**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **Washington,
        D.C. 20549**
  FORM
        10-Q
  **QUARTERLY
        REPORT PURSUANT TO SECTION 13 OR 15(D)**
 **OF
        THE SECURITIES EXCHANGE ACT OF 1934**
  **For
        the quarter ended September 30, 2008**
  
 Commission
        File Number 0-51312
 
 **SHENGTAI
        PHARMACEUTICAL, INC.**
 (Exact
        name of small business issuer as specified in its charter)
  DELAWARE
              
              54-2155579(State
                  or other jurisdiction of
              
              (I.R.S.
                  Employerincorporation
                  or organization)
              
              Identification
                  No.)
 
 CHANGDA
        ROAD EAST, DEVELOPMENT DISTRICT,
 CHANGLE
        COUNTY, SHANDONG,
 PEOPLE’S
        REPUBLIC OF CHINA 262400
 (Address
        of principal executive offices)
 
 011-86-536-6295802
 (Issuer's
        telephone number)
  Indicate
        by check mark 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 o No o.
  Indicate
        by check mark whether the registrant is a large accelerated filer, an
        accelerated filer, a non-accelerated filer or a smaller reporting company.
        See
        the definitions of “large accelerated filer,” “accelerated filer” and “smaller
        reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 Large
                    Accelerated Filer ̈
                Accelerated
                    Filer o
                Non-Accelerated
                    Filer o
                Smaller
                    Reporting Companyþ(Do
                    not check if a smaller reporting company)
 Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act). Yes o No þ
  As
        of
        October 31 , 2008, there were outstanding 19,094,805 shares of common stock,
        par
        value $0.001 per share, of the registrant.
  
 
 SHENGTAI
        PHARMACEUTICAL INC. AND SUBSIDIARIES


CONSOLIDATED
        BALANCE SHEETS
 AS
        OF
        SEPTEMBER 30, 2008 AND JUNE 30, 2008




ASSETSSeptember
                30,
            
            June
                30,2008
            
            2008(Unaudited)CURRENT
                ASSETS:Cash
            
            $
            1,621,671
            
            $
            3,405,606Restricted
                cash
            
            
            5,570,525
            
            
            6,763,500Accounts
                receivable, net of allowance for doubtful accounts of
                $486,406and
                $440,701 as of September 30, 2008 and June 30, 2008,
                respectively
            
            
            5,189,101
            
            
            7,614,236Notes
                receivable
            
            
            822,513
            
            
            458,630Other
                receivables
            
            
            699,333
            
            
            691,215Inventories
            
            
            4,626,569
            
            
            5,039,278Prepayments
            
            
            195,058
            
            
            310,381Loan
                to related party
            
            
            438,900
            
            
            -Total
                current assets
            
            
            19,163,670
            
            
            24,282,846PLANT
                AND EQUIPMENT, net
            
            
            72,326,330
            
            
            69,943,021OTHER
                ASSETS:Investment
                in Changle Shengshi Redian Co., Ltd.
            
            
            3,620,009
            
            
            3,607,912Loan
                to related party - non-current
            
            
            -
            
            
            437,700Intangible
                assets - land use right, net of accumulated amortization
            
            
            3,037,480
            
            
            3,042,183Total
                other assets
            
            
            6,657,489
            
            
            7,087,795Total
                assets
            
            $
            98,147,489
            
            $
            101,313,662LIABILITIES
                AND SHAREHOLDERS' EQUITYCURRENT
                LIABILITIES:Accounts
                payable
            
            $
            7,662,624
            
            $
            7,669,728Accounts
                payable - related parties
            
            
            534,740
            
            
            714,776Notes
                payable - banks
            
            
            8,543,920
            
            
            10,942,500Short
                term loans
            
            
            21,740,180
            
            
            22,658,270Accrued
                liabilities
            
            
            303,357
            
            
            261,187Other
                payable
            
            
            2,361,874
            
            
            2,146,108Employee
                loans
            
            
            1,294,292
            
            
            1,382,287Employee
                loan - officer
            
            
            53,738
            
            
            53,605Third
                party loan
            
            
            362,521
            
            
            640,228Customer
                deposit
            
            
            1,412,531
            
            
            804,323Taxes
                payable
            
            
            3,902,402
            
            
            4,631,252Total
                current liabilities
            
            
            48,172,179
            
            
            51,904,264LONG
                TERM LIABILITIES:Other
                payable - noncurrent
            
            
            2,267,020
            
            
            2,653,995Total
                long term liabilities
            
            
            2,267,020
            
            
            2,653,995Total
                liabilities
            
            
            50,439,199
            
            
            54,558,259COMMITMENTS
                AND CONTINGENCIES
            
            
            -
            
            
            -SHAREHOLDERS'
                EQUITY:Preferred
                stock, $0.001 par value, 5,000,000 shares authorized,no
                shares issued and outstanding
            
            
            -
            
            
            -Common
                stock, $0.001 par value, 100,000,000 shares authorized,19,094,805
                shares issued and outstanding as ofSeptember
                30, 2008 and June 30, 2008, respectively
            
            
            19,095
            
            
            19,095Paid-in
                capital
            
            
            20,146,526
            
            
            19,987,708Statutory
                reserves
            
            
            2,894,902
            
            
            2,894,902Retained
                earnings
            
            
            19,766,373
            
            
            19,136,577Accumulated
                other comprehensive income
            
            
            4,881,394
            
            
            4,717,121Total
                shareholders' equity
            
            
            47,708,290
            
            
            46,755,403Total
                liabilities and shareholders' equity
            
            $
            98,147,489
            
            $
            101,313,662


The
        accompanying notes are an integral part of this statement.




-1-




SHENGTAI
        PHARMACEUTICAL INC. AND SUBSIDIARIES
 
 CONSOLIDATED
        STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
 FOR
        THE
        THREE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007
 (UNAUDITED)


Three
                  months endedSeptember
                  30,2008
              
              2007SALES
                  REVENUE
              
              $
              18,123,728
              
              $
              19,373,069COST
                  OF SALES
              
              
              14,931,187
              
              
              14,779,032GROSS
                  PROFIT
              
              
              3,192,541
              
              
              4,594,037SELLING,
                  GENERAL AND ADMINISTRATIVE EXPENSES
              
              
              2,429,790
              
              
              1,696,555INCOME
                  FROM OPERATIONS
              
              
              762,751
              
              
              2,897,482OTHER
                  INCOME (EXPENSE):Earnings
                  on equity investment
              
              
              1,851
              
              
              148,779Other
                  income
              
              
              11,869
              
              
              39,747Other
                  expense
              
              
              (8,910
              )
              
              (177,349
              )Interest
                  expense and other charges
              
              
              (21,839
              )
              
              (416,464
              )Interest
                  income
              
              
              17,293
              
              
              66,161Other
                  income (expense), net
              
              
              264
              
              
              (339,126
              )INCOME
                  BEFORE PROVISION FOR INCOME TAXES
              
              
              763,015
              
              
              2,558,356PROVISION
                  FOR INCOME TAXES
              
              
              133,219
              
              
              305,845NET
                  INCOME
              
              
              629,796
              
              
              2,252,511OTHER
                  COMPREHENSIVE INCOME:Foreign
                  currency translation adjustments
              
              
              164,273
              
              
              445,097COMPREHENSIVE
                  INCOME
              
              $
              794,069
              
              $
              2,697,608EARNINGS
                  PER SHAREBasic
              
              $
              0.03
              
              $
              0.12Diluted
              
              $
              0.03
              
              $
              0.11WEIGHTED
                  AVERAGE NUMBER OF SHARESBasic
              
              
              19,094,805
              
              
              18,875,000Diluted
              
              
              19,353,448
              
              
              19,697,359
 The
        accompanying notes are an integral part of this
        statement.
  -2-




SHENGTAI
        PHARMACEUTICAL INC. AND SUBSIDIARIES
 
 CONSOLIDATED
        STATEMENTS OF SHAREHOLDERS' EQUITY




Retained
                  earnings
              
              Accumulated
                  otherCommon
                  stock
              
              Paid-in
              
              Statutory
              
              
              
              comprehensiveShares
              
              Par
                  value
              
              capital
              
              reserves
              
              Unrestricted
              
              income
              
              TotalsBALANCE,
                  June 30, 2007
              
              
              18,875,000
              
              $
              18,875
              
              $
              19,163,549
              
              $
              1,735,484
              
              $
              9,885,670
              
              $
              826,998
              
              $
              31,630,576Net
                  income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              2,252,511
              
              
              
              
              
              2,252,511Foreign
                  currency translation adjustments
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              445,097
              
              
              445,097BALANCE,
                  September 30, 2007 (Unaudited)
              
              
              18,875,000
              
              $
              18,875
              
              $
              19,163,549
              
              $
              1,735,484
              
              $
              12,138,181
              
              $
              1,272,095
              
              $
              34,328,184Exercised
                  warrants
              
              
              219,805
              
              
              220
              
              
              506,523
              
              
              
              
              
              
              
              
              
              
              
              506,743Option
                  issued to employees
              
              
              
              
              
              
              
              
              317,636
              
              
              
              
              
              
              
              
              
              
              
              317,636Net
                  income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              8,157,814
              
              
              
              
              
              8,157,814Transferred
                  to statutory reserve
              
              
              
              
              
              
              
              
              
              
              
              1,159,418
              
              
              (1,159,418
              )
              
              
              
              
              -Foreign
                  currency translation adjustments
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              3,445,026
              
              
              3,445,026BALANCE,
                  June 30, 2008
              
              
              19,094,805
              
              $
              19,095
              
              $
              19,987,708
              
              $
              2,894,902
              
              $
              19,136,577
              
              $
              4,717,121
              
              $
              46,755,403Option
                  issued to employees
              
              
              
              
              
              
              
              
              158,818
              
              
              
              
              
              
              
              
              
              
              
              158,818Net
                  income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              629,796
              
              
              
              
              
              629,796Foreign
                  currency translation adjustments
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              164,273
              
              
              164,273BALANCE,
                  September 30, 2008 (Unaudited)
              
              
              19,094,805
              
              $
              19,095
              
              $
              20,146,526
              
              $
              2,894,902
              
              $
              19,766,373
              
              $
              4,881,394
              
              $
              47,708,290


The
      accompanying notes are an integral part of this
      statement.




-3-




SHENGTAI
        PHARMACEUTICAL INC. AND SUBSIDIARIES
 
 CONSOLIDATED
        STATEMENTS OF CASH FLOWS
 FOR
        THE
        THREE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007
 (UNAUDITED)




2008
              
              2007CASH
                  FLOWS FROM OPERATING ACTIVITIES:Net
                  income
              
              $
              629,796
              
              $
              2,252,511Adjustments
                  to reconcile net income to cashprovided
                  by operating activities:Depreciation
              
              
              951,659
              
              
              686,653Amortization
              
              
              13,051
              
              
              11,809Allowance
                  for bad debts
              
              
              226,911
              
              
              -Loss
                  on disposal of land use right
              
              
              -
              
              
              5,903Share
                  based compensation to employees
              
              
              158,818
              
              
              -Earnings
                  on equity investment
              
              
              (2,207
              )
              
              (148,779
              )Change
                  in operating assets and liabilities:Accounts
                  receivable
              
              
              2,220,604
              
              
              (516,885
              )Notes
                  receivable
              
              
              (685,757
              )
              
              (860,590
              )Other
                  receivables
              
              
              (10,957
              )
              
              479,437Other
                  receivables - related parties
              
              
              -
              
              
              1,510,151Other
                  receivables - shareholder
              
              
              -
              
              
              (34,668
              )Inventories
              
              
              426,788
              
              
              778,620Prepayments
              
              
              175,061
              
              
              33,913Deferred
                  assets
              
              
              (58,966
              )
              
              -Accounts
                  payable
              
              
              (1,069,660
              )
              
              (1,529,592
              )Accounts
                  payable - related parties
              
              
              (727,816
              )
              
              31,921Accrued
                  liabilities
              
              
              535,069
              
              
              (77,963
              )Other
                  payable
              
              
              (184,454
              )
              
              (110,003
              )Customer
                  deposit
              
              
              606,375
              
              
              1,192,497Taxes
                  payable
              
              
              (742,003
              )
              
              643,363Net
                  cash provided by operating activities
              
              
              2,462,312
              
              
              4,348,298CASH
                  FLOWS FROM INVESTING ACTIVITIES:Acquisition
                  of plant and equipment
              
              
              (1,723,339
              )
              
              (2,489,638
              )Acquisition
                  of intangible assets
              
              
              -
              
              
              (319,798
              )Advances
                  on plant and equipment purchase
              
              
              -
              
              
              (2,076,530
              )Net
                  cash used in investing activities
              
              
              (1,723,339
              )
              
              (4,885,966
              )CASH
                  FLOWS FROM FINANCING ACTIVITIES:Release
                  of restricted cash
              
              
              1,211,722
              
              
              3,046,580Borrowings
                  on notes payable - banks
              
              
              1,961,626
              
              
              1,324,600Payments
                  on notes payable - banks
              
              
              (4,391,700
              )
              
              (6,093,160
              )Borrowings
                  on short term loans
              
              
              1,463,900
              
              
              887,482Payments
                  on short term loans
              
              
              (2,444,713
              )
              
              (3,616,158
              )Borrowings
                  on employee loans
              
              
              201,287
              
              
              -Payments
                  on employee loans
              
              
              (293,128
              )
              
              (90,905
              )Payments
                  on third party loan
              
              
              (279,634
              )
              
              -Net
                  cash used in financing activities
              
              
              (2,570,640
              )
              
              (4,541,561
              )EFFECTS
                  OF EXCHANGE RATE CHANGE IN CASH
              
              
              47,732
              
              
              41,437DECREASE
                  IN CASH
              
              
              (1,783,935
              )
              
              (5,037,792
              )CASH,
                  beginning of period
              
              
              3,405,606
              
              
              6,420,439CASH,
                  end of period
              
              $
              1,621,671
              
              $
              1,382,647SUPPLEMENTAL
                  DISCLOSURECash
                  paid for Interest, net of capitalized interest
              
              $
              -
              
              $
              406,325Cash
                  paid for Income taxes
              
              $
              731,950
              
              
              13,445Non-cash
                  investing and financing activities -Acquisition
                  of plant and equipment through advances on plant andand
                  equipment purchase
              
              $
              1,093,496
              
              $
              2,754,637Acquisition
                  of plant and equipment in exchange for note receivableand
                  other receivables
              
              $
              327,638
              
              $
              -


The
      accompanying notes are an integral part of this
      statement.




-4-




SHENGTAI
        PHARMACEUTICAL INC. AND SUBSIDIARIES
 NOTES
        TO
        THE CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
        30, 2008
 (UNAUDITED)
 
 **Note
        1 - Organization background and principal activities**
 
 Shengtai
        Pharmaceutical Inc, (the “Company”), formerly known as West Coast Car Company
        was incorporated in March 2004 in the State of Delaware as West Coast Car
        Company.
 
 Shengtai
        Holding, Inc. (“SHI” was incorporated in the state of New Jersey on February 27,
        2006. The Company, through its Chinese subsidiary, Weifang Shengtai
        Pharmaceutical Co., Ltd. (“Weifang Shengtai”), manufactures and distributes raw
        drug materials (e.g., glucose, dehydrated glucose) and drug supplements (e.g.,
        starch, dextrin, polyacrylic acid resin). The Company’s primary business
        operations are conducted in the People’s Republic of China (“PRC”).
 
 Weifang
        Shengtai was established in Changle County, Weifang City, Shandong Province,
        PRC
        on February 4, 1999. On May 26, 2007, Weifang Shengtai increased its registered
        capital from $3,920,000 to $15,000,000. In May and June 2007, SHI contributed
        $11,080,000 towards the additional registered capital. This transaction was
        approved by the local branch of the MOC in Weifang City and the Company obtained
        a new business license on July 16, 2007, for a term of 20 years.
  **Note
        2 - Summary of significant accounting policies**
 
 The
        reporting entity
 
 The
        consolidated financial statements of Shengtai Pharmaceutical Inc. and
        Subsidiaries reflect the activities of the parent and its wholly-owned
        subsidiaries SHI and Weifang Shengtai.
 
 The
        Company recorded all normal recurring adjustments considered necessary to
        give a
        fair presentation of operating results for the periods presented. Interim
        results are not necessarily indicative of results for a full year. The
        information included in this Form 10-Q should be read in conjunction with
        information included in the 2008 annual report filed on Form 10-K.
 
 Basis
        of presentation
 
 The
        accompanying consolidated financial statements have been prepared in accordance
        with accounting principles generally accepted in the United States of America.
        All material inter-company transactions and balances have been eliminated
        in the
        consolidation.
  -5-
 SHENGTAI
          PHARMACEUTICAL INC. AND SUBSIDIARIES
 NOTES
          TO
          THE CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
          30, 2008
 (UNAUDITED)
  Use
        of
        estimates
 
 The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States of America 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 revenues and expenses
        during the reporting period. The significant estimates made in the preparation
        of the Company’s consolidated financial statements relate to the assessment of
        the fair value of share based compensation, and the collectability of accounts
        receivable. Actual results could be materially different from these estimates
        upon which the carrying values were based.
 
 Foreign
        currency translation
 
 The
        reporting currency of the Company is the US dollar. The Company uses the
        Chinese
        Renminbi (“RMB”) as its functional currency. In accordance with Statement of
        Financial Accounting Standards (“SFAS”) No. 52, “Foreign Currency Translation,”
results of operations and cash flows are translated at average exchange rates
        during the period, and assets and liabilities are translated at the unified
        exchange rates at the balance sheet dates, and equity is translated at the
        historical exchange rates. As a result, amounts related to assets and
        liabilities reported on the statements of cash flows will not necessarily
        agree
        with changes in the corresponding accounts on the balance sheets. Translation
        adjustments resulting from this process are included in accumulated other
        comprehensive income in the statements of shareholders’ equity. Translation
        gains and losses that arise from exchange rate fluctuations on transactions
        denominated in a currency other than the functional currency are included
        in the
        results of operations as incurred.
 
 Translation
        adjustments amounted to $4,881,394 and $4,717,121 as of September 30, 2008
        and
        June 30, 2008, respectively. Assets and liabilities were translated at 6.83
        RMB
        to $1.00 at September 30, 2008. The equity accounts were stated at their
        historical rate. The average translation rates applied to income statement
        for
        the three months ended September 30, 2008 and 2007 were 6.84 RMB and 7.55
        RMB to
        $1.00. Cash flows are also translated at average translation rates for the
        period; therefore, amounts reported on the statement of cash flows will not
        necessarily agree with changes in the corresponding balances on the balance
        sheet.
 
 Revenue
        recognition
 
 The
        Company recognizes revenue when the goods are delivered, title has passed,
        pricing is fixed, and collection is reasonably assured. Sales revenue represents
        the invoiced value of goods, net of value-added tax (“VAT”). Most of the
        Company’s products sold in the PRC are subject to a VAT rate of 17% of the gross
        sales price or at a rate approved by the Chinese local government. This VAT
        may
        be offset by VAT paid by the Company on raw materials and other materials
        included in the cost of producing their finished products and certain freight
        expenses.
 
 Shipping
        and handling
 
 Shipping
        and handling costs related to costs of goods sold are included in selling,
        general and administrative expenses. Shipping and handling costs amounted
        to
        $779,336 and $747,314 for the three months ended September 30, 2008 and 2007,
        respectively.
  -6-
  SHENGTAI
          PHARMACEUTICAL INC. AND SUBSIDIARIES
 NOTES
          TO
          THE CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
          30, 2008
 (UNAUDITED)
  Financial
        instruments
 
 SFAS
        107,
“Disclosures about Fair Value of Financial Instruments” requires disclosure of
        the fair value of financial instruments held by the Company. SFAS 107 defines
        the fair value of financial instruments as the amount at which the instrument
        could be exchanged in a current transaction between willing parties. The
        Company
        considers the carrying amount of cash, accounts receivable, notes receivable,
        other **** receivables,
        prepayments, accounts payable, other payables, accrued liabilities, customer
        deposits, taxes payable, and loans to approximate their fair values because
        of
        the short period of time between the origination of such instruments and
        their
        expected realization and their current market rates of interest.
 
 On
        July
        1, 2008, the Company adopted SFAS No. 157, “Fair Value Measurements” (“SFAS
        157”), which defines fair value, establishes a three-level valuation hierarchy
        for disclosures of fair value measurement and enhances disclosures requirements
        for fair value measures. The carrying amounts reported in the balance sheets
        for
        current receivables and payables, including short term loans, qualify as
        financial instruments and are a reasonable estimate of fair value because
        of the
        short period of time between the origination of such instruments and their
        expected realization and their current market rate of interest. The three
        levels
        are defined as follow:
 
 ·
              Level
                  1: inputs to the valuation methodology are quoted prices (unadjusted)
                  for
                  identical assets or liabilities in active
                  markets.
  ·
              Level
                  2: inputs to the valuation methodology include quoted prices for
                  similar
                  assets and liabilities in active markets, and inputs that are observable
                  for the assets or liability, either directly or indirectly, for
                  substantially the full term of the financial
                  instruments.
  ·
              Level
                  3: inputs to the valuation methodology are unobservable and significant
                  to
                  the fair value.
 
 The
        Company did not identify any assets or liabilities that are required to be
        presented on the balance sheet at fair value in accordance with SFAS
        157.
 
 Stock-based
        compensation
 
 The
        Company records stock-based compensation expense pursuant to SFAS 123R, “Share
        Based Payment.” The Company estimates the fair value of the award using the
        Black-Scholes option pricing model. Under SFAS 123R, the Company’s expected
        volatility assumption is based on the historical volatility of Company’s stock.
        The expected life assumption is primarily based on historical exercise patterns
        and employee post-vesting termination behavior. The risk-free interest rate
        for
        the expected term of the option is based on the U.S. Treasury yield curve
        in
        effect at the time of grant.
 
 Stock-based
        compensation expense is recognized based on awards expected to vest, and
        there
        were no estimated forfeitures as the Company has a short history of issuing
        options. SFAS 123R requires forfeitures to be estimated at the time of grant
        and
        revised in subsequent periods, if necessary, if actual forfeitures differ
        from
        those estimates.
 
 Earnings
        per share
 
 The
        Company reports earnings per share in accordance with the provisions of SFAS
        No.
        128 (“SFAS 128”), "Earnings Per Share." SFAS 128 requires presentation of basic
        and diluted earnings per share in conjunction with the disclosure of the
        methodology used in computing such earnings per share. Basic earnings per
        share
        excludes dilution and is computed by dividing income available to common
        stockholders by the weighted average common shares outstanding during the
        period. Diluted earnings per share takes into account the potential dilution
        that could occur if securities or other contracts to issue common stock were
        exercised and converted into common stock.
  -7-
  SHENGTAI
          PHARMACEUTICAL INC. AND SUBSIDIARIES
 NOTES
          TO
          THE CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
          30, 2008
 (UNAUDITED)
  The
        following is a reconciliation of the basic and diluted earnings per share:
  Three
                  months ended
                September
                  30,2008
              
              2007(Unaudited)
              
              (Unaudited)Net
                  income for earnings per share
              
              $
              629,796
              
              $
              2,252,511Weighted
                  average shares used in basic computation
              
              
              19,094,805
              
              
              18,875,000Diluted
                  effect of warrants
              
              
              258,643
              
              
              822,359Weighted
                  average shares used in diluted computation
              
              
              19,353,448
              
              
              19,697,359Earnings
                  per shareBasic
              
              $
              0.03
              
              $
              0.12Diluted
              
              $
              0.03
              
              $
              0.11
 
 At
        September 30, 2008, 4,473,945 shares of outstanding warrants were included
        in
        the three months ended September 30, 2008 calculation of diluted earnings
        per
        share and 660,000 shares
        of outstanding stock options were excluded from the diluted earnings per
        share
        calculation as they are anti-dilutive. At
        September 30, 2007, all outstanding warrants were included in the three months
        ended September 30, 2007 calculation of diluted earnings per share.
 
 Cash
        and cash equivalents
 
 The
        Company considers all highly liquid investments with original maturities
        of
        three months or less to be cash and cash equivalents.
  -8-
 SHENGTAI
          PHARMACEUTICAL INC. AND SUBSIDIARIES
 NOTES
          TO
          THE CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
          30, 2008
 (UNAUDITED)
  Restricted
        cash
 
 The
        Company through its bank agreements is required to keep certain amounts on
        deposit that are subject to withdrawal restrictions. As of September 30,
        2008
        and June 30, 2008, these amounts totaled $5,570,525 and $6,763,500,
        respectively.
 
 In
        accordance with the Escrow Agreement and the Share Purchase Agreement signed
        by
        Shengtai Holding Inc., West Coast Car Company, Chinamerica Fund LP, and
        Tri-State Title & Escrow, LLC (the “Escrow Agent”), the Company was required
        to deposit with the Escrow Agent $5,500,000 immediately on the Closing Date
        of
        the Share Purchase Agreement. This fund can only be disbursed until certain
        criteria are met. As of September 30, 2008 and June 30, 2008, the amount
        not
        disbursed was $201,305 and $198,000, respectively, and these are included
        in
        restricted cash in the consolidated balance sheets.
 
 Accounts
        receivable
 
 In
        the
        normal course of business, the Company extends credit to its customers without
        requiring collateral or other security interests.  Management
        reviews its accounts receivables at each reporting period to provide for
        an
        allowance against accounts receivable for an amount that could become
        uncollectible. This review process may involve the identification of payment
        problems with specific customers. The Company estimates this allowance based
        on
        the aging of the accounts receivable, historical collection experience, and
        other relevant factors, such as changes in the economy and the imposition
        of
        regulatory requirements that can have an impact on the industry. These factors
        continuously change, and can have an impact on collections and the Company’s
        estimation process. These impacts may be material. Certain accounts receivable
        amounts are charged off against allowances after designated period of collection
        efforts. Subsequent cash recoveries are recognized as income in the period
        when
        they occur.
 
 The
        activity in the allowance for doubtful accounts for trade accounts receivable
        is
        as follows:
  Three
                  months ended September 30, 2008
              
              Year
                  ended
                June
                  30, 2008(Unaudited)Beginning
                  allowance for doubtful accounts
              
              $
              440,701
              
              $
              431,178Additions
                  charged to bad debt expense
              
              
              226,911
              
              
              93,557Write-off
                  charged against the allowance
              
              
              (182,386
              )
              
              (129,130
              )Foreign
                  currency translation adjustments
              
              
              1,180
              
              
              45,096Ending
                  allowance for doubtful accounts
              
              $
              486,406
              
              $
              440,701
  -9-
  SHENGTAI
          PHARMACEUTICAL INC. AND SUBSIDIARIES
 NOTES
          TO
          THE CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
          30, 2008
 (UNAUDITED)
 Concentrations
        of risk
 
 The
        Company's operations are carried out in the PRC. Accordingly, the Company's
        business, financial condition and results of operations may be influenced
        by the
        political, economic and legal environments in the PRC, and by the general
        state
        of the PRC's economy. The Company's operations in the PRC are subject to
        specific considerations and significant risks not typically associated with
        companies in North America and Western Europe. These include risks associated
        with, among others, the political, economic and legal environments and foreign
        currency exchange. The Company's results may be adversely affected by changes
        in
        governmental policies with respect to laws and regulations, anti-inflationary
        measures, currency conversion and remittance abroad, and rates and methods
        of
        taxation, among others.
 
 Management
        believes the credit risk on bank deposits is limited because the counterparties
        are banks with high credit-ratings assigned by international credit-rating
        agencies, or state-owned banks in China. Cash includes cash on hand and demand
        deposits in accounts maintained with state-owned banks within the PRC and
        the
        United States of America. The cash deposits in U.S. financial institutions
        exceed the amounts insured by the U.S. government. Balances at financial
        institutions or state owned banks within the PRC are not covered by insurance.
        Non-performance by these institutions could expose the Company to losses
        for
        amounts in excess of insured balances. At September 30, 2008 and June 30,
        2008,
        the Company’s bank balances exceeded government insured limits or not covered by
        insurance by approximately $6,740,882 and $10,175,000, respectively. The
        Company
        has not experienced, nor does it anticipate, nonperformance by these
        institutions.
 
 The
        Company’s concentrations of credit risk are primarily in trade accounts
        receivable and accounts payable. For the three months ended September 30,
        2008
        and 2007, there were no customers that individually comprised 10% or more
        of the
        Company’s total revenues. For the three months ended September 30, 2008 and
        2007, there were no vendors that individually accounted for over 10% or more
        of
        the Company’s total purchases.
 
 For
        export sales, we frequently require significant down payments or letter of
        credit by our customers prior to shipment. During the year, the Company
        maintains export credit insurance to protect the Company against the risk
        that
        the overseas customers may default on settlement.
 
 The
        following table summarizes financial information for the three months ended
        September 30, 2008 and 2007, concerning the Company’s revenues based on
        geographic area:
 
 Revenue
              
              September
                  30, 2008
              
              September
                  30, 2007(Unaudited)
              
              (Unaudited)China
              
              $
              15,960,750
              
              $
              17,187,494International
              
              
              2,162,978
              
              
              2,185,575Total
              
              $
              18,123,728
              
              $
              19,373,069
  -10-
  SHENGTAI
          PHARMACEUTICAL INC. AND SUBSIDIARIES
 NOTES
          TO
          THE CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
          30, 2008
 (UNAUDITED)
 Inventories
 
 Inventories
        are stated at the lower of cost (weighted average basis) or market and consist
        of the following:
 
 September
                  30,
                2008
              
              June
                  30,
                2008(Unaudited)Raw
                  materials
              
              $
              1,160,192
              
              $
              1,409,577Work-in-progress
              
              
              1,662,310
              
              
              1,688,161Finished
                  goods
              
              
              1,804,067
              
              
              1,941,540Total
              
              $
              4,626,569
              
              $
              5,039,278
 
 The
        Company reviews its inventory periodically for possible obsolete goods or
        to
        determine if any reserves are necessary. As of September 30, 2008, the Company
        has determined that no reserves are necessary.
 
 Prepayments
 
 Prepayments
        represent partial payments or deposits for inventory purchases.
 
 Plant
        and equipment
 
 Plant
        and
        equipment are stated at cost less accumulated depreciation. Additions and
        improvements to property and equipment accounts are recorded at cost.
        Maintenance, repairs, and minor renewals are charged directly to expense
        as
        incurred. Major additions and betterments to property and equipment accounts
        are
        capitalized. Depreciation is computed using the straight-line method over
        the
        estimated useful lives of the assets with 3% residual value.
 
 Estimated
        useful lives of the assets are as follows:
 
 Estimated
                  Useful LifeBuildings
              
              
              5-20
              
              
              YearsMachinery
                  and equipment
              
              
              5-10
              
              
              YearsAutomobile
                  facilities
              
              
              5-10
              
              
              YearsElectronic
                  equipment
              
              
              5-7
              
              
              Years
  -11-
 SHENGTAI
          PHARMACEUTICAL INC. AND SUBSIDIARIES
 NOTES
          TO
          THE CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
          30, 2008
 (UNAUDITED)
  Impairment
        of long-lived assets
 
 Long-lived
        assets of the Company are reviewed periodically or more often if circumstances
        dictate, to determine whether their carrying value has become impaired. The
        Company considers assets to be impaired if the carrying value exceeds the
        future
        projected cash flows from related operations. The Company also re-evaluates
        the
        periods of amortization to determine whether subsequent events and circumstances
        warrant revised estimates of useful lives. As of September 30, 2008, the
        Company
        expects these assets to be fully recoverable.
 
 Investment
        in unconsolidated affiliate
 
 Equity
        method investments are recorded at original cost and adjusted to recognize
        the
        Company’s proportionate share of the investee’s net income or losses and
        additional contributions made and distributions received. The Company recognizes
        a loss if it is determined that other than temporary decline in the value
        of the
        investment exists.
 
 Intangible
        assets
 
 Intangible
        assets are primarily comprised of land use rights. All land in the PRC is
        owned
        by the Chinese government. However, the government grants “land use rights” for
        terms ranging from 20 to 50 years. From March 2000 to June 2008, the Company
        acquired various land use rights for approximately $3,291,000. The Company
        amortizes the cost of land use rights over the usage terms using the
        straight-line method.
 
 Intangible
        assets of the Company are reviewed at least annually, more often if
        circumstances dictate, to determine whether their carrying value has become
        impaired. The Company considers assets to be impaired if the carrying value
        exceeds the future projected cash flows from related operations. The Company
        also re-evaluates the periods of amortization to determine whether subsequent
        events and circumstances warrant revised estimates of useful lives. As of
        September 30, 2008, the Company determined that there had been no impairment.
        Total amortization expense for the three months ended September 30, 2008
        and
        2007 amounted to $ 13,051 and $11,809 respectively.
 
 Income
        taxes
 
 The
        Company accounts for income taxes in accordance with SFAS 109, “Accounting for
        Income Taxes.” Under the asset and liability method as required by SFAS 109,
        deferred income taxes are recognized for the tax consequences of temporary
        differences by applying enacted statutory tax rates applicable to future
        years
        to differences between the financial statement carrying amounts and the tax
        bases of existing assets and liabilities. Under SFAS 109, the effect on deferred
        income taxes of a change in tax rates is recognized in income in the period
        that
        includes the enactment date. A valuation allowance is recognized if it is
        more
        likely than not that some portion, or all of, a deferred tax asset will not
        be
        realized. As of September 30, 2008 and June 30, 2008, the Company did not
        have
        any deferred tax assets or liabilities, and as such, no valuation allowances
        were recorded at September 30, 2008 and June 30, 2008.
  -12-
  SHENGTAI
          PHARMACEUTICAL INC. AND SUBSIDIARIES
 NOTES
          TO
          THE CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
          30, 2008
 (UNAUDITED)
 In
        July
        2006, the Financial Accounting Standards Board (“FASB”) issued FASB
        Interpretation No. 48 (“FIN 48”), "Accounting for Uncertainty in Income Taxes -
        an interpretation of FASB Statement No. 109," which clarifies the accounting
        and
        disclosure for uncertain tax positions. This interpretation is effective
        for
        fiscal years beginning after December 15, 2006, and the Company has implemented
        this interpretation as of July 1, 2007. FIN 48 prescribes a recognition
        threshold and measurement attribute for recognition and measurement of a
        tax
        position taken or expected to be taken in a tax return. FIN 48 also provides
        guidance on de-recognition, classification, interest and penalties, accounting
        in interim periods, disclosure and transition.
 
 Under
        FIN
        48, evaluation of a tax position is a two-step process. The first step is
        to
        determine whether it is more-likely-than-not that a tax position will be
        sustained upon examination, including the resolution of any related appeals
        or
        litigation based on the technical merits of that position. The second step
        is to
        measure a tax position that meets the more-likely-than-not threshold to
        determine the amount of benefit to be recognized in the financial statements.
        A
        tax position is measured at the largest amount of benefit that is greater
        than
        50 percent likely of being realized upon ultimate settlement. Tax positions
        that
        previously failed to meet the more-likely-than-not recognition threshold
        should
        be recognized in the first subsequent period in which the threshold is met.
        Previously recognized tax positions that no longer meet the more-likely-than-not
        criteria should be de-recognized in the first subsequent financial reporting
        period in which the threshold is no longer met.
 
 The
        adoption of FIN 48 at July 1, 2007, did not have a material effect on the
        Company's consolidated financial statements.
 
 The
        Company’s operations are subject to income and transaction taxes in the United
        States and in the PRC jurisdictions. Significant estimates and judgments
        are
        required in determining the Company’s worldwide provision for income taxes. Some
        of these estimates are based on interpretations of existing tax laws or
        regulations, and as a result the ultimate amount of tax liability may be
        uncertain. However, the Company does not anticipate any events that would
        lead
        to changes to these uncertainties.
 
 Value
        Added Tax
 
 Enterprises
        or individuals who sell products, engage in repair and maintenance or import
        and
        export goods in the PRC are subject to a value added tax in accordance with
        Chinese laws. The standard value added tax rate is 17% of the gross sales
        price,
        however, for the Company’s corn plumules products, the VAT rate is 13%. A credit
        is available whereby VAT paid on the purchases of semi-finished products,
        raw
        materials used in the production of the Company’s finished products, and payment
        of freight expenses can be used to offset the VAT due on sales of the finished
        products.
 
 VAT
        on
        sales and VAT on purchases amounted to $1,884,466 and $2,476,725 for the three
        months ended September 30, 2008, and $2,860,229 and $2,432,415 for the three
        months ended September 30, 2007, respectively. Sales and purchases are recorded
        net of VAT collected and paid as the Company acts as an agent for the
        government. VAT taxes are not impacted by the income tax holiday in the PRC.
 
 Guarantees
 
 From
        time
        to time, the Company guarantees the debt of others unrelated to the Company.
        Pursuant to FIN 45, “Guarantor’s Accounting for and Disclosure Requirements for
        Guarantees, Including Indirect Guarantees of Indebtedness to Others,” the
        Company must record guarantees at the fair value of the expected future
        payments. However, the Company estimates that it will not be required to
        make
        any payments under these guarantees based on the past experience and the
        financial condition of the companies to which the guarantees were made.
  -13-
  SHENGTAI
          PHARMACEUTICAL INC. AND SUBSIDIARIES
 NOTES
          TO
          THE CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
          30, 2008
 (UNAUDITED)
 
 Recently
        issued accounting pronouncements
 
 In
        February 2007, the FASB issued SFAS No. 159, (“SFAS 159”), “The Fair Value
        Option for Financial Assets and Financials Liabilities — Including an Amendment
        of FASB Statement No. 115.” This standard permits measurement of certain
        financial assets and financial liabilities at fair value. If the fair value
        option is elected, the unrealized gains and losses are reported in earnings
        at
        each reporting date. Generally, the fair value option may be elected on an
        instrument-by-instrument basis, as long as it is applied to the instrument
        in
        its entirety. The fair value option election is irrevocable, unless a new
        election date occurs. SFAS 159 requires prospective application and also
        establishes certain additional presentation and disclosure requirements.
        The
        standard is effective as of the beginning of the fiscal year that begins
        after
        November 15, 2007. The Company adopted SFAS 159 on July 1, 2008. The
        Company chose not to elect the option to measure the fair value of eligible
        financial assets and liabilities.
 
 In
        December 2007, the Securities and Exchange Commission (“SEC”) issued Staff
        Accounting Bulletin No. 110 (“SAB 110”). SAB 110 amends and replaces Question 6
        of Section D.2 of Topic 14, *Share-Based
        Payment* of
        the
        Staff Accounting Bulletin series. Question 6 of Section D.2 of Topic 14
        expresses the views of the staff regarding the use of the “simplified” method in
        developing an estimate of expected term of “plain vanilla” share options and
        allows usage of the “simplified” method for share option grants prior to
        December 31, 2007. SAB 110 allows public companies which do not have
        historically sufficient experience to provide a reasonable estimate to continue
        use of the “simplified” method for estimating the expected term of “plain
        vanilla” share option grants after December 31, 2007. The Company currently uses
        the “simplified” method to estimate the expected term for share option grants as
        the Company does not have enough historical experience to provide a reasonable
        estimate. The Company intends on using the “simplified” method until the Company
        has enough historical experience to provide a reasonable estimate of expected
        term in accordance with SAB 110. The Company adopted SAB 110 on January 1,
        2008
        which did not materially affect the company.
 
 In
        December 2007, the FASB issued SFAS 141(R) "Business Combinations". The
        statement retains the purchase method of accounting for acquisitions, but
        requires a number of changes, including changes in the way assets and
        liabilities are recognized in the purchase accounting as well as requiring
        the
        expensing of acquisition-related costs as incurred. Furthermore, SFAS 141R
        provides guidance for recognizing and measuring the goodwill acquired in
        the
        business combination and determines what information to disclose to enable
        users
        of the financial statements to evaluate the nature and financial effects
        of the
        business combination. SFAS 141R is effective for fiscal years beginning on
        or
        after December 15, 2008. Earlier adoption is prohibited. The Company is
        evaluating the impact, if any, that the adoption of this statement will have
        on
        its consolidated results of operations or financial position.
 
 In
        December 2007, the FASB issued SFAS No. 160 (“SFAS 160”), “Noncontrolling
        Interests in Consolidated Financial Statements — An Amendment of ARB No. 51.”
SFAS 160 amends ARB No. 51 to establish accounting and reporting standards
        for
        the noncontrolling interest in a subsidiary and for the deconsolidation of
        a
        subsidiary. It is intended to eliminate the diversity in practice regarding
        the
        accounting for transactions between equity and noncontrolling interests by
        requiring that they be treated as equity transactions. Further, it requires
        consolidated net income to be reported at amounts that include the amounts
        attributable to both the parent and the noncontrolling interest. SFAS 160
        also
        establishes a single method of accounting for changes in a parent’s ownership
        interest in a subsidiary that do not result in deconsolidation, requires
        that a
        parent recognize a gain or loss in net income when a subsidiary is
        deconsolidated, requires expanded disclosures in the consolidated financial
        statements that clearly identify and distinguish between the interests of
        the
        parent’s owners and the interests of the noncontrolling owners of a subsidiary,
        among others. SFAS 160 is effective for fiscal years beginning on or after
        December 15, 2008, with early adoption permitted, and it is to be applied
        prospectively. SFAS 160 is must be applied prospectively as of the beginning
        of
        the fiscal year in which it is initially applied, except for the presentation
        and disclosure requirements, which must be applied retrospectively for all
        periods presented. The Company has not yet evaluated the impact that SFAS
        160
        will have on its consolidated financial position or results of operations.
  -14-
  SHENGTAI
          PHARMACEUTICAL INC. AND SUBSIDIARIES
 NOTES
          TO
          THE CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
          30, 2008
 (UNAUDITED)
  In
        March
        2008, the FASB issued SFAS 161, "Disclosures about Derivative Instruments
        and
        Hedging Activities." SFAS 161 is intended to improve financial reporting
        of
        derivative instruments and hedging activities by requiring enhanced disclosures
        to enable financial statement users to better understand the effects of
        derivatives and hedging on an entity's financial position, financial performance
        and cash flows. The provisions of SFAS 161 are effective for interim periods
        and
        fiscal years beginning after November 15, 2008. The Company does not anticipate
        that the adoption of SFAS 161 will have a material impact on its consolidated
        results of operations or financial position.
 
 In
        May
        2008, the FASB issued SFAS 162, "The Hierarchy of Generally Accepted Accounting
        Principles." SFAS 162 is intended to improve financial reporting by identifying
        a consistent framework, or hierarchy, for selecting accounting principles
        to be
        used in preparing financial statements that are presented in conformity with
        GAAP for nongovernmental entities. SFAS 162 is effective 60 days following
        the
        SEC's approval of the Public Company Accounting Oversight Board amendments
        to AU
        Section 411, "The Meaning of Present Fairly in Conformity with Generally
        Accepted Accounting Principles." The Company does not expect the adoption
        of
        SFAS 162 will have a material impact on its consolidated results of operations
        or financial position.
 
 On
        May 9,
        2008, the FASB issued FSP APB 14-1, "Accounting for Convertible Debt Instruments
        That May Be Settled in Cash upon Conversion (Including Partial Cash
        Settlement)." FSP APB 14-1 clarifies that convertible debt instruments that
        may
        be settled in cash upon conversion (including partial cash settlement) are
        not
        addressed by paragraph 12 of APB Opinion No. 14, "Accounting for Convertible
        Debt and Debt Issued with Stock Purchase Warrants." Additionally, FSP APB
        14-1
        specifies that issuers of such instruments should separately account for
        the
        liability and equity components in a manner that will reflect the entity's
        nonconvertible debt borrowing rate when interest cost is recognized in
        subsequent periods. FSP APB14-1 is effective for financial statements issued
        for
        fiscal years beginning after December 15, 2008, and interim periods within
        those
        fiscal years. The Company has not yet evaluated the impact that FSP APB 14-1
        will have on its consolidated results of operations or financial position.
 
 In
        June
        2008, the FASB issued EITF 07-5 “Determining whether an Instrument (or Embedded
        Feature) is indexed to an Entity’s Own Stock”. This Issue is effective for
        financial statements issued for fiscal years beginning after December 15,
        2008,
        and interim periods within those fiscal years. Early application is not
        permitted. Paragraph 11(a) of SFAS No 133 “Accounting for Derivatives and
        Hedging Activities” (“SFAS 133”) specifies that a contract that would otherwise
        meet the definition of a derivative but is both (a) indexed to the
        Company’s own stock and (b) classified in stockholders’ equity in the
        statement of financial position would not be considered a derivative financial
        instrument. EITF 07-5 provides a new two-step model to be applied in determining
        whether a financial instrument or an embedded feature is indexed to an issuer’s
        own stock and thus able to qualify for the SFAS 133 paragraph 11(a) scope
        exception. This standard triggers liability accounting on all options and
        warrants exercisable at strike prices denominated in any currency other than
        the
        functional currency of the operating entity in China (Renminbi). EITF 07-5
        is
        effective for fiscal years beginning after December 15, 2008. The Company
        is
        currently evaluating the impact of adoption of EITF 07-5 on the Company’s
        consolidated financial statements.
 
 In
        June
        2008, FASB issued EITF 08-4, “Transition Guidance for Conforming Changes to
        Issue No. 98-5”. The objective of EITF 08-4 is to provide transition
        guidance for conforming changes made to EITF No. 98-5, “Accounting for
        Convertible Securities with Beneficial Conversion Features or Contingently
        Adjustable Conversion Ratios”, that result from EITF No. 00-27 “Application of
        Issue No. 98-5 to Certain Convertible Instruments”, and SFAS 150, “Accounting
        for Certain Financial Instruments with Characteristics of both Liabilities
        and
        Equity”. This Issue is effective for financial statements issued for fiscal
        years ending after December 15, 2008. Early application is
        permitted. Management is currently evaluating the impact of adoption of
        EITF 08-4 on the accounting for the convertible notes and related warrants
        transactions.
 
 On
        October 10, 2008, the FASB issued FSP 157-3, “Determining the Fair Value of a
        Financial Asset When the Market for That Asset Is Not Active,” which clarifies
        the application of SFAS 157 in a market that is not active and provides an
        example to illustrate key considerations in determining the fair value of
        a
        financial asset when the market for that financial asset is not active. FSP
        157-3 became effective on October 10, 2008, and its adoption did not have
        a
        material impact on our financial position or results for the quarter ended
        September 30, 2008.
  -15-
  SHENGTAI
          PHARMACEUTICAL INC. AND SUBSIDIARIES
 NOTES
          TO
          THE CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
          30, 2008
 (UNAUDITED)
 **Note
        3 - Plant and equipment**
 
 Plant
        and
        equipment consist of the following:
 
 September
                  30,
                2008
              
              June
                  30,
                2008(Unaudited)Buildings
              
              $
              11,624,589
              
              $
              6,343,954Machinery
                  and equipment
              
              
              44,195,785
              
              
              37,239,847Automobile
                  facilities
              
              
              598,518
              
              
              562,039Electronic
                  equipment
              
              
              415,667
              
              
              368,550Construction
                  in progress
              
              
              27,417,909
              
              
              36,373,688Total
              
              
              84,252,468
              
              
              80,888,078Accumulated
                  depreciation
              
              
              (11,926,138
              )
              
              (10,945,057
              )Total
              
              $
              72,326,330
              
              $
              69,943,021
 
 Construction-in-progress
        represents the costs incurred in connection with the construction of buildings
        or new additions to the Company’s plant facilities. No depreciation is provided
        for construction-in-progress until such time as the assets are completed
        and
        placed into service. Depreciation expense for the three months ended September
        30, 2008 and 2007 amounted to $951,659 and $686,653, respectively. Interest
        costs totaling $701,621 and $230,656 was capitalized into
        construction-in-progress for the three months ended September 30, 2008 and
        2007,
        respectively.
  -16-
  SHENGTAI
          PHARMACEUTICAL INC. AND SUBSIDIARIES
 NOTES
          TO
          THE CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
          30, 2008
 (UNAUDITED)
 **Note
        4 - Investment in unconsolidated affiliate**
 
 On
        September 16, 2003, the Company entered into a joint venture partnership
        with
        Weifang City Investment Company and Changle Century Sun Paper Industry Co.,
        Ltd,
        and formed Changle Shengshi Redian Co., Ltd (“Changle Shengshi”). Changle
        Shengshi was incorporated in Weifang City, Shandong Province, PRC. Changle
        Shengshi’s principal activity is to produce and sell electricity and heat. The
        Company accounts for this 20% investment under the equity method of accounting.
 
 Summarized
        unaudited financial information of Changle Shengshi is as follows:
 September
                  30,
              
              June
                  30,2008
              
              2008Current
                  assets
              
              $
              15,487,906
              
              $
              14,117,813Non-current
                  assets
              
              
              27,824,899
              
              
              27,231,806Total
                  assets
              
              
              43,312,805
              
              
              41,349,619Current
                  liabilities
              
              
              22,228,241
              
              
              20,333,700Non-current
                  liabilities
              
              
              2,984,520
              
              
              2,976,360Shareholders'
                  equity
              
              
              18,100,044
              
              
              18,039,559Total
                  liabilities and shareholders' equity
              
              $
              43,312,805
              
              $
              41,349,619
  -17-
  SHENGTAI
          PHARMACEUTICAL INC. AND SUBSIDIARIES
 NOTES
          TO
          THE CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
          30, 2008
 (UNAUDITED)
  Summarized
        financial information of Changle Shengshi for the three months ended September
        30, 2008 and 2007 is as follows:
 
 September
                  30,2008
              
              2007Net
                  sales
              
              $
              10,394,563
              
              $
              7,171,525Gross
                  profit
              
              $
              360,394
              
              $
              2,167,691Income
                  before taxes
              
              $
              14,714
              
              $
              1,757,159Net
                  income
              
              $
              11,035
              
              $
              1,372,948Company
                  share of income
              
              $
              2,207
              
              $
              274,589Elimination
                  of intercompany profit
              
              
              356
              
              
              125,810Company’s
                  share of net income
              
              $
              1,851
              
              $
              148,779
  **Note
        5 - Related party transactions**
 
 The
        Company’s utilities are partially provided by Changle Shengshi (See Note 4). As
        of September 30, 2008 and June 30, 2008, the Company’s accounts payable due to
        Changle Shengshi was approximately $535,000 and $715,000, respectively, which
        related to a portion of the Company’s utilities being provided by Changle
        Shengshi. The utilities expense amounted to approximately $1,676,331 and
        $2,068,766 for the three months ended September 30, 2008 and 2007, respectively.
 
 The
        Company’s receivables from one loan contract with Changle Shengshi are as
        follows:
 
 September
                  30, 2008
              
              June
                  30, 2008(Unaudited)Due
                  on September 14, 2009, unsecured, 7.60% interest rate per
                  annum
              
              $
              438,900
              
              $
              437,700
  -18-
  SHENGTAI
          PHARMACEUTICAL INC. AND SUBSIDIARIES
 NOTES
          TO
          THE CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
          30, 2008
 (UNAUDITED)
 **Note
        6 - Debt**
 
 Short
        term loans
 
 Short
        term loans represent amounts due to various banks which are normally due
        within
        one year, and these loans can be renewed with the banks. The Company’s short
        term bank loans consisted of the following:
  September
                  30, 2008
                (Unaudited)
              
              June
                  30, 2008Loan
                  from Bank of China, due various dates from January 2009 to June
                  2009;
                  monthly interest only payments; interest rates ranging from 7.47%
                  to 8.96%
                  per annum, guaranteed by an unrelated third party and secured by
                  certain
                  properties.
              
              $
              13,693,680
              
              $
              13,656,240Loan
                  from Industrial and Commercial Bank of China, due various dates
                  from
                  January 2009 to May 2009; monthly interest only payments; interest
                  rates
                  ranging from 7.47% to 8.96% per annum, guaranteed by an unrelated
                  third
                  party and secured by certain properties.
              
              $
              2,926,000
              
              $
              3,895,530Loan
                  from Agriculture Bank of China, due February 2009; monthly interest
                  only
                  payments; interest rate of 8.96% per annum, guaranteed by an unrelated
                  third party and secured by certain properties
              
              $
              2,194,500
              
              $
              2,188,500Loan
                  from Commercial Bank, due June 2009; monthly interest-only payments;
                  interest rate at 8.019% per annum, guaranteed by an unrelated third
                  party,
                  unsecured.
              
              $
              1,463,000
              
              $
              1,459,000Loan
                  from ShangHai PuFa Bank, due October 2008; monthly interest-only
                  payments;
                  interest rate of 8.384% per annum, guaranteed by an unrelated third
                  party,
                  unsecured.
              
              $
              1,463,000
              
              $
              1,459,000Total
              
              $
              21,740,180
              
              $
              22,658,270
 
 The
        loans
        are secured by buildings and improvements, machinery and equipment, and land
        use
        rights with carrying values as follows:
 
 September
                  30, 2008Buildings
                  and improvements
              
              $
              4,649,817Machinery
                  andequipment
              
              
              4,161,709Land
                  use rights
              
              
              4,873,549Total
              
              $
              13,685,075
  -19-
 SHENGTAI
          PHARMACEUTICAL INC. AND SUBSIDIARIES
 NOTES
          TO
          THE CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
          30, 2008
 (UNAUDITED)
  Notes
        payable - banks
 
 Notes
        payable represent amounts due to various banks which are normally due within
        one
        year, and these notes can be renewed with the banks. The Company’s notes
        payables consisted of the following:
  September
                  30, 2008
                (Unaudited)
              
              June
                  30, 2008Bank
                  of China, due November 2008, 0.05% transaction fee, restricted
                  cash
                  required 100% of loan amount, guaranteed by an unrelated third
                  party.
              
              $
              731,500
              
              $
              729,500Industrial
                  and Commercial Bank of China, due in March 2009, 0.05% transaction
                  fee,
                  restricted cash required 50% of loan amount, guaranteed by an unrelated
                  third party.
              
              
              1,960,420
              
              
              4,377,000Shenzhen
                  Development Bank, due in December 2008, 0.05% transaction fee,
                  restricted
                  cash required 50% of loan amount, guaranteed by an unrelated third
                  party.
              
              
              4,389,000
              
              
              4,377,000Shenzhen
                  Development Bank, due in December 2008, 0.05% transaction fee,
                  restricted
                  cash required 100% of loan amount, guaranteed by an unrelated third
                  party.
              
              
              1,463,000
              
              
              1,459,000Total
              
              $
              8,543,920
              
              $
              10,942,500
 
 Employee
        loans
 
 From
        time
        to time, the Company borrows monies from certain employees for cash flow
        purposes of the Company. These loans do not require collateral and bear interest
        at 7.2% for the first six months, and then 10.8% thereafter until the full
        principal amounts are paid by the Company and the principal is due upon
        demand.  Employee
        loans amounted to $1,294,292 and $1,382,287 as of September 30, 2008 and
        June
        30, 2008, respectively. These loans are payable upon demand.
  -20-
  SHENGTAI
          PHARMACEUTICAL INC. AND SUBSIDIARIES
 NOTES
          TO
          THE CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
          30, 2008
 (UNAUDITED)
 Employee
        loan - officer
 
 From
        time
        to time, the Company has borrowed monies from Qingtai Liu for cash flow purposes
        of the Company. The loan does not require collateral and bears interest at
        7.2%
        for the first six months, and then 10.8% until the full principal amount
        is paid
        by the Company and the principal is due upon demand. Employee loan from officer
        amounted to $53,738 and $53,605 as of September 30, 2008 and June 30, 2008,
        respectively. Interest expense was de minimis on this loan for the three
        months
        ended September 30, 2008 and 2007, respectively.
 
 Third
        party loan
 
 From
        time
        to time, the Company borrowed money from an unrelated individual for use
        in
        operations. The loan does not require collateral and bears interest at 7.2%
        for
        the first six months, and then 10.8% until the full principal amount is paid
        by
        the Company . The principal is due upon demand. Balance of the loan as of
        September 30, 2008 and June 30, 2008 amounted to $362,521 and $640,228,
        respectively.
 
 Interest
 
 Total
        interest expense, net of capitalized interest, for the three months ended
        September 30, 2008 and 2007 on all debt, amounted to $584,509 and $391,608,
        respectively. Interest capitalized into construction-in-progress totaled
        $701,621 and $230,656 for the three months ended September 30, 2008 and 2007,
        respectively.
 
 **Note
        7 - Income taxes**
 
 The
        Company is governed by the Income Tax Law of the PRC concerning Foreign
        Investment Enterprises (“FIEs”) and Foreign Enterprises and various local income
        tax laws (the “Income Tax Laws”). Under the Income Tax Laws, FIEs are generally
        subject to an effective income tax of 33% (30% state income taxes plus 3%
        local
        income taxes) on income as reported in their statutory financial statements
        after appropriate tax adjustments, unless the enterprise is located in specially
        designated regions of cities for which more favorable effective tax rates
        apply.
        Upon approval by the PRC tax authorities, FIEs scheduled to operate for a
        period
        of 10 years or more and engaged in manufacturing and production may be exempt
        from income taxes for up to two years, commencing with their first profitable
        year of operations, after taking into account any losses brought forward
        from
        prior years, and thereafter with a 50% exemption for the next three years.
 
 In
        February 2004, the Company became a Sino-foreign joint venture. In August
        2004,
        the state government granted the Company income tax exemptions as follows:
        100%
        exemption for the first two years from September 2004 to August 2006, and
        50%
        exemption for years three to five from September 2006 to August 2009. In
        addition, the Company is located in a Special Economic Zone and the PRC tax
        authority has offered it with a special income tax rate of 24%. With the
        approval of the local government, the Company is subject to income taxes
        at a
        reduced rate of 12% from September 2006 to August 2009, after the two-year
        exemption 24% for income taxes until its exemption and reduction periods
        expire
        in August 2009.
  -21-
 SHENGTAI
          PHARMACEUTICAL INC. AND SUBSIDIARIES
 NOTES
          TO
          THE CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
          30, 2008
 (UNAUDITED)
  Beginning
        on January 1, 2008, the new Enterprise Income Tax (“EIT”) law replaced the
        existing laws for Domestic Enterprises (“DES”) and Foreign Invested Enterprises
        (“FIEs”).
 
 The
        key
        changes are:
 
 a.
              The
                  new standard EIT rate of 25% will replace the 33% rate currently
                  applicable to both DES and FIEs, except for High Tech companies
                  who pays a
                  reduced rate of 15%;
 
 b.
              Companies
                  established before March 16, 2007 will continue to enjoy tax holiday
                  treatment approved by local government for a grace period of the
                  next 5
                  years or until the tax holiday term is completed, whichever is
                  sooner.
 
 The
        Company’s subsidiary, Weifang Shengtai was established before March 16, 2007,
        and therefore is qualified to continue to be taxed at the reduced rate as
        described above until the tax holiday term is completed. Starting on September
        1, 2009, the Company will be subject to a 25% income tax rate pursuant to
        the
        new income tax laws. During the three months ended September 30, 2008 and
        2007,
        the provision for income taxes was $133,219 and $305,845,
        respectively.
 
 The
        following table reconciles the U.S. statutory rates to the Company’s effective
        tax rate for the three months ended September 30:
 
 2008
              
              2007(Unaudited)
              
              (Unaudited)U.S.
                  Statutory rates
              
              
              34.0
              %
              
              34.0
              %Foreign
                  income not recognized in USA
              
              
              (34.0
              )
              
              (34.0
              )China
                  income taxes
              
              
              25.0
              
              
              33.0China
                  income tax exemption
              
              
              (13.0
              )
              
              (21.0
              )Total
                  provision for income taxes
              
              
              12.0
              %
              
              12.0
              %
 
 The
        estimated tax savings due to the tax exemption for the three months ended
        September 30, 2008 and 2007 amounted to $174,934 and $535,229, respectively.
        The
        net effect on basic earnings per share if the income tax had been applied
        would
        decrease basic earnings per share for the three months ended September 30,
        2008
        and 2007 by $0.01 and $0.03, respectively. The net effect on diluted earnings
        per share if the income tax had been applied would decrease diluted earnings
        per
        share for the three months ended September 30, 2008 and 2007 by $0.01 and
        $0.03,
        respectively.
  -22-
 SHENGTAI
          PHARMACEUTICAL INC. AND SUBSIDIARIES
 NOTES
          TO
          THE CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
          30, 2008
 (UNAUDITED)
  Taxes
        payable
 
 Taxes
        payable consisted of the following:
 
 September
                  30, 2008
                (Unaudited)
              
              June
                  30, 2008VAT
                  payable
              
              $
              1,542,042
              
              $
              3,049,000Individual
                  income tax withheld
              
              
              464
              
              
              767Income
                  tax payable
              
              
              924,077
              
              
              1,518,278Housing
                  property tax payable
              
              
              9,930
              
              
              9,903Others
              
              
              1,425,889
              
              
              53,304Total
                  taxes payable
              
              $
              3,902,402
              
              $
              4,631,252
  **Note
        8 - Commitments and Contingent liabilities**
 
 Guarantees
 
 As
        of
        September 30, 2008, the Company has guaranteed $7.3 million of short term
        loan
        for unrelated party, Shandong Kuangji Group, Inc. (“Shandong Kuangji”). The
        Company is obligated to perform under the guarantee if Shandong Kuangji fails
        to
        pay principal and interest payments when due. The maximum potential amount
        of
        future undiscounted payments under the guarantee is about $8.0 million including
        accrued interest. The Company did not record a liability for the guarantee
        because management believes Shandong Kuangji is current in its payment
        obligations, and the likelihood of the Company having to make good on the
        guarantee is remote.
  -23-
  SHENGTAI
          PHARMACEUTICAL INC. AND SUBSIDIARIES
 NOTES
          TO
          THE CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
          30, 2008
 (UNAUDITED)
  Detail
        of
        guarantee amount to the unrelated parties as of September 30, 2008 is as
        follows:
 Short
                  TermCompany
              
              Bank
                  LoansShandong
                  Kuangji Group Inc.
              
              $
              7,315,000Total
              
              $
              7,315,000
 
 Commitments
 
 Capital
        commitments outstanding as of September 30, 2008 were as follows:
 
 Property
                  and EquipmentNine
                  months ended June 30, 2009
              
              $
              234,080Thereafter
              
              $
              -
 
 Litigation
  In
        the
        Company’s ordinary course of business, the Company may be subject to certain
        legal proceedings. After review and consultation with the Company’s legal
        counsel, management believes that the outcome of the legal matters will not
        have
        a materially adverse effect on the consolidated results of operations or
        consolidated financial position of the Company.
 
 **Note
        9 - Shareholders’ equity**
 
 Warrants
 
 In
        connection with the Share Purchase Agreement, the 4,375,000 warrants (“Investor
        Warrants”) carry an exercise price of $2.60 and a 5-year term. The Investor
        Warrants are callable if the Company’s shares trade at or above $8.00 per share
        for 20 consecutive trading days and underlying shares are registered for
        resale.
        The Investor Warrants contain standard adjustment provisions upon stock
        dividend, stock split, stock combination, recapitalization, and a change
        of
        control transaction.
 
 Also
        in
        connection with the Share Purchase Agreement, the Company issued 218,750
        warrants (“Placement Agent Warrants”) to Brill Securities, the Placement Agent.
        These Placement Agent Warrants have the same terms as the Investor Warrants.
        These warrants were issued on August 8, 2007.
  -24-
  SHENGTAI
          PHARMACEUTICAL INC. AND SUBSIDIARIES
 NOTES
          TO
          THE CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
          30, 2008
 (UNAUDITED)
 Concurrent
        with the offering related to the Share Purchase Agreement, the Company issued
        75,000 warrants to Chinamerica Fund, LLP and 25,000 warrants to Jeff Jenson
        (collectively as “Lead Investor Warrants”) to compensate Chinamerica Fund LLP as
        the lead investor and for Jeff Jenson in assisting in providing the shell
        of
        West Coast Car Company. These warrants have the same terms as the Investor
        Warrants except with an exercise price of $0.01 per share. In June 2008,
        Jeff
        Jenson exercised the 25,000 warrants issued to him.
 
 All
        Investor Warrants, Placement Agent Warrants, and Lead Investor Warrants meet
        the
        conditions for equity classification pursuant to SFAS No. 133 “Accounting for
        Derivatives” and EITF 00-19, “Accounting for Derivative Financial Instruments
        Indexed to, and Potentially Settled in, a Company's Own Stock.” Therefore, these
        warrants were classified as equity and accounted for as common stock issuance
        cost.
 Weighted
              
              AverageWarrants
              
              Warrants
              
              Average
                  Exercise
              
              RemainingOutstanding
              
              Exercisable
              
              Price
              
              Contractual
                  LifeOutstanding,
                  June 30, 2007
              
              
              4,475,000
              
              
              4,475,000
              
              $
              2.54
              
              
              4.87Granted
              
              
              218,750
              
              
              218,750
              
              
              2.60
              
              
              5.00Forfeited
              
              
              -
              
              
              -
              
              
              -
              
              
              -Exercised
              
              
              219,805
              
              
              219,805
              
              
              2.31
              
              
              -Outstanding,
                  June 30, 2008
              
              
              4,473,945
              
              
              4,473,945
              
              $
              2.54
              
              
              3.88Granted
              
              
              -
              
              
              -
              
              
              -
              
              
              -Forfeited
              
              
              -
              
              
              -
              
              
              -
              
              
              -Exercised
              
              
              -
              
              
              -
              
              
              -
              
              
              -Outstanding,
                  September 30, 2008 (unaudited)
              
              
              4,473,975
              
              
              4,473,945
              
              $
              2.54
              
              
              3.63
 
 Stock
        options
 
 On
        January 4, 2008, the Company adopted “Shengtai Pharmaceutical, Inc. 2007 Stock
        Incentive Plan” (the “Stock Incentive Plan”). The Company believes that such
        awards better align the interests of its employee with those of its
        shareholders. Option awards are generally granted with an exercise price
        equal
        to the fair value of the Company’s stock at the date of grant.
  -25-
 SHENGTAI
          PHARMACEUTICAL INC. AND SUBSIDIARIES
 NOTES
          TO
          THE CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
          30, 2008
 (UNAUDITED)
 On
        May
        14, 2008, the Company granted 500,000 stock options and 160,000 non-qualified
        stock options pursuant to the Stock Incentive Plan. All options have an exercise
        price of $3.34, which is the closing price on the date of grant, and expire
        five
        years after the date of grant. All options vest over a period of three years
        on
        a quarterly basis from the date of grant.
 
 The
        Company uses the Black-Scholes option pricing model which was developed for
        use
        in estimating the fair value of options. Option pricing models require the
        input
        of highly complex and subjective variables including the expected life of
        options granted and the Company’s expected stock price volatility over a period
        equal to or greater than the expected life of the options. Because changes
        in
        the subjective assumptions can materially affect the estimated value of the
        Company’s employee stock options, it is management’s opinion that the
        Black-Scholes option valuation model may not provide an accurate measure
        of the
        fair value of the Company’s employee stock options. Although the fair value of
        employee stock options is determined in accordance with SFAS 123R using an
        option pricing model, that value may not be indicative of the fair value
        observed in a willing buyer/willing seller market transaction.
 
 The
        assumptions used in calculating the fair value of options granted using the
        Black-Scholes option pricing model are as follows:
 
 Weighted
                  average risk-free interest rate
              
              
              3.22%Expected
                  term
              
              
              4
                  yearsExpected
                  volatility
              
              
              146%Expected
                  dividend yield
              
              
              0%Weighted
                  average grant-date fair value per option
              
              $
              3.34
 
 The
        volatility of the Company’s common stock was estimated by management based on
        the historical volatility; the risk free interest rate was based on Treasury
        Constant Maturity Rates published by the U.S. Federal Reserve for periods
        applicable to the estimated life of the options; and the expected dividend
        yield
        was based on the current and expected dividend policy. The fair value of
        the
        options was based on the Company’s common stock price on the date the options
        were granted. SFAS 123R allows use of the “simplified” method to determine the
        term when other information is not available. Because the Company does not
        have
        sufficient applicable history of employee stock options activity, the Company
        uses the simplified method to estimate the life of the options by taking
        the sum
        of the vesting period and the contractual life and then calculating the midpoint
        which is the estimated term of the options.
  -26-
  SHENGTAI
          PHARMACEUTICAL INC. AND SUBSIDIARIES
 NOTES
          TO
          THE CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
          30, 2008
 (UNAUDITED)
 The
        stock
        option activity was as follows:
 
 Options
                outstanding
              
              Weighted
                Average
                Exercise
                  Price
              
              Aggregate
                Intrinsic
                  ValueOutstanding,
                  June 30, 2007
              
              
              -
              
              
              -
              
              
              -Granted
              
              
              660,000
              
              $
              3.34
              
              $
              -Forfeited
              
              
              -
              
              
              -
              
              
              -Exercised
              
              
              -
              
              
              -
              
              
              -Outstanding,
                  June 30, 2008
              
              
              660,000
              
              $
              3.34
              
              $
              -Granted
              
              
              -
              
              
              -
              
              
              -Forfeited
              
              
              -
              
              
              -
              
              
              -Exercised
              
              
              -
              
              
              -
              
              
              -Outstanding,
                  September 30, 2008
              
              
              660,000
              
              $
              3.34
              
              $
              -
 
 Following
        is a summary of the status of options outstanding at September 30, 2008:
 
 Outstanding
                  Options
              
              Exercisable
                  OptionsAverage
                Exercise
                  Price
              
              Outstanding
                  Options
              
              Average
                  Remaining
                Contractual
                  Life
              
              
              Average
                Exercise
                  Price
              
              Exercisable
                  Options$
              3.34
              
              660,000
              
              4.62
              
              $
              3.34
              
              —
 
 Compensation
        expense from stock options recognized for the three months ended September
        30,
        2008 was $158,818. **** There
        were no such expenses recognized for the three months ended September 30,
        2007.
  -27-
  SHENGTAI
          PHARMACEUTICAL INC. AND SUBSIDIARIES
 NOTES
          TO
          THE CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
          30, 2008
 (UNAUDITED)
 **Note
        10 - Statutory reserves**
 
 The
        laws
        and regulations of the People’s Republic of China required that before a
        Sino-foreign cooperative joint venture enterprise distributes profits to
        its
        partners, it must first satisfy all tax **** liabilities,
        provide for losses in previous years, and make allocations, in proportions
        determined at the discretion of the board of directors, after the statutory
        reserve. The statutory reserves include the surplus reserve fund, and the
        enterprise fund. These statutory reserves represent restricted retained
        earnings.
 
 Surplus
        reserve fund
 
 The
        Company is required to transfer 10% of its net income, as determined in
        accordance with the PRC accounting rules and regulations, to a statutory
        surplus
        reserve fund until such reserve balance reaches 50% of the Company’s registered
        capital.
 
 The
        transfer to this reserve must be made before distribution of any dividends
        to
        shareholders. For the three months ended September 30, 2008 and 2007, the
        Company did not transfer any fund to this reserve. The surplus reserve fund
        is
        non-distributable other than during liquidation and can be used to fund previous
        years’ losses, if any, and may be utilized for business expansion or converted
        into share capital by issuing new shares to existing shareholders in proportion
        to their shareholding or by increasing the par value of the shares currently
        held by them, provided that the remaining reserve balance after such issue
        is
        not less than 25% of the registered capital.
 
 Enterprise
        fund
 
 The
        enterprise fund may be used to acquire fixed assets or to increase the working
        capital to expend on production and operation of the business. No minimum
        contribution is required and the Company has not made any contribution to
        this
        fund.
 
 **Note
        11 - Retirement benefit plans**
 
 Regulations
        in the PRC require the Company to contribute to a defined contribution
        retirement plan for the benefit of all permanent employees. The Company is
        required to make contributions to the state retirement plan at 15% to 20%
        of the
        monthly base salaries of all current permanent employees. The PRC government
        is
        responsible for the administration and benefit liability to retired employees.
        For the three months ended September 30, 2008 and 2007, the Company made
        contributions in the amounts of $135,036 and $57,351, respectively to the
        Company’s retirement plan.
 
 **Note
        12 - Subsequent event**
 
 Short
        term loans
 
 In
        October 2008, the Company borrowed $1,465,000 loan from Xingye Bank in Weifang,
        due June 2009, monthly interest-only payments, interest rate at 7.9695% per
        annum, secured by certain properties.
 
 Notes
        payable
  In
        October 2008, the Company borrowed $1,465,000 notes payable of from Industrial
        and Commercial Bank of China, due in March 2009, 0.05% transaction fee,
        restricted cash required 50% of loan amount, secured by certain
        properties.
  -28-


**Item
        2.**  **Management’s
        Discussion and Analysis of Financial Condition and Results of
        Operations.**
 
 **Forward
        looking statements**
 
 The
        following is a discussion and analysis of the results of operations of 
Shengtai Pharmaceutical, Inc. (the "Company") and should be read in
        conjunction with our financial statements and related notes contained in
        this
        Form 10-Q. This Form 10-Q contains forward looking statements that involve
        risks
        and uncertainties. You can identify these statements by the use of
        forward-looking words such as "may", "will", "expect", "anticipate", "estimate",
        "believe", "continue", or other similar words. You should read statements
        that
        contain these words carefully because they discuss our future expectations,
        contain projections of our future results of operation or financial condition
        or
        state other "forward-looking" information. We believe that it is important
        to
        communicate our future expectations to our investors. However, there may
        be
        events in the future that we are unable to accurately predict or control.
        Those
        events as well as any cautionary language in this Form 10-Q provide
        examples of risks, uncertainties and events that may cause our actual results
        to
        differ materially from the expectations we describe in our forward-looking
        statements. You should be aware that the occurrence of the events described
        in
        this Form 10-Q could have a material adverse effect on our business, operating
        results and financial condition. Actual results may differ materially from
        current expectations.
 
 **Overview**
 
 We
        are,
        through our wholly-owned subsidiary, Shengtai Holding Inc. and its wholly-owned
        subsidiary in the People’s Republic of China (“PRC”), Weifang Shengtai
        Pharmaceutical Co., Ltd, a leading manufacturer and supplier of pharmaceutical
        grade glucose in the PRC. We are a market leader and preferred domestic supplier
        of pharmaceutical grade glucose with about 40% market share in China. We
        also
        manufacture glucose, cornstarch and other products for the food and
        beverage industry for the Chinese market.
 
 Our
        cornstarch production facility, which has a maximum capacity to produce 240,000
        metric tons of cornstarch per year, was fully completed at the end of October
        2007. This facility is close to our glucose production plants.
 
 During
        the three months ended September 30, 2008, we produced a total of 32,076
        metric
        tons of cornstarch, of which 17,253 metric tons were used to satisfy our
        own
        glucose production needs. The excess cornstarch was or will be then sold
        to
        outside customers who are in the pharmaceutical, food and beverage, and
        industrial industries. The cornstarch sales amounted to $5.181 million and
        accounted for 28.59% of our total sales revenue for the three months ended
        September 30, 2008.
 
 Corn
        is
        the principal raw material for our cornstarch. Since mid-2007 corn and other
        food prices have been climbing at an annual inflation rate of 15% in China,
        mostly due to the shortages of pork and grain and the development of alternative
        energy industry. In order to maintain a stable corn price, the Chinese
        government put restrictions to control the development of industrial use
        of
        corn, such as the conversion of corn into ethanol. Also the Chinese government
        has put its corn reserve into market to help to maintain the corn price.
        In
        September corn prices increased at an annual rate of only 2%.
 
 We
        consider these government policies have had and will continue to have positive
        effects on our operations. Management believes that stable corn prices will
        help
        maintain the availability of our raw materials and tend to stabilize our
        gross
        profit margin over time, although market and economic conditions may continue
        to
        have negative effects on our operations. However, in the three months ended
        September 30, 2008 our margin has fallen from 24% to 18%, as discussed
        below. The principal raw material for glucose is cornstarch. By using the
        cornstarch manufactured from our own cornstarch production facility, we can
        ensure our glucose products’ quality and consistency. Also, because our
        cornstarch manufacturing facility is located next to our glucose manufacturing
        facilities, we are able to eliminate shipping costs and lower glucose products’
manufacturing costs.
 -29-
 At
        the
        end of July 2008, we completed construction of a new glucose manufacturing
        facility to boost our production capacity. At the end of September 2008,
        the
        facility passed its GMP inspection. The facility has a production capacity
        of
        120,000 tons, and with our pre-existing glucose manufacturing facility, we
        now
        have the production capacity of a total 180,000 tons (if necessary, can be
        easily expandable to a total of 210,000 tons). From October 2008, we are
        commencing start up operations in the new facility in stages with small amounts
        first and building up to larger quantities.
 
 During
        the three months ended September 30, 2008, we produced a total of 21,291
        metric
        tons of glucose, and our sales of pharmaceutical grade glucose and other
        glucose
        products were $8.207 million, or 45.30% of our revenues.
 
 In
        addition to our pharmaceutical glucose and cornstarch series of products,
        we also produce other products such asdextrin, corn embryo, fibers, protein
        powders, and phytin, which are used for food, beverage and industrial
        production. The sales revenues generated from these products were $4.730
        million, and constituted approximately 26.1% of our total sales revenues
        for the
        three months ended September 30, 2007.
 
 Management
        believes that better living standards in China should lead to higher consumption
        of our pharmaceutical glucose products in the PRC, especially the Dextrose
        Monohydrate Transfusion Solution. In March 2008, the Chinese government
        announced its plan to give insurance coverage to more rural residents in
        China.
        That is to say, more and more farmers in China can afford the expense of
        healthcare. At the same time, despite the current deceleration in growth,
        we
        believe that the continuing economic growth, the rising purchasing power
        of
        domestic market, as well as the public awareness of quality health care
        products, will resume as drivers in the demand for our pharmaceutical glucose
        products.
  We
        believe that production capacity and product quality are key factors in
        maintaining and improving our competitive position and enhancing our long
        term competitiveness. As a result, we have been placing emphasis on (i) product
        quality control, (ii) enhancement of operating efficiency and employee
        competence, (iii) expansion of geographical coverage and diversification
        of
        customer base, and (iv)
        expansion of our production capacity.
 
 Our
        rate
        of quality output (output conforming to pharmaceutical-grade glucose product
        specifications) is maintained at 100%. We have a three-tier quality control
        system and a well equipped quality inspection center to ensure timely detection
        and then reprocessing of non-conforming products.
 
 At
        the
        end of September 2008, the new glucose production facility passed its GMP
        inspection, and our facilities and many of our products are fully certified
        for
        GMP, ISO9002 and HACCP international quality standards, and globally certified
        HALAL, KOSHER and IP GMO.
 -30-
 Our
        sales
        network presently covers almost all provinces of mainland China except Tibet
        Autonomous Region. We have four representative offices in Chengdu, Guangzhou,
        Hangzhou and Nanchang to strengthen our domestic sales network. We believe
        that
        these offices help us to better interact with our customers, reinforce our
        sales
        force and improve our corporate image.
 
 At
        the
        same time, we have exported our products to over 70 countries, including
        Japan,
        Singapore, Korea, Australia, Russia and India. For the three months ended
        September 30, 2008, our international sales comprised approximately 11.7%
        of our
        total sales revenues.
  The
        target customers of our company are drug makers, medical supply companies,
        medical supply exporters and food and beverage companies.
 
 We
        constantly strive to broaden and diversify our customer base. We believe
        that a
        broader customer base will mitigate our reliance on certain customers. We
        believe a broader market for our products can increase demand for our products,
        reduce our vulnerability to market changes, and provide additional areas
        of
        growth in the future. For the three months ended September 30, 2008, our
        top ten
        customers accounted for 35% for our total sales revenue.
 
 **Results
        of Operations**
 
 The
        following table sets forth our statements of operations for the three months
        ended September 30, 2008 and 2007:
  **Three
        Months Ended September 30, 2008 Compared with Three Months Ended September
        30,
        2007**
 
 *The
        following table shows our operating results for the three months ended September
        30, 2007 and 2008* .
  **Three
                  months**
                **ended**
                **September
                  30,**
                **2008**
              
              **Three
                  months**
                **ended**
                **September
                  30,**
                **2007**Sales
                  Revenue
              
              
              18,123,728
              
              
              19,373,069Costs
                  of Goods Sold
              
              
              14,931,187
              
              
              14,779,032Gross
                  Profit
              
              
              3,192,541
              
              
              4,594,037Sales,
                  General and Administrative Expenses
              
              
              2,429,790
              
              
              1,696,555Operating
                  Income
              
              
              762,751
              
              
              2,897,482Other
                  Net Income (Expense)
              
              
              264
              
              
              (339,126
              )Income
                  before Income Taxes
              
              
              763,015
              
              
              2,558,356Provision
                  for Income Taxes
              
              
              133,219
              
              
              305,845Net
                  income
              
              
              629,796
              
              
              2,252,511
 -31-
 *The
        following table shows the breakdown of production and sales by product
        categories, and between internal use and external sales of cornstarch, for
        the
        three months ended September 30, 2007 and 2008* .
  Product
                  Metric
                      Tons
                    Three
                      months ended September 30, 2008
                  Metric
                      Tons
                    Three
                      months ended September 30, 2007
                  Sales
                      Revenue (%)
                    Three
                      months ended September 30, 2008
                  Sales
                      Revenue (%)
                    Three
                      months ended September 30,
                      2007
 Glucose
                21,291
                24,181
                $8,207,000
                    (45.3%)
                $9,014,766(46.53%)Cornstarch-Internal
                17,253
                    (53.8%)
                11,164
                    (30%)Cornstarch-Sales
                14,823
                    (46.1%)
                26,073
                    (70%)
                $5,181,000
                    (28.59%)
                $6,025,748
                    (31.10%)Total
                    Cornstarch
                32,076
                    (100%)
                37,237
                    (100%)Other
                
                
                $4,730,000
                    (26.1%)
                $4,256,379
                    (21.97%)Total
                
                
                $18,123,728
                    (100%)
                $19,373,069
                    (100%)
  Overview
  ·
                Since
                    mid-2007 corn prices have increased at an annual rate of 15%,
                    until
                    September 2008, when the increase was only at a rate of 2% per
                    year,
                    following the PRC government’s restrictions on industrial uses of corn and
                    the introduction of the government strategic corn reserve into
                    the
                    market.
 ·
                After
                    our new cornstarch plant was completed in October 2007 we increased
                    our
                    cornstarch production with the objective of producing our own
                    cornstarch
                    raw material for our increasing production capacity for pharmaceutical
                    grade glucose. As our new glucose plant was only completed in
                    July 2008
                    and is being put into service on a gradual basis, we have been
                    producing
                    more cornstarch than we could use and selling the excess to customers.
                    In
                    the fiscal year ended June 30, 2008 we used 37% of our cornstarch
                    production as raw materials in our glucose production and sold
                    the
                    remaining 63% to customers. In the three months ended September
                    30, 2008,
                    we used 53.8% of our cornstarch internally and sold 46.1% to
                    customers.
 ·
                Demand
                    for cornstarch plummeted in August and September 2008, as food
                    prices
                    dropped sharply amidst global financial turmoil. For example,
                    pork prices
                    dropped 40% in those months. In addition our sales were adversely
                    affected
                    by PRC government restrictions on manufacturing and transportation
                    during
                    the Beijing Olympics in August, which were aimed at reducing
                    pollution.
                    The resulting excess inventories (produced at very high corn
                    prices in the
                    cost of goods) led to aggressive price-cutting in the cornstarch
                    market,
                    sharply reducing margins. Some cornstarch companies are stopping
                    cornstarch production in this
                    market.
 ·
                Because
                    we have the ability to raise or lower our production of cornstarch,
                    in
                    September we began to cut production to a level closer to our
                    own internal
                    needs. However, the combination of high corn prices built into
                    our
                    inventory and the much lower market prices led to a sharp reduction
                    in our
                    sales, profit margin and net income for the three months ended
                    September
                    30, 2008.
 ·
                Our
                    objective in adjusting our cornstarch production is to improve
                    our
                    margins, as we ramp up glucose production in our new
                    plant.
 ·
                We
                    plan to produce cornstarch to supply our own increasing needs
                    and will
                    produce more for outside sales if future market prices of corn
                    and
                    cornstarch make it economic.
  Sales
        revenue for the three months ended September 30, 2008 was $18,123,728, a
        decrease of $1,249,341, or 6.45% compared with the corresponding period in
        2007.
        The decre ase
        in
        sales revenue resulted from the decrease of our domestic sales of cornstarch
        and
        glucose. Our sales were impacted by government restrictions on manufacturing
        and
        transportation during the Beijing Olympics in August and sharply lower prices
        of
        cornstarch since August. However, Management believes that cornstarch
        inventories are decreasing and will lead to higher prices in the future.
        Management also believes that in the long run most of our cornstarch products
        will be consumed internally to manufacture glucose.
 -32-
 Costs
        of
        goods sold for the three months ended September 30, 2008 was $14,931,187,
        an
        increase of $152,155, or 1.00% compared with the corresponding period in
        2007.
        The increase in cost of goods sold primarily resulted from increased corn
        prices
        and decreased demand resulting in higher per unit costs.
 
 Gross
        profit for the three months ended September 30, 2008 was $3,192,541, a decrease
        of $1,401,496, or 30.51% compared with the corresponding period in 2007.
        The
        decrease in gross profits resulted from the decrease in sales and the increase
        in cost of goods sold compared with the same period in 2007.
 
 Gross
        profit margin for the three months ended September 30, 2008 was 17.6%, a
        decrease from 23.7% for the same period in 2007. The reasons for the decrease
        in
        gross profit margin were because of lower sales, increased raw material costs,
        lower production, and higher production cost per unit.
 
 Selling,
        General and Administrative expenses for the three months ended September
        30,
        2008 were $2,429,790, an increase of $733,235, or 43.22% compared with the
        corresponding period in 2007. The increase in our Selling, General and
        Administrative expenses was mainly the result of increased labor cost and
        increased bad debt expenses and in our China operation, as well as more
        administrative expenses, such as consulting fees, legal fees, audit fees,
        and
        investor relations expenses as a reporting company. We incurred $158,818
        in
        non-cash stock option expenses for the three months ended September 30, 2008.
  Net
        income for the three months ended September 30, 2008 was $629,796, a decrease
        of
        $1,622,715 or 72.04% compared with the corresponding period in 2007. The
        decrease in net income was primarily due to the decrease in our sales volume,
        the increase of cost of goods sold, and increased selling, general, and
        administrative expenses.
 
 **Liquidity
        and Capital Resources**
 
 ***Operating
        Activities***
  **Three
        Months Ended September 30, 2008 and 2007**
 
 Net
        cash
        provided by operating activities for the three months ended September 30,
        2008
        was $2,462,312, a decrease of 43.4%, or $1,885,986, from $4,348,298 provided
        by
        operating activities for the same period in 2007. The decrease in net cash
        provided by operations was principally due to the decrease in net income
        and
        payments of tax payable and accounts payable. Unless this recent unfavorable
        trend moderates, we may need to seek outside financing in very challenging
        financial market conditions.
 -33-
 ***Investing
        Activities***
 
 **Three
        Months Ended September 30, 2008 and 2007**
 
 Net
        cash
        used in investing activities for the three months ended September 30, 2008
        was
        $1,723,339, a decrease of 64.8%, or $3,162,626 from $4,885,965 used in investing
        activities for the same period in 2007. The
        decrease of net cash used in investing activities resulted from capital
        expenditures for building our cornstarch and glucose factories in fiscal
        year
        2007. During
        the three months ended September 30, 2007, most of the cash had been spent
        on
        the construction of the new glucose manufacturing complex and the construction
        of a new dormitory. Less capital expenditure was spent during the three months
        ended September 30, 2008. The new glucose manufacturing facility was completed
        in July 2008. Management believes that we will have limited capital expenditures
        during the balance of the fiscal 2009 year.
  ***Financing
        Activities***
  **Three
        Months Ended September 30, 2008 and 2007**
  Net
        cash
        used in financing activities for the three months ended September 30, 2008
        was
        $2,570,640, a decrease of 43.4%, or $1,970,921 from $4,541,561 used in the
        financing activities for the same period in fiscal 2007. The decrease of
        net
        cash used in financing is mainly because the Company has more repayments
        of
        notes payable and short term loans for the three months ended September 30,
        2007
        than for the three months ended September 30, 2008.
 
 **Loans**
 
 Other
        than our private placement financing in 2007, we have financed our operations
        primarily through bank loans and operating income. We had a total of $21,740,180
        short term bank loans outstanding as of September 30 2008. The loans were
        secured by our properties or guaranteed by unrelated third parties. The terms
        of
        all these short term loans are for one year. We have never defaulted on any
        of
        these loans.
 
 We
        have
        $2,267,020 non-current payables as of September 30 2008 and $2,653,995 as
        of
        June 30, 2008.
 
 **Guarantees**
 
 We
        have
        guaranteed certain borrowings of other unrelated third parties including
        short
        term bank loans. The total guaranteed amounts were $7,315,000 as of September
        30, 2008. The total amount of guarantees provided to us by unrelated third
        parties is $13,693,680.
 
 **Future
        cash commitments**
 
 The
        final
        cost of our new glucose facility was approximately $32 million, out of which
        the
        building accounted for approximately $10 million and machinery and equipment
        approximately $22 million. We are commencing start up operations in the new
        facility in stages with small amounts first and building up to larger
        quantities.
 We
          estimate the need for $6 million to $10 million per year to run the new
          glucose
          facilities at full capacity. However we are ramping up our production gradually,
          so the exact amount required will be determined based on both  the
          market demand of our products and the time needed for these facilities
          to run at
          full capacity. We will carefully review our financial condition and consider financing either with the cash internally generated, bank loans, or with
          additional equity.
  -34-
 **Critical
        Accounting Policies and Estimates**
 
 We
        have
        disclosed in the notes to our financial statements those accounting policies
        that we consider to be significant in determining our results of operations
        and
        our financial position which are incorporating by reference herein. We believe
        that the following reflect the more critical accounting policies that currently
        affect our financial condition and results of operations.
 
 ***Revenue
        recognition***
  We
        utilize the accrual method of accounting. Revenue is recognized when the
        products are delivered, title has passed, and collectibility is reasonably
        assured. Sales revenue represents the invoiced value of goods, net of
        value-added tax (VAT).
 
 ***Use
        of estimates***
 
 In
        preparing the consolidated financial statements in conformity with accounting
        principles generally accepted in the United States of America, management
        makes
        estimates and assumptions that affect the reported amounts of assets and
        liabilities and disclosures of contingent assets and liabilities at the dates
        of
        the financial statements, as well as the reported amounts of revenues and
        expenses during the reporting year. Significant estimates, required by
        management, include the recoverability of long-lived assets and the valuation
        of
        inventories. Actual results could differ from those estimates.
  ***Accounts
        Receivable***
 
 Accounts
        receivable are stated at net realizable value. Any allowance for doubtful
        accounts is established based on the management’s assessment of the
        recoverability of accounts and other receivables. Management reviews our
        accounts receivable on a regular basis to determine if the bad debt allowance
        is
        adequate. An estimate for doubtful accounts is made when collection of the
        full
        amount is no longer probable. Known bad debts are written off as incurred.
  ***Property
        and equipment***
 
 Property
        and equipment are stated at cost less accumulated depreciation. Depreciation
        is
        computed using straight-line method with a 3% residual value over the estimated
        useful lives of the assets.
 
 ***Foreign
        currency translation***
 
 Our
        functional currency is *Renminbi* (or
“RMB”). Foreign currency transactions are translated at the applicable rates of
        exchange in effect at the transaction dates. Monetary assets and liabilities
        denominated in foreign currencies at the balance sheet date are translated
        at
        the applicable rates of exchange in effect at that date. Revenues and expenses
        are translated at the average exchange rates in effect during the reporting
        period.
  -35-
  Translation
        adjustments arising from the use of different exchange rates from period
        to
        period are included as a component of stockholders’ equity as “Accumulated Other
        Comprehensive Income”. Gains and losses resulting from foreign currency
        translations are included in Accumulated Other Comprehensive
        Income.
 
 ***Recently
        issued accounting pronouncements***
 
 Included
        in the Notes to the Financial Statements.
 
 **Item
        4. Controls and Procedure****s**
 
 (a)
         Disclosure Controls and Procedures.
 
 Mr.
        Qingtai Liu, our Chief Executive Officer and Ms. Yiru Melody Shi, our Chief
        Financial Officer, evaluated the effectiveness of the design and operation
        of
        our disclosure controls and procedures, as defined in Rules 13a-15(e) and
        15d-15(e) under the Exchange Act, as of the end of the period covered by
        this
        Report. Based on that evaluation, our officers concluded that our disclosure
        controls and procedures were effective and adequately designed to ensure
        that
        the information required to be disclosed by us in the reports we submit under
        the Exchange Act is recorded, processed, summarized and reported within the
        time
        periods specified in the applicable rules and forms and that such information
        was accumulated and communicated to our chief executive officer and chief
        financial officer, in a manner that allowed for timely decisions regarding
        required disclosure.
 
 (b) Changes
        in Internal Control over Financial Reporting
 
 During
        the three months ended September 30, 2008, there has been no change in internal
        control over financial reporting that has materially affected, or is reasonably
        likely to materially affect our internal control over financial
        reporting.
  A
        control
        system, no matter how well conceived and operated, can provide only reasonable,
        not absolute, assurance that the objectives of the control systems are met.
        Because of the inherent limitations in all control systems no evaluation
        of
        controls can provide absolute assurance that all control issues, if any,
        within
        a company have been detected. Such limitations include the fact that human
        judgment in decision-making can be faulty and that breakdowns in internal
        control can occur because of human failures, such as simple errors or mistakes
        or intentional circumvention of the established process.
 
 **Other
        Information**
 
 The
        certifications of our Chief Executive Officer and Chief Financial Officer
        attached as Exhibits 31.1 and 31.2 to this Quarterly Report on Form 10-Q
        include, in paragraph 4 of such certifications, information concerning our
        disclosure controls and procedures and internal controls over financial
        reporting. Such certifications should be read in conjunction with the
        information contained in this Item 4 for a more complete understanding of
        the
        matters covered by such certifications.
  -36-
  PART
        II -
        OTHER INFORMATION.
  **Item
        1A. Risk Factors.**
 
 ***Our
        failure to contribute to certain designated statutory reserve funds prevents
        us
        for paying any dividends to our shareholders and this may adversely affect
        the
        value of your investment.***
 
 Under
        the
        PRC laws, Weifang Shengtai, a PRC wholly foreign -owned enterprise, is required
        to set aside 10% of its net income each year to fund certain designated
        statutory reserve funds until such reserve balance reaches 50% of its registered
        capital.  50% of our registered capital is $7,502,998. Our designated
        statutory reserve funds were $2,894,902 as of September 30, 2008. These reserves
        are not distributable other than during liquidation and can be used to fund
        previous years’ losses, if any, and may be utilized for business expansion or
        converted into share capital by issuance of new shares to existing shareholders
        in proportion to their shareholding or by increasing the par value of the
        shares
        currently held by them, provided that the remaining reserve balance after
        such
        issue is not less than 25% of the registered capital.  As of September 30,
        2008, Weifang Shengtai has not reached the required contributions to make
        payment of any dividends to its shareholders until such contributions have
        been
        made. We currently intend to retain all future earnings for use in the operation
        and expansion of our business.  However, our inability to pay dividends may
        adversely affect the market value of our common stock.
 
 Other
        than the above, there are no material changes in our risk factors from those
        disclosed in our Annual Report on Form 10-K filed with the SEC on September
        29,
        2008.
  **Item
        6. Exhibits**
 
 (a)
              Exhibits
 
 **Exhibit
                  No.**
              
              **Description**31.1
              
              Certification
                  pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e), as adopted
                  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Qingtai
                  Liu;31.2
              
              Certification
                  pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e), as adopted
                  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Yiru Shi;32.1
              
              Certification
                  pursuant to 18 U.S.C. 1350.
  -37-
 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.
  Shengtai
                  Pharmaceutical, Inc.
                (Registrant)Dated:
                  November 13, 2008
              
              /s/ Qingtai
                  LiuQingtai
                  LiuChief
                  Executive OfficerDated:
                  November 13, 2008
              /s/ Yiru
                  ShiYiru
                  ShiChief
                  Financial Officer
  -38-