----

**UNITED        STATES**

**SECURITIES        AND EXCHANGE COMMISSION**

**WASHINGTON,        D.C. 20549**

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**FORM        10-Q/A**

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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)**

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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        | 11 |
| Item 4T.                                       | Control                  and Procedures                                            | 11 |
|                                                     |                                                                               |   |
| **PART                  II— OTHER INFORMATION**    |                                                                               |
|                                                     |                                                                               |
|  Item                  1                            | Legal                  Proceedings                                                 | 13 |
|  Item                  2.                           | Unregistered                  Sales of Equity Securities and Use of Proceeds       | 14 |
|  Item                  3.                           | Defaults                  Upon Senior Securities                                   | 15 |
|  Item                  4.                           | Submission                  of Matters to a Vote of Security Holders               | 15 |
|  Item                  5.                           | Other                  Information                                                 | 15 |
|  Item                  6.                           | Exhibits                  and Reports on Form 8-K                                  | 15 |
|                                                     |                                                                               |   |
| **SIGNATURE**                                            | 16                                                                                 |

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

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

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

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**Benda        Pharmaceutical, Inc.**

**Notes        to Consolidated Financial Statements**

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

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

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

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

**Consolidated        Balance Sheet**

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

----

**Consolidated        Statement of Operations**

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

**Consolidated        Balance Sheet**

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

**Consolidated        Statement of Operations**

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

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

----

----

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

**Cash        and Cash Equivalents**

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

**Property        and Equipment**

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

----

**Impairment        of Long-Lived Assets**

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

**Intangible        Assets**

**Revenue        Recognition**

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

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

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

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

**Research        and Development**

**Income        Taxes**

*        Accounting for Income Taxes*

**Comprehensive        Income**

*        Reporting Comprehensive Income,*

**Concentration        of Credit Risk **

----

|                                                                                          |   | THREE                    MONTH ENDED MARCH 31, |       |
|-----------------------------------------------------------------------------------------------|--------|------------------------------------------------|------------|
|                                                                                          |   | 2008                                           |       | 2007 |   |
|                                                                                          |   | (Unaudited)                                    |       | (Unaudited) |   |
|                         Revenue                                           |   | $                                              | 5,947,370  |   |   | % |   | $ | 3,029,035 |   |   | % |   |
| *                        Individual customer's revenue*                   |   |                                           |       |   |   |   |   |   |   |   |   |   |   |
| 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 | % |
|                                                                                          |   |                                           |       |   |   |   |   |   |   |   |   |   |   |
|                         Trade receivables, 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*

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

**Use        of Estimates**

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

----

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

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

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

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

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

----

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

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

----

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

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

----

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

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

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

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

----

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

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

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

----

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

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

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

|   | a) | Duration                  of the agreement is three years; |
|--------|----|------------------------------------------------------------|

|   | b) | It                  is non-interest bearing; |
|--------|----|----------------------------------------------|

|   | c) | The                  repayment period of each commercial note payable is six                  months; |
|--------|----|-------------------------------------------------------------------------------------------------------|

|   | d) | The                  total commercial note issuable limit is Rmb 60 million; however                  50% of                  deposit should be made into the bank in order to secure the issuance                  of                  commercial bank note, thus the net available amount is Rmb 30                  million; |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | e) | If                  the net amount of each commercial bank note payable is not settled                  on the                  due date, the penalty will be the penalty rate of the PRC bank                  loan on                  daily and compound basis. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

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

----

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

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

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

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

| 2. | Benda                  Ebei should pay for the penalty of Rmb                  46,800; |
|----|----------------------------------------------------------------------------------------|

| 3. | Benda                  Eebi should pay for legal and arbitration expenses of Rmb                  268,971. |
|----|------------------------------------------------------------------------------------------------------------|

----

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

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

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

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

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

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

----

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

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

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

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

----

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

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

----

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

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

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

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

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

----

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

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

----

----

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

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

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

----

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

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

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

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

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

----

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

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

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

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

|   | 1. | Benda                  Ebei produces branded and generic                  medicines; |
|--------|----|--------------------------------------------------------------------------------------|

|   | 2. | Jiangling                  Benda produces active pharmaceutical ingredients,                  APIs; |
|--------|----|-----------------------------------------------------------------------------------------------------|

|   | 3. | Yidu                  Benda produces bulk chemicals; |
|--------|----|------------------------------------------------------|

|   | 4. | Beijing                  Shusai produces pharyngitis killer therapy; and |
|--------|----|--------------------------------------------------------------------------|

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

----

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

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

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

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

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

----

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

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

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

----

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

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

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

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

----

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

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

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

----

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

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

----

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

**Critical        Accounting Policies**

**Revenue        Recognition**

----

----

**Operational        Results**

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

***Restatement***

*Net        Revenue:*

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

----

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

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

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

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

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

----

*Cost        of Goods Sold*

*Gross        Profit *

*Selling        Expenses:*

*General        and Administrative Expenses:*

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

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*Operating        Income/ (Loss):*

*Interest        Expenses:*

*Income        Taxes:*

----

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

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

|   | 1. | $941K                  that incurred as interest expenses related to the amortization                  of discount                  on long-term debt and issuance cost associated with the warrants                  and the                  beneficial conversion features (please refer to Note 24 of the                  Notes to                  Consolidated Financial Statements for                  details); |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | $230K                  that incurred as the penalty payment made in form of shares issuance                  to                  PIPE investors due to the late effective of the registered statement;                  and |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | Other                  factors: $471K incurred on bad debt provision; $453K incurred on                  depreciation; $184K incurred on amortization of intangible assets;                  $65K                  million incurred on amortization of debt issue cost; and $22K incurred                  on                  minority interest. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

*Trade        receivables*

|   | a) | Customers                  whom have sales relationship with our company are all relatively                  big                  business wholesale enterprises and they have all passed the examination                  of                  GMP Certificate so that the collectibility from those is out of                  question; |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | Due                  to the fact that there was a long Chinese New Year holiday and                  a big                  snowing in the first quarter of 2008, it did affect the collection                  of                  trade receivables to certain extend; and |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c) | The                  management realized that it did affect the cash flow situation                  of the                  company, therefore the company will put more efforts to reduce                  the balance                  of trade receivables starting from the second quarter of 2008. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Inventories*

*Tax        Payable*

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

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

----

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

----

**PART        II - OTHER INFORMATION**

**Item        1. Legal Proceedings.**

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

----

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

----

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

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

**Item        5. Other Information.**

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

----

**SIGNATURES**

|                                 |   | **BENDA                  PHARMACEUTICAL, INC.**     |
|--------------------------------------|--------|-----------------------------------------------------|
|                                 |   | Registrant                                          |
|                                 |   |                                                |
| Date:                  June 26, 2008 |   | By:                  */s/ Yiqing Wan*               |
|                                 |   | Yiqing                  Wan                         |
|                                 |   | President,                  Chief Executive Officer |
|                                 |   | Chairman                  of Board of Directors     |

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