**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON, D.C.
      20549**







**FORM
      10-QSB**




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


For
      Quarter ended March 31, 2007




**OR**




**oTRANSITION
      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 Tang 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 May 1, 2007Common
                Stock, $0.0001 par value
            115,100,000





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**
            
            
            1ITEM
                1. FINANCIAL STATEMENTS
            
            
            1ITEM
                2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
                OPERATION
            
            
            25ITEM
                3. CONTROLS AND PROCEDURES
            
            
            27ITEM
                3A(T). CONTROLS AND PROCEDURES
            
            
            27**PART
                II - OTHER INFORMATION**
            
            
            27ITEM
                1. LEGAL PROCEEDINGS
            
            
            27ITEM
                2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
                PROCEEDS
            
            
            27ITEM
                3. DEFAULTS UPON SENIOR SECUTIRIES
            
            
            28ITEM
                4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
            
            
            28ITEM
                5. OTHER INFORMATION
            
            
            29ITEM
                6. EXHIBITS
            
            
            30SIGNATURES
            
            
            31











**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.




**PART
      1. FINANCIAL INFORMATION**




**Item
      1. Financial Statements**




1




**SINOBIOMED
        INC.**
 **AND
        CONSOLIDATED SUBSIDIARIES**
   **INDEX
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 ***Unaudited-
        Prepared by Management***
  PageConsolidated
                    Balance Sheet
                
                
                3Consolidated
                    Statements of Operations
                
                
                4Consolidated
                    Statements of Cash Flows
                
                
                5Consolidated
                    Statement of Stockholders' (Deficit)
                
                
                6Notes
                    to Consolidated Financial Statements
                
                
                7




2




**SINOBIOMED
        INC.**
 **AND
        CONSOLIDATED SUBSIDIARIES**
 ***Consolidated
        Balance Sheet***
 ***(Expressed
        in US Dollars)***
 ***Unaudited-
          Prepared by Management***
   Note
                    1 - Basis of Presentation - going concern
                
                **March
                    31****2007**ASSETSCURRENT
                    ASSETSCash
                    - unrestricted
                
                $
                418,338Cash
                    - restricted (Note 3)
                
                
                19,590Accounts
                    receivable (Note 4)
                
                
                240,981Loans
                    to unrelated parties (Note 5)
                
                
                646,839Inventory
                    (Note 6)
                
                
                356,450Prepaid
                    expenses
                
                
                142,419Total
                    current assets
                
                
                1,824,617Fixed
                    assets (Note 7)
                
                
                6,752,031Total
                    assets
                
                $
                8,576,648LIABILITIES
                    AND STOCKHOLDERS' (DEFICIT)CURRENT
                    LIABILITIESShort-term
                    loans (Notes 8, 9 and 19)
                
                $
                18,848,618Accounts
                    payable
                
                
                170,803Interest
                    payable
                
                
                3,979,011Unearned
                    revenue
                
                
                92,082Shareholder
                    loans (Note 10)
                
                
                2,113,297Other
                    current liabilities
                
                
                1,656,557Total
                    current liabilities
                
                
                26,860,368COMMITMENTS
                    (Note 16)STOCKHOLDERS'
                    (DEFICIT)Common
                    stockAuthorized
                    250,000,000 shares at par value of $ .0001 eachIssued
                    and outstanding 115,100,000 shares
                
                
                11,510Additional
                    paid-in capital
                
                
                8,134,224Subscriptions
                    received
                
                
                416,000Common
                    stock to be issued
                
                
                15,375Accumulated
                    (deficit)
                
                
                (25,869,794
                )Accumulated
                    other comprehensive income (loss)
                
                
                (991,035
                )Total
                    stockholders' (deficit)
                
                
                (18,283,720
                )Total
                    liabilities and stockholders' (deficit)
                
                $
                8,576,648


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




3
 
  **SINOBIOMED
          INC.**
 **AND
          CONSOLIDATED SUBSIDIARIES**
 ***Consolidated
          Statements of Operations***
 ***(Expressed
          in US Dollars)***
 ***Unaudited-
          Prepared by Management***
  Three
                    Months Ended March 312007
                
                2006REVENUESales
                
                $
                216,002
                
                $
                167,447Cost
                    of goods sold
                
                
                156,064
                
                
                114,319Gross
                    profit
                
                
                59,938
                
                
                53,128Other
                    income (Note 14)
                
                
                156,198
                
                
                -216,136
                
                
                53,128EXPENSESAdvertising
                    and promotion
                
                
                1,523
                
                
                47Depreciation
                
                
                21,785
                
                
                24,536Freight
                
                
                1,455
                
                
                2,472General
                    and administration
                
                
                470,169
                
                
                46,613Repairs
                    and maintenance
                
                
                5,606
                
                
                3,628Research
                    and development
                
                
                492,774
                
                
                404,925Salaries
                    and benefits
                
                
                101,783
                
                
                87,109Stock-based
                    compensation (Note 15)
                
                
                454,536
                
                
                -Travel
                
                
                25,266
                
                
                10,039Total
                    expenses
                
                
                1,574,897
                
                
                579,369Net
                    (loss) for the period from operations
                
                
                (1,358,761
                )
                
                (526,241
                )OTHER
                    EXPENSESInterest
                    and bank charges (Notes 8 and 10)
                
                
                353,991
                
                
                404,889Losses
                    on loans and guarantees to other parties (Note 5)
                
                
                72,631
                
                
                46,730Net
                    (loss) for the period before minority interests
                
                
                (1,785,383
                )
                
                (977,860
                )Minority
                    interest in loss for the period
                
                
                8,039
                
                
                2,563Net
                    (loss) for the period
                
                $
                (1,777,344
                )
                $
                (975,297
                )Other
                    comprehensive income (loss)Foreign
                    currency translation
                
                $
                (175,868
                )
                
                (101,282
                )Comprehensive
                    (loss)
                
                
                (1,953,212
                )
                $
                (1,076,579
                )Net
                    (loss) per common share - basic and fully diluted:Net
                    (loss) for the period
                
                $
                (0.01
                )
                $
                (0.01
                )Weighted
                    average number of common stock outstanding162,321,111
                
                
                70,000,000
 The
            accompanying notes to the consolidated financial statements are an integral
            part
            of these statements.
  4
 
 **SINOBIOMED
              INC.**
 **AND
              CONSOLIDATED SUBSIDIARIES**
 ***Consolidated
              Statements of Cash Flows***
 ***(Expressed
              in US Dollars)***
 ***Unaudited-
              Prepared by Management***
  Three
                    Months Ended March 312007
                
                2006Cash
                    from (used in) operating activities:Net
                    (loss)
                
                $
                (1,777,344
                )
                $
                (975,297
                )Adjustments
                    to reconcile net loss to net cash used in operating
                    activities:Depreciation
                
                
                184,163
                
                
                167,912Imputed
                    interest expense on shareholders' loans
                
                
                27,439
                
                
                37,165Minority
                    interest in net loss
                
                
                (8,039
                )
                
                (2,563
                )Shares
                    issued for services
                
                
                85,400
                
                
                -Stock-based
                    compensation
                
                
                454,536
                
                
                -Net
                    change in operating assets and liabilities:Accounts
                    receivable
                
                
                20,907
                
                
                (28,998
                )Inventory
                
                
                87,188
                
                
                43,303Prepaid
                    expenses
                
                
                (112,747
                )
                
                (138,674
                )Accounts
                    payable
                
                
                (93,619
                )
                
                (3,807
                )Interest
                    payable
                
                
                360,126
                
                
                431,654Unearned
                    revenue
                
                
                16,939
                
                
                (1,611
                )Other
                    current liabilities
                
                
                146,810
                
                
                286,646Net
                    cash (used in) operating activities
                
                
                (608,241
                )
                
                (184,270
                )Cash
                    (used in) investing activities:Purchases
                    of fixed assets
                
                
                (22,208
                )
                
                (15,538
                )Proceeds
                    of disposition of fixed assets
                
                
                3,911
                
                
                -Net
                    cash (used in) investing activities
                
                
                (18,297
                )
                
                (15,538
                )Cash
                    from (used in) financing activities:Loans
                    made to unrelated parties
                
                
                (499,683
                )
                
                (138,682
                )Share
                    subscriptions received
                
                
                416,000
                
                
                -Loans
                    made to shareholders
                
                
                -
                
                
                (2,081
                )Increase
                    in short-term loans
                
                
                -
                
                
                171,828Repayments
                    of short-term loans
                
                
                (835,440
                )
                
                -Loans
                    received from shareholders
                
                
                82,676
                
                
                22,391Net
                    cash from (used in) financing activities
                
                
                (836,447
                )
                
                53,456Effect
                    of other comprehensive income (loss) on cash
                
                
                (245,367
                )
                
                (150,646
                )Increase
                    (decrease) in cash
                
                
                (1,708,352
                )
                
                (296,998
                )Cash,
                    beginning of period
                
                
                2,146,280
                
                
                779,116Cash,
                    end of period
                
                $
                437,928
                
                $
                482,118
  The
            accompanying notes to the consolidated financial statements are an integral
            part
            of these statements.
  5
 
 **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
                
                
                100,000.00
                
                
                10.00
                
                
                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
                )
  6
 
  **SINOBIOMED
            INC.**
 **AND
            CONSOLIDATED SUBSIDIARIES**
 ***Notes
            to Consolidated Financial Statements***
 ***March
            31, 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
            $25,869,794, and has negative working capital and a stockholder’s deficit as of
            March 31 ,
            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.
 
 7
 
  **SINOBIOMED
                INC.**
 **AND
                CONSOLIDATED SUBSIDIARIES**
 ***Notes
                to Consolidated Financial Statements***
 ***March
                31, 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.
 
 8
 
  **SINOBIOMED
                INC.**
 **AND
                CONSOLIDATED SUBSIDIARIES**
 ***Notes
                to Consolidated Financial Statements***
 ***March
                31, 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.
 
 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 March 31, 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 production when Good
            Manufacturing Practice (“GMP”) certification is received, expected in June 2007
            (Note 17). 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.
 
 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.
 
 9
 
  **SINOBIOMED
                INC.**
 **AND
                CONSOLIDATED SUBSIDIARIES**
 ***Notes
                to Consolidated Financial Statements***
 ***March
                31, 2007***
 ***(Expressed
                in US Dollars)***
 ***Unaudited
                - Prepared by Management***
 **Cash
            and Cash Equivalents**
 
 Cash
            equivalents comprise certain highly liquid instruments with a maturity
            of three
            months or less when purchased. As at March 31, 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 three months ended March 31, 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:
 
 10
 
  **SINOBIOMED
                INC.**
 **AND
                CONSOLIDATED SUBSIDIARIES**
 ***Notes
                to Consolidated Financial Statements***
 ***March
                31, 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 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.
 
 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.
  11
 
  **SINOBIOMED
                INC.**
 **AND
                CONSOLIDATED SUBSIDIARIES**
 ***Notes
                to Consolidated Financial Statements***
 ***March
                31, 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 March 31, 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
            three
            months ended March 31, 2007 and 2006 because common stock equivalents
            outstanding at March 31, 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 March 31,
            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 arises 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.
 
 12
 
  **SINOBIOMED
                INC.**
 **AND
                CONSOLIDATED SUBSIDIARIES**
 ***Notes
                to Consolidated Financial Statements***
 ***March
                31, 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.
 
 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.
  13
 
  **SINOBIOMED
                INC.**
 **AND
                CONSOLIDATED SUBSIDIARIES**
 ***Notes
                to Consolidated Financial Statements***
 ***March
                31, 2007***
 ***(Expressed
                in US Dollars)***
 ***Unaudited
                - Prepared by Management***
 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.
 
 14
 
  **SINOBIOMED
                INC.**
 **AND
                CONSOLIDATED SUBSIDIARIES**
 ***Notes
                to Consolidated Financial Statements***
 ***March
                31, 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 $ 19,418 on deposit to secure a letter of credit related
            to the
            purchase in April 2007 of a fixed asset and $172 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 $7,247.
 
 
 **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 $4,384,366
            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. $95,734 has been charged
            to
            income in the three months ended March 31, 2007 (2006 - $46,730) 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 $12,375 (95,634 Chinese yuan) of additional
            loans
            receivable from sales agents and employees. $214 recovery has been recognized
            in
            income in the three months ended March 31, 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 March 31, 2007. The remaining loans receivable do not bear
            interest and have no stated terms of repayment.
 
 
 **6.
            INVENTORY**
 
 Inventory
            consists of the following:
  March
                      31,
                      2007Raw
                      materials
                  
                  $
                  55,862Goods
                      in process
                  
                  
                  163,717Finished
                      goods
                  
                  
                  136,871$
                  356,450
 
 15
 
  **SINOBIOMED
                INC.**
 **AND
                CONSOLIDATED SUBSIDIARIES**
 ***Notes
                to Consolidated Financial Statements***
 ***March
                31, 2007***
 ***(Expressed
                in US Dollars)***
 ***Unaudited
                - Prepared by Management***
 **7.
            FIXED ASSETS**
 
 Fixed
            assets consist of the following:
  March
                      31,
                      2007Buildings
                  
                  $
                  5,908,823Climate
                      control equipment
                  
                  
                  1,196,570Computer
                      software
                  
                  
                  1,812Land
                      license
                  
                  
                  2,173,920Manufacturing
                      equipment
                  
                  
                  1,900,372Office
                      furniture and equipment
                  
                  
                  149,347Other
                      equipment
                  
                  
                  31,897Road
                  
                  
                  32,572Vehicles
                  
                  
                  715,14812,110,461Less:
                      Accumulated depreciation
                  
                  
                  5,358,430$
                  6,752,031
 
 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 hypoethecated 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.
 
 
 **8.
            SHORT-TERM LOANS**
 
 The
            Company has obligations under the following bank loan agreements, all
            of which
            are
 overdue
            as at March 31, 2007:
 
 16
 
  **SINOBIOMED
                INC.**
 **AND
                CONSOLIDATED SUBSIDIARIES**
 ***Notes
                to Consolidated Financial Statements***
 ***March
                31, 2007***
 ***(Expressed
                in US Dollars)***
 ***Unaudited
                - Prepared by Management***
 Name
                      of Bank
                  
                  Principal
                      amount
                    2006
                  
                  Due
                      date
                  
                  Interest
                      rate
                    Not
                      due/ overdue
                  
                  Security
                    (2)Industrial
                      and Commercial bank
                  
                  3,623,200
                  
                  May
                      25, 2004
                  
                  6.633%
                      / 9.05%
                  
                  GuaranteeIndustrial
                      and Commercial bank
                  
                  5,168,450
                  
                  (1)
                  
                  (1)
                  
                  GuaranteeAgriculture
                      Bank
                  
                  1,503,628
                  
                  May
                      14, 2004
                  
                  5.841%
                      / 7.56%
                  
                  GuaranteeConstruction
                      Bank
                  
                  2,756,220
                  
                  October
                      16, 2004
                  
                  5.31%
                      / 7.56%
                  
                  Building
                      mortgage (3)Shenzen
                      Development Bank
                  
                  1,656,320
                  
                  June
                      6, 2005
                  
                  6.372%
                      / 9.56%
                  
                  GuaranteeIndustrial
                      Bank
                  
                  4,140,800
                  
                  December
                      19, 2005
                  
                  6.138%
                      / NA
                  
                  Guarantee18,848,618
 
 (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
                      overdue interest rate is range from
                      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 $3,235,000 (25,000,000 Chinese yuan) plus interest.
                      $3,235,000
                      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 $3,840,626 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 is 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 will 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 and has subsequently
            received
            another waiver from the bank for an unspecified time (Note 19).
 
 17
 
  **SINOBIOMED
                INC.**
 **AND
                CONSOLIDATED SUBSIDIARIES**
 ***Notes
                to Consolidated Financial Statements***
 ***March
                31, 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 388,000) plus interest at the rate of 0.561% per month
            on the
            remaining balance of the first 49,145,766 (approximately $US 6,360,000)
            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 3,623,000)
            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 has 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 388,000)
            on April
            28, 2007, 2 million yuan (approximately $US 259,000) on May 10, 2007,
            10 million
            yuan (approximately $US 1,294,000) on May 15, 2007, and the balance of
            principal
            of 52.94 million yuan (approximately $US 6,850,000) plus interest of
            1 million
            (approximately $US 129,000) 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 (2,316,000) will be
            forgiven.
            If the Company does not meet this schedule, the previously-agreed payment
            schedule will still apply (Note 19).
 
 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 388,000) before
            March
            20, 2007, 3 million yuan (approximately $US 388,000) before June 20,
            2007, 3
            million yuan (approximately $US 388,000) before September 20, 2007 and
            3.8
            million yuan (approximately $US 492,000) 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 has defaulted on the settlement agreement by not making the scheduled
            loan payment of 3 million yuan (approximately $US 388,000) on March 20,
            2007.
            The bank has granted a waiver of default in respect of this payment until
            May
            30, 2007.
 
 18
 
  **SINOBIOMED
                INC.**
 **AND
                CONSOLIDATED SUBSIDIARIES**
 ***Notes
                to Consolidated Financial Statements***
 ***March
                31, 2007***
 ***(Expressed
                in US Dollars)***
 ***Unaudited
                - Prepared by Management***
 
 **10.
            SHAREHOLDER LOANS**
 
 The
            loans
            from a shareholder of a subsidiary **** do
            not
            bear interest. $2,113,297 payable to a shareholder of a subsidiary is
            due
            December 31, 2007. 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
            $2,113,297.
 
 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).
 
 
 **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:
  March
                      31, 2007Loss
                      for the year
                  
                  $
                  (1,777,344
                  )Average
                      statutory tax rate in China
                  
                  
                  33
                  %Expected
                      income tax provision
                  
                  $
                  (586,524
                  )Tax
                      basis of deferred expenses in excess of book cost
                  
                  
                  243,353Unrecognized
                      tax losses
                  
                  
                  343,171Income
                      tax expense
                  
                  $
                  --
 
 19
 
  **SINOBIOMED
                INC.**
 **AND
                CONSOLIDATED SUBSIDIARIES**
 ***Notes
                to Consolidated Financial Statements***
 ***March
                31, 2007***
 ***(Expressed
                in US Dollars)***
 ***Unaudited
                - Prepared by Management***
 Significant
            components of deferred income tax assets are as follows:
  March
                      31, 2007Operating
                      losses carried forward
                  
                  
                  3,869,156Excess
                      of tax basis over book cost of deferred expenses in China
                  
                  $
                  4,165,264Valuation
                      allowance
                  
                  
                  (8,034,420
                  )Net
                      deferred income tax assets
                  
                  $
                  -
 
 The
            Company has tax losses carried forward for Chinese tax purposes of approximately
            $11,720,000 which will expire in 2011 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.
 
 On
            March
            1, 2007 the Company increased it authorized capital from 50,000,000 common
            shares o 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.
  20
 
  **SINOBIOMED
                INC.**
 **AND
                CONSOLIDATED SUBSIDIARIES**
 ***Notes
                to Consolidated Financial Statements***
 ***March
                31, 2007***
 ***(Expressed
                in US Dollars)***
 ***Unaudited
                - Prepared by Management***
 As
            of
            March 31, 2007, the Company has received payment for subscriptions to
            purchase
            488,000 units (each a “Unit”) of the Company at a price of $0.75 per Unit for
            total proceeds of $366,000. 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
            $1.25 per share with an expiry date of two years from the date of issuance
            of
            the Warrants. In connection with this private placement the Company has
            agreed
            to pay finders fees of $6,375 and 20,500 shares of common stock to four
            individuals and one corporate entity.
 
 As
            of
            March 31, 2007, the Company has received payment for subscriptions to
            purchase
            50,000 units (each a “Unit”) of the Company at a price of $1.00 per Unit for
            total proceeds of $50,000. 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
            $1.75 per share with an expiry date of two years from the date of issuance
            of
            the Warrants. In connection with this private placement the Company has
            agreed
            to pay a finders fee of $5,000 to one corporate entity.
 
 
 **14.
            OTHER INCOME**
 
 Other
            income includes $128,900 in revenue from product licensing and $27,298
            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.
 
 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
                  
                  
                  4,545,364
 
 21
 
  **SINOBIOMED
                INC.**
 **AND
                CONSOLIDATED SUBSIDIARIES**
 ***Notes
                to Consolidated Financial Statements***
 ***March
                31, 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:
  Number
                  
                  Weighted
                    Average
                      Exercise
                  
                  Aggregate
                    IntrinsicExercise
                      Price
                  
                  of
                      Shares
                  
                  Price
                  
                  ValueVested
                        at March 31,
                    2007
                      and earlier
                  
                  
                  0.50
                  
                  
                  600,000
                  
                  
                  0.50
                  
                  
                  454,536Remainder
                      of 2007
                  
                  
                  0.50
                  
                  
                  2,700,000
                  
                  
                  0.50
                  
                  
                  2,045,4142008
                  
                  
                  0.50
                  
                  
                  2,700,000
                  
                  
                  0.50
                  
                  
                  2,045,4146,000,000
                  
                  
                  
                  
                  
                  4,545,364
 
 Non-vested
            options are as follows:
 
 Number
                      outstanding
                  
                  Total
                      fair value
                  
                  Weighted
                      average grant-date fair valueNon-vested
                      options outstanding, January 1, 2007
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -Non-vested
                      options outstanding, March 31, 2007
                  
                  
                  5,400,000
                  
                  
                  4,090,828
                  
                  
                  0.50Options
                      vested in three months ended March 31, 2007
                  
                  
                  600,000
                  
                  
                  454,536
                  
                  
                  -
 
 If
            not
            previously exercised or canceled, options outstanding at March 31, 2007
            will
            expire as follows:
  Expiry
                      Date
                  
                  Exercise
                      Price
                  
                  Number
                    of
                      Shares
                  
                  Weighted
                        average
                    exercise
                      priceYear
                      Ending December 31,2012
                  
                  
                  0.50
                  
                  
                  6,000,000
                  
                  
                  0.50
 
 22
 
  **SINOBIOMED
                INC.**
 **AND
                CONSOLIDATED SUBSIDIARIES**
 ***Notes
                to Consolidated Financial Statements***
 ***March
                31, 2007***
 ***(Expressed
                in US Dollars)***
 ***Unaudited
                - Prepared by Management***
 The
            fair
            values of the options granted in the three months ended March 31, 2007
            were
            estimated at a value of $0.758 per share using the Black-Scholes Option
            Pricing
            Model with the following weighted average assumptions:
 
 Volatility:
                  
                  44.3%Risk-free
                      interest rate:
                  
                  4.5%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 mid-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:
 
 23
 
  **SINOBIOMED
                INC.**
 **AND
                CONSOLIDATED SUBSIDIARIES**
 ***Notes
                to Consolidated Financial Statements***
 ***March
                31, 2007***
 ***(Expressed
                in US Dollars)***
 ***Unaudited
                - Prepared by Management***
 
 Revenues
                  
                  Net
                      loss
                  
                  Total
                      assetsPharmaceuticals
                  
                  $
                  300,399
                  
                  $
                  1,216,405
                  
                  $
                  8,224,238Cosmetics
                  
                  
                  71,801
                  
                  
                  8,146
                  
                  
                  116,138Parent
                      company administration
                  
                  
                  
                  
                  
                  552,793
                  
                  
                  236,272Total
                      consolidated
                  
                  $
                  372,200
                  
                  $
                  1,777,344
                  
                  $
                  8,576,648
 
 
 **18.
            MANUFACTURING SHUT-DOWN**
 
 In
            December 2006, Wanxin Bio-pharmaceuticals temporarily closed its manufacturing
            facility while it undergoes inspection and review for the purposes of
            obtaining
            a Good Manufacturing Practice (“GMP”) certificate in respect of its
            manufacturing processes for its aFGF product. In accordance with Chinese
            law,
            the manufacturing will remain halted until the GMP certificate is determined,
            which is expected to occur in June, 2007. The Company continues to sell
            its
            interferon products from inventory of finished goods in stock, and production
            of
            Leflunomide, which is manufactured under licence by another facility,
            are not
            affected.
 
 
 **19.
            SUBSEQUENT EVENTS**
 
 The
            Company has made payments of 3 million yuan (approximately $US 388,000)
            on April
            26, 2007 and 2 million yuan (approximately $US 259,000) on April 27,
            2007 to
            Industrial and Commercial Bank in compliance with the revise settlement
            agreement with that bank as described in Note 9.
 
 The
            Company has defaulted on its loan settlement agreement with Agriculture
            Bank of
            China, as described in Note 9, by not making a scheduled loan payment
            of 2
            million yuan (approximately $US 259,000) on March 31, 2007. The bank
            has granted
            a waiver of default in respect of this payment for an unspecified
            time.
 
 The
            Company has notified China Construction Bank of its inability to make
            a
            scheduled loan payment of 6.8 million yuan (approximately $US 880,000)
            on April
            30, 2007. The bank has granted a waiver of default in respect of this
            payment
            for an unspecified time.
 
 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.


24




**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”
elsewhere in this Annual Report.





**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 March 31, 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 production when Good Manufacturing Practice
      (“GMP”) certification is received from the Chinese government, expected in June
      2007. 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.




**Revenues**





The
      Company has revenues from the Wanferon/Wanferin product line and the cosmetics
      products in the three months ended March 31, 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 $124,903 of sales revenue and $111,621 of cost of sales
      in
      the three months ended March 31, 2007, as compared to $136,199 of sales revenue
      and $99,322 of cost of sales in the three months ended March 31, 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.





Cosmetics
      sales accounted for $71,801 of sales revenue and $50,200 of cost of sales in
      the
      three months ended March 31, 2007, as compared to $10,134 of sales revenue
      and
      $13,629 of cost of sales in the three months ended March 31, 2006.




25




There
      were no sales of the Leflunomide product, which is sold by an independent sales
      agent under license, in the three months ended March 31, 2007. The Company
      has
      an agreement with the sales agent under which the sales agent is required to
      sell a minimum amount of product each year. The sales agent did not meet its
      sales target for the first year of the agreement, which ended March 31, 2007.




**Operating
      Expenses**





Operating
      expenses increased from $572,971 for the three months ended March 31 2006 to
      $1,358,760 for the three months ended March 31 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 $470,169 from $93,343 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 has been closed down since December of 2006, 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. 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





Stock-based
      compensation expense of $454,536 was recognized in the three months ended March
      31, 2007 compared to $ nil in the comparable period in the previous year. The
      expense represents recognition of 10% 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% vested on April 1, 2007. 5% of the options
      will vest on the first day of each subsequent month until October 1, 2008.




**Net
      Loss**





As
      a
      result of the increase in our operating expenses our net loss for the three
      months ended March 31, 2007 was $1,777,344, compared to a net loss of $975,297
      for the three months ended March 31, 2006 (of the Wanxin subsidiaries) and
      the
      related cash used in operating activities in the three months ended March 31,
      2007 was $608,241, compared to cash used of $184,270 for the three months ended
      March 31, 2006.




**Liquidity
      and Capital Resources**





At
      March
      31, 2007 we had $437,928 of cash on hand (including $416,000 received from
      subscriptions to acquire the Company's stock) and a working capital deficiency
      of $25,035,751. However subsequent to March 31 2007 we have raised additional
      gross proceeds of $2,763,001 from private placements. The Company is currently
      in the process of raising additional funds from private placements. The Company
      believes that the funds raised 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 .





26




**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 ethics 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.




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





On
      January 11, 2007 we issued 1,750,000 (pre forward stock split) shares of common
      stock in connection with the closing of the acquisition of Wanxin Bio-Technology
      Limited in accordance with the Share Purchase Agreement between the Company,
      Wanxin Bio-Technology Limited and the shareholders of Wanxin Bio-Technology
      Limited, dated December 21, 2006. We believe that such issuance is exempt from
      registration as the securities were issued to the individuals/entities in an
      offshore transaction which was negotiated and consummated outside of the United
      States.




In
      addition, on March 22, 2007, we issued 100,000 (post forward stock split) shares
      of common stock in accordance with the Corporate Consulting Services Agreement
      between the Company and Asher Zwebner, dated effective January 1, 2007. We
      believe that such issuance is exempt from registration as the securities were
      issued to the individuals/entities in an offshore transaction which was
      negotiated and consummated outside of the United States.




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.
      The
      Company believes that some of the issuances are exempt from registration under
      Regulation D Rule 506 and Section 4(2) of the Securities Act of 1933, as amended
      (the “Act”). In addition, the Company believes that the remaining issuances are
      exempt from registration under Regulation S promulgated under the Act as the
      securities were issued to the individuals/entities through an offshore
      transaction which was negotiated and consummated outside of the United States.




27




In
      relation to the Company’s private placement offering at $0.75 per Unit entered
      into with the offshore investors only, the Company will be paying: (i) a cash
      finder’s fee in the amount of $20,625 to Windsor Venture Capital Pte. Ltd. of
      Singapore; (ii) a finder’s fee of $36,000 in cash and 48,000 shares of common
      stock of the Company to Rita Chou of Singapore; (iii) a finder’s fee of $12,375
      in cash and 16,500 shares of common stock of the Company to Dennis Tan of the
      Philippines; (iv) a finder’s fee $1,500 in cash to Jim McFarland of Vancouver,
      B.C.; (v) a finder’s fee of 15,000 shares of common stock of the Company to
      Josephine Tang of Malaysia; and (vi) a finder’s fee of $375 in cash and 500
      shares of common stock of the Company to Jamie Liu of Hong Kong. The Company
      believes that the finder’s fee share issuances are exempt from registration
      under Regulation S promulgated under the Act as the securities were issued
      to
      the individuals through an offshore transaction which was negotiated and
      consummated outside of the United States.





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. The Company believes that one of the issuances is exempt
      from registration under Regulation D Rule 506 and Section 4(2) of the Securities
      Act of 1933, as amended (the “Act”). In addition, the Company believes that the
      remaining issuances are exempt from registration under Regulation S promulgated
      under the Act as the securities were issued to the individuals/entities through
      an offshore transaction which was negotiated and consummated outside of the
      United States.





In
      relation to the Company’s private placement offering at $1.00 per Unit entered
      into with the offshore investors only, the Company will be paying: (i) a cash
      finder’s fee in the amount of $145,500 to Windsor Venture Capital Pte. Ltd. of
      Singapore; and (ii) a finder’s fee of $5,500 in cash and 5,500 shares of common
      stock of the Company to Dennis Tan of the Philippines. The Company believes
      that
      the finder’s fee share issuance is exempt from registration under Regulation S
      promulgated under the Act as the securities were issued to the individual
      through an offshore transaction which was negotiated and consummated outside
      of
      the United States.





**Item
      3. Defaults Upon Senior Securities**





N/A





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





On
      March
      1, 2007, the Company held its annual meeting of stockholders whereby the
      following corporate actions were all approved by holders of a majority of the
      issued and outstanding shares of the Company:




1.
            Amendment
                to the Certificate of Incorporation to effectuate a name change of
                the
                Company to “Sinobiomed Inc.”;




2.
            Amendment
                to the Certificate of Incorporation to effectuate an increase in
                the
                authorized shares of common stock from 50,000,000 to
                250,000,000;




3.
            Forward
                Stock Split of the Company’s issued and outstanding shares of common stock
                on a basis of forty (40) new shares for each one (1) old
                share;




4.
            Amendment
                of the Company’s By-Law Article IV, Section 5 to read as
                follows:




“Whenever
      shareholders are required or permitted to take any action by vote, such action
      may be taken without a meeting on written consent, setting for the action so
      taken, signed by the holders of a majority of outstanding shares entitled to
      vote thereon.”;




28




5.
            Election
                of Messrs. Ban-Jun Yang, Ka Yu, Robert Ip, Chris Metcalf and Kim
                Kiat Ong
                as Directors of the Company to hold office until the next annual
                meeting
                of stockholders or until their successors are elected or
                appointed;




6.
            Ratification
                of the appointment of Schumacher & Associates, Inc. as the Company’s
                independent registered public accountants for the fiscal year ended
                December 31, 2006; and




7.
            Ratification
                of the adoption of the 2006 Stock Option and Incentive Plan for key
                personnel of the Company.




**Item
      5. Other Information**




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.
      The
      Company believes that some of the issuances are exempt from registration under
      Regulation D Rule 506 and Section 4(2) of the Securities Act of 1933, as amended
      (the “Act”). In addition, the Company believes that the remaining issuances are
      exempt from registration under Regulation S promulgated under the Act as the
      securities were issued to the individuals/entities through an offshore
      transaction which was negotiated and consummated outside of the United States.





In
      relation to the Company’s private placement offering at $0.75 per Unit entered
      into with the offshore investors only, the Company will be paying: (i) a cash
      finder’s fee in the amount of $20,625 to Windsor Venture Capital Pte. Ltd. of
      Singapore; (ii) a finder’s fee of $36,000 in cash and 48,000 shares of common
      stock of the Company to Rita Chou of Singapore; (iii) a finder’s fee of $12,375
      in cash and 16,500 shares of common stock of the Company to Dennis Tan of the
      Philippines; (iv) a finder’s fee $1,500 in cash to Jim McFarland of Vancouver,
      B.C.; (v) a finder’s fee of 15,000 shares of common stock of the Company to
      Josephine Tang of Malaysia; and (vi) a finder’s fee of $375 in cash and 500
      shares of common stock of the Company to Jamie Liu of Hong Kong. The Company
      believes that the finder’s fee share issuances are exempt from registration
      under Regulation S promulgated under the Act as the securities were issued
      to
      the individuals through an offshore transaction which was negotiated and
      consummated outside of the United States.





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. The Company believes that one of the issuances is exempt
      from registration under Regulation D Rule 506 and Section 4(2) of the Securities
      Act of 1933, as amended (the “Act”). In addition, the Company believes that the
      remaining issuances are exempt from registration under Regulation S promulgated
      under the Act as the securities were issued to the individuals/entities through
      an offshore transaction which was negotiated and consummated outside of the
      United States.





In
      relation to the Company’s private placement offering at $1.00 per Unit entered
      into with the offshore investors only, the Company will be paying: (i) a cash
      finder’s fee in the amount of $145,500 to Windsor Venture Capital Pte. Ltd. of
      Singapore; and (ii) a finder’s fee of $5,500 in cash and 5,500 shares of common
      stock of the Company to Dennis Tan of the Philippines. The Company believes
      that
      the finder’s fee share issuance is exempt from registration under Regulation S
      promulgated under the Act as the securities were issued to the individual
      through an offshore transaction which was negotiated and consummated outside
      of
      the United States.




29




On
      May
      14, 2007, the Board of Directors appointed Professor Zhi-Xin Wang as a director
      of the Company effective forthwith and to remain as a director until the next
      annual general meeting of the Company or until his successor is elected or
      appointed.





From
      2004
      to present, Mr. Zhi-Xin Wang has been a professor at the Department of
      Biological Sciences and Biotechnology at Tsinghua University, P.R. China. From
      1999 to 2003, Mr. Wang was a director for the Institute of Biophysics at
      Academia Sinica, P.R. China. From 1997 to 2003, Mr. Wang was also a director
      for
      the National Laboratory of Biomacromolecules, P.R. China. From 1993 to 2003,
      Mr
      Wang was a professor at the Institute of Biophysics at Academia Sinica, P.R.
      China. Mr. Wang is the Chair of the Chinese Society of Biochemistry and
      Molecular Biology. Mr. Wang is a member of the Chinese Society of Biophysics
      as
      well as the Chinese Academy of Sciences. In addition, Mr. Wang is a fellow
      of
      the Third World Academy of Sciences. Mr. Wang received his Bachelors of Science
      (Chemistry) from the University of Tsinghua in Beijing, P.R. China in 1977
      and
      received his Ph.D. (Biochemistry) from the Institute of Biophysics at Academia
      Sinica, P.R. China in 1988. Mr. Wang has not been a director or officer of
      any
      other reporting issuer.







**Item
      6. Exhibits**




(a)
            Exhibit List31.1
            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
            Consulting
                Agreement between Sinobiomed Inc. and Dr. Dicken S.C. Ko, dated April
                12,
                200799.2
            Audited Financial Statements of Wanxin
              BioTechnology Limted for the fiscal year ended December 31 2006




30




**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 18 day of May,
      2007




**SINOBIOMED
                INC.**
              (Registrant)By:Ban
                Jun Yang
              President
                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**Ban
                Jun Yang
            
            President,
                CEO and Director
            
            May
                18, 2007Ka
                Yu
            
            Secretary,
                Treasurer and Director
            
            May
                18, 2007Asher
                Zwebner
            
            Chief
                Financial Officer
            
            May
                18, 2007




31