UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q

|X|  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                  For the quarterly period ended June 30, 2008

                                       OR

|_|  TRANSITIONAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

          For the transition period from ___________ to _____________

                         Commission File No. 814-00063

                    CHINA BIOPHARMACEUTICALS HOLDINGS, INC.
                    ---------------------------------------
             (Exact Name of registrant as specified in its charter)

           Delaware                                     13-2949462
 ------------------------------              ---------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

                         No. 859, Pan Xu Road, Suzhou,
                         Jiangsu Province, China 215000
                         ------------------------------
               (Address of principal executive offices)(Zip Code)

                               (86) 512 6855 0568
                               ------------------
              (Registrant's telephone number, including area code)



              (Former name, former address and former fiscal year,
                         of changed since last report)

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 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 |_|

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

Large accelerated filer |_|                         Accelerated filer |_|
Non-accelerated filer|_|                            Smaller Reporting Company|X|
(Do not check if a smaller reporting company)


Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes |_| No |X|

As of June 30, 2008, 36,490,312 shares of Common Stock, par value $0.01 per
share, were outstanding.



<PAGE>



                               Table of Contents

Item No.  Description                                                   Page No.

PART I - FINANCIAL INFORMATION

Item 1.       Financial Statements.                                            2

Item 2.       Management's Discussion and Analysis of Financial
              Condition and Results of Operations.                            25

Item 3.       Quantitative and Qualitative Disclosures About Market Risk.     30

Item 4T.      Controls and Procedures.                                        30

PART II - OTHER INFORMATION

Item 1.       Legal Proceedings.                                              30

Item 1A       Risk Factors.                                                   30

Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds.    31

Item 3.       Defaults Upon Senior Securities.                                31

Item 4.       Submission of Matters to a Vote of Security Holders.            31

Item 5.       Other Information.                                              31

Item 6.       Exhibits.                                                       31

SIGNATURES                                                                    32







<PAGE>
            CHINA BIOPHARMACEUTICALS HOLDINGS, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                    AS OF JUNE 30, 2008 AND DECEMBER 31, 2007
<TABLE>
<CAPTION>
                                                                                  June 30,     December 31,
                                                                                    2008           2007
                                                                                ------------   ------------
                                                                                  Unaudited
<S>                                                                             <C>            <C>
                                     ASSETS
CURRENT ASSETS:
   Cash                                                                         $  3,512,836   $    669,699
   Short term investment                                                                  --      1,096,800
   Accounts receivable, trade, net of allowance for doubtful accounts of
     $1,341,685 and $1,260,760 at June 30, 2008 and December 31, 2007,
     respectively                                                                  5,459,455      3,551,483
   Accounts receivable, related parties                                              146,303         41,932
   Other receivables                                                                 115,730        863,627
   Other receivables - related parties                                             1,064,360        819,621
   Advances to suppliers                                                             432,559        797,302
   Prepaid expenses                                                                  417,383        363,819
   Inventories                                                                    10,944,195      8,962,055
   Loan to shareholders                                                               48,147         45,243
                                                                                ------------   ------------
     Total current assets                                                         22,140,968     17,211,581
                                                                                ------------   ------------

PLANT AND EQUIPMENT, net                                                           8,829,057      4,122,169
                                                                                ------------   ------------
OTHER ASSETS:
   Intangible asset, net                                                           7,617,664      7,398,189
   Long term notes receivable                                                        583,600        640,518
   Long term other receivables - related parties                                     224,928        267,768
   Restricted cash                                                                 1,187,883        518,589
   Advance on patent and right purchase                                            1,021,300        959,700
   Other assets                                                                       21,905         81,484
                                                                                ------------   ------------
     Other assets                                                                 10,657,280      9,866,248
                                                                                ------------   ------------

       Total assets                                                             $ 41,627,305   $ 31,199,998
                                                                                ============   ============
                      LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable                                                             $  7,250,074   $  5,988,289
   Short-term loans                                                                2,159,320      2,371,830
   Other payables                                                                    298,586      1,381,462
   Other payables - related parties                                                  704,383        689,338
   Customer deposits                                                               3,678,467      2,129,318
   Notes payable                                                                   3,957,538      1,727,460
   Taxes payable                                                                   2,523,126      1,488,964
   Redeemable series B preferred stock                                            13,209,353     12,585,641
   Other accrued liabilities                                                         857,715        281,390
                                                                                ------------   ------------
     Total current liabilities                                                    34,638,562     28,643,692

LONG TERM LIABILITIES:                                                                64,658         65,114
                                                                                ------------   ------------

       Total liabilities                                                          34,703,220     28,708,806
                                                                                ------------   ------------

COMMITMENTS AND CONTINGENCIES                                                             --             --
                                                                                ------------   ------------

MINORITY INTEREST                                                                  7,718,079      5,508,061
                                                                                ------------   ------------

SHAREHOLDERS' EQUITY:
   Preferred stock, $0.01 par value, 10,000,000 shares authorized; 50,000
     and 50,000 shares Issued and outstanding at June 30, 2008 and December
     31, 2007, respectively                                                              500            500
   Common stock, $0.01 par value, 200,000,000 shares authorized; 36,490,312
     shares issued and outstanding at June 30, 2008 and December 31, 2007,
     respectively                                                                    364,903        364,903
   Paid-in capital                                                                13,199,476     13,199,476
   Capital receivable                                                               (252,471)      (252,471)
   Deferred compensation                                                              (2,625)       (21,375)
   Statutory reserves                                                              1,417,795        976,439
   Accumulated deficit                                                           (17,196,959)   (18,059,232)
   Accumulated other comprehensive income                                          1,675,387        774,891
                                                                                ------------   ------------
     Total shareholders' equity                                                     (793,994)    (3,016,869)
                                                                                ------------   ------------

       Total liabilities and shareholders' equity                               $ 41,627,305   $ 31,199,998
                                                                                ============   ============
</TABLE>

The accompanying notes are an integral part of this statement.

                                      - 1 -
<PAGE>
            CHINA BIOPHARMACEUTICALS HOLDINGS, INC. AND SUBSIDIARIES

         CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
     FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2008 AND DECEMBER 31, 2007
                                    UNAUDITED

<TABLE>
<CAPTION>
                                                           Three months ended June 30,   Six months ended June 30,
                                                               2008           2007          2008          2007
                                                           ------------   ------------   ----------   ------------
                                                                            Restated                    Restated
<S>                                                        <C>            <C>            <C>          <C>
REVENUES                                                   $ 13,340,544   $  7,754,670   24,313,785   $ 13,910,230

COST OF GOODS SOLD                                            9,215,170      5,850,627   16,926,332     10,535,729
                                                           ------------   ------------   ----------   ------------

GROSS PROFIT                                                  4,125,374      1,904,043    7,387,453      3,374,501
                                                           ------------   ------------   ----------   ------------
OPERATING EXPENSES
   Research and development                                     241,400             --      259,347         43,163
   Selling, general and administrative                        1,224,364      1,145,801    2,299,161      2,049,301
                                                           ------------   ------------   ----------   ------------
     Total Operating Expenses                                 1,465,764      1,145,801    2,558,508      2,092,464
                                                           ------------   ------------   ----------   ------------

INCOME FROM OPERATIONS                                        2,659,610        758,242    4,828,945      1,282,037
                                                           ------------   ------------   ----------   ------------

OTHER INCOME (EXPENSE)
   Interest income (expense), net                              (346,650)      (338,587)    (703,234)      (686,072)
   Other income (expense), net                                  (29,727)       228,433      (29,727)       228,433
                                                           ------------   ------------   ----------   ------------
     Total other expense, net                                  (376,377)      (110,154)    (732,961)      (457,639)
                                                           ------------   ------------   ----------   ------------

INCOME BEFORE INCOME TAXES AND MINORITY INTEREST              2,283,233        648,088    4,095,984        824,398

PROVISION FOR INCOME TAXES                                      331,204              5      630,613          1,113
                                                           ------------   ------------   ----------   ------------

INCOME BEFORE MINORITY INTEREST                               1,952,029        648,083    3,465,371        823,285

MINORITY INTEREST                                             1,140,476        565,772    2,161,742        918,767
                                                           ------------   ------------   ----------   ------------

INCOME (LOSS) FROM CONTINUING OPERATIONS                        811,553         82,311    1,303,629        (95,482)

LOSS ON DISCONTINUED OPERATIONS
   loss from discontinued operations, net of tax effect              --       (111,600)          --        (22,075)
                                                           ------------   ------------   ----------   ------------

NET INCOME (LOSS)                                               811,553        (29,289)   1,303,629       (117,557)

   Foreign currency translation adjustment                      218,359        319,364      900,496        354,318
                                                           ------------   ------------   ----------   ------------

COMPREHENSIVE INCOME (LOSS)                                $  1,029,912   $    290,075    2,204,125   $    236,761
                                                           ============   ============   ==========   ============
EARNING (LOSS) PER SHARE OF COMMON STOCK

   Continuing operations
     Basic                                                 $      0.022   $      0.002        0.036   $     (0.003)
     Diluted                                                      0.022          0.002        0.036         (0.003)
                                                           ============   ============   ==========   ============
   Discontinued operations
     Basic                                                           --         (0.003)          --         (0.001)
     Diluted                                                         --         (0.003)          --         (0.001)
                                                           ============   ============   ==========   ============

WEIGHTED AVERAGED NUMBER OF SHARES OUTSTANDING - BASIC       36,490,312     36,027,615   36,490,312     36,027,615
                                                           ============   ============   ==========   ============

WEIGHTED AVERAGED NUMBER OF SHARES OUTSTANDING - DILUTED     36,540,312     36,027,615   36,540,312     36,027,615
                                                           ============   ============   ==========   ============
</TABLE>

The accompanying notes are an integral part of this statement.

                                      - 2 -
<PAGE>
            CHINA BIOPHARMACEUTICALS HOLDINGS, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                                   Preferred stock (series A)        Common stock
                                                   --------------------------   -----------------------      Paid-in      Capital
                                                       Shares      Par value       Shares     Par value      capital     receivable
                                                   -------------   ----------   -----------   ---------   ------------   ----------
<S>                                                <C>             <C>          <C>           <C>         <C>            <C>
BALANCE, December 31, 2006, Restated                     930,000   $    9,300    35,586,740   $ 355,868   $ 13,059,911   $ (252,471)

   Common shares issued for service                                                 125,000       1,250         36,250
   Common shares issued for preferred
      stock conversion                                  (512,500)      (5,125)      753,572       7,535         (2,410)
   Net loss
   Staturoty reserves
   Foreign currency translation adjustments

                                                   -------------   ----------   -----------   ---------   ------------   ----------
BALANCE, June 30, 2007, Restated (Unaudited)             417,500        4,175    36,465,312     364,653     13,093,751     (252,471)

   Common shares issued for preferred
      stock conversion                                   (25,000)        (250)       25,000         250             --
   Cancellation of preferred shares                     (342,500)      (3,425)                                   3,425
   Amortization of deferred compensation
   Disposal of Enshi
   Change in value of warrants issued for
      Enshi acquisition                                                                                        102,300
   Net loss
   Statutory reserves
   Foreign currency translation adjustments

                                                   -------------   ----------   -----------   ---------   ------------   ----------
BALANCE, December 31, 2007                                50,000   $      500    36,490,312   $ 364,903   $ 13,199,476   $ (252,471)

   Amortization of deferred compensation
   Net income
   Statutory reserves
   Foreign currency translation adjustments

                                                   -------------   ----------   -----------   ---------   ------------   ----------
BALANCE, June 30, 2008 (Unaudited)                        50,000   $      500    36,490,312   $ 364,903   $ 13,199,476   $ (252,471)
                                                   =============   ==========   ===========   =========   ============   ==========

<CAPTION>
                                                                                                         Other
                                                           Deferred      Accumulated     Statutory    comprehensive
                                                         compensation      deficit        reserves    income (loss)       Total
                                                         ------------   -------------   -----------   -------------   -------------
<S>                                                      <C>            <C>             <C>           <C>             <C>
BALANCE, December 31, 2006, Restated                     $    (18,000)  $  (6,060,461)  $ 2,524,655   $     885,998   $  10,504,800

   Common shares issued for service                           (28,125)                                                        9,375
   Common shares issued for preferred stock conversion                                                                           --
   Net loss                                                                  (117,557)                                     (117,557)
   Staturoty reserves                                                        (229,802)      229,802                              --
   Foreign currency translation adjustments                                                                  34,954          34,954

                                                         ------------   -------------   -----------   -------------   -------------
BALANCE, June 30, 2007, Restated (Unaudited)                  (46,125)     (6,407,820)    2,754,457         920,952      10,431,572

   Common shares issued for preferred stock conversion                                                                           --
   Cancellation of preferred shares                            (9,375)                                                       (9,375)
   Amortization of deferred compensation                       34,125                                                        34,125
   Disposal of Enshi                                                        1,862,414    (1,862,414)       (837,320)       (837,320)
   Change in value of warrants issued for
      Enshi acquisition                                                                                                     102,300
   Net loss                                                               (13,429,430)                                  (13,429,430)
   Statutory reserves                                                         (84,396)       84,396                              --
   Foreign currency translation adjustments                                                                 691,259         691,259

                                                         ------------   -------------   -----------   -------------   -------------
BALANCE, December 31, 2007                               $    (21,375)  $ (18,059,232)  $   976,439   $     774,891   $  (3,016,869)

   Amortization of deferred compensation                       18,750                                                        18,750
   Net income                                                               1,303,629                                     1,303,629
   Statutory reserves                                                        (441,356)      441,356                              --
   Foreign currency translation adjustments                                                                 900,496         900,496

                                                         ------------   -------------   -----------   -------------   -------------
BALANCE, June 30, 2008 (Unaudited)                       $     (2,625)  $ (17,196,959)  $ 1,417,795   $   1,675,387   $    (793,994)
                                                         ============   =============   ===========   =============   =============
</TABLE>

The accompanying notes are an integral part of this statement.

                                      - 3 -

<PAGE>
            CHINA BIOPHARMACEUTICALS HOLDINGS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
                                    UNAUDITED

<TABLE>
<CAPTION>
                                                                                       2008          2007
                                                                                  -------------   -----------
                                                                                                   Restated
<S>                                                                               <C>             <C>
CASH FLOWS FROM CONTINUING OPERATING ACTIVITIES:
   Net income (loss)                                                              $   1,303,629   $   (117,557)
   Net loss from discontinued operations                                                     --        (22,075)
                                                                                  -------------   ------------
   Net loss from continuing operations                                                1,303,629        (95,482)
   Adjustments to reconcile net loss from continuing
      operations to cash provided by (used in) continuing operating activities:
         Common stock issued for services                                                    --          9,375
         Amortization of stock based compensation                                        18,750             --
         Depreciation                                                                   605,571        354,693
         Amortization                                                                   140,277        818,906
         Minority interest                                                            2,473,598      1,284,090
   Change in operating assets and liabilities:
         Accounts receivable, trade                                                  (1,988,897)    (1,246,004)
         Accounts receivable, related parties                                           (28,806)      (255,526)
         Other receivables and prepayments                                              694,333        271,949
         Other receivables-related party                                                     --     (1,178,997)
         Notes receivables                                                                   --        (73,030)
         Advances to suppliers                                                          364,742        (89,780)
         Other assets                                                                    59,579         88,628
         Inventories                                                                 (1,982,140)      (453,906)
         Accounts payable                                                             1,261,784        611,488
         Accounts payable - related parties                                             (75,565)      (645,430)
         Other payables and accrued liabilities                                         116,705        523,106
         Customer deposits                                                            1,549,149        839,636
         Taxes payable                                                                1,034,162         49,130
                                                                                  -------------   ------------
            Net cash provided by continuing operating activities                      5,546,871        812,846
                                                                                  -------------   ------------

CASH FLOWS FROM CONTINUING OPERATION INVESTING ACTIVITIES:
   Purchase of intangible assets                                                             --     (1,299,940)
   Payment received from long term notes receivables                                         --        173,531
   Purchase of equipment                                                               (557,094)      (102,274)
   Additions to construction in progress                                             (4,607,455)            --
   (Increase) in other receivables - related parties                                   (417,840)            --
   Decrease in other receivables - related parties                                           --         80,504
   Proceed on selling short term investment                                           1,096,800             --
   Proceeds on loan from related party                                                   99,758             --
                                                                                  -------------   ------------
            Net cash used in continuing operation investing activities               (4,385,831)    (1,148,179)
                                                                                  -------------   ------------

CASH FLOWS FROM CONTINUING OPERATION FINANCING ACTIVITIES:
   (Increase) decrease in restricted cash                                              (669,294)        76,122
   Proceeds from short term bank loan                                                        --        (50,209)
   Payments on bank loan                                                               (212,510)       (64,855)
   Payment on long term debts - related parties                                              --       (390,252)
   Increase in notes payable                                                          2,230,078             --
   Proceeds (payments) on long term debts - related parties                             185,242             --
                                                                                  -------------   ------------
            Net cash provided by (used in) continuing operation financing
              activities                                                              1,533,516       (429,194)
                                                                                  -------------   ------------

   Net increase (decrease) in cash from continuing operations                         2,694,556       (764,527)
                                                                                  -------------   ------------

Cash used in discontinued operating activities                                               --     (1,577,929)
Cash provided by discontinued operations investing activities                                --        787,049
Cash provided by discontinued operations financing activities                                --         50,209
                                                                                  -------------   ------------
   Net cash provided by discontinued operations                                              --       (740,671)
                                                                                  -------------   ------------

Effect of exchange rate on cash                                                         148,581       (223,100)
                                                                                  -------------   ------------

INCREASE (DECREASE) IN CASH                                                           2,843,137     (1,728,298)

Cash, beginning of period                                                               669,699      2,958,556
                                                                                  -------------   ------------

Cash, end of period                                                               $   3,512,836   $  1,230,258
                                                                                  =============   ============
</TABLE>

The accompanying notes are an integral part of this statement.

                                      - 4 -

<PAGE>

            CHINA BIOPHARMACEUTICALS HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2008
                                   (Unaudited)

--------------------------------------------------------------------------------

Note 1 -  ORGANIZATION AND OPERATIONS

China Biopharmaceuticals Holdings, Inc. (CBH), a Delaware corporation, was
originally organized as a Corporation under the laws of the state of New York on
August 6, 1976. Since August 2004, the Company acquired various subsidiaries
located in mainland China. The principal activities of the Company, through its
subsidiaries located in mainland China ("China" or "PRC"), are research,
manufacture, and sale of drug raw materials and intermediates as well as
prescription and non-prescription drugs and traditional Chinese medicines. Also,
the Company is engaged in the discovery, development and commercialization of
innovative drugs and related bio-pharmaceutical products in China.

Note 2 - RESTATEMENT OF FINANCIAL STATEMENTS

As  discussed in Note 16, Enshi had been taken over by RimAisa as  collateral of
the $11.5 million debt since the third quarter of 2007. Therefore, the financial
statements  as of and for the three and six months ended June 30, 2007 have been
restated to reflect Enshi as a discontinued operation for comparison purposes.

Note 3 - SIGNIFICANT ACCOUNTING POLICIES

Economic and Political Risks

The Company faces a number of risks and challenges since its assets are located
in China and its revenues are derived from its operations in China. China is a
developing country with a young market economic system overshadowed by the
state. Its political and economic systems are very different from the more
developed countries and are still in the stage of change. China also faces many
social, economic and political challenges that may produce major shocks and
instabilities and even crises, in both its domestic arena and its relationship
with other countries, including but not limited to the United States. Such
shocks, instabilities and crises may in turn significantly and negatively affect
the Company's performance.

Use of Estimates

The  preparation  of the  financial  statements  in  conformity  with  generally
accepted  accounting  principles  in  the  United  States  of  America  requires
management to make estimates and assumptions that affect the reported amounts of
assets and  liabilities  and disclosure of contingent  assets and liabilities at
the date of the financial  statements  and the reported  amounts of revenues and
expenses during the reporting  periods.  For example,  the Company estimates the
collectibility  of its receivables  which affects the carry value of the related
asset.  Management makes these estimates using the best information available at
the time the estimate are made;  however actual results could differ  materially
from those estimates.

Management has included all normal recurring adjustments considered necessary to
give a fair presentation of operating results for the periods presented. Interim
results  are  not  necessarily  indicative  of  results  for a  full  year.  The
information  included  in this Form  10-Q  should  be read in  conjunction  with
information included in the 2007 annual report filed on Form 10-K.

Basis of Presentation

The consolidated  financial  statements  include the accounts of the Company and
all  its  majority-owned  subsidiaries  that  require  consolidation.   Material
inter-company transactions have been eliminated in the consolidation.

The consolidated financial statements of China Biopharmaceuticals Holdings, Inc.
and Subsidiaries reflect the activities of the following subsidiaries:

   Entity        Percentage of Ownership               Location
------------------------------------------------------------------------
    CBH                   Parent Company       United States of America
    CBC                100% owned by CBH          British Virgin Inland
    Erye                51% owned by CBH                          P.R.C
   Keyuan               90% owned by CBC                          P.R.C

Land Use Rights

According to Chinese law, the government  owns all the land in China.  Companies
or individuals  are authorized to possess and use the land only through land use
rights granted by the Chinese  government.  Land use rights are being  amortized
using the straight-line method over the lease term of 40 to 50 years.

                                      - 7 -

<PAGE>

            CHINA BIOPHARMACEUTICALS HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2008
                                   (Unaudited)

--------------------------------------------------------------------------------

Plant and  Equipment

Plant  and  equipment  are  stated  at  cost  less   accumulated   depreciation.
Depreciation  is  provided  on the  straight-line  basis over  their  respective
estimated useful lives. Estimated useful lives are as follows.

    Equipment and machinery                                 5 years
    Motor vehicles                                          5 years
    Furniture and fixtures                                  5 years
    Buildings                                               20 years
    Land use right                                          40-50 years

The cost and  related  accumulated  depreciation  of  assets  sold or  otherwise
retired are eliminated from the accounts and any gain or loss is included in the
statement  of  operations.  The cost of  maintenance  and  repairs is charged to
income  as  incurred,   whereas   significant   renewals  and   betterments  are
capitalized.

Construction  in progress  represents the costs incurred in connection  with the
construction of buildings or new additions to the Company's plant facilities. No
depreciation  is provided  for  construction  in  progress  until the assets are
completed and are placed into service.

Long-term assets of the Company are reviewed  periodically to determine  whether
their carrying value has become impaired, pursuant to the guidelines established
in Statement of Financial  Accounting  Standards (SFAS) No. 144,  Accounting for
the Impairment or Disposal of Long-Lived Assets. As of June 30, 2008, management
concluded long term assets are not impaired.

Cash and Cash Equivalents

For  financial  reporting  purposes,  the Company  considers  all highly  liquid
investments  purchased with original maturity of three months or less to be cash
equivalents.

Short Term Investment

In 2007,  the Company  opened an account with an investment  broker to invest in
short term  investments  in initial  public  offering  securities.  The  Company
classified the account balance as trading securities, which should be carried at
fair value with unrealized gains and losses reported in income.  Total amount in
this account was $0 as of June 30, 2008 and  $1,096,800 as of December 31, 2007.
For the six months ended June 30, 2008,  the Company did not record any realized
or unrealized  gain or loss since the account didn't have activities in 2008 and
was closed as of June 30, 2008.

Accounts Receivable

Accounts receivable are carried at original invoice amount less an estimate made
for doubtful accounts based on a review of all outstanding  amounts on a monthly
basis.   Management's  judgment  and  estimates  are  made  in  connection  with
establishing  the allowance  for doubtful  accounts.  Specifically,  the Company
analyzes  the aging of  accounts  receivable  balances,  historical  bad  debts,
customer concentrations, customer credit-worthiness, current economic trends and
changes  in  our  customer  payment  terms.   Significant  changes  in  customer
concentrations or payment terms,  deterioration of customer credit-worthiness or
weakening  economic trends could have a significant impact on the collectibility
of the accounts receivable and our operating results. If the financial condition
of our  customers  were to  deteriorate,  resulting  in an  impairment  of their
ability to make payments, additional allowance may be required.

                                      - 8 -

<PAGE>

            CHINA BIOPHARMACEUTICALS HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2008
                                   (Unaudited)

--------------------------------------------------------------------------------

Inventories

Inventories  are  stated  at the lower of cost or  market  using  the  first-in,
first-out basis.

Patents

The patents represent  patented  pharmaceutical  formulas,  on which the Company
have  obtained  official  registration  certificate  or  official  approval  for
clinical trials. No amortization is provided when the Company intends to and has
the  ability to sell the  patent or  formulas  within not more than two  months,
Otherwise  the patent costs will be subject to  amortization  over its estimated
useful life  period,  generally  ten to fifteen  years.  Such costs  comprise of
purchase  costs for  patented  pharmaceutical  formulas  and costs  incurred for
patent  application.  Patent costs are accounted for on an individual basis. The
carrying  value of patent  costs is reviewed  for  impairment  annually and more
often when events and changes in circumstances  indicate that the carrying value
may not be recoverable.

Research and Development Costs

Research and development (or "R&D") expenses  include  salaries,  benefits,  and
other headcount related costs, clinical trial and related clinical manufacturing
costs,  contract and other outside  service fees,  and  facilities  and overhead
costs. R&D costs are expensed when incurred.

Under the  guidance of  paragraphs  8 to 11 of SFAS 2, the Company  expenses the
costs  associated  with the research and  development  activities when incurred.
None of the intangible assets of the Company was recorded based on R&D costs.

Advertising Costs

The Company expenses the cost of advertising as incurred or, as appropriate, the
first time the advertising  takes place.  Advertising costs for the three months
ended June 30,  2008 and 2007  amounted $ 55,502  and  $45,540,  and for the six
months ended June 30, 2008 and 2007 amounted $73,118 and $51,686.

Shipping and Handling Costs

Shipping  and  handling  costs  related to costs of goods sold are  included  in
selling,  general and  administrative  costs which were $93,524 and $198,071 for
the three months and six months  ended June 30,  2008;  For the three months and
six months ended 2007 amounted $57,452 and $121,613, respectively.

Concentration of Risks

Cash includes cash on hand and demand deposits in accounts maintained with state
owned banks within the People's  Republic of China and Hong Kong.  Total cash in
these banks at June 30, 2008 and December 31, 2007  amounted to  $3,410,806  and
$731,956 of which no  deposits  are  covered by  insurance.  The Company has not
experienced  any losses in such  accounts  and believes it is not exposed to any
risks on its cash in bank accounts.

                                      - 9 -

<PAGE>

            CHINA BIOPHARMACEUTICALS HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2008
                                   (Unaudited)

--------------------------------------------------------------------------------

The Company sells  intermediary  pharmaceutical  products to general  consumers.
Five major customers  accounted for approximately 50% of the net revenue for the
six months ended June 30, 2008 with each customer  individually  accounting  for
14%,  12%,  9%, 8% and 7%,  respectively.  Five major  customers  accounted  for
approximately 11.2% of the net revenue for the 3 months ended June 30, 2008 with
each customer  individually  accounting  for 2.5%,  2.3%,  2.4%,  2.2% and 1.8%,
respectively.  At June 30,  2008,  the total  receivable  balance due from these
customers was $928,110,  representing 14% of total accounts receivable.  For the
six months ended June 30, 2007,  five major  customers  accounted for 17% of the
net revenue with each customer individually accounting for 5%, 4%, 3%, 2.8%, and
2.5%,  respectively.  For the three  months  ended  June 30,  2007,  five  major
customers accounted for 18.4% of the net revenue with each customer individually
accounting for 4.2%, 3.6%, 2.8%, 2.7% and 5.1%, respectively

For the six months ended June 30, 2008, five major suppliers provided
approximately 40% of the Company's purchases of raw materials with each supplier
individually accounting for 16%, 14.2%, 4.3%, 3.4% and 1.9%, respectively. For
the three months ended June 2008, five major suppliers provided approximately
31.7% of the Company's purchases of raw materials with each supplier
individually accounted for 7.3%, 7.2%, 6.6%, 5.7% and 4.9%, respectively. Five
suppliers provided 64.2% of the Company's purchase of raw materials for the six
months ended June 30, 2007, with each suppliers individually accounting for
22.4%, 19.1%, 12.8%, 5.5% and 4.4%, respectively. Five suppliers provided 63.4%
of the Company's purchase of raw materials for the three months ended June 30,
2007, with each suppliers individually accounted for 21.7%, 18.5%, 13.2%, 5.9%
and 4.1%, respectively.

Fair Value of Financial Instruments

On January 1, 2008,  the Company  adopted SFAS No. 157. SFAS No. 157, Fair Value
Measurements,  defines fair value, establishes a three-level valuation hierarchy
for disclosures of fair value measurement and enhances disclosures  requirements
for fair value measures. The carrying amounts reported in the balance sheets for
current assets and current  liabilities  qualify as financial  instruments are a
reasonable  estimate of fair value  because of the short  period of time between
the  origination of such  instruments  and their expected  realization and their
current market rate of interest. The three levels are defined as follow:

      o     Level 1  inputs  to the  valuation  methodology  are  quoted  prices
            (unadjusted) for identical assets or liabilities in active markets.

      o     Level 2 inputs to the valuation  methodology  include  quoted prices
            for similar  assets and  liabilities in active  markets,  and inputs
            that are observable for the assets or liability,  either directly or
            indirectly,  for  substantially  the  full  term  of  the  financial
            instruments.

      o     Level 3 inputs to the valuation  methodology  are  unobservable  and
            significant to the fair value.

Revenue Recognition

The Company  has  various  categories  of revenue  resources,  sales of new drug
formulas, R&D services and revenue from sales of medical product.

                                     - 10 -

<PAGE>

            CHINA BIOPHARMACEUTICALS HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2008
                                   (Unaudited)

--------------------------------------------------------------------------------

The Company  recognizes  revenue from product and drug formula  sales when title
has passed,  the risks and rewards of  ownership  have been  transferred  to the
customer,  the fee is fixed and determinable,  and the collection of the related
receivable  is probable  which is generally at the time of shipment.  Allowances
are established for estimated rebates, wholesaler charge backs, prompt pay sales
discounts, product returns, and bad debts.

For  revenue  from R&D  service,  revenue  is  recognized  based on  fixed-price
refundable new drug contracts.  The fixed-price  refundable new drug contract is
also called as milestone contract,  which establishes the phase goals of the R&D
service provided by the Company and the corresponding  milestone payments by the
customers.  Milestone payments become payable and are recognized as revenue when
milestone  goals,  as defined in the  contract,  are  achieved.  Milestones  are
substantive and not derived solely from arriving at a specific date.  Revenue is
recognized when milestone goals are achieved at the amount of the  corresponding
milestone  payment.  To determine when milestones are achieved,  typically,  the
milestone goals require one or more of the following:  (1) a certificate  from a
licensed  authoritative agency, (2)  approval/acknowledgement  by a governmental
agency,  such as agency like Food and Drug  Administration of the United States,
(3) an  authoritative  professional  appraisal  report,  or  (4) an  independent
technological  feasibility report,  testing analysis and other form of valuation
on  the  result  and  value  of  products  and  service.  After  receipt  of the
certificate,  and/or approval and/or report,  continued  service is not required
thus the  respective  milestone  goals are  achieved.  Therefore,  the milestone
payment is no longer refundable and revenue is recognized.

For six  months  ended  June 30,  2008 and 2007,  revenue  was  $24,313,785  and
$13,910,230, respectively, made up of the following product categories.

                                                2008              2007
                                           ---------------   --------------
                                              Unaudited        Unaudited
                                                             --------------
                                                                Restated
                                                             --------------
Revenue:
   Intermediary pharmaceuticals products   $     7,517,331   $    4,133,763
   Prescription drugs                           16,687,128        9,776,467
   Other sales                                      52,590               --
   R&D service                                      56,736               --
                                           ---------------   --------------
Total revenue                              $    24,313,785   $   13,910,230
                                           ===============   ==============

Income Taxes

Income taxes are provided on the liability  method  whereby  deferred tax assets
and  liabilities  are recognized for the expected tax  consequences of temporary
differences   between  the  tax  basis  and  reported   amounts  of  assets  and
liabilities.  Deferred tax assets and liabilities are computed using enacted tax
rates  expected  to apply to taxable  income in the  periods in which  temporary
differences are expected to be recovered or settled.  The effect on deferred tax
assets and liabilities from a change in tax rates is recognized in income in the
period that  includes  the  enactment  date.  The  Company  provides a valuation
allowance  for certain  deferred tax assets,  if it is more likely than not that
the Company will not realize tax assets through future operations.

                                     - 11 -

<PAGE>

            CHINA BIOPHARMACEUTICALS HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2008
                                   (Unaudited)

--------------------------------------------------------------------------------

The Company  adopted FASB  Interpretation  48,  "Accounting  for  Uncertainty in
Income Taxes" ("FIN 48"), as of January 1, 2007. A tax position is recognized as
a benefit only if it is "more  likely than not" that the tax  position  would be
sustained in a tax examination,  with a tax examination being presumed to occur.
The amount  recognized is the largest amount of tax benefit that is greater than
50% likely of being realized on  examination.  For tax positions not meeting the
"more  likely than not" test,  no tax benefit is  recorded.  The adoption had no
effect on the Company's financial statements.

Comprehensive Income

SFAS No. 130,  Reporting  Comprehensive  Income,  establishes  standards for the
reporting and display of  comprehensive  income,  its components and accumulated
balances in a full set of general  purpose  financial  statements.  SFAS No. 130
defines  comprehensive  income to include  all  changes in equity  except  those
resulting from investments by owners and  distributions  to owners.  Among other
disclosures,  SFAS No.  130  requires  that all items  that are  required  to be
recognized  under current  accounting  standards as components of  comprehensive
income be  reported  in  financial  statement  that is  presented  with the same
prominence as other financial statements.

The  Company's  only current  component of  comprehensive  income is the foreign
currency translation adjustment.

Foreign Currency Translation

The reporting  currency of the Company is the US dollar.  The Company's  Chinese
subsidiaries'  financial  records are  maintained  and the  statutory  financial
statements are stated in its local currency, Renminbi (RMB), as their functional
currency.  Results of operations are translated at average exchange rates during
the period,  assets and liabilities are translated at the unified  exchange rate
as quoted by the People's Bank of China at the end of each reporting period, and
equity are stated at their historical  rates.  Cash flows are also translated at
average  translation  rates for the period,  therefore,  amounts reported on the
statement  of  cash  flows  will  not  necessarily  agree  with  changes  in the
corresponding balances on the balance sheet.

This quotation of the exchange rates does not imply free  convertibility  of RMB
to other foreign currencies.  All foreign exchange transactions continue to take
place either through the People's Bank of China or other banks authorized to buy
and sell foreign  currencies at the exchange rate quoted by the People's Bank of
China.

Approval of foreign currency payments by the Bank of China or other institutions
requires submitting a payment application form together with invoices,  shipping
documents and signed contracts.

Translation  adjustments resulting from this process are included in accumulated
other comprehensive income in the consolidated statement of shareholders' equity
and amounted to $1,675,387  and $774,891 at June 30, 2008 and December 31, 2007,
respectively. Assets and liabilities at June 30, 2008 and December 31, 2007 were
translated  at 6.85 and 7.29 RMB to 1.00  USD.  The  average  translation  rates
applied to income statement accounts, statement of cash flows for the six months
ended June 30,  2008 and 2007 were 7.05 and 7.75 RMB to 1.00 USD,  respectively.
Cash flows are also  translated  at average  translation  rates for the  period,
therefore,  amounts reported on the statement of cash flows will not necessarily
agree with changes in the corresponding balances on the balance sheet.

                                     - 12 -

<PAGE>

            CHINA BIOPHARMACEUTICALS HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2008
                                   (Unaudited)

--------------------------------------------------------------------------------

Transaction  gains and losses  that arise from  exchange  rate  fluctuations  on
transactions  denominated in a currency  other than the functional  currency are
included in the results of operations as incurred.  These amounts are immaterial
to the consolidated financial statements.

Earnings per Share

The  Company  adopted  Statement  of  Financial  Accounting  Standards  No. 128,
"Earnings per Share"  (SFAS128).  SFAS 128 requires the presentation of earnings
per  share  (EPS) as Basic  and  Diluted  EPS.  Basic  earnings  per  share  are
calculated by taking net income divided by the weighted average shares of common
stock outstanding during the period. Diluted earnings per share is calculated by
taking  basic  weighted  average  shares of common stock and  increasing  it for
dilutive common stock  equivalents  such as preferred stock, as well as warrants
and options that are in the money.

Under   SFAS  150   "Accounting   for   Certain   Financial   Instruments   with
Characteristics  of both  Liabilities  and  Equity",  entities  that have issued
mandatory  redeemable  shares of common stock or entered into forward  contracts
that require physical settlement by repurchase of a fixed number of the issuer's
equity  shares of common  stock in  exchange  for cash shall  exclude the common
shares that are to be redeemed or repurchased  in calculating  basic and diluted
earnings per share.  Thus, the redeemable  shares described in Note 14 have been
excluded from the June 30, 2008 earnings per share calculations.

The Company  determined  that all the warrants  were  anti-dilutive  because the
exercise  prices were higher than average market price in the period  presented.
The convertible  preferred stock was  anti-dilutive for the six months and three
months ended June 30, 2007 because the Company recorded net loss for the periods
presented.  For the six  months  and  three  months  ended  June 30,  2008,  the
convertible preferred stock of 50,000 was considered to have diluted effect. The
number of shares used in computing  basic  earnings per share for the six months
and three months ended June 30, 2008 and 2007 were  36,490,312  and  36,027,615,
respectively.  The number of shares used in computing diluted earnings per share
for the six months and three months ended June 30, 2008 and 2007 were 36,540,312
and 36,027,615,  respectively.  Basic and diluted earnings per share for the six
months and three  months  ended June 30, 2008 were $0.036 and $0.022.  Basic and
diluted losses per share for the six months and three months ended June 30, 2007
was amount to $0.003 and 0.002.

Shares Subject to Mandatory Redemption

The  Company  adopted  Statement  of  Financial  Accounting  Standards  No. 150,
"Accounting  for Certain  Financial  Instruments  with  Characteristics  of both
Liabilities  and Equity".  FAS 150  established  classification  and measurement
standards  for  three  types of  freestanding  financial  instruments  that have
characteristics of both liabilities and equity.  Instruments within the scope of
FAS 150 must be classified  as  liabilities  within the  Company's  Consolidated
Financial  Statements  and be reported  at  settlement  date value.  The Company
issued  redeemable  stock in November  2007 related to the  settlement  of notes
payables  owed to RimAisa.  The amount of  redeemable  stock was  presented as a
liability  on the  balance  sheet  at the fair  market  value  plus the  accrued
interest expense at the balance sheet date.

                                     - 13 -

<PAGE>

            CHINA BIOPHARMACEUTICALS HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2008
                                   (Unaudited)

--------------------------------------------------------------------------------

Recent Accounting Pronouncements

In  February  2007,  the FASB issued  SFAS No.  159,  The Fair Value  Option for
Financial  Assets and  Financial  Liabilities--Including  an  amendment  of FASB
Statement  No. 115 ("FAS 159").  FAS 159 permits  companies to choose to measure
many  financial  instruments  and certain other items at fair value that are not
currently  required to be measured at fair value. The objective of FAS 159 is to
provide  opportunities  to mitigate  volatility in reported  earnings  caused by
measuring  related assets and  liabilities  differently  without having to apply
hedge  accounting  provisions.   FAS  159  also  establishes   presentation  and
disclosure  requirements  designed to facilitate  comparisons  between companies
that choose  different  measurement  attributes  for similar types of assets and
liabilities. The Company chose not to elect the option to measure the fair value
of eligible financial assets and liabilities.

In June 2007, the FASB issued FASB Staff Position No. EITF 07-3, "Accounting for
Nonrefundable  Advance Payments for Goods or Services Received for use in Future
Research and Development  Activities" ("FSP EITF 07-3"), which addresses whether
nonrefundable  advance  payments for goods or services that used or rendered for
research and development  activities should be expensed when the advance payment
is made or when the research and development  activity has been  performed.  The
Company  adapted EITF 07-3 on January 1, 2008 and there is no material effect on
financial statements.

In December  2007,  the FASB issued SFAS No. 160,  "Noncontrolling  Interests in
Consolidated Financial Statements - an amendment of Accounting Research Bulletin
No. 51" ("SFAS 160"), which establishes  accounting and reporting  standards for
ownership  interests in subsidiaries held by parties other than the parent,  the
amount  of  consolidated  net  income  attributable  to  the  parent  and to the
non-controlling  interest,  changes in a  parent's  ownership  interest  and the
valuation of retained  non-controlling  equity  investments when a subsidiary is
deconsolidated.  The Statement  also  establishes  reporting  requirements  that
provide sufficient disclosures that clearly identify and distinguish between the
interests of the parent and the interests of the  non-controlling  owners.  SFAS
160 is effective for fiscal years beginning after December 15, 2008. The Company
has not determined the effect that the  application of SFAS 160 will have on its
consolidated financial statements.

In December  2007,  Statement  of Financial  Accounting  Standards  No.  141(R),
Business Combinations, was issued. SFAS No. 141R replaces SFAS No. 141, Business
Combinations.  SFAS 141R retains the  fundamental  requirements in SFAS 141 that
the acquisition method of accounting (which SFAS 141 called the purchase method)
be used for all business  combinations  and for an acquirer to be identified for
each  business  combination.  SFAS 141R  requires an acquirer to  recognize  the
assets acquired,  the liabilities assumed,  and any non-controlling  interest in
the acquiree at the acquisition  date,  measured at their fair values as of that
date, with limited exceptions. This replaces SFAS 141's cost-allocation process,
which  required the cost of an  acquisition  to be  allocated to the  individual
assets  acquired and  liabilities  assumed based on their estimated fair values.
SFAS 141R also  requires  the  acquirer  in a business  combination  achieved in
stages  (sometimes   referred  to  as  a  step  acquisition)  to  recognize  the
identifiable assets and liabilities,  as well as the non-controlling interest in
the  acquiree,  at the full  amounts  of their  fair  values  (or other  amounts
determined in accordance  with SFAS 141R).  SFAS 141R applies  prospectively  to
business  combinations  for  which  the  acquisition  date  is on or  after  the
beginning of the first annual  reporting  period  beginning on or after December
15,  2008.  An entity may not apply it before that date.  The  Company  believes
adopting SFAS No. 141R might materially impact the accounting  treatment for any
future merger or acquisition consummated January 1, 2009.

                                     - 14 -

<PAGE>

            CHINA BIOPHARMACEUTICALS HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2008
                                   (Unaudited)

--------------------------------------------------------------------------------

In  March  2008,  the  Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial Accounting Standards ("SFAS") No. 161, "Disclosures about
Derivative  Instruments  and Hedging  Activities - An Amendment of SFAS No. 133"
("SFAS  161").  SFAS 161 seeks to improve  financial  reporting  for  derivative
instruments and hedging activities by requiring enhanced  disclosures  regarding
the impact on financial  position,  financial  performance,  and cash flows.  To
achieve this increased transparency, SFAS 161 requires (1) the disclosure of the
fair value of derivative  instruments  and gains and losses in a tabular format;
(2) the disclosure of derivative features that are credit risk-related;  and (3)
cross-referencing  within the  footnotes.  SFAS 161 is  effective  on January 1,
2009.   The  Company  is  in  the  process  of  evaluating  the  new  disclosure
requirements under SFAS 161.

In June 2008, the FASB issued Emerging Issues Task Force Issue 07-5 "Determining
whether an Instrument (or Embedded Feature) is indexed to an Entity's Own Stock"
("EITF No. 07-5").  This Issue is effective for financial  statements issued for
fiscal years beginning after December 15, 2008, and interim periods within those
fiscal years.  Early application is not permitted.  Paragraph 11(a) of Statement
of Financial  Accounting Standard No 133 "Accounting for Derivatives and Hedging
Activities" ("SFAS 133") specifies that a contract that would otherwise meet the
definition  of a derivative  but is both (a) indexed to the  Company's own stock
and (b)  classified  in  stockholders'  equity  in the  statement  of  financial
position would not be considered a derivative financial instrument. EITF No.07-5
provides a new two-step model to be applied in  determining  whether a financial
instrument  or an embedded  feature is indexed to an issuer's own stock and thus
able to qualify for the SFAS 133 paragraph  11(a) scope  exception.  The Company
believes  adopting this statement  will have a material  impact on the financial
statements  because among other things,  any option or warrant previously issued
and all new issuances  denominated  is US dollars will be required to be carried
as a liability and marked to market each reporting period.

In June  2008,  FASB  issued  EITF  Issue No.  08-4,  "Transition  Guidance  for
Conforming  Changes to Issue No. 98-5 ("EITF No. 08-4")".  The objective of EITF
No.08-4 is to provide  transition  guidance for conforming  changes made to EITF
No. 98-5,  "Accounting  for Convertible  Securities  with Beneficial  Conversion
Features or Contingently  Adjustable  Conversion Ratios",  that result from EITF
No. 00-27  "Application of Issue No. 98-5 to Certain  Convertible  Instruments",
and  SFAS  No.  150,   "Accounting  for  Certain   Financial   Instruments  with
Characteristics  of both  Liabilities  and Equity".  This Issue is effective for
financial  statements  issued for fiscal years  ending after  December 15, 2008.
Early  application is permitted.  Management is currently  evaluating the impact
the  adoption  of  EITF  No.  08-4  will  have  on  its  consolidated  financial
statements.

Reclassifications

Certain  prior  period  amounts  have been  reclassified  to  conform to current
period's  presentation.  Those  reclassifications  had  no  material  effect  on
operations or cash flows.  Further,  the financial  statements as of and for the
six months and three  months  ended June 30, 2007 have been  restated to reflect
Enshi as a discontinued operation for comparison purpose.

Note 4 - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Interest and Income Taxes Paid

      o     Interest  expense paid  amounted to $81,073 and $779,789 for the six
            months ended June 30, 2008 and 2007, respectively.

      o     Income tax was paid  $112,150  and $0 for the six months  ended June
            30, 2008 and 2007, respectively.

                                     - 15 -

<PAGE>

            CHINA BIOPHARMACEUTICALS HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2008
                                   (Unaudited)

--------------------------------------------------------------------------------

Note 5 - ACCOUNTS RECEIVABLE

The reserve for bad debts was  $1,341,685  and  $1,260,760  at June 30, 2008 and
December 31, 2007, respectively.

As of June 30, 2008 and December 31, 2007 accounts  receivable  consisted of the
following:

                                          June 30,     December 31,
                                            2008           2007
                                        (Unaudited)
                                        ------------   ------------
Accounts receivable                     $  6,801,140   $  4,812,243
Allowance for doubtful accounts           (1,341,685)    (1,260,760)
                                        ------------   ------------
   Accounts receivable, net             $  5,459,455   $  3,551,483
                                        ============   ============

Note 6 - INVENTORIES

Inventories consisted of the following at June 30, 2008 and December 31, 2007

                                          June 30,     December 31,
                                            2008          2007
                                        (Unaudited)
                                        ------------   ------------
Raw materials                           $  2,518,706   $  1,858,866
Refinery materials                         3,607,395      3,139,200
Packaging supplies                           274,666        239,624
Sundry supplies                                8,471         11,984
Work in process                              734,055        351,611
Finished goods                             3,800,902      3,360,770
                                        ------------   ------------
   Total inventories                    $ 10,944,195   $  8,962,055
                                        ============   ============

Note 7 - PLANT AND EQUIPMENT

Plant and equipment  consisted of the following as of June 30, 2008 and December
31, 2007:

                                          June 30,     December 31,
                                            2008           2007
                                        (Unaudited)
                                        ------------   ------------
Plant                                   $  2,432,785   $  2,286,051
Office equipment                              26,654         25,478
Machinery                                  6,919,129      6,368,927
Automobile                                   234,935        228,043
Construction in progress                   4,793,418        185,963
                                        ------------   ------------
   Total plant and equipment              14,406,921      9,094,462
   Less: accumulated depreciation         (5,577,864)    (4,972,293)
                                        ------------   ------------
      Plant and equipment, net          $  8,829,057   $  4,122,169
                                        ============   ============

                                     - 16 -

<PAGE>

            CHINA BIOPHARMACEUTICALS HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2008
                                   (Unaudited)

--------------------------------------------------------------------------------

Depreciation expense for the six months ended June 30, 2008 and 2007 amounted to
$280,837  and  $244,175;  For the  three  months  ended  June 30,  2008 and 2007
amounted to $137,032 and $123,019,  respectively.  As of June 30, 2008 and 2007,
capitalized interest amounted to $85,320 and $0, respectively.

Note 8 - OTHER ASSETS

Intangible Assets

Intangible  assets at June 30,  2008 and  December  31, 2007  included  land use
rights and drug patents, and consist of the following:

                                                    June 30,
                                                      2008       December 31,
                                                  (Unaudited)        2007
                                                  -----------    ------------
Land use rights:
Erye                                              $ 5,621,218    $  5,282,173
CBH                                                 2,406,464       2,406,464
                                                  -----------    ------------
   Total land use rights                            8,027,682       7,688,637
   Less: accumulated amortization                    (580,260)       (459,333)
                                                  -----------    ------------
      Land use rights, net                          7,447,422       7,229,304
                                                  -----------    ------------
Patent:
   Approved drugs                                     343,303         322,596
   Less: accumulated amortization                    (173,061)       (153,711)
                                                  -----------    ------------
         Subtotal:                                    170,242         168,885
                                                  -----------    ------------
            Total intangible assets, net          $ 7,617,664    $  7,398,189
                                                  ===========    ============

Land use rights are pledged as collateral for bank loans.  Amortization expenses
for the six months ended June 30, 2008 and 2007 were  $156,393 and $33,203;  for
the three  months  ended June 30,  2008 and 2007  amounted  $94,796  and $7,843,
respectively.

Restricted Cash

Restricted  cash  represents  cash  required to be deposited  with banks for the
balance of bank notes  payable but are subject to withdrawal  with  restrictions
according  to the  agreement  with the bank and saving  accounts.  The  required
deposit rate is approximately  30-50% of the notes payable.  Given the nature of
the restricted cash, it is reclassified as a financing  activity in Statement of
Cash Flows.  The  following  lists the  depositors,  the amount and names of the
banks:

                                                    June 30,
                                                      2008       December 31.
                    Name of Bank                  (Unaudited)        2007
-----------------------------------------------   -----------    ------------
Hua Xia Bank, Suzhou                              $       374    $    164,871
Industrial and commercial bank, Suzhou                 61,278         353,718
China CITIC Bank                                    1,126,231
-----------------------------------------------   -----------    ------------
                                Total             $ 1,187,883    $    518,589
                                                  ===========    ============

                                     - 17 -

<PAGE>

            CHINA BIOPHARMACEUTICALS HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2008
                                   (Unaudited)

--------------------------------------------------------------------------------

Long Term Notes Receivable

Long term notes receivable  represents loans made to third parties for cash flow
needs for R&D projects on new drugs.  The Company has first priority to purchase
the new drug rights if the projects are successfully  completed.  If the Company
gives up the right, the debtors are required to repay the loans plus 3% interest
per annum within one month after the drug rights are sold to another  party.  If
on or before  February 28, 2010,  the R&D projects are not  completed or failed,
the debtors are  required to repay the loans plus 6% interest  per annum  within
ten days after such a conclusion  was made. As of June 30, 2008 and December 31,
2007,  the total  amount of the long term  notes  receivable  was  $583,600  and
$640,518,  respectively, where 51% of ownership equity of the debtor was pledged
for the loan. Management believes the likelihood of repayment to be collected is
high based on the above  conditions  and the well  financial  conditions  of the
counter parties.

Note 9 - RELATED PARTIES TRANSACTIONS

Accounts Receivables - Related Parties

As of June 30, 2008 and  December  31, 2007,  accounts  receivable  included the
following:

               June 30,   December 31,                               Manner of
                 2008         2007         Due From        Term      Settlement
------------  ---------   -----------------------------------------------------
     Erye     $ 146,303      41,932      Hainan Kaiye   Short Term      Cash

Hainan  Kaiye  is  company  owned  by  minority   shareholders  of  Suzhou  Erye
Pharmaceutical Limited Company.

Other Receivables - Related Parties

As of June 30, 2008 and  December  31,  2007,  other  receivable  contained  the
following  related  party  balances  where  Hainan  Kaiye and Erye  Trading  are
companies owned by minority  shareholders of Suzhou Erye Pharmaceutical  Limited
Company and Hengyi is the discontinued subsidiary since August 28, 2006.

              June 30,    December 31,                               Manner of
                2008          2007         Due From        Term      Settlement
----------  -----------   -----------------------------------------------------
   Erye     $   959,069   $    819,621   Hainan Kaiye   Short Term      Cash
   CBH          105,291             --      Enshi       Short Term      Cash
----------  -----------   ------------
  Total     $ 1,064,360   $    819,621
            ===========   ============

                                     - 18 -

<PAGE>

            CHINA BIOPHARMACEUTICALS HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2008
                                   (Unaudited)

--------------------------------------------------------------------------------

Loan to Shareholder and Officer

<TABLE>
<CAPTION>
              June 30,    December 31,                                         Manner of
                2008          2007              Due From             Term      Settlement
----------  -----------   ---------------------------------------------------------------
<S>         <C>           <C>             <C>                     <C>          <C>
   Keyuan   $    48,147   $     45,243    Keyuan's shareholder    Short Term      Cash
</TABLE>

Other Payables - Related Parties

<TABLE>
<CAPTION>
              June 30,    December 31,                                         Manner of
                2008          2007               Due To              Term      Settlement
----------  -----------   ---------------------------------------------------------------
<S>         <C>           <C>                 <C>                 <C>          <C>
  Erye          686,134        644,750        Erye Trading        Short Term      Cash
</TABLE>

Erye  Trading  is  company  owned  by  minority   shareholders  of  Suzhou  Erye
Pharmaceutical Limited Company.

Other Payables- Related Parties, Shareholders

<TABLE>
<CAPTION>
              June 30,    December 31,                                         Manner of
                2008          2007               Due To              Term      Settlement
----------  -----------   ---------------------------------------------------------------
<S>         <C>           <C>            <C>                      <C>          <C>
CBH         $    17,582   $     43,961       Chris Peng Mao       Short Term      Cash
Keyuan              667            627   Lufan An & Xiaohao Liu   Short Term      Cash
            -----------   ------------
  Total     $    18,249   $     44,588
            ===========   ============
</TABLE>

Chris  Peng  Mao is the CEO of the  Company.  Lufan  An &  Xiaohao  Liu are both
shareholder of the Company.

Long Term Other Receivables - Related Parties

<TABLE>
<CAPTION>
              June 30,    December 31,                                         Manner of
                2008          2007              Due From             Term      Settlement
----------  -----------   ---------------------------------------------------------------
<S>         <C>           <C>                <C>                   <C>         <C>
  CBH       $   224,928   $    267,768       Suzhou Heng yi        Long Term      Cash
</TABLE>

Note 10 - NOTES PAYABLE

The Company's  subsidiary  Erye has $3,957,538  and $1,727,460  notes payable to
Erye's  vendors for the  purchase of drug raw  materials as of June 30, 2008 and
2007.  Notes  payable are  interest  free and usually  mature  after a six month
period.

Note 11 - STATUTORY RESERVES

According  to  Chinese  corporation  law,  a  company  incorporated  in China is
required  to  contribute  an amount of no less than 10% of its yearly net income
for its employees to a reserve account in the company.

This statutory reserve fund is planned for future  development of the company or
use for  employee's  benefits.  These  reserves  represent  restricted  retained
earnings.   The  following  table  list  the  provision  of  statutory  reserves
contributed as of June 30, 2008.

   Year          Amount                         Description
----------   --------------   --------------------------------------------------
   2004      $       60,750
   2005             383,873   15% of China Subsidiaries' net income
   2006           2,080,032   10% of China Subsidiaries' net income
   2007          (1,548,216)  10% of Erye's net income, deducted Enshi's
                              Statutory reserve balance at December 12/31/2006
   2008             441,356   10% of China Subsidiaries' net income
----------   ==============
   Total     $    1,417,795
             ==============

                                     - 19 -

<PAGE>

            CHINA BIOPHARMACEUTICALS HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2008
                                   (Unaudited)

--------------------------------------------------------------------------------

Note 12 - INCOME TAXES

Corporation Income Tax (CIT)

The  Company's  subsidiaries  operate in China.  According to the Chinese  Joint
Venture Business Law, these  subsidiaries  have been registered and incorporated
with the status of Sino-foreign joint venture companies and are subject to a two
year tax exemption and a three year 50% reduction in income tax rates preference
treatment, which generally commences from the first year of establishing a joint
venture or the approval date of the income tax preference application.

Erye was granted income tax exemption for two years  commencing  from January 1,
2006. Keyuan's total revenue is subject to 1.7% to 3.3% income tax rates depends
on the range of the taxable  income.  Provision for CIT amounted to $630,613 and
$1,114 for the six months ended June 30, 2008 and  2007,and  $331,204 and $5 for
three months ended June 30, 2008 and 2007, respectively.

Effective  January 1, 2008, the New  Enterprise  Income Tax ("EIT") law replaced
the  existing  laws  for  Domestic  Enterprises  ("DES")  and  Foreign  Invested
Enterprises ("FIEs"). The new standard EIT rate of 25% has replaced the 33% rate
previously  applicable to both DES and FIEs. Companies  established before March
16,  2007  will  continue  to enjoy  tax  holiday  treatment  approved  by local
government  for a grace period of the next 5 years or until the tax holiday term
is completed, whichever is sooner.

The Company's  subsidiaries,  Suzhou Erye was established  before March 16, 2007
and  therefore  is  qualified  to  continue  enjoying  the  reduced  tax rate as
described above. The company is subject to 50% of the 25% EIT tax rate, or 12.5%
from January 1, 2008 through December 31, 2010.

The  following  table  reconciles  the U.S.  statutory  rates  to the  Company's
effective tax rate:

                                               June 30,
                                            --------------
                                             2008    2007
                                            -----   ------
U.S. Statutory rate                          34.0%    34.0%
Foreign income not recognized in USA        (34.0)   (34.0)
China income taxes                           25.0     33.0
Income tax exempted                         (12.5)   (32.4)
                                            -----   ------
Total provision for income taxes             12.5%     0.6%
                                            =====   ======

                                     - 20 -

<PAGE>

            CHINA BIOPHARMACEUTICALS HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2008
                                   (Unaudited)

--------------------------------------------------------------------------------

The  estimated  tax savings due to the reduced tax rate for the three months and
six months  ended June 30, 2008 are $54,293 and  $208,072;  for the three months
and six months ended June 30, 2007 were $518,493 and $758,644, respectively. The
net effect on income per share if the income tax had been applied would decrease
income per share by $0.001 and $0.06 for the three  months and six months  ended
June 30,  2008.  The net  effect  on loss per share if the  income  tax had been
applied  would  increase  net loss per share for the three months and six months
ended June, 2007 by $0.014 and 0.021, respectively.

Business Tax

The Company is subject to business tax, which is charged on the selling price of
applicable  product and service at a general rate of 5% in  accordance  with the
tax law  applicable.  Keyuan is exempt  from  business  tax  according  to local
applicable favorable tax policy.

Value Added Tax ("VAT")

In  accordance  with  the  relevant  taxation  laws in  China,  the VAT rate for
domestic sales is 17% and 0% for export sales on the invoiced value of sales and
is payable  by the  purchaser.  A credit is  available  whereby  VAT paid on the
purchases of  semi-finished  products or raw materials used in the production of
the  Company's  finished  products can be used to offset the VAT due on sales of
the finished product.

VAT on sales and VAT on purchases  amounted to $3,957,487and  $3,228,400 for six
months ended,  2008, and $2,340,711  and  $1,503,064  respectively  for the same
period in 2007.  Sales and  purchases are recorded net of VAT collected and paid
as the Company acts as an agent for the  government.  VAT taxes are not impacted
by the income tax holiday.

Note 13 - LOANS

Short Term Bank Loans

The Company has a total of  $2,159,320  and  $2,371,830 in short term loans from
different  banks in China at June 30, 2008 and December 31, 2007,  respectively.
These  loans  mature in one year or less and renew  automatically.  The  average
interest rates were approximately 7.95% and 7.33% respectively.  Bank loans were
collateralized by the land use right and buildings of Erye.

Interest  expense for the six months ended June 30, 2008 and 2007 were  $703,234
and $54,139; for the three months ended June 30, 2008 and 2007 amounted $346,639
and $19,788,  respectively.  Interest  capitalized  as of June 30, 2008 and 2007
amounted to $85,320 and $0, respectively.

Note 14 - Redeemable Preferred Stock

On  November  16,  2007,  the  Company  entered a  conditional  loan  conversion
agreement (the  "Agreement")  with RimAsia,  under which the principal amount of
the $11.5 million Loan owed to RimAsia in connection with the Enshi acquisitions
plus unpaid interest of $1,008,534 (combined total of $12,508,534) was converted
in full  into  6,185,607  shares of Series B  redeemable  convertible  preferred
shares of the Company ("Series B Preferred  Shares") at an effective  conversion
price at $2.0222 per  preferred  share.  Each  Series B Preferred  Shares may be
converted into two shares of common stock.  Additionally,  the exercise price of
$1.375 for the 12  million  existing  warrants  exercisable  into the  Company's
common stock  previously  issued to and currently  held by RimAsia in connection
with the extension of the Loan  financing  ("Existing  Warrants") was lowered to
$1.26 per share and the term of the Existing Warrants extended to 4.5 years from
the closing date. This Agreement is conditioned on the subsequent  completion of
at least one of sizeable  acquisition  by the end of June 2008 and then extended
to the end of 2008. The Company is currently in serious  discussions  with three
companies for a possible business merger  opportunity.  Management believes that
this merger  transaction  will happen soon. If the merger  transaction  does not
happen, RimAsia has right to convert the preferred back to debt.

                                     - 21 -

<PAGE>

            CHINA BIOPHARMACEUTICALS HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2008
                                   (Unaudited)

--------------------------------------------------------------------------------

According to the Agreement, the Series B preferred stock are subject to optional
redemption at the Company's  option before the 4th  anniversary of issuance date
and mandatory  redemption at the investors of the Company's  option  thereafter.
The Company maybe required to repurchase the remaining  Series B preferred stock
four years  after the  closing  date at a per share  price of the sum of (1) the
original  Series B issue  price  $2.0222  per share;  (2) all accrued but unpaid
annual dividends;  (3) 5% of the original Series B issue price per annum accrued
from the occurrence of certain triggering events,  such as the Company's failure
to pay annual dividends, mandatory redemption price or any other amount due. The
Company adopted Statement of Financial Accounting Standards No. 150, "Accounting
for Certain Financial  Instruments with  Characteristics of both Liabilities and
Equity"  and the  6,185,607  shares of Series B  preferred  stock was counted as
liability due to the mandatory  redemption feature.  The shares were recorded at
fair  value on the date of  issuance  and any  accrued  interest  expense at the
reporting  dates.  As of June 30, 2008,  balance of redeemable  preferred  stock
amounted to $13,209,353,  in which $634,284 was the accrued interest expense for
the period of November 16, 2007 through June 30, 2008.

The  holders of the Series B  Preferred  Shares  shall be entitled to receive an
annual  dividend  of 5% of the  original  issue  price  ($2.0222  per share) and
dividend is payable annually on January 1st in either cash or in kind determined
by the Board of directors. Accrued dividend payable at June 30, 2008 amounted to
$623,712.  Further,  since the  Company  did not make a dividend  payment to the
shareholders  on time  pursuant to the  Agreement,  the Company has to accrue an
additional  5% of the  original  issue  price of Series B  Preferred  Shares per
annum,  effective January 1, 2008, as an addition to the redemption price. As of
June 30, 2008, $311,856 of penalty was included in the accrued dividend payable.

Note 15 - COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leases office space from third parties. Accordingly, for the six
months and three months ended June 30, 2008 and 2007, the Company recognized
rent expense of $7,730 and $32,111; for the three months ended June 30, 2008 and
2007, rent expenses amounted $3,865 and $15,046 respectively.

As of June 30,  2008,  the Company  has  outstanding  commitments  in respect to
non-cancelable operating leases as follows:

                                            Amount
                                          ----------
For the year ended December 31, 2008      $    6,565
Thereafter                                     6,566
                                          ----------
      Total                               $   13,131
                                          ==========

                                     - 22 -

<PAGE>

            CHINA BIOPHARMACEUTICALS HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2008
                                   (Unaudited)

--------------------------------------------------------------------------------

Research and Development Contract

On November 5, 2007, the Company  entered into a new drug  development  contract
with a third party ("the  Developer").  Pursuant to the contract,  the Developer
will  transfer  a drug  patent  to the  Company,  and  also is  responsible  for
obtaining the New Drug Certificate and the Drug Manufacturing  Approval from the
PRC Drug Administration  Authority no later than July 1, 2009. In exchange,  the
Company  will  pay up to  RMB12  million  (approximately  $1.6  million)  to the
Developer.  Of the total $1.6 million,  approximately $933,800 and $266,800 will
need to be paid before  December 31, 2007 and  February 25, 2008,  respectively,
and the final payment ranging from $0 to $400,200  (depending on the date of the
Manufacturing  Approval)  needs to be paid no later than 10 days after the grant
date of the  Manufacturing  Approval.  Further,  the two parties agreed that the
Company will pay sales  commission to the Developer based on the sales volume of
the  contracted  new drug  during a 10 year  period  after this drug is put into
production.  If the PRC Drug Administration  Authority denies the application of
the Drug Manufacturing, all payments made by the Company would be fully returned
to the  Company  by the  Developer.  The  Company  had paid  $1,459,000,  or RMB
10,000,000 by June 30, 2008.

Legal Proceedings

In March 2007, the Company  identified  non-existent  trade accounts  receivable
acquired in the acquisition of Enshi. The Company has commenced legal proceeding
for damages of $10,000,000  against Mr. Li Xiaobo ("Mr. Li"), the previous owner
and controlling shareholder of Enshi, and his related parties ("Defendants") for
breach of representations and warranties and fraud("LXB  Litigation").  The Hong
Kong courts frozen approximately $10,000,000 worth of assets per the court order
in Hong Kong and the  Defendants  lost  their  opposition  actions  against  the
seizure  order.  The company has been waiting for the court hearing in HK court.
The Company reasonably expects to prevail in the lawsuit against the Defendants.
The Company  reserves  the right to take  further  actions if  necessary to seek
additional   damages   and   compensation   for  these   serious   breaches   of
representations  and warranties and fraud and will make appropriate  disclosures
pending the legal  proceedings.  In April 2007,  the Company lost an action in a
court in Shenyang,  China to offset  claims  against Mr. Li and against Mr. Li's
working capital loan to Enshi. The court decided to view each action  separately
on its own merit.  The Company  paid the amount of $560,735 due to Liao Ning Xie
He and $86,765 due to Mr. Li. The Company  reserves the right to take additional
actions against Mr. Li and will continue its proceedings in other courts outside
as well as in China.

On November  16, 2007 and amended on January 22,  2008,  the Company and RimAisa
entered into a litigation agreement ("Litigation  Agreement").  Pursuant to this
Litigation  Agreement,  if RimAisa or RACP (as the plaintiff) prevail in the LXB
Litigation or the settlement is reached, any judgment awards,  settlement amount
and salvage value  realized  from Enshi,  would be firstly used to reimburse all
the legal and related expenses incurred by RimAsia in the LXB Litigation,  up to
$4,000,000, and the remaining amounts of the judgment proceeds would be entitled
to the Company. If RimAisa and the Company do not prevail in the LXB Litigation,
RACP should be returned to CBH and all the  proceeds of any sale of  liquidation
of Enshi or any assets of or interest in Enshi shall be distributed as agreed by
both  parties.  In addition,  all the costs and expenses  (including  attorneys'
fees) incurred by or on behalf of the  plaintiffs  shall be borne 55% by RimAsia
and 45% by the Company.

                                     - 23 -

<PAGE>

            CHINA BIOPHARMACEUTICALS HOLDINGS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 30, 2008
                                   (Unaudited)

--------------------------------------------------------------------------------

Note 16 - BUSINESS COMBINATIONS

Discontinued Operation - Shenyang Enshi

We acquired Shenyang Enshi  Pharmaceutical  Limited Company ("Enshi") on June 6,
2006.  Subsequent to the acquisition of Enshi,  the Company  identified fraud by
the previous owner and controlling  shareholder of Enshi,  Mr. Li Xiaobo and his
related  parties   ("Defendants")  and  breaches  in  the   representations  and
warranties  provided by him to the Company and the  Defendants'  including their
refusal to honor their indemnification obligations to the Company. The Company's
subsidiary  RACP filed a lawsuit  against the Defendants  alleging fraud and had
requested rescission of the agreement and damages.  Enshi's operations have been
interfered with and as a result the Company decided to suspend its operations in
the third quarter of 2007. In addition,  Enshi has been taken over by RimAsia in
July 2007 since Enshi was pledged as collateral  for the $11.5 million loan owed
to RimAsia in connection with the Enshi  Acquisition.  As a result,  Enshi is no
longer a subsidiary of the Company.  Due to the  uncertainty on the amount to be
recovered  from the  lawsuit,  management  has  decided  to write off the entire
carrying  value of Enshi in third  quarter  of 2007 and has  reported  a loss on
discontinued operations in the consolidated financial statements.  The recovered
value of Enshi after the completion of the litigation against Li Xiaobo, if any,
will be recognized as income.

                                     - 24 -
<PAGE>


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

The following discussion and analysis should be read in conjunction with the
consolidated financial statements and related notes thereto. The following
discussion contains forward-looking statements. China Biopharmaceuticals
Holdings, Inc. is referred to herein as "we", "our,", "us", or "the Company".
The words or phrases "would be," "will allow," "expect to", "intends to," "will
likely result," "are expected to," "will continue," "is anticipated,"
"estimate," or similar expressions are intended to identify forward-looking
statements. Such statements include those concerning our expected financial
performance, our corporate strategy and operational plans. Actual results could
differ materially from those projected in the forward-looking statements as a
result of a number of risks and uncertainties, including: (a) those risks and
uncertainties related to general economic conditions in China, including
regulatory factors that may affect such economic conditions; (b) whether we are
able to manage our planned growth efficiently and operate profitable operations,
including whether our management will be able to identify, hire, train, retain,
motivate and manage required personnel or that management will be able to
successfully manage and exploit existing and potential market opportunities;(c)
whether we are able to generate sufficient revenues or obtain financing to
sustain and grow our operations; and (d) whether we are able to successfully
fulfill our primary requirements for cash which are explained below under
"Liquidity and Capital Resources". Statements made herein are as of the date of
the filing of this Form 10-Q with the Securities and Exchange Commission and
should not be relied upon as of any subsequent date. Unless otherwise required
by applicable law, we do not undertake, and we specifically disclaim any
obligation, to update any forward-looking statements to reflect occurrences,
developments, unanticipated events or circumstances after the date of such
statement.

OUR BUSINESS

We are a vertically integrated bio-pharmaceutical company focused on developing,
manufacturing and distributing innovative drugs in the People's Republic of
China ("China" or PRC"). Our mission is to maximize investment returns for our
shareholders by integrating our strong drug discovery and development strength
with manufacturing and commercialization capabilities and by actively
participating in the consolidation and privatization of the pharmaceutical
industry in China to become a dominant player in the bio-pharmaceutical industry
in China.

We acquired Shenyang Enshi Pharmaceutical Limited Company ("Enshi) on June 6,
2006. Upon the acquisition of Enshi the Company identified major breaches and
fraud by the previous owner and controlling shareholders of Enshi, Mr. Li Xiaobo
and his related parties ("Defendants") in the representations and warranties
provided by him to the Company and the Defendants' refusal to honor their
indemnification obligations to the Company. The Company's subsidiary RACP filed
a lawsuit against the Defendants alleging fraud and is pursuing rescission and
damages. Enshi's operations have been severely hindered and as a result we
decided to suspend its operations. In addition, since Enshi was pledged as
collateral for the $11.5 million debt owed to RimAsia Capital Partners, L.P.
("RimAsia") in connection with the Enshi Acquisition, Enshi was taken over by
RimAsia in July 2007. As a result, Enshi is no longer a subsidiary of the
Company. Due to the uncertainty on the amount to be recovered from the lawsuit,
our management decided to write off the total carrying value of Enshi in the
third quarter of 2007 and report it as discontinued operations in the
consolidated financial statements. Accordingly, assets, liabilities and
operating results that were attributed to Enshi are presented as discontinued
operations. The recovered value of Enshi, if any, after the completion of the
litigation against the Defendants will be recognized as income. Under Statement
of Financial Accounting Standards No. 144 ("SFAS 144"), when a component of an
entity, as defined in SFAS 144, has been disposed of or is classified as held
for sale, the results of its operations, including the gain or loss on its
disposal should be classified as discontinued operations and the assets and
liabilities of such component should be classified as assets and liabilities
attributed to discontinued operations, that is provided that the operations,
assets and liabilities and cash flows of the component have been eliminated from
the company's consolidated operations and the Company will no longer have any
significant continuing involvement in the operations of the component.

Therefore, the results of Enshi's operations and cash flows for the three months
and six months ended June 30, 2007 were reported as discontinued operations in
our consolidated financial statements.

CRITICAL ACCOUNTING POLICIES

We have identified the policies below as critical to understanding of our
financial statements. The application of these polices requires management to
make estimates and assumptions that affect the valuation of assets and expenses
during the reporting period. There can be no assurance that actual results will
not differ from these estimates. The impact and any associated risks related to
these policies on our business operations are discussed below.

REVENUE AND REVENUE RECOGNITION

For fixed-price refundable contracts, we recognize revenue on a milestone basis.
Progress payments received/receivables are recognized as revenue only if the
specified milestone is achieved and accepted by the customer. Confirmed revenue
is not refundable and continued performance of future research and development
services related to the milestone are not required. For sale of patented
pharmaceutical formulas, the Company recognizes revenue upon delivery of the
patented formulas. For sales of final medicines and processed materials, we
recognize revenue upon delivery of the goods. The company usually does not offer
sales returns or refunds on the products except for some specific circumstances,
such as quality problems, which is rare and is difficult to have an accurate
estimate.

                                     - 25 -
<PAGE>
ACCOUNTS RECEIVABLE

Accounts receivable are carried at original invoice amount less an estimate made
for doubtful receivables based on a review of all outstanding amounts on a
monthly basis. Management judgment and estimates are made in connection with
establishing the allowance for doubtful accounts. Specifically, we analyze the
aging of accounts receivable balances, historical bad debts, customer
concentrations, customer credit-worthiness, current economic trends and changes
in our customer payment terms. Significant changes in customer concentration or
payment terms, deterioration of customer credit-worthiness or weakening in
economic trends could have a significant impact on the collectibility of
receivables and our operating results. If the financial condition of our
customers were to deteriorate, resulting in an impairment of their ability to
make payments, additional allowances may be required. The reserve for bad debts
increased to $1,341,685 at June 30, 2008 from $1,260,760 at December 31, 2007.
This increase is mainly resulted from change in the exchange rate of RMB to USD.
As of June 30, 2008, accounts receivable, net of allowance for doubtful
accounts, amounted to $5,459,455.

The following table provides the roll forward of the allowance of doubtful
accounts:

     Allowance for doubtful accounts

     As of December 31, 2007                                     $1,260,760
     Foreign currency translation adjustment                         80,925
                                                                 ----------
     As of June 30, 2008                                         $1,341,685
                                                                 ==========


The following list the aging of our accounts receivable as of June 30, 2008:
<TABLE>
<CAPTION>

                  3 months         6 months       9 months     Over 9 months     Over 1 year
  Total       Amount      %      Amount   %    Amount    %     Amount      %     Amount     %
<C>         <C>         <C>     <C>      <C>   <C>      <C>    <C>       <C>   <C>        <C>
6,801,140   5,236,558   77.0    191,715  2.8   59,569   0.8    24,384    0.4   1,288,914  19.0
</TABLE>


We prepare the above consolidated aging based on the aging for each subsidiary
in above format. As each subsidiary of the Company conducts business with
different customers with different size and creditworthiness, and each
subsidiary has different impact on and different relationship with their
customers, we determine the allowance on an individual basis. Basically, we
assign various rates to each of the aging group of AR and add up the products
for respective aging group to the total allowance for doubtful accounts.
Different subsidiaries have different rates for even the same aging category. In
addition to that, we also consider the changes in specific financial condition
of their customers if situation or events indicate that some accounts may pose
unusual risk compared to others, additional allowance may be provided for those
accounts.

INCOME TAX

Significant judgment is required in determining our income tax provision. In the
ordinary course of business, there are many transactions and calculations where
the ultimate tax outcome is uncertain. Although we believe that our estimates
are reasonable, no assurance can be given that the final outcome of these
matters will not be different than that which is reflected in our historical
income tax provisions and accruals. Such differences could have a material
effect on our income tax provision and net income in the period in which such
determination is made. We apply an asset and liability approach to accounting
for income taxes. Deferred tax liabilities and assets are recognized for the
expected future tax consequences of temporary 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. The
recoverability of deferred tax assets is dependent upon our assessment of
whether it is more likely than not that sufficient future taxable income will be
generated to utilize the deferred tax asset. In the event we determine that
future taxable income will not be sufficient to utilize the deferred tax asset,
a valuation allowance is recorded.

                                     - 26 -
<PAGE>



RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 2008 AS COMPARED TO THREE
MONTHS ENDED JUNE 30, 2007

REVENUE

Revenue for the three months ended June 30, 2008 was $13,340,544 while the
revenue for the three months ended June 30, 2007 was $7,754,670, representing an
approximately 72% increase. The increase is mainly attributed to three reasons:
First is the rise in selling price and sales volume of Erye's raw material
drugs. Second, the reform of medical insurance system in rural areas of China
helps to promote the sales of Erye's drugs. Third, the selling price of the
freeze-dried drugs has increased.

COST OF GOODS SOLD

Cost of goods sold for the three months ended June 30, 2008 was $9,215,170 as
compared to $5,850,627 for the three months ended June 30, 2007. Cost of goods
sold as a percentage of sales revenues was approximately 69.1% for the three
months ended June 30, 2008 as compared to approximately 75.4% for the three
months ended June 30, 2007. The increase in cost of goods sold in terms of
dollar amount is mainly attributed to the increase of sales.

GROSS PROFIT

Gross profit in the three months ended June 30, 2008 amounted at $4,125,374, as
compared to $1,904,043 for the three months ended June 30, 2007, representing
approximately 117% increase. The gross profit margin for the three months ended
June 30, 2008 was 30.9% as compared to approximately 24.6% for the three months
ended June 30, 2007. The increase is attributed primarily to the increase of the
gross profit of the freeze-dried drugs and raw material drugs.

OPERATING EXPENSES

Operating expenses for the three months ended June 30, 2008 was $1,465,764 as
compared to $1,145,801 for the three months ended June 30, 2007, representing
27.9% increase. The increase is attributed mainly to higher sales expenses of
Suzhou Erye, such as promotional meeting, commission etc.

RESEARCH AND DEVELOPMENT

Research and development costs for the three months ended June 30, 2008 were
$241,400 as compared to $0 for the three months ended June 30, 2007. This
increase was primarily attributed to new R&D project in year 2008.

INCOME FROM OPERATIONS

Income from operations in the three months ended June 30, 2008 amounted at
$2,659,610, as compared to $758,242 for the three months ended June 30, 2007,
representing approximately 250.8% increase. The increase is mainly attributable
to Erye's strong performance in sales and increased gross margin.

NET INCOME

Net income for the three months ended June 30, 2008 was $811,553 as compared to
net loss of $29,289 for the three months ended June 30, 2007. The increase is
attributed to Erye's strong operating performance and increased profit margin.

                                     - 27 -
<PAGE>

RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 2008 AS COMPARED TO SIX MONTHS
ENDED JUNE 30, 2007

REVENUE

Revenue for the six months ended June 30, 2008 was $24,313,785 while the revenue
for the six months ended June 30, 2007 was $13,910,230, representing an
approximately 74.8% increase. The increase is mainly attributed to Erye's
significant revenue growth. Erye's revenue increase approximately 74.8% in the
first half year of 2008 comparing with its revenue in the first half year of
2007. The current industry environment provides a great opportunity for Erye to
grow its core business. Erye consistently expands its market share in rural area
in China.

COST OF GOODS SOLD

Cost of goods sold for the six months ended June 30, 2008 was $16,926,332 as
compared to $10,535,729 for the six months ended June 30, 2007. Cost of goods
sold as a percentage of sales revenues was approximately 69.6% for the six
months ended June 30, 2008 as compared to approximately 75.7% for the six months
ended June 30, 2007. The increase in cost of goods sold in terms of dollar
amount is mainly attributed to the cost of good sold of Erye which had a high
growth in its sales in the first half year of 2008.

GROSS PROFIT.

Gross profit in the six months ended June 30, 2008 amounted at $7,387,453, as
compared to $3,374,501 for the six months ended June 30, 2007, representing
approximately 120% increase. The gross profit margin for the six months ended
June 30, 2008 was 30.4% as compared to approximately 24.3% for the six months
ended June 30, 2007. The increase in gross profit as percentage to sales is
mainly due to the Company has adjusted its product mixture and increased the
sales volume of products with higher GP%.

OPERATING EXPENSES

Operating expenses for the six months ended June 30, 2008 was $2,558,508 as
compared to $2,092,464 for the six months ended June 30, 2007, representing 22%
increase. The increase is attributed mainly to higher sales expenses of Suzhou
Erye such as promotional meeting and commission etc.

RESEARCH AND DEVELOPMENT

Research and development costs for the six months ended June 30, 2008 were
$259,347 as compared to $43,163 for the six months ended June 30, 2007,
representing approximately 501% increase. This inrease was primarily attributed
to new R&D project in year 2008.


                                     - 28 -
<PAGE>

INCOME FROM OPERATIONS

Income from operations in the six months ended June 30, 2008 amounted at
$4,828,945, as compared to $1,282,037 for the six months ended June 30, 2007,
representing approximately 276.7% increase. The increase is mainly attributable
to Erye's strong performance in sales and increased gross margin.

NET INCOME

Net income for the six months ended June 30, 2008 was $1,303,629 as compared to
net loss of $117,557 for the six months ended June 30, 2007. The increase is
attributed to Erye's strong operating performance and increased profit margin.


LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2008, total current assets were $22,140,968 and total current
liabilities were $34,638,562. Cash and cash equivalents on June 30, 2008 was
$3,512,836, an increase of $2,843,137 from the $669,699 reported on December 31,
2007.

For the six months ended June 30, 2008, net cash provided by continuing
operating activities was $5,546,871, net cash used in continuing investing
activities was $4,385,831, and net cash used in continuing financing activities
was $1,533,516. Cash provided by operating activites results primarily from the
Company's strong performance in sales and increase in its profit margin. Cash
used for investing activities during the six months ended June 30, 2008 results
mainly from the construction of the new plant and purchase of equipments.

On November 19, 2007, we entered into an agreement (the "Agreement") RimAsia as
a follow-up to letters of intent signed on July 14, 2007 and August 2, 2007,
under which the principal amount of the $11.5 million Loan owed to RimAsia in
connection with the acquisition of Enshi plus unpaid interest of $1,008,534
(total of $12,508,534) was converted in full into 6,185,607 shares of senior
redeemable convertible preferred shares of the Company ("Preferred Shares") at a
conversion price of $2.0222 per Preferred Share. Each Preferred Share may be
converted into two shares of common stock. Additionally, the exercise price of
$1.375 for the 12 million existing warrants exercisable into the Company's
common stock previously issued to and currently held by RimAsia in connection
with the extension of the Loan financing ("Existing Warrants") was lowered to
$1.26 per share and the term of the Existing Warrants extended to 4.5 years from
the closing date. This is conditioned on the registrant signing a letter of
intent for acquisition of a new company (or for the injection of the remaining
49% equity stake of Erye not already owned by the registrant) before January 15,
2008, having such acquisition closed before June 30, 2008 and then extended to
January 1, 2009. In connection therewith, the parties also entered into a
registration rights agreement and certain other agreements, and the registrant
issued additional common stock purchase warrant and a modified common stock
purchase warrant.

The Enshi acquisition has created a drag on the Company's overall operational
results and expansion plan due to Enshi below-expectation results and the
associated large acquisition financing loan. Upon the acquisition of Enshi the
Company has identified major breaches and fraud by the previous owner and
controlling shareholders of Enshi, Mr. Li Xiaobo and his related parties
("Defendants") in the representations and warranties provided by him to the
Company and the Defendants' refusal to honor their indemnification obligations
to the Company. The Company's subsidiary RACP filed a lawsuit against the
Defendants alleging fraud and for rescission and damages. Currently, RimAsia,
which provided the Company with the Enshi acquisition related financing loan has
taken ownership of RACP, the holding company of Enshi with expectation to return
Enshi to the Defendants. Enshi's operations have been interfered with and as a
result we have decided to suspend its operations. Enshi's operations have been
suspended and Enshi no longer a subsidiary of the Company. Due to the
uncertainty on the amount to be recovered from the lawsuit, our management
decided to write off the total carrying value of Enshi in the third quarter of
2007 and report it as discontinued operations in the consolidated financial
statements. Accordingly, assets, liabilities and operating results that were
attributed to Enshi were written off and presented as discontinued operations.
The recovered value of Enshi, if any, after the completion of the litigation
against the Defendants will be recognized as income.

Our main manufacturing unit, Erye, recorded a significant growth of 69% in sales
revenue for the six months ended June 30, 2008, along the line of our
expectation. The Enshi acquisition may slow down our original expansion plan in
terms of management resources devoted to its operations and integration but we
are still actively looking for growth and expansion opportunities and still
believe in the overall strategy of internal growth and acquisitions. We expect
that the recent changes in our management, whereas Erye's top management, Ms.
ZHANG Jian and Mr. SHI Mingsheng joined our board of directors and are now
playing an active role in our management, will improve our overall
operations,giving play to their industrial and manufacturing and marketing
expertise. Indeed, we returned to profitability during the three and six months
period ended June 30, 2008.

Going forward, our primary requirements for cash consist of: (1) Stabilize and
streamline the Erye operation;(2) acquire additional pharmaceutical
manufacturing companies with GMP standard facilities in order to commercialize
new drugs in our extensive new drug pipeline and further extend of product
pipeline and expand the our sales network (3) continue R&D for more selected new
drug projects (4) build up sales network for new drug distribution. We
anticipate that our internal source of liquid assets may enable us to continue
our operating activities other than acquisition activities for next twelve
months. However, we anticipate that our current operating activities may not
enable us to meet the anticipated cash requirements for future acquisition
activities. External source of capital may be needed for our expansion. We are
exploring bank loans and private equity financing to finance such expenditures
and intend to raise equity through the capital market to allow us to accomplish
our future acquisition goals.

MANAGEMENT ASSUMPTIONS

Management anticipates, based on internal forecasts and assumptions relating to
our current operations, that existing cash and funds generated from operations
may not be sufficient to meet capital requirements for future acquisition
activities. We could therefore be required to seek additional financing. There
can be no assurance that we will be able to obtain such additional financing at
acceptable terms to us, or at all.


                                     - 29 -
<PAGE>
EFFECT OF FLUCTUATION IN FOREIGN EXCHANGE RATES

Our operating subsidiaries are located in China. Their business activities are
mainly in China using Chinese Renminbi as the functional currency. The value of
the Renminbi against the U.S. dollar and other currencies may fluctuate and is
affected by, among other things, changes in China's political and economic
conditions. As we rely entirely on revenues earned in China, any significant
revaluation of the Renminbi may materially and adversely affect our cash flows,
revenues and financial condition. For example, to the extent that we need to
convert U.S. dollars we receive from an offering of our securities into Renminbi
for our operations, appreciation of the Renminbi against the U.S. dollar could
have a material adverse effect on our business, financial condition and results
of operations.

Conversely, if we decide to convert our Renminbi into U.S. dollars for the
purpose of making payments for dividends on our common shares or for other
business purposes and the U.S. dollar appreciates against the Renminbi, the U.S.
dollar equivalent of the Renminbi we convert would be reduced. To date, however,
we have not engaged in transactions of either type.

Since 1994 China has pegged the value of the Renminbi to the U.S. dollar. We do
not believe that this policy has had a material effect on our business. However,
there have been indications that the Chinese government may be reconsidering its
monetary policy in light of the overall devaluation of the U.S. dollar against
the Euro and other currencies during the last two years. As of June 30, 2008,
the value of the Renminbi to the U.S. dollar was translated at 6.85 RMB to $1.00
USD.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4T. Controls and Procedures

Disclosure Controls and Procedures. As of June 30, 2008, we carried out an
evaluation, under the supervision and with the participation of our management,
including our chief executive officer and our chief financial officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures. Based on the foregoing, our chief executive officer and chief
financial officer concluded that our disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934) were not effective.

During our assessment of the effectiveness of internal control over financial
reporting as of December 31, 2007, our management identified significant
deficiencies related to the following:

1. Accounting and Finance Personnel Weaknesses - The current staff in the
accounting department is relatively inexperienced, and needs substantial
training so as to meet with the higher demands of being a U.S. public company.
The accounting skills and understanding necessary to fulfill the requirements of
U.S. GAAP-based reporting, including the skills of subsidiary financial
statement consolidation, are not at par, which resulted in a less than optimal
segregation of duties relative to key financial reporting functions.

2. Lack of Internal Audit Function - The Company lacks qualified resources to
perform the internal audit functions properly. In addition, the scope and
effectiveness of internal audit function are yet been fully developed.

3. Lack of Internal Audit System - The Company lacked internal audit department,
which was ineffective in preventing and detecting control lapses and errors in
the accounting of certain key areas like revenue recognition, purchase
approvals, inter-company transactions, cash receipt and cash disbursement
authorizations, inventory safeguard and proper accumulation for cost of
products, in accordance with the appropriate costing method used by the Company.

As disclosed in our Management's Annual Report on Internal Control over
Financial Reporting filed with the 2007 Form 10KSB, the Company's management has
identified the steps necessary to address the material weaknesses described
above and we are in the process to have the remediation procedures implemented.

Changes in Internal Control over Financial Reporting. During the fiscal quarter
ended June 30, 2008, there have been no changes in the Company's internal
control over financial reporting, identified in connection with our evaluation
thereof, that have materially affected, or are reasonably likely to materially
affect, its internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

None of our directors, officers or affiliates is involved in a proceeding
adverse to our business or has a material interest adverse to our business.

In March 2007, The Company has commenced legal proceeding for recession against
Mr. Li Xiaobo ("Mr. Li") the previous owner and controlling shareholder of Enshi
and his related parties ("Defendants") for breach of representations and
warranties and fraud and frozen approximately $10,000,000 worth of assets per
the court order in Hong Kong and the Defendants lost their opposition actions
against the seizure order. The Company has been waiting for the court hearing
date in HK court. The Company reasonably expects to prevail in the lawsuit
against the Defendants. The Company reserves the right to take further actions
if necessary to seek additional damages and compensation for such serious breach
of representations and warranties and fraud and will make appropriate
disclosures pending the legal proceedings. In April 2007, the Company lost an
action in a court in Shenyang, China to offset claims against Mr. Li against Mr.
Li's working capital loan to Enshi. The court decided to view each action
separately on its own merit. The Company paid the amount of $560,735 due to Liao
Ning Xie He and $86,765 due to Mr. Li. The Company reserves the right to take
additional actions against Mr. Li and will continue its proceedings in other
courts outside as well as in China.


                                     - 30 -
<PAGE>
Item 1A. RISK FACTORS.

Not applicable

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

Item 3. DEFAULTS UPON SENIOR SECURITIES.

None.

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

There was no matter submitted to a vote of security holders during the fiscal
quarter ended June 30, 2008.

Item 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS

The following exhibits are filed as part of this quarterly report on Form 10-Q:

EXHIBIT
NUMBER         DESCRIPTION
------         --------------------------------------------------------------

31.1           Certification of Chief Executive Officer Pursuant to Section 302
               of the Sarbanes-Oxley Act of 2002.

31.2           Certification of Chief Financial Officer Pursuant to Section 302
               of the Sarbanes-Oxley Act of 2002.

32.1            Certification of Chief Executive Officer pursuant to Section 906
                of the Sarbanes-Oxley Act of 2002

32.2           Certification of Acting Chief Financial Officer pursuant to
               Section 906 of the Sarbanes-Oxley Act of 2002



                                     - 31 -
<PAGE>



SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                                    CHINA BIOPHARMACEUTICALS HOLDINGS, INC.

                                    By: /s/ Chris Peng Mao
                                    -------------------------------------------
                                    Name:  Chris Peng Mao
                                    Title: Chief Executive Officer
                                    Date: August 14, 2008


                                    By: /s/ ZHANG Jian
                                    -------------------------------------------
                                    Name: ZHANG Jian
                                    Title: Chief Financial Officer
                                    Date: August 14, 2008




                                      - 32-
<PAGE>