**SECURITIES
        AND EXCHANGE COMMISSION**


**WASHINGTON, D.C.
      20549**









**FORM
      10-QSB**




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


For
      Quarter ended June 30, 2007




**OR**




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


For
      the
      transition period from______________  to 
_________________




Commission
      File Number 333-128399









**SINOBIOMED
      INC.**


(Exact
      Name of Registrant as Specified in its Charter)




**Delaware**
            **20-1945139**(State
                or other Jurisdiction of
              Incorporation
                or Organization)
            (IRS
                Employer
              Identification
                Number)**Lane
                4705, No. 58, North Yang Gao Rd.**
              **Pudong
                New Area Shanghai, China**
            **201206**(Address
                of Principal Executive Offices)
            (Zip
                Code)**011-86-21-58546923**
              (Registrant's
                Telephone Number, Including Area
                Code)










Indicate
      by check mark whether the issuer (1) filed all reports required to be filed
      by
      Section 13 or 15(d) of the Exchange Act of 1934 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 shell company (as defined in rule
      12b-2 of the Exchange Act).




Yes o No x





**Applicable
      only to issuers involved in bankruptcy proceedings during the preceding five
      years:**





Check
      whether the registrant filed all documents and reports required to be filed
      by
      Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
      under a plan confirmed by a court.





Yes o No o





**Applicable
      only to corporate issuers:**





Indicate
      the number of shares outstanding of each of the issuer’s classes of common
      equity, as of the latest practicable date.





Class
            Outstanding
                as of August 14, 2007Common
                Stock, $0.0001 par value
            125,382,668





Traditional
      Small Business Disclosure Format (Check one):




Yes o No x












**TABLE
      OF CONTENTS**




**Page**FORWARD-LOOKING
                STATEMENTS
            
            
            1USE
                OF NAMES
            
            
            1**PART
                I - FINANCIAL INFORMATION**
            
            
            2ITEM
                1. FINANCIAL STATEMENTS
            
            
            2ITEM
                2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
                OPERATION
            
            
            3ITEM
                3. CONTROLS AND PROCEDURES
            
            
            5**PART
                II - OTHER INFORMATION**
            
            
            5ITEM
                1. LEGAL PROCEEDINGS
            
            
            5ITEM
                2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
                PROCEEDS
            
            
            6ITEM
                3. DEFAULTS UPON SENIOR SECUTIRIES
            
            
            6ITEM
                4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
            
            
            7ITEM
                5. OTHER INFORMATION
            
            
            7ITEM
                6. EXHIBITS
            
            
            7SIGNATURES
            
            
            8





ii




**Forward
      Looking Statements**




This
      quarterly report on Form 10-QSB and other reports that we file with the SEC
      contain statements that are considered forward-looking statements.
      Forward-looking statements give the Company’s current expectations, plans,
      objectives, assumptions or forecasts of future events. All statements other
      than
      statements of current or historical fact contained in this annual report,
      including statements regarding the Company’s future financial position, business
      strategy, budgets, projected costs and plans and objectives of management for
      future operations, are forward-looking statements. In some cases, you can
      identify forward-looking statements by terminology such as “anticipate,”
“estimate,” “plans,” “potential,” “projects,” “ongoing,” “expects,” “management
      believes,” “we believe,” “we intend,” and similar expressions. These statements
      are based on the Company’s current plans and are subject to risks and
      uncertainties, and as such the Company’s actual future activities and results of
      operations may be materially different from those set forth in the forward
      looking statements. Any or all of the forward-looking statements in this
      periodic report may turn out to be inaccurate and as such, you should not place
      undue reliance on these forward-looking statements. The Company has based these
      forward-looking statements largely on its current expectations and projections
      about future events and financial trends that it believes may affect its
      financial condition, results of operations, business strategy and financial
      needs. The forward-looking statements can be affected by inaccurate assumptions
      or by known or unknown risks, uncertainties and assumptions due to a number
      of
      factors, including:




·
            dependence
                on key personnel;




·
            competitive
                factors;




·
            degree
                of success of research and development
                programs




·
            the
                operation of our business; and




·
            general
                economic conditions in the United States, Israel and
                China




These
      forward-looking statements speak only as of the date on which they are made,
      and
      except to the extent required by federal securities laws, we undertake no
      obligation to update any forward-looking statements to reflect events or
      circumstances after the date on which the statement is made or to reflect the
      occurrence of unanticipated events. In addition, we cannot assess the impact
      of
      each factor on our business or the extent to which any factor, or combination
      of
      factors, may cause actual results to differ materially from those contained
      in
      any forward-looking statements. All subsequent written and oral forward-looking
      statements attributable to the Company or persons acting on its behalf are
      expressly qualified in their entirety by the cautionary statements contained
      in
      this annual report.




**Use
      of Names**




In
      this
      quarterly report, the terms “Sinobiomed”, “Company”, “we”, or “our”, unless the
      context otherwise requires, mean Sinobiomed Inc. and its
      subsidiaries.




1




**PART
      1. FINANCIAL INFORMATION**




**Item
      1. Financial Statements**




**SINOBIOMED
          INC.** **AND
            CONSOLIDATED SUBSIDIARIES**
 **INDEX
          TO CONSOLIDATED FINANCIAL STATEMENTS** ***Unaudited-
            Prepared by Management***
 PageConsolidated
                  Balance Sheet
              
              
              F-1Consolidated
                  Statements of Operations
              
              
              F-2Consolidated
                  Statements of Cash Flows
              
              
              F-3Consolidated
                  Statement of Stockholders' (Deficit)
              
              
              F-4Notes
                  to Consolidated Financial Statements
              
              
              F-5
  2
  **SINOBIOMED
          INC.** **AND
            CONSOLIDATED SUBSIDIARIES** ***Consolidated
              Balance Sheet*** ***(Expressed
                in US Dollars)*** ***Unaudited-
                  Prepared by Management***
  Note
          1 - Basis of Presentation - going concern
  **June
                    30****2007**ASSETSCURRENT
                    ASSETSCash
                    - unrestricted
                
                $
                1,288,846Cash
                    - restricted (Note 3)
                
                
                2,397Accounts
                    receivable (Note 4)
                
                
                310,860Loans
                    to unrelated parties (Note 5)
                
                
                951Inventory
                    (Note 6)
                
                
                343,518Prepaid
                    expenses
                
                
                103,177Total
                    current assets
                
                
                2,049,749Fixed
                    assets (Note 7)
                
                
                6,731,837Total
                    assets
                
                $
                8,781,586LIABILITIES
                    AND STOCKHOLDERS' (DEFICIT)CURRENT
                    LIABILITIESShort-term
                    loans (Notes 8, 9 and 19)
                
                $
                11,530,460Accounts
                    payable
                
                
                160,891Interest
                    payable
                
                
                4,247,965Unearned
                    revenue
                
                
                78,176Shareholder
                    loans (Note 10)
                
                
                2,569,322Other
                    current liabilities
                
                
                1,449,414Total
                    current liabilities
                
                
                20,036,228COMMITMENTS
                    (Note 16)STOCKHOLDERS'
                    (DEFICIT)Common
                    stockAuthorized
                    250,000,000 shares at par value of $ .0001 eachIssued
                    and outstanding 125,382,668 shares
                
                
                12,538Additional
                    paid-in capital
                
                
                17,695,040Subscriptions
                    received
                
                
                491,000Accumulated
                    (deficit)
                
                
                (28,182,272
                )Accumulated
                    other comprehensive income (loss)
                
                
                (1,270,948
                )Total
                    stockholders' (deficit)
                
                
                (11,254,642
                )Total
                    liabilities and stockholders' (deficit)
                
                $
                8,781,586
  The
          accompanying notes to the consolidated financial statements are an integral
          part
          of these statements.
  F-1
  **SINOBIOMED
          INC.** **AND
            CONSOLIDATED SUBSIDIARIES** ***Consolidated
              Statements of Operations*** ***(Expressed
                in US Dollars)*** ***Unaudited-
                  Prepared by Management***
  Three
                    Months Ended June 30
                
                Six
                    Months Ended June 302007
                
                2006
                
                2007
                
                2006REVENUESales
                
                $
                346,495
                
                $
                183,077
                
                $
                562,497
                
                $
                350,524Cost
                    of goods sold
                
                
                232,722
                
                
                157,795
                
                
                388,786
                
                
                272,114Gross
                    profit
                
                
                113,773
                
                
                25,282
                
                
                173,711
                
                
                78,410Other
                    income (Note 14)
                
                
                848
                
                
                848,057
                
                
                157,046
                
                
                848,057114,621
                
                
                873,339
                
                
                330,757
                
                
                926,467EXPENSESAdvertising
                    and promotion
                
                
                1,142
                
                
                4,513
                
                
                2,665
                
                
                4,560Depreciation
                
                
                22,825
                
                
                9,389
                
                
                44,610
                
                
                33,925Freight
                
                
                1,580
                
                
                4,636
                
                
                3,035
                
                
                7,108General
                    and administration
                
                
                802,035
                
                
                65,312
                
                
                1,272,204
                
                
                111,925Repairs
                    and maintenance
                
                
                12,293
                
                
                4,238
                
                
                17,899
                
                
                7,866Research
                    and development
                
                
                203,370
                
                
                518,903
                
                
                696,144
                
                
                923,828Salaries
                    and benefits
                
                
                169,477
                
                
                85,909
                
                
                271,260
                
                
                173,018Stock-based
                    compensation (Note 15)
                
                
                699,074
                
                
                -
                
                
                1,153,610
                
                
                -Travel
                
                
                113,154
                
                
                12,231
                
                
                138,420
                
                
                22,270Total
                    expenses
                
                
                2,024,950
                
                
                705,131
                
                
                3,599,847
                
                
                1,284,500Net
                    (loss) for the period from operations
                
                
                (1,910,329
                )
                
                168,208
                
                
                (3,269,090
                )
                
                (358,033
                )OTHER
                    EXPENSESInterest
                    and bank charges (Notes 8 and 10)
                
                
                327,669
                
                
                463,212
                
                
                681,660
                
                
                868,101Losses
                    on loans and guarantees to other parties (Note 5)
                
                
                74,480
                
                
                80,511
                
                
                147,111
                
                
                127,241Net
                    (loss) for the period before minority interests
                
                
                (2,312,478
                )
                
                (375,515
                )
                
                (4,097,861
                )
                
                (1,353,375
                )Minority
                    interest in loss for the period
                
                
                -
                
                
                (684
                )
                
                8,039
                
                
                1,879Net
                    (loss) for the period
                
                $
                (2,312,478
                )
                $
                (376,199
                )
                $
                (4,089,822
                )
                $
                (1,351,496
                )Other
                    comprehensive income (loss)Foreign
                    currency translation
                
                $
                (279,913
                )
                
                (101,628
                )
                $
                (455,781
                )
                
                (202,910
                )Comprehensive
                    (loss)
                
                
                (2,592,391
                )
                $
                (477,827
                )
                
                (4,545,603
                )
                $
                (1,554,406
                )Net
                    (loss) per common share - basic and fully diluted:Net
                    (loss) for the period
                
                $
                (0.02
                )
                $
                (0.01
                )
                $
                (0.03
                )
                $
                (0.02
                )Weighted
                    average number of common stock outstanding
                
                
                119,402,613
                
                
                70,000,000
                
                
                141,238,584
                
                
                70,000,000
  The
          accompanying notes to the consolidated financial statements are an integral
          part
          of these statements.
  F-2
  **SINOBIOMED
          INC.** **AND
            CONSOLIDATED SUBSIDIARIES** ***Consolidated
              Statements of Cash Flows*** ***(Expressed
                in US Dollars)*** ***Unaudited-
                  Prepared by Management***
 Three
                    Months EndedJune 30
                
                Six
                    Months EndedJune 302007
                
                2006
                
                2007
                
                2006Cash
                    from (used in) operating activities:Net
                    (loss)
                
                $
                (2,312,478
                )
                $
                (376,199
                )
                $
                (4,089,822
                )
                $
                (1,351,496
                )Adjustments
                    to reconcile net loss to net cash used in operating
                    activities:Depreciation
                
                
                191,638
                
                
                159,621
                
                
                375,801
                
                
                327,533Loss
                    on disposition of fixed assets
                
                
                6,699
                
                
                10,417
                
                
                6,699
                
                
                10,417Imputed
                    interest expense on shareholders' loans
                
                
                28,894
                
                
                37,059
                
                
                56,333
                
                
                74,224Minority
                    interest in net income (loss)
                
                
                -
                
                
                684
                
                
                (8,039
                )
                
                (1,879
                )Shares
                    issued for services
                
                
                -
                
                
                -
                
                
                85,400
                
                
                -Stock-based
                    compensation
                
                
                699,074
                
                
                -
                
                
                1,153,610
                
                
                -Net
                    change in operating assets and liabilities:Accounts
                    receivable
                
                
                (69,879
                )
                
                120,427
                
                
                (48,972
                )
                
                91,429Inventory
                
                
                12,932
                
                
                63,057
                
                
                100,120
                
                
                106,360Prepaid
                    expenses
                
                
                39,242
                
                
                66,904
                
                
                (73,505
                )
                
                (71,770
                )Accounts
                    payable
                
                
                (9,912
                )
                
                1,319
                
                
                (103,531
                )
                
                (2,488
                )Interest
                    payable
                
                
                268,954
                
                
                474,620
                
                
                629,080
                
                
                906,274Unearned
                    revenue
                
                
                (13,906
                )
                
                (403,597
                )
                
                3,033
                
                
                (405,208
                )Other
                    current liabilities
                
                
                (195,768
                )
                
                (44,779
                )
                
                (48,958
                )
                
                241,867Net
                    cash (used in) operating activities
                
                
                (1,354,510
                )
                
                109,533
                
                
                (1,962,751
                )
                
                (74,737
                )Cash
                    (used in) investing activities:Purchases
                    of fixed assets
                
                
                (71,219
                )
                
                (84,847
                )
                
                (93,427
                )
                
                (100,385
                )Proceeds
                    of disposition of fixed assets
                
                
                -
                
                
                -
                
                
                3,911
                
                
                -Net
                    cash (used in) investing activities
                
                
                (71,219
                )
                
                (84,847
                )
                
                (89,516
                )
                
                (100,385
                )Cash
                    from (used in) financing activities:Loans
                    made to unrelated parties
                
                
                -
                
                
                -
                
                
                (499,683
                )
                
                (138,682
                )Repayments
                    of loans by unrelated parties
                
                
                650,395
                
                
                161,450
                
                
                650,395
                
                
                161,450Share
                    subscriptions received
                
                
                9,754,001
                
                
                -
                
                
                10,170,001
                
                
                -Finders'
                    fees paid in cash
                
                
                (871,875
                )
                
                -
                
                
                (871,875
                )
                
                -Loans
                    made to shareholders
                
                
                -
                
                
                -
                
                
                -
                
                
                (2,081
                )Repayments
                    of loans by shareholders
                
                
                -
                
                
                98,149
                
                
                -
                
                
                98,149Increase
                    in short-term loans
                
                
                743,906
                
                
                -
                
                
                743,906
                
                
                171,828Repayments
                    of short-term loans
                
                
                (8,446,512
                )
                
                (254,449
                )
                
                (9,281,952
                )
                
                (254,449
                )Loans
                    received from shareholders
                
                
                816,017
                
                
                -
                
                
                898,693
                
                
                22,391Repayments
                    of loans from shareholders
                
                
                (492,480
                )
                
                (15,846
                )
                
                (492,480
                )
                
                (15,846
                )Net
                    cash from (used in) financing activities
                
                
                2,153,452
                
                
                (10,696
                )
                
                1,317,005
                
                
                42,760Effect
                    of other comprehensive income (loss) on cash
                
                
                125,592
                
                
                (148,032
                )
                
                (119,775
                )
                
                (298,678
                )Increase
                    (decrease) in cash
                
                
                853,315
                
                
                (134,042
                )
                
                (855,037
                )
                
                (431,040
                )Cash,
                    beginning of period
                
                
                437,928
                
                
                482,118
                
                
                2,146,280
                
                
                779,116Cash,
                    end of period
                
                $
                1,291,243
                
                $
                348,076
                
                $
                1,291,243
                
                $
                348,076
  The
          accompanying notes to the consolidated financial statements are an integral
          part
          of these statements.
  F-3
  **SINOBIOMED
          INC.** **AND
            CONSOLIDATED SUBSIDIARIES** ***Consolidated
              Statement of Stockholders' (Deficit)*** ***(Expressed
                in US Dollars)*** ***Unaudited-
                  Prepared by Management***
  Common
                    Stock
                
                Amount
                
                Additional
                    paid-in capital
                
                Subscriptions
                    received
                
                Common
                    Stock to be issued
                
                Cumulative
                    Other Comprehensive Income (loss)
                
                Accumulated
                    (Deficit)
                
                Stockholders' 
                    (Deficit)Balance
                    December 31, 2006
                
                
                70,000,000
                
                $
                7,000
                
                $
                7,660,082
                
                $
                -
                
                $
                -
                
                $
                (815,167
                )
                $
                (24,092,450
                )
                $
                (17,240,535
                )Cancellation
                    of shares
                
                
                (76,000,000
                )
                
                (7,600
                )
                
                7,600
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -Capital
                    changes to give effect to reverse take-over
                
                
                121,000,000
                
                
                12,100
                
                
                (74,073
                )
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (61,973
                )Issue
                    of shares for services
                
                
                100,000
                
                
                10
                
                
                85,390
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                85,400Stock-based
                    compensation
                
                
                -
                
                
                -
                
                
                454,536
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                454,536Subscriptions
                    received for units pursuant to private placements
                
                
                -
                
                
                -
                
                
                -
                
                
                416,000
                
                
                -
                
                
                -
                
                
                -
                
                
                416,000Finders
                    fees payable in shares
                
                
                -
                
                
                -
                
                
                (15,375
                )
                
                -
                
                
                15,375
                
                
                -
                
                
                -
                
                
                -Finders
                    fees payable in cash
                
                
                -
                
                
                -
                
                
                (11,375
                )
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (11,375
                )Imputed
                    interest on shareholders' loans
                
                
                -
                
                
                -
                
                
                27,439
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                27,439Net
                    (loss) for the period
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (175,868
                )
                
                (1,777,344
                )
                
                (1,953,212
                )Balance
                    March 31, 2007
                
                
                115,100,000
                
                $
                11,510
                
                $
                8,134,224
                
                $
                416,000
                
                $
                15,375
                
                $
                (991,035
                )
                $
                (25,869,794
                )
                $
                (18,283,720
                )Stock-based
                    compensation
                
                
                -
                
                
                -
                
                
                699,074
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                699,074Subscriptions
                    received for units pursuant to private placement
                
                
                -
                
                
                -
                
                
                -
                
                
                9,754,001
                
                
                -
                
                
                -
                
                
                -
                
                
                9,754,001Shares
                    issued pursuant to subscriptions
                
                
                10,197,668
                
                
                1,020
                
                
                9,677,981
                
                
                (9,679,001
                )
                
                -
                
                
                -
                
                
                -
                
                
                -Finders
                    fees paid in cash
                
                
                -
                
                
                -
                
                
                (860,500
                )
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (860,500
                )Shares
                    issued as finders' fees
                
                
                85,000
                
                
                8
                
                
                15,367
                
                
                -
                
                
                (15,375
                )
                
                -
                
                
                -
                
                
                -Imputed
                    interest on shareholders' loans
                
                
                -
                
                
                -
                
                
                28,894
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                28,894Net
                    (loss) for the period
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (279,913
                )
                
                (2,312,478
                )
                
                (2,592,391
                )Balance
                    June 30, 2007
                
                
                125,382,668
                
                $
                12,538
                
                $
                17,695,040
                
                $
                491,000
                
                $
                -
                
                $
                (1,270,948
                )
                $
                (28,182,272
                )
                $
                (11,254,642
                )
  F-4
  **SINOBIOMED
        INC.**
 **AND
        CONSOLIDATED SUBSIDIARIES**
 ***Notes
        to Consolidated Financial Statements***
 ***June
        30, 2007***
 ***(Expressed
        in US Dollars)***
 ***Unaudited
        - Prepared by Management***
  **1.
        BASIS OF PRESENTATION - GOING CONCERN**
  These
        consolidated financial statements of Sinobiomed Inc. (the “Company”) have been
        prepared on a going-concern basis which assumes that the Company will be
        able to
        realize assets and discharge liabilities in the normal course of business
        for
        the foreseeable future.
  The
        Company has experienced losses since commencement of operations amounting
        to
        $28,182,272, and has negative working capital and a stockholder’s deficit as of
        June 30, 2007, which raise substantial doubt about the Company's ability
        to
        continue as a going concern. The ability of the Company to meet its commitments
        as they become payable is dependent on the ability of the Company to obtain
        necessary financing or achieving a profitable level of operations. There
        are no
        assurances that the Company will be successful in achieving these
        goals.
  The
        Company is in the process of researching, developing, testing and evaluating
        proposed new pharmaceutical products and has not yet determined whether these
        products are technically or economically feasible. The underlying value of
        the
        company is entirely dependent on the successful implementation of one or
        more of
        these products, the ability of the Company to obtain the necessary financing
        to
        complete development and upon future profitable production or sufficient
        proceeds from the disposition of manufacturing rights. Management’s plan is to
        actively search for new sources of capital, including government and
        non-government grants toward research projects and new equity
        investment.
  These
        financial statements do not give effect to adjustments to the amounts and
        classifications to assets and liabilities that would be necessary should
        the
        Company be unable to continue as a going concern.
 
 **2.
        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
 
 **Organization
        and Description of Business**
  The
        Company was incorporated under the laws of the State
        of
        Delaware on November 18, 2004 under the name CDoor Corp. The initial business
        plan of the Company was to develop a commercial application utilizing a patent
        pertaining to automobiles. In addition, in 2004, the Company commenced a
        capital
        formation activity to effect a Registration Statement on Form SB-2 with the
        Securities and Exchange Commission (“SEC”), and raise capital of up to $100,000
        from a self-underwritten offering of 40.0 million shares of newly issued
        common
        stock (post forward stock split) in the public markets. On May 30, 2006,
        the
        Company successfully completed the capital formation activity of its registered
        common stock.
 
 On
        October 16, 2006, the two Directors, officers, and principal stockholders
        of the
        Company agreed to sell 80.0 million shares of the Company’s common stock (post
        forward stock split), constituting 66% of the Company’s issued and outstanding
        stock, to an unrelated third party. The
        purchase closed on November 2, 2006. At the same time, the Company adopted
        a new
        business plan to pursue a reverse merger with Wanxin Bio-Technology Limited
        (“Wanxin BVI”), a British Virgin Islands company, and entered into a merger
        agreement with Wanxin BVI and its stockholders on December 21, 2006. Under
        the
        merger agreement, the stockholders of Wanxin BVI would transfer all the shares
        of Wanxin BVI to the Company in return for the issue of 70 million (post
        forward
        stock split) shares of the Company. The new business plan and focus of the
        Company centers around the Chinese biopharmaceutical industry.
  F-5
 **SINOBIOMED
          INC.**
 **AND
          CONSOLIDATED SUBSIDIARIES**
 ***Notes
          to Consolidated Financial Statements***
 ***June
          30, 2007***
 ***(Expressed
          in US Dollars)***
 ***Unaudited
          - Prepared by Management***
 The
        transaction to complete the reverse merger with Wanxin BVI was effected on
        January 12, 2007, as a recapitalization of the Company, with the net assets
        of
        Wanxin BVI and the Company brought forward at their historical bases, and
        95
        percent of the voting stock of the former majority shareholder of the Company
        (76.0 million shares of common stock, post forward stock split) being
        surrendered to the Company for cancellation and return to the treasury such
        that
        voting control of the Company was obtained by the former stockholders of
        Wanxin
        BVI. The costs associated with the reverse merger were expensed as incurred.
 
 At
        an
        annual meeting of the stockholders of the Company held on March 1, 2007,
        the
        stockholders voted to complete a forward stock split of forty for one of
        the
        Company’s common stock with an effective date of March 2, 2007. All transactions
        involving the Company’s common stock prior to March 2, 2007 and determinations
        of the weighted average number of common shares outstanding have been restated
        to reflect this forward stock split. At the same meeting, a five-member board
        of
        directors was elected and the Company’s name was changed to its present
        name.
 
 Wanxin
        BVI was
        incorporated under the laws of the British Virgin Islands on July 3, 2002.
        From
        the date of incorporation until October 15, 2006, Wanxin
        BVI remained
        dormant. On October 15, 2006 Wanxin
        BVI acquired
        all the shares of Manhing Enterprises Limited (“Manhing”), a company
        incorporated under the laws of Hong Kong on July 2, 1991, in return for 750
        shares of Wanxin
        BVI .
        The
        purposes of this transaction were to expatriate the operating companies’
ownership and to align legal and beneficial ownership of the group of companies
        prior to the January 12, 2007 reverse takeover. Accordingly the transaction
        has
        been treated as a reorganization of capital rather than a business
        combination.
 
 On
        June
        28, 1996, Manhing and two other unrelated companies founded Shanghai Pudong
        New
        District Wanxing Living Things Co., Ltd. (“Wanxing Bio-Pharmaceuticals”), a
        Sino-Foreign Joint Venture company incorporated with limited liability under
        the
        laws of the People’s Republic of China. Wanxing Bio-Pharmaceuticals has a term
        of 30 years from the date of incorporation, at which time it is to be
        liquidated. Manhing’s original investment and proportionate interest in Wanxing
        Bio-Pharmaceuticals were $1.3 Million and 52%, respectively. On August 19,
        1996,
        Wanxing Bio-Pharmaceuticals changed its name to Shanghai Wanxing Living Things
        Co., Ltd. On the same date Manhing transferred a 1% interest in Wanxing
        Bio-Pharmaceuticals to another company for consideration of $25,000. On the
        same
        date Wanxing Bio-Pharmaceuticals increased its registered capital and Manhing
        contributed an additional $895,500 to keep its interest at 51%. In 1998 Manhing
        acquired an additional interest in Wanxing Bio-Pharmaceuticals for $1,445,000
        and contributed an additional $2,087,500 upon Wanxing Bio-Pharmaceuticals
        increasing its registered capital. After these transactions Manhing held
        a
        63.33% interest in Wanxing Bio-Pharmaceuticals.
  F-6
 **SINOBIOMED
          INC.**
 **AND
          CONSOLIDATED SUBSIDIARIES**
 ***Notes
          to Consolidated Financial Statements***
 ***June
          30, 2007***
 ***(Expressed
          in US Dollars)***
 ***Unaudited
          - Prepared by Management***
 In
        2000,
        Wanxing Bio-Pharmaceuticals changed it name to its current name, Shanghai
        Wanxing Bio-pharmaceuticals Co., Ltd.
 
 In
        2002
        Manhing transferred an 18% interest in Wanxing Bio-Pharmaceuticals to another
        investor.
 
 In
        2003
        Manhing acquired an additional combined 36.6% interest in Wanxing
        Bio-Pharmaceuticals from other shareholders over three transactions. Subsequent
        to these transactions, Manhing’s interest in Wanxing Bio-Pharmaceuticals was
        82%, or $7.38 Million of Wanxing Bio-Pharmaceuticals’ registered capital of $9.0
        Million. On March 14, 2007, the government of China approved an increase
        in the
        registered capital of Wanxing Bio-Pharmaceuticals to $30 Million. Under Chinese
        law, Manhing and the minority shareholder are required to invest the additional
        $21 Million in Wanxing Bio-Pharmaceuticals by March 14, 2009. If the additional
        investment is not made by that date, time extensions are available. In the
        three
        months ended June 30, 2007, Manhing has invested $8,512,819 in Wanxing
        Bio-Pharmaceuticals.
 
 Wanxing
        Bio-Pharmaceuticals’ business is research, development, manufacture and sale of
        pharmaceutical products, primarily for the Chinese market. There are two
        product
        lines currently manufactured and sold as at June 30, 2007 and several other
        potential products in various stages of research and development. The product
        lines currently sold are Wanferon/Wanferin, formulations of recombinant human
        interferon for treating hepatitis and viral diseases and Leflunomide, a drug
        for
        the treatment of rheumatoid arthritis. Wanxing Bio-Pharmaceuticals received
        a
        new drug licence for a third product, acidic Fibroblast Growth Factor (“aFGF”),
        in January 2007. This product will enter commercial sales when Good
        Manufacturing Practice (“GMP”) certification is received. As at June 30, 2007,
        Wanxing Bio-Pharmaceuticals has been advised the certification has been
        approved, and awaits receipt of the formal certificate. Wanxing
        Bio-Pharmaceuticals’ offices and manufacturing facility are in owned premises
        located on land used under license in the Pudong New Area of Shanghai, China.
 
 On
        April
        14, 2004, Wanxing Bio-Pharmaceuticals and two other unrelated companies founded
        Shanghai Wanxing Bio-science Cosmetic Co., Ltd. (“Wanxing Cosmetic”). Wanxing
        Cosmetic’s registered capital is $3.0 Million and Wanxing Bio-Pharmaceuticals’
interest is 50.33% or $1,510,000. Wanxing Cosmetic has a term of thirty years
        from the date of issue of the business license, at which time it is to be
        liquidated. Wanxing Cosmetic manufactures skin-care products under the brand
        name KaiYing.
 
 **Principles
        of Consolidation**
 
 The
        consolidated financial statements include accounts of the Company and its
        subsidiaries, Wanxin BVI, Manhing, Wanxing Bio-Pharmaceuticals, and Wanxing
        Cosmetic.
  F-7
 
 **SINOBIOMED
            INC.**
 **AND
            CONSOLIDATED SUBSIDIARIES**
 ***Notes
            to Consolidated Financial Statements***
 ***June
            30, 2007***
 ***(Expressed
            in US Dollars)***
 ***Unaudited
            - Prepared by Management***
 All
        significant inter-company balances and transactions are eliminated. Minority
        interest represents the other shareholders’ interests in the net assets of the
        subsidiaries after deducting the minority interest share of net losses of
        the
        companies.
 
 **Cash
        and Cash Equivalents**
  Cash
        equivalents comprise certain highly liquid instruments with a maturity of
        three
        months or less when purchased. As at June 30, 2007, the Company did not have
        any
        cash equivalents.
  **Inventory**
 
 Inventory
        is carried at the lower of cost and estimated net realizable value. Raw
        materials cost is determined on the first in, first out basis. Manufacturing
        costs are applied to goods in process on a full cost basis. Cost of finished
        goods on hand at the balance sheet date is determined on the first in, first
        out
        basis.
 
 **Revenue
        recognition**
 
 Revenues
        are recognized in accordance with SEC Staff Accounting Bulletin (SAB) No.
        104,
        "Revenue Recognition." Under SAB 104, product revenues (or service revenues)
        are
        recognized when persuasive evidence of an arrangement exists, delivery has
        occurred (or service has been performed), the sales price is fixed and
        determinable and collectibility is reasonably assured.
 
 **Concentrations**
 
 The
        Interferon product line is subject to increasing competition in the marketplace,
        with the result that gross margin per unit on sales has decreased markedly
        over
        the years 2005 and 2006 and the six months ended June
        30 ,
        2007.
 
 **Research
        and Development Expenditures**
  Expenditures
        on research and development activities, including assets acquired for use
        in
        research and development activities, are charged to operations as incurred.
  **Asset
        Retirement Obligations**
  The
        Company has adopted SFAS No. 143, *Accounting
        for Asset Retirement Obligations* which
        requires that the fair value of a liability for an asset retirement obligation
        be recognized in the period in which it is incurred. The Company has no asset
        retirement obligations.
  **Fixed
        Assets**
  Fixed
        assets are carried at cost less a provision for depreciation on a straight-line
        basis over their estimated useful lives. Each asset is estimated to have
        a
        residual value of 10% of cost at the end of its useful life. Estimated useful
        lives are as follows:
  F-8
  **SINOBIOMED
            INC.**
 **AND
            CONSOLIDATED SUBSIDIARIES**
 ***Notes
            to Consolidated Financial Statements***
 ***June
            30, 2007***
 ***(Expressed
            in US Dollars)***
 ***Unaudited
            - Prepared by Management***
  Buildings
                20
                    yearsClimate
                    control equipment
                8
                    yearsComputer
                    software
                5
                    yearsLand
                    license
                29
                    yearsManufacturing
                    equipment
                5
                    -
                    8 yearsOffice
                    furniture and equipment
                5
                    yearsOther
                    equipment and fixtures
                5
                    yearsRoad
                20
                    yearsVehicles
                5
                    years
 **Advertising
        Expenses**
  Advertising
        expenses are expensed as incurred.
 
 **Foreign
        Currency**
  The
        parent company’s operation of the Company is located in the China. It maintains
        no bank accounts. The functional currency is the U.S. Dollar. Transactions
        in
        foreign currencies, if any, are remeasured into the functional currency at
        the
        rate in effect at the time of the transaction. Remeasurement gains and losses
        that arise from exchange rate fluctuations are included in income or loss
        from
        operations. Monetary assets and liabilities denominated in foreign currencies
        are presented in the balance sheet at the rate in effect at the balance sheet
        date.
 
 Wanxin
        BVI’s operation of the Company is located in the British Virgin Islands and Hong
        Kong. It maintains bank accounts in Hong Kong Dollars and US Dollars. The
        functional currency is the U.S. Dollar. Transactions in foreign currencies,
        if
        any, are remeasured into the functional currency at the rate in effect at
        the
        time of the transaction. Remeasurement gains and losses that arise from exchange
        rate fluctuations are included in income or loss from operations. Monetary
        assets and liabilities denominated in foreign currencies are presented in
        the
        balance sheet at the rate in effect at the balance sheet date.
 
 Manhing’s
        operation of the Company is located in Hong Kong. It maintains a bank account
        in
        US Dollars. The functional currency is the U.S. Dollar. Transactions in foreign
        currencies, if any, are remeasured into the functional currency at the rate
        in
        effect at the time of the transaction. Remeasurement gains and losses that
        arise
        from exchange rate fluctuations are included in income or loss from operations.
        Monetary assets and liabilities denominated in foreign currencies are presented
        in the balance sheet at the rate in effect at the balance sheet
        date.
 
 The
        operations of Wanxing Bio-Pharmaceuticals and Wanxing Cosmetic are located
        in
        China, and their accounting records are maintained in Chinese Renminbi Yuan.
        The
        functional currency is the Chinese Renminbi Yuan. Transactions in foreign
        currencies other than the functional currency, if any, are remeasured into
        the
        functional currency at the rate in effect at the time of the transaction.
        Remeasurement gains and losses that arise from exchange rate fluctuations
        are
        included in income or loss from operations. Monetary assets and liabilities
        of
        the subsidiaries denominated in the functional currency are translated into
        U.S.
        Dollars at the rate in effect at the balance sheet date. Revenue and expenses
        denominated in the functional currency are translated at the average exchange
        rate. Other comprehensive income includes the foreign exchange gains and
        losses
        that arise from translating from the functional currency into U.S.
        Dollars.
  F-9
 **SINOBIOMED
          INC.**
 **AND
          CONSOLIDATED SUBSIDIARIES**
 ***Notes
          to Consolidated Financial Statements***
 ***June
          30, 2007***
 ***(Expressed
          in US Dollars)***
 ***Unaudited
          - Prepared by Management***
  **Use
        of Estimates**
  The
        preparation of the Company’s consolidated financial statements in conformity
        with generally accepted accounting principles of the United States of America
        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 financial statements and the reported amounts
        of
        revenues and expenses during the reporting period. Management makes its best
        estimate of the ultimate outcome for these items based on historical trends
        and
        other information available when the financial statements are prepared. Actual
        results could differ from those estimates.
 
 **Loss
        Per Share**
  Basic
        earnings (loss) per share of common stock is computed by dividing the net
        earnings (loss) by the weighted average number of common shares outstanding
        during the period .
        For
        purposes of determining the weighted average number of common shares
        outstanding, the number of shares outstanding as at June
        30 ,
        2007 is
        given effect on a pro forma basis as if the forward stock split which occurred
        in 2007 had occurred by January 1, 2007. Diluted
        earnings (loss) per share is equal to the basic loss per share for the six
        months ended June 30, 2007 and 2006 because common stock equivalents outstanding
        at June 30, 2007 are anti-dilutive.
 
 **Fair
        Value of Financial Instruments**
  The
        Company’s financial instruments consist of cash, accounts receivable, loans
        receivable, short term loans payable and accounts payable at June 30, 2007.
        Accounts receivable and loans receivable are carried at estimated net realizable
        values net of provisions for uncollectible amounts. The carrying values of
        the
        remaining financial instruments reflected in these financial statements
        approximate their fair values due to the short-term maturity of the instruments.
 
 **Comprehensive
        Income**
  The
        Company has adopted Statement of Financial Accounting Standards (SFAS) No.
        130,
“Reporting Comprehensive Income”. Comprehensive income includes net income and
        all changes in equity during a period that arise from non-owner sources,
        such as
        foreign currency items and unrealized gains and losses on certain investments
        in
        equity securities.
 
 **Income
        taxes**
  The
        Company records deferred taxes in accordance with Statement of Financial
        Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." The
        statement requires recognition of deferred tax assets and liabilities for
        temporary differences between the tax bases of assets and liabilities and
        the
        amounts at which they are carried in the financial statements, based upon
        the
        enacted tax rates in effect for the year in which the differences are expected
        to reverse. A valuation allowance is established when necessary to reduce
        deferred tax assets to the amount expected to be realized.
  F-10
 **SINOBIOMED
          INC.**
 **AND
          CONSOLIDATED SUBSIDIARIES**
 ***Notes
          to Consolidated Financial Statements***
 ***June
          30, 2007***
 ***(Expressed
          in US Dollars)***
 ***Unaudited
          - Prepared by Management***
 
 **Impairment
        of Long-Lived Assets**
  The
        Company periodically analyzes its long-lived assets for potential impairment,
        assessing the appropriateness of lives and recoverability of unamortized
        balances through measurement of undiscounted operation cash flows in accordance
        with SFAS No. 144, *Accounting
        for the Impairment or Disposal of Long-lived Assets.* If
        impairment is deemed to exist, the asset will be written down to its fair
        value.
        Fair value is generally determined using a discounted cash flow analysis.
        As at
        December 31, 2006, the Company wrote down $512,400 in intangible assets acquired
        in 2006 for rights to produce the Company’s Leflunomide product, due to
        uncertainty about future sales potential and profit margins which makes it
        impossible to establish a fair value for the asset.
 
 **Stock-Based
        Compensation**
 
 As
        of
        July 31, 2006, the Company has implemented the provisions of Statement of
        Financial Accounting Standards No. 123 (revised 2004), *Share-
        Based Payment* (“SFAS
        No. 123R”), which replaced Statement of Financial Accounting Standards No. 123, *Accounting
        for Stock-Based Compensation* (“SFAS
        No. 123”) as amended by No. 148, *Accounting
        for Stock-Based Compensation - Transition and Disclosure* .
        Compensation expense is recorded in accordance with the fair value recognition
        provisions of SFAS 123R beginning in 2006 for options issued to
        employees.
 
 **New
        Accounting Pronouncements**
 
 In
        December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets,
        an amendment of APB No. 29, Accounting for Nonmonetary Transactions”. SFAS No.
        153 requires exchanges of productive assets to be accounted for at fair value,
        rather than at carryover basis, unless (1) neither the asset received nor
        the
        asset surrendered has a fair value that is determinable within reasonable
        limits
        or (2) the transactions lack commercial substance. SFAS 153 is effective
        for
        nonmonetary asset exchanges occurring in fiscal periods beginning after June
        15,
        2005. The adoption of FASB No. 153 does not have a material impact on the
        Company’s consolidated financial statements.
  In
        May
        2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections”.
        SFAS No. 154 replaces APB Opinion No. 20 “Accounting Changes” and SFAS No. 3,
“Reporting Accounting Changes in Interim Financial Statements”. SFAS No. 154
        requires retrospective application to prior periods’ financial statements of
        changes in accounting principle, unless it is impracticable to determine
        either
        the period-specific effects or the cumulative effect of the change. The adoption
        of SFAS No. 154 does not have any impact on the Company’s consolidated financial
        statements.
  F-11
 **SINOBIOMED
          INC.**
 **AND
          CONSOLIDATED SUBSIDIARIES**
 ***Notes
          to Consolidated Financial Statements***
 ***June
          30, 2007***
 ***(Expressed
          in US Dollars)***
 ***Unaudited
          - Prepared by Management***
 
 In
        March
        2006, the FASB issued SFAS No. 156, *“Accounting
        for Servicing of Financial Assets,”* (“SFAS
        No. 156”), which amends SFAS No. 140, *”
        Accounting for Transfers and Servicing of Financial Assets and Extinguishments
        of Liabilities.* ”
In
        a
        significant change to current guidance, SFAS No. 156 permits an entity to
        choose
        either of the following subsequent measurement methods for each class of
        separately recognized servicing assets and servicing liabilities: (1)
        Amortization Method or (2) Fair Value Measurement Method. SFAS No. 156 is
        effective as of the beginning of an entity’s first fiscal year that begins after
        September 15, 2006. The
        adoption of SFAS No. 156 does not have any impact on the Company’s consolidated
        financial statements.
  In
        June
        2006, the FASB issued SFAS Board Interpretation No. 48, “ *Accounting
        for Uncertainty in Income Taxes - an Interpretation of FASB statement No.
        109* ”
(“FIN
        48”), which clarifies the accounting for uncertainty in income taxes recognized
        in an enterprise’s financial statements in accordance with FASB No. 109. The
        interpretation prescribes a recognition threshold and measurement attribute
        for
        the financial statement recognition and measurement of a tax position taken
        or
        expected to be taken in a tax return. This interpretation also provides guidance
        on derecognition, classification, interest and penalties, accounting in interim
        periods, disclosure, and transition. FIN 48 is effective for fiscal years
        beginning after December 15, 2006. Earlier application of the provisions
        of FIN
        48 is encouraged if the enterprise has not yet issued financial statements,
        including interim financial statements, in the period this Interpretation
        is
        adopted. The
        adoption of FIN 48 does not have any impact on the Company’s consolidated
        financial statements.
 
 In
        September 2006, the FASB issued SFAS No. 157, “ *Fair
        Value Measurements* .”
This
        statement defines fair value, establishes a framework for measuring fair
        value
        in generally accepted accounting principles, and expands disclosure about
        fair
        value measurements. This statement applies under other accounting pronouncements
        that require or permit fair value measurement, the FASB having previously
        concluded in those accounting pronouncements that fair value is the relevant
        measurement attribute. This statement does not require any new fair value
        measurements. However, for some entities, the application of the statement
        will
        change current practice. This statement is effective for financial statements
        issued for fiscal years beginning after November 15, 2007, and interim periods
        within those fiscal years. The Company is currently reviewing the effect,
        if
        any, that this new pronouncement will have on its financial
        statements.
 
 In
        September 2006, the FASB issued SFAS No. 158, “ *Employers’
        Accounting for Defined Benefit Pension and Other Postretirement Plans - an
        amendment of FASB Statements No. 87, 88, 106 and 123(R)* .”
This
        statement improves financial reporting by requiring an employer to recognize
        the
        overfunded or underfunded status of a defined benefit postretirement plan
        (other
        than a multi-employer plan) as an asset or liability in its statement of
        financial position and to recognize changes in that funded status in the
        year in
        which the changes occur through comprehensive income of a business entity
        or
        changes in unrestricted net assets for a not-for-profit organization. This
        statement also improves financial reporting by requiring an employer to measure
        the funded status of a plan as of the date of its year-end statement of
        financial position, with limited exceptions. The Company does not expect
        the
        adoption of this pronouncement to have a material impact on its financial
        statements.
  F-12
 **SINOBIOMED
          INC.**
 **AND
          CONSOLIDATED SUBSIDIARIES**
 ***Notes
          to Consolidated Financial Statements***
 ***June
          30, 2007***
 ***(Expressed
          in US Dollars)***
 ***Unaudited
          - Prepared by Management***
 
 There
        were various other accounting standards and interpretations recently issued,
        none of which is expected to have a material impact on the Company's financial
        position, operations or cash flows.
 
 **3.
        CASH - RESTRICTED**
 
 Restricted
        cash consists of $ 2,221 on deposit to secure a letter of credit related
        to
        purchases and $176 on deposit pursuant to agreement with a bank to maintain
        funds on deposit to ensure payment of interest on debt.
  **4.
        ACCOUNTS RECEIVABLE**
 
 Trade
        accounts receivable consists of receivable for sales of product on credit,
        largely to independent sales agents. The Company is required by law to sell
        to a
        sales agent rather than the ultimate purchaser when the ultimate purchaser
        is a
        hospital. Accounts receivable are net of allowance for doubtful accounts
        in the
        amount of $7,359.
 
 **5.
        LOANS TO UNRELATED PARTIES**
 
 The
        Company has loans receivable from other companies arising from guarantee
        arrangements under which the Company guaranteed the debt of other companies
        and
        has been called on its guarantees (Note 8). The company has $4,526,993
        receivable from these companies including interest accrued on the original
        debts
        since call of the guarantees, but has provided for the full amount of the
        receivables due to uncertainty of collectibility. $146,862 has been charged
        to
        income in the six months ended June 30, 2007 (2006 - $93,460) in respect
        of the
        provision. Under the terms of the guarantee agreements, the other companies
        have
        until December 31, 2007 to pay the Company.
 
 The
        Company has fully provided for $12,389 (94,289 Chinese yuan) of additional
        loans
        receivable from sales agents and employees. $516 recovery has been recognized
        in
        income in the six months ended June 30, 2007 in respect of the
        provision.
 
 The
        remaining loans receivable are carried at their face amounts, which approximate
        estimated net realizable values based on collection and settlement experience
        subsequent to June 30, 2007. The remaining loans receivable do not bear interest
        and have no stated terms of repayment.
  F-13
 **SINOBIOMED
            INC.**
 **AND
            CONSOLIDATED SUBSIDIARIES**
 ***Notes
            to Consolidated Financial Statements***
 ***June
            30, 2007***
 ***(Expressed
            in US Dollars)***
 ***Unaudited
            - Prepared by Management***
 **6.
            INVENTORY**
 
 Inventory
            consists of the following:
 June
                  30,
                  2007Raw
                  materials
              
              $
              51,965Goods
                  in process
              
              
              260,141Finished
                  goods
              
              
              31,412$
              343,518
  **7.
        FIXED ASSETS**
 
 Fixed
        assets consist of the following:
  June
                  30,
                  2007Buildings
              
              $
              5,953,897Climate
                  control equipment
              
              
              1,215,065Computer
                  software
              
              
              1,840Land
                  license
              
              
              2,207,520Manufacturing
                  equipment
              
              
              2,032,681Office
                  furniture and equipment
              
              
              152,496Other
                  equipment
              
              
              32,390Road
              
              
              33,075Vehicles
              
              
              673,81012,302,774Less:
                  Accumulated depreciation
              
              
              5,570,937$
              6,731,837
 
 The
        land
        license is for the use of the land on which the Company’s buildings are
        situated, and is for a term of 30 years from September 18, 1996. At the end
        of
        the license, the Company expects to have an option to renew the
        license.
 
 On
        June
        21, 2004 the Company’s land, building and equipment were hypothecated by the
        People’s Court of Yangpu District, Shanghai, China pursuant to an action for non
        payment of bank debt (Note 9). The Company has had use of the assets while
        under
        hypothecation, but is not free to sell any of the hypothecated assets. The
        Company has entered an agreement to settle the debt and release the assets
        from
        hypothecation (Note 9). The amount of the debts secured by this hypothecation
        and by the mortgage on the land license and buildings approximate the carrying
        value of the assets pledged.
  F-14
 **SINOBIOMED
            INC.**
 **AND
            CONSOLIDATED SUBSIDIARIES**
 ***Notes
            to Consolidated Financial Statements***
 ***June
            30, 2007***
 ***(Expressed
            in US Dollars)***
 ***Unaudited
            - Prepared by Management***
 **8.
        SHORT-TERM LOANS**
 
 The
        Company has obligations under the following loan agreements with banks and
        with
        an unrelated company. The bank loans are all overdue as at June 30, 2007.
 
 Name
                  of Bank
              
              Principal
                  amount2006
              
              
              Due
                  date
              
              Interest
                  rateNot
                  due/ overdue
              
              Security(2)Industrial
                  and Commercial bank
              
              3,408,733
              
              
              (1)
              
              (1)
              
              GuaranteeConstruction
                  Bank
              
              1,879,020
              
              
              October
                  16, 2004
              
              5.31%
                  / 7.56%
              
              Building
                  mortgage (3)Shenzen
                  Development Bank
              
              1,287,720
              
              
              June
                  6, 2005
              
              6.372%
                  / 9.56%
              
              GuaranteeIndustrial
                  Bank
              
              4,204,800
              
              
              December
                  19, 2005
              
              6.138%
                  / NA
              
              GuaranteeShanghai
                  Wanjun Economic Trading Co. Ltd.
              
              750,187
              
              
              No
                  stated due date
              
              No
                  interest
              
              None11,530,460
 
 (1)
              The
                  debt to Industrial and Commercial Bank, Jingqiao consists of 5
                  loan
                  contracts with due dates ranging from April 23, 2004 through January
                  13,
                  2005. Nominal interest rates range from 5.31% to 5.576% per annum
                  while
                  the overdue interest rate is
                  7.965%.
 
 (2)
              Guarantees
                  have been arranged with various companies under cross-guarantee
                  arrangements where each guarantees a loan for the other, or a loan
                  forward
                  basis where Wanxing Bio-Pharmaceuticals borrows and then loans
                  a specified
                  amount to the guarantor in return for the guarantee. The Company
                  has
                  guaranteed debt of two other companies under such arrangements,
                  up to an
                  amount of $3,285,000 (25,000,000 Chinese yuan) plus interest. $3,285,000
                  of the Company’s debt above arose upon the Company being called on its two
                  guarantees. The Company recorded a corresponding loan receivable
                  from the
                  other companies and has made a provision for uncollectibility in
                  the full
                  amount of the receivable (Note 5).
 
 (3)
              Buildings
                  with carrying value of $3,784,255 have been mortgaged as
                  security.
 
 The
        Company is involved in litigation over some of its bank loans and has negotiated
        payment terms on some of its loans as more fully described in Note
        9.
  **9.
        LITIGATION**
 
 On
        June
        21, 2004 the Company was sued by the Agriculture Bank of China to enforce
        payment under the loan agreement with that bank. The Company’s land, building
        and equipment, new medicine certificates and a bank account were hypothecated
        by
        the People’s Court of Yangpu District, Shanghai, China pursuant to the action.
        On September 15, 2006 the Company and the bank entered into a settlement
        agreement to settle the litigation and the debt. The debt at that time had
        a
        principal balance of 21.62 million yuan (approximately $US (2,680,000). Under
        the terms of the settlement agreement, the Company was obligated to pay the
        bank
        12 million yuan (approximately $US 1,487,000) before October 31, 2006, 3
        million
        yuan (approximately $US 388,000) before June 30, 2007 and 6.62 million yuan
        (approximately $US 857,000) before October 31, 2007. The Company’s new medicine
        certificates and bank account were to be released upon payment of the first
        12
        million by October 31, 2006. If the Company completely meets this schedule,
        the
        Company’s property, building and equipment will be released from hypothecation.
        The Company paid 10 million yuan (approximately $US 1,281,000) pursuant to
        the
        settlement on October 25, 2006 and received a waiver from the bank of the
        default in respect of the remaining 2 million yuan due until March 31, 2007.
        The
        Company did not make the March 31, 2007 payment when due and received another
        waiver from the bank for an unspecified time. The Company has repaid this
        loan
        in full by June 30, 2007. Subsequent to June 30, 2007, the company has received
        a court judgment that this matter is now closed (Note 19).
  F-15
 **SINOBIOMED
          INC.**
 **AND
          CONSOLIDATED SUBSIDIARIES**
 ***Notes
          to Consolidated Financial Statements***
 ***June
          30, 2007***
 ***(Expressed
          in US Dollars)***
 ***Unaudited
          - Prepared by Management***
 
 The
        Company has been sued by the Industrial and Commercial Bank of China to enforce
        payment under the loan agreement with that bank and judgment was granted
        in
        favour of the bank by the People’s Court of Pudong District. On October 25, 2006
        the Company and the bank entered into a settlement agreement to settle the
        litigation and the debt. The debt at that time had a principal balance of
        77.15
        million yuan (approximately $US 9,560,000). Under the terms of the settlement
        agreement, the Company is obligated to pay the bank 3 million yuan
        (approximately $US 394,000) plus interest at the rate of 0.561% per month
        on the
        remaining balance of the first 49,145,766 (approximately $US 6,458,000) of
        the
        principal on the 21 st day of
        each month. The Company is also obligated to pay the bank quarterly interest
        payments at the rate of 0.5775% per month commencing December 20, 2006 on
        the
        remaining balance of the last 28,000,000 yuan (approximately $US 3,679,000)
        of
        the principal. The payments will continue until the debt principal is paid.
        If
        the Company completely meets this schedule, the bank agrees to apply to the
        upper bank authority for a waiver of the interest accumulated prior to the
        entering of the agreement. The Company has made the payments to December
        31,
        2006 in compliance with the settlement but defaulted by
        not
        making the scheduled loan payments in January, February and March, 2007.
        In
        March 2007 the Company entered a new agreement for payment of debt obligations,
        which calls for payment of 3 million yuan (approximately $US 394,000) on
        April
        28, 2007, 2 million yuan (approximately $US 263,000) on May 10, 2007, 10
        million
        yuan (approximately $US 1,314,000) on May 15, 2007, and the balance of principal
        of 52.94 million yuan (approximately $US 6,956,000) plus interest of 1 million
        (approximately $US 131,000) on June 15, 2007. If the company meets this
        schedule, the debt will be repaid and accrued interest in the amount of
        approximately 17.9 million yuan (approximately $US 2,352,000) will be forgiven.
        If the Company does not meet this schedule, the previously-agreed payment
        schedule will still apply. The Company has paid 42,000,000 yuan on these
        loans
        in the three months ended June 30, 2007, but did not pay the entire balance
        by
        June 15, 2007 in accordance with the revised settlement agreement. The bank
        granted the Company an additional deferral to July 15, 2007 with interest
        at the
        rate of 1.4 times the central bank rate from the settlement due date to the
        actual date of payment, and subsequent to June 30, 2007 has granted the Company
        an additional deferral. (Note 19).
  F-16
 **SINOBIOMED
          INC.**
 **AND
          CONSOLIDATED SUBSIDIARIES**
 ***Notes
          to Consolidated Financial Statements***
 ***June
          30, 2007***
 ***(Expressed
          in US Dollars)***
 ***Unaudited
          - Prepared by Management***
 
 The
        Company has been sued by the Shenzhen Development Bank to enforce payment
        under
        the loan agreement with that bank and judgment was granted in favor of the
        bank
        by the 1st Secondary People’s Court of Shanghai. On October 25, 2006 the Company
        and the bank entered into a settlement agreement to settle the litigation
        and
        the debt. The debt at that time had a principal balance of 17,800,000 yuan
        (approximately $US 2,205,000). Under the terms of the settlement agreement,
        the
        Company is obligated to pay the bank 5 million yuan (approximately $US 620,000)
        before October 30, 2006, 3 million yuan (approximately $US 394,000) before
        March
        20, 2007, 3 million yuan (approximately $US 394,000) before June 20, 2007,
        3
        million yuan (approximately $US 394,000) before September 20, 2007 and 3.8
        million yuan (approximately $US 499,000) plus the balance of accrued interest
        before December 20, 2007. The Company made a payment of 5 million yuan in
        compliance with the settlement agreement in
        December 2006. The
        Company defaulted on the settlement agreement by not making the scheduled
        loan
        payment of 3 million yuan (approximately $US 394,000) on March 20, 2007.
        The
        bank has granted a waiver of default in respect of this payment until May
        30,
        2007. The Company made the payment due May 30 and has defaulted on the payment
        of 3
        million
        yuan (approximately $US 394,000) due before June 20, 2007 .
 
 **10.
        SHAREHOLDER LOANS**
 
 The
        loans
        from shareholders do not bear interest. $1,636,485 payable to a shareholder
        of a
        subsidiary is due December 31, 2007 and the remainder have no stated repayment
        terms. Imputed interest has been recorded on the shareholder loans at an
        interest rate of 5.31%. The net interest calculated is included in interest
        expense and has been recorded as additional paid-in capital since the imputed
        interest is not payable.
 
 **11.**  **RELATED
        PARTY TRANSACTIONS**
 
 The
        Company is indebted to the minority shareholder of a subsidiary in the amount
        of
        $1,636,485.
 
 The
        Company is indebted to three shareholders in amounts of 4,740,000 yuan
        (approximately $623,000), $300,000 and $10,000.
 
 Two
        minority shareholders of a subsidiary are indebted to the Company in the
        amount
        of $120,600. The Company has provided an allowance for the full amount of
        this
        indebtedness.
 
 The
        Company has paid the residential rent in Shanghai as part of the remuneration
        for the Chief Executive Officer of the Company for the months of January
        through
        June 2007 in the amount of 132,000 Chinese yuan (approximately
        $17,000).
 
  F-17
 **SINOBIOMED
          INC.**
 **AND
          CONSOLIDATED SUBSIDIARIES**
 ***Notes
          to Consolidated Financial Statements***
 ***June
          30, 2007***
 ***(Expressed
          in US Dollars)***
 ***Unaudited
          - Prepared by Management***
  **12.
          INCOME TAXES**
 The
        Company is subject to Chinese income taxes to the extent of its operations
        in
        China and in the United States should it ever have operations in the United
        States. The company had no income tax expense during the reported periods
        due to
        net operating losses.
 
 A
        reconciliation of income tax expense to the amount computed at the statutory
        rates is as follows:
  June
                  30, 2007Loss
                  for the six months to June 30, 2007
              
              $
              (4,089,822
              )Average
                  statutory tax rate in China
              
              
              33
              %Expected
                  income tax provision
              
              $
              (1,349,641
              )Tax
                  basis of deferred expenses in excess of book cost
              
              
              632,081Unrecognized
                  tax losses
              
              
              717,560Income
                  tax expense
              
              $
              —
 
 Significant
        components of deferred income tax assets are as follows:
  June
                  30, 2007Operating
                  losses carried forward
              
              
              4,243,545Excess
                  of tax basis over book cost of deferred expenses in China
              
              $
              4,553,993Valuation
                  allowance
              
              
              (8,797,537
              )Net
                  deferred income tax assets
              
              $
              —
 
 The
        Company has tax losses carried forward for Chinese tax purposes of approximately
        $12,860,000 which will expire in 2012 if not utilized.
 
 **13.
        COMMON STOCK**
 
 On
        January 12, 2007 the Company issued 1,750,000 pre forward stock split shares
        of
        common stock (equivalent to 70,000,000 post-forward stock split shares) to
        the
        former shareholders of Wanxin BVI in return for all the outstanding shares
        of
        Wanxin BVI as described in Note 1.
  F-18
 **SINOBIOMED
            INC.**
 **AND
            CONSOLIDATED SUBSIDIARIES**
 ***Notes
            to Consolidated Financial Statements***
 ***June
            30, 2007***
 ***(Expressed
            in US Dollars)***
 ***Unaudited
            - Prepared by Management***
 On
        March
        1, 2007 the Company increased it authorized capital from 50,000,000 common
        shares to 250,000,000 common shares.
 
 On
        March
        2, 2007 the Company forward split its common stock on a 40-for-1
        basis.
 
 On
        March
        9, 2007 the Company cancelled 76,000,000 (post forward stock split) common
        shares pursuant to the surrender for cancellation of those shares by the
        former
        majority shareholder of the Company.
  On
        March
        22, 2007, the Company issued 100,000 (post forward stock split) shares of
        common
        stock in return for the services of the Company’s Chief Financial Officer for
        the 12 months commencing January 1, 2007. The Company recognized an issue
        price
        for the shares of $0.854 per share, reflecting a discount from market price
        on
        that date due to there being a one-year hold period before the shares can
        be
        sold.
 
 On
        May
        14, 2007, the Company issued 2,074,668 units (each a “Unit”) to 36
        individuals/entities due to the closing of the Company’s private placement at
        $0.75 per Unit for total gross proceeds of $1,556,001. Each Unit consists
        of one
        share of common stock of the Company and one-half of one share purchase warrant,
        with each whole warrant entitling the holder to purchase one additional share
        of
        common stock of the Company at $1.25 per warrant share until May 14, 2009.
 
 In
        addition, on May 14, 2007, the Company issued 1,623,000 units (each a “Unit”) to
        44 individuals/entities due to the closing of the first part of the Company’s
        private placement at $1.00 per Unit for total gross proceeds of $1,623,000.
        Each
        Unit consists of one share of common stock of the Company and one-half of
        one
        share purchase warrant, with each whole warrant entitling the holder to purchase
        one additional share of common stock of the Company at $1.75 per warrant
        share
        until May 14, 2009.
 
 On
        May
        24, 2007, the Company issued 3,500,000 units (each a “Unit”) to 2
        individuals/entities due to the closing of the second traunche of the Company’s
        private placement at $1.00 per Unit for total gross proceeds of $3,500,000.
        Each
        Unit consists of one share of common stock of the Company and one-half of
        one
        share purchase warrant, with each whole warrant entitling the holder to purchase
        one additional share of common stock of the Company at $1.75 per warrant
        share
        until May 24, 2009.
 
 In
        addition, on May 30, 2007, the Company issued 3,000,000 units (each a “Unit”) to
        4 individuals/entities due to the closing of the third and fourth traunches
        of
        the Company’s private placement at $1.00 per Unit for total gross proceeds of
        $3,000,000. Each Unit consists of one share of common stock of the Company
        and
        one-half of one share purchase warrant, with each whole warrant entitling
        the
        holder to purchase one additional share of common stock of the Company at
        $1.75
        per warrant share until May 30, 2009.
 
 In
        relation to the private placements entered into with the offshore investors,
        the
        Company has paid cash finders’ fees in the amount of $871,875 and finders’ fees
        in the form of 85,000 shares.
  F-19
 **SINOBIOMED
          INC.**
 **AND
          CONSOLIDATED SUBSIDIARIES**
 ***Notes
          to Consolidated Financial Statements***
 ***June
          30, 2007***
 ***(Expressed
          in US Dollars)***
 ***Unaudited
          - Prepared by Management***
  As
        of
        June 30, 2007, the Company has received payment for subscriptions to purchase
        392,800 units (each a “Unit”) of the Company at a price of $1.25 per Unit for
        total proceeds of $491,000. Each Unit consists of one (post forward stock
        split)
        share of common stock of the Company and one-half of one share purchase warrant
        (each a “Warrant”). Each whole Warrant entitles the holder thereof to acquire
        one additional share of common stock of the Company at an exercise price
        of
        $2.00 per share with an expiry date of two years from the date of issuance
        of
        the Warrants.
 
 **14.
        OTHER INCOME**
 
 Other
        income includes $129,600 in revenue from product licensing and $27,446 in
        grant
        revenue received as funding assistance toward the research and development
        of
        the Company’s malaria vaccine.
 
 **15.
        STOCK-BASED COMPENSATION**
 
 The
        Company’s 2006 Stock Option and Incentive Plan (the “Plan”) allows the Company
        to award stock options for up to 10,000,000 (post-forward stock split) shares
        to
        its directors, officers, employees, and consultants. The plan is administered
        by
        the Company’s Board of Directors, or its assigned committee, who has discretion
        as to the awards and terms of the options to be issued. Upon exercise of
        options, shares are issued from treasury.
  On
        March
        1, 2007, 6,000,000 stock options were granted under the Plan with the exercise
        price of $0.50 per share. 300,000 of 6,000,000 options vested on March 1,
        2007
        with the reminder to vest in equal monthly proportions on the first day of
        each
        of the next 19 months.
 
 On
        May
        30, 2007, 1,000,000 stock options were granted under the Plan with the exercise
        price of $1.90 per share. 500,000 of 1,000,000 options will vest on June
        1, 2009
        with the reminder to vest on June 1, 2011.
 
 A
        summary
        of the Company’s stock option activities is presented below:
 
 Number
                  of options
              
              Weighted
                  Average Exercise Price
              
              Weighted
                  Average Grant-date Fair Value
              
              Aggregate
                  Intrinsic Value**Options
                  Outstanding**,
                  January 1, 2007Options
                  granted:
              
              
              6,000,000
              
              
              0.50
              
              
              0.758
              
              $
              4,545,364**Options
                  Outstanding**,
                  March 31, 2007
              
              
              6,000,000
              
              
              0.50
              
              
              0.758
              
              $
              4,545,364Options
                  granted:
              
              
              1,000,000
              
              
              1.90
              
              
              0.829
              
              $
              828,928**Options
                  Outstanding**,
                  June 30, 2007
              
              
              7,000,000
              
              
              0.70
              
              
              0.768
              
              $
              5,374,292
  F-20
 **SINOBIOMED
            INC.**
 **AND
            CONSOLIDATED SUBSIDIARIES**
 ***Notes
            to Consolidated Financial Statements***
 ***June
            30, 2007***
 ***(Expressed
            in US Dollars)***
 ***Unaudited
            - Prepared by Management***
 Compensation
        cost related to options to vest in the future will be recognized as the related
        options vest. Outstanding options vest as follows:
  Weighted
              
              Aggregate IntrinsicExercise
                  Price
              
              Number
              
              Average
                  Exercise
              
              ValueVested
                  at June 30,
              
              
              
              
              
              of
                  Shares
              
              
              Price2007
                  and earlier
              
              
              0.50
              
              
              1,500,000
              
              
              0.50
              
              $
              1,136,341Remainder
                  of 2007
              
              
              0.50
              
              
              1,800,000
              
              
              0.50
              
              
              1,363,6092008
              
              
              0.50
              
              
              2,700,000
              
              
              0.50
              
              
              2,045,4142009
              
              
              1.90
              
              
              500,000
              
              
              1.90
              
              
              414,4642011
              
              
              1.90
              
              
              500,000
              
              
              1.90
              
              
              414,4647,000,000
              
              
              
              
              $
              5,374,292
 
 Non-vested
        options are as follows:
 
 Number
                outstanding
              
              Total
                  fair value
              
              Weighted
                  average grant-date fair valueNon-vested
                  options outstanding, April 1, 2007
              
              
              5,400,000
              
              $
              4,090,828
              
              
              0.758Non-vested
                  options outstanding, June 30, 2007
              
              
              5,500,000
              
              $
              4,239,928
              
              
              0.771Options
                  vested in three months ended June 30, 2007
              
              
              900,000
              
              $
              682,200
              
              
              0.758
 
 If
        not
        previously exercised or canceled, options outstanding at June 30, 2007 will
        expire as follows:
  Range
                  of Exercise Prices
              
              Number
              
              Weighted
                  averageExpiry
                  Date
              
              High
              
              Low
              
              of
                  Shares
              
              exercise
                  priceYear
                  Ending December 31,2012
              
              
              1.90
              
              
              0.50
              
              
              7,000,000
              
              
              0.70
 
 F-21
 **SINOBIOMED
            INC.**
 **AND
            CONSOLIDATED SUBSIDIARIES**
 ***Notes
            to Consolidated Financial Statements***
 ***June
            30, 2007***
 ***(Expressed
            in US Dollars)***
 ***Unaudited
            - Prepared by Management***
  The
        fair
        values of the options granted in the three months ended June 30, 2007 were
        estimated at a value of $0.829 per share using the Black-Scholes Option Pricing
        Model with the following weighted average assumptions:
 
 Volatility:
              
              
              41.0
              %Risk-free
                  interest rate:
              
              
              4.92
              %Dividend
                  yield:
              
              
              —Expected
                  lives(years):
              
              
              5
  Option-pricing
        models require the use of highly subjective estimates and assumptions including
        the expected stock price volatility. Changes in the underlying assumptions
        can
        materially affect the fair value estimates and therefore, in management’s
        opinion, existing models do not necessarily provide reliable measure of the
        fair
        value of the Company’s stock options.
 
 **16.
        CONTINGENT PATENT RIGHTS COMMITMENTS**
 
 The
        Company has committed to payments for rights to use patented technology,
        contingent upon successful clinical trials and approval of products for
        production as follows:
 
 11
        Million yuan (approximately $1,420,000) will be payable upon completion of
        both
        Phase III clinical trials and approval of new drug certificate for Ethelphazine,
        an anti-tumor drug entering Phase III clinical trials.
 
 20
        Million yuan (approximately $2,590,000) will be payable upon completion of
        both
        Phase III clinical trials and approval of new drug certificate for the Company’s
        recombinant malaria vaccine. This drug is expected to enter Phase II clinical
        trials in later in 2007.
 
 2.5
        Million yuan (approximately $320,000) will be payable in respect of the
        Company’s recombinant Human Stem Cell factor bio-product in two stages. The
        first 1 Million yuan (approximately $129,000) will be due by the time of
        upon
        completion of Phase II trials and 1.5 Million yuan (approximately $194,000)
        will
        be payable upon completion of both Phase III clinical trials and approval
        of the
        product for production. This product is in Phase I trials.
  **17.
        SEGMENTED INFORMATION**
 
 The
        Company is operating in a single geographic market, the People’s Republic of
        China. The Company has two operating segments, the cosmetics business and
        the
        pharmaceuticals business. Segment revenues, net loss and assets are as
        follows:
  Revenues
              
              Net
                  loss
              
              Total
                  assetsPharmaceuticals
              
              $
              609,945
              
              $
              2,338,734
              
              $
              8,312,225Cosmetics
              
              
              109,598
              
              
              4,151
              
              
              122,170Parent
                  company administration
              
              
              
              
              
              1,746,937
              
              
              347,191Total
                  consolidated
              
              $
              719,543
              
              $
              4,089,822
              
              $
              8,781,586
  F-22
 **SINOBIOMED
            INC.**
 **AND
            CONSOLIDATED SUBSIDIARIES**
 ***Notes
            to Consolidated Financial Statements***
 ***June
            30, 2007***
 ***(Expressed
            in US Dollars)***
 ***Unaudited
            - Prepared by Management***
  **18.
        MANUFACTURING SHUT-DOWN**
 
 In
        December 2006, Wanxin Bio-pharmaceuticals temporarily closed its manufacturing
        facility while it underwent inspection and review for the purposes of obtaining
        a Good Manufacturing Practice (“GMP”) certificate in respect of its
        manufacturing processes for its aFGF product and renewal of the GMP
        certification for its Interferon product line. The renewal of the GMP
        certificate for Interferon products was issued May 23, 2007 for a period
        of five
        years and production of this product line was recommenced thereafter. The
        official GMP certificate for the aFGF product is expected in the third quarter
        of 2007. During the shut-down, the Company continued to sell its Interferon
        products from inventory of finished goods in stock. Production of Leflunomide,
        which is manufactured under licence by another facility, was not affected.
  **19.
        SUBSEQUENT EVENTS**
 
 On
        July
        2, 2007, the Company received a civil judgment order from the Shanghai Yangpu
        District People’s Court that the execution order of the court dated June 21,
        2004 in respect of the litigation by the
        Agriculture Bank of China as described in Note 9 has
        been
        completed and the case is closed. A recovery for forgiveness of accrued interest
        in the amount of RMB 4,091,546 (approximately $US 538,000) will be recognized
        in
        the three months ending September 30, 2007.
 
 The
        Company missed its payment of the balance of 25,941,653 yuan principal plus
        1
        million yuan interest (total approximately $US 3,540,000) due on July 15,
        2007
        under the deferred schedule to the revised settlement agreement with the
        Industrial and Commercial Bank as described in Note 9. The bank has granted
        an
        additional deferral to August 18, 2007, with interest payable from the due
        date
        under the revised settlement agreement to the actual date of payment.
 
 On
        August
        6, 2007, the Company, through Wanxing Bio-pharmaceuticals, entered into a
        formal
        equity transfer contract (the “Equity Transfer Contract”) with the equity owners
        of Suzhou Boai Medical Development Company (“Suzhou Boai”), a pharmaceutical
        distribution company organized under the laws of China, to acquire 90% of
        the
        equity in Suzhou Boai in exchange for the payment of a transfer fee (the
        “Transfer Fee”) to the equity owners of Suzhou Boai.
 
 Under
        the
        Equity Transfer Contract, all the equity owners of Suzhou Boai will transfer
        all
        of their equity to Wanxing Bio-pharmaceuticals, except for one equity owner
        who
        will retain a 10% interest, for an aggregate Transfer Fee of RMB18 million
        (approximately USD$2.4 million).
 
 The
        Transfer Fee, the final determination of which is subject to a due diligence
        report, shall be two times the authorized capital of Suzhou Boai (RMB18 million,
        or approx. USD$2,400,000.00). Wanxing Bio-pharmaceuticals shall pay: (i)
        30% of
        the Transfer Fee (RMB5.4 million, or approx. USD$720,000) three days after
        signing the Equity Transfer Contract; (ii) 55% of the Transfer Fee (RMB9.9
        million, or approx. USD$1,320,000) one week after registration of the equity
        alteration; and (iii) 15% of the Transfer Fee (RMB2.7 million, or approx.
        USD$360,000) a half year after registration of the equity alteration. The
        first
        30% of the Transfer Fee was paid on August 7, 2007. After receiving 30% of
        the
        Transfer Fee, the equity owners of Suzhou Boai are responsible for obtaining
        government administrative approval and registering the equity
        alteration.
  Suzhou
        Boai Medical Development Company is a pharmaceutical distribution company
        located in Suzhou, China engaged in the wholesale supply of biological products,
        chemical medicines and Chinese traditional medicine. Suzhou Boai has been
        Good
        Supply Practice certified by the Chinese State Food and Drug Administration
        and
        has two 100% owned subsidiaries, Suzhou Boai Vaccine Sales Co., Ltd. which
        sells
        vaccines, and Suzhou Boai Medical Instrument Co., Ltd. which sells medical
        instruments.
  F-23




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




You
      should read the following plan of operation together with our financial
      statements and related notes appearing elsewhere in this quarterly report.
      This
      plan of operation contains forward-looking statements that involve risks,
      uncertainties, and assumptions. The actual results may differ materially from
      those anticipated in these forward-looking statements as a result of certain
      factors, including, but not limited to, those presented under “Risk Factors” in
      the Form 10-KSB/A filed with the SEC on EDGAR on April 17, 2007.




**Overview**





As
      from
      the inception of the Company and until the end of November 2006 we were in
      business of developing a Patent known as the "Car Door Safety Feature", however,
      we determined to change our business plan from the development of the Car Door
      Safety Feature Patent and began focusing around the Chinese biopharmaceutical
      industry. On January 12, 2007, the Company completed the reverse merger of
      Wanxin Bio-Technology Limited (“Wanxin”) and all the subsidiaries of Wanxin in
      accordance with the Share Purchase Agreement, whereby the Company acquired
      100%
      of the issued and outstanding shares in the capital of Wanxin (the “Wanxin
      Capital”), through the issuance of 1,750,000 (pre forward stock split) shares of
      common stock of the Company in aggregate to the shareholders of Wanxin on a
      pro
      rata basis in accordance with each Wanxin shareholder’s percentage of ownership
      in Wanxin.





Wanxin
      is
      a company incorporated
      under the laws of the British Virgin Islands. Its only asset at the time of
      the
      reverse merger was 100% ownership of Manhing Enterprises Limited (“Manhing”), a
      company incorporated under the laws of Hong Kong. Manhing’s only asset was 82%
      ownership of Shanghai
      Wanxing Bio-pharmaceuticals Co., Ltd. (“Wanxing Bio-Pharmaceuticals”), a Sino-
      Foreign Joint Venture company incorporated with limited liability under the
      laws
      of the People’s Republic of China. Wanxing Bio-Pharmaceuticals’ business is
      research, development, manufacture and sale of pharmaceutical products,
      primarily for the Chinese market. There are two product lines currently
      manufactured and sold as at June 30, 2007 and several other potential products
      in various stages of research and development. The product lines currently
      sold
      are Wanferon/Wanferin, formulations of recombinant human interferon for treating
      hepatitis and viral diseases and Leflunomide, a drug for the treatment of
      rheumatoid arthritis. Wanxing Bio-Pharmaceuticals received a new drug licence
      for a third product, acidic Fibroblast Growth Factor (“aFGF”), in January 2007.
      This product will enter commercial sales when Good Manufacturing Practice
      (“GMP”) certification is received from the Chinese government. Wanxing
      Bio-Pharmaceuticals has recived verbal notification of the GMP certification,
      and awaits receipt of the formal certificate (expected imminently) before sales
      can commence. Wanxing Bio-Pharmaceuticals’ offices and manufacturing facility
      are in owned premises located on land used under license in the Pudong New
      Area
      of Shanghai, China.





Wanxing
      Bio-Pharmaceuticals is also the owner of 50.33% of Shanghai Wanxing Bio-science
      Cosmetic Co., Ltd. (“Wanxing Cosmetic”). Wanxing Cosmetic manufactures skin-care
      products under the brand name KaiYing.




**Subsequent
      Event**





The
      Company through its 82% owned subsidiary, Shanghai Wanxing Bio-pharmaceuticals
      Co., Ltd. (“Shanghai Wanxing”), entered into a formal equity transfer contract
      (the “Equity Transfer Contract”) with the equity owners of Suzhou Boai Medical
      Development Company (“Suzhou Boai”), a pharmaceutical distribution company
      organized under the laws of the P.R. China, to acquire 90% of the equity in
      Suzhou Boai in exchange for the payment of a transfer fee (the “Transfer Fee”)
      to the equity owners of Suzhou Boai.





3




Under
      the
      contract, all the equity owners of Suzhou Boai will transfer all of their equity
      to Shanghai Wanxing, except for one equity owner who will retain a 10% interest,
      for an aggregate Transfer Fee of RMB18 million (approximately USD$2.4
      million).





The
      Transfer Fee, the final determination of which is subject to a due diligence
      report, shall be two times the authorized capital of Suzhou Boai (RMB18 million,
      or approx. USD$2,400,000.00). Shanghai Wanxing shall pay: (i) 30% of the
      Transfer Fee (RMB5.4 million, or approx. USD$720,000) three days after signing
      the Equity Transfer Contract, which has already been paid as of August 7, 2007;
      (ii) 55% of the Transfer Fee (RMB9.9 million, or approx. USD$1,320,000) one
      week
      after registration of the equity alteration; and (iii) 15% of the Transfer
      Fee
      (RMB2.7 million, or approx. USD$360,000) a half year after registration of
      the
      equity alteration. After receiving 30% of the Transfer Fee, which has already
      been paid, the equity owners of Suzhou Boai shall be responsible for obtaining
      government administrative approval and registering the equity
      alteration.




**Revenues**




The
      Company has revenues from the Wanferon/Wanferin product line, Leflunomide and
      the cosmetics products in the six months ended June 30, 2007. The Company also
      sells a relatively small amount of reagent, which is product completed only
      to
      the stage where it can still be made into various different recombinant protein
      based pharmaceutical products.





Wanferon/Wanferin
      sales accounted for $205,791 of sales revenue and $218,211 of cost of sales
      in
      the six months ended June 30 , 2007, as compared to $419,515 of sales revenue
      and $445,153 of cost of sales in the six months ended June 30 , 2006. The market
      for this product line is very competitive, and selling prices have been
      decreasing through the 2006 year and to date in 2007.





Leflunomide
      sales accounted for $186,624 of sales revenue and $99,533 of cost of sales
      in
      the six months ended June 30 , 2007, as compared to no sales and
      no cost of sales in the six months ended June 30 , 2006.





Cosmetics
      sales accounted for $109,598 of sales revenue and $63,641 of cost of sales
      in
      the six months ended June 30 2007, as compared to $17,947 of sales revenue
      and
      $31,371 of cost of sales in the six months ended June 30 , 2006.




**Operating
      Expenses**





Operating
      expenses increased from $1,284,500 for the six months ended June 30 2006 to
      $3,599,847 for the six months ended June 30 2007. This increase was primarily
      due to 1) an increase in General and Administrative Expenses and 2) an expense
      relating to Stock-Based Compensation, for the first time being recorded in
      2007.





1)
      General and Administrative Expenses





General
      and administrative expenses increased to $1,272,204 from $111,925 in the
      comparable period in the previous year, partially due to additional professional
      and reporting costs associated with the reverse take-over which occurred in
      the
      period and in being a public company with operating businesses. Also
      contributing to the increase in general and administrative expenses was the
      fact
      that the company has more administrative activity in 2007 associated with
      getting the aFGF product on line. In addition, the Wanxing Bio-pharmaceuticals
      manufacturing facility was been closed down between December of 2006 and May
      2007, as required by Chinese law, while that company goes through the
      application and review process for the purposes of obtaining its GMP
      certification for manufacturing of the aFGF product and renewing GMP
      certification for manufacture of the Interferon products. As a result, certain
      overhead and indirect manufacturing costs that would normally be absorbed into
      the cost of manufactured inventory have been included in expense.





2)
      Stock-based compensation





4




Stock-based
      compensation expense of $1,153,610 was recognized in the six months ended June
      30 2007 compared to $ nil in the comparable period in the previous year. The
      expense represents 1) $1,136,341 as recognition of 25% of 6,000,000 options
      with
      an aggregate value of $4,545,364 granted on March 1, 2007 in accordance with
      the
      Company’s stock option and incentive plan. Under the terms of the grant, 5% of
      the options vested immediately and another 5% vest on the first day of each
      subsequent month until October 1, 2008. and 2) $17,269 as recognition of 1
      month
      amortization pertaining to 1 million options with an aggregate value of $828,928
      granted on May 30 2007 in accordance to the terms of the Company's stock option
      and incentive plan. Under the terms of the grant, 50% of the options will vest
      on May 30 2009 and the remaining 50% on May 30 2011.




**Net
      Loss**





As
      a
      result of the increase in our operating expenses ( including the stock based
      compensation expense) our net loss for the six months ended June 30 2007 was
      $4,089,822, compared to a net loss of $1,351,496 for the six months ended June
      30 2006 (of the Wanxin subsidiaries) and the related cash used in operating
      activities in the six months ended June 30, 2007 was $1,962,751, compared to
      cash used of $74,737 for the six months ended June 30 2006.




**Liquidity
      and Capital Resources**





At
      June
      30 , 2007 we had $ 1,288,846 of cash on hand and a working capital deficiency
      of
      $17,986,479. However subsequent to June 30 2007 we have raised additional gross
      proceeds of $6,191,000 from private placements. The Company is currently in
      the
      process of raising additional funds from private placements. The Company
      believes that its cash on hand as at June 30 2007 , the funds raised subsequent
      to June 30 , and the funds it plans to raise from additional equity financing,
      and its future revenues will enable the Company to meet its working capital
      needs and its debt service requirements for the following 12 months




**ITEM
      3. Controls and Procedures**




**Disclosure
      Controls and Procedures.** The
      Company’s management, with the participation of the Company’s Chief Executive
      Officer and Chief Financial Officer, has evaluated the effectiveness of the
      Company’s disclosure controls and procedures as of the end of the period covered
      by this report. Based on such evaluation, the Chief Executive Officer and Chief
      Financial Officer have concluded that, as of the end of such period, the
      Company’s disclosure controls and procedures were effective.




**Internal
      Control over Financial Reporting.** There
      have been no changes in the Company’s internal controls over the financial
      reporting that occurred during the most recent fiscal quarter that have
      materially affected, or are reasonably likely to materially affect, our internal
      controls over financial reporting.





The
      Company has appointed Chris Metcalf who is a director of the company and a
      financial expert to serve as the head of the audit committee.





The
      Company intends to adopt a code of business conduct and ethics as an additional
      element to its financial controls and procedures in the near future





**PART
      11 - OTHER INFORMATION**




**Item
      1. Legal Proceedings**




Other
      than the litigation and settlement agreements of our newly acquired business
      as
      disclosed in the Form 8-K/A-1 filed with the SEC on January 16, 2007, under
      the
      section titled “Legal Proceedings and Settlement Agreements” from page 37 to 38,
      which information is incorporated by reference herein, there are no material
      pending legal proceedings to which we are a party or to which any of our
      property is subject and, to the best of our knowledge, no such actions against
      us are contemplated or threatened.




5




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





As
      of
      August 10, 2007, the Company has received payment for subscriptions to purchase
      4,928,800 units (each a “Unit”) of the Company at a price of $1.25 per Unit for
      total proceeds of $6,161,000. Each Unit consists of one share of common stock
      of
      the Company and one-half of one share purchase warrant (each a “Warrant”). Each
      whole Warrant entitles the holder thereof to acquire one additional share of
      common stock of the Company at an exercise price of $2.00 per share with an
      expiry date of two years from the date of issuance of the Warrants.





In
      addition, as of August 10, 2007, the Company has received payment for
      subscriptions to purchase 20,000 units (each a “Unit”) of the Company at a price
      of $1.50 per Unit for total proceeds of $30,000. Each Unit consists of one
      share
      of common stock of the Company and one-half of one share purchase warrant (each
      a “Warrant”). Each whole Warrant entitles the holder thereof to acquire one
      additional share of common stock of the Company at an exercise price of $3.00
      per share with an expiry date of two years from the date of issuance of the
      Warrants.





**Item
      3. Defaults Upon Senior Securities**





N/A





6


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





N/A




**Item
      5. Other Information**




N/A




**Item
      6. Exhibits**




(a)  Exhibit
      List


31.1
              Certificate
                  pursuant to Rule 13a-14(a)31.2
              Certificate
                  pursuant to Rule 13a-14(a)32.1
              Certificate
                  pursuant to 18 U.S.C. §135032.2
              Certificate
                  pursuant to 18 U.S.C. §135099.1
              Audit
                  Committee Charter99.2
              Audit
                  Committee Procedures for
                  Whistleblowers




7




**SIGNATURES**




Pursuant
      to the requirements of Section 13 or 15(d) 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 on this 13 day of August,
      2007




**SINOBIOMED
                INC.**
              (Registrant)By:
            /s/
                Ban Jun YangBan
                Jun YangPresident
              and
              Chief Executive Officer




Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report has
      been
      signed below by the following persons on behalf of the registrant and in the
      capacities and on the dates indicated:




**Signature**
            
            **Title**
            
            **Date**/s/
                Ban Jun YangBan
                Jun Yang
            
            President,
                CEO
              and
                Director
            
            August
                14, 2007/s/
                Ka YuKa
                Yu
            
            Secretary,
                Treasurer
              and
                Director
            
            August
                14, 2007/s/
                  Asher Zwebner
              
              Asher
                Zwebner
            
            Chief
                Financial
              Officer
            
            August
                14, 2007




8