**U.S.
      Securities and Exchange Commission**


**Washington,
      D.C. 20549**




**FORM
      10-QSB**




(Mark
      One)




**x**
            **Quarterly
                Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                Act of
                1934**




For
      the
      quarterly period ended December 31, 2005




or




** ̈**
            **Transition
                Report Pursuant to Section 13 of 15(d) of the Securities Exchange
                Act of
                1934**




For
      the
      Transition Period From  to




Commission
      File number 000-50601







**SYNUTRA
      INTERNATIONAL, INC.**


**** **(Exact
      name of small business issuer as specified in its charter)**




DELAWARE
            
            13-4306188**(State
                or other jurisdiction of**
              **incorporation
                or organization)**
            
            **(IRS
                Employer Identification
                No.)**




15200
      Shady Grove Road, Suite 350


Rockville,
      Maryland 20850


**** **(Address
      of principal executive offices)**




(301)
      840-3888


**(Issuer’s
      telephone number)**




Vorsatech
      Ventures, Inc.


**Former
      Name, Former Address and Former Fiscal Year, if Changed Since Last
      Report**




Check
      whether the Registrant (1) has filed all reports required to be filed by Section
      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 whether the registrant is a shell company (as defined in Rule
      12b-2of the Exchange Act).





Yes  ̈ No x





As
      of
      January 20, 2006, there were 50,000,713 **** shares
      of
      Common Stock outstanding.




Transitional
      Small Business Disclosure Format




Yes  ̈ No x










**INDEX**




PART
                I. FINANCIAL INFORMATIONItem
                1.
            
            Financial
                Statements: (unaudited)
            
            F-1Consolidated
                Balance Sheets as of December 31, 2005 and March 31, 2005
                (unaudited)
            
            F-2Statements
                of Operations for three months ended December 31, 2005 and 2004 and
                nine
                months ended December 31, 2005 and 2004 (unaudited)
            
            F-3Consolidated
                Statements of Changes in Stockholders' Equity December 31, 2005
                (unaudited)
            
            F-4Consolidated
                Statements of Cash Flows for the nine-months ended December 31, 2005
                and
                2004 (unaudited)
            
            F-5Notes
                to Financial Statements (unaudited)
            
            F-6
                - F-9Item
                2.
            
            Management's
                Discussion and Analysis or Plan of Operations
            
            10Item
                3.
            
            Controls
                and Procedures
            
            24PART
                II. OTHER INFORMATIONItem
                1.
            
            Exhibits
            
            24SIGNATURES
            
            25





2


**PART
      I**


**FINANCIAL
      INFORMATION**




**Item
      1.** **** **Financial
      Statements.**







**SYNUTRA,
      INC.**




**Rockville,
      MD**




**CONSOLIDATED
      BALANCE SHEETS (UNAUDITED)**




**December
                31,2005**
            
            **March
                31,2005****ASSETS**
            **USD**
            
            USD**Current
                Assets**Cash
                and Cash Equivalents
            **$19,727,274**
            
            $16,085,403Short
                Term Investment - at Market
            **42,276**
            
            45,237Trade
                Receivables, Net of Provisions
            **1,418,545**
            
            1,968,235Other
                Receivables, Net of Provisions
            **2,525,362**
            
            1,745,985Notes
                Receivable
            **94,226**
            
            27,790Inventory
            **11,479,627**
            
            6,757,021Prepaid
                Expenses
            **176,650**
            
            721,623Due
                from Related Companies
            **7,696,812**
            
            8,082,451Deferred
                Costs
            **7,126**
            
            383,869**Total
                Current Assets**
            **$43,167,897**
            
            $35,817,613**Property,
                Plant and Equipment, Net of Accumulated
                Depreciation**
            **13,940,346**
            
            13,887,012**Other
                Assets**Intangible
                Assets, Net of Accumulated Amortization
            **283,892**
            
            334,392Construction
                In Progress
            **19,967,212**
            
            14,152,518**Total
                Assets**
            **$77,359,348**
            
            $64,191,535








3


**SYNUTRA,
      INC.**




**Rockville,
      MD**




**CONSOLIDATED
      BALANCE SHEETS (UNAUDITED) Continued**





**December
                31,2005**
            
            **March
                31,2005****LIABILITIES
                AND SHAREHOLDERS’ EQUITY**
            **USD**
            
            USD**Current
                Liabilities**Accounts
                Payable
            **10,122,306**
            
            4,966,997Other
                Payables
            **4,983,331**
            
            4,400,128Notes
                Payable
            **17,795,624**
            
            19,821,180Deposit
                Received from Customers
            **1,482,530**
            
            540,843Bank
                Loans
            **12,366,484**
            
            12,299,885Accrued
                Expenses
            **148,937**
            
            899,555Due
                to Related Companies
            **9,266,276**
            
            8,808,904**Total
                Current Liabilities**
            **$56,165,488**
            
            $51,737,492**Long
                Term Liabilities**Bank
                Loans
            **4,932,182**
            
            4,832,961**Total
                Liabilities**
            **$61,097,670**
            
            $56,570,453**Minority
                Interest**
            **-**
            
            (576)**Shareholders’
                Equity**Registered
                Capital
            **10,000**
            
            10,000Additional
                Paid-in Capital
            **7,618,289**
            
            7,200,409Reserve
            **45,804**
            
            45,804Retained
                Earnings
            **7,989,142**
            
            583,603Accumulated
                Comprehensive Income (Loss)
            **598,443**
            
            (218,158)**Total
                Shareholders’ Equity**
            **16,261,678**
            
            7,621,658**Total
                Liabilities and Shareholders’ Equity**
            **$77,359,348**
            
            $64,191,535





4


**SYNUTRA,
      INC.**




**Rockville,
      MD**




**CONSOLIDATED
      STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
      (UNAUDITED)**





**Three
                Months Ended Dec31,**
            
            **Nine
                Months Ended Dec31,****USD**
            
            **USD****2005**
            2004
            
            **2005**
            2004**Sales**
            **$30,517,635**
            $16,967,956
            
            **$74,293,412**
            $39,742,984Cost
                of Sales
            **13,869,681**
            8,775,545
            
            **33,291,299**
            20,203,921**Gross
                Profit**
            **$16,647,953**
            $8,192,411
            
            **$41,002,113**
            $19,539,063Selling
                Expenses
            **5,440,177**
            1,727,673
            
            **11,165,177**
            6,706,458Advertising
                and Sales Promotion
            **5,439,493**
            2,245,178
            
            **18,056,584**
            9,156,467General
                and Administrative Expenses
            **1,281,265**
            1,033,343
            
            **4,206,155**
            2,215,729**Income
                (Loss) from Operations**
            **$4,487,018**
            $3,186,217
            
            **$7,574,196**
            $1,460,409Other
                Income (Expenses)
            **(64,834)**
            673,507
            
            **1,602,388**
            636,546**Other
                Expenses**Interest
                Expense
            **299,429**
            379,666
            
            **1,018,976**
            940,042Other
                Expenses
            **136,586**
            70,093
            
            **237,942**
            304,774**Total
                Other Expenses**
            **$436,015**
            $449,759
            
            **$1,256,918**
            $1,244,816**Income
                (Loss) from Operations Before Provision for Income
                Taxes**
            **3,986,169**
            3,409,964
            
            **7,919,666**
            852,139Income
                Taxes - Current
            **208,552**
            18,875
            
            **513,551**
            56,669**Net
                Income (Loss) Before Minority Interest**
            **3,777,618**
            3,391,089
            
            **7,406,115**
            795,470Minority
                Interest
            **-**
            2,563,701
            
            **576**
            2,243,946**Net
                Income (Loss)**
            **$3,777,618**
            $827,388
            
            **$7,405,539**
            ($1,448,476)**Comprehensive
                Income (Loss)**Foreign
                Currency Translation
            **172,596**
            (441,214)
            
            **824,793**
            (77,939)Unrealized
                Loss on Investment
            **-**
            (10,222)
            
            **(8,192)**
            (22,764)**Comprehensive
                Income (Loss)**
            **$3,950,214**
            $375,952
            
            **$8,222,140**
            ($1,549,179)Earnings
                per Share (EPS)EPS
                Basic and Diluted
            **$0.08**
            **$0.01**
            
            **$0.16**
            **($0.03)**Weighted
                Average Shares Basic and Diluted
            **50,000,713**
            **50,000,713**
            
            **50,000,713**
            **50,000,713**







5


**SYNUTRA,
      INC.**




**Rockville,
      MD**




**CONSOLIDATED
      STATEMENTS OF CASH FLOWS (UNAUDITED)**





**Nine
                Months Ended December 31****USD**
            **2005**
            2004**Cash
                Flows from Operating Activities****Net
                Income**
            **$7,405,539**
            ($1,314,192)**Adjustments
                to Reconcile Net Income to Net Cash Provided by (Used in) Operating
                Activities**Minority
                Interest
            **576**
            2,109,662Depreciation
                and Amortization
            **1,082,140**
            1,056,814Bad
                Debts
            **4,214**
            62,606**(Increase)
                Decrease in Assets:**Inventory
            **(4,722,607)**
            166,191Trade
                Receivables, Net of Provisions
            **549,690**
            (1,841,769)Other
                Receivables, Net of Provisions
            **(779,377)**
            11,135,933Intangible
                Assets
            **35,235**
            -Prepaid
                Expenses
            **544,974**
            66,331Deferred
                Costs and Other Assets
            **376,743**
            40,670**Increase
                (Decrease) in Liabilities:**Accounts
                Payable
            **5,155,309**
            (595,949)Other
                Payables
            **452,011**
            (1,186,740)Accrued
                Expenses
            **(750,618)**
            (1,350,980)Deposit
                Received from Customers
            **941,688**
            539,890**Net
                Cash Provided By (Used in) Operating Activities**
            **$10,295,518**
            $8,888,467





6


**SYNUTRA,
      INC.**




**Rockville,
      MD**




**CONSOLIDATED
      STATEMENTS OF CASH FLOWS (UNAUDITED) Continued**





**Nine
                Months Ended December 31****USD**
            **2005**
            2004**Cash
                Flows from Investing Activities**Cash
                Purchase of Short Term Investments
            **7,431**
            11,330Acquisition
                of Property, Plant and Equipment
            **(993,492)**
            (854,059)Cash
                Proceeds from Sales of Fixed Assets
            **-**
            52,775Cash
                Used for Construction in Progress
            **(5,814,694)**
            (12,746,910)Notes
                Receivable
            **(66,436)**
            (10,083)Purchase
                of Intangible Assets
            **(4,213)**
            -Due
                from Related Companies
            **385,639**
            (2,190,100)**Net
                Cash Used in Investing Activities**
            **($6,485,765)**
            ($15,737,046)**Cash
                Flows from Financing Activities**Bank
                Loans
            **165,821**
            2,899,776Notes
                Payable
            **(2,025,556)**
            7,370,265Capital
                Contributions - Stockholders
            **417,880**
            419Due
                to Related Companies - Cash Received
            **457,372**
            (1,098,796)**Net
                Cash Provided by Financing Activities**
            **($984,483)**
            $9,171,665**Effect
                of Exchange Rate Changes on Cash and Cash
                Equivalents**
            **$816,602**
            ($77,939)Net
                Change in Cash and Cash Equivalents
            **3,641,872**
            2,245,148Cash
                and Cash Equivalents - Beginning of Period
            **16,085,403**
            13,737,303**Cash
                and Cash Equivalents - End of Period**
            **$19,727,274**
            $15,982,451**SUPPLEMENTARY
                CASH FLOWS DISCLOSURES**Interest
                Paid
            **1,018,976**
            930,959Taxes
                Paid
            **513,551**
            89,689






7


**SYNUTRA,
      INC.**




**Rockville,
      MD**




**CONSOLIDATED
      STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)**




**In
                USD**
            **Registered
                Capital**
            **Additional
                Paid-In Capital**
            **Reserve**
            **Retained
                Ernings (Deficit)**
            **Accumulated
                Comprehensive Income (Loss)**
            **Total
                Stockholder’s Equity****Balance
                - March 31, 2005**
            **$10,000**
            **$7,200,409**
            **$45,804**
            **$583,603**
            **($218,158)**
            **$7,621,658**Net
                Income(Loss)
            -
            -
            -
            1,724,204
            -
            1,724,204Other
                Comprehensive Income (Loss)
            -
            -
            -
            -
            26,877
            26,877Capital
                contributions
            -
            470,985
            -
            -
            -
            470,985**Balance
                - June 30, 2005**
            **$10,000**
            **$7,671,394**
            **$45,804**
            **$2,307,807**
            **($191,281)**
            **$9,843,724**Net
                Income(Loss)
            -
            -
            -
            1,903,717
            -
            1,903,717Other
                Comprehensive Income (Loss)
            -
            -
            -
            -
            617,128
            617,128Additions
                to Reserve
            -
            -
            -
            -
            -
            -Shareholder
                Distributions
            -
            (253,601)
            -
            -
            -
            (253,601)**Balance
                - September 30, 2005**
            **$10,000**
            **$7,417,793**
            **$45,804**
            **$4,211,524**
            **$425,847**
            **$12,110,968**Net
                Income(Loss)
            -
            -
            -
            3,777,618
            -
            3,777,618Other
                Comprehensive Income (Loss)
            -
            -
            -
            -
            172,596
            172,596Additions
                to Reserve
            -
            -
            -
            -
            -
            -Capital
                contributions
            -
            200,496
            -
            -
            -
            200,496**Balance
                - December 31 2005**
            **$10,000**
            **$7,618,289**
            **$45,804**
            **$7,989,142**
            **$598,443**
            **$16,261,678**





8


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




**NOTE
      1**  **ORGANIZATION/SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**




**Basics
      of Presentation**




The
      unaudited condensed consolidated financial statements of Synutra International,
      Inc. (the “Company”), have been prepared in accordance with generally accepted
      accounting principles for interim financial information and pursuant to the
      requirements for reporting on Form 10-QSB and Item 310(b) of Regulation S-B.
      Accordingly, they do not include all the information and footnotes required
      by
      accounting principles generally accepted in the United States of America for
      complete financial statements. However, such information reflects all
      adjustments (consisting solely of normal recurring adjustments), which are,
      in
      the opinion of management, necessary for a fair statement of results for the
      interim periods. Results shown for interim periods are not necessarily
      indicative of the results to be obtained for a full fiscal year. The condensed
      consolidated balance sheet information as of December 31, 2004 was derived
      from
      the audited consolidated financial statements. These interim financial
      statements should read in conjunction with that report.




**Description
      of Business**




The
      Company is a Delaware corporation that at December 31, 2005 owned 100% of six
      subsidiary companies in the People’s Republic of China (“PRC” or “China”). These
      six subsidiaries are all principally engaged in different stages of the
      production, distribution, and sales of dairy based infant formulas and other
      nutritional products. The Company’s extensive sales network covers 24 provinces,
      227 cities, and more than 800 counties throughout China. In 2004, the Company’s
      infant formula market share was rated number eight among international
      manufacturers and number three among domestic manufacturers in China. The
      Company’s fiscal year end is March 31.




**SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**




**Accounting
      method**




The
      Company uses the accrual method of accounting for financial statement. The
      accrual method of accounting recognizes revenues when earned and expenses when
      incurred.




**Principles
      of Consolidation**




The
      consolidated financial statements as of December 31, 2005, the related
      consolidated statements of income for the three-month and nine-month periods
      ended December 31, 2005 and 2004, and the related consolidated statements of
      cash flows and stockholders’ equity statement for the nine-month periods ended
      December 31, 2005 and 2004 are unaudited. All significant inter-company balances
      and transactions have been eliminated in the consolidation.




9





The
      following companies are consolidated for financial statement
      presentation:




**Company**
            
            **Incorporation
                Date**Qingdao
                St. George Dairy Co. Ltd.
            
            September
                2001Qingdao
                Shengyuan Dairy Co. Ltd.
            
            January
                1998Chabei
                Shengyuan Dairy Co. Ltd.*
            
            February
                2002Heilongjiang
                Luobei Shengyuan Food Co. Ltd.
            
            April
                2001Bei’an
                Yipin Dairy Co. Ltd.
            
            June
                2004Qingdao
                Women and Children Nutrition Research Co. Ltd.
            
            April
                2004Zhangjiakou
                Shengyuan Co. Ltd.*
            
            March
                2004


*
      Chabei
      Shengyuan and Zhangjiakou Shengyuan completed a merger as of August, 2005 and
      Zhangjiakou emerged as the surviving entity from the merger.





**Income
      taxes**




Taxation
      authorities in China grant long term registered foreign investment companies
      engaged in manufacturing with preferential tax relief programs that include
      a
      2-year tax holiday and a 3-year 50% tax abatement, applicable from the first
      profit-making year in operation. For example, a company would receive a tax
      holiday in the first 2 years of operation from the date of its first consecutive
      profit-making year, and a 50% tax abatement for the 3rd through 5th year in
      operation. When a company commences its operations during a year where the
      profit-making period is shorter than 6 months, the company may choose to start
      counting the period of the tax holiday and abatement years from the following
      year, but the net profit of that year becomes taxable.




During
      the 2005 tax year, the taxation responsibilities of the Company’s subsidiaries
      in China are each described as follows:




**Chabei
      Shengyuan Dairy Co. Ltd:** not
      liable to levy in years before 2005. Net profit is taxable at a 33% rate in
      2005.




**Zhangjiakou
      Shengyuan Co. Ltd** :
      subject
      to 33% income tax for year 2005 and elected to apply for a tax holiday and
      abatement for year 2006.




**Heilongjiang
      Luobei Shengyuan Dairy Co. Ltd** :
      subject
      to 33% income tax in current year and elected to apply for a tax holiday and
      abatement for 2006.




**Qingdao
      St George Dairy Co. Ltd** :
      subject
      to 24% income tax, accorded tax holiday and abatement for 2004.




**Qingdao
      Shengyuan Dairy Co. Ltd:** subject
      to 30% income tax.




**Bei’an
      Yipin Dairy Co. Ltd:** subject
      to 33% income tax currently, accorded tax holiday and abatement for
      2004.




10


**Qingdao
      Women and Children Nutrition Research Co. Ltd** :
      subject
      to 33% income tax.




**Foreign
      currency translation** -
      The
      reporting currency of the Company is U.S. dollars and the financial records
      are
      maintained and the financial statements are prepared in Renminbi (“RMB”).
      Transactions in other currencies are translated into the reporting currencies
      at
      exchange rates prevailing at the time of the transactions. Monetary assets
      and
      liabilities denominated in other currencies at the balance sheet date are
      re-translated at exchange rates prevailing at that date. Non-monetary assets
      and
      liabilities in other currencies are translated at historical rates. Exchange
      differences are recognized in the income statement in the period in which they
      arise. In recent months the RMB has been under growing pressure to appreciate
      against a basket of foreign currencies, including the USD. As of December 31,
      2005, the exchange rate was approximately USD $1.00 to RMB 8.07, about a 2.8%
      appreciation from the year end 2004 exchange rate of about 8.3 RMB yuan to
      1 US
      dollar.




**Recently
      Issued Accounting Standards**




In
      May
      2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial
      Instruments with Characteristics of both Liabilities and Equity,” which
      establishes standards for how an issuer classifies and measures certain
      financial instruments with characteristics of both liabilities and equity.
      It
      requires that an issuer classify a financial instrument that is within its
      scope
      as a liability (or an asset in some circumstances). This Statement is effective
      for financial instruments entered into or modified after May 31, 2003, and
      otherwise is effective at the beginning of the first interim period beginning
      after September 15, 2003. It is to be implemented by reporting the cumulative
      effect of a change in an accounting principle for financial instruments created
      before the issuance date of the Statement and still existing at the beginning
      of
      the interim period of adoption. Restatement is not permitted. This statement
      does not affect the Company.




In
      December 2004, the FASB issued SFAS No. 123R, “Share-Based Payment” (“SFAS
      123R”). SFAS 123R revises FASB Statement No. 123 “Accounting for Stock-Based
      Compensation” and supersedes APB Opinion No. 25 “Accounting for Stock Issued to
      Employees”. SFAS 123R requires all public and non-public companies to measure
      and recognize compensation expense for all stock-based payments for services
      received at the grant-date fair value, with the cost recognized over the vesting
      period (or the requisite service period). SFAS 123R is effective for small
      business issuers for all interim periods beginning after December 15, 2005.
      As
      such, the Company is required to adopt these provisions at the beginning of
      the
      fiscal quarter ended September 30, 2006. Retroactive application of the
      provisions of SFAS 123R to the beginning of the fiscal year that includes the
      effective date is permitted, but not required. The Company is currently
      evaluating the impact of SFAS 123R on its financial statements.




In
      May
      2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections
      -
      a replacement of APB Opinion No. 20 and FASB Statement No. 3" (“SFAS 154”). SFAS
      154 changes the requirements for the accounting for and reporting of a change
      in
      accounting principle. These requirements apply to all voluntary changes and
      changes required by an accounting pronouncement in the unusual instance that
      the
      pronouncement does not include specific transition provisions. SFAS 154 is
      effective for fiscal years beginning after December 15, 2005. As such, the
      Company is required to adopt these provisions at the beginning of the fiscal
      year ended December 31, 2006. The Company is currently evaluating the impact
      of
      SFAS 154 on its consolidated financial statements.




11


**Intangible
      assets** -
      Intangible assets represent technology know-how. Intangible assets are measured
      initially at cost. Intangible assets are recognized if it is probable that
      the
      future economic benefits that are attributable to the asset will flow to the
      enterprise and the cost of the asset can be measured reliably. After initial
      recognition, intangible assets are measured at cost less any impairment losses.
      Intangible assets with definite useful lives are amortized on a straight-line
      basis over their useful lives.




**Trade
      receivables and allowance for bad debts** - The
      Company presents trade, net of allowances for doubtful accounts and returns,
      to
      ensure accounts receivable are not overstated due to uncollectible payments.
      Trade receivables generated from credit sales have general credit terms of
      45 to
      60 days. The allowances are calculated based on detailed review of certain
      individual customer accounts, historical rates and an estimation of the overall
      economic conditions affecting the Company's customer base. The Company reviews
      a
      customer's credit history before extending credit. If the financial condition
      of
      its customers were to deteriorate, resulting in an impairment of their ability
      to make payments, additional allowances may be required.





**Revenue
      recognition** -
      Revenues from the sale of goods is recognized when the risks and rewards of
      ownership of the goods have transferred to the buyer. Revenues consist of the
      invoice value for the sale of goods and services net of value-added tax ("VAT"),
      rebates and discounts.





**Shipping
      and handling fees** -
      Shipping and handling fees are expensed as incurred and are classified as
      selling expenses.




**Research
      and development expenses** -
      Research and development costs are classified as general and administrative
      expenses and are expensed as incurred.





**Advertising
      costs** -
      Advertising costs are expensed as incurred and are classified as selling
      expenses.





**Income
      taxes** - The
      Company accounts for income taxes under the provision of Statement of Financial
      Accounting Standards ("SFAS" No. 109), "Accounting for Income Taxes," whereby
      deferred income tax assets and liabilities are computed for differences between
      the financial statements and tax bases of assets and liabilities that will
      result in taxable or deductible amounts in the future, based on enacted tax
      laws
      and rates applicable to the periods in which the differences are expected to
      affect taxable income. Valuation allowances are established when necessary;
      to
      reduce deferred income tax assets to the amount expected to be
      realized.




12


**NOTE
      2 - SUPPLEMENT OF FINANCIAL INFORMATION**




**RELATED
      PARTY TRANSACTIONS**




The
      following related party transactions occurred during the three months ended
      December 31, 2005 and March 31, 2005:





**Total
                Purchases from Related Companies**
            **December
                31, 2005**
            March
                31, 2005Beijing
                Kelqin Dairy Company, Ltd.
            **510,971**
            95,699Sheng
                Zhi Da Dairy Group Corp.
            **1,141,249**
            981,822Heilongjiang
                Baoquanling Shengyuan Dairy Company, Ltd.
            **3,480,097**
            2,064,482Beijing
                Honnete Dairy Corporation, Ltd.
            **3,061,772**
            -Total
                Purchases
            **$8,194,089**
            $3,142,003







**Total
                Sales to Related Companies**
            **December
                31, 2005**
            March
                31, 2005Beijing
                Kelqin Dairy Company, Ltd.
            **-**
            122,199Sheng
                Zhi Da Dairy Group Corp.
            **90,168**
            550,042Heilongjiang
                Baoquanling Shengyuan Dairy Company, Ltd.
            **1,143,581**
            806,289St.
                Angel (Beijing Business Service)
            **410,054**
            113,443Beijing
                Ao Naier Feed Stuff LLC
            **-**
            16,523Beijing
                Honnete Dairy Corporation, Ltd.
            **10,843,021**
            1,495,053Total
                Sales to Related Companies
            **$12,486,824**
            $3,103,549







**NOTE
      3 - COMMON STOCK**




**The
      Share Exchange** -
      On July
      15, 2005, the Company issued 48,879,500 shares of its common stock in exchange
      for all of the issued and outstanding shares of Synutra, Inc., an Illinois
      corporation (“Synutra Illinois”) that owned all the registered capital of six
      companies organized under the laws of the People’s Republic of China (the
“Exchange”).




As
      a
      result of this Exchange, Synutra Illinois became a wholly owned subsidiary
      of
      the Company.




The
      Exchange occurred pursuant to a Share Exchange Agreement dated as of June 14,
      2005 among the Company, Thomas Braun, Beams Power Investment Limited, Strong
      Gold Finance Ltd and Synutra Illinois.




13


Immediately
      prior to the Exchange, the Company had 2,638,713 outstanding shares of common
      stock and no outstanding shares of preferred stock. The Company’s Certificate of
      Incorporation provides for authorized capital of two hundred and seventy million
      shares (270,000,000) of which two hundred and fifty million (250,000,000) are
      $0.0001 par value common stock and twenty million (20,000,000) are $0.0001
      par
      value preferred stock. Prior to the Exchange, Thomas Braun, the sole director
      and officer of the Company, and his affiliates owned 2,200,000 shares of the
      Company common stock. Pursuant to the Exchange, the Company cancelled
      approximately 1,517,500 shares of common stock owned by Mr. Braun and his
      affiliates reducing their ownership to 682,500 shares, resulting in the total
      issued and outstanding shares of the Company common stock equaling 1,121,213
      shares.




Pursuant
      to the Exchange, the Company issued 46,000,000 shares of its common stock in
      exchange for all of the outstanding capital stock of Synutra Illinois held
      by
      Beams Power Investment Limited and Strong Gold Finance Ltd., 2,844,500 shares
      were issued to various financial consultants and/or their designees and 35,000
      shares to a finder. Therefore, the total issued and outstanding shares of the
      Company’s common stock were 50,000,713 shares after giving effect to the
      Exchange.




As
      a
      result of the Exchange, the stockholders of the Company immediately prior to
      the
      Exchange owned approximately 1,121,213 shares, or approximately 2% of the issued
      and outstanding shares of the Company’s common stock and the Company is now
      controlled by the former stockholders of Synutra Illinois.




The
      Share
      Exchange Agreement was determined through arms’-length negotiations between the
      Company and Synutra Illinois.




Immediately
      following the completion of the Exchange, all of the existing members of the
      Company’s board of directors and all of its executive officers resigned and new
      appointees were elected to the Company’s board of directors.




On
      September 9, 2005, the Company changed its name to Synutra International, Inc.




Although
      the Company acquired Synutra Illinois pursuant to the Exchange, the Exchange
      was
      treated as a “reverse merger” whereby Synutra Illinois is considered to be the
      accounting acquirer. As such, the results of operations are those of Synutra
      Illinois.




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




**Overview**




Through
      its wholly owned subsidiary, Synutra Inc., an Illinois corporation (“Synutra
      Illinois”), Synutra International, Inc. (the “Company” or “Synutra”) owns all of
      the equity interests of six companies in the People’s Republic of China,
      (“China” or the “PRC”), each engaged in different stages of the production,
      marketing, packaging and development of dairy based nutritional products in
      China for infants, children and pregnant women and nursing mothers under the
      brand name of “Sheng Yuan”, and for adults under the brand name of “YiPin”.
      These two product lines contributed approximately 90% and 10%, respectively,
      to
      the Company’s 2004 revenue. In September 2005, Synutra launched a new rice
      cereal product line. As supplemental foods to infant and children formula
      products, management believes that rice cereal products possess significant
      growth potential. At the same time, Synutra also began to make and sell non-fat
      dry milk as well as anhydrous milk-fat.




14


Synutra
      Illinois was incorporated in the State of Illinois in 2000. At that time,
      Synutra Illinois was wholly owned by companies controlled by Mr. Liang Zhang,
      Synutra’s Chairman of the Board and Chief Executive Officer. Mr. Zhang formed
      Synutra Illinois to become a holding company for the six companies in China
      that
      he and his affiliates controlled that have been engaged in the production,
      marketing, packaging and development of dairy based nutritional products for
      infants, children and adults beginning in 1998. Since the incorporation of
      Synutra Illinois in 2000, it has increased its investment in these subsidiaries
      and Mr. Zhang has transferred all of his and his affiliates’ ownership in the
      six companies directly to Synutra Illinois, which transfer was completed at
      the
      end of March 2005. Synutra Illinois currently owns 100% of the following
      subsidiaries:




Qingdao
      Sheng Yuan Dairy Co., Ltd. is engaged in the sales and marketing of dairy based
      nutritional products for infants, children and adults under the brand name
      of
“Sheng Yuan” (primarily for infants and child nutritional products) and “YiPin”
for adult dairy based nutritional products. Qingdao Sheng Yuan Dairy Co., Ltd.
      was formed in 1998 by Beijing Honnete Dairy Co., Ltd., an affiliate of Mr.
      Liang
      Zhang. In 2003, Mr. Zhang transferred 40% of his ownership to Synutra Illinois,
      and then transferred the balance of the ownership to Synutra Illinois in
      2005.




Qingdao
      ST George Dairy Co., Ltd. is engaged in the packaging, shipping and distribution
      of all of Synutra’s products. Qingdao ST George Dairy Co., Ltd. was formed in
      2001 by Sheng Zhi Da Dairy Group, Co., Ltd., an affiliate of Mr. Liang Zhang,
      and Synutra Illinois where 60% of the company was owned by Sheng Zhi Da Dairy
      Group, Co., Ltd. and 40% by Synutra Illinois. In 2005, Mr. Zhang transferred
      the
      60% of Qingdao ST George Dairy Co., Ltd. owned by Sheng Zhi Da Dairy Group
      Co.,
      Ltd. to Synutra Illinois.




Beian
      Yi
      Pin Dairy Co., Ltd. (“Beian”) is engaged in the production and processing of
      adult dairy based nutritional products under the brand name of “Yipin”. In 2004,
      Mr. Liang Zhang acquired 100% of the interest of Beian Olisong Dairy Co., Ltd.
      which changed its name to Beian. In 2005, Mr. Zhang transferred 100% of his
      ownership in Beian to Synutra Illinois.




Luobei
      Sheng Yuan Dairy Co., Ltd. (“Loubei”) is engaged in the production and
      processing Synutra’s products for infants and children under the brand name of
“Sheng Yuan.” Loubei was formed in 2001 by Mr. Liang Zhang. In 2003, Mr. Zhang
      transferred 33% of his ownership to Synutra Illinois and then transferred the
      balance of the ownership to Synutra Illinois in 2005.




Quindao
      Mother and Infant Nutrition Research Company Limited is engaged in the research
      and development of various nutritional products for both infants and children
      as
      well as pregnant and lactating women. Quindao Mother and Infant Nutrition
      Research Company Limited was formed in 2004 by Mr. Liang Zhang. In 2005, Mr.
      Zhang transferred 100% of his ownership to Synutra Illinois.




15


Zhangjiakou
      Sheng Yuan Dairy Co., Ltd. (“Zhangjiakou”) is engaged in the production and
      processing of all of Synutra’s products. Zhangjiakou Sheng Yuan Dairy Co., Ltd.
      was formed in 2004 by Chaibei Sheng Yuan Diary Co., Ltd., an affiliate of Mr.
      Zhang and Synutra Illinois as a joint venture. In 2005, Chaibei Sheng Yuan
      Diary
      Co., Ltd. was merged into Zhangjiakou resulting in Synutra Illinois owing 100%
      of Zhangjiakou.




On
      July
      15, 2005, the Company issued 48,879,500 shares of its common stock in exchange
      for all of the issued and outstanding shares of Synutra Illinois (the
“Exchange”). As a result of this Exchange, Synutra Illinois became a wholly
      owned subsidiary of the Company. The Exchange occurred pursuant to a Share
      Exchange Agreement dated as of June 14, 2005 among the Company, Thomas Braun,
      Bearns Power Investment Limited, Strong Gold Finance Ltd and Synutra
      Illinois.




Immediately
      prior to the Exchange, the Company had 2,638,713 outstanding shares of common
      stock and no outstanding shares of preferred stock. The Company’s Certificate of
      Incorporation provides for authorized capital of two hundred and seventy million
      shares (270,000,000) of which two hundred and fifty million (250,000,000) are
      $0.0001 par value common stock and twenty million (20,000,000) are $0.0001
      par
      value preferred stock. Prior to the Exchange, Thomas Braun, the sole director
      and officer of the Company, and his affiliates owned 2,200,000 shares of the
      Company common stock. Pursuant to the Exchange, the Company cancelled
      approximately 1,517,500 shares of common stock owned by Mr. Braun and his
      affiliates reducing their ownership to 682,500 shares, resulting in the total
      issued and outstanding shares of the Company common stock equaling 1,121,213
      shares.




Pursuant
      to the Exchange, the Company issued 46,000,000 shares of its common stock in
      exchange for all of the outstanding capital stock of Synutra Illinois held
      by
      Beams Power Investment Limited and Strong Gold Finance Ltd., 2,844,500 shares
      were issued to various financial consultants and/or their designees and 35,000
      shares to a finder. Therefore, the total issued and outstanding shares of the
      Company’s common stock were 50,000,713 shares after giving effect to the
      Exchange.




As
      a
      result of the Exchange, the stockholders of the Company immediately prior to
      the
      Exchange owned approximately 1,121,213 shares, or approximately 2% of the issued
      and outstanding shares of the Company’s common stock and the Company is now
      controlled by the former stockholders of Synutra Illinois.




The
      Share
      Exchange Agreement was determined through arms’-length negotiations between the
      Company and Synutra Illinois.




Immediately
      following the completion of the Exchange, all of the existing members of the
      Company’s board of directors and all of its executive officers resigned and new
      appointees were elected to the Company’s board of directors.




On
      September 9, 2005 the Company changed its name to Synutra International, Inc.
      (OCTBB: SYUT).




Although
      the Company acquired Synutra Illinois pursuant to the Exchange, the Exchange
      was
      treated as a “reverse merger” whereby Synutra Illinois is considered to be the
      accounting acquirer. As such, the results of operations are those of Synutra
      Illinois.




16


**CRITICAL
      ACCOUNTING POLICIES AND ESTIMATES**




The
      Company prepares its financial statements in accordance with accounting
      principles generally accepted in the United States of America. The preparation
      of these financial statements requires the use of estimates and assumptions
      that
      affect the reported amounts of assets and liabilities and the disclosure of
      contingent assets and liabilities at the date of the financial statements and
      the reported amount of revenues and expenses during the reporting period.
      Management periodically evaluates the estimates and judgments made. Management
      bases its estimates and judgments on historical experience and on various
      factors that are believed to be reasonable under the circumstances. Actual
      results may differ from these estimates as a result of different assumptions
      or
      conditions.




The
      following critical accounting policies affect the more significant judgments
      and
      estimates used in the preparation of the Company’s financial
      statements.




For
      certain of the Company's financial instruments, including cash and cash
      equivalents, trade receivables and payables, prepaid expenses, deposits and
      other current assets, short-term bank borrowings, and other payables and
      accruals, the carrying amounts approximate fair values due to their short
      maturities.




A
      related
      party is generally defined as (i) any person that holds 10% or more of the
      Company's securities and their immediate families, (ii) the Company's
      management, (iii) someone that directly or indirectly controls, is controlled
      by
      or is under common control with the Company, or (iv) anyone who can
      significantly influence the financial and operating decisions of the Company.
      A
      transaction is considered to be a related party transaction when there is a
      transfer of resources or obligations between related parties.




The
      Company is exposed to the following risk factors:





(i)
      Credit risks - The Company has policies in place to ensure that sales of
      products are made to customers with an appropriate credit history. The Company
      also has a concentration of credit risk due to geographic sales as a majority
      of
      its products are marketed and sold in the PRC.





(ii)
      Liquidity risks - Prudent liquidity risk management implies maintaining
      sufficient cash, the availability of funding through an adequate amount of
      committed credit facilities and ability to close out market
      positions.





(iii)
      Interest rate risk - The interest rate and terms of repayments of short-term
      and
      long-term bank borrowings are approximately 5% per annum. The Company's income
      and cash flows are substantially independent of changes in market interest
      rates. The Company has no significant interest-bearing assets. The Company's
      policy is to maintain all of its borrowings in fixed rate
      instruments.





17


**Cash
      and cash equivalents** - The
      Company considers all highly liquid instruments purchased with an original
      maturity of three months or less to be cash equivalents.





**Short
      Term Investments** -
      The
      Company has classified its short term investment as Available-for-Sale.
      Available-for-Sale securities are stated at fair value with unrealized gains
      and
      losses included as a separate component of stockholders’ equity. Realized gains
      and losses are included in income (expense). The cost of securities sold is
      based on the specific identification method.





**Inventories** -
      Inventories are stated at the lower of cost or net realizable value, with cost
      computed on a weighted-average basis. Cost includes all costs of purchase,
      cost
      of conversion and other costs incurred in bringing the inventories to their
      present location and condition. Net realizable value is the estimated selling
      price in the ordinary course of business less the estimated costs of completion
      and the estimated costs necessary to make the sale. .





**Property,
      plant and equipment** -
      Property, plant and equipment are stated at cost less accumulated depreciation
      and impairment losses. The initial cost of the asset comprises its purchase
      price and any directly attributable costs of bringing the asset to its working
      condition and location for its intended use. Depreciation is provided using
      the
      straight-line method over the assets estimated useful life for periods ranging
      from five to fifty years. Significant improvements and betterments are
      capitalized where it is probable that the expenditure resulted in an increase
      in
      the future economic benefits expected to be obtained form the use of the asset
      beyond its originally assessed standard of performance. Routine repairs and
      maintenance are expensed when incurred. Gains and losses on disposal of fixed
      assets are recognized in the income statement based on the net disposal proceeds
      less the carrying amount of the assets.





**Impairment
      of long-lived assets** -
      Long-lived assets, such as property, plant and equipment and other non-current
      assets, including intangible assets, are reviewed for impairment whenever events
      or changes in circumstances indicate that the carrying value of an asset may
      not
      be recoverable. An impairment loss is recognized when the estimated undiscounted
      cash flows associated with the asset or group of assets is less than their
      carrying value. If impairment exists, an adjustment is made to write the asset
      down to its fair value, and a loss is recorded as the difference between the
      carrying value and fair value. Fair values are determined based on quoted market
      values, discounted cash flows or internal and external appraisals, as
      applicable. Assets to be disposed of are carried at the lower of carrying value
      or estimated net realizable value.







**RESULTS
      OF OPERATIONS**




**Three
      Months Ended December 31, 2005 Compared to Three Months Ended December 31,
      2004.**




**Sales**




18


Sales
      increased by $13,549,678 or79.85% to $30,517,635 for the three months ended
      December 31, 2005 as compared to $16,967,956 for the three months ended December
      31, 2004. Sales increased due to greater market penetration as a result of
      various measures including changes made by management to incentive structures
      and policies affecting the Synutra sales force. Such changes strengthened
      promotional efforts in the medium-sized city markets and rural markets of China
      by modifying sales force incentive programs through aligning bonuses with sales
      performance. The increase in sales also reflects the overall industry growth
      acceleration in the current year. Management estimates that the infant formula
      industry in China has grown faster than its traditional natural growth due
      to
      increased consumer recognition and acceptance of the products, especially
      Synutra’s name-brand products. Management believes Synutra name brand product
      lines have gained recognition in the marketplaces where it operates and thus
      has
      captured a greater portion of the increased growth experienced by the industry.
      In addition, management believes premium products with a higher margin have
      grown faster in the period across the industry. Since September 2004, Synutra
      has launched entire lines of premium products and introduced new product
      packaging along with significant price increases.




**Cost
      of Sales**




Cost
      of
      sales for the three months ended December 31, 2005 increased to $13,869,681
      from
      $8,775,545 for the three months ended December 31, 2004. The increase in cost
      of
      sales was a result of increases in purchases of raw materials and other
      ingredients, as well as increases in processing expenses, all in proportion
      to
      the production volume increases. Due to a combination of sales volume increases
      and reductions in unit cost of sales, the cost of sales continued to decrease
      in
      the reporting period. New products accounted for a significant portion in the
      increase of the total cost of sales for the period.




**Gross
      Profit**




Gross
      profit was $16,647,953 or 54.55% of sales for the three months ended December
      31, 2005. Comparable gross profit was $16,420,885 or59.39% of sales for the
      three months ended December 31, 2005, as compared to gross profit of $8,192,411
      or 48.28% of sales for the three months ended December 31, 2004, an increase
      of
      $8,228,474. Non-comparable product lines produced a gross profit of $227,068
      this quarter. With sales increasing in 2005 compared to 2004, the Company
      experienced an increase in both gross profit and gross margin, exceeding the
      gross margin target of 50% the management set for its operations for calendar
      year 2005. This increase was primarily a result of increased sales and gross
      margins at the same time. Due to implementation of targeted sales incentive
      programs, higher margin lines of products increased more, resulting in the
      increase in gross margin.




**Selling
      Expenses**




Selling
      expenses increased by $3,712,504 to $5,440,177 for the three months ended
      December 31, 2005, as compared to $1,727,673 for the three months ended December
      31, 2004. The increase in selling and distribution expenses in 2005 as compared
      to 2004 was a result of increased transportation and management expenses, in
      addition to increases in other major components of selling expenses such as
      wages, and supermarket expenses. The increase in average compensation to the
      sales force constitutes most of the increase in selling expenses.




**Advertising
      and Sales Promotion**




19


Advertising
      and sales promotion increased by $3,194,315 or 142.27% to $5,439,493 for the
      three months ended December 31, 2005, as compared to $2,245,178 for the three
      months ended December 31, 2004 as a result of increased advertising and
      promotional activity expenses. The major components of advertising and sales
      promotion are placement of advertising with media outlets and points of sale
      and
      community promotional activities.




**General
      and Administrative Expenses**




General
      and administrative expenses increased by $247,922 or 24% to $1,281,265 for
      the
      three months ended December 31, 2005, as compared to $1,033,343 for the three
      months ended December 31, 2004, The major components of general and
      administrative expenses are wages, depreciation and management
      expenses.




**Income
      from Operations**




As
      a
      result of the aforementioned factors, income from operations was $4,487,018
      for
      the three months ended December 31, 2005, as compared to $3,186,217 for the
      three months ended December 31, 2004.




**Other
      Income (Expense)**




Other
      expense was  $64,834
      for the three months ended December 31, 2005, as compared to income of $673,507
      for the three months ended December 31, 2004.





**Interest
      Expense**




Interest
      expense was $299,429, for the three months ended December 31, 2005, as
      compared to $379,666 for the three months ended December 31, 2004.




**Non-Operating
      Expense**




Non-operating
      expense was $136,586 for the three months ended December 31, 2005, as compared
      to $70,093 for the three months ended December 31, 2004.




**Provision
      for Income Taxes**




The
      provision for income taxes, which is computed on a per subsidiary basis, was
      $208,552 and $18,875 for the three months ended December 31, 2005 and 2004,
      respectively. The difference in income tax provisions was due to election of
      preferential tax relief treatment periods for 2006 by Heilongjiang Luobei
      Shengyuan Dairy Co. Ltd and Zhangjiakou Shengyuan Dairy Co. Ltd as elaborated
      above.




**Net
      Income**




20


Net
      income for the three months ended December 31, 2005 increased by $2,950,229
      to
      $3,777,618 from $827,389 for the three months ended December 31, 2004 due to
      the
      factors discussed above.




**Earnings
      per Share**




Earnings
      per share were $0.08 for the three months ended December 31, 2005.




**Nine
      Months Ended December 31, 2005 Compared to Nine Months Ended December 31,
      2004.**




**Sales**




Sales
      increased by $34,550,428 or 86.93% to $74,293,412 for the nine months ended
      December 31, 2005 as compared to $39,742,984 for the nine months ended December
      31, 2004. Sales increased due to greater market penetration as a result of
      various measures including changes made by management to incentive structures
      and policies affecting the Synutra sales force. Such changes strengthened
      promotional efforts in medium-sized city markets and rural markets by modifying
      sales force incentive programs through aligning bonuses with sales performance.
      The increase in sales also reflects the overall industry growth acceleration
      in
      the current year. Management estimates that the infant formula industry in
      China
      has grown faster than its traditional natural growth due to increased consumer
      recognition and acceptance of the Company’s products, especially its name-brand
      products. Management believes Synutra name brand product lines have gained
      recognition in the marketplaces where it operates and has captured a greater
      portion of the increased growth experienced by the industry. In addition,
      management believes premium products with a higher margin have grown faster
      in
      the period across the industry. Since September 2004, Synutra has launched
      entire lines of premium products and introduced new product packaging along
      with
      significant price increases.




**Cost
      of Sales**




Cost
      of
      sales for the six months ended December 31, 2005 increased to $33,291,299 from
      $20,203,921 for the nine months ended December 31, 2004. The increase in cost
      of
      sales was a result of increase in purchase of raw materials and other
      ingredients, as well as increases in processing expenses, all in proportion
      to
      the production volume increase. Due to a combination of sales volume increase
      and unit cost of sales reduction, the cost of sales continued to decrease in
      the
      reporting period. New products accounted for a significant portion of the
      increase in the total cost of sales for the period.




**Gross
      Profit**




Gross
      profit was $41,002,113 or 55.2% of sales for the nine months ended December
      31,
      2005. Comparable gross profit was $40,301,012 or 58.29% of sales for the nine
      months ended December 31, 2005, as compared to gross profit of $19,539,063
      or
      49.16% of sales for the nine months ended December 31, 2004, an increase of
      $20,761,949. Non-comparable product lines produced a gross profit of $701,101
      in
      the period. With sales increasing in 2005 compared to 2004, the Company
      experienced an increase in both gross profit and gross margin, exceeding the
      gross margin target of 50% the management set for its operations for calendar
      year 2005. This increase was primarily a result of increased sales and gross
      margins at the same time. Due to implementation of targeted sales incentive
      programs, higher margin lines of products increased more, resulting in the
      increase in gross margin.




21


**Selling
      Expenses**




Selling
      expenses increased by $4,458,719 to $11,165,177 for the nine months ended
      December 31, 2005, as compared to $6,706,458 for the nine months ended December
      31, 2004. The increase in selling and distribution expenses in 2005 as compared
      to 2004 was a result of increased transportation and management expenses. The
      major components of selling expenses are wages, transportation, and supermarket
      expenses. The increase in average compensation to the sales force constitutes
      most of the increase in selling expenses.




**Advertising
      and Sales Promotion**




Advertising
      and sales promotion increased by $8,900,117 or 97.2% to $18,056,584 for the
      nine
      months ended December 31, 2005, as compared to $9,156,467 for the nine months
      ended December 31, 2004 as a result of increased promotional activity expenses.
      The major components of advertising and sales promotion are placement of
      advertising with media outlets and points of sale and community promotional
      activities.




**General
      and Administrative Expenses**




General
      and administrative expenses increased by $1,990,426 or 89.83% to $4,206,155
      for
      the nine months ended December 31, 2005, as compared to $2,215,729 for the
      nine
      months ended December 31, 2004, as a result of increased consulting and advisory
      service expenses. The major components of general and administrative expenses
      are wages, depreciation and management expenses.




**Income
      from Operations**




As
      a
      result of the aforementioned factors, income from operations was $7,574,196
      for
      the nine months ended December 31, 2005, as compared to $1,460,409 for the
      nine
      months ended December 31, 2004.




**Other
      Income (Expense)**




Non-operating
      income was $1,602,388 for the nine months ended December 31, 2005, as compared
      to $636,546 for the nine months ended December 31, 2004. Non-operating income
      was generated through manufacturing of by-products such as anhydrous milk fat
      and non-fat dry milk, as well as private label manufacturing, including toll
      drying of formulated powder products or toll packaging.




**Interest
      Expense**




Interest
      expense was $1,018,976 for the nine months ended December 31, 2005, as compared
      to $940,042 for the nine months ended December 31, 2004.




22


**Non-Operating
      Expense**




Non-operating
      expense was $237,942 for the nine months ended December 31, 2005, as compared
      to
      $304,774 for the nine months ended December 31, 2004.




**Provision
      for Income Taxes**




The
      provision for income taxes, which is computed on a per subsidiary basis, was
      $513,551 and $56,669 for the nine months ended December 31, 2005 and 2004,
      respectively. The variance in income tax provisions are due to election of
      preferential tax relief treatment periods for 2006 by Heilongjiang Luobei
      Shengyuan Dairy Co. Ltd and Zhangjiakou Shengyuan Dairy Co. Ltd as elaborated
      above.





**Net
      Income**




The
      net
      income for the nine months ended December 31, 2005 increased by $8,854,015
      to a
      net income of $7,405,539 from a net loss of $1,448,476 for the nine months
      ended
      December 31, 2004 due to the factors discussed above.




**Earnings
      per Share**




Earnings
      per share were $0.16 for the nine months ended December 31, 2005.




**Financial
      Condition - December 31, 2005:**




**Liquidity
      and Capital Resources**




**Operating**




The
      Company’s operations generated cash resources of $10,295,518 for the nine months
      ended December 31, 2005 as compared to $8,888,467 of cash resources generated
      for the nine months ended December 31, 2004, primarily as a result of cash
      generated in 2005 from increased sales and decreases to accounts receivable.
      At
      December 31, 2005, the Company had cash and cash equivalents of $19,727,274
      as
      compared to cash and cash equivalents of $16,085,403 at March 31, 2005. The
      Company had a working capital deficit of $12,997,591 at December 31, 2005,
      as
      compared to a working capital deficit of $15,919,879 at March 31, 2005,
      reflecting a significant decrease in this aspect.




Since
      2004, growth of the Company’s pretax earnings continues to outpace by an average
      factor of about 10 times the interest payments over current liabilities,
      demonstrating the Company’s ability to meet interest payment of current
      liabilities with cash from operations. In addition, management believes much
      of
      the bank loans and notes payables booked as current liabilities are readily
      extended in revolving terms.




23


Net
      accounts receivable decreased to $1,418,545 at December 31, 2005, as compared
      to
      $1,968,235  at
      March
      31, 2005, a reduction of $549,690.  Accounts
      receivable went down at the end of the reporting period as compared to prior
      quarter and yearend while sales nearly doubled over the nine months period,
      as a
      result of implementation of cash-before-delivery payment terms with most of
      the
      Company’s distributors.





Other
      receivables increased to $2,525,362 at December 31, 2005, as compared to
      $1,745,985 at March 31, 2005, as a result, in part, of expanded credit programs
      for dairy suppliers.




Inventories
      increased to $11,479,627 at December 31, 2005, as compared to $6,757,021 at
      March 31, 2005, an increase of $4,722,607 or70%, primarily as a result of
      increase in raw material purchases  and
      increase in finished product inventory in anticipation of the Chinese New Years
      holidays.




The
      Company anticipates that its working capital resources are adequate to fund
      anticipated costs and expenses for the remainder of the fiscal year ending
      March
      31, 2006 with net cash provided by operating activities (or surplus from
      operating cash flow).





There
      were no other non-cash transactions for the nine months ended December 31,
      2005.




**Investing**




During
      the nine months ended December 31, 2005, the Company utilized $6,485,765 in
      investing activities, the major components of which were the acquisition of
      property and equipment of $993,492, investment in construction in progress
      of
      $5,814,694 and cash received from related companies of $385,639. During the
      nine
      months ended December 31, 2004, the Company utilized $15,737,046 in investing
      activities, the major components of which were the acquisition of property
      and
      equipment of $854,059, investment in construction in progress of $12,746,910
      and
      cash paid to related companies of $2,190,100.




**Financing**




During
      the nine months ended December 31, 2005, the Company  had
      a
      negative cash outflow of  $984,483
      in financing activities, the major components of which were proceeds from bank
      loans of $165,821, and repayment of notes payable of $2,025,556, and cash
      received from related companies of $457,372. During the nine months ended
      December 31, 2005, the Company generated $9,171,665 in financing activities,
      the
      major components of which were proceeds from bank loans of $2,899,776 and
      proceeds from notes payable of $7,370,265.




As
      of
      December 31, 2005, the Company does not have any material commitments for
      capital expenditures or have any transactions, obligations or relationships
      that
      could be considered off-balance sheet arrangements.




**Macroeconomic
      Conditions and Currency Matters**




24


In
      the
      most recent decade, the Chinese economy has experienced sustained periods of
      rapid growth as well as occasional elevated rates of inflation or deflation,
      which in turn has resulted in the periodic adoption by the Chinese government
      of
      various corrective measures designed to regulate growth and stabilize consumer
      prices. The success of the Company depends in substantial part on the continued
      growth and development of the Chinese economy.




Foreign
      operations are subject to certain risks inherent in conducting business abroad,
      including price and currency exchange controls, and fluctuations in the relative
      value of currencies. The RMB is not yet freely convertible into foreign
      currencies, and the ability to convert the RMB is subject to the availability
      of
      foreign currencies. The Company conducts virtually all of its business in China
      and, accordingly, the sale of its products is settled primarily in RMB. As
      a
      result, currency fluctuation of the RMB against the USD mainly affects the
      Company’s financial performance when measured in USD. In the event of a
      significant devaluation of the RMB against the USD, the Company’s numbers will
      likely appear proportionally lower than would otherwise, whereas a RMB currency
      appreciation will make these numbers appear larger as measured in
      USD.




Although
      in the previous decade the RMB experienced significant devaluation against
      the
      USD, the RMB has remained fairly stable since then. In recent months, actually,
      the RMB has been under growing pressure to appreciate against a basket of
      foreign currencies, including the USD. As of December 31, 2005, the exchange
      rate was approximately USD $1.00 to RMB 8.07, about a 2.77% appreciation from
      the year end 2004 exchange rate of about 8.3 RMB yuan to 1 US
      dollar.




**Quantitative
      and Qualitative Disclosures about Market Risk**




The
      Company does not have any market risk with respect to such factors as commodity
      prices, equity prices, and other market changes that affect market risk
      sensitive investments. A 10 point basis change in the Company’s average debt
      interest rate would not have a material effect on the Company’s results of
      operations.




With
      respect to foreign currency exchange rates, the Company does not believe that
      a
      devaluation or fluctuation of the RMB against the USD would have a detrimental
      effect on the Company’s operations, since the Company conducts virtually all of
      its business in China, and the sale of its products and the purchase of raw
      materials and services are settled in RMB. The effect of a devaluation or
      fluctuation of the RMB against the USD would affect the Company’s results of
      operations, financial position and cash flows, when presented in USD (based
      on a
      current exchange rate) as compared to RMB.




As
      the
      Company’s debt obligations are primarily short-term in nature, with fixed
      interest rates, the Company does not have any risk from an increase in market
      interest rates. However, to the extent that the Company arranges new borrowings
      in the future, an increase in market interest rates would cause a commensurate
      increase in the interest expense related to such borrowings.




25


**Item
      3.**  **Controls
      and Procedures**




(a) Evaluation
      of Disclosure Controls and Procedures




Our
      management evaluated, with the participation of our Chief Executive and
      Financial Officer, the effectiveness of our disclosure controls and procedures
      as of the end of the period covered by this Quarterly Report on Form 10-QSB.
      Based on this evaluation, our Chief Executive and Financial Officer has
      concluded that our disclosure controls and procedures (as defined in Rules
      13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the Exchange
      Act)) are inadequate to ensure that information required to be disclosed by
      us
      in reports that we file or submit under the Exchange Act is recorded, processed,
      summarized and reported within the time periods specified in SEC rules and
      forms. We are developing a plan to ensure that all information will be recorded,
      processed, summarized and reported on a timely basis. This plan is dependent,
      in
      part, upon reallocation of responsibilities among various personnel, possibly
      hiring additional personnel and additional funding. It should also be noted
      that
      the design of any system of controls is based in part upon certain assumptions
      about the likelihood of future events, and there can be no assurance that any
      design will succeed in achieving its stated goals under all potential future
      conditions, regardless of how remote.






(b) Changes
      in Internal Controls




During
      the period covered by the Quarterly Report on Form 10-QSB, there were no
      significant changes in our internal controls over financial reporting or in
      other factors that have materially affected, or are reasonably likely to
      materially affect, our internal controls over financial reporting.







26


**PART
      II**


**OTHER
      INFORMATION**





**Exhibits**







31.1  Certification
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002




32.1  Certification
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002






27


**SIGNATURES**




Pursuant
      to the requirements of the Securities Exchange Act of 1934, the Registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.









SYNUTRA
                INTERNATIONAL, INC.Dated:February
                11, 2006
            /s/
                Liang
                Zhang
              Name:Liang
                Zhang
              Title:Chief
                Executive Officer







28