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


                                  FORM 10-QSB/A


(Mark One)
              [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                 For the quarterly period ended: March 31, 2005
                                                ---------------

             [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
                                  EXCHANGE ACT

          For the transition period from ______________to ____________

                        Commission file number 000-27959
                                              ----------

                            GFR Pharmaceuticals Corp.
                           ---------------------------
        (Exact name of small business issuer as specified in its charter)


           Nevada                                               77-0517964
--------------------------------------------------------------------------------
  (State or other jurisdiction                                (IRS Employer
of incorporation or organization)                            Identification No.)

        Suite 11405 - 201A Street, Maple Ridge, British Columbia V2X 0Y3
                    (Address of principal executive offices)

                                 (604) 460-8440
                            Issuer's telephone number


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

                      APPLICABLE ONLY TO CORPORATE ISSUERS

         State the number of shares  outstanding of each of the issuer's classes
of common  equity,  as of the latest  practical  date:  March 31, 2005 1,079,940


         Transitional Small Business Disclosure Format (check one).
Yes [ ];  No [X]



                                       1

<PAGE>




                                Explanatory Note

We are filing this  Amendment No. 1 to our  Quarterly  Report on Form 10-QSB for
the three months ended March 31, 2005 to respond to certain comments received by
us from the Staff of the Securities  and Exchange  Commission  ("SEC").  We have
restated  our  balance  sheet at March  31,  2005,  and  statements  of  income,
stockholders'  equity and cash flows for the three  months ended March 31, 2005.
The restatement impacts the three months ended March 31, 2005 and the year ended
December 31, 2004, but has no effect on the financial statements issued in prior
fiscal years. The restatement  corrects an error within the currency translation
adjustment,  which was  erroneously  expensed.  The  impact  of the  restatement
reduced net income by $109,806,  net of tax and reduced  earnings per share from
$0.13 to $0.03 for the three months ended March 31, 2005.

For convenience and ease of reference we are filing this Quarterly Report in its
entirety with the applicable  changes.  Unless otherwise stated, all information
contained  in this  amendment  is as of May 16,  2005,  the  filing  date of our
Quarterly  Report on Form  10-QSB for the three  months  ended  March 31,  2005.
Accordingly,  this  Amendment  No. 1 to the  Quarterly  Report on Form  10-QSB/A
should be read in conjunction with our subsequent filings with the SEC.


                                        2

<PAGE>



PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                    GFR PHARMACEUTICALS INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>



                                                                                 (Restated)
                                                                                (Unaudited)

                                                                                 March 31,          December 31,
                                                                                    2005                2004
                                                                             ------------------  ------------------
ASSETS
Current Assets:
<S>                                                                          <C>                 <C>
Cash and Cash Equivalents                                                    $                -  $                -
Accounts Receivable, Net                                                              1,178,248           1,537,168
Inventory                                                                             1,720,776           1,502,719
Prepaid expense                                                                           8,181                   -
                                                                             ------------------  ------------------

     Total Current Assets                                                             2,907,205           3,039,887
                                                                             ------------------  ------------------

Fixed Assets:
Manufacturing Equipment                                                                 615,569             615,409
Office Equipment                                                                        261,018             262,320
Furniture & Fixtures                                                                      4,915               4,939
Leasehold improvements                                                                   67,347              67,682
Property Held Under Capital Lease                                                       432,928             432,928
                                                                             ------------------  ------------------
                                                                                      1,381,777           1,383,278
Less Accumulated Depreciation                                                          (444,512)           (415,199)
                                                                             ------------------  ------------------
     Total Fixed Assets                                                                 937,265             968,079
                                                                             ------------------  ------------------

Deferred Tax Asset                                                                        5,714                   -
                                                                             ------------------  ------------------

     TOTAL ASSETS                                                            $        3,850,184  $        4,007,966
                                                                             ==================  ==================
</TABLE>



                                        3

<PAGE>



                    GFR PHARMACEUTICALS INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (Continued)

<TABLE>
<CAPTION>



                                                                                 (Restated)
                                                                                (Unaudited)

                                                                                 March 31,          December 31,
                                                                                    2005                2004
                                                                             ------------------  ------------------
LIABILITIES
Current Liabilities:
<S>                                                                          <C>                 <C>
Accounts Payable and Accrued Liabilities                                     $        1,122,752  $        1,093,235
Bank Overdraft                                                                          111,089              24,306
Bank Line                                                                               491,898             643,902
Related Party Loans                                                                     142,633             139,159
Shareholder Payables                                                                    167,447             253,409
Current Portion of Obligations Under Capital Leases                                      51,247              57,721
Current Portion Long-Term Debt                                                           24,453              34,468
                                                                             ------------------  ------------------

     Total Current Liabilities                                                        2,111,519           2,246,200
                                                                             ------------------  ------------------

Non-Current Liabilities:
Long-Term Debt                                                                           27,968              29,653
Lease Obligations                                                                       103,354             114,636
Deferred Tax Liability                                                                        -             169,986
                                                                             ------------------  ------------------

     Total Non-Current Liabilities                                                      131,322             314,275
                                                                             ------------------  ------------------

     Total Liabilities                                                                2,242,841           2,560,475
                                                                             ------------------  ------------------

STOCKHOLDERS EQUITY
Common Stock - $0.001 par value, 100,000,000
   shares authorized, 1,079,940 issued and outstanding

   at March 31, 2005 and December 31, 2004                                                1,080               1,080
Additional Paid-in Capital                                                              698,961             698,961
Currency Translation Adjustment                                                         484,209             353,914
Retained Earnings (Deficit)                                                             423,093             393,536

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


     Total Stockholders' Equity                                                       1,607,343           1,447,491

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

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                   $        3,850,184  $        4,007,966
                                                                             ==================  ==================
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                        4

<PAGE>



                    GFR PHARMACEUTICALS INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                               For the Three Months Ended
                                                                                        March 31,
                                                                       -------------------------------------------
                                                                                2005                  2004
                                                                       ---------------------- --------------------

                                                                             (Restated)

REVENUES
<S>                                                                    <C>                    <C>
Sales                                                                  $            1,374,801 $          1,200,654
Cost of Sales                                                                         917,163              907,280
                                                                       ---------------------- --------------------
Gross Margin                                                                          457,638              293,374
                                                                       ---------------------- --------------------

EXPENSES
   Selling & Marketing                                                                 48,992               82,051
   General & Administrative                                                            95,547              100,849
   Consulting                                                                          18,145               41,643
   Depreciation Expense                                                                29,313               27,068
   Salaries & Wages                                                                   191,261              104,605
                                                                       ---------------------- --------------------
                                                                                      383,258              356,216
                                                                       ---------------------- --------------------

Net Income (Loss) from Operations                                                      74,380              (62,842)

Other Income (Expense)

   Interest, Net                                                                      (23,237)             (12,358)
   Currency Exchange, Net                                                                 367               13,514

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

Net Income (Loss) Before Income Taxes                                                  51,510              (61,686)
Income Tax (Expense) Benefit                                                          (21,953)             (38,676)
                                                                       ---------------------- --------------------


NET INCOME (LOSS)                                                      $               29,557 $           (100,362)

                                                                       ====================== ====================


Basic & Diluted Earnings Per Share                                     $                 0.03 $             (0.09)

                                                                       ====================== ====================

Weighted Average Shares Outstanding                                                 1,079,940            1,079,940
                                                                       ====================== ====================
</TABLE>





   The accompanying notes are an integral part of these financial statements.

                                        5

<PAGE>



                    GFR PHARMACEUTICALS INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                   For The Three Months Ended
                                                                                            March 31,
                                                                              -------------------------------------
                                                                                    2005                2004
                                                                              -----------------  ------------------

                                                                                 (Restated)

Cash Flows From Operating Activities

<S>                                                                           <C>                <C>
   Net income (loss) for the period                                           $          29,557  $         (100,362)
Adjustments to reconcile net loss to net cash

   Provided by operating activities

     Currency Translation Adjustment                                                    109,806             (56,172)
     Depreciation and Amortization                                                       29,313              27,068
     Decrease (Increase) in Receivables                                                 358,995             (43,881)
     Decrease (Increase) in Inventory                                                  (218,057)           (130,397)
     Decrease (Increase) in Prepaid Expense                                              (8,181)                117
     Increase in Accounts Payable & Accrued Liabilities                                  37,520             299,284
     Increase (Decrease) in Bank Overdraft                                               86,783              (1,431)
     Increase (Decrease) in Deferred Tax Liability                                            -              (4,092)

                                                                              -----------------  ------------------
Net Cash Provided by (Used in) Operating Activities                                     425,736              (9,866)
                                                                              -----------------  ------------------

Cash Flows From Investing Activities
   Purchase of Property and Equipment                                                     1,502             (23,841)
                                                                              -----------------  ------------------
Net Cash Used by Investing Activities                                                     1,502             (23,841)
                                                                              -----------------  ------------------

Cash Flows From Financing Activities
   Proceeds/Payments on Bank Line                                                      (152,003)             62,950
   Proceeds (Payments) Shareholder Payables                                            (247,788)                  -
   Proceeds (Payments) Long-term Debt/Capital Lease Obligations                         (27,447)            (29,243)
                                                                              -----------------  ------------------
Net Cash Provided by (Used in) Financing Activities                                    (427,238)             33,707
                                                                              -----------------  ------------------

Increase (Decrease) in Cash                                                                   -                   -
Cash at beginning of period                                                                   -                   -
                                                                              -----------------  ------------------
Cash at End of Period                                                         $               -  $                -
                                                                              =================  ==================


Supplemental Disclosure of Interest and Income Taxes Paid
   Interest paid during the period                                            $          23,237  $           12,358
                                                                              =================  ==================
   Income taxes paid during the period                                        $               -  $                -
                                                                              =================  ==================

Supplemental Disclosure of Non-cash Investing and Financing Activities
   Equipment acquired through Capital Lease                                   $               -  $                -
                                                                              =================  ==================
   Stock issued as payment on short-term notes payable                        $               -  $                -
                                                                              =================  ==================
</TABLE>


   The accompanying notes are an integral part of these financial statements.

                                        6

<PAGE>



                    GFR PHARMACEUTICALS INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         This summary of accounting policies for GFR  Pharmaceuticals,  Inc. and
Subsidiaries  (Formerly  Laredo  Investment  Corp.)  is  presented  to assist in
understanding  the  Company's  financial  statements.  The  accounting  policies
conform to generally accepted  accounting  principles and have been consistently
applied in the preparation of the financial statements.


Restatment of Previously Issued Financial  Statements for the Three Months Ended
March 31, 2005

         We have restated our balance sheet at March 31, 2005, and statements of
income, stockholders' equity and cash flows for the three months ended March 31,
2005. The restatement impacts the three months ended March 31, 2005 and the year
ended December 31, 2004, but has no effect on the financial statements issued in
prior  fiscal  years.  The  restatement  corrects an error  within the  currency
translation  adjustment,  which  was  erroneously  expensed.  The  impact of the
restatement reduced net income by $109,806,  net of tax and reduced earnings per
share from $0.13 to $0.03 for the three months ended March 31, 2005.


Interim Reporting

         The unaudited financial statements as of March 31, 2005, in the opinion
of management, all adjustments (which include only normal recurring adjustments)
necessary to fairly state the financial  position and results of operations  for
the three  months.  Operating  results for interim  periods are not  necessarily
indicative of the results which can be expected for full years.

Organization and Basis of Presentation

         The Company was  incorporated  under the laws of the State of Nevada on
December 18, 1996. The Company ceased all operating activities during the period
from December 18, 1996 to July 9, 1999 and was  considered  dormant.  On July 9,
1999,  the Company  obtained a Certificate  of renewal from the State of Nevada.
From July 9, 1999 to January 21, 2000, the Company was in the development stage.

         On January 21, 2000, Laredo entered into an Acquisition  Agreement with
GFR  Pharma,  Ltd.  (Formerly  GFR  Nutritionals,   Ltd.),  a  British  Columbia
corporation,  (GFR),  Richard Pierce and Lucretia  Schanfarber (the GFR Majority
Shareholders)  to acquire  their  shares  representing  100% of the  outstanding
common stock of GFR in exchange for  19,000,000  newly issued shares of Laredo's
restricted common stock. The transaction was recorded as a reverse  acquisition.
GFR was incorporated in March 1997 as Helm  Developments  Ltd. In June 1998, the
Company formally changed its name to GFR Nutritionals Ltd. GFR was 100% owned by
the President and CEO,  Richard  Pierce from  inception  until January 17, 2000,
when a 10% interest was acquired by Lucretia  Schanfarber.  Business  operations
began in October 1998 after acquiring  manufacturing  equipment and arranging to
manufacture nutritional supplements under a private label contract.

                                        7

<PAGE>



                    GFR PHARMACEUTICALS INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

         On June 21, 2000,  the Company  entered into an  Acquisition  Agreement
with Nutritionals (USA) Direct.Com, a Washington corporation,  (NDC), to acquire
100%  of the  outstanding  common  stock  of NDC in  exchange  for  $1,000.  The
transaction  has been recorded as a purchase.  NDC operations were wound down in
October 2002 and the company became dormant.

         On November 1, 2000, the Company entered into an Acquisition  Agreement
with GFR  Health,  Inc.  (Formerly  R & L  Health,  Inc.),  a  British  Columbia
corporation, to acquire 100% of the outstanding common stock of GFR Health, Inc.
in exchange for $0.01. The transaction was recorded as a purchase.

         On April 5, 2004,  GFR  Nutritionals  Ltd.  and R&L Health Inc  changed
their names to GFR Pharma Ltd. and GFR Health Inc. respectively.

         On August 9, 2004,  Laredo  Investment  Corp.  changed  its name to GFR
Pharmaceuticals, Inc.

Principles of Consolidation

         The  consolidated  financial  statements  include  the  accounts of GFR
Pharmaceuticals,  Inc.  (Formerly  Laredo  Investment  Corp.) and the  following
wholly owned subsidiaries:

*        GFR Pharma Ltd.  (Formerly GFR Nutritionals,  Ltd.), a British Columbia
         corporation
*        Nutritionals(USA) Direct.com, a Washington corporation
*        GFR Health,  Inc.  (Formerly R & L Health,  Inc.),  a British  Columbia
         corporation

         All  significant  inter-company  accounts  and  transactions  have been
eliminated.

Nature of Business

         The Company  specializes in formulating,  blending,  encapsulating  and
packing nutritional products.  The Company also distributes products through its
GFR Health Inc. subsidiary. The Company's operations are located in the province
of British Columbia, Canada.

Cash and Cash Equivalents

         For purposes of the statement of cash flows, the Company  considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.


                                        8

<PAGE>



                    GFR PHARMACEUTICALS INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Inventories

         Raw materials  inventory is stated at a lower of weighted  average cost
and replacement value. Inventories of work in progress is stated at the lower of
weighted average cost and net realizable value.

Revenue Recognition

         Revenue is recognized  from sales of product at the time of shipment to
customers.

Advertising Costs

         Advertising is expensed as incurred.

Depreciation

         Fixed  assets  are stated at cost.  Depreciation  and  amortization  is
calculated  on a  straight-line  basis over the  estimated  useful  lives of the
assets as follows:


                     Asset                              Rate
------------------------------------------------  -----------------

Manufacturing equipment                                 10-20 years
Furniture and fixtures                                    5-7 years
Office equipment                                          3-5 years
Computer Software                                           4 years
Leasehold improvements                                Term of lease

         Maintenance  and  repairs are charged to  operations;  betterments  are
capitalized.  The  cost  of  property  sold  or  otherwise  disposed  of and the
accumulated  depreciation  thereon are eliminated  from the property and related
accumulated depreciation accounts, and any resulting gain or loss is credited or
charged to income.

         The Company has adopted the Financial  Accounting  Standards Board SFAS
No., 121,  "Accounting  for the  Impairment of Long-lived  Assets." SFAS No. 121
addresses  the  accounting  for (i)  impairment of  long-lived  assets,  certain
identified  intangibles and goodwill  related to assets to be held and used, and
(ii) long-live lived assets and certain identifiable  intangibles to be disposed
of.  SFAS No. 121  requires  that  long-lived  assets and  certain  identifiable
intangibles  be held and used by an entity be reviewed for  impairment  whenever
events or changes in circumstances indicate

                                        9

<PAGE>



                    GFR PHARMACEUTICALS INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

that the carrying amount of an asset may not be  recoverable.  If the sum of the
expected  future  cash  flows  from  the  use  of the  asset  and  its  eventual
disposition  (un-discounted  and  without  interest  charges)  is less  than the
carrying amount of the asset, an impairment loss is recognized.

Foreign Currency Translation

         The  Company's  functional  currency  is the  Canadian  dollar  and the
reporting currency is the U.S. Dollar. All elements of financial  statements are
translated  using a current  exchange  rate.  For  assets and  liabilities,  the
exchange  rate at the  balance  sheet  date is  used.  Stockholders'  Equity  is
translated using the historical rate. For revenues,  expenses,  gains and losses
the weighted average exchange rate for the period is used. Translation gains and
losses are included as a separate component of stockholders'  equity.  Gains and
losses resulting from foreign currency transactions are included in net income.

Pervasiveness of Estimates

         The  preparation of financial  statements in conformity  with generally
accepted  accounting  principles  required  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

Concentrations of Credit Risk

         The  Company has no  significant  off-balance-sheet  concentrations  of
credit  risk such as foreign  exchange  contracts,  options  contracts  or other
foreign hedging arrangements.

Income Taxes

         The Company  accounts for income taxes under the provisions of SFAS No.
109, "Accounting for Income Taxes." SFAS No.109 requires recognition of deferred
income  tax  assets  and   liabilities   for  the  expected  future  income  tax
consequences,  based on enacted tax laws, of temporary  differences  between the
financial reporting and tax bases of assets and liabilities.

Reclassifications

         Certain   reclassifications  have  been  made  in  the  2004  financial
statements to conform with the 2005 presentation.

                                       10

<PAGE>



                    GFR PHARMACEUTICALS INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Earnings (Loss) per Share

         Basic  earnings  (loss) per share has been  computed  by  dividing  the
income (loss) for the year applicable to the common stockholders by the weighted
average  number of common  shares  outstanding  during the years.  There were no
common equivalent shares outstanding at March 31, 2005 and 2004.

Stock Compensation for Non-Employees

         The  Company  accounts  for the fair  value of its  stock  compensation
grants for  non-employees  in accordance with FASB Statement 123. The fair value
of each grant is equal to the market price of the Company's stock on the date of
grant if an active  market  exists or at a value  determined  in an arms  length
negotiation between the Company and the non-employee.

NOTE 2 - ACCOUNTS RECEIVABLE

         As of March  31,  2005  and  December  31,  2004,  accounts  receivable
consisted of the following:

<TABLE>
<CAPTION>
                                                       March 31,       December 31,
                                                          2005               2004
                                                   ------------------  -----------------

<S>                                                <C>                 <C>
Accounts Receivable                                $        1,262,423  $       1,630,830
Less: Allowance for Doubtful Accounts                         (84,175)           (93,662)
                                                   ------------------  -----------------

Total Accounts Receivable                          $        1,178,248  $       1,537,168
                                                   ==================  =================
</TABLE>

         The allowance for doubtful accounts is based on management  estimate of
75% of receivables over 120 days outstanding.










                                       11

<PAGE>



                    GFR PHARMACEUTICALS INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 3 - INVENTORY

         Inventory  is valued at lower of cost or market.  As of March 31,  2005
and December 31, 2003, inventory consists of the following:


                                       March 31,          December 31
                                          2005                2004
                                   ------------------  ------------------
Raw Materials                      $        1,058,050  $          937,864
Work in Process                               332,300             229,032
Finished Goods                                330,426             335,823
                                   ------------------  ------------------

Total Inventory                    $        1,720,776  $        1,502,719
                                   ==================  ==================

NOTE 4 - INCOME TAXES

         The  provision  for income  taxes  consists  of  Canadian  federal  and
provincial  and  territorial  income tax.  For the three  months ended March 31,
2005,  income tax expense has been estimated as $21,953.  For the same period in
2004, it was estimated as $38,676.

         Deferred taxes result from temporary  differences in the recognition of
income and expenses for income tax reporting and financial  statement  reporting
purposes. The Company had deferred tax liability (asset) of $(5,714 and $169,986
as of March 31, 2005 and December 31, 2004.  The deferred tax liability  (asset)
is the result of excess depreciation for income tax purposes over the amount for
financial reporting purposes.

NOTE 5 - RELATED PARTY TRANSACTIONS

         As of March 31,  2005,  a major  shareholder  of the  Company  gave the
Company an unsecured line of credit of up to $310,125 (375,000 Canadian).  As of
March 31, 2005, the Company owes $167,447 (202,544)  Canadian) against this line
of credit.

         Richard  Pierce,  CEO of Laredo and Lucretia  Schanfarber,  former Vice
President of Sales,  hold contracts with GFR Health,  Inc.  (Formerly R&L Health
Inc.) that licenses their names and images for use on certain products. Each are
paid a quarterly bonus of 10% of GFR Health,  Inc.  profits before income taxes,
depreciation,  and amortization  are deducted as expenses.  As of March 31, 2005
and 2004, $8,184 and $23,855 were accrued or paid.

         As of April 1,  2004,  Ms.  Schanfarber  is no longer  being  paid this
license fee as her name and image has been removed from all products.




                                       12

<PAGE>



                    GFR PHARMACEUTICALS INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 6 - SHORT-TERM OBLIGATIONS

<TABLE>
<CAPTION>
                                                             March 31,          December 31,
                                                                2005                2004
                                                         ------------------  ------------------
<S>                                                      <C>                 <C>
Promissory note, repayable to related parties upon
   demand, including interest at 12%                     $          142,633  $          139,159
                                                         ==================  ==================
</TABLE>

         The Company has a line of credit with a bank with a total  amount owing
of  $491,898  and  $643,902  as  of  March  31,  2005  and  December  31,  2004,
respectively.  This line carries an interest  rate of prime plus 1.5 and a total
available  credit of $706,350  ($850,000  Canadian) as of December 31, 2004. The
line is secured by certain manufacturing equipment of the Company.

NOTE 7 - LONG-TERM DEBT

<TABLE>
<CAPTION>
                                                                                 March 31,          December 31,
                                                                                    2005                2004
                                                                             ------------------  ------------------
<S>                                                                          <C>                 <C>
TDBank Small Business  loan,  repayable in monthly
installments  $2,515 ($3,973 Canadian), including interest
at 10.15%, maturing September 15, 2005, secured by
certain manufacturing equipment of the Company                               $           24,453  $           26,959

Business Development Bank of Canada Loan, repayable in
monthly installments $657 ($830 Canadian), including interest
at prime plus 1%, maturing August 23, 2009                                               27,968              37,162

Less current portion of long-term debt                                                  (24,453)            (34,468)
                                                                             ------------------  ------------------

                                                                             $           27,968  $           29,653
                                                                             ==================  ==================
</TABLE>

         Principal  payments  due on  long-term  debt for each of the five years
subsequent to December 31, 2004 and thereafter are as follows:


       Year ending:                Amount
---------------------------  ------------------

           2005              $           34,468
           2006                           7,936
           2007                           8,468
           2008                           9,035
           2009                           4,214
                             ------------------
        Thereafter
           Total             $           64,121
                             ==================


                                       13
<PAGE>

                    GFR PHARMACEUTICALS INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 8 - ECONOMIC DEPENDENCE


         The Company sells a substantial portion of its product to one customer,
Prairie Naturals,  Inc. During the first quarter of 2005 and 2004, sales to that
customer aggregated 53% and 50%, respectively. As of March 31, 2005 and December
31, 2004,  amounts due from that customer  included in accounts  receivable were
41%  and  17%,  respectively.   Future  operations  of  the  Company  depend  on
continuation of the manufacturing arrangement with that customer.


NOTE 9 - COMMITMENTS

         The Company has entered into a lease  agreements for its  manufacturing
and office  facilities  and certain  manufacturing  equipment with the Company's
major  shareholder  and other  parties.  The rental  charges  are  approximately
$86,250  ($115,000  Canadian) per year for real  property and $81,675  ($108,900
Canadian) per year for equipment.  The real property lease expired  December 31,
2004, and the equipment lease expires June 2005 through December 2008.

         The assets and  liabilities  under  capital  leases are recorded at the
fair value of the asset.  The  assets  are  depreciated  over the lower of their
estimated  productive  lives.  Depreciation  of assets under  capital  leases is
included in depreciation expense for 2005 and 2004.

         Following is a summary of property held under capital leases:


                                            March 31,          December 31,
                                               2005                2004
                                        ------------------  ------------------
Manufacturing Equipment                 $          432,928  $          432,928
Less: Accumulated Depreciation                     (63,052)            (57,640)
                                        ------------------  ------------------

Net Assets Held Under Capital Lease     $          369,876  $          375,288
                                        ==================  ==================

         The minimum  future lease payments under these leases for the next five
years are:

<TABLE>
<CAPTION>
    Ending December 31:                              Real Property         Equipment
----------------------------                       ------------------  -----------------
<S>                                                <C>                 <C>
      2005                                         $                -  $          67,097
      2006                                                          -             50,338
      2007                                                          -             50,338
      2008                                                          -             19,508
      2009                                                          -                  -
                                                   ------------------  -----------------
      Net Minimum Lease Payments                                    -            187,281
      Less: Amount Representing Interest                            -            (97,404)
                                                   ------------------  -----------------
      Present Value of Net Minimum Lease Payment   $                -  $          89,877
                                                   ==================  =================
</TABLE>

                                       14
<PAGE>

                    GFR PHARMACEUTICALS INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                      (Continued)

NOTE 9 - COMMITMENTS (Continued)

         The leases  generally  provides  that  insurance,  maintenance  and tax
expenses  are  obligations  of the  Company.  It is expected  that in the normal
course of business,  leases that expire will be renewed or replaced by leases on
other properties.

         During 2002, the Company  entered into a lease  agreement for warehouse
space.  The  lease is month to month  with a six  month  notice  of  termination
clause.  Under the terms of the lease  agreement,  the  monthly  rent  charge is
approximately $4,600 ($5,500 Canadian).

NOTE 10 - STOCK INCENTIVE PLAN

         The Board of Directors has authorized  and the Company has  established
the 2000  Incentive  and  Non-qualified  Stock Option  Plan.  Under the plan the
Company is  authorized to issue up to 6,000,000  shares of the Company's  common
stock with such  exercise  price and vesting  periods as the Board of  Directors
deems to be in the best  interest  of the  Company.  As of March  31,  2005,  no
options have been granted.

NOTE 11 - STOCK SPLIT

         On August 9, 2004, the Company changed its name from Laredo  Investment
Corp. To GFR Pharmaceuticals, Inc. In addition, a retroactive 30:1 reverse stock
split was approved by shareholders.  All references to stock in the accompanying
financial statements reflect this stock split.

















                                       15

<PAGE>



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.


We have restated our balance sheet at March 31, 2005,  and statements of income,
stockholders'  equity and cash flows for the three  months ended March 31, 2005.
The restatement impacts the three months ended March 31, 2005 and the year ended
December 31, 2004, but has no effect on the financial statements issued in prior
fiscal years. The restatement  corrects an error within the currency translation
adjustment,  which was  erroneously  expensed.  The  impact  of the  restatement
reduced net income by $109,806,  net of tax and reduced  earnings per share from
$0.13 to $0.03 for the three months ended March 31, 2005.


Plan of Operations

The  Company  is  currently  working  on  securing   additional   private  label
manufacturing  contracts.  The key target for private  label sales are wholesale
distributors   of  health  food  nutrition   products.   GFR  is  also  pursuing
opportunities  for direct  sales to  consumers  through  the  Internet.  GFR has
entered into the OTC (Over the  Counter)  drug market with the  introduction  of
Acetaminophen and A.S.A. products but has no signed contracts at this time.

Liquidity and Capital Resources

GFR's  working  capital  ratio was 1.50 at March 31,  2005  compared  to 1.35 at
December  31,  2004.  Current  liabilities  include a $142,633  promissory  note
payable to a party related to the major shareholder, which bears interest at 12%
annually. These funds are repayable on demand, however the request for repayment
occurring at this time is not expected.

GFR has a small business loan  outstanding with a balance of $24,453 as at March
31, 2005.  This loan bears interest at 10.15% and matures on September 15, 2005.
The Company has a second business loan with an outstanding balance of $27,968 as
of March 31, 2005.  This loan bears  interest at prime plus 1 percent,  maturing
August 23, 2009.

GFR acquired an additional $160 of manufacturing  equipment in the first quarter
of 2005. An  additional  $125,000 of  manufacturing  equipment is expected to be
purchased in 2005 in order to meet demands for new private label sales.

Results of Operations



                                               For the Three Months Ended
                                                       March 31,
                                          ------------------------------------
                                                2005               2004
                                          -----------------  -----------------
Sales                                             1,374,801          1,200,654
Cost of Sales                                       917,163            907,280
                                          -----------------  -----------------
Gross Margin                                        457,638            293,374
Gross Profit Percentage                              33.29%             24.43%


                                       16

<PAGE>



                                               For the Three Months Ended

Selling and Marketing Expenses                       48,992             82,051
Selling Expense as a % of Sales                       3.56%              6.83%

Admin. and Other Expenses                           334,266            274,165
Admin Expenses as a % of Sales                       24.31%             22.83%


For the three months ended March 31, 2005,  sales were $174,147 higher than 2004
and are expected to continue to grow during 2005.

During the first  quarter of 2005 and 2004 sales to Prairie  Naturals  Inc. were
53% and 50%  respectively.  GFR has a verbal  arrangement to manufacture,  on an
as-ordered  basis,  private  label  products  that  Prairie  Naturals  Inc.  and
distributes  under the Prairie  Naturals  Inc.  name.  GFR also has an exclusive
written   contract  to  manufacture  one  product  that  Prairie  Naturals  Inc.
distributes for a third party private label.

Operating  margins  for the three  months  ending  March 31,  2005 and 2004 were
33.29%  and  24.43% of sales  revenue.  Cost of Sales  includes  the cost of raw
materials used in manufacturing,  production labor costs and an applicable share
of overhead expenses. Operating margins for the quarter are higher than the same
period for 2004 in part because of the decrease in costs associated with initial
runs of new products and the completion of jobs with lower margins in general.

General and  administrative  expenses  for the three months ended March 31, 2005
and 2004 were 24.31% and 22.83% of sales. GFR anticipates realizing economies of
scale as production  volumes increase.  This will be reflected  favorably in the
future by decreasing the percentage of sales for these expenses.


Foreign Currency Gains and Loses

Foreign currency gains and losses are the result of fluctuations in the exchange
rate between Canada and our Foreign customers and vendors.  Our foreign currency
gains and losses result  primarily due to the our purchasing of raw materials in
foreign currencies from both inside and outside Canada. During March 31, 2005 we
purchased approximately 53% of our raw materials in U.S. dollars compared to 43%
for  December  31, 2004.  We also have sales to foreign  countries  amounting to
approximately  1% of our total sales for the three  months  ended March 31, 2005
and the year ended  December  31,  2004.  Foreign  currency  gains  decreased by
$13,147 to $367 for the three  months  ended March 31, 2005 and from $13,514 for
the three  months  ended March 31,  2004.  We expect or  purchases  and sales in
foreign  currencies to remain  relatively  constant over the next twelve months.
Because  exchange  rates are outside our control,  however,  exchange  gains and
losses are unpredictable.




                                       17

<PAGE>




Effect of Inflation

GFR does not anticipate any financial impact, whether beneficial or detrimental,
as a result of inflation.

ITEM 3. CONTROLS AND PROCEDURES


RESTATEMENT

On September 23, 2005, our independent  auditors,  Robison, Hill & Co., informed
our principal  executive  officer and principal  financial officer that they had
discovered an error in our financial  statements for the year ended December 31,
2004.

The error relates to the  translation of our financial  statements from Canadian
dollars to U.S.  dollars for  reporting  purposes.  The error  impacts the three
months  ended March 31, 2005 and the six months ended June 30, 2005 and the year
ended December 31, 2004, but has no effect on the financial statements issued in
prior  fiscal  years.  The  restatement  corrects an error  within the  currency
translation  adjustment,  which should be reported in the equity  section of the
balance sheet, but was reported in error in the income statement.  The impact of
the restatement reduced net income by $109,806,  net of tax and reduced earnings
per share from $0.13 to $0.0310 for the three months ended March 31, 2005.

Following  our  discussion  with Robison,  Hill & Co., our  principal  executive
officer and principal  financial officer  determined that the March 31, 2005 and
June 30, 2005 financial  statements should be restated to reflect the correction
of this error. We have restated our balance sheet at March 31, 2005 and June 30,
2005,  and  statements  of income,  stockholders'  equity and cash flows for the
three months ended March 31, 2005 and the six months ended June 30, 2005.

In  connection  with  the  restatement,  the  principal  executive  officer  and
principal  financial officer of GFR  Pharmaceuticals,  Inc. have reevaluated GFR
Pharmaceuticals,  Inc.'s disclosure controls and procedures (as defined in Rules
13a-15(e)  and  15d-15(e)  under  the  Securities  Exchange  Act  of  1934)  and
identified the a material weakness in internal controls over financial reporting
with  respect  to a failure to ensure  correct  reporting  of  foreign  currency
translation adjustments.

The principal  executive officer and principal  financial officer have concluded
that our disclosure  controls and  procedures  were not effective as of December
31, 2004, March 31, 2005, or June 30, 2005.

REMEDIATION OF MATERIAL WEAKNESS IN INTERNAL CONTROL

We are confident that, as of this filing,  we have fully remediated the material
weakness in our  internal  control  over  financial  reporting  with  respect to
accounting for foreign currency  translation  adjustments.  The remedial actions
included changes to our software properly position the translation


                                       18

<PAGE>




adjustments  in the equity  section of the  balance  sheet,  improved  training,
education and accounting  reviews designed to ensure that all relevant personnel
involved in foreign currency translation adjustments understand and apply proper
reporting of currency translation adjustments.

As   previously   reported,   there   were  no   significant   changes   in  GFR
Pharmaceuticals,  Inc.  internal  control over  financial  reporting  during the
Company's  first  fiscal  quarter of 2005 that has  materially  affected,  or is
reasonably  likely to materially  affect,  the Company's  internal  control over
financial  reporting.  However,  subsequent  to June 30, 2005,  we took remedial
actions described above.


PART II- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

         None.

ITEM 2. CHANGES IN SECURITIES

            None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

         None.

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

         None.

ITEM 5. OTHER INFORMATION

         None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         The Company did not file a report on Form 8-K during the past quarter.





                                       19

<PAGE>



                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                             GFR Pharmaceuticals, Inc.
                                                   (Registrant)

DATE: December 28, 2005            By: /s/ Richard Pierce
      -----------------            --------------------------------------------

                                       Richard Pierce
                                   President, C.E.O., Director
                                   (Principal Executive Officer)


DATE: December 28, 2005            By: /s/  Marc Casavant
      -----------------            --------------------------------------------

                                        Marc Casavant
                                     C.F.O., Director
                                   (Principal Accounting Officer)























                                       20