yUNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
  FORM
10-K
   |X|             ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
  For
the fiscal year ended: March 31, 2009
  or
  |   |             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: 0-53600
 
 CHINA
YCT INTERNATIONAL GROUP, INC.
 (Exact
name of registrant as specified in its charter)
  Delaware____                                                                                                                          
65-2954561
  (State
or other jurisdiction of incorporation or
organization)                                                                           
(IRS Employer Identification No.)
    c/o
      Shandong Spring Pharmaceutical Co., Ltd Economic Development
      Zone.
                Gucheng Road Sishui
      County Shandong Province PR China
              273200(Adreess of
      principal executive offices)
              (Zip
      Code)
  
  Issuer's
telephone number: 212-232-0120
 Securities
Registered Pursuant to Section 12(b) of the Act: None
 Securities
Registered Pursuant to Section 12(g) of the Act:
  Common
Stock, $.01 par value per share
 
 Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 406 of the Securities Act.    Yes __ No X
 
 Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.    Yes __ No X
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 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
__
 
 Indicate
by check mark disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K (§ 229.405) is not contained herein, and will not be
contained,  to the best of
registrant's  knowledge,  in definitive proxy or
information  statements incorporated  by
reference  in Part III of this Form 10-K or any  amendment
to this Form 10-K. [X]
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check One)
  Large
accelerated filerAccelerated
filer_Non-accelerated filerSmall 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 __ No X
 
 The
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked price of such common equity, as of June 25,
2009 was $16,515,905.
 
 The
number of shares outstanding of the issuer’s common stock, as of June 25, 2009
was 29,380,073.
 
 Documents
incorporated by reference: NONE
   
 PART
I


CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
  This
Report contains certain forward-looking statements regarding China YCT
International Group, Inc. (“China YCT International Group”), its business and
its financial prospects.  These statements represent Management’s
present intentions and its present belief regarding the Company’s
future.  Nevertheless, there are numerous risks and uncertainties that
could cause our actual results to differ from the results suggested in this
Report.  A number of those risks are set forth in the section of this
report titled “Risk Factors”.
  Because
these and other risks may cause China YCT International Group’s actual results
to differ from those anticipated by Management, the reader should not place
undue reliance on any forward-looking statements that appear in this
Report.  Readers should also take note that China YCT International
Group will not necessarily make any public announcement of changes affecting
these forward-looking statements, which should be considered accurate on this
date only.
 
 ITEM
1.                      BUSINESS
 
 The
Structure of our Business
 
 China YCT
International Group, through its wholly-owned subsidiary, Landway Nano Bio-Tech
Group, Inc., owns 100% of the registered capital of Shandong Spring
Pharmaceutical Co., Ltd. (“Shandong Spring Pharmaceutical”), a corporation
organized in 2005 under the laws of The People’s Republic of
China.  Shandong Spring Pharmaceutical is engaged in the business of
developing, manufacturing and marketing gingko products in the People’s Republic
of China.
  From
January 2006 until January 2007 management of Shandong Spring Pharmaceutical was
engaged in developing the company’s manufacturing facility and distribution
network.  In January 2007 Shandong Spring Pharmaceutical commenced
revenue-producing activities; specifically distributing products manufactured by
Shandong Yong Chun Tang Bioengineering Co., Ltd. (“Shandong Yong Chun Tang”),
which is owned by Yan Tinghe, the Chairman of Shandong Spring
Pharmaceutical.
  Shandong
Spring Pharmaceutical was originally organized as a subsidiary of Shandong Yong
Chun Tang for the purpose of focusing on advanced technology related to the use
of gingko as an aide to health.  Shandong Yong Chun Tang later
transferred ownership of Shandong Spring Pharmaceutical to its
equity-holders.  Through the end of its 2009 fiscal year on March
31, 2009, Shandong Spring Pharmaceutical served solely as a distributor for
Shandong Yong Chun Tang, pursuant to a distribution agreement that fixed the
resale profit that would be earned by Shandong Spring
Pharmaceutical.
  The
profits from our health and beauty aid distribution business are adequate to
fund our ongoing operations.  In order to fully implement its business
plan, however, Shandong Spring Pharmaceutical will require a large capital
infusion to finance the creation of state-of-the-art facilities for the
extraction of compounds from gingko and the formulation of products based on
those compounds.
 
 The
Market for Gingko
  Traditional
Chinese medicine recommends consumption of gingko tea to improve circulation and
pulmonary function.  Although scientific testing of the health
benefits traditionally attributed to gingko has been inconclusive to date, there
remains a widespread belief in the benefits of a regimen of gingko
consumption.  In particular, the potential use of gingko to alleviate
symptoms of Alzheimer’s disease has recently attracted considerable
attention.  Today, therefore, the flavonoid aglycone, a compound
derived from the gingko plant, is used throughout the world in pharmaceutical
formulations as well as in food and cosmetic products.
  The
annual worldwide consumption of various gingko extracts exceeds 460 tons, of
which over 80% is produced in China.  A large portion of the Chinese
production, however, is extracted from gingko biloba, and lacks
aglycone.  Ironically, the primary sources of aglycone-rich extracts
are outside of China.  Our business plan is to compete directly with
these international competitors.  The advantages that we bring to the
competition will be a substantially lower cost of production and advanced
extraction technology.
 3
  Research
and Development:  Our Products
  Our goal
is to utilize advanced biological technology to isolate and extract the
beneficial compounds in plants that have traditionally been known to have
medicinal benefits, primarily gingko.  Toward that end, we have a
staff of ten currently engaged in research and development of new technologies
and resulting products.  In addition we maintain close ties to the
research staffs at Tsinghua University, China Agriculture University, Shandong
Herbal Medicine University, and the Shandong Herbal Medicine Research
Institute.
  Through
March 31, 2009 we have invested approximately $181,531 in research and
development.  The immediate result of our efforts has been three
patents awarded by the Chinese government:
  ·
              Patent
      No. ZL00 2 54604.3 for a gingko regimen pillow.·
              Patent
      No. ZL2005 20082190.2 for a health
pillow.
 ·
              Patent
      No. ZL02 2 14022.0 for a medicated magnetic health
  pillow.
 
 In
addition, we currently have six pending patent applications:
  ·
              Application
      No. 03153489.9.  Technology for flavonoids biotransformation and
      purification.·
              Application
      No. 200610068680.6.  Technology for purification of grapefruit
      glycoside.
 
 ·
              Application
      No. 200610068732.X.  Technology to manufacture gingko regimen
      tea.·
              Application
      No. 200610068731.5.  Application of gingko flavonoids in
      cosmetics.
 
 ·
              Application
      No. 200610068728.3.  Technology to manufacture gingko flavonoids
      capsule.·
              Application
      No. 200610068733.4.  Technology to extract and manufacture high
      purity gingko flavonoids compound.
 
 Based on
the results of our research activities, we have developed a line of health care
products that isolate the primary beneficial qualities of gingko and other
plants to allow our customers to focus their herbal self-treatment
regimens.  When we initiate production, our first products will
be:
  4
 ·
              Gingko
      Nutrient Tea.  This tea combines gingko, fiveleaf gynostemma
      herb, ganoderma lucidem and green tea.  Each of these
      ingredients is native to Shandong Province, which enables us to guarantee
      a tea of the highest quality, with minimal pre-production
      oxygenation.·
              Red
      Sage Root Gingko Tea.  This combination of gingko, red sage
      root, red sage root extract and other active ingredients offers the
      benefits of gingko along with the benefits of red sage, which is believed
      by practitioners of traditional Chinese medicine to improve cardiac
      function by relaxing arteries and dissolving
  obstructions.
 
 ·
              Ganoderma
      Lucidum Nutrient Capsule.  This combination of ganoderma and
      spore powder is microprocessed to achieve optimal absorption into the
      circulatory system.  Practitioners of traditional Chinese
      medicine believe ganoderma accelerates the production of immuno-function
      in the circulatory system, thus aiding in the prevention of tumors and
      cancers.·
              Low
      Polyxylose Capsule.  Practitioners of traditional Chinese
      medicine believe that low level doses of polyxylose aid the intestine in
      the generation of bifidobacterium, the digestive bacteria that line the
      human intestine.  The proliferation of bifidobacterium aids in
      the prevention of intestinal infection and the alleviation of
      diarrhea.
 
 ·
              Tiancibao
      Soybean Capsule.  Recent scientific research in the U.S., albeit
      inconclusive, has identified an association between soybean isoflavone and
      the suppression of development of cancer cells.  Our Tiancibao
      capsules contain soybean isoflavone and protein polypeptide, which
      provides nutritional benefits.·
              Medlar
      Essence Capsule. Medlar has long been considered one of the three
      treasures of traditional Chinese medicine, along with ginseng and
      fleece-flower root polygonum multiflorum thunb.  Medlar contains
      a raft of nutrients known to be essential to health, including 14 kinds of
      aminophenols, carotene, niacin, selenium, lycine and Vitamin
      C.  Medlar is believed to aid pulmonary function and improve
      haematogenesis.
 
 ·
              Protein
      Essence Capsule.   These capsules contain a combination of
      aminophenols and microelements that are believed to aid the body’s natural
      collagen in maintaining skin moisture and texture.·
              Cactus
      Healthy Tablet.  We manufacture this tablet by extracting the
      active compounds from cactus and combining them with other
      nutrients.  The tablets contain more magnesium, autunite and
      iron than one would obtain in an ordinary diet, and provide a supplement
      for these essential nutrients.
 
 ·
              Spirulina
      Platensis Tablet.  Spirulina, a multicell algae, has been
      consumed in the Americas since Pre-Columbian times for both nutrition and
      health.  Spirulina contains aminophenol, amylase, and vitamins
      and minerals.  It is also high in protein and unsaturated fats,
      which are useful for reducing
cholesterol.
 
 Facilities
  Through
March 31, 2009 we have invested $4,570,587 in the development of our
manufacturing and R&D facilities. We have invested an additional $1,454,592
in the acquisition of our campus and farm.
 
 Our plan
is to develop a state of the art enzyme extraction facility for the utilization
of gingko compounds.  Achievement of that goal will depend on our
ability to obtain substantial additional funds.
  5
 Shandong
Spring Pharmaceutical operates on a property of approximately 1,700 acres that
it occupies under a 50 year lease.  Besides housing our executive
offices, the property is home to a manufacturing facility measuring 17,200
m2and a research facility measuring 3,000 m2.  When
completed, our manufacturing facility will have the capacity to process 100 tons
of gingko extract annually.
  The
greater portion of the property, 1,647 acres, is dedicated to agricultural use,
primarily the production of gingko. For the fiscal year 2009, we produced
2,300 tons of gingko leaves on our farm. In addition we have reached
cooperative agreements with gingko growers in Shandong Province who control
approximately 33,000 acres.
  The
manufacturing facility developed by Shandong Spring Pharmaceutical has received
GMP (good manufacturing practices) certification by the Chinese
government. The company has also achieved ISO9000 certification of its
management processes.
  The farm
operated by Shandong Spring Pharmaceutical is operated in a manner consistent
with the requirements for organic certification by the Organic Foods Development
Center.  The farm has been certified as “green” by the Chinese
Ministry of Agriculture, which reflects the company’s dedication to organic
agricultural methods. Currently Shandong Spring Pharmaceutical incurs
approximately $150,000 in expenses annually to comply with government
environmental regulations.  It expects this expense to increase in the
future, as its operations expand and as the government of China adopts more
restrictive environmental regulations.
 
 Marketing
  Our
current operations consist of distributing 34 products manufactured by Shandong
Yong Chun Tang.  Through March 31, 2009 we conducted the distribution
business pursuant to a Purchase and Sale Contract that we signed on December 26,
2006.  The Contract sets forth the wholesale prices at which we
purchase products from Shandong Yong Chun Tang.
  The
products that we are currently distributing are primarily pills and teas that
offer a variety of health benefits.  The product line also includes
moisturizing creams, masques and cosmetics, as well as various toiletries such
as shampoo and toothpaste.  The largest selling product is a “magnetic
pillow.”  No product dominates sales, although the magnetic pillow
accounted for 11.3% of sales in fiscal year 2009.
  We market
through a network of approximately 2000 dealers.  Our in-house
marketing staff supervises independent primary dealers, who sub-distribute
through networks of supermarkets, beauty parlors and other retail
sites.  This network allows us to accomplish broad geographic
distribution with a marketing staff of only eight, thus keeping our overhead to
a minimum.
  When we
commence marketing our proprietary gingko products, we intend to use our
distribution network as the backbone for a multi-dimensional marketing
program.  The key overlay onto our established marketing network will
be an Internet distribution program designed to both promote local sales by our
distribution network and enable customers to purchase our products
online.  Our goal will be to establish worldwide online distribution
of our products.  Towards that end we have established a strategic
distribution agreement with China National Post Logistics, a subsidiary of China
Post, which has 31 provincial offices located throughout China.
  Employees
  Shandong
Spring Pharmaceutical currently employs 54 individuals, each on a full-time
basis.  11 employees are involved in administration; 8 are dedicated
to marketing, 8 to research and development.  The remainder of its
employees are involved in agriculture.
 
 6
 ITEM
1A                      RISK
FACTORS
 
 You
should carefully consider the risks described below before buying our common
stock.  If any of the risks described below actually occurs, that
event could cause the trading price of our common stock to decline, and you
could lose all or part of your investment.
 
 Because
we have not yet commenced our gingko production operations, unexpected factors
may hamper our efforts to implement our business plan.
  Our
business plan contemplates that we will become a fully-integrated grower,
manufacturer and marketer of products derived from gingko.  At the
present time, however, our entire business consists of distributing health and
beauty aids manufactured by Shandong Yong Chun Tang.  In order to
fully implement our business plan, we will have to successfully complete the
development of an agricultural facility and an industrial
facility.   The complexity of this undertaking means that we are
likely to face many challenges, some of which are not yet
foreseeable.  Problems may occur with our raw material production and
with the roll-out of efficient manufacturing processes.  If we are not
able to minimize the costs and delays that result, our business plan may fall
short of its goals, and the current profitability or our distribution activities
may be offset by losses from the new gingko business.
 
 The
capital investments that we plan may result in dilution of the equity of our
present shareholders.
  Our
business plan contemplates that we will invest approximately $40 million in
capital improvements during the next five years.  At very least, we
estimate that we will be unable to achieve profitable operations as an
independent producer of gingko products unless we invest over $10 million in our
facility.  We intend to raise the largest portion of the necessary
funds by selling equity in our company.  At present we have no
commitment from any source for those funds.  We cannot determine,
therefore, the terms on which we will be able to raise the necessary
funds.  It is possible that we will be required to dilute the value of
our current shareholders’ equity in order to obtain the funds.  If,
however, we are unable to raise the necessary funds, our growth will be limited,
as will our ability to compete effectively.
 
 We
are subject to the risk of natural disasters.
  We intend
to produce the greater portion of our raw materials.  In particular,
we intend to produce our own gingko.  Gingko is a very sensitive crop,
which can be readily damaged by harsh weather, by disease, and by
pests.  If our crops are destroyed by drought, flood, storm, blight,
or the other woes of farming, we will not be able to meet the demands of our
manufacturing facility, which will then become inefficient and
unprofitable.  In addition, if we are unable to produce sufficient
products to meet demand, our distribution network is likely to
atrophy.  This could have a long-term negative effect on our ability
to grow our business, in addition to the near-term loss of income.
 
 7
 If
we lost control of our distribution network, our business would
fail.
  We depend
on our distribution network for the success of our
business.  Competitors may seek to pull our distribution network away
from us.  In addition, if dominant members of our distribution network
become dissatisfied with their relationship with Shandong Spring Pharmaceutical,
a concerted effort by the distribution network could force us to accept less
favorable financial terms from the distribution network.  Either of
these possibilities, if realized, would have an adverse effect on our
business.
 
 Increased
government regulation of our production and/or marketing operations could
diminish our profits.
  At
present, there is no significant government regulation of the health claims that
participants in our industry make regarding their products.  In
addition, there is only limited government regulation of the conditions under
which we will manufacture our products.  Other developed countries,
such as the United States and, in particular, members of the European Community,
have far more extensive regulation of the operations of nutraceuticals and
plant-based cosmetics, including strict limitations on the health-related claims
that can be made without scientifically-tested evidence.  It is not
unlikely, therefore, that China will increase its regulation of our activities
in the future.  To the extent that new regulations required us to
conduct a regimen of scientific tests of the efficacy of our products, the
expense of such testing would reduce our profitability.  In addition,
to the extent that the health benefits of some of our products could not be
fully supported by scientific evidence, our sales might be reduced.
 
 Our
business and growth will suffer if we are unable to hire and retain key
personnel that are in high demand.
  Our
future success depends on our ability to attract and retain highly skilled
agronomists, biologists, chemists, industrial technicians, production
supervisors, and marketing personnel.  In general, qualified
individuals are in high demand in China, and there are insufficient experienced
personnel to fill the demand.  In a specialized scientific field, such
as ours, the demand for qualified individuals is even greater.  If we
are unable to successfully attract or retain the personnel we need to succeed,
we will be unable to implement our business plan.
 
 We
may have difficulty establishing adequate management and financial controls in
China.
  The
People’s Republic of China has only recently begun to adopt the management and
financial reporting concepts and practices that investors in the United States
are familiar with.  We may have difficulty in hiring and retaining
employees in China who have the experience necessary to implement the kind of
management and financial controls that are expected of a United States public
company.  If we cannot establish such controls, we may experience
difficulty in collecting financial data and preparing financial statements,
books of account and corporate records and instituting business practices that
meet U.S. standards.
  Government
regulation may hinder our ability to function efficiently.
  The
national, provincial and local governments in the People’s Republic of China are
highly bureaucratized.  The day-to-day operations of our business will
require frequent interaction with representatives of the Chinese government
institutions.  The effort to obtain the registrations, licenses and
permits necessary to carry out our business activities can be
daunting.  Significant delays can result from the need to obtain
governmental approval of our activities.  These delays can have an
adverse effect on the profitability of our operations.  In addition,
compliance with regulatory requirements applicable to agriculture and to
nutraceutical manufacturing and marketing may increase the cost of our
operations, which would adversely affect our profitability.
  8
 Capital
outflow policies in China may hamper our ability to pay dividends to
shareholders in the United States.
  The
People’s Republic of China has adopted currency and capital transfer
regulations. These regulations require that we comply with complex regulations
for the movement of capital. Although Chinese governmental policies were
introduced in 1996 to allow the convertibility of RMB into foreign currency for
current account items, conversion of RMB into foreign exchange for capital
items, such as foreign direct investment, loans or securities, requires the
approval of the State Administration of Foreign Exchange. We may be unable to
obtain all of the required conversion approvals for our operations, and Chinese
regulatory authorities may impose greater restrictions on the convertibility of
the RMB in the future. Because most of our future revenues will be in RMB, any
inability to obtain the requisite approvals or any future restrictions on
currency exchanges will limit our ability to pay dividends to our
shareholders.
 
 Currency
fluctuations may adversely affect our operating results.
  Shandong
Spring Pharmaceutical generates revenues and incurs expenses and liabilities in
Renminbi, the currency of the People’s Republic of China.  However, as
a subsidiary of China YCT International Group, it reports its financial results
in the United States in U.S. Dollars.  As a result, our financial
results will be subject to the effects of exchange rate fluctuations between
these currencies.  From time to time, the government of China may take
action to stimulate the Chinese economy that will have the effect of reducing
the value of Renminbi.  In addition, international currency markets
may cause significant adjustments to occur in the value of the
Renminbi.  Any such events that result in a devaluation of the
Renminbi versus the U.S. Dollar will have an adverse effect on our reported
results.  We have not entered into agreements or purchased instruments
to hedge our exchange rate risks.
 
 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, and do not, to our
knowledge, offer business liability insurance. As a result, we do not have any
business liability insurance coverage for our operations. Moreover, while
business disruption insurance is available, we have determined that the risks of
disruption and cost of the insurance are such that we do not require it at this
time. Any business disruption, litigation or natural disaster might result in
substantial costs and diversion of resources.
 
 China
YCT International Group is not likely to hold annual shareholder meetings in the
next few years.
  Management
does not expect to hold annual meetings of shareholders in the next few years,
due to the expense involved.  The current members of the Board of
Directors were appointed to that position by the previous
directors.  If other directors are added to the Board in the future,
it is likely that the current directors will appoint them.  As a
result, the shareholders of China YCT International Group will have no effective
means of exercising control over the operations of China YCT International
Group.
 
 9
 ITEM
1B                   UNRESOLVED
STAFF COMMENTS
 
 Not
Applicable.
 ITEM
2.                      DESCRIPTION
OF PROPERTY
  Shandong
Spring Pharmaceutical operates on a property of approximately 1700 acres that it
occupies under a 50 year lease.  Besides housing our executive
offices, the property is home to a manufacturing facility measuring 17,200
m2and a research facility measuring 3,000 m2.
  China YCT
International Group maintains a mail-drop at the offices of American Union
Securities, Inc. in New York City.  We do not compensate American
Union Securities for this concession.
 
 ITEM
3.                      LEGAL
PROCEEDINGS
 
 None.
 
 ITEM
4.                      SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
 No matter
was submitted to a vote of our shareholders during the fourth quarter of fiscal
2009.
 
 PART
II
 
 ITEM
      5.
              MARKET
      FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
      ISSUER PURCHASES OF EQUITY
SECURITIES.
 
 (a)  Market
Information.
 
 Our
common stock has been listed for quotation on the OTC Bulletin Board since
February 23, 2007.  It is currently listed under the trading symbol
“CYIG.” Set forth below are the high and low bid prices for each of the
fiscal quarters since April 1, 2007.  The reported bid quotations reflect
inter-dealer prices without retail markup, markdown or commissions, and may not
necessarily represent actual transactions.   The prices reflect
the effect of a 1-for-28 reverse split of our common stock (which occurred on
November 23, 2007) as if it occurred on April 1, 2007.
  Period
                      
                      High
                      
                      
                      LowApril
      1, 2007 to June 30, 2007
                      
                      $
                      6.72
                      
                      
                      $
                      0.84July
      1, 2007 to September 30, 2007
                      
                      $
                      1.68
                      
                      
                      $
                      0.56October
      1, 2007 to December 31, 2007
                      
                      $
                      5.45
                      
                      
                      $
                      1.12January
      1, 2008 to March 31, 2008
                      
                      $
                      5.50
                      
                      
                      $
                      4.45April
      1, 2008 to June 30, 2008
                      
                      $
                      5.00
                      
                      
                      $
                      0.51July
      1, 2008 to September 30, 2008
                      
                      $
                      3.00
                      
                      
                      $
                      0.12October
      1, 2008 to December 31, 2008
                      
                      $
                      1.61
                      
                      
                      $
                      0.35January
      1, 2009 to March 31, 2009
                      
                      $
                      1.49
                      
                      
                      $
                      0.35
 
 10
 (b)  Holders.   Our
shareholders list contains the names of 769 registered stockholders of record of
the Company’s Common Stock.
  (c)  Dividend
Policy.  China YCT International Group has  not
declared or paid cash  dividends or made distributions  in
the  past,  and we do
not  anticipate  that we will  pay  cash
dividends or make  distributions in the foreseeable  future.
We currently intend to retain and reinvest future earnings, if any, to finance
our operations.
 (d)  Equity Compensation Plan
Information
  The information set forth in the table
below regarding equity compensation plans (which include individual compensation
arrangements) was determined as of March 31, 2009.
   Number
      of securities to be issued upon exercise of outstanding options, warrants
      and rights
                  Weighted
      average exercise price of outstanding options, warrants and
      rights
                  Number
      of securities remaining available for future issuance under equity
      compensation plansEquity
      compensation plans approved by security holders
                  0
                  
                  0Equity
      compensation plans not approved by security holders
                  0
                  
                  0Total
                  0
                  
                  0
 (e)
Recent Sales of
Unregistered Securities.
 
 None.
  (f)
Repurchase of Equity
Securities.  The Company did not repurchase any of its equity
securities that were registered under Section 12 of the Securities Act during
the 4th quarter of fiscal 2009.
  ITEM
6.                     
SELECTED FINANCIAL DATA
  Not applicable.
 
 ITEM
7.                      MANAGEMENT'S
DISCUSSION AND ANALYSIS.
 
 Results
of Operations
  In fiscal
year 2009, Shandong Spring Pharmaceutical continued to grow as a marketing
force.  During fiscal year 2008, which ended on March 31, 2008,
Shandong Spring Pharmaceutical realized $16,586,741 in revenue.  For
fiscal year 2009, which ended on March 31, 2009, the Company realized
$25,817,447 in revenue, including $3,844,009 in the quarter ended March 31, 2009
and $8,634,345 in the quarter ended December 31, 2008, an overall 55.6% year on
year increase compared to fiscal year 2008.
 
 During
those periods, no single product accounted for more than 20% of our revenue and
a total of 34 products each contributed to revenue, including both health care
supplements, cosmetics and toiletries.
  All of
the business reflected in the financial statements filed with this Report
consisted of resale of products purchased by Shandong Spring Pharmaceutical from
Shandong Yong Chun Tang. The purchases were made pursuant to a Purchase &
Sale Contract dated December 26, 2006, which sets forth the wholesale price that
Shandong Spring Pharmaceutical pays to Shandong Yong Chun Tang for each of the
34 products governed by the Contract.
 
 Since
Shandong Spring Pharmaceutical was not an exclusive distributor for Shandong
Yong Chun Tang during this period, its resale prices are determined in large
part by competition.  For that reason, the gross margin realized by
Shandong Spring Pharmaceutical was nearly identical in each quarter of this
fiscal year, averaging 56%, despite the significant growth in sales from quarter
to quarter.
  Our
selling, general and administrative expenses in the year ended March 31, 2009
were equal to 16.1% of our revenue as compared to 21.6% in the year ended March
31, 2008. This difference is due to the fact that during the fiscal year ended
March 31, 2008, our selling, general and administrative expenses included an one
time charge of $683,987 related to our going public expenses. Excluding
this one time expenese, our selling, general and administrative expenses as a
percent of revenue for the fiscal year ended March 31, 2008 would have been
18.3%. We have been able to lower our selling, general and administrative
expenses as a percentage of sales year on year as a result of our
management's abililty to lower costs while maximizing the efficiencies
of our business.
  11
 Our
operations produced net pre-tax income of $10,061,209 or an increase of 85.6%
compared to the pre-tax income of $5,420,962 in fiscal year 2008.  In
fiscal year 2009, we incurred an effective tax rate of 25% as compared to 28.3%
in fiscal year 2008.
  The tax
provisions left us with $7,481,543 net income for fiscal year 2009 ($.25 per
share), compared to $3,886,342 ($.13 per share) in fiscal year
2008.
  Our
business operates entirely in Chinese Renminbi, but we report our results in our
SEC filings in U.S. Dollars.  The conversion of our accounts from RMB
to Dollars results in translation adjustments, which are reported as a middle
step between net income and comprehensive income.  The net income is
added to the retained earnings on our balance sheet; while the translation
adjustment is added to a line item on our balance sheet labeled “accumulated
other comprehensive income,” since it is more reflective of changes in the
relative values of U.S. and Chinese currencies than of the success of our
business.  In year ended March 31, 2009, the effect of converting our
financial results to Dollars was to add $272,813 to our accumulated other
comprehensive income.
  Liquidity and Capital
Resources
  At March
31, 2009 Shandong Spring Pharmaceutical had $11,000,379 in working capital, an
increase of $6,481,423 since the beginning of the fiscal year on April 1,
2008.
  In
addition to $10,048,380 in cash, our current working capital included a
debt of $1,124,366 due to us from Shandong Yong Chun Tang, our
supplier.  We expect that debt to be liquidated in the future by
delivery to us of products for resale, which will correspondingly increase the
cash flow from our operations.
  Our
current level of working capital is sufficient to fund our current
operations.  Ever since we commenced marketing activity in January,
2007, our operations produced positive cash flow, including $9,614,495 in fiscal
year 2009 and $1,356,006 in fiscal year 2008.  Because we carry
relatively little inventory and no accounts receivable, we expect our marketing
activities to continue to operate cash-positive.
  To this
point the development of Shandong Spring Pharmaceutical and its initial
operations have been funded by capital contributions from its shareholders and
by occasional loans from management and their associates, all of which have been
repaid.  As a result, at March 31, 2009 Shandong Spring Pharmaceutical
had over $5.7 million in fixed assets and no debt.  This situation
provides an opportunity to fund future development and an expansion of
operations through bank debt by pledging the company’s fixed assets as
collateral.  We expect that financing of this variety will be readily
available to us, when our manufacturing facility approaches
completion.
  In order
to fully implement our business plan, however, we will require capital
contributions far in excess of our current asset value.  Our budget
for bringing our manufacturing facility to an operating level that assures
profitability is $10 million.  To fully implement our business plan -
including development of a facility to utilize our proprietary method of
extracting flavones from ginkgo by using enzyme technology - we expect to need
$40 million.  Our expectation, therefore, is that we will seek to
access the capital markets in both the U.S. and China to obtain the funds we
require.  At the present time, however, we do not have commitments of
funds from any source.
 
 12
 Off-Balance
Sheet Arrangements
 
 We do not
have any off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition or results of
operations.
  Critical
Accounting Policies and Estimates
 
 In
preparing our financial statements we are required to formulate working policies
regarding valuation of our assets and liabilities and to develop estimates of
those values.  In our preparation of the financial statements for
fiscal year 2009, there was one estimate made which was (a) subject to a
high degree of uncertainty and (b) material to our results.  This
estimate was:
 
 ·
              Our
      decision, described in Note 5 to the Consolidated Financial Statements, to
      record no provision for uncollectible accounts, against total related
      party receivables of $2,075,549.  This decision was based on our
      relationship with the debtors and our knowledge of their capacity to repay
      the debts.
 
 We have
made no material changes to our critical accounting policies in connection with
the preparation of financial statements for fiscal year 2009.
 
 Impact
of Accounting Pronouncements
 
 There
were no recent accounting pronouncements that have had a material effect on the
Company’s financial position or results of operations.  There were
nine recent accounting pronouncement that may have a material effect on the
Company’s financial position or results of operations.
  In
March 2008, the Financial Accounting Standards Board (“FASB”) issued Statement
of Financial Accounting Standards (“SFAS”) No. 161, “Disclosures about
Derivative Instruments and Hedging Activities - An Amendment of SFAS
No. 133” (“SFAS 161”). SFAS 161 seeks to improve financial reporting for
derivative instruments and hedging activities by requiring enhanced
disclosures regarding the impact on financial position, financial performance,
and cash flows. To achieve this increased transparency, SFAS 161 requires
(1) the disclosure of the fair value of derivative instruments and gains
and losses in a tabular format; (2) the disclosure of derivative
features that are credit risk-related; and (3) cross-referencing within the
footnotes. SFAS 161 is effective on January 1, 2009. The company does not
expect SFAS No. 161 to have a material impact on the preparation of its
consolidated financial statements.
 
 In
April 2008, FASB Staff Position No. 142-3, Determination of the Useful Life
of Intangible Assets (“FSP 142-3”) was issued. This standard amends the factors
that should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under FASB Statement
No. 142, Goodwill and Other Intangible Assets. FSP 142-3 is effective for
financial statements issued for fiscal years beginning after December 15,
2008, and interim periods within those fiscal years. Early adoption is
prohibited. The Company has not determined the impact on its financial
statements of this accounting standard.
 
 In
May 2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff
Position (“FSP”) APB 14-1, Accounting for Convertible Debt Instruments That
May Be Settled in Cash upon Conversion (Including Partial Cash Settlement). FSP
APB 14-1 clarifies that convertible debt instruments that may be settled in cash
upon either mandatory or optional conversion (including partial cash settlement)
are not addressed by paragraph 12 of APB Opinion No. 14, Accounting for
Convertible Debt and Debt issued with Stock Purchase Warrants. Additionally, FSP
APB 14-1 specifies that issuers of such instruments should separately account
for the liability and equity components in a manner that will reflect the
entity’s nonconvertible debt borrowing rate when interest cost is recognized in
subsequent periods. FSP APB 14-1 is effective for financial statements issued
for fiscal years beginning after December 15, 2008, and interim periods within
those fiscal years. The company is evaluating the impact the adoption of FSP APB
14-1 will have on its consolidated financial position and results of
operations.
  In
May 2008, the FASB issued Statement of Financial Accounting Standards (“SFAS”)
No. 162, The Hierarchy of Generally Accepted Accounting Principles. This
standard is intended to improve financial reporting by identifying a consistent
framework, or hierarchy, for selecting accounting principles to be used in
preparing financial statements that are presented in conformity with generally
accepted accounting principles in the United States for non-governmental
entities. SFAS No. 162 is effective 60 days following approval by the U.S.
Securities and Exchange Commission (“SEC”) of the Public Company Accounting
Oversight Board’s amendments to AU Section 411, The Meaning of Present Fairly in
Conformity with Generally Accepted Accounting Principles. The company does not
expect SFAS No. 162 to have a material impact on the preparation of its
consolidated financial statements.
 
 In
May 2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee
Insurance Contracts – an interpretation of FASB Statement No. 60.”  SFAS
163 requires that an insurance enterprise recognize a claim liability prior to
an event of default (insured event) when there is evidence that credit
deterioration has occurred in an insured financial obligation.  This
Statement also clarifies how Statement 60 applies to financial guarantee
insurance contracts, including the recognition and measurement to be used
to account for premium revenue and claim liabilities. Those clarifications will
increase comparability in financial reporting of financial guarantee insurance
contracts by insurance enterprises. This Statement requires expanded disclosures
about financial guarantee insurance contracts. The accounting and disclosure
requirements of the Statement will improve the quality of information provided
to users of financial statements.  SFAS 163 will be effective for financial
statements issued for fiscal years beginning after December 15, 2008.  The
Company does not expect the adoption of SFAS 163 will have a material impact on
its financial condition or results of operation.
 
 In
June 2008, the FASB ratified EITF 07-5, “Determining Whether an Instrument
(or Embedded Feature) is Indexed to an Entity’s Own Stock”. EITF 07-5
addresses how an entity should evaluate whether an instrument or embedded
feature is indexed to its own stock, carrying forward the guidance in
EITF 01-6 and superseding EITF 01-6. Other issues addressed in
EITF 07-5 include addressing situations where the currency of the linked
instrument differs from the host instrument and how to account for market-based
employee stock options. EITF 07-5 is effective for fiscal years beginning
after December 15, 2008 and early adoption is not permitted. The Company
has evaluated this statement and estimated that it is not expected to have an
impact on its financial position and results of operations.
  On
June 16, 2008, the FASB issued Final Staff Position (“FSP”) No. EITF 03-6-1,
Determining Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities” to address the question of whether instruments granted
in share-based payment transactions are participating securities prior to
vesting. The FSP determines that unvested share-based payment awards that
contain rights to dividend payments should be included in earnings per share
calculations. The guidance will be effective for fiscal years beginning after
December 15, 2008. The Company does not expect the adoption of EITF 03-6-1 will
have a material impact on its financial condition or results of
operation.
 On
October 10, 2008, the FASB issued FSP 157-3, “Determining the Fair Value of a
Financial Asset When the Market for That Asset Is Not Active,” which clarifies
the application of SFAS 157 in a market that is not active and provides an
example to illustrate key considerations in determining the fair value of a
financial asset when the market for that financial asset is not active. FSP
157-3 became effective on October 10, 2008, and its adoption did not have a
material impact on the company’s financial position or results.
  In
January 2009, the FASB issued FSP EITF 99-20-1, “Amendments to the Impairment
Guidance of EITF Issue No. 99“Recognition of Interest Income and Impairment on
Purchased and Retained Beneficial Interests in Securitized Financial Assets”.
FSP EITF 99-20-1 changes the impairment model included within EITF 99-20 to be
more consistent with the impairment model of SFAS No. 115. FSP EITF 99-20-1
achieves this by amending the impairment model in EITF 99-20 to remove its
exclusive reliance on “market participant” estimates of future cash flows used
in determining fair value. Changing the cash flows used to analyze
other-than-temporary impairment from the “market participant” view to a holder’s
estimate of whether there has been a “probable” adverse change in estimated cash
flows allows companies to apply reasonable judgment in assessing whether an
other-than-temporary impairment has occurred. The adoption of FSP EITF 99-20-1
did not have a material impact on the company’s consolidated financial
statements.
  ITEM
7A                       
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     13
   ITEM
7.                          
FINANCIAL
STATEMENTS China
YCT International Group, Inc.
 
 Consolidated
Financial Statements
 
 March
31, 2009 and 2008
    
  PageReport
      of Independent Registered Public Accounting Firm
                F-1Consolidated
      Balance Sheets as of March 31, 2009 and 2008
                F-2Consolidated
      Statements of Income for the Years Ended March 31, 2009 and
      2008
                F-3Consolidated
      Statements of Stockholders' Equity for the Years Ended March 31,
      2009 and 2008
                F-4Consolidated
      Statements of Cash Flows for the Years Ended March, 2009 and
      2008
                F-5Notes
      to Consolidated Financial Statement
                F-6-F-16
  14
  REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
      To the
Board of Directors and Stockholders of
 China YCT
International Group, Inc.
   We have
audited the accompanying balance sheets of China YCT International Group, Inc.
as of March 31, 2009 and 2008, and the related statements of income,
stockholders’ equity and comprehensive income, and cash flows for each of the
years in the two-year period ended March 31, 2009. China YCT International
Group, Inc.’s management is responsible for these financial statements. Our
responsibility is to express an opinion on these financial statements based on
our audits.
   We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
   In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of China YCT International Group, Inc.
as of March 31, 2009 and 2008, and the results of its operations and its cash
flows for each of the years in the two-year period ended March 31, 2009 in
conformity with accounting principles generally accepted in the United States of
America.
    /s/Bagell Josephs, Levine
& Company, LLC
   Bagell
Josephs, Levine & Company, LLC
   Marlton,
New Jersey
   June 15,
2009
 F-1
  CHINA
      YCT INTERNATIONAL GROUP, INC.CONSOLIDATED
      BALANCE SHEETSASSETSMarch
      31,2009
                              
                              
                              2008Current
      assets:Cash
      and cash equivalents
                              
                              $
                              10,048,380
                              
                              
                              $
                              1,614,336Inventory
                              
                              
                              8,346
                              
                              
                              
                              737,153Advance
      to suppliers
                              
                              
                              -
                              
                              
                              
                              834,284Other
      receivable - related party
                              
                              
                              2,075,549
                              
                              
                              
                              2,022,742Total
      Current Assets
                              
                              
                              12,132,275
                              
                              
                              
                              5,208,515Property
      and equipment, net of accumulated depreciation of$133,670
      and $68,282, respectively
                              
                              
                              4,349,493
                              
                              
                              
                              3,083,031Land
      use right, net of accumulated amortization
                              
                              
                              1,411,274
                              
                              
                              
                              1,404,803Total
      Assets
                              
                              $
                              17,893,042
                              
                              
                              $
                              9,696,349LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilities:Accounts
      payable
                              
                              $
                              456,568
                              
                              
                              $
                              59,688Unearned
      Revenue
                              
                              
                              -
                              
                              
                              
                              33,742Taxes
      payable
                              
                              
                              485,438
                              
                              
                              
                              563,135Accrued
      expenses and other payables
                              
                              
                              189,890
                              
                              
                              
                              32,994Total
      Current Liabilities
                              
                              
                              1,131,896
                              
                              
                              
                              689,559Stockholders'
      EquityPreferred
      stock series A, $500 par value, 45 shares authorized and
      outstanding
                              
                              
                              22,500
                              
                              
                              
                              22,500as
      of  March 31, 2009 and 2008 respectivelyPreferred
      stock series B convertible, $0.001 par value, 5,000,000 shares
      authorized,-0-
      shares issued and outstanding
                              
                              
                              -
                              
                              
                              
                              -Common
      stock, $0.001 par value, 100,000,000 shares authorized;
      29,380,073shares
      issued and outstanding as of  March 31, 2009 and 2008,
      respectively
                              
                              
                              29,380
                              
                              
                              
                              29,380Additional
      paid-in capital
                              
                              
                              4,063,039
                              
                              
                              
                              4,063,039Accumulated
      other comprehensive income
                              
                              
                              1,130,576
                              
                              
                              
                              857,763Retained
      earnings
                              
                              
                              11,515,651
                              
                              
                              
                              4,034,108Total
      Stockholders' Equity
                              
                              
                              16,761,146
                              
                              
                              
                              9,006,790Total
      Liabilities and Stockholders' Equity
                              
                              $
                              17,893,042
                              
                              
                              $
                              9,696,349
 The accompanying notes are an integral part of
these consolidated financial statements  F-2
   CHINA
      YCT INTERNATIONAL GROUP, INC.CONSOLIDATED
      STATEMENTS OF INCOMEFOR
      THE YEARS ENDED MARCH 31,2009
                              
                              
                              2008Revenues
                              
                              $
                              25,817,447
                              
                              
                              $
                              16,586,741Cost
      of Goods Sold
                              
                              
                              11,323,587
                              
                              
                              
                              7,322,143Gross
      Profit
                              
                              
                              14,493,860
                              
                              
                              
                              9,264,598Operating
      ExpensesResearch
      and development expenses
                              
                              
                              181,531
                              
                              
                              
                              141,241Selling,
      general and administrative
                              
                              
                              4,167,322
                              
                              
                              
                              3,586,140Income
      Before Other Expenses
                              
                              
                              10,145,007
                              
                              
                              
                              5,537,217Other
      Expenses
                              
                              
                              (83,799
                              )
                              
                              
                              (116,255
                              )Income
      Before Income Taxes
                              
                              
                              10,061,209
                              
                              
                              
                              5,420,962Provision
      for Income Taxes
                              
                              
                              2,579,666
                              
                              
                              
                              1,534,620Net
      Income
                              
                              $
                              7,481,543
                              
                              
                              $
                              3,886,342Other
      Comprehensive Income:Foreign
      currency translation adjustment
                              
                              
                              272,813
                              
                              
                              
                              696,468Comprehensive
      Income
                              
                              $
                              7,754,356
                              
                              
                              $
                              4,582,810Basic
      and diluted income per common shareBasic
      and Diluted
                              
                              $
                              0.25
                              
                              
                              $
                              0.13Weighted
      average number of common shares outstandingBasic
      and Diluted
                              
                              
                              29,380,073
                              
                              
                              
                              29,300,825
 The accompanying notes are an integral part of
these consolidated financial statements  F-3
 CHINA
      YCT INTERNATIONAL GROUP, INC.CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS' EQUITYFOR
      THE YEARS ENDED MARCH 31, 2009 AND 2008Preferred
      Stock Series A
                                          
                                          
                                          Preferred
      Stock Series B
                                          
                                          
                                          Common
      Stock$500
      Par Value
                                          
                                          
                                          $0.001
      Par Value
                                          
                                          
                                          $0.001
      Par Value
                                          
                                          
                                          Additional
      Paid-in
                                          
                                          
                                          Accumulated
      Other
                                            Comprehensive
                                          
                                          
                                          RetainedShares
                                          
                                          
                                          Amount
                                          
                                          
                                          Shares
                                          
                                          
                                          Amount
                                          
                                          
                                          Shares
                                          
                                          
                                          Amount
                                          
                                          
                                          Capital
                                          
                                          
                                          Income
                                          
                                          
                                          Earnings
                                          
                                          
                                          TotalBalance
      - March 31, 2007
                                          
                                          
                                          45
                                          
                                          
                                          $
                                          22,500
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          454,444
                                          
                                          
                                          $
                                          454
                                          
                                          
                                          $
                                          4,091,966
                                          
                                          
                                          $
                                          161,295
                                          
                                          
                                          $
                                          147,766
                                          
                                          
                                          $
                                          4,423,981Issuance
      of Series B Convertible Preferred Stock
                                          
                                          
                                          
                                          1,000
                                          
                                          
                                          
                                          1
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          1Conversion
      of Series B Preferred Stock
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          (1,000
                                          )
                                          
                                          
                                          (1
                                          )
                                          
                                          
                                          809,866,230
                                          
                                          
                                          
                                          809,867
                                          
                                          
                                          
                                          (809,868
                                          )
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          (2
                                          )Effect
      of 1 to 28 reverse split
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          (780,940,601
                                          )
                                          
                                          
                                          (780,941
                                          )
                                          
                                          
                                          780,941
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          -Comprehensive
      incomeNet
      income for the year
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          3,886,342
                                          
                                          
                                          
                                          3,886,342Other
      Comprehensive income, net of taxForeign
      currency translation adjustment
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          696,468
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          696,468Balance
      - March 31, 2008
                                          
                                          
                                          45
                                          
                                          
                                          $
                                          22,500
                                          
                                          
                                          
                                          -
                                          
                                          
                                          $
                                          -
                                          
                                          
                                          
                                          29,380,073
                                          
                                          
                                          $
                                          29,380
                                          
                                          
                                          $
                                          4,063,039
                                          
                                          
                                          $
                                          857,763
                                          
                                          
                                          $
                                          4,034,108
                                          
                                          
                                          $
                                          9,006,790Comprehensive
      incomeNet
      income for the year
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          7,481,543
                                          
                                          
                                          
                                          7,481,543Other
      Comprehensive income, net of taxForeign
      currency translation adjustment
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          272,813
                                          
                                          
                                          
                                          
                                          
                                          
                                          
                                          272,813Balance
      - March 31, 2009
                                          
                                          
                                          45
                                          
                                          
                                          $
                                          22,500
                                          
                                          
                                          
                                          -
                                          
                                          
                                          $
                                          -
                                          
                                          
                                          
                                          29,380,073
                                          
                                          
                                          $
                                          29,380
                                          
                                          
                                          $
                                          4,063,039
                                          
                                          
                                          $
                                          1,130,576
                                          
                                          
                                          $
                                          11,515,651
                                          
                                          
                                          $
                                          16,761,146
 The
accompanying notes are an integral part of these consolidated financial
statements F-4
   CHINA
      YCT INTERNATIONAL GROUP, INC.CONSOLIDATED
      STATEMENTS OF CASH FLOWSFOR
      THE YEARS ENDED MARCH 31,2009
                                                    
                                                    
                                                    
                                                    2008Cash
      Flows From Operating Activities:Net
      income
                                                    
                                                    $
                                                    7,481,543
                                                    
                                                    
                                                    
                                                    $
                                                    3,886,342Adjustments
      to reconcile net income to net cashprovided
      by operating activities:Depreciation
      and amortization
                                                    
                                                    
                                                    180,332
                                                    
                                                    
                                                    
                                                    
                                                    72,115Changes
      in operating assets and liabilities:Inventory
                                                    
                                                    
                                                    728,807
                                                    
                                                    
                                                    
                                                    
                                                    (737,153
                                                    )Advance
      to suppliers
                                                    
                                                    
                                                    834,284
                                                    
                                                    
                                                    
                                                    
                                                    (834,284
                                                    )Other
      receivable -related party
                                                    
                                                    
                                                    (52,806
                                                    )
                                                    
                                                    
                                                    
                                                    (1,504,116
                                                    )Accounts
      payable
                                                    
                                                    
                                                    396,880
                                                    
                                                    
                                                    
                                                    
                                                    (19,740
                                                    )Unearned
      revenue
                                                    
                                                    
                                                    (33,742
                                                    )
                                                    
                                                    
                                                    
                                                    33,742Taxes
      payable
                                                    
                                                    
                                                    (77,697
                                                    )
                                                    
                                                    
                                                    
                                                    563,135Accrued
      expenses and other payables
                                                    
                                                    
                                                    156,894
                                                    
                                                    
                                                    
                                                    
                                                    (104,035
                                                    )Cash
      provided by operating activities
                                                    
                                                    
                                                    9,614,495
                                                    
                                                    
                                                    
                                                    
                                                    1,356,006Cash
      Flows From Investing Activities:Addition
      to plant and equipment
                                                    
                                                    
                                                    (1,330,350
                                                    )
                                                    
                                                    
                                                    
                                                    (418,745
                                                    )Purchase
      of land use right
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    
                                                    (308,298
                                                    )Cash
      used in investing activities
                                                    
                                                    
                                                    (1,330,350
                                                    )
                                                    
                                                    
                                                    
                                                    (727,043
                                                    )Cash
      Flows From Financing ActivitiesCash
      provided by financing activities
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    
                                                    -Effect
      of exchange rate changes on cash and cash equivalents
                                                    
                                                    
                                                    149,899
                                                    
                                                    
                                                    
                                                    
                                                    305,602Increase
      in cash and cash equivalents
                                                    
                                                    
                                                    8,434,044
                                                    
                                                    
                                                    
                                                    
                                                    934,566Cash
      and Cash Equivalents - Beginning of year
                                                    
                                                    
                                                    1,614,336
                                                    
                                                    
                                                    
                                                    
                                                    679,770Cash
      and Cash Equivalents - End of year
                                                    
                                                    $
                                                    10,048,380
                                                    
                                                    
                                                    
                                                    $
                                                    1,614,336Supplemental
      disclosures of cash flow information:Interest
      paid
                                                    
                                                    $
                                                    -
                                                    
                                                    
                                                    
                                                    $
                                                    -Income
      Taxes paid
                                                    
                                                    $
                                                    2,608,665
                                                    
                                                    
                                                    
                                                    $
                                                    1,196,189The accompanying notes are an
      integral part of these consolidated financial
      statements
   F-5
 CHINA
YCT INTERNATIONAL GROUP, INC.
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 FOR
THE YEARS ENDED MARCH 31, 2009 AND 2008
  1.  BASIS
OF PRESENTATION AND ORGANIZATION
  China
YCT International Group, Inc., formerly known as ItLinkz Group, Inc., Medical
Technology & Innovations, Inc. and Southstar Productions, Inc. (the
“Company” or “China YCT”), was incorporated in the State of Florida in January
1989.
 
 On
June 4, 2007 the Company entered into a Share Purchase and Merger Agreement
dated June 1, 2007 with Landway Nano Bio-Tech, Inc., a Delaware corporation
(“Landway Nano”), and with Huaqin Zhou and Xiaojin Wang, two investors
associated with Landway Nano.  Landway Nano is a holding company that
owns 100% of the registered capital of Shandong Spring Pharmaceutical Co., Ltd.
(“Shandong Spring”), a corporation organized under the laws of The People’s
Republic of China (“PRC”). On July 31, 2007, pursuant to the Share Purchase and
Merger Agreement, Huaqin Zhou and Xiaojin Wang purchased 500 shares of the
Company’s Series B Preferred Stock for $530,000. On September 28, 2007, the
Company acquired all of the outstanding capital stock of Landway Nano by issuing
to the shareholders of Landway Nano an additional 500 shares of Series B
Preferred Stock. The 1,000 shares of Series B Preferred Stock were subsequently
converted into 28,925,629 shares of common stock, representing 98.4% of the
outstanding common shares.  The Board of Directors of the Company also
elected Mr.Yan Tinghe and Mr. Zhang Jirui, the executive officers of Shandong
Spring Pharmaceutical, to serve as members of the Board, and they together
elected Yan Tinghe to serve as the Chief Executive Officer and Zhang Jirui to
serve as Chief Financial Officer of the Company.
 
 As
a result of these transactions, there was a change in control of the Company as
the shareholders of Landway Nano became the majority shareholders of the
Company.
 
 For
accounting purposes, the transaction has been accounted for as a reverse
acquisition under the purchase method of accounting. Accordingly, Landway Nano
was treated as the continuing entity for accounting purposes.
 
 On
November 23, 2007, the Company changed the name of the corporation from “Itlinkz
Group, Inc.” to “China YCT International Group, Inc.”
 
 China
YCT, through its wholly owned subsidiary, Shandong Spring, is engaged in the
business of developing, manufacturing and marketing gingko and other dietary
supplement products in the PRC.
 
 The
Company’s consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
(“US GAAP”). In the opinion of management, the accompanying condensed
consolidated financial statements reflect all adjustments, necessary for their
fair presentation in conformity with accounting principles generally accepted in
the United States of America.
  
 2.   SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
 
 Principle
of consolidation
 
 The
consolidated financial statements include the financial statements of the
Company, Landway Nano and its wholly owned subsidiary, Shandong
Spring.  All significant inter-company transactions and balances among
the Company and its subsidiaries are eliminated upon consolidation.
 
 F-6
 Use
of estimates
 
 In
preparing the financial statements in conformity with accounting principles
generally accepted in the United States of America, management makes estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the dates of the financial
statements, as well as the reported amounts of revenues and expenses during the
reporting year. Significant estimates, required by management, include the
recoverability of long-lived assets and the valuation of
inventories.  Actual results could differ from those
estimates.
 
 Cash
and cash equivalents
 
 For
purposes of the statement of cash flow, the Company considers all highly liquid
investments with an original maturity of three months or less to be cash
equivalents.
 
 Accounts
receivables
 
 Accounts
receivables are stated at net realizable value. Any allowance for doubtful
accounts is established based on the management’s assessment of the
recoverability of accounts and other receivables. A considerate amount of
judgment is required in assessing the realization of these receivables,
including the current credit worthiness of each customer and the related aging
analysis. The Company has no account receivables as of March 31, 2009 and
2008.
 
 Inventory
 
 Inventory
is primarily composed of raw materials and packing materials for manufacturing,
work in process, and finished goods. Inventories are valued at the lower of cost
or market with cost determined on a weighted average basis. Management compares
the cost of inventory with the market value and an allowance is made for writing
down the inventory to its market value, if lower than cost.
  Property
and equipment
 
 Property
and equipment are stated at cost. The cost of an asset comprises its purchase
price and any directly attributable costs of bringing the asset to its present
working condition and locations for its intended use. Depreciation is calculated
using the straight-like method over the following useful lives:
    Buildings
      and improvements
                30-35 yearsMachinery,
      equipment and automobiles
                7-15
      years
 
 
 Expenditures
for maintenance and repairs are charged to expense as incurred. Additions,
renewals and betterments are capitalized.
 
 F-7
 Advance
to suppliers
 
 Advance
to suppliers represent the payments made and recorded in advance for goods and
services received. The Company makes advances to certain vendors’ inventory
purchases, construction projects and equipment purchases. The advance to
suppliers totaled $-0- and $834,284 as of March 31, 2009 and 2008,
respectively.
 
 Revenue
recognition
 
 The
Company’s revenue recognition policies are in compliance with Staff Accounting
Bulletin (“SAB”) 104. Sales revenue is recognized at the date of shipment to
customers when a formal arrangement exists, the price is fixed or determinable,
the delivery is completed, no other significant obligations of the Company exist
and collectability is reasonably assured. Payments received before all of the
relevant criteria for revenue recognition are recorded as customer deposits.
 
 Unearned
revenue
 
 Revenue
from the sale of goods or services is recognized at the time that goods are
delivered or services are rendered. Receipts in advance for goods to be
delivered or services to be rendered in a subsequent period are carried forward
as unearned revenue.
 
 Impairment
of long-lived assets
  Long-lived
assets, which include property, plant and equipment and intangible assets, are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.
 
 Recoverability
of long-lived assets to be held and used is measured by a comparison of the
carrying amount of an asset to the estimated undiscounted future cash flows
expected to be generated by the asset.   If the carrying amount
of an asset exceeds its estimated undiscounted future cash flows, an impairment
charge is recognized by the amount by which the carrying amount of the asset
exceeds the fair value of the assets.  Fair value is generally
determined using the asset’s expected future discounted cash flows or market
value, if readily determinable.
 
 F-8
 Income
taxes
 
 The
Company accounts for income tax under the provisions of SFAS No.109 "Accounting
for Income Taxes", which requires recognition of deferred tax assets and
liabilities for the expected future tax consequences of the events that have
been included in the financial statements or tax returns.  Deferred
income taxes are recognized for all significant temporary differences between
tax and financial statements bases of assets and
liabilities.  Valuation allowances are established against net
deferred tax assets when it is more likely than not that some portion or all of
the deferred tax asset will not be realized. There were no deferred tax amounts
at March 31, 2009 and 2008, respectively.
 
 Value-added
tax
 
 Sales
revenue represents the invoiced value of goods, net of a Value-Added Tax
(“VAT”). All of the Company’s products that are sold in the PRC are subject to a
Chinese value-added tax at a rate of 4% of the gross sales price. This VAT may
be offset by VAT paid by the Company on raw materials and other materials
included in the cost of producing their finished product. The Company did not
have any recorded VAT Payable or VAT receivable net of payments in the financial
statements. The VAT tax return is usually filed offsetting the payables against
the receivables.
 
 Research
and development
 
 Research
and development costs are related primarily to the Company developing its
intellectual property. Research and development costs are expenses as incurred.
The costs of material and equipment that are acquired or constructed for
research and development activities and have alternative future uses are
classified as plant and equipment and depreciated over their estimated useful
lives.
 
 The
research and development expense for the years ended March 31, 2009 and 2008 was
$181,531 and $141,241, respectively.
 
 Advertising
costs
 
 Advertising
costs in newspaper and televisions are expensed as incurred.  The
Company incurred advertising costs of $1,372,580 and $501,729 for the years
ended March 31, 2009 and 2008, respectively.
 
 Mailing
and handling costs
 
 The
Company accounts for mailing and handling fees in accordance with the Financial
Accounting Standards Board Emerging Issues Task Force Issue No. 00-10
“Accounting for  Shipping and Handling Fees and Costs” (EITF Issue No.
00-10).  For the years ended March 31, 2009 and 2008, the Company
incurred $1,123,018 and $716,646 mailing and handling costs,
respectively.
 
 F-9
 Earnings
per share
 
 Basic
earnings per share are computed by dividing income available to common
stockholders by the weighted-average number of common shares outstanding during
the period. Diluted earnings per share is computed similar to basic earnings per
share except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were dilutive.
There are no common stock equivalents available for dilution purposes as of
March 31, 2009 and 2008.
   Risks
and uncertainties
 
 The
Company’s operations are carried out in the PRC. Accordingly, the Company’s
business, financial condition and results of operations may be influenced by the
political, economic and legal environments in the PRC, and by the general state
of the PRC’s economy. The Company’s operations in the PRC are subject to
specific considerations and significant risks not typically associated with
companies in the North America and Western Europe. These include risks
associated with, among others, the political, economic and legal environments
and foreign currency exchange. The Company’s results may be adversely affected
by changes in governmental policies with respect to laws and regulations,
anti-inflationary measures, currency conversion and remittance abroad, and rates
and methods of taxation, among other things.
 
 Fair
value of financial instruments
 
 The
carrying amounts of certain financial instruments, including cash and
cash    equivalents, account receivables, other receivables,
accounts payable, accrued expenses, tax payable, and other payable approximate
fair value due to the short-term nature of these items.
 
 Foreign
currency translation
 
 The
Company’s functional currency is the Renminbi (“RMB”). For financial reporting
purposes, RMB has been translated into United States dollars ("USD") as the
currency.  Assets and liabilities are translated at the exchange rate
in effect at the balance sheet date. Revenues and expenses are translated at the
average rate of exchange prevailing during the reporting period. The equity
accounts were stated at their historical rate. Translation adjustments arising
from the use of different exchange rates from period to period are included as a
component of stockholders' equity as "Accumulated other comprehensive income".
Gains and losses resulting from foreign currency translations are included in
accumulated other comprehensive.  There is no significant fluctuation
in exchange rate for the conversion of RMB to USD after the balance sheet
date.
 
 Translation
adjustments resulting from this process amounted to $1,130,576 and $857,763 as
of March 31, 2009 and 2008, respectively. The balance sheet amounts with the
exception of equity at March 31, 2009 were translated at 6.8336 RMB to 1.00 US$
as compared to 7.012 RMB to 1.00 US$ at March 31, 2008. The equity accounts were
stated at their historical rate. The average translation rates applied to income
statement accounts for the years ended March 31, 2009 and 2008 were 6.8678 RMB
and 7.4566 RMB, respectively.
 
  F-10
 
 New
accounting pronouncements
 
 In
March 2008, the Financial Accounting Standards Board (“FASB”) issued Statement
of Financial Accounting Standards (“SFAS”) No. 161, “Disclosures about
Derivative Instruments and Hedging Activities - An Amendment of SFAS
No. 133” (“SFAS 161”). SFAS 161 seeks to improve financial reporting for
derivative instruments and hedging activities by requiring enhanced
disclosures regarding the impact on financial position, financial performance,
and cash flows. To achieve this increased transparency, SFAS 161 requires
(1) the disclosure of the fair value of derivative instruments and gains
and losses in a tabular format; (2) the disclosure of derivative
features that are credit risk-related; and (3) cross-referencing within the
footnotes. SFAS 161 is effective on January 1, 2009. The company does not
expect SFAS No. 161 to have a material impact on the preparation of its
consolidated financial statements.
 
 In
April 2008, FASB Staff Position No. 142-3, Determination of the Useful Life
of Intangible Assets (“FSP 142-3”) was issued. This standard amends the factors
that should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under FASB Statement
No. 142, Goodwill and Other Intangible Assets. FSP 142-3 is effective for
financial statements issued for fiscal years beginning after December 15,
2008, and interim periods within those fiscal years. Early adoption is
prohibited. The Company has not determined the impact on its financial
statements of this accounting standard.
 
 In
May 2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff
Position (“FSP”) APB 14-1, Accounting for Convertible Debt Instruments That
May Be Settled in Cash upon Conversion (Including Partial Cash Settlement). FSP
APB 14-1 clarifies that convertible debt instruments that may be settled in cash
upon either mandatory or optional conversion (including partial cash settlement)
are not addressed by paragraph 12 of APB Opinion No. 14, Accounting for
Convertible Debt and Debt issued with Stock Purchase Warrants. Additionally, FSP
APB 14-1 specifies that issuers of such instruments should separately account
for the liability and equity components in a manner that will reflect the
entity’s nonconvertible debt borrowing rate when interest cost is recognized in
subsequent periods. FSP APB 14-1 is effective for financial statements issued
for fiscal years beginning after December 15, 2008, and interim periods within
those fiscal years. The company is evaluating the impact the adoption of FSP APB
14-1 will have on its consolidated financial position and results of
operations.
  In
May 2008, the FASB issued Statement of Financial Accounting Standards (“SFAS”)
No. 162, The Hierarchy of Generally Accepted Accounting Principles. This
standard is intended to improve financial reporting by identifying a consistent
framework, or hierarchy, for selecting accounting principles to be used in
preparing financial statements that are presented in conformity with generally
accepted accounting principles in the United States for non-governmental
entities. SFAS No. 162 is effective 60 days following approval by the U.S.
Securities and Exchange Commission (“SEC”) of the Public Company Accounting
Oversight Board’s amendments to AU Section 411, The Meaning of Present Fairly in
Conformity with Generally Accepted Accounting Principles. The company does not
expect SFAS No. 162 to have a material impact on the preparation of its
consolidated financial statements.
 
 In
May 2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee
Insurance Contracts – an interpretation of FASB Statement No. 60.”  SFAS
163 requires that an insurance enterprise recognize a claim liability prior to
an event of default (insured event) when there is evidence that credit
deterioration has occurred in an insured financial obligation.  This
Statement also clarifies how Statement 60 applies to financial guarantee
insurance contracts, including the recognition and measurement to be used
to account for premium revenue and claim liabilities. Those clarifications will
increase comparability in financial reporting of financial guarantee insurance
contracts by insurance enterprises. This Statement requires expanded disclosures
about financial guarantee insurance contracts. The accounting and disclosure
requirements of the Statement will improve the quality of information provided
to users of financial statements.  SFAS 163 will be effective for financial
statements issued for fiscal years beginning after December 15, 2008.  The
Company does not expect the adoption of SFAS 163 will have a material impact on
its financial condition or results of operation.
 
 In
June 2008, the FASB ratified EITF 07-5, “Determining Whether an Instrument
(or Embedded Feature) is Indexed to an Entity’s Own Stock”. EITF 07-5
addresses how an entity should evaluate whether an instrument or embedded
feature is indexed to its own stock, carrying forward the guidance in
EITF 01-6 and superseding EITF 01-6. Other issues addressed in
EITF 07-5 include addressing situations where the currency of the linked
instrument differs from the host instrument and how to account for market-based
employee stock options. EITF 07-5 is effective for fiscal years beginning
after December 15, 2008 and early adoption is not permitted. The Company
has evaluated this statement and estimated that it is not expected to have an
impact on its financial position and results of operations.
 F-11
  On
June 16, 2008, the FASB issued Final Staff Position (“FSP”) No. EITF 03-6-1,
Determining Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities” to address the question of whether instruments granted
in share-based payment transactions are participating securities prior to
vesting. The FSP determines that unvested share-based payment awards that
contain rights to dividend payments should be included in earnings per share
calculations. The guidance will be effective for fiscal years beginning after
December 15, 2008. The Company does not expect the adoption of EITF 03-6-1 will
have a material impact on its financial condition or results of
operation.
 
 On
October 10, 2008, the FASB issued FSP 157-3, “Determining the Fair Value of a
Financial Asset When the Market for That Asset Is Not Active,” which clarifies
the application of SFAS 157 in a market that is not active and provides an
example to illustrate key considerations in determining the fair value of a
financial asset when the market for that financial asset is not active. FSP
157-3 became effective on October 10, 2008, and its adoption did not have a
material impact on the company’s financial position or results.
 
 In
January 2009, the FASB issued FSP EITF 99-20-1, “Amendments to the Impairment
Guidance of EITF Issue No. 99“Recognition of Interest Income and Impairment on
Purchased and Retained Beneficial Interests in Securitized Financial Assets”.
FSP EITF 99-20-1 changes the impairment model included within EITF 99-20 to be
more consistent with the impairment model of SFAS No. 115. FSP EITF 99-20-1
achieves this by amending the impairment model in EITF 99-20 to remove its
exclusive reliance on “market participant” estimates of future cash flows used
in determining fair value. Changing the cash flows used to analyze
other-than-temporary impairment from the “market participant” view to a holder’s
estimate of whether there has been a “probable” adverse change in estimated cash
flows allows companies to apply reasonable judgment in assessing whether an
other-than-temporary impairment has occurred. The adoption of FSP EITF 99-20-1
did not have a material impact on the company’s consolidated financial
statements.
 
 3.    INVENTORY
 
 Inventory
primarily consists of finished goods. The Company purchased all of its goods
from Shandong Yong Chun Tang Bioengineering Co., Ltd. (“Shandong YCT??, an
affiliated company owned by the Chairman of the Company (See Note 5). No
allowance for inventory was made for the year ended March 31, 2009 and
2008.
 
 
 F-12
 4.   PROPERTY
AND EQUIPMENT, NET
 
 Property
and equipment at March 31, 2009 and 2008 consist of the following:
 Balance
      as ofMarch
      31, 2009
                          
                          
                          March
      31, 2008Machinery
      & Equipment
                          
                          $
                          459,628
                          
                          
                          $
                          260,025Furniture
      & Fixture
                          
                          
                          95,475
                          
                          
                          
                          -Building
                          
                          
                          
                          3,804,107
                          
                          
                          
                          1,794,406Subtotal
                          
                          
                          4,359,210
                          
                          
                          
                          2,054,431Less:
      Accumulated Depreciation
                          
                          
                          (221,095
                          )
                          
                          
                          (68,282
                          )Construction
      in progress
                          
                          
                          211,377
                          
                          
                          
                          1,096,882Total
      Property and equipment, net
                          
                          $
                          4,349,493
                          
                          
                          $
                          3,083,031
  The
depreciation expense for the year ended March 31, 2009 and 2008 was $150,279 and
$46,493, respectively.
 
 Construction
in progress represents direct costs of construction or acquisition and design
fees incurred for the Company’s new plant and equipment. Capitalization of these
costs ceases and the construction in progress is transferred to plant and
equipment when substantially all the activities necessary to prepare the assets
for their intended use are completed. No depreciation is provided until it is
completed and ready for its intended use.
 
 The
costs involved with construction in progress amounted to the total of $211,377
and $1,096,882 as of March 31, 2009 and 2008, respectively.
 
 5.  RELATED
PARTY TRANSACTIONS
 
 As
of March 31, 2009 and 2008, the Company has loan to related party in the amount
of $2,075,549 and $2,022,742, respectively, representing loans receivables from
two affiliates as stated below.
 
 F-13
 As
      of March, 312009
                          
                          
                          2008a)
      Loan receivable from Shandong YCT
                          
                          $
                          1,124,366
                          
                          
                          $
                          1,095,760b)
      Loan receivable from Changqing Paper Co.,Ltd.
                          
                          
                          951,182
                          
                          
                          
                          926,982Total
                          
                          $
                          2,075,549
                          
                          
                          $
                          2,022,742
 Shandong
YCT is an affiliated company owned by the chairman and controlling shareholder
Mr. Yan Tinghe.  Prior to the completion of the Company’s own plant,
Shandong YCT provides products to the Company for resale and makes settlement
upon sales of goods. The purpose of the loan is to finance Shandong YCT’s
production. The loan bears no interests and is unsecured and due upon
demand.
 
 Changqing
Paper Co., Ltd is an affiliated company also owned by the chairman and
controlling shareholder Mr. Yan Tinghe.  This loan is also unsecured
and interest free with an original maturity date of August 20, 2008. But the
loan demands 0.08% monthly late payment penalty on any unpaid due amount after
the maturity date. On October 27, 2008, the Company extended the loan with
Changqing Paper Co., Ltd. for an additional year. All other terms remain
unchanged.
 
 6.   MAJOR
CUSTOMER AND VENDOR
 
 The
Company sells products to individual retail customers and does not have major
customer due to the high level competition within the industry.
 
 The
Company purchases its products from its affiliate company, Shandong YCT,
according to the contract signed on December 26, 2006 between the Company and
Shandong YCT. For the years ended March 31, 2009 and 2008, Shandong YCT is the
sole vendor to the Company.
 
 F-14
 
 7.   LAND
USE RIGHT
 
 All
land in the People’s Republic of China is government owned and cannot be sold to
any individual or company. However, the government grants the user a “land use
right” (the “Right”) to use the land. The Company has total land use right of
RMB10,199,600 (equivalent to $1,454,592) to use for 50 years and amortizes the
Right on a straight line basis over 50 years.
 
 Net
intangible assets were as follows:
  As
      of March 31,2009
                          
                          
                          2008Land
      use right
                          
                          $
                          1,492,566
                          
                          
                          $
                          1,454,592Less:
      Accumulated amortization
                          
                          
                          (81,293
                          )
                          
                          
                          (49,789
                          )Total
                          
                          $
                          1,411,274
                          
                          
                          $
                          1,404,803
 The
amortization expense for the years ended March 31, 2009 and 2008 was $30,053 and
$25,623, respectively.
 
 8.   TAX
PAYABLE
 
 The
Company has tax payable as below:
 As
      of March 31,2009
                          
                          
                          2008Corporate
      Income Tax
                          
                          $
                          445,195
                          
                          
                          $
                          462,272Value-Added
      Tax
                          
                          
                          37,262
                          
                          
                          
                          93,392Other
      Tax & Fees
                          
                          
                          2,981
                          
                          
                          
                          7,471Total
      Tax Payable
                          
                          $
                          485,438
                          
                          
                          $
                          563,135
  F-15
 
 9.INCOME TAXES
 
 The
Company is governed by the Income Tax Law of the People’s Republic of China
concerning the private-run enterprises, which are subject to tax at a statutory
rate of 25% and were, until January 2008, subject to tax at a statutory rate of
33% (30% state income tax plus 3% local income tax) on its income reported in
the statutory financial statements after appropriate tax
adjustments.
 
 On
March 16, 2007, the National People’s Congress of China approved the Corporate
Income Tax Law of the People’s Republic of China (the “New CIT Law”), which is
effective from January 1, 2008. Under the new law, the corporate income tax rate
applicable to all Companies, including both domestic and foreign-invested
companies, will be 25%, replacing the current applicable tax rate of
33%.  However, tax concession granted to eligible companies prior to
the new CIT laws will be grand fathered.
 
 For
the years ended March 31, 2009 and 2008, the company recorded income tax
provisions of $2,579,666 and $1,534,620, respectively.
 For
      the years ended March 31,2009
                                  
                                  
                                  2008Statutory
      tax rate in PRC
                                  
                                  
                                  25.0%
                                  
                                  
                                  
                                  25.0%Impact
      of the new statutory tax rate according to New CIT Law
                                  
                                  
                                  -
                                  
                                  
                                  
                                  3.3%Effective
      Tax rate
                                  
                                  
                                  25.0%
                                  
                                  
                                  
                                  28.3%
 10.
STOCKHOLDERS’ EQUITY
 
 Before
the share exchange agreement in June 2007, the Company has 12,724,438 shares of
common stock issued and outstanding.
 
 On
July 30, 2007, in accordance with the Share Exchange Agreement with Landway
Nano, the Company issued 500 shares of its newly-designated Series B Convertible
Preferred Stock to two individual investors for $530,000.
 
 On
September 28, 2007, the Company issued additional 500 shares of Series B
Convertible Preferred Stock to the shareholders of Landway Nano.
 
 On
November 23, 2007, the Company effected a reverse stock split of the
corporation’s common stock in the ratio o-f 1:28. At the same time, the 1,000
shares of the Company’s Series B Preferred Stock was converted into common stock
and simultaneously reversed split into 28,915,629 shares of common stock. All
stock amounts have been retroactively restated for the effect of the reverse
stock split.
 
 As
of March 31, 2009 and 2008, there were 45 shares of Series A Preferred Stock and
29,380,073 shares of Common Stock issued and outstanding. There was no Series B
Preferred Stock issued and outstanding.
   F-16
 
 ITEM
9.                      CHANGES
IN AND DISAGREEMENTS WITH   ACCOUNTANTS ONACCOUNTING AND
FINANCIAL DISCLOSURE.
 
 Not
applicable.
 
 ITEM
9A.                   CONTROLS
AND PROCEDURES.
 
 (a)           Evaluation of disclosure controls and
procedures.
  The term
“disclosure controls and procedures” (defined in SEC Rule 13a-15(e)) refers to
the controls and other procedures of a company that are designed to ensure that
information required to be disclosed by a company in the reports that it files
under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded,
processed, summarized and reported within required time periods. The Company’s
management, with the participation of the 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 annual
report (the “Evaluation Date”). Based on that evaluation, the Company’s Chief
Executive Officer and Chief Financial Officer have concluded that, as of the
Evaluation Date, such controls and procedures were effective.
  (b)           Changes in internal
controls.
  The term
“internal control over financial reporting” (defined in SEC Rule 13a-15(f))
refers to the process of a company that is designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally
accepted accounting principles. The Company’s management, with the participation
of the Chief Executive Officer and Chief Financial Officer, has evaluated any
changes in the Company’s internal control over financial reporting that occurred
during the fourth quarter of the year covered by this annual report, and they
have concluded that there was no change to the Company’s internal control over
financial reporting that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial
reporting.
 
 (c)
              Management’s
      Report on Internal Control over Financial
  Reporting.
  Management
of the Company is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rule 13a-15(f) under the
Securities Exchange Act of 1934.  We have assessed the effectiveness
of those internal controls as of March 31, 2009, using the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”) Internal Control –
Integrated Framework as a basis for our assessment.
  Because
of inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies and procedures may deteriorate.  All internal
control systems, no matter how well designed, have inherent
limitations.  Therefore, even those systems determined to be effective
can provide only reasonable assurance with respect to financial statement
preparation and presentation.
  32
 A
material weakness in internal controls is a deficiency in internal control, or
combination of control deficiencies, that adversely affects the Company’s
ability to initiate, authorize, record, process, or report external financial
data reliably in accordance with accounting principles generally accepted in the
United States of America such that there is more than a remote likelihood that a
material misstatement of the Company’s annual or interim financial statements
that is more than inconsequential will not be prevented or detected. In the
course of making our assessment of the effectiveness of internal controls over
financial reporting, we identified one material weaknesses in our internal
control over financial reporting.  This material weakness consisted
of:
  Lack of expertise
in U.S accounting principles among the personnel in our Chinese
headquarters.Our books are maintained
and our financial statements are prepared by the personnel employed at our
executive offices in Shandong Province in the People’s Republic of
China.  Few of our employees have experience or familiarity with U.S
accounting principles.  The lack of personnel in our Shandong office
who are trained in U.S. accounting principles is a weakness because it could
lead to improper classification of items and other failures to make the entries
and adjustments necessary to comply with U.S. GAAP.
 
 Management
is currently reviewing its staffing and their training in order to remedy the
weaknesses identified in this assessment.  To date, we are not aware
of significant accounting problems resulting from these weaknesses; so we have
to weigh the cost of improvement against the benefit of strengthened
controls.  However, because of the above conditions, management’s
assessment is that the Company’s internal controls over financial reporting were
not effective as of March 31, 2009.
  This
annual report does not include an attestation report of the Company’s
independent registered public accounting firm regarding internal control over
financial reporting.  Management’s report was not subject to
attestation by the Company’s independent registered public accounting firm
pursuant to temporary rules of the Securities and Exchange Commission that
permit the Company to provide only management’s report in this annual
report.
  ITEM
9B.                  
OTHER INFORMATION.
 
 None.
 33
 PART
III
 
 ITEM
10.                    DIRECTORS
AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 
 The
following individuals are the members of China YCT International Group’s Board
of Directors and its executive officers.
  Name
                    
                    Age
                    
                    Position
      with the Company
                    Director
      SinceYan
      Tinghe
                    
                    56
                    
                    Chairman,
      Chief Executive Officer
                    2007Zhang
      Jirui
                    
                    51
                    
                    President,
      Chief Financial Officer
                    2007Robert
      J. Fanella
                    
                    58
                    
                    Independent
      Director
                    2009Dr.
      Bai Junying
                    
                    50
                    
                    Independent
      Director
                    2009Zhang
      Wengao
                    
                    66
                    
                    Independent
      Director
                    2009
  All
directors hold office until the next annual meeting of our shareholders and
until their successors have been elected and qualify.  Officers serve
at the pleasure of the Board of Directors.
  Yan Tinghe has over twenty
years of experience in corporate management within the food and food supplements
industries.  Having founded Shandong Spring Pharmaceuticals, he has
served as its Chairman since January 2006.  During the eight years
prior to founding Shandong Spring Pharmaceutical, Mr. Yan was employed as
Chairman and General Manager of Shandong Yong Chun Tang Bioengineering Co.,
Ltd., which manufactures a wide variety of food supplements and is currently the
exclusive supplier for Shandong Spring Pharmaceutical.  During the
period from 1988 to 1997 Mr. Yan served as Executive Vice President of Shishui
Sanyin Company, and from 1985 to 1987 as Factory Director of Beijing Shishui
Lianhe Preserved Fruits, both of which were multi-facility enterprises in the
food industry.
  34
 Zhang Jirui brings over twenty
years of technical training to Shandong Spring Pharmaceutical, where he has been
employed as Director since January 2006.  During 2005 Mr. Zhang was
the Manager of the International Market Department for Shandong Yong Chun Tang
Bioengineering Co., Ltd., which manufactures a wide variety of food supplements
and is currently the exclusive supplier for Shandong Spring
Pharmaceutical.  During the 22 years prior to joining Shandong Yong
Chun Tang Bioengineering Co., Ltd., Mr. Zhang was employed as an Instructor in
the Shandong Chemical Engineering Vocational School.
 
 Robert J. Fanella, CPA was
appointed to the post of the company’s independent directors effective from
April 6, 2009. DuringMr. Fanella’s more than
35 year career specializing in corporate finance and accounting, he was
responsible for audit and financial service oversight for both private and
public traded companies world-wide, national and regional accounting and
financial analysis and service. From 2008 to the present, Mr. Fanella has served
as a senior consultant to an Illinois based LED Lighting Manufacturer, providing
advice regarding  capital raising affairs,
capitalization  at both the subsidiary and corporate level, and
day-to-day financial operations. From 2006 to 2007, Mr. Fanella
served  as a senior consultant at Chicago Industrial Plating
Manufacturer, a more than 100 year old family owned company. In that position,
Mr. Fanella was responsible for the resolving company’s short-term gap financing
issues and working with external auditors to finalize the annual financial
report. Prior to that, from 2001 to 2006, Mr. Fanella was co-owner and CFO of
Tru-Way, Inc. During his tenure, Mr. Fanella  successfully conducted
some acquisition deals and helped the company achieve annual revenue growth.
From 1983 to 2001, Mr. Fanella was a co-founder and  CFO of
Microenergy, Inc. At Microenergy, Inc., Mr. Fanella shared with the President
total responsibility for all operations of the organization. As the CFO, Mr.
Fanella was also  responsible for all accounting and SEC filings. Mr.
Fanella earned his Bachelor Degree in Finance from North Illinois University in
1972, and he became a Certified Public Accountant in 1975. In 1979, Mr. Fanella
received his MBA from the University of Chicago, specializing in Finance &
Marketing.
 
 Bai Junying, Ph.D. in Pharmacy
was appointed as an independent director of China YCT International Group on
April 6, 2009. Over the last twenty years, Dr. Bai has held senior management
roles in several companies, including as CEO of Shandong Dong-e E-jiao Group,
CEO of Shandong Xinhua Pharmaceutical Co., Ltd., and head of the research and
development department and subsequently vice executive manager of Lukang
Pharmaceutical Group Co., Ltd.  Dr. Bai is currently the CEO of
Shandong Dong E-jiao Group, a national well-know pharmaceutical and health care
group. From 2000 to 2005, while Dr. Bai served at Shandong Xinhua Pharmaceutical
Group Co., Ltd, where he was responsible for the daily operation of the
company.  Dr. Bai successfully brought the company public and helped
develop  the company into one of the leading pharmaceutical companies
in China. As  Head of the R&D Department at Lukang Pharmaceutical
Group from 1987 to 2000, Dr. Bai played a central role in the integration and
development of an antibiotic injection agent, which made Lukang Pharmaceutical
Group a national research center for antibiotics. In 1990, Dr. Bai obtained his
Ph.D.  in Pharmacy from Beijing University Health Science
Center.
 
 Zhang Wengao was appointed as
an independent director of China YCT International Group on April 6, 2009. Mr.
Zhang has over 30 years of experience in pharmaceutical, Chinese traditional
medicine and diagnostic industries. Mr. Zhang is currently a full time professor
of Shandong University of Traditional Chinese Medicine, specializing in clinical
treatment via both Chinese and western methods. From 1985 to 1998 Professor
Zhang was a dean of the research and development department of Shandong
University of Traditional Chinese Medicine. Professor Zhang has received various
awards within the clinical medicine field, including awards
for  combining western clinical treatment with traditional Chinese
medicine methods, and the 20th Geneva Invention Silver
Award.  Professor Zhang has published more than 200 papers
concerning  the advantages of Chinese traditional medicine in clinical
treatment. Among his other engagements, Mr. Zhang is an associate commissioner
of the International Chinese Medicine Association and director of the
International Chinese Medicine Association Cardiovascular Committee. In 1968,
Mr. Zhang received his bachelor degree majoring in Pharmacy from Shandong
University of Traditional Chinese Medicine.
 
 35
 
 Nominating,
Compensation and Audit Committees
  The Board
of Directors has not appointed either a nominating committee or a compensation
committee, due to the small number of officers in the Company.
 
 The Board
of Directors has appointed an audit committee, which consists of Mr. Robert J.
Fanella as the Chairman, and Dr. Bai and Mr. Zhang as members.  Mr.
Fanella is qualified to serve as an “audit committee financial expert,” as
defined in  the Regulations of the Securities and Exchange Commission,
by reason of his experience in public accounting and as a principal financial
officer.  Mr. Fanella, Dr. Bai, and Mr. Zhang are 
“independent” directors, as defined in the listing standards of
NASDAQ.
 
 Code
of Ethics
  The Board
of Directors has not adopted a code of ethics applicable to the Company’s
executive officers.  The Board believes that the small number of
individuals involved in the Company’s management makes such a code
unnecessary.
 
 Section
16(a) Beneficial Ownership Reporting Compliance
  None of
the officers, directors or beneficial owners of more than 10% of the Company’s
common stock failed to file on a timely basis the reports required by Section
16(a) of the Exchange Act during the year ended March 31, 2009, except that Yan
Tinghe and Zhang Jirui each failed to file a Form 3 when due.
  ITEM 11.                                EXECUTIVE
COMPENSATION
 
 The
following table sets forth all compensation awarded to, earned by, or paid by
China YCT International Group, Ltd. and its subsidiaries to Yan Tinghe, its
Chief Executive Officer, during the past three fiscal years. There were no
executive officers whose total salary and bonus for the fiscal year ended March
31, 2009 exceeded $100,000.
  
 Fiscal
                  Year
                Salary
                Bonus
                Stock
                  Awards
                Option
                  Awards
                Other
                  CompensationYan
      Tinghe
                2009
                $21,820
                0
                0
                0
                02008
                $30,770
                0
                0
                0
                02007
                $12,820
                - -
                - -
                - -
                - -
  36
 Equity
Awards
 
 The
following tables set forth certain information regarding the stock options
acquired by the executive officer named in the table above during the year ended
March 31, 2009 and those options held by him on March 31, 2009.
 37
  Remuneration
of Directors
  The Board
of Directors has agreed that it will issue to Dr. Bai Junying and Zhang Wengao,
upon commencement of his service and on each anniversary of his commencement
date, common shares with a market value equal to $10,000 cash plus $25,000 in
the form of restricted shares of common stock.
 
 The Board
of Directors has agreed that it will issue to Mr. Robert J. Fanella, upon
commencement of his service and on each anniversary of his commencement date,
common shares with a market value equal to $15,000 cash plus $40,000 in the form
of restricted shares of common stock.
 
  ITEM
12.                                SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
 
 The
following table sets forth information known to us with respect to the
beneficial ownership of our common stock as of the date of this prospectus by
the following:
  ·
              each
      shareholder known by us to own beneficially more than 5% of our common
      stock;
  ·
              Yan
      Tinghe, our Chief Executive Officer
  ·
              each
      of our directors; and
  ·
              all
      directors and executive officers as a
group.
  Except as
otherwise indicated, we believe that the beneficial owners of the common stock
listed below have sole voting power and investment power with respect to their
shares,  subject to community property laws where
applicable.  Beneficial ownership is determined in accordance with the
rules of the Securities and Exchange Commission.
  Name
      and Address
                  
                  Amount
      and Nature
                  
                  
                  Percentageof
      Beneficial Owner (1)
                  
                  of
      Beneficial Ownership (2)
                  
                  
                  of
      ClassYan
      Tinghe
                  
                  
                  9,653,690
                  
                  
                  
                  32.90
                  %Zhang
      Jirui
                  
                  
                  1,427,783
                  
                  
                  
                  4.90
                  %Robert
      J. Fanella
                  
                  
                  20,000
                  
                  
                  
                  0.07
                  %Dr.
      Bai Junying
                  
                  
                  12,500
                  
                  
                  
                  0
                  %Zhang
      Wengao
                  
                  
                  12,500
                  
                  
                  
                  0
                  %All
      officers and directorsas
      a group (5 persons)
                  
                  
                  11,126,473
                  
                  
                  
                  37.87
                  %Warner
      Technology &
                  
                  
                  1,762,695
                  
                  
                  
                  6.00
                  %Investment
      Corp.18
      Kimberly Ct.East
      Hanover, NJ 07936
 
 (1)
              Except
      as otherwise noted, each shareholder’s address is c/o Shandong Spring
      Pharmaceutical Co., Ltd., Economic Development Zone, Gucheng Road, Sishui
      County, Shandong Province, P.R.
China.
 (2)           Except
as otherwise noted, all shares are owned of record and
beneficially.
 38
  ITEM
      13.
              CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
      INDEPENDENCE
 
 Certain
Relationships
 
 Our
Chairman, Yan Tinghe, owns the registered capital of Shandong Yong Chun
Tang.  Since January 2007 the exclusive business activity of Shandong
Spring Pharmaceutical has been the distribution of products manufactured by
Shandong Yong Chun Tang.  In addition, Shandong Yong Chun Tang
contributed the initial funds for the development of our manufacturing
facility.  Currently Shandong Spring Pharmaceutical advances funds to
Shandong Yong Chun Tang ($1,124,366 at March 31, 2009) in anticipation of future
deliveries of products.   In addition, during the year ended
March 31, 2009, Shandong Spring Pharmaceutical loaned $951,182 to Changqing
Paper Co., Ltd., a company owned by Yan Tinghe.
  Other
than the aforesaid relationship, neither Yan Tinghe nor Zhang Jirui has engaged
in any transaction with China YCT International Group or Shandong Spring
Pharmaceutical during the past two fiscal years that had a transaction value in
excess of $60,000.
  Director
Independence
 
 The
following members of our Board of Directors are independent, as “independent” is
defined in the rules of the NASDAQ STOCK MARKET:  Robert J. Fanella,
Dr. Bai Junying, and Zhang Wengao.
 ITEM
14                      PRINCIPAL
ACCOUNTANT FEES AND SERVICES
  Audit
Fees
 
 Bagell,
Josephs, Levine & Company, LLC billed $65,000 to the Company for
professional services rendered for the audit of fiscal 2009 financial statements
and review of the financial statements included in the 10-Q filings for fiscal
2009.  Bagell, Josephs, Levine & Company, LLC billed
$55,000  to the Company for professional services rendered for the
audit of fiscal 2008 financial statements and review of the financial statements
included in the 10-Q filings for the second and third quarters of fiscal
2008.
 
 Audit-Related
Fees
 
 Bagell,
Josephs, Levine & Company, LLC billed $0 to the Company during fiscal 2009
for assurance and related services that are reasonably related to the
performance of the fiscal 2009 audit or review of the quarterly financial
statements.  Bagell, Josephs, Levine & Company, LLC billed $0 to
the Company during fiscal 2008 for assurance and related services that are
reasonably related to the performance of the fiscal 2008 audit or review of the
quarterly financial statements.
 
 Tax
Fees
 
 Bagell,
Josephs, Levine & Company, LLC billed $0 to the Company during fiscal 2009
and fiscal 2008 for professional services rendered for tax compliance, tax
advice and tax planning.
 
 All
Other Fees
 
 Bagell,
Josephs, Levine & Company, LLC billed $0 to the Company in fiscal 2009 and
fiscal 2008  for services not described above.
  It is the
policy of the Company that all services other than audit, review or attest
services must be pre-approved by the Board of Directors.  No such
services have been performed by Bagell, Josephs, Levine & Company,
LLC.
  39
  ITEM
15.                                EXHIBITS
  3-a
                                        Certificate
      of Incorporation - filed as an exhibit to
      the Company's Registration Statement on Form 8-A (SEC File
      No. 000-53600) and incorporated herein by reference.3-a(1)
                                        Certificate
      of Amendment to Certificate of Incorporation - filed as an exhibit to the
      Company's Registration Statement on Form 8-A (SEC File No. 000-53600) and
      incorporated herein by reference.3-b
                                        By-laws–
      filed as an exhibit to the Company's Registration Statement on Form 8-A
      (SEC File No. 000-53600) and incorporated herein by
    reference.21
                                        Subsidiaries:
      Landway Nano Bio-Tech Group, Inc., a Delaware corporation;Shandong Spring Pharmaceutical Co., Ltd, a People's Republic of China
      corporation31.1
                                        Rule
      13a-14(a) Certification – CEO31.2
                                        Rule
      13a-14(a) Certification – CFO32
                                        Rule
      13a-14(a) Certification
   40
  SIGNATURES





In
accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.





CHINA
YCT INTERNATIONAL GROUP, LTD.





By:





/s/ Yan
Tinghe


Yan
Tinghe Chief Executive Officer





/s/
Zhang Jirui


Zhang
Jirui,


Chief
Financial Officer





In
accordance with the Exchange Act, this Report has been signed below on June 29,
2009 by the following persons, on behalf of the Registrant and in the capacities
and on the dates indicated.





/s/ Yan
Tinghe


Yan
Tinghe, Director


Chief
Executive Officer





/s/
Zhang Jirui


Zhang
Jirui,


Chief
Financial Officer





/s/
Robert J. Fanella


Robert J.
Fanella


Director





/s/ Dr.
Bai Junying


Dr. Bai
Junying


Director





/s/
Zhang Wengao


Zhang
Wengao


Director


41