UNITED
STATES






SECURITIES
AND EXCHANGE COMMISSION






Washington,
D.C. 20549









FORM
10-Q






þ
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the quarterly period ended September 30, 2008ORo
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
the transition period from ___________________ to _______________






CHINA
DASHENG BIOTECHNOLOGY COMPANY
 (Exact
name of registrant as specified in its charter)
 
 Nevada
              333-141327
              26-0162321(State
      or other jurisdiction
                of
      incorporation or organization)
              Commission
      File Number
              (I.R.S.
      Employer
                Identification
      No.)
 
 Building
B 17th Floor
 Century
Plaza
 Qingyang
Road
 Lanzhou,
Gansu
 People's
Republic of China
 Telephone
number: (86)931
8441248
 (Address
and telephone number of principal executive offices)
 
 c/o
American Union Securities
 100
Wall Street 15th Floor
 New
York, NY 10005
 Telephone
number: (212)
232-0058
 (Address
and telephone number of United States agent offices)






Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes þ No o






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




Large
      accelerated filer      o
            
            
            Accelerated
      filer     oNon-accelerated
      filer        o
            (Do
      not check if a smaller reporting company)
            
            Smaller
      reporting company     þ




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






Yes o No þ






As of
November 14, 2008, 30,000,000 shares of common stock, par value $.001
per share, were outstanding.









TABLE OF
    CONTENTS
              PagePART I. FINANCIAL
      INFORMATION
 
 Item 1. Financial Statements
              1Consolidated Balance
      Sheets as of September 30, 2008 (Unaudited) and June 30, 2008
              1Consolidated Statements
      of Operations for three months ended September 30, 2008 and 2007
      (Unaudited)
              2Consolidated
      Statements of Cash Flows for the three months ended September 30,
      2008 and 2007 (Unaudited)
              3Notes to
      Consolidated Financial Statements
              4-11Item 2. Management's
      Discussion and Analysis of Financial Condition and Results of
      Operation
              12Item 3. Quantitative
      and Qualitative Disclosures About Market Risk
              13Item 4. Controls and
      Procedures
              13PART
      II. OTHER INFORMATIONItem 1. Legal
      Proceedings
              14Item 2. Unregistered
      Sales of Equity Securities and Use of Proceeds
              14Item 3. Defaults
      Upon Senior Securities
              14Item 4. Submission
      of Matters to a Vote of Security Holders
              14Item 5. Other
      Information
              14
 Item 6.
      Exhibitions
              14Signatures
              15







PART I. FINANCIAL
INFORMATION
 ITEM I. FINANCIAL
STATEMENTS




CHINA
      DASHENG BIOTECHNOLOGY COMPANY(FORMERLY
      NAMED AS MAX NUTRITION INC.)CONSOLIDATED
      BALANCE SHEETSAS
      OF SEPTEMBER 30, 2008 and JUNE 30, 2008(in
      US DOLLARS)30-Sep-08
              
              
              30-Jun-08(UNAUDITED)ASSETSCurrent
      assets:Cash
      & cash equivalents
              
              $
              2,381,735
              
              
              $
              1,561,403Accounts
      receivable, net of allowance for doubtful
              
              
              5,113,965
              
              
              
              3,244,476accounts
      of $16,470 and $16,303, respectivelyInventory
              
              
              435,538
              
              
              
              561,883Advances
      to suppliers
              
              
              859,784
              
              
              
              1,486,379Due
      from related parties
              
              
              1,596,931
              
              
              
              1,580,820Prepayments
      and other current assets
              
              
              22,153
              
              
              
              35,675Total
      current assets
              
              
              10,410,106
              
              
              
              8,470,636Investment
      in Real Estate Ventures
              
              
              6,549,514
              
              
              
              6,483,437Property, plant and
      equipment, net of accumulated depreciation
              
              
              1,551,703
              
              
              
              1,618,829Other
      AssetsLand
      use right, net of accumulated amortization
              
              
              1,519,575
              
              
              
              1,531,555Notes
      receivable
              
              
              1,030,225
              
              
              
              998,502Long-term
      prepayments
              
              
              1,508,146
              
              
              
              1,150,082Total
      other assets
              
              
              4,057,946
              
              
              
              3,680,139Total
      Assets
              
              $
              22,569,269
              
              
              $
              20,253,041LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilities:Accounts
      payable
              
              $
              854,144
              
              
              $
              725,680Accrued
      expenses and other payables
              
              
              806,155
              
              
              
              809,463Payable
      to related parties
              
              
              321,088
              
              
              
              -Total
      current liabilities
              
              
              1,981,387
              
              
              
              1,535,143Long-term
      payable - land use right
              
              
              1,474,008
              
              
              
              1,459,137Minority
      Interest
              
              
              1,986,483
              
              
              
              1,564,957Stockholders'
      Equity:Preferred
      stock, $0.001 par value, 1,000,000 shares authorized,-
      0 - shares issued and outstanding at September 30, 2008 and June 30,
      2008
              
              
              -
              
              
              
              -Common
      stock, $0.001 and $0.1208 par value, 74,000,000 and 74,000,000
      sharesauthorized,
      30,000,000 and 30,000,000 shares issued and outstanding atSeptember
      30, 2008 and June 30, 2008, respectively
              
              
              30,000
              
              
              
              30,000Additional
      paid-in-capital
              
              
              3,846,035
              
              
              
              3,846,035Statutory
      surplus reserve and common welfare fund
              
              
              1,837,187
              
              
              
              1,837,187Retained
      earnings
              
              
              9,338,072
              
              
              
              8,009,800Accumulated
      other comprehensive income
              
              
              2,076,097
              
              
              
              1,970,782Total
      stockholders' equity
              
              
              17,127,391
              
              
              
              15,693,804Total
      Liabilities and Stockholders' Equity
              
              $
              22,569,269
              
              
              $
              20,253,041See
      accompanying notes to the Consolidated Financial
Statements
  1


CHINA
      DASHENG BIOTECHNOLOGY COMPANY(FORMERLY
      NAMED AS MAX NUTRITION INC.)CONSOLIDATED
      STATEMENTS OF OPERATIONFOR
      THE THREE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007(in
      US DOLLARS)For
      the three months ended September 30,2008
                  
                  
                  2007(Unaudited)
                  
                  
                  (Unaudited)Net
      Sales
                  
                  $
                  5,107,515
                  
                  
                  $
                  3,006,437Cost
      of Sales
                  
                  
                  (2,666,604
                  )
                  
                  
                  (1,811,755
                  )Gross
      profit
                  
                  
                  2,440,911
                  
                  
                  
                  1,194,682Operating
      Expenses:Selling
      expenses
                  
                  
                  350,927
                  
                  
                  
                  150,077Genernal
      and administration expense
                  
                  
                  454,915
                  
                  
                  
                  199,670Total
      operating expenses
                  
                  
                  805,842
                  
                  
                  
                  349,747Income
      from Operations
                  
                  
                  1,635,069
                  
                  
                  
                  844,935Other
      Income and Expenses:Interest
      income (expenses)
                  
                  
                  26,237
                  
                  
                  
                  (22,383
                  )Other
      income
                  
                  
                  2,925
                  
                  
                  
                  4,546Other
      expenses
                  
                  
                  (4,923
                  )
                  
                  
                  -Total
      other income and (expense)
                  
                  
                  24,239
                  
                  
                  
                  (17,837
                  )Income
      before income taxes and minority interest
                  
                  
                  1,659,308
                  
                  
                  
                  827,098Minority
      Interest
                  
                  
                  (331,036
                  )
                  
                  
                  (171,243
                  )Net
      income
                  
                  $
                  1,328,272
                  
                  
                  $
                  655,855Other
      Comprehensive Income:Foreign
      currency translation adjustment
                  
                  
                  97,236
                  
                  
                  
                  175,384Comprehensive
      income
                  
                  $
                  1,425,508
                  
                  
                  $
                  831,239Basic
      and Diluted Income per common shareBasic
                  
                  $
                  0.04
                  
                  
                  $
                  0.02Diluted
                  
                  $
                  0.04
                  
                  
                  $
                  0.02Weighted
      average common share outstandingBasic
                  
                  
                  30,000,000
                  
                  
                  
                  32,080,000Diluted
                  
                  
                  30,000,000
                  
                  
                  
                  32,080,000See
      accompanying notes to the Consolidated Financial
Statements
 
 
  CHINA
      DASHENG BIOTECHNOLOGY COMPANY(FORMERLY
      NAMED AS MAX NUTRITION INC.)CONSOLIDATED
      STATEMENTS OF CASH FLOWSFOR
      THE THREE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007(
      in US DOLLARS)For
      the three months ended September 30,2008
                  
                  
                  2007(Unaudited)
                  
                  
                  (Unaudited)Cash
      Flows From Operating Activities:Net
      income
                  
                  $
                  1,328,272
                  
                  
                  $
                  655,855Adjustments
      to reconcile net income to net cashprovided
      by operating activities:Minority
      interest in net income of consoldiated subsidiaries
                  
                  
                  331,036
                  
                  
                  
                  171,243Interest
      income from real estate project
                  
                  
                  (21,396
                  )
                  
                  
                  -Bad
      debt expense
                  
                  
                  (167
                  )
                  
                  
                  -Depreciation
      expense
                  
                  
                  67,126
                  
                  
                  
                  74,897Amortization
      expense
                  
                  
                  11,980
                  
                  
                  
                  36,600Changes
      in operating assets and liabilities:Accounts
      receivable
                  
                  
                  (1,869,320
                  )
                  
                  
                  (1,200,754
                  )Inventory
                  
                  
                  (43,794
                  )
                  
                  
                  228,764Advance
      to suppliers
                  
                  
                  626,595Prepayments
      and other current assets
                  
                  
                  (344,543
                  )
                  
                  
                  (103,480
                  )Accounts
      payable
                  
                  
                  298,603
                  
                  
                  
                  695,756Accrued
      expenses and other current liabilities
                  
                  
                  (3,308
                  )
                  
                  
                  (1,217,448
                  )Cash
      provided (used) by operating activities
                  
                  
                  381,084
                  
                  
                  
                  (658,567
                  )Cash
      Flows From Investing Activities:Purchases
      of property, plant and equipment
                  
                  
                  -
                  
                  
                  
                  (21,198
                  )Cash
      used in investing activities
                  
                  
                  -
                  
                  
                  
                  (21,198
                  )Cash
      Flows From Financing Activities:Repayment
      of loans payable
                  
                  
                  321,088
                  
                  
                  
                  -Advances
      received from related parties
                  
                  
                  -
                  
                  
                  
                  1,816,110Cash
      provided by financing activities
                  
                  
                  321,088
                  
                  
                  
                  1,816,110Effect
      of currency exchange rate on cash and cash equivalents
                  
                  
                  118,160
                  
                  
                  
                  27,884Increase
      in cash and cash equivalents
                  
                  
                  820,332
                  
                  
                  
                  1,164,229Cash
      and Cash Equivalents - Beginning of the year
                  
                  
                  1,561,403
                  
                  
                  
                  1,316,569Cash
      and Cash Equivalents - Ending of the year
                  
                  $
                  2,381,735
                  
                  
                  $
                  2,480,798Supplemental
      disclosures of cash flow information:Interest
      paid
                  
                  $
                  41,760
                  
                  
                  $
                  22,383Income
      Taxes paid
                  
                  
                  -
                  
                  
                  
                  -See
      accompanying notes to the Consolidated Financial
Statements


3


CHINA
DASHENG BIOTECHNOLOGY COMPANY AND SUBSIDIARIES


Notes
to the Consolidated Financial Statements


September 30,
2008


(Unaudited)


NOTE
1 – ORGANIZATION AND OPERATIONS




China Dasheng Biotechnology Company (“Dasheng” or the “Company”) was
incorporated in the state of Nevada on January 12, 2007, under the original name
of Max Nutrition Inc, as a holding vehicle for selling the nutritional
supplements.
  On January 29, 2008, Pursuant to an Agreement and Plan of Reorganization,
American Spring Pharmaceutical, Inc., a Delaware corporation (“ASPI”) purchased
an aggregate of 7,700,000 shares of the 10,000,000 issued and outstanding shares
of Max Nutrition common stock for $183,000 and ASPI’s transfer of 100% of the
issued and outstanding shares of Gansu Dasheng Biology Science and Technology
Stock Co., Ltd. (“Dasheng”) to Max Nutrition in exchange for 20,000,000 shares
of the common stock of Max Nutrition. Upon completion of the transaction, ASPI
distributed 27,700,000 shares of Max Nutrition common stock it received from Max
Nutrition and the Max Nutrition’ previous principal stockholder to Dasheng’s
shareholders, pro rata. At the effective time of the merger, the total number of
shares of Max Nutrition acquired and number of shares of Max Nutrition Common
Stock issued to the shareholders of Dasheng pursuant to the agreement,
represented approximately 92.33% of the outstanding shares of Max Nutrition’s
common stock after giving effect to Max Nutrition’s acquisition of Dasheng. As a
result of the ownership interests of the former shareholders of Dasheng, for
financial statement reporting purposes, the merger between the Company and
Dasheng has been treated as a reverse acquisition with Dasheng deemed as the
accounting acquirer and the Max Nutrition deemed the accounting acquire in
accordance with Statement of Financial Accounting Standards No. 141 “Business
Combinations” (“SFAS No. 141”). The reverse merger is deemed as a
recapitalization of Dasheng and the net assets of Dasheng (the accounting
acquirer) are carried forward to the Company (the legal acquirer and the
reporting entity) at their historical carrying value before the combination. The
assets and liabilities of Dasheng are recorded at historical cost.
  Gansu Dasheng Biology Science and Technology Stock Co., Ltd. was incorporated on
October 16, 2002, in the City of Lanzhou, Gansu Province, People’s Republic of
China (“PRC”). Dasheng operates within the biological products and agents
market. This space includes organic fertilizers, non-chemical agents, and
biological agents based additives.
  On March 6, 2008, the Company changed its name to China Dasheng Biotechnology
Company.
  The Company derived its revenues from the sale of products in the biological
products and agents market. All revenues generated are from sales to customers
in China. The Company has two majority-owned subsidiaries in China. It has 80%
interest in Hainan Lüshen Biology Technology Co., Ltd. (“Lüshen”) located in
HaiKou, Hainan Province, China. Lüshen engages in developing, manufacturing and
marketing artificial microorganisms (“AM”), high-efficiency microorganism (“HM”)
based biological bacterium blends, and biological preservatives. The Company
also has a 60% interest in
 
 Yangling Elemiss Foods Co., Ltd.  (“Elemiss”) located in City of Yangling,
Shaanxi Province, China. Elemiss engages in developing, manufacturing and
marketing artificial microorganism (“AM”) based biological bacterium blends, and
Bulgarian lactobacillus live stock feed additives.







CHINA
DASHENG BIOTECHNOLOGY COMPANY AND SUBSIDIARIES
 Notes
to the Consolidated Financial Statements
 September 30,
2008 (Continued)
 (Unaudited)


NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




Interim
Statements
  The
accompanying unaudited interim financial statements of China DaSheng
Biotechnology Company have been prepared in accordance with accounting
principles generally accepted in the United States of America and the rules of
the Securities and Exchange Commission, and should be read in conjunction with
the audited consolidated financial statements and notes thereto contained in the
Company’s Amendment No. 1 to Annual Report filed with the SEC on Form 10-K/A. In
the opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of financial position and the
results of operations for the interim periods presented have been reflected
herein. The results of operations for the interim periods are not necessarily
indicative of the results to be expected for the full year. Notes to the
consolidated financial statements which would substantially duplicate the
disclosure contained in the audited consolidated financial statements for 2008
as reported in the 10-K/A have been omitted.
 Basis
of presentation and consolidation
  The
consolidated financial statements include the financial statements of DaSheng,
and its wholly owned subsidiary, and its majority-owned subsidiaries, Lüshen and
Elemiss. All significant inter-company transactions and balances among the
Company and its subsidiary are eliminated upon consolidation.
 
 Reclassifications
  Certain previously reported amounts have been reclassified to conform to
classifications adopted in the period ended September 30,
2008.
  Accounts
receivable
 Accounts
receivables consist primarily of receivables resulting from sales of products.
The Company establishes provisions for doubtful accounts receivable based on
management’s estimates of amounts that it believes are unlikely to be
collected.  Collectability of receivables is reviewed and the
allowance for doubtful accounts is adjusted at least quarterly, based on aging
of specific accounts and other available information about the associated
customers. The allowance for uncollectible amounts as of September 30, 2008 and
June 30, 2008 was $16,470 and $16,303, respectively.
 Investment
in real estate ventures
 
 The Company had two joint ventures for real estate projects in China to develop
commercial and residential real estate in China. The Company’s ownership
interests in the two ventures are 17.5% and 16.5%, respectively. As a result,
the Company accounts for these two ventures based on cost method of
accounting.
 
 Land
use rights
  Land use rights represent the cost to obtain the right to use land in China.
Land use rights are carried at cost and amortized on a straight-line basis over
the lives of the rights, ranging from 17 to 50 years.







CHINA
DASHENG BIOTECHNOLOGY COMPANY AND SUBSIDIARIES Notes
to the Consolidated Financial Statements
 September 30,
2008 (Continued)
 (Unaudited)


NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)




Patent
and purchased formulae
  The Company has adopted the guidelines as set out in Statement of Financial
Accounting Standards No. 142 “Goodwill and Other Intangible Assets” (“SFAS No.
142”) for the patent and purchased formulae. Under the requirements as set out
in SFAS No. 142, the Company amortizes the costs of acquired patent and formulae
over their remaining legal lives or the term of the contract, whichever is
shorter. All internally developed process costs incurred to the point when a
patent application is to be filed are expensed as incurred and classified as
research and development costs. Patent application costs, generally legal costs,
thereafter incurred, are capitalized pending disposition of the individual
patent application, and are subsequently either amortized based on the initial
patent life granted, generally 15 to 20 years for domestic patents and 5 to 20
years for foreign patents, or expensed if the patent application is rejected.
The costs of defending and maintaining patents are expensed as incurred. Upon
becoming fully amortized, the related cost and accumulated amortization are
removed from the accounts.
  Impairment
of long-lived assets
  Long-lived assets, which include property, plant and equipment and intangible
assets, are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be
recoverable.
 
 Recoverability of long-lived assets to be held and used is measured by a
comparison of the carrying amount of an asset to the estimated undiscounted
future cash flows expected to be generated by the asset.  If the
carrying amount of an asset exceeds its estimated undiscounted future cash
flows, an impairment charge is recognized by the amount by which the carrying
amount of the asset exceeds the fair value of the assets.  Fair value
is generally determined using the asset’s expected future discounted cash flows
or market value, if readily determinable. No impairment loss is recorded
for three months ended September 30, 2008 and 2007.
  Income
taxes
  The Company accounts for income tax under the provisions of SFAS No.109
"Accounting for Income Taxes", which requires recognition of deferred tax assets
and liabilities for the expected future tax consequences of the events that have
been included in the financial statements or tax returns.  Deferred
income taxes are recognized for all significant temporary differences between
tax and financial statements bases of assets and
liabilities.  Valuation allowances are established against net
deferred tax assets when it is more likely than not that some portion or all of
the deferred tax asset will not be realized.  There are no deferred
tax amounts as at September 30, 2008 and June 30, 2008.
  Revenue
recognition
  The Company utilizes the accrual method of accounting.  In accordance
with the provisions of Staff Accounting Bulletin (“SAB”) 104, sales revenue is
recognized when products are shipped and payments of the customers and
collection are reasonably assured.  Payments received before all of
the relevant criteria for revenue recognition are satisfied are recorded as
unearned revenue.
 
 The Company follows the guidance of the Securities and Exchange Commission’s
Staff Accounting Bulletin 104 (“SAB No.104”) for revenue recognition. The
Company records revenue when persuasive evidence of an arrangement exists,
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. For sale of additive for livestock
feed and crop cultivation, the Company derives the majority of its revenue from
sales contracts with customers with revenues being generated upon the shipment
of goods. Persuasive evidence of an arrangement is demonstrated via invoice,
product delivery is evidenced by warehouse shipping log as well as a signed bill
of lading from the trucking or rail company and title transfers upon shipment,
based on either free on board (“FOB”) factory or destination terms; the sales
price to the customer is fixed upon acceptance of the purchase order and there
is no separate sales rebate, discount, or volume incentive. When the Company
recognizes revenue, no provisions are made for returns because, historically,
there have been very few sales returns and adjustments that have impacted the
ultimate collection of revenues.
 
 Earnings
per share
 
 The Company computes earnings per share (“EPS’) in accordance with Statement of
Financial Accounting Standards No. 128, “Earnings per Share” ("FAS No. 128”),
and SEC Staff Accounting Bulletin No. 98 (“SAB 98”).  SFAS
No. 128 requires companies with complex capital structures to present basic
and diluted EPS.  Basic EPS is measured as net income divided by the
weighted average common shares outstanding for the period.  Diluted EPS is
similar to basic EPS but presents the dilutive effect on a per share basis of
potential common shares (e.g., convertible securities, options and warrants) as
if they had been converted at the beginning of the periods presented, or
issuance date, if later.  Potential common shares that have an
anti-dilutive effect (i.e., those that increase income per share or decrease
loss per share) are excluded from the calculation of diluted EPS. There are
30,000,000 and 30,000,000 shares of common stock equivalent available in the
computation of dilute earnings per share at September 30, 2008 and June 30, 2008
respectively.
 Risks
and uncertainties
  The operations of the Company 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, as well as by the
general state of the PRC economy.
 
 The Company’s operations in the PRC are subject to special considerations and
significant risks not typically associated with companies in North America and
Western Europe. These include risks associated with, among others, the
political, economic and legal environment and foreign currency exchange. The
Company’s results may be adversely affected by changes in the political and
social conditions in the PRC, and by changes in governmental policies with
respect to laws and regulations, anti-inflationary measures, currency
conversion, remittances abroad, and rates and methods of taxation, among other
things.





CHINA
DASHENG BIOTECHNOLOGY COMPANY AND SUBSIDIARIES
 Notes
to the Consolidated Financial Statements
 September 30,
2008 (Continued)
 (Unaudited)


NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued)


Foreign
currency translation
  The Company’s functional currency is the Renminbi (“RMB”). For financial
reporting purposes, RMB has been translated into United States dollars ("USD")
as the reporting currency.
Assets and liabilities are translated at the exchange rate in effect at the
balance sheet date. Revenues and expenses are translated at the average rate of
exchange prevailing during the reporting period. Translation adjustments arising
from the use of different exchange rates from period to period are included as a
component of stockholders' equity as "Accumulated other comprehensive income".
Gains and losses resulting from foreign currency translations are included in
accumulated other comprehensive income.  There is no significant
fluctuation in exchange rate for the conversion of RMB to USD after the balance
sheet date.


NOTE
3 – INVENTORY





The inventory consists of the following:
 Balance
      as ofSeptember
      30,2008
                
                
                June
      30, 2008Raw
      materials
                
                $
                9,108
                
                
                $
                218,985Packing
      materials
                
                
                35,209
                
                
                
                14,461Work-in-process
                
                
                347,206
                
                
                
                246,695Finished
      goods
                
                
                44,015
                
                
                
                81,742Total
                
                $
                435,538
                
                
                $
                561,883
 No allowance for inventory was made for as of September 30, 2008 and June 30,
2008.
  NOTE
4 – RELATED PARTY TRANSACTIONS





The detail of related party transactions is as follows:





(i) Office space





On
December 1, 2006, Lüshen entered into a non-cancellable operating lease for its
manufacturing facility in Hainan Province from Dasheng Industries Co., Ltd., an
affiliate of the Company, expiring November 30, 2026. Lüshen prepaid the total
lease obligation of RMB3.0 million (equivalent to $441,833 and $437,375 at
September 30, 2008 and June 30, 2008 respectively) upon signing the lease, which
approximates the present fair market value of the lease.






Balance
      as ofSeptember
      30, 2008
              
              
              June
      30, 2008Receivables
      from shareholders/officers
              
              $
              1,596,931
              
              
              $
              1,580,820Payable
      to shareholder
              
              
              (321,088
              )
              
              
              -Total
              
              $
              1,275,843
              
              
              $
              1,580,820
  The
advances to shareholders/officers bear no interest and have no formal repayment
terms.
  7
 CHINA
DASHENG BIOTECHNOLOGY COMPANY AND SUBSIDIARIES Notes
to the Consolidated Financial Statements
 September 30,
2008 (Continued)
 (Unaudited)
 NOTE 5 – REAL
ESTATE
 
 i) Dasheng Garden Development Project
 On March 19, 2005, the Company signed a joint venture property development
("JV") agreement with an unrelated developer (the "Developer"). Under the
agreement, the Company was required to (1) contribute RMB14 million (equivalent
to $1,924,002 at date of signing) in cash as the investment into the project,
(2) assist the Developer in the project planning and (3) assist the Developer in
applying for and obtaining relevant approvals.  The Developer was required
to contribute RMB71million (equivalent to $8,578,505 at date of signing) in cash
into the project.
 
 Upon completion of Phase I, representing approximately 50% of the Company owned
land use rights in the City of Lanzhou, the Company will receive RMB7 million
(equivalent to $845,768 at date of signing) from the JV and will retain the
ownership of all the commercial retail units on the first floor and the basement
which will be sold as a parking lot, and the Developer will obtain all remaining
units.
  Upon completion of Phase II, (which concerns the development of the remaining
50% of the land use rights, the Company and the Developer will be entitled to
29% and 71% of the net profits, respectively.
  The Company ownership percentage in the real estate venture is
16.5%.
 
 On June 30, 2005 the Company transferred the land use right associated with
Phase I valued at RMB 2,929,686 (equivalent to $353,976 at date of transfer)
less accumulated amortization of RMB459,142 (equivalent to $55,475 at date
of transfer) from the land use right account and reclassified the net amount to
investment in real estate ventures, with no further amortization of the land use
right to be taken.
 
 On
December 31, 2007, the Company received cash from Dasheng Garden Development of
RMB 7,000,000 (equivalent to US$1,020,542), which was accounted for as a
reduction of the investment in real estate investment (return of
capital).
  (ii) Changlin Real Estate Development project
 
 On May 31, 2008, the Company contributed RMB35m (equivalent to US$5,102,710) to
set up a joint venture of Changlin Real Estate Development Co., Ltd. The joint
venture intends to develop residential real estate in an old manufacturing site
in Lanzhou within 2 years. The Company's share of the joint venture project is
17.5%.
 
 8
 CHINA
DASHENG BIOTECHNOLOGY COMPANY AND SUBSIDIARIES Notes
to the Consolidated Financial Statements
 September 30,
2008 (Continued)
 (Unaudited)
 NOTE
6 - PROPERTY, PLANT ADN EQUIPMENT, NET





The detail of property, plant and equipment is as follows:


Balance
      as ofSeptember
      30,2008
              
              
              June
      30, 2008Buildings
      and improvements
              
              $
              1,610,801
              
              
              $
              1,594,550Machinery
      and equipments
              
              
              1,162,135
              
              
              
              1,278,136Transportation
      equipments
              
              
              333,251
              
              
              
              258,194Office
      equipments
              
              
              104,731
              
              
              
              62,729Sub-total
              
              
              3,210,918
              
              
              
              3,193,609Less:
      Accumulated Depreciation
              
              
              (1,659,215
              )
              
              
              (1,574,780
              )Total
              
              $
              1,551,703
              
              
              $
              1,618,829
  Depreciation expense for the three months ended September 30, 2008 and 2007 was
$67,126 and $74,897, respectively.





CHINA
DASHENG BIOTECHNOLOGY COMPANY AND SUBSIDIARIES
 Notes
to the Consolidated Financial Statements
 September 30,
2008 (Continued)
 (Unaudited)


NOTE
7 - LAND USE RIGHTS




All land in the People’s Republic of China is government owned and cannot be
sold to any individual or company. Instead, the government grants the user a
“Land use right” (the “Right”) to use the land.





On
August 17, 2006, Elemiss entered into an agreement with and obtained a
certificate of a land use right from the Chinese government, whereby Elemiss
acquired for RMB 703,200 (equivalent to $88,247 at date of acquisition) the
right to use certain land until August 16, 2056. The purchase price is being
amortized over the term of the right, which is 50
years.


Net land use right at September 30, 2008 and June 30, 2008 were as
follows:





Balance
      as ofSeptember
      30,2008
            
            
            June
      30, 2008Land
      use right
            
            $
            1,902,492
            
            
            $
            1,883,298Less:
      Accumulated amortization
            
            
            (382,917
            )
            
            
            (351,743
            )Total
            
            $
            1,519,575
            
            
            $
            1,531,555




Amortization expense for the three months ended September 30, 2008 and 2007 was
$11,980 and $36,600, respectively. Amortization expense for the next five years
is approximately $70,510 per year.


NOTE
8.  NOTES RECEIVABLE


As of September 30, 2008 and June 30, 2008, the Company had notes receivable due
from Weiye Forestry Ecosystem and Development Co., Ltd (“Weiye
Forestry”).  On May 24, 2007, the Company sold its forestry
development rights at RMB 10,439,340 (equivalent to US$1,364,174  at
date of signing) to Weiye Forestry for 5 installments from 5/23/2008 to
5/23/2012.  According to this agreement, the Company would collect RMB
2,000,000 annually, with the remaining RMB 439,340 collected at the last
year.  Weiye Forestry was a related party at the time the transaction
occurred. The CEO of one of the Company’s affiliates was the owner of Weiye.
During the year ended June 30, 2008, this person was no longer the CEO of the
affiliated company. As a result, Weiye is no longer a related
party.
 
 As
this sale of forestry development right payment term is five years and there is
no specified interest rate, the Company used discounted rate of 8.5%, which
approximate five year China bank loan rate, to calculate present value of the
future payments.
 NOTE
9.  PREPAYMENTS
 
 As of September 30, 2008 and June 30, 2008, long-term prepayments consisted of
the followings:
  Balance
      as ofSeptember
      30,2008
                  
                  
                  June
      30, 2008Consulting
      Fees
                  
                  $
                  987,152
                  
                  
                  $
                  538,850Land
      Lease Exp.
                  
                  
                  344,261
                  
                  
                  
                  406,394Rental
                  
                  
                  -
                  
                  
                  
                  4,374Advertisement
                  
                  
                  176,733
                  
                  
                  
                  200,464Total
                  
                  $
                  1,508,146
                  
                  
                  $
                  1,150,082
  NOTE
10.  ACCRUED EXPENSES AND OTHER PAYABLES
 
 As of September 30, 2008 and June 30, 2008, accrued expenses and other payables
consisted of the followings:
 Balance
      as ofSeptember
      30,2008
                
                
                June
      30, 2008Accrued
      expenses
                
                $
                476,351
                
                
                $
                477,512Other
      payables and accruals
                
                
                329,804
                
                
                
                331,951Total
                
                $
                806,155
                
                
                $
                809,463
  NOTE
11.  LONG-TERM PAYABLE-LAND USE RIGHTS
  In April 2001, Lüshen obtained a land use right from the Chinese government, for
RMB 10,008,364 (equivalent to $1,200,381 at the date of acquisition). The term
of the land use right is through May 18, 2031. The purchase price is being
amortized over the term of the right. The payment of the original purchase price
was deferred and due on or before June 24, 2011.  The long-term
payable bears no interest.
 NOTE
12 – INCOME TAXES
 
 The
Company is governed by the Income Tax Law of the People’s Republic of China
concerning foreign invested companies, which, until January 2008, generally
subject to tax at a statutory rate of 33% (30% state income tax plus 3% local
income tax) on income reported in the statutory financial statements after
appropriate tax adjustments. 
 Substantially all of the Company’s taxable income and related tax expense are
from PRC sources. Dasheng, Lüshen and Elemiss file separate income tax returns
under the Income Tax Law of the People’s Republic of China concerning Foreign
Investment Enterprises and Foreign Enterprises and local income tax laws (the
“PRC Income Tax Law”). In accordance with the relevant income tax laws, the
profits of the Company derived from agribusiness are fully exempted from income
taxes and the profits of the Company derived from real estate investment are
subject to income taxes. As of September 30, 2008 and 2007, the Company derived
all of its revenues and profits from its agriculture business.
 
 On
March 16, 2007, the National People’s Congress of China approved the Corporate
Income Tax Law of the People’s Republic of China (the “New CIT Law”), which is
effective from January 1, 2008. Under the new law, the corporate income tax rate
applicable to all Companies, including both domestic and foreign-invested
companies, will be 25%, replacing the current applicable tax rate of
33%.  However, tax concession granted to eligible companies prior to
the new CIT laws will be grand fathered in.
 
 The
Company has been formally approved by the local tax bureau for the favorable tax
benefit enjoyed by the foreign invested company, which allows two-year tax
exemption from income tax from January 1, 2007 through December 31, 2008, and
three-year 50% tax reduction from January 1, 2009 to December 31, 2011. As a
result of this tax reduction benefit, the Company is still subject to income tax
exemption for the three months ended September 30,
2008.





CHINA
DASHENG BIOTECHNOLOGY COMPANY AND SUBSIDIARIES Notes
to the Consolidated Financial Statements
 September 30,
2008 (Continued)
 (Unaudited)
 NOTE
13.  FOREIGN OPERATION
  (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) Profit Appropriation & Statutory Reserves
 
 Under
the laws 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 to any discretionary surplus reserve, if approved by
stockholders.
 
 The
statutory reserves represent restricted retained earnings and is
non-distributable other than during liquidation and can be used to fund previous
years’ losses, if any, and may be utilized for business expansion or converted
into share capital by issuing new shares to existing shareholders in proportion
to their shareholding or by increasing the par value of the shares currently
held by them, provided that the remaining reserve balance after such issue is
not less than 25% of the registered capital.
 
 As of September 30, 2008 and June 30, 2008, the Company established and
segregated in retained earnings an aggregate amount for the Statutory Surplus
Reserve of $1,837,187 and $1,837,187, respectively.
 Note
14.  CONCENTRATIONS AND CREDIT RISK
  Financial instruments that potentially subject the Company to significant
concentration of credit risk consist primarily of cash and cash
equivalents.  As of September 30, 2008 and June 30, 2008,
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.
  11


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






Forward
Looking Statements




This Quarterly Report on Form 10-Q contains “forward-looking” statements as such
term is defined in the Private Securities Litigation Reform Act of 1995 and
information relating to the Company that is based on the beliefs of the
Company’s management as well as assumptions made by and information currently
available to the Company’s management. When used in this report, the words
“anticipate,” “believe,” “estimate,” “expect” and “intend” and words or phrases
of similar import, as they relate to the Company or Company management, are
intended to identify forward-looking statements. Such statements reflect the
current risks, uncertainties and assumptions related to certain factors
including, without limitations, competitive factors, general economic
conditions, customer relations, relationships with vendors, the interest rate
environment, governmental regulation and supervision, seasonality, distribution
networks, product introductions and acceptance, technological change, changes in
industry practices, onetime events and other factors described herein and in
other filings made by the company with the Securities and Exchange Commission.
Based upon changing conditions, should any one or more of these risks or
uncertainties materialize, or should any underlying assumptions prove incorrect,
actual results may vary materially from those described herein as anticipated,
believed, estimated, expected or intended. The Company does not intend to update
these forward-looking statements.







Management's
Discussion and Analysis of Financial Condition and Results of
Operations





RESULTS OF OPERATIONS – Three
Months Ended September 30, 2008 compared to Three Months Ended September 30,
2007
  Revenues for the three months ended September 30, 2008 were $5,107,515, compared
to $3,006,437 for the same period in 2007. The $2,101,078, or 69.8% increase in
revenues was primarily due to an increase in AM/HM livestock feed additive
products and bacterial based fertilizer sales volume. For the three months ended
September 30, 2008, we sold a total of 1,694.12 and 227.96 tons of AM/HM
livestock feed additives and bacterial based fertilizer respectively in
comparison to 863.14 and 49.90 tons in the same period in 2007. Overall, we saw
a healthy growth in the sales volume of all four of our major product
lines.
  The following is a breakdown of revenue by product, by region, and by subsidiary
and as a percentage of total revenue:
  Percentage
      of Q1 2008
                  
                  
                  Percentage
      of Q1 2009Product
      lineAM/HMTM
      Crop additives
                  
                  $
                  1,919,328
                  
                  
                  
                  63.84
                  %
                  
                  $
                  2,729,170
                  
                  
                  
                  53.43
                  %AM/HMTM
      Livestock feed additives
                  
                  $
                  926,669
                  
                  
                  
                  30.82
                  %
                  
                  $
                  1,896,619
                  
                  
                  
                  37.13
                  %FGWTM
      Preservatives
                  
                  $
                  90,991
                  
                  
                  
                  3.03
                  %
                  
                  $
                  151,059
                  
                  
                  
                  2.96
                  %Bacterial
      based Fertilizer
                  
                  $
                  69,449
                  
                  
                  
                  2.31
                  %
                  
                  $
                  330,690
                  
                  
                  
                  6.47
                  %Total
                  
                  $
                  3,006,437
                  
                  
                  
                  
                  
                  
                  $
                  5,107,515
  Revenue
                  
                  
                  Percentage
      of RevenueRegionNorthwest
                  
                  $
                  1,751,895
                  
                  
                  
                  34.30
                  %Southwest
                  
                  $
                  102,252
                  
                  
                  
                  2.00
                  %Northern
                  
                  $
                  464,367
                  
                  
                  
                  9.09
                  %Northeast
                  
                  $
                  152,385
                  
                  
                  
                  2.98
                  %Central
                  
                  $
                  87,690
                  
                  
                  
                  1.72
                  %Eastern
                  
                  $
                  466,680
                  
                  
                  
                  9.14
                  %South
                  
                  $
                  2,082,268
                  
                  
                  
                  40.77
                  %
  Revenue
                    
                    
                    Percentage
      of RevenueSubsidiariesHainan
      Lüshen
                    
                    $
                    2,082,268
                    
                    
                    
                    40.77
                    %Yangling
      Elemiss
                    
                    $
                    1,263,173
                    
                    
                    
                    24.73
                    %Gansu
      Dasheng
                    
                    $
                    1,762,097
                    
                    
                    
                    34.50
                    %
  Gross profit for the three months ended September 30, 2008 was $2,440,911, an
increase of $1,246,229 or 104.3% compared to the same period in 2007. The
increase in gross profit is a direct result of our increase in revenues as we
experienced an increase in demand for our products.
 Gross
      Marginfor
      the quarter ended Sept 30, 2008Product
      lineAM/HMTM
      Crop Additives
                    
                    
                    48.73
                    %AM/HMTM Livestock
      feed Additives
                    
                    
                    46.19
                    %FGWTM
      Preservatives
                    
                    
                    39.05
                    %Bacterial
      based Fertilizer
                    
                    
                    53.21
                    %Over
      all
                    
                    
                    47.79
                    %
  Operating expenses for the three months ended September 30, 2008 were $805,842
compared to $349,747 in the same period for 2007. This increase of $456,095 or
130.4% is primarily due to the significantly increase Selling and General
Administrative expenses. Our selling and general administrative expenses were
increased by $200,850 and $255,245 respectively. The cause for the increase is
primarily because of the increase of  advertising and sales promotion
expense and professional fees. The advertising and sales promotion expense
has significantly increased by $130,456 or 330% from the same period of
2007. The professional fee of $212,125 which did not
incurred for the same period of 2007 also materially increased our
current quarter's operation expenses.
  Net
income for the three months ended September 30, 2008 was $1,328,272, an increase
of $672,417 or 102.5% compared to the same period in 2007. The increase in net
income is due to our higher sales volume which is a result of greater market
demand.


LIQUIDITY AND CAPITAL RESOURCES


At
September 30, 2008, we had $8,428,719 in working capital, an increase of
$1,493,226 since the end of the last fiscal year on June 30,
2008.  The increase was primarily a result of our net income for the
quarter.  In addition to $2,381,735 in cash and cash equivalents, the
greater portion of our current working capital consists of account receivables
of $5,113,965.  We expect that account receivables will be
significantly reduced the end of calendar year 2008. In addition, we are
owed $1,596,931 by Weiye Forestry Ecosystem and Development Co., Ltd (“Weiye
Forestry”).  On May 24, 2007, the Company sold its forestry
development rights at RMB10, 439,340 (equivalent to US$ 1,364,174  at
date of signing) to Weiye Forestry for 5 installments from 5/23/2008 to
5/23/2012.  According to this agreement, the Company would collect
RMB2,000,000 annually.
  Net
cash used in operating activities totaled $381,084 for the three months ended
September 30, 2008, as compared to cash used by operating activities of $658,567
for the three months ended September 30, 2007. The net cash used in
operations was largely due to the increase in account receivable of
$1,869,320.
 
 We had no
investing activities for the three month period ended September 30, 2008 as
compared to the same period in 2007 when we had $21,198 in purchase of plant and
equipment.
 
 Net cash provided by financing activities was $321,088 for the three months
ended September 30, 2008 as compared to $1,816,110 for the same period in 2007.
 12
 CRITICAL
ACCOUNTING POLICIES AND USE OF ESTIMATES




The discussion and analysis of our financial condition and results of operations
are based on our unaudited financial statements, which have been prepared
according to U.S. generally accepted accounting principles. In preparing these
financial statements, we are required to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses and
related disclosures of contingent assets and liabilities. We evaluate these
estimates on an on-going basis. We base these estimates on historical experience
and on various other assumptions that we believe are reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities. Actual results may differ from
these estimates under different assumptions or conditions. We consider the
following accounting policies to be the most important to the portrayal of our
financial condition and that require the most subjective judgment.




ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK




The Company is
subject to certain market risks, including changes in interest rates and
currency exchange rates. The Company does not undertake any specific actions to
limit those exposures.




ITEM
4. CONTROLS AND PROCEDURES




(a)  Evaluation of Disclosure Controls and Procedures




We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our Securities Exchange Act reports is
recorded, processed, summarized and reported within the time periods specified
in the SEC’s rules and forms, and that such information is accumulated and
communicated to our management, including our Principal Executive Officer and
Principal Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure. In designing and evaluating the disclosure controls and
procedures, management recognized that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives, as ours are designed to do, and
management necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.




As
of March 31, 2008, we carried out an evaluation, under the supervision and with
the participation of our management, including our Principal Executive Officer
and Principal Financial Officer, of the effectiveness of the design and
operation of our disclosure controls and procedures, as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934.
Based upon that evaluation, our Principal Executive Officer and Principal
Financial Officer concluded that our disclosure controls and procedures are
effective in enabling us to record, process, summarize and report information
required to be included in our periodic SEC filings within the required time
period.




(b)  Changes in Internal Controls




There
have been no changes in our internal control over financial reporting that
occurred during the period covered by this report that have materially affected,
or are reasonably likely to materially affect, our internal control over
financial reporting.







PART
II






OTHER
INFORMATION






ITEM 1.
LEGAL PROCEEDINGS






The company is not party to any material legal proceeding.






ITEM
2. CHANGES IN SECURITIES






None.






ITEM
3. DEFAULTS UPON SENIOR SECURITIES






None.






ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS






None.






ITEM
5. OTHER INFORMATION






None.






ITEM
6. EXHIBITS






EXHIBIT 31
Certification of the Principal Executive Officer and Principal Financial Officer
pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of
1934, as amended




EXHIBIT32
Certifications of the Principal Executive Officer and Principal Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002









SIGNATURES






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




Date: November
      14, 2008China
      Dasheng Biotechnology CompanyBy:
            /s/
      JiJun
      QiJiJun
      QiChief
      Executive Officer and President
              (Principal
      Executive, Financial and Accounting Officer)





15