----

----

**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      D.C. 20549**

----

**FORM      10-Q/A**

----

| **x** | **QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934** |
|-------|------------------------------------------------------------------------------------------------------------------------------------------|

**For      the quarterly period ended March 31, 2008**

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

**For      the transition period from ______to______.**

**BENDA      PHARMACEUTICAL, INC.**

**(Exact      name of registrant as specified in Charter**

| **Delaware**                                                                                    |   | **000-16397**                       |   |  **41-2185030**                               |
|-------------------------------------------------------------------------------------------------|--------|-------------------------------------|--------|----------------------------------------------------|
| **(State or other jurisdiction****of****incorporation or****organization)** |   | **(Commission File No.)** |   | **(IRS Employee****Identification No.)** |

**Sunny      New World Tower, 25th Floor **

**No.      231 Xinhua Road **

**Wuhan,      Hubei Province, PRC**

** (Address      of Principal Executive Offices)**

----

**+86      (27) 5953-8563**

** (Issuer      Telephone number)**

----

** (Former      Name or Former Address if Changed Since Last Report)**

| Large Accelerated Filer o  | Accelerated Filer o | Non-Accelerated Filer o | Smaller Reporting Company x |
|------------------------------------------------|-------------------------------|-----------------------------------|--------------------------------------------|

----

**BENDA      PHARMACEUTICAL, INC.**

**FORM      10-Q**

**March      31, 2008**

**INDEX**

| **PART                I— FINANCIAL INFORMATION** |                                                                             |
|--------------------------------------------------------|----------------------------------------------------------------------------------|
|                                                   |                                                                             |   |
| Item                1.                                 | Financial                Statements                                              | 3 |
| Item                2.                                 | Management’s                Discussion and Analysis of Financial Condition | 4 |
| Item                3.                                 | Quantitative                and Qualitative Disclosures About Market Risk        | 11 |
| Item 4T.                                     | Control                and Procedures                                            | 11 |
|                                                   |                                                                             |   |
| **PART                II— OTHER INFORMATION**    |                                                                             |
|                                                   |                                                                             |
|  Item                1                            | Legal                Proceedings                                                 | 13 |
|  Item                2.                           | Unregistered                Sales of Equity Securities and Use of Proceeds       | 14 |
|  Item                3.                           | Defaults                Upon Senior Securities                                   | 15 |
|  Item                4.                           | Submission                of Matters to a Vote of Security Holders               | 15 |
|  Item                5.                           | Other                Information                                                 | 15 |
|  Item                6.                           | Exhibits                and Reports on Form 8-K                                  | 15 |
|                                                   |                                                                             |   |
| **SIGNATURE**                                          | 16                                                                               |

----

**Item      1. Financial Information**

**BENDA      PHARMACEUTICAL, INC.**

**(an      exploration stage company)**

**FINANCIAL      STATEMENTS**

**AS      OF MARCH 31, 2008**

**CONTENTS**

| PAGE   | F1                      | CONDENSED                BALANCE SHEETS AS OF MARCH 31, 2008 (UNAUDITED) AND AS OF DECEMBER                31,                2007 (AUDITED).   |
|--------|-------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                    |                                                                                                                                            |
| PAGE   | F2                      | CONDENSED                STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2008                AND                2007 (UNAUDITED). |
|   |                    |                                                                                                                                            |
| PAGE   | F3                      | CONDENSED                STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2008                AND                2007 (UNAUDITED). |
|   |                    |                                                                                                                                            |
| PAGES  | F4                - F31 | NOTES                TO CONDENSED FINANCIAL STATEMENTS                (UNAUDITED).                                                              |

----

**Benda      Pharmaceutical, Inc.**

**Consolidated      Balance Sheets**

**(Amounts      expressed in U.S. Dollars)**

----

|                                                                                                                                                                                                                                 |   | **March 31****2008****Restated** |       | **December 31****2007****Restated** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|------------|------------------------------------------|--------|
|                                                                                                                                                                                                                                      |   | **(Unaudited)**                       |       |                                |   |
| **Assets**                                                                                                                                                                                                                                |   |                                  |       |                                     |   |   |   |
| Current                Assets                                                                                                                                                                                                             |   |                                  |       |                                     |   |   |   |
| Cash                and cash equivalents                                                                                                                                                                                                  |   | $                                     | 1,401,178  |                                     | $      | 1,266,240 |   |
| Trade                receivables, net (Note 5)                                                                                                                                                                                            |   |                                  | 11,215,913 |                                     |   | 10,472,233 |   |
| Other                receivables (Note 5)                                                                                                                                                                                                 |   |                                  | 716,743    |                                     |   | 453,595 |   |
| Refundable                purchase price paid (Note 6)                                                                                                                                                                                    |   |                                  | -          |                                     |   | 1,200,000 |   |
| Inventories                (Note 7)                                                                                                                                                                                                       |   |                                  | 2,712,963  |                                     |   | 1,952,348 |   |
| Prepaid                expenses and deposits (Note 5)                                                                                                                                                                                     |   |                                  | 1,176,692  |                                     |   | 933,299 |   |
| Total                current assets                                                                                                                                                                                                       |   |                                  | 17,223,489 |                                     |   | 16,277,715 |   |
| Due                from related parties (Note 18)                                                                                                                                                                                         |   |                                  | 2,785,347  |                                     |   | 2,630,019 |   |
| Property                and equipments, net (Note 8)                                                                                                                                                                                      |   |                                  | 28,297,036 |                                     |   | 27,123,035 |   |
| Intangible                assets, net (Note 9)                                                                                                                                                                                            |   |                                  | 6,616,622  |                                     |   | 6,494,510 |   |
| Goodwill                (Note 10)                                                                                                                                                                                                         |   |                                  | 7,704,058  |                                     |   | 7,395,752 |   |
| Restricted                cash (Note 11)                                                                                                                                                                                                  |   |                                  | 5,454,150  |                                     |   | 3,957,624 |   |
| Refundable                purchase price paid (Note 6)                                                                                                                                                                                    |   |                                  | 1,200,000  |                                     |   |   |   |
| Other                assets (Note 12)                                                                                                                                                                                                     |   |                                  | 1,782,297  |                                     |   | 1,710,972 |   |
| Debt                issue costs (Note 24)                                                                                                                                                                                                 |   |                                  | 262,066    |                                     |   | 327,945 |   |
| Total                Assets                                                                                                                                                                                                               |   | $                                     | 71,325,065 |                                     | $      | 65,917,572 |   |
|                                                                                                                                                                                                                                      |   |                                  |       |                                     |   |   |   |
| **Liabilities                & Shareholders' Equity**                                                                                                                                                                                 |   |                                  |       |                                     |   |   |   |
| Current                Liabilities                                                                                                                                                                                                        |   |                                  |       |                                     |   |   |   |
| Bank                indebtedness (Note 11)                                                                                                                                                                                                |   | $                                     | 1,160,976  |                                     | $      | 874,490 |   |
| Bank                loans payable (current portion) (Note 13)                                                                                                                                                                             |   |                                  | 2,934,657  |                                     |   | 2,867,004 |   |
| Long                term debt payable (current portion) (Note 14)                                                                                                                                                                         |   |                                  | 1,732,498  |                                     |   | 1,787,239 |   |
| Accounts                payable and accrued liabilities (Note 15)                                                                                                                                                                         |   |                                  | 5,519,316  |                                     |   | 4,665,984 |   |
| Commercial                notes payable (Note 11)                                                                                                                                                                                         |   |                                  | 8,187,194  |                                     |   | 5,118,758 |   |
| Taxes                payable                                                                                                                                                                                                              |   |                                  | 797,940    |                                     |   | 1,279,385 |   |
| Acquisition                price payable (Note 10)                                                                                                                                                                                        |   |                                  | 1,388,825  |                                     |   | 1,333,246 |   |
| Wages                payable                                                                                                                                                                                                              |   |                                  | 848,922    |                                     |   | 664,785 |   |
| Total                current liabilities                                                                                                                                                                                                  |   |                                  | 22,570,328 |                                     |   | 18,590,891 |   |
| Long                term debt payable (long term portion) (Note 14)                                                                                                                                                                       |   |                                  | 442,718    |                                     |   | 425,001 |   |
| Long-term                convertible promissory notes (Note 24)                                                                                                                                                                           |   |                                  | 3,816,197  |                                     |   | 2,875,075 |   |
| Due                to related parties (Long-term) (Note 18)                                                                                                                                                                               |   |                                  | 3,284,540  |                                     |   | 3,193,618 |   |
| Total                liabilities                                                                                                                                                                                                          |   |                                  | 30,113,783 |                                     |   | 25,084,585 |   |
|                                                                                                                                                                                                                                      |   |                                  |       |                                     |   |   |   |
| Minority                interest                                                                                                                                                                                                          |   |                                  | 5,752,933  |                                     |   | 5,502,755 |   |
|                                                                                                                                                                                                                                      |   |                                  |       |                                     |   |   |   |
| Redeemable                common stock, 2,049,560 shares at $3.6 per share (Note 19)                                                                                                                                                      |   |                                  | 7,376,366  |                                     |   | 7,376,366 |   |
|                                                                                                                                                                                                                                      |   |                                  |       |                                     |   |   |   |
| Shareholders                ' Equity                                                                                                                                                                                                      |   |                                  |       |                                     |   |   |   |
| Preferred                stock, $0.001 par value; 5,000,000 shares authorized;None                issued and outstanding (Note 25)                                                                                                        |   |                                  | -          |                                     |   | - |   |
| Common                stock, $0.001 par value; 150,000,000 shares authorized;100,803,509                shares issued and outstanding as of 3/31/2008;100,170,071                shares issued and outstanding as of 12/31/2007 (Note 25) |   |                                  | 100,803    |                                     |   | 100,170 |   |
| Additional                paid in capital (Note 25)                                                                                                                                                                                       |   |                                  | 21,853,508 |                                     |   | 21,547,929 |   |
| Retained                earnings (unrestricted)                                                                                                                                                                                           |   |                                  | (1,936,960 | )                                        |   | 100,452 |   |
| Statutory                surplus reserve fund (Note 17)                                                                                                                                                                                   |   |                                  | 2,310,681  |                                     |   | 2,310,681 |   |
| Accumulative                other comprehensive income                                                                                                                                                                                    |   |                                  | 5,250,091  |                                     |   | 3,390,774 |   |
| Shares                issuable for acquisition and services                                                                                                                                                                               |   |                                  | 503,860    |                                     |   | 503,860 |   |
| Total                Shareholders ' Equity                                                                                                                                                                                                |   |                                  | 28,081,983 |                                     |   | 27,953,866 |   |
| Total                Liabilities & Shareholders ' Equity                                                                                                                                                                              |   | $                                     | 71,325,065 |                                     | $      | 65,917,572 |   |

----

**Benda      Pharmaceutical, Inc.**

**Consolidated      Statements of Operations**

**(Amounts      expressed in U.S. Dollars) **

----

|                                                                     |   | **THREE MONTHS ENDED MARCH 31** |        |
|--------------------------------------------------------------------------|--------|-----------------------------------------------------|-------------|
|                                                                     |   | **2008****Restated****(Unaudited)**                 |        | **2007****Restated****(Unaudited)** |   |
| Revenue                                                                  |   | $                                                   | 5,947,370   |   | $ | 3,029,035 |   |
| Cost                of goods sold                                        |   |                                                | (3,817,246  | ) |   | (1,847,212 | ) |
| Gross                profit                                              |   |                                                | 2,130,124   |   |   | 1,181,823 |   |
|                                                                     |   |                                                |        |   |   |   |   |
| Selling                expenses                                          |   |                                                | (436,371    | ) |   | (88,183 | ) |
|                                                                     |   |                                                |        |   |   |   |   |
| General                and administrative expenses                       |   |                                                |        |   |   |   |   |
| Amortization                of intangible assets                         |   |                                                | (51,575     | ) |   | (26,284 | ) |
| Amortization                of debt issue costs (Note 24)                |   |                                                | (65,879     | ) |   | (8,743 | ) |
| Depreciation                                                             |   |                                                | (123,220    | ) |   | (76,576 | ) |
| Bad                debts                                                 |   |                                                | (471,297    | ) |   | 70,986 |   |
| Director                remuneration                                     |   |                                                | (110,873    | ) |   | - |   |
| Penalty                to investors (Note 20)                            |   |                                                | (722,205    | ) |   | (120,000 | ) |
| Other                general and administrative expenses (Note 21)       |   |                                                | (1,097,869  | ) |   | (324,713 | ) |
| Total                general and administrative expenses                 |   |                                                | (2,642,918  | ) |   | (485,330 | ) |
| Gains                / (losses) on disposals of fixed assets             |   |                                                | -           |   |   | (12,025 | ) |
| Research                and development expenses                         |   |                                                | (22,064     | ) |   | - |   |
| Total                operating expenses                                  |   |                                                | (3,101,353  | ) |   | (585,538 | ) |
| Operating                income / (loss)                                 |   |                                                | (971,229    | ) |   | 596,285 |   |
|                                                                     |   |                                                |        |   |   |   |   |
| Interest                income / (expenses) (Note 24)                    |   |                                                | (1,212,282  | ) |   | (17,585 | ) |
| Other                income (expenses)                                   |   |                                                | 301,693     |   |   | 937 |   |
| Government                subsidies / grants (Note 22)                   |   |                                                | -           |   |   | - |   |
|                                                                     |   |                                                |        |   |   |   |   |
| Income                / (loss) before minority interest and income taxes |   |                                                | (1,881,818  | ) |   | 579,637 |   |
| Income                taxes (Note 23)                                    |   |                                                | (133,197    | ) |   | - |   |
| Minority                interest (Note 28)                               |   |                                                | (22,398     | ) |   | (46,906 | ) |
|                                                                     |   |                                                |        |   |   |   |   |
| Net                income / (loss)                                       |   | $                                                   | (2,037,413  | ) | $ | 532,731 |   |
|                                                                     |   |                                                |        |   |   |   |   |
| Earnings                / (loss) per share - basic                       |   | $                                                   | (0.02       | ) | $ | 0.01 |   |
|                                                                     |   |                                                |        |   |   |   |   |
| Weighted                average shares outstanding - basic               |   |                                                | 100,312,873 |   |   | 96,281,951 |   |
|                                                                     |   |                                                |        |   |   |   |   |
| Earnings                / (loss) per share - diluted                     |   | $                                                   | (0.02       | ) | $ | 0.00 |   |
|                                                                     |   |                                                |        |   |   |   |   |
| Weighted                average shares outstanding - diluted (Note 26)   |   |                                                | 100,312,873 |   |   | 124,099,914 |   |

----

**Benda      Pharmaceutical, Inc.**

**Consolidated      Statements of Cash Flows**

**(Amounts      expressed in U.S. Dollars) **

----

|                                                                                                                     |   | **THREE MONTHS ENDED MARCH 31** |       |
|--------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|------------|
|                                                                                                                     |   | **2008****Restated****(Unaudited)**                 |       | **2007****Restated****(Unaudited)** |   |
| **Cash                Flows From Operating Activities**                                                                  |   |                                                |       |   |   |   |   |
| Net                income / (loss)                                                                                       |   | $                                                   | (2,037,413 | ) | $ | 532,731 |   |
| Adjustments                to reconcile net income / (loss) to net cash provided by operating                activities: |   |                                                |       |   |   |   |   |
| Bad                Debt provision                                                                                        |   |                                                | 471,297    |   |   | (70,986 | ) |
| Minority                interest                                                                                         |   |                                                | 22,398     |   |   | 46,906 |   |
| Loss                on disposals of fixed assets                                                                         |   |                                                | -          |   |   | 12,025 |   |
| Depreciation                                                                                                             |   |                                                | 453,235    |   |   | 99,861 |   |
| Amortization                of intangible assets                                                                         |   |                                                | 184,115    |   |   | 50,467 |   |
| Amortization                of debt issue costs (Note 24)                                                                |   |                                                | 65,879     |   |   | 8,743 |   |
| Interest                expense (amortization of debt discount) (Note 24)                                                |   |                                                | 941,122    |   |   | 15,497 |   |
| Penalty                to investors settled by issuance of common stock                                                  |   |                                                | 230,312    |   |   | - |   |
| Directors                remuneration settled by issuance of common stock                                                |   |                                                | 75,900     |   |   | - |   |
| Changes                in operating assets and liabilities:                                                              |   |                                                |       |   |   |   |   |
| Trade                receivables                                                                                         |   |                                                | (1,327,952 | ) |   | (920,421 | ) |
| Other                receivables                                                                                         |   |                                                | (138,461   | ) |   | 35 |   |
| Prepaid                expenses and deposits                                                                             |   |                                                | (304,699   | ) |   | (4,686 | ) |
| Inventories                                                                                                              |   |                                                | (760,615   | ) |   | 165,295 |   |
| Accounts                payable and accrued liabilities                                                                  |   |                                                | 966,144    |   |   | (204,275 | ) |
| Others                payable                                                                                            |   |                                                | -          |   |   | 84,693 |   |
| Taxes                payable                                                                                             |   |                                                | (481,445   | ) |   | (31,208 | ) |
| **Net                cash provided by operating activities**                                                             |   |                                                | (1,640,183 | ) |   | (215,323 | ) |
|                                                                                                                     |   |                                                |       |   |   |   |   |
| **Cash                Flows From Investing Activities**                                                                  |   |                                                |       |   |   |   |   |
| Purchases                of property and equipment and construction-in-progress                                          |   |                                                | (214,454   | ) |   | (100,973 | ) |
| Loans                to related parties, net                                                                             |   |                                                | -          |   |   | (166,612 | ) |
| **Net                cash used in investing activities**                                                                 |   |                                                | (214,454   | ) |   | (267,585 | ) |
|                                                                                                                     |   |                                                |       |   |   |   |   |
| **Cash                Flows From Financing Actives**                                                                     |   |                                                |       |   |   |   |   |
| Proceeds                from issuance of convertible promissory note (Note 24)                                           |   |                                                | -          |   |   | 5,520,000 |   |
| Proceeds                and repayments of borrowings under related parties, net                                          |   |                                                | (64,406    | ) |   | 77,442 |   |
| Proceeds                and repayments of borrowings under government debts payable, net                                 |   |                                                | 230,527    |   |   | - |   |
| Proceeds                and repayments of borrowings under commercial bank notes, net (Note                11)           |   |                                                | 1,498,624  |   |   | - |   |
| Proceeds                and repayments of borrowings under bank loans, net                                               |   |                                                | (51,863    | ) |   | (256,492 | ) |
| **Net                cash provided by (used in) financing activities**                                                   |   |                                                | 1,612,882  |   |   | 5,340,950 |   |
| Effect                of exchange rate changes on cash                                                                   |   |                                                | 376,693    |   |   | 98,441 |   |
| **Net                increase in cash and cash equivalents**                                                             |   |                                                | 134,938    |   |   | 4,956,483 |   |
|                                                                                                                     |   |                                                |       |   |   |   |   |
| **Cash                and cash equivalents, beginning of period**                                                        |   |                                                | 1,266,240  |   |   | 1,676,119 |   |
|                                                                                                                     |   |                                                |       |   |   |   |   |
| **Cash                and cash equivalents, end of period**                                                              |   | $                                                   | 1,401,178  |   | $ | 6,632,601 |   |
|                                                                                                                     |   |                                                |       |   |   |   |   |
| **Supplemental                Disclosure of Cash Flow Information**                                                      |   |                                                |       |   |   |   |   |
| **Cash                paid for interest**                                                                                |   | $                                                   | 211,407    |   | $ | 2,565 |   |
| **Cash                paid for income taxes**                                                                            |   | $                                                   | 487,318    |   | $ | - |   |

----

**Benda      Pharmaceutical, Inc.**

**Notes      to Consolidated Financial Statements**

**(Amounts      expressed in U.S. Dollars) **

----

| **1.** | **Restatement                of Previously Issued Financial                Statements** |
|--------|-----------------------------------------------------------------------------------------|

**Statements      of Operations for the three months ended March 31, 2008 and      2007**

**Balance      Sheets March 31, 2008 and 2007**

**Consolidated      Balance Sheet**

|                                                    |   | As PreviouslyReportedThree Month EndedMarch 31,2008 |       | RestatedThree Month EndedMarch 31,2008 |   |
|---------------------------------------------------------|--------|-------------------------------------------------------------------------|------------|-------------------------------------------------------|--------|
| Property                and equipments, net             |   | $                                                                       | 27,343,976 |                                                  | $      | 28,297,036 |   |
| Intangible                assets, net                   |   |                                                                    | 6,464,173  |                                                  |   | 6,616,622 |   |
| Retained                (deficit) earnings unrestricted |   | $                                                                       | (2,987,195 | )                                                     | $      | (1,936,960 | ) |

----

**Consolidated      Statement of Operations**

|                                                                     |   | As PreviouslyReportedThree Month EndedMarch 31,2008 |       | RestatedThree Month EndedMarch 31,2008 |   |
|--------------------------------------------------------------------------|--------|-------------------------------------------------------------------------|------------|-------------------------------------------------------|--------|
| Cost                of goods sold                                        |   | $                                                                       | (3,940,080 | )                                                     | $      | (3,817,246 | ) |
| As                included in General and administrative expenses        |   |                                                                    |       |                                                  |   |   |   |
| Depreciation                expense                                      |   | $                                                                       | (123,220   | )                                                     | $      | (123,220 | ) |
| Amortization                expense                                      |   |                                                                    | (51,575    | )                                                     |   | (51,575 | ) |
| Total                operating expense                                   |   |                                                                    | (3,101,353 | )                                                     |   | (3,101,353 | ) |
| Operating                income / (loss)                                 |   |                                                                    | (1,094,063 | )                                                     |   | (971,229 | ) |
| Income                / (loss) before minority interest and income taxes |   |                                                                    | (2,004,652 | )                                                     |   | (1,881,818 | ) |
| Net                income / (loss)                                       |   |                                                                    | (2,154,106 | )                                                     |   | (2,037,413 | ) |
| Earnings                / (loss) per share - basic                       |   |                                                                    | (0.02      | )                                                     |   | (0.02 | ) |
| Earnings                / (loss) per share - diluted                     |   | $                                                                       | (0.02      | )                                                     | $      | (0.02 | ) |

**Consolidated      Balance Sheet**

|                                                    |   | As PreviouslyReportedThree Month EndedMarch 31,2007 |       | RestatedThree Month EndedMarch 31,2007 |   |
|---------------------------------------------------------|--------|-------------------------------------------------------------------------|------------|-------------------------------------------------------|--------|
| Property                and equipments, net             |   | $                                                                       | 13,766,129 |                                                  | $      | 14,295,607 |   |
| Intangible                assets, net                   |   |                                                                    | 1,459,487  |                                                  |   | 1,544,181 |   |
| Retained                (deficit) earnings unrestricted |   | $                                                                       | 7,853,700  |                                                  | $      | 8,437,165 |   |

**Consolidated      Statement of Operations**

|                                                                     |   | As PreviouslyReportedThree Month EndedMarch 31,2007 |       | Restated Three Month EndedMarch 31,2007 |   |
|--------------------------------------------------------------------------|--------|-------------------------------------------------------------------------|------------|-------------------------------------------------------------|--------|
| Cost                of goods sold                                        |   | $                                                                       | (1,970,047 | )                                                           | $      | (1,847,212 | ) |
| As                included in General and administrative expenses        |   |                                                                    |       |                                                        |   |   |   |
| Depreciation                expense                                      |   | $                                                                       | (76,576    | )                                                           | $      | (76,576 | ) |
| Amortization                expense                                      |   |                                                                    | (26,284    | )                                                           |   | (26,284 | ) |
| Total                operating expense                                   |   |                                                                    | (585,538   | )                                                           |   | (585,538 | ) |
| Operating                income / (loss)                                 |   |                                                                    | 473,450    |                                                        |   | 596,285 |   |
| Income                / (loss) before minority interest and income taxes |   |                                                                    | 456,802    |                                                        |   | 579,637 |   |
| Net                income / (loss)                                       |   |                                                                    | 416,037    |                                                        |   | 532,731 |   |
| Earnings                / (loss) per share - basic                       |   |                                                                    | 0.00       |                                                        |   | 0.01 |   |
| Earnings                / (loss) per share - diluted                     |   | $                                                                       | 0.00       |                                                        | $      | 0.00 |   |

| **2.** | **Organization** |
|--------|------------------|

----

----

| **3.** | **Significant                Accounting Policies** |
|--------|----------------------------------------------------|

**Cash      and Cash Equivalents**

**Estimates      Affecting Trade Receivables, Other Receivables, Prepaid and Deposits and      Inventories**

**Property      and Equipment**

| Buildings                                       |   |   | 20-30                years |   |
|-------------------------------------------------|--------|--------|----------------------------|--------|
| Machinery                and equipment          |   |   | 10-15                years |   |
| Motor                Vehicles                   |   |   | 5                years     |   |
| Electronics and office equipment |   |   | 5                years     |   |

----

**Impairment      of Long-Lived Assets**

*      Accounting for the Impairment or Disposal of Long-Lived Assets*

**Intangible      Assets**

**Revenue      Recognition**

|   | 1. | Persuasive                evidence of an arrangement exists; |
|--------|----|--------------------------------------------------------------|

|   | 2. | Delivery                has occurred or services have been                rendered; |
|--------|----|-------------------------------------------------------------------------------------|

|   | 3. | The                seller's price to the buyer is fixed or determinable;                and |
|--------|----|---------------------------------------------------------------------------------------------|

|   | 4. | Collectibility                is reasonably assured. |
|--------|----|------------------------------------------------------|

**Research      and Development**

**Income      Taxes**

*      Accounting for Income Taxes*

**Comprehensive      Income**

*      Reporting Comprehensive Income,*

**Concentration      of Credit Risk **

----

|                                                                                   |   | THREE                  MONTH ENDED MARCH 31, |       |
|----------------------------------------------------------------------------------------|--------|----------------------------------------------|------------|
|                                                                                   |   | 2008                                         |       | 2007 |   |
|                                                                                   |   | (Unaudited)                                  |       | (Unaudited) |   |
|                         Revenue                               |   | $                                            | 5,947,370  | % |   |   |   | $ | 3,029,035 | % |   |   |   |
| *      **Individual                  customer's revenue* |   |                                         |            |   |   |  |   |   |  |   |   |  |   |
| Zhuhai                  Gongbei Pharmaceutical Co, Ltd.                                |   |                                         | 1,527,292  |   |   | 26 | % |   | 684,290 |   |   | 23 | % |
| Hubei                  Hengchuan Health Products Co., Ltd.                             |   |                                         | 970,148    |   |   | 16 | % |   | - |   |   | 0 | % |
| Shenzhen                  Huihua Pharmaceutical Co. Ltd.                               |   |                                         | 875,175    |   |   | 15 | % |   | 535,528 |   |   | 18 | % |
| Shenyang                  Pharmaceutical Co. Ltd.                                      |   |                                         | 712,182    |   |   | 12 | % |   | 444,736 |   |   | 15 | % |
| Jiangxi                  Huiren Pharmaceutical Co. Ltd.                                |   |                                         | 352,842    |   |   | 6 | % |   | 252,573 |   |   | 8 | % |
|                                                                                   |   |                                         |            |   |   |  |   |   |  |   |   |  |   |
|                         Trade receivables, gross         |   | $                                            | 12,237,873 | % |   |   |   | $ | 7,555,831 | % |   |   |   |
| * **Individual                  customer's account receivable gross balance*      |   |                                         |            |   |   |  |   |   |  |   |   |  |   |
| Zhuhai                  Gongbei Pharmaceutical Co, Ltd.                                |   |                                         | 2,196,438  |   |   | 18 | % |   | 1,130,530 |   |   | 15 | % |
| Hubei                  Hengchuan Health Products Co., Ltd.                             |   |                                         | 1,577,335  |   |   | 13 | % |   | - |   |   | 0 | % |
| Shenzhen                  Huihua Pharmaceutical Co. Ltd.                               |   |                                         | 1,347,251  |   |   | 11 | % |   | 1,444,580 |   |   | 19 | % |
| Shenyang                  Pharmaceutical Co. Ltd.                                      |   |                                         | 1,078,182  |   |   | 9 | % |   | 910,440 |   |   | 12 | % |
| Jiangxi                  Huiren Pharmaceutical Co. Ltd.                                |   |                                         | 571,918    |   |   | 5 | % |   | 838,128 |   |   | 11 | % |

**Basic        and Diluted Earnings Per Share**

**Foreign      Currency Translation**

----

|                        |   | March 31,2008 |   | March 31,2007 |   |
|-----------------------------|--------|--------------------|--------|--------------------|--------|
| Fixed                rate   |   | $                  | 0.1428 |               | $      | 0.1295 |   |
| Average                rate |   | $                  | 0.1398 |               | $      | 0.1290 |   |

**Fair      Value of Financial Instruments**

**Recent      Accounting Pronouncements**

*      Noncontrolling interest in Consolidated Financial Statements*

*      Business Combinations (*

----

**Recently      Adopted Accounting Pronouncements**

*      Share-Based Payment, an Amendment of SFAS No. 123*

| **4.** | **Basis                of Preparation** |
|--------|-----------------------------------------|

**Use      of Estimates**

| **5.** | **Trade                Receivables, Other Receivables and Prepaid and Deposits - Allowance                for                Doubtful Debts** |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                        |   | March 31, |       | December 31, |   |
|---------------------------------------------|--------|----------------|------------|-------------------|--------|
|                                        |   | 2008           |       | 2007              |   |
|                                        |   | (Unaudited)    |       |              |   |
| Trade                receivables, gross     |   | $              | 12,237,873 |              | $      | 10,909,921 |   |
| Allowance                for doubtful debts |   |           | (1,021,960 | )                 |   | (437,688 | ) |
| Trade                receivables, net       |   | $              | 11,215,913 |              | $      | 10,472,233 |   |

|                                        |   | March 31, |    | December 31, |   |
|---------------------------------------------|--------|----------------|---------|-------------------|--------|
|                                        |   | 2008           |    | 2007              |   |
|                                        |   | (Unaudited)    |    |              |   |
| Other                receivables, gross     |   | $              | 753,432 |              | $      | 614,971 |   |
| Allowance                for doubtful debts |   |           | (36,689 | )                 |   | (161,376 | ) |
| Other                receivables, net       |   | $              | 716,743 |              | $      | 453,595 |   |

|                                        |   | March                31, |      | December                31, |   |
|---------------------------------------------|--------|--------------------------|-----------|-----------------------------|--------|
|                                        |   | 2008                     |      | 2007                        |   |
|                                        |   | (Unaudited)              |      |                        |   |
| Prepaid                and deposits, gross  |   | $                        | 1,582,581 |                        | $      | 1,277,882 |   |
| Allowance                for doubtful debts |   |                     | (405,889  | )                           |   | (344,583 | ) |
| Prepaid                and deposits, net    |   | $                        | 1,176,692 |                        | $      | 933,299 |   |

|                                                |   | THREE MONTHS ENDED MARCH 31 |       |
|-----------------------------------------------------|--------|-------------------------------------------------|------------|
|                                                |   | 2008                                            |       | 2007 |   |
|                                                |   | (Unaudited)                                     |       | (Unaudited) |   |
| Balance                at beginning of period       |   | $                                               | (943,647   | ) | $ | (467,015 | ) |
| Provision/Reversal                during the period |   |                                            | (471,297   | ) |   | 70,986 |   |
| Foreign                exchange difference          |   |                                            | (49,594    | ) |   | (4,351 | ) |
| Balance                at end of period             |   | $                                               | (1,464,538 | ) | $ | (400,380 | ) |

| **6.** | **Refundable                Purchase Price Paid** |
|--------|---------------------------------------------------|

----

| **7.** | **Inventories** |
|--------|-----------------|

|                                              |   | March                31, |       | December                31, |   |
|---------------------------------------------------|--------|--------------------------|------------|-----------------------------|--------|
|                                              |   | 2008                     |       | 2007                        |   |
|                                              |   | (Unaudited)              |       |                        |   |
| Raw                materials                      |   | $                        | 1,011,499  |                        | $      | 1,078,438 |   |
| Packing                materials                  |   |                     | 163,316    |                        |   | 155,101 |   |
| Other                materials / supplies         |   |                     | 76,719     |                        |   | 93,206 |   |
| Finished                goods                     |   |                     | 763,224    |                        |   | 415,627 |   |
| Work-in-progress                                  |   |                     | 4,998,220  |                        |   | 4,631,990 |   |
| Total                inventories at cost          |   |                     | 7,012,978  |                        |   | 6,374,362 |   |
|                                              |   |                     |       |                        |   |   |   |
| Less:                Reserves on work-in-progress |   |                     | (4,300,015 | )                           |   | (4,422,014 | ) |
|                                              |   |                     |       |                        |   |   |   |
| Total                inventories, net             |   | $                        | 2,712,963  |                        | $      | 1,952,348 |   |

----

| **8.** | **Property                and Equipment (Restated)** |
|--------|------------------------------------------------------|

|                                             |   | December 31,2007 |       | Addition |   | ForeignCurrencyTranslationDifference |   | March 31, 2008 |      |
|--------------------------------------------------|--------|-----------------------|------------|----------|--------|--------------------------------------|--------|--------------------------|-----------|
|                                             |   |                  |       |     |   |                                 |   | (Unaudited)              |      |
| Buildings                                        |   | $                     | 8,858,126  |     |   | 2,691                                |   |                     | 469,315   |   | $ | 9,330,132 |   |
| Machinery                and equipment           |   |                  | 15,260,167 |     |   | 33,983                               |   |                     | 815,481   |   |   | 16,109,631 |   |
| Office                equipment                  |   |                  | 28,762     |     |   | 5,605                                |   |                     | 5,336     |   |   | 39,703 |   |
| Motor                Vehicles                    |   |                  | 206,252    |     |   | 9,924                                |   |                     | 11,226    |   |   | 227,402 |   |
| Cost                                             |   |                  | 24,353,307 |     |   | 52,203                               |   |                     | 1,301,358 |   |   | 25,706,868 |   |
|                                             |   |                  |       |     |   |                                 |   |                     |      |   |   |   |   |
| Less:                Accumulated Depreciation    |   |                  |       |     |   |                                 |   |                     |      |   |   |   |   |
|                                             |   |                  |       |     |   |                                 |   |                     |      |   |   |   |   |
| Buildings                                        |   | $                     | (981,116   | )        |   | (106,983                             | )      |                     | (51,854   | ) | $ | (1,139,953 | ) |
| Machinery                and equipment           |   |                  | (2,423,002 | )        |   | (337,115                             | )      |                     | (98,985   | ) |   | (2,859,102 | ) |
| Office                equipment                  |   |                  | (4,281     | )        |   | (474                                 | )      |                     | 1,992     |   |   | (2,763 | ) |
| Motor                Vehicles                    |   |                  | (46,447    | )        |   | (8,663                               | )      |                     | (2,744    | ) |   | (57,854 | ) |
| Accumulated                Depreciation          |   |                  | (3,454,846 | )        |   | (453,235                             | )      |                     | (151,591  | ) |   | (4,059,672 | ) |
|                                             |   |                  |       |     |   |                                 |   |                     |      |   |   |   |   |
| Construction                in progress          |   | $                     | 6,224,573  |     |   | 162,252                              |   |                     | 263,015   |   | $ | 6,649,840 |   |
|                                             |   |                  |       |     |   |                                 |   |                     |      |   |   |   |   |
| Total                property and equipment, net |   | $                     | 27,123,035 |     |   | (238,780                             | )      |                     | 1,412,782 |   | $ | 28,297,036 |   |

----

|                                         |   | Original Cost    |       |               |   |            |   |         |       |                      |   |                   |   |
|----------------------------------------------|--------|-----------------------|------------|--------------------|--------|-----------------|--------|--------------|------------|---------------------------|--------|------------------------|--------|
|                                         |   | December 31,2007 |       | March 31,2008 |   | Average         |   | SalvageValue |       | EstimateUseful Lives |   | DepreciationCalculated |   | DeprecationReported |   | Difference |   |
| Building                                |   | $                     | 8,858,126  |               |   | 9,330,132  |   |         | 9,094,129  |                      |   | 5                      | %      |   | 25 |   |   | 86,394 |   |   | 106,983 |   |   | (20,589 | ) |
| Property                and equipment        |   |                  | 15,260,167 |               |   | 16,109,631      |   |         | 15,684,899 |                      |   | 5                      | %      |   | 13 |   |   | 298,013 |   |   | 337,115 |   |   | (39,102 | ) |
| Office                equipment              |   |                  | 28,762     |               |   | 39,703          |   |         | 34,233     |                      |   | 5                      | %      |   | 5 |   |   | 1,626 |   |   | 474 |   |   | 1,152 |   |
| Motor                vehicle                 |   |                  | 206,252    |               |   | 227,402         |   |         | 216,827    |                      |   | 5                      | %      |   | 5 |   |   | 10,299 |   |   | 8,663 |   |   | 1,636 |   |
| Total                property and equipments |   | $                     | 24,353,307 |               |   | 25,706,868      |   |         | 25,030,088 |                      |   |                   |   |   |   |   |   | 396,332 |   |   | 453,235 |   |   | (56,903 | ) |

|                                    |   | THREE MONTHS ENDED MARCH 31 |    |
|-----------------------------------------|--------|-------------------------------------------------|---------|
|                                    |   | 2008                                            |    | 2007 |   |
|                                    |   | (Unaudited)                                     |    | (Unaudited) |   |
| Cost of sales            |   | $                                               | 330,015 |   | $ | 23,285 |   |
| Operating expenses                 |   |                                            | 123,220 |   |   | 76,576 |   |
| Balance                at end of period |   | $                                               | 453,235 |   | $ | 99,861 |   |

| **9.** | **Intangible                Assets (Restated)** |
|--------|-------------------------------------------------|

|                                        |   | December 31,2007 |       | Addition |   | ForeignCurrencyTranslationDifference |   | March 31, 2008 |    |
|---------------------------------------------|--------|-----------------------|------------|----------|--------|--------------------------------------|--------|--------------------------|---------|
|                                        |   |                  |       |     |   |                                 |   | (Unaudited)         |    |
| Land-use                rights              |   | $                     | 2,875,796  |     |   | -                                    |   |                     | 143,851 |   | $ | 3,019,647 |   |
| Drugs                permits and licenses   |   |                  | 2,564,996  |     |   | -                                    |   |                     | 128,305 |   |   | 2,693,301 |   |
| Technology                formulas          |   |                  | 1,220,164  |     |   | -                                    |   |                     | 50,865  |   |   | 1,271,029 |   |
| Patent                                      |   |                  | 1,685,919  |     |   | -                                    |   |                     | 70,280  |   |   | 1,756,199 |   |
| Cost                                        |   |                  | 8,346,875  |     |   | -                                    |   |                     | 393,301 |   |   | 8,740,176 |   |
|                                        |   |                  |       |     |   |                                 |   |                     |    |   |   |   |   |
| Land-use                rights              |   | $                     | (201,030   | )        |   | (18,247                              | )      |                     | (9,993  | ) | $ | (229,270 | ) |
| Drugs                permits and licenses   |   |                  | (1,291,425 | )        |   | (64,927                              | )      |                     | (60,050 | ) |   | (1,416,402 | ) |
| Technology                formulas          |   |                  | (154,863   | )        |   | (31,098                              | )      |                     | (7,133  | ) |   | (193,094 | ) |
| Patent                                      |   |                  | (205,047   | )        |   | (69,843                              | )      |                     | (9,899  | ) |   | (284,789 | ) |
| Accumulated                amortization     |   |                  | (1,852,364 | )        |   | (184,115                             | )      |                     | (87,075 | ) |   | (2,123,554 | ) |
|                                        |   |                  |       |     |   |                                 |   |                     |    |   |   |   |   |
| Total                intangible assets, net |   | $                     | 6,494,510  |     |   | (184,115                             | )      |                     | 306,226 |   | $ | 6,616,622 |   |

----

|                                      |   | Original Cost |      |           |   |            |   |              |            |         |   |
|-------------------------------------------|--------|--------------------|-----------|----------------|--------|-----------------|--------|-------------------|-----------------|--------------|--------|
|                                      |   | December 31,  |      | March 31, |   |            |   | Estimated         |            | Amortization |   | Amortization |   |   |   |
|                                      |   | 2007               |      | 2008           |   | Average         |   | Useful lives |            | Calculated   |   | Reported |   | Difference |   |
| Land-use rights                 |   | $                  | 2,875,796 |           |   | 3,019,647  |   |              | 2,947,722  |         |   | 40 |   | $ | 18,423 |   |   | 18,247 |   |   | 176 |   |
| Drugs                permits and licenses |   |               | 2,564,996 |           |   | 2,693,301       |   |              | 2,629,149       |         |   | 10 |   |   | 65,729 |   |   | 64,927 |   |   | 802 |   |
| Technology                formulas        |   |               | 1,220,164 |           |   | 1,271,029       |   |              | 1,245,597       |         |   | 10 |   |   | 31,140 |   |   | 31,098 |   |   | 42 |   |
| Patent                                    |   |               | 1,685,919 |           |   | 1,756,199       |   |              | 1,756,199       |         |   | 6 |   |   | 73,175 |   |   | 69,843 |   |   | 3,332 |   |
| Total                Intangible assets    |   | $                  | 8,346,875 |           |   | 8,740,176       |   |              | 8,578,666       |         |   |   |   | $ | 188,467 |   |   | 184,115 |   |   | 4,352 |   |

|                                    |   | THREE MONTHS ENDED MARCH 31 |    |
|-----------------------------------------|--------|-------------------------------------------------|---------|
|                                    |   | 2008                                            |    | 2007 |   |
|                                    |   | (Unaudited)                                     |    | (Unaudited) |   |
| Cost                of sales            |   | $                                               | 132,540 |   | $ | 24,183 |   |
| Operating                expenses       |   |                                            | 51,575  |   |   | 26,284 |   |
| Balance                at end of period |   | $                                               | 184,115 |   | $ | 50,467 |   |

| **10.** | **Goodwill                and Acquisition Cost                Payable** |
|---------|-------------------------------------------------------------------------|

| Condensed Balance Sheet of SiBiono, as of March 31, 2007  |   | In '000 |       |   |   |
|-------------------------------------------------------------------------------------------------------------|--------|--------------|------------|--------|--------|
|                                                                                                        |   |         |       |   |   |
| **Current                  Assets**                                                                         |   |         |       |   |   |   |   |
| Cash                  and cash equivalents                                                                  |   | $            | 590        |   |   |   |   |
| Receivables,                  prepaid expenses and deposits                                                 |   |         | 969        |   |   |   |   |
| Inventories                                                                                                 |   |         | 688        |   |   |   |   |
| **Total                  current assets**                                                                   |   |         | **2,246**  |   |   |   |   |
| **Non-current                  Assets**                                                                     |   |         |       |   |   |   |   |
| Property                  and equipments, net                                                               |   |         | 6,789      |   |   |   |   |
| Intangible                  assets, net                                                                     |   |         | 1,939      |   |   |   |   |
| **Total                  non-current assets**                                                               |   |         | **8,728**  |   |   |   |   |
| **Total                  Assets**                                                                           |   | **$**        | **10,975** |   |   |   |   |
|                                                                                                        |   |         |       |   |   |   |   |
| **Current                  Liabilities**                                                                    |   |         |       |   |   |   |   |
| Trade                  payables and miscellaneous payables                                                  |   | $            | 1,175      |   |   |   |   |
| Current                  portion of long term loans payable                                                 |   |         | 1,813      |   |   |   |   |
| Current                  portion of long term government debts payable                                      |   |         | 2,710      |   |   |   |   |
| **Total                  current liabilities**                                                              |   |         | **5,699**  |   |   |   |   |
| **Non-current                  Liabilities**                                                                |   |         |       |   |   |   |   |
| Long                  term loans payable                                                                    |   |         | 1,360      |   |   |   |   |
| Long                  term government debts payable                                                         |   |         | 1,723      |   |   |   |   |
| Due                  to related parties (long term)                                                         |   |         | 338        |   |   |   |   |
| **Total                  non-current liabilities**                                                          |   |         | **3,420**  |   |   |   |   |
| **Total                  liabilities**                                                                      |   | **$**        | **9,119**  |   |   |   |   |
|                                                                                                        |   |         |       |   |   |   |   |
| **Net                  assets**                                                                             |   | **$**        | **1,855**  |   |   |   |   |
|                                                                                                        |   |         |       |   |   |   |   |
| %                of equity interest acquired                                                           |   |         | 60.13      | %      |   |   |   |
| **Net                  assets acquired**                                                                    |   | **$**        | **1,116**  |   |   | Note                  a |   |

----

| **11.** | **Restricted                Cash, Bank Indebtedness and Commercial Notes                Payable** |
|---------|---------------------------------------------------------------------------------------------------|

|                                                     |   | March 31, |      | December 31, |   |
|----------------------------------------------------------|--------|----------------|-----------|-------------------|--------|
|                                                     |   | 2008           |      | 2007              |   |
|                                                     |   | (Unaudited)    |      |              |   |
| Deposits                for issuance of commercial notes |   | $              | 4,185,066 |              | $      | 2,615,254 |   |
| Funds                from government technolgy agencies  |   |           | 1,269,084 |              |   | 1,342,370 |   |
| Total                restricted cash                     |   | $              | 5,454,150 |              | $      | 3,957,624 |   |

| A)     | On                August 14, 2007, Benda Ebei entered into a commercial bank note issuable                agreement with Shanghai Pudong Development Bank. Pursuant to this                agreement, the following terms are included: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | a)                                                                                                                                                                                                                                      | Duration                of the agreement is three years; |

|   | b) | It                is non-interest bearing;                                                                                                                                                                                                                                                                          |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | c) | The                repayment period of each commercial note payable is six                months;                                                                                                                                                                                                                   |
|   | d) | The                total commercial note issuable limit is Rmb 60 million; however 50%                of                deposit should be made into the bank in order to secure the issuance                of                commercial bank note, thus the net available amount is Rmb 30                million; |
|   | e) | If                the net amount of each commercial bank note payable is not settled                on the                due date, the penalty will be the penalty rate of the PRC bank loan                on                daily and compound basis.                                                            |

|   | f) | As                mentioned in Note 8, this credit facility is guaranteed by SiBiono                and                secured by the buildings, machinery and equipment of Benda Ebei.                On                December 15, 2007, Benda Ebei received a consent letter from Pudong                Bank                that Pudong Bank agreed to cancel SiBiono’s guarantee toward this credit                facility. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| B) | The                bank indebtedness was resulted from the acquisition of SiBiono with                the                effective date April 1, 2007. The reasons for causing bank indebtedness                were stated as follows: |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | a) | Among                the cash and cash equivalents balances of SiBiono were composed of                two                parts; (i) unrestricted cash, which were generated from either operations,                or loans from bank and financial institutions, or invested capital;                (ii)                restricted cash, which were obtained from the various government                technology agencies as long term debt payable (see note 13 for the                related                details). |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | The                cash obtained from the various government technology agencies as                long term                debt payable could only be dedicated to the related project’s research and                development activities and purchase of fixed assets and construction                in                progress, therefore the cash balances for that part will be classified                as                restricted cash. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | c) | Due                to the above reasons, SiBiono relocated the balances of restricted                cash                from the cash and cash equivalents balances for the reporting periods. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | d) | However,                since the balance of the restricted cash was larger than the balance                of                cash and cash equivalents balances, thus bank indebtedness were resulted                for the reporting periods. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **12.** | **Other                assets** |
|---------|---------------------------------|

| 1. | Benda                Ebei should pay for the consideration of Rmb 6.24 million, equal                to 50% of                the total consideration set forth in the Equity Transfer Agreement.                For                the other 50% of the total consideration which was supposed to be                settled                in the form of issuing common stock, since Zhang did not make an                arbitration request on how to execute the arrangement, the Arbitration                Commission did not make an award on this particular                part. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2. | Benda                Ebei should pay for the penalty of Rmb 46,800;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 3. | Benda                Eebi should pay for legal and arbitration expenses of Rmb                268,971.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

----

| **13.** | **Bank                Loans Payable** |
|---------|---------------------------------------|

|                                          |   | March 31, |      | December 31, |   |
|-----------------------------------------------|--------|----------------|-----------|-------------------|--------|
|                                          |   | 2008           |      | 2007              |   |
|                                          |   | (Unaudited)    |      |         |   |
| Bank                loans due within one year |   | $              | 2,934,657 |              | $      | 2,867,004 |   |
| Bank                loans due after one year  |   |           | -         |              |   | - |   |
| Total                bank loans               |   | $              | 2,934,657 |              | $      | 2,867,004 |   |

| **14.** | **Long                Term Debt Payable** |
|---------|-------------------------------------------|

|                                                      |   | March 31, |      | December 31, |   |
|-----------------------------------------------------------|--------|----------------|-----------|-------------------|--------|
|                                                      |   | 2008           |      | 2007              |   |
|                                                      |   | (Unaudited)    |      |         |   |
| Long-term                debt payable due within one year |   | $              | 1,732,498 |              | $      | 1,787,239 |   |
| Long-term                debt payable due after one year  |   |           | 442,718   |              |   | 425,001 |   |
| Total                long-term debt payable               |   | $              | 2,175,216 |              | $      | 2,212,240 |   |

| **15.** | **Accounts                Payable and Accrued                Liabilities** |
|---------|----------------------------------------------------------------------------|

|                                                                       |   | March 31, |      | December 31, |   |
|----------------------------------------------------------------------------|--------|----------------|-----------|-------------------|--------|
|                                                                       |   | 2008           |      | 2007              |   |
|                                                                       |   | (Unaudited)    |      |         |   |
| Trade                payable                                               |   | $              | 407,863   |              | $      | 305,443 |   |
| Deposits                paid by customer                                   |   |           | 14,451    |              |   | 160,818 |   |
| Acquistion                cost payable following the arbitration (Note 12) |   |           | 1,827,393 |              |   | 1,754,263 |   |
| Accrued                liabilities                                         |   |           | 2,934,776 |              |   | 2,162,455 |   |
| Miscellaneous                payables                                      |   |           | 334,832   |              |   | 283,005 |   |
| Total                account payables and accurred liabilities             |   | $              | 5,519,316 |              | $      | 4,665,984 |   |

----

| **16.** | **Welfare                and Employment Liabilities** |
|---------|-------------------------------------------------------|

| **17.** | **Statutory                Reserves** |
|---------|---------------------------------------|

| **18.** | **Related                Party Transactions** |
|---------|-----------------------------------------------|

|                                                                 |   | March 31, |      | December 31, |   |
|----------------------------------------------------------------------|--------|----------------|-----------|-------------------|--------|
|                                                                 |   | 2008           |      | 2007              |   |
|                                                                 |   | (Unaudited)    |      |         |   |
| Yiqing                Wan                                            |   |           |           |              |   |  |   |
| Due                to Ever Leader Holdings Co. Ltd.                  |   | $              | 648,278   |              | $      | 646,429 |   |
| Due                to Hubei Tongji Benda Ebei Phamacetucial Co. Ltd. |   |           | 155,613   |              |   | 72,949 |   |
| Due                to Shenzhen SiBiono Gene Tech Co. Ltd.            |   |           | -         |              |   | 3,608 |   |
| Hubei                Benda Science and Technology Co. Ltd            |   |           |           |              |   |  |   |
| Due                to Yidu Benda Chemicals Co. Ltd.                  |   |           | 1,564,737 |              |   | 1,502,118 |   |
| Due                to Ever Leader Holdings Co. Ltd.                  |   |           | 230,818   |              |   | 230,160 |   |
| Feng                Wang                                             |   |           |           |              |   |  |   |
| Due                to Beijing Shusai Pharyngitis Research Co. Ltd.   |   |           | 30,541    |              |   | 29,318 |   |
| Qin                Yu                                                |   |           |           |              |   |  |   |
| Due                to Shenzhen SiBiono Gene Tech Co. Ltd.            |   |           | 5,427     |              |   | - |   |
| Hua                Shen                                              |   |           |           |              |   |  |   |
| Due                to Shenzhen SiBiono Gene Tech Co. Ltd.            |   |           | 142,797   |              |   | 137,097 |   |
| Pong                Tsaiohuei                                        |   |           |           |              |   |  |   |
| Due                to Shenzhen SiBiono Gene Tech Co. Ltd.            |   |           | 1,273     |              |   | 3,257 |   |
| Xiaozhi                Zhang                                         |   |           |           |              |   |  |   |
| Due                to Shenzhen SiBiono Gene Tech Co. Ltd.            |   |           | 5,295     |              |   | 5,083 |   |
| Xiaojing                Wang                                         |   |           |           |              |   |  |   |
| Due                to Shenzhen SiBiono Gene Tech Co. Ltd.            |   |           | 282       |              |   | - |   |
| Rong                He                                               |   |           |           |              |   |  |   |
| Due                to Shenzhen SiBiono Gene Tech Co. Ltd.            |   |           | 286       |              |   | - |   |
| Total                due from related parties                        |   | $              | 2,785,347 |              | $      | 2,630,019 |   |

----

|                                                                  |   | March 31, |      | December 31, |   |
|-----------------------------------------------------------------------|--------|----------------|-----------|-------------------|--------|
|                                                                  |   | 2008           |      | 2007              |   |
|                                                                  |   | (Unaudited)    |      |         |   |
| Hubei                Benda Science and Technology Co. Ltd             |   |           |      |              |   |   |   |
| Due                fromHubei Tongji Benda Ebei Phamacetucial Co. Ltd. |   | $              | 27,848    |              | $      | 49,056 |   |
| Due                fromJiangliang Benda Pharamaceutical Co. Ltd.      |   |           | 1,932,149 |              |   | 1,872,374 |   |
| Due                from Beijing Shusai Pharyngitis Research Co. Ltd.  |   |           | 13,879    |              |   | 6,846 |   |
| Wei                Xu                                                 |   |           |      |              |   |   |   |
| Due                fromShenzhen SiBiono Gene Tech Co. Ltd.            |   |           | 1,574     |              |   | - |   |
| Hua                Xu                                                 |   |           |      |              |   |   |   |
| Due                fromShenzhen SiBiono Gene Tech Co. Ltd.            |   |           | 24,849    |              |   | - |   |
| Due                fromHubei Tongji Benda Ebei Phamacetucial Co. Ltd. |   |           | 1,051,887 |              |   | 1,009,792 |   |
| Due                from Beijing Shusai Pharyngitis Research Co. Ltd.  |   |           | 64,054    |              |   | 61,491 |   |
| Yiqing,                Wan                                            |   |           |      |              |   |   |   |
| Due                from Yidu Benda Chemicals Co. Ltd.                 |   |           | 545       |              |   | - |   |
| Due                fromShenzhen SiBiono Gene Tech Co. Ltd.            |   |           | 139,668   |              |   | 137,687 |   |
| Hui                Xu                                                 |   |           |      |              |   |   |   |
| Due                fromHubei Tongji Benda Ebei Phamacetucial Co. Ltd. |   |           | 27,732    |              |   | 26,622 |   |
| Due                from Beijing Shusai Pharyngitis Research Co. Ltd.  |   |           | -         |              |   | 3,153 |   |
| Hua                Shen                                               |   |           |      |              |   |   |   |
| Due                fromShenzhen SiBiono Gene Tech Co. Ltd.            |   |           | 355       |              |   | 26,597 |   |
| Total                due to related parties                           |   | $              | 3,284,540 |              | $      | 3,193,618 |   |

| **19.** | **Redeemable                Common Stock Issuable For Services** |
|---------|------------------------------------------------------------------|

----

| **20.** | **Penalty                to investors** |
|---------|-----------------------------------------|

| **21.** | **Other                general and administrative                expenses** |
|---------|-----------------------------------------------------------------------------|

|                                                             |   | THREE MONTHS ENDED MARCH 31 |      |
|------------------------------------------------------------------|--------|-------------------------------------------------|-----------|
|                                                             |   | 2008                                            |      | 2007 |   |
|                                                             |   | (Unaudited)                                     |      | (Unaudited) |   |
| Audit                and accounting                              |   | $                                               | 129,334   |   | $ | 3,500 |   |
| Legal                fees                                        |   |                                            | 8,053     |   |   | 62,316 |   |
| Office                expenses                                   |   |                                            | 138,971   |   |   | 67,199 |   |
| Salaries                and wages                                |   |                                            | 349,270   |   |   | 131,362 |   |
| Consultancy                and professional fees                 |   |                                            | 232,914   |   |   | - |   |
| Rent                & Utilities                              |   |                                            | 35,540    |   |   | 4,490 |   |
| Investor                relation, Transfer agent and filing fees |   |                                            | 18,846    |   |   | 35,930 |   |
| Travel                and transportation                         |   |                                            | 70,563    |   |   | 12,045 |   |
| Repair                and maintanence                            |   |                                            | 76,654    |   |   | 3,472 |   |
| Miscellaneous                                                    |   |                                            | 37,724    |   |   | 4,399 |   |
| Total                other general & administrative expenses |   | $                                               | 1,097,869 |   | $ | 324,713 |   |

| **22.** | **Government                Subsidies / Grants** |
|---------|--------------------------------------------------|

| **23.** | **Income                Taxes** |
|---------|---------------------------------|

----

| Year                          |   | Tax                rate |   |
|-------------------------------|--------|-------------------------|--------|
|                          |   |                    |   |
| 2008                          |   |                    | 18     | % |
|                          |   |                    |        |   |
| 2009                          |   |                    | 20     | % |
|                          |   |                    |        |   |
| 2010                          |   |                    | 22     | % |
|                          |   |                    |        |   |
| 2011                          |   |                    | 24     | % |
|                          |   |                    |        |   |
| 2012 and thereafter |   |                    | 25     | % |

| **24.** | **Long                Term Convertible Promissory                Note** |
|---------|-------------------------------------------------------------------------|

----

----

| **25.** | **Common                Stock, Preferred Stock, Additional Paid-in Capital, Warrants and                Options** |
|---------|-------------------------------------------------------------------------------------------------------------------|

|   | (a) | None                shares of preferred stock issued and                outstanding; |
|--------|-----|--------------------------------------------------------------------------------------|

|   | (b) | As                of December 31, 2007, 100,170,071 shares of common stock were issued                and                outstanding, par value $0.001 each; During the three months ended                March                31, 2008:; (i) 523,438 shares were issued to PIPE investors for being                late                submission of 10K-SB (see Note 20); and (ii) 110,000 shares were                issued to                the independent directors in lieu of their reumeration. Thus, the                share of                common stock issued and outstanding was 100,803,509 as of March 31,                2008. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | (c) | The                following tables shows the events occurred in additional paid-in                capital: |
|--------|-----|-------------------------------------------------------------------------------------------------------------|

|                                                                                                                  |   | December 31, |         | Events occurred during |   | March 31, |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------------|----------------------------------|--------|----------------|--------|
|                                                                                                                  |   | 2007              |         | the reporting period   |   | 2008           |   |
| Events                                                                                                           |   |         |         |                        |   | (Unaudited)    |   |
| To                record the changes of par value from $0.01 to $0.001                                                |   |              |              |                             |   |                |   |   |  |   |
| of                the outstanding common stock as of 11/17/2005                                                       |   | $                 | 584,481      |                             |   | -              |   | $ | 584,481 |   |
| To                adjust the par value of outstanding common stock as of 3/31/2006                                    |   |              | (5,354       | )                                |   | -              |   |   | (5,354 | ) |
| Waiver                of shareholder loan on 9/5/2006                                                                 |   |              | 2,298,434    |                             |   | -              |   |   | 2,298,434 |   |
| To                eliminate the common stock and additional paid-in capital of                the                     |   |              |              |                             |   |                |   |   |  |   |
|  former                shell company "Applied Spectrum Technologies, Inc." on 11/15/2006                         |   |              | 16,215,770   |                             |   | -              |   |   | 16,215,770 |   |
| To                eliminate the accumulated deficit of the former shell                company                        |   |              |              |                             |   |                |   |   |  |   |
| "Applied                Spectrum Technologies, Inc." on 11/15/2006                                                    |   |              | (16,209,962  | )                                |   | -              |   |   | (16,209,962 | ) |
| Issuance                of common stock, 25,961,760 shares at $0.4622 per share, on 11/15/2006                        |   |              | 11,974,038   |                             |   | -              |   |   | 11,974,038 |   |
| Issuance                of common stock, 64,942,369 shares at $0.001 per share on 11/15/2006                          |   |              | (64,942      | )                                |   | -              |   |   | (64,942 | ) |
| To                relocate the original common stock of Ever Leader on 11/15/2006                                     |   |              | 1,285        |                             |   | -              |   |   | 1,285 |   |
| To                record the placement agent commission and transaction related                fee                    |   |              |              |                             |   |                |   |   |  |   |
| of                reverse merger on 11/15/2006                                                                        |   |              | (1,694,326   | )                                |   | -              |   |   | (1,694,326 | ) |
| Issuance                of common stock 706,195 at $0.4622 per share                                                  |   |              | 325,697.00   |                             |   | -              |   |   | 325,697 |   |
| Debt                discount on beneficial conversion feature on convertible promissory                notes          |   |              | 2,385,089.00 |                             |   | -              |   |   | 2,385,089 |   |
| Debt                discount on warrants issued with convertible promissory notes                                     |   |              | 5,174,911.00 |                             |   | -              |   |   | 5,174,911 |   |
| Placement                agent exercised 849,007 warrants at strike price through cashless                arrangement |   |              | 470,347.00   |                             |   | -              |   |   | 470,347 |   |
| Issuance                of common stock to PIPE investors as penalty for late submission                of 10KSB      |   |              | 92,461.00    |                             |   | -              |   |   | 92,461 |   |
| Issuance                of common stock to directors in lieu of their remuneration                                    |   |              | -            |                             |   | 75,790         |   |   | 75,790 |   |
| Issuance                of common stock to PIPE investors as penalty for late submission                of 10KSB      |   |              | -            |                             |   | 229,789        |   |   | 229,789 |   |
| Additional                paid-in capital, balance for the period ended                                               |   | $                 | 21,547,929   |                             |   | 305,579        |   | $ | 21,853,508 |   |

|   | (d) | As                of December 31, 2007, 27,708,929 Warrants, each convertible into                one (1)                share of the Group’s Common Stock, issued and outstanding. During the                three months ended March 31, 2008, 1,597,075 warrants were issuable                to CRT                Capital Group, LLC and 956,245 warrants were issuable to EastGate                Financial, Inc. in lieu of their consultancy service. Thus the remaining                balance as March 31, 2008 was                30,262,249 |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (e) | None                options issued and outstanding. |
|--------|-----|-----------------------------------------------------|

| **26.** | **Weighted                average shares outstanding -                diluted** |
|---------|--------------------------------------------------------------------------------------|

----

|                                                           |   | THREE MONTHS ENDED MARCH 31 |        |
|----------------------------------------------------------------|--------|-------------------------------------------------|-------------|
|                                                           |   | 2008                                            |        | 2007 |   |
|                                                           |   | (Unaudited)                                     |        | (Unaudited) |   |
| Numerator:                                                |   |                                            |        |   |   |   |   |
| Net                income (loss)                               |   | $                                               | (2,037,412  | ) | $ | 532,731 |   |
|                                                           |   |                                            |        |   |   |   |   |
| Denominator:                                                   |   |                                            |        |   |   |   |   |
| Basic                weighted-average shares outstanding       |   |                                            | 100,312,873 |   |   | 96,281,951 |   |
| Effect                of dilutive stock options & warrants |   |                                            | -           |   |   | 27,817,963 |   |
| Diluted                weighted-average shares outstanding     |   |                                            | 100,312,873 |   |   | 124,099,914 |   |
|                                                           |   |                                            |        |   |   |   |   |
| Net                income (loss) per share:                    |   |                                            |        |   |   |   |   |
| Basic                                                          |   | $                                               | (0.02       | ) | $ | 0.01 |   |
| Diluted                                                        |   | $                                               | (0.02       | ) | $ | 0.00 |   |

| **27.** | **Commitments                and Contingencies** |
|---------|--------------------------------------------------|

|                                              |   | March 31, |    |
|---------------------------------------------------|--------|----------------|---------|
|                                              |   | 2008           |    |
|                                              |   | (Unaudited)    |    |
| Rental                and Property Management Fee |   |           |         |   |
| Within                one year                    |   | $              | 91,715  |   |
| One                to two year                    |   |           | 76,763  |   |
| Total                commitments payable          |   | $              | 168,478 |   |

| **28.** | **Segment                Information** |
|---------|----------------------------------------|

|   | 1. | Benda                Ebei produces branded and generic medicines;                     |
|--------|----|---------------------------------------------------------------------------------------|
|   | 2. | Jiangling                Benda produces active pharmaceutical ingredients, APIs;      |
|   | 3. | Yidu                Benda produces bulk chemicals;                                    |
|   | 4. | Beijing                Shusai produces pharyngitis killer therapy;                and |

|   | 5. | SiBiono                produces gene therapy medicines, Gendicine. |
|--------|----|--------------------------------------------------------------------|

----

|                                              |   | THREE MONTHS ENDED MARCH 31                                                                                                      |       |
|---------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
|                                              |   |             2008             |       |             2007             |   |
|                                              |   | (Unaudited)                                                                                                                                          |       | (Unaudited) |   |
|                                              |   |                                                                                                                                                 |       |   |   |
| *Branded/Generic                medicine segment* |   |                                                                                                                                                 | 2008       |   |   | 2007 |   |
| Revenue                from external customers    |   | $                                                                                                                                                    | 5,521,109  |   | $ | 2,339,463 |   |
| Cost                of sales                      |   |                                                                                                                                                 | (3,781,154 | ) |   | (1,456,232 | ) |
| Gross                profit                       |   |                                                                                                                                                 | 1,739,955  |   |   | 883,231 |   |
| Gross                margin                       |   |                                                                                                                                                 | 32         | % |   | 38 | % |
| Research                and development           |   |                                                                                                                                                 | -          |   |   | - |   |
| Selling                expense                    |   |                                                                                                                                                 | (214,651   | ) |   | (55,803 | ) |
| General                and administrative expense |   |                                                                                                                                                 | (441,833   | ) |   | (134,147 | ) |
| Segment                contribution               |   | $                                                                                                                                                    | 1,083,471  |   | $ | 693,281 |   |
| Contribution                margin                |   |                                                                                                                                                 | 20         | % |   | 30 | % |
|                                              |   |                                                                                                                                                 |            |   |   |  |   |
| Total                assets, segment              |   | $                                                                                                                                                    | 37,198,711 |   | $ | 15,565,853 |   |

| *Active pharmaceutical ingredients segment * |   |             2008             |      |             2007             |   |
|------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Revenue                from external customers                   |   | $                                                                                                                                                    | 348       |                                                                                                                                                 | $      | - |   |
| Cost                of sales                                     |   |                                                                                                                                                 | -         |                                                                                                                                                 |   | (5,805 | ) |
| Gross                profit                                      |   |                                                                                                                                                 | 348       |                                                                                                                                                 |   | (5,805 | ) |
| Gross                margin                                      |   |                                                                                                                                                 | 100       | %                                                                                                                                                    |   | - |   |
| Research                and development                          |   |                                                                                                                                                 | -         |                                                                                                                                                 |   | - |   |
| Selling                expense                                   |   |                                                                                                                                                 | -         |                                                                                                                                                 |   | (3,011 | ) |
| General                and administrative expense                |   |                                                                                                                                                 | (243,569  | )                                                                                                                                                    |   | 28,767 |   |
| Segment                contribution                              |   | $                                                                                                                                                    | (243,221  | )                                                                                                                                                    | $      | 19,951 |   |
| Contribution                margin                               |   |                                                                                                                                                 | -69891    | %                                                                                                                                                    |   | - |   |
|                                                             |   |                                                                                                                                                 |      |                                                                                                                                                 |   |   |   |
| Total                assets, segment                             |   | $                                                                                                                                                    | 8,909,348 |                                                                                                                                                 | $      | 4,004,119 |   |

| *Bulk                chemicals segment*           |   |             2008             |      |             2007             |   |
|---------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Revenue                from external customers    |   | $                                                                                                                                                    | -         |                                                                                                                                                 | $      | 684,465 |   |
| Cost                of sales                      |   |                                                                                                                                                 | -         |                                                                                                                                                 |   | (384,868 | ) |
| Gross                profit                       |   |                                                                                                                                                 | -         |                                                                                                                                                 |   | 299,597 |   |
| Gross                margin                       |   |                                                                                                                                                 | -         |                                                                                                                                                 |   | 44 | % |
| Research                and development           |   |                                                                                                                                                 | -         |                                                                                                                                                 |   | - |   |
| Selling                expense                    |   |                                                                                                                                                 | -         |                                                                                                                                                 |   | (26,409 | ) |
| General                and administrative expense |   |                                                                                                                                                 | (297,977  | )                                                                                                                                                    |   | (90,564 | ) |
| Segment                contribution               |   | $                                                                                                                                                    | (297,977  | )                                                                                                                                                    | $      | 182,624 |   |
| Contribution                margin                |   |                                                                                                                                                 | -         |                                                                                                                                                 |   | 27 | % |
|                                              |   |                                                                                                                                                 |      |                                                                                                                                                 |   |   |   |
| Total                assets, segment              |   | $                                                                                                                                                    | 7,536,881 |                                                                                                                                                 | $      | 8,692,511 |   |

| *Pharynigitis                killer therapy segment* |   |             2008             |    |             2007             |   |
|------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Revenue                from external customers       |   | $                                                                                                                                                    | 2,097   |                                                                                                                                                 | $      | 5,107 |   |
| Cost                of sales                         |   |                                                                                                                                                 | (115    | )                                                                                                                                                    |   | (307 | ) |
| Gross                profit                          |   |                                                                                                                                                 | 1,982   |                                                                                                                                                 |   | 4,800 |   |
| Gross                margin                          |   |                                                                                                                                                 | 95      | %                                                                                                                                                    |   | 94 | % |
| Research                and development              |   |                                                                                                                                                 | -       |                                                                                                                                                 |   | - |   |
| Selling                expense                       |   |                                                                                                                                                 | (699    | )                                                                                                                                                    |   | (2,960 | ) |
| General                and administrative expense    |   |                                                                                                                                                 | (12,317 | )                                                                                                                                                    |   | (24,081 | ) |
| Segment                contribution                  |   | $                                                                                                                                                    | (11,034 | )                                                                                                                                                    | $      | (22,241 | ) |
| Contribution                margin                   |   |                                                                                                                                                 | -526    | %                                                                                                                                                    |   | -436 | % |
|                                                 |   |                                                                                                                                                 |    |                                                                                                                                                 |   |   |   |
| Total                assets, segment                 |   | $                                                                                                                                                    | 101,173 |                                                                                                                                                 | $      | 97,785 |   |

| *Gendicine                (Ad-p53) segment*       |   |             2008             |       |             2007             |   |
|---------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Revenue                from external customers    |   | $                                                                                                                                                    | 423,816    |                                                                                                                                                 | $      | - |   |
| Cost                of sales                      |   |                                                                                                                                                 | (35,977    | )                                                                                                                                                    |   | - |   |
| Gross                profit                       |   |                                                                                                                                                 | 387,839    |                                                                                                                                                 |   | - |   |
| Gross                margin                       |   |                                                                                                                                                 | 92         | %                                                                                                                                                    |   | - |   |
| Research                and development           |   |                                                                                                                                                 | (22,064    | )                                                                                                                                                    |   | - |   |
| Selling                expense                    |   |                                                                                                                                                 | (221,021   | )                                                                                                                                                    |   | - |   |
| General                and administrative expense |   |                                                                                                                                                 | (310,157   | )                                                                                                                                                    |   | - |   |
| Segment                contribution               |   | $                                                                                                                                                    | -165,403   |                                                                                                                                                 | $      | - |   |
| Contribution                margin                |   |                                                                                                                                                 | -39        | %                                                                                                                                                    |   | - |   |
|                                              |   |                                                                                                                                                 |       |                                                                                                                                                 |   |   |   |
| Total                assets, segment              |   | $                                                                                                                                                    | 14,031,627 |                                                                                                                                                 | $      | - |   |

----

|                                                 |   | TOTAL                                                                                                                                                |       |
|------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
|                                                 |   |             2008             |       |             2007             |   |
| Total                revenue from external customers |   | $                                                                                                                                                    | 5,947,370  |   | $ | 3,029,035 |   |
| Cost                of sales                         |   |                                                                                                                                                 | (3,817,246 | ) |   | (1,847,212 | ) |
| Gross                profit                          |   |                                                                                                                                                 | 2,130,124  |   |   | 1,181,823 |   |
| Gross                margin                          |   |                                                                                                                                                 | 36         | % |   | 39 | % |
| Research                and development              |   |                                                                                                                                                 | (22,064    | ) |   | 0 |   |
| Selling                expense                       |   |                                                                                                                                                 | (436,371   | ) |   | (88,183 | ) |
| General                and administrative expense    |   |                                                                                                                                                 | (1,305,853 | ) |   | (220,025 | ) |
| Segment                contribution                  |   | $                                                                                                                                                    | 365,836    |   | $ | 873,615 |   |
| Contribution                margin                   |   |                                                                                                                                                 | 6          | % |   | 29 | % |
|                                                 |   |                                                                                                                                                 |            |   |   |  |   |
| Total                assets, segment                 |   | $                                                                                                                                                    | 67,777,739 |   | $ | 28,360,268 |   |

|                                                                           |   | THREE MONTHS ENDED MARCH 31                                                                                                      |       |
|--------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
|                                                                           |   |             2008             |       |             2007             |   |
|                                                                           |   | (Unaudited)                                                                                                                                          |       | (Unaudited) |   |
| Total                segment contribution                                      |   | $                                                                                                                                                    | 365,836    |   | $ | 873,615 |   |
| Unallocated                amounts:                                            |   |                                                                                                                                                 |       |   |   |   |   |
| Other                income                                                    |   |                                                                                                                                                 | 301,693    |   |   | 937 |   |
| Other                corporate expenses                                        |   |                                                                                                                                                 | (2,549,347 | ) |   | (294,915 | ) |
|                                                                           |   |                                                                                                                                                 |            |   |   |  |   |
| Total                income / (loss) before minority interest and income taxes |   | $                                                                                                                                                    | (1,881,818 | ) | $ | 579,637 |   |

|                                                             |   | THREE MONTHS ENDED MARCH 31                                                                                                      |      |
|------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|
|                                                             |   |             2008             |      |             2007             |   |
|                                                             |   | (Unaudited)                                                                                                                                          |      | (Unaudited) |   |
| Consulting                and professional fees (Note 19)        |   | $                                                                                                                                                    |      |   | $ |   |   |
| Penalty                to investor                               |   |                                                                                                                                                 | 722,205   |   |   | 120,000 |   |
| Wages                and salaries                                |   |                                                                                                                                                 | 151,765   |   |   | 60,000 |   |
| Audit                and accounting                              |   |                                                                                                                                                 | 45,306    |   |   | 3,500 |   |
| Amortization                of debt issue cost                   |   |                                                                                                                                                 | 65,879    |   |   | 8,743 |   |
| Consulting                fee                                    |   |                                                                                                                                                 | 180,500   |   |   | - |   |
| Investor                relation, transfer agent and filing fees |   |                                                                                                                                                 | 18,846    |   |   | 35,930 |   |
| Director                renumeration                             |   |                                                                                                                                                 | 110,873   |   |   | - |   |
| Legal                fee                                         |   |                                                                                                                                                 | 31,624    |   |   | 35,095 |   |
| Travel                and transportation                         |   |                                                                                                                                                 | 4,842     |   |   | - |   |
| Office                expense                                    |   |                                                                                                                                                 | 1,120     |   |   | 2,297 |   |
| Interest                expense                                  |   |                                                                                                                                                 | 1,212,282 |   |   | 17,585 |   |
| Miscellaneous                                                    |   |                                                                                                                                                 | 4,105     |   |   | 11,765 |   |
|                                                             |   |                                                                                                                                                 |           |   |   |  |   |
|                                                             |   | $                                                                                                                                                    | 2,549,347 |   | $ | 294,915 |   |

----

|                                          |   | March 31, |       | March 31, |   |
|-----------------------------------------------|--------|----------------|------------|----------------|--------|
|                                          |   | 2008           |       | 2007           |   |
|                                          |   | (Unaudited)    |       | (Unaudited)    |   |
| Total assets,                segment     |   | $              | 67,777,739 |           | $      | 28,360,268 |   |
| Total                assets of corporate:     |   |           |       |           |   |   |   |
| Cash                and cash equivalent       |   |           | 44,958     |           |   | 5,845,699 |   |
| Bank                indebtedness              |   |           | 1,160,976  |           |   | - |   |
| Prepaid                expesnes and deposit   |   |           | 230        |           |   | 2,288 |   |
| Refundable                purchase price paid |   |           | 1,200,000  |           |   | 3,680,492 |   |
| Due                from related parties       |   |           | 879,096    |           |   | 263,296 |   |
| Debit                issue costs:             |   |           |       |           |   |   |   |
| placement                agent commission     |   |           | 262,066    |           |   | 377,657 |   |
| Total                assets                   |   | $              | 71,325,065 |           | $      | 38,529,700 |   |

|                                                           |   | **Three Months Ended March 31, 2008** |      |
|----------------------------------------------------------------|--------|----------------------------------------------------------------|-----------|
|                                                           |   | BendaEbei                                                      |      | JianglingBenda |   | YiduBenda |   | BeijingShusai |   | SiBiono |   | Total |   |
| **Segment operating profit                / (loss)** |   | $                                                              | 1,083,472 |   |   | (243,221 | ) |   | (297,977 | ) |   | (11,034 | ) |   | (165,403 | ) | $ | 365,837 |   |
| Interest                income/ (expenses)                     |   |                                                           | (147,734  | ) |   | 1,065 |   |   | (18 | ) |   | (2 | ) |   | (48,853 | ) |   | (195,542 | ) |
| Other                income / (expenses)                       |   |                                                           | (5,647    | ) |   | 493 |   |   | 992 |   |   | 7,278 |   |   | 298,577 |   |   | 301,693 |   |
| Income                taxes                                    |   |                                                           | (133,197  | ) |   | - |   |   | - |   |   | - |   |   | - |   |   | (133,197 | ) |
| **Income                / (loss) before minority interest**    |   | $                                                              | 796,894   |   |   | (241,663 | ) |   | (297,003 | ) |   | (3,758 | ) |   | 84,321 |   | $ | 338,791 |   |
|                                                           |   |                                                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| MI                percentage                                   |   |                                                           | 5.00      | % |   | 9.75 | % |   | 9.75 | % |   | 28.75 | % |   | 42.88 | % |   |   |   |
| MI                interest                                     |   | $                                                              | 39,845    |   |   | (23,562 | ) |   | (28,958 | ) |   | (1,080 | ) |   | 36,154 |   | $ | 22,398 |   |

|                                                        |   | **Three Months Ended March 31, 2007**  |    |
|-------------------------------------------------------------|--------|----------------------------------------------------------------------|---------|
|                                                        |   | BendaEbei                                                            |    | JianglingBenda |   | YiduBenda |   | BeijingShusai |   | SiBiono |   | Total |   |
| **Segment                operating profit / (loss)**        |   | $                                                                    | 693,280 |   |   | 19,951 |   |   | 182,624 |   |   | (22,241 | ) |   | - |   | $ | 873,614 |   |
| Loss                on disposal of assets                   |   |                                                                 | -       |   |   | (6,955 | ) |   | (5,070 | ) |   | - |   |   | - |   |   | (12,025 | ) |
| Interest                income/ (expenses)                  |   |                                                                 | 636     |   |   | (3 | ) |   | (2,597 | ) |   | (19 | ) |   | - |   |   | (1,983 | ) |
| Other                income / (expenses)                    |   |                                                                 | -       |   |   | 65 |   |   | 872 |   |   | - |   |   | - |   |   | 937 |   |
| **Income                / (loss) before minority interest** |   | $                                                                    | 693,916 |   |   | 13,058 |   |   | 175,829 |   |   | (22,260 | ) |   | - |   | $ | 860,543 |   |
|                                                        |   |                                                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| MI                percentage                                |   |                                                                 | 5.00    | % |   | 9.75 | % |   | 9.75 | % |   | 28.75 | % |   | - |   |   |   |   |
| MI                interest                                  |   | $                                                                    | 34,696  |   |   | 1,273 |   |   | 17,143 |   |   | (6,400 | ) |   | - |   | $ | 46,906 |   |

| **Manufacturer**          |   | **Product**                             |   | **Type** |   | **Function**                                       |
|---------------------------|--------|-----------------------------------------|--------|----------|--------|----------------------------------------------------|
| Benda                Ebei |   | Jixuening                injection vial |   | Generic  |   | Haemostatic                (stops bleeding)        |
|                      |   |                                    |   |     |   |                                               |
| Benda                Ebei |   | Xujing                injection vial    |   | Generic  |   | Haemostatic                                        |
|                      |   |                                    |   |     |   |                                               |
| Benda                Ebei |   | Nokeqing                injection vial  |   | Generic  |   | Used                to treat hepatitis             |
|                      |   |                                    |   |     |   |                                               |
| Benda                Ebei |   | Yidingshu                injection vial |   | Generic  |   | Vitamin                to treat lack of Riboflavin |
|                      |   |                                    |   |     |   |                                               |
| Benda                Ebei |   | Shusai-A                injection vial  |   | Generic  |   | Anti-inflammatory                analgesic         |

----

| Benda                Ebei      |   | Suzheng-B                injection vial                                 |   | Generic                                     |   | Vitamin;                complementary medicine used to treat hepatitis                             |
|--------------------------------|--------|-------------------------------------------------------------------------|--------|---------------------------------------------|--------|----------------------------------------------------------------------------------------------------|
|                           |   |                                                                    |   |                                        |   |                                                                                               |
| Benda                Ebei      |   | Ribavirin                injection vial                                 |   | Generic                                     |   | Anti-virus,                to treat acute upper respiratory tract infection                        |
|                           |   |                                                                    |   |                                        |   |                                                                                               |
| Benda                Ebei      |   | Gentamycin                Sulfate Injection vial                        |   | Generic                                     |   | Broad                spectrum antibiotic                                                           |
|                           |   |                                                                    |   |                                        |   |                                                                                               |
| Benda                Ebei      |   | Vitamin                B6 injection vial                                |   | Generic                                     |   | Vitamin;                complementary medicine used to treat hepatitis                             |
|                           |   |                                                                    |   |                                        |   |                                                                                               |
| Benda                Ebei      |   | Inosine                injection vial                                   |   | Generic                                     |   | Nutrition,                complementary medicine used to treat hepatitis                           |
|                           |   |                                                                    |   |                                        |   |                                                                                               |
| Benda                Ebei      |   | Vitamin                C injection vial                                 |   | Generic                                     |   | To                treat deficiency of vitamin C                                                    |
|                           |   |                                                                    |   |                                        |   |                                                                                               |
| Jiangling                Benda |   | Ribavirin                API (1)                                        |   | API                                         |   | Ribavirin                drug manufacture.                                                         |
|                           |   |                                                                    |   |                                        |   |                                                                                               |
| Jiangling                Benda |   | Asarin                API (1)                                           |   | API                                         |   | Asarin                manufacture to treat acute upper respiratory system                infection |
|                           |   |                                                                    |   |                                        |   |                                                                                               |
| Jiangling                Benda |   | Levofloxacin                Mesylate API (1)                            |   | API                                         |   | Broad                spectrum antibiotic drug manufacture                                          |
|                           |   |                                                                    |   |                                        |   |                                                                                               |
| Yidu                Benda      |   | Triazol                carboxylic acid methyl ester (“TCA”) |   | Bulk chemical                          |   | Ribavirin                manufacture, anti-virus                                                   |
|                           |   |                                                                    |   |                                        |   |                                                                                               |
| Yidu                Benda      |   | L-methionine                                                            |   | Bulk chemical                Nutrition |   | An                essential amino acid for humans                                                  |
|                           |   |                                                                    |   |                                        |   |                                                                                               |
| Yidu                Benda      |   | Tricabroxylic                acid amide (“TAA”)             |   | Bulk chemical                          |   | Ribavirin                manufacture, anti-virus drug manufacture                                  |
|                           |   |                                                                    |   |                                        |   |                                                                                               |
| Yidu                Benda      |   | 1,2,3,5-Tetraacetyl-ß-D-Ribose                                |   | Bulk chemical                          |   | Ribavirin                manufacture, anti-virus drug                manufacture                   |

| **29.** | **Subsequent                Events** |
|---------|--------------------------------------|

| (a) | SiBiono                patents - on January 29, 2007, SiBiono entrusted Grandall Legal Group                Shenzhen Law Firm to issue a legal letter to Zhaohui Peng, one of                the                shareholders of Sibiono and the inventor of Gendicine, requesting                him to                transfer all the title of patents to SiBiono. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| **Item ** |         | **Patent name**                                                                                                                                      |         | **Countries****/ Date ** |         | **Application****Number (1) ** |         | **Publication****Number (2) ** |         | **Approved Patent****Number (3) ** |         | **Name of Patent****Inventor (6) ** |         | **Name of****Applicant (6) ** |         | **Patent****Assignees ** |         |
|----------------|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|------------------------------------|--------------|------------------------------------------|--------------|------------------------------------------|--------------|---------------------------------------------------|--------------|---------------------------------------------------------|--------------|----------------------------------------------|--------------|-------------------------------|--------------|
| 1         |         | A                  new method for manufacturing recombinant adenovirus                                                                                    |         |                               |         |                                     |         |                                     |         |                                              |         |                                                    |         |                                         |         |                          |         |
|           |         | A                                                                                                                                                         |         | China                              |         | 98123346.5                               |         | CN1228474A                               |         | ZL98123346.5                                      |         | Peng                                                    |         | Peng                                         |         | SiBiono                       |         |
|           |         |                                                                                                                                                      |         | Date                               |         | 1998/12/14                               |         | 1999/9/15                                |         | 2002/7/3                                          |         |                                                    |         |                                         |         |                          |         |
| 2              |         | A                  recombinant constructed by a virus vector and a human tumor suppressor                  gene and its use                               |         |                               |         |                                     |         |                                     |         |                                              |         |                                                    |         |                                         |         |                          |         |
|           |         | A                                                                                                                                                         |         | China                              |         | 02115228.4                               |         | CN1401778A                               |         | ZL02115228.4                                      |         | Peng                  / Zhang                           |         | Peng                  / Zhang                |         | Peng                  / Zhang |         |
|           |         |                                                                                                                                                      |         | Date                               |         | 2002/5/8                                 |         | 2003/3/12                                |         | 2004/11/24                                        |         |                                                    |         |                                         |         |                          |         |
|           |         |                                                                                                                                                      |         |                               |         |                                     |         |                                     |         |                                              |         |                                                    |         |                                         |         |                          |         |
|           |         | B                                                                                                                                                         |         | PCT                  (4)           |         | 65                                       |         | WO2004/078987A1                          |         | Not                  Approved                     |         | Peng                  / Zhang                           |         | Peng                  / Zhang                |         | N/A                           |         |
|           |         |                                                                                                                                                      |         | Date                               |         | 2004/3/8                                 |         | 2004/9/16                                |         | N/A                                               |         |                                                    |         |                                         |         |                          |         |
| 3              |         | Recombinant                  gene medicine of adenovirus vector and and gene p54 for treating                  proloferative diseases                     |         |                               |         |                                     |         |                                     |         |                                              |         |                                                    |         |                                         |         |                          |         |
|           |         | A                                                                                                                                                         |         | China                              |         | 03125129.3                               |         | CN1471977A                               |         | ZL03125129.3                                      |         | Peng                  / Zhang                           |         | Peng                  / Zhang                |         | Peng                  / Zhang |         |
|           |         |                                                                                                                                                      |         | Date                               |         | 2003/5/10                                |         | 2004/2/4                                 |         | 2007/7/25                                         |         |                                                    |         |                                         |         |                          |         |
|           |         |                                                                                                                                                      |         |                               |         |                                     |         |                                     |         |                                              |         |                                                    |         |                                         |         |                          |         |
|           |         | B                                                                                                                                                         |         | PCT                  (4)           |         | 58                                       |         | WO2004/104204A1                          |         | Not                  Approved                     |         | Peng                  / Zhang                           |         | Peng                  / Zhang                |         | N/A                           |         |
|           |         |                                                                                                                                                      |         | Date                               |         | 2004/5/9                                 |         | 2004/12/2                                |         | N/A                                               |         |                                                    |         |                                         |         |                          |         |
| 4              |         | The                  application of recombinant adenoviral p53 as cancer vaccine (tentative                  title)                                       |         |                               |         |                                     |         |                                     |         |                                              |         |                                                    |         |                                         |         |                          |         |
|           |         | A                                                                                                                                                         |         | China                              |         | 200510002779.1                           |         | CN1679641A                               |         | ZL200510002779.1                                  |         | Peng                  / Zhang                           |         | Peng                  / Zhang                |         | Peng                  / Zhang |         |
|           |         |                                                                                                                                                      |         | Date                               |         | 2005/1/26                                |         | 2005/10/12                               |         | 2007/8/29                                         |         |                                                    |         |                                         |         |                          |         |
|           |         |                                                                                                                                                      |         |                               |         |                                     |         |                                     |         |                                              |         |                                                    |         |                                         |         |                          |         |
|           |         | B                                                                                                                                                         |         | PCT                  (4)           |         | 11                                       |         | WO2006/079244A1                          |         | Not                  Approved                     |         | Peng                  / Zhang                           |         | Peng                  / Zhang                |         | N/A                           |         |
|           |         |                                                                                                                                                      |         | Date                               |         | 2005/1/26                                |         | 2006/8/3                                 |         | N/A                                               |         |                                                    |         |                                         |         |                          |         |
|           |         |                                                                                                                                                      |         |                               |         |                                     |         |                                     |         |                                              |         |                                                    |         |                                         |         |                          |         |
|           |         | C                                                                                                                                                         |         | US                  (5)            |         | 11/075035                                |         | 2005/0281785A1                           |         | Not                  Approved                     |         | Peng                  / Zhang                           |         | Unidentified                  Yet            |         | N/A                           |         |
|           |         |                                                                                                                                                      |         | Date                               |         | 2005/3/7                                 |         | 2005/12/22                               |         | N/A                                               |         |                                                    |         |                                         |         |                          |         |
| 5              |         | Human                  Embryonic Kidney (HEK) sub-clone cell line                                                                                         |         |                               |         |                                     |         |                                     |         |                                              |         |                                                    |         |                                         |         |                          |         |
|           |         | A                                                                                                                                                         |         | China                              |         | 03126889.7                               |         | CN1513985A                               |         | Not                  Approved                     |         | Peng                  / Zhang                           |         | Peng                  / Zhang                |         | N/A                           |         |
|           |         |                                                                                                                                                      |         | Date                               |         | 2003/6/13                                |         | 2004/7/21                                |         | N/A                                               |         |                                                    |         |                                         |         |                          |         |
|           |         |                                                                                                                                                      |         |                               |         |                                     |         |                                     |         |                                              |         |                                                    |         |                                         |         |                          |         |
|           |         | B                                                                                                                                                         |         | PCT                  (4)           |         | 57                                       |         | WO2004/111239                            |         | Not                  Approved                     |         | Peng                  / Zhang                           |         | Peng                  / Zhang                |         | N/A                           |         |
|           |         |                                                                                                                                                      |         | Date                               |         | 2004/5/9                                 |         | 2004/12/23                               |         | N/A                                               |         |                                                    |         |                                         |         |                          |         |
| 6              |         | The                  complex of poly peptide liposome and human VGEF gene, and its use                  and                  human VGEF gene, and its use |         |                               |         |                                     |         |                                     |         |                                              |         |                                                    |         |                                         |         |                          |         |
|           |         | A                                                                                                                                                         |         | China                              |         | 02134321.7                               |         | CN1389269A                               |         | Not                  Approved                     |         | Peng                  / Zhang / Zhu                     |         | Peng                  / Zhang / Zhu          |         | N/A                           |         |
|           |    |                                                                                                                                                      |    | Date                               |    | 2002/7/4                                 |    | 2003/1/8                                 |    | N/A                                               |    |                                                    |    |                                         |    |                          |    |

| (1) | Application                number is obtained when application is submitted;                    |
|-----|-------------------------------------------------------------------------------------------------|
| (2) | Publication                number is obtained after the first phase                examination; |

| (3) | Approved                patent number is obtained after the final examination;                  |
|-----|-------------------------------------------------------------------------------------------------|
| (4) | PCT                is referred to an International Patent Organization in                Paris; |

| (5) | US                is referred to the application is made in United States of America                alone;                                       |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------|
| (6) | Peng                is referred to Zhaohui Peng; Zhang is referred to Xiaozhi Zhang;                Zhu is                referred to Jinya Zhu. |

| (b) | As                mentioned in Note 12, following this arbitration decision, Benda                Ebei has                the obligation to pay the total acquisition cost payable of Rmb 12.48                million, plus the penalty and related legal and arbitration expenses,                totaling approximately Rmb 12.80 million (or $1.75 million). Up to                now,                since both parties are still in the process of negotiation about                the date                of the payment, no actual equity transfer is made                yet. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Item      2. Management’s Discussion and Analysis or Plan of      Operation**

**Critical      Accounting Policies**

**Revenue      Recognition**

|   | 1. | Persuasive                evidence of an arrangement exists; |
|--------|----|--------------------------------------------------------------|

|   | 2. | Delivery                has occurred or services have been                rendered; |
|--------|----|-------------------------------------------------------------------------------------|

|   | 3. | The                seller's price to the buyer is fixed or determinable;                and |
|--------|----|---------------------------------------------------------------------------------------------|

|   | 4. | Collectibility                is reasonably assured. |
|--------|----|------------------------------------------------------|

----

----

**Operational      Results**

|                                                                     |   | **March 31,** |        | **March 31,** |   |
|--------------------------------------------------------------------------|--------|--------------------|-------------|--------------------|--------|
|                                                                     |   | **2008**           |        | **2007**           |   |
|                                                                     |   | **(Unaudited)**    |        | **(Unaudited)**    |   |
|                                                                     |   | **(Restated)**     |        | **(Restated)**     |   |
| Revenue                                                             |   | $                  | 5,947,370   |               | $      | 3,029,035 |   |
| Cost                of goods sold                                        |   |               | (3,817,246  | )                  |   | (1,847,212 | ) |
| Gross                profit                                              |   |               | 2,130,124   |               |   | 1,181,823 |   |
| Selling                expenses                                          |   |               | (436,371    | )                  |   | (88,183 | ) |
| General                and administravive expenses                       |   |               | (2,642,918  | )                  |   | (485,330 | ) |
| Gains                / (losses) on disposals of fixed assets             |   |               | -           |               |   | (12,025 | ) |
| Research                and development expenses                         |   |               | (22,064     | )                  |   | - |   |
| Total                operating expenses                                  |   |               | (3,101,353  | )                  |   | (585,538 | ) |
| Operating                income / (loss)                                 |   |               | (971,229    | )                  |   | 596,285 |   |
| Interest                expenses                                         |   |               | (1,212,282  | )                  |   | (17,585 | ) |
| Other                income (expenses)                                   |   |               | 301,693     |               |   | 937 |   |
| Income                / (loss) before minority interest and income taxes |   |               | (1,881,818  | )                  |   | 579,637 |   |
| Income                taxes                                              |   |               | (133,197    | )                  |   | - |   |
| Minority                interest                                         |   |               | (22,398     | )                  |   | (46,906 | ) |
|                                                                     |   |               |        |               |   |   |   |
| Net                Income / (loss)                                       |   | $                  | (2,037,413  | )                  | $      | 532,731 |   |
|                                                                     |   |               |        |               |   |   |   |
| Earnings                / (loss) per share - basic                       |   | $                  | (0.02       | )                  | $      | 0.01 |   |
|                                                                     |   |               |        |               |   |   |   |
| Weighted                average shares outstanding - basic               |   |               | 100,312,873 |               |   | 96,281,951 |   |
|                                                                     |   |               |        |               |   |   |   |
| Earnings                / (loss) per share - diluted                     |   | $                  | (0.02       | )                  | $      | 0.00 |   |
|                                                                     |   |               |        |               |   |   |   |
| Weighted                average shares outstanding - diluted             |   |               | 100,312,873 |               |   | 124,099,914 |   |

***Restatement***

*Net      Revenue:*

| 1. | One                of the Benda’s subsidiary, Benda Ebei’s net revenue increased $3.18                million (or 136%) to $5.52 million for the three months ended March                31,                2008 from $2.34 million for the three months ended March 31, 2007.                It was                mainly due to the increase sales of the existing major products and                the                introduction of new products and they are shown in the table                below: |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                  |   | Three months ended March 31, |   | Variance    |   | Variance          |   |
|---------------------------------------|--------|--------------------------------------------------|--------|-------------|--------|-------------------|--------|
| Products (Million)          |   | 2008                                             |   | 2007        |   | + / (-) |   | + / (-) % |   |
|                                  |   | (Unaudited)                                      |   | (Unaudited) |   |              |   |   |   |
| Suzheng-B                        |   | $                                                | 0.88   |        | $      | 0.50              |   | $ | 0.37 |   |   | 75 | % |
| Shusai-A                              |   |                                             | 0.80   |        |   | 0.15              |   |   | 0.65 |   |   | 445 | % |
| Xujing                                |   |                                             | 0.71   |        |   | 0.48              |   |   | 0.23 |   |   | 48 | % |
| Yidingshu                             |   |                                             | 0.73   |        |   | 0.27              |   |   | 0.45 |   |   | 166 | % |
| Jixuening                             |   |                                             | 0.35   |        |   | 0.12              |   |   | 0.23 |   |   | 196 | % |
| Gentamycin                80 Thousand |   |                                             | 0.11   |        |   | 0.02              |   |   | 0.09 |   |   | 366 | % |
| Anagin                                |   |                                             | 0.09   |        |   | -                 |   |   | 0.09 |   |   | 100 | % |
| Lincomycin                            |   |                                             | 0.31   |        |   | -                 |   |   | 0.31 |   |   | 100 | % |
| Kanamycin                             |   |                                             | 0.14   |        |   | -                 |   |   | 0.14 |   |   | 100 | % |
| Troxerutin                            |   | $                                                | 0.05   |        | $      | -                 |   | $ | 0.05 |   |   | 100 | % |

| 2. | One                of the Benda’s subsidiary, Jiangling Benda, there was no reported net                revenue for the three months ended March 31, 2007 due to the fact                that it                only resumed its production in October 2007. For the three months                ended                March 31, 2008, since it was still under the stage of production                planning,                therefore there was net revenue generated. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3. | One                of the Benda’s subsidiary, Yidu Benda’s net revenue dropped $0.68 million                (or 100%) to zero for the three month ended March 31, 2008 from $0.68                million for the three month ended March 31, 2007 due to the fact                that the                plant was temporarily closed since mid January to upgrade its waster                water                treatment system to comply with new environmental standards enforced                by                PRC local government. |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4. | One                of the Benda’s subsidiary, Beijing Shusai which incorporated on July 15,                2006. China’s State Food and Drug Administration (SFDA) recently                experienced an overhaul in its policies and regulatory systems in                an                effort to fight against corruption in Chinese pharmaceutical industry.                Beijing Shusai’s operation has been adversely affected by this recent                policy changes which prohibits some state-owned hospitals from forming                alliances with private companies. The management could not estimate                that                such situation could be resolved in the coming future. |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5. | One                of the Benda’s subsidiary, SiBiono, acquired and effective since April 1,                2007, realized net revenue of $0.42 million for the three month ended                March 31, 2008. SiBiono’s flagship product, Gendicine is the                commercialized gene therapy product for the treatment of cancer and                about                1,087 vials of Gendicine were sold in the first quarter in 2008. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

*Cost      of Goods Sold*

*Gross      Profit *

*Selling      Expenses:*

*General      and Administrative Expenses:*

|                                                        |   | Three Months Ended March 31, |      |              |   |
|------------------------------------------------------------------|--------|--------------------------------------------------|-----------|-------------------|--------|
| Major general & administrative expenses  |   | 2007                                             |      | 2006              |   | Variance |   |
|                                                             |   | (Unaudited)                                 |      | (Unaudited)  |   |   |   |
| Amortization on intangible assets            |   | $                                                | 51,575    |              | $      | 26,284 |   | $ | 25,291 |   |
| Amortization                on debt issue cost                   |   |                                             | 65,879    |              |   | 8,743 |   |   | 57,136 |   |
| Audit                and accounting                              |   |                                             | 129,334   |              |   | 3,500 |   |   | 125,834 |   |
| Office                expenses                                   |   |                                             | 138,971   |              |   | 67,199 |   |   | 71,772 |   |
| Repair                and maintenance                            |   |                                             | 76,654    |              |   | 3,472 |   |   | 73,182 |   |
| Salaries                and wages                                |   |                                             | 349,270   |              |   | 131,362 |   |   | 217,908 |   |
| Consultant                and Professional Fees                  |   |                                             | 232,914   |              |   | - |   |   | 232,914 |   |
| Training                & professional development           |   |                                             | 5,793     |              |   | 1,156 |   |   | 4,637 |   |
| Conference                                                       |   |                                             | 12,877    |              |   | 9,600 |   |   | 3,277 |   |
| Rent                & Utilities                              |   |                                             | 35,540    |              |   | 4,490 |   |   | 31,050 |   |
| Penalty                to Investor for late filings on 10KSB     |   |                                             | 722,205   |              |   | 120,000 |   |   | 602,205 |   |
| Investor                relation, Transfer agent and filing fees |   |                                             | 18,846    |              |   | 35,930 |   |   | -17,084 |   |
| Director                Renumeration                             |   |                                             | 110,873   |              |   | - |   |   | 110,873 |   |
| Travel                and transportation                         |   |                                             | 70,563    |              |   | 12,045 |   |   | 58,518 |   |
|                                                             |   | $                                                | 2,021,294 |              | $      | 423,781 |   | $ | 1,597,513 |   |

----

*Operating      Income/ (Loss):*

*Interest      Expenses:*

*Income      Taxes:*

----

| Year                               |   | Tax rate |   |
|------------------------------------|--------|---------------|--------|
|                               |   |          |   |
| 2008                               |   |          | 18     | % |
|                               |   |          |   |   |
| 2009                               |   |          | 20     | % |
|                               |   |          |   |   |
| 2010                               |   |          | 22     | % |
|                               |   |          |   |   |
| 2011                               |   |          | 24     | % |
|                               |   |          |   |   |
| 2012                and thereafter |   |          | 25     | % |

| a) | Non-cash                operating activities, reconciliation items to the net                income |
|----|-----------------------------------------------------------------------------------------------------|

|   | 1. | $941K                that incurred as interest expenses related to the amortization of                discount                on long-term debt and issuance cost associated with the warrants                and the                beneficial conversion features (please refer to Note 24 of the Notes                to                Consolidated Financial Statements for details); |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 2. | $230K                that incurred as the penalty payment made in form of shares issuance                to                PIPE investors due to the late effective of the registered statement;                and                                                                                                                                                                        |
|   | 3. | Other                factors: $471K incurred on bad debt provision; $453K incurred on                depreciation; $184K incurred on amortization of intangible assets;                $65K                million incurred on amortization of debt issue cost; and $22K incurred                on                minority interest.                                                      |

| b) | Trade                receivables |
|----|----------------------------------|

*Trade      receivables*

|   | a) | Customers                whom have sales relationship with our company are all relatively                big                business wholesale enterprises and they have all passed the examination                of                GMP Certificate so that the collectibility from those is out of question; |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | b) | Due                to the fact that there was a long Chinese New Year holiday and a                big                snowing in the first quarter of 2008, it did affect the collection                of                trade receivables to certain extend; and                                             |
|   | c) | The                management realized that it did affect the cash flow situation of                the                company, therefore the company will put more efforts to reduce the                balance                of trade receivables starting from the second quarter of 2008.                 |

----

*Inventories*

*Tax      Payable*

**Item      3.**
**Quantitative      and Qualitative Disclosures About Market Risk**

**ITEM      8A.**
**CONTROLS      AND PROCEDURES**

----

***Management’s      Report on Internal Controls over Financial      Reporting***

----

**PART      II - OTHER INFORMATION**

**Item      1. Legal Proceedings.**

| 1. | Benda                Ebei should pay for the consideration of Rmb 6.24 million, equal                to 50% of                the total consideration set forth in the Equity Transfer Agreement.                For                the other 50% of the total consideration which was supposed to be                settled                in the form of issuing common stock, since Zhang did not make an                arbitration request on how to execute the arrangement, the Arbitration                Commission did not make an award on this particular                part. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2. | Benda                Ebei should pay for the penalty of Rmb 46,800;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 3. | Benda                Eebi should pay for legal and arbitration expenses of Rmb                268,971.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

----

**Item      2. Unregistered Sales of Equity Securities and Use of      Proceeds**

----

**Item      3. Defaults Upon Senior Securities.**

**Item      4. Submission of Matters to a Vote of Security Holders.**

**Item      5. Other Information.**

**Item      6. Exhibits and Reports of Form 8-K.**

----

**SIGNATURES**

|                                     | **BENDA                PHARMACEUTICAL, INC.**     |
|------------------------------------------|---------------------------------------------------|
|                                     | Registrant                                        |
|                                     |                                              |   |
| Date: August                1, 2008 | By:                                               | */s/                Yiqing Wan* |
|                                     | Yiqing                Wan                         |
|                                     | President,                Chief Executive Officer |
|                                     | Chairman                of Board of Directors     |

----