**U.S.
        Securities and Exchange Commission**
 **Washington,
        D.C. 20549**
  
 FORM
        10-QSB
  
  
 **[X]**
              **QUARTERLY
                  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                  OF 1934
                  for the quarterly period ended June 30,
                  2005**
 
 **[
                  ]**
              **TRANSITION
                  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                  OF 1934
                  for the transition period from _______ to
                  _______**
 
  PINGCHUAN
        PHARMACEUTICAL, INC.
 (Exact
        name of small business issuer as specified in its charter)
  **North
                    Carolina**
                **58-2258912****(State
                    or other jurisdiction of**
                **(IRS
                    Employer identification No.)****incorporation
                    or organization)**
 **32
        Ganshui Rd., Harbin, Heilongjiang, P.R.China**
 **(Address
        of principal executive offices)**
 
 **(86451)
        8271-3712**
 **(Issuer's
        telephone number)**
 
 
 Check
        whether the issuer (1) 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 [ ]
  Number
          of
          shares of common stock outstanding as of July
          31,
          2005: 71,996,407
 
 Number
          of
          shares of preferred stock outstanding as of July
          31,
          2005: -0-
  
 
  **INDEX
                      TO FORM 10-QSB**Page
                      No.PART
                      IItem
                      1. Financial Statements - UnauditedConsolidated
                      Balance Sheet - June 30, 2005
                  3Consolidated
                      Statements of Operations - Three and
                      Six Months Ended June 30,
                      2005 and 2004
                  4Consolidated
                      Statements of Cash Flows - Six Months Ended
                      June 30,
                      2005 and 2004
                  5Notes
                      to Financial Statements
                  6 -
                      7Item
                      2. Management’s Discussion and Analysis of Financial
                      Condition And
                      Results of Operations
                  8Item
                      3. Quantitative and Qualitative Disclosures on Market
                      Risk
                  10Item
                      4. Controls and Procedures
                  11-12PART
                      IIItem
                      1. Legal Proceedings
                  13Item
                      2. Changes in Securities
                  13Item
                      3. Defaults Upon Senior SecuritiesItem
                      4. Submission of Matters to a Vote of Security
                      Holders
                  13Item
                      5. Other Information
                  13Item
                      6. Exhibits
                  13
   2
 *Index*
 ITEM
        1.
  **PING
                    CHUAN PHARMACEUTICAL, INC. AND SUBSIDIARY****Consolidated
                    Balance Sheet*****June
                    30, 2005 (Unaudited)***ASSETSCURRENT
                    ASSETS:Cash
                    and cash equivalents
                
                $
                54,104Accounts
                    receivable - a related company
                
                
                40,943Accounts
                    receivable, net
                
                
                100,000TOTAL
                    CURRENT ASSETS
                
                
                195,047OTHER
                    ASSETS:
                
                
                -TOTAL
                    ASSETS
                
                $
                195,047LIABILITIES
                    AND STOCKHOLDERS' EQUITYCURRENT
                    LIABILITIES:Accounts
                    payable and accrued expenses
                
                $
                98,130Notes
                    payable
                
                
                60,000Due
                    to director
                
                
                1,510Accrued
                    taxes
                
                
                56,842TOTAL
                    CURRENT LIABILITIES
                
                
                216,482STOCKHOLDERS'
                    EQUITY:Preferred
                    stock ($.001 par value, 5,000,000 shares authorized:none
                    issued and outstanding)
                
                
                -Common
                    stock ($.001 par value, 150,000,000 shares authorized:72,096,407
                    issued and outstanding)
                
                
                72,096Additional
                    paid-in-capital
                
                
                392,110Retained
                    deficit
                
                
                (485,641
                )TOTAL
                    STOCKHOLDERS' EQUITY
                
                
                (21,435
                )TOTAL
                    LIABILITIES AND STOCKHOLDERS' EQUITY
                
                $
                195,047The
                    accompanying notes are an integral part of these financial
                    statements
 3
 *Index*
  **PING
                      CHUAN PHARMACEUTICAL, INC. AND SUBSIDIARY****Consolidated
                      Statements of Operations*****For
                      the three months and six months ended June 30, 2005 and 2004
                      (Unaudited)***Three
                      months ended June 30,
                  
                  
                  
                  Six
                      months ended June 30,2005
                  
                  2004
                  
                  2005
                  
                  2004REVENUE
                      AND COST OF SALES:Sales
                  
                  $
                  71,299
                  
                  $
                  -
                  
                  $
                  143,129
                  
                  $
                  -Cost
                      of sales
                  
                  
                  3,367
                  
                  
                  -
                  
                  
                  7,354
                  
                  
                  -Gross
                      Profit
                  
                  
                  67,932
                  
                  
                  -
                  
                  
                  135,775
                  
                  
                  -OPERATING
                      EXPENSES:Selling,
                      general and administrative
                  
                  
                  13,219
                  
                  
                  595
                  
                  
                  26,371
                  
                  
                  1,132Consulting
                  
                  
                  87,150
                  
                  
                  -
                  
                  
                  287,150
                  
                  
                  -Professional
                      fees
                  
                  
                  75,800
                  
                  
                  
                  
                  
                  79,100TOTAL
                      OPERATING EXPENSES
                  
                  
                  176,169
                  
                  
                  595
                  
                  
                  392,621
                  
                  
                  1,132(LOSS)
                      INCOME FROM OPERATIONS
                  
                  
                  (108,237
                  )
                  
                  (595
                  )
                  
                  (256,846
                  )
                  
                  (1,132
                  )OTHER
                      INCOMEInterest
                      income
                  
                  
                  1
                  
                  
                  
                  
                  
                  1Total
                      Other Income
                  
                  
                  1
                  
                  
                  
                  
                  
                  1INCOME
                      TAX EXPENSE
                  
                  
                  18,056
                  
                  
                  -
                  
                  
                  36,103
                  
                  
                  -NET
                      LOSS
                  
                  $
                  (126,291
                  )
                  $
                  (595
                  )
                  $
                  (292,948
                  )
                  $
                  (1,132
                  )OTHER
                      COMPREHENSIVE INCOMEForeign
                      currency translation gains (loss)
                  
                  
                  (143
                  )
                  
                  -
                  
                  
                  15
                  
                  
                  -COMPREHENSIVE
                      LOSS
                  
                  
                  (126,434
                  )
                  
                  (595
                  )
                  
                  (292,933
                  )
                  
                  (1,132
                  )Basic
                      & fully diluted loss per share
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -Weighted
                      average commonshares
                      outstanding
                  
                  
                  71,976,518
                  
                  
                  -
                  
                  
                  71,736,295
                  
                  
                  -The
                      accompanying notes are an integral part of these financial
                      statements
  4
 *Index*
 **PING
                      CHUAN PHARMACEUTICAL, INC. AND
                      SUBSIDIARY****Consolidated
                      Statements of Cash Flows*****For
                      the six months ended June 30, 2005 and 2004
                      (Unaudited)***2005
                  
                  2004CASH
                      FLOWS FROM OPERATING ACTIVITIES:Net
                      loss
                  
                  $
                  (292,948
                  )
                  $
                  (1,132
                  )Adjustments
                      to reconcile net income (loss) to netcash
                      provided by (used in) operating activities:Common
                      stock issued for services
                  
                  
                  287,150Foreign
                      currency translation gains (loss)
                  
                  
                  15(Increase)
                      decrease in operating assets:Other
                      receivable
                  
                  
                  (100,000
                  )
                  
                  -Other
                      receivable, related company
                  
                  
                  (2,061
                  )
                  
                  -Increase
                      (decrease) in operating liabilities:Accounts
                      payables and accrued expenses
                  
                  
                  76,139
                  
                  
                  132Accrued
                      taxes
                  
                  
                  38,110
                  
                  
                  -NET
                      CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
                  
                  
                  6,405
                  
                  
                  (1,000
                  )CASH
                      FLOWS FROM INVESTING ACTIVITIES:
                  
                  
                  -
                  
                  
                  -CASH
                      FLOWS FROM FINANCING ACTIVITIES:Proceeds
                      from issuance of common stock
                  
                  
                  1,415Contribution
                      by stockholders
                  
                  
                  54,853
                  
                  
                  -Repayment
                      of convertible notes
                  
                  
                  (10,000
                  )
                  
                  -NET
                      CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
                  
                  
                  46,268
                  
                  
                  -NET
                      INCREASE (DECREASE) IN CASHAND
                      CASH EQUIVALENTS
                  
                  
                  52,673
                  
                  
                  (1,000
                  )CASH
                      AND CASH EQUIVALENTS:Beginning
                      of year
                  
                  
                  1,431
                  
                  
                  1,132End
                      of period
                  
                  $
                  54,104
                  
                  $
                  132SUPPLEMENTAL
                      CASH FLOW DISCLOSURES AND NON-CASHINVESTING
                      INFORMATION:Common
                      stock issued to others for services
                  
                  $
                  287,150
                  
                  $
                  -Cash
                      paid during the year for interest
                  
                  $
                  -
                  
                  $
                  -The
                      accompanying notes are an integral part of these financial
                      statements
   5
 *Index*
 PINGCHUAN
            PHARMACEUTICAL, INC. AND SUBSIDIARY
 NOTES
            TO
            CONDENSED CONSOLIDATED FINANCIAL
 STATEMENTS
            AS OF JUNE 30, 2005
 (UNAUDITED)
 
 **NOTE
            1 BASIS OF PRESENTATION**
 
 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.
 
 In
            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 financial position at June
            30, 2005,
            the results of operations for the three months and six months ended June
            30,
            2005, and cash flows for the six months ended June 30, 2005. The results
            for the
            six months ended June 30, 2005 are not necessarily indicative of the
            results to
            be expected for the entire fiscal year ending December 31, 2005. These
            financial
            statements should be read in conjunction with the Company's annual report
            on
            Form 10-KSB as filed with the Securities and Exchange Commission.
  **NOTE
            2 REVERSE MERGER**
 
 Xenicent,
            Inc. (“Xenicent”) was organized under the laws of the State of North Carolina on
            July 20, 1996. Xenicent is authorized to issue 50,000,000 shares of common
            stock
            of $0.001 par value and 50,000,000 shares of preferred stock of $0.001
            par
            value. Xenicent is a non-operative holding company of Heilongjiang Pingchuan
            Yi
            Liao Qi Xie You Xian Gong Si ("Heilongjiang Pingchuan"), a corporation
            organized
            and existed under the laws of the Peoples' Republic of China (“PRC”) and is
            primarily engaged in the sale of medical equipment and the providing
            of
            consultation services in the pharmaceutical business.
 
 On
            June
            22, 2004, Xenicent executed a Plan of Exchange (“the Agreement") with all the
            shareholders of Heilongjiang Pingchuan  to
            exchange 70,000,000 shares of common stock of the Company for 100% of
            the
            registered capital of Heilongjiang Pingchuan. On July 28, 2004, Xenicent
            changed
            its name to Pingchuan Pharmaceutical, Inc. (“Pingchuan Pharmaceutical “) and
            increased its authorized shares of common stock from 50,000,000 to 150,000,000
            by filing Articles of Amendment with the Secretary of State in the State
            of
            North Carolina.
 
 The
            Agreement was consummated on August 11, 2004. As a result of the Agreement,
            the
            transaction was treated for accounting purposes as a capital transaction
            and
            recapitalization by the accounting acquirer (Heilongjiang Pingchuan)
            and as a
            reorganization of the accounting acquiree (Pingchuan Pharmaceutical).
            Accordingly, the financial statements include the following:
 
 (1)
                  The
                      balance sheet consists of the net assets of the acquirer at
                      historical
                      cost and the net assets of the acquiree at historical cost;
                      and
 
 (2)
                  The
                      statements of operations include the operations of the acquirer
                      for the
                      periods presented and the operations of the acquiree from the
                      date of the
                      merger.
  Pingchuan
            Pharmaceutical and Heilongjiang
            Pingchuan Yi Liao Qi Xie You Xian Gong Si are hereafter referred to as
            the
            Company.
  **NOTE
            3 PRINCIPLES OF CONSOLIDATION**
 
 The
            accompanying unaudited condensed consolidated financial statements for
            2005 and
            2004 include the accounts of the Company and its wholly owned subsidiary,
            Heilongjiang Pingchuan. All significant inter-company accounts and transactions
            have been eliminated on consolidation.
  **NOTE
            4 USE OF ESTIMATES**
 
 The
            preparation of the financial statements in conformity with US GAAP requires
            the
            Company's management to make estimates and assumptions that affect the
            reported
            amounts of assets and liabilities at the date of financial statements
            and the
            reported amounts of revenues and expenses during the reported periods.
            Actual
            amounts could differ from those estimates.
  6
 *Index*
 
 PINGCHUAN
            PHARMACEUTICAL, INC. AND SUBSIDIARY
 NOTES
            TO
            CONDENSED CONSOLIDATED FINANCIAL
 STATEMENTS
            AS OF JUNE 30, 2005
 (UNAUDITED)
 
 
 **NOTE
            5 EARNINGS (LOSS) PER SHARE**
 
 Basic
            earnings (loss) per share exclude dilution and are computed by dividing
            earnings
            (loss) available to common shareholders by the weighted average number
            of common
            shares outstanding for the period. Diluted earnings (loss) per share
            are
            computed by dividing earnings (loss) available to common shareholders
            by the
            weighted average number of common shares outstanding adjusted to reflect
            potentially dilutive securities. The company does not have any dilutive
            securities outstanding as of June 30, 2005.
  **NOTE
            6 NOTE PAYABLE**
 
 Balance
            at June 30, 2005 (unaudited) and December 31, 2004:
 2005(Unaudited)
                    
                    2004Note
                        payable
                    
                    $
                    60,000
                    
                    $
                    70,000
  Notes
            payable consisted of two notes of $40,000 each issued to a third party,
            is
            unsecured and bears interest at a rate of approximately 9% per annum.
            The
            Company scheduled monthly payments, each in the amount of $1,000 starting
            on
            July 25, 2004 and ending on June 25, 2005, with the balance of $28,000
            due and
            payable on June 25, 2005, at the option of the Company, in cash or in
            an
            equivalent amount of free trading common stock of the Company.
  **NOTE
            7 SHAREHOLDERS’ EQUITY**
 
 **Stock
            issuances**
  On
            June
            22, 2004, the Company executed a Plan of Exchange pursuant to which the
            Company
            agreed to issue 70,000,000 new shares of common stock to the shareholders
            of Heilongjiang
            Pingchuan in
            exchange for 100% of registered capital of Heilongjiang Pingchuan. The
            Plan of
            Exchange was consummated on August 11, 2004.
 
 During
            2004, the Company issued 791,407 shares of common stock upon completion
            of the
            reverse merger to the existing stockholders of Xenicent, Inc.
 
 During
            January 2005, the Company issued 1,000,000 shares of common stock for
            services.
 
 During
            April 2005, the Company issued 415,000 shares of common stock for
            services.
 
 
 **NOTE
            8 RELATED PARTY TRANSACTIONS**
 
 The
            Company occupies certain office spaces rented by a related company at
            no charge
            to the Company.
 
 The
            Company owed a director $1,510 for short-term advances as of June 30,
            2005 and
            December 31, 2004.
 
 During
            the six months ended June 30, 2005, the Company earned management fee
            of $43,129
            from a related company. An amount of $40,943 and $38,882 was outstanding
            as of
            June 30, 2005 and December 31, 2004, respectively.
 
 During
            the six months ended June 30, 2005, the Company recorded additional paid
            in
            capital of $8,500 being amount owed to and waived by the
            stockholders.
 
 
 **NOTE
            9 SUBSEQUENT EVENT**
 
 During
            July 2005, the Company retired 100,000 shares of common stock that were
            issued
            for services with a fair value of $21,000.
    7
 *Index*
  ITEM
        2.  MANAGEMENT'S
        DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
 
 With
        the
        exception of historical facts stated herein, the matters discussed in this
        report are "forward looking" statements that involve risks and uncertainties
        that could cause actual results to differ materially from projected results.
        Such "forward looking" statements include, but are not necessarily limited
        to,
        statements regarding anticipated levels of future revenues and earnings from
        operations of the Company. Readers of this report are cautioned not to put
        undue
        reliance on "forward looking" statements, which are, by their nature, uncertain
        as reliable indicators of future performance. The Company disclaims any intent
        or obligation to publicly update these "forward looking" statements, whether
        as
        a result of new information, future events, or otherwise . In
        addition the uncertainties include, but are not limited to, competitive
        conditions involving the Company's markets.
 
  **GENERAL
        DESCRIPTION OF BUSINESS**
  We
          were
          incorporated under the laws of the State of North Carolina on July 26,
          1996. On
          August 11, 2004, we acquired Heilongjiang Pingchuan Yi Liao Qi Xie You
          Xian Gong
          Si (“Heilongjiang Pingchuan”), a corporation organized and validly existing
          under the laws of the People’s Republic of China since its formation on December
          7, 2001.
  Before
          the
          Acquisition, Heilongjiang Pingchuan’s operations focused on sales of medical
          equipment, such as infusion apparatus and respirator equipment. Substantially
          all of Heilongjiang Pingchuan’s revenues in 2003 derived from medical equipment
          sales.
  In
        2004,
        our medical equipment sales diminished, and we began to focus on deriving
        revenue from the medical industry by providing integrated operational management
        services for a related medical company, Harbin Pingchuan Yao Ye Gu Fen You
        Xian
        Gong Si, a corporation validly organized and existing under the laws of the
        People’s Republic of China (“Gu Fen”). Pingchuan Yi Liao’s major shareholder,
        Mr. Hu Zhanwu, also owns more than 50% of the common stock of Gu Fen.
 
 In
        October 2004, we entered into a letter of intent with Gu Fen, pursuant to
        which
        Gu Fen agreed to retain our integrated operational management services and
        pay
        us a professional service fee of US$48,000 per year, plus 15% of their sales
        revenue as a commission.
 
 Gu
        Fen is
        an integrated pharmaceutical company whose main products are antibiotics,
        chemical medicine capsules, traditional Chinese medicines, medical instruments,
        health care food, and other related products.
  8
 *Index*
  Based
        on
        our agreement and relationship with Gu Fen, we provide Gu Fen with various
        value-added services, such as formula control, supplier selection, quality
        assurance, package design services, cost analysis, product packaging and
        tracking, just-in-time and point-of-use delivery, billing services and
        post-sales support. We primarily focus on improving their sales growth. Through
        our management and related services, we are also helping Gu Fen to develop
        a
        nation-wide sales network for most of their products. We are seeking
        opportunities to build strategic partnerships with national chain drugstores
        so
        that Gu Fen can distribute their products via an improved national sales
        network. We believe our services distinguish us from traditional pharmaceutical
        manufacturers in China, who lack a developed sales network. We also believe
        our
        status as a reporting public entity could give us a competitive advantage
        over
        privately held entities having a similar business objective in seeking strategic
        partnerships. Our ability to raise capital in the public market is our strength
        in negotiating with potential strategic partners. Our developed, customized
        information systems provide Gu Fen with efficiency and flexibility through
        our
        operational management services. This enables Gu Fen to: (1) significantly
        reduce the direct and indirect costs of production by outsourcing internal
        purchasing, quality assurance and inventory fulfillment responsibilities;
        (2) reduce the amount of working capital invested in inventory and
        floor
        space; (3) reduce production costs through purchasing efficiencies;
        and
        (4) receive expertise in production and package design and marketing.
        Our
        strategy to expand sales networks through strategic partnerships with national
        chain drugstores is designed to enable Gu Fen to grow their sales rapidly
        in the
        future; as a result, we will improve our position as a leader in the
        distribution of pharmaceuticals in China.
  We
          are also
          seeking the opportunities to diversify our business in consultancy. In
          May 2005,
          we signed a market research consignment agreement with Moscow Sing Sing
          Co.
          Ltd., a corporation validly organized and existing under the laws of Russia
          (åSing Singæ). Sing Sing produced desktop computers, correlative supplies and
          equipment room building. After the desegregation of the Former Soviet Union,
          it
          gradually shifted its core businesses to the area of network building,
          software
          development and international commerce consultation.
  Pursuant
          to
          the agreement, Sing Sing authorized us as its exclusive partner to conduct
          market researches for business projects in P. R. China (excluding Hong
          Kong ¡B Macao
          and
          Taiwan). We agreed to perform commercial market research and deliver business
          plans for Sing Sing. The co-operation with Sing Sing will bring in estimated
          revenue of USD ¢C 200,000
          over the next year.
  **COMPETITION**
 
 We
        expect
        to encounter intense competition from other entities having a business objective
        similar to ours. Many of these entities are well-established and have extensive
        experience in the pharmaceutical and medical industries. Many of these
        competitors possess greater financial, marketing, technical, personnel and
        other
        resources than us, and there can be no assurances that we will have the ability
        to compete successfully. Our financial resources will be extremely limited
        in
        comparison to those of many of our competitors. Management believes, however,
        that our status as a reporting public entity could give us a competitive
        advantage over privately held entities having a similar business objective
        in
        forming strategic partnerships with Chinese companies having significant
        growth
        potential.
  **RESULTS
          OF OPERATIONS**
 
 Net
          Loss
  We
          had a net
          loss o f
          $126,434, or less than $ .01 per common share, for the three months ended
          June
          30, 2005, and a net loss of $292,933, or less than $ .01 per common share,
          for
          the six months ended June 30, 2005, versus net losses of $595 and $1,132
          for the
          three months and six months ended June 30, 2004, respectively. The increase
          in
          net loss in the six months ended June 30, 2005 was primarily due to the
          consulting fees of $287,150, of which $200,000 paid by 1,000,000 shares
          of
          common stock in the first quarter and $87,150 paid by 415,000 shares of
          common
          stock in the second quarter of 2005. The increase in general and administrative
          expenses, which was $26,371 for the six months ended June 30, 2005, versus
          $1,132 for the same period ended in 2004, was another factor contributing
          to the
          increase in net loss.
  9
 *Index*
 Revenue
  We
          recorded
          revenues of $71,299 and $143,129 for the three months and six months ended
          June
          30, 2005, respectively, versus no sales revenue for the same periods ended
          in
          2004. The revenue for the six months ended June 30, 2005 was due to the
          rendering of professional service fees from a related company ("Gu Fen")
          and
          Moscow Sing Sing Share Co. Ltd. ("Sing Sing"), based on a negotiated contract
          basis. There was no income in the first and second quarter of 2004 due
          to the
          diminution of our equipment sales and the professional service fees in
          connection with our integrated management consulting services to Gu Fen
          commencing from the fourth quarter of 2004.
 
 Expenses
  Operating
          expenses for the six months ended June 30, 2005 increased to $392,621 from
          $1,132 in the same period in 2004. An increase of $391,489 in operating
          expenses
          in 2005 was due primarily to the consulting fees of $287,150 and professional
          fees of $79,100.
 
 Liquidity
          and Capital Resources
  On
          June 30,
          2005, we had cash of $54,104 and working capital deficit of $21,435. The
          working
          capital deficit was due primarily to an increase in accounts payable and
          accrued
          expenses, which was $98,130. In addition accrued taxes, increased to $56,842
          on
          June 30, 2005.
  Net
          cash
          flows provided by operating activities were $6,405 for the six months ended
          June
          30, 2005 as compared with net cash flows used in operating activities of
          $1,000
          for the same period in 2004. The increase in cash provided by operations
          was
          primarily attributable to stock issued for services of $287,150 for
          2005.
  There
          were no
          cash flows from investing activities in both six-month periods ended June
          30,
          2005 and 2004.
  Net
          cash
          flows provided by financing activities were $46,268 for the six months
          ended
          June 30, 2005, versus no cash flows from financing activities for the same
          period in 2004. The increase in cash provided by financing activities was
          primarily attributable to proceeds from shareholder, offset by the payment
          of
          convertible notes for the six month period of 2005.
  Overall,
          we
          have funded our cash needs from inception through June 30, 2005 with a
          series of
          debt and equity transactions. If we are unable to receive additional cash
          from
          our majority stockholder, we may need to rely on financing from outside
          sources
          through debt or equity transactions. Failure to obtain such financing could
          have
          a material adverse effect on operations and financial condition.
  Going
          Concern Opinion.
  As
          discussed
          in this report, we had recurring losses and had an accumulated deficit
          of
          $485,641 at June 30, 2005 that included a net loss of $292,948 for the
          six
          months ended June 30, 2005. Our independent auditors have expressed doubt
          as to
          our ability to continue as a going concern. Our continued existence is
          dependent
          upon our ability to resolve our business and liquidity problems, principally
          through raising additional capital and increasing our sales. Our plans
          with
          regard to this matter are to seek additional capital for operations through
          either debt or equity and increase sales.
 
 ITEM
          3.
          QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
          RISK
  We
          did not
          have any material risk with respect to changes in foreign currency exchange
          rates, commodities prices or interest rates as of June 30, 2005. We do
          not
          believe that we have any other relevant market risk with respect to the
          categories intended to be discussed in this item of this report.
  10
 *Index*
 
 ITEM
        4.  CONTROLS
        AND PROCEDURES
 
 Quarterly
        Evaluation of Controls
 
 As
        of the
        end of the period covered by this quarterly report on Form 10-Q, we evaluated
        the effectiveness of the design and operation of (i) our disclosure controls
        and
        procedures ("Disclosure Controls"), and (ii) our internal control over financial
        reporting ("Internal Controls"). This evaluation ("Evaluation") was performed
        by
        our Chief Executive Officer, Yao, Qitai ("CEO"), and our Chief Financial
        Officer, Zhang, Chunman ("CFO"). In this section, we present the conclusions
        of
        our CEO based on and as of the date of the Evaluation, (i) with respect to
        the
        effectiveness of our Disclosure Controls, and (ii) with respect to any change
        in
        our Internal Controls that occurred during the most recent fiscal quarter
        that
        has materially affected, or is reasonably likely to materially affect our
        Internal Controls.
 
 CEO
        and
        CFO Certifications
 
 Attached
        to this quarterly report, as Exhibits 31.1 and 31.2, are certain certifications
        of the CEO and CFO, which are required in accordance with the Exchange Act
        and
        the Commission's rules implementing such section (the "Rule 13a-14(a)/15d-14(a)
        Certifications"). This section of the quarterly report contains the information
        concerning the Evaluation referred to in the Rule 13a-14(a)/15d-14(a)
        Certifications. This information should be read in conjunction with the Rule
        13a-14(a)/15d-14(a) Certifications for a more complete understanding of the
        topic presented.
 
 Disclosure
        Controls and Internal Controls
 
 Disclosure
        Controls are procedures designed with the objective of ensuring that information
        required to be disclosed in our reports filed with the Commission under the
        Exchange Act, such as this quarterly report, is recorded, processed, summarized
        and reported within the time period specified in the Commission's rules and
        forms. Disclosure Controls are also designed with the objective of ensuring
        that
        material information relating to the Company is made known to the CEO and
        the
        CFO by others, particularly during the period in which the applicable report
        is
        being prepared. Internal Controls, on the other hand, are procedures which
        are
        designed with the objective of providing reasonable assurance that (i) our
        transactions are properly authorized, (ii) our assets are safeguarded against
        unauthorized or improper use, and (iii) our transactions are properly recorded
        and reported, all to permit the preparation of complete and accurate financial
        statements in conformity with accounting principals generally accepted in
        the
        United States.
 
 Limitations
        on the Effectiveness of Controls
 
 Our
        management does not expect that our Disclosure Controls or our Internal Controls
        will prevent all error and all fraud. A control system, no matter how well
        developed and operated, can provide only reasonable, but not absolute assurance
        that the objectives of the control system are met. Further, the design of
        the
        control system must reflect the fact that there are resource constraints,
        and
        the benefits of controls must be considered relative to their costs. Because
        of
        the inherent limitations in all control systems, no evaluation of controls
        can
        provide absolute assurance that all control issues and instances so of fraud,
        if
        any, within the Company have been detected. These inherent limitations include
        the realities that judgments in decision-making can be faulty, and that
        breakdowns can occur because of simple error or mistake. Additionally, controls
        can be circumvented by the individual acts of some persons, by collusion
        of two
        or more people, or by management override of the control. The design of a
        system
        of controls also is based in part upon certain assumptions about the likelihood
        of future events, and there can be no assurance that any design will succeed
        in
        achieving its stated objectives under all potential future conditions. Over
        time, control may become inadequate because of changes in conditions, or
        because
        the degree of compliance with the policies or procedures may deteriorate.
        Because of the inherent limitations in a cost-effective control system,
        misstatements due to error or fraud may occur and not be detected.
 
 11
 *Index*
  Scope
        of
        the Evaluation
 
 The
        CEO
        and CFO's evaluation of our Disclosure Controls and Internal Controls included
        a
        review of the controls' (i) objectives, (ii) design, (iii) implementation,
        and
        (iv) the effect of the controls on the information generated for use in this
        quarterly report. In the course of the Evaluation, the CEO and CFO sought
        to
        identify data errors, control problems, acts of fraud, and they sought to
        confirm that appropriate corrective action, including process improvements,
        was
        being undertaken. This type of evaluation is done on a quarterly basis so
        that
        the conclusions concerning the effectiveness of our controls can be reported
        in
        our quarterly reports on Form 10-QSB and annual reports on Form 10-KSB. The
        overall goals of these various evaluation activities are to monitor our
        Disclosure Controls and our Internal Controls, and to make modifications
        if and
        as necessary. Our external auditors also review Internal Controls in connection
        with their audit and review activities. Our intent in this regard is that
        the
        Disclosure Controls and the Internal Controls will be maintained as dynamic
        systems that change (including improvements and corrections) as conditions
        warrant.
 
 Among
        other matters, we sought in our Evaluation to determine whether there were
        any
        significant deficiencies or material weaknesses in our Internal Controls,
        which
        are reasonably likely to adversely affect our ability to record, process,
        summarize and report financial information, or whether we had identified
        any
        acts of fraud, whether or not material, involving management or other employees
        who have a significant role in our Internal Controls. This information was
        important for both the Evaluation, generally, and because the Rule
        13a-14(a)/15d-14(a) Certifications, Item 5, require that the CEO and CFO
        disclose that information to our Board (audit committee), and to our independent
        auditors, and to report on related matters in this section of the quarterly
        report. In the professional auditing literature, "significant deficiencies"
        are
        referred to as "reportable conditions". These are control issues that could
        have
        significant adverse affect on the ability to record, process, summarize and
        report financial data in the financial statements. A "material weakness"
        is
        defined in the auditing literature as a particularly serious reportable
        condition where the internal control does not reduce, to a relatively low
        level,
        the risk that misstatement cause by error or fraud may occur in amounts that
        would be material in relation to the financial statements and not be detected
        within a timely period by employee in the normal course of performing their
        assigned functions. We also sought to deal with other controls matters in
        the
        Evaluation, and in each case, if a problem was identified, we considered
        what
        revisions, improvements and/or corrections to make in accordance with our
        ongoing procedures.
 
 Conclusions
 
 Based
        upon the Evaluation, our CEO and CFO have concluded that, subject to the
        limitations noted above, our Disclosure Controls are effective to ensure
        that
        material information relating to us is made known to management, including
        the
        CEO and CFO, particularly during the period when our periodic reports are
        being
        prepared, and that our Internal Controls are effective to provide reasonable
        assurance that our financial statements are fairly presented inconformity
        with
        accounting principals generally accepted in the United States. Additionally,
        there has been no change in our Internal Controls that occurred during our
        most
        recent fiscal quarter that has materially affected, or is reasonably likely
        to
        affect, our Internal Controls.
 
 12
 *Index*
 
 PART
        II. OTHER
        INFORMATION
 
 Item
        1.
Legal Proceedings
 
 None.
 
 Item
        2.Changes in Securities
 
 None.
 
 Item
        3.
Defaults Upon Senior Securities
 
 None.
  Item
        4.
Submission of Matters to a Vote of Security Holders
 
 None.
 
 Item
        5.
Other Information
 
 None.
 
 Item
        6.
Exhibits and Reports on Form 8-K
 
 (a)
        Exhibits
 
 3.
        Articles of Incorporation with amendments and bylaws are incorporated by
        reference
 from
        Exhibit No. 1 of Form SB-2, as amended, filed with the Commission on or about
        December 2000.
 Entrust
        market research agreement, dated January 28,
        2005.
 31.1
Certifications
        of CEO pursuant to Section 302
 31.2
Certifications
        of CFO pursuant to Section 302
 32.1
Section
        1350 Certifications of CEO
 32.2
Section
        1350 Certifications of CFO
 
 (b)
        Reports on Form 8-K
 
    13
 *Index*
  SIGNATURES
 
 Pursuant
        to the requirements of the Securities Exchange Act of 1934, the registrant
        has
        duly caused this report to be signed on its behalf by the undersigned, thereunto
        duly authorized.
 
 
 
 PINGCHUAN
        PHARMACEUTICAL, INC.
 (Registrant)
 
  
 /s/
        HU, ZHANWU, PRESIDENT
 Date:
        August 19,
        2005 HU,
        ZHANWU
 PRESIDENT
  14