----

**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      D.C. 20549**

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**FORM      10-Q**

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| **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)**

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

** (Issuer      Telephone number)**

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

ox

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**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        | 9 |
| Item                4T.                                | Control                and Procedures                                            | 9 |
|                                                   |                                                                             |   |
| **PART                II— OTHER INFORMATION**    |                                                                             |
|                                                   |                                                                             |
|  Item                1                            | Legal                Proceedings                                                 | 11 |
|  Item                2.                           | Unregistered                Sales of Equity Securities and Use of Proceeds       | 11 |
|  Item                3.                           | Defaults                Upon Senior Securities                                   | 12 |
|  Item                4.                           | Submission                of Matters to a Vote of Security Holders               | 12 |
|  Item                5.                           | Other                Information                                                 | 12 |
|  Item                6.                           | Exhibits                and Reports on Form 8-K                                  | 12 |
|                                                   |                                                                             | 12 |
| **SIGNATURE**                                          | 13                                                                               |

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**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).                                                                |

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**Benda        Pharmaceutical, Inc.**

**Consolidated        Balance Sheets**

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

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|                                                                                                                                                                                                                                                                                |   | **March 31****2008****(Unaudited)** |       | **December 31****2007** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|------------|------------------------------|--------|
| **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)                                                                                                                                                                                                                              |   |                                     | 27,343,976 |                         |   | 26,275,871 |   |
| Intangible                  assets, net (Note 9)                                                                                                                                                                                                                                    |   |                                     | 6,464,173  |                         |   | 6,359,000 |   |
| 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                                                                                                                                                                                                                                                       |   | $                                        | 70,219,556 |                         | $      | 64,934,898 |   |
|                                                                                                                                                                                                                                                                                |   |                                     |       |                         |   |   |   |
| **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    |                         |   | 664,786 |   |
| Total                  current liabilities                                                                                                                                                                                                                                          |   |                                     | 22,570,328 |                         |   | 18,590,892 |   |
| 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 |                         |   | 25,084,586 |   |
|                                                                                                                                                                                                                                                                                |   |                                     |       |                         |   |   |   |
| Minority                  interest                                                                                                                                                                                                                                                  |   |                                     | 5,697,658  |                         |   | 5,453,622 |   |
|                                                                                                                                                                                                                                                                                |   |                                     |       |                         |   |   |   |
| 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)                                                                                                                                                                                                                                   |   |                                     | (2,987,195 | )                            |   | (833,089 | ) |
| Statutory                  surplus reserve fund (Note 17)                                                                                                                                                                                                                           |   |                                     | 2,310,681  |                         |   | 2,310,681 |   |
| Accumulative                  other comprehensive income                                                                                                                                                                                                                            |   |                                     | 5,250,092  |                         |   | 3,390,774 |   |
| Shares                  issuable for acquisition and services                                                                                                                                                                                                                       |   |                                     | 503,860    |                         |   | 503,860 |   |
| Total                  Shareholders' Equity                                                                                                                                                                                                                                         |   |                                     | 27,031,749 |                         |   | 27,020,325 |   |
| Total                  Liabilities & Shareholders' Equity                                                                                                                                                                                                                       |   | $                                        | 70,219,556 |                         | $      | 64,934,898 |   |

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**Benda        Pharmaceutical, Inc.**

**Consolidated        Statements of Operations**

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

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|                                                                       |   | **THREE MONTHS ENDED MARCH 31** |        |
|----------------------------------------------------------------------------|--------|-----------------------------------------------------|-------------|
|                                                                       |   | **2008****(Unaudited)**                             |        | **2007****(Unaudited)** |   |
| Revenue                                                                    |   | $                                                   | 5,947,370   |   | $ | 3,029,035 |   |
| Cost                  of goods sold                                        |   |                                                | (3,940,080  | ) |   | (1,970,047 | ) |
| Gross                  profit                                              |   |                                                | 2,007,290   |   |   | 1,058,988 |   |
|                                                                       |   |                                                |        |   |   |   |   |
| 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)                                 |   |                                                | (1,094,063  | ) |   | 473,450 |   |
|                                                                       |   |                                                |        |   |   |   |   |
| 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 |   |                                                | (2,004,652  | ) |   | 456,802 |   |
| Income                  taxes (Note 23)                                    |   |                                                | (133,197    | ) |   | - |   |
| Minority                  interest (Note 28)                               |   |                                                | (16,257     | ) |   | (40,765 | ) |
|                                                                       |   |                                                |        |   |   |   |   |
| Net                  income / (loss)                                       |   | $                                                   | (2,154,106  | ) | $ | 416,037 |   |
|                                                                       |   |                                                |        |   |   |   |   |
| Earnings                  / (loss) per share - basic                       |   | $                                                   | (0.02       | ) | $ | 0.00 |   |
|                                                                       |   |                                                |        |   |   |   |   |
| 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 |   |

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**Benda        Pharmaceutical, Inc.**

**Consolidated        Statements of Cash Flows**

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

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|                                                                                                                         |   | **THREE MONTHS ENDED MARCH 31** |       |
|------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|------------|
|                                                                                                                         |   | **2008****(Unaudited)**                             |       | **2007****(Unaudited)** |   |
| **Cash                  Flows From Operating Activities**                                                                    |   |                                                |       |   |   |   |   |
| Net                  income / (loss)                                                                                         |   | $                                                   | (2,154,106 | ) | $ | 416,037 |   |
|                                                                                                                         |   |                                                |       |   |   |   |   |
| Adjustments                  to reconcile net income / (loss) to net cash provided by operating                  activities: |   |                                                |       |   |   |   |   |
|                                                                                                                         |   |                                                |       |   |   |   |   |
| Bad                  Debt provision                                                                                          |   |                                                | 471,297    |   |   | (70,986 | ) |
| Minority                  interest                                                                                           |   |                                                | 16,257     |   |   | 40,765 |   |
| Loss                  on disposals of fixed assets                                                                           |   |                                                | -          |   |   | 12,025 |   |
| Depreciation                                                                                                                 |   |                                                | 559,131    |   |   | 205,757 |   |
| Amortization                  of intangible assets                                                                           |   |                                                | 201,054    |   |   | 67,406 |   |
| 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                                                                    |   |                                                | 966,143    |   |   | (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                                            |   |                                                | (214,455   | ) |   | (100,973 | ) |
| Loans                  to related parties, net                                                                               |   |                                                | -          |   |   | (166,612 | ) |
| **Net                  cash used in investing activities**                                                                   |   |                                                | (214,455   | ) |   | (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**                                                               |   |                                                | 134,937    |   |   | 4,956,483 |   |
|                                                                                                                         |   |                                                |       |   |   |   |   |
| **Cash                  and cash equivalents, beginning of period**                                                          |   |                                                | 1,266,240  |   |   | 1,676,119 |   |
|                                                                                                                         |   |                                                |       |   |   |   |   |
| **Cash                  and cash equivalents, end of period**                                                                |   | **$**                                               | 1,401,177  |   | **$** | 6,632,601 |   |
|                                                                                                                         |   |                                                |       |   |   |   |   |
| **Supplemental                  Disclosure of Cash Flow Information**                                                        |   |                                                |       |   |   |   |   |
| **Cash                  paid for interest**                                                                                  |   | **$**                                               | 211,407    |   | **$** | 2,565 |   |
| **Cash                  paid for income taxes**                                                                              |   | **$**                                               | 487,318    |   | **$** | - |   |

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**Benda        Pharmaceutical, Inc.**

**Notes        to Consolidated Financial Statements**

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

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| **1.** | **Organization** |
|--------|------------------|

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| **2.** | **Basis                  of Preparation** |
|--------|-------------------------------------------|

**reclassifications**        had no effect on the results of        operations or shareholders' equity as previously reported.

| **3.** | **Use                  of Estimates** |
|--------|---------------------------------------|

| **4.** | **Significant                  Accounting Policies** |
|--------|------------------------------------------------------|

**Cash        and Cash Equivalents**

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

**Property        and Equipment**

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

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**Impairment        of Long-Lived Assets**

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

**Intangible        Assets**

**Revenue        Recognition**

**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*                             |   |                                            |       |   |   |   |   |   |   |   |   |   |   |
| 1   Zhuhai                    Gongbei Pharmaceutical Co, Ltd.   |   |                                            | 1,527,292  |   |   | 26 | % |   | 684,290 |   |   | 23 | % |
| 2   Hubei                    Hengchuan Health Products Co.,Ltd. |   |                                            | 970,148    |   |   | 16 | % |   | - |   |   | 0 | % |
| 3   Shenzhen                    Huihua Pharmaceutical Co. Ltd.  |   |                                            | 875,175    |   |   | 15 | % |   | 535,528 |   |   | 18 | % |
| 4   Shenyang                    Pharmaceutical Co. Ltd.         |   |                                            | 712,182    |   |   | 12 | % |   | 444,736 |   |   | 15 | % |
| 5   Jiangxi                    Huiren Pharmaceutical Co. Ltd.   |   |                                            | 352,842    |   |   | 6 | % |   | 252,573 |   |   | 8 | % |
|                                                                           |   |                                            |       |   |   |   |   |   |   |   |   |   |   |
| Account                    receivable, gross                                   |   | $                                               | 12,237,873 |   |   |   | % | $ | 7,555,831 |   |   |    | %  |
|                                                                           |   |                                            |       |   |   |   |   |   |   |   |   |   |   |
| *Individual                    customer's account receivable gross balance*    |   |                                            |       |   |   |   |   |   |   |   |   |   |   |
| 1   Zhuhai                    Gongbei Pharmaceutical Co, Ltd.   |   |                                            | 2,196,438  |   |   | 18 | % |   | 1,130,530 |   |   | 15 | % |
| 2   Hubei                    Hengchuan Health Products Co.,Ltd. |   |                                            | 1,577,335  |   |   | 13 | % |   | - |   |   | 0 | % |
| 3   Shenzhen                    Huihua Pharmaceutical Co. Ltd.  |   |                                            | 1,347,251  |   |   | 11 | % |   | 1,444,580 |   |   | 19 | % |
| 4   Shenyang                    Pharmaceutical Co. Ltd.         |   |                                            | 1,078,182  |   |   | 9 | % |   | 910,440 |   |   | 12 | % |
| 5   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*

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

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

----

|                                               |   | December 31,2007 |       | Addition |   | Foreign CurrencyTranslationDifference |   | 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                                          |   | $                     | (1,175,343 | )        |   | (131,261                                   | )      |                                | (51,854   | ) | $ | (1,358,458 | ) |
| Machinery                  and equipment           |   |                  | (3,072,321 | )        |   | (418,280                                   | )      |                                | (98,985   | ) |   | (3,589,586 | ) |
| Office                  equipment                  |   |                  | (7,901     | )        |   | (927                                       | )      |                                | 1,992     |   |   | (6,836 | ) |
| Motor                  Vehicles                    |   |                  | (46,447    | )        |   | (8,663                                     | )      |                                | (2,744    | ) |   | (57,854 | ) |
| Accumulated                  Depreciation          |   |                  | (4,302,012 | )        |   | (559,131                                   | )      |                                | (151,591  | ) |   | (5,012,734 | ) |
|                                               |   |                  |       |     |   |                                       |   |                                |      |   |   |   |   |
| Construction                  in progress          |   | $                     | 6,224,575  |     |   | 162,252                                    |   |                                | 263,015   |   | $ | 6,649,842 |   |
|                                               |   |                  |       |     |   |                                       |   |                                |      |   |   |   |   |
| Total                  property and equipment, net |   | $                     | 26,275,871 |     |   | (344,676                                   | )      |                                | 1,412,782 |   | $ | 27,343,976 |   |

|                                           |   | Original Cost    |       |               |   |       |   |         |       |                      |   |                   |   |
|------------------------------------------------|--------|-----------------------|------------|--------------------|--------|------------|--------|--------------|------------|---------------------------|--------|------------------------|--------|
|                                           |   | December 31,2007 |       | March 31,2008 |   | Average    |   | SalvageValue |       | EstimateUseful Lives |   | DepreciationCalculated |   | DeprecationReported |   | Difference |   |
| Building                                       |   | $                     | 11,344,960 |               |   | 11,816,965 |   |         | 11,580,962 |                      |   | 5                      | %      |   | 25 |   |   | 110,019 |   |   | 131,261 |   |   | (21,242 | ) |
| Property                  and equipment        |   |                  | 19,544,311 |               |   | 20,393,774 |   |         | 19,969,042 |                      |   | 5                      | %      |   | 13 |   |   | 379,412 |   |   | 418,280 |   |   | (38,868 | ) |
| Office                  equipment              |   |                  | 36,837     |               |   | 47,778     |   |         | 42,308     |                      |   | 5                      | %      |   | 5 |   |   | 2,010 |   |   | 927 |   |   | 1,083 |   |
| Motor                  vehicle                 |   |                  | 264,155    |               |   | 285,306    |   |         | 274,730    |                      |   | 5                      | %      |   | 5 |   |   | 13,050 |   |   | 8,663 |   |   | 4,387 |   |
| Total                  property and equipments |   | $                     | 31,190,262 |               |   | 32,543,823 |   |         | 31,867,042 |                      |   |                   |   |   |   |   |   | 504,491 |   |   | 559,131 |   |   | (54,640 | ) |

----

|                                      |   | THREE MONTHS ENDED MARCH 31 |    |
|-------------------------------------------|--------|-------------------------------------------------|---------|
|                                      |   | 2008(Unaudited)                                 |    | 2007(Unaudited) |   |
| Cost                  of sales            |   | $                                               | 435,911 |   | $ | 129,181 |   |
| Operating                  expenses       |   |                                            | 123,220 |   |   | 76,576 |   |
| Balance                  at end of period |   | $                                               | 559,131 |   | $ | 205,757 |   |

|                                               |   | March 31,2008 |       | December 31,2007 |   |
|----------------------------------------------------|--------|--------------------|------------|-----------------------|--------|
| Original                  cost of all subsidiaries |   | $                  | 32,543,823 |                  | $      | 31,190,262 |   |
| Less:                  negative goodwill           |   |               | (6,836,955 | )                     |   | (6,836,955 | ) |
| Consolidated                  original cost        |   | $                  | 25,706,868 |                  | $      | 24,353,307 |   |

| **9.** | **Intangible                  Assets** |
|--------|----------------------------------------|

|                                          |   | 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              |   | $                     | (228,380   | )        |   | (21,666                              | )      |                                | (9,993  | ) | $ | (260,039 | ) |
| Drugs                  permits and licenses   |   |                  | (1,399,584 | )        |   | (78,447                              | )      |                                | (60,050 | ) |   | (1,538,081 | ) |
| Technology                  formulas          |   |                  | (154,863   | )        |   | (31,098                              | )      |                                | (7,133  | ) |   | (193,094 | ) |
| Patent                                        |   |                  | (205,047   | )        |   | (69,843                              | )      |                                | (9,899  | ) |   | (284,789 | ) |
| Accumulated                  amortization     |   |                  | (1,987,874 | )        |   | (201,054                             | )      |                                | (87,075 | ) |   | (2,276,003 | ) |
|                                          |   |                  |       |     |   |                                 |   |                                |    |   |   |   |   |
| Total                  intangible assets, net |   | $                     | 6,359,000  |     |   | (201,054                             | )      |                                | 306,226 |   | $ | 6,464,173 |   |

----

|                                        |   | Original                  Cost |      |           |   |      |   |              |      |         |   |
|---------------------------------------------|--------|--------------------------------|-----------|----------------|--------|-----------|--------|-------------------|-----------|--------------|--------|
|                                        |   | December 31,              |      | March 31, |   |      |   | Estimated    |      | Amortization |   | Amortization |   |   |   |
|                                        |   | 2007                           |      | 2008           |   | Average   |   | Useful lives |      | Calculated   |   | Reported |   | Difference |   |
| Land-use                  rights            |   | $                              | 3,450,771 |           |   | 3,594,620 |   |              | 3,522,696 |         |   | 40 |   | $ | 22,017 |   |   | 21,666 |   |   | 351 |   |
| Drugs                  permits and licenses |   |                           | 3,077,830 |           |   | 3,206,135 |   |              | 3,141,983 |         |   | 10 |   |   | 78,550 |   |   | 78,447 |   |   | 103 |   |
| 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    |   | $                              | 9,434,683 |           |   | 9,827,984 |   |              | 9,666,474 |         |   |   |   | $ | 204,882 |   |   | 201,054 |   |   | 3,828 |   |

|                                      |   | THREE MONTHS ENDED MARCH 31 |    |
|-------------------------------------------|--------|-------------------------------------------------|---------|
|                                      |   | 2008                                            |    | 2007 |   |
|                                      |   | (Unaudited)                                     |    | (Unaudited) |   |
| Cost                  of sales            |   | $                                               | 149,479 |   | $ | 41,122 |   |
| Operating                  expenses       |   |                                            | 51,575  |   |   | 26,284 |   |
| Balance                  at end of period |   | $                                               | 201,054 |   | $ | 67,406 |   |

|                                               |   | March                  31, |       | December                  31, |   |
|----------------------------------------------------|--------|----------------------------|------------|-------------------------------|--------|
|                                               |   | 2008                       |       | 2007                          |   |
| Original                  cost of all subsidiaries |   | $                          | 9,827,984  |                          | $      | 9,434,683 |   |
| Less:                  negative goodwill           |   |                       | (1,087,808 | )                             |   | (1,087,808 | ) |
| Consolidated                  original cost        |   | $                          | 8,740,176  |                          | $      | 8,346,875 |   |

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

----

| **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                  Loan****s                  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                  from Hubei Tongji Benda Ebei Phamacetucial Co. Ltd. |   | $                          | 27,848                                                            |                          | $      | 49,056 |   |
| Due                  from Jiangliang 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                  from Shenzhen SiBiono Gene Tech Co. Ltd.            |   |                       | 1,574                                                             |                          |   | - |   |
| Hua                  Xu                                                  |   |                       |                                                              |                          |   |   |   |
| Due                  from Shenzhen SiBiono Gene Tech Co. Ltd.            |   |                       | 24,849                                                            |                          |   | - |   |
| Due                  from Hubei 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                  from Shenzhen SiBiono Gene Tech Co. Ltd.            |   |                       | 139,668                                                           |                          |   | 137,687 |   |
| Hui                  Xu                                                  |   |                       |                                                              |                          |   |   |   |
| Due                  from Hubei Tongji Benda Ebei Phamacetucial Co. Ltd. |   |                       | 27,732                                                            |                          |   | 26,622 |   |
| Due                  from Beijing Shusai Pharyngitis Research Co. Ltd.   |   |                       | -                                                                 |                          |   | 3,153 |   |
| Hua                  Shen                                                |   |                       |                                                              |                          |   |   |   |
| Due                  from Shenzhen 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          |   | $                                               | 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)                                  |   | $                                               | (2,154,106  | ) | $ | 416,037 |   |
|                                                                  |   |                                            |        |   |   |   |   |
| 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       | ) | $ | 0.00 |   |
| 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 conventional medicines which including banded 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 |       |
|-------------------------------------------------------------|--------|-------------------------------------------------|------------|
|                                                        |   | Benda                    Ebei                   |       |
|                                                        |   | March                    31, 2008               |       | March                    31, 2007 |   |
| *Products                    produced*                      |   | (Unaudited)                                     |       | (Unaudited) |   |
| *Conventional                    medicines/injection vials* |   |                                            |       |   |   |   |   |
| Revenue                    from external customers          |   | $                                               | 5,521,109  |   | $ | 2,339,463 |   |
| Intersegement                    revenue                    |   |                                            | -          |   |   | - |   |
| Segment                    operating profit / (loss)        |   |                                            | 960,637    |   |   | 570,446 |   |
| Total                    assets, segment                    |   | $                                               | 36,093,202 |   | $ | 14,951,681 |   |

|                                                   |   | Jiangling                    Benda |      |
|--------------------------------------------------------|--------|------------------------------------|-----------|
| *Products                    produced*                 |   | March                    31, 2008  |      | March                    31, 2007 |   |
| *Active                    pharmaceutical ingredients* |   |                               |      |   |   |   |   |
| Revenue                    from external customers     |   | $                                  | 348       |   | $ | - |   |
| Intersegement                    revenue               |   |                               | -         |   |   | - |   |
| Segment                    operating profit / (loss)   |   |                               | (243,221  | ) |   | 19,951 |   |
| Total                    assets, segment               |   | $                                  | 8,909,348 |   | $ | 4,004,119 |   |

|                                                 |   | Yidu                    Benda     |      |
|------------------------------------------------------|--------|-----------------------------------|-----------|
| *Products                    produced*               |   | March                    31, 2008 |      | March                    31, 2007 |   |
| *Bulk                    chemicals*                  |   |                         |      |    |   |
| Revenue                    from external customers   |   | $                                 | -         |   | $ | 684,465 |   |
| Intersegement                    revenue             |   |                              | -         |   |   | - |   |
| Segment                    operating profit / (loss) |   |                              | (297,977  | ) |   | 182,624 |   |
| Total                    assets, segment             |   | $                                 | 7,536,881 |   | $ | 8,692,511 |   |

|                                                 |   | Beijing                    Shusai |    |
|------------------------------------------------------|--------|-----------------------------------|---------|
| *Products                    produced*               |   | March                    31, 2008 |    | March                    31, 2007 |   |
| *Pharynigitis                    killer therapy*     |   |                         |    |    |   |
| Revenue                    from external customers   |   | $                                 | 2,097   |   | $ | 5,107 |   |
| Intersegement                    revenue             |   |                              | -       |   |   | - |   |
| Segment                    operating profit / (loss) |   |                              | (11,034 | ) |   | (22,241 | ) |
| Total                    assets, segment             |   | $                                 | 101,173 |   | $ | 97,785 |   |

|                                                 |   | SiBiono                           |       |
|------------------------------------------------------|--------|-----------------------------------|------------|
| *Products                    produced:*              |   | March                    31, 2008 |       | March                    31, 2007 |   |
| *Genedicin                    (Ad-p53)*              |   |                         |       |    |   |
| Revenue                    from external customers   |   | $                                 | 423,816    |   | $ | - |   |
| Intersegement                    revenue             |   |                              | -          |   |   | - |   |
| Segment                    operating profit / (loss) |   |                              | (165,403   | ) |   | - |   |
| Total                    assets, segment             |   | $                                 | 14,031,627 |   | $ | - |   |

|                                                                      |   | TOTAL                                           |       |
|---------------------------------------------------------------------------|--------|-------------------------------------------------|------------|
|                                                                      |   | THREE MONTHS ENDED MARCH 31 |       |
|                                                                      |   | 2008                                            |       | 2007 |   |
|                                                                      |   | (Unaudited)                                     |       | (Unaudited) |   |
| Total                    revenue from external customers                  |   | $                                               | 5,947,370  |   | $ | 3,029,035 |   |
| Total                    intersegement revenue                            |   |                                            | -          |   |   | - |   |
| Total                    operating profit / (loss) for reportable segment |   |                                            | 243,002    |   |   | 750,780 |   |
| Total                    assets, segment                                  |   | $                                               | 66,672,230 |   | $ | 27,746,095 |   |

----

|                                                                       |   | TOTAL                                           |       |
|----------------------------------------------------------------------------|--------|-------------------------------------------------|------------|
|                                                                       |   | THREE MONTHS ENDED MARCH 31 |       |
|                                                                       |   | 2008                                            |       | 2007 |   |
|                                                                       |   | (Unaudited)                                     |       | (Unaudited) |   |
| Total                  operating profit / (loss) for reportable segment    |   | $                                               | 243,002    |   | $ | 750,780 |   |
| Unallocated                  amounts:                                      |   |                                            |       |   |   |   |   |
| Other                  income                                              |   |                                            | 301,693    |   |   | 937.00 |   |
| Other                  corporate expenses                                  |   |                                            | (2,549,347 | ) |   | (294,915 | ) |
|                                                                       |   |                                            |       |   |   |   |   |
| Income                  / (loss) before minority interest and income taxes |   |                                            | (2,004,652 | ) |   | 456,802 |   |
|                                                                       |   |                                            |       |   |   |   |   |
| Total                  assets                                              |   | $                                               | 70,219,556 |   | $ | 37,915,528 |   |

|                                                                 |   | 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          |   | $                          | 66,672,230 |                       | $      | 27,746,095 |   |
|                                            |   |                       |       |                       |   |   |   |
| Total                  assets of corporate:     |   |                       |       |                       |   |   |   |
| Cash                  and cash equivalent       |   |                       | 44,958     |                       |   | 5,845,699 |   |
| Bank                  indebtedness              |   |                       | 1,160,976  |                       |   | - |   |
| Prepaid                  expesnes and deposit   |   |                       | 230        |                       |   | 2,289 |   |
| Refundable                  purchase price paid |   |                       | 1,200,000  |                       |   | 3,680,492 |   |
| Due                  from related parties       |   |                       | 879,096    |                       |   | 263,296 |   |
| Debt                  issue costs:              |   |                       |       |                       |   |   |   |
| placement                  agent commission     |   |                       | 262,066    |                       |   | 377,657 |   |
|                                            |   |                       |       |                       |   |   |   |
| Total                  assets                   |   | $                          | 70,219,556 |                       | $      | 37,915,528 |   |

----

|                                                            |   | **Three                    Months Ended March 31, 2008** |     |
|-----------------------------------------------------------------|--------|----------------------------------------------------------|----------|
|                                                            |   | Benda                                                    |     | Jiangling |   | Yidu |   | Beijing |   |   |   |   |   |
|                                                            |   | Ebei                                                     |     | Benda |   | Benda |   | Shusai |   | SiBiono |   | Total |   |
| **Segment                    operating profit / (loss)**        |   | $                                                        | 960,637  |   |   | (243,221 | ) |   | (297,977 | ) |   | (11,034 | ) |   | (165,403 | ) | $ | 243,002 |   |
| Loss                    on disposal of assets                   |   |                                                     | -        |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| 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 |   |
| Prior                    year adjustment                        |   |                                                     | -        |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Government                    subsidies                         |   |                                                     | -        |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Income                    taxes                                 |   |                                                     | (133,197 | ) |   | - |   |   | - |   |   | - |   |   | - |   |   | (133,197 | ) |
| **Income                    / (loss) before minority interest** |   | $                                                        | 674,059  |   |   | (241,663 | ) |   | (297,003 | ) |   | (3,758 | ) |   | 84,321 |   | $ | 215,956 |   |
|                                                            |   |                                                     |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| MI                    percentage                                |   |                                                     | 5.00     | % |   | 9.75 | % |   | 9.75 | % |   | 28.75 | % |   | 42.88 | % |   |   |   |
| MI                    interest                                  |   | $                                                        | 33,703   |   |   | (23,562 | ) |   | (28,958 | ) |   | (1,080 | ) |   | 36,154 |   | $ | 16,257 |   |

|                                                              |   | **Three                      Months Ended March 31, 2007** |    |
|-------------------------------------------------------------------|--------|------------------------------------------------------------|---------|
|                                                              |   | Benda                                                      |    | Jiangling |   | Yidu |   | Beijing |   |   |   |   |   |
|                                                              |   | Ebei                                                       |    | Benda |   | Benda |   | Shusai |   | SiBiono |   | Total |   |
| **Segment                      operating profit / (loss)**        |   | $                                                          | 570,446 |   |   | 19,951 |   |   | 182,624 |   |   | (22,241 | ) |   | - |   | $ | 750,780 |   |
| 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 |   |
| Prior                      year adjustment                        |   |                                                       | -       |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Government                      subsidies                         |   |                                                       | -       |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Income                      taxes                                 |   |                                                       | -       |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| **Income                      / (loss) before minority interest** |   | $                                                          | 571,082 |   |   | 13,058 |   |   | 175,829 |   |   | (22,260 | ) |   | - |   | $ | 737,709 |   |
|                                                              |   |                                                       |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| MI                      percentage                                |   |                                                       | 5.00    | % |   | 9.75 | % |   | 9.75 | % |   | 28.75 | % |   | - |   |   |   |   |
| MI                      interest                                  |   | $                                                          | 28,554  |   |   | 1,273 |   |   | 17,143 |   |   | (6,400 | ) |   | - |   | $ | 40,765 |   |

| **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                           |   | 12/14/1998                         |   | 9/15/1999                          |   | 7/3/2002                                    |   |                                                |   |                                                |   |                                |
|     |   |                                                                                                                                                      |   |                           |   |                               |   |                               |   |                                        |   |                                                |   |                                                |   |                                |
| 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                           |   | 5/8/2002                           |   | 3/12/2003                          |   | 11/24/2004                                  |   |                                                |   |                                                |   |                                |
|     |   | B                                                                                                                                                         |   | PCT                        (4) |   | PCT/CN/2004/000465                 |   | WO2004/078987A1                    |   | Not                        Approved         |   | Peng                        / Zhang                 |   | Peng                        / Zhang                 |   | N/A                                 |
|     |   |                                                                                                                                                      |   | Date                           |   | 3/8/2004                           |   | 9/16/2004                          |   | 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                           |   | 5/10/2003                          |   | 2/4/2004                           |   | 7/25/2007                                   |   |                                                |   |                                                |   |                                |
|     |   | B                                                                                                                                                         |   | PCT                        (4) |   | PCT/CN/2004/000458                 |   | WO2004/104204A1                    |   | Not                        Approved         |   | Peng                        / Zhang                 |   | Peng                        / Zhang                 |   | N/A                                 |
|     |   |                                                                                                                                                      |   | Date                           |   | 5/9/2004                           |   | 12/2/2004                          |   | 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                           |   | 1/26/2005                          |   | 10/12/2005                         |   | 8/29/2007                                   |   |                                                |   |                                                |   |                                |
|     |   | B                                                                                                                                                         |   | PCT                        (4) |   | PCT/CN/2005/000111                 |   | WO2006/079244A1                    |   | Not                        Approved         |   | Peng                        / Zhang                 |   | Peng                        / Zhang                 |   | N/A                                 |
|     |   |                                                                                                                                                      |   | Date                           |   | 1/26/2005                          |   | 8/3/2006                           |   | N/A                                         |   |                                                |   |                                                |   |                                |
|     |   | C                                                                                                                                                         |   | US                        (5)  |   | 11/075035                          |   | 2005/0281785A1                     |   | Not                        Approved         |   | Peng                        / Zhang                 |   | Unidentified                        Yet             |   | N/A                                 |
|     |   |                                                                                                                                                      |   | Date                           |   | 3/7/2005                           |   | 12/22/2005                         |   | 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                           |   | 6/13/2003                          |   | 7/21/2004                          |   | N/A                                         |   |                                                |   |                                                |   |                                |
|     |   | B                                                                                                                                                         |   | PCT                        (4) |   | PCT/CN/2004/000457                 |   | WO2004/111239                      |   | Not                        Approved         |   | Peng                        / Zhang                 |   | Peng                        / Zhang                 |   | N/A                                 |
|     |   |                                                                                                                                                      |   | Date                           |   | 5/9/2004                           |   | 12/23/2004                         |   | N/A                                         |   |                                                |   |                                                |   |                                |
|     |   |                                                                                                                                                      |   |                           |   |                               |   |                               |   |                                        |   |                                                |   |                                                |   |                                |
| 6        |   | The                        complex of polypeptide 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                           |   | 7/4/2002                           |   | 1/8/2003                           |   | N/A                                         |   |                                                |   |                                                |   |                                |

| (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. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

**Critical      Accounting Policies**

**Revenue      Recognition**

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**Operational      Results **

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|                                                                     |   | **March                31,** |        | **March                31,** |   |
|--------------------------------------------------------------------------|--------|------------------------------|-------------|------------------------------|--------|
|                                                                     |   | **2008**                     |        | **2007**                     |   |
|                                                                     |   | **(Unaudited)**              |        | **(Unaudited)**              |   |
| Revenue                                                                  |   | $                            | 5,947,370   |                         | $      | 3,029,035 |   |
| Cost                of goods sold                                        |   |                         | (3,940,080  | )                            |   | (1,970,047 | ) |
| Gross                profit                                              |   |                         | 2,007,290   |                         |   | 1,058,988 |   |
|                                                                     |   |                         |        |                         |   |   |   |
| 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)                                 |   |                         | (1,094,063  | )                            |   | 473,450 |   |
|                                                                     |   |                         |        |                         |   |   |   |
| Interest                expenses                                         |   |                         | (1,212,282  | )                            |   | (17,585 | ) |
| Other                income (expenses)                                   |   |                         | 301,693     |                         |   | 937 |   |
|                                                                     |   |                         |        |                         |   |   |   |
| Income                / (loss) before minority interest and income taxes |   |                         | (2,004,652  | )                            |   | 456,802 |   |
| Income                taxes                                              |   |                         | (133,197    | )                            |   | - |   |
| Minority                interest                                         |   |                         | (16,257     | )                            |   | (40,765 | ) |
|                                                                     |   |                         |        |                         |   |   |   |
| Net                Income / (loss)                                       |   | $                            | (2,154,106  | )                            | $      | 416,037 |   |
|                                                                     |   |                         |        |                         |   |   |   |
| Earnings                / (loss) per share - basic                       |   | $                            | (0.02       | )                            | $      | 0.00 |   |
|                                                                     |   |                         |        |                         |   |   |   |
| 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 |   |

*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; $559K incurred on                depreciation; $201K incurred on amortization of intangible assets;                $65K                million incurred on amortization of debt issue cost; and $16K 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      4T.  Evaluation of Disclosure Controls and Procedures**

----

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

*Internal      Control – Integrated Framework*

----

**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**

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**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.**

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**SIGNATURES**

|                              |   | **BENDA                PHARMACEUTICAL, INC.**     |
|-----------------------------------|--------|---------------------------------------------------|
|                              |   | Registrant                                        |
|                              |   |                                              |
| Date:                May 20, 2008 |   | By:                */s/ Yiqing Wan*               |
|                              |   | Yiqing                Wan                         |
|                              |   | President,                Chief Executive Officer |
|                              |   | Chairman                of Board of Directors     |

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