**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-Q/A**


**(Amendment
      No. 2)**





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





For
      the
      quarterly period ended December 31, 2006





or





o
            **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.**





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





2275
      Research Blvd., Suite 500


Rockville,
      Maryland 20850





(301)
      840-3888





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 o




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.





Large
                accelerated filer o
            Accelerated
                filer o
            Non-accelerated filer
x




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2of the Exchange Act).





Yes
o    
No
x





As
      of
      February 9, 2007, there were 50,000,713 shares of Common Stock outstanding.







EXPLANATORY
      NOTE:





On
      August
      15, 2007, Synutra International, Inc. (“Synutra” or the “Company”) filed a
      timely Notification of Late Filing on Form 12b-25 with the U.S. Securities
      and
      Exchange Commission (the “SEC”) to report that it would be unable to file its
      Quarterly Report on Form 10-Q as and for the fiscal quarter ended June 30,
      2007
      by the prescribed due date of August 14, 2007. Further, the Company was unable
      to file its Form 10-Q within the five-day extension period provided in Rule
      12b-25 under the Exchange Act of 1934, as amended (the “Exchange Act”). On
      August 17, 2007, the Company filed a current report on Form 8-K stating that
      management had concluded that Synutra’s financial statements as of and for the
      fiscal year ended March 31, 2007 and for each fiscal quarter ended June 30,
      2006, September 30, 2006 and December 31, 2006 should not be relied upon. On
      August 20, 2007, the Company received a staff determination letter from The
      Nasdaq Stock Market stating that the Company’s common stock is subject to
      delisting from The Nasdaq Global Market for the Company’s failure to file its
      Form 10-Q. Finally, on October 2, 2007, the Company filed a current report
      on
      Form 8-K announcing that Lawrence Lee, a member of Synutra’s Board of Directors,
      resigned from his position on the Board to become Synutra’s Chief Financial
      Officer.





The
      Company’s failure to file timely its Form 10-Q was due to management’s
      assessment of accounting errors and irregularities identified during the
      preparation of the Form 10-Q. As a result of such assessment, the Company is
      filing this amendment to its Quarterly Report on Form 10-Q with restated
      financial statements as and for the fiscal quarter ended December 31, 2006
      as
      filed on February 14, 2007 (the “Original Filing”), an amendment to its
      Quarterly Report on Form 10-Q with restated financial statements as and for
      the
      fiscal quarter ended September 30, 2006. On October 5, 2007, the Company filed
      an amendment to its Annual Report on Form 10-K with restated financial
      statements as and for the fiscal year ended March 31, 2007 (the “Form 10-K/A”).
      On October 10, 2007, the Company received a letter from The Nasdaq Stock Market
      stating that its filing delinquency had been cured following the filing of
      the Quarterly Report on Form 10-Q for the three months period ended June 30,
      2007.





The
      Company’s dismissal of its independent registered public accounting firm,
      Rotenberg & Co. LLP, engagement of Deloitte Touche Tohmatsu CPA Ltd. as its
      new independent auditors effective July 27, 2007 and assessment of the
      accounting errors and irregularities identified during the preparation of the
      Form 10-Q are described in the Company’s previously-filed Exchange Act documents
      as follows:





·
            the
                Current Report on Form 8-K filed on July 27,
                2007;


·
            the
                Current Report on Form 8-K/A filed on August 9,
                2007;


·
            the
                Company’s Notification of Late Filing on Form 12b-25 filed on August 15,
                2007;


·
            the
                Current Report on Form 8-K filed on August 17, 2007;


·
            the
                Current Report on Form 8-K filed on August 24, 2007; and


·
            the
                Current Report on Form 8-K filed on October 2,
                2007.





In
      addition, aspects of the restatement are described in Note 15 to the Notes
      to
      the Condensed Consolidated Financial Statements to this Form 10-Q/A, Note 15
      to
      the Notes to the Condensed Consolidated Financial Statements to the Form 10-Q/A
      as and for the fiscal quarter ended September 30, 2006, Note 18 to the Notes
      to
      the Consolidated Financial Statements to the Form 10-K/A, Note 3 to the Notes
      to
      Condensed Consolidated Financial Statements to the Company’s Form 10-Q as and
      for the fiscal quarter ended June 30, 2007 and as described immediately below.




2




**Adjustments**


·
              Restricted
                  cash, included as cash and cash equivalents in the Original Filing,
                  represents cash deposited with the banks as guarantees for the
                  issuance of
                  promissory notes. Under US GAAP, restricted cash does not meet
                  the
                  definition of cash and cash equivalents, and separate disclosure
                  on the
                  face of balance sheet is required. In addition, the change in the
                  restricted cash balance, given its use to secure promissory notes,
                  should
                  have been presented as an investing activity. Therefore, restricted
                  cash
                  of $17.8 million and $16.4 million is reclassified and is presented
                  as an
                  individual item on our consolidated balance sheets as of December
                  31, 2006
                  and March 31, 2006, respectively. In addition, the decrease in
                  restricted
                  cash of $1.4 million and $471,000 is reclassified from operating
                  to
                  investing activities in the consolidated statements of cash flows
                  for nine
                  months ended December 31, 2006 and 2005, respectively.
 
 ·
              As
                  at December 31, 2006 and March 31, 2006, the Company had provided
                  bank
                  loan guarantee of $1.1 million and $1.1 million in total extended
                  to 104
                  farmers in the Zhangbei area. This was incorrectly presented as
                  gross
                  other receivable and other payable in the Original filing. The
                  Company has
                  revised the balance sheet to eliminate both the other receivable
                  and other
                  payable.
 
 ·
              Land
                  use rights, which represents a prepaid lease payment, is reclassified
                  as
                  an individual line item on our consolidated balance sheets as of
                  December
                  31, 2006 and March 31, 2006, respectively. It has been included
                  as part of
                  the property, plant and equipment, net in the Original Filing.
 
 ·
              In
                  fiscal year 2007, we acquired certain fixed assets from Zheng Lan
                  Qi
                  County and subsequently established a new subsidiary with these
                  assets. In
                  conjunction with the acquisition, the local government provided
                  an
                  irrevocable subsidy of $4.1 million which we recognized as subsidy
                  income
                  for the fiscal year ended March 31, 2007. Subsequent to the Original
                  Filing, we determined that the $4.1 million should be deferred
                  and netted
                  against the depreciation expenses of the assets acquired, as this
                  method
                  effectively matches the related depreciation of the cost of assets
                  with
                  the corresponding grant income. The effect of this adjustment is
                  a
                  decrease in subsidy income by $1.3 million and $4.1 millionfor
                  the three and nine months ended December 31, 2006, respectively.We
                  did not recognize any of the subsidies during thethree
                  and nine months ended December 31, 2006as
                  the asset had not yet been placed in
                  service.
 
 ·
              Certain
                  short term notes payable balances, in the amount of $19.7 million
                  and
                  $18.5 million, is reclassified to short-term loan as of December
                  31 and
                  March 31, 2006, respectively,as
                  the ultimate lender of the note is an accredited financial
                  institution.
 
 ·
              The
                  cash consideration given to our retailers, who purchased our products
                  directly from our distributors, is reclassified as a reduction
                  of sales.
                  It was recorded as advertising and promotion expenses in the Original
                  Filing.The
                  effects of this adjustment are a decrease in sales and an increase
                  in
                  advertising and promotion expenses of $336,000 and $862,000 for
                  the three
                  and nine months ended December 31, 2006,
                  respectively.




3




·
            The
                amount of free products provided to our customers is reclassified
                as cost
                of salesfor
                the three and nine months ended December 31, 2006 and 2005.It
                had been recorded as advertising and promotion expense in the Original
                Filing. The effects of this adjustment are an increase in cost of
                sales
                and a decrease in advertising and promotion expense of $462,000 and
                $970,000 for the three and nine months ended December 31, 2006,
                respectively.





In
      addition to the above correcting adjustments, we also made reclassifications
      on
      our consolidated financial statements as disclosed in footnote 15 to the
      consolidated financial statements for the current period and have reclassified
      prior period amounts to conform to the current period presentation.





In
      Footnote 14 to the consolidated financial statements, we have added a disclosure
      on contingencies to reflect loan guarantees provided to farmers in the
      Zhangjiakou region.





We
      also
      added a disclosure of our aborted acquisition of Cangshan Tian Fa Bio-chemical
      Co., Ltd. (“Tian Fa”), which was omitted in our Original Filing.





Except
      as
      described above, all other information is unchanged and reflects the disclosures
      made at the time of the Original Filing. This Form 10-Q/A does not otherwise
      reflect events occurring after the Original Filing or otherwise modify or update
      these disclosures. Accordingly, this Form 10-Q/A should be read in conjunction
      with our filings with the SEC subsequent to the Original Filing.





4


**SYNUTRA
      INTERNATIONAL, INC.**




**FORM
      10-Q**


For
      the
      Quarter Ended December 31, 2006





**INDEX**





PART
                  I. FINANCIAL INFORMATIONItem
                1. Consolidated Financial Statements:Consolidated
                Balance Sheets as of December 31, 2006 (restated, unaudited) and
                March 31,
                2006 (restated, audited)
            
            
            6Consolidated
                Statements of Income for the three and nine months ended December 31,
                2006 and 2005 (restated, unaudited)
            
            
            7Consolidated
                Statements of Changes in Shareholders’ Equity for the nine months ended
                December 31, 2006 (restated, unaudited)
            
            
            8Consolidated
                Statements of Cash Flows for the nine months ended December 31, 2006
                and
                2005 (restated, unaudited)
            
            
            9Notes
                to the Consolidated Financial Statements
            
            
            10Item
                2. Management’s Discussion and Analysis of Financial Condition and Results
                of Operations
            
            
            32Item
                4T. Controls and Procedures
            
            
            45PART
                  II. OTHER INFORMATIONItem
                6. Exhibits
            
            
            47Signatures
            
            
            48




5


**PART
      I**


**FINANCIAL
      INFORMATION**





**ITEM
      1. FINANCIAL STATEMENTS**





**SYNUTRA
      INTERNATIONAL, INC. AND SUBSIDIARIES**


**(INCORPORATED
      IN THE STATE OF DELAWARE**


**WITH
      LIMITED LIABILITY)**





**CONSOLIDATED
      BALANCE SHEETS**


**(restated,
      see note 15)**




**December
                31,**
              **2006**
            
            **March
                31,**
              **2006**(In
                thousands)
            
            (unaudited)**ASSETS****Current
                Assets:**Cash
                and cash equivalents
            
            $
            6,666
            
            $
            5,677Restricted
                cash
            
            
            17,826
            
            
            16,457Accounts
                receivable
            
            
            5,793
            
            
            2,540Inventories
            
            
            14,950
            
            
            11,789Other
                receivable
            
            
            3,080
            
            
            2,230Due
                from the related parties
            
            
            22,578
            
            
            8,602Advances
                to suppliers
            
            
            3,934
            
            
            354Prepaid
                expenses and other current assets
            
            
            15
            
            
            139**Total
                current assets**
            
            
            **74,842**
            
            
            **47,788****Property,
                plant and equipment, net**
            
            
            43,100
            
            
            33,318**Land
                use rights, net**
            
            
            1,566
            
            
            1,546**Other
                Assets**
            
            
            279
            
            
            357**TOTAL
                ASSETS**
            
            
            **119,787**
            
            
            **83,009****LIABILITIES
                AND SHAREHOLDERS' EQUITY****Current
                Liabilities:**Bank
                loans
            
            
            53,086
            
            
            36,680Accounts
                payable
            
            
            13,134
            
            
            13,079Due
                to related parties
            
            
            345
            
            
            4,301Advances
                from customers
            
            
            1,405
            
            
            933Tax
                payables
            
            
            908
            
            
            1,996Other
                current liabilities
            
            
            8,570
            
            
            5,069**Total
                current liabilities**
            
            
            **77,448**
            
            
            **62,058**Deferred
                income
            
            
            4,098
            
            
            -**Total
                liabilities**
            
            
            **81,546**
            
            
            **62,058****Shareholders'
                equity:**Common
                Stock, $.0001 par value: 250,000 authorized; 50,001  issued and
                outstanding at December 31 and March 31, 2006
            
            
            5
            
            
            5Additional
                paid-in capital
            
            
            8,226
            
            
            8,226Retained
                earnings
            
            
            27,476
            
            
            11,664Accumulated
                other comprehensive income
            
            
            2,534
            
            
            1,056**Total
                shareholders' equity**
            
            
            **38,
                241**
            
            
            **20,951****TOTAL
                LIABILITIES AND SHAREHOLDERS' EQUITY**
            
            **$**
            **119,787**
            
            **$**
            **83,009**





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





6


**SYNUTRA
      INTERNATIONAL, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF INCOME**


**(restated,
      see note 15, unaudited)**





**Three
                Months Ended**
            
            **Nine
                Months Ended****December
                31,**
            
            **December
                31,**(In
                thousands, except per share amounts)
            
            **2006**
            
            **2005**
            
            **2006**
            
            **2005**Net
                sales
            
            $
            56,314
            
            $
            43,805
            
            $
            151,039
            
            $
            95,141Including
                sales to related parties
            
            
            4,148
            
            
            12,487
            
            
            10,554
            
            
            18,148Cost
                of sales
            
            
            28,183
            
            
            27,930
            
            
            78,039
            
            
            55,210Including
                cost of sales to related parties
            
            
            3,917
            
            
            12,615
            
            
            10,465
            
            
            17,768**Gross
                profit**
            
            
            **28,131**
            
            
            **15,875**
            
            
            **73,000**
            
            
            **39,931**Selling
                & distribution expenses
            
            
            10,093
            
            
            5,440
            
            
            20,330
            
            
            11,165Advertising
                and promotion expenses
            
            
            12,419
            
            
            4,809
            
            
            29,953
            
            
            16,265General
                & administrative expenses
            
            
            2,036
            
            
            1,282
            
            
            4,440
            
            
            4,302Total
                operating expense
            
            
            24,548
            
            
            11,531
            
            
            54,723
            
            
            31,732**Income
                from operations**
            
            
            **3,583**
            
            
            **4,344**
            
            
            **18,
                277**
            
            
            **8,199**Interest
                expense
            
            
            (548
            )
            
            (299
            )
            
            (1,319
            )
            
            (1,490
            )Interest
                income
            
            
            109
            
            
            2
            
            
            231
            
            
            106Other
                income, net
            
            
            62
            
            
            (60
            )
            
            356
            
            
            538**Income
                before provision for income tax**
            
            **$**
            **3,206**
            
            **$**
            **3,987**
            
            **$**
            **17,545**
            
            **$**
            **7,353**Provision
                for income tax
            
            
            287
            
            
            209
            
            
            1,733
            
            
            514**Net
                income before minority interests**
            
            
            **2,919**
            
            
            **3,778**
            
            
            **15,812**
            
            
            **6,839**Minority
                interests
            
            
            -
            
            
            -
            
            
            -
            
            
            1**Net
                income attributable to shareholders**
            
            
            **2,919**
            
            
            **3,778**
            
            
            **15,812**
            
            
            **6,838**Other
                comprehensive income
            
            
            849
            
            
            172
            
            
            1,478
            
            
            817**Comprehensive
                income**
            
            **$**
            **3,768**
            
            **$**
            **3,950**
            
            **$**
            **17,290**
            
            **$**
            **7,655****Earning
                per share—basic and diluted**
            
            $
            0.06
            
            $
            0.08
            
            $
            0.32
            
            $
            0.14**Weighted
                average common share outstanding-basic and
                diluted**
            
            
            **50,001**
            
            
            **50,001**
            
            
            **50,001**
            
            
            **48,445**





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





7




**SYNUTRA
      INTERNATIONAL, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF SHAREHOLDERS’ EQUITY**


**(restated,
      unaudited)**




**Common
                Stock outstanding**
            
            **Registered
                Capital**
            
            **Additional**
              **Paid-In**
              **Capital**
            
            **Retained
                Earnings(see note 13)**
            
            **Accumulated
                Comprehensive Income**
            
            **Total
                Shareholders’ Equity**(In
                thousands)**Balance
                at March 31, 2006**
            
            
            **50,001**
            
            **$**
            **5**
            
            **$**
            **8,226**
            
            **$**
            **11,664**
            
            **$**
            **1,056**
            
            **$**
            **20,951**Net
                income
            
            
            -
            
            
            -
            
            
            -
            
            
            15,812
            
            
            -
            
            
            15,812Other
                comprehensive income — foreign currency translation
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            1,478
            
            
            1,478**Balance
                at December 31, 2006**
            
            
            **50,001**
            
            **$**
            **5**
            
            **$**
            **8,226**
            
            **$**
            **27,476**
            
            **$**
            **2,534**
            
            **$**
            **38,241**





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





8


**SYNUTRA
      INTERNATIONAL, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**(restated,
      see note 15, unaudited)**




**Nine
                Months Ended****December
                31,****2006**
            
            **2005**(In
                thousands)**Cash
                flow from operating activities:**Net
                income
            
            $
            15,812
            
            $
            6,838Adjustments
                to reconcile net income to net cash provided by operating
                activitiesDepreciation
                and amortization
            
            
            1,177
            
            
            1,082Bad
                debt expense
            
            
            (158
            )
            
            4Gain
                on short term investment
            
            
            (44
            )
            
            -Minority
                interest
            
            
            -
            
            
            1Financial
                consultants and finders fee
            
            
            -
            
            
            567Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            (3,095
            )
            
            483Inventories
            
            
            (3,160
            )
            
            (4,723
            )Advances
                to suppliers
            
            
            (3,580
            )
            
            545Due
                from related parties
            
            
            (13,976
            )
            
            386Other
                receivable
            
            
            (850
            )
            
            -Deferred
                expenses
            
            
            81
            
            
            (367
            )Accounts
                payable
            
            
            39
            
            
            4,510Due
                to related parties
            
            
            (3,940
            )
            
            458Advances
                from customers
            
            
            473
            
            
            942Tax
                payable
            
            
            (1,089
            )
            
            -Other
                liabilities
            
            
            3,501
            
            
            (298
            )Deferred
                revenue
            
            
            4,098
            
            
            -**Net
                cash provided by operating activities**
            
            
            **(4,711**
            **)**
            
            **10,428****Cash
                flow from investing activities:**Acquisition
                of property, plant and equipment
            
            
            (1,984
            )
            
            (993
            )Cash
                used for construction in progress
            
            
            (8,890
            )
            
            (5,815
            )Purchases
                of intangible assets
            
            
            (28
            )
            
            (4
            )Sales
                on short term investment
            
            
            87
            
            
            7Change
                of restricted cash
            
            
            (1,369
            )
            
            (471
            )**Net
                cash used in investing activities**
            
            **$**
            **(12,184**
            **)**
            **$**
            **(7,276**
            **)****Cash
                flow from financing activities:**Borrowing
                of bank loans
            
            
            55,952
            
            
            46,023Repayment
                of bank loans
            
            
            (39,546
            )
            
            (47,238
            )Issuance
                of Common stock
            
            
            -
            
            
            418**Net
                cash provided by financing activities**
            
            **$**
            **16,406**
            
            **$**
            **(797**
            **)****Net
                change in increase in cash and cash equivalents**
            
            
            **(489**
            **)**
            
            **2,355**Effect
                of exchange rate changes on cash and cash equivalents
            
            
            1,478
            
            
            817**Cash
                and cash equivalents, beginning of period**
            
            
            **5,677**
            
            
            **5,812****Cash
                and cash equivalents, end of period**
            
            
            **6,666**
            
            
            **8,984****Supplementary
                cash flows disclosure**Interest
                paid
            
            **$**
            1,591
            
            $
            1,019Income
                taxes paid
            
            $
            1,445
            
            $
            514





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





9


**SYNUTRA
      INTERNATIONAL, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**1.
      DESCRIPTION OF BUSINESS**





Synutra
      International, Inc. is a Delaware corporation that at December 31, 2006 owned
      100% of five subsidiary companies in the People’s Republic of China (“PRC” or
“China”). These five subsidiaries are all principally engaged in different
      stages of the production, distribution, and sales of dairy based pediatric
      and
      adult nutrition products. The Company’s extensive sales network covers 24
      provinces, 227 cities, and more than 800 counties throughout China. The
      Company’s fiscal year end is March 31.




On
      November 6, 2006, the Company consummated a transaction with the Department
      of
      Finance of Zheng Lan Qi (County) of Inner Mongolia in which the Company acquired
      certain assets owned by them including approximately $256,000 in land use rights
      and $5,635,000 in plant and buildings under construction. The transaction was
      consummated in order to establish a wholly foreign-owned company to produce
      milk
      fat and other diary-based food ingredients. The agreement provided that the
      effective date of the transaction was when the Company received 60% of the
      non
      refundable subsidy of RMB 30,000,000 (approximately $3,800,000). This occurred
      during September 2006 and thus the assets were recorded during that period,
      notwithstanding that the official ownership certificates have not yet been
      obtained. The non refundable subsidy was received in two installments and was
      recorded in the periods received.  The acquisition was considered
      immaterial since the acquired assets only comprise approximately 5% of the
      Company’s total assets. No additional disclosures are deemed necessary in this
      filing.





In
      November, 2006 Zhangjiakou Sheng Yuan Co., Ltd., one of the Company’s operating
      subsidiaries, entered into an agreement with the shareholders of Inner Mongolia
      Meng Yuan Food Co., Ltd. (“Meng Yuan”) to acquire 100% of the equity interest in
      Meng Yuan for a consideration of about $900,000. At the close of the transaction
      Meng Yuan transferred assets under its control to Zhangjiakou which included
      land use rights, plant equipment and plant buildings under construction. The
      Meng Yuan project is anticipated to be put in service in mid 2007 and it is
      designed to produce 7,200 tons per year infant formula products. The transfer
      of
      the above assets and the payment of the considerations have been accounted
      for
      in this quarterly report and no additional disclosure is deemed
      necessary.





On December
      8, 2006, the Company’s subsidiary, Qingdao ST George Dairy Co., Ltd., entered
      into an agreement with the owners of Cangshan Tian Fa Bio-chemical Co., Ltd.
      (“Tian Fa”), a chondroitin sulfates supplier of the Company, to acquire a 51%
      equity stake in Tian Fa from its owners for a consideration of $ 196,000. The
      consideration was not paid and the transaction was terminated with mutual
      consent on December 18, 2006, due to differences on business directions. Qingdao
      ST George Dairy Co., Ltd. ceased to be a shareholder of Tian Fa on the same
      date.




10





**2.
      CRITICAL ACCOUNTING POLICIES AND ESTIMATES**





The
      accompanying unaudited consolidated financial statements have been prepared
      in
      accordance with generally accepted accounting principles in the United States
      (“GAAP”) for interim financial information and with the instructions to Form
      10-Q. Accordingly, they do not include all information and footnote disclosures
      normally included in the financial statements prepared in accordance with GAAP,
      and should be read in conjunction with the Company’s fiscal 2006 Annual Report
      on Form 10-KSB/A.




In
      the
      opinion of management, the accompanying unaudited consolidated financial
      statements contain all adjustments necessary to present fairly the balance
      sheet
      of Synutra International, Inc. and subsidiaries as of December 31, 2006, the
      results of their operations for the three and nine month periods ended December
      31, 2006 and 2005, and their cash flows for the nine month periods ended
      December 31, 2006 and 2005. All adjustments are of normal recurring nature.
      The
      results of operations for the three and nine month periods ended December 31,
      2006 and 2005 are not necessarily indicative of future results. The consolidated
      balance sheet information as of March 31, 2006 was derived from the Company’s
      audited consolidated financial statements and notes for the fiscal year ended
      March 31, 2006 included in the Company’s fiscal 2006 Annual Report on Form
      10-KSB/A.





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





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





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





**Accounting
      method**





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





**Principles
      of consolidation**





The
      consolidated balance sheet as of December 31, 2006, the consolidated statements
      of income for the three and nine months ended December 31, 2006 and 2005, the
      consolidated statements of cash flows for the nine months ended December 31,
      2006 and 2005, and the shareholders’ equity statement for the nine months ended
      December 31, 2006 are unaudited. All significant inter-company balances and
      transactions have been eliminated in the consolidation.




11





The
      following companies are consolidated for financial statement presentation:





**Name
                of subsidiaries**
            
            **December
                31,**
              **2006**
            
            **Incorporation**
              **date**Qingdao
                St. George Dairy Co. Ltd
            
            
            100
            %
            
            Sep-01Qingdao
                Sheng Yuan Dairy Co. Ltd
            
            
            100
            %
            
            Jan-98Heilongjiang
                Loubei Sheng Yuan Food Co. Ltd
            
            
            100
            %
            
            Apr-01Bei’an
                Yipin Dairy Co. Ltd
            
            
            100
            %
            
            Jun-04Qingdao
                Women and Children Nutrition Research Co., Ltd.*
            
            
            100
            %
            
            Apr-04Zhangjiakou
                Shen Yuan Co. Ltd **
            
            
            100
            %
            
            Mar-04




*
      Qingdao
      Women and Children Nutrition Research Co, Ltd was dissolved and disposed of
      in
      July 2006. Its operational results were not classified separately as
      discontinued operations in the Consolidated Statement of Income due to their
      immateriality.




**
      Zhangjiakou completed a merger with Chaibei Sheng Yuan as of August 2005 and
      Zhangjiakou emerged as the surviving entity from the merger.





**Restricted
      cash**




Restricted
      cash is 30%, 50%, or 100% of bank demand deposits used as security against
      notes
      payables of 3 to 6 months terms. This is used by the Company as a short term
      instrument to reduce short-term interest expenses.





**Accounts
      receivable** ****





The
      Company presents trade and notes receivables, net of allowance for doubtful
      accounts. The allowance is calculated based on review of individual customer
      accounts.





Trade
      receivables are recognized and carried at the original invoice amount less
      allowance for any uncollectible amounts. An estimate for doubtful accounts
      is
      made when collection of the full amount is no longer probable. Bad debts are
      written off as incurred. The allowance on the doubtful accounts was $575,000
      and
      $417,000 as at December 31, 2006 and March 31, 2006, respectively.





**Inventories**





Inventories
      are stated at the lower of cost or net realizable value. Cost is calculated
      on
      the moving-average basis and includes all costs to acquire and other costs
      incurred in bringing the inventories to their present location and condition.
      The Company evaluates the net realizable value of its inventories on a regular
      basis and records a provision for loss to reduce the computed weighted-average
      cost if it exceeds the net realizable value. 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.





12




**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 statement of income based on the net disposal
      proceeds less the carrying amount of the assets.




Construction
      in progress represents direct costs of construction or acquisition and design
      fees incurred. Capitalization of these costs ceases and the construction in
      progress is transferred to plant and equipment when substantially all the
      activities necessary to prepare the assets for their intended use are completed.
      No depreciation is provided until it is completed and ready for intended use.





The
      capitalized interest accrued up to the three and nine months ended December
      31,
      2006 was $74,109 and $222,210, respectively, associated with construction in
      progress





Depreciation
      is calculated on a straight-line basis over the estimated useful lives of the
      assets. The useful lives for property, plant and equipment are as follows:





Buildings
                and leasehold improvement
            
            
            20
                yearsPlant
                and machinery
            
            
            5
                - 10 yearsOffice
                equipment and furnishings
            
            
            5
                yearsMotor
                vehicles
            
            
            5
                years





**Land
      use right**





According
      to the law of China, the government owns all the land in China. Companies or
      individuals are authorized to possess and use the land only through land use
      rights granted by the Chinese government. Land use rights are being amortized
      using the straight-line method over the lease term of 20 to 50 years.





**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,
      when necessary, is provided for the amount of deferred tax assets and
      liabilities that, based on available evidence, are not expected to be realized.




13





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 was not be subject to local income tax prior to 2003.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 was not subject to local income tax prior to 2005, 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
      was not subject to local income tax prior to 2004. 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 was not subject to local income tax prior to 2005. The subsidiary’s
      first cumulative profit-making year was 2006.





Qingdao
      Women and Children Nutrition Research Co. Ltd. was subject to 33% income tax.
      This entity was dissolved in July 2006.




Tax
      Rates
      Schedule for various operating subsidiaries of the Company in China is as
      follows:




**Period-Tax
                  rate (Calendar Year)**
              
              **Incorporation****Name
                  of subsidiaries**
              
              **2006**
              
              **2007**
              
              **2008**
              
              **2009**
              
              **2010**
              
              **2011**
              
              **date**Qingdao
                  St. George Dairy Co., Ltd.
              
              
              12
              %
              
              12
              %
              
              12
              %
              
              24
              %
              
              24
              %
              
              24
              %
              
              Sep-01Qingdao
                  Sheng Yuan Dairy Co., Ltd.
              
              
              30
              %
              
              30
              %
              
              25
              %
              
              25
              %
              
              25
              %
              
              25
              %
              
              Jan-98Heilongjiang
                  Luobei Sheng Yuan Dairy Co., Ltd.
              
              
              0
              %
              
              0
              %
              
              16.5
              %
              
              16.5
              %
              
              16.5
              %
              
              25
              %
              
              Apr-01Bei’an
                  Yipin Dairy Co., Ltd.
              
              
              0
              %
              
              16.5
              %
              
              16.5
              %
              
              16.5
              %
              
              25
              %
              
              25
              %
              
              Jun-04Zhangjiakou
                  Shen Yuan Dairy Co., Ltd.
              
              
              0
              %
              
              0
              %
              
              16.5
              %
              
              16.5
              %
              
              16.5
              %
              
              25
              %
              
              Mar-04Qingdao
                  Women and Children Nutrition Research Co.,Ltd*.
              
              
              33
              %
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              Apr-04





*
      Qingdao
      Women and Children Nutrition Research Co, Ltd was dissolved and disposed of
      in
      July 2006.




14




On
      March
      16, 2007, the National People’s Congress approved and promulgated a new tax law,
      which will take effect beginning January 1, 2008. Under the new tax law, foreign
      invested enterprises and domestic companies are subject to a uniform tax rate
      of
      25%. The new tax law provides a five-year transition period from its effective
      date for those enterprises which were established before the promulgation date
      of the new tax law and which were entitled to a preferential lower tax rate
      under the then effective tax laws or regulations.





**Revenue
      recognition**





The
      Company recognizes revenue from product sales when goods are 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 reduction is accounted for in the same period the related
      sales
      are recorded.





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 acceptance of delivery of
      products 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 met.





A
      nominal
      amount 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.





The
      Company provides its distributors and retailers the right to return products
      due
      to package damage and shelf-life expiration. The majority of the Company’s
      products carry shelf lives of 18 to 24 months and most of them are sold during
      the shelf lives. Product returns due to damage and expiration, if any, are
      charged against current sales revenues. The arrangement meets the revenue
      recognition criteria under FASB Statement of Financial Accounting Standards
      No.48 “Revenue Recognition When Right of Return Exists





For
      new
      product offerings, the Company grants its distributors and retailers the same
      rights to return products due to package damage and shelf-life expiration,
      and
      these returns are deducted from revenue for the reporting period. The Company
      monitors over time each product line, including new product offerings, to track
      the pattern of sales returns and considers if sales return reserves are
      necessary.




15





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. 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.





**Government
      subsidies**





Government
      grants for revenue and/or expenses should be recognized in income when the
      related revenue and/or expense is recorded. Government grants related to
      property, plant, and equipment should be netted against the depreciation
      expenses of the related assets over the useful lives of these assets. Government
      subsidies were $136,000 and $66,000 during the three months ended December
      31,
      2006 and 2005, respectively, and were $468,000 and $713,000 during the nine
      months ended December 31, 2006 and 2005, respectively.





**Related
      parties**





Parties
      are considered to be related if one party has the ability, directly or
      indirectly, to control the other party or exercise significant influence over
      the other party in making financial and operational decisions. Parties are
      also
      considered to be related if they are subject to common control or common
      significant influence. Related parties may be individuals or corporate entities.





**Foreign
      currency translation**




The
      Company maintains its books and accounting records in Renminbi ("RMB"), the
      PRC's currency, being the functional currency. Transactions denominated in
      foreign currencies are translated into the reporting currency at the exchange
      rates prevailing on the transaction dates. Assets and liabilities denominated
      in
      foreign currencies are translated into the reporting currency at the exchange
      rates prevailing at the balance sheet date. Income and expenditures are
      translated at the average exchange rate of this term.





In
      July
      2005, the PRC began to value the RMB against a basket of currencies of its
      major
      trading partners, including the U.S. This measure has allowed the RMB to
      fluctuate within a narrow band vis á vis the U.S. dollars. Since the adoption of
      this managed flexible exchange rate policy, the RMB has been under pressure
      to
      appreciate against the U.S. dollar. This has affected changes in the foreign
      currency translation over the reporting period and is reflected in the
      other comprehensive income of $849,000 and $172,000 for the three months ended
      December 31, 2006 and 2005, respectively, and of $1.5million and $817,000 for
      the nine months ended December 31, 2006 and 2005, respectively.




16





**Use
      of estimates**





The
      preparation of financial statements in conformity with GAAP requires management
      to make estimates and assumptions that affect the reported amounts of assets
      and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial statements, and the reported amounts of revenue and expenses
      during the reporting period. Actual results when ultimately realized could
      differ from those estimates.




**Fair
      value of financial instruments**





The
      carrying value of financial instruments including cash, receivables, accounts
      payable and accrued expenses and debt, approximates their fair value at December
      31, 2006 and 2005 due to the relatively short-term nature of these instruments.





**Shipping
      and handing**





All
      shipping and handling are expensed as incurred and outbound freight is not
      billed to customers. Shipping and handling expenses are included in selling
      and
      distribution expenses. The expenses were $1.3million and $462,000 during the
      three months ended December 31, 2006 and 2005, respectively, and were
      $2.9million and $1.6million during the nine months ended December 31, 2006
      and
      2005, respectively.





**Advertising
      costs and promotion expenses**





Advertising
      costs and promotion include salaries for all salesmen and are expensed as
      incurred. The advertising costs and promotion expenses were $12.4millionand
      $4.8million for the three months ended December 31, 2006 and 2005, respectively,
      and were $30.0million and $16.3million during the nine months ended December
      31,
      2006 and 2005, respectively.




**Employees’
      benefits**





Mandatory
      contributions are made to the Government's health, retirement benefit and
      unemployment schemes at the statutory rates in force during the period, based
      on
      gross salary payments. The cost of these payments is charged to the statement
      of
      income in the same period as the related salary cost.





**Comprehensive
      income**





The
      Company has adopted the provisions of Statement of Financial Accounting
      Standards No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"). SFAS
      No.
      130 establishes standards for the reporting and display of comprehensive income,
      its components and accumulated balances in a full set of general-purpose
      financial statements. SFAS No. 130 defines comprehensive income to include
      all
      changes in equity except those resulting from investments by owners and
      distributions to owners, including adjustments to minimum pension liabilities,
      accumulated foreign currency translation, and unrealized gains or losses on
      marketable securities. The comprehensive income was $3.8million and $4.0million
      for the three months ended December31, 2006 and 2005, respectively, and was
      $17.3million and $7.7million during the nine months ended December 31, 2006
      and
      2005, respectively.




17





**Reclassifications**





Certain
      amounts in 2005 have been reclassified to conform to the 2006
      presentation.





**3.
      CONCENTRATION OF CREDIT RISK**





Financial
      instruments that potentially subject the Company to significant concentrations
      of credit risk consist primarily of trade receivable. The Company performs
      ongoing credit evaluations with respect to the financial condition of its
      creditors, but does not require collateral. In order to determine the value
      of
      the Company’s accounts receivable, the Company records a provision for doubtful
      accounts to cover probable credit losses. Management reviews and adjusts this
      allowance periodically based on historical experience and its evaluation of
      the
      collectibility of outstanding accounts receivable. 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 as its export of protein product
      to North America is through a single importer in the US. Amount due from this
      importer accounts for a significant proportion of the Company’s total account
      receivables.




(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.




**4.
      RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS**





**FIN
      48**




In
      July
      2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in
      Income Taxes—an interpretation of FASB Statement No. 109” (“FIN 48”), which
      clarifies the accounting for uncertainty in tax positions. This interpretation
      requires that the Company recognize in its financial statements the impact
      of a
      tax position if that position is more likely than not of being sustained on
      audit, based on the technical merits of the position. FIN 48 is effective for
      fiscal years beginning after December 15, 2006 which is the beginning of the
      Company’s fiscal 2008. The Company is currently evaluating the impact of
      adopting FIN 48 on its financial statements.




18





**SAB
      108**




In
      September, 2006, the Securities and Exchange Commission (“SEC”) issued Staff
      Accounting Bulletin No. 108 (“SAB 108”) which provides interpretive guidance on
      how the effects of the carryover or reversal of prior year misstatements should
      be considered in quantifying a current year misstatement. SAB 108 is effective
      for fiscal years ending after November 15, 2006 and early application is
      encouraged for any interim period of the first fiscal year ending after that
      date. The Company will adopt SAB 108 in the 4 th quarter
      of its fiscal 2007 and is currently evaluating the impact of adopting SAB 108
      on
      its financial statements.





**FAS
      157**




In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      No.
      157 “Defining Fair Value Measurement” (“FAS 157”) which defines fair value,
      establishes a framework for measuring fair value in generally accepted
      accounting principles and expands disclosures about fair value measurements.
      FAS
      157 is effective for financial statements issued for fiscal years beginning
      after November 15, 2007, which is the Company’s fiscal 2009. The Company is
      currently evaluating the impact of adopting FAS 157 on its financial statements.





**FAS
      158**




In
      September 2006, the FASB also issued Statement of Financial Accounting Standards
      No. 158 “Employers’ Accounting for Defined Benefit Pension and Other
      Postretirement Plans, an amendment of FAS Statements No. 87, 88, 106, and
      132(R)” (“FAS 158”). FAS 158 requires an employer to recognize the over-funded
      or under-funded status of a defined benefit postretirement plan as an asset
      or
      liability in its statement of financial position and to recognize changes in
      that funded status in the year in which the changes occur through comprehensive
      income of a business entity. This statement also requires an employer to measure
      the funded status of a plan as of the date of its year-end statement of
      financial position, with limited exceptions. The Company will be required to
      initially recognize the funded status of a defined benefit postretirement plan
      and to provide the required disclosures as of the end of the fiscal year ending
      after December 15, 2006, which for the Company will be the end of fiscal
      2007. The requirement to measure plan assets and benefit obligations as of
      the
      date of the employer's fiscal year-end statement of financial position is
      effective for fiscal years ending after December 15, 2008, or fiscal 2009
      for the Company. The Company does not currently have a defined benefit pension
      plan but is currently evaluating the possible impact of adopting FAS 158 on
      its
      financial statements.




**SEC
      Staff’s letter regarding accounting for stock options under APB
      25**




In
      September 2006, SEC issued a Staff letter regarding several common errors in
      the
      past practices related to the granting of stock options under APB 25 “Accounting
      to Stock Issued to Employees”. This letter provided guidance on what constitutes
      an error and how to correct them. The Company has not granted stock options
      and
      therefore this new pronouncement is not applicable.




19





**5.
      ACCOUNTS RECEIVABLES, NET**





The
      Company's trade receivables, net as at December 31, 2006 and March 13, 2006
      are
      summarized as follows:




(in
                thousands)
            
            **December
                31, 2006**
            
            **March
                31, 2006**Trade
                receivables
            
            $
            6,114
            
            $
            2,957Less:
                Allowance for doubtful accounts
            
            
            575
            
            
            417Trade
                receivables, net
            
            
            5,539
            
            
            2,540Notes
                receivable
            
            
            254
            
            
            -Total
                Accounts receivable
            
            **$**
            **5,793**
            
            **$**
            **2,540**





**6.
      PROPERTY, PLANT AND EQUIPMENT, NET**





(in
                thousands)
            
            **December
                31, 2006**
            
            **March
                31, 2006****Cost:**Buildings
                and leasehold improvement
            
            $
            16,219
            
            $
            7,252Plant
                and machinery
            
            
            21,294
            
            
            7,206Office
                equipment and furnishings
            
            
            2,878
            
            
            988Motor
                vehicles
            
            
            1,055
            
            
            1,21241,446
            
            
            16,658**Less:
                Accumulated depreciation:**Buildings
                and leasehold improvement
            
            
            1,593
            
            
            1,265Plant
                and machinery
            
            
            2,570
            
            
            2,306Office
                equipment and furnishings
            
            
            735
            
            
            336Motor
                vehicles
            
            
            553
            
            
            6315,451
            
            
            4,538Construction
                in progress
            
            
            7,105
            
            
            21,198Property,
                plant and equipment, net
            
            **$**
            **43,100**
            
            **$**
            **33,318**




Depreciation
      expenses was $340,000 and $306,000 for the three months ended December 31,
      2006
      and 2005, respectively, and was $1.0 million and $ 970,000 for the nine months
      ended December 31, 2006 and 2005 respectively.




20





**7.
      LAND USE RIGHTS**





(in
                thousands)
            
            **December
                31, 2006**
            
            **March
                31, 2006****Cost:**
            
            $
            1,708
            
            $
            1,660**Less:
                Accumulated amortization:**
            
            
            142
            
            
            114**Land
                use rights, net**
            
            **$**
            **1,566**
            
            **$**
            **1,546**





Amortization
      expenses was $10,000 and $9,000 for the three months ended December 31, 2006
      and
      2005, respectively, and was $28,000 and $25,000 for the nine months ended
      December 31, 2006 and 2005 , respectively.





**8.
      INVENTORIES**





The
      Company's inventories at December 31, 2006 and March 31, 2006 are summarized
      as
      follows:




(in
                thousands)
            
            **December
                31, 2006**
            
            **March
                31, 2006**Raw
                Materials
            
            $
            1,920
            
            $
            1,985Work
                in Process
            
            
            8,742
            
            
            7,586Finished
                Goods
            
            
            3,472
            
            
            2,131Packing
                Materials & Other Consumables
            
            
            816
            
            
            87Total
            
            **$**
            **14,950**
            
            **$**
            **11,789**





**9.
      DUE FROM/(TO) RELATED PARTIES**





The
      amounts are unsecured, interest-free and have no fixed repayment terms.




**A.
      Classification by name of related parties**





**a.
      Due from related parties**




(in
                thousands)
            
            **December
                31, 2006**
            
            **March
                31, 2006**St.
                Angel (Beijing Business Service)
            
            $
            -
            
            $
            1,761Beijing
                Ludin Xueyuan Trading Co. Ltd
            
            
            219
            
            
            692Beijing
                Ao Naier Feed Stuff LLC
            
            
            381
            
            
            298Sheng
                Zhi Da Dairy Group Corporation
            
            
            675
            
            
            (268
            )Heilongjiang
                Baoquanling Shen Yuan Dairy Co. Ltd
            
            
            1,186
            
            
            226Beijing
                Kelqin Dairy Co. Ltd
            
            
            3,169
            
            
            1,708Beijing
                Honnete Dairy Corporation Ltd
            
            
            16,948
            
            
            4,185Total
                Due from Related Companies
            
            **$**
            **22,578**
            
            **$**
            **8,602**




21




**b.
      Due to related parties**




(in
                thousands)
            
            **December
                31, 2006**
            
            **March
                31, 2006**Heilongjiang
                Baoquanling Shen Yuan Dairy Co. Ltd
            
            $
            -
            
            $
            706Sheng
                Zhi Da Dairy Group Corporation
            
            
            50
            
            
            2,193Beijing
                Honnete Dairy Corporation Ltd
            
            
            17
            
            
            1,339Beijing
                Kelqin Dairy Co. Ltd
            
            
            278
            
            
            63Total
                Due to Related Companies
            
            **$**
            **345**
            
            **$**
            **4,301**





**B.
      Classification of Related Party Transactions by Nature**




**a.** **Due
            from related parties**


(in
                thousands)
            
            **December
                31, 2006**
            
            **March
                31, 2006**Trade
                receivables
            
            $
            3,388
            
            $
            2,018Prepayments
                for goods
            
            
            1,760
            
            
            4,526Other
                receivables
            
            
            17,430
            
            
            2,058**Total**
            
            **$**
            **22,578**
            
            **$**
            **8,602**





**b.
      Due to related parties**





(in
                thousands)
            
            **December
                31, 2006**
            
            **March
                31, 2006**Trade
                payables
            
            $
            278
            
            $
            4,301Advance
                from customers
            
            
            17
            
            
            -Other
                payables
            
            
            50
            
            
            -**Total**
            
            **$**
            **345**
            
            **$**
            **4,301**





Above-mentioned
      entities are considered related parties to the Company because they are
      affiliates of the Company under the common control of the Company’s major
      shareholder.





**10.
      RELATED PARTY TRANSACTIONS**




The
      following related party transactions occurred during the three and nine months
      ended December 31, 2006 and 2005:




In
      the
      three and nine months ended December 31, 2006 and 2005, the Company’s sales to
      the related parties included anhydrous milk fat and Non-Fat Dry Milk to Beijing
      Kelgin Dairy Co., Ltd. and Beijing Honnete Dairy Corporation, Ltd.; formulation
      ingredients to Sheng Zhi Da Dairy Group Corporation, Beijing Ao Naier Feed
      Stuff
      LLC, and Heilongjiang Baoquanling Sheng Yuan Dairy Co., Ltd.; and the Company’s
      name brand products to St Angel (Beijing Business Service) and Luding Xueyuan
      for direct sales, catalogue sales, and regional retail outlets distribution.
      Terms of all the sales are at market prices.




22




**Sales
      to related parties**





**Three
                Months Ended**
              **December
                31**
            
            **Nine
                Months Ended**
              **December
                31**(in
                thousands)
            
            **2006**
            
            **2005**
            
            **2006**
            
            **2005**Heilongjiang
                Baoquanling Sheng Yuan Dairy Co.
            
            $
            1,786
            
            $
            1,144
            
            $
            3,547
            
            $
            3,094Sheng
                Zhi Da Dairy Group Corporation
            
            
            -
            
            
            90
            
            
            -
            
            
            548Beijing
                Kelqin Dairy Co. Ltd
            
            
            2,338
            
            
            -
            
            
            2,766
            
            
            2,111St.
                Angel (Beijing Business Service)
            
            
            -
            
            
            410
            
            
            32
            
            
            1,036Beijing
                Honnete Dairy Corporation Ltd
            
            
            -
            
            
            10,843
            
            
            4,157
            
            
            11,114Beijing
                Ludin Xueyuan Trading Co. Ltd
            
            
            24
            
            
            -
            
            
            52
            
            
            245Total
            
            **$**
            **4,148**
            
            **$**
            **12,487**
            
            **$**
            **10,554**
            
            **$**
            **18,148**




In
      the
      three and nine months ended December 31, 2006 and 2005, the Company’s purchases
      from related parties included whey protein powders from Beijing Kelgin Dairy
      Co.
      Ltd. and Beijing Honnete Dairy Corporation Ltd; various ingredients and
      materials (packaging, etc.) from Sheng Zhi Da Dairy Group Corporation;
      spray-dried milk powder from Heilongjiang Baoquanling Sheng Yuan Dairy Co.
      Ltd.;
      and catalogues, brochures, and marketing materials from Beijing Sheng Long
      Media
      Co., Ltd. Terms of these transactions are all done at market
      prices.





**Purchases
      from related parties**


**Three
                  Months Ended**
                **December
                  31**
              
              **Nine
                  Months Ended**
                **December
                  31**(in
                  thousands)
              
              **2006**
              
              **2005**
              
              **2006**
              
              **2005**Beijing
                  Kelqin Dairy Co. Ltd
              
              $
              614
              
              $
              511
              
              $
              1,686
              
              $
              1,558Sheng
                  Zhi Da Dairy Group Corporation
              
              
              -
              
              
              1,141
              
              
              -
              
              
              2,890Heilongjiang
                  Baoquanling Shengyuan Dairy Co.
              
              
              4,066
              
              
              3,480
              
              
              10,840
              
              
              7,221Beijing
                  Honnete Dairy Corporation Ltd
              
              
              1,357
              
              
              3,062
              
              
              4,700
              
              
              4,523Beijing
                  Ao Naier Feed Stuff LLC
              
              
              -
              
              
              -
              
              
              46
              
              
              -Beijing
                  Sheng Long Media Co. Ltd
              
              
              -
              
              
              -
              
              
              -
              
              
              23Total
              
              **$**
              **6,037**
              
              **$**
              **8,194**
              
              **$**
              **17,272**
              
              **$**
              **16,215**
  23




**11.
      BANK LOANS**





As
      at
      December 31, 2006 and March 31, 2006, the Company had short-term loans from
      banks in the amount of $53.1million and $36.7million bearing interest ranging
      from 5.58% to 6.48% per annum. Such loans are extendable for terms of no less
      than one year to December 2007. The loans were secured by the pledge of certain
      fixed assets held by the Company and its subsidiaries. The value of the fixed
      assets pledged was $24 million and $11.56 million as of December 31, 2006 and
      March 31, 2006, respectively.





There
      are
      no other long term borrowings by the Company at December 31, 2006.




**12.
      INCOME TAXES**





The
      Company’s income before income taxes was comprised of the following for the
      three and nine months ended December 31, 2006 and 2005,
      respectively.




**Three
                Months Ended**
              **December
                31,**
            
            **Nine
                Months Ended**
              **December
                31,**(in
                  thousands)
            
            **2006**
            
            **2005**
            
            **2006**
            
            **2005**United
                States
            
            $
            (182
            )
            $
            (74
            )
            $
            (332
            )
            $
            (59
            )PRC
            
            
            3,388
            
            
            4,061
            
            
            17,877
            
            
            7,412Total
            
            **$**
            **3,206**
            
            **$**
            **3,987**
            
            **$**
            **17,545**
            
            **$**
            **7,353**




Income
      taxes are calculated on a separate entity basis. There currently is no tax
      benefit or burden recorded in the United States.





The
      provisions for income taxes for the three and nine months ended December 31,
      2006 and 2005, respectively, are summarized as follows:




**Three
                Months Ended**
              **December
                31,**
            
            **Nine
                Months Ended**
              **December
                31,**(in
                  thousands)
            
            **2006**
            
            **2005**
            
            **2006**
            
            **2005**Current
            
            $
            287
            
            $
            209
            
            $
            1,733
            
            $
            514Deferred
            
            
            -
            
            
            -
            
            
            -
            
            
            -Total
            
            **$**
            **287**
            
            **$**
            **209**
            
            **$**
            **1,733**
            
            **$**
            **514**





**13.
      NET INCOME PER SHARE (EPS)**





SFAS
      128
“Earnings Per Share” requires the Company to calculate its net income per share
      based on basic and diluted net income per share, as defined. Basic EPS excludes
      dilution and is computed by dividing net income by the weighted average number
      of shares outstanding for the period. Diluted EPS reflects the potential
      dilution that could occur if securities or other contracts to issue common
      stock
      were exercised or converted into common stock. The dilutive effect of
      outstanding options and warrants, if exists, will be reflected in diluted EPS
      using the treasury stock method. Under the treasury stock method, options and
      warrants will generally have a dilutive effect when the average market price
      of
      common stock during the period exceeds the exercise price of the options.




**For
                the Three Months Ended December 31,**(in
                  thousands, except for per share amounts)
            
            **2006**
            
            **2005****Income**
            
            **Shares**
            
            **Per-Share**
            
            **Income**
            
            **Shares**
            
            **Per-Share****(Numerator)**
            
            **(Denominator)**
            
            **Amount**
            
            **(Numerator)**
            
            **(Denominator)**
            
            **Amount****Basic
                EPS**Net
                income available to common stockholders
            
            $
            2,919
            
            
            50,001
            
            $
            0.06
            
            $
            3,778
            
            
            50,001
            
            $
            0.08**Diluted
                EPS**Net
                income available to common stockholders plus assumed
                conversions
            
            $
            2,919
            
            
            50,001
            
            $
            0.06
            
            $
            3,778
            
            
            50,001
            
            $
            0.08




24




**For
                the Nine Months Ended December 31,**(in
                  thousands, except for per share amounts)
            
            **2006**
            
            **2005****Income**
              **(Numerator)**
            
            **Shares**
              **(Denominator)**
            
            **Per-Share**
              **Amount**
            
            **Income**
              **(Numerator)**
            
            **Shares**
              **(Denominator)**
            
            **Per-Share**
              **Amount****Basic
                EPS**Net
                income available to common stockholders
            
            $
            15,812
            
            
            50,001
            
            $
            0.32
            
            $
            6,838
            
            
            48,445
            
            $
            0.14**Diluted
                EPS**Net
                income available to common stockholders plus assumed
                conversions
            
            $
            15,812
            
            
            50,001
            
            $
            0.32
            
            $
            6,838
            
            
            48,445
            
            $
            0.14





**14.
      COMMITMENTS AND CONTINGENCIES**





**A.
      CAPITAL COMMITMENTS**





As
      of
      December 31, 2006, the Company had no significant capital commitments required
      for disclosure. **





**B.
      LEASE COMMITMENTS**





The
      lease
      commitments of the Company as of December 31, 2006 were as follows:





(in
                thousands)
            
            **Lease
                terms**
            
            **Monthly
                payment**
            
            **Mar-07**
            
            **Mar-08**
            
            **Mar-09**Office
                facilities in Beijing (SOHO903)
            
            
            20-Apr-05
            
            
            14-Dec-07
            
            $
            7
            
            $
            22
            
            $
            62
            
            
            -Office
                facilities in Beijing (SOHO2903-2905)
            
            
            15-Dec-04
            
            
            14-Dec-07
            
            
            11
            
            
            33
            
            
            92
            
            
            -Office
                facilities in Beijing
            
            
            1-Jan-06
            
            
            31-Dec-07
            
            
            4
            
            
            12
            
            
            36
            
            
            -**Total
                rent expenses**
            
            
            
            
            
            
            
            
            
            
            **$**
            **67**
            
            **$**
            **190**
            
            
            -




25




**C.
      LEGAL PROCEEDINGS**





None.





**D.
      GUARANTEES**


As
      at
      December 31, 2006, the Company had a guarantee given to the Zhangbei Branch
      of
      the Agriculture Bank of China in respect of bank loans of $ 1.1 million in
      total
      extended to 104 farmers in the Zhangjiakou REgion. These bank loans mature
      on
      December 25, 2007. The potential loss from this guarantee could not be estimated
      as the Company was unable to assess the financial position of individual
      farmers. However, based on general economic information available for this
      area,
      the Company believes that these loans will be repaid by the farmers upon
      maturity. Therefore, no liability was recorded on the balance sheet in relation
      to these guarantees.




**15.
      RESTATEMENT**




We
      are
      filing this amendment to the Synutra International, Inc. Quarterly Report on
      Form 10-Q for the fiscal quarter ended December 31, 2006 to include or revise
      information necessary to improve the disclosures as follows:





**Adjustments**




·
            Restricted
                cash, included as cash and cash equivalents in the Original Filing,
                represents cash deposited with the banks as guarantees for the issuance
                of
                promissory notes. Under US GAAP, restricted cash does not meet the
                definition of cash and cash equivalents, and separate disclosure
                on the
                face of balance sheet is required. In addition, the change in the
                restricted cash balance, given its use to secure promissory notes,
                should
                have been presented as an investing activity. Therefore, restricted
                cash
                of $17.8 million and $16.4 million is reclassified and is presented
                as an
                individual item on our consolidated balance sheets as of December
                31, 2006
                and March 31, 2006, respectively. In addition, the decrease in restricted
                cash of $1.4 million and $471,000 is reclassified from operating
                to
                investing activities in the consolidated statements of cash flows
                for nine
                months ended December 31, 2006 and 2005, respectively.




26




·
            As
                at December 31, 2006 and March 31, 2006, the Company had provided
                bank
                loan guarantee of $1.1 million and $1.1 million in total extended
                to 104
                farmers in the Zhangbei area. This was incorrectly presented as gross
                other receivable and other payable in the Original filing. The Company
                has
                revised the balance sheet to eliminate both the other receivable
                and other
                payable.




·
            Land
                use rights, which represents a prepaid lease payment, is reclassified
                as
                an individual line item on our consolidated balance sheets as of
                December
                31, 2006 and March 31, 2006, respectively. It has been included as
                part of
                the property, plant and equipment, net in the Original Filing.




·
            In
                fiscal year 2007, we acquired certain fixed assets from Zheng Lan
                Qi
                County and subsequently established a new subsidiary with these assets.
                In
                conjunction with the acquisition, the local government provided an
                irrevocable subsidy of $4.1 million which we recognized as subsidy
                income
                for the fiscal year ended March 31, 2007. Subsequent to the Original
                Filing, we determined that the $4.1 million should be deferred and
                netted
                against the depreciation expenses of the assets acquired, as this
                method
                effectively matches the related depreciation of the cost of assets
                with
                the corresponding grant income. The effect of this adjustment is
                a
                decrease in subsidy income by $1.3 million and $4.1 million for the
                three
                and nine months ended December 31, 2006, respectively. We did not
                recognize any of the subsidies during the three and nine months ended
                December 31, 2006 as the asset had not yet been placed in
                service.




·
            Certain
                short term notes payable balances, in the amount of $19.7 million
                and
                $18.5 million, is reclassified to short-term loan as of December
                31 and
                March 31, 2006, respectively, as the ultimate lender of the note
                is an
                accredited financial
                institution.




·
            The
                cash consideration given to our retailers, who purchased our products
                directly from our distributors, is reclassified as a reduction of
                sales.
                It was recorded as advertising and promotion expenses in the Original
                Filing. The effects of this adjustment are a decrease in sales and an
                increase in advertising and promotion expenses of $336,000 and $862,000
                for the three and nine months ended December 31, 2006,
                respectively.




·
            The
                amount of free products provided to our customers is reclassified
                as cost
                of sales for the three and nine months ended December 31, 2006 and
                2005.
                It had been recorded as advertising and promotion expense in the
                Original
                Filing. The effects of this adjustment are an increase in cost of
                sales
                and a decrease in advertising and promotion expense of $462,000 and
                $970,000 for the three and nine months ended December 31, 2006,
                respectively.




**Reclassifications**





Based
      on
      the above adjustments, we also made reclassifications on our consolidated
      financial statements as follows for the current period and the prior period
      presentation has been conformed:




·
            Accounts
                receivable and notes receivable have been combined as account receivable.
                They used to be reported separately.The
                combined amounts of Accounts receivable were $5.8 million and $2.5
                million
                as ofDecember
                31 and March 31, 2006,
                respectively.




27




·
            Construction
                in progress has been included under property, plant and equipment,
                net. It
                used to be reported separately. The amounts of construction in progress
                were $7.1 million and $21.2 million as of December 31 and March 31,
                2006,
                respectively.





·
            Accounts
                payable and notes payable have been combined as accounts payable.
                They
                used to be reported separately.The
                combined amounts of accounts payable were $13.1million and $13.1
                million
                as ofDecember
                31 and March 31, 2006,
                respectively.





·
            Accrued
                expense, other Payable and other Accrued liabilities have been combined
                as
                other current liabilities. They used to be reported separately. The
                combined amounts of other current liabilities were $8.6 million and
                $5.1
                million as of December 31 and March 31, 2006,
                respectively.





·
            Retained
                earnings and reserves have been combined as retained earnings. They
                used
                to be reported separately. The combined amounts of retained earnings
                and
                reserves were $27.5 million and $11.7 million as of December 31 and
                March
                31, 2006, respectively.





·
            Government
                grants other than those related to assets, which used to be reported
                as a
                separate line item, have been reported as other income, net. The
                effect of
                the reclassification is an increase of $136,000 and $468,000 on other
                income, net for the three and nine months ended December 31, 2006,
                respectively. For the three and nine months ended December 31, 2005,
                other
                income increased by $66,000 and $713,000, respectively. These subsidies
                are not related to fixed asset government explained
                above.




The
      consolidated balance sheets, as of December 31 and March 3 1,
      2006,
      have been adjusted as follows:





**December
                31, 2006**
            
            **March
                31, 2006****(As**
            
            **Adjustments
                &**
            
            **(As**
            
            **(As**
            
            **Adjustments
                &**
            
            **(As**(In
                thousands)
            
            **Reported)**
            
            **Reclassifications**
            
            **Restated)**
            
            **Reported)**
            
            **Reclassifications**
            
            **Restated)****Current
                Assets:**Cash
                and cash equivalents
            
            $
            24,492
            
            $
            (17,826
            )
            $
            6,666
            
            $
            22,134
            
            $
            (16,457
            )
            $
            5,677Restricted
                cash
            
            
            -
            
            
            17,826
            
            
            17,826
            
            
            -
            
            
            16,457
            
            
            16,457Short-term
                investment
            
            
            -
            
            
            -
            
            
            -
            
            
            43
            
            
            (43
            )
            
            -Notes
                receivable
            
            
            254
            
            
            (254
            )
            
            -
            
            
            -
            
            
            -
            
            
            -Accounts
                receivable
            
            
            5,539
            
            
            254
            
            
            5,793
            
            
            2,540
            
            
            -
            
            
            2,540Other
                receivable, net
            
            
            4,192
            
            
            (1,112
            )
            
            3,080
            
            
            2,230
            
            
            -
            
            
            2,230Deferred
                expenses and other current assets
            
            
            15
            
            
            
            
            
            15
            
            
            126
            
            
            13
            
            
            139**Total
                current assets**
            
            **$**
            **75,954**
            
            **$**
            **(1,112**
            **)**
            **$**
            **74,842**
            
            **$**
            **47,818**
            
            **$**
            **(30**
            **)**
            **$**
            **47,788****Property,
                plant and equipment, net**
            
            
            37,623
            
            
            5,477
            
            
            43,100
            
            
            13,728
            
            
            19,590
            
            
            33,318**Construction
                in progress**
            
            
            7,105
            
            
            (7,105
            )
            
            -
            
            
            21,198
            
            
            (21,198
            )
            
            -**Land
                use rights, net**
            
            
            -
            
            
            1,566
            
            
            1,566
            
            
            -
            
            
            1,546
            
            
            1,546**Other
                Assets**
            
            
            217
            
            
            62
            
            
            279
            
            
            265
            
            
            92
            
            
            357**TOTAL
                ASSETS**
            
            **$**
            **120,899**
            
            **$**
            **(1,112**
            **)**
            **$**
            **119,787**
            
            **$**
            **83,009**
            
            **$**
            -
            
            **$**
            **83,009****Current
                Liabilities:**Bank
                loans
            
            
            33,364
            
            
            19,722
            
            
            53,086
            
            
            13,134
            
            
            23,546
            
            
            36,680Notes
                payable
            
            
            20,234
            
            
            (20,234
            )
            
            -
            
            
            19,113
            
            
            (19,113
            )
            
            -Accounts
                payable
            
            
            12,622
            
            
            512
            
            
            13,134
            
            
            12,580
            
            
            499
            
            
            13,079Other
                payables
            
            
            6,141
            
            
            (1,112
            )
            
            5,029
            
            
            4,570
            
            
            -
            
            
            4,570**Total
                current liabilities**
            
            **$**
            **78,560**
            
            **$**
            **(1,112**
            **)**
            $
            **77,448**
            
            **$**
            **57,126**
            
            **$**
            **4,932**
            
            **$**
            **62,058****Long
                term debts**
            
            
            -
            
            
            -
            
            
            -
            
            
            4,932
            
            
            (4,932
            )
            
            -**Deferred
                income**
            
            
            -
            
            
            4,098
            
            
            4,098
            
            
            -
            
            
            -
            
            
            -**Total
                liabilities**
            
            **$**
            **78,560**
            
            **$**
            **2,986**
            
            **$**
            **81,546**
            
            **$**
            **62,058**
            
            **$**
            -
            
            **$**
            **62,058****Shareholders'
                equity:**Retained
                earnings
            
            
            31,506
            
            
            (4,030
            )
            
            27,476
            
            
            11,664
            
            
            -
            
            
            11,664Accumulated
                other comprehensive income
            
            
            2,601
            
            
            (67
            )
            
            2,534
            
            $
            1,056
            
            $
            -
            
            $
            1,056**Total
                shareholders' equity**
            
            **$**
            **42,338**
            
            **$**
            **(4,097**
            **)**
            **$**
            **38,241**
            
            **$**
            **20,951**
            
            **$**
            -
            
            
            **20,951****TOTAL
                LIABILITIES AND**
              **SHAREHOLDERS'
                EQUITY**
            
            **$**
            **120,898**
            
            **$**
            **(1,111**
            **)**
            **$**
            **119,787**
            
            **$**
            **83,009**
            
            **$**
            -
            
            **$**
            **83,009**




28




Consolidated
      Statements of Income for the three and nine months ended December 31,2006 and
      2005, have been adjusted as follows:




**Three
                  Months Ended**
              
              **Nine
                  Months Ended**(In
                  thousands, except for per share amounts)
              
              **December
                  31, 2006**
              
              **December
                  31, 2006****(As**
              
              **Adjustments
                  &**
              
              **(As**
              
              **(As**
              
              **Adjustments
                  &**
              
              **(As****Reported)**
              
              **Reclassifications**
              
              **Restated)**
              
              **Reported)**
              
              **Reclassifications**
              
              **Restated)**Net
                  sales
              
              $
              56,650
              
              $
              (336
              )
              $
              56,314
              
              $
              151,901
              
              $
              (862
              )
              $
              151,039Cost
                  of sales
              
              
              27,721
              
              
              462
              
              
              28,183
              
              
              77,069
              
              
              970
              
              
              78,039**Gross
                  profit**
              
              
              **28,928**
              
              
              **(798**
              **)**
              
              **28,131**
              
              
              **74,832**
              
              
              **(1,832**
              **)**
              
              **73,000**Advertising
                  and promotion expenses
              
              
              13,217
              
              
              (798
              )
              
              12,419
              
              
              31,786
              
              
              (1,833
              )
              
              29,953General
                  and administrative expenses
              
              
              1,965
              
              
              71
              
              
              2,036
              
              
              4,282
              
              
              158
              
              
              4,440Total
                  operating expense
              
              
              25,275
              
              
              (727
              )
              
              24,548
              
              
              56,397
              
              
              (1,674
              )
              
              54,723**Income
                  from operations**
              
              **$**
              **3,653**
              
              **$**
              **(71**
              **)**
              **$**
              **3,583**
              
              **$**
              **18,434**
              
              **$**
              **(157**
              **)**
              **$**
              **18,277**Subsidy
                  income
              
              
              1,409
              
              
              (1,409
              )
              
              -
              
              
              4,498
              
              
              (4,498
              )
              
              -Interest
                  expense
              
              
              (704
              )
              
              156
              
              
              (548
              )
              
              (1,591
              )
              
              272
              
              
              (1,319
              )Other
                  income, net
              
              
              12
              
              
              50
              
              
              62
              
              
              2
              
              
              354
              
              
              356**Income
                  before provision for income tax**
              
              **$**
              **4,479**
              
              **$**
              **(1,273**
              **)**
              **$**
              **3,206**
              
              **$**
              **21,575**
              
              **$**
              **(4,030**
              **)**
              **$**
              **17,545****Net
                  income attributable to shareholders**
              
              **$**
              **4,192**
              
              **$**
              **(1,273**
              **)**
              **$**
              **2,919**
              
              **$**
              **19,842**
              
              **$**
              **(4,030**
              **)**
              **$**
              **15,812**Other
                  comprehensive income
              
              
              893
              
              
              (44
              )
              
              849
              
              
              1,546
              
              
              (68
              )
              
              1,478**Comprehensive
                  income**
              
              **$**
              **5,085**
              
              **$**
              **(1,317**
              **)**
              **$**
              **3,768**
              
              **$**
              **21,388**
              
              **$**
              **(4,098**
              **)**
              **$**
              **17,290****Earning
                  per share—basic and diluted**
              
              **$**
              **0.08**
              
              **$**
              **(0.02**
              **)**
              **$**
              **0.06**
              
              **$**
              **0.40**
              
              **$**
              **(0.08**
              **)**
              **$**
              **0.32****Weighted
                  average common share outstanding-basic and diluted**
              
              
              **50,001**
              
              
              -
              
              
              **50,001**
              
              
              **50,001**
              
              
              -
              
              
              **50,001**




29




**Three
                Months Ended**
            
            **Nine
                Months Ended****December
                31, 2005**
            
            **December
                31, 2005****(As**
            
            **Adjustments
                &**
            
            **(As**
            
            **(As**
            
            **Adjustments
                &**
            
            **(As****Reported)**
            
            **Reclassifications**
            
            **Restated)**
            
            **Reported)**
            
            **Reclassifications**
            
            **Restated)**(In
                thousands)General
                and administrative expenses
            
            
            1,282
            
            
            -
            
            
            1,282
            
            
            4,206
            
            
            96
            
            
            4,302Income
                of operations
            
            
            4,344
            
            
            -
            
            
            4,344
            
            
            8,295
            
            
            (96
            )
            
            8,199Subsidy
                income
            
            
            66
            
            
            (66
            )
            
            -
            
            
            713
            
            
            (713
            )
            
            -Interest
                expenses
            
            
            (299
            )
            
            -
            
            
            (299
            )
            
            (1,587
            )
            
            97
            
            
            (1,490
            )Other
                income, net
            
            
            (126
            )
            
            66
            
            
            (60
            )
            
            (175
            )
            
            713
            
            
            538





Consolidated
      Statements of Cash Flow for the nine months ended December 31, 2006 and 2005,
      have been adjusted as follows:




**Nine
                  Months Ended****December
                  31, 2006****(As**
              
              **Adjustments
                  &**
              
              **(As****Reported)**
              
              **Reclassifications**
              
              **Restated)**(In
                  thousands)**Cash
                  flow from operating activities:**Net
                  income
              
              $
              19,842
              
              $
              (4,030
              )
              $
              15,812Changes
                  in operating assets and liabilities:Other
                  receivable, net
              
              
              (1,962
              )
              
              1,112
              
              
              (850
              )Notes
                  payable
              
              
              1,121
              
              
              (1,121
              )
              
              -Accounts
                  payable
              
              
              26
              
              
              13
              
              
              39Other
                  payables and accrued liabilities
              
              
              4,613
              
              
              (1,112
              )
              
              3,501Deferred
                  revenue
              
              
              -
              
              
              4,098
              
              
              4,098Net
                  cash provided by operating activities
              
              **$**
              **(3,672**
              **)**
              **$**
              **(1,039**
              **)**
              **$**
              **(4,711**
              )**Cash
                  flow from investing activities:**Restricted
                  cash
              
              
              -
              
              
              (1,369
              )
              
              (1,369
              **)****Net
                  cash provided by (used in)investing activities**
              
              **$**
              **(10,814**
              **)**
              **$**
              **(1,370**
              **)**
              **$**
              **(12,184**
              )**Cash
                  flow from financing activities:**Borrowing
                  of bank loans
              
              
              15,299
              
              
              40,653
              
              
              55,952Repayment
                  of bank loans
              
              
              -
              
              
              (39,546
              )
              
              (39,546
              )**Net
                  cash provided by financing activities**
              
              **$**
              **15,299**
              
              **$**
              **1,107**
              
              
              **16,406****Net
                  change in increase in cash and cash equivalents**
              
              
              **812**
              
              
              **(1,301**
              **)**
              
              **(489**
              **)**Effect
                  of exchange rate changes on cash and cash equivalents
              
              
              1,546
              
              
              (68
              )
              
              1,478Cash
                  and cash equivalents, beginning of period
              
              
              22,134
              
              
              (16,457
              )
              
              5,677**Cash
                  and cash equivalents, end of period**
              
              **$**
              **24,493**
              
              **$**
              **(17,827**
              **)**
              **$**
              **6,666**





30


**Nine
                  Months Ended****December
                  31, 2005****(As**
              
              **Adjustments
                  &**
              
              **(As****Reported)**
              
              **Reclassifications**
              
              **Restated)**(in
                  thousands)**Cash
                  flow from operating activities:**Changes
                  in operating assets and liabilities:Notes
                  payable
              
              $
              (2,026
              )
              $
              1,381
              
              $
              (645
              )**Net
                  cash provided by operating activities**
              
              
              **9,047**
              
              
              **1,381**
              
              
              **10,428****Cash
                  flow from investing activities:**Change
                  of Restricted cash
              
              
              -
              
              
              (471
              )
              
              (471
              )**Net
                  cash provided by (used in)investing activities**
              
              
              **(6,805**
              **)**
              
              **(471**
              **)**
              
              **(7,276**
              **)****Cash
                  flow from financing activities:**Borrowing
                  of bank loans
              
              
              166
              
              
              45,857
              
              
              46,023Repayment
                  of bank loans
              
              
              -
              
              
              (47,238
              )
              
              (47,238
              )**Net
                  cash provided by financing activities**
              
              
              **584**
              
              
              **(1,381**
              **)**
              
              **(797**
              **)****Net
                  change in increase in cash and cash equivalents**
              
              
              **2,825**
              
              
              **(470**
              **)**
              
              **2,355**Effect
                  of exchange rate changes on cash and cash equivalents
              
              
              817
              
              
              -
              
              
              817**Cash
                  and cash equivalents, beginning of period**
              
              
              **16,085**
              
              
              **(10,273**
              **)**
              
              **5,812****Cash
                  and cash equivalents, end of period**
              
              **$**
              **19,728**
              
              **$**
              **(10,
                  744**
              **)**
              **$**
              **8,984**





31




**ITEM
      2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
      RESULTS OF OPERATIONS**





**Organizational
      structure**





Through
      its wholly owned subsidiary, Synutra Inc., an Illinois corporation (“Synutra
      Illinois”), Synutra International, Inc. owns all of the equity interests of five
      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,
      pregnant women and nursing mothers, and other adults under the brand names
      of
      Super, U-Smart, U-Strong, and National Standards. Approximately 90% of the
      revenue for the fiscal year ended March 31, 2006 was from pediatric nutrition
      products and the rest from adult and other products. In September 2005, Synutra
      launched a new rice cereal product line, and in March 2006 the Company launched
      new premium infant formula products and line extensions. As supplemental foods
      to infant and children formula products, management believes that rice cereal
      products possess significant market potential. The new premium products and
      line
      extensions were designed to capture the fastest growing segment of the infant
      formula market in China. At the same time, Synutra also began to make and sell
      non-fat dry milk, anhydrous milk-fat, as well as certain ingredients of
      nutritional supplements.





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. In
      September, 2006 Qingdao St. George Dairy Co., Ltd. incorporated into its
      existing operations the research and development functions of the then dissolved
      Qingdao Mother and Infant Nutrition Research and Development Company, Ltd.





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





32




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 was 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. In July 2006 Qingdao Mother and Infant Nutrition Research
      Company Limited was dissolved.





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, 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, the Company issued 48,879,500 shares of its common
      stock in exchange for all of the issued and outstanding shares of Synutra
      Illinois that owned all the registered capital of the six subsidiaries (the
      “Exchange”). As a result of this Exchange, Synutra Illinois became a wholly
      owned subsidiary of the Company.





33




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.
      (OTCBB: 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.





On
      November 6, 2006, the Company consummated a transaction with the Department
      of
      Finance of Zheng Lan Qi (County) of Inner Mongolia in which the Company acquired
      certain assets owned by them including approximately $ 256,000 in land use
      rights and $5,635,000 in plant and buildings under construction. The transaction
      was consummated in order to establish a wholly foreign-owned company to produce
      milk fat and other diary-based food ingredients. The agreement, provided that
      the effective date of the transaction was when the Company received 60% of
      the
      non refundable subsidy of RMB 30,000,000 (approximately $3,800,000). This
      occurred during September 2006 and thus the assets were recorded during that
      period, notwithstanding that the official ownership certificates have not yet
      been obtained. The non refundable subsidy was received in two installments
      and
      was recorded in the periods received as subsidy income. The acquisition was
      considered immaterial since the acquired assets only comprise approximately
      5%
      of the Company’s total assets. No additional disclosures are deemed necessary in
      this filing.




34




In
      November, 2006 Zhangjiakou Sheng Yuan Co., Ltd., one of the Company’s operating
      subsidiaries, entered into an agreement with the shareholders of Inner Mongolia
      Meng Yuan Food Co., Ltd. (“Meng Yuan”) to acquire 100% of the equity interest in
      Meng Yuan for a consideration of about $900,000. At the close of the transaction
      Meng Yuan transferred assets under its control to Zhangjiakou which included
      land use rights, plant equipment and plant buildings under construction. The
      Meng Yuan project is anticipated to be put in service in mid 2007 and it is
      designed to produce 7,200 tons per year infant formula products. The transfer
      of
      the above assets and the payment of the considerations have been accounted
      for
      in this quarterly report and no additional disclosure is deemed necessary.





On December
      8, 2006, the Company’s subsidiary, Qingdao ST George Dairy Co., Ltd., entered
      into an agreement with the owners of Cangshan Tian Fa Bio-chemical Co., Ltd.
      (“Tian Fa”), a chondroitin sulfates supplier of the Company, to acquire a 51%
      equity stake in Tian Fa from its owners for a consideration of $ 196,000. The
      consideration was not paid and the transaction was terminated with mutual
      consent on December 18, 2006, due to differences on business directions. Qingdao
      ST George Dairy Co., Ltd. ceased to be a shareholder of Tian Fa on the same
      date.





**RESULTS
      OF OPERATIONS**





**Three
      Months Ended December 31, 2006 Compared to Three Months Ended December 31,
      2005**





**Sales**





Sales
      for
      the three months ended December 31, 2006 increased by $12.5 million or28.6%
      to
      $56.3 million from $43.8 million for the three months ended December 31, 2005.





Increase
      in volume of products sold was due in part to greater market penetration as
      a
      result of various measures including changes made by management to incentive
      programs and policies affecting the Synutra sales system. Such changes enhanced
      sales force productivity through targeted resource allocation down to the store
      level, and strengthened promotional efforts in the medium sized city markets
      and
      rural markets of China by aligning bonuses with sales performance.





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.
      The total revenue also included sales generated from processing and packaging
      of
      nutritional supplement ingredients, anhydrous milk-fat, non-fat dry milk, and
      toll packaging and blending services.





a.
            The
                tons sold of traditional main products increased to7,400 tons in
                the three
                months ended December 31, 2006 from 5,200 tons in the three months
                ended
                December 31, 2005, resulting in an increase of $11.4 million in gross
                sales




35




b.
            Higher
                average selling price also contributed to the increase in sales.
                For the
                three months ended December 31, 2006, the average selling price of
                the
                Company’s traditional main products increased from $5,200 to $5,900 per
                ton, resulting in an increase of $4.7 million in gross sales.





c.
            New
                product launches contributed $4.8 million to gross sales for the
                three
                months ended December 31, 2006, reflecting a net increase of $1.9
                million
                in new product contributions over the amount of $2.9 million for
                the same
                three months the year before.





d.
            Revenue
                generated from ancillary products and services included sales of
                dairy and
                other ingredients and packaging materials to industry customers,
                and toll
                drying, packaging and blending services which amounted to $8.4 million
                and
                $13.9 million for the three months ended December 31 of 2006 and
                2005
                respectively. The decrease of $5.5 million partially offset the sales
                growth as discussed above.





The
      decrease in revenue from ancillary product and services for the three months
      ended December 31, 2006 was a result of tight market supply of dairy ingredients
      and reduction in our excess production capacities available for other industry
      customers.





For
      the
      three months ended December 31, 2006, the Company generated approximately 98.7%
      of its traditional main products sales revenue of $43.1 million through its
      wholesale distributor networks and about 1.3% through supermarket retailers.
      Of
      the traditional main products sales revenue of $27.0million generated for the
      three months period ended December 31, 2005, about 98.8% was from distributors
      and about 1.2% from supermarket retailers.





Management
      believes that the overall infant formula industry in China has grown faster
      than
      its traditional natural growth due to increased consumer recognition and
      acceptance of the products, especially Synutra’s name-brand products. Management
      believes Synutra name brand product lines have gained recognition in the
      marketplaces where it operates and thus has captured a greater portion of the
      increased growth experienced by the industry. In addition, management believes
      premium products with a higher margin have grown faster in the period across
      the
      industry.





**Cost
      of Sales**





Cost
      of
      sales for the three months ended December 31, 2006 increased by $253,000 to$28.2
      million from $27.9 million for the three months ended December 31, 2005.





The
      cost
      of traditional main products for the three months ended December 31, 2006
      increased to $15.5 million from $11.2 million for the three months ended
      December 31, 2005. The increase of $4.3 million 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.
      Among
      the $4.3 million increase related to the traditional main products, the increase
      of 2,200 tons sold of the traditional main products resulted in a $4.7 million
      cost increase. The average cost per unit decreased by $63 per metric ton,
      resulting in a $461,000 cost decrease for the three months ended December 31,
      2006.





36




The
      launch of new products accounted for an increase of $2.1 million in the total
      cost of sales for the three months ended December 31, 2006 compared to the
      three
      months ended December 31, 2005.





The
      total
      cost of sales also included costs associated with processing and packaging
      of
      nutritional supplement ingredients, anhydrous milk-fat, non-fat dry milk, and
      toll packaging and blending services which decreased $6.1 million to $7.9
      million for the three months ended December 31, 2006 from $14.1 million in
      the
      same period prior year. This cost decrease was in proportion to the level of
      business activities in these areas. Due to the fact that such non-core business
      activities are carried out only at times when excess capacities are available,
      their output and related costs tend to fluctuate since related sales and service
      contracts are often made on an ad hoc basis.





**Gross
      Profit**





Concurrent
      with the sales increase in the three months ended December 31, 2006 compared
      to
      2005, the Company experienced a significant increase in gross profit. This
      increase was primarily a result of increased volume of products sold and the
      average sales price during the year. Due to implementation of targeted sales
      incentive programs, sales of the higher margin lines of products increased
      more,
      contributing to the increase in gross margin for these traditional main
      products.





Gross
      profit was $28.1 million or 50.0% of sales for the three months ended December
      31, 2006, compared to $15.9 million or36.2% of sales for the three months ended
      December 31, 2005, an increase of $12.3 million or77.2%.





The
      sales
      of traditional main products contributed $27.6 million of gross profit for
      the
      three months ended December 31, 2006, compared to $15.8 million of gross profit
      for the three months ended December 31, 2005. New product launches accounted
      for
      $64,000 in gross profit for the three months ended December 31, 2006, as
      compared to $227,000 for the same three months period the year before. Other
      non-core products and services accounted for $469,000 in gross profit for the
      three months ended December 31, 2006, as compared to a loss of $143,000 for
      the
      three months ended December 31, 2005.





**Selling
      and Distribution Expenses**





Selling
      and distribution expenses increased by $4.7 million or 85.5% to $10.1 million
      for the three months ended December 31, 2006, as compared to $5.4 million for
      the three months ended December 31, 2005. The increase was a result of
      increased transportation and travel expenses in proportion to the increase
      in
      sales volume, in addition to increases in expenses such as wages. ** The
      total
      compensation to the sales force increased by $1.3 million from $1.1 million
      in
      the three months ended December 31, 2005 to $2.5 million in the three months
      ended December 31, 2006. The increase was due to the hiring of additional sales
      personnel in response to expanding business and greater market penetration.
      In
      the meantime shipping and handling expenses increased by $840,000 from $462,000
      in the three months ended December 31, 2005 to $1.3 million in the three months
      ended December 31, 2006, proportionate to the increase in sales; and travel
      expenses increased by $152,000 from $383,000 in the three months ended December
      31, 2005 to $536,000 in the three months ended December 31, 2006. The Company
      continued to expand its sales promotion efforts both in rural and urban areas
      by
      utilizing motorized marketing and sales teams to expand the reach of its
      products and to build brand image by participating in trade shows and in other
      marketing activities. These efforts accounted for much of the increases in
      expenses.




37




**Advertising
      and Sales Promotion Expenses**





Advertising
      and sales promotion increased by $7.6 million or158.2% to $12.4 million for
      the
      three months ended December 31, 2006, as compared to $4.8 million for the three
      months ended December 31, 2005 as a result of increased advertising and
      promotional activities. The major components of advertising and sales promotion
      expenses are placement of advertisements with major media outlets and points
      of
      sale and community promotional activities.




(in thousands)
              
              **Three
                  Months Ended**
                **December
                  31,****2006**
              
              **2005**
              
              **change
                  in $**
              
              **change
                  in %**Advertising
              
              $
              2,965
              
              $
              1,039
              
              $
              1,926
              
              
              185.4
              %Sales
                  promotion
              
              
              9,454
              
              
              3,770
              
              
              5,684
              
              
              150.8
              %**Totals**
              
              **$**
              **12,419**
              
              **$**
              **4,809**
              
              **$**
              **7,610**
              
              
              158.2
              %





**General
      and Administrative Expenses**





General
      and administrative expenses increased by $754,000 or 58.8% to $2.0 million
      for
      the three months ended December 31, 2006, as compared to $1.3 million for the
      three months ended December 31, 2005. Most of the increases were for staff
      salaries, management expenses, and legal, accounting, and consulting costs
      related to corporate transactions and the costs associated with operating a
      public company.





**Income
      from Operations**





Based
      on
      the sales increase of $12.5million or 28.6% and the cost of sales increase
      of
      $253,000 for the three months ended December 31, 2006, gross profit increased
      by
      $12.3 million or 77.2% compared to the three months ended December 31, 2005.
      In
      the meantime, operational expenses also increased by approximately $13.0 million
      from $11.5 million for the three months ended December 31, 2005 to $24.5 million
      for the respective period ended December 31, 2006. As a result, income from
      operations was $3.6 million for the three months ended December 31, 2006, as
      compared to $4.3 million for the three months ended December 31, 2005.





**Interest
      expense**





Interest
      expense increased by $249,000 to $548,000 for the three months ended December
      31, 2006, as compared to $299,000 for the three months ended December 31, 2005,
      due to the increasing borrowing activities took place in the fiscal quarter.




38




**Other
      Income (Expenses), Net**





Other
      income, net was $62,000 for the three months ended December 31, 2006, and other
      expense, net was $60,000 for the three months ended December 31, 2005. The
      Company incurred these net income or expenses mainly as a result of Subsidy
      income from local governments increased by $70,000to $136,000 for the three
      months ended December 31, 2006 as compared to $66,000 for the three months
      ended
      December 31, 2005.





**Provision
      for Income Taxes**





The
      provision for income taxes, which is computed on a per subsidiary basis, was
      $287,000 and $209,000 for the three months ended December 31, 2006 and 2005,
      respectively. The difference in income tax provisions was due to changes in
      the
      status of tax holidays and abatement treatment for the fiscal year 2007 for
      some
      of the operating subsidiaries.





**Net
      Income Attributable to Shareholders**





Net
      income attributable to shareholders for the three months ended December 31,
      2006
      decreased by $858,000 or 22.7% to $2.9million from $3.8million for the three
      months ended December 31, 2005 due to the factors discussed above.





**Earnings
      Per Share**





Basic
      and
      diluted Earnings Per Share were $0.06 for three months ended December 31, 2006
      and $0.08 for three months ended December 31, 2005.





**Nine
      Months Ended December 31, 2006 Compared to Nine Months Ended December 31, 2005**





**Sales**





Sales
      for
      the nine months ended December 31, 2006 increased by $55.9 million or 58.8%
      to
      $151.0 million from $95.1 million for the nine months ended December 31, 2005.





Increase
      in volume of products sold was due in part to greater market penetration as
      a
      result of various measures including changes made by management to incentive
      programs and policies affecting the Synutra sales system. Such change enhanced
      sales force productivity through targeted resource allocation down to the store
      level, and strengthened promotional efforts in the medium sized city markets
      and
      rural markets of China by aligning bonuses with sales performance.




39




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.
      The total revenue also included sales generated from processing and packaging
      of
      nutritional supplement ingredients, anhydrous milk-fat, non-fat dry milk, and
      toll packaging and blending services.





a.
            The
                tons sold of traditional main products increased to 20,000 tons in
                the
                nine months ended December 31, 2006 from 13,000 tons in the nine
                months
                ended December 31, 2005, resulting in an increase of $33.0million
                in gross
                sales





b.
            Higher
                average selling price also contributed to the increase in sales.
                For the
                nine months ended December 31, 2006, the average selling price of
                the
                Company’s traditional main products increased from $5,000 to $5,800 per
                ton, resulting in an increase of $15.4million in gross sales.





c.
            New
                product launches contributed $17.4million to gross sales for the
                nine
                months ended December 31, 2006, reflecting a net increase of $12.2million
                in new product contributions over the amount of $5.2million for same
                nine
                months the year before.





d.
            Revenue
                generated from ancillary products and services included sales of
                dairy and
                other ingredients and packaging materials to industry customers,
                and toll
                drying, packaging and blending services which amounted to $17.9million
                and
                $22.6million for the nine months ended December 31 of 2006 and 2005
                respectively. The decrease of $4.7million partially offset the sales
                growth as discussed above.





The
      decrease in revenue from ancillary product and services for the nine months
      ended December 31, 2006 was a result of tight market supply of dairy ingredients
      and reduction in our excess production capacities available for other industry
      customers.





For
      the
      nine months ended December 31, 2006, the Company generated approximately 98.9%
      of its traditional main products sales revenue of $115.8 million through its
      wholesale distributor networks and about 1.1% through the supermarket retailers.
      Of the traditional main products sales revenue of $67.3 million generated for
      the nine months ended December 31, 2005, about 98.6% was from distributors
      and
      about 1.4% from supermarket retailers.





Management
      believes that the overall infant formula industry in China has grown faster
      than
      its traditional natural growth due to increased consumer recognition and
      acceptance of the products, especially Synutra’s name-brand products. Management
      believes Synutra name brand product lines have gained recognition in the
      marketplaces where it operates and thus has captured a greater portion of the
      increased growth experienced by the industry. In addition, management believes
      premium products with a higher margin have grown faster in the period across
      the
      industry.




40




**Cost
      of Sales**





Cost
      of
      sales for the nine months ended December 31, 2006 increased to $78.0 million
      from $55.2 million for the nine months ended December 31, 2005.





The
      cost
      of traditional main products for the nine months ended December 31, 2006
      increased to $44.9 million from $28.8 million for the nine months ended December
      31, 2005. The increase of $16.1million 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. Among the
      increase of $16.1 million related to traditional main products, the increase
      of
      6,500 tons sold of the traditional main products resulted in $14.1 million
      increase of cost. The average cost per unit increased by $99per metric ton,
      resulting in $2.0million cost increase for the nine months ended December 31,
      2006.





The
      launch of new products accounted for an increase of $11.0 million in the total
      cost of sales for the nine months ended December 31, 2006 compared to the
      respective prior year.





The
      total
      cost of sales also included costs associated with processing and packaging
      of
      nutritional supplement ingredients, anhydrous milk-fat, non-fat dry milk, and
      toll packaging and blending services which decreased $4.2 million to $17.7
      million for the nine months ended December 31, 2006 from $21.9 million in the
      same period prior year. This cost decrease was in proportion to the level of
      business activities in these areas. Due to the fact that such non-core business
      activities are carried out only at times when excess capacities are available,
      their output and related costs tend to fluctuate since related sales and service
      contracts are often made on an ad hoc basis.





**Gross
      Profit**





Concurrent
      with the sales increase in the nine months ended December 31, 2006 compared
      to
      2005, the Company experienced a significant increase in gross profit. This
      increase was primarily a result of increased volume of products sold and the
      average sales price during the year. Due to implementation of targeted sales
      incentive programs, sales of the higher margin lines of products increased
      more,
      contributing to the increase in gross margin.





Gross
      profit was $73.0 million or 48.3% of sales for the nine months ended December
      31, 2006, compared to $39.9million or 42.0% of sales for the nine months ended
      December 31, 2005. It was an increase of $33.1million or 82.8%.





The
      sales
      of traditional main products contributed $70.8 million or 97.0% of gross profit
      for the nine months ended December 31, 2006 compared to $38.5 million or 96.4%
      of gross profit for the nine months ended December 31, 2005. New product
      launches accounted for $1.9 million in gross profit for the nine months ended
      December 31, 2006, as compared to $700,000 for the same nine months period
      the
      year before. Other non-core products and services accounted for $216,000 in
      gross profit for the nine months ended December 31, 2006, as compared to
      $721,000 for the nine months ended December 31, 2005.




41




**Selling
      and Distribution Expenses**





Selling
      and distribution expenses increased by $9.2 million or 82.1% to $20.3 million
      for the nine months ended December 31, 2006, as compared to $11.2 million for
      the nine months ended December 31, 2005. The increase in selling and
      distribution expenses in the nine months ended December 31 2006 as compared
      to
      2005 was a result of increased transportation and travel expenses in proportion
      to the increase in sales volume, in addition to increases in expenses such
      as
      wages. The total compensation to the sales force increased by $3.4 million
      from
      $2.8 million in the nine months ended December 31, 2005 to $6.2 million in
      the
      nine months ended December 31, 2006. The increase was due to the hiring of
      additional sales personnel in response to expanding business and greater market
      penetration. In the meantime shipping and handling expenses increased by $1.3
      million from $1.6 million in the nine months ended December 31, 2005 to $2.9
      million in the nine months ended December 31, 2006, proportionate to the
      increase in sales; and travel expenses increased by $463,000 from $1 million
      in
      the nine months ended December 31, 2005 to $1.5 million in the nine months
      ended
      December 31, 2006. The Company continued to expand its sales promotion efforts
      both in rural and urban areas by utilizing motorized marketing and sales teams
      to expand the reach of its products and to build brand image by participating
      in
      trade shows and in other marketing activities. These efforts accounted for
      much
      of the increases in expenses.





**Advertising
      and Sales Promotion Expenses**





Advertising
      and sales promotion increased by $13.7 million or84.1% to $30.0 million for
      the
      nine months ended December 31, 2006, as compared to $16.3 million for the nine
      months ended December 31, 2005 as a result of increased advertising and
      promotional activities. The major components of advertising and sales promotion
      expenses are placement of advertisements with major media outlets and points
      of
      sale and community promotional activities.





**Nine
                Months Ended**
              **December
                31**(in
                  thousands)
            
            **2006**
            
            **2005**
            
            **change
                in $**
            
            **change
                in %**Advertising
            
            $
            6,045
            
            $
            4,427
            
            $
            1,618
            
            
            36.5
            %Sales
                promotion
            
            
            23,908
            
            
            11,838
            
            
            12,070
            
            
            101.9
            %**Totals**
            
            **$**
            **29,953**
            
            **$**
            **16,265**
            
            **$**
            **13,688**
            
            
            **84.1**
            **%**





**General
      and Administrative Expenses**





General
      and administrative expenses increased by $137,000 to $4.4 million for the nine
      months ended December 31, 2006, as compared to $4.3 million for the nine months
      ended December 31, 2005. The small increase in general and administrative
      expenses was due to the consolation of certain business functions and
      development of shared services.





**Income
      from Operations**





Based
      on
      the sales increase of $55.9 million or 58.8% and the cost of sales increase
      of
      $22.8 million or 41.4% for the nine months ended December 31, 2006, gross profit
      increase by almost $33.1 million or 82.8% compared to the nine months ended
      December 31, 2005. In the meantime, operational expenses also increased by
      approximately $23.0 million from $31.7 million for the nine months ended
      December 31, 2006 to $54.7 million for the respective prior year period. As
      a
      result, income from operations was $18.3 million for the nine months ended
      December 31, 2006, as compared to $8.2 million for the nine months ended
      December 31, 2005.




42




**Interest
      expense**





Interest
      expense decreased by $170,000 to $1.3 million for the nine months ended December
      31, 2006, as compared to $1.5 million for the nine months ended December 31,
      2005.





**Other
      Income/(Expenses), Net**





Other
      income, net was $356,000 for the nine months ended December 31, 2006, and other
      income, net was $538,000 for the nine months ended December 31, 2005. The
      Company incurred these net income or expenses mainly as a result of Subsidy
      income from local governments decreased by $555,000 to $158,000 for the nine
      months ended December 31, 2006 as compared to $713,000 for the nine months
      ended
      December 31, 2005.





**Provision
      for Income Taxes**





The
      provision for income taxes, which is computed on a per subsidiary basis, was
      $1.7 million and $514,000 for the nine months ended December 31, 2006 and 2005,
      respectively. The difference in income tax provisions was due to changes in
      the
      status of tax holidays and abatement treatment for the fiscal year 2007 for
      some
      of the operating subsidiaries.





**Net
      Income Attributable to Shareholders**





Net
      income attributable to shareholders for the nine months ended December 31,
      2006
      increased by $9.0 million or 131.1% to $15.8 million from $6.8 million for
      the
      nine months ended December 31, 2005 due to the factors discussed above.





**Earnings
      Per Share**





Basic
      and
      diluted Earnings Per Share were $0.32 for nine months ended December 31, 2006
      and $0.14 for nine months ended December 31, 2005.





**CHANGE
      IN FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES**





**Cash**





The
      cash
      balance increased by $989,000 to $6.7 million at December 31, 2006, as compared
      to $5.7 million at March 31, 2006. The increase was mainly attributable to
      new bank loans of $16.4 million, offset by cash used in operating
      activities of $4.7 million and cash spent in construction projects on plant
      and
      acquisition of fixed assets which amounted to $10.9 million. The remaining
      increase of $1.5 million was the effect of exchange rate changes on cash items.




43




The
      Company used $4.9 million of cash for the nine months ended December 31, 2006.
      Trade receivables decreased by $3.1 million and advances to suppliers decreased
      by $3.6 million. Expanded scale of operations from the increase in sales
      revenues in the nine months ended December 31, 2006 resulted in additional
      demand on working capital. Therefore, we experienced increased account
      receivables and inventories to support our increased sales revenues and
      production activities.





Cash
      flows used in investing activities amounted to $12.2 million. During the nine
      months, we used $9million for the construction of a new factory plant and
      facilities. The facilities are expected to be completed by the end of
      2007 *.* We
      also
      spent around $2.0 million for new machinery and equipment.





**Working
      Deficit**





Working
      deficit improved by $11.7 million to $2.6 million at December 31, 2006, from
      $14.3 million at March 31, 2006. The improvement in working deficit reflects
      an
      increase in the ratio of current assets over current liabilities to 96.6% from
      77.0% over the periods in discussion.





During
      the fiscal year ending March 31, 2007, we intend to continue to work to expand
      our product lines and product mix, as well as our product distribution
      throughout China. We believe our existing cash, cash from operations and credit
      facilities at December 31, 2006 are adequate to fund our operations for at
      least
      the next twelve months.





**OFF-BALANCE
      SHEET ARRANGEMENTS**





Same
      as
      disclosed in footnote 14 to the Condensed Financial Statements, we do not have
      any special purpose entities or off-balance sheet financing
      arrangements.




**CONTRACTUAL
      OBLIGATIONS**





Please
      refer to footnote 14 to the Consolidated Financial Statements for a detailed
      discussion.





**CRITICAL
      ACCOUNTING ESTIMATES AND JUDGEMENTS**





There
      are
      no material changes in our critical accounting estimates as disclosed in our
      Annual Report on Form 10-KSB/A for the year ended March 31, 2006.





**RECENTLY
      ISSUED ACCOUNTING PRONOUNCEMENTS**





Please
      refer to footnote 4 to the Consolidated Financial Statements for detailed
      discussion.




44




**ITEM
      4T. CONTROLS AND PROCEDURES**





**Disclosure
      Controls and Procedures**





As
      of
      December 31, 2006, the end of the period covered by this report, our Chief
      Executive Officer and our Chief Financial Officer reviewed and evaluated the
      effectiveness of our disclosure controls and procedures (as defined in Exchange
      Act Rule 13a-15(e) and 15d-15(e)), which are designed to ensure that material
      information we are required to disclose in our reports filed or submitted under
      the Exchange Act is recorded, processed, summarized, and reported within
      required time periods. Disclosure controls and procedures include, without
      limitation, controls and procedures designed to ensure that information required
      to be disclosed is accumulated and communicated to the Company’s management
      including its Chief Executive Officer and Chief Financial Officer, as
      appropriate, to allow timely decisions regarding required disclosures. We have
      concluded, based on that evaluation, that as of the end of the period covered
      by
      this report, our disclosure controls and procedures were not effective at the
      reasonable assurance level because of the identification of material weaknesses
      in our internal control over financial reporting, which we view as an integral
      part of our disclosure controls and procedures.




Management’s
      assessment identified the following material weaknesses:




1.
      The
      Company did not maintain a sufficient complement of personnel with an
      appropriate level of technical accounting knowledge, experience, and training
      in
      the application of generally accepted accounting principles commensurate with
      the Company’s complex financial accounting and reporting requirements and low
      materiality thresholds.




2.
      The
      Company did not have a robust antifraud and risk assessment process in place
      to
      regularly monitor and document the procedures, programs and controls related
      to
      its financial reporting.





3.
      The
      Company did not have effective controls to ensure that significant non-routine
      transactions, accounting estimates, and other adjustments were appropriately
      reviewed, analyzed, and monitored on a timely basis.





Due
      to
      these material weaknesses in internal control over financial reporting -- as
      evidenced by the significant number and magnitude of out-of-period adjustments
      identified during the year-end closing process and the resulting restatements
      --
      management has concluded that the Company’s disclosure controls and procedures
      were not effective at the reasonable assurance level. Further, management
      understands that these material weaknesses, if not remediated, could result
      in
      the Company not being able to meet its regulatory filing deadlines or cause
      a
      material misstatement in the future.





**Remediation
      and Changes in Internal Control over Financial Reporting**





The
      Company is in the process of developing and implementing remediation plans
      to
      address our material weaknesses in our internal control over financial reporting
      by adopting and implementing the Sarbanes Oxley Act for the Company's
      fiscal year ending March 31, 2008. During the second quarter of 2008, management
      conducted a program to plan the remediation of all identified material
      weaknesses and significant deficiencies using a risk-based approach based on
      the
“Internal Control — Integrated Framework” issued by the Committee of
      Sponsoring Organizations of the Treadway Commission ("COSO"). These plans
      contemplate various changes in process, procedures, policy, training and
      organizational design, and are currently being implemented. In addition, the
      Company will hire and/or appoint new managers in the accounting area and engage
      accounting professionals from external resources to address internal control
      weaknesses related to technical accounting.




45




The
      following specific remedial actions are in process to address the material
      weaknesses in our internal control over financial reporting described above:




1.
      Reorganize and restructure the Company’s corporate accounting staff (“Corporate
      Accounting”) by (1) revising the reporting structure and establishing clear
      roles, responsibilities, and accountability, (2) hiring additional technical
      accounting personnel to address the Company's complex accounting and financial
      reporting requirements, and (3) assessing the technical accounting capabilities
      at our subsidiaries to ensure the right complement of knowledge, skills, and
      training.




2.
      Improve period-end closing procedures by (1) requiring all significant
      non-routine transactions to be reviewed by Corporate Accounting, (2) ensuring
      that account reconciliations and analyses for significant financial statement
      accounts are reviewed for completeness and accuracy by qualified accounting
      personnel, (3) implementing a process that ensures the timely review and
      approval of complex accounting estimates by qualified accounting personnel
      and
      subject matter experts, where appropriate, and (4) developing better monitoring
      controls at Corporate Accounting and at our subsidiaries and (5) documenting
      and
      implementing antifraud programs and controls as well as comprehensive risk
      assessment procedures, programs and controls.





As
      previously noted, management has augmented the resources in Corporate Accounting
      by utilizing external resources in technical accounting areas and will implement
      additional closing procedures during the remainder of fiscal 2008. As a result,
      management believes that there are no material inaccuracies or omissions of
      material fact and, to the best of its knowledge, believes that the condensed
      consolidated financial statements as and for the fiscal quarter ended December
      31, 2006 in this Form 10-Q, fairly present in all material respects the
      financial condition and results of operations of the Company in conformity
      with
      accounting principles generally accepted in the United States of America.





Other
      than as described above, management does not believe that there have not been
      any other changes in the Company’s internal control over financial reporting
      during the fiscal quarter ended December 31, 2006, which have materially
      affected, or are reasonably likely to materially affect, the Company’s internal
      control over financial reporting.




46


**PART
      II**


**OTHER
      INFORMATION**





**ITEM
      6. EXHIBITS**





**EXHIBIT**
              **NO.**
            
            **DOCUMENT
                DESCRIPTION**3.1
            
            Articles
                of Incorporation (1)3.2
            
            Bylaws
                (1)10.1
            
            Share
                Exchange Agreement dated as of June 14, 2005 (2)10.2
            
            License
                and Supply Agreement dated as of September 1st,
                2003 (3)10.3
            
            Agreement
                between he Company and the Department of Finance of Zheng Lan Qi
                (County)
                of Inner Mongolia, with Amendment and Schedule (4)31.1
            
            Certification
                of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
                promulgated under the Securities and Exchange Act of 1934, as amended.31.2
            
            Certification
                of Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
                promulgated under the Securities and Exchange Act of 1934, as amended.32.1
            
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
                Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive
                Officer).32.2
            
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
                Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial
                Officer).





(1)
            Incorporated
                herein by reference from the Registrant’s Form 10SB126 filed with the
                Securities and Exchange Commission on June 15, 2005.(2)
            Incorporated
                herein by reference from the Registrant’s Form 8-K filed with Securities
                and Exchange Commission on July 21, 2005.(3)
            Incorporated
                herein by reference from the Registrant’s Form 10-KSB filed with the
                Securities and Exchange Commission on June 29, 2006.(4)
            Incorporated
                herein by reference from the Registrant’s Form 8-K filed with the
                Securities and Exchange Commission on November 9,
                2006.




47





**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.Date: October
                13, 2007
            By:
            /s/ Liang
              ZhangName: Liang
                ZhangTitle:  
                Chief Executive Officer




48