
participants a strong incentive to put forth maximum effort for our continued
success and growth, to aid in retaining individuals who put forth such efforts,
and to assist in attracting the best available individuals to the Company in the
future.





Officers
(including officers who are members of the board of directors), directors (other
than members of the stock option committee to be established to administer the
stock option plan) and other employees and consultants and its subsidiaries (if
established) will be eligible to receive options under the stock option
plan.  The committee will administer the stock option plan and will
determine those persons to whom options will be granted, the number of options
to be granted, the provisions applicable to each grant and the time periods
during which the options may be exercised.  No options may be granted
more than ten years after the date of the adoption of the stock option
plan.





Non-qualified
stock options will be granted by the committee with an option price equal to the
fair market value of the shares of common stock to which the non-qualified stock
option relates on the date of grant.  The committee may, in its
discretion, determine to price the non-qualified option at a different
price.  In no event may the option price with respect to an incentive
stock option granted under the stock option plan be less than the fair market
value of such common stock to which the incentive stock option relates on the
date the incentive stock option is granted.





29


Each option granted under the stock
option plan will be exercisable for a term of not more than ten years after the
date of grant.  Certain other restrictions will apply in connection
with this plan when some awards may be exercised.  In the event of a
change of control (as defined in the stock option plan), the date on which all
options outstanding under the stock option plan may first be exercised will be
accelerated.  Generally, all options terminate 90 days after a change
of control.





Recent
Sales of Unregistered Securities





On February 3, 2009, we issued 399,688
shares of our common stock to Stoecklein Law Group and 337,500 shares of our
common stock to TKM Accounting for services rendered to the
Company.  The shares issued were registered in a Registration
Statement on Form S-8 filed on January 30, 2009.





On February 27, 2009, we issued a total
of 2,389,955 shares of our common stock to the following:





Name
            No.
      of Shares
            ReasonPeter
      Cunningham
            56,205
            Executive
      variable compensation pool planJoseph
      Cunningham
            28,125
            Executive
      variable compensation pool planHao
      Zhang
            28,125
            Executive
      variable compensation pool planAllen
      Campbell
            157,500
            ServicesSandy
      Lang
            500,000
            ServicesBlack
      Cat Consulting
            1,000,000
            ServicesJugular
      Inc.
            90,000
            License
      FeeRichard
      Fielder
            40,000
            ServicesGood
      News Capital LLC
            225,000
            ServicesJ H
      Darbie Co., Inc.
            50,000
            ServicesMagellin
      Entertainment Inc.
            60,000
            ServicesJohn
      Cunningham
            20,000
            ServicesRonald
      Balducci
            40,000
            ServicesPaul
      Cohen
            95,000
            Services





We
believe that the issuances of the shares were exempt from the registration and
prospectus delivery requirements of the Securities Act of 1933 by virtue of
Section 4(2). The
recipients of the shares were afforded an opportunity for effective access to
files and records of the Company that contained the relevant information needed
to make their investment decision, including the Company’s financial statements
and 34 Act reports. We reasonably believe that the recipients, immediately prior
to issuing the shares, had such knowledge and experience in our financial and
business matters that they were capable of evaluating the merits and risks of
their investment. The recipients had the opportunity to speak with our president
and directors on several occasions prior to their investment
decision.





On May 28, 2009, we issued a total
of 1,449,099 shares of our common stock to the following:





30


Name
            No.
      of Shares
            ReasonPeter
      Cunningham
            122,545
            Executive
      variable compensation pool planJoseph
      Cunningham
            56,250
            Executive
      variable compensation pool planHao
      Zhang
            56,250
            Executive
      variable compensation pool planAllen
      Campbell
            43,000
            ServicesTKM
      Accounting Services
            110,954
            ServicesSPC
      Consultants LLC Inc
            800,000
            ServicesJugular
      Inc.
            93,600
            License
      FeeEugene
      Richards
            71,250
            ServicesGary
      Reeves
            71,250
            ServicesJohn
      Cunningham
            20,000
            Services





We
believe that the issuances of the shares were exempt from the registration and
prospectus delivery requirements of the Securities Act of 1933 by virtue of
Section 4(2). The
recipients of the shares were afforded an opportunity for effective access to
files and records of the Company that contained the relevant information needed
to make their investment decision, including the Company’s financial statements
and 34 Act reports. We reasonably believe that the recipients, immediately prior
to issuing the shares, had such knowledge and experience in our financial and
business matters that they were capable of evaluating the merits and risks of
their investment. The recipients had the opportunity to speak with our president
and directors on several occasions prior to their investment
decision.





On May
28, 2009, we issued a total of 1,940,000 shares of our restricted common stock
to 6 accredited investors (for a total purchase price of $194,000, all of which
was paid in cash) who purchased the shares before the year ended March 31,
2009.  We believe that the issuances of the shares were exempt from
the registration and prospectus delivery requirements of the Securities Act of
1933 by virtue of Section 4(2). The recipients of the
shares were afforded an opportunity for effective access to files and records of
the Company that contained the relevant information needed to make their
investment decision, including the Company’s financial statements and 34 Act
reports. We reasonably believe that the recipients, immediately prior to issuing
the shares, had such knowledge and experience in our financial and business
matters that they were capable of evaluating the merits and risks of their
investment. The recipients had the opportunity to speak with our president and
directors on several occasions prior to their investment decision.





On May
28, 2009, we issued a total of 1,100,000 shares of our restricted common stock
to 2 accredited investors (for a total purchase price of $110,000, all of which
was paid in cash) who purchased the shares after the year ended March 31,
2009.  We believe that the issuances of the shares were exempt from
the registration and prospectus delivery requirements of the Securities Act of
1933 by virtue of Section 4(2). The recipients of the
shares were afforded an opportunity for effective access to files and records of
the Company that contained the relevant information needed to make their
investment decision, including the Company’s financial statements and 34 Act
reports. We reasonably believe that the recipients, immediately prior to issuing
the shares, had such knowledge and experience in our financial and business
matters that they were capable of evaluating the merits and risks of their
investment. The recipients had the opportunity to speak with our president and
directors on several occasions prior to their investment decision.





31


Series A Preferred
Stock





On March 31, 2009, we issued a total of
7,462 shares of $0.001 Series A Preferred Stock to our officers in exchange for
cancellation of $895,553 of accrued executive compensation.The evaluation use is
$0.12 per share as of the above date.  Each preferred share represents
1,000 shares of common stock for voting purposes.





Issuer
Purchases of Equity Securities





We did not repurchase any equity
securities during the fourth quarter ended March 31, 2009.





ITEM
6.                      SELECTED
FINANCIAL DATA





Not applicable.





ITEM
      7.
            MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS





The following discussion and analysis
of our financial condition and results of operations should be read in
conjunction with our consolidated financial statements and related notes
included elsewhere in this annual report.  References in the following
discussion and throughout this quarterly report to “we”, “our”, “us”, “Gamma”,
“the Company”, and similar terms refer to Gamma Pharmaceuticals Inc. and its
wholly owned subsidiary Gamma Pharmaceuticals (HK) Ltd. unless otherwise
expressly stated or the context otherwise requires.





OVERVIEW
AND OUTLOOK





We are a marketing and product formulation company selling our own
branded products through wholesalers and direct to retailers both in the US and
internationally.  Our core focus is the marketing and sale of vitamins
and nutriceuticals, OTC pharmaceutical products and personal care products in
Greater China and the United States.  We sell our branded nutritional
supplements under the trademarks Brilliant ChoiceTM children’s
nutritional supplements featuring the call to action – “Mom you’ve made a
brilliant choice for you children’s nutrition,” SAVVYTM adult nutritional
supplements featuring the call to action “Be SAVVY Stay Healthhy,” and Jugular Energy ProductsTM and
high performance supplements featuring the call to action “Go for the JugularTM.”
Our customer focus is on selling products in the Lifestyle of Health &
Sustainability ("LOHAS") marketplace and in the Energy Supplement
Market.  We developed a series of innovative marketing programs to
support our product sales and retail partners.  We have successfully
sought and will continue to seek financing opportunities to fund our development
and to support our marketing programs and the commercialization of our product
lines





32


We have
copyrights, trademarks, trade secrets and knowhow for product lines of vitamins
and nutriceuticals, energy products and personal care products spread across 3
major brands. The products have been formulated to be in compliance with
prevailing regulations of the appropriate government regulatory agencies in
China, Taiwan, Hong Kong and the U.S.  Final submission of labeling
and product performance claims, to the same regulatory agencies, has been made
for certain products and is pending for certain other products.  We
intend to take the necessary steps to market the products in these jurisdictions
and will undertake manufacturing through qualified third party
sources.  In all of these major markets, our management has experience
in marketing and selling similar products.





A large
part of our initial product line of nutritional supplements, personal care
products and OTC pharmaceutical products is based on proprietary uses of
plant-based Gel technology to create innovative products.  Products
based on our “Gel Delivery Technology” offer, management believes, a highly
desirable innovation over the typical tablets and capsules to which consumers
have grown accustomed.  We believe that Gel based products are the
latest product forms consumers are seeking in the healthcare and supplement
industries.  Our Gel Delivery Technology will be a significant part of
our marketing strategy.





We have a license agreement with
Jugular, Inc., an established brand development and management
company.  Jugular granted us the exclusive right to use the Licensor
Marks (all Trademarks for the mark JUGULAR owned by Jugular, Inc.) on or in
association with certain products as well as on packaging, promotional, and
advertising material.





In the
period ended December 31, 2007, we shipped our first products to test several
commercial and operational capabilities and systems, and to demonstrate the
consumer preference for products made utilizing Gamma’s Gel Delivery Technology,
versus well established technologies in the market.  Sales have been
made to a major national retail account for a product utilizing Gamma's
proprietary Gel Technology, in a gumdrop product form.  All tests were
successful.  We undertook timely order processing, efficient and
effective manufacturing processes, billing and collection processes and
financial reporting processes and product recall processes.  During
the period ended September 30, 2007, we launched our Product Distributor /
Broker Management Program.  Agreements have been signed that establish
Gamma's national network of product brokers and distributors in the United
States.  The consumer acceptance of the Gamma Gel Delivery Technology has
been overwhelmingly positive.  Gamma is in the process now of taking
orders for own brands of products manufactured utilizing the Gamma Gel Delivery
Technology both in the US and  internationally.





In the
second quarter ended September 30, 2008, we were advised by the major national
retail chain account with whom we launched the test product as a private label
brand for the national retail chain, that the FTC found them to be in violation
of certain regulations because of their choice of graphic elements on the
packaging were in violation of certain regulations of the Federal Trade
Commission.  In the private label contract with the national retail
chain, Gamma was required to use the graphic elements provided by the national
retail chain.  Gamma’s management recommended graphics we knew to be
compliant with the FTC regulations.  The national retail chain
rejected Gamma’s proposed packaging graphics.  The experience confirms
the maturity of Gamma’s management and processes, and confirmed it is in Gamma’s
best interest to pursue commercialization of its own brands retaining greater
control of the product packaging, claims and marketing.





33


On
December 24, 2007, our common stock began trading on the Financial Industry
Regulatory Authority's (FINRA) Over-the-Counter Bulletin Board under the symbol
GMPM.OB.





We have
incurred losses since inception.  For the year ended March 31, 2009,
we had a net loss of $3,906,424 as compared to a net loss of $3,795,571 for the
year ended March 31, 2008.  Our ability to proceed with our plan of
operation has continuously been a function of our ability to increase revenues
and raise sufficient capital to continue our operations.





Recent
Developments





On June
17, 2008, we executed a Securities Purchase Agreement with Kenridge Holdings LLC
(“Kenridge”).  Pursuant to the Securities Purchase Agreement, Kenridge
agreed to purchase 1,333,333 shares of our restricted common stock for a total
purchase price of $1,000,000 or $0.75 per share.  In connection with
the Securities Purchase Agreement, we agreed to issue Kenridge 1,333,333 series
“A” warrants exercisable at $0.75 per share; 1,333,333 series “B” warrants
exercisable at $1.00 per share; and 1,333,333 series “C” warrants exercisable at
$1.25 per share.  The warrants have a five year exercise
right.  In the quarter ended September 30, 2008, we received $600,000
from Kenridge in exchange for 799,999 shares of the 1,333,333 shares of our
restricted common stock, 799,999 series “A” warrants (of the 1,666,666 series
“A”), 799,999 series “B” warrants (of the 1,666,666 series “B”) and 799,999
series “C” warrants (of the series “C”).  Of the 799,999 shares,
666,666 shares were issued on July 14, 2008 and the remaining 133,333 shares
remain unissued as of the date of this filing.  As of the date of this
filing, Kenridge owes the Company the remaining $400,000.  The Company
continues to pursue Kenridge for the remaining balance of $400,000 on its
investment obligation to the Company.  The Company is currently
evaluating its legal options and continues to maintain a dialogue with Kenridge
towards resolving this matter





On May 15, 2008, we issued a press
release announcing that we have commenced our export program with
China.





On May 19, 2008, we issued a press
release announcing that the Western United States Agricultural Trade Association
has approved the Company for up to $300,000 in annual reimbursement for eligible
marketing and promotional activities in China.





On June 10, 2008, we issued a press
release announcing that we started national distribution of our Brilliant
Choice® and Savvy® brands.





On June 13, 2008, we issued a press
release announcing that our Brilliant Choice® and Savvy® brands have been
selected for distribution by DPI Midwest, a distributor of nutritional
products.





34


On July 16, 2008, we issued a press
release announcing that we will exhibit our nutritional supplements at the
8th
Annual Fashion Baby Maternal Infant-Children Products Expo in China from July
17-19th in
Shanghai, China.





On August 14, 2008, we amended our
articles of incorporation increasing our authorized capital from 20,000,000
shares of $0.001 par value common stock to 100,000,000 shares of $0.001 par
value common stock and from 500,000 shares of $0.001 par value preferred stock
to 2,000,000 shares of $0.001 par value common stock.





On September 3, 2008, we issued a press
release announcing that the Company’s China-based operation has received its
Certificate of Hygience from the Customs Office in the People’s Republic of
China. The Certificate of Hygiene is a requirement for any imported food grade
product, and will allow the Company to sell product in the country.





On September 25, 2008, we issued a
press release announcing the signing of contracts with three distribution
companies in China.





On November 17, 2008, we issued a press
release announcing the launch of our annual private label program for 2008-2009.
Our 2008-2009 program is a continuation and expansion of our 2007 rollout of a
gum drop based immune booster with a national retail pharmacy
chain.





On
December 18, 2008, we issued a press release announcing the receipt of purchase
orders for our Jugular® brand energy products by a large convenience store chain
in Nevada.





On March 27, 2009, we issued a press
release to announce the receipt of purchase orders for our Jugular® brand Energy
Products from Texas Liquid Energy Distributing Co. of San Antonio,
Texas.





On June 4, 2009, we issued a press
release to announce we have been issued Purchase Orders from pharmacy and
supermarket chains in the American Southwest.





On June 9, 2009, we issued a press
release announcing the receipt of purchase orders from Liberty USA, Inc., a
distributor in Pennsylvania, Ohio and West Virginia.





On June 15, 2009, we issued a press
release announce an agreement with Mr. Checkout, a national network of
distributors for coverage in selected territories.





On June 23, 2009, we issued a press
release announcing an agreement with 360 Distribution, a distributor in
Texas.





35


Our
Strengths





We
believe we have the following competitive strengths that could enable us to
capitalize on the large, fragmented and growing market for our Gel based
products:





·
            Fully
      integrated platform for sustainable
growth


·
            Diverse
      product categories that provide operating
  flexibility


·
            Recognizable
      brand names that can be leveraged for additional
  growth


·
            Geographic
      diversity to mitigate market risk
concentration


·
            Demonstrated
      ability to identify and commercialize
  opportunities


·
            Experience
      and results oriented management
team


·
            Retail
      account presents with major US retail pharmacy
  chain.





Results
of Operations





The
following table summarizes selected items from the statement of operations for
the fiscal year ended March 31, 2009 compared to March 31, 2008.





SALES
AND COST OF GOODS SOLD:





Fiscal
      Year Ended
              March
      31,
            
            
            %2009
            
            
            2008
            
            
            ChangeSales
            
            $
            56,141
            
            
            $
            197,840
            
            
            
            (72
            %)Cost
      of Goods Sold
            
            
            40,266
            
            
            
            187,293
            
            
            
            (79
            %)Gross
      Profit (loss)
            
            
            15,875
            
            
            
            10,547
            
            
            
            51
            %Gross
      Profit (loss) Percentage of Sales
            
            
            28
            %
            
            
            5
            %








Fiscal
      Year Ended March 31,2009
            
            
            %
            
            
            2008
            
            
            %Sales
      – U.S.
            
            $
            31,534
            
            
            
            56
            %
            
            $
            197,840
            
            
            
            100
            %Sales
      – China
            
            
            24,607
            
            
            
            44
            %
            
            
            -
            
            
            
            0
            %Total
      Sales
            
            $
            56,141
            
            
            
            100
            %
            
            $
            197,840
            
            
            
            100
            %





Sales





Our sales
for the fiscal year ended March 31, 2009 were $56,141 compared to $197,840 sales
during the same period in 2007.  In 2009 our sales decreased by
72%.  The decrease in our sales is a result of the decrease in the
amount of orders we have from one of our major customers.  The sales
to date are influenced significantly by our customer’s citation by the Federal
Trade Commission for certain acts that are 100% independent of Gamma, but did
affect their performance and their decisions to implement certain corrections so
to be in compliance.





Cost
of goods sold / Gross profit percentage of sales





Our cost of goods sold decreased 79%
during the fiscal year ended March 31, 2009 compared to the same period in
2008.  The decrease in our cost of goods sold is a result of a
decrease in sales relative to the cost to produce our products.  Gross
profit margins increased from the prior fiscal year because the Company has
begun to commercialize its product line and manufacturing products to meet
demand.  Additionally, the packaging materials and costs have
decreased since the Company outsourced those services to China.





36


EXPENSES:





Fiscal
      Year
              Ended
              March
      31,
            
            
            
            
            
            %2009
            
            
            2008
            
            
            
            
            
            ChangeExpenses:Consulting
      – stock-based
            
            
            484,636
            
            
            
            1,280,199
            
            
            
            
            
            
            (62
            %)Consulting
            
            
            404,849
            
            
            
            215,886
            
            
            
            
            
            
            88
            %Executive
      compensation –
              stock
      based
            
            
            446,585
            
            
            
            470,313
            
            
            
            
            
            
            (5
            %)Executive
      compensation –
              shares
      to be issued
            
            
            25,916
            
            
            
            -
            
            
            
            
            
            
            -Executive
      compensation
            
            
            662,664
            
            
            
            568,334
            
            
            
            
            
            
            17
            %General
      and administrative –
              stock
      based
            
            
            134,475
            
            
            
            76,886
            
            
            
            
            
            
            75
            %General
      and administrative
            
            
            1,674,880
            
            
            
            1,156,799
            
            
            
            
            
            
            45
            %Total
      operating expenses
            
            
            3,834,005
            
            
            
            3,768,417
            
            
            
            
            
            
            2
            %(Loss)
      from operations
            
            
            (3,818,130
            )
            
            
            (3,757,870
            )
            
            
            
            
            
            2
            %Other
      income (expense):Interest
      income
            
            
            692
            
            
            
            2,029
            
            
            
            
            
            
            (66
            %)Miscellaneous
      income
            
            
            400
            
            
            
            -
            
            
            
            
            
            
            -Interest
      expense
            
            
            (89,237
            )
            
            
            (39,730
            )
            
            
            
            
            
            125
            %(Loss)
      on the sale of fixed assets
            
            
            (270
            )
            
            
            -
            
            
            
            -
            
            
            
            -Foreign
      currency transaction gain
              (loss)
            
            
            121
            
            
            
            -
            
            
            
            
            
            
            
            -Total
      other income (expense)
            
            
            (88,294
            )
            
            
            (37,701
            )
            
            
            
            
            
            
            134
            %Net
      (loss)
            
            
            (3,906,424
            )
            
            
            (3,795,571
            )
            
            
            
            
            
            
            3
            %





Consulting
Expenses





Our consulting expenses have decreased
from 2008 for the fiscal year ended March 31, 2009, respectively.  The
decrease in consulting expenses was the result of decline in revenue and our
current financial position.  Due to limited cash resources, we
temporarily scaled back the use of consultants.





Executive
Compensation





Executive compensation is comprised of
cash and stock based compensation.  For the fiscal year ended March
31, 2009, executive compensation increased by 12% from the same period a year
ago.  The increase in our executive compensation in the year ended
March 31, 2009 is a result of the variable compensation pool awards and an
increase in the base salaries of the executives by 5%.





37


General
and Administrative Expenses





General and administrative expenses for
the year ended March 31, 2009 increased by 120% from the year ended March 31,
2008, respectively.  The increase in expenses was the result of
increase in use of independent contractors for marketing support services,
product development and investor relations.





Loss
from Operations





The loss from operations for the fiscal
year ended March 31, 2009 was $3,818,130, versus a loss from operations of
$3,757,870 for the year ended March 31, 2008, a change in loss from operations
of 2%.  The increase in the loss from operations in the year ended
March 31, 2009 resulted from the increase in executive compensation and
amortization expense from the intangible assets.





Interest
Income and Interest Expense





Interest income decreased by 66% in the
fiscal year ended March 31, 2009.  The decrease of interest income was
as a result of greater use of non-interest bearing accounts and lower account
balances.





Foreign
Currency Transaction Gain (Loss)





During the fiscal year ended March 31,
2009, the Company commenced product sales in China.  There was a
foreign currency transaction gain of $121 and $0 for the years ended March 31,
2009 and 2008, respectively.





Net
(Loss)





Our net
loss for the fiscal year ended March 31, 2009 was $3,906,424, an increase of
$110,853, or 3%, from $3,795,571 for the year ended March 31,
2008.  We continue to have a net loss and believe the loss will be
reduced and profitability will be attained in future quarters as the sales of
our products increase.





Operation
Plan





We are a
marketing and product formulation company selling our own branded products
through wholesalers and direct to retailers both in the US and
internationally.  Our core focus is the marketing and sale of vitamins
and nutriceuticals, OTC pharmaceutical products and personal care products in
Greater China and the United States.  We sell our branded nutritional
supplements under the trademarks Brilliant ChoiceTM children’s
nutritional supplements featuring the call to action – “Mom you’ve made a
brilliant choice for you children’s nutrition,” SAVVYTM adult nutritional
supplements featuring the call to action “Be SAVVY Stay Healthhy,” and Jugular Energy ProductsTM and
high performance supplements featuring the call to action “Go for the JugularTM.”
Our customer focus is on selling products in the Lifestyle of Health &
Sustainability ("LOHAS") marketplace and in the Energy Supplement
Market.  We developed a series of innovative marketing programs to
support our product sales and retail partners.  We have successfully
sought and will continue to seek financing opportunities to fund our development
and to support our marketing programs and the commercialization of our product
lines





38


We first
began selling our branded product in China and today we are taking orders for US
sales and additional orders internationally.





During
the quarter ended December 31, 2007, we completed the development of certain
product lines and began shipping products to a major U.S. based retail chain
account.





In the
second quarter ended September 30, 2008, we were advised by the major national
retail chain account with whom we launched the test product as a private label
brand for the national retail chain, that the FTC found them to be in violation
of certain regulations because of their choice of graphic elements on the
packaging were in violation of certain regulations of the Federal Trade
Commission.  In the private label contract with the national retail
chain, Gamma was required to use the graphic elements provided by the national
retail chain.  Gamma’s management recommended graphics we knew to be
compliant with the FTC regulations.  The national retail chain
rejected Gamma’s proposed packaging graphics.   The experience
confirms the maturity of Gamma’s management and processes, and confirmed it is
in Gamma’s best interest to pursue commercialization of its own brands retaining
greater control of the product packaging, claims and marketing.





Our Growth
Strategy





Our
strategy has been focused initially on developing, marketing and selling
products in the LOHAS marketplace and in the Energy Supplement Market in greater
China and the United States.  LOHAS is a term popularized by the
Natural Marketing Institute for the American Botanical Council as well as others
industry opinion leaders.  The LOHAS market is an identifiable
consumer category.  In the LOHAS category, there are found high growth
sub-segments of selected vitamins and nutriceuticals, over-the-counter ("OTC")
pharmaceutical products, and personal care products.  We believe that
these categories of the LOHAS market are fast developing, in both Greater China
and the United States.  We further believe that the Greater China
market offers the fastest path to grow revenues and achieve profitability in
this business.





In China,
the economy has grown between 8% and 10% in each year of this decade and the
Chinese economy has been in the least affected major economy during the current
global economic slowdown will.  According to the Frost & Sullivan,
total expenditures on pharmaceuticals products in China are expected to reach
$125 billion in 2011.  IMS Health estimates that China will become the
second largest pharmaceuticals market in the world by
2020.  Expenditures on health supplements for health maintenance and
disease prevention were estimated to have been approximately $9.10bn in 2006 and
are expected to double to approximately $13.4bn by 2010 according to a report
entitled, The Health Food / Dietary Supplements Market in China, published by
the Commercial Services Unit of the US Embassy, Beijing.  In the
United States, LOHAS is the fastest growing market in the nutritional supplement
category, and according to research reports from The National Marketing
Institute, 68 million Americans are LOHAS consumers.  Consumer
spending by LOHAS consumers was estimated to have been $118bn on personal health
products in 2005.  According to the LOHAS Market Review, the U.S.
LOHAS market grew by approximately 1% new joiners and 10% new spending per
year.  At that level of spending, the wellness products category
accounts for approximately 25% of the spending amongst the LOHAS consumer
category.





39


The
Energy Supplement Market is largely defined by the Energy Beverage
category.  The Energy Beverage category is, by most measures, the
fastest growing beverage category in North America and overseas.  This
category is led by Red Bull with North American sales of nearly $272 million
according to Energy Drink Buyer Guide and a 50% market share in the North
American market according to a recent article in Business Week
Magazine.  Our strategy is to use our Jugular Energy Products (“Go for
the Jugular”) to side-step head-to-head competition in the beverage market but
to use our Gel technology to stretch the category definition to include Energy
Strips, Energy Gels and other energy related products that complement the fast
growing Energy Beverage category.  We believe that, in part, the high
growth of the Energy Beverage category is driven by health and wellness trends
that complement the LOHAS consumer category.





On July
14, 2008, we amended our license agreement with Jugular, Inc.  The
purpose of the amendment is to clarify ambiguities which were created through
the various amendments.  The July 14, 2008 amendment is intended to
supersede and replace the previous Licensor/Licensee Agreement, the Amended
License Agreement, and the Second Amendment to License
Agreement.  Jugular granted us the exclusive right to use the Licensor
Marks (all Trademarks for the mark JUGULAR owned by Jugular, Inc.) on or in
association with certain products as well as on packaging, promotional, and
advertising material.  The initial term  of the agreement
shall extend from the effective date of August 5, 2007 until the expiration date
of August 5, 2021.  The intitial term shall automatically renew for a
subsequent 5 year period, if certain requirements are met, as set forth in the
agreement.





We are aiming to become a technology
and formulation leader in the wellness products category of the fast growing
LOHAS market. Our management team has experience with formulation, production
and commercialization for medicated confectionary supplement products and
personal care products.  We have proprietary formulations for vitamin
and nutritional supplements, and have developed formulations for adjunctive
therapies for type II diabetes, symptoms of menopause, cognition, stress
reduction, and relief from selected side effects of
chemotherapies.  Also, we intend to become a major competitor in
personal care products.





Our
management team has decades of experience in the personal care, OTC
pharmaceutical and prescription pharmaceutical industries worldwide and, in
particular, in Asia.  Our product offerings take advantage of the
following market place characteristics:





40


·
            High
      incidence and high growth of targeted medical conditions and lifestyle
      objectives;


·
            Identifiable
      market segments for our products and known consumer purchasing patterns by
      targeted customers;


·
            High
      growth markets in Asia including Greater China and in the United
      States;


·
            Low
      cost manufacturing or repacking mainly from China but also located in the
      United States;


·
            Multi-tiered
      price points for product and market differentiation;
  and


·
            Branded
      consumer product preferences.





We
believe the combination of the above marketplace characteristics, combined with
our management expertise and products, will enable our business model to achieve
long term sustained profitability.





We
developed our corporate infrastructure as a marketing and sales organization. We
will not initially seek to acquire manufacturing in China or the United States
but will instead look to leverage our management's contacts
and  expertise to outsource  manufacturing to a third party
original equipment manufacturer ("OEM").  We believe this will provide
us with an advantage in cost of goods sold manufacturing margins and improve our
return on assets.  We may, in the future, look to acquire or partner
more closely with a single manufacturer for certain products or for product
distribution.  Our objective is to utilize our management's marketing
and sales abilities and resources to generate revenue and establish a market
presence in key product categories that can be expanded as we develop local
capacity in Asia.  Our aim is to establish a known and recognized
product brands that, we believe, will attract attention from local suppliers and
retailers who will seek to carry our product offerings.





Our
corporate organization today is comprised of a US based headquarters in Las
Vegas, Nevada, a wholly owned subsidiary in Hong Kong (Gamma Pharmaceuticals
(HK) Ltd) and a Representative office in Beijing, The Peoples Republic of China
(Gamma Pharmaceuticals (HK) Limited Beijing Representative
Office).  We plan to use a variety of contract and third party
resources in China and will undertake all invoicing and most administration for
their services from our Hong Kong subsidiary.





Liquidity and Capital
Resources





The
following table summarizes total current assets, total current liabilities and
working capital at March 31, 2009 and March 31, 2008.





March
      31,
            
            
            March
      31,
            
            
            Increase
      / (Decrease)2009
            
            
            2008
            
            
            $
            
            
            %Current
      Assets
            
            $
            268,849
            
            
            $
            284,564
            
            
            $
            (15,715
            )
            
            
            (6
            %)Current
      Liabilities
            
            $
            937,835
            
            
            $
            944,592
            
            
            $
            (6,757
            )
            
            
            (1
            %)Working
      Capital (deficit)
            
            $
            (668,986
            )
            
            $
            (660,028
            )
            
            $
            8,958
            
            
            
            (1
            %)





41


Liquidity
is a measure of a company’s ability to meet potential cash
requirements.  We have historically met our capital requirements
through the issuance of stock and by borrowings.  In the future we
anticipate we will be able to provide the necessary liquidity we need by the
revenues generated from the sales of our products, however, if we do not
generate sufficient sales revenues we will continue to finance our operations
through equity and/or debt financings with traditional financial or industry
“partners.”





As of
March 31, 2009, we continued to use equity sales and debt financing to provide
the capital we need to run our business.  In the future we need to
generate sufficient revenues from product sales in order to eliminate or reduce
the need to sell additional stock or obtain additional loans.  In the
first quarter in 2008, we successfully raised $400,000 by way of a private
placement.  In the three month period ended December 31, 2008, we
raised $50,000 and subsequently raised $25,000.  There can be no
assurance we will be successful in raising the necessary funds to execute our
business plan.





On June
17, 2008, we executed a Securities Purchase Agreement with Kenridge Holdings LLC
(“Kenridge”).  Pursuant to the Securities Purchase Agreement, Kenridge
agreed to purchase 1,333,333 shares of our restricted common stock for a total
purchase price of $1,000,000 or $0.75 per shares.  In connection with
the Securities Purchase Agreement, we agreed to issue Kenridge 1,333,333 series
“A” warrants exercisable at $0.75 per share; 1,333,333 series “B” warrants
exercisable at $1.00 per share; and 1,333,333 series “C” warrants exercisable at
$1.25 per share.  During the second quarter ended September 30, 2008,
we received $600,000 from Kenridge in exchange for 799,999 shares of the
1,333,333 shares of our restricted common stock, 799,999 series “A” warrants (of
the 1,666,666 series “A”), 799,999 series “B” warrants (of the 1,666,666 series
“B”) and 799,999 series “C” warrants (of the series “C”).  As of the
date of this filing 666,666 of the shares have been issued and 133,333 of the
shares remain unissued.  As of the date of this filing, Kenridge owes
the Company the remaining $400,000.  The Company continues to pursue
Kenridge for the remaining balance of $400,000 on its investment obligation to
the Company.  The Company is currently evaluating its legal options
and continues to maintain a dialogue with Kenridge towards resolving this
matter





On April 6, 2009, we executed a
promissory note with Rubicon Financial Insurance Services for the principal
amount of $21,000.  Pursuant to the promissory note, we agreed to
prepay the principal amount as follows; a) $4,000 by April 6, 2009; b) $4,250 by
May 4, 2009; c) $4,250 by June 1, 2009; d) $4,250 by July 6, 2009; and $4,250 by
August 2, 2009.  As of the date of this filing we paid $8,000 toward
the loan.





Satisfaction
of our cash obligations for the next 12 months.





As of
March 31, 2009, our cash balance was $116,669.  Our plan for
satisfying our cash requirements for the next twelve months is through
additional sales of our common stock, third party financing, and/or traditional
bank financing.  In the three months ended September 30, 2008, we
received $600,000 from Kenridge pursuant to our agreement dated June 17,
2008.  As of the date of this filing, we have not received the
remaining $400,000 from Kenridge pursuant to our agreement.  The
Company is pursuing Kenridge for the remaining balance of $400,000 on its
investment obligation to the Company.  We anticipate sales-generated
income during that same period of time, but do not anticipate generating
sufficient amounts of revenues to meet our working capital requirements.
Consequently, we intend to make appropriate plans to insure sources of
additional capital in the future to fund growth and expansion through additional
equity or debt financing or credit facilities.





42


Since
inception, we have financed cash flow requirements through debt financing and
the issuance of common stock for cash and services.  As we continue to
expand operational activities, we may continue to experience net negative cash
flows from operations, pending receipt of revenues from product sales, and will
be required to obtain additional financing to fund operations through common
stock offerings and debt borrowings, giving consideration to loans and working
diligently to move sales ahead to the extent necessary to provide working
capital.





We
anticipate incurring operating losses over the majority of the next twelve
months. Our lack of operating history makes predictions of future operating
results difficult to ascertain. Our prospects must be considered in light of the
risks, expenses and difficulties frequently encountered by companies in their
early stage of development, particularly companies in new and rapidly evolving
technology markets. Such risks include, but are not limited to, an evolving and
unpredictable business model and the management of growth. To address these
risks we must, among other things, implement and successfully execute our
business and marketing strategy, continue to develop and upgrade technology and
products, respond to competitive developments, and continue to attract, retain
and motivate qualified personnel. There can be no assurance that we will be
successful in addressing such risks, and the failure to do so can have a
material adverse effect on our business prospects, financial condition and
results of operations.





As a
result of our cash requirements and our lack of revenues, we anticipate
continuing to issue stock in exchange for loans and/or equity financing, which
may have a substantial dilutive impact on our existing
stockholders.





Going
Concern





The
consolidated financial statements included in this filing have been prepared in
conformity with generally accepted accounting principles that contemplate the
continuance of Gamma as a going concern.  Gamma may not have a
sufficient amount of cash required to pay all of the costs associated with
operating, production and marketing of products.  Management intends
to use borrowings and security sales to mitigate the effects of cash flow
deficits, however no assurance can be given that debt or equity financing, if
and when required, will be available.  The financial statements do not
include any adjustments relating to the recoverability and classification of
recorded assets and classification of liabilities that might be necessary should
Gamma be unable to continue existence.





Summary
of product research and development that we will perform for the term of our
plan.





We do not
anticipate performing any significant product research and development under our
plan of operation until such time as we can raise adequate working capital to
sustain our operations.  To date, all research and development work
has been undertaken in-house, by management, with input from outside
consultants. Management’s experience with research and development enable the
Company to reasonably control most associated research and development
expenses.





43


Expected
purchase or sale of any significant equipment.





We do not
anticipate the purchase or sale of any significant equipment, as such items are
not required by us at this time or anticipated to be needed in the next twelve
months.





Significant
changes in the number of employees.





We
currently have 3
full time employees in China and the United States.  We intend
to hire additional full time employees to fill specific functions in our
organization as product sales commence and our operations expand.  We
will also hire part-time or independent contractors in connection with certain
projects in Greater China and the United States.  We expect to have
full-time-equivalent employees working directly for our distributors,
manufacturers, and advertising and public relations agencies.  We will
vary employment as product demand dictates.  We have planned to expand
our full time employment over the next 12 months to meet our existing or
anticipated operational needs.





Critical
Accounting Policies





Intangible
Assets


Financial
Accounting Standards Board (“FASB”) Statement No. 142, Goodwill and Other
Intangible Assets ("FAS 142") requires that goodwill and intangible assets with
indefinite useful lives no longer be amortized, but instead tested for
impairment at least annually in accordance with the provisions of FAS 142. This
standard also requires that intangible assets with definite useful lives be
amortized over their respective estimated useful lives to their estimated
residual values, and reviewed for impairment. As of June 30, 2008, the Company
believes there is no impairment of its intangible assets.





The
Company's intangible assets consist of the costs of filing various trademarks.
The trademarks are recorded at cost. The Company determined that the trademarks
have an estimated useful life of 10 - 15 years and will be reviewed annually for
impairment.  Amortization will be recorded over the estimated useful
life of the assets using the straight-line method for financial statement
purposes. The Company will commence amortization once the economic benefits of
the assets begin to be consumed and they plan to record amortization once
production begins and the related revenues are recorded.





The
Company acquired intangible assets from an officer of the Company during April
2006 and May 2007.  During the year ended March 31, 2008, the Company
has commenced production on products and they have started amortization
effective October 2007.  The amortization of the intangible assets is
based on an estimated useful life of 10 years.





44


Revenue
Recognition


The
Company recognized revenue from product sales once all of the following criteria
for revenue recognition have been met: pervasive evidence that an agreement
exists; the services have been rendered; the fee is fixed and determinable and
not subject to refund or adjustment; and collection of the amount due is
reasonable assured.  The Company will primarily derive its revenues
from the sales of its vitamins, nutriceutical products and personal care
products.





The Company has products that are in
China that are sold on a consignment basis.  Once the products are
shipped to a customer they will have 30 days to return product and the Company
grants the customer an additional 30 days to pay for the
product.  Because of the return policy the Company will defer the
recognition of revenue until end of the 30 day return policy.





Stock Based
Compensation


The
Company adopted Statement of Financial Accounting Standards (SFAS) No. 123R
(revised 2004), “Share-Based Payment,” requiring the Company to recognize
expense related to the fair value of its employee stock option awards.
 SFAS-123R eliminates accounting for share-based compensation transactions
using the intrinsic value method prescribed in Accounting Principles Board
Opinion No. 25 (APB-25), “Accounting for Stock Issued to Employees”, and
requires instead that such transactions be accounted for using a
fair-value-based method. The Company recognizes the cost of all share-based
awards on a graded vesting basis over the vesting period of the
award.





Off-Balance
Sheet Arrangements





We do not
have any off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that is material to investors.





ITEM
      7A.
            QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.





Not applicable.





ITEM
8.                      FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA





See Index
to Financial Statements and Financial Statement Schedules appearing on page F-1
through F-18 of this Form 10-K.





ITEM
      9.
            CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE





We have
had no disagreements with our independent auditors on accounting or financial
disclosures.





ITEM
9A(T).                                CONTROLS
AND PROCEDURES





45


Evaluation
of Disclosure Controls and Procedures





Our Chief
Executive Officer and Chief Financial Officer, Peter Cunningham and Joseph
Cunningham, have evaluated the effectiveness of our disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of
1934, as amended) as of the end of the period covered by this Report. Based on
that evaluation, Messrs. Cunningham concluded that our disclosure controls and
procedures are effective in timely alerting them to material information
relating to us (including our consolidated subsidiaries) required to be included
in our periodic SEC filings.





Management’s
Report on Internal Control Over Financial Reporting





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting (as defined in Rule 13a- l5(f) under the
Exchange Act) and for assessing the effectiveness of our internal control over
financial reporting.  Our internal control system is designed to
provide reasonable assurance to our management and board of directors regarding
the preparation and fair presentation of published financial statements in
accordance with United States’ generally accepted accounting
principles.





Our
internal control over financial reporting is supported by written policies and
procedures that pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of our
assets; provide reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with generally
accepted accounting principles and that our receipts and expenditures are being
made only in accordance with authorizations of our management and our board of
directors; and provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of our assets that
could have a material effect on our financial statements.





Our
management assessed the effectiveness of our internal control over financial
reporting as of March 31, 2008 using the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control
- Integrated Framework. Management’s assessment included an evaluation of the
design of our internal control over financial reporting and testing of the
operational effectiveness of our internal control over financial
reporting.  Based on this assessment, our management concluded that,
as of March 31, 2009, our internal control over financial reporting were
ineffective.





Because
of its inherent limitations, a system of internal control over financial
reporting can provide only reasonable assurance and may not prevent or detect
misstatements or fraud.  In addition, projections of any evaluation of
effectiveness to future periods are subject to the risks that controls may
become inadequate because of changes in conditions and that the degree of
compliance with the policies or procedures may deteriorate.





This
annual report does not include an attestation report of the Company’s registered
public accounting firm, L.L. Bradford & Company, LLC, regarding internal
control over financial reporting.  Management’s report was not subject
to attestation by the Company’s registered public accounting firm pursuant to
temporary rules of the Securities and Exchange Commission that permit the
Company to provide only management’s report in this annual
report.





46


Changes
in Internal Control Over Financial Reporting





There
were no changes in our internal control over financial reporting that occurred
during our most recent fiscal quarter that have materially affected, or
reasonably likely to materially affect, our internal control over financial
reporting.





ITEM
9B.                                OTHER
INFORMATION





None.





PART
III





ITEM
      10.
            DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE





The
members of our board of directors serve for one year terms and are elected at
the next annual meeting of stockholders, or until their successors have been
elected.  The officers serve at the pleasure of the board of
directors.  Officers are appointed to serve until the meeting of the
Board of Directors following the next annual meeting of stockholders and until
their successors have been elected and qualified.





Information
as to our current directors and executive officers is as follows:





Name
            Age
            Title
            Term
            CommitteesPeter
      Cunningham
            53
            CEO,
      Secretary and Chairman
            Since
      April 7, 2006
            CompensationJoseph
      Cunningham
            47
            CFO,
      Treasurer and Director
            Since
      April 7, 2006
            AuditHao
      Zhang
            33
            Chief
      Marketing Officer and Director
            Since
      April 7, 2006
            Audit
      & Compensation





Duties,
Responsibilities and Experience





Mr. Peter
Cunningham, is the Chief Executive Officer, President, Secretary and has
been the Chairman of Gamma's Board of Directors since April 2006.  Mr.
Peter Cunningham is a Senior Executive with extensive experience in the
international pharmaceutical industry.  Mr. Cunningham has worked for
approximately 10 years in the pharmaceutical industry and an additional 10 years
consulting to the pharmaceutical industry, with some of the best known companies
in the pharmaceutical industry, including Glaxo Smith Kline, Bristol Myers
Squibb, Baxter, Becton Dickinson, Novartis & Roche, and most recently,
AXM.  Mr. Cunningham's consulting practice was established as a joint
venture with Coopers & Lybrand (PriceWaterhouse
Coopers).  Products Mr. Cunningham has launched, developed or marketed
worldwide generate more than US$ 800 million in sales annually.  Mr.
Peter Cunningham has an MBA from George Washington University and an
undergraduate degree in Sociology from the State University of New York. Mr.
Peter Cunningham is the brother of Joseph Cunningham, a Director and our Chief
Financial Officer.





47


Mr. Joseph
Cunningham, is the Chief Financial Officer, Treasurer and has been a
Director of Gamma since April 2006.  Mr. Joseph Cunningham is has
expertise in financial management, corporate control, banking, fund raising,
strategic planning and business start-up.  Mr. Cunningham is a trained
economist and former think-tank practitioner.  He is also an
Investment Banker and has originated and executed more than US$ 5.0 billion in
deals in Asia, from his former offices in Singapore and London.  Mr.
Cunningham has an international MBA from the Thunderbird School of International
Management, and an undergraduate degree in Economic and Business Administration
from Northeastern University, Boston Massachusetts.  Mr. Joseph
Cunningham is the brother of Peter Cunningham, our Chairman and our Chief
Executive Officer.





Mr. Hao
Zhang, is the Chief Marketing Officer and has been a Director of Gamma
since April 2006.  Mr. Zhang is a senior executive with significant
experience and success in the pharmaceutical and personal care products
industries.  Mr. Zhang has worked for approximately 10 years in
consulting, with some of the best-known companies in the World, including
Pfizer,  Roche, Johnson & Johnson, GE, GSK, and Bayer. The
products he worked on generate approximately US$ 200 million/in sales annually
in China.  In 2004, the Ogilvy Group acquired his consulting firm in
Beijing ZZAD. Mr. Zhang has a PHD in electrical engineering from the University
of British Columbia.





When the
accompanying proxy is properly executed and returned, the shares it represents
will be voted in accordance with the directions indicated thereon or, if no
direction is indicated, the shares will be voted in favor of the election of the
three nominees identified above.  Gamma expects each nominee to be
able to serve if elected, but if any nominee notifies Gamma before this meeting
that he is unable to do so, then the proxies will be voted for the remainder of
those nominated and, as designated by the Directors, may be voted (i) for a
substitute nominee or nominees, or (ii) to elect such lesser number to
constitute the whole Board as equals the number of nominees who are able to
serve.





Indemnification





Section
145 of the Delaware General Corporation Law provides for the indemnification of
officers, directors and other corporate agents under certain circumstances for
liabilities (including reimbursement for expenses incurred).  Article
5 of our Bylaws provides for indemnification of our directors, officers,
employees and other agents to the extent and under the circumstances permitted
by the Delaware General Corporation Law.  We also plan to obtain
director’s and officer’s liability insurance if available at reasonable prices,
but as of the date of this filing we have not obtained a policy.





The
extent to which the indemnification provisions of the Delaware General
Corporation Law and our certificate of incorporation and bylaws provide
indemnification to officers and directors for violations of the federal
securities laws has not been settled by court precedent.  We
understand that, in the position of the Securities and Exchange Commission, such
indemnification is against public policy and is unenforceable.





48


Involvement
in Certain Legal Proceedings





No
Executive Officer or Director of the Corporation has been the subject of any
Order, Judgment, or Decree of any Court of competent jurisdiction, or any
regulatory agency permanently or temporarily enjoining, barring, suspending or
otherwise limiting him from acting as an investment advisor, underwriter, broker
or dealer in the securities industry, or as an affiliated person, director or
employee of an investment company, bank, savings and loan association, or
insurance company or from engaging in or continuing any conduct or practice in
connection with any such activity or in connection with the purchase or sale of
any securities.


No
Executive Officer or Director of the Corporation has been convicted in any
criminal proceeding (excluding traffic violations) or is the subject of a
criminal proceeding which is currently pending.





Section
16(a) Beneficial Ownership Reporting Compliance





Section
16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
requires executive officers and directors, and persons who beneficially own more
than ten percent of an issuer's common stock, which has been registered under
Section 12 of the Exchange Act, to file initial reports of ownership and reports
of changes in ownership with the SEC.





As a
company with securities registered under Section 12(g) of the Exchange Act, our
executive officers and directors, and persons who beneficially own more than ten
percent of our common stock are required to file Section 16(a)
reports.





Code
of Ethics





On
September 1, 2006, we adopted a Code of Ethics for Directors and a Code of
Ethics for the Chairman, Chief Executive Officer, and Senior Financial
Officers.  Copies of the Code of Ethics for Directors and Code of
Ethics for the Chairman, Chief Executive Officer, and Senior Financial Officers
were attached as Exhibits A and B to the proxy filed with the SEC on February
13, 2007.





Corporate
Governance





Nominating
Committee





We do not have a Nominating Committee
or Nominating Committee Charter.  Our board of directors perform some
of the functions associated with a Nominating Committee.  Our board of
directors intends to establish such a committee in the near future.





49


Director Nomination
Procedures





Generally,
nominees for Directors are identified and suggested by the members of the Board
or management using their business networks. The Board has not retained any
executive search firms or other third parties to identify or evaluate director
candidates in the past and does not intend to in the near future. In selecting a
nominee for director, the Board or management considers the following
criteria:





1.
            whether
      the nominee has the personal attributes for successful service on the
      Board, such as demonstrated character and integrity; experience at a
      strategy/policy setting level; managerial experience dealing with complex
      problems; an ability to work effectively with others; and sufficient time
      to devote to the affairs of the
Company;


2.
            whether
      the nominee has been the chief executive officer or senior executive of a
      public company or a leader of a similar organization, including industry
      groups, universities or governmental
  organizations;


3.
            whether
      the nominee, by virtue of particular experience, technical expertise or
      specialized skills or contacts relevant to the Company’s current or future
      business, will add specific value as a Board member;
  and


4.
            whether
      there are any other factors related to the ability and willingness of a
      new nominee to serve, or an existing Board member to continue his
      service.





The Board
or management has not established any specific minimum qualifications that a
candidate for director must meet in order to be recommended for Board
membership. Rather the Board or management will evaluate the mix of skills and
experience that the candidate offers, consider how a given candidate meets the
Board’s current expectations with respect to each such criterion and make a
determination regarding whether a candidate should be recommended to the
stockholders for election as a director. During 2008, the Company received no
recommendation for Directors from its stockholders.





The
Company will consider for inclusion in its nominations of new Board of Director
nominees proposed by stockholders who have held at least 1% of the outstanding
voting securities of the Company for at least one year. Board candidates
referred by such stockholders will be considered on the same basis as Board
candidates referred from other sources. Any stockholder who wishes to recommend
for the Company’s consideration a prospective nominee to serve on the Board of
Directors may do so by giving the candidate’s name and qualifications in writing
to the Company’s Secretary at the following address:  2225 Angelfire
Street, Las Vegas, Nevada 89128.





There
were no material changes in fiscal 2008 to the procedures by which the Company’s
stockholder’s may recommend nominees to the Company’s Board of
Directors.





Audit
Committee





The Company has a separately-designed
standing Audit Committee of its Board of Directors.  The Audit
Committee currently consists of two members.





Name
            TermJoseph
      Cunningham, Chairman
            Since
      April 2006Hao
      Zhang, Member
            Since
      April 2006





50


The Audit Committee is responsible for,
among other things:





·
            Quarterly
      and annual consolidated financial statements and financial information
      filed with the SEC;





·
            System
      of internal controls;





·
            Financial
      accounting principles and policies;





·
            Internal
      and external audit processes; and





·
            Regulatory
      compliance programs.





The
committee meets periodically to consider the adequacy of our internal controls
and financial reporting process. It also discusses these matters with our
independent auditors and with appropriate financial personnel employed by the
Company. The committee reviews our financial statements and discusses them with
management and our independent auditors before those financial statements are
filed with the SEC.  The Audit Committee held 1 meeting in fiscal
2009.





The
committee has the sole authority to retain and dismiss our independent auditors
and periodically reviews their performance and independence from
management.  The independent auditors have unrestricted access and
report directly to the committee.





ITEM
11.                                EXECUTIVE
COMPENSATION





Overview
of Compensation Program





The
Compensation Committee has responsibility for establishing, implementing and
continually monitoring adherence with Gamma’s compensation
philosophy.  The Compensation Committee works with management to
ensure that the total compensation paid to the Executives is fair, reasonable
and competitive.





51


Executive
Compensation Philosophy





Our
compensation program was designed to attract, motivate and retain the highly
talented individuals needed to drive business success. The program reflects the
following principles:




•
            
            Compensation should be related
      to performance. To that end, our compensation program reinforces
      our business and financial objectives. Employees compensation varies based
      on company and individual performance. Employees will receive greater or
      reduced incentive awards depending on whether, and to what extent we meet
      our financial goals. Individual compensation will also vary based on the
      person’s performance, contribution and overall value to the
      business.•
            
            Gamma employees should think
      like Gamma stockholders. The best way to encourage our employees to
      act in the best interest of Gamma is through an equity stake in the
      Company.•
            
            Our compensation plan should
      balance our short and long term financial objectives and reward individual
      and company performance.•
            
            Our compensation should be
      competitive.When we determine compensation levels for executive
      officers, we review compensation survey data from independent sources to
      ensure that our total compensation program is competitive. Companies
      selected for the survey are those with whom we compete for executive
      talent.





Components
of our Compensation Plan





The
components of our executive compensation program are: base salary and long term
incentives.





Base
Salary: We target
base salaries for senior management at levels that are comparable to similar
positions at companies with whom we compare for compensation purposes. We
conduct surveys periodically to ensure that our salaries are competitive. We
believe that compensation above competitive levels should come primarily from
the variable portion of the compensation package. The committee reviews and
approves all executive officer salary adjustments and recommended by the CEO.
The committee also reviews the performance of the CEO and establishes his/her
base salary.





Long Term
Incentives; Stock Option: We believe that making employees think like
owners is a key objective for our compensation program and that retaining our
senior management team is essential to our success. Our 2006 Long Term Incentive
Plan adopted by the Board of Directors on April 21, 2006 addresses those
goals.





SUMMARY
COMPENSATION TABLE





The
following table sets forth the cash compensation of the Company’s executive
officers during the last two fiscal years of the Company.  The
remuneration described in the table does not include the cost of the Company of
benefits furnished to the named executive officers, including premiums for
health insurance and other benefits provided to such individuals that are
extended in connection with the conduct of the Company’s business.





52





SUMMARY
      COMPENSATION TABLEName
      and Principal Position
            Fiscal
              Year
              Ended
              March
      31,
            Salary
      ($)
            Bonus
      ($)
            Stock
      Awards ($)
            Option
      Awards ($)
            Non-Equity
      Incentive Plan Compen-sation ($)
            Nonqualified
      Deferred Compen-sation Earnings ($)
            All
      Other Compen-sation ($)
            Total
      ($)Peter
      Cunningham,CEO/Director
            2007
            $122,603 (1)
            -0-
            $375,000
            -0-
            -0-
            -0-
            -0-
            $497,6032008
            $145,000
            $75,000
            $215,625
            -0-
            -0-
            -0-
            -0-
            $435,6252009
            $164,666.67
            $38,250
              (2)
            $141,750
            -0-
            $150,000
              (3)
            -0-
            $364,854
              (8)
            $859,520.67Joseph
      Cunningham,CFO/Director
            2007
            $117,699
              (1)
            -0-
            $375,000
            -0-
            -0-
            -0-
            -0-
            $492,6992008
            $137,500
            $37,500
            $127,344.25
            -0-
            -0-
            -0-
            -0-
            $530,1992009
            $155,250
            $19,124.32
              (4)
            $70,875
            -0-
            $75,000
              (5)
            -0-
            $262,948
              (9)
            $583,197.32Hao
      Zhang,Chief
      Marketing Officer/ Director
            2007
            $112,795
              (1)
            -0-
            $375,000
            -0-
            -0-
            -0-
            -0-
            $487,7952008
            $135,416
            $37,500
            $127,344
            -0-
            -0-
            -0-
            -0-
            $300,2602009
            $155,250
            $19,124.32
              (6)
            $70,875
            -0-
            $75,000
              (7)
            -0-
            $267,750
              (10)
            $587,999,32


(1)
            Management
      agreed to accrue or partially accrue the salaries in 2007 until the
      Company raised sufficient capital or generate sufficient revenue through
      operations to make such payments.


(2)
            Peter
      Cunningham received a stock bonus of 28,125 shares of common stock valued
      at $38,250.


(3)
            Peter
      Cunningham received $150,000 in cash pursuant to the Variable Compensation
      Plan.


(4)
            Joseph
      Cunningham received a stock bonus of 14,062 shares of common stock valued
      at $19,124.32.


(5)
            Joseph
      Cunningham received $75,000 in cash pursuant to the Variable Compensation
      Plan.


(6)
            Hao
      Zhang received a stock bonus of 14,062 shares of common stock valued at
      $19,124.32.


(7)
            Haw
      Zhang received $75,000 in cash pursuant to the Variable Compensation
      Plan.


(8)
            On
      March 31, 2009, we issued 3,040 Shares of Series A Preferred Stock to
      Peter Cunningham in exchange for cancellation of $364,854 of accrued
      executive compensation.


(9)
            On
      March 31, 2009, we issued 2,191 Shares of Series A Preferred Stock to
      Joseph Cunningham in exchange for cancellation of $262,948 of accrued
      executive compensation.


(10)
            On
      March 31, 2009, we issued 2,231 Shares of Series A Preferred Stock to Hao
      Zhang in exchange for cancellation of $267,750 of accrued executive
      compensation.





Employment
Agreements





Peter Cunningham. On August
31, 2007, we executed an Employment Agreement with Peter Cunningham, wherein Mr.
Peter Cunningham agreed to serve as the Company's Chief Executive
Officer.  The term of the agreement commenced on August 31, 2007 and
will terminate on August 31, 2012; provided that the term shall automatically
renew for successive five-year periods unless either party notifies the other in
writing at least 60 days prior to the otherwise scheduled expiration of the
agreement that such term of employment shall not so renew.  We agreed
to pay Mr. Peter Cunningham a base salary of $160,000 annually (payable in
semi-monthly installments).  Mr. Peter Cunningham's base salary shall
be increased each April 1 during the term of employment in an amount at least
equal to the percentage increase in the Consumer Price Index – All Urban Areas
("CPI") issued by the U.S. Department of Labor, Bureau of Labor Statistics, for
the preceding calendar year.  In addition to Mr. Peter Cunningham's
base salary we agreed to pay him variable compensation for each quarter of each
year during the term of employment in amounts determined in accordance with the
terms and provisions of the Compensation Pool Plan (described
below).  Additionally, Mr. Peter Cunningham will be entitled to
participate in any stock option program, stock compensation program and employee
benefit plans.





53


Joseph Cunningham. On August
31, 2007, we executed an Employment Agreement with Joseph Cunningham, wherein
Mr. Joseph Cunningham agreed to serve as the Company's Chief Financial
Officer.  The term of the agreement commenced on August 31, 2007 and
will terminate on August 31, 2012; provided that the term shall automatically
renew for successive five-year periods unless either party notifies the other in
writing at least 60 days prior to the otherwise scheduled expiration of the
agreement that such term of employment shall not so renew.  We agreed
to pay Mr. Joseph Cunningham a base salary of $150,000 annually (payable in
semi-monthly installments).  Mr. Joseph Cunningham's base salary shall
be increased each April 1 during the term of employment in an amount at least
equal to the percentage increase in the Consumer Price Index – All Urban Areas
("CPI") issued by the U.S. Department of Labor, Bureau of Labor Statistics, for
the preceding calendar year.  In addition to Mr. Joseph Cunningham's
base salary we agreed to pay him variable compensation for each quarter of each
year during the term of employment in amounts determined in accordance with the
terms and provisions of the Compensation Pool Plan (described
below).  Additionally, Mr. Joseph Cunningham will be entitled to
participate in any stock option program, stock compensation program and employee
benefit plans.





Hao Zhang. On August 31,
2007, we executed an Employment Agreement with Hao Zhang, wherein Mr. Zhang
agreed to serve as the Company's Chief Marketing Officer.  The term of
the agreement commenced on August 31, 2007 and will terminate on August 31,
2012; provided that the term shall automatically renew for successive five-year
periods unless either party notifies the other in writing at least 60 days prior
to the otherwise scheduled expiration of the agreement that such term of
employment shall not so renew.  We agreed to pay Mr. Zhang a base
salary of $150,000 annually (payable in semi-monthly
installments).  Mr. Zhang's base salary shall be increased each April
1 during the term of employment in an amount at least equal to the percentage
increase in the Consumer Price Index – All Urban Areas ("CPI") issued by the
U.S. Department of Labor, Bureau of Labor Statistics, for the preceding calendar
year.  In addition to Mr. Zhang's base salary we agreed to pay him
variable compensation for each quarter of each year during the term of
employment in amounts determined in accordance with the terms and provisions of
the Compensation Pool Plan (described below).  Additionally, Mr.
Zhang's will be entitled to participate in any stock option program, stock
compensation program and employee benefit plans.





Executive Variable
Compensation Pool Plan





54


On August
30, 2007, we established an Executive Variable Compensation Pool Plan
("Plan").  The Plan will be administered by the Chief Executive
Officer, Peter Cunningham.  Currently, the employees eligible to
participate in the Plan are Peter Cunningham, Chief Executive Officer, Joseph
Cunningham, Chief Financial Officer, and Hao Zhang, Chief Marketing Officer
(collectively "Participants") and will eligible to participate for as long as
they remain employees of the Company.  In addition, the CEO may from
time to time, in his sole discretion, designate additional Employees as eligible
to participate in the Plan for a particular fiscal quarter.  If a
Participate is promoted or demoted during a particular fiscal quarter, the CEO
may, in his sole discretion, elect to adjust the Participant's award percentage
for such fiscal quarter.  Beginning with the fiscal quarter ended on
September 30, 2007, a Participant's unvested variable compensation pool award
for each fiscal quarter, if any, shall be calculated by multiplying the variable
compensation pool for such fiscal quarter, if any by his award percentage for
such fiscal quarter.  The eligible employees shall receive at a
minimum 15% each of the Participant's unvested variable compensation pool award
for each fiscal quarter.  The maximum award amounts vary per quarter
and in some quarters are based on a percentage of net revenue.  At the
end of each quarter the CEO will determine the amount of the award and whether
it will be paid in cash or shares of common stock.  If a change in
control occurs during a fiscal quarter, the variable compensation pool
applicable to the Participants for such fiscal quarter and each subsequent
fiscal quarter during which one or more of the Participants remains a
Participant shall not be less than two percent (2%) of the net revenue for the
applicable fiscal quarter.





ITEM
      12.
            SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS





The
following table presents information, to the best of our knowledge, about the
beneficial ownership of our common stock on July 13, 2009 relating to the
beneficial ownership of our common stock by those persons known to beneficially
own more than 5% of our capital stock and by our directors and executive
officers. The percentage of beneficial ownership for the following table is
based on 27,020,876 shares of common stock outstanding.





Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and does not necessarily indicate beneficial ownership for
any other purpose. Under these rules, beneficial ownership includes those shares
of common stock over which the stockholder has sole or shared voting or
investment power. It also includes shares of common stock that the stockholder
has a right to acquire within 60 days after July 13, 2009 pursuant to options,
warrants, conversion privileges or other right. The percentage ownership of the
outstanding common stock, however, is based on the assumption, expressly
required by the rules of the Securities and Exchange Commission, that only the
person or entity whose ownership is being reported has converted options or
warrants into shares of our common stock.





Security
Ownership of Management


Name
      of Beneficial Owner (1)
            
            Number
              of
      Shares
            
            Percent
              Beneficially
              Owned
      (2)Peter
      Cunningham, CEO and Chairman
              2225
      Angelfire Street
              Las
      Vegas, NV 89128
            
            5,309,659
      (3)
            
            20%Joseph
      Cunningham, CFO and Director
              18
      Pheasant Lane
              North
      Oaks, MN 55127
            
            3,197,477
      (4)
            
            12%Hao
      Zhang, Chief Marketing Officer and Director
              S-052
      16th
      Building
              3rd
      District, An huaxili
              Chaoyang
      District
              Beijing,
      PR China
            
            1,993,346
      (5)
            
            7%All
      Directors & Officers as a Group
            
            10,500,482
            
            39%


(1)
            As
      used in this table, “beneficial ownership” means the sole or shared power
      to vote, or to direct the voting of, a security, or the sole or shared
      investment power with respect to Common Stock (i.e., the power to dispose
      of, or to direct the disposition of, a
  security).


(2)
            Rounded
      to the nearest whole percentage.


(3)
            The
      5,309,659 shares include 560,000 shares gifted by Mr. Peter Cunningham to
      his wife and children.


(4)
            The
      3,197,477 shares include 417,000 shares gifted by Mr. Joseph Cunningham to
      his wife and children.


(5)
            The
      1,993,346 shares include 400,000 shares gifted by Mr. Hao Zhang to his
      wife.





55


ITEM
      13.
            CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE





On August
30, 2007, we established an executive variable compensation pool plan. The
maximum award amounts vary per quarter and in some quarters are based on a
percentage of net revenue.  The plan is administered by our Chief Executive
Officer (CEO).  At the end of each quarter the CEO will determine the
amount of the award and whether it will be paid in cash or shares of common
stock.





During
the quarter ended September 30, 2007, the maximum amount that can be awarded was
$312,500.  The CEO declared an award of $273,437 to be paid in shares of
common stock to the executives.  The difference of $39,063 will be rolled
over to the variable compensation pool plan for the next quarter.  As
of March 31, 2008, we issued 364,582 shares of common stock valued at
$273,437.





During
the quarter ended December 31, 2007, the maximum amount that can be awarded was
$312,500.  The CEO declared an award of $84,375 to be paid in shares of
common stock and $75,000 in cash to the executives.  The difference of
$153,125 will be rolled over to the variable compensation pool plan for the next
quarter.  As of March 31, 2008, we issued 112,500 shares of common
stock valued at $84,375.





During
the quarter ended March 31, 2008, the maximum amount that can be awarded was
$312,500.  The CEO declared an award of $112,502 to be paid in shares of
common stock and $75,000 in cash to the executives.  The difference of
$124,998 will be rolled over to the variable compensation pool plan for the next
quarter.  As of March 31, 2008, the shares have not been issued and
the cash was not paid and are recorded as accrued executive
compensation.





On August
31, 2007, we executed a five year employment agreement with Peter Cunningham for
the position of Chief Executive Officer.  Mr. Cunningham will receive
an annual salary of $160,000 per year and is eligible to participate in the
Company’s executive variable compensation pool plan.





On August
31, 2007, we executed a five year employment agreement with Joseph Cunningham
for the position of Chief Financial Officer.  Mr. Cunningham will
receive an annual salary of $150,000 per year and is eligible to participate in
the Company’s executive variable compensation pool plan.





56


On August
31, 2007, we executed a five year employment agreement with Hao Zhang for the
position of Chief Marketing Officer.  Mr. Zhang will receive an annual
salary of $150,000 per year and is eligible to participate in the Company’s
executive variable compensation pool plan.





During
the quarter ended March 31, 2009, the maximum amount that can be awarded was
$312,500. The CEO has declared an award of $9,000 to be paid in shares of common
stock and $75,000 in cash to the executives. The difference of $228,500 will be
rolled over to the variable compensation pool plan for the next
quarter.  As of March 31, 2009, the shares have not been issued and
are recorded as accrued executive compensation.





As of
March 31, 2009 and 2008, the Company owed a total of $25,916 and $492,156,
respectively, to the officers of the Company for accrued salaries.





As of
March 31, 2009 and 2008, the Company had accounts payable due to related parties
totaling $78,398 and $450, respectively.





Director
Independence





The Board
of Directors have not made the determination if any of its Directors are
considered independent directors in accordance with the director independence
standards of the American Stock Exchange; however, each Director is also an
Officer, therefore, as of the date of this filing, each director should be
considered as non-independent.





ITEM
14.                                PRINCIPAL
ACCOUNTING FEES AND SERVICES





(1) AUDIT
FEES





The aggregate fees billed for
professional services rendered by LL Bradford & Company, LLC, for the audit
of our annual financial statements and review of the financial statements
included in our Form 10-Q or services that are normally provided by the
accountant in connection with statutory and regulatory filings or engagements
for fiscal years ended March 31, 2009 and March 31, 2008 were $25,000 and
$38,600, respectively.





(2)
AUDIT-RELATED FEES





The aggregate fees billed by LL
Bradford & Company, LLC for professional services rendered for audit related
for fiscal years ended March 31, 2009 and March 31, 2008 were $-0- and
$-0-.





57


(3) TAX
FEES





There were $750 and $1,500 fees billed
by LL Bradford & Company, LLC for professional services to be rendered for
tax fees for fiscal years ended March 31, 2009 and March 31, 2008.





(4) ALL
OTHER FEES





There were no other fees to be billed
by LL Bradford & Company, LLC for the fiscal years ended March 31, 2009 and
2008 other than the fees described above.





(5) AUDIT
COMMITTEE POLICIES AND PROCEDURES





The Audit
Committee has established a policy regarding pre-approval of all audit and
permissible non-audit services provided by the independent
auditor.  Each year, the Audit Committee approves the terms on which
the independent auditor is engaged for the ensuing fiscal year.  On at
least a quarterly basis, the Committee reviews and, if appropriate, pre-approves
services to be performed by the independent auditor, reviews a report
summarizing fiscal year-to-date services provided by the independent auditor,
and reviews an updated projection of the fiscal year’s estimated
fees.  The Audit Committee, as permitted by its pre-approval policy,
from time to time delegates the approval of certain permitted services or
classes of services to a member of the Committee.  The Committee then
reviews the delegate’s approval decisions on a quarterly basis.





(6) If
greater than 50 percent, disclose the percentage of hours expended on the
principal accountant's engagement to audit the registrant's financial statements
for the most recent fiscal year that were attributed to work performed by
persons other than the principal accountant's full-time, permanent
employees.





Not
applicable.





58


ITEM
15.                                EXHIBITS,
FINANCIAL STATEMENT SCHEDULES





(a)
            Exhibits





Incorporated
      by referenceExhibit
              number
            
            Exhibit
      description
            
            Filed
              herewith
            
            Form
            
            Period
              ending
            
            Exhibit
      No.
            
            Filing
              date3.1
            
            Amended
      and Restated Certificate of Incorporation
            
            
            
            SB-23.2
            
            Certificate
      of Amendment to Certificate of Incorporation,  dated April 4,
      2006
            
            
            
            8-K
            
            
            
            3.2
            
            4/13/063.3
            
            Certificate
      of Amendment to Certificate of  Incorporation  filed
      April 25, 2006
            
            
            
            10-KSB
            
            3/31/06
            
            3.3
            
            7/14/063.4
            
            Certificate
      of Amendment to
      Certificate  of  Incorporation  filed July
      13, 2006
            
            
            
            10-KSB
            
            3/31/06
            
            3.4
            
            7/14/063.5
            
            Bylaws
      of the Registrant
            
            
            
            SB-24.1
            
            Form
      of Certificate of Common Stock of Registrant
            
            
            
            SB-210.1
            
            Letter
      Agreement,  dated as of April 7, 2006, between Gamma and Joseph
      Cunningham, on behalf of New Management
            
            
            
            8-K
            
            
            
            10.1
            
            4/13/0610.2
            
            Technology  Transfer  Agreement  between  Gamma
      and Peter  Cunningham, Joseph Cunningham and Hao Zhang, dated
      April 7, 2007
            
            
            
            8-K
            
            
            
            10.2
            
            4/13/0610.3
            
            Employment
      Agreement with Peter Cunningham, CEO
            
            
            
            8-K
            
            
            
            10.3
            
            4/13/0610.4
            
            Employment
      Agreement with Joseph Cunningham, CFO
            
            
            
            8-K
            
            
            
            10.4
            
            4/13/0610.5
            
            Employment
      Agreement with Hao Zhang, CMO
            
            
            
            8-K
            
            
            
            10.5
            
            4/13/0610.6
            
            Executive
      Employment Agreement – Peter Cunningham dated August 31,
    2007
            
            
            
            10-QSB
            
            9/30/07
            
            10.9
            
            11/14/0710.7
            
            Executive
      Employment Agreement – Joseph Cunningham dated August 31,
    2007
            
            
            
            10-QSB
            
            9/30/07
            
            10.10
            
            11/14/0710.8
            
            Executive
      Employment Agreement – Hao Zhang dated August 31, 2007
            
            
            
            10-QSB
            
            9/30/07
            
            10.11
            
            11/14/0710.9
            
            Compensation
      Pool Plan
            
            
            
            10-QSB
            
            9/30/07
            
            10.12
            
            11/14/0731.1
            
            Certification
      of CEO pursuant to Section 302 of the Sarbanes-Oxley Act
            
            X31.2
            
            Certification
      of CFO pursuant to Section 302 of the Sarbanes-Oxley Act
            
            X32.1
            
            Certification
      of CEO pursuant to Section 906 of the Sarbanes-Oxley Act
            
            X32.2
            
            Certification
      of CFO pursuant to Section 906 of the Sarbanes-Oxley Act
            
            X99.1
            
            Audit
      Committee Charter
            
            
            
            10-KSB
            
            3/31/07
            
            99.1
            
            7/06/0799.2
            
            Compensation
      Committee Charter
            
            
            
            10-KSB
            
            3/31/07
            
            99.2
            
            7/06/0799.3
            
            Code
      of Ethics for Directors
            
            
            
            10-KSB
            
            3/31/07
            
            99.3
            
            7/06/0799.4
            
            Code
      of Ethics for the Chairman, Chief Executive Officer, and Senior Financial
      Officers
            
            
            
            10-KSB
            
            3/31/07
            
            99.4
            
            7/06/07





59


SIGNATURES





Pursuant to the requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.





GAMMA
PHARMACEUTICALS INC.








By: /S/ Peter
Cunningham


Peter Cunningham,
President





Date:
July 14, 2009





Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.





Signature
            Title
            Date/S/
      Peter Cunningham
            CEO
      and Chairman
            July
      14, 2009Peter
      Cunningham/S/
      Joseph Cunningham
            Chief
      Financial Officer,
            July
      14, 2009Joseph
      Cunningham
            Secretary
      and Director/S/
      Hao Zhang
            Chief
      Marketing Officer
            July
      14, 2009Hao
      Zhang
            And
      Director


60


TABLE OF
CONTENTS





PAGESREPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
            F-1CONSOLIDATED
      BALANCE SHEETS
            F-2CONSOLIDATED
      STATEMENTS OF OPERATIONS
            F-3CONSOLIDATED
      STATEMENT OF STOCKHOLDERS' EQUITY
            F-4CONSOLIDATED
      STATEMENTS OF CASH FLOWS
            F-5NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
            F-6













REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM













To the
Board of Directors and Stockholders


Gamma
Pharmaceuticals, Inc.


Las
Vegas, Nevada





We have
audited the accompanying consolidated balance sheets of Gamma Pharmaceuticals,
Inc. as of March 31, 2009 and 2008, and the related consolidated statements of
operations, stockholders’ equity, and cash flows for the years then
ended.  These financial statements are the responsibility of the
Company’s management.  Our responsibility is to express an opinion on
these financial statements based on our audit.





We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States).Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  The
Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting.  Our audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting.  Accordingly, we express no
such opinion.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe
that our audit provides a reasonable basis for our opinion.





In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Gamma Pharmaceuticals, Inc. as of
March 31, 2009 and 2008, and the results of its activities and cash flows for
the years then ended in conformity with accounting principles generally accepted
in the United States.





The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 3 to the financial
statements, the Company’s current liabilities exceed current assets and has
incurred significant losses during the development stage, all of which raise
substantial doubt about the Company’s ability to continue as a going
concern.  Management’s plans in regards to these matters are also
described in Note 3. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.





/S/ L.L. Bradford &
Company, LLC


L.L.
Bradford & Company, LLC


July 14,
2009


Las
Vegas, Nevada


F-1


Gamma
Pharmaceuticals, Inc.


Consolidated
Balance Sheets





March
      31,2009
            
            
            2008AssetsCurrent
      assets:Cash
            
            $
            116,669
            
            
            $
            71,209Accounts
      receivable
            
            
            9,947
            
            
            
            47,451Inventory
            
            
            142,233
            
            
            
            128,131Prepaid
      expenses
            
            
            -
            
            
            
            37,773Total
      current assets
            
            
            268,849
            
            
            
            284,564Fixed
      assets, net
            
            
            11,524
            
            
            
            18,180Website,
      net
            
            
            23,766
            
            
            
            -Intangible
      assets, net
            
            
            6,007,809
            
            
            
            6,604,634Total
      assets
            
            $
            6,311,948
            
            
            $
            6,907,378Liabilities
      and Stockholders' EquityCurrent
      liabilities:Accounts
      payable and accrued expense
            
            $
            269,972
            
            
            $
            224,320Accrued
      payable and accrued expense – related party
            
            
            78,398
            
            
            
            450Accrued
      compensation
            
            
            25,916
            
            
            
            492,156Accrued
      payroll taxes
            
            
            77,633
            
            
            
            30,575Accrued
      interest payable
            
            
            2,919
            
            
            
            -Notes
      payable
            
            
            3,000
            
            
            
            -Current
      portion of long term notes payable, net
            
            
            479,997
            
            
            
            197,091Total
      current liabilities
            
            
            937,835
            
            
            
            944,592Long-term
      liabilitiesNotes
      payable, net
            
            
            307,159
            
            
            
            580,350Total
      long-term liabilities
            
            
            307,159
            
            
            
            580,350Total
      liabilities
            
            
            1,244,994
            
            
            
            1,524,942Commitments
      and contingenciesStockholders'
      equity:Preferred
      stock, $0.001 par value, 2,000,000 sharesauthorized,
      7,462 shares issued or outstanding
            
            
            7
            
            
            
            -Common
      stock, $0.001 par value, 100,000,000 sharesauthorized,
      22,538,354 and 16,759,399 shares issued andoutstanding
      at March 31, 2009 and 2008, respectively
            
            
            22,538
            
            
            
            16,759Additional
      paid in capital
            
            
            15,196,776
            
            
            
            11,900,452Stock
      payable
            
            
            318,000
            
            
            
            95,001Prepaid
      stock compensation
            
            
            (159,167
            )
            
            
            (225,000
            )Accumulated
      deficit
            
            
            (10,311,200
            )
            
            
            (6,404,776
            )Total
      stockholders' equity
            
            
            5,066,954
            
            
            
            5,382,436Total
      liabilities and stockholders' equity
            
            $
            6,311,948
            
            
            $
            6,907,378





The
accompanying notes are an integral part of these consolidated financial
statements.


F-2


Gamma
Pharmaceuticals, Inc.


Consolidated
Statements of Operations





For
      the year endedMarch
      31,2009
            
            
            2008Revenues
            
            $
            56,141
            
            
            $
            197,840Cost
      of goods sold:Materials
            
            
            22,733
            
            
            
            119,035Labor
            
            
            8,932
            
            
            
            54,274Freight
            
            
            6,066
            
            
            
            13,984Consignment
      fees
            
            
            2,535
            
            
            
            -Total
      cost of goods sold
            
            
            40,266
            
            
            
            187,293Gross
      profit
            
            
            15,875
            
            
            
            10,547Expenses:Consulting
      - stock-based
            
            
            484,636
            
            
            
            1,280,199Consulting
            
            
            404,849
            
            
            
            215,886Executive
      compensation - stock-based
            
            
            446,585
            
            
            
            470,313Executive
      compensation - shares to be issued
            
            
            25,916
            
            
            
            -Executive
      compensation
            
            
            662,664
            
            
            
            568,334General
      and administrative expenses - stock-based
            
            
            134,475
            
            
            
            76,886General
      and administrative expenses
            
            
            1,068,315
            
            
            
            851,599Depreciation
      and amortization
            
            
            606,565
            
            
            
            305,200Total
      expenses
            
            
            3,834,005
            
            
            
            3,768,417(Loss)
      from operations
            
            
            (3,818,130
            )
            
            
            (3,757,870
            )Other
      income (expense):Interest
      income
            
            
            692
            
            
            
            2,029Miscellaneous
      income
            
            
            400
            
            
            
            -Interest
      expense
            
            
            (89,237
            )
            
            
            (39,730
            )(Loss)
      on the sale of fixed assets
            
            
            (270
            )Foreign
      currency transaction gain (loss)
            
            
            121
            
            
            
            -Total
      other income (expense)
            
            
            (88,294
            )
            
            
            (37,701
            )(Loss)
      before provision for income taxes
            
            
            (3,906,424
            )
            
            
            (3,795,571
            )Provision
      for income taxes
            
            
            -
            
            
            
            -Net
      (loss)
            
            $
            (3,906,424
            )
            
            $
            (3,795,571
            )Weighted
      average number of commonshares
      outstanding - basic and fully diluted
            
            
            18,703,926
            
            
            
            13,796,070Net
      (loss) per common share - basic and fully diluted
            
            $
            (0.21
            )
            
            $
            (0.28
            )





The
accompanying notes are an integral part of these consolidated financial
statements.


F-3


Gamma
Pharmaceuticals, Inc.


Consolidated
Statement of Stockholders’ Equity





Additional
            
            
            
            
            
            Prepaid
            
            
            
            
            
            TotalPreferred
      Stock
            
            
            Common
      Stock
            
            
            Paid-in
            
            
            Stock
            
            
            Stock
            
            
            Accumulated
            
            
            Stockholders'Shares
            
            
            
            
            
            Shares
            
            
            
            
            
            Capital
            
            
            Payable
            
            
            Compensation
            
            
            Deficit
            
            
            EquityBalance,
      March 31, 2007
            
            
            -
            
            
            $
            -
            
            
            
            12,382,334
            
            
            $
            12,382
            
            
            $
            8,113,772
            
            
            $
            260,500
            
            
            $
            -
            
            
            $
            (2,609,205
            )
            
            $
            5,777,449Shares
      issued for services
            
            
            -
            
            
            
            -
            
            
            
            1,408,532
            
            
            
            1,409
            
            
            
            1,580,676
            
            
            
            -
            
            
            
            (225,000
            )
            
            
            -
            
            
            
            1,357,085Shares
      issued for cash, net offering costs
            
            
            -
            
            
            
            -
            
            
            
            2,131,451
            
            
            
            2,131
            
            
            
            1,570,344
            
            
            
            (165,499
            )
            
            
            -
            
            
            
            -
            
            
            
            1,406,976Shares
      issued for intangible assets
            
            
            -
            
            
            
            -
            
            
            
            110,000
            
            
            
            110
            
            
            
            91,076
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            91,186Shares
      issued for executive compensation
            
            
            -
            
            
            
            -
            
            
            
            477,082
            
            
            
            477
            
            
            
            357,334
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            357,811Shares
      issued for charitable donation
            
            
            -
            
            
            
            -
            
            
            
            250,000
            
            
            
            250
            
            
            
            187,250
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            187,500Net
      (loss)For
      the year ended March 31, 2008
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (3,795,571
            )
            
            
            (3,795,571
            )Balance,
      March 31, 2008
            
            
            -
            
            
            
            -
            
            
            
            16,759,399
            
            
            
            16,759
            
            
            
            11,900,452
            
            
            
            95,001
            
            
            
            (225,000
            )
            
            
            (6,404,776
            )
            
            
            5,382,436Shares
      issued for services
            
            
            
            
            
            
            
            
            
            
            3,705,183
            
            
            
            3,706
            
            
            
            864,155
            
            
            
            34,999
            
            
            
            (283,750
            )
            
            
            
            
            
            
            619,110Shares
      issued for cash, net offering costs
            
            
            
            
            
            
            
            
            
            
            1,628,333
            
            
            
            1,628
            
            
            
            1,068,372
            
            
            
            188,000
            
            
            
            
            
            
            
            
            
            
            
            1,258,000Shares
      issued for payment on notes payable
            
            
            
            
            
            
            
            
            
            
            108,029
            
            
            
            108
            
            
            
            22,003
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            22,111Shares
      issued for executive compensation
            
            
            
            
            
            
            
            
            
            
            337,410
            
            
            
            337
            
            
            
            446,248
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            446,585Amortization
      of prepaid stock compensation
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            349,583
            
            
            
            
            
            
            
            349,583Shares
      issued for satisfaction of accrued executive compensation
            
            
            7,462
            
            
            
            7
            
            
            
            
            
            
            
            
            
            
            
            895,546
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            895,553Net
      (loss)For
      the year ended March 31, 2009
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (3,906,424
            )
            
            
            (3,906,424
            )Balance,
      March 31, 2009
            
            
            7,462
            
            
            $
            7
            
            
            
            22,538,354
            
            
            $
            22,538
            
            
            $
            15,196,776
            
            
            $
            318,000
            
            
            $
            (159,167
            )
            
            $
            (10,311,200
            )
            
            $
            5,066,954





The
accompanying notes are an integral part of these consolidated financial
statements.





F-4


Gamma
Pharmaceuticals, Inc.


Consolidated
Statements of Cash Flows





For
      the year endedMarch
      31,2009
            
            
            
            
            
            2008Cash
      flows from operating activitiesNet
      (loss)
            
            $
            (3,906,424
            )
            
            
            
            
            $
            (3,795,571
            )Adjustments
      to reconcile net (loss) tonet
      cash (used) by operating activities:Depreciation
      and amortization
            
            
            606,565
            
            
            
            
            
            
            305,200Shares
      issued for services
            
            
            619,110
            
            
            
            
            
            
            1,357,085Shares
      issued for executive compensation
            
            
            446,585
            
            
            
            
            
            
            357,811Shares
      issued for charitable donation
            
            
            -
            
            
            
            
            
            
            187,500Amortization
      of debt discount
            
            
            85,998
            
            
            
            
            
            
            39,730Amortization
      of prepaid stock compensation
            
            
            349,583
            
            
            
            
            
            
            -(Loss)
      on the sale of assets
            
            
            270
            
            
            
            
            
            
            -Changes
      in operating assets and liabilities:(Increase)
      decrease in accounts receivable
            
            
            37,504
            
            
            
            
            
            
            (47,451
            )(Increase)
      in inventory
            
            
            (14,102
            )
            
            
            
            
            
            (120,806
            )Decrease
      in prepaid expenses
            
            
            37,773
            
            
            
            
            
            
            (13,273
            )Increase
      in accounts payable and related party payable
            
            
            127,599
            
            
            
            
            
            
            57,938Increase
      in accrued compensation
            
            
            429,313
            
            
            
            
            
            
            259,004Increase
      in accrued payroll taxes
            
            
            47,058
            
            
            
            
            
            
            30,575Increase
      in accrued interest payable
            
            
            2,919
            
            
            
            
            
            
            -Net
      cash (used) by operating activities
            
            
            (1,130,248
            )
            
            
            #
            
            
            
            (1,382,258
            )Cash
      flows from investing activitiesPurchase
      of fixed assets
            
            
            (7,354
            )
            
            
            
            
            
            
            (22,673
            )Purchase
      of website
            
            
            (23,766
            )
            
            
            
            
            
            
            -Purchase
      of intangible assets
            
            
            -
            
            
            
            
            
            
            
            (32,000
            )Net
      cash (used) by investing activities
            
            
            (31,120
            )
            
            
            #
            
            
            
            (54,673
            )Cash
      flows from financing activitiesProceeds
      from sale of common stock
            
            
            1,258,000
            
            
            
            
            
            
            
            1,406,976Proceeds
      from notes payable
            
            
            3,000
            
            
            
            
            
            
            
            -Principal
      payments on notes payable
            
            
            (54,172
            )
            
            
            
            
            
            
            (59,500
            )Net
      cash provided by financing activities
            
            
            1,206,828
            
            
            
            #
            
            
            
            1,347,476Net
      (decrease) in cash
            
            
            45,460
            
            
            
            
            
            
            
            (89,455
            )Cash
      - beginning
            
            
            71,209
            
            
            
            #
            
            
            
            160,664Cash
      - ending
            
            $
            116,669
            
            
            
            #
            
            
            $
            71,209Supplemental
      disclosures:Interest
      paid
            
            $
            -
            
            
            
            #
            
            
            $
            -Income
      taxes paid
            
            $
            -
            
            
            
            #
            
            
            $
            -Non-cash
      transactions:Minimum
      guaranteed payments for intangible assets:Issuance
      of common stock
            
            $
            22,111
            
            
            
            
            
            
            $
            91,186Issuance
      of shares for stock payable
            
            $
            -
            
            
            
            
            
            
            $
            797,211Issuance
      of shares for prepaid stock compensation
            
            $
            283,750
            
            
            
            
            
            
            $
            -Issuance
      of shares for satisfaction of accrued executive
    compensation
            
            $
            895,553
            
            
            
            
            
            
            $
            -Issuance
      of shares for executive compensation
            
            $
            446,585
            
            
            
            
            
            
            $
            -





The
accompanying notes are an integral part of these consolidated financial
statements.





F-5
 Gamma
Pharmaceuticals, Inc.
 Notes
to Consolidated Financial Statements


Note
1: Organization and Description of Business





Organization


Emerging
Gamma Corporation (the "Company") was incorporated under the laws of the State
of Delaware on February 10, 1993.  On April 25, 2006, the Company
amended its articles of incorporation and changed its name to Sunburst
Pharmaceuticals, Inc.  On July 11, 2006, the Company amended its
articles of incorporation and changed its name to Gamma Pharmaceuticals,
Inc.





On
October 17, 2006, the Company acquired 100% of Gamma Pharmaceuticals (HK)
Limited (“Gamma HK”).  Gamma HK was a recently formed corporation with
no operations.





On
December 8, 2006 our Hong Kong subsidiary company, Gamma Pharmaceuticals (HK)
Ltd., established Gamma Pharmaceuticals (HK) Limited Beijing Representative
Office, in Beijing China.  The Representative Office will represent
Gamma Pharmaceuticals (HK) Ltd., interests in China.  All invoicing
and commercial arrangements for China will be contracted through our Hong Kong
subsidiary company.





Description of
Business


Our
business is focused on the formulation, marketing and sale of vitamins and
nutriceuticals, OTC pharmaceutical products and personal care products in
Greater China and the United States.





Note
2: Summary of Significant Accounting Policies





Principles of
Consolidation


The
consolidated financial statements include the accounts of Gamma Pharmaceuticals,
Inc. (US corporation), and its wholly-owned subsidiary Gamma HK.  All
significant inter-company balances and transactions have been
eliminated.  Gamma Pharmaceuticals, Inc. (US Corporation) and Gamma HK
will be collectively referred herein to as the “Company”.





Reclassifications


Certain
reclassifications have been made to the prior years’ financial statements to
conform to the current year presentation. These reclassifications had no effect
on previously reported results of operations or retained earnings.





Use of
Estimates


The
preparation of financial statements in conformity with accounting principles
generally accepted 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 financial statements and the reported amounts of revenue and expenses during
the reporting period.  Actual results could differ from those
estimates.





Fair Value of Financial
Instruments


The
Company has financial instruments whereby the fair value of the financial
instruments could be different than that recorded on a historical basis in the
accompanying balance sheets.  The Company's financial instruments
consist of cash and payables.  The carrying amounts of the Company's
financial instruments approximate their fair values as of March 31, 2009 and
2008 due to their short-term nature.





Cash and
      Equivalents


Cash and
cash equivalents consist primarily of cash on deposit, certificates of deposit,
money market accounts, and investment grade commercial paper that are readily
convertible into cash and purchased with original maturities of three months or
less.





Inventory


Inventories
are stated at the lower of cost (first-in, first-out basis) or market (net
realizable value).





F-6


Fixed
Assets


Property
and equipment are recorded at cost.  Expenditures for major additions
and improvements are capitalized and minor replacements, maintenance, and
repairs are charged to expense as incurred.  When property and
equipment are retired or otherwise disposed of, the cost and accumulated
depreciation are removed from the accounts and any resulting gain or loss is
included in the results of operations for the respective
period.  Depreciation is provided over the estimated useful lives of
the related assets using the straight-line method for financial statement
purposes.  The Company uses other depreciation methods (generally
accelerated) for tax purposes where appropriate.  The estimated useful
lives for significant property and equipment categories are as
follows:





Computer
equipment                                                      3
years


Equipment                                           3
years


Furniture
and
fixtures                                                      7
years





The
Company reviews the carrying value of property, plant and equipment for
impairment whenever events and circumstances indicate that the carrying value of
an asset may not be recoverable from the estimated future cash flows expected to
result from its use and eventual disposition.  In cases where
undiscounted expected future cash flows are less than the carrying value, an
impairment loss is recognized equal to an amount by which the carrying value
exceeds the fair value of assets.  The factors considered by
management in performing this assessment include current operating results,
trends and prospects, the manner in which the property is used, and the effects
of obsolescence, demand, competition and other economic
factors.  Based on this assessment there was no impairment as March
31, 2009 and 2008.





Website


The
Company capitalizes the costs associated with the development of the Company’s
website pursuant to Statement of Position 98-1 and Emerging Issues Task Force
00-20.  Other costs related to the maintenance of the website are
expensed as incurred.  Amortization is provided over the estimated
useful lives of 3 years using the straight-line method for financial statement
purposes.   The Company will commence amortization once the
economic benefits of the assets begin to be consumed and they plan to record
amortization once the website is completed and is fully
operational.





Intangible
Assets


Financial
Accounting Standards Board (“FASB”) Statement No. 142, Goodwill and Other
Intangible Assets ("FAS 142") requires that goodwill and intangible assets with
indefinite useful lives no longer be amortized, but instead tested for
impairment at least annually in accordance with the provisions of FAS 142. This
standard also requires that intangible assets with definite useful lives be
amortized over their respective estimated useful lives to their estimated
residual values, and reviewed for impairment. As of March 31, 2009 and 2008, the
Company believes there is no impairment of its intangible assets.





The
Company's intangible assets consist of the costs of filing and acquiring various
trademarks. The trademarks are recorded at cost. The Company determined that the
trademarks have an estimated useful life of 10 – 15 years and will be reviewed
annually for impairment.  Amortization will recorded over the
estimated useful life of the assets using the straight-line method for financial
statement purposes. The Company will commence amortization once the economic
benefits of the assets begin to be consumed and they plan to record amortization
once production begins and the related revenues are recorded.





The
Company acquired intangible assets from an officer of the Company during April
2006 and May 2007.  During the year ended March 31, 2008, the Company
has commenced production on products and they have started amortization
effective October 2007.





Revenue
Recognition


The
Company recognized revenue from product sales once all of the following criteria
for revenue recognition have been met: pervasive evidence that an agreement
exists; the services have been rendered; the fee is fixed and determinable and
not subject to refund or adjustment; and collection of the amount due is
reasonable assured.  The Company will primarily derive its revenues
from the sales of its vitamins, nutriceutical products and personal care
products.





F-7


The
Company has products that are in China that are sold on a consignment
basis.  Once the products are shipped to a customer they will have 30
days to return product and the Company grants the customer an additional 30 days
to pay for the product.  Because of the return policy the Company will
defer the recognition of revenue until end of the 30 day return
policy.





Concentrations


In 2009,
three customers accounted for 100% of sales and one customer for 100% of
accounts receivable.  During the year ended March 31, 2009, 56% of
sales were in the US and 44% of sales in China.  In 2008, one customer
accounted for 100% of sales and 100% of accounts receivable.  During
the year ended March 31, 2008, 100% of sales were in the US.





Research and
Development


Research
and development costs are expensed as incurred. The costs of materials and
equipment that will be acquired or constructed for research and development
activities, and have alternative future uses, both in research and development,
marketing or sales, will be classified as property and equipment and depreciated
over their estimated useful lives. To date research and development costs
include the development of various vitamins, nutriceutical products and personal
care products.





Stock Based
Compensation


The
Company adopted Statement of Financial Accounting Standards (SFAS) No. 123R
(revised 2004), “Share-Based Payment,” requiring the Company to recognize
expense related to the fair value of its employee stock option awards.
 SFAS-123R eliminates accounting for share-based compensation transactions
using the intrinsic value method prescribed in Accounting Principles Board
Opinion No. 25 (APB-25), “Accounting for Stock Issued to Employees”, and
requires instead that such transactions be accounted for using a
fair-value-based method. The Company recognizes the cost of all share-based
awards on a graded vesting basis over the vesting period of the
award.





Income
Taxes


The
Company accounts for income taxes in accordance with FASB Statement No. 109
"Accounting for Income Taxes." SFAS No. 109 requires the Company to provide a
net deferred tax asset/liability equal to the expected future tax
benefit/expense of temporary reporting differences between book and tax
accounting methods and any available operating loss or tax credit carry
forwards.





Loss per Common
Share


The
Company presents basic loss per share (“EPS”) and diluted EPS on the face of
consolidated statements of operations.  Basic EPS is computed by
dividing reported earnings by the weighted average shares outstanding. Diluted
EPS is computed by adding to the weighted average shares the dilutive effect if
stock options and warrants were exercised into common stock. For the years ended
March 31, 2009 and 2008, the denominator in the diluted EPS computation is the
same as the denominator for basic EPS due to the anti-dilutive effect of the
warrants and stock options on the Company’s net loss.




Foreign Currency
Adjustments


The U.S.
dollar is the functional currency of the Company’s consolidated financial
statements.  All foreign currency asset and liability amounts are
remeasured into U.S. dollars at end-of-period exchange rates, except for
inventories, prepaid expenses, and fixed assets, which are remeasured at
historical rates.  Exchange gains and loss arising from remeasurement
of foreign currency denominated monetary assets and liabilities are included in
income in the period in which they occur.





Fiscal Year
End


The Company’s fiscal year
end is March 31.





F-8


Recent Accounting
Pronouncements





In March
2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments
and Hedging Activities", an amendment of SFAS No. 133. SFAS 161 applies to all
derivative instruments and non-derivative instruments that are designated and
qualify as hedging instruments pursuant to paragraphs 37 and 42 of SFAS 133 and
related hedged items accounted for under SFAS 133. SFAS 161 requires entities to
provide greater transparency through additional disclosures about how and why an
entity uses derivative instruments, how derivative instruments and related
hedged items are accounted for under SFAS 133 and its related interpretations,
and how derivative instruments and related hedged items affect an entity's
financial position, results of operations, and cash flows. SFAS 161 is effective
as of the beginning of an entity's first fiscal year that begins after November
15, 2008. The Company does not expect the adoption of SFAS 161 will have a
material impact on its financial condition or results of operation.





In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles.”  SFAS 162 will provide framework for selecting
accounting principles to be used in preparing financial statements that are
presented in conformity with U.S. generally accepted accounting principles
(GAAP) for nongovernmental entities.  SFAS 162 will be effective 60
days following the Securities and Exchange Commission’s approval of the Public
Company Accounting Oversight Board (PCAOB) amendments to AU Section
411.  The Company does not expect the adoption of SFAS 162 will have a
material impact on its financial condition or results of operation.





In April
2008, the FASB issued Staff Position FAS 142-3, “Determination of the Useful Life of
Intangible Assets” (“FSP FAS 142-3”) which amends the factors an entity
should consider in developing renewal or extension assumptions used to determine
the useful life of a recognized intangible asset under FAS No. 142, “Goodwill and Other Intangible
Assets” (“FAS No. 142”).  FSP FAS 142-3 applies to intangible assets
that are acquired individually or with a group of assets and intangible assets
acquired in both business combinations and asset acquisitions.  It removes
a provision under FAS No. 142, requiring an entity to consider whether a
contractual renewal or extension clause can be accomplished without substantial
cost or material modifications of the existing terms and conditions associated
with the asset.  Instead, FSP FAS 142-3 requires that an entity consider
its own experience in renewing similar arrangements.  An entity would
consider market participant assumptions regarding renewal if no such relevant
experience exists.  FSP FAS 142-3 is effective for year ends beginning
after December 15, 2008 with early adoption prohibited.  The Company does
not expect the adoption of FSP FAS 142-3 will have a material impact on its
financial condition or results of operation.





Recent Accounting
Pronouncements (Continued)





In May
2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee
Insurance Contracts – an interpretation of FASB Statement No.
60.”  SFAS 163 requires that an insurance enterprise recognize a claim
liability prior to an event of default (insured event) when there is evidence
that credit deterioration has occurred in an insured financial
obligation.  This Statement also clarifies how Statement 60 applies to
financial guarantee insurance contracts, including the recognition and
measurement to be used to account for premium revenue and claim liabilities.
Those clarifications will increase comparability in financial reporting of
financial guarantee insurance contracts by insurance enterprises. This Statement
requires expanded disclosures about financial guarantee insurance contracts. The
accounting and disclosure requirements of the Statement will improve the quality
of information provided to users of financial statements.  SFAS 163
will be effective for financial statements issued for fiscal years beginning
after December 15, 2008.  The Company does not expect the adoption of
SFAS 163 will have a material impact on its financial condition or results of
operation.





In
June 2008, the FASB issued FSP No. EITF 03-6-1, “Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities”
(“FSP EITF 03-6-1”).  FSP EITF 03-6-1 concludes that unvested share-based
payment awards that contain rights to receive non-forfeitable dividends or
dividend equivalents are participating securities, and thus, should be included
in the two-class method of computing earnings per share (“EPS”).  FSP EITF
03-6-1 is effective for fiscal years beginning after December 15, 2008, and
interim periods within those years.  Early application of EITF 03-6-1 is
prohibited.  It also requires that all prior-period EPS data be adjusted
retrospectively.  The Company does not expect the adoption of EITF 03-6-1
will have a material impact on its financial condition or results of
operation.





F-9


In
September 2008, the FASB issued exposure drafts that eliminate qualifying
special purpose entities from the guidance of SFAS No. 140, “Accounting for
Transfers and Servicing of Financial  Assets and  Extinguishments of
Liabilities,” and  FASB  Interpretation 46 (revised December 2003),
“Consolidation of  Variable  Interest Entities − an
interpretation of ARB  No. 51,” as well as other
modifications.  While the proposed revised pronouncements have not
been finalized and the proposals are subject to further public comment, the
Company anticipates the changes will not have a significant impact on the
Company’s financial statements.  The changes would be effective March
1, 2010, on a prospective basis.





In
October 2008, the FASB issued FSP No. FAS 157-3, “Determining the Fair Value of
a Financial Asset When the Market for That Asset is Not Active,” (“FSP FAS
157-3”), which clarifies application of SFAS 157 in a market that is not
active.  FSP FAS 157-3 was effective upon issuance, including prior
periods for which financial statements have not been issued.  The
adoption of FSP FAS 157-3 had no impact on the Company’s results of operations,
financial condition or cash flows.





In
December 2008, the FASB issued FSP No. FAS 140-4 and FIN 46(R)-8, “Disclosures
by Public Entities (Enterprises) about Transfers of Financial Assets and
Interests in Variable Interest Entities.”  This disclosure-only FSP
improves the transparency of transfers of financial assets and an enterprise’s
involvement with variable interest entities, including qualifying
special-purpose entities.  This FSP is effective for the first
reporting period (interim or annual) ending after December 15, 2008, with
earlier application encouraged.  The Company adopted this FSP
effective January 1, 2009.  The adoption of the FSP had no impact
on the Company’s results of operations, financial condition or cash
flows.





Recent Accounting
Pronouncements (Continued)





In
December 2008, the FASB issued FSP No. FAS 132(R)-1, “Employers’ Disclosures
about Postretirement Benefit Plan Assets” (“FSP FAS 132(R)-1”).  FSP
FAS 132(R)-1 requires additional fair value disclosures about employers’ pension
and postretirement benefit plan assets consistent with guidance contained in
SFAS 157.  Specifically, employers will be required to disclose
information about how investment allocation decisions are made, the fair value
of each major category of plan assets and information about the inputs and
valuation techniques used to develop the fair value measurements of plan assets.
This FSP is effective for fiscal years ending after December 15,
2009.  The Company does not expect the adoption of FSP FAS 132(R)-1
will have a material impact on its financial condition or results of
operation.





In April
2009, the FASB issued FSP No. FAS 157-4, “Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased
and Identifying Transactions That Are Not Orderly” (“FSP FAS
157-4”).  FSP FAS 157-4 provides guidance on estimating fair value
when market activity has decreased and on identifying transactions that are not
orderly.  Additionally, entities are required to disclose in interim
and annual periods the inputs and valuation techniques used to measure fair
value.  This FSP is effective for interim and annual periods ending
after June 15, 2009.  The Company does not expect the adoption of FSP
FAS 157-4 will have a material impact on its financial condition or results of
operation.





Note
3: Going Concern





The
accompanying financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. The Company has incurred a net loss of
$3,906,424 for the year ended March 31, 2009, with an accumulated loss of
approximately $10,311,200. The Company’s current liabilities exceed its current
assets by $668,986 as of March 31, 2009.





F-10


These
conditions give rise to substantial doubt about the Company’s ability to
continue as a going concern. These financial statements do not include
adjustments relating to the recoverability and classification of reported asset
amounts or the amount and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern. The Company’s
continuation as a going concern is dependent upon its ability to obtain
additional financing or sale of its common stock as may be required and
ultimately to attain profitability.





Management’s
plan, in this regard, is to raise financing of approximately $7,000,000 through
a combination of equity and debt financing. Management believes this amount will
be sufficient to finance the continuing development for the next twelve months.
However, there is no assurance that the Company will be successful in raising
such financing.





Note
4: Inventory





Inventories
consisted of the following as of March 31, 2009 and 2008:





March
      31,
            
            March
      31,2009
            
            2008Finished
      goods
            
            $      111,961
            
            $        7,325Work-in-process
            
            17,266
            
            91,800Raw
      materials
            
            13,006
            
            29,006Total
            
            $      142,233
            
            $    128,131





Note
5: Prepaid Expenses





As of
March 31, 2009 and 2008, the Company had $0 and $37,773 in prepaid expenses,
respectively.  The prepaid expenses relate to insurance and a license
agreement for a trade name.





Note
6: Fixed Assets





Fixed
assets consisted of the following as of March 31, 2009 and 2008:





March
      31,
            
            March
      31,2009
            
            2008Computer
      equipment
            
            $    13,567
            
            $     11,514Equipment
            
            12,825
            
            12,825Furniture
      and fixtures
            
            1,087
            
            1,087Accumulated
      depreciation
            
            (15,955)
            
            (7,246)$    11,524
            
            $     18,180





During
the years ended March 31, 2009 and 2008, the Company recorded depreciation
expense of $9,740 and $6,787, respectively.





Note
7: Intangible Assets





On April
7, 2006,  the  Company  entered  into
a  Technology  Transfer Agreement (the
"Technology  Transfer  Agreement") pursuant to which, the
Company has obtained all copyrights, trademarks, and know-how (collectively
"Transferred Technology") to a portfolio of vitamin
and  nutriceutical  products and personal
care  products.  The transferred technology is based on
propriety formulation technology, and the Company believes that such technology
represents improved versions of branded products currently being marketed by
other companies. The Company issued 9,045,900 shares of common stock under the
Technology  Transfer  Agreement is recorded at
the  estimated  fair value of the
Transferred  Technology  totaling $5,951,250 and is included
as an intangible asset on the balance sheet at March 31, 2009.





F-11


On May 4,
2007, the Company purchased intellectual property from an officer and director
of the Company for cash of $17,000 and would be eligible to participate in any
additional management compensation structure.  The value was based on
the historical costs incurred by the officer and director of the
Company.  The Company views the intellectual property as a core
component of its pending patent application.





On August
5, 2006, the Company executed a license agreement with Jugular, Inc. for the use
of their trade name through December 31, 2010 on two product lines in exchange
for $31,400.  On July 2, 2007, the Company amended its license
agreement with Jugular, Inc. to expand the scope of product
lines.  Additionally, on August 29, 2007, the Company amended the
license agreement and increased the term to 15 years with an automatic renewal
for 5 year terms if the Company meets the minimum sales
requirements.  As part of the amendments to the license agreement, the
Company agreed to issue a total of 110,000 shares of common stock, 17,000
warrants and $15,000 to be paid in cash.  The warrants shall be
exercisable at any time until August 29, 2012 at a price of $1.00 per
share.  As of March 31, 2008, the Company issued the shares of common
stock, warrants and paid the cash of $15,000.  The Company is
obligated to pay minimum guaranteed quarterly payments totaling $1,598,306 over
a period of four years.  The present value of the total payments is
$1,217,799 and the Company has capitalized this cost.  The Company has
imputed interest at approximately 10% per annum and will amortize the interest
over the four year period.  During the year ended March 31, 2009, the
Company recorded interest expense totaling $85,998 and paid $76,283 in
guaranteed payments to Jugular, Inc.  As of March 31, 2009, the
Company is in default and has accrued interest of $2,919 for the late charges on
the annual guarantee payments and is renegotiating its agreement with Jugular,
Inc.  The total value of the amendment to the license agreement is
$1,323,985.





March
      31,
            
            
            March
      31,2009
            
            
            2008Intangible
      assets
            
            $
            6,903,047
            
            
            $
            6,908,047Accumulated
      amortization
            
            
            (895,238
            )
            
            
            (298,413
            )$
            6,007,809
            
            
            $
            6,609,634





During
the years ended March 31, 2009 and 2008, the Company recorded amortization
expense of $596,825 and $298,413, respectively.





Note
8: Notes Payable





On
February 1, 2009, the Company executed a promissory note for $3,000 with an
unrelated third party.  The loan bears 0% interest and is due on
September 30, 2009.





Note
9: Equity





Effective  May
15, 2006,  the Company  declared a stock  dividend
of 18 shares for each share of its common  stock  which has
the effect of a 19 for one
stock  split,  resulting  in  10,071,000  shares  of  common  stock  issued  and
outstanding.  The stock split has been reflected in the accompanying
financial statements by retroactively restating all shares and per share
amounts.





During
May 2008, the Company authorized its amendment to the articles of incorporation
and increased its authorized capital from 500,000 shares of $0.001 preferred
stock to 2,000,000 shares of $0.001 preferred stock and from 20,000,000 shares
of $0.001 common stock to 100,000,000 shares of $0.001 common
stock.





Series A Preferred
Stock





On March
31, 2009, the Company designated their preferred stock to 8% Series A
Convertible Preferred Stock.  The holders of the preferred stock will
be entitled to receive a dividend at a rate of 8% per annum.  The
dividends will be cumulative and shall be paid quarterly at the option and
discretion of the Company either in cash or shares of the Company’s common stock
at a price of $0.12 per share.  Each 1 share of preferred stock shall
be convertible into 1,000 shares of common stock at the option of the
holder.





On March
31, 2009, the Company issued a total of 7,462 shares of $0.001 preferred stock
to its officers for satisfaction of $895,553 of accrued executive
compensation.  (See Note 12).





F-12


Common
Stock





The
Company raised funds via private placement (the “August 2006 Private
Placement”).  Each unit consists of one share of common stock, one
Series A warrant, one Series B warrant and one Series C warrant and is sold at
$0.75 per unit.  The warrants were sold in three series and expire in
5 years. The Series A warrants are exercisable for cash at an exercise
price of $0.75 per share. The Series B warrants are exercisable for cash at an
exercise price of $1.00 per share. The Series C warrants are exercisable
for cash at an exercise price of $1.25 per share.  The warrants vest
immediately upon issuance.  The exercise prices of the warrants are
subject to adjustment in certain circumstances, including downward adjustment
upon issuance by the Company of common stock at a per share price less than the
exercise price of the warrants. The Company anticipates using these proceeds to
commence implementation of the Company’s growth strategy and for general working
capital purposes.





The
Company has agreed to file a registration statement with the SEC, within 180
days following the final Closing of the August 2006 Private Placement, using its
best efforts, a registration statement on Form S-1 (or such other form as
applicable) registering the resale of the shares of Common Stock and the shares
of Common Stock issuable upon the exercise of the Investor Warrants. In
addition, the Company has agreed, to the best of its abilities, to keep such
registration statement current and effective. At present, the shares and
warrants are not registered and the Company can settle in unregistered shares
and warrants.  The Company is not obligated under any restrictions
related to this effort.





The offer
and sale of the shares of common stock, the warrants and the shares of common
stock underlying the warrants were not registered under the Securities Act, in
reliance upon the exemption from registration provided by Section 4(2) of
the Securities Act of 1933, as amended, as transactions not involving any public
offering.





This
offering was formally closed on June 30, 2008.





During
the year ended March 31, 2008, the Company issued a total of 1,408,532 shares of
common stock to various individuals and entities for services
rendered.  The shares were valued at the fair market value of the
stock at $1,582,085.  Of the total, $225,000 is considered prepaid
stock compensation since it is for future services.  The Company will
amortize the prepaid stock compensation over the service period of the
agreement.





During
the year ended March 31, 2008, the Company sold a total of 2,131,451 shares of
our common stock and 6,394,353 common stock purchase warrants to various
accredited investors in a private placement. The terms of the private placement
are the same as the August 2006 Private Placement (see above). The gross
proceeds from the sale were $1,572,475 for the common stock and up to $6,394,353
should all of the warrants be exercised for cash.  During the year
ended March 31, 2008, the Company adjusted its stock payable account by $165,499
to account for the shares issued during this year for cash that was received in
the prior year.  As of March 31, 2008, the Company had a stock payable
for $95,001 for a total of 126,667 shares of common stock.





On May 9,
2007, the Company issued 8,540 common stock purchase warrants and $25,620 in
cash to an entity as a commission related to the recent sales of
equity.  The Series A warrants are exercisable for cash for a
period of 5 years at an exercise price of $0.75 per share and vest immediately.
The warrants and cash are considered offering costs and were netted against the
proceeds and recorded in additional paid in capital.





During
the year ended March 31, 2008, the Company issued 110,000 shares of common stock
to Jugular, Inc. for the amendment of a license agreement (See Note
7).  The shares were valued at the fair market value of the stock at
$82,500.  Additionally, the Company issued 14,000 common stock
purchase warrants to Jugular which was valued at $8,686.  The
Series B warrants are exercisable for cash for a period of 5 years at an
exercise price of $1.00 per share and vest immediately.





F-13


During
the year ended March 31, 2008, the Company issued a total of 477,082 shares of
common stock to three individuals who are officers and directors of the
Company.  The shares were valued at the fair market value of the stock
at $357,811.  The shares are from an award that was declared for the
quarters ended September 30, 2007 and December 31, 2007 from the executive
variable compensation pool plan.





On
December 12, 2007, the Company issued 250,000 shares of common stock to a
charitable organization, which is managed by a former officer of the Company, as
a charitable donation.  The shares were valued at the fair market
value of the stock at $187,500.





During
the year ended March 31, 2009, the Company issued a total of 3,705,183 shares of
common stock to various individuals and entities for services
rendered.  The shares were valued at the fair market value of the
stock at $902,860.  Of the total, $283,750 is considered prepaid stock
compensation since it is for future services and $34,999 is considered stock
payable because the shares were unissued as of March 31, 2009.  The
Company will amortize the prepaid stock compensation over the service period of
the agreement.  During the year ended March 31, 2009, the Company
recorded $349,583 for the amortization of the prepaid stock
compensation.





During
the year ended March 31, 2009, the Company sold a total of 1,301,666 shares of
our common stock and 1,434,999 common stock purchase warrants to various
accredited investors in a private placement. The terms of the private placement
are the same as the August 2006 Private Placement (see above). The gross
proceeds from the sale were $820,000 for the common stock and up to $4,304,997
should all of the warrants be exercised for cash.





During
the year ended March 31, 2009, the Company sold a total of 326,667 shares of our
common stock to various accredited investors in a private placement. The gross
proceeds from the sale were $120,000.





As of
March 31, 2009, the Company had a stock payable for $318,000 for a total of
2,463,333 shares of common stock.





During
the year ended March 31, 2009, the Company issued a total of 108,029 shares of
our common stock to Jugular, Inc. for payment of the notes payable for the
minimum annual guarantee payments.  The shares were valued at $22,111
based on the fair value of the common stock on the date of grant.





During
the year ended March 31, 2009, the Company issued a total of 337,410 shares of
common stock to three individuals who are officers and directors of the
Company.  The shares were valued at the fair market value of the stock
at $446,585.  The shares are from a bonus declared in July 2008 and
awards that were declared for the quarters ended March 31, 2008, June 30, 2008,
September 30, 2008, and December 31, 2008 from the executive variable
compensation pool plan.





Note
10: Stock Warrants





The
following is a summary of the status of all of the Company’s stock warrants as
of March 31, 2009 and changes during the years ended on that date:





Number
              Of
      Warrants
            
            
            Weighted-Average
              Exercise
      PriceOutstanding
      at March 31, 2007
            
            
            2,443,998
            
            
            $
            1.00Granted
            
            
            5,750,398
            
            
            $
            1.00Exercised
            
            
            -
            
            
            $
            0.00Cancelled
            
            
            -
            
            
            $
            0.00Outstanding
      at March 31, 2008
            
            
            8,194,396
            
            
            $
            1.00Granted
            
            
            4,307,997
            
            
            $
            1.00Exercised
            
            
            -
            
            
            $
            0.00Cancelled
            
            
            -
            
            
            $
            0.00Outstanding
      at March 31, 2009
            
            
            12,499,393
            
            
            $
            1.00Warrants
      exercisable at March 31, 2009
            
            
            12,499,393
            
            
            $
            1.00Warrants
      exercisable at March 31, 2008
            
            
            8,194,396
            
            
            $
            1.00





F-14


The
following tables summarize information about stock warrants outstanding and
exercisable at March 31, 2009:





STOCK
      WARRANTS OUTSTANDINGExercise
      Price
            
            
            Number
      of
              Warrants
              Outstanding
            
            
            Weighted-Average
              Remaining
              Contractual
              Life
      in Years
            
            
            Weighted-
              Average
              Exercise
      Price$
            0.75
            
            
            
            4,166,491
            
            
            
            3.53
            
            
            $
            0.75$
            1.00
            
            
            
            4,174,951
            
            
            
            3.53
            
            
            $
            1.00$
            1.25
            
            
            
            4,157,951
            
            
            
            3.53
            
            
            $
            1.2512,499,393
            
            
            
            3.53
            
            
            $
            1.00








STOCK
      WARRANTS EXERCISABLEExercise
      Prices
            
            
            Number
      of
              Shares
              Exercisable
            
            
            Weighted-
              Average
              Exercise
      Price$
            0.75
            
            
            
            4,166,491
            
            
            $
            0.75$
            1.00
            
            
            
            4,174,951
            
            
            $
            1.00$
            1.25
            
            
            
            4,157,951
            
            
            $
            1.2512,499,393
            
            
            $
            1.00


Note
11:  Agreements





On April
1, 2008, the Company entered into a marketing support agreement with an
unrelated third party for a period of two years.  The individual will
receive commissions of 1% based on collection of receivables for a period of six
months from the start of a referred buyer and 1% upon achievement of the sales
forecast for each quarter.  The individual will receive a 5%
commission on collection of receivables from buyers in their
territory.  The total commissions are not to exceed $4,000 per
month.  During the year ended March 31, 2008, the Company has issued a
total of 100,000 shares of common stock to this individual and has recorded the
value of $225,000 as prepaid stock compensation.  During the year
ended March 31, 2009, the Company recorded consulting expense of $112,500 due to
the amortization of the prepaid compensation and $57,480 of consulting expense
which was due in cash.





On May 7,
2008, the Company entered into a finder agreement with an individual for equity
financing.  For each $100,000 this individual raises, he will receive
20,000 shares of common stock.  During the three months ended
September 30, 2008, he raised a total of $50,000 for the Company and earned
10,000 shares of common stock valued at $16,000.  As of September 30,
2008, the shares have been issued.





On June
2, 2008, the Company entered into a consulting agreement with an entity for a
six month term.  The consultant will receive a monthly payment of
$6,000 for the first three months and $9,000 for the last three months of the
agreement.  Additionally, the consultant will receive 150,000 shares
of common stock valued at $256,500.  The shares were valued at the
fair market value of the stock.  During the year ended March 31, 2009,
the Company recorded consulting expense of $45,000 for the cash portion and
$256,500 for the equity portion of the agreement.  As of December 31,
2008, the shares have been issued.





On
October 1, 2008, the Company executed a consulting agreement for investor
relations services with an entity for a period of six months.  The
Company agreed to pay the consultant $25,000 in cash and 250,000 shares of
common stock.  On October 30, 2008, the Company and the consultant
mutually terminated this agreement and the Company compensated the consultant $0
in cash and 24,000 shares of common stock.  The shares were issued on
October 24, 2008 and November 11, 2008.





F-15


On
October 15, 2008, the Company entered into a finder agreement with an
individual, wherein he agreed to introduce the Company to certain financing
sources known to or identified by him relating to potential financing
(“transaction”) involving the Company.  If the Company closed on a
transaction wherein this individual identified the source of financing, we
agreed to pay him, upon closing of the transaction, 8% cash fee and 10,000
shares of our restricted common stock per $100,000 raised through a direct
equity investment and a 2% cash fee if an introduction results in the successful
closing of a transaction.  The agreement may be terminated at any time
by either party.  Subsequent to December 31, 2008, this individual
assisted the Company in raising $25,000.





On
November 3, 2008, the Company executed a consulting agreement for investor
relations services with an entity for a period of six months.  The
Company has agreed to issue 250,000 shares of common stock which will vest at
42,000 shares per month beginning May 1, 2009 and will be 100% vested by October
1, 2009.  The shares were issued on November 11, 2008.





On
November 19, 2008, the Company entered into a professional advisory agreement
with a consultant for a period of one year.  Upon completion of a
funding from a directly introduced source, the Company has agreed to pay no more
than 5% of the gross proceeds.  For introductions to other financial
intermediary and successful closing of funding, the Company shall pay a one-time
finders’ fee of 2% in cash.  If the consultant assists the Company
with securing an equity line of credit, then the Company will pay the consultant
a one-time fee equal to 1.30% in cash and 1.30% in shares of common
stock.  As of December 31, 2008, the agreement was mutually terminated
by both parties.





On
December 1, 2008, the Company entered into an inventory consignment agreement
with Bridgeland Trading Ltd., wherein the Company granted to Bridgeland, upon
and subject to the terms and conditions of the agreement, an exclusive license
under the rights to develop, manufacture, market, distribute and sell, and have
manufactured, marketed, distributed and sold, certain
products.  Pursuant to the agreement the Company and Bridgeland desire
that Bridgeland sell the consigned merchandise pursuant to a consignment
arrangement, the terms of which are set forth in the agreement.  The
consignment payment shall be equal to 10% of Bridgeland’s net sales of consigned
merchandise, plus such additional amount, if any, as may be necessary for
Bridgeland to pay the minimum consignment payment.





In
connection with the consignment agreement mentioned above between the Company
and Bridgeland, on December 1, 2008, Bridgeland entered into an inventory
consignment agreement with Parco Sino-Can Science Technology
Inc.  Parco is a corporation that is owned and controlled by an
officer, director and shareholder of the Company.  Bridgeland is
engaged in the supply of pharmaceutical products as a result of its inventory
consignment agreement with the Company and wishes to provide Parco with rights
to package, promote, sell and distribute certain of its products in the
Territory on a Consignment basis. Parco is in the business of packaging,
marketing and distributing a number of products, for companies doing business in
China and elsewhere, including pharmaceutical products.  Pursuant to
the agreement, Parco will market and sell certain of Bridgeland's products as
consigned to Bridgeland pursuant to the terms and conditions of the Company’s
agreement, on a consignment basis, the “Consigned Merchandise,” which includes,
but is not limited to various pharmaceutical products including but not limited
to Multi-Flavored Gumdrops, Swirl Gummy Bears, Multi-Flavored gummy Bears, and
Orange Gumdrops.  The consignment payment shall be equal to 10% of
Parco’s net sales of consigned merchandise, plus such additional amount, if any,
as may be necessary for Parco to pay the minimum consignment
payment.





F-16


Note
12:  Related Party Transactions





On August
30, 2007, the Company established an executive variable compensation pool plan.
The maximum award amounts vary per quarter and in some quarters are based on a
percentage of net revenue. The plan is administered by the Chief Executive
Officer (CEO). At the end of each quarter the CEO will determine the amount of
the award and whether it will be paid in cash or shares of common
stock.





During
the quarter ended September 30, 2007, the maximum amount that can be awarded was
$312,500. The CEO has declared an award of $273,437 to be paid in shares of
common stock to the executives. The difference of $39,063 will be rolled over to
the variable compensation pool plan for the next quarter.  As of March
31, 2008, the Company issued 364,582 shares of common stock valued at
$273,437.





During
the quarter ended December 31, 2007, the maximum amount that can be awarded was
$312,500. The CEO has declared an award of $84,375 to be paid in shares of
common stock and $75,000 in cash to the executives. The difference of $153,125
will be rolled over to the variable compensation pool plan for the next
quarter.  As of March 31, 2008, the Company issued 112,500 shares of
common stock valued at $84,375.





During
the quarter ended March 31, 2008, the maximum amount that can be awarded was
$312,500. The CEO has declared an award of $112,502 to be paid in shares of
common stock and $75,000 in cash to the executives. The difference of $124,998
will be rolled over to the variable compensation pool plan for the next
quarter.  As of March 31, 2009, the Company issued 56,251 shares of
common stock valued at $112,502.





During
the quarter ended June 30, 2008, the maximum amount that can be awarded was
$312,500. The CEO has declared an award of $156,375 to be paid in shares of
common stock and $75,000 in cash to the executives. The difference of $81,125
will be rolled over to the variable compensation pool plan for the next
quarter.  As of March 31, 2009, the Company issued 112,455 shares of
common stock valued at $112,502.





During
the quarter ended September 30, 2008, the maximum amount that can be awarded was
$312,500. The CEO has declared an award of $156,375 to be paid in shares of
common stock and $75,000 in cash to the executives. The difference of $81,125
will be rolled over to the variable compensation pool plan for the next
quarter.  As of March 31, 2009, the Company issued 112,455 shares of
common stock valued at $101,210.  As of March 31, 2009, there are 45
shares have not been issued and is recorded as accrued executive
compensation.





During
the quarter ended December 31, 2008, the maximum amount that can be awarded was
$312,500. The CEO has declared an award of $16,875 to be paid in shares of
common stock and $75,000 in cash to the executives. The difference of $220,625
will be rolled over to the variable compensation pool plan for the next
quarter.  As of March 31, 2009, the shares have not been issued and
are recorded as accrued executive compensation.





During
the quarter ended March 31, 2009, the maximum amount that can be awarded was
$312,500. The CEO has declared an award of $9,000 to be paid in shares of common
stock and $75,000 in cash to the executives. The difference of $228,500 will be
rolled over to the variable compensation pool plan for the next
quarter.  As of March 31, 2009, the shares have not been issued and
are recorded as accrued executive compensation.





On August
31, 2007, the Company executed a five year employment agreement with Peter
Cunningham for the position of Chief Executive Officer.  Mr.
Cunningham will receive an annual salary of $160,000 per year and is eligible to
participate in the Company’s executive variable compensation pool
plan.  On September 1, 2008, Mr. Cunningham received a raise due to
cost of living adjustment and his annual salary was increased to
$168,000.





On August
31, 2007, the Company executed a five year employment agreement with Joseph
Cunningham for the position of Chief Financial Officer.  Mr.
Cunningham will receive an annual salary of $150,000 per year and is eligible to
participate in the Company’s executive variable compensation pool
plan.  On September 1, 2008, Mr. Cunningham received a raise due to
cost of living adjustment and his annual salary was increased to
$159,000.





On August
31, 2007, the Company executed a five year employment agreement with Hao Zhang
for the position of Chief Marketing Officer.  Mr. Zhang will receive
an annual salary of $150,000 per year and is eligible to participate in the
Company’s executive variable compensation pool plan.  On September 1,
2008, Mr. Cunningham received a raise due to cost of living adjustment and his
annual salary was increased to $159,000.





F-17


On March
31, 2009, the Company issued a total of 7,462 shares of $0.001 preferred stock
to its officers for satisfaction of $895,553 of accrued executive
compensation.  (See Note 9).





As of
March 31, 2009 and 2008, the Company owed a total of $25,916 and $492,156,
respectively, to the officers of the Company for accrued salaries.





As of
March 31, 2009 and 2008, the Company had accounts payable due to related parties
totaling $78,398 and $450, respectively.





Note
13: Subsequent Events





On April
6, 2009, the Company executed a promissory note for $21,000 with an unrelated
third party.  The loan bears 0% interest and is due on August 3,
2009.  The first monthly payment was $4,000 and was due in April
2009.  The remaining monthly payments are $4,250.





On May
28, 2009, the Company issued a total of 1,116,454 shares for services
rendered.  The shares valued using the fair value of the common stock
totaling $112,550.





On May
28, 2009, the Company issued a total of 1,840,000 shares for cash received
during the year ended March 31, 2008.





On May
28, 2009, the Company issued a total of 1,200,000 shares for cash received
during April and May 2009 and issued 500,000 warrants with an exercise price of
$0.25 for a three year period.





On May
28, 2009, the Company issued a total of 225,045 shares for satisfaction of
accrued executive compensation of $25,916.





On May
28, 2009, the Company issued 93,600 shares for satisfaction the current portion
of notes payable related to the Jugular minimum annual guarantee payments of
$26,208.








F-18