**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-Q**


(Mark
      One)





x
            QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934





**For
      the quarterly period ended June 30, 2008**





o
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
                ACT





For
      the
      transition period from ____________ to __________




Commission
      file number: **000-32253**




**HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY, INC.**


(Exact
      name of registrant as specified in its charter)





**Nevada**
            **87-0650264**(State
                or Other Jurisdiction of
            (I.R.S.
                Employer ofIncorporation
                or Organization)
            Identification
                No.)




16B/F
      Ruixin Bldg., No. 25 Gaoxin Road


Xi’an
      710075 Shaanxi Province, China


(Address
      of Principal Executive Offices Including Zip Code)




**86-29-8822
      4682**


(Registrant
      's telephone number, including area code)





N/A


(Former
      name, former address and former fiscal year, if changed since last
      report)





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


Yes x No o





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





Large
                accelerated filero
            Accelerated
                fileroNon-accelerated
                filerx
            Smaller
                reporting companyo


(Do
      not
      check if a smaller reporting company)




Number
      of
      shares of Common Stock outstanding as of June 30, 2008, was 18,466,169 shares
      of
      common stock, par value $0.018.





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


Yes o No x










HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY, INC.





INDEX





PART
                I.
            
            FINANCIAL
                INFORMATIONItem
                1.
            
            Financial
                StatementsCondensed
                Consolidated Balance Sheets as of June 30, 2008 (unaudited) and December
                31, 2007 (audited)
            
            4Unaudited
                Condensed Consolidated Statements of Income and Other Comprehensive
                Income
                for the three and six months ended June 30, 2008 and 2007
            
            5Unaudited
                Condensed Consolidated Statements of Cash Flows for the six months
                ended
                June 30, 2008 and 2007
            
            6Notes
                to Unaudited Condensed Consolidated Financial Statements as of June
                30,
                2008
            
            7Item
                2.
            
            Management's
                Discussion and Analysis of Financial Condition and Results of
                Operations
            
            12Item
                3.
            
            Quantitative
                and Qualitative Disclosures About Market Risk
            
            16Item
                4T.
            
            Controls
                and Procedures
            
            16PART
                II.
            
            OTHER
                INFORMATION
            
            16Item
                1.
            
            Legal
                Proceedings
            
            16Item
                1A.
            
            Risk
                Factors
            
            16Item
                2.
            
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            
            23Item
                3.
            
            Defaults
                Upon Senior Securities
            
            23Item
                4.
            
            Submission
                of Matters to a Vote of Security Holders
            
            23Item
                5.
            
            Other
                Information
            
            23Item
                6.
            
            Exhibits
                and Reports on Form 8-K
            
            23SIGNATURES
            
            24





2


**SPECIAL
      NOTE REGARDING FORWARD—LOOKING STATEMENTS**




On
      one or
      more occasions, we may make forward-looking statements in this Quarterly Report
      on Form 10-Q regarding our assumptions, projections, expectations, targets,
      intentions or beliefs about future events. Words or phrases such as
“anticipates,” “may,” “will,” “should,” “believes,” “estimates,” “expects,”
“intends,” “plans,” “predicts,” “projects,” “targets,” “will likely result,”
“will continue” or similar expressions identify forward-looking statements.
      Readers are cautioned that these forward-looking statements are only predictions
      and are subject to risks, uncertainties, and assumptions that are difficult
      to
      predict, including those identified below, under “ *Part
      II — Other Information, Item 1A. Risk Factors* ”
and
      elsewhere herein. Therefore, actual results may differ materially and adversely
      from those expressed in any forward-looking statements. We undertake no
      obligation to publicly update or revise any forward-looking statements, whether
      as a result of new information, future events or otherwise. However, your
      attention is directed to any further disclosures made on related subjects in
      our
      subsequent annual and periodic reports filed with the Securities and Exchange
      Commission on Forms 10-K, 10-Q and 8-K and Proxy Statements on Schedule
      14A.




Unless
      the context requires otherwise, references to “we,” “us,” “our,” the “Company”
and “the Company” refer specifically to Huifeng Bio-Pharmaceutical Technology,
      Inc. and our subsidiaries.





3





**PART
      I. FINANCIAL INFORMATION**


**Item
      1. Financial Statements**




HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY, INC


AND
      SUBSIDIARIES


CONDENSED
      CONSOLIDATED BALANCE SHEETS


AS
      OF
      JUNE 30, 2008 AND DECEMBER 31,2007





**June 30, 2008**
              **(Unaudited)**
            
            **December 31,**
              **2007 (Audited)**ASSETS**CURRENT
                ASSETS**Cash
                and cash equivalents
            
            $
            945,293
            
            $
            2,219,694Short-term
                investment
            
            
            29,104
            
            
            -Accounts
                receivable, net of allowances
            
            
            2,751,453
            
            
            1,660,829Inventories
            
            
            3,931,554
            
            
            2,657,305Other
                assets
            
            
            531,578
            
            
            1,011,985Total
                Current Assets
            
            
            8,188,982
            
            
            7,549,813**PROPERTY
                AND EQUIPMENT, NET**
            
            
            4,699,769
            
            
            3,509,344**LAND
                USE RIGHTS, NET**
            
            
            149,839
            
            
            142,334**TOTAL
                ASSETS**
            
            $
            13,038,590
            
            $
            11,201,491**LIABILITIES
                AND STOCKHOLDERS' EQUITY****CURRENT
                LIABILITIES**Accounts
                payable
            
            $
            104,552
            
            $
            93,126Other
                payables and accrued expenses
            
            
            355,204
            
            
            245,568Income
                tax and other tax payables
            
            
            722,927
            
            
            498,655Notes
                payable
            
            
            582,089
            
            
            295,320Due
                to stockholders
            
            
            -
            
            
            280,503Total
                Current Liabilities
            
            
            1,764,772
            
            
            1,413,172**LONG-TERM
                LIABILITIES**Convertible
                notes payable (net of unamortized discount of $484,639 and due on
                December
                31, 2009)
            
            
            1,515,361
            
            
            1,353,814**TOTAL
                LIABILITIES**
            
            
            3,280,133
            
            
            2,766,986**COMMITMENTS
                AND CONTINGENCIES**
            
            
            -
            
            
            -**MINORITY
                INTERESTS**
            
            
            505,595
            
            
            461,826**STOCKHOLDERS'
                EQUITY**Preferred
                stock ($0.001 par value, 5,000,000 shares authorized, none issued
                and
                outstanding)
            
            
            -
            
            
            -Common
                stock ($0.018 par value, 100,000,000 shares authorized, 18,466,169
                shares
                issued and outstanding as of June 30, 2008 and December 31,
                2007)
            
            
            332,388
            
            
            332,388Additional
                paid-in capital
            
            
            8,334,030
            
            
            8,326,752Retained
                earnings (deficit)Unappropriated
            
            
            (973,337
            )
            
            (1,671,410
            )Appropriated
            
            
            219,964
            
            
            219,964Accumulated
                other comprehensive income
            
            
            1,339,817
            
            
            764,985Total
                Stockholders' Equity
            
            
            9,252,862
            
            
            7,972,679**TOTAL
                LIABILITIES AND STOCKHOLDERS' EQUITY**
            
            $
            13,038,590
            
            $
            11,201,491




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




4




HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY, INC


AND
      SUBSIDIARIES


UNAUDITED
      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


AND
      COMPREHENSIVE INCOME





**For the Three**
            
            **For the Three**
            
            **For the Six**
            
            **For the Six****Months Ended**
            
            **Months Ended**
            
            **Months Ended**
            
            **Months Ended****June 30, 2008**
            
            **June 30, 2007**
            
            **June 30, 2008**
            
            **June 30, 2007****NET
                SALES**
            
            $
            2,764,994
            
            $
            1,610,478
            
            $
            5,351,442
            
            $
            3,008,147**COST
                OF SALES**
            
            
            (1,903,370
            )
            
            (1,042,071
            )
            
            (3,512,315
            )
            
            (2,031,889
            )**GROSS
                PROFIT**
            
            
            861,624
            
            
            568,407
            
            
            1,839,127
            
            
            976,258**OPERATING
                EXPENSES**Selling
                expenses and distribution expenses
            
            
            67,005
            
            
            24,652
            
            
            91,898
            
            
            43,696General
                and administrative expenses
            
            
            232,039
            
            
            93,763
            
            
            629,816
            
            
            134,760Depreciation
                and amortization
            
            
            13,188
            
            
            11,983
            
            
            25,890
            
            
            23,818Total
                Operating Expenses
            
            
            312,232
            
            
            130,398
            
            
            747,604
            
            
            202,274**INCOME
                FROM OPERATIONS**
            
            
            549,392
            
            
            438,009
            
            
            1,091,523
            
            
            773,984**OTHER
                INCOME (EXPENSE)**Interest
                income
            
            
            3,518
            
            
            7,986
            
            
            4,373
            
            
            13,867Interest
                expense
            
            
            (149,629
            )
            
            (8,371
            )
            
            (285,975
            )
            
            (17,759
            )Other
                income
            
            
            89,070
            
            
            12,133
            
            
            164,565
            
            
            33,420Total
                Other Income (Expenses), net
            
            
            (57,041
            )
            
            11,748
            
            
            (117,037
            )
            
            29,528**INCOME
                FROM OPERATIONS BEFORE TAXES AND MINORITY
                INTEREST**
            
            
            492,351
            
            
            449,757
            
            
            974,486
            
            
            803,512**INCOME
                TAX EXPENSE**
            
            
            (127,751
            )
            
            (76,549
            )
            
            (262,768
            )
            
            (133,157
            )**MINORITY
                INTEREST**
            
            
            (4,782
            )
            
            14,494
            
            
            (13,645
            )
            
            28,475**NET
                INCOME**
            
            
            359,818
            
            
            387,702
            
            
            698,073
            
            
            698,830**OTHER
                COMPREHENSIVE INCOME**Foreign
                currency translation gain
            
            
            224,538
            
            
            127,297
            
            
            574,832
            
            
            153,672**COMPREHENSIVE
                INCOME**
            
            $
            584,356
            
            $
            514,999
            
            $
            1,272,905
            
            $
            852,502**Net
                income per share - basic**
            
            
            0.02
            
            
            0.02
            
            
            0.04
            
            
            0.04**Net
                income per share - diluted**
            
            
            0.02
            
            
            0.02
            
            
            0.03
            
            
            0.04Weighted
                average number of shares outstanding during the year during the period
                -
                basic
            
            $
            18,466,169
            
            $
            18,466,169
            
            $
            18,466,169
            
            $
            18,466,169Weighted
                average number of shares outstanding during the period - diluted
            
            $
            20,466,169
            
            $
            18,466,169
            
            $
            20,466,169
            
            $
            18,466,169





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


5




HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY INC.


AND
      SUBSIDIARIES


CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS


(UNAUDITED)





**For the Six**
              **Months Ended**
              **June 30, 2008**
            
            **For the Six**
              **Months Ended**
              **June 30, 2007****CASH
                FLOWS FROM OPERATING ACTIVITIES**Net
                income
            
            $
            698,073
            
            $
            698,830Adjusted
                to reconcile net income to cash (used in) provided by operating
                activities:Allowance
                for doubtful accounts - accounts receivable
            
            
            21,374
            
            
            (32,726
            )Depreciation
                and amortization - cost of sales
            
            
            210,371
            
            
            148,661Depreciation
                and amortization
            
            
            25,890
            
            
            23,818Amortization
                of discount on convertible notes
            
            
            76,672
            
            
            -Amortization
                of deferred financing costs
            
            
            84,875
            
            
            -Stock
                option issued to a legal counsel
            
            
            7,278
            
            
            -Minority
                interest
            
            
            13,645
            
            
            (28,475
            )Changes
                in operating assets and liabilities(Increase)
                decrease in:Accounts
                receivable
            
            
            (977,166
            )
            
            (101,614
            )Inventories
            
            
            (1,071,887
            )
            
            (1,191,555
            )Due
                from stockholders
            
            
            -
            
            
            24,408Other
                assets
            
            
            530,052
            
            
            583,469Increase
                (decrease) in:Accounts
                payable
            
            
            5,278
            
            
            2,003Other
                payables and accrued expenses
            
            
            91,165
            
            
            89,903Income
                tax and other taxes payable
            
            
            186,719
            
            
            36,664Due
                to stockholders
            
            
            (290,080
            )
            
            -Net
                cash (used in) provided by operating activities
            
            
            (387,741
            )
            
            253,386**CASH
                FLOWS FROM INVESTING ACTIVITIES**Decrease
                in notes receivable
            
            
            -
            
            
            258,733Purchase
                of short-term investment
            
            
            (28,278
            )
            
            -Purchase
                of property and equipment
            
            
            (1,172,615
            )
            
            (264,978
            )Net
                cash used in investing activities
            
            
            (1,200,893
            )
            
            (6,245
            )**CASH
                FLOWS FROM FINANCING ACTIVITIES**Proceeds
                from note payable
            
            
            260,158
            
            
            -Net
                cash provided by financing activities
            
            
            260,158
            
            
            -**EFFECT
                OF EXCHANGE RATES ON CASH**
            
            
            54,075
            
            
            15,822**NET
                (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS**
            
            
            (1,274,401
            )
            
            262,963**CASH
                AND CASH EQUIVALENTS AT BEGINNING OF PERIOD**
            
            
            2,219,694
            
            
            463,468**CASH
                AND CASH EQUIVALENTS AT END OF PERIOD**
            
            $
            945,293
            
            $
            726,431**SUPPLEMENTAL
                DISCLOSURE OF CASH FLOW INFORMATION**Cash
                paid during the period for:Income
                taxes
            
            $
            2,258
            
            $
            914Interest
                expenses
            
            $
            107,762
            
            $
            15,108




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


6





**HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**AS
      OF JUNE 30, 2008** **(UNAUDITED)**




**NOTE
      1 ORGANIZATION AND BASIS OF PRESENTATION**




Huifeng
      Bio-Pharmaceutical Technology Inc. (“Huifeng Bio-Pharmaceutical”) is a US-listed
      company that was incorporated in Nevada on March 16, 2000 under the name
“Enternet, Inc.” On May 23, 2002, the Articles of Incorporation were amended to
      change the name of the Company to “Secured Data, Inc.” On October 12, 2005, the
      Articles of Incorporation were amended to change the name of the Company to
      “Huifeng Bio-Pharmaceutical Technology Inc.”




Northwest
      Bio-Technic Inc. (“Northwest”) was incorporated in the British Virgin Islands
      (“BVI”) on June 25, 2004. Xian Huifeng Biochemistry Group Joint-Stock Company
      Limited (previously Xian Huifeng Biochemistry Joint-Stock Company Limited)
      (“Huifeng Biochemistry”) was incorporated in the People's Republic of China
      (“PRC”) on January 20, 2000 as a company with limited liabilities and was
      restructured as a joint stock company on September 29, 2002 under the laws
      of
      the PRC. On April 20, 2005, the Articles of Incorporation were amended to change
      the name of Huifeng Biochemistry to Xian Huifeng Biochemistry Group Joint-Stock
      Company Limited.




Huifeng
      Biochemistry produces plant extracts and bio-chemical products used as
      pharmaceutical raw materials in the PRC. Most of its products are distributed
      within the PRC and some European countries.




On
      August
      23, 2001, Huifeng Biochemistry established a 70% owned subsidiary, Xi’an Huifeng
      Biochemistry Engineering Company Limited (“Huifeng Engineering”) in the PRC with
      a registered capital of $265,778. The subsidiary has no operations since its
      incorporation.




On
      June
      16, 2004 Huifeng Biochemistry acquired an 86.7% interest in Baoji Jisen
      Pharmaceutical Company Limited, later renamed to Xi’an Huifeng Pharmaceutical
      Company Limited (“Huifeng Pharmaceutical”), a limited liability company in the
      PRC. On November 10, 2004 Huifeng Pharmaceutical increased its registered
      capital from $181,159 to $603,865. The increased registered capital was fully
      subscribed by a stockholder of the Company, diluting the Company's interest
      in
      Huifeng Pharmaceutical from 86.7% to 26%. On May 27, 2005 the PRC Government
      approved Huifeng Biochemistry's increased investment in Huifeng Pharmaceutical
      from $31,401 to $1,685,990 through an increase in the registered capital of
      Huifeng Pharmaceutical from $603,865 to $2,258,454. The acquisition of Huifeng
      Pharmaceutical by Huifeng Biochemistry was accomplished by increasing Huifeng
      Biochemistry's interest in Huifeng Pharmaceutical from 26% to 80.2%. On April
      3,
      2007, Huifeng Pharmaceutical was renamed to Shaanxi Huifeng Pharmaceutical
      Company Limited.





The
      accompanying unaudited condensed consolidated financial statements have been
      prepared in accordance with accounting principles generally accepted in the
      United States of America for interim financial information and pursuant to
      the
      rules and regulations of the Securities and Exchange Commission. Accordingly,
      they do not include all of the information and footnotes required by generally
      accepted accounting principles for complete financial statements.





It
      the
      opinion of management, the unaudited condensed consolidated financial statements
      contain all adjustments consisting only of normal recurring accruals considered
      necessary to present fairly the Company's consolidated financial position at
      June 30, 2008 and December 31, 2007, the consolidated results of operations
      for
      the three and six months ended June 30, 2008 and 2007, and consolidated cash
      flows for the six months ended June 30, 2008 and 2007. The consolidated results
      for the three and six months ended June 30, 2008 are not necessarily indicative
      of the results to be expected for the entire fiscal year ending December 31,
      2008. These consolidated financial statements should be read in conjunction
      with
      the consolidated financial statements and notes for the year ended December
      31,
      2007 appearing in the Company's annual report on Form 10-K as filed with the
      Securities and Exchange Commission.




**NOTE
      2 USE OF ESTIMATES**





In
      preparing financial statements to conform with generally accepted accounting
      principles, management is required to make estimates and assumptions that affect
      the reported amounts of assets and liabilities and the disclosure of contingent
      assets and liabilities at the date of the financial statements and revenues
      and
      expenses during the reported period. Actual results could differ from those
      estimates.





**NOTE
      3 PRINCIPLES OF CONSOLIDATION**





The
      accompanying unaudited condensed consolidated financial statements as of June
      30, 2008 and 2007 include the financial statements of Huifeng Bio-Pharmaceutical
      and its 100% owned subsidiary Northwest, 100% owned subsidiary Huifeng
      Biochemistry, 70% owned subsidiary Huifeng Engineering and 80.2% owned
      subsidiary Huifeng Pharmaceutical. Minority interests represent the minority
      stockholders' proportionate share of the profits of Huifeng Engineering and
      Huifeng Pharmaceutical.





All
      significant inter-company balances and transactions have been eliminated in
      consolidation.





7




**HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**AS
      OF JUNE 30, 2008** **(UNAUDITED)**




**NOTE
      4 CASH AND CASH EQUIVALENTS**





For
      purposes of the cash flow statements, the Company considers all highly liquid
      investments with original maturities of three months or less at the time of
      purchase to be cash equivalents.





**NOTE
      5 STOCK-BASED COMPENSATION**





In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards (“SFAS”) No. 123R, “Share-Based
      Payment”, a revision to SFAS No. 123, “Accounting for Stock-Based Compensation”,
      and superseding APB Opinion No. 25, “Accounting for Stock Issued to Employees”
and its related implementation guidance. Effective April 2008, the Company
      adopted SFAS 123R, using a modified prospective application transition method,
      which establishes accounting for stock-based awards in exchange for consultancy
      services. Under this application, the Company is required to record stock-based
      compensation expense for all awards granted after the date of adoption and
      unvested awards that were outstanding as of the date of adoption. SFAS 123R
      requires that stock-based compensation cost is measured at grant date, based
      on
      the fair value of the award, and recognized in expense over the vesting
      period.





Common
      stock, stock options and warrants issued to other than employees or directors
      in
      exchange for services are recorded on the basis of their fair value, as required
      by SFAS No. 123R, which is measured as of the date required by EITF Issue 96-18,
      “Accounting for Equity Instruments That Are Issued to Other Than Employees for
      Acquiring, or in Conjunction with Selling, Goods or Services”. In accordance
      with EITF 96-18, the non-employee stock options or warrants are measured at
      their fair value by using the Black-Scholes option pricing model as of the
      earlier of the date at which a commitment for performance to earn the equity
      instruments is reached (“performance commitment date”) or the date at which
      performance is complete (“performance completion date”). The stock-based
      compensation expenses are recognized on a straight-line basis over the shorter
      of the period over which services are to be received or the vesting period.
      Accounting for non-employee stock options or warrants which involve only
      performance conditions when no performance commitment date or performance
      completion date has occurred as of reporting date requires measurement a the
      equity instruments then-current fair value. Any subsequent changes in the market
      value of the underlying common stock are reflected in the expense recorded
      in
      the subsequent period in which that change occurs.





**NOTE
      6 INCOME TAXES**





The
      Company accounts for income taxes under the Statement of Financial Accounting
      Standards No. 109, “Accounting for Income Taxes” (“Statement 109”). Under
      Statement 109, deferred tax assets and liabilities are recognized for the future
      tax consequences attributable to differences between the financial statement
      carrying amounts of existing assets and liabilities and their respective tax
      bases. Deferred tax assets and liabilities are measured using enacted tax rates
      expected to apply to taxable income in the years in which those temporary
      differences are expected to be recovered or settled. Under Statement 109, the
      effect on deferred tax assets and liabilities of a change in tax rates is
      recognized in income in the period that includes the enactment date. Huifeng
      Bio-pharmaceutical was incorporated in the United States and has incurred net
      operating loss as for income tax purposes for the six months ended June 30,
      2008
      and 2007.




Northwest,
      a wholly owned subsidiary of the Company, was incorporated in the British Virgin
      Islands and, under current laws of the British Virgin Islands, is not subject
      to
      tax on income or on capital gains.





Huifeng
      Biochemistry, a wholly-owned subsidiary of Northwest, was incorporated in the
      PRC being registered as a new and high technology enterprise is entitled to
      an
      income tax reduction. According to the document of reductions approved by the
      local tax bureau, the income tax rate was reduced from 33% to 15% on a permanent
      basis. Provision for income tax expenses for the six months ended June 30,
      2008
      and 2007 were $219,818 and $131,941 respectively.





Huifeng
      Engineering, 70% owned subsidiary of Huifeng Biochemistry, was incorporated
      in
      the PRC and subject to PRC income tax which is computed according to the
      relevant laws and regulations in the PRC. No provision for income tax expenses
      for the six months ended June 30, 2008 and 2007 as Huifeng Engineering has
      incurred net operating loss.





Huifeng
      Pharmaceutical, 80.2% owned subsidiary of Huifeng, was also incorporated in
      the
      PRC and subject to PRC income tax which is computed according to the relevant
      laws and regulations in the PRC. The applicable tax rates for the six months
      ended June 30, 2008 and 2007 were 25% and 33% respectively. The provision for
      income tax expenses for the six months ended June 30, 2008 and 2007 was $42,950
      and $1,216 respectively.




**NOTE
      7 INCOME PER SHARE**





Basic
      income per share is computed by dividing income available to common stockholders
      by the weighted average number of common shares outstanding during the period.
      Diluted income per share is computed similar to basic income per share except
      that the denominator is increased to include the number of additional common
      shares that would have been outstanding if the potential common shares had
      been
      issued and if the additional common shares were dilutive.





Warrants
      to purchase 500,000 shares of common stock at $1.50 per share and stock
      option to purchase 100,000 shares of common stock at $1.50 per share were
      outstanding as of June 30, 2008, but were excluded from the calculation of
      diluted income per share because the effect of stock warrants and an option
      was anti-dilutive.





**NOTE
      8 BUSINESS SEGMENTS**





The
      Company operates in one segment and therefore segment information is not
      presented.





8


**HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**AS
      OF JUNE 30, 2008** **(UNAUDITED)**





**NOTE
      9 RECENT ACCOUNTING PRONOUNCEMENTS**





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. The
      objective of SFAS 157 is to increase consistency and comparability in fair
      value
      measurements and to expand disclosures about fair value measurements. SFAS
      157
      defines fair value, establishes a framework for measuring fair value in
      generally accepted accounting principles, and expands disclosures about fair
      value measurements. SFAS 157 applies under other accounting pronouncements
      that
      require or permit fair value measurements and does not require any new fair
      value measurements. The provisions of SFAS No. 157 are effective for fair value
      measurements made in fiscal years beginning after November 15, 2007. The
      adoption of this statement did not have a material effect on the
      Company's future reported financial position or results of
      operations.





In
      February 2007, the Financial Accounting Standards Board (FASB) issued SFAS
      No.
      159, “The Fair Value Option for Financial Assets and Financial Liabilities -
      Including an Amendment of FASB Statement No. 115”. This statement permits
      entities to choose to measure many financial instruments and certain other
      items
      at fair value. Most of the provisions of SFAS No. 159 apply only to entities
      that elect the fair value option. However, the amendment to SFAS No. 115
“Accounting for Certain Investments in Debt and Equity Securities” applies to
      all entities with available-for-sale and trading securities. SFAS No. 159 is
      effective as of the beginning of an entity’s first fiscal year that begins after
      November 15, 2007. Early adoption is permitted as of the beginning of a fiscal
      year that begins on or before November 15, 2007, provided the entity also elects
      to apply the provision of SFAS No. 157, “Fair Value Measurements”. The adoption
      of this statement did not have a material effect on the Company's
      financial statements.





In
      December 2007, FASB issued Statement 160, “Noncontrolling Interests in
      Consolidated Financial Statement - an amendment of ARB No. 51”, which
      establishes accounting and reporting standards to improve the relevance,
      comparability, and transparency of financial information in its consolidated
      financial statements that include an outstanding noncontrolling interest in
      one
      or more subsidiaries. This effective will effective for all full fiscal and
      interim periods beginning after December 15, 2008. The Company is currently
      evaluating the impact this new Standard, but believes that it will not have
      a
      material impact on the Company’s financial position.





In
      March
      2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
      Instruments and Hedging Activities, an amendment of FASB Statement
      No. 133” (SFAS 161).
      This statement is intended to improve transparency in financial reporting by
      requiring enhanced disclosures of an entity’s derivative instruments and hedging
      activities and their effects on the entity’s financial position, financial
      performance, and cash flows. SFAS 161
      applies to all derivative instruments within the scope of SFAS 133, “Accounting
      for Derivative Instruments and Hedging Activities” as well as related hedged
      items, bifurcated derivatives, and nonderivative instruments that are designated
      and qualify as hedging instruments. Entities with instruments subject
      to SFAS 161 must
      provide more robust qualitative disclosures and expanded quantitative
      disclosures. SFAS 161 is
      effective prospectively for financial statements issued for fiscal years and
      interim periods beginning after November 15, 2008, with early application
      permitted. The Company is currently evaluating the disclosure implications
      of
      this statement.





In
      May 2008, the FASB released SFAS No. 162, “The
      Hierarchy of Generally Accepted Accounting Principles.” ****** SFAS
      No. 162 identifies the sources of accounting principles and the framework
      for selecting the principles used in the preparation of financial statements
      of
      nongovernmental entities that presented in conformity with generally accepted
      accounting principles in the United States of America. SFAS No. 162 will be
      effective 60 days following the SEC’s approval of the PCAOB amendments to AU
      Section 411, The
      Meaning of Present Fairly in Conformity With Generally Accepted Accounting
      Principles *.* The
      Company does not believe SFAS 162 will have a significant impact on the
      Company’s consolidated financial statements.




**NOTE
      10 SHORT-TERM INVESTMENT**





Short-term
      investment as of June 30, 2008 (unaudited) and December 31, 2007 (audited)
      consisted of the following:





June
                30,
              2008
            
            December 31,
              2007Bond
                fund
            
            $
            29,104
            
            $
            -





No
      unrealized gain or loss was recorded on the fund for the six months ended June
      30, 2008 and 2007.




9




**HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**AS
      OF JUNE 30, 2008** **(UNAUDITED)**





**NOTE
      11 NOTES PAYABLE**





Notes
      payable as of June 30, 2008 (unaudited) and December 31, 2007 (audited)
      consisted of the following:





June
                30,
              2008
            
            December 31,
              2007Notes
                payable to a financial institution, interest rate of 12.5% per annum,
                secured by a director property and the company's fixed assets, guaranteed
                by a third party, due June 2008, was extended to June 2009
            
            $
            291,044
            
            $
            295,320Note
                payable to a bank, interest rate of 9.711% per annum , secured by
                the
                company's property and land, due December 2008
            
            
            291,045
            
            
            -Current
                maturities
            
            $
            582,089
            
            $
            295,320





**NOTE
      12 CONVERTIBLE NOTES PAYABLE**





On
      December 31, 2007, the Company consummated a private placement of $2,000,000
      principal amount of 10% secured convertible notes (the “Notes”) with a
      three-year common stock warrants to seven accredited investors. Financing cost
      of $339,500 was paid out of the gross proceeds. Financing cost is amortized
      over
      the life of the Notes to interest expense using the effective interest method.
      For the six months ended June 30, 2008 and 2007, the Company amortized $84,875
      and $0 of financing costs in interest expenses. The Notes are due December
      31,
      2009 and are convertible into 2,000,000 shares of common stock of the Company
      at
      a conversion price of $1.00 per share.





The
      holders of the Notes may convert the unpaid principal amount of the Notes into
      common stock of the Company at any time prior to maturity, at the applicable
      conversion price. The Company may prepay all or any part of the outstanding
      principal amount of the Notes, together with interest, if any, plus a premium,
      if payable prepayment occurs prior to December 31, 2008, the amount paid shall
      be 125% of the principal deemed prepaid, and in the event such prepayment occurs
      after December 31, 2008, the amount paid shall be 140% of the principal deemed
      prepaid. After the occurrence of an Event of Default, 150% of the principal
      amount then outstanding plus all interest occurred to the date of the prepayment
      is payable within three days.





In
      accordance with EITF 98-5, no beneficial conversion feature has been recorded
      on
      the issuance of the Notes as the conversion price of the Notes of $1 is higher
      than the fair market value per share of $0.75 at December 31, 2007.





The
      Company issued warrants to the note holders in the note financing, for the
      purchase of up to a total 500,000 shares of common stock at an exercise price
      of
      $1.50. The warrants are exercisable for a period that extends three years
      beginning from the date that a registration statement covering the underlying
      warrant shares is declared effective.





In
      the
      event that a registration statement covering the Common Stock issuable upon
      exercise of the warrant is not effective on or before December 31, 2008, the
      warrant holders may exercise its right during the exercise period to receive
      warrant shares on a net basis such that, with any payment of funds by the
      warrant holders, the warrant holders receive that number of warrant shares
      otherwise issuable upon exercise of its warrants less the number of warrant
      shares having an aggregate market price at the time of exercise equal to the
      aggregate exercise price per share that would otherwise have been payable by
      the
      holder of all such warrant shares.





The
      Notes
      are secured by 300,000 shares of Northwest’s share capital pursuant to a pledge
      agreement, the Company’s performance of the Notes and other obligations in
      connection with the financing is also secured by a pledge of 5,272,860 shares
      of
      common stock personally held by the current Chief Executive Officer and two
      other stockholders pursuant to another pledge agreement. Upon any event of
      default (as defined in the Notes and pledge agreements), the investors will
      be
      entitled to exercise their respective rights under the pledge
      agreements.





As
      of
      June 30, 2008, the Note holders have not converted the principal amount of
      their
      notes into shares of common stock of the Company.




The
      Company recorded a discount on the Notes in accordance with EITF 98-5 of
      $306,686 for the fair value of the warrants issued. The fair value of warrants
      was calculated using the Bionomial model with the following assumptions: (i)
      risk-free interest rate of 3.07%; (ii) expected life (in years) of 3; (iii)
      expected volatility of 172%; (iv) expected dividend yield of 0.00%; and (v)
      stock market price of $0.75. The discount on Notes is amortized using effective
      interest method over 2 years. For the six months ended June 30, 2008 and 2007,
      the Company recorded amortization of $76,671 and $0 respectively as interest
      expenses in the statement of operations.


10


**HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY INC. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**AS
      OF JUNE 30, 2008** **(UNAUDITED)**





The
      Notes
      bear a 10% annual interest rate payable in arrears with a first payment due
      March 1, 2008, and thereafter on each June 1, September 1 and December 1 while
      the Notes are outstanding, with a final payment of interest due on the maturity
      date. For the six months ended June 30, 2008 and 2007, $101,667 and $0
      respectively was recorded as interest expenses.





**NOTE
      13 COMMITMENTS AND CONTINGENCIES**





(A)
      Capital commitments




As
      of
      June 30, 2008 and December 31, 2007, the Company had capital commitments of
      $88,219 with suppliers for the purchase of production equipment and
      $512,954 with suppliers for the purchase of production equipment and
      factory construction respectively.





(B)
      Operating lease commitments





The
      Company occupies office from a third party under operating leases which expires
      on September 30, 2008 at a quarterly rental of $2,898. Accordingly, for the
      six
      months ended June 30, 2008 and 2007, the Company recognized rental expenses
      for
      this space in the amount of $5,796 and $6,050 respectively.





As
      of
      June 30, 2008, the Company has outstanding commitments with respect to the
      non-cancelable operating leases of $2,898 which are due by September
      2008.






**NOTE
      14 STOCKHOLDERS’ EQUITY**





Stock
      option





On
      April
      28, 2008, the Company issued an option to its legal counsel to purchase up
      to
      100,000 shares of common stock at an exercise price of $1.50 per share. The
      option shall be exercisable in whole or in part, according to the vest schedule,
      shall be fully vested upon execution of the agreement and shall be exercisable
      at any time pursuant to the terms of the Agreement until April 28, 2010. The
      fair value of the option was estimated on the grant date using the Black-Scholes
      option pricing model as required by SFAS 123R with the following assumptions
      and
      estimates: expected dividend 0%, volatility 189%, a risk-free rate of 2.36%
      and
      an expected like of two years. The value of an option recognized during the
      six
      months ended June 30, 2008 was $7,278.





**NOTE
      15 CONCENTRATIONS AND RISKS**





During
      the six months ended June 30, 2008 and 2007, 100% of the Company’s assets were
      located in China and Hong Kong.





During
      the six months ended June 30, 2008 and 2007, 49% and 52% of the Company's
      revenues were derived from companies located in China respectively.





The
      Company relied on one supplier for approximately $400,156 representing in
      aggregate 10% of purchases for the six months ended June 30, 2008, and relied
      on
      three suppliers for approximately $531,922, $463,807 and $320,809, representing
      in aggregate 88% of purchases for the six months ended June 30, 2007. Accounts
      payable to those suppliers as of June 30, 2008 and 2007 were $0 and
      $8,485.





11




**Item
      2.Management's Discussion and Analysis of Financial Condition and
      Results**  **of**  **Operations**




*The
      following discussion should be read in conjunction with the Huifend
      Bio-Pharmaceutical Techonology, Inc. consolidated financial statements and
      accompanying notes included elsewhere in this report. The following discussion
      contains forward-looking statements that reflect the plans, estimates and
      beliefs of Huifeng Bio-Pharmaceutical Technology, Inc. The actual results could
      differ materially from those discussed in the forward-looking statements.
      Factors that could cause or contribute to these differences include those
      discussed below and elsewhere in this Report and the Annual Report 10-K,
      particularly in “Risk Factors.” All references to years relate to the calendar
      year ended December 31 of the particular year.*





**OVERVIEW**





The
      audited consolidated financial statements include the accounts of Huifeng
      Bio-Pharmaceutical, Inc., a Nevada corporation, and its subsidiaries. We are
      in
      the business of producing and selling plant extracts, biochemical products
      and
      pharmaceutical raw products in the PRC.





On
      December 20, 2004, pursuant to a Stock Purchase Agreement, Art Malone, Jr.
      ("Selling Shareholder") sold 7,229,601 shares of the common stock of the Company
      for $300,000 (the "Sale") to Zhi Lan Wang and Jun Lin, individuals on the
      closing date of December 20, 2004. Such 7,229,601 shares of the common stock
      of
      the Company represented approximately 56.18% of the total outstanding stock
      of
      the Company as of that date.




Immediately
      thereafter, pursuant to the terms of an Agreement and Plan of Reorganization
      dated December 20, 2004 ("Northwest Agreement"), the Company agreed to purchase
      all of the outstanding shares of Northwest BioTechnic, Inc. (“NBTI”), a British
      Virgin Islands corporation (the “Acquisition”). NBTI was incorporated in the
      British Virgin Islands on June 25, 2004.




At
      the
      time of the Acquisition, NBTI had a total of 500,000 shares issued and
      outstanding, 250,000 of which were held by Jing An Wang, and 50,000 each were
      held by Xinwen Hou, Zhang Jungi, Wang Bijun, Wang Zhilan, and Wang Xugang (the
      “NBTI Shareholders”). Pursuant to the terms of the Northwest Agreement, at the
      closing of the Acquisition, the Company delivered the following consideration
      to
      the NBTI Shareholders: (i) 80,735,590 newly-issued shares of the common stock
      of
      the Company (the “Initial NBTI Consideration”) in exchange for 30% of the total
      outstanding shares of NBTI (such shares of the common stock of the Company
      allocated among the NBTI Shareholders on a pro rata basis according to their
      respective ownership of NBTI); and (ii) a promissory note (the “Promissory
      Note”) payable to the NBTI Shareholders for the total amount of $1,900,000, in
      exchange for the remaining 70% of the total outstanding shares of NBTI. The
      Promissory Note is convertible into 10,465,725 shares of the Company's common
      stock (allocated among the NBTI Shareholders on a pro rata basis according
      to
      their respective ownership of NBTI), with such number of shares calculated
      assuming the completion of a one-for-eighteen reverse split of the Company's
      common stock prior to such conversion. Based on the current ownership of NBTI
      shares by the NBTI Shareholders, Jing An Wang would receive 5,232,860 shares
      of
      the Company's common stock upon conversion, and each of Xinwen Hou, Zhang Junqi,
      Wang Bijun, Wang Zhilan, and Wang Xugang would receive 1,046,573 shares of
      the
      Company's common stock.




NBTI
      operates through its wholly owned subsidiary, Huifeng Biochemistry Joint Stock
      Company ("Huifeng"), which is a joint venture company established under the
      laws
      of China and is engaged in the production and sales of plant extracts,
      biochemical products and pharmaceutical raw products in the PRC.





The
      exchange was treated as a reverse acquisition for accounting purposes. As such,
      the financial information reflected activity subsequent to the acquisition
      of
      the Company and its subsidiaries and financial activity of NBTI prior to the
      acquisition. We will continue the business operations conducted by
      NBTI.




The
      Company filed a definitive Information Statement pursuant to Section 14(c)
      of
      the Securities Exchange Act of 1934 on September 13, 2005 to change the name
      of
      the Company to "Huifeng Bio-Pharmaceutical Technology Inc." On October 12,
      2005,
      the name of the Company changed to Huifeng Bio-pharmaceutical Technology Inc.
      and the ticker symbol changed to HFGB.OB.





**CRITICAL
      ACCOUNTING POLICIES AND ESTIMATES**





We
      have
      identified one policy area as critical to the understanding of our consolidated
      financial statements. The preparation of our consolidated financial statements
      requires management to make estimates and assumptions that affect the reported
      amounts of assets and liabilities and disclosure of contingent assets and
      liabilities at the date of the consolidated financial statements and the
      reported amounts of sales and expenses during the reporting periods. With
      respect to net realizable value of the Company's accounts receivable and
      inventories, significant estimation judgments are made and actual results could
      differ materially from these estimates.


12


The
      Company does not have any reserves against its accounts receivable or
      inventories at June 30, 2008 and 2007. Management's estimation that there are
      no
      reserves is based on the current facts that there are no significant aged
      accounts receivable and the current inventory turnover is sufficient to realize
      the current carrying value of the inventories. In making their judgment,
      management has assumed that there will be continued demand for their products
      in
      the future, thereby maintaining adequate turnover of the inventories.
      Additionally, management has assumed that customers will continue to pay their
      outstanding invoices timely, and that their customers' financial positions
      will
      not deteriorate significantly in the future, which would result in their
      inability to pay their debts to the Company. While the Company's management
      currently believes that there is little likelihood that the actual results
      of
      their current estimates will differ materially from its current estimates,
      if
      customer demand for its products decreases significantly in the near future,
      or
      if the financial position of its customers deteriorates in the near future,
      the
      Company could realize significant write downs for slow moving inventories or
      uncollectible accounts receivable.





We
      believe the following is among the most critical accounting policies that impact
      our consolidated financial statements. We suggest that our significant
      accounting policies, as described in our consolidated financial statements
      in
      the Summary of Significant Accounting Policies, be read in conjunction with
      this
      Management's Discussion and Analysis of Financial Condition and Results of
      Operations.





We
      recognize revenue in accordance with Staff Accounting Bulletin ("SAB") No.
      104.
      All of the following criteria must exist in order for us to recognize
      revenue:





1. Persuasive
      evidence of an arrangement exists;





2. Delivery
      has occurred or services have been rendered;





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





4. Collectibility
      is reasonably assured.





The
      majority of the Company's revenue results from sales contracts with distributors
      and revenue is generated upon the shipment of goods. The Company's pricing
      structure is fixed and there are no rebate or discount programs. Management
      conducts credit background checks for new customers as a means to reduce the
      subjectivity of assuring collectibility. Based on these factors, the Company
      believes that it can apply the provisions of SAB 104 with minimal
      subjectivity.





THREE
      MONTHS ENDED JUNE 30, 2008 COMPARED TO THREE MONTHS ENDED JUNE 30,
      2007





Revenues,
      Cost of Revenues and Gross Margin





Revenues
      for the quarter ended June 30, 2008 were $2,764,994, an increase of $1,154,516
      or 71.7% from $1,610,478 for the same quarter in 2007. Our increase in revenues
      for the second quarter of 2008 was mainly due to the increase in our sales
      of
      pharmaceutical raw-material and Plant Extractive and others products, which
      include our products of NF11 Rutin, L-Rhamnose, Quercetin, Troxerutin
      (injection) and Diosmin as set forth in the table below. Our increase in revenue
      is mainly as a result of a gain in new customers and an increase in the number
      of orders from the Company’s existing customers.


For the quarter ended
                June 30,
              
              Increase /Product
              
              2008
              
              2007
              
              (Decrease)Pharmaceutical intermediates
              
              $
              829,344
              
              $
              654,399
              
              $
              174,945Pharmaceutical
                  raw-material
              
              
              1,365,665
              
              
              847,813
              
              
              517,852Plant
                  Extractive and others
              
              
              569,985
              
              
              108,266
              
              
              461,719TOTAL
              
              $
              2,764,994
              
              $
              1,610,478
              
              $
              1,154,516




Cost
      of
      revenues for the quarter ended June 30, 2008 were $1,903,370, an increase of
      $861,299 or 82.7% from $1,042,071 for the quarter ended June 30, 2007. Compared
      to the quarter ended June 30, 2007, the increase in the cost of revenues for
      the
      second quarter of 2008 was caused by the significant increase in sales of our
      pharmaceutical raw-material and Plant Extractive and others as follows:


For the quarter ended
                June 30,
              
              Increase /Product
              
              2008
              
              2007
              
              (Decrease)Pharmaceutical intermediates
              
              $
              559,603
              
              $
              401,607
              
              $
              157,996Pharmaceutical
                  raw-material
              
              
              987,512
              
              
              552,920
              
              
              434,592Plant
                  Extractive and others
              
              
              356,255
              
              
              87,544
              
              
              268,711TOTAL
              
              $
              1,903,370
              
              $
              1,042,071
              
              $
              861,299


13


Gross
      margin for the quarter ended June 30, 2008 was $861,624, an increase of $293,217
      or 51.6% from $568,407 for the same period ended June 30, 2007 as a result
      of
      the increase in product sales.





Our
      gross
      profit margin for 2008 decreased from 35.3% for the second quarter of 2007
      to
      31.2% in the same quarter in 2008 because of the increase of price in production
      raw-materials, mainly the prices of immature bitter orange and Japanese pagoda
      tree flower-bud which were increased by 100% and 20%
      respectively.





General
      and Administrative Expenses


General
      and Administrative expenses totaled $232,039 for the three months ended June
      30,
      2008, an increase of $138,276 or 147% from $93,763 for the three months ended
      June 30, 2007. The increase in general and administrative expenses was mainly
      due to an increase in legal and professional fees of $88,882 and exchange losses
      of $48,490 from foreign currency fluctuations.





Selling
      and Distribution Expenses





Selling
      and distribution expenses totaled $67,005 for the three months ended June 30,
      2008, an increase of $42,353 or 172% from $24,652 for the three months ended
      June 30, 2007. The increase in selling and distribution expenses was mainly
      due
      to the increase of freight expenses of $36,042 as compared to the same quarter
      last year as a result of the increase in product sales.





SIX
      MONTHS ENDED JUNE 30, 2008 COMPARED TO SIX MONTHS ENDED JUNE 30, 2007





Revenues,
      Cost of Revenues and Gross Margin





Revenues
      for the six months ended June 30, 2008 were $5,351,442, an increase of
      $2,343,295 or 78% from $3,008,147 for the same period in 2007. Our increase
      in
      revenues for the second quarter of 2008 was mainly due to the increase in our
      sales of pharmaceutical raw-material and Plant Extractive and others products,
      which include our products of NF11 Rutin, L-Rhamnose, Quercetin, Troxerutin
      (injection) and Diosmin as set forth in the table below. Our increase in revenue
      is mainly as a result of a gain in new customers and an increase in the number
      of orders from the Company’s existing customers.




Six
                months ended
              June
                30,
            
            Increase
                /Product
            
            2008
            
            2007
            
            (Decrease)Pharmaceutical
                intermediates
            
            $
            1,651,168
            
            $
            1,255,450
            
            
            
            $
            395,718Pharmaceutical
                raw-material
            
            
            2,534,912
            
            
            1,559,024
            
            
            
            
            975,888Plant
                Extractive and others
            
            
            1,165,362
            
            
            193,673
            
            
            
            
            971,689TOTAL
            
            $
            5,351,442
            
            $
            3,008,147
            
            
            
            $
            2,343,295





Cost
      of
      revenues for the six months ended June 30, 2008 were $3,512,315, an increase
      of
      $1,480,426 or 73% from $2,031,889 for the six months ended June 30, 2007.
      Compared to the six months ended June 30, 2007, the increase in the cost of
      revenues for the six months ended June 30, 2008 was caused by the significant
      increase of sales of our pharmaceutical raw-material and Plant Extractive and
      others products as follows:




Six months ended
              June 30,
            
            Increase /Product
            
            2008
            
            2007
            
            (Decrease)Pharmaceutical
                intermediates
            
            $
            1,093,231
            
            $
            798,738
            
            
            
            $
            294,493Pharmaceutical
                material
            
            
            1,841,782
            
            
            1,062,325
            
            
            
            
            779,457Plant
                Extractive and others
            
            
            577,302
            
            
            170,826
            
            
            
            
            406,476TOTAL
            
            $
            3,512,315
            
            $
            2,031,889
            
            
            
            $
            1,480,426


14


The
      gross
      profit margin for the six months ended June 30, 2008 was $1,839,127, an increase
      of $862,869 or 88.4% from $976,258 for the period ended June 30, 2007 as a
      result of the increase in product sales and a slight price increase.





Our
      gross
      profit margin for the six months ended June 30, 2008 had a small increase from
      32.5% to 34.4% compare to the same period in 2007. The increase was a result
      of
      the lower unit cost of our products over the six-month period despite increases
      in cost of raw material during the second quarter of 2008.





General
      and Administrative Expenses





General
      and Administrative expenses totaled $629,816 for the six months ended June
      30,
      2008, an increase of $495,056 or 367% from $134,760 for the six months ended
      June 30, 2007. The increase in general and administrative expenses was mainly
      due to an increase in consulting fees and legal and professional fees of
      $265,723 and exchange losses of $184,806 from foreign currency
      fluctuations..





Selling
      and Distribution Expenses





Selling
      and distribution expenses totaled $91,898 for the six months ended June 30,
      2008, an increase of $48,202 or 110% from $43,696 for the six months ended
      June
      30, 2007. The increase in selling and distribution expenses was mainly due
      to
      the increase of freight expenses of $38,394.





Liquidity
      and Capital Resources





Cash





Our
      cash
      balance amounted to $945,293 at June 30, 2008.





In
      the
      six months ended June 30, 2008, our cash used in operating activities
      totaled $387,741, mainly due to our net income for the period of $698, 073,
      increase in accounts receivable of $977,166 and increase in
      inventories of $1,071,887. In the six months ended June 30, 2007, our cash
      used in investing activities totaled $1,200,893 mainly for the construction
      of
      our new finished goods warehouse and costs incurred to achieve the requirement
      of Certificate of Suitability. Our cash provided by financing activities in
      the six months ended June 30, 2008 of $260,158 was a bank loan from a PRC
      bank.





Working
      Capital




Our
      working capital amounted to $6,424,210 at June 30, 2008.





**INFLATION**




Inflation
      has had a small impact on our business. It increased the purchase cost of our
      raw materials resulting in an increase in our production cost.




**CURRENCY
      EXCHANGE FLUCTUATIONS**




All
      of
      our revenues and majority of the expenses for the six months ended June 30,
      2008
      were denominated primarily in Renminbi ("RMB"), the currency of China, and
      were
      converted into US Dollars at the exchange rate of 6.8718 to 1. Since July
      22, 2005, the Renminbi has strengthened against the US dollars. As a result
      of
      the appreciation of RMB we recognized a foreign currency translation gain of
      $574,832 during the six months ended June 30, 2008. There could be no assurance
      that RMB-to-U.S. dollar exchange rates will remain stable. A devaluation of
      RMB
      relative to the U.S. dollar would adversely affect our business, financial
      condition and results of operations. We do not engage in currency
      hedging.





15


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





Not
      required





**Item
      4T. Controls and Procedures**




*(a)
      Evaluation of Disclosure Controls and Procedures* .
      Under
      the supervision and with the participation of our management, including our
      Chief Executive Officer and Chief Financial Officer, we conducted an evaluation
      of the effectiveness of the design and operation of our disclosure controls
      and
      procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
      Exchange Act of 1934, as amended, as of the end of the period covered by this
      Quarterly Report on Form 10-Q (the “Evaluation Date”). The purpose of this
      evaluation is to determine if, as of the Evaluation Date, our disclosure
      controls and procedures were operating effectively such that the information,
      required to be disclosed in our Securities and Exchange Commission (“SEC”)
      reports (i) was recorded, processed, summarized and reported within the time
      periods specified in SEC rules and forms, and (ii) was accumulated and
      communicated to our management, including our Chief Executive Officer and Chief
      Financial Officer, as appropriate to allow timely decisions regarding required
      disclosure.




Based
      on
      this evaluation, our Chief Executive Officer and Chief Financial Officer
      concluded that, as of the Evaluation Date, our disclosure controls and
      procedures were operating effectively.




*(b) Changes
      in Internal Control over Financial Reporting* .  There
      have been no significant changes in our internal controls over financial
      reporting that occurred during the second quarter of fiscal year 2008 that
      have
      materially affected, or are reasonably likely to materially affect our internal
      controls over financial reporting.




*Limitations
      on the Effectiveness of Disclosure Controls and Procedures.*




Disclosure
      controls and procedures and other procedures that are designed to ensure that
      information required to be disclosed in our reports filed or submitted under
      the
      Exchange Act are recorded, processed, summarized and reported, within the time
      period specified in the Securities and Exchange Commission's rules and forms.
      Disclosure controls and procedures include, without limitation, controls and
      procedures designed to ensure that information required to be disclosed in
      our
      reports filed under the Exchange Act is accumulated and communicated to
      management, including our Chief Executive Officer and Chief Financial Officer
      as
      appropriate, to allow timely decisions regarding required
      disclosure.





**PART
      II.**  **OTHER
      INFORMATION**




**Item
      1.**  **Legal
      Proceedings:**





We
      are
      currently not involved in any litigation that we believe could have a material
      adverse effect on our financial condition or results of operations. There is
      no
      action, suit, proceeding, inquiry or investigation before or by any court,
      public board, government agency, self-regulatory organization or body pending
      or, to the knowledge of the executive officers of our Company or any of our
      subsidiaries, threatened against or affecting the Company, our common stock,
      any
      of our subsidiaries or of our Company's or our Company's subsidiaries' officers
      or directors in their capacities as such, in which an adverse decision could
      have a material adverse effect.





**Item
      1 A. Risk Factors**





You
      should carefully consider the risks described below together with all of the
      other information included in this report before making an investment decision
      with regard to our securities. The statements contained in or incorporated
      into
      this offering that are not historic facts are forward-looking statements that
      are subject to risks and uncertainties that could cause actual results to differ
      materially from those set forth in or implied by forward-looking statements.
      If
      any of the following risks actually occurs, our business, financial condition
      or
      results of operations could be harmed. In that case, the trading price of our
      common stock could decline, and you may lose all or part of your
      investment.


16


***If
      We Are Not Able To Implement Our Strategies To Achieve Our Business Objectives,
      Our Business Operations And Financial Performance May Be Adversely
      Affected.***





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





***If
      We Need Additional Capital To Fund Our Growing Operations, We May Not Be Able
      To
      Obtain Sufficient Capital And May Be Forced To Limit The Scope Of Our
      Operations.***





As
      we
      implement our growth strategies, we may experience increased capital needs
      and
      we may not have enough capital to fund future operations without additional
      capital investments. Our capital needs will depend on numerous factors,
      including (1) our profitability; (2) the release of competitive products by
      our
      competition; (3) the level of our investment in research and development; and
      (4) the amount of our capital expenditures. We cannot assure you that we will
      be
      able to obtain capital in the future to meet our needs.




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





·
            reduce
                our investments in research and development;·
            limit
                our marketing efforts; and·
            decrease
                or eliminate capital expenditures.





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





***We
      Depend On Third Parties To Supply Raw Materials, And Any Adverse Changes In
      Such
      Supply Or The Costs Of Raw Materials May Adversely Affect Our
      Operations.***





We
      currently obtain all of our raw materials from third parties and through various
      farms. Due to the nature of the raw materials, mainly plants, the supply of
      these raw materials can be adversely affected by any material change in the
      climate or environmental conditions in China, which may, in turn, result in
      increased costs to purchase these raw materials.




***Intense
      Competition From Existing And New Entities May Adversely Affect Our Revenues
      And
      Profitability.***





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





***We
      Depend On Our Key Management Personnel And The Loss Of Their Services Could
      Adversely Affect Our Business.***





We
      place
      substantial reliance upon the efforts and abilities of our executive officers,
      Jingan Wang, our Chairman and Chief Executive Officer; Sanding Tao, our acting
      Chief Financial Officer; and Xinwen Hou, Chief Operations Officer and Secretary.
      The loss of the services of any of our executive officers could have a material
      adverse effect on our business, operations, revenues or prospects. We do not
      maintain key man life insurance on the lives of these
      individuals.


17


***We
      May Incur Significant Costs To Ensure Compliance With U.S. Corporate Governance
      And Accounting Requirements.***





We
      may
      incur significant costs associated with our public company reporting
      requirements, costs associated with newly applicable corporate governance
      requirements, including requirements under the Sarbanes-Oxley Act of 2002 and
      other rules implemented by the Securities and Exchange Commission and the NASDAQ
      OTCBB. We expect all of these applicable rules and regulations to increase
      our
      legal and financial compliance costs and to make some activities more
      time-consuming and costly. We also expect that these applicable rules and
      regulations may make it more difficult and more expensive for us to obtain
      director and officer liability insurance and we may be required to accept
      reduced policy limits and coverage or incur substantially higher costs to obtain
      the same or similar coverage. As a result, it may be more difficult for us
      to
      attract and retain qualified individuals to serve on our board of directors
      or
      as executive officers. We are currently evaluating and monitoring developments
      with respect to these newly applicable rules, and we cannot predict or estimate
      the amount of additional costs we may incur or the timing of such
      costs.





***We
      May Have Difficulty Raising Necessary Capital To Fund Operations As A Result
      Of
      Market Price Volatility Of Our Shares Of Common
      Stock.***





If
      our
      business development plans are successful, we may require additional financing
      to continue to develop and exploit existing and new technologies and to expand
      into new markets. The exploitation of our technologies may, therefore, be
      dependent upon our ability to obtain equity financing through debt and equity
      or
      other means. In recent years, the securities markets in the United States have
      experienced a high level of price and volume volatility, and the market price
      of
      securities of many companies have experienced wide fluctuations that have not
      necessarily been related to the operations, performance, underlying asset values
      or prospects of such companies.




For
      these
      reasons, our shares of common stock can also be expected to be subject to
      volatility resulting from purely market forces over which we will have no
      control. Such volatility may make it more difficult to find investors willing
      to
      invest in our common stock, or to negotiate equity financing or terms that
      are
      acceptable to us.





**Risks
      Relating To Our Company**





***To
      Maximize Our Potential For Future Growth And Achieve Our Expected Revenues,
      We
      Need To Manage Growth In Our Current Operations.***





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





***We
      Cannot Assure You That Our Organic Growth Strategy Will Be
      Successful.***





One
      of
      our growth strategies is to grow organically by increasing the distribution
      and
      sales of our products in new markets outside of China. However, many obstacles
      to entering new markets exist, such as the costs associated with entering into
      new markets, developing and implementing effective marketing efforts abroad
      and
      maintaining attractive foreign exchange ratios. We cannot, therefore, assure
      you
      that we will be able to successfully overcome such obstacles and establish
      our
      products in any additional markets. Our inability to successfully implement
      our
      organic growth strategy may have a negative impact on our growth strategy and
      on
      our future financial condition, results of operations or cash
      flows.





***We
      Cannot Assure You That Our Acquisition Growth Strategy Will Be
      Successful.***





In
      addition to our organic growth strategy we also expect to grow through strategic
      acquisitions. We intend to pursue opportunities to acquire businesses that
      are
      complementary or related to our existing product lines. We may not be able
      to
      locate suitable acquisition candidates at prices that we successfully consider
      appropriate. If we do identify an appropriate acquisition candidate, we may
      not
      be able to successfully negotiate the terms of an acquisition, finance the
      acquisition on terms that are satisfactory to us or if the acquisition occurs
      successfully, integrate the acquired business into our existing business.
      Acquisitions of businesses or other material operations may require debt
      financing or additional equity financing, resulting in leverage or dilution
      of
      ownership. Integration of acquired business operations could disrupt our
      business by diverting management away from day-to-day operations. The
      difficulties of integration may be increased by the necessity of coordinating
      geographically dispersed organizations, integrating personnel with disparate
      business backgrounds and combining different corporate cultures. We also may
      not
      be able to maintain key employees or customers of an acquired business or
      realize cost efficiencies or synergies or other benefits we anticipated when
      selecting our acquisition candidates. In addition, we may need to record
      write-downs from future impairments of intangible assets, which could reduce
      our
      future reported earnings. At times, acquisition candidates may have liabilities
      or adverse operating issues that we fail to discover through due diligence
      prior
      to the acquisition which will be required to comply with laws of the People's
      Republic of China ("PRC"), to the extent applicable. There can be no assurance
      that any proposed acquisition will be able to comply with PRC requirements,
      rules and/or regulations, or that we will successfully obtain governmental
      approvals to the extent required, which may be necessary to consummate such
      acquisitions.


18


***If
      We Are Not Able To Implement Our Strategies To Achieve Our Business Objectives,
      Our Business Operations And Financial Performance May Be Adversely
      Affected.***





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





***If
      We Need Additional Capital To Fund Our Growing Operations, We May Not Be Able
      To
      Obtain Sufficient Capital And May Be Forced To Limit The Scope Of Our
      Operations.***





As
      we
      implement our growth strategies, we may experience increased capital needs
      and
      we may not have enough capital to fund future operations without additional
      capital investments. Our capital needs will depend on numerous factors,
      including (1) our profitability; (2) the release of competitive products by
      our
      competition; (3) the level of our investment in research and development; and
      (4) the amount of our capital expenditures. We cannot assure you that we will
      be
      able to obtain capital in the future to meet our needs.




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





·
            reduce
                our investments in research and development;·
            limit
                our marketing efforts; and·
            decrease
                or eliminate capital expenditures.




Such
      reductions could have a material adverse affect our business and our ability
      to
      compete.




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





***We
      Depend On Third Parties To Supply Raw Materials, And Any Adverse Changes In
      Such
      Supply Or The Costs Of Raw Materials May Adversely Affect Our
      Operations.***





We
      currently obtain all of our raw materials from third parties and through various
      farms. Due to the nature of the raw materials, mainly plants, the supply of
      these raw materials can be adversely affected by any material change in the
      climatic or environmental conditions in China, which may, in turn, result in
      increased costs to purchase these raw materials.





***Intense
      Competition From Existing And New Entities May Adversely Affect Our Revenues
      And
      Profitability.***





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





***We
      Depend On Our Key Management Personnel And The Loss Of Their Services Could
      Adversely Affect Our Business.***





We
      place
      substantial reliance upon the efforts and abilities of our executive officers,
      Jingan Wang, our Chairman and Chief Executive Officer; Sanding Tao our acting
      Chief Financial Officer; Xinwen Hou, Chief Operations Officer and Secretary.
      The
      loss of the services of any of our executive officers could have a material
      adverse effect on our business, operations, revenues or prospects. We do not
      maintain key man life insurance on the lives of these individuals.




***We
      May Incur Significant Costs To Ensure Compliance With U.S. Corporate Governance
      And Accounting Requirements.***





We
      may
      incur significant costs associated with our public company reporting
      requirements, costs associated with newly applicable corporate governance
      requirements, including requirements under the Sarbanes-Oxley Act of 2002 and
      other rules implemented by the Securities and Exchange Commission and the NASDAQ
      OTCBB. We expect all of these applicable rules and regulations to increase
      our
      legal and financial compliance costs and to make some activities more
      time-consuming and costly. We also expect that these applicable rules and
      regulations may make it more difficult and more expensive for us to obtain
      director and officer liability insurance and we may be required to accept
      reduced policy limits and coverage or incur substantially higher costs to obtain
      the same or similar coverage. As a result, it may be more difficult for us
      to
      attract and retain qualified individuals to serve on our board of directors
      or
      as executive officers. We are currently evaluating and monitoring developments
      with respect to these newly applicable rules, and we cannot predict or estimate
      the amount of additional costs we may incur or the timing of such
      costs.


19


***We
      May Have Difficulty Raising Necessary Capital To Fund Operations As A Result
      Of
      Market Price Volatility Of Our Shares Of Common
      Stock.***





If
      our
      business development plans are successful, we may require additional financing
      to continue to develop and exploit existing and new technologies and to expand
      into new markets. The exploitation of our technologies may, therefore, be
      dependent upon our ability to obtain equity financing through debt and equity
      or
      other means. In recent years, the securities markets in the United States have
      experienced a high level of price and volume volatility, and the market price
      of
      securities of many companies have experienced wide fluctuations that have not
      necessarily been related to the operations, performance, underlying asset values
      or prospects of such companies.





For
      these
      reasons, our shares of common stock can also be expected to be subject to
      volatility resulting from purely market forces over which we will have no
      control. Such volatility may make it more difficult to find investors willing
      to
      invest in our common stock, or to negotiate equity financing or terms that
      are
      acceptable to us.





**Risks
      Relating To The People's Republic Of China**





***There
      Could Be Changes In Government Regulations Towards The Pharmaceutical And Health
      Supplement Industries That May Adversely Affect Our
      Business.***





The
      manufacture and sale of pharmaceutical products in the PRC is heavily regulated
      by many state, provincial and local authorities. These regulations significantly
      increase the difficulty and costs involved in obtaining and maintaining
      regulatory approvals for marketing new and existing products. Our future growth
      and profitability depend to a large extent on our ability to obtain regulatory
      approvals. The State Food and Drug Administration of China recently implemented
      new guidelines for licensing of pharmaceutical products. All existing
      manufacturers with licenses, which are currently valid under the previous
      guidelines, are required to apply for the Good Manufacturing Practices ("GMP")
      certifications, and we receive approvals in January 2005. We have received
      our
      certifications. However, should we fail to maintain the GMP certifications
      under
      the new guidelines in the future; our businesses would be materially and
      adversely affected. Moreover, the laws and regulations regarding acquisitions
      of
      the pharmaceutical industry in the PRC may also change and may significantly
      impact our ability to grow through acquisitions.





***Currency
      Conversion And Exchange Rate Volatility Could Adversely Affect Our Financial
      Condition.***





The
      PRC
      government imposes control over the conversion of Renminbi into foreign
      currencies. Under the current unified floating exchange rate system, the
      People's Bank of China publishes an exchange rate, which we refer to as the
      People's Bank of China exchange rate, based on the previous day's dealings
      in
      the inter-bank foreign exchange market. Financial institutions authorized to
      deal in foreign currency may enter into foreign exchange transactions at
      exchange rates within an authorized range above or below the People's Bank
      of
      China exchange rate according to market conditions. Pursuant to the Foreign
      Exchange Control Regulations of the PRC issued by the State Council which came
      into effect on April 1, 1996, and the Regulations on the Administration of
      Foreign Exchange Settlement, Sale and Payment of the PRC which came into effect
      on July 1, 1996, regarding foreign exchange control, conversion of Renminbi
      into
      foreign exchange by Foreign Investment Enterprises, for use on current account
      items, including the distribution of dividends and profits to foreign investors,
      is permissible. Foreign Investment Enterprises are permitted to convert their
      after-tax dividends and profits to foreign exchange and remit such foreign
      exchange to their foreign exchange bank accounts in the PRC. Conversion of
      Renminbi into foreign currencies for capital account items, including direct
      investment, loans, and security investment, is still under certain restrictions.
      On January 14, 1997, the State Council amended the Foreign Exchange Control
      Regulations and added, among other things, an important provision, which
      provides that the PRC government shall not impose restrictions on recurring
      international payments and transfers under current account items.




Enterprises
      in the PRC (including Foreign Investment Enterprises) which require foreign
      exchange for transactions relating to current account items, may, without
      approval of the State Administration of Foreign Exchange, or SAFE, effect
      payment from their foreign exchange account or convert and pay at the designated
      foreign exchange banks by providing valid receipts and proofs.





***Most
      Of Our Assets Are Located In China, Any Dividends Of Proceeds From Liquidation
      Is Subject To The Approval Of The Relevant Chinese Government
      Agencies.***





Our
      assets are predominantly located inside China. Under the laws governing foreign
      invested enterprises in China, dividend distribution and liquidation are allowed
      but subject to special procedures under the relevant laws and rules. Any
      dividend payment will be subject to the decision of the board of directors
      and
      subject to foreign exchange rules governing such repatriation. Any liquidation
      is subject to both the relevant government agency's approval and supervision
      as
      well the foreign exchange control. This may generate additional risk for our
      investors in case of dividend payment and liquidation.


20


***China’s
      economic policies could affect our business.***





Substantially
      all of our assets are located in China and substantially all of our revenue
      is
      derived from our operations in China. Accordingly, our results of operations
      and
      prospects are subject, to a significant extent, to the economic, political
      and
      legal developments in China.




While
      China's economy has experienced a significant growth in the past twenty years,
      growth has been irregular, both geographically and among various sectors of
      the
      economy. The Chinese government has implemented various measures to encourage
      economic growth and guide the allocation of resources. Some of these measures
      benefit the overall economy of China, but may also have a negative effect on
      us.
      For example, our operating results and financial condition may be adversely
      affected by the government control over capital investments or changes in tax
      regulations.





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





***We
      may face obstacles from the communist system in The People's Republic of
      China.***





Foreign
      companies conducting operations in The People's Republic of China face
      significant political, economic and legal risks. The Communist regime in The
      People's Republic of China, including a stifling bureaucracy may hinder Western
      investment.





***We
      may have difficulty establishing adequate management, legal and financial
      controls in The People's Republic of China.***





The
      People's Republic of China historically has been deficient in Western style
      management and financial reporting concepts and practices, as well as in modern
      banking, computer and other control systems. We may have difficulty in hiring
      and retaining a sufficient number of qualified employees to work in The People's
      Republic of China. As a result of these factors, we may experience difficulty
      in
      establishing management, legal and financial controls, collecting financial
      data
      and preparing financial statements, books of account and corporate records
      and
      instituting business practices that meet Western standards.





***Because
      our assets and operations are located in China, you may have difficulty
      enforcing any civil liabilities against us under the securities and other laws
      of the United States or any state.***





We
      are a
      holding company, and all of our assets are located in the Republic of China.
      In
      addition, our directors and officers are non-residents of the United States,
      and
      all or a substantial portion of the assets of these non-residents are located
      outside the United States. As a result, it may be difficult for investors to
      effect service of process within the United States upon these non-residents,
      or
      to enforce against them judgments obtained in United States courts, including
      judgments based upon the civil liability provisions of the securities laws
      of
      the United States or any state.




There
      is
      uncertainty as to whether courts of the Republic of China would
      enforce:





·
            Judgments
                of United States courts obtained against us or these non-residents
                based
                on the civil liability provisions of the securities laws of the United
                States or any state; or·
            In
                original actions brought in the Republic of China, liabilities against
                us
                or non-residents predicated upon the securities laws of the United
                States
                or any state. Enforcement of a foreign judgment in the Republic of
                China
                also may be limited or otherwise affected by applicable bankruptcy,
                insolvency, liquidation, arrangement, moratorium or similar laws
                relating
                to or affecting creditors' rights generally and will be subject to
                a
                statutory limitation of time within which proceedings may be
                brought.


21


***The
      PRC legal system embodies uncertainties, which could limit law enforcement
      availability.***





The
      PRC
      legal system is a civil law system based on written statutes. Unlike common
      law
      systems, decided legal cases have little precedence. In 1979, the PRC government
      began to promulgate a comprehensive system of laws and regulations governing
      economic matters in general. The overall effect of legislation over the past
      27
      years has significantly enhanced the protections afforded to various forms
      of
      foreign investment in China. Each of our PRC operating subsidiaries and
      affiliates is subject to PRC laws and regulations. However, these laws and
      regulations change frequently and the interpretation and enforcement involve
      uncertainties. For instance, we may have to resort to administrative and court
      proceedings to enforce the legal protection that we are entitled to by law
      or
      contract. However, since PRC administrative and court authorities have
      significant discretion in interpreting statutory and contractual terms, it
      may
      be difficult to evaluate the outcome of administrative court proceedings and
      the
      level of law enforcement that we would receive in more developed legal systems.
      Such uncertainties, including the inability to enforce our contracts, could
      affect our business and operation. In addition, intellectual property rights
      and
      confidentiality protections in China may not be as effective as in the United
      States or other countries. Accordingly, we cannot predict the effect of future
      developments in the PRC legal system, particularly with regard to the industries
      in which we operate, including the promulgation of new laws. This may include
      changes to existing laws or the interpretation or enforcement thereof, or the
      preemption of local regulations by national laws. These uncertainties could
      limit the availability of law enforcement, including our ability to enforce
      our
      agreements with the government entities and other foreign
      investors.





**Risks
      Related to Corporate and Stock Matters**





***The
      limited trading volume in our stock may cause volatility in the market price
      of
      our common stock.***





Our
      common stock is currently traded on a limited basis on the OTCBB under the
      symbol, "HFGB.OB" The quotation of our common stock on the OTCBB does not
      assure that a meaningful, consistent and liquid trading market currently exists,
      and in recent years, such market has experienced extreme price and volume
      fluctuations that have particularly affected the market prices of many smaller
      companies like us. Our common stock is thus subject to volatility. In the
      absence of an active trading market:





·
            investors
                may have difficulty buying and selling or obtaining market
                quotations;·
            market
                visibility for our common stock may be limited; and·
            a
                lack of visibility for our common stock may have a depressive effect
                on
                the market for our common stock.





***Our
      stock is a penny stock. Trading of our stock may be restricted by the SEC's
      penny stock regulations which may limit a stockholder's ability to buy and
      sell
      our stock.***





Our
      stock
      is a penny stock. The SEC has adopted Rule 15g-9 which generally defines "penny
      stock" to be any equity security that has a market price (as defined) less
      than
      $5.00 per share or an exercise price of less than $5.00 per share, subject
      to
      certain exceptions. Our securities are covered by the penny stock rules, which
      impose additional sales practice requirements on broker-dealers who sell to
      persons other than established customers and "accredited investors". The term
      "accredited investor" refers generally to institutions with assets in excess
      of
      $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual
      income exceeding $200,000 or $300,000 jointly with their spouse. The penny
      stock
      rules require a broker-dealer, prior to a transaction in a penny stock not
      otherwise exempt from the rules, to deliver a standardized risk disclosure
      document in a form prepared by the SEC which provides information about penny
      stocks and the nature and level of risks in the penny stock market. The
      broker-dealer also must provide the customer with current bid and offer
      quotations for the penny stock, the compensation of the broker-dealer and its
      salesperson in the transaction and monthly account statements showing the market
      value of each penny stock held in the customer's account. The bid and offer
      quotations, and the broker-dealer and salesperson compensation information,
      must
      be given to the customer orally or in writing prior to effecting the transaction
      and must be given to the customer in writing before or with the customer's
      confirmation. In addition, the penny stock rules require that prior to a
      transaction in a penny stock not otherwise exempt from these rules, the
      broker-dealer must make a special written determination that the penny stock
      is
      a suitable investment for the purchaser and receive the purchaser's written
      agreement to the transaction. These disclosure requirements may have the effect
      of reducing the level of trading activity in the secondary market for the stock
      that is subject to these penny stock rules. Consequently, these penny stock
      rules may affect the ability of broker-dealers to trade our securities. We
      believe that the penny stock rules discourage investor interest in and limit
      the
      marketability of our common stock.




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





Section
      15(g) of the Securities Exchange Act of 1934, as amended, and Rule 15g-2
      promulgated thereunder by the SEC require broker-dealers dealing in penny stocks
      to provide potential investors with a document disclosing the risks of penny
      stocks and to obtain a manually signed and dated written receipt of the document
      before effecting any transaction in a penny stock for the investor's
      account.





Potential
      investors in our common stock are urged to obtain and read such disclosure
      carefully before purchasing any shares that are deemed to be "penny stock."
      Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the
      account of any investor for transactions in such stocks before selling any
      penny
      stock to that investor. This procedure requires the broker-dealer to (i) obtain
      from the investor information concerning his or her financial situation,
      investment experience and investment objectives; (ii)reasonably determine,
      based
      on that information, that transactions in penny stocks are suitable for the
      investor and that the investor has sufficient knowledge and experience as to
      be
      reasonably capable of evaluating the risks of penny stock transactions; (iii)
      provide the investor with a written statement setting forth the basis on which
      the broker-dealer made the determination in (ii) above; and (iv) receive a
      signed and dated copy of such statement from the investor, confirming that
      it
      accurately reflects the investor's financial situation, investment experience
      and investment objectives. Compliance with these requirements may make it more
      difficult for holders of our common stock to resell their shares to third
      parties or to otherwise dispose of them in the market or
      otherwise.


22


***Shares
      eligible for future sale may adversely affect the market price of our Common
      stock, as the future sale of a substantial amount of our restricted stock in
      the
      public marketplace could reduce the price of our common
      stock.***





From
      time
      to time, certain of our stockholders may be eligible to sell all or some of
      their shares of common stock by means of ordinary brokerage transactions in
      the
      open market pursuant to Rule 144, promulgated under the Securities Act ("Rule
      144"), subject to certain limitations. In general, pursuant to Rule 144, a
      stockholder (or stockholders whose shares are aggregated) who has satisfied
      a
      one-year holding period may, under certain circumstances, sell within any
      three-month period a number of securities which does not exceed the greater
      of
      1% of the then outstanding shares of common stock or the average weekly trading
      -volume of the class during the four calendar weeks prior to such sale. Rule
      144
      also permits, under certain circumstances, the sale of securities, without
      any
      limitations, by a non-affiliate of our company that has satisfied a two-year
      holding period. Any substantial sale of common stock pursuant to Rule 144 or
      pursuant to any resale prospectus may have an adverse effect on the market
      price
      of our securities.




If
      we or
      our independent registered public accountants cannot attest our adequacy in
      the
      internal control measures over our financial reporting, as required by Section
      404 of the U.S. Sarbanes-Oxley Act, for the fiscal year ended December 31,
      2007,
      we may be adversely affected.





As
      a
      public company, we are subject to report our internal control structure and
      procedures for financial reporting in our annual reports on Form 10-K, as a
      requirement of Section 404 of the U.S. Sarbanes-Oxley Act of 2002 by the U.S.
      Securities and Exchange Commission (the "SEC"). The report must contain an
      assessment by management about the effectiveness of our internal controls over
      financial reporting. Moreover, the independent registered public accountants
      of
      our Company must attest to and report on management's assessment of the same.
      Even if our management attests to our internal control measures to be effective,
      our independent registered public accountants may not be satisfied with our
      internal control structure and procedures. We cannot guarantee the outcome
      of
      the report and it could result in an adverse impact on us in the financial
      marketplace due to the loss of investor confidence in the reliability of our
      financial statements, which could negative influence to our stock market
      price.




**Stockholders
      should have no expectation of any dividends.**





The
      holders of our common stock are entitled to receive dividends when declared
      by
      the Board of Directors out of funds available. To date, we have not declared
      nor
      paid any cash dividends. The Board of Directors does not intend to declare
      any
      dividends in the near future, but instead intends to retain all earnings, if
      any, for use in our business operations.





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





None




I **tem
      3.**  **Defaults
      Upon Senior Securities**





None.




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





Not
      applicable




**Item
      5.**  **Other
      Information**





None




**Item
      6.**  **Exhibits**





(a) Exhibits





31.1
            Sarbanes
                Oxley Section 302 Certification31.2
            Sarbanes
                Oxley Section 302 Certification32.1
            Sarbanes
                Oxley Section 906 Certification32.2
            Sarbanes
                Oxley Section 906 Certification


23





SIGNATURES





Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, as amended, the registrant has duly caused this Report to be signed on
      its
      behalf by the undersigned, thereunto duly authorized this 14th day of August,
      2008.





**HUIFENG
                BIO-PHARMACEUTICAL TECHNOLOGY, INC**By:
            /s/
                Jing’an WangJing’an
                Wang
              Chief
                Executive Officer


24