**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON, D.C.
      20549**









**FORM
      10-Q**




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


For
      the
      quarterly period ended September 30, 2008




**OR**




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


For
      the
      transition period
      from                to




Commission
      File Number 333-128399





**SINOBIOMED
      INC.**




(Exact
      Name of Registrant as Specified in its Charter)




**Delaware**
            **20-1945139****(State
                or other Jurisdiction of Incorporation or**
              **Organization)**
            **(IRS
                Employer**
              **Identification
                Number)****Lane
                4705, No. 58, North Yang Gao Rd.**
              **Pudong
                New Area Shanghai**
              **China**
            **201206****(Address
                of Principal Executive Offices)**
            **(Zip
                Code)****011-86-21-58546923**
              **(Registrant's
                Telephone Number, Including Area Code)****N/A**
              **(Former
                name, former address and former fiscal year, if changed since last
                report)**





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 large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company.
      See
      the definitions of “large accelerated filer,” “accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act.





Large
      accelerated filer o      Accelerated filer o


Non-accelerated
      filer o (Do not check if a smaller
      reporting company) Smaller reporting company x





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 October 31, 2008Common
                  Stock, $0.0001 par value
              131,422,086




ii




**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 AND RESULTS OF
                OPERATIONS
            
            17ITEM
                3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
                RISK
            
            20ITEM
                4. CONTROLS AND PROCEDURES
            
            21**PART
                II – OTHER INFORMATION**
            
            21ITEM
                1. LEGAL PROCEEDINGS
            
            21ITEM
                1A. RISK FACTORS
            
            22ITEM
                2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
                PROCEEDS
            
            37ITEM
                3. DEFAULTS UPON SENIOR SECUTIRIES
            
            38ITEM
                4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
            
            38ITEM
                5. OTHER INFORMATION
            
            38ITEM
                6. EXHIBITS
            
            39SIGNATURES
            
            40




iii




**Forward
      Looking Statements**




This
      quarterly report on Form 10-Q 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 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**


**SINOBIOMED
        INC.**
 **AND
        CONSOLIDATED SUBSIDIARIES**
  **INDEX
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 ***Unaudited
        - Prepared by Management***
 
 PageConsolidated
                  Balance Sheet
              2Consolidated
                  Statements of Operations
              3Consolidated
                  Statements of Cash Flows
              4Consolidated
                  Statement of Stockholders' (Deficit)
              5Notes
                  to Consolidated Financial Statements
              6
  1
 **SINOBIOMED
        INC.**
 **AND
        CONSOLIDATED SUBSIDIARIES**
 ***Consolidated
        Balance Sheet***
 ***(Expressed
        in US Dollars)***
 ***Unaudited-
        Prepared by Management***
  Note
        1 -
        Basis of Presentation - going concern
 **September 30**
              
              **December 31****2008**
              
              **2007**ASSETSCURRENT
                  ASSETSCash
                  - unrestricted
              
              $
              346,731
              
              $
              64,866Cash
                  - restricted (Note 3)
              
              
              197
              
              
              184Accounts
                  receivable (Note 4)
              
              
              69,766
              
              
              48,071Inventory
                  (Note 6)
              
              
              1,211,039
              
              
              893,402Prepaid
                  expenses and deposits
              
              
              198,063
              
              
              428,841Total
                  current assets
              
              
              1,825,796
              
              
              1,435,364Fixed
                  assets (Note 7)
              
              
              6,529,246
              
              
              6,658,831Total
                  assets
              
              $
              8,355,042
              
              $
              8,094,195LIABILITIES
                  AND STOCKHOLDERS' (DEFICIT)CURRENT
                  LIABILITIESShort-term
                  loans (Notes 8 and 9)
              
              $
              6,492,158
              
              $
              7,105,118Accounts
                  payable
              
              
              991,679
              
              
              824,706Interest
                  payable
              
              
              2,424,208
              
              
              1,918,408Unearned
                  revenue
              
              
              317,071
              
              
              170,471Shareholder
                  loans (Note 10)
              
              
              3,883,528
              
              
              2,176,526Other
                  current liabilities
              
              
              2,047,781
              
              
              1,986,284Total
                  current liabilities
              
              
              16,156,425
              
              
              14,181,513Convertible
                  debentures (Note 11)
              
              
              350,000
              
              
              -Total
                  liabilities
              
              
              16,506,425
              
              
              14,181,513COMMITMENTS
                  AND CONTINGENCIES (Notes 1, 2, 3, 4, 5, 8, 9, 10, 11, 12, 13, 15,
                  17 and
                  19)STOCKHOLDERS'
                  (DEFICIT)Common
                  stock (Note 14)Authorized
                  250,000,000 shares at par value of $ 0.0001 each Issued and outstanding
                  131,422,086 shares (2007 - 131,312,086)
              
              
              13,143
              
              
              13,132Additional
                  paid-in capital
              
              
              29,084,356
              
              
              26,127,797Accumulated
                  (deficit)
              
              
              (35,476,143
              )
              
              (30,761,870
              )Accumulated
                  other comprehensive income (loss)
              
              
              (1,772,739
              )
              
              (1,466,377
              )Total
                  stockholders' (deficit)
              
              
              (8,151,383
              )
              
              (6,087,318
              )Total
                  liabilities and stockholders' (deficit)
              
              $
              8,355,042
              
              $
              8,094,195
 
 The
        accompanying notes to the consolidated financial statements are an integral
        part
        of these statements.
  2
  **SINOBIOMED
        INC.**
 **AND
        CONSOLIDATED SUBSIDIARIES**
 ***Consolidated
        Statements of Operations***
 ***(Expressed
        in US Dollars)***
 ***Unaudited-
        Prepared by Management***
 
 Three Months Ended September 30
              
              Nine Months Ended September 302008
              
              2007
              
              2008
              
              2007REVENUESales
              
              $
              293,853
              
              $
              221,975
              
              $
              827,174
              
              $
              784,472Cost
                  of goods sold
              
              
              239,166
              
              
              111,043
              
              
              473,029
              
              
              499,829Gross
                  profit
              
              
              54,687
              
              
              110,932
              
              
              354,145
              
              
              284,643Other
                  income
              
              
              99,124
              
              
              33,142
              
              
              582,079
              
              
              190,188153,811
              
              
              144,074
              
              
              936,224
              
              
              474,831EXPENSESAdvertising
                  and promotion
              
              
              67
              
              
              562
              
              
              575
              
              
              3,227Depreciation
              
              
              53,557
              
              
              45,099
              
              
              161,056
              
              
              89,709General
                  and administration
              
              
              344,990
              
              
              616,453
              
              
              1,195,055
              
              
              2,226,892Repairs
                  and maintenance
              
              
              11,029
              
              
              13,980
              
              
              37,147
              
              
              31,879Research
                  and development
              
              
              76,793
              
              
              246,252
              
              
              264,531
              
              
              942,396Salaries
                  and benefits
              
              
              156,194
              
              
              177,209
              
              
              521,992
              
              
              448,469Stock-based
                  compensation (Note 15)
              
              
              928,570
              
              
              733,612
              
              
              2,762,886
              
              
              1,887,222Travel
              
              
              19,804
              
              
              117,694
              
              
              65,965
              
              
              256,114Total
                  expenses
              
              
              1,591,004
              
              
              1,950,861
              
              
              5,009,207
              
              
              5,885,908Net
                  (loss) for the period from operations
              
              
              (1,437,193
              )
              
              (1,806,787
              )
              
              (4,072,983
              )
              
              (5,411,077
              )OTHER
                  INCOME AND EXPENSESInterest
                  and bank charges (Notes 8, 9 and 10)
              
              
              (121,980
              )
              
              (151,632
              )
              
              (395,638
              )
              
              (833,292
              )Gain
                  on forgiveness of interest on debt
              
              
              -
              
              
              2,284,194
              
              
              -
              
              
              2,284,194(Losses)
                  on loans and guarantees to other parties (Note 5)
              
              
              (80,415
              )
              
              (36,758
              )
              
              (245,652
              )
              
              (183,869
              )Net
                  income (loss) for the period before minority interests
              
              
              (1,639,588
              )
              
              289,017
              
              
              (4,714,273
              )
              
              (4,144,044
              )Minority
                  interest in loss for the period
              
              
              -
              
              
              -
              
              
              -
              
              
              8,039Net
                  income (loss) for the period
              
              $
              (1,639,588
              )
              $
              289,017
              
              $
              (4,714,273
              )
              $
              (4,136,005
              )Other
                  comprehensive income (loss)Foreign
                  currency translation
              
              $
              909
              
              
              (78,658
              )
              $
              (306,362
              )
              
              (524,696
              )Comprehensive
                  income (loss)
              
              
              (1,638,679
              )
              $
              210,359
              
              
              (5,020,635
              )
              $
              (4,660,701
              )Net
                  (loss) per common share - basic and fully diluted:Net
                  (loss) for the period
              
              $
              (0.01
              )
              $
              0.00
              
              $
              (0.04
              )
              $
              (0.03
              )Weighted
                  average number of common stock outstanding
              
              
              131,422,086
              
              
              126,478,571
              
              
              131,412,852
              
              
              136,622,638
  The
        accompanying notes to the consolidated financial statements are an integral
        part
        of these statements.
  3
  **SINOBIOMED
        INC.**
 **AND
        CONSOLIDATED SUBSIDIARIES**
 ***Consolidated
        Statements of Cash Flows***
 ***(Expressed
        in US Dollars)***
 ***Unaudited-
        Prepared by Management***
 
 Three Months Ended September 30
              
              Nine Months Ended September 302008
              
              2007
              
              2008
              
              2007Cash
                  from (used in) operating activities:Net
                  (loss)
              
              $
              (1,639,588
              )
              $
              289,017
              
              $
              (4,714,273
              )
              $
              (4,136,005
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Depreciation
              
              
              205,647
              
              
              194,086
              
              
              619,016
              
              
              569,887Loss
                  on disposition of fixed assets
              
              
              -
              
              
              145
              
              
              -
              
              
              6,844Imputed
                  interest expense on shareholders' loans
              
              
              50,999
              
              
              30,086
              
              
              135,934
              
              
              86,419Minority
                  interest in net income (loss)
              
              
              -
              
              
              -
              
              
              -
              
              
              (8,039
              )Shares
                  issued for services
              
              
              28,875
              
              
              -
              
              
              57,750
              
              
              85,400Stock-based
                  compensation
              
              
              928,570
              
              
              733,612
              
              
              2,762,886
              
              
              1,887,222Gain
                  on foregiveness of interest on debt
              
              
              
              
              
              (2,284,194
              )
              
              
              
              
              (2,284,194
              )Net
                  change in operating assets and liabilities:Accounts
                  receivable
              
              
              327,652
              
              
              103,907
              
              
              (21,695
              )
              
              54,935Inventory
              
              
              50,490
              
              
              (349,306
              )
              
              (317,637
              )
              
              (249,186
              )Prepaid
                  expenses and deposits
              
              
              (75,680
              )
              
              (685,688
              )
              
              230,778
              
              
              (759,193
              )Accounts
                  payable
              
              
              (31,763
              )
              
              74,881
              
              
              166,973
              
              
              306,550Interest
                  payable
              
              
              156,688
              
              
              (334,903
              )
              
              505,800
              
              
              294,177Unearned
                  revenue
              
              
              51,584
              
              
              83,602
              
              
              146,600
              
              
              86,635Other
                  current liabilities
              
              
              (198,677
              )
              
              673,603
              
              
              61,497
              
              
              624,645Net
                  cash (used in) from operating activities
              
              
              (145,203
              )
              
              (1,471,152
              )
              
              (366,371
              )
              
              (3,433,903
              )Cash
                  (used in) investing activities:Purchases
                  of fixed assets
              
              
              (24,995
              )
              
              (27,206
              )
              
              (41,942
              )
              
              (120,633
              )Proceeds
                  of disposition of fixed assets
              
              
              -
              
              
              -
              
              
              -
              
              
              3,911Net
                  cash (used in) investing activities
              
              
              (24,995
              )
              
              (27,206
              )
              
              (41,942
              )
              
              (116,722
              )Cash
                  from (used in) financing activities:Loans
                  made to unrelated parties
              
              
              -
              
              
              -
              
              
              -
              
              
              (499,683
              )Repayments
                  of loans by unrelated parties
              
              
              
              
              
              403
              
              
              
              
              
              650,798Share
                  subscriptions received
              
              
              -
              
              
              6,407,500
              
              
              -
              
              
              16,577,501Finders
                  fees paid in cash
              
              
              -
              
              
              (488,500
              )
              
              
              
              
              (1,360,375
              )Short-term
                  loans received
              
              
              -
              
              
              180,794
              
              
              
              
              
              924,700Repayments
                  of short-term loans
              
              
              -
              
              
              (3,854,286
              )
              
              (1,057,601
              )
              
              (13,136,238
              )Proceeds
                  of convertible debentures received
              
              
              350,000
              
              
              
              
              
              350,000Loans
                  received from shareholders
              
              
              80,409
              
              
              
              
              
              1,563,119
              
              
              898,693Repayments
                  of loans from shareholders
              
              
              
              
              
              (463,935
              )
              
              (20,800
              )
              
              (956,415
              )Net
                  cash from (used in) financing activities
              
              
              430,409
              
              
              1,781,976
              
              
              834,718
              
              
              3,098,981Effect
                  of other comprehensive income (loss) on cash
              
              
              (15,781
              )
              
              (677,864
              )
              
              (144,527
              )
              
              (797,639
              )Increase
                  (decrease) in cash
              
              
              244,430
              
              
              (394,246
              )
              
              281,878
              
              
              (1,249,283
              )Cash,
                  beginning of period
              
              
              102,498
              
              
              1,291,243
              
              
              65,050
              
              
              2,146,280Cash,
                  end of period
              
              $
              346,928
              
              $
              896,997
              
              $
              346,928
              
              $
              896,997
 
 The
        accompanying notes to the consolidated financial statements are an integral
        part
        of these statements.
  4
  **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
              
              Cumulative
                Other
                Comprehensive
                  Income (loss)
              
              Accumulated
                (Deficit)
              
              Stockholders'
                (Deficit)Balance
                  December 31, 2007
              
              
              131,312,086
              
              $
              13,132
              
              $
              26,127,797
              
              $
              (1,466,377
              )
              $
              (30,761,870
              )
              $
              (6,087,318
              )Issue
                  of shares for services
              
              
              110,000
              
              
              11
              
              
              57,739
              
              
              -
              
              
              -
              
              
              57,750Stock-based
                  compensation
              
              
              -
              
              
              -
              
              
              917,158
              
              
              -
              
              
              -
              
              
              917,158Imputed
                  interest on shareholders' loans
              
              
              -
              
              
              -
              
              
              35,828
              
              
              -
              
              
              -
              
              
              35,828Net
                  (loss) for the period
              
              
              -
              
              
              -
              
              
              -
              
              
              (194,382
              )
              
              (1,858,906
              )
              
              (2,053,288
              )Balance
                  March 31, 2008
              
              
              131,422,086
              
              $
              13,143
              
              $
              27,138,522
              
              $
              (1,660,759
              )
              $
              (32,620,776
              )
              $
              (7,129,870
              )Stock-based
                  compensation
              
              
              -
              
              
              -
              
              
              917,158
              
              
              -
              
              
              -
              
              
              917,158Imputed
                  interest on shareholders' loans
              
              
              -
              
              
              -
              
              
              49,107
              
              
              -
              
              
              -
              
              
              49,107Net
                  (loss) for the period
              
              
              -
              
              
              -
              
              
              -
              
              
              (112,889
              )
              
              (1,215,779
              )
              
              (1,328,668
              )Balance
                  June 30, 2008
              
              
              131,422,086
              
              $
              13,143
              
              $
              28,104,787
              
              $
              (1,773,648
              )
              $
              (33,836,555
              )
              $
              (7,492,273
              )Stock-based
                  compensation
              
              
              -
              
              
              -
              
              
              928,570
              
              
              -
              
              
              -
              
              
              928,570Imputed
                  interest on shareholders' loans
              
              
              -
              
              
              -
              
              
              50,999
              
              
              -
              
              
              -
              
              
              50,999Net
                  (loss) for the period
              
              
              -
              
              
              -
              
              
              -
              
              
              909
              
              
              (1,639,588
              )
              
              (1,638,679
              )Balance
                  September 30, 2008
              
              
              131,422,086
              
              $
              13,143
              
              $
              29,084,356
              
              $
              (1,772,739
              )
              $
              (35,476,143
              )
              $
              (8,151,383
              )
 
 The
        accompanying notes to the consolidated financial statements are an integral
        part
        of these statements.
  5
 
 
  **SINOBIOMED
        INC.**
 **AND
        CONSOLIDATED SUBSIDIARIES**
 ***Notes
        to Consolidated Financial Statements***
 ***September
        30, 2008***
 ***(Expressed
        in US Dollars)***
 ***(Unaudited –
        Prepared by Management)***
 
 **1.
        BASIS OF PRESENTATION**
  The
        unaudited financial statements as of September 30, 2008 included herein have
        been prepared without audit pursuant to the rules and regulations of the
        Securities and Exchange Commission. Certain information and footnote disclosures
        normally included in financial statements prepared in accordance with United
        States generally accepted accounting principles have been condensed or omitted
        pursuant to such rules and regulations. In the opinion of management, all
        adjustments (consisting of normal recurring accruals) considered necessary
        for a
        fair presentation have been included. It is suggested that these financial
        statements be read in conjunction with the December 31, 2007 audited financial
        statements and notes thereto.
 
 **2.
        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
        $35,476,143 and has negative working capital and a stockholders’ deficit as of
        September 30, 2008, 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 achieve 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.
 
 **3.
        CASH - RESTRICTED**
 
 Restricted
        cash consists of $197 on deposit pursuant to agreement with a bank to maintain
        funds on deposit to ensure payment of interest on debt.
  6
 
 **SINOBIOMED
        INC.**
 **AND
        CONSOLIDATED SUBSIDIARIES**
 ***Notes
        to Consolidated Financial Statements***
 ***September
        30, 2008***
 ***(Expressed
        in US Dollars)***
 ***(Unaudited –
        Prepared by Management)***
 
 **4.
        ACCOUNTS RECEIVABLE**
 
 Trade
        accounts receivable consists of receivable for sales of product on credit.
        Accounts receivable are net of allowance for doubtful accounts in the amount
        of
        $9,210.
 
 **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 $5,452,369
        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. $245,652 has been charged
        to
        income in the nine months ended September 30, 2008 (2007 - $223,049) in respect
        of the provision. The increase in the amount of the loan receivable and the
        corresponding provision from year to year arises due to the interest accruing
        on
        the debt guaranteed. Under the terms of the guarantee agreements, the other
        companies had until December 31, 2007 to pay the Company, but nothing has
        been
        paid.
 
 The
        Company has fully provided for $14,303 of additional loans receivable from
        sales
        agents and employees. $823 has been charged to expense in the nine months
        ended
        September 30, 2008 (2007 - $700 recovery) in respect of the
        provision.
 
 The
        Company has fully provided for $136,446 of loans receivable from minority
        shareholders of Wanxing Cosmetic.
 
 **6.
        INVENTORY**
 
 Inventory
        consists of the following:
  September 30, 2008
              
              December 31, 2007Raw
                  materials
              
              $
              163,560
              
              $
              74,007Goods
                  in process
              
              
              809,556
              
              
              550,198Finished
                  goods
              
              
              237,923
              
              
              269,197$
              1,211,039
              
              $
              893,402
  7
  **SINOBIOMED
        INC.**
 **AND
        CONSOLIDATED SUBSIDIARIES**
 ***Notes
        to Consolidated Financial Statements***
 ***September
        30, 2008***
 ***(Expressed
        in US Dollars)***
 ***(Unaudited –
        Prepared by Management)***
 
 **7.
        FIXED ASSETS**
 
 Fixed
        assets consist of the following:
  September 30, 2008
              
              December 31, 2007Buildings
              
              $
              6,646,817
              
              $
              6,220,810Climate
                  control equipment
              
              
              1,350,997
              
              
              1,265,923Computer
                  software
              
              
              2,045
              
              
              1,917Land
                  license
              
              
              2,454,480
              
              
              2,299,920Manufacturing
                  equipment
              
              
              2,286,854
              
              
              2,119,775Office
                  furniture and equipment
              
              
              176,049
              
              
              156,532Other
                  equipment
              
              
              31,365
              
              
              29,048Road
              
              
              36,776
              
              
              34,460Vehicles
              
              
              748,679
              
              
              701,53513,734,062
              
              
              12,829,920Less:
                  Accumulated depreciation
              
              
              7,204,816
              
              
              6,171,089$
              6,529,246
              
              $
              6,658,831
 
 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.
 
 **8.
        SHORT-TERM LOANS**
 
 The
        Company has obligations under the following loan agreements.
 Name of Lender
              
              Principal
                amount
                September
                30,
                2008
              
              Principal
                amount
                December
                31, 2007
              
              Due date
              
              Interest rate
                Not due/
                overdue
              
              Security
                (1)China
                  Construction Bank
              
              $
              1,928,520
              
              $
              1,957,670
              
              
              October 16, 2004
              
              
              5.31%
                  / 7.56
              %
              
              Building
                  mortgage
              (2)Shenzhen
                  Development Bank
              
              
              818,160
              
              
              766,640
              
              
              June 6, 2005
              
              
              6.372%/9.56
              %
              
              GuaranteeIndustrial
                  Bank
              
              
              2,693,558
              
              
              3,395,128
              
              
              December 19, 2005
              
              
              6.138%
                  / NA
              
              
              Guarantee
              (3)Zheda
                  Haina S&T Holding
              
              
              613,620
              
              
              574,980
              
              
              -
              
              
              -
              
              
              
              (4)Luoyang
                  Zonghong
              
              
              438,300
              
              
              410,700
              
              
              -
              
              
              -$
              6,492,158
              
              $
              7,105,118
  8
  **SINOBIOMED
        INC.**
 **AND
        CONSOLIDATED SUBSIDIARIES**
 ***Notes
        to Consolidated Financial Statements***
 ***September
        30, 2008***
 ***(Expressed
        in US Dollars)***
 ***(Unaudited
        - Prepared by Management)***
 
 (1)
              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 $3,652,500 (25,000,000 Chinese yuan) plus interest. The
                  Company’s debt to the Industrial Bank 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).
 (2)
              Buildings
                  with carrying value of $3,849,637 have been mortgaged as
                  security.
 (3)
              A
                  payment on the Industrial Bank loan in the nine months ended September
                  30,
                  2008 was provided by the minority shareholder of Wanxing
                  Bio-Pharmaceuticals pursuant to a guarantee provided by the minority
                  shareholder. The corresponding debt to the minority shareholder
                  is
                  included in Shareholder Loans (Note 10).
 (4)
              The
                  debt to Zheda Haina arose upon the payment by Zheda Haina of part
                  of the
                  Company’s loan from Shenzhen Development Bank pursuant to guarantees
                  provided to the bank by Zheda Haina in
                  2004.
 
 The
        bank
        loans are all delinquent at September 30, 2008. The Company has been involved
        in
        litigation over some of its bank loans. Two of the suits have been settled,
        and
        a further one is outstanding as at September 30, 2008 as more fully described
        in
        Note 9.
 
 On
        April
        3, 2008, Wanxin Bio-pharmaceuticals agreed to a revised payment schedule
        for the
        bank loan with the China Construction Bank. Under this agreement, Wanxin
        Bio-pharmaceuticals agreed to pay 4 Million yuan (approximately $584,000)
        by
        June 30, 2008 and the balance of principal and interest by September 30,
        2008.
        Wanxin Bio-pharmaceuticals paid 1,200,000 yuan by June 30, 2008
 
 On
        April
        8, 2008, Wanxin Bio-pharmaceuticals agreed to a revised payment schedule
        for the
        bank loan with the Industrial Bank. Under this agreement, Wanxin
        Bio-pharmaceuticals agreed to pay 3 Million yuan (approximately $438,000)
        by
        April 30, 2008, 10 Million yuan (approximately $1,461,000) by June 30, 2008
        and
        the balance of principal and interest by September 30, 2008. Wanxin
        Bio-pharmaceuticals paid 1 Million yuan by April 30, 2008 and another 600,000
        yuan by June 30, 2008.
  9
 
 **SINOBIOMED
        INC.**
 **AND
        CONSOLIDATED SUBSIDIARIES**
 ***Notes
        to Consolidated Financial Statements***
 ***September
        30, 2008***
 ***(Expressed
        in US Dollars)***
 ***(Unaudited –
        Prepared by Management)***
 
 **9.
        LITIGATION**
 
 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 2,600,000 at September 30, 2008 exchange rates). Under
        the
        terms of the settlement agreement, the Company was obligated to pay the bank
        5
        million yuan (approximately $US 730,000) before October 30, 2006, 3 million
        yuan
        (approximately $US 438,000) before March 20, 2007, 3 million yuan (approximately
        $US 438,000) before June 20, 2007, 3 million yuan (approximately $US 438,000)
        before September 20, 2007 and 3.8 million yuan (approximately $US 555,000)
        plus
        the balance of accrued interest before December 20, 2007. The Company made
        a
        payment of 5 million yuan in compliance with the settlement agreement in
        December 2006. The Company defaulted on the settlement agreement by not making
        the scheduled loan payment of 3 million yuan (approximately $US 438,000)
        on
        March 20, 2007. The bank granted a waiver of default in respect of this payment
        until May 30, 2007. The Company made the payment due May 30, defaulted on
        the
        two payments due by June 20, 2007 and September 20, 2007, made payments of
        4,200,000 yuan after September 30, 2007, and has defaulted on the payment
        due
        December 20, 2007.
 
 **10.
        SHAREHOLDER LOANS**
 
 The
        loans
        from shareholders in the aggregate amount of $3,883,528 do not bear interest.
        $1,962,972 payable to a minority shareholder of a subsidiary was due December
        31, 2007, $500,000 is payable on demand, and the remainder have no stated
        repayment terms. Imputed interest has been recorded on the shareholder loans
        at
        an interest rate of 5.31%. The net interest calculated is included in interest
        expense and has been recorded as additional paid-in capital since the imputed
        interest is not payable.
 
 **11.
        CONVERTIBLE DEBENTURES**
 
 On
        July
        30, 2008 the Company closed an initial $100,000 portion of a $500,000 financing
        pursuant to a subscription agreement dated June 30, 2008 between the Company
        and
        an Asian-based investment fund. The Company issued the subscriber a $100,000
        principal amount convertible debenture due July 1, 2011, convertible into
        shares
        of the Company’s common stock, par value $0.0001, at a price of $0.30 per share
        together with 300,000 common share purchase warrants (each a “Warrant”) and
        600,000 common share purchase piggyback warrants (each a “Piggyback Warrant”).
        Each Warrant entitles the holder thereof to acquire one additional share
        of
        common stock in the capital of the Company at a price of $0.33 per share
        for the
        period ending on December 1, 2008. Each Piggyback Warrant, which will only
        be
        available for exercise by the holder thereof if the Warrants have been exercised
        in full (unless subsequently waived in writing by the Company), entitles
        the
        holder thereof to acquire one additional share of common stock in the capital
        of
        the Company at a price of $0.37 per share for the period ending on July 1,
        2010.
 
 Interest
        is payable on the principal amount of the convertible debenture outstanding
        from
        the closing date at 8% per annum, calculated and payable quarterly in arrears.
        Interest payable under the convertible debenture shall be paid on the last
        day
        of September, December, March and June of each year. The holder of the
        convertible debenture has the option to convert any accrued and unpaid interest
        due at the time of a conversion.
  10
 
 **SINOBIOMED
        INC.**
 **AND
        CONSOLIDATED SUBSIDIARIES**
 ***Notes
        to Consolidated Financial Statements***
 ***September
        30, 2008***
 ***(Expressed
        in US Dollars)***
 ***(Unaudited –
        Prepared by Management)***
 
 As
        at
        September 30, 2008 the Company has received $250,000 on a second $250,000
        portion of the above financing. See also Note 19.
 
 **12.**  **RELATED
        PARTY TRANSACTIONS**
 
 The
        Company is indebted to a company related to a shareholder in the amount of
        $300,000 and to the minority shareholder of a subsidiary in the amount of
        $2,886,093, and to four individual shareholders in the aggregate amount of
        $697,435 for shareholders’ loans.
 
 The
        Company has paid or accrued finders’ fees to shareholders and a company related
        to a shareholder in the amounts of $1,295,875 and 20,000 shares.
 
 The
        Company has incurred fees and associated expenses in the amount of $40,420
        to a
        company related to a shareholder for services. The Company has committed
        to pay
        that company $2,000 per month plus expenses for services. The arrangement
        may be
        terminated by either party on one month notice.
 
 The
        Company has committed to purchase consulting services from a shareholder
        at the
        rate of $10,000 per month for five years from March 31, 2007. The Company
        is
        indebted to the shareholder in the amount of $120,000 at September 30, 2008
        in
        respect of these fees.
 
 Two
        minority shareholders of a subsidiary are indebted to the Company in the
        amount
        of $136,165. The Company has provided an allowance for the full amount of
        this
        indebtedness (Note 5).
 
 **13.
        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 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:
  Nine months ended
                September 30, 2008Loss for the period
              
              $
              (4,714,273
              )Average
                  statutory tax rate in China
              
              
              33
              %Expected
                  income tax provision
              
              $
              (1,555,710
              )Non-deductible
                  stock-based compensation and imputed interest expenses
              
              
              956,611Tax
                  basis of deferred expenses in excess of book cost
              
              
              180,260Unrecognized
                  tax losses
              
              
              418,840Income
                  tax expense
              
              $
              —
  11
  **SINOBIOMED
        INC.**
 **AND
        CONSOLIDATED SUBSIDIARIES**
 ***Notes
        to Consolidated Financial Statements***
 ***September
        30, 2008***
 ***(Expressed
        in US Dollars)***
 ***(Unaudited –
        Prepared by Management)***
  Significant
        components of deferred income tax assets are as follows:
  September 30, 2008Operating
                  losses carried forward
              
              
              4,400,486Excess
                  of tax basis over book cost of deferred expenses in China
              
              $
              4,927,525Valuation
                  allowance
              
              
              (9,328,011
              )Net
                  deferred income tax assets
              
              **$**
              **-**
  The
        Company has tax losses carried forward for Chinese tax purposes of approximately
        $13,335,000 which will expire in 2013 if not utilized.
 
 **14.
        COMMON STOCK**
 
 On
        January 23, 2008, the Company issued 110,000 shares of common stock in return
        for the services of the Company’s Chief Financial Officer for the 12 months
        commencing January 1, 2008. The Company recognized an issue price for the
        shares
        of $0.525 per share, reflecting a discount from market price on that date
        due to
        there being a hold period before the shares can be sold.
 
 Warrants
        outstanding and exercisable as of September 30, 2008 are as
        follows:
 
 Exercise Price
              
              Number of Warrants
              
              Expiry Date$
                  0.33
              
              
              300,000
              
              
              December 1, 2008$
                  1.25
              
              
              1,012,334
              
              
              May 14, 2009$
                  1.75
              
              
              4,061,500
              
              
              May 14 to May 30, 2009$
                  2.00
              
              
              2,624,400
              
              
              September 11, 2009$
                  2.00
              
              
              274,169
              
              
              December 5, 20098,272,403
 
  12
 
 **SINOBIOMED
        INC.**
 **AND
        CONSOLIDATED SUBSIDIARIES**
 ***Notes
        to Consolidated Financial Statements***
 ***September
        30, 2008***
 ***(Expressed
        in US Dollars)***
 ***(Unaudited –
        Prepared by Management)***
 
 **15.
        STOCK-BASED COMPENSATION**
 
 The
        Company’s 2006 Stock Option and Incentive Plan (the “Plan”) allows the Company
        to award stock options for up to 10,000,000 (post-forward stock split) shares
        to
        its directors, officers, employees, and consultants. The plan is administered
        by
        the Company’s Board of Directors, or its assigned committee, who has discretion
        as to the awards and terms of the options to be issued. Upon exercise of
        options, shares are issued from treasury.
  On
        March
        1, 2007, 6,000,000 stock options were granted under the Plan with the exercise
        price of $0.50 per share. 300,000 of 6,000,000 options vested on March 1,
        2007
        with the reminder to vest in equal monthly proportions on the first day of
        each
        of the next 19 months.
 
 On
        May
        30, 2007, 1,000,000 stock options were granted under the Plan with the exercise
        price of $1.90 per share. 500,000 of 1,000,000 options will vest on June
        1, 2009
        with the reminder to vest on June 1, 2011. On August 31, 2008 the Company
        re-priced these options to an exercise price of $0.50, with all other terms
        of
        the options remaining as they were.
 
 On
        November 29, 2007, 1,000,000 stock options were granted under the Plan with
        the
        exercise price of $1.67 per share. 50,000 of 1,000,000 options vested on
        November 29, 2007 with the reminder to vest in equal monthly proportions
        on the
        first day of each of the next 19 months. On August 31, 2008 the Company
        re-priced these options to an exercise price of $0.50, with all other terms
        of
        the options remaining as they were.
 
 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, 2008
              
              
              8,000,000
              
              
              0.50
              
              
              0.825
              
              $
              -Options
                  granted:
              
              
              -**Options
                  Outstanding**,
                  September 30, 2008
              
              
              8,000,000
              
              
              0.50
              
              
              0.68
              
              $
              -
 
 Compensation
        cost related to options to vest in the future will be recognized as the related
        options vest. Outstanding options vest as follows:
  13
 
 **SINOBIOMED
        INC.**
 **AND
        CONSOLIDATED SUBSIDIARIES**
 ***Notes
        to Consolidated Financial Statements***
 ***September
        30, 2008***
 ***(Expressed
        in US Dollars)***
 ***(Unaudited –
        Prepared by Management)***
 Vested at
                
                Range of
                    Exercise
                  Prices
                
                Number
                  of
                    Shares
                
                Weighted
                    Average
                    Exercise
                  Price
                
                Compensation
                  Expense to be
                    Recognized
                
                Aggregate
                    Intrinsic
                  ValueSeptember
                    30, 2008 and earlier
                
                
                0.50
                
                
                6,200,000
                
                
                0.50
                
                
                
                
                $
                -Remainder
                    of 2008
                
                
                0.50
                
                
                450,000
                
                
                0.50
                
                $
                278,080
                
                
                -2009
                
                
                0.50
                
                
                850,000
                
                
                0.50
                
                
                827,594
                
                
                -2010
                
                
                0.50
                
                
                -
                
                
                0.50
                
                
                258,141
                
                
                -2011
                
                
                0.50
                
                
                500,000
                
                
                0.50
                
                
                107,559
                
                
                -8,000,000
                
                
                
                
                
                
                
                
                -
  Non-vested
        options are as follows:
  Number
                outstanding
              
              Total fair value
              
              Weighted average grant-date fair valueNon-vested options
                  outstanding, January 1, 2008
              
              
              4,650,000
              
              $
              4,037,450
              
              
              -Non-vested
                  options outstanding, September 30, 2008
              
              
              1,600,000
              
              $
              740,800
              
              
              0.46Options
                  vested in nine months ended September 30, 2008
              
              
              3,050,000
              
              $
              2,201,000
              
              $
              0.825
 
 If
        not
        previously exercised or canceled, options outstanding at September 30, 2008
        will
        expire as follows:
  Range of
                  Exercise Prices
                
                Number
                
                Weighted averageExpiry Date
                
                High
                
                Low
                
                of Shares
                
                exercise priceYear
                    Ending December 31,2012
                
                
                0.50
                
                
                0.50
                
                
                8,000,000
                
                
                0.50
 
 The
        fair
        values of the options repriced in August 2008 were estimated at values of
        $0.44
        per share (May 30, 2007 grant), and $0.45 (November 29, 2007 grant) using
        the
        Black-Scholes Option Pricing Model with the following weighted average
        assumptions:
  14
 
 **SINOBIOMED
        INC.**
 **AND
        CONSOLIDATED SUBSIDIARIES**
 ***Notes
        to Consolidated Financial Statements***
 ***September
        30, 2008***
 ***(Expressed
        in US Dollars)***
 ***(Unaudited –
        Prepared by Management)***
 
 May, 2007
              
              November,
                2007Volatility:
              
              
              104.3
              %
              
              104.3
              %Risk-free interest
                  rate:
              
              
              2.06
              %
              
              2.06
              %Dividend
                  yield:
              
              
              —
              
              
              —Expected
                  lives(years):
              
              
              3.75
              
              
              4.25
 
 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.
        OTHER INCOME**
 
 Other
        income includes $164,680 in government grant revenue to support clinical
        trials
        of the Company’s malaria vaccine and $400,000 contract revenue from hiring out
        part of the Company’s research and manufacturing facilities and staff to another
        company.
 
 **17.
        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 $1,607,000) 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 $2,922,000) 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 2008.
 
 2.5
        Million yuan (approximately $365,000) 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 $146,000) will be due by the time of
        upon
        completion of Phase II trials and 1.5 Million yuan (approximately $219,000)
        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.
 
 **18.
        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:
  15
 
 **SINOBIOMED
        INC.**
 **AND
        CONSOLIDATED SUBSIDIARIES**
 ***Notes
        to Consolidated Financial Statements***
 ***September
        30, 2008***
 ***(Expressed
        in US Dollars)***
 ***(Unaudited –
        Prepared by Management)***
 
 Revenues
              
              Net loss
                (income)
              
              Total assetsPharmaceuticals
              
              $
              856,296
              
              $
              1,527,292
              
              $
              7,764,700Cosmetics
              
              
              552,957
              
              
              (155,924
              )
              
              476,483Parent
                  company administration
              
              
              
              
              
              3,342,905
              
              
              113,859Total
                  consolidated
              
              $
              1,409,253
              
              $
              4,714,273
              
              $
              8,355,042
 
 **19.
        SUBSEQUENT EVENTS**
 
 On
        October 2, 2008 the Company entered into a Corporate Consulting Services
        Agreement dated effective September 1, 2008 to appoint a new Chief Financial
        Officer. The term of the Agreement is for a period of three years and shall
        renew automatically for subsequent one-year periods unless notice not to
        renew
        is given by either party in writing at least 60 calendar days prior to the
        end
        of the term. As compensation for his services as the Company’s CFO, the Company
        shall pay to the CFO a monthly salary of US$5,000, which will become $15,000
        per
        month should the Company succeed in completing a private placement of shares
        for
        $5,000,000 or greater. Also on October 2, 2008 the Company agreed to grant
        500,000 stock options to the CFO at an exercise price of US$0.50 per share
        which
        options shall expire five years from the grant date. 5% of the options vested
        immediately and another 5% will vest at the start of each of the subsequent
        19
        months.
 
 On
        November 11, 2008 the Company closed a second $250,000 portion of a $350,000
        financing, which was reduced from the original amount of $500,000 pursuant
        to a
        subscription agreement between the Company and an Asian-based investment fund.
        The Company issued the fund a $250,000 principal amount convertible debenture
        due July 1, 2011, convertible into shares of the Company’s common stock, par
        value $0.0001, at a price of $0.30 per share together with 750,000 common
        share
        purchase warrants and 1,500,000 common share purchase piggyback warrants.
        Each
        warrant entitles the holder thereof to acquire one additional share of common
        stock in the capital of the Company at a price of $0.33 per share for the
        period
        ending on December 1, 2008. Each piggyback warrant, which will only be available
        for exercise by the holder thereof if the warrants have been exercised in
        full
        (unless subsequently waived in writing by the Company), entitles the holder
        thereof to acquire one additional share of common stock in the capital of
        the
        Company at a price of $0.37 per share for the period ending on July 1,
        2010.
 
 Interest
        is payable on the principal amount of the convertible debenture outstanding
        at
        8% per annum, calculated and payable quarterly in arrears. Interest payable
        under the convertible debenture shall be paid on the last day of December,
        March, June and September of each year. The holder of the convertible debenture
        has the option to convert any accrued and unpaid interest due at the time
        of a
        conversion.
  16




**ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION**




You
      should read the following plan of operation together with our financial
      statements and related notes appearing elsewhere in this quarterly report.
      This
      plan of operation contains forward-looking statements that involve risks,
      uncertainties, and assumptions. The actual results may differ materially from
      those anticipated in these forward-looking statements as a result of certain
      factors, including, but not limited to, those presented under “Risk Factors” in
      the Form 10-KSB filed with the SEC on EDGAR on April 14, 2008.





**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. (“Shanghai Wanxing”), a Sino-Foreign Joint
      Venture company incorporated with limited liability under the laws of the
      People’s Republic of China. Shanghai Wanxing’s business is research,
      development, manufacture and sale of pharmaceutical products, primarily for
      the
      Chinese market. There are currently 10 products approved or in development:
      three on the market, four in clinical trials and three in R&D. Shanghai
      Wanxing’s products respond to a wide range of diseases, including malaria and
      hepatitis. Currently manufactured product lines include Wanferon/Wanferin,
      formulations of recombinant human interferon for treating hepatitis and viral
      diseases, Leflunomide, a drug for the treatment of rheumatoid arthritis, and
      acidic Fibroblast Growth Factor (“aFGF”), a product that treats diabetic ulcers
      and burns and supports recovery from plastic surgery.





Shanghai
      Wanxing 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.





During
      the nine months ended September 30, 2008, Shanghai Wanxing was approved to
      receive grants from government funding of RMB 9 million (US$1.24 million) to
      continue the clinical trial of its recombinant malaria vaccine and advance
      its
      development with partner Second Military Medical University (“SMMU”). This
      government funding has been delayed until the end of the year.




The
      grant
      from China’s Ministry of Science and Technology, awarded jointly to Shanghai
      Wanxing and SMMU, is part of the key “863 Program” to support technology
      development as part of the government’s 11th five-year plan. Two-thirds of the
      fund will support Shanghai Wanxing’s planned Phase II Clinical Trial of the
      patented PfCP2.9 vaccine to be conducted in epidemic areas. The current research
      schedule calls for the application to the Chinese Food and Drug Administration
      (SFDA) for the Phase II Clinical trial in malaria endemic areas to be submitted
      by end of 2008.




The
      balance of the fund will support the joint development by Shanghai Wanxing
      and
      SMMU of a multistage, multivalent vaccine based on PfCP2.9. The multistage,
      multivalent vaccine, which seeks to improve immunogenicity and extend the immune
      period, is expected to enter into clinical trials in 2009.




17


**Results
      of Operations**





The
      Company has revenues from the Wanferon/Wanferin product line, aFGF, and the
      cosmetics products in the nine months ended September 30, 2008. Shanghai Wanxing
      is involved in a dispute with the company which manufactures the Leflunomide
      product under license. Should this dispute not be resolved, we may not realize
      further sales of the Leflunomide product. The Company also sells a relatively
      small amount of reagent, which is a product completed only to the stage where
      it
      can still be made into various different recombinant protein based
      pharmaceutical products.





Wanferon/Wanferin
      and interferon reagent sales accounted for $200,708 of sales revenue and $90,879
      of cost of sales in the nine months ended September 30, 2008, as compared to
      $329,152 of sales revenue and $267,307 of cost of sales in the nine months
      ended
      September 30, 2007. The market for this product line is very competitive, and
      selling prices and volume have been decreasing through the 2006, 2007 years
      and
      to date in 2008 due to increased competition.





There
      has
      been no sales of the Leflunomide product and therefore no revenue or costs
      attributable to the product for the three months ended September 30,
      2008 ***.***





aFGF
      sales accounted for $73,509 of sales revenue and $118,505 of cost of sales
      in
      the nine months ended September 30, 2008. There was no sales revenue or cost
      of
      sales of aFGF in the nine months ended September 30, 2007 as the product was
      awaiting regulatory approval at the time.





Cosmetics
      sales accounted for $552,957of sales revenue and $258,714 of cost of sales
      in
      the nine months ended September 30, 2008, as compared to $142,094 of sales
      revenue and $104,055 of cost of sales in the nine months ended September 30,
      2007.





**Operating
      Expenses**





Operating
      expenses decreased from $5,885,908 for the nine months ended September 30,
      2007
      to $5,009,207 for the nine months ended September 30, 2008. This decrease was
      primarily due to (1) a decrease in General and Administrative expenses charged
      to operations due to the closure of the manufacturing facility for government
      inspection and recertification for most of the nine months ended September
      30,
      2007, which resulted in far less expense charged to cost of goods manufactured
      in 2007 than would otherwise have been charged, and (2) reduction in research
      and development activity so far in 2008, partly offset by (3) an increase in
      expenses relating to Stock-Based Compensation on options issued to employees
      and
      consultants .





**Stock-based
      compensation**





Stock-based
      compensation expense of $2,762,886 was recognized in the nine months ended
      September 30, 2008 compared to $1,887,222 in the comparable period in the
      previous year. The expense represents:


·
            $2,045,415
                as recognition of nine months amortization of 6,000,000 options with
                an
                aggregate value of $4,545,364 granted on March 1, 2007 in accordance
                with
                the Company’s stock option and incentive plan. Under the terms of the
                grant, 5% of the options vested immediately and another 5% vest on
                the
                first day of each subsequent month until October 1, 2008;


·
            $156,834
                as recognition of nine months amortization pertaining to 1 million
                options
                with an aggregate value at time of grant of $828,928, granted on
                May 30,
                2007 in accordance with the terms of the Company's stock option and
                incentive plan. These options were re-priced and revalued on August
                31,
                2008. Under the terms of the grant, 50% of the options will vest
                on May
                30, 2009 and the remaining 50% on May 30, 2011;
                and


·
            $560,637
                as recognition of nine months amortization pertaining to 1 million
                options
                with an aggregate value at time of grant of $1,223,630, granted on
                November 29, 2007 in accordance with the terms of the Company's stock
                option and incentive plan. These options were re-priced and revalued
                on
                August 31, 2008. Under the terms of the grant, 5% of the options
                vested
                immediately and another 5% vest on the first day of each subsequent
                month
                thereafter starting on January 1
                2008.


18




**Other
      Income and Expenses**





During
      the nine month period ending September 30, 2008, the Company's interest expense
      (included in other income and expenses) was reduced from $833,292 in the
      comparable period to $395,638, attributable to a substantial reduction of its
      bank debt in 2007.




**Net
      Loss**





As
      a
      combined result of (1) the decrease in our operating expenses, (2) the reduction
      in other income and expenses, and (3) the increase in stock-based compensation
      expense our net loss for the nine months ended September 30, 2008, was
      $4,714,273, compared to a net loss of $4,136,005 for the nine months ended
      September 30, 2007 and the related cash used in operating activities in the
      nine
      months ended September 30, 2008, was $366,371, compared to cash used of
      $3,433,903 for the nine months ended September 30, 2007.




**Liquidity
      and Capital Resources**





At
      September 30, 2008, we had $346,928 of cash on hand and a working capital
      deficiency of $14,330,629. The Company is currently in the process of seeking
      to
      raise additional funds from equity and/or debt financing. The Company believes
      that its cash on hand as at September 30, 2008, and the funds it expects to
      raise from additional equity and/or debt financing, and its future revenues
      from
      its new products currently entering the market will enable the Company to meet
      its working capital needs and its debt service requirements for the following
      12
      months.





On
      July
      30, 2008 the Company closed an initial $100,000 portion of a $500,000 financing
      pursuant to a Non-U.S. and Non-Canadian Private Placement Subscription
      Agreement, dated June 30, 2008, between the Company and Accelera Evolution
      Limited (“Accelera”), an Asian-based investment fund. The Company issued
      Accelera a $100,000 principal amount convertible debenture due July 1, 2011,
      convertible into shares of our common stock, par value $0.0001, at a price
      of
      $0.30 per share together with 300,000 common share purchase warrants (each
      a
“Warrant”) and 600,000 common share purchase piggyback warrants (each a
“Piggyback Warrant”). Each Warrant entitles the holder thereof to acquire one
      additional share of common stock in the capital of the Company at a price of
      $0.33 per share (each a “ *Warrant
      Share* ”)
      for
      the period ending at 4:00 p.m. (Pacific Standard Time) on December 1, 2008
      (the
“ *Warrant
      Exercise Period* ”).
      Each
      Piggyback Warrant, which will only be available for exercise by the holder
      thereof if the Warrants have been exercised in full (unless subsequently waived
      in writing by the Company), entitles the holder thereof to acquire one
      additional share of common stock in the capital of the Company at a price of
      $0.37 per share (each a “ *Piggyback
      Warrant Share* ”)
      for
      the period ending at 4:00 p.m. (Pacific Standard Time) on July 1, 2010 (the
      “ *Piggyback
      Warrant Exercise Period* ”).





Interest
      is payable on the principal amount of the convertible debenture outstanding
      at
      8% per annum, calculated and payable quarterly in arrears. Interest payable
      under the convertible debenture shall be paid on the last day of September,
      December, March and June of each year. The holder of the convertible debenture
      has the option to convert any accrued and unpaid interest due at the time of
      a
      conversion.





The
      proceeds from the transaction have been or will be used to fund the business
      of
      Sinobiomed Inc. and for general corporate purposes.


19




On
      November 11, 2008 the Company closed a second $250,000 portion of a $350,000
      financing, which was reduced from the original amount of $500,000 pursuant
      to a
      Non-U.S. and Non-Canadian Private Placement Subscription Agreement, dated June
      30, 2008, between the Company and Accelera Ventures Ltd. (“Accelera”), an
      Asian-based investment fund. The Company issued Accelera a $250,000 principal
      amount convertible debenture due July 1, 2011, convertible into shares of our
      common stock, par value $0.0001, at a price of $0.30 per share together with
      750,000 common share purchase warrants (each a “Warrant”) and 1,500,000 common
      share purchase piggyback warrants (each a “Piggyback Warrant”). Each Warrant
      entitles the holder thereof to acquire one additional share of common stock
      in
      the capital of the Company at a price of $0.33 per share (each a “ *Warrant
      Share* ”)
      for
      the period ending at 4:00 p.m. (Pacific Standard Time) on December 1, 2008
      (the
“ *Warrant
      Exercise Period* ”).
      Each
      Piggyback Warrant, which will only be available for exercise by the holder
      thereof if the Warrants have been exercised in full (unless subsequently waived
      in writing by the Company), entitles the holder thereof to acquire one
      additional share of common stock in the capital of the Company at a price of
      $0.37 per share (each a “ *Piggyback
      Warrant Share* ”)
      for
      the period ending at 4:00 p.m. (Pacific Standard Time) on July 1, 2010 (the
      “ *Piggyback
      Warrant Exercise Period* ”).





Interest
      is payable on the principal amount of the convertible debenture outstanding
      at
      8% per annum, calculated and payable quarterly in arrears. Interest payable
      under the convertible debenture shall be paid on the last day of December,
      March, June and September of each year. The holder of the convertible debenture
      has the option to convert any accrued and unpaid interest due at the time of
      a
      conversion.





The
      proceeds from the transaction have been or will be used to fund the business
      of
      Sinobiomed Inc. and for general corporate purposes.




**ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK**




Market
      risk represents the risk of loss that may impact our financial position, results
      of operations or cash flows due to adverse change in foreign currency and
      interest rates.





**Exchange
      Rate**





Our
      reporting currency is United States Dollars (“USD”).





The
      Chinese Renminbi yuan (“RMB”) is the functional currency of Sinobiomed and its
      operating subsidiary, Shanghai Wanxing Bio-pharmaceuticals Co., Ltd.; and
      therefore, the fluctuation of exchange rates of RMB may have positive or
      negative impacts on the results of operations of the Company.





The
      value
      of the Renminbi yuan, against the U.S. dollar and other currencies may fluctuate
      and is affected by, among other things, changes in China’s political and
      economic conditions. The conversion of Renminbi yuan into foreign currencies,
      including U.S. dollars, has historically been set by the People’s Bank of China.
      On July 21, 2005, the PRC government changed its policy of pegging the value
      of
      the Renminbi yuan to the U.S. dollar. Under the new policy, the Renminbi yuan
      is
      permitted to fluctuate within a band against a basket of certain foreign
      currencies. This change in policy resulted initially in an approximately 2.0%
      appreciation in the value of the Renminbi yuan against the U.S. dollar. Since
      the adoption of this new policy, the value of Renminbi yuan against the U.S.
      dollar has fluctuated on a daily basis within narrow ranges, but overall has
      continued to strengthen against the U.S. dollar. There remains significant
      international pressure on the PRC government to further liberalize its currency
      policy, which could result in a further and more significant appreciation or
      depreciation in the value of the Renminbi yuan against the U.S. dollar.





Since
      all
      sales revenue and expenses of the operating subsidiary company are denominated
      in RMB, the net income effect of appreciation and devaluation of the currency
      against the US Dollar will be limited to the net operating results of the
      subsidiary company attributable to the Company.


20




**ITEM
      4. CONTROLS AND PROCEDURES**




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




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





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





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




**PART
      II - OTHER INFORMATION**




**Item
      1. Legal Proceedings**




The
      Company, through Shanghai Wanxing, 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 2,600,000 at September 30, 2008
      exchange rates). Under the terms of the settlement agreement, the Company was
      obligated to pay the bank 5 million yuan (approximately $US 730,000) before
      October 30, 2006, 3 million yuan (approximately $US 438,000) before March 20,
      2007, 3 million yuan (approximately $US 438,000) before June 20, 2007, 3 million
      yuan (approximately $US 438,000) before September 20, 2007 and 3.8 million
      yuan
      (approximately $US 555,000) plus the balance of accrued interest before December
      20, 2007. The Company made a payment of 5 million yuan in compliance with the
      settlement agreement in
      December 2006. The
      Company defaulted on the settlement agreement by not making the scheduled loan
      payment of 3 million yuan (approximately $US 438,000) on March 20, 2007. The
      bank granted a waiver of default in respect of this payment until May 30, 2007.
      The Company made the payment due May 30, defaulted on the two payments due
      by
      June 20, 2007 and September 20, 2007, made payments of 4,200,000 yuan after
      September 30, 2007, and has defaulted on the payment due December 20,
      2007 .





Other
      than the above mentioned litigation and settlement agreements, 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.


21




**ITEM
      1A. RISK FACTORS**




An
      investment in the Company has a high degree of risk. Before you invest you
      should carefully consider the risks and uncertainties described below and the
      other information in this Quarterly Report. If any of the following risks
      actually occur, our business, operating results and financial condition could
      be
      harmed and the value of our stock could go down.





***Risks
      Related to the Company***





***We
      have a history of operating losses and may never be profitable.***




Biopharmaceutical
      product development is a highly speculative undertaking and involves a
      substantial degree of risk. Shanghai Wanxing has incurred substantial losses
      since its inception, and it expects to continue to incur losses for the
      foreseeable future. The losses have resulted principally from research and
      development costs and selling, general and administrative expenses. Shanghai
      Wanxing expects to incur additional operating losses in the future if its sales
      do not increase or if its expenses grow. The losses have had, and are expected
      to continue to have, an adverse impact on working capital, total assets,
      stockholders’ equity and cash flow. Shanghai Wanxing and Sinobiomed cannot
      assure you that we will ever become profitable, or, even if we become
      profitable, that we would be able to sustain or increase our profitability.





***We
      will need additional capital to expand the production capacity for our existing
      products, to continue development of our product pipeline and to market existing
      and future products on a large scale, and we cannot guarantee that we will
      find
      adequate sources of capital in the future.***




We
      will
      need to raise further funds from the capital markets to finance expenditures
      for
      equipment, intellectual property asset acquisitions, to expand the production
      capacity for our existing products, to continue the development and
      commercialization of our product candidates and for other corporate purposes.
      We
      will need to undertake significant future financings for the following reasons:




·
            To
                proceed with the research and development of other vaccine products,
                including clinical testing relating to new products;·
            To
                develop or acquire other product candidates, technologies or other
                lines
                of business;·
            To
                establish and expand manufacturing capabilities;·
            To
                commercialize our products, including the marketing and distribution
                of
                new and existing products;·
            To
                protect our intellectual property;·
            To
                seek and obtain regulatory approvals; and·
            To
                finance general and administrative and research activities that are
                not
                related to specific products under
                development.




In
      the
      past, Shanghai Wanxing funded most of its research and development and other
      expenditures through grants and debt financing. We intend to raise additional
      funds in the near future because our current operating and capital resources
      are
      insufficient to meet future requirements.




If
      we
      raise additional funds by issuing equity securities, it will result in further
      dilution to our existing shareholders, because the shares may be sold at a
      time
      when the market price is low, and because shares issued in equity financing
      will
      normally be sold at a discount to the current market price. Unforeseen problems,
      including materially negative developments relating to, among other things,
      product sales, new product rollouts, clinical trials, research and development
      programs, our strategic relationships, our intellectual property, litigation,
      regulatory issues in our industry, the Chinese market generally or in general
      economic conditions, could interfere with our ability to raise additional equity
      capital or materially adversely affect the terms upon which such funding is
      available. If we raise additional funds by issuing debt securities, these debt
      securities would have rights, preferences and privileges senior to those of
      holders of our common shares, and the terms of the debt securities issued could
      impose significant restrictions on our operations. If we raise additional funds
      through collaborations and licensing arrangements, we might be required to
      relinquish significant rights to certain of our technologies, marketing
      territories, product candidates or products that we would otherwise seek to
      develop or commercialize ourselves, or be required to grant licenses on terms
      that are not favorable to us.




22





We
      do not
      know whether additional financing will be available to us on commercially
      acceptable terms when needed. If adequate funds are not available or are not
      available on commercially acceptable terms, we may need to downsize or suspend
      some or all of our operations and may be unable to continue developing our
      products. In any such event, our ability to bring a product to market and obtain
      revenues could be delayed, competitors could develop products sooner than us,
      and we could be forced to relinquish rights to technologies, products or
      potential products.





***We
      currently have limited revenue sources and a reduction in revenues of our
      existing products would cause our revenues to decline and could materially
      harm
      our business.***




Shanghai
      Wanxing generates a significant portion of its revenues from sales of its
      Wanferon/Wanferin products. We expect that sales of Wanferon/Wanferin will
      continue to comprise a substantial portion of our revenues in the near future.
      A
      decrease in Wanferon/Wanferin sales would most likely have an adverse affect
      on
      our financial results. Shanghai Wanxing also generates a significant portion
      of
      its revenues from its cosmetic sales of its skin care products produced by
      its
      majority-owned subsidiary Shanghai Wanxing Bio-science Cosmetic Co.,
      Ltd.




***If
      we are unable to successfully compete in the highly competitive biotechnology
      industry, our business could be harmed.***




We
      operate in a highly competitive environment, and the competition is expected
      to
      increase. Competitors include large pharmaceutical and biotechnology companies
      and academic research institutions, in each case both within and outside China.
      Some of these competitors, particularly large pharmaceutical and biotechnology
      companies, have greater resources than us. New competitors may also enter into
      the markets where we currently compete. Accordingly, even if we are successful
      in launching a product, we may find that a competitive product dominates the
      market for any number of reasons, including:




·
            The
                possibility that the competitor may have launched its product
                first;·
            The
                competitor may have greater access to certain raw
                materials;·
            The
                competitor may have more efficient manufacturing
                processes;·
            The
                competitor may have greater marketing capabilities; or·
            The
                competitive product may have therapeutic or other
                advantages.




The
      technologies applied by our competitors and us are rapidly evolving, and new
      developments frequently result in price competition and product obsolescence.
      In
      addition, we may be impacted by competition from generic forms of our products,
      substitute products or imports of products from lower priced markets.





***Competitors
      may develop and market biopharmaceutical products that are less expensive,
      more
      effective or safer, making our products obsolete or
      uncompetitive.***





Some
      of
      our competitors and potential competitors have greater product development
      capabilities and financial, scientific, marketing and human resources than
      we
      do. Technological competition from biopharmaceutical companies and biotechnology
      companies is intense and is expected to increase. Other companies have developed
      technologies that could be the basis for competitive products. Some of these
      products have an entirely different approach or means of accomplishing the
      desired curative effect than products we are developing. Alternative products
      may be developed that are more effective, work faster and are less costly than
      our products. Competitors may succeed in developing products earlier than us,
      obtaining approvals and clearances for such products more rapidly than us,
      or
      developing products that are more effective than ours. In addition, other forms
      of treatment may be competitive with our products. Over time, our technology
      or
      products may become obsolete or uncompetitive.


23





***We
      are controlled by a small number of shareholders and their affiliated entities
      and their interests may not be aligned with the interests of our other
      shareholders.***





Our
      directors and executive officers and their affiliates collectively control
      approximately 34% of our outstanding common shares as of September 30, 2008.
      These stockholders, if they act together, will be able to influence our
      management and affairs and all matters requiring stockholder approval, including
      the election of directors and approval of significant corporate transactions.
      The concentration of ownership of these shareholders may discourage, delay
      or
      prevent a change in control of our company, which could deprive our shareholders
      of an opportunity to receive a premium for their shares as part of a sale of
      our
      company and might reduce the price of our common shares. These actions may
      be
      taken even if they are opposed by our other shareholders. In cases where the
      interests of our significant shareholders are aligned and they vote together,
      these shareholders may also have the power to prevent or cause a change in
      control. In addition, these shareholders could divert business opportunities
      from us to themselves or others.





***If
      we are unable to obtain the regulatory approvals or clearances that are
      necessary to commercialize our products, we will have less revenue than
      expected.***





China
      and
      other countries impose significant statutory and regulatory obligations upon
      the
      manufacture and sale of bio-pharmaceutical products. Each regulatory authority
      typically has a lengthy approval process in which it examines pre-clinical
      and
      clinical data and the facilities in which the product is manufactured.
      Regulatory submissions must meet complex criteria to demonstrate the safety
      and
      efficacy of the ultimate products. Addressing these criteria requires
      considerable data collection, verification and analysis. We may spend time
      and
      money preparing regulatory submissions or applications without assurances as
      to
      whether they will be approved on a timely basis or at all.





Our
      product candidates, some of which are currently in the early stages of
      development, will require significant additional development and pre-clinical
      and clinical testing prior to their commercialization. These steps and the
      process of obtaining required approvals and clearances can be costly and
      time-consuming. If our potential products are not successfully developed, cannot
      be proven to be safe and effective through clinical trials, or do not receive
      applicable regulatory approvals and clearances, or if there are delays in the
      process:





·
            the
                commercialization of our products could be adversely
                affected;·
            any
                competitive advantages of the products could be diminished;
                and·
            revenues
                or collaborative milestones from the products could be reduced or
                delayed.





Governmental
      and regulatory authorities may approve a product candidate for fewer indications
      or narrower circumstances than requested or may condition approval on the
      performance of post-marketing studies for a product candidate. Even if a product
      receives regulatory approval and clearance, it may later exhibit adverse side
      effects that limit or prevent its widespread use or that force us to withdraw
      the product from the market. Any marketed product and its manufacturer,
      including us, will continue to be subject to strict regulation after approval.
      Results of post-marketing programs may limit or expand the further marketing
      of
      products. Unforeseen problems with an approved product or any violation of
      regulations could result in restrictions on the product, including its
      withdrawal from the market and possible civil actions.





***We
      rely on vendors to supply ingredients for our
      products.***





Regulatory
      authorities also periodically inspect manufacturing facilities, including third
      parties who provide ingredients to us, and may challenge their quality,
      qualifications or competence. Pharmaceutical manufacturing facilities must
      comply with applicable good manufacturing practice standards, and manufacturers
      usually must invest substantial funds, time and effort to ensure full compliance
      with these standards and make quality products. We do not have control over
      our
      vendors’ compliance with these requirements. Failure to comply with regulatory
      requirements can result in sanctions, fines, delays, suspension of approvals,
      seizures or recalls of products, operating restrictions, manufacturing
      interruptions, costly corrective actions, injunctions, adverse publicity against
      us and our products and criminal prosecutions.


24





If
      we are
      unable to obtain sufficient supplies of ingredients, if climatic or
      environmental conditions adversely affect them or if they increase significantly
      in price, our business would be seriously harmed. If any of our current or
      future third-party suppliers cease to supply products in the quantity and
      quality we need to produce our products, or if they are unable to comply with
      applicable regulations, the qualification of other suppliers could be a lengthy
      process, and there may not be adequate alternatives to meet our needs. As a
      result, we may not be able to obtain the necessary ingredients used in our
      products in the future on a timely basis, if at all. This would negatively
      affect our business.





***We
      could be subject to costly and time-consuming product liability actions.***




We
      manufacture recombinant protein drugs and vaccines that are injected into
      individuals to treat and protect against infectious illnesses. A failure of
      our
      products to function as anticipated, whether as a result of the design of these
      products, unanticipated health consequences or side effects, or misuse or
      mishandling by third parties of such products or because of faulty or
      contaminated supplies, could result in injury and as a result subject us to
      product liability lawsuits. Claims also could be based on failure to immunize
      as
      anticipated. Any product liability claim brought against us, with or without
      merit, could have a material adverse effect on us. Even a meritless or
      unsuccessful product liability claim could be time consuming, expensive to
      defend, and could result in the diversion of management’s attention from
      managing our core business or result in associated negative publicity.





Our
      business exposes us to potential product liability risks that are inherent
      in
      the testing, manufacturing and marketing of biopharmaceutical products. But
      we
      cannot be certain that we will be able to maintain adequate product liability
      insurance at a reasonable cost. In addition, we have no clinical trial insurance
      for our clinical trials except for our Malaria vaccine clinical trials because
      such coverage is not available in mainland China. Any insurance coverage we
      do
      have may not be sufficient to satisfy any liability resulting from product
      liability claims. A successful product liability claim or series of claims
      could
      have a material adverse impact on our business, financial condition and results
      of operations.





***We
      depend on our key personnel, the loss of whom would adversely affect our
      operations. If we fail to attract and retain the talent required for our
      business, our business will be materially harmed.***





We
      are a
      small company with approximately 93 full-time employees as of September 30,
      2008, and we depend to a great extent on principal members of our management
      and
      scientific staff. If we lose the services of any key personnel it could
      significantly impede the achievement of our research and development objectives
      and delay our product development programs and the approval and
      commercialization of our product candidates. We do not currently have any key
      man life insurance policies. We have entered into employment agreements with
      our
      senior staff. The employment agreements do not ensure that we may be able to
      retain the services of our executive officers for an indefinite period of time
      in the future. In addition, recruiting and retaining qualified scientific,
      technical and managerial personnel and research partners will be critical to
      our
      success. Competition among biopharmaceutical and biotechnology companies for
      qualified employees in China is intense and turnover rates are high. There
      is
      currently a shortage of employees in China with expertise in our areas of
      research and clinical and regulatory affairs, and this shortage is likely to
      continue. We may not be able to retain existing personnel or attract and retain
      qualified staff in the future. If we fail to hire and retain personnel in key
      positions, we may be unable to develop or commercialize our product candidates
      in a timely manner.


25





***We
      may encounter difficulties in managing our growth, which could adversely affect
      our results of operations.***




We
      have
      experienced a period of rapid and substantial growth that has taken place and,
      if such growth continues, it will continue to place a strain on our
      administrative and operational infrastructure. If we are unable to manage this
      growth effectively, our business, results of operations or financial condition
      may be materially and adversely affected. Our ability to manage our operations
      and growth effectively requires us to continue to improve our operational,
      financial and management controls, reporting systems and procedures and hiring
      programs. We may not be able to successfully implement these required
      improvements.





***We
      may face difficulties in achieving and maintaining widespread market acceptance
      for our biopharmaceutical products and any future biopharmaceutical product
      candidates.***





If
      any of
      our products or product candidates for which we receive regulatory approval
      do
      not achieve broad market acceptance, the revenues that we generate from their
      sales will be limited.





The
      commercial success of any of our products or product candidates for which we
      obtain marketing approval from regulatory authorities will depend upon the
      acceptance of these products by the medical community, including physicians,
      patients and healthcare payors. The degree of market acceptance of any of our
      approved products will depend on a number of factors, including:





·
            demonstration
                of clinical safety and efficacy compared to other
                products;·
            the
                relative convenience and ease of administration;·
            the
                prevalence and severity of any adverse side effects;·
            limitations
                or warnings contained in a product’s approved labeling;·
            availability
                of alternative treatments, including, a number of competitive products
                already approved or expected to be commercially launched in the near
                future;·
            pricing
                and cost effectiveness;·
            the
                effectiveness of our or any future collaborators’ sales and marketing
                strategies;·
            our
                ability to obtain sufficient third-party coverage or reimbursement;
                and·
            the
                willingness of patients to pay out of pocket in the absence of third-party
                coverage.





If
      any of
      our products or approved product candidates do not achieve an adequate level
      of
      acceptance by physicians, healthcare payors and patients, we may not generate
      sufficient revenue from these products, and we may not become or remain
      profitable. In addition, our efforts to educate the medical community and
      third-party payors on the benefits of our product candidates may require
      significant resources and may never be successful.





Moreover,
      even if any of our products or product candidates receive marketing approval,
      we
      or others may later identify undesirable side effects caused by the product,
      and
      in that event a number of potentially significant negative consequences could
      result, including but not limited to:





·
            regulatory
                authorities may withdraw their approval of the product;·
            regulatory
                authorities may require the addition of labeling statements, such
                as
                warnings or contraindications;·
            we
                may be required to change the way the product is administered, conduct
                additional clinical trials or change the labeling of the product;
                and·
            our
                reputation may suffer.





Any
      of
      these events could prevent us from achieving or maintaining market acceptance
      of
      the affected product or product candidate and could substantially increase
      the
      costs of commercializing our other products or product candidates.





***We
      may have difficulties in developing future biopharmaceutical
      products.***





Our
      product candidates are prone to the risks of failure inherent in drug
      development. Before obtaining regulatory approvals for the commercial sale
      of
      any product candidate for a target indication we must demonstrate with
      substantial evidence gathered in well-controlled clinical trials and to the
      satisfaction of regulatory authorities that the product candidate is safe and
      effective for use for that target indication.


26





Despite
      our efforts, our product candidates may not:





·
            offer
                therapeutic or other improvement over existing, comparable
                drugs;·
            be
                proven safe and effective in clinical trials;·
            meet
                applicable regulatory standards;·
            be
                capable of being produced in commercial quantities at acceptable
                costs;
                or·
            be
                successfully commercialized.





Positive
      results in preclinical studies of a product candidate may not be predictive
      of
      similar results in humans during clinical trials, and promising results from
      early clinical trials of a product candidate may not be replicated in later
      clinical trials. Interim results of a clinical trial do not necessarily predict
      final results. A number of companies in the pharmaceutical and biotechnology
      industries have suffered significant setbacks in late-stage clinical trials
      even
      after achieving promising results in early-stage development. Accordingly,
      the
      results from completed preclinical studies and clinical trials may not be
      predictive of the results we may obtain in later stage trials. Our preclinical
      studies or clinical trials may produce negative or inclusive results, and we
      may
      decide, or regulators may require us, to conduct additional preclinical studies
      or clinical trials.




Undesirable
      side effects caused by our product candidates could cause us, regulatory
      authorities or institutional review boards to interrupt, delay or halt clinical
      trials and could result in the denial of regulatory approval.





***We
      have limited business insurance coverage.***





The
      insurance industry in China is still at an early stage of development. Insurance
      companies in China offer limited business insurance products. As a result,
      we do
      not have any property or casualty insurance coverage for our facilities or
      business liability insurance coverage for our operations. If we incur any
      losses, we will have to bear those losses without any assistance. As a result,
      we may not have sufficient capital to cover material damage to, or the loss
      of,
      our manufacturing facilities due to fire, severe weather, flood or other causes,
      and such damage or loss would have a material adverse effect on our financial
      condition, business and prospects.





***Risk
      Related to our Stock***





***Our
      common stock is subject to the “penny stock” rules of the SEC and the trading
      market in our securities is limited, which makes transactions in our stock
      cumbersome and may reduce the value of an investment in our
      stock.***




The
      Securities and Exchange Commission has adopted Rule 15g-9 which establishes
      the
      definition of a “penny stock,” for the purposes relevant to us, as any equity
      security that has a market price of less than $5.00 per share or with an
      exercise price of less than $5.00 per share, subject to certain exceptions.
      For
      any transaction involving a penny stock, unless exempt, the rules
      require:




·
            that
                a broker or dealer approve a person’s account for transactions in penny
                stocks; and·
            the
                broker or dealer receive from the investor a written agreement to
                the
                transaction, setting forth the identity and quantity of the penny
                stock to
                be purchased.




In
      order
      to approve a person’s account for transactions in penny stocks, the broker or
      dealer must:




·
            obtain
                financial information and investment experience objectives of the
                person;
                and·
            make
                a reasonable determination that the transactions in penny stocks
                are
                suitable for that person and the person has sufficient knowledge
                and
                experience in financial matters to be capable of evaluating the risks
                of
                transactions in penny stocks.




27





The
      broker or dealer must also deliver, prior to any transaction in a penny stock,
      a
      disclosure schedule prescribed by the Commission relating to the penny stock
      market, which, in highlight form:




·
            sets
                forth the basis on which the broker or dealer made the suitability
                determination; and·
            that
                the broker or dealer received a signed, written agreement from the
                investor prior to the transaction.




Generally,
      brokers may be less willing to execute transactions in securities subject to
      the
“penny stock” rules. This may make it more difficult for investors to dispose of
      our common stock and cause a decline in the market value of our
      stock.




Disclosure
      also has to be made about the risks of investing in penny stocks in both public
      offerings and in secondary trading and about the commissions payable to both
      the
      broker-dealer and the registered representative, current quotations for the
      securities and the rights and remedies available to an investor in cases of
      fraud in penny stock transactions. Finally, monthly statements have to be sent
      disclosing recent price information for the penny stock held in the account
      and
      information on the limited market in penny stocks.





***There
      are substantial risks of lack of liquidity and volatility
      risks.***





Currently,
      the Company’s common stock is quoted in the OTC Bulletin Board (the
“ **OTCBB** ”)
      market
      under the symbol “SOBM”. The liquidity of our common stock may be very limited
      and affected by its limited trading market. The OTCBB market is an inter-dealer
      market much less regulated than the major exchanges, and is subject to abuses
      and volatilities and shorting. There is currently no broadly followed and
      established trading market for our common stock. An established trading market
      may never develop or be maintained. Active trading markets generally result
      in
      lower price volatility and more efficient execution of buy and sell orders.
       Absence of an active trading market reduces the liquidity of the shares
      traded there.





The
      trading volume of our common stock may be limited and sporadic.  As a
      result of such trading activity, the quoted price for our common stock on the
      OTCBB may not necessarily be a reliable indicator of its fair market value.
       In addition, if our shares of common stock cease to be quoted, holders
      would find it more difficult to dispose of or to obtain accurate quotations
      as
      to the market value of, our common stock and as a result, the market value
      of
      our common stock likely would decline.





***Because
      we do not intend to pay any cash dividends on our shares of common stock, our
      stockholders will not be able to receive a return on their shares unless they
      sell them.***




We
      intend
      to retain any future earnings to finance the development and expansion of our
      business. We do not anticipate paying any cash dividends on our Common Stock
      in
      the foreseeable future. Unless we pay dividends, our stockholders will not
      be
      able to receive a return on their shares unless they sell them.





***We
      are a holding company and rely on the receipt of dividends from our operating
      subsidiaries. We may encounter limitations on the ability of our subsidiaries
      to
      pay dividends to us.***





As
      a
      holding company, we have no direct business operations other than the ownership
      of our operating subsidiaries. Our ability to pay dividends and meet other
      obligations depends upon the receipt of dividends or other payments from our
      operating subsidiaries. In addition, our operating subsidiaries, from time
      to
      time, may be subject to restrictions on their ability to make distributions
      to
      us, including as a result of restrictive covenants in loan agreements,
      restrictions on the conversion of local currency into U.S. dollars or other
      hard
      currency and other regulatory restrictions relating to doing business in China.
      If future dividends are paid in Renminbi, fluctuations in the exchange rate
      for
      the conversion of Renminbi into U.S. dollars may reduce the amount received
      by
      U.S. stockholders upon conversion of the dividend payment into U.S.
      dollars.




28


***Risks
      Related To Government Regulation***




***We
      can only sell products that have received regulatory approval and many factors
      affect our ability to obtain such approvals.***




Pre-clinical
      and clinical trials of our products, and the manufacturing and marketing of
      our
      technologies, are subject to extensive, costly and rigorous regulation by
      governmental authorities in the People’s Republic of China (“PRC”) and in other
      countries. Even if we complete preclinical and clinical trials successfully,
      we
      may not be able to obtain applicable regulatory approvals. We cannot market
      any
      product candidate until we have both completed our clinical trials and obtained
      the necessary regulatory approvals for that product candidate.




Conducting
      clinical trials and obtaining regulatory approvals are uncertain, time consuming
      and expensive processes. The process of obtaining required regulatory approvals
      from the China State Food and Drug Administration (the China “ **SFDA** ”),
      and
      other regulatory authorities often takes many years to complete and can vary
      significantly based on the type, complexity and novelty of the product
      candidates.




There
      can
      be no assurance that all of the clinical trials pertaining to our recombinant
      protein drugs and vaccines in development will be completed within the time
      frames anticipated by us. We could encounter difficulties in enrolling such
      recombinant protein drugs and vaccines for trials or encounter setbacks during
      the conduct of trials that result in delays or trial cancellation. Data obtained
      from preclinical and clinical studies are subject to varying interpretations
      that could delay, limit or prevent regulatory approval, and failure to observe
      regulatory requirements or inadequate manufacturing processes are examples
      of
      other problems that could prevent approval. In addition, we may encounter delays
      or rejections in the event of additional government regulations from future
      legislation, administrative action or changes in China SFDA policy or if
      unforeseen health risks become an issue with the participants of clinical
      trials. Clinical trials may also fail at any stage of testing. Results of early
      trials frequently do not predict results of later trials, and acceptable results
      in early trials may not be repeated. For these reasons, we do not know whether
      regulatory authorities will grant approval for any of our product candidates
      in
      the future.




Delays
      in
      obtaining China SFDA or foreign approvals of our products could result in
      substantial additional costs and adversely affect our ability to compete with
      other companies. Even if regulatory approval is ultimately granted, there can
      be
      no assurance that we can maintain the approval or that the approval will not
      be
      withdrawn. Any approval received may also restrict the intended use and
      marketing of the product we want to commercialize.




Outside
      the PRC, our ability to market any of our potential products is contingent
      upon
      receiving marketing authorizations from the appropriate regulatory authorities.
      These foreign regulatory approval processes include all of the risks associated
      with the China SFDA approval process described above and may include additional
      risks.




***We
      may not be able to comply with applicable good manufacturing practice
      requirements and other regulatory requirements, which could have a material
      adverse affect on our business, financial condition and results of operations.***




We
      are
      required to comply with applicable good manufacturing practice regulations,
      which include requirements relating to quality control and quality assurance
      as
      well as corresponding maintenance, record-keeping and documentation standards.
      Manufacturing facilities must be approved by governmental authorities before
      we
      can use them to commercially manufacture our products and are subject to
      inspection by regulatory agencies.




If
      we
      fail to comply with applicable regulatory requirements, including following
      any
      product approval, we may be subject to sanctions, including:




29





·
            Fines;·
            Product
                recalls or seizure;·
            Injunctions;·
            Refusal
                of regulatory agencies to review pending market approval applications
                or
                supplements to approval applications;·
            Total
                or partial suspension of production;·
            Civil
                penalties;·
            Withdrawals
                of previously approved marketing applications; or·
            Criminal
                prosecution.





***Failure
      to comply with the U.S. Foreign Corrupt Practices Act could subject us to
      penalties and other adverse consequences.***





We
      are
      subject to the U.S. Foreign Corrupt Practices Act, which generally prohibits
      U.S. companies from engaging in bribery or other prohibited payments to foreign
      officials for the purpose of obtaining or retaining business. In addition,
      we
      are required to maintain records that accurately and fairly represent our
      transactions and have an adequate system of internal accounting controls.
      Chinese companies and some other foreign companies, including some that may
      compete with us, are not subject to these prohibitions, and therefore may have
      a
      competitive advantage over us. Corruption, extortion, bribery, pay-offs, theft
      and other fraudulent practices occur from time-to-time in the PRC, and our
      executive officers and employees have not been subject to the U.S. Foreign
      Corrupt Practices Act prior to the completion of the Share Purchase Agreement.
      We can make no assurance that our employees or other agents will not engage
      in
      such conduct for which we might be held responsible. If our employees or other
      agents are found to have engaged in such practices, we could suffer severe
      penalties and other consequences that may have a material adverse effect on
      our
      business, financial condition and results of operations.





***A
      recent campaign imposed by the Chinese government against the export of unsafe
      and substandard products, could hinder our ability to export our products
      internationally.***





In
      August
      2007, China’s Administration of Quality Supervision, Inspection and Quarantine
      (“ **AQSIQ** ”)
      announced an ongoing national campaign in China against unsafe food and
      substandard products. The special campaign against poor product quality was
      launched in response to a series of safety scares involving Chinese products
      worldwide. The campaign set 20 detailed goals, including twelve “100 percents”.
      The campaign, which was originally scheduled to finish at the end of 2007,
      is
      currently scheduled to continue throughout 2008.





As
      a
      result of this campaign by the AQSIQ, there has been a general slow-down and
      backlog of export clearances for certain Chinese consumer products. If we seek
      to export our products in the future, we may experience significant delays
      in
      obtaining export clearances.





***Compliance
      with changing regulation of corporate governance and public disclosure will
      result in additional expenses and pose challenges for our management
      team.***





Changing
      laws, regulations and standards relating to corporate governance and public
      disclosure, including the Sarbanes-Oxley Act and SEC regulations, have
      created uncertainty for public companies and significantly increased the costs
      and risks associated with accessing the public markets and public reporting.
      Our
      management team will need to devote significant time and financial resources
      to
      comply with both existing and evolving standards for public companies, which
      will lead to increased general and administrative expenses and a diversion
      of management time and attention from revenue generating activities to
      compliance activities.




30


***Standards
      for compliance with Section 404 of the Sarbanes-Oxley Act are uncertain, and
      if
      we fail to comply in a timely manner, our business could be harmed and our
      stock
      price could decline.***





Rules
      adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act require
      an
      annual assessment of a public company’s internal control over financial
      reporting, and attestation of this assessment by the public company’s
      independent registered public accountants. We believe that the annual assessment
      of our internal controls requirement will first apply to our annual report
      for
      the 2008 fiscal year and the attestation requirement of management’s assessment
      by our independent registered public accountants will first apply to our annual
      report for the 2009 fiscal year. The standards that must be met for management
      to assess the internal control over financial reporting are new and complex,
      and
      require significant documentation, testing and possible remediation to meet
      the
      detailed standards. We may encounter problems or delays in completing activities
      necessary to make an assessment of our internal control over financial
      reporting. In addition, the attestation process by our independent registered
      public accountants is new and we may encounter problems or delays in completing
      the implementation of any requested improvements and receiving an attestation
      of
      our assessment by our independent registered public accountants. If we cannot
      assess our internal control over financial reporting as effective, or our
      independent registered public accountants are unable to provide an unqualified
      attestation report on such assessment, investor confidence and share value
      may
      be negatively impacted.





***Risks
      Related To Our Intellectual Property***





***If
      we are unable to protect our intellectual property, we may not be able to
      operate our business profitably.***




Our
      success depends, in part, on our ability to protect our proprietary
      technologies. We try to protect the technology that we consider important to
      our
      business by filing PRC patent applications and relying on trade secret and
      pharmaceutical regulatory protection.




In
      addition to patents, we rely on trade secrets and proprietary know-how to
      protect our intellectual property. We have entered into confidentiality
      agreements (which include, in the case of employees, non-competition provisions)
      with the majority of our employees and all our advisors. These agreements
      provide that all confidential information developed or made known to the
      individual during the course of the individual’s relationship with us is to be
      kept confidential and not disclosed to third parties except in specific
      circumstances. In the case of our employees, the agreements provide that all
      of
      the technology which is conceived by the individual during the course of
      employment is our exclusive property. These agreements may not provide
      meaningful protection or adequate remedies in the event of unauthorized use
      or
      disclosure of our proprietary information. In addition, it is possible that
      third parties could independently develop proprietary information and techniques
      substantially similar to ours or otherwise gain access to our trade secrets.




We
      cannot
      assure you that our current or potential competitors, many of which have
      substantial resources and may have made substantive investments in competing
      technologies, do not have and will not develop, products that compete directly
      with our products despite our intellectual property rights.




Intellectual
      property rights and confidentiality protections in China may not be as effective
      as in the United States or other countries. For example, implementation and
      enforcement of PRC intellectual property-related laws have historically been
      deficient and ineffective and may be hampered by corruption and local
      protectionism. Policing unauthorized use of proprietary technology is difficult
      and expensive, and we might need to resort to litigation to enforce or defend
      patents issued to us or to determine the enforceability, scope and validity
      of
      our proprietary rights or those of others. The experience and capabilities
      of
      PRC courts in handling intellectual property litigation varies, and outcomes
      are
      unpredictable. Further, such litigation may require significant expenditure
      of
      cash and management efforts and could harm our business, financial condition
      and
      results of operations. An adverse determination in any such litigation could
      materially impair our intellectual property rights and may harm our business,
      prospects and reputation.




31


***We
      may depend on market exclusivity for certain of our products, which will afford
      us less protection than patents.***




Assuming
      regulatory approvals are obtained, our ability to successfully commercialize
      certain drugs may depend on the availability of market exclusivity under PRC
      law, which provides protection for certain new products. Under the PRC’s former
      Regulation on the Protection of New Pharmaceuticals and Technology Transfer,
      new
      drugs were afforded exclusivity protection of six, eight or twelve years,
      depending on the category of the drug in question. During the protection period,
      the China SFDA would not accept third parties’ applications for manufacturing
      the drug under protection.





After
      China joined the WTO in 2001, the government amended and implemented many laws
      and regulations in the area of pharmaceuticals. Currently, the Drug
      Administration Law, Implementing Regulations on Drug Administration and Drug
      Registration Regulation are the primary laws and regulations governing the
      exclusive protection regime for new drugs.





The
      Implementing Regulations on Drug Administration provide that the China SFDA
      may
      establish a monitoring period for up to five years for certain new drugs to
      monitor the safety of these products. During the monitoring period, the China
      SFDA will not accept third parties’ application for manufacturing or importing
      the same drug. The China SFDA’s regulations provide that the monitoring period
      shall be 3, 4 or 5 years. The China SFDA determines the availability and length
      of the monitoring period depending on the approval conditions of the same or
      similar drugs in China and in overseas markets. According to the Regulations
      on
      the Drug Registration promulgated by the China SFDA in 2005, in case there
      is
      more than one application for the same new drug pending, after the issuance
      of
      the first production license afforded with a monitoring period, the other
      co-pending applications should be rejected unless a clinical trial application
      has been approved.





***If
      our products infringe the intellectual property rights of third parties, we
      may
      incur substantial liabilities, and we may be unable to sell these products.***





Our
      commercial success depends significantly on our ability to operate without
      infringing the patents and other proprietary rights of third parties. Patent
      applications are maintained incognito until their publication 18 months from
      the
      filing date. The publication of discoveries in the scientific or patent
      literature frequently occurs substantially later than the date on which the
      underlying discoveries were made and patent applications are filed. China,
      similar to many other countries, adopts the first-to-file system under which
      whoever first files a patent application (instead of the one who makes first
      actual discoveries) will be awarded a patent. Even after reasonable
      investigation we may not know with certainty whether we have infringed upon
      a
      third-party’s patent because such third-party may have filed a patent
      application without our knowledge while we are still developing that product.
      If
      a third-party claims that we infringe upon its proprietary rights, any of the
      following may occur:




·
            We
                may become involved in time-consuming and expensive litigation, even
                if
                the claim is without merit;·
            We
                may become liable for substantial damages for past infringement if
                a court
                decides that our technology infringes upon a competitor’s
                patent;·
            A
                court may prohibit us from selling or licensing our product without
                a
                license from the patent holder, which may not be available on commercially
                acceptable terms, if at all, or which may require us to pay substantial
                royalties or grant cross licenses to our patents, and·
            We
                may have to reformulate our product so that it does not infringe
                upon
                others’ patent rights, which may not be possible or could be very
                expensive and time-consuming.




If
      any of
      these events occurs, our business will suffer and the market price of our common
      shares could decline.




32


***The
      success of our business may depend on licensing biologics from, and entering
      into collaboration arrangements with, third parties. We cannot be certain that
      our licensing or collaboration efforts will succeed or that we will realize
      any
      revenue from them.***




The
      success of our business strategy may be, in part, dependent on our ability
      to
      enter into licensing and collaboration arrangements and to manage effectively
      the resulting relationships.




Our
      ability to enter into agreements with commercial partners depends in part on
      our
      ability to convince them of the value of our technology and know-how. This
      may
      require substantial time and effort on our part. While we anticipate expending
      substantial funds and management effort, we cannot assure you that strategic
      relationships will result or that we will be able to negotiate additional
      strategic agreements in the future on acceptable terms, if at all. Furthermore,
      we may incur significant financial commitments to collaborators in connection
      with potential licenses and sponsored research agreements. In addition, we
      may
      not be able to control the areas of responsibility undertaken by our strategic
      partners and may be adversely affected should these partners prove unable to
      carry a product candidate forward to full commercialization or should they
      lose
      interest in dedicating the necessary resources toward developing any such
      product quickly.




Third
      parties may terminate our licensing and other strategic arrangements if we
      do
      not perform as required under these arrangements. Generally, we expect that
      agreements for rights to develop technologies will require us to exercise
      diligence in bringing product candidates to market and may require us to make
      milestone and royalty payments that, in some instances, could be substantial.
      Our failure to exercise the required diligence or make any required milestone
      or
      royalty payments could result in the termination of the relevant license
      agreement, which could have a material adverse effect on us and our operations.
      In addition, these third parties may also breach or terminate their agreements
      with us or otherwise fail to conduct their activities in connection with our
      relationships in a timely manner. If we or our partners terminate or breach
      any
      of our licenses or relationships, we:




·
            May
                lose our rights to develop and market our product
                candidates;·
            May
                lose trade secret protection for our product
                candidates;·
            May
                experience significant delays in the development or commercialization
                of
                our product candidates;·
            May
                not be able to obtain any other licenses on acceptable terms, if
                at all;
                and·
            May
                incur liability for damages.




Licensing
      arrangements and strategic relationships in our industry can be very complex,
      particularly with respect to intellectual property rights. Disputes may arise
      in
      the future regarding ownership rights to technology developed by or with other
      parties. These and other possible disagreements between us and third parties
      with respect to our licenses or our strategic relationships could lead to delays
      in the research, development, manufacture and commercialization of our product
      candidates. These disputes could also result in litigation or arbitration,
      both
      of which are time-consuming and expensive. These third parties also may pursue
      alternative technologies or product candidates either on their own or in
      strategic relationships with others in direct competition with us.





***Any
      cessation or suspension of our collaborations with scientific advisors and
      academic institutions may increase our costs in research and development and
      lengthen our new vaccines/drugs development process and lower our efficiency
      in
      new products development.***




We
      work
      with scientific advisors and academic collaborators who assist us in our
      research and development efforts. We generally benefit considerably from the
      resources, technology and experience such academic collaboration may bring
      us.
      Any cessation or suspension of our collaborations with scientific advisors
      and
      academic institutions may increase our costs in research and development and
      lengthen our new vaccines development process and lower our efficiency in new
      products development.




33


***Risks
      Related To Doing Business in China***




***Adverse
      changes in political, economic and other policies of the Chinese government
      could have a material adverse effect on the overall economic growth of China,
      which could reduce the demand for our products and materially and adversely
      affect our competitive position.***




All
      of
      our business operations are conducted in China, and all of our sales are
      currently made in China. Accordingly, our business, financial condition, results
      of operations and prospects are affected significantly by economic, political
      and legal developments in China. The Chinese economy differs from the economies
      of most developed countries in many respects, including:




·
            The
                extent of government involvement;·
            The
                level of development;·
            The
                growth rate;·
            The
                control of foreign exchange;·
            The
                allocation of resources;·
            An
                evolving regulatory system; and·
            Lack
                of sufficient transparency in the regulatory
                process.




While
      the
      Chinese economy has experienced significant growth in the past 20 years, growth
      has been uneven, both geographically and among various sectors of the economy.
      The Chinese government has implemented various measures to encourage economic
      growth and guide the allocation of resources. Some of these measures benefit
      the
      overall Chinese economy, but may also have a negative effect on us. For example,
      our financial condition and results of operations may be adversely affected
      by
      government control over capital investments or changes in tax regulations that
      are applicable to us.




The
      Chinese economy has been transitioning from a planned economy to a more
      market-oriented economy. Although in recent years the Chinese government has
      implemented measures emphasizing the utilization of market forces for economic
      reform, the reduction of state ownership of productive assets and the
      establishment of sound corporate governance in business enterprises, a
      substantial portion of the productive assets in China is still owned by the
      Chinese government. The continued control of these assets and other aspects
      of
      the national economy by the Chinese government could materially and adversely
      affect our business. The Chinese government also exercises significant control
      over Chinese economic growth through the allocation of resources, controlling
      payment of foreign currency-denominated obligations, setting monetary policy
      and
      providing preferential treatment to particular industries or companies. Efforts
      by the Chinese government to slow the pace of growth of the Chinese economy
      could result in decreased expenditures by hospitals and other users of our
      products, which in turn could reduce demand for our products.





Moreover,
      the political relationship between the United States, Europe, or other Asian
      nations and China is subject to sudden fluctuation and periodic tension. Changes
      in political conditions in China and changes in the state of foreign relations
      are difficult to predict and could adversely affect our operations or cause
      our
      products to become less attractive. This could lead to a decline in our
      profitability.




Any
      adverse change in the economic conditions or government policies in China could
      have a material adverse effect on overall economic growth and the level of
      healthcare investments and expenditures in China, which in turn could lead
      to a
      reduction in demand for our products and consequently have a material adverse
      effect on our businesses.


34





***Future
      changes in laws, regulations or enforcement policies in China could adversely
      affect our business.***




Laws,
      regulations and enforcement policies in China, including those regulating our
      business, are evolving and subject to future change. Future changes in laws,
      regulations or administrative interpretations, or stricter enforcement policies
      by the Chinese government, could impose more stringent requirements on us,
      including fines or other penalties. Changes in applicable laws and regulations
      may also increase our operating costs. Compliance with such requirements could
      impose substantial additional costs or otherwise have a material adverse effect
      on our business, financial condition and results of operations. These changes
      may relax some requirements, which could be beneficial to our competitors or
      could lower market entry barriers and increase competition. Further, regulatory
      agencies in China may periodically, and sometimes abruptly, change their
      enforcement practice. Therefore, prior enforcement activity, or lack of
      enforcement activity, is not necessarily predictive of future actions. Any
      enforcement actions against us could have a material and adverse effect on
      us
      and the market price of our common shares. In addition, any litigation or
      governmental investigation or enforcement proceedings in China may be protracted
      and may result in substantial cost and diversion of resources and management
      attention, negative publicity, damage to our reputation and decline in the
      price
      of our common shares.





***We
      may have difficulty establishing adequate management, legal and financial
      controls in China.***





PRC
      companies historically have not adopted a Western style of management and
      financial reporting concepts and practices, which includes strong corporate
      governance, internal controls and computer, financial and other control systems.
      As a result, we may experience difficulty in establishing management, legal
      and
      financial controls, collecting financial data and preparing financial
      statements, books of account and corporate records and instituting business
      practices that meet standards required of U.S. public companies. Therefore,
      we
      may, in turn, experience difficulties in implementing and maintaining adequate
      internal controls as required under Section 404 of the Sarbanes-Oxley Act.
      This
      may result in significant deficiencies or material weaknesses in our internal
      controls which could impact the reliability of our financial statements and
      prevent us from complying with SEC rules and regulations and the requirements
      of
      the Sarbanes-Oxley Act. Any such deficiencies, weaknesses or lack of compliance
      could have a material adverse effect on our business.





***The
      Chinese government exerts substantial influence over the manner in which we
      must
      conduct our business activities.***





In
      the
      last 20 years, despite a process of devolution of regulatory control to
      provincial and local levels and resulting economic autonomy and private economic
      activities, the Chinese central government has exercised and continues to
      exercise substantial control over virtually every sector of the Chinese economy
      through regulation and state ownership. Our ability to operate in China may
      be
      harmed by changes in its laws and regulations, including those relating to
      taxation, import and export tariffs, environmental regulations, land use rights,
      property and other matters. We believe that our operations in China are in
      material compliance with all applicable legal and regulatory requirements.
      However, the central or local governments of the jurisdictions in which we
      operate may impose new, stricter regulations or interpretations of existing
      regulations that would require additional expenditures and efforts on our part
      to ensure our compliance with such regulations or interpretations.





Accordingly,
      government actions in the future, including any decision to adjust
      economic policies or even to return to a more centrally planned
      economy or regional or local variations in the implementation of economic
      policies, could have a significant effect on economic conditions in China or
      particular regions thereof, and could require us to divest ourselves of any
      interest we then hold in Chinese properties or joint ventures.


35





***Fluctuation
      in the value of the Chinese currency may have a material adverse effect on
      your
      investment.***




The
      value
      of the Chinese currency, the Renminbi yuan, against the U.S. dollar and other
      currencies may fluctuate and is affected by, among other things, changes in
      China’s political and economic conditions. The conversion of Renminbi yuan into
      foreign currencies, including U.S. dollars, has historically been set by the
      People’s Bank of China. On July 21, 2005, the PRC government changed its policy
      of pegging the value of the Renminbi yuan to the U.S. dollar. Under the new
      policy, the Renminbi yuan is permitted to fluctuate within a band against a
      basket of certain foreign currencies. This change in policy resulted initially
      in an approximately 2.0% appreciation in the value of the Renminbi yuan against
      the U.S. dollar. Since the adoption of this new policy, the value of Renminbi
      yuan against the U.S. dollar has fluctuated on a daily basis within narrow
      ranges, but overall has continued to strengthen against the U.S. dollar. There
      remains significant international pressure on the PRC government to further
      liberalize its currency policy, which could result in a further and more
      significant appreciation or depreciation in the value of the Renminbi yuan
      against the U.S. dollar. Any significant revaluation of the Renminbi yuan may
      have a material adverse effect on our revenues and financial condition, and
      the
      value of, and any dividends payable on, our common shares in foreign currency
      terms. For example, to the extent that we need to convert U.S. dollars into
      Renminbi yuan for our operations, appreciation of the Renminbi yuan against
      the
      U.S. dollar would reduce the Renminbi yuan amount we receive from the
      conversion. Conversely, if we decide to convert our Renminbi yuan into U.S.
      dollars for the purpose of making dividend payments on our common shares or
      for
      other business purposes, appreciation of the U.S. dollar against the Renminbi
      yuan would reduce the U.S. dollar amount available to us.





***Under
      the new EIT Law, we may be classified a “resident enterprise” for PRC tax
      purposes, which may subject us to PRC enterprise income tax for any dividends
      we
      receive from our Chinese subsidiaries and to PRC income tax withholding for
      any
      dividends we pay to our non-PRC shareholders.***





On
      March
      16, 2007, the National People’s Congress promulgated the Law of the People’s
      Republic of China on Enterprise Income Tax, or the new EIT Law,
      which became effective on January 1, 2008. In accordance with the new EIT
      Law, the corporate income tax rate is set at 25% for all enterprises. However,
      certain industries and projects, such as enterprises with foreign investors,
      may
      enjoy favorable tax treatment pursuant to the new EIT Law and its implementing
      rules.





Under
      the
      new EIT Law, an enterprise established outside of China whose “de facto
      management bodies” are located in China is considered a “resident enterprise”
and is subject to the 25% enterprise income tax rate on its worldwide income.
      The new EIT Law and its implementing rules are relatively new, and currently,
      no
      official interpretation or application of this new “resident enterprise”
classification is available. Therefore, it is unclear how tax authorities will
      determine the tax residency of enterprises established outside of
      China.





Most
      of
      our management is currently based in China. If the PRC tax authorities determine
      that our U.S. holding company is a “resident enterprise” for PRC enterprise
      income tax purposes, we may be subject to an enterprise income tax rate of
      25%
      on our worldwide taxable income. The “resident enterprise” classification also
      could subject us to a 10% withholding tax on any dividends we pay to our non-PRC
      shareholders if the relevant PRC authorities determine that such income is
      PRC-sourced income. In addition to the uncertainties regarding the
      interpretation and application of the new “resident enterprise” classification,
      the new EIT Law may change in the future, possibly with retroactive effect.
      If
      we are classified as a “resident enterprise” and we incur these tax liabilities,
      our net income will decrease accordingly.





***It
      may be difficult to effect service of process and enforcement of legal judgments
      upon our subsidiaries and some of our officers and directors because they reside
      outside the United States.***





Our
      operating subsidiaries are presently based in China and some of our directors
      and officers reside in China, service of process on our operating subsidiaries
      and such directors and officers may be difficult to effect within the United
      States.  Also, substantially all of our subsidiaries’ assets are located in
      China and any judgment obtained in the United States against our subsidiaries
      may not be enforceable outside the United States.





***Since
      all of our subsidiaries’ assets are located in China, any dividends of proceeds
      from liquidation is subject to the approval of the relevant Chinese government
      agencies.***





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


36





***We
      are required to be in compliance with the registered capital requirements of
      the
      PRC.***





Under
      the
      company law of China, the combined company will be required to contribute a
      certain amount of “registered capital” to its wholly owned subsidiary. By law,
      the Company’s subsidiaries are required to contribute at least 10% of after tax
      net income (as determined in accordance with Chinese GAAP) into a statutory
      surplus reserve until the reserve is equal to 50% of the subsidiaries’
registered capital, and between 5% and 10% of its after tax net income, as
      determined by the subsidiaries’ board of directors, into a public welfare fund.
      These reserve funds are recorded as part of shareholders' equity but are not
      available for distribution to shareholders other than in the case of
      liquidation. As a result of this requirement, the amount of net income available
      for distribution to shareholders will be limited.




**ITEM
      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS**




On
      July
      30, 2008 the Company closed an initial $100,000 portion of a $500,000 financing
      pursuant to a Non-U.S. and Non-Canadian Private Placement Subscription
      Agreement, dated June 30, 2008, between the Company and Accelera Evolution
      Limited (“Accelera”), an Asian-based investment fund. The Company issued
      Accelera a $100,000 principal amount convertible debenture due July 1, 2011,
      convertible into shares of our common stock, par value $0.0001, at a price
      of
      $0.30 per share together with 300,000 common share purchase warrants (each
      a
“Warrant”) and 600,000 common share purchase piggyback warrants (each a
“Piggyback Warrant”). Each Warrant entitles the holder thereof to acquire one
      additional share of common stock in the capital of the Company at a price of
      $0.33 per share (each a “ *Warrant
      Share* ”)
      for
      the period ending at 4:00 p.m. (Pacific Standard Time) on December 1, 2008
      (the
“ *Warrant
      Exercise Period* ”).
      Each
      Piggyback Warrant, which will only be available for exercise by the holder
      thereof if the Warrants have been exercised in full (unless subsequently waived
      in writing by the Company), entitles the holder thereof to acquire one
      additional share of common stock in the capital of the Company at a price of
      $0.37 per share (each a “ *Piggyback
      Warrant Share* ”)
      for
      the period ending at 4:00 p.m. (Pacific Standard Time) on July 1, 2010 (the
      “ *Piggyback
      Warrant Exercise Period* ”).





Interest
      is payable on the principal amount of the convertible debenture outstanding
      at
      8% per annum, calculated and payable quarterly in arrears. Interest payable
      under the convertible debenture shall be paid on the last day of September,
      December, March and June of each year. The holder of the convertible debenture
      has the option to convert any accrued and unpaid interest due at the time of
      a
      conversion.





The
      proceeds from the transaction have been or will be used to fund the business
      of
      Sinobiomed Inc. and for general corporate purposes.





The
      foregoing description of the Convertible Debenture of Sinobiomed Inc. in the
      principal sum of $100,000 issued to Accelera Evolution Limited does not purport
      to be complete and is qualified in its entirety by reference to the Convertible
      Debenture of Sinobiomed Inc. in the principal sum of $100,000 issued to Accelera
      Evolution Limited, which was attached as Exhibit 10.2 to the Form 8-K filed
      on
      August 8, 2008, which is incorporated herein by reference.





On
      November 11, 2008 the Company closed a second $250,000 portion of a $350,000
      financing, which was reduced from the original amount of $500,000 pursuant
      to a
      Non-U.S. and Non-Canadian Private Placement Subscription Agreement, dated June
      30, 2008, between the Company and Accelera Ventures Ltd. (“Accelera”), an
      Asian-based investment fund. The Company issued Accelera a $250,000 principal
      amount convertible debenture due July 1, 2011, convertible into shares of our
      common stock, par value $0.0001, at a price of $0.30 per share together with
      750,000 common share purchase warrants (each a “Warrant”) and 1,500,000 common
      share purchase piggyback warrants (each a “Piggyback Warrant”). Each Warrant
      entitles the holder thereof to acquire one additional share of common stock
      in
      the capital of the Company at a price of $0.33 per share (each a “ *Warrant
      Share* ”)
      for
      the period ending at 4:00 p.m. (Pacific Standard Time) on December 1, 2008
      (the
“ *Warrant
      Exercise Period* ”).
      Each
      Piggyback Warrant, which will only be available for exercise by the holder
      thereof if the Warrants have been exercised in full (unless subsequently waived
      in writing by the Company), entitles the holder thereof to acquire one
      additional share of common stock in the capital of the Company at a price of
      $0.37 per share (each a “ *Piggyback
      Warrant Share* ”)
      for
      the period ending at 4:00 p.m. (Pacific Standard Time) on July 1, 2010 (the
      “ *Piggyback
      Warrant Exercise Period* ”).




37


Interest
      is payable on the principal amount of the convertible debenture outstanding
      at
      8% per annum, calculated and payable quarterly in arrears. Interest payable
      under the convertible debenture shall be paid on the last day of December,
      March, June and September of each year. The holder of the convertible debenture
      has the option to convert any accrued and unpaid interest due at the time of
      a
      conversion.





The
      proceeds from the transaction have been or will be used to fund the business
      of
      Sinobiomed Inc. and for general corporate purposes.





The
      foregoing description of the Convertible Debenture of Sinobiomed Inc. in the
      principal sum of $250,000 issued to Accelera Ventures Ltd. does not purport
      to
      be complete and is qualified in its entirety by reference to the Convertible
      Debenture of Sinobiomed Inc. in the principal sum of $250,000 issued to Accelera
      Ventures Ltd., which is attached hereto as Exhibit 10.1, which is incorporated
      herein by reference.




**ITEM
      3. DEFAULTS UPON SENIOR SECURITIES**




N/A




**ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**




N/A




**ITEM
      5. OTHER INFORMATION**




On
      August
      31, 2008, the Board of Directors of the Company unanimously approved to: (i)
      amend the exercise price of the 1,000,000 stock options granted to the Company’s
      employees on May 30, 2007 be reducing the exercise price of such stock options
      from $1.90 per share to $0.50 per share; and (ii) amend the exercise price
      of
      the 1,000,000 stock options granted to two of the Company’s directors on
      November 29, 2007 by reducing the exercise price of such stock options from
      $1.90 per share to $0.50 per share.





On
      October 2, 2008, the Board of Directors unanimously approved and granted in
      aggregate 500,000 stock options to the Company’s new CFO, Mr. Lionel Choong
      having an exercise price of $0.50 per share and an expiry date of five years
      from the date of grant. These stock options have vesting provisions of 5% on
      the
      date of grant and 5% on the first day of each month thereafter beginning on
      November 1, 2008.





On
      November 11, 2008 the Company closed a second $250,000 portion of a $350,000
      financing, which was reduced from the original amount of $500,000 pursuant
      to a
      Non-U.S. and Non-Canadian Private Placement Subscription Agreement, dated June
      30, 2008, between the Company and Accelera Ventures Ltd. (“Accelera”), an
      Asian-based investment fund. The Company issued Accelera a $250,000 principal
      amount convertible debenture due July 1, 2011, convertible into shares of our
      common stock, par value $0.0001, at a price of $0.30 per share together with
      750,000 common share purchase warrants (each a “Warrant”) and 1,500,000 common
      share purchase piggyback warrants (each a “Piggyback Warrant”). Each Warrant
      entitles the holder thereof to acquire one additional share of common stock
      in
      the capital of the Company at a price of $0.33 per share (each a “ *Warrant
      Share* ”)
      for
      the period ending at 4:00 p.m. (Pacific Standard Time) on December 1, 2008
      (the
“ *Warrant
      Exercise Period* ”).
      Each
      Piggyback Warrant, which will only be available for exercise by the holder
      thereof if the Warrants have been exercised in full (unless subsequently waived
      in writing by the Company), entitles the holder thereof to acquire one
      additional share of common stock in the capital of the Company at a price of
      $0.37 per share (each a “ *Piggyback
      Warrant Share* ”)
      for
      the period ending at 4:00 p.m. (Pacific Standard Time) on July 1, 2010 (the
      “ *Piggyback
      Warrant Exercise Period* ”).




38


Interest
      is payable on the principal amount of the convertible debenture outstanding
      at
      8% per annum, calculated and payable quarterly in arrears. Interest payable
      under the convertible debenture shall be paid on the last day of December,
      March, June and September of each year. The holder of the convertible debenture
      has the option to convert any accrued and unpaid interest due at the time of
      a
      conversion.




**ITEM
      6. EXHIBITS**




(b)
            Exhibit
                List10.1
            Convertible
                Debenture of Sinobiomed Inc. in the principal sum of $250,000 issued
                to
                Accelera Ventures Ltd.10.2
            Share
                Purchase Warrant Certificate for up to 750,000 common shares of Sinobiomed
                Inc. issued to Accelera Ventures Ltd.10.3
            Share
                Purchase Piggyback Warrant Certificate for up to 1,500,000 common
                shares
                of Sinobiomed Inc. issued to Accelera Ventures Ltd.31.1
            Certificate
                pursuant to Rule 13a-14(a)31.2
            Certificate
                pursuant to Rule 13a-14(a)32.1
            Certificate
                pursuant to 18 U.S.C. §135032.2
            Certificate
                pursuant to 18 U.S.C. §1350


39




**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 19 th day of
      November, 2008




**SINOBIOMED
                INC.**
              (Registrant)By:
                /s/ Banjun YangBanjun
                YangPresident
                and Chief Executive Officer




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




**Signature**
            
            **Title**
            
            **Date**/s/
                Banjun Yang
            
            President,
                CEO, and
              Director
            
            November
                19, 2008Banjun
                Yang/s/
                Ka Yu
            
            Secretary,
                Treasurer
              and
                Director
            
            November
                19, 2008Ka
              Yu/s/
                  Lionel Choong
            
            Chief
                Financial Officer
            
            November
                19, 2008Lionel
                Choong




40