UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549











Form
10-Q







x   QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934:





For the quarterly period endedMarch 31,
2010





o   TRANSITION REPORT UNDER SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934:





For the transition period from______ to _______





01-06914


Commission
File Number







Worldwide Biotech &
Pharmaceutical Company


(Name of
small business issuer in its charter)





Delaware


(State or
other jurisdiction of Incorporation)





59-0950777


(IRS
Employer Identification Number)





4
Fenghui South Road, 15th
Floor, A10-11501


Jie
Zuo Mansion, Xi'an, Shaanxi 710075


P.R.
China


(Address
of principal executive offices)





86-29-88193339


(Issuer's
telephone number)







Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes x  No
o





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files).  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
filer.  See definition of “accelerated filer” and “large accelerated
filer” in Rule 12b-2 of the Exchange Act (Check one):





Large
Accelerated Filer oAccelerated Filer oNon-Accelerated Filer oSmaller Reporting
Company x





Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12b-2 of the Securities Exchange Act of 1934) (check one): Yes o  No x





As of May
14, 2010, there were 53,915,653 shares of the common stock issued and
outstanding.









WORLDWIDE
BIOTECH & PHARMACEUTICAL COMPANY AND
SUBSIDIARIES





FORM
10-Q





March
31, 2010





TABLE
OF CONTENTS





PagePART
      I - FINANCIAL INFORMATIONITEM 1 - FINANCIAL STATEMENTS
            3ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
      CONDITION AND RESULTS OF OPERATIONS
            19ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK
            23ITEM 4  - CONTROLS AND PROCEDURES
            23PART
      II - OTHER INFORMATIONITEM 6 - EXHIBITS
            24SIGNATURES
            25




2
 Table of Contents





Item 1.  Financial Statements





WORLDWIDE
BIOTECH & PHARMACEUTICAL COMPANY





March
31, 2010





INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS





Contents
            Page(s)Consolidated Balance Sheets at March 31, 2010 (Unaudited) and
      December 31, 2009
            4Consolidated Statements of Operations for the Three Months
      Ended March 31, 2010 and 2009 (Unaudited)
            5Consolidated Statement of Comprehensive Loss for the Three
      Months Ended March 31, 2010 and 2009 (Unaudited)
            6Consolidated Statement of Changes in Equity (Deficit) for the
      Three Months Ended March 31, 2010 (Unaudited)
            7Consolidated Statements of Cash Flows for the Three Months
      Ended March 31, 2010 and 2009 (Unaudited)
            8Notes to the Consolidated Financial Statements
      (Unaudited)
            9 -
      18




3
 Table of Contents




WORLDWIDE
      BIOTECH & PHARMACEUTICAL COMPANYCONSOLIDATED
      BALANCE SHEETSMarch
      31, 2010
              
              
              December
      31, 2009(Unaudited)ASSETSCurrent
      Assets:Cash
              
              $
              236,495
              
              
              $
              595,478Accounts
      receivable, net (Note 4)
              
              
              4,501
              
              
              
              1,863Inventories
      (Note 5)
              
              
              162,118
              
              
              
              139,507Prepayments
      and other current assets
              
              
              184,154
              
              
              
              87,231Total
      Current Assets
              
              
              587,268
              
              
              
              824,079Property,
      plant and Equipment, net
              
              
              4,235,376
              
              
              
              4,316,918Land
      use rights, net
              
              
              764,114
              
              
              
              768,590Total
      Assets
              
              $
              5,586,758
              
              
              $
              5,909,587LIABILITIESCurrent
      liabilities:Loan
      payable (Note 7)
              
              $
              703,206
              
              
              $
              703,089Note
      payable- stockholder (Note 6)
              
              
              154,002
              
              
              
              161,300Current
      maturities of note payable - bank (Note 8)
              
              
              1,465,013
              
              
              
              1,464,768Accounts
      payable
              
              
              350,935
              
              
              
              354,617Due
      to related parties (Note 6)
              
              
              3,027,732
              
              
              
              3,090,339Other
      current liabilities
              
              
              2,147,803
              
              
              
              2,124,049Total
      Current Liabilities
              
              
              7,848,691
              
              
              
              7,898,162Total
      Liabilities
              
              
              7,848,691
              
              
              
              7,898,162EQUITY(DEFICIT)WWBP
      stockholders' equity(deficit):Common
      stock $.001 par value; 90,000,000 shares authorized;53,915,653
      shares issued and outstanding,
              
              
              53,916
              
              
              
              53,916Additional
      paid-in capital
              
              
              12,693,188
              
              
              
              12,669,140Accumulated
      deficit
              
              
              (14,888,112
              )
              
              
              (14,645,196
              )Accumulated
      other comprehensive income:Foreign
      currency translation gain
              
              
              161,895
              
              
              
              162,167Total
      WWBP stockholders' equity(deficit)
              
              
              (1,979,113
              )
              
              
              (1,759,973
              )Noncontrolling
      interest
              
              
              (282,820
              )
              
              
              (228,602
              )Total
      Equity(Deficit)
              
              
              (2,261,933
              )
              
              
              (1,988,575
              )Total
      Liabilities and Equity(Deficit)
              
              $
              5,586,758
              
              
              $
              5,909,587See
      accompanying notes to the consolidated financial
  statements




4
 Table of Contents




WORLDWIDE
      BIOTECH & PHARMACEUTICAL COMPANYCONSOLIDATED
      STATEMENTS OF OPERATIONS(UNAUDITED)For
      the Three Months EndedMarch
      31, 2010
              
              
              March
      31, 2009Net
      Revenues
              
              $
              3,995
              
              
              $
              18,265Cost
      of Goods Sold
              
              
              35,445
              
              
              
              13,589Gross
      Profit
              
              
              (31,450
              )
              
              
              4,676Operating
      Expenses:Selling
      expenses
              
              
              41,026
              
              
              
              1,518Research
      and development
              
              
              3,618
              
              
              
              -Professional
      fees
              
              
              877
              
              
              
              270General
      and administrative
              
              
              74,243
              
              
              
              75,502Total
      Operating Expenses
              
              
              119,764
              
              
              
              77,290Loss
      from Operations
              
              
              (151,214
              )
              
              
              (72,614
              )Other
      Expenses(Income):Interest
      income
              
              
              (33
              )
              
              
              (305
              )Interest
      expense
              
              
              112,064
              
              
              
              95,308Other
      expenses (income)
              
              
              (8,472
              )
              
              
              1,358Depreciation
      and production cost of idle capacity
              
              
              42,262
              
              
              
              60,920Total
      Other Expenses (Income)
              
              
              145,821
              
              
              
              157,281Net
      Loss
              
              
              (297,035
              )
              
              
              (229,895
              )Less:
      Net loss attributable to the noncontrolling interest
              
              
              54,119
              
              
              
              35,535Net
      Loss Attributable to WWBP common stockholders
              
              $
              (242,916
              )
              
              $
              (194,360
              )Net
      Loss Per Common ShareNet
      loss per common share - Basic and diluted
              
              $
              (0.00
              )
              
              $
              (0.00
              )Weighted
      average number of common shares outstanding-
      Basic and diluted
              
              
              53,915,653
              
              
              
              53,915,653See
      accompanying notes to the consolidated financial
    statements.




5
 Table of Contents




WORLDWIDE
      BIOTECH & PHARMACEUTICAL COMPANYCONSOLIDATED
      STATEMENTS OF COMPREHENSIVE LOSS(UNAUDITED)For
      the Three Months EndedMarch
      31, 2010
              
              
              March
      31, 2009Net
      loss
              
              $
              (297,035
              )
              
              $
              (229,895
              )Other
      comprehensive income(loss), net of tax:Foreign
      currency translation gain(loss)
              
              
              (371
              )
              
              
              (36,568
              )Comprehensive
      loss
              
              
              (297,406
              )
              
              
              (266,463
              )Comprehensive
      loss attributable to the noncontrolling interest
              
              
              54,218
              
              
              
              46,591Comprehensive
      loss attributable to WWBP
              
              $
              (243,188
              )
              
              $
              (219,872
              )See
      accompanying notes to the consolidated financial
    statements.




6
 Table of Contents




WORLDWIDE
      BIOTECH & PHARMACEUTICAL COMPANYCONSOLIDATED
      STATEMENTS OF CHANGES IN EQUITY (DEFICIT)FOR
      THE THREE MONTHS ENDED MARCH 31, 2010(UNAUDITED)WWBP
      StockholdersAccumulatedCommon
      Stock, $.001 Par Value
              
              
              Additional
              
              
              
              
              
              OtherComprehnsive
              
              Number
      of
              
              
              
              
              Paid-in
              
              
              Accumulated
              
              
              Comprehensive
              
              NoncontrollingTotal
              
              
              Income
              
              
              Shares
              
              
              Amount
              
              
              Capital
              
              
              Deficit
              
              
              Income
              
              
              InterestBalance,
      December 31, 2009
              
              $
              (1,988,575
              )
              
              
              
              
              
              53,915,653
              
              
              $
              53,916
              
              
              $
              12,669,140
              
              
              $
              (14,645,196
              )
              
              $
              162,167
              
              
              $
              (228,602
              )Interest
      for due to related parties
              
              
              24,048
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              24,048Comprehensive
      loss:Net
      loss
              
              
              (297,035
              )
              
              
              (297,035
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (242,916
              )
              
              
              
              
              
              
              (54,119
              )Other
      comprehensive loss, net of tax:Foreign
      currency translation loss
              
              
              (371
              )
              
              
              (371
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (272
              )
              
              
              (99
              )Comprehensive
      loss
              
              
              (297,406
              )
              
              $
              (297,406
              )Balance,
      March 31, 2010
              
              $
              (2,261,933
              )
              
              
              
              
              
              
              53,915,653
              
              
              $
              53,916
              
              
              $
              12,693,188
              
              
              $
              (14,888,112
              )
              
              $
              161,895
              
              
              $
              (282,820
              )See
      accompanying notes to the consolidated financial
  statements




7
 Table of Contents




WORLDWIDE
      BIOTECH & PHARMACEUTICAL COMPANYCONSOLIDATED
      STATEMENTS OF CASH FLOWS(UNAUDITED)For
      The Three Months EndedMarch
      31, 2010
              
              
              March
      31, 2009CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
              
              $
              (297,035
              )
              
              $
              (229,895
              )Adjustments
      to reconcile net loss to net cash provided by(used
      in) operating activities:Depreciation
      and amortization
              
              
              88,176
              
              
              
              108,310Imputed
      interest for due to related parties
              
              
              24,048
              
              
              
              30,034Changes
      in assets and liabilities:Accounts
      receivable
              
              
              (2,638
              )
              
              
              43Inventories
              
              
              (22,611
              )
              
              
              (37,297
              )Prepayments
      and other current assets
              
              
              (96,923
              )
              
              
              (24,507
              )Accounts
      payable
              
              
              (3,682
              )
              
              
              2,114Accrued
      expenses and other current liabilities
              
              
              23,754
              
              
              
              111,943NET
      CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
              
              
              (286,911
              )
              
              
              (39,255
              )CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchase
      of property and equipment
              
              
              (1,330
              )
              
              
              (21,510
              )NET
      CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
              
              
              (1,330
              )
              
              
              (21,510
              )CASH
      FLOWS FROM FINANCING ACTIVITIES:Repayment
      of note payable - stockholder
              
              
              (7,323
              )
              
              
              (36,570
              )Repayment
      for due to related parties
              
              
              (63,108
              )
              
              
              -Proceeds
      from stockholders/officers
              
              
              -
              
              
              
              47,188NET
      CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
              
              
              (70,431
              )
              
              
              10,618EFFECT
      OF EXCHANGE RATE CHANGES ON CASH
              
              
              (311
              )
              
              
              (34,679
              )NET
      CHANGE IN CASH
              
              
              (358,983
              )
              
              
              (84,826
              )CASH
      at beginning of period
              
              
              595,478
              
              
              
              190,039CASH
      at end of period
              
              $
              236,495
              
              
              $
              105,213SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW  INFORMATION:Interest
      paid
              
              $
              -
              
              
              $
              -See
      accompanying notes to the consolidated financial
    statements.




8
 Table of Contents





WORLDWIDE
BIOTECH & PHARMACEUTICAL COMPANY


Notes
to the Consolidated Financial Statements


March 31,
2010


(Unaudited)







NOTE 1 - ORGANIZATION AND
OPERATIONS





Worldwide
Biotech & Pharmaceutical Company, (“Worldwide” or the “Company”) was
incorporated in Delaware in 1961. In the fourth quarter of 2005, the Company
commenced revenue producing operations.





On April
20, 2004, as amended on August 3, 2004 and effective December 16, 2004, under an
Agreement and Plan of Reorganization, the Company issued 33,600,000 shares of
its common stock for the acquisition of all of the outstanding capital stock of
Yangling Daiying Biological Engineering Co., Ltd. (“Daiying”) with the former
shareholders of the Company retaining 1,057,102 or approximately 5% of the
outstanding stock. As a result of the ownership interests of the former
shareholders of Daiying, for financial accounting purposes, the exchange of
stock has been treated as a recapitalization of Worldwide with Daiying deemed
the accounting acquirer and Worldwide deemed the accounting acquiree under the
purchase method of accounting in accordance with Statement of Financial
Accounting Standards No. 141 “Business Combinations” (“SFAS
No. 141”). Additionally, as part of the Merger, the Company, whose former
name was Sun City Industries, Inc., amended its Articles of Incorporation, and
changed its name to Worldwide Biotech & Pharmaceutical
Company.





Daiying
was incorporated on November 26, 2001 in Shaanxi Province, the People's Republic
of China (the “PRC”). Its principal business activities are to develop and
market viruses/viral vectors, external diagnostic reagents, prophylactic
vaccines for humans, and oral solid dosage forms of traditional Chinese medicine
products.





On March
7, 2005, Daiying formed Shaanxi Daiying Medicine Distribution Co., Ltd.
(“Shaanxi”) with a stockholder of the Company, in which Daiying holds a 90%
interest. The stockholder's contribution for its 10% interest was Renminbi
(“RMB”) 500,000 (equivalent to $61,956 at December 31, 2005), which has been
reduced by its proportional share of Shaanxi's loss from inception-to-date.
Shaanxi's principal business activities are trading of medicine
products.





On July
26, 2005, Glory Dragon Investments Ltd. (“Glory Dragon”), an international
business company, was formed in the British Virgin Islands by the Company. Glory
Dragon then established a wholly-owned foreign investment company in the
People's Republic of China known as Shaanxi Allied Shine International
Investment Management Consulting Ltd. (“Shaanxi Allied”) on December 27, 2005.
Worldwide transferred all of its shares in Daiying to Shaanxi Allied on December
27, 2005.





On
January 19, 2006, Worldwide by and through its wholly owned subsidiary, Daiying,
entered into a Reorganization Agreement with Hunan Hua Yang Pharmaceutical Co.
Ltd. (“Hua Yang”) and its shareholders. Pursuant to this agreement, the Company
issued 482,800 shares of its common stock to the shareholders of Hua Yang to
acquire 51%. Hua Yang, incorporated on June 22, 1999 in Hunan Province, China,
engages in developing, manufacturing and marketing synthetic chemical medicine,
antibiotics, immune vaccine and nutrient supplements.





Also on
January 19, 2006, Daiying entered into a Reorganization Agreement with Hunan Ze
An Pharmaceutical Co. Ltd. (“Ze An”) and its shareholders.  Daiying paid
RMB3,400,000 (equivalent to US$424,115 at March 31, 2006) and 217,600 shares of
common stock of Worldwide for 65% of Ze An. Ze An was incorporated in February
2000 in Hunan Province, China, and engages in developing, manufacturing and
marketing essential traditional Chinese medicine, organic herbal medicine, and
neutraceutical products.





On
December 18, 2006, Daiying, Mr. Aibin Chen and Mr. Zuobin Li, minority
shareholders of Ze An and Hua Yang, entered into a Consolidation and
Reorganization Agreement (“Consolidation”).   Pursuant to the
Consolidation, Ze An merged into Hua Yang with Hua Yang assuming all assets and
liabilities of Ze An and Hua Yang continuing as the surviving entity. In
addition, as part of the Consolidation, Daiying acquired an additional 15%
equity interest in Ze An for a note payable to Mr. Zhongyu Lu, a former
shareholder of Ze An, of RMB 1,351,200 (equivalent to $172,954 at December 31,
2006). The note included the principal of RMB1.2 million (equivalent to $153,600
at December 31, 2006) and accrued interest of RMB151,200 (equivalent to $19,354
at December 31, 2006) based on an interest rate of 6.3% per annum with both
principal and interest due December 4, 2007; the note is currently passed due.
The Company owns a 67.3486% equity interest of Hua Yang subsequent to the
consolidation.


9
 Table of Contents
 
 WORLDWIDE
BIOTECH & PHARMACEUTICAL COMPANY
 Notes
to the Consolidated Financial Statements
 March 31,
2010
 (Unaudited)




NOTE 2 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES





Basis of
presentation





The
accompanying unaudited consolidated financial statements and related notes have
been prepared in accordance with accounting principles generally accepted in the
United States of America (“U.S. GAAP”) for interim financial information, and
with the rules and regulations of the United States Securities and Exchange
Commission to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by U.S. GAAP for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation of the financial position, results of operations and cash flows for
the interim periods have been included. These consolidated financial statements
should be read in conjunction with the consolidated financial statements of the
Company for the year ended December 31, 2008 and notes thereto contained in the
Report on Form 10-K of the Company as filed with the United States Securities
and Exchange Commission (the “SEC”) on March 31, 2010. Interim results are not
necessarily indicative of the results for the full year.





The
consolidated financial statements include all the accounts of the Company and
its wholly-owned and majority-owned subsidiaries. All significant inter-company
balances and transactions have been eliminated. The results of operations for
Hua Yang have been included in the Consolidated Statements of Operations and
Comprehensive Loss since the date of acquisition.





Reclassification





Certain
amounts in the prior period financial statements have been reclassified to
conform to the current period presentation. These reclassifications had no
effect on reported losses.





Use of
estimates





In
preparing these consolidated financial statements, management makes estimates
and assumptions that affect the reported amounts of assets and liabilities in
the balance sheets and revenues and expenses during the year reported. Actual
results may differ from these estimates. The Company regularly evaluates
estimates and assumptions related to obsolete inventory, useful life and
recoverability of long lived assets, and goodwill. The Company bases its
estimates and assumptions on current facts, historical experience and various
other factors that it believes to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values
of assets and liabilities and the accrual of costs and expenses that are not
readily apparent from other sources. The actual results experienced by the
Company may differ materially and adversely from the Company’s estimates. To the
extent there are material differences between the estimates and the actual
results, future results of operations will be affected.





Subsequent
Events





The
Company has evaluated subsequent events through the date that the financial
statements were issued, which was May 17, 2010, the date of the Company’s
Quarterly Report on Form 10-Q for the period ended March 31,
2010.





Cash
equivalents





Cash and
cash equivalents include cash on hand, demand deposits with banks and liquid
investments with an original maturity of three months or less. Cash deposits
with banks are held in financial institutions in China, which has no federally
insured deposit protection. Accordingly, the Company has a concentration of
credit risk related to these uninsured deposits.





Marketable
securities





Marketable
securities, available-for-sale, securities consisted of investments in the
equity of publicly traded companies in China and are stated at market value
based on the most recently traded price of these securities. Unrealized gains
and losses, determined by the difference between historical purchase price and
the market value at each balance sheet date, are recorded as a component of
Accumulated other comprehensive income in stockholders’ equity. Realized gains
and losses are determined by the difference between historical purchase price
and gross proceeds received when the marketable securities are
sold.




10
 Table of Contents
  WORLDWIDE
BIOTECH & PHARMACEUTICAL COMPANY
 Notes
to the Consolidated Financial Statements
 March 31,
2010
 (Unaudited)
 
  NOTE 2 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)





Trade
accounts receivable





Trade
accounts receivable are recorded at the invoiced amount, net of an allowance for
doubtful accounts. The allowance for doubtful accounts is the Company's best
estimate of the amount of probable credit losses in the Company's existing
accounts receivable. The Company determines the allowance based on historical
write-off experience, customer specific facts and economic conditions. Bad debt
expense is included in general and administrative expenses, if
any.





Outstanding
account balances are reviewed individually for collectibility. Account balances
are charged off against the allowance after all means of collection have been
exhausted and the potential for recovery is considered remote. The Company does
not have any off-balance-sheet credit exposure to its
customers.





Inventories





Inventories
are stated at the lower of cost or market value. Cost is determined using the
weighted average cost method. Costs include direct material, direct labor and
applicable manufacturing overhead. Market value is determined by reference to
selling prices after the balance sheet date or to management’s estimates based
on prevailing market conditions. Management writes down the inventories to
market value if market value is below cost. Management also regularly evaluates
the composition of the Company’s inventories to identify slow-moving and
obsolete inventories to determine if a valuation allowance is
required.





Property,
plant and equipment





Property,
plant and equipment are recorded at cost.  Expenditures for major additions
and betterments are capitalized.  Maintenance and repairs are charged to
operations as incurred. Depreciation of property, plant and equipment is
computed by the straight-line method (after taking into account their respective
estimated residual values) over the assets estimated useful lives ranging from
five (5) years to 20 years. Upon sale or retirement of property, plant and
equipment, the related cost and accumulated depreciation are removed from the
accounts and any gain or loss is reflected in operations. Leasehold
improvements, if any, are amortized on a straight-line basis over the lease
period or the estimated useful life, whichever is shorter. Upon becoming fully
amortized, the related cost and accumulated amortization are removed from the
accounts.  Construction in progress includes direct costs of construction
of factory building. Interest incurred during the period of construction has not
been capitalized as such amounts are considered to be immaterial at this time.
Construction in progress is not depreciated until such time as the assets are
completed and put into operational use.





Land use
rights





Land use
rights represent the cost to obtain the right to use land in the PRC. Land use
rights are carried at cost and amortized on a straight-line basis over the lives
of the right ranging from 40 to 50 years. Upon becoming fully amortized, the
related cost and accumulated amortization are removed from the
accounts.





Licenses





The
Company has adopted the guidelines as set out in the standard, “Goodwill and Other Intangible
Assets,” codified with ASC 350, for the licenses. Under the requirements
as set out in SFAS No. 142, the Company amortizes the costs of acquired licenses
over their remaining legal lives or the term of the contract, whichever is
shorter. Licenses are stated at cost less accumulated amortization and
accumulated impairment losses, if any. Upon becoming fully amortized, the
related cost and accumulated amortization are removed from the
accounts.





Impairment
of long-lived assets





The
Company follows the standard, “Accounting for the Impairment or
Disposal of Long-Lived Assets,” codified with ASC 360, for its long-lived
assets. The Company's long-lived assets, which include property, plant and
equipment, land use rights and licenses are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable.





The
Company assesses the recoverability of its long-lived assets by comparing the
projected undiscounted net cash flows associated with the related long-lived
asset or group of long-lived assets over their remaining estimated useful lives
against their respective carrying amounts. Impairment, if any, is based on the
excess of the carrying amount over the fair value of those assets. Fair value is
generally determined using the asset's expected future discounted cash flows or
market value, if readily determinable. If long-lived assets are determined to be
recoverable, but the newly determined remaining estimated useful lives are
shorter than originally estimated, the net book values of the long-lived assets
are depreciated over the newly determined remaining estimated useful lives. The
Company determined that there were no impairments of long-lived assets for the
three months ended March 31, 2010 and 2009.




11
 Table of Contents
  WORLDWIDE
BIOTECH & PHARMACEUTICAL COMPANY
 Notes
to the Consolidated Financial Statements
 March 31,
2010
 (Unaudited)
 
  NOTE 2 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)





Segment
information





The
standard, “Disclosures about
Segments of an Enterprise and Related Information,”codified with ASC
280, requires certain financial and supplementary information to be disclosed on
an annual and interim basis for each reportable segment of an enterprise. The
Company believes that it operates in one business segment (research,
development, production, marketing and sales of auto electronic products) and in
one geographical segment (China), as all of the Company’s current operations are
carried out in China.





Revenue
recognition





The
Company follows the guidance of the standard, “Revenue Recognition,”
codified with ASC 605, for revenue recognition. The Company revenue when
persuasive evidence of an arrangement exists, services have been rendered or
product delivery has occurred and the title and risk of loss transfer to the
buyer, the sales price to the customer is fixed or determinable, and
collectability is reasonably assured.  Persuasive evidence of an
arrangement is demonstrated via invoice to the customer; product delivery is
evidenced by the warehouse shipping log as well as a signed bill of lading from
the trucking company and no product return is allowed except for defective or
damaged products; the sales price to the customer is fixed upon acceptance of
the purchase order; and there are no separate sales rebates, discounts, or
volume incentives. The Company manufactures and distributes traditional Chinese
medicine, including drink tablets, synthetic medicine, antibiotics, biotech
medicine and biotech reagents; wholesale Class II medical devices, Class III
medical devices, including but not limited to, medical sewing materials and
bond, medical high molecular materials and products, and disposable sterile
medical devices. The majority of the Company's revenue derives from sales
contracts with distributors. The Company sells certain products to certain
customers on a consignment basis. The Company records revenue for consignment
transactions when the consignee sells the product to the end
users.





Stock
based compensation





Effective
January 1, 2006, the Company adopted the fair value recognition provisions of
Statement of Financial Accounting Standards No. 123 (revised 2004) “Share-Based Payment” (“SFAS
No. 123R”) using the modified prospective method. On January 12, 2007, the
Company issued 1,400,000 shares of its common stock to three employees pursuant
to the 2005 Non-Qualified Stock Compensation Plan (see Note 15(i)). The Company
valued the shares at $0.15 per share, the closing price of the Company's common
stock on the date of issuance and charged $210,000 to stock based
compensation.  The Company did not issue any stock options or warrants to
any employees, directors, officers or third parties since January 1,
2006.





Research
and development





Research
and development costs are charged to expense as incurred. Research and
development costs consist primarily of remuneration for research and development
staff, depreciation and maintenance expenses of research and development
equipment and material costs for research and development.





Government
grants





Receipts
of government grants to encourage research and development activities which are
non-refundable are credited to deferred income upon receipt. The Company
recognizes government grants income when the government completes inspection on
regulated use of the subsidy. There was no government grants income recognized
for the three months ended March 31, 2010 or 2009. As of March 31 2010,
government grants of $366,253 were recorded as deferred income.





Shipping
and handling costs





The
Company accounts for shipping and handling fees in accordance with the Financial
Accounting Standards Board Emerging Issues Task Force Issue No. 00-10 “Accounting for Shipping and
Handling Fees and Costs” (“EITF Issue No. 00-10”). While amounts charged
to customers for shipping product are included in revenues, the related costs
are classified in cost of goods sold as incurred.




12
 Table of Contents


WORLDWIDE
BIOTECH & PHARMACEUTICAL COMPANY
 Notes
to the Consolidated Financial Statements
 March 31,
2010
 (Unaudited)
 
  NOTE 2 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)





Income
taxes





The
Company follows the standard, “Accounting for Income
Taxes,” codified with ASC 740, which requires recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that
have been included in the financial statements or tax returns. Under this
method, deferred tax assets and liabilities are based on the differences between
the financial statement and tax bases of assets and liabilities using enacted
tax rates in effect for the year in which the differences are expected to
reverse. Deferred tax assets are reduced by a valuation allowance to the extent
management concludes it is more likely than not that the assets will not be
realized. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in the
Consolidated Statements of Operations and Comprehensive Income in the period
that includes the enactment date.





Fair
value of financial instruments





The
Company adopted the standard “Fair Value Measurements,” codified with ASC 820
and effective January 1, 2008.  The provisions of ASC 820 are to be
applied prospectively.





ASC 820
clarifies that fair value is an estimate of the exit price, representing the
amount that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants (i.e., the exit price at
the measurement date).  Under ASC 820, fair value measurements are not
adjusted for transaction cost.  ASC 820 provides for use of a fair
value hierarchy that prioritizes inputs to valuation techniques used to measure
fair value into three levels:





Level
      1:
            Unadjusted
      quoted prices in active markets for identical assets or
      liabilities





Level
      2:
            Input
      other than quoted market prices that are observable, either directly or
      indirectly, and reasonably available.  Observable inputs reflect
      the assumptions market participants would use in pricing the asset or
      liability and are developed based on market data obtained from sources
      independent of the Company.





Level
      3:
            Unobservable
      inputs.  Unobservable inputs reflect the assumptions that the
      Company develops based on available information about what market
      participants would use in valuing the asset or
  liability.





An asset
or liability’s level within the fair value hierarchy is based on the lowest
level of any input that is significant to the fair value
measurement.  Availability of observable inputs can vary and is
affected by a variety of factors.  The Company uses judgment in
determining fair value of assets and liabilities and Level 3 assets and
liabilities involve greater judgment than Level 1 and Level 2 assets or
liabilities.





Foreign
currency translation





Transactions
and balances originally denominated in U.S. dollars are presented at their
original amounts. Transactions and balances in other currencies are converted
into U.S. dollars in accordance with the standard, “Foreign Currency
Translation,” codified with ASC 830.





The
financial records of the Company are maintained in their local currency, the
Renminbi (“RMB”), which is the functional currency. Assets and liabilities are
translated from the local currency into the reporting currency, U.S. dollars, at
the exchange rate prevailing at the balance sheet date. Revenues and expenses
are translated at weighted average exchange rates for the period to approximate
translation at the exchange rates prevailing at the dates those elements are
recognized in the combined and consolidated financial statements. Foreign
currencytranslation gain (loss)
resulting from the process of translating the local currency financial
statements into U.S. dollars are included in determining accumulated other
comprehensive income in the consolidated statement of stockholders'
equity.





RMB is
not a fully convertible currency. All foreign exchange transactions involving
RMB must take place either through the People's Bank of China (the “PBOC”) or
other institutions authorized to buy and sell foreign exchange. The exchange
rate adopted for the foreign exchange transactions are the rates of exchange
quoted by the PBOC, which are determined largely by supply and demand.
Translation of amounts from RMB into United States dollars (“US$”) has been made
at the following exchange rates for the respective years:




13
 Table of Contents




WORLDWIDE
BIOTECH & PHARMACEUTICAL COMPANY
 Notes
to the Consolidated Financial Statements
 March 31,
2010
 (Unaudited)
 
  NOTE 2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


March 31,
2010





Balance
sheet   RMB 6.8259 to US$1.00





Statement
of operations and comprehensive income (loss) RMB 6.8275 to
US$1.00





December 31,
2009





Balance
sheet   RMB 6.8270 to US$1.00





Statement
of operations and comprehensive income (loss) RMB 6.8311to
US$1.00





March 31,
2009





Balance
sheet   RMB 6.8336 to US$1.00





Statement
of operations and comprehensive income (loss) RMB 6.8363 to
US$1.00





Commencing
July 21, 2005, China adopted a managed floating exchange rate regime based
on market demand and supply with reference to a basket of currencies. The
exchange rate of the US dollar against the RMB was adjusted from approximately
RMB 8.2765 per US dollar to approximately RMB 8.11 per US dollar on
July 21, 2005. Since then, the PBOC administers and regulates the exchange
rate of the US dollar against the RMB taking into account demand and supply of
RMB, as well as domestic and foreign economic and financial
conditions.





Net gains
and losses resulting from foreign exchange transactions, if any, are included in
the Consolidated Statements of Operations and Comprehensive loss. The foreign
currency translation gain(loss) for the three months ended March 31, 2010 and
2009 were and $(371) and $(36,568) and effect of exchange rate changes on cash
flows for the three months period then ended were $(311) and $(34,679),
respectively.




Related
parties





A party
is considered to be related to the Company if the party directly or indirectly
or through one or more intermediaries, controls, is controlled by, or is under
common control with the Company. Related parties also include principal owners
of the Company, its management, members of the immediate families of principal
owners of the Company and its management and other parties with which the
Company may deal if one party controls or can significantly influence the
management or operating policies of the other to an extent that one of the
transacting parties might be prevented from fully pursuing its own separate
interests. A party which can significantly influence the management or operating
policies of the transacting parties or if it has an ownership interest in one of
the transacting parties and can significantly influence the other to an extent
that one or more of the transacting parties might be prevented from fully
pursuing its own separate interests is also a related party.





Comprehensive
income (loss)





The Company has adopted the
standard, “Reporting
Comprehensive Income” codified with ASC 220. This statement establishes
rules for the reporting of comprehensive income (loss) and its components.
Comprehensive income (loss), for the Company, consists of net loss and foreign
currency translation adjustments and is presented in the Consolidated Statements
of Operations and Comprehensive Income (loss) and Stockholders'
Equity.





Net loss
per common share





Net loss
per common share is computed pursuant to the standard, “Earnings Per Share,”
codified with ASC 260. Basic net loss per common share is computed by dividing
net loss by the weighted average number of shares of common stock outstanding
during each period. Diluted net loss per common share is computed by dividing
net loss by the weighted average number of shares of common stock and
potentially outstanding shares of common stock during each period.  There
were no potentially dilutive shares outstanding as of March 31,
2010.





Commitments
and contingencies





Liabilities
for loss contingencies arising from claims, assessments, litigation, fines and
penalties and other sources are recorded when it is probable that a liability
has been incurred and the amount of the assessment can be reasonably
estimated.




14
 Table of Contents




WORLDWIDE
BIOTECH & PHARMACEUTICAL COMPANY
 Notes
to the Consolidated Financial Statements
 March 31,
2010
 (Unaudited)
 
  NOTE 2 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)


Recent Accounting
Pronouncements





In
June 2009, the FASB issued a new standard regarding the accounting for
transfers of financial assets amending the existing guidance on transfers of
financial assets to, among other things, eliminate the qualifying
special-purpose entity concept, include a new unit of account definition that
must be met for transfers of portions of financial assets to be eligible for
sale accounting, clarify and change the derecognition criteria for a transfer to
be accounted for as a sale, and require significant additional disclosure. For
the Company, this standard is effective for new transfers of financial assets
beginning January 1, 2010. Because the Company historically does not have
significant transfers of financial assets, the adoption of this standard is not
expected to have a material impact on the Company’s consolidated results of
operations or financial condition.





In
June 2009, the FASB issued a new standard that revises the consolidation
guidance for variable-interest entities. The modifications include the
elimination of the exemption for qualifying special purpose entities, a new
approach for determining who should consolidate a variable-interest entity, and
changes to when it is necessary to reassess who should consolidate a
variable-interest entity. For the Company, this standard was effective
January 1, 2010. The adoption of this standard did not have a material
impact on the Company’s consolidated results of operations or financial
condition.





In
October 2009, the FASB issued ASU No. 2009-13, “Multiple-Deliverable
Revenue Arrangements—a consensus of the FASB Emerging Issues Task Force,” that
provides amendments to the criteria for separating consideration in
multiple-deliverable arrangements. As a result of these amendments,
multiple-deliverable revenue arrangements will be separated in more
circumstances than under existing U.S. GAAP. The ASU does this by establishing a
selling price hierarchy for determining the selling price of a deliverable. The
selling price used for each deliverable will be based on vendor-specific
objective evidence if available, third-party evidence if vendor-specific
objective evidence is not available, or estimated selling price if neither
vendor-specific objective evidence nor third-party evidence is available. A
vendor will be required to determine its best estimate of selling price in a
manner that is consistent with that used to determine the price to sell the
deliverable on a standalone basis. This ASU also eliminates the residual method
of allocation and will require that arrangement consideration be allocated at
the inception of the arrangement to all deliverables using the relative selling
price method, which allocates any discount in the overall arrangement
proportionally to each deliverable based on its relative selling price. Expanded
disclosures of qualitative and quantitative information regarding the
application of the multiple-deliverable revenue arrangement guidance are also
required under the ASU. The ASU does not apply to arrangements for which
industry specific allocation and measurement guidance exists, such as long-term
construction contracts and software transactions. For the Company, ASU
No. 2009-13 is effective beginning January 1, 2011. The Company may
elect to adopt the provisions prospectively to new or materially modified
arrangements beginning on the effective date or retrospectively for all periods
presented. The Company is currently evaluating the impact of this standard on
its Company’s consolidated results of operations and financial
condition.





In
October 2009, the FASB issued ASU No. 2009-14, “Certain Revenue
Arrangements That Include Software Elements—a consensus of the FASB Emerging
Issues Task Force,” that reduces the types of transactions that fall within the
current scope of software revenue recognition guidance. Existing software
revenue recognition guidance requires that its provisions be applied to an
entire arrangement when the sale of any products or services containing or
utilizing software is considered more than incidental to the product or service.
As a result of the amendments included in ASU No. 2009-14, many tangible
products and services that rely on software will be accounted for under the
multiple-element arrangements revenue recognition guidance rather than under the
software revenue recognition guidance. Under the ASU, the following components
would be excluded from the scope of software revenue recognition guidance: 
the tangible element of the product, software products bundled with tangible
products where the software components and non-software components function
together to deliver the product’s essential functionality, and undelivered
components that relate to software that is essential to the tangible product’s
functionality. The ASU also provides guidance on how to allocate transaction
consideration when an arrangement contains both deliverables within the scope of
software revenue guidance (software deliverables) and deliverables not within
the scope of that guidance (non-software deliverables). For the Company, ASU
No. 2009-14 is effective beginning January 1, 2011. The Company is
currently evaluating the impact of this standard on the its consolidated results
of operations and financial condition.





In
January 2010, the FASB issued ASU No. 2010-6, “Improving Disclosures
About Fair Value Measurements,” that amends existing disclosure requirements
under ASC 820 by adding required disclosures about items transferring into and
out of Levels 1 and 2 in the fair value hierarchy; adding separate disclosures
about purchases, sales, issuances, and settlements relative to Level 3
measurements; and clarifying, among other things, the existing fair value
disclosures about the level of disaggregation. For the Company, this ASU is
effective for the first quarter of 2010, except for the requirement to provide
Level 3 activity of purchases, sales, issuances, and settlements on a gross
basis, which is effective beginning the first quarter of 2011. Since this
standard impacts disclosure requirements only, its adoption will not have a
material impact on the Company’s consolidated results of operations or financial
condition.




15
 Table of Contents




WORLDWIDE
BIOTECH & PHARMACEUTICAL COMPANY
 Notes
to the Consolidated Financial Statements
 March 31,
2010
 (Unaudited)
 
  NOTE 2 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)




In
March 2010, the FASB ratified a consensus of the FASB Emerging Issues Task
Force that recognizes the milestone method as an acceptable revenue recognition
method for substantive milestones in research or development arrangements. This
consensus would require its provisions be met in order for an entity to
recognize consideration that is contingent upon achievement of a substantive
milestone as revenue in its entirety in the period in which the milestone is
achieved. In addition, this consensus would require disclosure of certain
information with respect to arrangements that contain milestones. For the
Company, this guidance would be required prospectively beginning January 1,
2011. The Company is currently evaluating the impact of this consensus on its
consolidated results of operations and financial condition.





NOTE 3 - GOING
CONCERN





The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern.  As reflected in the
accompanying consolidated financial statements, the Company has an accumulated
deficit of $14,888,112 and a working capital deficiency of $7,261,423 at March
31, 2010, a net loss of $297,035 and net cash used in operations of $286,911 for
the three months ended March 31, 2010, respectively.





While the
Company is attempting to produce sufficient revenues, the Company's cash
position may not be enough to support the Company's daily operations. Management
intends to raise additional funds by way of a public or private offering. 
Management believes that the actions presently being taken to further implement
its business plan and generate sufficient revenues provide the opportunity for
the Company to continue as a going concern.  While the Company believes in
the viability of its strategy to increase revenues and in its ability to raise
additional funds, there can be no assurances to that effect. The ability of the
Company to continue as a going concern is dependent upon the Company's ability
to further implement its business plan and generate sufficient revenues. The
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.





NOTE 4 - ACCOUNTS
RECEIVABLE





Accounts
receivable at March 31, 2010 and December 31, 2009 consisted of the
following:




March
      31
              
              
              December
      312010
              
              
              2009Accounts
      Receivable
              
              $
              536,172
              
              
              $
              533,446Less:
      Allowance for doubtful accounts
              
              
              (531,671
              )
              
              
              (531,583
              )$
              4,501
              
              
              $
              1,863





For the
three month period ended March 31, 2010 and 2009, the Company did not record any
bad debt expense.





NOTE 5 -
INVENTORIES





Inventories
at March 31, 2010 and December 31, 2009 consisted of the
following:




March
      31
              
              
              December
      312010
              
              
              2009Raw
      Material
              
              $
              118,309
              
              
              $
              114,925Work
      in process
              
              
              277,446
              
              
              
              259,198Finished
      goods
              
              
              481,915
              
              
              
              480,816877,670
              
              
              
              854,939Less:
      Inventory obsolescence
              
              
              (715,552
              )
              
              
              (715,432
              )$
              162,118
              
              
              $
              139,507







16
 Table of Contents




WORLDWIDE
BIOTECH & PHARMACEUTICAL COMPANY
 Notes
to the Consolidated Financial Statements
 March 31,
2010
 (Unaudited)
 
  NOTE 6 - RELATED PARTY
TRANSACTIONS





Due to
and notes payable - related parties at March 31, 2010 and December 31, 2009
consisted of the following:




March
      31
                    
                    
                    December
      312010
                    
                    
                    2009Due to related parties (a)Guo,
      Wenxia
                    CEO;
      Stockholder; Stockholder of Daiying
                    
                    $
                    277,490
                    
                    
                    $
                    291,407Xian
      Jin Hao Tech
                    Stockholder;           Stockholder
      of Daiying
                    
                    
                    1,278,795
                    
                    
                    
                    1,308,568Daiying
      Bio-Tech Research Institute
                    The
      entity controlled by Guo,Wenxia
                    
                    
                    1,344,590
                    
                    
                    
                    1,363,528Li,
      Zhuobin
                    Stockholder;          Stockholder
      of Hua Yang
                    
                    
                    2,773
                    
                    
                    
                    2,773Chen,
      Aibin
                    Stockholder;          Stockholder
      of Hua Yang
                    
                    
                    124,084
                    
                    
                    
                    124,063$
                    3,027,732
                    
                    
                    $
                    3,090,339Note payable- stockholder
    (b)Lu,
      Zhongyu
                    Prior
      Stockholder of Ze An
                    
                    $
                    154,002
                    
                    
                    $
                    161,300





The chief
executive officer and a stockholder advanced funds to the Company for its
working capital. These advances are unsecured, due on demand and non-interest
bearing.





Due to
Xian Jin Hao Tech bears the interest at 12% per annum. For the three months
ended March 31, 2010 and 2009, the interest expense was $48,677 and $25,640
respectively.





Note
payable to a stockholder is unsecured, payable to a stockholder with interest at
6.3% per annum and due December 4, 2007.  The note is currently past
due. For the three months ended March 31, 2010 and 2009, the interest
expense accrued for this note payable was $2,483 and $2,825,
respectively.





On March
31, 2007, Xian Jin Hao Sci-Tech Investment Management Co., Ltd. (Xian Jin Hao),
a stockholder of the Company converted RMB7.73 million (equivalent to $1 million
at the date of conversion) to 10,000,000 shares of the Company’s common stock at
$0.10 per share, the closing price of the Company’s common stock on the date of
conversion





On
September 30, 2007, the Company and Xian Jin Hao, a stockholder of the Company
reached an agreement whereby the Company transferred certain property to Xian
Jin Hao, with the original cost of RMB3,030,707 and Xian Jin Hao assumed the
remaining mortgage of RMB1,087,250 and relieved debt of RMB1,943,457. Upon
transfer of the property, the related cost of RMB3,030,707 (equivalent to
$41,547 at December 31, 2007), accumulated depreciation of RMB447,032 ($61,283)
remaining mortgage of RMB1,087,250 ($149,049) and the payable to Jin Hao of
RMB1,943,457 ($266,424) were removed from the accounts with the excess value of
the payable and assumed mortgage over the net book value of the transferred
property being recorded as a contribution to capital.





Some due
to related parties do not bear interest and have no definite terms of repayment.
For the three months ended, March 31, 2010 and 2009, the Company imputed
interest of $24,048 and $30,034, respectively, based on a 5.5% interest rate
which approximates the bank lending rate.




Daiying
Bio-Tech Research Institute rents Company’s building for processing Emergency
Haemostatic Patch. The lease agreement is valid from 2009 to 2016. The net value
of leased building is $1,580,940 as of March 31, 2010. For the three months
ended March 31, 2010 and 2009, other income-rental from this lease
agreement was $8,788 and $0, respectively.




17
 Table of Contents





NOTE 7 – LOAN PAYABLE





Loan
payable is collateralized by all of Hua Yang’s equipment, building and land use
right, payable to a financial institution, with interest at 6.696% per annum
payable monthly, with principal due May 27, 2007. The loan is currently past
due. The Company paid interest through May 20, 2007 and interest accrued through
March 31, 2010 was included in accrued interest.  The net value of
equipment, building and land use right collateralized for this loan is
$2,830,892 as of March 31, 2010.





NOTE
8 – CURRENT MATURITIES OF NOTE PAYABLE- BANK





Note
payable - bank is collateralized by all of Hua Yang’s equipment, building and
land use right, and is payable to a financial institution, with interest at
6.696% per annum payable monthly, with RMB5 million (equivalent $667,307) due
April 29, 2007 and RMB5 million ($667,308) due April 27, 2008. The note is
currently past due for the first principal payment due on April 29, 2007. The
Company paid interest through May 20, 2007 and interest accrued through March
31, 2010 was included in accrued interest





The
accrued interest for above Loan Payable and Current Maturities of Note Payable
was $489,167 and $452,234 as of March 31, 2010 and December 31, 2009,
respectively. Interest expense accrued for above Loan Payable and Current
Maturities of Note Payable was $36,857 and $36,809 for the three months ended
March 31, 2010 and 2009, respectively.





NOTE 9 - CONCENTRATIONS AND CREDIT
RISK





Credit risk





Financial
instruments that potentially subject the Company to significant concentration of
credit risk consist primarily of cash and cash equivalents.  As of March
31, 2010, substantially all of the Company's cash and cash equivalents were held
by major financial institutions located in the PRC, none of which are insured.
However, the Company has not experienced losses on these accounts and management
believes that the Company is not exposed to significant risks on such
accounts.





NOTE
10 - FOREIGN OPERATIONS





(i) Operations





Substantially
all of the Company's operations are carried out and all of its assets are
located 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. The Company's business may be influenced by changes in
governmental policies with respect to laws and regulations, anti-inflationary
measures, currency fluctuation and remittances and methods of taxation, among
other things.





(ii) Dividends and
reserves





Under the
Corporation Law of the PRC, net income after taxation can only be distributed as
dividends after appropriation has been made for the following: (i) cumulative
prior years' losses, if any; (ii) allocations to the “Statutory Surplus Reserve”
of at least 10% of net income after tax, as determined under PRC accounting
rules and regulations, until the fund amounts to 50% of the Company's registered
capital; (iii) allocations of 5-10% of income after tax, as determined under PRC
accounting rules and regulations, to the Company's “Statutory Common Welfare
Fund,” which is established for the purpose of providing employee facilities and
other collective benefits to employees in PRC; and (iv) allocations to any
discretionary surplus reserve, if approved by stockholders.





As of
March 31, 2010, the Company had no Statutory Surplus Reserve and the
Statutory Common Welfare Fund established and segregated in retained
earnings.





18
 Table of Contents




Item
2. Management's Discussion and Analysis of Financial Condition and Results of
Operations
 
 A.
              PRELIMINARY
      NOTE REGARDING FORWARD-LOOKING
STATEMENTS
 
 The
following analysis of the Company's results of operations and financial
condition should be read in conjunction with the financial statements of
Worldwide Biotech & Pharmaceutical Company for the year ended December 31,
2009 and notes thereto contained in the Report on Form 10-K of Worldwide
Biotech & Pharmaceutical Company as filed with the Securities and Exchange
Commission.
 
 This
document contains certain forward-looking statements including, among others,
anticipated trends in our financial condition and results of operations and our
business strategy. These forward-looking statements are based largely on our
current expectations and are subject to a number of risks and uncertainties.
Actual results could differ materially from these forward-looking statements.
Important factors to consider in evaluating such forward-looking statements
include (i) changes in external factors or in our internal budgeting process
which might impact trends in our results of operations; (ii) unanticipated
working capital or other cash requirements; (iii) changes in our business
strategy or an inability to execute our strategy due to unanticipated changes in
the industries in which we operate; and (iv) various competitive market factors
that may prevent us from competing successfully in the marketplace.
 
 B.
              OVERVIEW
      OF BUSINESS
 
 The
Company was incorporated in Delaware in 1961. On Dec. 16, 2004, through a
Reorganization Agreement, the Company reorganized with Yangling Daiying Biotech
& Pharmaceutical Group Co., Ltd. (“Daiying”), located at Yangling High-tech
Agricultural Demonstration Zone, P.R. China. The Company operates its business
mainly through its wholly-owned subsidiary, Daiying and its subsidiaries in P.R.
China. The Company focuses on research and development, manufacture and
distribution of in vitro diagnostics, human vaccine, biomedicines, traditional
Chinese medicines, synthetic medicines and medical devices with frontier
technologies and great potential.
 
 Summary
of Research and Development
 
 As a
biotech-focused company, we have made significant progress on our Hepatitis C
virus (“HCV”) research pipelines. We successfully set up an in vitro intact HCV
culturing system that can continuously replicate HCV in vitro and we are the
first entity in the world to break this bottleneck in the HCV research field.
Secondly, we developed a new generation of HCV diagnostic reagents that was
fully approved for production and sales by the State Food and Drug
Administration (“SFDA”) in China in 2006. We also established a high-throughput
anti-HCV medicine screening system and started screening anti-HCV medicines. We
expect to get one or two new anti-HCV leads in the next two years if we can
raise enough capital funding for our research. We are actively developing an HCV
human vaccine and in 2006, we successfully created two replication-deficient HCV
strains that induced high immune responses in rabbit test subjects. We are now
optimizing large-quantity purification methods for replication-deficient HCV and
setting up ideal animal models for efficacy and safety studies of HCV human
vaccine. Meanwhile, we will actively seek new collaboration opportunities and
promising research projects. Our progress on research projects depends on our
ability to raise enough funding in the future.
 
 Corporate
Events and Accomplishments
 
 Our
growth and development as a business enterprise has been marked by a number of
significant corporate events. Daiying acquired Hunan Hua Yang Pharmaceutical
Co., Ltd. (Hua Yang) and Hunan Ze An Pharmaceutical Co., Ltd. (Ze An) on January
19, 2006. On December 18, 2006, Daiying, Mr. Aibin Chen and Mr. Zuobin Li,
minority shareholders of Ze An and Hua Yang, entered into a Consolidation and
Reorganization Agreement (“Consolidation”). Pursuant to the Consolidation Ze An
merged into Hua Yang with Hua Yang as a surviving entity. In addition, as part
of the Consolidation, Daiying acquired a 15% equity interest in Ze An for a note
payable to Mr. Zhongyu Lu, a former shareholder of Ze An, of RMB1,351,200
(equivalent to $172,954 at December 31, 2006). The note included the principal
of RMB1.2 million (equivalent to $153,600 at December 31, 2006) and accrued
interest of RMB151,200 (equivalent to $19,354 at December 31, 2006) based
on an interest rate of 6.3% per annum with both principal and interest due
December 4, 2007. The purpose of the Consolidation was to optimize capital
resources and to minimize operating expenses.
 
 With the
completion of these reorganization transactions, the Company now owns two
manufacturing facilities: the research and development and manufacturing
headquarters of the Company, Daiying, is located at Yangling Hi-tech
Demonstration Zone, Shaanxi Province, P.R. China. Daiying purchased the right to
use 35,940 square meters of land and constructed a 5,359 square meter fully
equipped manufacturing facility. Daiying owns six (6) traditional Chinese
medicines and HCV in vitro diagnostics, which have National Drug Production
Licenses from the China SFDA. Hua Yang purchased the right to use 51,640 square
meters of land with a GMP-compliant manufacturing facility of 13,093 square
meters. Hua Yang owns 29 medicines with National Drug Production Licenses and
one (1) functional food with a National Food Production License from the
SFDA.




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In
addition, the Company entered into a sole distribution agreement with Taramedic
Corporation Sdn. BHD (“Taramedic”), a Malaysian company, to distribute its Tara
KLamp® Disposable Circumcision Device (“Tara KLamp”). Taramedic owns patents for
Tara KLamp in both Malaysia and China. Tara KLamp has been registered with
the SFDA and sales began in 2006.
 
 On March
28, 2007, Daiying, and Shaanxi Yangling Daiying Biotech Research Institute
(“Institute”), entered into an Entrusting Agreement (the “Entrusting Agreement”)
with respect to the commercialization of an Emergency Haemostatic Patch
developed and patented in China by the Institute. Pursuant to the Entrusting
Agreement, Daiying agreed to register the Emergency Haemostatic Patch (“Patch”)
with the SFDA. All expenses associated with the registration process incurred by
Daiying were paid by the Institute. The Company is currently producing and
selling the SFDA-approved Emergency Haemostatic Patch product in
China.
 
 To
continue its research and development on HCV products and facilitate the
transition from focusing on research and development to engaging in both
research and commercialization of new medical products, the Company may have to
rely on its ability to raise additional capital during the next twelve months.
In the case that the Company does not meet its fundraising goal in the year
2010, the above research projects will be delayed and production might not meet
the market demand for the Company's new product.
 
 Results
of Operations for the three months ended March 31, 2010 compared to the three
months ended March 31, 2009
 
 The
following analysis shows the selected unaudited consolidated statement of
operations data of the Company for the three month periods ended March 31, 2010
and March 31, 2009.
 
 Revenues
 
 For the
three months ended March 31, 2010, our revenues were $3,995 as
compared to $18,265 for the three months ended March 31, 2009, a decrease of
$14,270. We attribute this decrease in net revenues to the reduced amounts of
goods sold by our subsidiaries as a result of greater competition in the
pharmaceutical market.
 
 Cost
of Sales and Gross Profit
 
 For the
three months ended March 31, 2010, cost of sales amounted to $35,445 as
compared to cost of sales of $13,589 for the three months ended March 31, 2009.
The increase in cost of sales is due to higher production costs and marketing
expenses. Gross profit for the three months ended March 31, 2010
was $(31,450), as compared to $4,676 for the three months ended March 31,
2009.
 
 Operating
Expenses
 
 For the
three months ended March 31, 2010, total operating expenses were
$119,764 as compared to $77,290 for the three months ended March 31, 2009,
an increase of $42,474, or approximately 55%.
 
 Included
in this increase was:
 
 —
              Selling
      expenses of $41,026 as compared to $1,518, respectively, an increase of
      $39,508, which is attributable to more expenditure on marketing
      activities.
 —
              Research
      and development costs of $3,618 as compared to $0, respectively, an
      increase of $3,618.  This increase was due to the Company
      spending more on research and development to improve the quality of its
      products.
 
 For the
three months ended March 31, 2010, interest expense was $112,064 as compared to
$95,308 for the three months ended March 31, 2009. For the three months ended
March 31, 2010, other expenses were $145,821 as compared to $157,281 for the
three months ended March 31, 2009.  The decrease in other expenses for
the period was mainly due to a reduction in depreciation and production cost of
idle capacity.




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As a
result of these factors, the Company reported a net loss of $297,035 or $0.00
per share for the three months ended March 31, 2010, as compared to a net loss
of $229,895 or $0.00 per share for the same period in 2009.
 
 LIQUIDITY
AND CAPITAL RESOURCES
 
 At March
31, 2010, we had cash and cash equivalents of $236,495.
  Net cash
used in operating activities for the three months ended March 31, 2010 was
$286,911 as compared to $39,255 for the three months ended March 31, 2009. For
the three months ended March 31, 2010, we used cash to fund our loss of
$297,035; our inventories increased by $22,611; accounts payable decreased by
$3,682;  accounts receivable increased by $2,638; prepayments and
other current assets increased by $96,923; accrued liabilities and other payable
increased by $23,754, offset by non-cash items such as depreciation and
amortization of $88,176 and $24,048 imputed interest due to related parties. For
the three months ended March 31, 2009, we used cash to fund our loss of
$229,895; our inventories increased by $37,297; prepayments and other current
assets increased by $24,507, accounts payable increased by $2,114, increasing
accrued expenses and other current liabilities by $111,943, offset by non-cash
items such as depreciation and amortization of $108,310 and $30,034 imputed
interest due to related parties.
  Net cash
used in investing activities for the three months ended March 31, 2010 was
$1,330 as compared to net cash used in investing activities for the three
months ended March 31, 2009 of $21,510. For the three months ended March 31,
2010, we used cash of $1,330 for purchase of property and equipment. For the
three months ended March 31, 2009, we used cash for purchase of property and
equipment of $21,510.
 
 Net cash
used in financing activities for the three months ended March 31, 2010 was
$70,431 as compared to net cash provided by financing activities of
$10,618 for the three months ended March 31, 2009. For the three months
ended March 31, 2010, the Company repaid due to related parties
$63,108.   In addition, the Company made the repayment of note
payable to a stockholder of $7,323. For the three months ended March 31, 2009,
the Company received $47,188 from stockholders/officers, offset by the repayment
of note payable to a stockholder of $36,570.
 
 The
Company has not generated sufficient cash flows from operations. If the Company
does not generate enough revenues from the sales of its products to meet the
cash needs, the Company will need other financing to continue to operate. As the
Company tries to increases sales from its products and services, the
Company expects to increase cash flows from operations.  However, we
may choose at any time to raise capital through private debt or equity financing
to strengthen our financial position and facilitate growth.
 
 The
Company currently has no material commitments for capital
expenditures.
 
 Although
China has been affected by the global recession, the government initiated a
package of incentive programs to stimulate the economy and encourage business
development, which has proven successful, especially in terms of
GDP.  According to China’s National Bureau of Statistics, China’s
Gross Domestic Product (GDP) amounted to RMB8.06 trillion for the three months
ended March 31, 2010, an increase of 11.9% as compared to the three months
ended March 31, 2009.  Additionally, a Chinese corporation can be
owned by a United States corporation, however, the laws and regulations of
China are subject to change and in the event said change occurs, it may affect
the ability of Company to operate in the People’s Republic of
China.
 
 The
Company’s future success depends on the continued services of its executive
management currently in place. The loss of any of their services could be
detrimental to the Company and could have an adverse affect on business
development. Future success is also dependent upon the ability to identify,
hire, train, or retain other qualified employees. Competition for these
individuals is intense and increasing.
 
 Efforts
to Improve the Company’s Financial Results
 
 The
Company has incurred losses since inception. Management is making every effort
in continuing to implement changes designed to significantly improve the
Company’s financial results and operating cash flows.  The actions
involve certain cost-saving initiatives and growth strategies,
including:
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(a)        Improve
capital conditions
 
 Taking
steps to improve the capital conditions, including increasing our bank loan and
attracting new investment.
 
 (b)        Expand
the market for our products by increasing marketing activities and
sales
 
 Manufacturing
some drugs that we did not make before, increasing marketing activities and
instituting polices to motivate salespersons to increase sales.
 
 (c)        Strengthen
internal controls
 
 Taking
steps to strengthen internal controls aimed at bringing down production costs
and various expenses.
 
 (d)        Continue
our cooperation with Yangling Daiying Biotech Institute
 
 Continue
cooperation with Yangling Daiying Biotech Institute on the manufacturing and
sale of its SFDA-approved product Emergency Haemostatic Patch, as well as
increasing other incomes.
 
 Off
Balance Sheet Arrangements
 
 The
Company has no off balance sheet arrangements at March 31,
2010.
 
 Recently
Issued Accounting Pronouncements
 
 In
June 2009, the FASB issued a new standard regarding the accounting for
transfers of financial assets amending the existing guidance on transfers of
financial assets to, among other things, eliminate the qualifying
special-purpose entity concept, include a new unit of account definition that
must be met for transfers of portions of financial assets to be eligible for
sale accounting, clarify and change the derecognition criteria for a transfer to
be accounted for as a sale, and require significant additional disclosure. For
the Company, this standard is effective for new transfers of financial assets
beginning January 1, 2010. Because the Company historically does not have
significant transfers of financial assets, the adoption of this standard is not
expected to have a material impact on the Company’s consolidated results of
operations or financial condition.
 
 In
June 2009, the FASB issued a new standard that revises the consolidation
guidance for variable-interest entities. The modifications include the
elimination of the exemption for qualifying special purpose entities, a new
approach for determining who should consolidate a variable-interest entity, and
changes to when it is necessary to reassess who should consolidate a
variable-interest entity. For the Company, this standard was effective
January 1, 2010. The adoption of this standard did not have a material
impact on the Company’s consolidated results of operations or financial
condition.
 
 In
October 2009, the FASB issued ASU No. 2009-13, “Multiple-Deliverable
Revenue Arrangements—a consensus of the FASB Emerging Issues Task Force,” that
provides amendments to the criteria for separating consideration in
multiple-deliverable arrangements. As a result of these amendments,
multiple-deliverable revenue arrangements will be separated in more
circumstances than under existing U.S. GAAP. The ASU does this by establishing a
selling price hierarchy for determining the selling price of a deliverable. The
selling price used for each deliverable will be based on vendor-specific
objective evidence if available, third-party evidence if vendor-specific
objective evidence is not available, or estimated selling price if neither
vendor-specific objective evidence nor third-party evidence is available. A
vendor will be required to determine its best estimate of selling price in a
manner that is consistent with that used to determine the price to sell the
deliverable on a standalone basis. This ASU also eliminates the residual method
of allocation and will require that arrangement consideration be allocated at
the inception of the arrangement to all deliverables using the relative selling
price method, which allocates any discount in the overall arrangement
proportionally to each deliverable based on its relative selling price. Expanded
disclosures of qualitative and quantitative information regarding the
application of the multiple-deliverable revenue arrangement guidance are also
required under the ASU. The ASU does not apply to arrangements for which
industry specific allocation and measurement guidance exists, such as long-term
construction contracts and software transactions. For the Company, ASU
No. 2009-13 is effective beginning January 1, 2011. The Company may
elect to adopt the provisions prospectively to new or materially modified
arrangements beginning on the effective date or retrospectively for all periods
presented. The Company is currently evaluating the impact of this standard on
its Company’s consolidated results of operations and financial
condition.




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In
October 2009, the FASB issued ASU No. 2009-14, “Certain Revenue
Arrangements That Include Software Elements—a consensus of the FASB Emerging
Issues Task Force,” that reduces the types of transactions that fall within the
current scope of software revenue recognition guidance. Existing software
revenue recognition guidance requires that its provisions be applied to an
entire arrangement when the sale of any products or services containing or
utilizing software is considered more than incidental to the product or service.
As a result of the amendments included in ASU No. 2009-14, many tangible
products and services that rely on software will be accounted for under the
multiple-element arrangements revenue recognition guidance rather than under the
software revenue recognition guidance. Under the ASU, the following components
would be excluded from the scope of software revenue recognition guidance: 
the tangible element of the product, software products bundled with tangible
products where the software components and non-software components function
together to deliver the product’s essential functionality, and undelivered
components that relate to software that is essential to the tangible product’s
functionality. The ASU also provides guidance on how to allocate transaction
consideration when an arrangement contains both deliverables within the scope of
software revenue guidance (software deliverables) and deliverables not within
the scope of that guidance (non-software deliverables). For the Company, ASU
No. 2009-14 is effective beginning January 1, 2011. The Company is
currently evaluating the impact of this standard on the its consolidated results
of operations and financial condition.
 
 In
January 2010, the FASB issued ASU No. 2010-6, “Improving Disclosures
About Fair Value Measurements,” that amends existing disclosure requirements
under ASC 820 by adding required disclosures about items transferring into and
out of Levels 1 and 2 in the fair value hierarchy; adding separate disclosures
about purchases, sales, issuances, and settlements relative to Level 3
measurements; and clarifying, among other things, the existing fair value
disclosures about the level of disaggregation. For the Company, this ASU is
effective for the first quarter of 2010, except for the requirement to provide
Level 3 activity of purchases, sales, issuances, and settlements on a gross
basis, which is effective beginning the first quarter of 2011. Since this
standard impacts disclosure requirements only, its adoption will not have a
material impact on the Company’s consolidated results of operations or financial
condition.
 
 In
March 2010, the FASB ratified a consensus of the FASB Emerging Issues Task
Force that recognizes the milestone method as an acceptable revenue recognition
method for substantive milestones in research or development arrangements. This
consensus would require its provisions be met in order for an entity to
recognize consideration that is contingent upon achievement of a substantive
milestone as revenue in its entirety in the period in which the milestone is
achieved. In addition, this consensus would require disclosure of certain
information with respect to arrangements that contain milestones. For the
Company, this guidance would be required prospectively beginning January 1,
2011. The Company is currently evaluating the impact of this consensus on its
consolidated results of operations and financial condition.
 
 Management
does not believe that any other recently issued, but not yet effective
accounting pronouncements, if adopted, would have a material effect on the
accompanying consolidated financial statements.
 
 Item
3. Quantitative and Qualitative Disclosures about Market
Risk
 
 Credit risk
 
 Financial
instruments that potentially subject the Company to significant concentration of
credit risk consist primarily of cash and cash equivalents.  As of March
31, 2010, substantially all of the Company's cash and cash equivalents were held
by major financial institutions located in the PRC, none of which are insured.
However, the Company has not experienced losses on these accounts and management
believes that the Company is not exposed to significant risks on such
accounts.
 
 Operations
 
 Substantially
all of the Company's operations are carried out and all of its assets are
located 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. The Company's business may be influenced by changes in
governmental policies with respect to laws and regulations, anti-inflationary
measures, currency fluctuation and remittances and methods of taxation, among
other things.




23
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Item
4.  Controls and Procedures
 
 Disclosure
Controls and Procedures
 
 The
Company maintains disclosure controls and procedures designed to ensure that
information required to be disclosed in reports filed under the Securities
Exchange Act of 1934 (“Exchange Act”) is recorded, processed, summarized and
reported within the specified time periods. The Company’s Chief Executive
Officer and its Chief Financial Officer (collectively, the “Certifying
Officers”) are responsible for maintaining disclosure controls and procedures
for the Company. The controls and procedures established by the Company are
designed to provide reasonable assurance that information required to be
disclosed by the issuer in the reports that it files or submits under the
Exchange Act are recorded, processed, summarized and reported within the time
periods specified in the Commission’s rules and forms.
 
 As of the
end of the period covered by this report, the Certifying Officers evaluated the
effectiveness of the Company’s disclosure controls and procedures. Based on the
evaluation, the Certifying Officers concluded that the Company’s disclosure
controls and procedures were effective to provide reasonable assurance that
information required to be disclosed by us in the reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported, within
the time periods specified in the applicable rules and forms, and that it is
accumulated and communicated to our management, including the Certifying
Officers, as appropriate to allow timely decisions regarding required
disclosure.
 
 Changes
in Internal Control over Financial Reporting
 
 There
were no changes in the Company's internal controls over financial reporting,
known to the chief executive officer or the chief financial officer that
occurred during the period covered by this report that has materially affected,
or is reasonably likely to materially affect, the Company's internal control
over financial reporting.





PART
II





Item
6. Exhibits





31.1
            Certification of the Chief Executive Officer Pursuant to
      Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of
      193431.2
            Certification of the Chief Financial Officer Pursuant to
      Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of
      193432.1
            Certification of the Company's Chief Executive Officer
      Pursuant to 18 U.S.C. SS. 1350 Adopted Pursuant to Section 906 of the
      Sarbanes-Oxley Act of 200232.2
            Certification of the Chief Financial Officer Pursuant to
      18 U.S.C. SS. 1350 Adopted Pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002





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 Table of Contents





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 hereunto
duly authorized.








WORLDWIDE
      BIOTECH & PHARMACEUTICAL COMPANY(Registrant)May
      17, 2010
            By:
            /s/ Wenxia
      GuoWenxia
      GuoChief
      Executive Officer and Director(Principal
      Executive Officer)May
      17, 2010
            By:
            /s/
      Peng
      WangPeng
      WangChief
      Financial Officer, Treasurer and Director(Principal
      Financial and Accounting Officer)May
      17, 2010
            By:
            /s/
      Qiang
      LiQiang
      LiDirector





25