**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **Washington,
        D.C. 20549**
 
 **FORM
        10-QSB/A**
 
 (Mark
        One)
 
 **x**
              **Quarterly
                  Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                  Act of
                  1934**
 
 For
        the
        quarterly period ended September 30, 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
              
              N/A**(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  ̈
 
 As
        of
        November 10, 2005, there were 50,000,713 **** shares
        of
        Common Stock outstanding.
 
 Transitional
        Small Business Disclosure Format
 
 Yes  ̈ No x
 
 **Back
          to Table of Contents**
  Reasons
        For Amendment
  This
        filing is being amended to include, revise or omit information necessary
        to
        improve the disclosures as follows:
  Financial
                  Statements have been revised to present the historical shares of
                  common
                  stock of Vorsatech that were issued and the historical activity
                  in the
                  Common Stock and Additional Paid-in Capital accounts during periods
                  to the
                  merger. The earnings per share have been revised also.Financial
                  Statements have been revised to reflect the cost of services rendered
                  by
                  various consultants and finder that received 2,844,500 shares and
                  35,000
                  shares, respectively, in conjunction with the share exchange.Financial
                  Statements have been revised to reflect the slotting fee that should
                  be
                  deducted from revenue, rather than included in Advertising and
                  Sales
                  Promotion expense.Disclosure
                  has been added to the financial statements, “Restatement” to elaborate
                  upon the criteria of revenue recognition policy specifically applies
                  to
                  the retailers and to the distributors.Disclosure
                  has been added to the financial statements, “Restatement” to describe the
                  nature and amounts of revenue dilution.Disclosure
                  has been added to the financial statements, “Restatement” to describe the
                  tax holiday of subsidiaries.
  **Back
            to Table of Contents**
  **INDEX**
  PART
                  I. FINANCIAL INFORMATIONItem
                  1.
              
              Consolidated
                  Financial Statements:
              
              F-1Consolidated
                  Balance Sheets as of September 30, 2005
                  (unaudited) and March 31, 2005 (audited)
              
              F-2Consolidated
                  Statements of Operations for the three and six
                  months ended September 30, 2005 and 2004 (unaudited)
              
              F-3Consolidated
                  Statements of Cash Flows for the six-months ended
                  September 30, 2005 and 2004 (unaudited)
              
              F-4Consolidated
                  Statements of Changes in Stockholders' Equity
                  September 30, 2005 (unaudited)
              
              F-6Notes
                  to Financial Statements (unaudited)
              
              F-7
                  - F-11Item
                  2.
              
              Management's
                  Discussion and Analysis or Plan of Operations
              
              12PART
                  II. OTHER INFORMATIONItem
                  6.
              
              Exhibits
              
              21SIGNATURES
              
              22
  **Back
            to Table of Contents**
  **PART
          I**
 **FINANCIAL
        INFORMATION**
 
 **Item
        1.********Financial Statements.**
 
 **SYNUTRA,
        INC.**
 **Rockville,
        MD**
 
 **CONSOLIDATED
        BALANCE SHEETS**
 **30-Sep-05**
              
              **31-Mar-05****(as
                  restated, unaudited)**
              
              **(as
                  restated,**
                **audited)****ASSETS**
              
              **USD**
              
              **USD****Current
                Assets**Cash
                  and Cash Equivalents
              
              
              **18,668,290**
              
              
              16,085,403Short
                  Term Investment - at Market
              
              
              **37,805**
              
              
              45,237Trade
                  Receivables, Net of Provisions
              
              
              **2,365,950**
              
              
              1,968,235Other
                  Receivables, Net of Provisions
              
              
              **2,770,987**
              
              
              1,745,985Notes
                  Receivable
              
              
              —
              
              
              27,790Inventory
              
              
              **6,940,879**
              
              
              6,757,021Prepaid
                  Expenses
              
              
              **453,839**
              
              
              721,623Due
                  from Related Companies
              
              
              **8,092,176**
              
              
              8,082,451
 Including:
                  Trade receivables
              
              
              **403,195**
              
              
              357,204Prepayments
              
              
              **4,863,630**
              
              
              5,552,056Other receivables
              
              
              **2,825,351**
              
              
              2,173,191
  Deferred
                  Costs
              
              
              **1,750,437**
              
              
              383,869**Total
                  Current Assets**
              
              
              **41,080,363**
              
              
              35,817,613**Property,
                  Plant and Equipment, Net of Accumulated Depreciation**
              
              
              **13,791,605**
              
              
              13,887,012**Other
                  Assets**Intangible
                  Assets, Net of Accumulated Amortization
              
              
              **299,157**
              
              
              334,392Construction
                  In Progress
              
              
              **19,606,113**
              
              
              14,152,518**Total
                  Assets**
              
              
              **74,777,238**
              
              
              64,191,535
  F-1
 **Back
            to Table of Contents**
  **SYNUTRA,
        INC.**
 **Rockville,
        MD**
 
 **CONSOLIDATED
        BALANCE SHEETS**
 **30-Sep-05**
              
              **31-Mar-05****(as
                  restated, unaudited)**
              
              **(as
                  restated,**
                **audited)****LIABILITIES
                AND SHAREHOLDERS’ EQUITY**
              
              **USD**
              
              **USD****Current
                Liabilities**Accounts
                  Payable
              
              
              **6,762,480**
              
              
              4,966,997Other
                  Payables
              
              
              **5,094,198**
              
              
              4,400,128Notes
                  Payable
              
              
              **21,393,342**
              
              
              19,821,180Deposit
                  Received from Customers
              
              
              **671,578**
              
              
              540,843Bank
                  Loans
              
              
              **13,785,450**
              
              
              12,299,885Accrued
                  Expenses
              
              
              **1,731,932**
              
              
              899,555Due
                  to Related Companies
              
              
              **8,058,868**
              
              
              8,808,904
  Including:
                  Trade payables
              
              
              **2,886,319**
              
              
              6,452,836Notes
                  payables
              
              
              **—**
              
              
              2,356,068Other
                  payables
              
              
              **5,172,549**
              
              
              **—**
  **Total
                  Current Liabilities**
              
              
              **57,497,848**
              
              
              51,737,492**Long
                  Term Liabilities**Bank
                  Loans
              
              
              **4,932,182**
              
              
              4,832,961**Total
                  Liabilities**
              
              
              **62,430,030**
              
              
              56,570,453**Minority
                  Interest**
              
              
              —
              
              
              (576
              )**Shareholders’
                  Equity**Preferred
                    Stock ($0.0001 par value; 20,000,000 authorized; 0 issued and
                    outstanding)
              
              
              —
              
              
              —Common
                  Stock ($0.0001 par value; 250,000,000 authorized; 50,000,713 and
                  46,000,000 issued and outstanding as of September 30, 2005 and
                  March 31,
                  2005, respectively)
              
              
              **5,000**
              
              
              4,600Additional
                  Paid-in Capital
              
              
              **8,226,033**
              
              
              7,205,809Reserve
              
              
              **45,804**
              
              
              45,804Accumulated
                  Comprehensive Income (Loss)
              
              
              **425,847**
              
              
              (218,158
              )Retained
                  Earnings
              
              
              **3,644,524**
              
              
              583,603**Total
                  Shareholders’ Equity**
              
              
              **12,347,208**
              
              
              7,621,658**Total
                  Liabilities and Shareholders’ Equity**
              
              
              **74,777,238**
              
              
              64,191,535
  F-2
 **Back
            to Table of Contents**
  **SYNUTRA,
        INC.**
 **Rockville,
        MD**
 
 **STATEMENT
        OF OPERATIONS AND COMPREHENSIVE
        INCOME**
 **Three
                  Months Ended**
              
              **Six
                  Months Ended****30-Sep**
              
              **30-Sep****(as
                  restated, unaudited)**
              
              **(as
                  restated, unaudited)****2005**
              
              **2004**
              
              **2005**
              
              **2004****Sales**
              
              $
              25,212,421
              
              $
              12,706,287
              
              $
              42,614,248
              
              $
              22,220,028
  Including
                  sales to related parties
              
              
              **529,117**
              
              
              78,966
              
              
              **870,616**
              
              
              78,966
  Cost
                  of sales
              
              
              **10,965,478**
              
              
              6,215,673
              
              
              **19,421,618**
              
              
              11,428,376
  Including
                  cost of sales to related parties
              
              
              **230,125**
              
              
              38,629
              
              
              **396,094**
              
              
              38,629
  **Gross
                  Profit**
              
              
              **14,246,943**
              
              
              6,490,614
              
              
              **23,192,630**
              
              
              10,791,652Selling
                  Expenses
              
              
              **3,910,023**
              
              
              3,036,702
              
              
              **5,725,000**
              
              
              4,978,785Advertising
                  and Sales Promotion
              
              
              **6,197,680**
              
              
              2,796,545
              
              
              **11,455,561**
              
              
              6,356,289General
                  and Administrative Expenses
              
              
              **2,065,390**
              
              
              641,055
              
              
              **2,924,891**
              
              
              1,182,386**Income
                  (Loss) from Operations**
              
              
              **2,073,850**
              
              
              16,312
              
              
              **3,087,178**
              
              
              (1,725,808
              )Other
                  Income
              
              
              **425,184**
              
              
              (198,166
              )
              
              **1,667,222**
              
              
              (36,961
              )**Other
                  Expenses**Interest
                  Expenses
              
              
              **871,261**
              
              
              304,293
              
              
              **1,286,547**
              
              
              560,376Other
                  Expenses
              
              
              **11,622**
              
              
              31,658
              
              
              **101,356**
              
              
              234,681**Total
                  Other Expenses**
              
              
              **882,884**
              
              
              335,951
              
              
              **1,387,904**
              
              
              795,057**Income
                  (Loss) from Operations Before Provisions for Income Taxes**
              
              
              **1,616,150**
              
              
              (517,805
              )
              
              **3,366,496**
              
              
              (2,557,825
              )Income
                  Taxes - Current
              
              
              **279,433**
              
              
              22,806
              
              
              **304,999**
              
              
              37,794**Net
                  Income (Loss) Before Minority Interest**
              
              
              **1,336,717**
              
              
              (540,611
              )
              
              **3,061,497**
              
              
              (2,595,619
              )Minority
                  Interest
              
              
              —
              
              
              884,905
              
              
              **576**
              
              
              (454,039
              )**Other
                  Transfer**
              
              
              —
              
              
              (134,285
              )
              
              —
              
              
              (134,285
              )**Net
                  Income (Loss)**
              
              
              **1,336,717**
              
              
              (1,559,801
              )
              
              **3,060,921**
              
              
              (2,275,865
              )**Comprehensive
                  Income (Loss)**Foreign
                  Currency Translation
              
              
              **617,128**
              
              
              363,275
              
              
              **652,197**
              
              
              363,275Unrealized
                  Loss on Investment
              
              
              —
              
              
              —
              
              
              **(8,192**
              **)**
              
              (12,542
              )**Comprehensive
                  Income (Loss)**
              
              $
              1,953,845
              
              $
              (1,196,526
              )
              $
              3,704,926
              
              $
              (1,925,132
              )**Earnings
                  Per Share (EPS)****EPS
                  Basic and Diluted**
              
              
              **0.03**
              
              
              (0.03
              )
              
              **0.06**
              
              
              (0.05
              )Weighted
                  Average Shares Basic and Diluted
              
              
              **49,333,928**
              
              
              46,000,000
              
              
              **47,666,964**
              
              
              46,000,000
  F-3
 **Back
            to Table of Contents**
  **SYNUTRA,
        INC.**
 **Rockville,
        MD**
 
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 **Six
                  Months Ended**
                **September
                  30****2005**
              
              2004**(as
                  restated, unaudited)**
              
              **(as
                  restated, unaudited)****USD**
              
              **USD****Cash
                  Flows from Operating Activities****Net
                  Income**
              
              $
              **3,060,921**
              
              $
              (2,275,865
              )**Adjustments
                  to Reconcile Net Income to Net Cash****Provided
                  by (Used in) Operating Activities**Minority
                  Interest
              
              
              **576**
              
              
              (454,039
              )Depreciation
                  and Amortization
              
              
              **745,816**
              
              
              734,156Bad
                  Debts
              
              
              **4,214**
              
              
              2,199Financial
                  consultants and finders fee
              
              
              **567,000**
              
              
              —**(Increase)
                  Decrease in Assets:**Inventory
              
              
              **(183,858**
              **)**
              
              (1,201,999
              )Trade
                  Receivables, Net of Provisions
              
              
              **(401,870**
              **)**
              
              (1,198,957
              )Other
                  Receivables, Net of Provisions
              
              
              **(1,025,058**
              **)**
              
              9,945,812Intangible
                  Assets
              
              
              **35,235**
              
              
              18,852Prepaid
                  Expenses,
              
              
              **267,784**
              
              
              786,142Deferred
                  Costs and Other Assets
              
              
              **(1,366,568**
              **)**
              
              (869,818
              )Due
                  from Related Companies
              
              
              **(9,725**
              **)**
              
              (24,108,445
              )Due
                  to Related Companies
              
              
              **(496,435**
              **)**
              
              17,856,840**Increase
                  (Decrease) in Liabilities:**Accounts
                  Payable
              
              
              **1,795,483**
              
              
              (301,307
              )Other
                  Payables
              
              
              **679,208**
              
              
              945,816Accrued
                  Expenses
              
              
              **829,878**
              
              
              (1,164,589
              )Deposit
                  Received from Customers
              
              
              **130,735**
              
              
              185,614**Net
                  Cash Provided By (Used in) Operating Activities**
              
              $
              **4,633,336**
              
              **$**
              **(1,099,588**
              **)**
  F-4
 **Back
            to Table of Contents**
  **SYNUTRA,
        INC.**
 **Rockville,
        MD**
 
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 **Continued**
 **Six
                  Months Ended**
                **September
                  30****2005**
              
              2004**(as
                  restated, unaudited)**
              
              **(as
                  restated, unaudited)****USD**
              
              **USD****Cash
                  Flows from Investing Activities**Cash
                  Purchase of Short Term Investments
              
              **$**
              **7,431**
              
              $
              11,330Acquisition
                  of Property, Plant and Equipment
              
              
              **(650,411**
              **)**
              
              (939,521
              )Cash
                  Used for Construction in Progress
              
              
              **(5,453,595**
              **)**
              
              (3,137,952
              )Notes
                  Receivable - Cash Received (Cash Paid)
              
              
              **27,790**
              
              
              200,782**Net
                  Cash Used in Investing Activities**
              
              $
              **(6,068,785**
              **)**
              **$**
              **(3,865,361**
              **)****Cash
                  Flows from Financing Activities**Proceeds
                  from Bank Loans
              
              
              **1,584,787**
              
              
              2,906,265Proceeds
                  from (Repayment of) Notes Payable
              
              
              **1,572,161**
              
              
              1,211,776Capital
                  Contributions - Stockholders
              
              
              **217,385**
              
              
              (1,174,434
              )**Net
                  Cash Provided by Financing Activities**
              
              $
              **3,374,333**
              
              **$**
              **2,943,607****Effect
                  of Exchange Rate Changes on Cash and Cash Equivalents**
              
              
              **644,005**
              
              
              242,383Net
                  Change in Cash and Cash Equivalents
              
              
              **2,582,888**
              
              
              (1,778,959
              )Cash
                  and Cash Equivalents - Beginning of Period
              
              
              **16,085,403**
              
              
              13,737,303**Cash
                  and Cash Equivalents - End of Period**
              
              $
              **18,668,290**
              
              $
              11,958,344**SUPPLEMENTARY
                  CASH FLOW DISCLOSURES**Interest
                  Paid
              
              
              **719,547**
              
              
              560,376Taxes
                  Paid
              
              
              **304,999**
              
              
              37,074
  F-5
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            to Table of Contents**
  **SYNUTRA,
        INC.**
 **Rockville,
        MD**
 
 **CONSOLIDATED
        STATEMENTS OF CHANGES IN STOCKHOLDERS’
EQUITY**
 **(as
        restated, unaudited)**
 **Common
                  Stock**
                **Outstanding**
              
              **Registered
                  Capital**
              
              **Additional**
                **Paid-In**
                **Capital**
              
              **Reserve**
              
              **Retained
                  Earnings(Deficit)**
              
              **Accumulated
                  Comprehensive Income(Loss)**
              
              **Total
                  Stockholder’s Equity****Balance
                  2004-12-31**
              
              
              **46,000,000**
              
              $
              4,600
              
              $
              7,001,558
              
              $
              45,804
              
              $
              (3,852,561
              )
              $
              (209,054
              )
              $
              2,990,347Net
                  Income(Loss)
              
              
              
              
              
              —
              
              
              —
              
              
              —
              
              
              4,436,164
              
              
              —
              
              
              4,436,164Other
                  Comprehensive Income (Loss)
              
              
              
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (9,104
              )
              
              (9,104
              )Capital
                  Contributions
              
              
              
              
              
              —
              
              
              204,251
              
              
              —
              
              
              —
              
              
              —
              
              
              204,251**Balance
                  2005-3-31**
              
              
              **46,000,000**
              
              $
              4,600
              
              $
              7,205,809
              
              $
              45,804
              
              $
              583,603
              
              $
              (218,158
              )
              $
              7,621,658Net
                  Income(Loss)
              
              
              
              
              
              —
              
              
              —
              
              
              —
              
              
              1,724,204
              
              
              —
              
              
              1,724,204Other
                  Comprehensive Income (Loss)
              
              
              
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              26,877
              
              
              26,877Capital
                  Contributions
              
              
              
              
              
              —
              
              
              470,985
              
              
              —
              
              
              —
              
              
              —
              
              
              470,985**Balance
                  2005-6-30**
              
              
              **46,000,000**
              
              $
              4,600
              
              $
              7,676,794
              
              $
              45,804
              
              $
              2,307,807
              
              $
              (191,281
              )
              $
              9,843,724Acquisiion
                  of Vorsatech
              
              
              2,638,713
              
              
              264
              
              
              (17,625
              )
              
              —
              
              
              —
              
              
              —
              
              
              **(17,361**
              **)**Capital
                  stock cancelled
              
              
              (1,517,500
              )
              
              (152
              )
              
              152
              
              
              —
              
              
              —
              
              
              —
              
              
              —Capital
                  stock issued to Financial consultant and finders
              
              
              2,879,500
              
              
              288
              
              
              566,712
              
              
              —
              
              
              —
              
              
              —
              
              
              567,000Capital
                  contribution during the year
              
              
              
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —Excess
                  in capital contribution
              
              
              
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —Net
                  income for the year
              
              
              
              
              
              —
              
              
              —
              
              
              —
              
              
              1,336,717
              
              
              —
              
              
              1,336,717Other
                  comprehensive income/(loss)
              
              
              
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              617,128
              
              
              617,128**Balance
                  2005-9-30**
              
              
              **50,000,713**
              
              $
              5,000
              
              $
              8,226,033
              
              $
              45,804
              
              $
              3,644,524
              
              $
              425,847
              
              $
              12,347,208


F-6
 **Back
            to Table of Contents**
  **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 September 30, 2005 owns 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 countries 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 September 30, 2005, the related
        consolidated statements of income for the three-month and six-month periods
        ended September 30, 2005 and 2004, and the related consolidated statements
        of
        cash flows and stockholders’ equity statement for the six-month periods ended
        September 30, 2005 and 2004 are unaudited. All significant inter-company
        balances and transactions have been eliminated in the
        consolidation.
 F-7
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            to Table of Contents**
 
 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
 
 **Income
        taxes**
 
 Income
        taxes of the Company’s subsidiaries are calculated in accordance with taxation
        principles currently effective in the PRC. For Synutra Illinois, applicable
        U.S.
        tax laws are followed. Deferred tax assets and liabilities are recognized
        for
        the future tax consequences attributable to differences between the financial
        statement carrying amounts of existing assets and liabilities and their
        respective tax bases. Deferred tax assets and liabilities are measured using
        enacted tax rates expected to apply to taxable income in the years in which
        those temporary differences are expected to be recovered or settled. The
        effect
        on deferred tax assets and liabilities of a change in tax rates is recognized
        as
        income in the period that includes the enactment date. A valuation allowance
        is
        provided for the amount of deferred tax assets and liabilities that, based
        on
        available evidence, are not expected to be realized.
 
 Qingdao
        St. George Dairy Co., Ltd , Heilongjiang
        Loubei Shengyuan Dairy Co. Ltd, Bei’an Yipin Dairy Co. Ltd and Zhangjiakou Sheng
        Yuan Co. Ltd qualify as a foreign investment production enterprise and were
        established in a special economic zone. As approved by the tax authorities,
        such
        subsidiaries are entitled to a two year exemption from income taxes followed
        by
        three years of a 50% tax reduction, commencing from the first cumulative
        profit-making year net of losses carried forward.
 
 Qingdao
        St. George Dairy Co., Ltd. is under such preferential tax treatment until
        December 31, 2008. Accordingly, the applicable enterprise income tax rate
        is 24 %
        and the
        local tax rate is 0 %,
        resulting in an aggregate tax rate of 24 %.
        The
        subsidiary will not be subject to local income tax prior to 20 03, The
        subsidiary’s first cumulative profit-making year was 2004 .
 
 Heilongjiang
        Luobei Sheng Yuan Dairy Co., Ltd. is under such preferential tax treatment
        until
        December 31, 2010. Accordingly, the applicable enterprise income tax rate
        is 30 %
        and the
        local tax rate is 3 %,
        resulting in an aggregate tax rate of 33 %.
        The
        subsidiary will not be subject to local income tax prior to 20 05, The
        subsidiary’s first cumulative profit-making year was 2006 .
 
 Bei’an
        Yipin Dairy Co., Ltd. is under such preferential tax treatment until December
        31, 2009. Accordingly, the applicable enterprise income tax rate is 30 %
        and the
        local tax rate is 3 %,
        resulting in an aggregate tax rate of 33 %.
        The
        subsidiary will not be subject to local income tax prior to 20 04 .
        The
        subsidiary’s first cumulative profit-making year was 2005 .
 
 Zhangjiakou
        Sheng Yuan Dairy Co., Ltd. is under such preferential tax treatment until
        December 31, 2010. Accordingly, the applicable enterprise income tax rate
        is 30 %
        and the
        local tax rate is 3 %,
        resulting in an aggregate tax rate of 33 %.
        The
        subsidiary will not be subject to local income tax prior to 20 05 .
        The
        subsidiary’s first cumulative profit-making year was 2006 .
  Qingdao
          Women and Children Nutrition Research Co. Ltd is subject to 33% income
          tax.
 Tax
        Rates
        Schedule for various operating subsidiaries of the Company in China is as
        follows.
 
 
 
 **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 September
        30,
        2005, the exchange rate was approximately USD $1.00 to RMB 8.11, about a
        2%
        appreciation from the year end 2004 exchange rate of about 8.3 RMB yuan to
        1 US
        dollar.
 F-8
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            to Table of Contents**
 
 **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.
 
 **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 uncollectibility. 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**
 The
        Company recognizes revenue from product sales when goods are shipped or
        delivered and rewards and risk of ownership and title pass to the customer.
        Revenues consist of the invoice value of the sale of goods and services net
        of
        value added tax, rebates and discounts, certain sales incentives, trade
        promotions, and product returns. Revenue dilution is accounted for either
        as
        reductions in sales in the same period the related sales are recorded, or
        as
        provisions with best estimates.
 
 Most
        of
        the Company’s mainline product sales are through distributors. The Company’s
        revenue arrangement with all its distributors requires distributor advance
        payment before shipment and delivery of goods to distributors. Under this
        distributor arrangement, evidenced by purchase order together with advance
        payment, sales revenue is realized and earned upon shipment and acceptance
        of
        delivery of products to and by distributors. The Company applies this revenue
        recognition policy uniformly to all its mainline products, including all
        dairy-based pediatric and adult nutritional products. Revenue recognition
        criteria outlined in the provisions of SAB 104, namely, persuasive evidence
        of
        arrangement, product delivery, fixed and determinable product prices, and
        reasonable assurance of collectibility are, therefore, met and self-evident.
 
 A
        fraction of the Company’s mainline product sales are through supermarket
        retailers directly. Revenue arrangement with these retailers requires receipt
        of
        purchase orders before product shipment and delivery. Similarly, the revenues
        from retailers are recognized upon shipment or delivery of the goods to the
        retailers under payment terms of the sales contracts which are negotiated
        with
        select long term retailers, to assure reasonable collectibility.
 
 Product
        returns to the supermarket retailers are charged against current sales revenues.
        These include product returns due to package damages in transportation and
        shelf-life expiration . Majority
        of the Company’s products carry shelf lives of 18 to 24 months. Unsold products
        with expired shelf life are returned and deducted from sales revenue. The
        arrangement meets the revenue recognition criteria under FASB Statement of
        Financial Accounting Standards No.48.
 
 The
        Company has put in place internal controls to track and assess product returns
        from retailers. Product returns are verified at the source, removed from
        shelf,
        and deducted from revenue . The
        Company evaluates market conditions for products or groups of products primarily
        through the analysis of third party sell-through and market research data,
        as
        well as internally generated information. Portions of the sales returns are
        estimated and recorded based on historical sales and returns information.
        Products that exhibit unusual sales or return patterns due to dating,
        competition or other marketing matters are specifically investigated and
        analyzed as part of the accounting for sales return accruals.
 
 On
        top of
        standard distributor pricing arrangements, the Company provides its larger
        distributors with a growth-based incentive mechanism that ties incremental
        discounts to the levels of incremental sales growth attained in the
        corresponding periods. Qualified discounts are accrued in the corresponding
        periods during which the sales growth materialized. The cost of this policy
        is
        treated as discount and is charged against sales revenue of the corresponding
        period.
 
 Most
        of
        the Company’s products are shipped to the distributors upon receipt of payment
        directly from them, and thus assume title of the products immediately. No
        single
        customer constitutes a significant distributor to the Company by commanding
        more
        than 3% of its total sales.
 
 The
        Company does not employ any sales incentive programs aimed at inducing sales
        to
        customers that result in excess inventory levels. The practice of the Company’s
        standard cash in advance revenue arrangement with distributors also discourages
        customers from accumulating excessive inventory beyond their normal business
        needs.
 F-9
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            to Table of Contents**
 .
 **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.
 
 **NOTE
        2 - SUPPLEMENT OF FINANCIAL INFORMATION**
 
 **RELATED
        PARTY TRANSACTIONS**
 
 The
        following related party transactions occurred during the three months ended
        September 30, 2005 and March 31, 2005:
 
 A.
        Sales
        to Related Companies
 
 **Three
                  Months ended**
                **September
                  30,**
                **2005**
              
              **Year
                  ended**
                **March
                  31,**
                **2005**St.
                  Angel (Beijing Business Service)
              
              
              375,508
              
              
              323,837Beijing
                  Ao Naier Feed Stuff LLC
              
              
              —
              
              
              36Beijing
                  Ludin Xueyuan Trading Co. Ltd
              
              
              153,609
              
              
              270,075Total
              
              $
              529,117
              
              $
              593,948
  B.
        Other
        income to related companies
  **Three
                  Months ended**
                **September
                  30,**
                **2005**
              
              **Year
                  ended**
                **March
                  31,**
                **2005**Beijing
                  Kelqin Dairy Co. Ltd
              
              $
              1,603,378
              
              
              384,118Sheng
                  Zhi Da Dairy Group Corporation
              
              
              103,894
              
              
              1,037,714Heilongjiang
                  Baoquanling Shen Yuan Dairy Co. Ltd
              
              
              1,387,668
              
              
              2,788,588Beijing
                  Honnete Dairy Corporation Ltd
              
              
              175,614
              
              
              —Beijing
                  Ao Naier Feed Stuff LLC
              
              
              —
              
              
              16,486Total
              
              $
              3,270,553
              
              $
              4,226,906
 
 C.
        Purchase from related companies
  **Three
                  Months ended**
                **September
                  30,**
                **2005**
              
              **Year
                  ended**
                **March
                  31,**
                **2005**Beijing
                  Kelqin Dairy Co. Ltd
              
              $
              125,157
              
              $
              904,075Sheng
                  Zhi Da Dairy Group Corporation
              
              
              1,131,217
              
              
              2,213,535Heilongjiang
                  Baoquanling Sheng Yuan Dairy Co. Ltd
              
              
              1,583,100
              
              
              7,246,611Beijing
                  Honnete Dairy Corporation Ltd
              
              
              490,109
              
              
              4,561,794Beijing
                  Sheng Long Media Co. Ltd
              
              
              —
              
              
              31,524Total
              
              $
              3,329,583
              
              $
              14,957,539
  F-10
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            to Table of Contents**
  **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 owns 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.
 
 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.
  **NOTE 4
          - RESTATEMENT**
 
 The
          financial statements for the period ended September 30, 2005 have been
          restated
          to give effect to the fair value of the 2,879,500 shares of common stocks
          issued
          to consultants for the services related to the recapitalization transaction
          of
          the company going public. The financial statement for the period ended
          September
          30, 2005 have also been restated to reflect the historical shares of common
          stock of Vorsatech that were issued and the related
          earnings per share forperiod prior to the merger. The effects on current
          liabilities, additional paid in capital, retained earnings, net income
          attributable to shareholders, earnings per share, and weighted average
          common
          shares outstanding are summarized as follows:
 
 Net
                    Income for the three
                  Months
                    Ended
                  Sep
                    30, 2005
                
                Net
                    Income for the
                  Six
                    Months Ended
                  Sep
                    30, 2005
                
                Current
                    Liabilities as of
                  Sep
                    30, 2005
                
                Share
                    Capital
                  as
                    of
                  Sep
                    30, 2005
                
                Additional
                    Paid In Capital
                  as
                    of
                  Sep
                    30, 2005
                
                Retained
                    Earnings
                  as
                    of
                  Sep
                    30, 2005As
                    previously stated
                
                $
                1,903,717
                
                $
                3,627,921
                
                $
                57,734,087
                
                $
                10,000
                
                $
                7,417,793
                
                $
                4,211,524Stock
                    compensation and recapitalization
                
                
                ($567,000
                )
                $
                (
                    567,000
                )
                $
                17,361
                
                
                
                
                $
                549,639
                
                $
                (
                    567,000
                )Reclassification
                    from Share Capital to Additional Paid In Capital
                
                
                —
                
                
                —
                
                
                —
                
                
                ($5,000
                )
                $
                5,000
                
                
                —Reclassification
                    from Due to Related Parties to Additional Paid In Capital
                
                
                —
                
                
                —
                
                
                ($253,601
                )
                
                —
                
                $
                253,601
                
                
                —Restated
                
                $
                1,336,717
                
                $
                3,060,921
                
                $
                57,497,848
                
                $
                5,000
                
                $
                8,226,033
                
                $
                3,644,524
 
 
 Three
                    Months Ended
                  Sep
                    30, 2005
                
                Three
                    Months Ended
                  Sep
                    30, 2004
                
                Nine
                    Months Ended
                  Sep
                    30, 2005
                
                Nine
                    Months Ended
                  Sep
                    30, 2004Earnings
                    per share as previously stated
                
                $
                0.04
                
                
                ($0.03
                )
                $
                0.07
                
                
                ($0.05
                )Earnings
                    restated
                
                $
                0.03
                
                
                ($0.03
                )
                $
                0.06
                
                
                ($0.05
                )Weighted
                    average common shares outstanding aspreviously stated
                
                
                50,000,713
                
                
                50,000,713
                
                
                50,000,713
                
                
                50,000,713Weighted
                    average common shares outstanding restated
                
                
                49,333,928
                
                
                46,000,000
                
                
                47,666,964
                
                
                46,000,000
 
 The
          weighted average common shares outstanding have been restated to reflect
          the
          actual time outstanding of common shares issued in connection with the
          recapitalization transaction of the company.
  F-11
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            to Table of Contents**
 
 **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”, each
        contributed 89% and 11% of 2004’s revenue. In September 2005, Synutra launched a
        new rice cereal product line. As supplemental foods to infant and children
        formula products, 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.
 
 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 its brand names
        of
        Super, U-Smart, U-Strong, and National Standards. Qingdao Sheng Yuan Dairy
        Co.,
        Ltd. was formed in January 1998 by Sodiaal Industrial Co. Ltd (55%) and Beijing
        Honnete Dairy Co., Ltd.,(45%) an affiliate of Mr. Liang Zhang, the Company’s
        Chief Executive Officer. In December 2003, Sodiaal Industrial Co. Ltd
        transferred 15% of its ownership to Beijing Honnete Dairy Co., Ltd ,and
        transferred 40% of its ownership to Synutra Illinois, In February 2004,Beijing
        Honnete Dairy Co., Ltd, transferred 60% of his ownership to Sheng Zhi Da
        Dairy
        Corporation ,In February 2005,Sheng Zhi Da Dairy Corporation transferred
        60%of
        its ownership to Synutra Illinois, resulting in a 100% of ownership of Qingdao
        Sheng Yuan Dairy Co., Ltd. by Synutra Illinois.
 
 Qingdao
        ST George Dairy Co., Ltd. is engaged in the production, packaging, shipping
        and
        distribution of all of Synutra’s products. Qingdao ST George Dairy Co., Ltd. was
        formed in September 2001 by Synutra Illinois. In March 2004 Synutra Illinois
        transferred 75% of Qingdao St George Dairy Co., Ltd ownership to Sheng Zhi
        Da
        Dairy Corporation and Synutra Illinois retained 25% of the company. In February
        2005 Sheng Zhi Da Dairy Corporation transferred all of its ownership in Qingdao
        St. George Dairy Co., Ltd. (75%) to Synutra Illinois, resulting in a 100%
        ownership of Qingdao St. George Dairy Co., Ltd by Synutra Illinois.
 
 Beian
        Yi
        Pin Dairy Co., Ltd. (“Beian”) is engaged in the production and processing of
        adult dairy based nutritional products and various milk powder products.
        Beian
        Yi Pin Dairy Co., Ltd. was formed In June 2004,by Sheng Zhi Da Dairy Corporation
        and Synutra Illinois-. In January 2005, Sheng Zhi Da Dairy Corporation
        transferred 71.26% of its ownership in Beian to Synutra Illinois, resulting
        in a
        100% ownership of Beian Yi Pin Dairy Co., Ltd. by Synutra Illinois
 
 Luobei
        Sheng Yuan Dairy Co., Ltd. (“Loubei”) is engaged in the production and
        processing of Synutra’s products for infants and children under the brand names
        U-Smart, U-Strong, and National Standards under the “Sheng Yuan” label. Loubei
        was formed in April 2001 by Mr. Liang Zhang, and Ms. Xiu Qing Meng. In June
        2003, Mr. Zhang transferred 67% of his ownership to Sheng Zhi Da Dairy
        Corporation. In January 2005,Ms. Xiu Qing Meng transferred 33% of her ownership
        to Synutra Illinois , Sheng Zhi Da Dairy Corporation transferred 67% of its
        ownership to Synutra Illinois, resulting in a 100% ownership of Luobei Sheng
        Yuan Dairy Co., Ltd by Synutra Illinois.
 
 Qingdao
        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. Qingdao Mother and Infant Nutrition
        Research Company Limited was formed in April 2004 by -Sheng Zhi Da Dairy
        Corporation (80%) and Ms. Xiu Qing Meng(20%). In May 2005, Sheng Zhi Da Dairy
        Corporation transferred 80% of its ownership to Synutra Illinois and Ms.
        Xiu
        Qing Meng transferred 20% of her ownership to Synutra Illinois, resulting
        in a
        100% ownership of Qingdao Mother and Infant Nutrition Research Company Limited
        by Synutra Illinois.
 
 Chabei
        Sheng Yuan Dairy Co., Ltd. is engaged in the production and processing of
        all of
        Synutra’s products under the brand names Super, U-Smart, U-Strong, and National
        Standards. Chabei Sheng Yuan Dairy Co., Ltd. was formed in February 2002,by
        Ms,
        Xiu Qing Meng (20%) and Sheng Zhi Da Dairy Corporation(80%). In March 2005,
        Ms.
        Xiu Qing Meng transferred 20% of her ownership to Synutra Illinois and Sheng
        Zhi
        Da Dairy Corporation transferred 80% of its ownership to Synutra Illinois,
        resulting in a 100% ownership of Chabei Sheng Yuan Dairy Co., Ltd. by Synutra
        Illinois. In August 2005, Chabei Sheng Yuan Diary Co., Ltd. was merged with
        Zhangjiakou Sheng Yuan Diary Co., Ltd. Zhangjiakou Sheng Yuan Diary Co.,
        Ltd.
        emerged as the surviving entity from the merger.
  Zhangjiakou
        Sheng Yuan Dairy Co., Ltd. (“Zhangjiakou”) is engaged in the production and
        processing of all of Synutra’s products under the brand names Super, U-Smart,
        U-Strong, and National Standards. Zhangjiakou Sheng Yuan Dairy Co., Ltd.
        was
        formed in March 2004 by Sheng Zhi Da Dairy Corporation(40%) and Synutra Illinois
        (60%). In March 2005, Sheng Zhi Da Dairy Corporation transferred 40% of its
        ownership to Synutra Illinois, 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.
 -12-
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            to Table of Contents**
 
 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.
 
 **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.
 -13-
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            to Table of Contents**
 
 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.
 
 **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.
 -14-
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            to Table of Contents**
  **RESULTS
        OF OPERATIONS**
 
 **Three
        Months Ended September 30, 2005 Compared to Three Months Ended September
        30,
        2004.**
 
 **Sales**
 
 Sales
        increased by $12,506,134 or98.42% to $25,212,421 for the three months ended
        September 30, 2005 as compared to $12,706,287 for the three months ended
        September 30, 2004.
 
 The
        sales
        of traditional main products, such as
        the dairy based nutritional products for infants, children and adults under
        its
        brand names of Super, U-Smart, U-Strong, and National Standards, mostly
        contributed to the increasing trend of revenue.
  a.
              The
                  tons sold of such products increased 1,851 tons for the three months
                  ended
                  Sep 30, 2005, resulting in$8,541,670
                  increase of gross sales.
  b.
              The
                  average selling price also contributed to the increase of gross
                  sales. For
                  the period ended Sep 30, 2005, the average selling price increased
                  $364
                  per ton, resulting in an increase of $1,000,726 in gross sales.
  c.
              Sales
                  growth attributable to combined factor of the increase of the volume
                  and
                  the price was $672,728
  d.
              New
                  product launched contributed $2,291,010 in gross sales growth.
 
 In
        the
        three Months ended September 30, 2005, the Company realized and earned close
        to
        98.3% of its total sales revenue of $25 million through its wholesale
        distributor networks and about 1.7% through the supermarket retailers. Of
        the
        total $12.7 million sales earned in the three Months ended September 30,2004,
        about 98.5% was from distributors and about 1.5% from supermarket
        retailers.
 
 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
        product. 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 product and introduced new product packaging
        along with significant price increases.
 
 **Cost
        of Sales**
 
 Cost
        of
        sales for the three months ended September 30, 2005 increased to $10,965,478
        from $6,215,673 for the three months ended September 30, 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.
 
 The
        increase of 1,851 tons sold of the traditional main products resulted in
        $4,178,422 increase of cost. The average cost per unit decreased by $271
        per
        metric ton, resulting in $744,866 cost reduction for the three months ended
        Sep
        30, 2005. Additionally, the combined factor of production volume and reduction
        of unit cost led to $500,728 decline of cost of products sold. The launch
        of new
        products accounted for $1,816,977 in the total cost of sales for the three
        months ended Sep 30, 2005.
 
 
 **Gross
        Profit**
 
 Gross
        profit was $14,246,943 or 56.51% of sales for the three months ended September
        30, 2005. The sales of traditional main products mostly
        contributed $13,772,910 or
        97% of
        gross profits for the three months ended Sep 30, 2005. Such main products
        contributed $6,490,614 or 100% gross profits for the three months ended Sep 30, 2004.
 .
 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.
 -15-
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            to Table of Contents**
  **Selling
          Expenses**
 
 Selling
        expenses increased by $873,321 to $3,910,023 for the three months ended
        September 30, 2005, as compared to $3,036,702 for the three months ended
        September 30, 2004. The increase in selling and distribution expenses in
        2005 as
        compared to 2004 was a result of reduced 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 $3,401,135 or 121.62% to $6,197,680 for
        the
        three months ended September 30, 2005, as compared to $2,796,545 for the
        three
        months ended September 30, 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 $1,424,335 or 222.19% to $2,065,390
        for
        the three months ended September 30, 2005, as compared to $641,055 for the
        three
        months ended September 30, 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 $2,073,850
        for
        the three months ended September 30, 2005, as compared to $16,312 for the
        three
        months ended September 30, 2004.
 
 **Non-Operating
        Income**
 
 Non-operating
        income was $425,184 for the three months ended September 30, 2005, as compared
        to $(198,166) for the three months ended September 30, 2004. None-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 $871,261, for the three months ended J September 30, 2005, as
        compared to $304,293 for the three months ended September 30, 2004.
 
 **Non-Operating
        Expense**
 
 Non-operating
        expense was $11,622 for the three months ended September 30, 2005, as compared
        to $31,658 for the three months ended September 30, 2004.
 
 **Provision
        for Income Taxes**
 
 The
        provision for income taxes, which is computed on a per subsidiary basis,
        was
        $279,433 and $22,806 for the three months ended September 30, 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.
 -16-
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            to Table of Contents**
  **Net
          Income**
 
 Net
        income for the three months ended September 30, 2005 increased by $2,896,518
        to
        $ 1,336,717 from ($1,559,800) for the three months ended September 30, 2004
        due
        to the factors discussed above.
 
 **Earnings
        Per Share**
 
 Earnings
        per share were $0.03 for the three months ended September 30, 2005.
 
 **Six
        Months Ended September 30, 2005 Compared to Six Months Ended September 30,
        2004.**
 
 **Sales**
 
 Sales
        increased by $20,394,220 or 91.78% to $42,614,248 for the six months ended
        September 30, 2005 as compared to $22,220,028 for the six months ended September
        30, 2004.
 
 The
        sales
        of traditional main products, such as
        the dairy based nutritional products for infants, children and adults under
        its
        brand names of Super, U-Smart, U-Strong, and National Standards, mostly
        contributed to the increasing trend of revenue.
  a.
              The
                  tons sold of such products increased 2,431 tons for the six months
                  ended
                  Sep 30, 2005, resulting in$9,521,079
                  increase of gross sales.
  b.
              The
                  average selling price also contributed to the increase of gross
                  sales. For
                  the period ended Sep 30, 2005, the average selling price increased
                  $1,059
                  per ton, resulting in an increase of $6,007,831 in gross sales.
  c.
              Sales
                  growth attributable to combined factor of the increase of the volume
                  and
                  the price was $2,574,301
  d.
              New
                  product launched contributed $2,291,010 in gross sales growth.
 
 In
        the
        six months ended September 30, 2005, the Company realized and earned close
        to
        98.4% of its total sales revenue of $42.6 million through its wholesale
        distributor networks and about 1.6% through the supermarket retailers. Of
        the
        total $22.2 million sales earned in the six months ended September 30,2004,
        about 98.4% was from distributors and about 1.6% from supermarket
        retailers.
 
 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, the 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 September 30, 2005 increased to $19,421,618
        from
        $11,428,376 for the six months ended September 30, 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.
 
 The
        increase of 2,431 tons sold of the traditional main products resulted in
        $4,896,955  increase of cost.  Additionally, the combined factor of
        production volume and reduction of unit cost led to $1,279,311 increase of
        cost
        of products sold. The launch of new products accounted for $1,816,977  in
        the total cost of sales for the three months ended Sep 30, 2005.
 
 **Gross
        Profit**
 
 Gross
        profit was $23,192,630 or54.42%of sales for the six months ended September
        30,
        2005.
 
 The
        sales
        of traditional main products mostly
        contributed $22,718,597 or
        98% of
        gross profits for the six months ended Sep 30, 2005. Such main products
        contributed $10,791,652
        or 100% gross profits for the six months ended Sep 30, 2004.
 
 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.
 -17-
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  **Selling
          Expenses**
 
 Selling
        expenses increased by $746,215 to $5,725,000 for the six months ended September
        30, 2005, as compared to $4,978,785 for the six months ended September 30,
        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. Increase in average compensation to the sales force constitute
        of the
        increase in selling expenses.
 
 **Advertising
        and Sales Promotion**
 
 Advertising
        and sales promotion increased by $5,099,272 or80.22% to $11,455,561for the
        six
        months ended September 30, 2005, as compared to $6,356,289 for the six months
        ended September 30, 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 $1,724,505 or 147.37% to $2,924,891
        for
        the six months ended September 30, 2005, as compared to $1,182,386 for the
        six
        months ended September 30, 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 $3,087,178
        for
        the six months ended September 30, 2005, as compared to loss from operations
        of
        $1,725,808 for the six months ended September 30, 2004.
 
 **Non-Operating
        Income**
 
 Non-operating
        income was $1,667,222 for the six months ended September 30, 2005, as compared
        to ($36,961) for the six months ended September 30, 2004. None-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 $1,286,547 for the six months ended September 30, 2005, as compared
        to $560,376 for the six months ended September 30, 2004.
 
 **Non-Operating
        Expense**
 
 Non-operating
        expense was $101,356 for the six months ended September 30, 2005, as compared
        to
        $234,681 for the six months ended September 30, 2004.
 
 **Provision
        for Income Taxes**
 
 The
        provision for income taxes, which is computed on a per subsidiary basis,
        was
        $304,999 and $37,794 for the six months ended September 30, 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.
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  **Net
          Income**
 
 The
        net
        income for the six months ended September 30, 2005 increased by $5,336,786
        to a
        net income of $3,060,921 from a net loss of $2,275,865 for the six months
        ended
        September 30, 2004 due to the factors discussed above.
 
 **Earnings
        Per Share**
 
 Earnings
        per share were $0.06for the six months ended September 30, 2005.
 
 **Financial
        Condition - September 30, 2005:**
 
 **Liquidity
        and Capital Resources**
  **Operating**
 
 The
        Company’s operations generated cash resources of $4,633,336 for the six months
        ended September 30, 2005, as compared to utilizing cash resources of $1,099,588
        for the six months ended September 30, 2004, primarily as a result of cash
        generated in 2005 from sales and decreases to accounts receivable. At September
        30, 2005, the Company had cash and cash equivalents of $18,668,290 as compared
        to cash and cash equivalents of $16,085,403 at March 31, 2005. The Company
        had a
        working capital deficit of $16,417,485 at September 30, 2005, as compared
        to a
        working capital deficit of $15,919,880 at March 31, 2005, reflecting current
        ratios of 71.45% and 69.23%, respectively.
 
 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.
 
 Net
        accounts receivable increased to $2,365,950 at September 30, 2005, as compared
        to $1,968,235 at March 31, 2005, an increase of $397,715.
 
 Inventories
        increased to $6,940,879 at September 30, 2005, as compared to $6,757,021
        at
        March 31, 2005, an increase of $183,858 or 2.72%, primarily as a result of
        increase in raw material purchases.
 
 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 by net cash provided by operating activities (or surplus from operating
        cash flow).
 
 **Investing**
 
 During
        the six months ended September 30, 2005, the Company utilized $ 6,068,785
        in
        investing activities, the major components of which were the acquisition
        of
        property and equipment of $650,411, investment in construction in progress
        of
        $5,453,595 During the six months ended September 30, 2004, the Company utilized
        $ 3,865,361 in investing activities, the major components of which were the
        acquisition of property and equipment of $939,521, investment in construction
        in
        progress of $3,137,952.
 
 **Financing**
 
 During
        the six months ended September 30, 2005, the Company generated $ 3,374,333
        in
        financing activities, the major components of which were proceeds from bank
        loans of $1,584,787, and proceeds from notes payable of $1,572,161. During
        the
        six months ended September 30, 2004, the Company generated $ 2,943,607 in
        financing activities, the major components of which were proceeds from bank
        loans of $2,906,265 and proceeds from notes payable of $ 1,211,776.
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  As
        of
        September 30, 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**
 
 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 affect 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 September 30, 2005, the exchange
        rate was approximately USD $1.00 to RMB 8.11, about a 2% 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.
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  **PART
          II**
 **OTHER
        INFORMATION**
 
 
 **Item
        6.********Exhibits**
 
 31.1  Certification
        pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 31.2  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
 32.2  Certification
        pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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 **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:September
                  28, 2006
              By:
              /s/ Liang
                  ZhangName: Liang
                  ZhangTitle:Chief
                  Executive Officer
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