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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-K

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007

                                       OR

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

              FOR THE TRANSITION PERIOD FROM _______ TO ___________
                          COMMISSION FILE NO. 000-26293
                              NURADYNE GROUP, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

               DELAWARE                           20-1661391
    (STATE OR OTHER JURISDICTION OF            (I.R.S. EMPLOYER
     INCORPORATION OR ORGANIZATION)           IDENTIFICATION NO.)

           927 Canada Court
     City of Industry, California                    91748
    (ADDRESS OF PRINCIPAL EXECUTIVE               (ZIP CODE)
               OFFICES)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (626) 581-9098

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                                      None.
           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                         Common Stock, $.0001 par value


Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.
                                                                  Yes |_| No |X|

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.
                                                                  Yes |_| No |X|

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. |_|

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:.

         Large accelerated filer   |_|             Accelerated filer  |_|
         Non-accelerated filer     |_|             Smaller reporting company |X|

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

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked prices of such common equity, as of the
last business day of the registrant's most recently completed second fiscal
quarter. $2,108,907 as of June 29, 2007.

There were 31,041,845 shares outstanding of registrant's common stock, par value
$0.001 per share, as of April 14, 2008. The shares of the registrant's common
stock are currently quoted on the Over-the-Counter Bulletin Board, or OTCBB.

Documents Incorporated by Reference:  None.



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TABLE OF CONTENTS
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                                                 NUTRADYNE GROUP, INC.
                                    TABLE OF CONTENTS TO ANNUAL REPORT ON FORM 10-K
                                      FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007

ITEM 1.   BUSINESS.................................................................................................  1
ITEM 1A:  RISK FACTORS............................................................................................. 12
ITEM 1B.  UNRESOLVED STAFF COMMENTS................................................................................ 28
ITEM 2.   PROPERTIES............................................................................................... 28
ITEM 3.   LEGAL PROCEEDINGS........................................................................................ 28
ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...................................................... 28
PART II   ......................................................................................................... 29
ITEM 5.   MARKET FOR REGISTRANT'S COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER
          PURCHASES OF EQUITY SECURITIES........................................................................... 29
ITEM 6.   SELECTED CONSOLIDATED FINANCIAL DATA..................................................................... 31
ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS........................................... 31
ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK............................................... 38
ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.............................................................. 38
ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE..................................................................................... 39
ITEM 9A.  CONTROLS AND PROCEDURES.................................................................................. 39
ITEM 9B.  OTHER INFORMATION........................................................................................ 39
PART III  ......................................................................................................... 39
ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE................................................... 39
ITEM 11.  EXECUTIVE COMPENSATION........................................ .......................................... 40
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
          RELATED STOCKHOLDER MATTERS........................................ ..................................... 40
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE................................ 40
ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES............................. ..................................... 40
PART IV.  ......................................................................................................... 41
ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES............................................................... 41
SIGNATURES......................................................................................................... 41


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            CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The information contained in this Form 10-K, includes some statements that are
not purely historical and that are "forward-looking statements." Such
forward-looking statements include, but are not limited to, statements regarding
our company's and our management's expectations, hopes, beliefs, intentions or
strategies regarding the future, including our financial condition, results of
operations, and the expected impact of the share exchange. In addition, any
statements that refer to projections, forecasts or other characterizations of
future events or circumstances, including any underlying assumptions, are
forward-looking statements. The words "anticipates," "believes," "continue,"
"could," "estimates," "expects," "intends," "may," "might," "plans," "possible,"
"potential," "predicts," "projects," "seeks," "should," "will," "would" and
similar expressions, or the negatives of such terms, may identify
forward-looking statements, but the absence of these words does not mean that a
statement is not forward-looking.

The forward-looking statements contained in this Form 10-K are based on current
expectations and beliefs concerning future developments and the potential
effects on the parties and the transaction. There can be no assurance that
future developments actually affecting us will be those anticipated. These
forward-looking statements involve a number of risks, uncertainties (some of
which are beyond the parties' control) or other assumptions that may cause
actual results or performance to be materially different from those expressed or
implied by these forward-looking statements, including the following:

         o        Our reliance on our major customers for a large portion of our
                  net sales;

         o        Our ability to develop and market new products;

         o        Our ability to establish and maintain a strong brand;

         o        Protection of our intellectual property rights;

         o        The market acceptance of our products;

         o        Exposure to product liability and defect claims;

         o        Changes in the laws of the PRC that affect our operations;

         o        Any recurrence of severe acute respiratory syndrome, or SARS;

         o        Our ability to obtain and maintain all necessary government
                  certifications and/or licenses to conduct our business;

         o        Development of a public trading market for our securities;

         o        The cost of complying with current and future governmental
                  regulations and the impact of any changes in the regulations
                  on our operations; and

         o        The other factors referenced in this Form 10-K, including,
                  without limitation, under the sections entitled "Risk
                  Factors," "Financial Information," "Management's Discussion
                  and Analysis of Financial Condition and Results of
                  Operations," and "Business."

These risks and uncertainties, along with others, are also described above under
the heading "Risk Factors." Should one or more of these risks or uncertainties
materialize, or should any of the parties' assumptions prove incorrect, actual
results may vary in material respects from those projected in these
forward-looking statements. Moreover, we operate in a very competitive and
rapidly changing environment. New risk factors emerge from time to time and we
cannot predict all such risk factors, nor can we assess the impact of all such
risk factors on our business or the extent to which any factor, or combination
of factors, may cause actual results to differ materially from those contained
in any forward looking statements. We undertake no obligation to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required under applicable
securities laws.




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                                     PART I

ITEM 1.  BUSINESS

With respect to this discussion, the terms, "we," "us," "our," "Company" and
"Nutradyne" refer to Nutradyne Group, Inc., formerly known as Digital Learning
Management Corporation ("DLMC"), and its 80%-owned subsidiary, Changchun Yongxin
Dirui Medical Co., Ltd., a company organized under the laws of the PRC
("Yongxin"), and (i) Yongxin's wholly-owned subsidiary Jilin Province Yongxin
Chain Drugstore Ltd., a company organized under the laws of the PRC ("Yongxin
Drugstore"); (ii) Yongxin's 90%-owned subsidiary Jilin Dingjian Natural & Health
Products Co., Ltd., a company organized under the laws of the PRC; (iii) Yongxin
Drugstore's 90%-owned subsidiary, Tianjin Jingyongxin Chain Drugstore Ltd., a
company organized under the laws of the PRC (Jinyongxin Drugstore"); and Yongxin
Drugstore's wholly-owned subsidiary, Baishan Caoantang Chain Drugstore Ltd., a
company organized under the laws of the PRC ("Caoantang Drugstore").

We also have five other wholly-owned subsidiaries related to our digital
e-learning business: (1) Digital Learning Institute Inc., a Delaware
corporation; (2) Software Education of America, Inc., a California corporation;
(3) McKinley Educational Services, Inc., a California corporation; (4) Digital
Knowledge Works, Inc., a Delaware corporation; and (5) Coursemate, Inc., a
California corporation (referred to collectively herein as the "Digital
E-learning Business"). The Digital E-learning Business constitutes a minimal
portion of our overall business. While we intend to operate the current Digital
E-learning Business and pursue opportunities related to the business, it is our
intention to divest ourselves of the current Digital E-learning Business in the
near future.

CORPORATE HISTORY

We were originally incorporated in the State of Delaware on February 19, 1999
under the name FreePCSQuote.Com, Inc. to offer Internet technology solutions and
services to other businesses. In January 2004, through our wholly-owned
subsidiary, FPQT Acquisition Corporation, we acquired Digital Learning
Institute, Inc. ("DLI"), a continuing education company that provides training
and education services, in a reverse merger transaction. We changed our name
from FreePCSQuote.Com, Inc. to Digital Learning Management Corporation in
September 2004.

To bolster our vocational training operations, DLI acquired Software Education
of America, Inc. ("SEA") and Global Computer Systems, Inc. ("Global") in July
2004 and November 2004, respectively. In March 2005 we decided to discontinue
and exit the traditional vocational training business and concentrate our focus
on our proprietary e-learning solution products, training and education. On
March 30, 2005, SEA filed a petition in bankruptcy under Chapter 7 of the U.S.
Bankruptcy Code, which was dismissed by the court in January, 2006. We also
discontinued the operations of Global in March 2005.

On November 16, 2007, we closed a share exchange transaction, described below,
pursuant to which (i) we became the 80% parent of Yongxin; (ii) assumed the
operations of Yongxin and its subsidiaries, and (iii) changed our name from
Digital Learning Management Corporation to Nutradyne Group, Inc.

Through Yongxin and its subsidiaries, we engage in the wholesale and retail
distribution of medical and health-care related products and the cultivation and
processing of ginseng-based herbal products.

INDUSTRY

China represents one of the world's largest pharmaceutical markets. With its
population of over one billion people and fast-growing economy, China presents
significant potential for the pharmaceutical and retail drugstore industry. The
rise in disposable income of many Chinese residents has resulted in greater
demand and affordability of prescription and over-the-counter medicines and
other personal care products. The increasing population of elderly people in
China has resulted in a stronger demand for such medicines and other
healthcare-related products, because elderly people tend to spend more money on
medicine than younger people, on average. As living standards across China
improve and the Chinese population continues to age, we expect the demand for
healthcare-related products to continue to rise. The PRC government has also
recently attempted to regulate the pharmaceutical industry by enacting a series
of regulatory measures that are expected to favor non-hospital drugstores more
than hospital pharmacies.


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In China, consumers can purchase pharmaceutical and other related products at
either hospital pharmacies or non-hospital drugstores, including independent
drugstores and drugstore chains. Because hospital patients usually purchase
prescription medicines at hospital pharmacies, sales by hospital pharmacies have
traditionally accounted for a larger percentage of retail sales of prescription
medicines than non-hospital drugstores. However, most Chinese people chose to
purchase over-the-counter ("OTC"), non-prescription medicines from non-hospital,
retail pharmacies. Retail pharmacies in China include pharmacy chains,
individual stores, retail stores with OTC counters and other retailers and
supermarkets with OTC counters.

The Chinese Government owns and operates most of the hospitals throughout China.
The hospitals purchase their supplies of healthcare-related products from
wholesalers and distributors. A hospital's decision to purchase certain products
is typically based on a number of factors, and is sometimes affected in part by
corrupt practices, such as illegal kickbacks. Recently, the PRC government has
stepped-up its effort to combat such anti-corruption practices, such as by
amending its criminal code in 2006 to increase the penalties for corrupt
business practices. We expect the increased enforcement of such anti-corruption
practices will create growth opportunities for our company as we can compete for
business from hospitals on fair and equal terms with other suppliers.

The PRC Ministry of Health proposed regulations in March 2007 to require
hospitals to permit prescriptions to be filled at non-hospital pharmacies, which
we also except to increase sales of prescription medications at retail
drugstores.

Additionally, reimbursements are available for sales of certain medicines by
authorized pharmacies to participants in the PRC national medical insurance
program. The provincial and municipal authorities responsible for the
administration of the social medical insurance funds to cover such
reimbursements have gradually increased funding in recent years. We expect the
funding to increase significantly in the future, which should help boost our
sales of products eligible for such reimbursements.

MARKET FOCUS

Our business operates in three segments: the wholesale of pharmaceuticals and
other medical-related products; the operation of retail drugstores; and the
cultivation, processing of ginseng. The following table reflects the revenue
contribution percentage from our business operations for the years ended
December 31, 2007 and 2006, respectively:

                                                        Years Ended December 31,
                                                          2007           2006
                                                          ----           ----
      Wholesale Operations                                  84%           87%
      Retail Drugstore Operations                           16%           13%
      Ginseng Processing and Manufacturing Operations         *             -
      Total Revenues                                       100%          100%
         * less than one percent.

         WHOLESALE OPERATIONS

Through Yongxin, we engage in the wholesale distribution of pharmaceutical
products, medical products and equipment, herbal and nutritional supplements and
cosmetics to over 3,500 customers, which include hospitals, large clinics and
retail pharmacies. Yongxin is one of approximately 17,000 pharmaceutical product
wholesalers in China that have received State Food and Drug Administration
approval and Good Supply Practices, or GSP, certification.

We opened our "Logistics Center" in January 2005 which contains a storage area
of over 43,000 square meters, where we have the ability to store our
pharmaceutical inventory at various temperatures. The Logistics Center is able
to process over 30,000 orders per day from our customers and from our retail
outlets.

Our wholesale business has a relationship with over 761 pharmaceutical and
original equipment manufacturers throughout China. Typically, we enter into
master agreements with our suppliers at the beginning of each year, which
provide the general terms, prices and conditions for transactions in the
supplier's products over the year. We then enter into separate purchase
agreements each time we actually purchase products from a supplier. When we

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purchase the product from our suppliers, we take title to the items and book
them as inventory. We then distribute the products to our wholesale customers.

         RETAIL OPERATIONS

We provide our retail drugstore customers with convenient and professional
pharmacy services. Each of our stores is staffed with a licensed pharmacist and
a staff trained to provide pharmacy services to our customers. Additionally, we
sell an assortment of other merchandise in our stores, including traditional
Chinese medicines, health and natural products, skin care products and cosmetics
in our stores. Our stores typically carry over 8,000 different types of
products, including our proprietary brand of ginseng-based products. We
frequently review and update the selection of products available in our stores
to in response to changing consumer preferences.

In July 2005, Yongxin signed an agreement with American Medicine Shoppe
International ("AMS") to become AMS's exclusive agent for AMS in the Jilin
Province and develop a drug store franchise system under license from AMS within
the Jilin Province. We operate 4 drugstores pursuant to our relationship with
AMS under the "Meixin Yongxin" name.

During the years ended December 31, 2007 and 2006, our retail drugstores served
an average of 4,652 and 3,318 customers per day, respectively. Sales made to
retail customers are made by cash or debit or credit cards, or by medical
insurance cards under the PRC national medical insurance program. We obtain
reimbursement from the relevant government social security bureaus, for sales
made to eligible participants in the PRC national medical insurance program on a
monthly basis. As of December 31, 2007, 31 of our drugstores were designated
stores under the PRC national medical insurance program.

We currently procure the merchandise for our stores from over 1,536 suppliers,
including both manufacturers and wholesalers. For the years ended December 31,
2007 and 2006, our largest five suppliers accounted for 8.2% and 10.4% of our
total purchases, respectively. We believe that the products we carry in our
stores are readily available from multiple sources and do not anticipate any
difficulties in continuing to procure such products.

         CULTIVATION AND PROCESSING OF GINSENG

In May 2007, Yongxin formed Jilin Dingjian Natural & Health Products Co., Ltd.
("Dingjian") to engage in the cultivation, processing, manufacturing and
distribution of ginseng electuary, pellets and liquid extracts that are
distributed by wholesalers and in retail drugstores. Dingjian markets and
distributes its ginseng and ginseng by-products under its proprietary Gaoliyuan"
i(degree)Zinuo" " Longlife" " Yongxintang" brand names to vArious
pharmaceutical, health supplement, and cosmetic manufacturers and distributors.
With the assistance of the Institute of Agricultural Sciences of China, Dingjian
established a ginseng plantation in the city of Zuojia in the Jilin province,
the largest production area of ginseng in the world.

Dingjian distributes its products to customers throughout mainland China,
Southeast Asia, Europe and the United States. Although Dingjian has agreements
with many of its customers, such agreements do not specify any minimum quantity
that must be purchased. The customer may return the product if it is not
satisfied with quality of the product upon inspection. Prices are based upon
market prices.

We intend to focus our efforts on enhancing the reputation of our products and
developing new products. Our recently-established ginseng plantation, which
encompasses 20,000 square meters of ginseng growing space, allows us to grow our
own ginseng for use in our products. Additionally, we opened a research and
development center in March 2007 to develop and test new ginseng-based products.
We currently have approximately 50 new products in development which we expect
to market and sell in 2008.

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SOURCES AND AVAILABILITY OF RAW MATERIALS

Ginseng can only be cultivated in certain environmental conditions, needing the
almost perfect combination of terrain, altitude, and temperature. The growth
cycle requires 5-6 years and once harvested, the land can not be used again (for
ginseng planting) for at least 25-30 years. Due to the long growth cycle for
ginseng, suitable land on which to grow ginseng is a major challenge of this
ginseng-cultivation industry. We are continually researching new techniques to
increase production per acre.

Currently we control 5 acres of land approved by the Chinese government
specifically for the growth and cultivation of ginseng. We produce more than
enough ginseng for our current use, and anticipate our crop supply to be more
than sufficient through year 2008.

MARKETING AND SALES

We have a staff of approximately 180 dedicated to marketing and sales who design
our adverting campaigns and regional promotional activities. We generate
business by marketing directly to hospitals, retail drugstores and medical
clinics in China. Additionally, we advertise our business and products through
television commercials and print advertisements in newspapers to promote our
brand, our proprietary ginseng-based products and the other products available
for sale in our stores. In 2007, we expended approximately $70,000 on
advertising.

RESEARCH AND DEVELOPMENT

As of December 31, 2007, we employed 18 staff members dedicated to researching
and developing new ginseng-based products. Our research and development staff
members specialize in medicine, pharmacology, chemistry, biology, and medicine
production equipment.

In an attempt to capitalize on the abundance of ginseng in the Jilin Province,
Dingjing recently established a research and development center in cooperation
with the Jilin Agricultural College. This research and development center
focuses on developing new techniques of extraction, purification and quality
control and developing new ginseng-based herbal products.

QUALITY CONTROL

We have stringent quality control systems that are implemented by more than 195
company-trained staff members to ensure quality control over our products,
services and production processes.

We conduct random quality control testing of the products procured from our
suppliers in our wholesale and retail operations. We replace suppliers that do
not meet our quality inspections. Additionally, we monitor the services provided
in our drugstores by sending inspectors to our stores to observe the quality of
services provided by our drugstore pharmacists and staff.

Our ginseng processing facilities are designed and maintained with a view
towards conforming with good practice standards. To comply with Good
Manufacturing Practice ("GMP") operational requirements, we have implemented a
quality assurance plan setting forth our quality assurance procedures. Our
quality control procedures at our processing facilities are designed to maintain
the quality standards throughout the production process. Quality control
executes the following functions at our processing facilities:

         o        setting internal controls and regulations for semi-finished
                  and finished products;

         o        implementing sampling systems and sample files;

         o        maintaining quality of equipment and instruments;

         o        auditing production records to ensure delivery of quality
                  products;

         o        evaluating the quality of raw materials, semi-finished
                  products and finished products; and

         o        articulating the responsibilities of the quality control
                  staff.


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SEASONALITY

Our business experiences seasonal variations in demand, which affects the sales
of certain of our pharmaceutical and OTC products. Sales of our pharmaceutical
and OTC products are typically stronger from October to March due to the winter
cold and flu season and weaker from April to September of each year when traffic
at our stores decreases. Additionally, sales of our cosmetic and personal care
products are affected, to some extent, by seasonal purchasing patterns and
product changes. Most of our ginseng customers place orders in the first and
fourth quarters in each year, as ginseng is harvested in the fall, and after
necessary processing procedures, it available for sale to our customers in the
winter.

COMPETITIVE STRENGTHS

We believe the following competitive strengths contribute to our success and
differentiate us from our competitors:

         EXPERIENCED MANAGEMENT TEAM. Our senior management team has extensive
business and industry experience. Our Chairman and Chief Executive Officer, Mr.
Yongxin Liu, has over 10 years of experience in China's pharmaceutical industry.
Additionally, other members of our senior management team have significant
experience with respect to other key aspects of our operations, including
product design, manufacturing, and sales and marketing.

         LOCATION. We are only one of 956 pharmaceutical wholesalers and 69
drugstore operators in the northeast region of China that have received proper
authentication from the PRC government to engage in the distribution of
pharmaceuticals. With our large distribution center and distribution network and
our system of 90 drugstores in the Jilin Province, we believe that we have a
leading market position in the wholesale and retail distribution of
pharmaceutical products in the Jilin Province.

         LARGE NETWORK OF SUPPLIERS AND DIVERSE PRODUCT OFFERINGS. We have a
relationship with over 1,536 suppliers for our products, which enable us to
carry a wide range of high-quality products for our customers. Our wholesale and
retail businesses offer over 10,000 types of products to our customers,
including prescription pharmaceuticals, OTC medicines, herbal and nutritional
supplements, skin care products and cosmetics. We constantly review our customer
preferences and products selection to ensure that our selection of products
meets customer preferences.

         CUSTOMER SERVICE EXPERTISE. We provide extensive training to our
employees, including our pharmacists, and monitor our staff to ensure that we
are providing high-quality customer service. Additionally, we seek customer
feedback to make sure that our customers are satisfied with our services. Our
sales representatives and marketing personnel undergo extensive training,
providing them with the skills necessary to answer product and service-related
questions, proactively educate potential customers about our products, and
promptly resolve customer inquiries.

OUR STRATEGY

Our goal is to become one of the leading retail drugstore operators and
pharmaceutical-product distributors in China. We intend to achieve this goal by
implementing the following strategies:

         OPEN NEW DRUGSTORES THROUGHOUT CHINA. We intend expand our reach across
China by opening new drugstores in other provinces across the country. We
believe that there is significant room for growth in the drugstore industry
across China for our stores, and currently intend to open 108 new drugstores in
2008. New store locations will increase our market share in the retail drugstore
industry, our access to customers and our profitability.

         EXPAND AND PROMOTE OUR EXISTING PRODUCTS AND PROPRIETARY BRANDS. We
intend to support and grow our proprietary brand of ginseng-based products and
are focused on expanding our line of proprietary ginseng-based herbal products.
Currently, we have approximately 50 new ginseng-based products which we expect
to begin marketing in 2008. We believe that strong brand recognition is key to
promoting our ginseng-based products. We intend to promote our proprietary
brands by expanding our direct-to-consumer advertising campaign highlighting the
benefits of our products and building customer loyalty and increasing customer
visits to our stores.

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         STRENGTHEN OUR BRAND NAME AND CUSTOMER TRUST AND LOYALTY THROUGH
MARKETING AND PROMOTIONAL PROGRAMS. We believe that a strong brand name is key
to gaining our customers' trust and loyalty. We intend to engage in marketing
and promotional programs to increase awareness of our brand and product
offerings. In particular, we intend to increase our selection of product
offerings, implement seasonal and cross-marketing programs and advertising our
brand and products in newspapers and magazines.

          ACQUIRE COMPLEMENTARY COMPANIES. We plan to pursue strategic
acquisition opportunities that we believe will expand our market share, grow our
customer base, and expand our product offerings. Pursuing acquisitions is an
important piece of our growth strategy. We identify and evaluate potential
acquisitions by searching for certain criteria, such as its strategic fit with
our existing operations, its ability to expand our business into new target
markets and locations and its brand recognition.

MAJOR CUSTOMERS

Our major customers include government owned and operated hospitals, large
clinics and other retailers. No single customer accounted for 10% or more of the
Company's net sales during the years ended December 31, 2007 and 2006. During
the year ended December 31, 2007, approximately 13.9% of our net sales were
generated from our five largest customers as compared to 16.0% for the year
ended December 31, 2006.

COMPETITION

The pharmaceutical distribution, retail drugstore and herbal supplement
manufacturing industries in China are fragmented and intensely competitive.
Currently, 1,410 pharmacy chain drug stores and 58,065 individual pharmaceutical
product retailers operate in China. We currently hold less than 0.1% of the
market share of the retail drugstore industry. While our primary competition
currently comes from other retail drugstore chains and drugstores, we face
increasing competition from discount and convenience stores and supermarkets for
our non-pharmaceutical products and services. We compete for customers based on
store location, selection of products and our brand name.

Many of our competitors are more established than we are, and have significantly
greater financial, technical, marketing and other resources than we do.
Additionally, many of them have greater name recognition and a larger customer
bases than us. These competitors may be able to respond more quickly to changing
consumer preferences and new business opportunities than us. Moreover,
competition is expected to increase due to the expected consolidation of the
drugstore industry and new store opening by our competitors. Our major
competitors include: China Nepstar Chain Drugstore Ltd., Shenzhen Accord
Pharmacy Co., Ltd., Shenzhen Associate Pharmacy Co., Ltd., Guangzhou
Pharmaceutical Company, Jianmin Chain Drugstore, Guangzhou Caizhilin Chain
Drugstore, Liaoning Chengda Co., Ltd., Hangzhou Wulin Drugstore Co., Ltd. and
Ningbo Siming Dayaofang Co., Ltd.

The market for ginseng products is occupied by a number of competitors, most of
which have a longer operating and manufacturing history and higher visibility,
name recognition and financial resources than we do. Our competitors in the
ginseng processing business include China Beijing Tongrentang Group Co.,Ltd.
Many of these entities have substantially greater research and development
capabilities and financial, scientific, manufacturing, marketing and sales
resources than we do, as well as more experience in research and development,
regulatory matters, manufacturing, marketing and sales.

INTELLECTUAL PROPERTY

We rely on a combination of trademark and trade secret protection and other
unpatented proprietary information to protect our intellectual property rights
and to maintain and enhance our competitiveness. We currently have four
registered trademarks in China, which include Longlife, Zinuo, Yongxintang,
Gaoliyuan.

We also rely on unpatented technologies to protect the proprietary nature of our
product and manufacturing processes. We require that our management team and key
employees enter into confidentiality agreements that require the employees to
assign the rights to any inventions developed by them during the course of their
employment with us. The confidentiality agreements include noncompetition and
nonsolicitation provisions that remain effective during the course of employment
and for periods following termination of employment, which vary depending on
position and location of the employee.

                                       6

<PAGE>

GOVERNMENT REGULATION

As a business operating in the PRC, we are subject to various regulations and
permit systems by the Chinese government. These regulations cover many of our
products, including herbal products, over-the-counter medicines and prescription
medications.

         PHARMACEUTICAL PRODUCT DISTRIBUTION

We currently only manufacture herbal supplements containing ginseng; we do not
manufacture pharmaceuticals. Pharmaceuticals, which have certain identified
medical functions and are designed to treat a specific illnesses or symptoms,
can be available by prescription only or over-the-counter and require the
approval of China's State Food and Drug Administration ("SFDA") before they can
be sold. Our herbal products, also known as dietary supplements or nutritional
supplements, are basically prophylactic or preventive in nature and are
available over-the-counter, and, in China, only require approval of the local
government for their production.

We are subject to the Drug Administration Law of China, which governs the
licensing, manufacturing, marketing and distribution of pharmaceutical products
in China and sets penalties for violations of the law. Distributors of
pharmaceutical products are required to obtain permits from the appropriate
provincial or county level SFDA where the pharmaceutical distribution enterprise
is located. The grant of such permits is subject to an inspection of a
distributor's facilities, warehouses, hygienic environment, quality control
systems, personnel and equipment. Such permits have five year terms and
distributors must apply for renewal no later than six months prior to the
expiration date of the permit. We have a wholesale pharmaceutical distribution
permit which expires in March 2010. Each of our retail locations also has a
pharmaceutical distribution permit, which expire on various dates. We do not
have a permit to manufacture pharmaceutical products.

Additionally, under the Supervision and Administration Rules on Pharmaceutical
Product Distribution disseminated by the SFDA on January 31, 2007, and effective
May 1, 2007, a pharmaceutical product distributor is accountable for its
procurement and sales activities and is liable for the actions of its employees
or agents in connection with their conduct of distribution on behalf of the
distributor. Retail distributors may not sell prescription pharmaceutical
products, or Tier A over-the counter pharmaceutical products, listed in the
national or provincial medical insurance catalogs without certified in-store
pharmacist begin present.

         FOREIGN OWNERSHIP OF WHOLESALE OR RETAIL PHARMACEUTICAL BUSINESSES IN
         CHINA

Under current PRC law on foreign investment, foreign companies are allowed to
establish or invest in wholly foreign-owned enterprises or joint ventures that
engage in wholesale or retail sales of pharmaceuticals in China. These
regulations limit the number and size of retail pharmacy outlets that a foreign
investor may establish. If a foreign investor owns more than 30 outlets that
sell a variety of branded pharmaceutical products sourced from different
suppliers, the foreign investor's ownership interests in the outlets are limited
to 49.0%.

         NUTRITIONAL SUPPLEMENTS AND OTHER FOOD PRODUCTS

Distributors of nutritional supplements and other food products must obtain a
food hygiene certificate from the appropriate provincial or local health
regulatory authorities pursuant to the PRC Food Hygiene Law and Rules on Food
Hygiene Certification. In order to obtain a certificate, a distributor's
facilities, warehouses, hygienic environment, quality control systems, personnel
and equipment are subject to inspection. Food hygiene certificates are valid for
four years, and must be renewed within six months prior to their expiration.

The Chinese Food Sanitation Law promulgates food sanitation standards. In the
PRC only products manufactured at Government Good Manufacturing Practice ("GMP")
certified facilities are available for sale in China. The China Food and Drug
Administration conducts the GMP inspections.


                                       7


<PAGE>

         GOOD SUPPLY PRACTICE STANDARDS

We are required to operate in accordance with Good Supply Practice (the "GSP")
standards that regulate wholesale and retail pharmaceutical product
distributors. The GSP standards ensure the quality of distribution of
pharmaceutical products in China. Pursuant to applicable GSP standards, we must
implement strict controls on the distribution of our pharmaceutical products,
including those concerning staff qualifications, distribution premises,
warehouses, inspection equipment and facilities, management and quality control.
Additionally, we are subject to inspections organized by the local drug
regulatory department of the people's government of the province, autonomous
region or municipality directly under the PRC central government. We received a
GSP Certificate from the Jilin Province SFDA Bureau with a term of five years,
which expires at the end of 2008.

         INSURANCE CATALOGUE

The Insurance Catalogue is divided into Parts A and B. The medicines included in
Part A are designated by the Chinese governmental authorities for general
application. Local governmental authorities may not adjust the content of
medicines in Part A. Although the medicines included in Part B are designated by
Chinese governmental authorities in the first instance, provincial level
authorities may make limited changes to the medicines included in Part B,
resulting in some regional variations in the medicines included in Part B from
region to region.

Patients purchasing medicines included in Part A are entitled to reimbursement
of the costs of such medicines from the social medical fund in accordance with
relevant regulations in China. Patients purchasing medicines included in Part B
are required to pay a predetermined proportion of the costs of such medicines.

The medicines included in the Insurance Catalogue are selected by the Chinese
government authorities based on various factors including treatment
requirements, frequency of use, effectiveness and price. Medicines included in
the Insurance Catalogue are subject to price control by the Chinese government.
The Insurance Catalogue is revised every two years. In connection with each
revision, the relevant provincial drug authority collects proposals from
relevant enterprises before organizing a comprehensive appraisal. The SFDA then
makes the final decision on any revisions based on the preliminary opinion
suggested by the provincial drug administration.

Approximately 24% of all the medicines distributed by Yongxin were listed in the
Insurance Catalogue during the fiscal years ended December 31, 2007 and 2006,
representing 35% and 33%, respectively, of our total revenues for those periods.

         PRICE CONTROLS

Pursuant to the Decision of the State Council on the Establishment of the State
Basic Medical Insurance System for Urban Employees and the Implementation
Measures for the Administration of the Scope of Medical Insurance Coverage for
Pharmaceuticals for Urban Employees, the Ministry of Labor and Social Security
in China established the Insurance Catalogue. The retail prices of certain
pharmaceutical products, including many of those listed in the Insurance
Catalog, are subject to price controls in the form of fixed prices or price
ceilings by the Chinese government. Manufacturers and distributors are not
permitted to set or change the retail price for any price-controlled product
above the applicable price ceiling or deviate from the applicable fixed price
imposed by the PRC government. The prices of other medicines that are not
subject to price control are determined by the pharmaceutical manufacturers,
subject, in certain cases, to providing notice to the provincial pricing
authorities.

The Price Control Office of the NDRC, as well as provincial and regional price
control authorities, set the retail prices of products that are subject to price
controls. The wholesale price of the pharmaceutical products subject to the
price controls are generally determined by the set retail price. The maximum
prices of such medicine products are published by the state and provincial
administration authorities from time to time. Only the pharmaceutical product
manufacturer can apply for an increase in the retail price of the product.
Approximately 750 of our products are subject to price controls. While all of
our pharmaceutical products are subject to price controls, because our products
are priced below the price control level, price controls currently do not affect
our sales of these products.

         PRC NATIONAL MEDICAL INSURANCE PROGRAM

Eligible participants in the PRC national medical insurance program, mainly
consisting of urban residents, can purchase medicines in an authorized pharmacy
by presenting their medical insurance cards if the medicines purchased are
included in the national or provincial medical insurance catalogues. Authorized
pharmacies can generally either sell medicine on credit and obtain reimbursement
from relevant government social security bureaus on a monthly basis, or accept
payments from the participants at the of the purchase, and the participants in
turn obtain reimbursement from relevant government social security bureaus.

                                       8

<PAGE>

Purchases of Tier A pharmaceutical products are generally fully reimbursable,
except for certain Tier A pharmaceutical products that are only reimbursable to
the extent the medicine is used the purposes stated in the insurance catalogs.
Only a portion of purchases of Tier B pharmaceutical are reimbursable;
participants purchasing Tier B pharmaceutical products must a certain co-payment
which is not reimbursable. Participants have varying amounts in their individual
accounts, which varies based on the contributions made by the participants and
his or her employer. Different regions in China have different requirements
regarding the caps of reimbursements in excess of the amounts in the individual
accounts.

         PHARMACEUTICAL PRODUCT ADVERTISEMENT

The Standards for Examination and Publication of Advertisements of
Pharmaceutical Products and Rules for Examination of Advertisement of
Pharmaceutical Products, promulgated by the PRC State Administration of Industry
and Commerce and the SFDA, prevents the deceptive and misleading advertising of
pharmaceutical products. These regulations prohibit the advertisement of certain
pharmaceutical products and mandate that prescription pharmaceuticals only be
advertised in certain authorized medical magazines upon obtaining proper
approval from the provincial level of food and drug administration.

         ENVIRONMENTAL REGULATIONS

The major environmental regulations applicable to us include the PRC
Environmental Protection Law, the PRC Law on the Prevention and Control of Water
Pollution and its Implementation Rules, the PRC Law on the Prevention and
Control of Air Pollution and its Implementation Rules, the PRC Law on the
Prevention and Control of Solid Waste Pollution, and the PRC Law on the
Prevention and Control of Noise Pollution.

We constructed our manufacturing facilities with the PRC's environmental laws
and requirements in mind. We have not been named as a defendant in any legal
proceedings alleging violation of environmental laws and have no reasonable
basis to believe that there is any threatened claim, action or legal proceedings
against us that would have a material adverse effect on our business, financial
condition or results of operations due to any non-compliance with environmental
laws.

         INTELLECTUAL PROPERTY PROTECTION IN CHINA

The PRC's intellectual property protection regime is consistent with those of
other modern industrialized countries. The PRC has domestic laws for the
protection of rights in copyrights, patents, trademarks and trade secrets. The
PRC is also a signatory to most of the world's major intellectual property
conventions, including:

         o        Convention establishing the World Intellectual Property
                  Organization (WIPO Convention) (June 4, 1980);

         o        Paris Convention for the Protection of Industrial Property
                  (March 19, 1985);

         o        Patent Cooperation Treaty (January 1, 1994); and

         o        The Agreement on Trade-Related Aspects of Intellectual
                  Property Rights (TRIPs) (November 11, 2001).

                  PATENTS

Patents in the PRC are governed by the China Patent Law and its Implementing
Regulations, each of which went into effect in 1985. Amended versions of the
China Patent Law and its Implementing Regulations came into effect in 2001 and
2003, respectively.

The PRC is signatory to the Paris Convention for the Protection of Industrial
Property, in accordance with which any person who has duly filed an application
for a patent in one signatory country shall enjoy, for the purposes of filing in
the other countries, a right of priority during the period fixed in the
convention (12 months for inventions and utility models, and 6 months for
industrial designs).


                                       9


<PAGE>

The Patent Law covers three kinds of patents, i.e., patents for inventions,
utility models and designs respectively. The Chinese patent system adopts the
principle of first to file. This means that, where more than one person files a
patent application for the same invention, a patent can only be granted to the
person who first filed the application. Consistent with international practice,
the PRC only allows the patenting of inventions or utility models that possess
the characteristics of novelty, inventiveness and practical applicability. For a
design to be patentable, it should not be identical with or similar to any
design which, before the date of filing, has been publicly disclosed in
publications in the country or abroad or has been publicly used in the country,
and should not be in conflict with any prior right of another.

PRC law provides that anyone wishing to exploit the patent of another must
conclude a written licensing contract with the patent holder and pay the patent
holder a fee. One rather broad exception to this, however, is that, where a
party possesses the means to exploit a patent but cannot obtain a license from
the patent holder on reasonable terms and in reasonable period of time, the PRC
State Intellectual Property Office, or SIPO, is authorized to grant a compulsory
license. A compulsory license can also be granted where a national emergency or
any extraordinary state of affairs occurs or where the public interest so
requires. SIPO, however, has not granted any compulsory license up to now. The
patent holder may appeal such decision within three months from receiving
notification by filing a suit in a people's court.

PRC law defines patent infringement as the exploitation of a patent without the
authorization of the patent holder. A patent holder who believes his patent is
being infringed may file a civil suit or file a complaint with a PRC local
Intellectual Property Administrative Authority, which may order the infringer to
stop the infringing acts. Preliminary injunction may be issued by the People's
Court upon the patentee's or the interested parties' request before instituting
any legal proceedings or during the proceedings. Evidence preservation and
property preservation measures are also available both before and during the
litigation. Damages in the case of patent infringement is calculated as either
the loss suffered by the patent holder arising from the infringement or the
benefit gained by the infringer from the infringement. If it is difficult to
ascertain damages in this manner, damages may be reasonably determined in an
amount ranging from one to more times of the license fee under a contractual
license. The infringing party may be also fined by Administration of Patent
Management in an amount of up to three times the unlawful income earned by such
infringing party. If there is no unlawful income so earned, the infringing party
may be fined in an amount of up to RMB500,000, or approximately $62,500.

                  TRADEMARKS

Trademarks in the PRC are government by the PRC Trademark Law and the PRC
Trademark Implementing Regulations. The State Administration of Industry and
Commerce is responsible for the registration and administration of trademarks in
China. The PRC has adopted a "first-to-file" principle with respect to
trademarks.

Trademark infringement in the PRC includes using a mark that is identical or
similar to a registered trademark with the same or similar products without the
trademark registrant's consent, selling products that infringe upon a trademark
registrant's exclusive right to use the trademark, counterfeiting or changing or
altering a registered trademark and selling products with the unauthorized
altered trademark.

 A registered trademark owner who believes his trademark is being infringed may
file a complaint with the state or local Administration for Industry and
Commerce, or AIC, which can order the immediate cessation of the infringing
behavior, seize and destroy infringing products and representations of the
trademark, close the facilities used to produce the infringing products or
impose a fine. Additionally, the trademark owner may file a civil suit against
the infringing party seeking an injunction and/or monetary damages. In addition,
the infringing party may be fined by Administration of Patent Management in an
amount of up to three times the unlawful income earned by such infringing party,
or an amount up to RMB500,000, or approximately $62,500 if there is no unlawful
income earned.

         TAX

Pursuant to the Provisional Regulation of China on Value Added Tax ("VAT") and
their implementing rules, all entities and individuals that are engaged in the
sale of goods, the provision of repairs and replacement services and the
importation of goods in China are generally required to pay VAT at a rate of
17.0% of the gross sales proceeds received, less any deductible VAT already paid
or borne by the taxpayer. Further, when exporting goods, the exporter is
entitled to a portion of or all the refund of VAT that it has already paid or
borne. Our imported raw materials that are used for manufacturing export
products and are deposited in bonded warehouses are exempt from import VAT.


                                       10


<PAGE>

         FOREIGN CURRENCY EXCHANGE

Under the PRC foreign currency exchange regulations applicable to us, the
Renminbi is convertible for current account items, including the distribution of
dividends, interest payments, trade and service-related foreign exchange
transactions. Conversion of Renminbi for capital account items, such as direct
investment, loan, security investment and repatriation of investment, however,
is still subject to the approval of the PRC State Administration of Foreign
Exchange, or SAFE. Foreign-invested enterprises may only buy, sell and/or remit
foreign currencies at those banks authorized to conduct foreign exchange
business after providing valid commercial documents and, in the case of capital
account item transactions, obtaining approval from the SAFE. Capital investments
by foreign-invested enterprises outside of China are also subject to
limitations, which include approvals by the Ministry of Commerce, the SAFE and
the State Reform and Development Commission.

         DIVIDEND DISTRIBUTIONS

Under applicable PRC regulations, foreign-invested enterprises in China may pay
dividends only out of their accumulated profits, if any, determined in
accordance with PRC accounting standards and regulations. In addition, a
foreign-invested enterprise in China are required to set aside at least 10.0% of
their after-tax profit based on PRC accounting standards each year to its
general reserves until the accumulative amount of such reserves reach 50.0% of
its registered capital. These reserves are not distributable as cash dividends.
The board of directors of a foreign-invested enterprise has the discretion to
allocate a portion of its after-tax profits to staff welfare and bonus funds,
which may not be distributed to equity owners except in the event of
liquidation.

EMPLOYEES

Substantially all of our employees are located in China. At December 31, 2007,
we had approximately 642 employees, all of whom are fully time and 166 of whom
are licensed pharmacists. There are no collective bargaining contracts covering
any of our employees. We believe our relationship with our employees is
satisfactory.

Yongxin is required to contribute a portion of its employees' total salaries to
the Chinese government's social insurance funds, including medical insurance,
unemployment insurance and job injuries insurance, and a housing assistance
fund, in accordance with relevant regulations. In the last three years, Yongxin
contributed approximately $61,918, $2,430 and $2,108 for the years ended
December 31, 2007, 2006 and 2005, respectively. We expect the amount of
Yongxin's contribution to the government's social insurance funds to increase in
the future as Yongxin expands its workforce and operations.


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<PAGE>


ITEM 1A:          RISK FACTORS

Any investment in our common stock involves a high degree of risk. Potential
investors should carefully consider the material risks described below and all
of the information contained in this Form 10-K before deciding whether to
purchase any of our securities. Our business, financial condition or results of
operations could be materially adversely affected by these risks if any of them
actually occur. The shares of our common stock are currently quoted on the
Over-the-Counter Bulletin Board, or OTCBB under the symbol "NTRG.OB." If and
when our securities are traded, the trading price could decline due to any of
these risks, and an investor may lose all or part of his investment. Some of
these factors have affected our financial condition and operating results in the
past or are currently affecting us. This report also contains forward-looking
statements that involve risks and uncertainties. Our actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including the risks faced described below and
elsewhere in this Form 10-K.

RISKS RELATED TO OUR BUSINESS

PURCHASES OF MANY OF OUR PRODUCTS ARE DISCRETIONARY, MAY BE PARTICULARLY
AFFECTED BY ADVERSE TRENDS IN THE GENERAL ECONOMY, AND AN ECONOMIC DECLINE WILL
MAKE IT MORE DIFFICULT TO GENERATE REVENUE.

The success of our operations depends to a significant extent upon a number of
factors relating to discretionary consumer spending in China. These factors
include economic conditions and perceptions of such conditions by consumers,
employment rates, the level of consumers' disposable income, business
conditions, interest rates, consumer debt levels, availability of credit and
levels of taxation in regional and local markets in China where we manufacture
and sell our products. There can be no assurance that consumer spending on many
of our products, including skin-care products, cosmetics and nutritional
supplements, will not be adversely affected by changes in general economic
conditions in China and globally.

While the Chinese economy has experienced rapid growth in recent years, such
growth has been uneven among various sectors of the economy and in different
geographical areas of the country. Also, many observers believe that this rapid
growth cannot continue at its current pace and that an economic correction may
be imminent. Rapid economic growth can also lead to growth in the money supply
and rising inflation. During the past two decades, the rate of inflation in
China has been as high as approximately 20% and China has experienced deflation
as low as minus 2%. If prices for our products rise at a rate that is
insufficient to compensate for the rise in the costs of supplies such as raw
materials, it may have an adverse effect on our profitability. In order to
control inflation in the past, the PRC government has imposed controls on bank
credit, limits on loans for fixed assets and restrictions on state bank lending.
The implementation of such policies may impede economic growth. In October 2004,
the People's Bank of China, the PRC's central bank, raised interest rates for
the first time in nearly a decade and indicated in a statement that the measure
was prompted by inflationary concerns in the Chinese economy. In April 2006 and
May 2007, the People's Bank of China raised the interest rate again. Repeated
rises in interest rates by the central bank could slow economic activity in
China which could, in turn, materially increase our costs and also reduce demand
for our products.

THE SUCCESS OF OUR BUSINESS DEPENDS ON OUR ABILITY TO MARKET AND ADVERTISE OUR
PRODUCTS EFFECTIVELY.

Our ability to establish effective marketing and advertising campaigns is key to
our success. Our advertisements promote our merchandise and our proprietary
brand of ginseng-based products, and the pricing of such products. If we are
unable to increase awareness of our company and our products, we may not be able
to attract new customers. Our marketing activities may not be successful in
promoting our products or pricing strategies. We cannot assure you that our
marketing programs will be adequate to support our future growth, which may
result in a material adverse effect on our results of operations.

WE MAY BE UNABLE TO IDENTIFY AND RESPOND EFFECTIVELY TO SHIFTING CUSTOMER
PREFERENCES, AND WE MAY FAIL TO OPTIMIZE OUR PRODUCT OFFERING AND INVENTORY
POSITION.

Consumer preferences in the drugstore industry change rapidly and are difficult
to predict. The success of our business depends on our ability to predict
accurately and respond to future changes in consumer preferences, carry the

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<PAGE>

inventory demanded by customers, deliver the appropriate quality of products,
price products correctly and implement effective purchasing procedures. We must
optimize our product selection and inventory positions based on consumer
preferences and sales trends. If we fail to anticipate, identify or react
appropriately to changes in consumer preferences and adapt our product selection
to these changing preferences, we could experience excess inventories, higher
than normal markdowns or an inability to sell our products, which could
significantly reduce our revenue and have a material adverse effect on our
business, financial condition and results of operations.

IF WE FAIL TO MAINTAIN OPTIMAL INVENTORY LEVELS, OUR INVENTORY HOLDING COSTS
COULD INCREASE OR CAUSE US TO LOSE SALES, EITHER OF WHICH COULD HAVE A MATERIAL
ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

While we must maintain sufficient inventory levels to operate our business
successfully and meet our customers' demands, we must be careful to avoid
amassing excess inventory. Changing consumer demands, manufacturer backorders,
uncertainty surrounding new product launches and our increased offering of our
proprietary ginseng-based products expose us to increased inventory risks.
Demand for products can change rapidly and unexpectedly, including the time
between when the product is ordered from the supplier to the time it is offered
for sale. We carry a wide variety of products and must maintain sufficient
inventory levels of our products. We may be unable to sell certain products in
the event that consumer demand changes. Our inventory holding costs will
increase if we carry excess inventory, however, if we do not have a sufficient
inventory of a product to fulfill customer orders, we may lose orders or
customers, which may adversely affect our business, financial condition and
results of operations. We cannot assure you that we can accurately predict
consumer demand and events and avoid over-stocking or under-stocking products.

OUR BUSINESS AND THE SUCCESS OF OUR PRODUCTS COULD BE HARMED IF WE ARE UNABLE TO
MAINTAIN OUR BRAND IMAGE.

We believe that establishing and strengthening our proprietary brands is
critical to achieving widespread acceptance of our products and to establishing
key strategic relationships. The importance of brand recognition will increase
as current and potential competitors enter the Chinese pharmaceutical market
with competing products. Our ability to promote and position our brands depends
largely on the success of our marketing efforts and our ability to provide high
quality products and customer service. These activities are expensive and we may
not generate a corresponding increase in sales to justify these costs. If we
fail to establish and maintain our brand, or if our brand value is damaged or
diluted, we may be unable to maintain or increase our sales or revenue.

IF WE ARE UNABLE TO MANAGE THE DISTRIBUTION OF OUR PRODUCTS AT OUR DISTRIBUTION
CENTERS, WE MAY BE UNABLE TO MEET CUSTOMER DEMAND.

Substantially all of our products are distributed to our stores and our
wholesale customers through our "Logistics Center" located in our "Logistics
Plaza" located in Chanchun. The efficient operation and management of this
facility is essential to our meeting customer demands ability to meet customer
demand. Our business would suffer if the operation of this facility were
disrupted. Our failure to manage this facility properly could result in higher
distribution costs, excess or sufficient inventory, or an inability to fulfill
customer orders, each of which could result in a material adverse effect on our
results of operations.

DUE TO THE GEOGRAPHIC CONCENTRATION OF OUR SALES IN THE NORTHEAST REGION OF
CHINA, OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION ARE SUBJECT TO
FLUCTUATIONS IN REGIONAL ECONOMIC CONDITIONS.

A significant percentage of our total sales are made in the northeast region of
China, particularly in the Jilin province. For the years ended December 31, 2007
and 2006, approximately 85% and 80% of revenues, respectively, was generated
from this area. Our concentration of sales in this area heightens our exposure
to adverse developments related to competition, as well as economic and
demographic changes in this region. Our geographic concentration might result in
a material adverse effect on our business, financial condition or results of
operations in the future.

WE HAVE HISTORICALLY DEPENDED ON A LIMITED NUMBER OF CUSTOMERS FOR A SIGNIFICANT
PORTION OF OUR REVENUES AND THIS DEPENDENCE IS LIKELY TO CONTINUE.


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<PAGE>

We have historically depended on a limited number of customers for a significant
portion of our revenues. We anticipate that a limited number of customers will
continue to contribute to a significant portion of our revenues in the future.
Maintaining the relationships with these significant customers is vital to the
expansion and success of our business, as the loss of a major customer could
expose us to risk of substantial losses. Our sales and revenue could decline and
our results of operations could be materially adversely affected if one or more
of these significant customers stops or reduces its purchasing of our products,
or if we fail to expand our customer base for our products.

CERTAIN DISRUPTIONS IN SUPPLY OF AND CHANGES IN THE COMPETITIVE ENVIRONMENT FOR
OUR PRODUCTS MAY ADVERSELY AFFECT OUR PROFITABILITY.

We carry a broad range of merchandise in our stores, including pharmaceuticals,
traditional Chinese medicines, herbal and nutritional supplements and cosmetics.
A significant disruption in the supply of these products could decrease
inventory levels and sales, and materially adversely affect our business.
Shortages of products or interruptions in transportation systems, labor strikes,
work stoppages, war, acts of terrorism or other interruptions to or difficulties
in the employment of labor or transportation in the markets in which we purchase
products may adversely affect our ability to maintain sufficient inventories of
our products to meet consumer demand. If we were to experience a significant or
prolonged shortage of products from any of our suppliers and could not procure
the products from other sources, we would be unable to meet customer demand,
which would adversely affect our sales, margins and customer relations.

OUR OPERATIONS WOULD BE MATERIALLY ADVERSELY AFFECTED IF THIRD-PARTY CARRIERS
WERE UNABLE TO TRANSPORT OUR PRODUCTS ON A TIMELY BASIS.

All of our products are shipped through third party carriers. If a strike or
other event prevented or disrupted these carriers from transporting our
products, other carriers may be unavailable or may not have the capacity to
deliver our products to our customers and to our retail stores. If adequate
third party sources to ship our products were unavailable at any time, our
business would be materially adversely affected.

THE MARKET FOR OUR PRODUCTS AND SERVICES IS VERY COMPETITIVE AND, IF WE CANNOT
EFFECTIVELY COMPETE, OUR BUSINESS WILL BE HARMED.

The industries in which we operate are highly fragmented and very competitive.
We compete with local drugstores and other local manufacturers of herbal
products and with large foreign multinational companies that offer products that
are similar to ours. Some of these competitors have larger local or regional
customer bases, more locations, more brand equity, and substantially greater
financial, marketing and other resources than we have. As a result, our
competitors may be in a stronger position to respond quickly to potential
acquisitions and other market opportunities, new or emerging technologies and
changes in customer tastes. We cannot assure you that we will be able to
maintain or increase our market share against the emergence of these or other
sources of competition. Failure to maintain and enhance our competitive position
could materially adversely affect our business and prospects

WE MAY NOT BE SUCCESSFUL IN COMPETING WITH OTHER WHOLESALERS AND DISTRIBUTORS OF
PHARMACEUTICAL PRODUCTS IN THE TENDER PROCESSES FOR THE PURCHASE OF MEDICINES BY
STATE-OWNED AND STATE-CONTROLLED HOSPITALS.

Our wholesale business sells various pharmaceutical products to hospitals owned
and controlled by government authorities in the PRC. Government owned hospitals
purchase pharmaceutical products by using collective tender processes. During a
collective tender process, a hospital establishes a committee of recognized
pharmaceutical experts, which assesses bids submitted by pharmaceutical
manufacturers. The hospitals may only purchase pharmaceuticals that win in
collective tender processes. The collective tender process for pharmaceuticals
with the same chemical composition must be conducted at least annually, and
pharmaceuticals that have won in the collective tender processes previously must
participate and win in the collective tender processes in the following period
before hospitals may make new purchases. If we are unable to win purchase
contracts through the collective tender processes in which we decide to
participate, we will lose market share to our competitors, and our sales and
profitability will be adversely affected.


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<PAGE>

COUNTERFEIT PRODUCTS IN CHINA COULD NEGATIVELY IMPACT OUR REVENUES, BRAND
REPUTATION, BUSINESS AND RESULTS OF OPERATIONS.

Our products are also subject to competition from counterfeit pharmaceuticals,
which are pharmaceuticals manufactured without proper licenses or approvals and
are fraudulently mislabeled with respect to their content and/or manufacturer.
Counterfeit pharmaceuticals are generally sold at lower prices than the
authentic products due to their low production costs, and in some cases are very
similar in appearance to the authentic products. Counterfeit pharmaceuticals may
or may not have the same chemical content as their authentic counterparts.
Although the PRC government has recently been increasingly active in policing
counterfeit pharmaceuticals, there is not yet an effective counterfeit
pharmaceutical regulation control and enforcement system in China. The
proliferation of counterfeit pharmaceuticals has grown in recent years and may
continue to grow in the future. Despite our implementation of quality controls,
we cannot assure you that we would not be distributing or selling counterfeit
products inadvertently. Any accidental sale or distribution of counterfeit
products can subject our company to fines, administrative penalties, litigation
and negative publicity, which could negatively impact our revenues, brand
reputation, business and results of operations.

THE RETAIL PRICES OF SOME OF OUR PRODUCTS ARE SUBJECT TO PRICE CONTROLS BY THE
PRC GOVERNMENT, WHICH MAY AFFECT BOTH OUR REVENUES AND NET INCOME.

The laws of the PRC permit the PRC government to fix and adjust prices of
certain pharmaceutical products, including many of those listed in the Medical
Insurance Catalog. Through these price controls, the government can fix retail
prices and set retail price ceiling for certain of the pharmaceutical products
we sell. Additionally, the PRC government may periodically adjust the retail
prices of these products downward in order to make pharmaceuticals more
affordable to the general Chinese population. While our sales of pharmaceutical
products are not affected by the price controls because we currently sell such
products are prices below the price control level, we cannot guarantee that our
sales of these products will not be affected in the future, as price controls
may be increased or may affect additional products. To the extent that we are
subject to price controls, our revenue, gross profit, gross margin and net
income will be affected because the revenue we derive from our sales will be
limited and we may face no limitation on our costs. Further, if price controls
affect both our revenue and costs, our ability to be profitable and the extent
of our profitability will be effectively subject to determination by the
applicable regulatory authorities in the PRC. Any future price controls or price
reductions may reduce our revenue and profitability and have a material adverse
effect on our financial condition and results of operations.

IF WE DO NOT COMPLY WITH THE APPLICABLE PRC LAWS AND REGULATIONS CONTROLLING THE
SALE OF MEDICINES UNDER THE PRC NATIONAL MEDICAL INSURANCE PROGRAM, WE MAY BE
SUBJECT TO FINES AND OTHER PENALTIES.

Persons eligible to participate in the PRC National Medical Insurance Program
can buy medicines that have been included in the medical insurance catalog using
a medical insurance card in an authorized pharmacy. The applicable PRC
government social security bureau then reimburses the pharmacy. PRC law also
forbids pharmacies from selling goods other than pre-proved medicines when
purchases are made with medical insurance cards. While we have established
procedures to prevent our drugstores from selling unauthorized goods to
customers who make purchases with medical insurance cards, we cannot assure you
that these procedures will be properly followed at all times in all of our
stores. Violations of this prohibition by any of our drugstores may result in
the revocation of its status as an authorized pharmacy. Additionally, we could
be subject to other fines or other penalties, and to negative publicity, which
could damage our company's reputation and have a material adverse effect on our
results of operations.

OUR CERTIFICATES, PERMITS, AND LICENSES RELATED TO OUR OPERATIONS ARE SUBJECT TO
GOVERNMENTAL CONTROL AND RENEWAL AND FAILURE TO OBTAIN RENEWAL WILL CAUSE ALL OR
PART OF OUR OPERATIONS TO BE TERMINATED.

We are subject to various PRC laws and regulations pertaining to our wholesale,
retail and manufacturing operations. We have attained certificates, permits, and
licenses required for the operation of a pharmaceutical distributor and retailer
and the manufacture of herbal and nutritional products in the PRC. We cannot
assure you that we will have all necessary permits, certificates and
authorizations for the operation of our business at all times. Additionally, our
certifications, permits and authorizations are subject to periodic renewal by
the relevant government authorities. We intend to apply for renewal of these
certificates, permits and authorizations prior to their expiration. During the
renewal process, we will be re-evaluated by the appropriate governmental
authorities and must comply with the then prevailing standards and regulations
which may change from time to time. In the event that we are not able to renew

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the certificates, permits and licenses, all or part of our operations may be
terminated. Furthermore, if escalating compliance costs associated with
governmental standards and regulations restrict or prohibit any part of our
operations, it may adversely affect our operations and profitability.

OUR PLANNED EXPANSION OF SALES INTO OVERSEAS MARKETS COULD FAIL, REDUCE
OPERATING RESULTS AND/OR EXPOSE US TO INCREASED RISKS ASSOCIATED WITH DIFFERENT
MARKET DYNAMICS AND COMPETITION IN ANY OF THE FOREIGN COUNTRIES WHERE WE ATTEMPT
TO SELL OUR PRODUCTS.

We could face many new obstacles in our planned expansion of product sales in
overseas markets. We currently have plans to open two retail pharmacy stores in
the United States in fiscal 2008. These markets are untested for our products
and we face risks in expanding our business overseas, which include differences
in regulatory product testing requirements, patent protection, taxation policy,
legal systems and rules, marketing costs, fluctuations in currency exchange
rates and changes in political and economic conditions. We may not be as
successful as our competitors in generating revenues in international markets
due to the lack of recognition of our products or other factors. Developing
product recognition overseas is expensive and time-consuming and our
international expansion efforts may be more costly and less profitable than we
expect. If we are not successful in our target markets, our sales could decline,
our margins could be negatively impacted and we could lose market share, any of
which could materially harm our business, results of operations and
profitability.

WE MAY SUFFER AS A RESULT OF PRODUCT LIABILITY OR DEFECTIVE PRODUCTS.

We may produce or sell products which inadvertently have an adverse effect on
the health of individuals despite proper testing which may expose us to
potential product liability claims. Such claims may arise despite our quality
controls, proper testing and instruction for use of our products, either due to
a defect during manufacturing or due to the individual's improper use of the
product. In addition, we may be required to participate in a recall of defective
products. Adverse side effects or manufacturing problems could also result in
adverse publicity which could harm our business.

Existing PRC laws and regulations do not require us to maintain third party
liability insurance to cover product liability claims. However, if a product
liability claim is brought against us, it may, regardless of merit or eventual
outcome, result in damage to our reputation, breach of contract with our
customers, decreased demand for our products, costly litigation, product
recalls, loss of revenue, and the inability to commercialize some products.

WE CANNOT GUARANTEE THE PROTECTION OF OUR INTELLECTUAL PROPERTY RIGHTS AND IF
INFRINGEMENT OF OUR INTELLECTUAL PROPERTY RIGHTS OCCURS, INCLUDING
COUNTERFEITING OF OUR PRODUCTS, OUR REPUTATION AND BUSINESS MAY BE ADVERSELY
AFFECTED.

To protect the reputation of our products, we have sought to file or register
our intellectual property, as appropriate, in the PRC where we have our primary
business presence. As of December 31, 2007, we had registered 4 trademarks. Our
products are currently sold under these trademarks in the PRC, and we plan to
expand the sale and distribution of our products to other international markets.
We plan to apply for trademark protection of these and other marks in the United
States in connection with the expansion of our retail drugstores into
California. There is no assurance that there will not be any infringement of our
brand name or other registered trademarks or counterfeiting of our products in
the future, in China, the U.S. or elsewhere. Should any such infringement and/or
counterfeiting occur, our reputation and business may be adversely affected. We
may also incur significant expenses and substantial amounts of time and effort
to enforce our trademark rights in the future. Such diversion of our resources
may adversely affect our existing business and future expansion plans.

IF OUR PRODUCTS ARE ALLEGED TO OR FOUND TO CONFLICT WITH PATENTS THAT HAVE BEEN
OR MAY BE GRANTED TO COMPETITORS OR OTHERS, OUR REPUTATION AND BUSINESS MAY BE
ADVERSELY AFFECTED.

The competitive nature of the nutritional and herbal products market make the
patent position of the manufacturers of such products subject to numerous
uncertainties related to complex legal and factual issues. While we currently do
not own any patents or license patents from third parties, other parties could
bring legal actions against us claiming damages and seeking to enjoin
manufacturing and marketing of our products for allegedly conflicting with
patents held by them. Any such litigation could result in substantial cost to us
and diversion of effort by our management and technical personnel. If any such
actions are successful, in addition to any potential liability for damages, we
could be required to obtain a license in order to continue to manufacture or


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<PAGE>

market the affected products. There can be no assurance that we would prevail in
any such action or that any license required under any such patent would be made
available on acceptable terms, if at all. Failure to obtain needed patents,
licenses or proprietary information held by others may have a material adverse
effect on our business. In addition, if we were to become involved in such
litigation, it could consume a substantial portion of our time and resources.
Also, with respect to licensed technology, there can be no assurance that the
licensor of the technology will have the resources, financial or otherwise, or
desire to defend against any challenges to the rights of such licensor to its
patents.

WE RELY ON TRADE SECRET PROTECTIONS THROUGH CONFIDENTIALITY AGREEMENTS WITH OUR
EMPLOYEES, CUSTOMERS AND OTHER PARTIES; THE BREACH OF SUCH AGREEMENTS COULD
ADVERSELY AFFECT OUR BUSINESS ANDS RESULTS OF OPERATIONS.

We also rely on trade secrets, which we seek to protect, in part, through
confidentiality and non-disclosure agreements with our employees, customers and
other parties. There can be no assurance that these agreements will not be
breached, that we would have adequate remedies for any such breach or that our
trade secrets will not otherwise become known to or independently developed by
competitors. To the extent that consultants, key employees or other third
parties apply technological information independently developed by them or by
others to our proposed projects, disputes may arise as to the proprietary rights
to such information that may not be resolved in our favor. We may be involved
from time to time in litigation to determine the enforceability, scope and
validity of our proprietary rights. Any such litigation could result in
substantial cost and diversion of effort by our management and technical
personnel.

THE FAILURE TO MANAGE GROWTH EFFECTIVELY COULD HAVE AN ADVERSE EFFECT ON OUR
EMPLOYEE EFFICIENCY, PRODUCT QUALITY, WORKING CAPITAL LEVELS, AND RESULTS OF
OPERATIONS.

Any significant growth in the market for our products or our entry into new
markets may require and expansion of our employee base for managerial,
operational, financial, and other purposes. As of December 31, 2007, we had
approximately 642 full time employees. During any growth, we may face problems
related to our operational and financial systems and controls, including quality
control and delivery and service capacities. We would also need to continue to
expand, train and manage our employee base. Continued future growth will impose
significant added responsibilities upon the members of management to identify,
recruit, maintain, integrate, and motivate new employees.

Aside from increased difficulties in the management of human resources, we may
also encounter working capital issues, as we will need increased liquidity to
finance the purchase of raw materials and supplies, development of new products,
and the hiring of additional employees. For effective growth management, we will
be required to continue improving our operations, management, and financial
systems and control. Our failure to manage growth effectively may lead to
operational and financial inefficiencies that will have a negative effect on our
profitability. We cannot assure investors that we will be able to timely and
effectively meet that demand and maintain the quality standards required by our
existing and potential customers.

WE ARE DEPENDENT ON CERTAIN KEY PERSONNEL AND LOSS OF THESE KEY PERSONNEL COULD
HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

Our success is, to a certain extent, attributable to the management, sales and
marketing, and operational and technical expertise of certain key personnel.
Each of the named executive officers performs key functions in the operation of
our business. The loss of a significant number of these employees could have a
material adverse effect upon our business, financial condition, and results of
operations.

WE ARE DEPENDENT ON A TRAINED WORKFORCE AND AN INABILITY TO RETAIN OR
EFFECTIVELY RECRUIT SUCH EMPLOYEES, INCLUDING IN-STORE PHARMACISTS FOR OUR
STORES, COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.

We must attract, recruit and retain a sizeable workforce of qualified and
trained staff, including in-store pharmacists, in order to operate our retail
drugstores. Applicable PRC regulations require at least one qualified pharmacist
to be stationed in each drugstore to instruct or advise customers on
prescription medications. A shortage of pharmacists in the past few years has
occurred in the past few years due to increasing demand within the drugstore
industry as well as demand from other businesses in the healthcare industry. We
face competition for personnel from other drugstore chains, supermarkets, retail
chains, and pharmaceutical companies. We cannot assure you that we will be able
to attract, hire and retain sufficient numbers of in-store pharmacists necessary
to continue to develop and grow our business.


                                       17


<PAGE>

Additionally, we must recruit and retain technically competent employees to
develop and manufacture our pharmaceutical products. Our ability to implement
effectively our business strategy and expand our operations will depend upon,
among other factors, the successful recruitment and retention of additional
highly skilled and experienced pharmacists and other technical and marketing
personnel. There is significant competition for technologically qualified
personnel in our business and we may not be successful in recruiting or
retaining sufficient qualified personnel consistent with our operational needs.

OUR QUARTERLY RESULTS MAY FLUCTUATE BECAUSE OF MANY FACTORS AND, AS A RESULT,
INVESTORS SHOULD NOT RELY ON QUARTERLY OPERATING RESULTS AS INDICATIVE OF FUTURE
RESULTS.

Fluctuations in operating results or the failure of operating results to meet
the expectations of public market analysts and investors may negatively impact
the value of our securities. Quarterly operating results may fluctuate in the
future due to a variety of factors that could affect revenues or expenses in any
particular quarter. Fluctuations in quarterly operating results could cause the
value of our securities to decline. Investors should not rely on
quarter-to-quarter comparisons of results of operations as an indication of
future performance. As a result of the factors listed below, it is possible that
in future periods results of operations may be below the expectations of public
market analysts and investors. This could cause the market price of our
securities to decline. Factors that may affect our quarterly results include:

         o        vulnerability of our business to a general economic downturn
                  in China;

         o        fluctuation and unpredictability of costs related to the raw
                  materials used to manufacture our products;

         o        seasonality of our business;

         o        changes in the laws of the PRC that affect our operations;

         o        competition from our competitors; and

         o        Our ability to obtain necessary government certifications
                  and/or licenses to conduct our business.

OUR STRATEGY TO ACQUIRE COMPANIES MAY RESULT IN UNSUITABLE ACQUISITIONS OR
FAILURE TO SUCCESSFULLY INTEGRATE ACQUIRED COMPANIES, WHICH COULD LEAD TO
REDUCED PROFITABILITY.

We may embark on a growth strategy through acquisitions of companies or
operations that complement existing product lines, customers or other
capabilities. We may be unsuccessful in identifying suitable acquisition
candidates, or may be unable to consummate a desired acquisition. To the extent
any future acquisitions are completed, we may be unsuccessful in integrating
acquired companies or their operations, or if integration is more difficult than
anticipated, we may experience disruptions that could have a material adverse
impact on future profitability. Some of the risks that may affect our ability to
integrate, or realize any anticipated benefits from, acquisitions include:

         o        unexpected losses of key employees or customer of the acquired
                  company;

         o        difficulties integrating the acquired company's standards,
                  processes, procedures and controls;

         o        difficulties coordinating new product and process development;

         o        difficulties hiring additional management and other critical
                  personnel;



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<PAGE>

         o        difficulties increasing the scope, geographic diversity and
                  complexity of our operations;

         o        difficulties consolidating facilities, transferring processes
                  and know-how;

         o        difficulties reducing costs of the acquired company's
                  business;

         o        diversion of management's attention from our management; and

         o        adverse impacts on existing business relationships with
                  customers.

RISKS RELATED TO US DOING BUSINESS IN CHINA

SUBSTANTIALLY ALL OF OUR ASSETS ARE LOCATED IN THE PRC AND SUBSTANTIALLY ALL OF
OUR REVENUES ARE DERIVED FROM OUR OPERATIONS IN CHINA, AND CHANGES IN THE
POLITICAL AND ECONOMIC POLICIES OF THE PRC GOVERNMENT COULD HAVE A SIGNIFICANT
IMPACT UPON THE BUSINESS WE MAY BE ABLE TO CONDUCT IN THE PRC AND ACCORDINGLY ON
THE RESULTS OF OUR OPERATIONS AND FINANCIAL CONDITION.

Our business operations may be adversely affected by the current and future
political environment in the PRC. The Chinese government exerts substantial
influence and control over the manner in which we must conduct our business
activities. Our ability to operate in China may be adversely affected by changes
in Chinese laws and regulations, including those relating to taxation, import
and export tariffs, raw materials, environmental regulations, land use rights,
property and other matters. Under the current government leadership, the
government of the PRC has been pursuing economic reform policies that encourage
private economic activity and greater economic decentralization. There is no
assurance, however, that the government of the PRC will continue to pursue these
policies, or that it will not significantly alter these policies from time to
time without notice.

OUR OPERATIONS ARE SUBJECT TO PRC LAWS AND REGULATIONS THAT ARE SOMETIMES VAGUE
AND UNCERTAIN. ANY CHANGES IN SUCH PRC LAWS AND REGULATIONS, OR THE
INTERPRETATIONS THEREOF, MAY HAVE A MATERIAL AND ADVERSE EFFECT ON OUR BUSINESS.

The PRC's legal system is a civil law system based on written statutes. Unlike
the common law system prevalent in the United States, decided legal cases have
little value as precedent in China. There are substantial uncertainties
regarding the interpretation and application of PRC laws and regulations,
including but not limited to, the laws and regulations governing our business,
or the enforcement and performance of our arrangements with customers in the
event of the imposition of statutory liens, death, bankruptcy or criminal
proceedings. The Chinese government has been developing a comprehensive system
of commercial laws, and considerable progress has been made in introducing laws
and regulations dealing with economic matters such as foreign investment,
corporate organization and governance, commerce, taxation and trade. However,
because these laws and regulations are relatively new, and because of the
limited volume of published cases and judicial interpretation and their lack of
force as precedents, interpretation and enforcement of these laws and
regulations involve significant uncertainties. New laws and regulations that
affect existing and proposed future businesses may also be applied
retroactively.

Our principal operating subsidiary, Changchun Yongxin Dirui Medical Co., Ltd.,
("Yongxin") is considered a foreign invested enterprise under PRC laws, and as a
result is required to comply with PRC laws and regulations, including laws and
regulations specifically governing the activities and conduct of foreign
invested enterprises. We cannot predict what effect the interpretation of
existing or new PRC laws or regulations may have on our businesses. If the
relevant authorities find us in violation of PRC laws or regulations, they would
have broad discretion in dealing with such a violation, including, without
limitation:

         o        levying fines;

         o        revoking our business license, other licenses or authorities;

         o        requiring that we restructure our ownership or operations; and


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<PAGE>

         o        requiring that we discontinue any portion or all of our
                  business.

THE SCOPE OF OUR BUSINESS LICENSE IN CHINA IS LIMITED, AND WE MAY NOT EXPAND OR
CONTINUE OUR BUSINESS WITHOUT GOVERNMENT APPROVAL AND RENEWAL, RESPECTIVELY.

Our principal operating subsidiary, Yongxin, is a wholly foreign-owned
enterprise, commonly known as a WFOE. A WFOE can only conduct business within
its approved business scope, which ultimately appears on its business license.
Our license permits us to design, manufacture, sell and market pharmaecutial
products throughout the PRC. Any amendment to the scope of our business requires
further application and government approval. In order for us to expand our
business beyond the scope of our license, it will be required to enter into a
negotiation with the authorities for the approval to expand the scope of our
business. We cannot assure investors that Yongxin will be able to obtain the
necessary government approval for any change or expansion of its business.

OUR BUSINESS IS SUBJECT TO A VARIETY OF ENVIRONMENTAL LAWS AND REGULATIONS. OUR
FAILURE TO COMPLY WITH ENVIRONMENTAL LAWS AND REGULATIONS MAY HAVE A MATERIAL
ADVERSE EFFECT ON OUR BUSINESS AND RESULTS OF OPERATIONS.

We are subject to various environmental laws and regulations that require us to
obtain environmental permits and are subject to registration and inspection by
the State Food and Drug Administration of China ("SFDA"). We have a provincial
license issued by the Business Administration Bureau, Jilin Province. Although
we are currently compliant with all provisions of our registrations and
licenses, we cannot assure you that at all times we will be in compliance with
environmental laws and regulations or our environmental permits or that we will
not be required to expend significant funds to comply with, or discharge
liabilities arising under, environmental laws, regulations and permits.
Additionally, we cannot guarantee you that our licenses and registrations will
be renewed. Any non-renewal of any of our required permits and licenses could
result in the termination of our business operations.

RECENT PRC REGULATIONS RELATING TO ACQUISITIONS OF PRC COMPANIES BY FOREIGN
ENTITIES MAY CREATE REGULATORY UNCERTAINTIES THAT COULD RESTRICT OR LIMIT OUR
ABILITY TO OPERATE, INCLUDING OUR ABILITY TO PAY DIVIDENDS.

The PRC State Administration of Foreign Exchange, or SAFE, issued a public
notice in January 2005 concerning foreign exchange regulations on mergers and
acquisitions in China. The public notice states that if an offshore company
controlled by PRC residents intends to acquire a PRC company, such acquisition
will be subject to strict examination by the relevant foreign exchange
authorities. The public notice also states that the approval of the relevant
foreign exchange authorities is required for any sale or transfer by the PRC
residents of a PRC company's assets or equity interests to foreign entities for
equity interests or assets of the foreign entities.

In April 2005, SAFE issued another public notice further explaining the January
notice. In accordance with the April notice, if an acquisition of a PRC company
by an offshore company controlled by PRC residents has been confirmed by a
Foreign Investment Enterprise Certificate prior to the promulgation of the
January notice, the PRC residents must each submit a registration form to the
local SAFE branch with respect to their respective ownership interests in the
offshore company, and must also file an amendment to such registration if the
offshore company experiences material events, such as changes in the share
capital, share transfer, mergers and acquisitions, spin-off transaction or use
of assets in China to guarantee offshore obligations. The April notice also
provides that failure to comply with the registration procedures set forth
therein may result in restrictions on our PRC resident shareholders and
subsidiaries. Pending the promulgation of detailed implementation rules, the
relevant government authorities are reluctant to commence processing any
registration or application for approval required under the SAFE notices.

On August 8, 2006, the PRC Ministry of Commerce ("MOFCOM"), joined by the
State-owned Assets Supervision and Administration Commission of the State
Council, the State Administration of Taxation, the State Administration for
Industry and Commerce, the China Securities Regulatory Commission and SAFE,
released a substantially amended version of the Provisions for Foreign Investors
to Merge with or Acquire Domestic Enterprises (the "Revised M&A Regulations"),
which took effect September 8, 2006. These new rules significantly revised
China's regulatory framework governing onshore-to-offshore restructurings and
foreign acquisitions of domestic enterprises. These new rules signify greater

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PRC government attention to cross-border merger, acquisition and other
investment activities, by confirming MOFCOM as a key regulator for issues
related to mergers and acquisitions in China and requiring MOFCOM approval of a
broad range of merger, acquisition and investment transactions. Further, the new
rules establish reporting requirements for acquisition of control by foreigners
of companies in key industries, and reinforce the ability of the Chinese
government to monitor and prohibit foreign control transactions in key
industries.

These new rules may significantly affect the means by which offshore-onshore
restructurings are undertaken in China in connection with offshore private
equity and venture capital financings, mergers and acquisitions. It is expected
that such transactional activity in China in the near future will require
significant case-by-case guidance from MOFCOM and other government authorities
as appropriate. It is anticipated that application of the new rules will be
subject to significant administrative interpretation, and we will need to
closely monitor how MOFCOM and other ministries apply the rules to ensure its
domestic and offshore activities continue to comply with PRC law. Given the
uncertainties regarding interpretation and application of the new rules, we may
need to expend significant time and resources to maintain compliance.

It is uncertain how our business operations or future strategy will be affected
by the interpretations and implementation of the SAFE notices and new rules. Our
business operations or future strategy could be adversely affected by the SAFE
notices and the new rules. For example, we may be subject to more stringent
review and approval process with respect to our foreign exchange activities.

THE FOREIGN CURRENCY EXCHANGE RATE BETWEEN U.S. DOLLARS AND RENMINBI COULD
ADVERSELY AFFECT OUR FINANCIAL CONDITION.

To the extent that we need to convert U.S. Dollars into Renminbi for our
operational needs, our financial position and the price of our common stock may
be adversely affected should the Renminbi appreciate against the U.S. Dollar at
that time. Conversely, if we decide to convert our Renminbi into U.S. Dollars
for the operational needs or paying dividends on our common stock, the dollar
equivalent of our earnings from our subsidiaries in China would be reduced
should the U.S. Dollar appreciate against the Renminbi.

Until 1994, the Renminbi experienced a gradual but significant devaluation
against most major currencies, including dollars, and there was a significant
devaluation of the Renminbi on January 1, 1994 in connection with the
replacement of the dual exchange rate system with a unified managed floating
rate foreign exchange system. Since 1994, the value of the Renminbi relative to
the U.S. Dollar has remained stable and has appreciated slightly against the
U.S. Dollar. Countries, including the United States, have argued that the
Renminbi is artificially undervalued due to China's current monetary policies
and have pressured China to allow the Renminbi to float freely in world markets.
In July 2005, the PRC government changed its policy of pegging the value of the
Renminbi to the U.S. Dollar. Under the new policy, the Renminbi is permitted to
fluctuate within a narrow and managed band against a basket of designated
foreign currencies. While the international reaction to the Renminbi revaluation
has generally been positive, there remains significant international pressure on
the PRC government to adopt an even more flexible currency policy, which could
result in further and more significant appreciation of the Renminbi against the
dollar.

INFLATION IN THE PRC COULD NEGATIVELY AFFECT OUR PROFITABILITY AND GROWTH.

While the PRC economy has experienced rapid growth, such growth has been uneven
among various sectors of the economy and in different geographical areas of the
country. Rapid economic growth can lead to growth in the money supply and rising
inflation. During the past decade, the rate of inflation in China has been as
high as approximately 20% and China has experienced deflation as low as
approximately minus 2%. If prices for our products and services rise at a rate
that is insufficient to compensate for the rise in the costs of supplies such as
raw materials, it may have an adverse effect on our profitability. In order to
control inflation in the past, the PRC government has imposed controls on bank
credits, limits on loans for fixed assets and restrictions on state bank
lending. The implementation of such policies may impede economic growth. In
October 2004, the People's Bank of China, the PRC's central bank, raised
interest rates for the first time in nearly a decade and indicated in a
statement that the measure was prompted by inflationary concerns in the Chinese
economy. In April 2006, the People's Bank of China raised the interest rate
again. Repeated rises in interest rates by the central bank would likely slow
economic activity in China which could, in turn, materially increase our costs
and also reduce demand for our products and services.


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FAILURE TO COMPLY WITH THE UNITED STATES FOREIGN CORRUPT PRACTICES ACT COULD
SUBJECT US TO PENALTIES AND OTHER ADVERSE CONSEQUENCES.

As our ultimate holding company is a Delaware corporation, we are subject to the
United States Foreign Corrupt Practices Act, which generally prohibits United
States companies from engaging in bribery or other prohibited payments to
foreign officials for the purpose of obtaining or retaining business. Foreign
companies, including some that may compete with us, are not subject to these
prohibitions. Corruption, extortion, bribery, pay-offs, theft and other
fraudulent practices may occur from time-to-time in the PRC. We can make no
assurance, however, that our employees or other agents will not engage in such
conduct for which we might be held responsible. If our employees or other agents
are found to have engaged in such practices, we could suffer severe penalties
and other consequences that may have a material adverse effect on our business,
financial condition and results of operations.

IF WE MAKE EQUITY COMPENSATION GRANTS TO PERSONS WHO ARE PRC CITIZENS, THEY MAY
BE REQUIRED TO REGISTER WITH THE STATE ADMINISTRATION OF FOREIGN EXCHANGE OF THE
PRC, OR SAFE. WE MAY ALSO FACE REGULATORY UNCERTAINTIES THAT COULD RESTRICT OUR
ABILITY TO ADOPT AN EQUITY COMPENSATION PLAN FOR OUR DIRECTORS AND EMPLOYEES AND
OTHER PARTIES UNDER PRC LAW.

On April 6, 2007, SAFE issued the "Operating Procedures for Administration of
Domestic Individuals Participating in the Employee Stock Ownership Plan or Stock
Option Plan of An Overseas Listed Company, also know as "Circular 78." It is not
clear whether Circular 78 covers all forms of equity compensation plans or only
those which provide for the granting of stock options. For any plans which are
so covered and are adopted by a non-PRC listed company after April 6, 2007,
Circular 78 requires all participants who are PRC citizens to register with and
obtain approvals from SAFE prior to their participation in the plan. In
addition, Circular 78 also requires PRC citizens to register with SAFE and make
the necessary applications and filings if they participated in an overseas
listed company's covered equity compensation plan prior to April 6, 2007. We
intend to adopt an equity compensation plan in the future and make option grants
to our officers and directors, most of who are PRC citizens. Circular 78 may
require our officers and directors who receive option grants and are PRC
citizens to register with SAFE. We believe that the registration and approval
requirements contemplated in Circular 78 will be burdensome and time consuming.
If it is determined that any of our equity compensation plans are subject to
Circular 78, failure to comply with such provisions may subject us and
participants of our equity incentive plan who are PRC citizens to fines and
legal sanctions and prevent us from being able to grant equity compensation to
our PRC employees. In that case, our ability to compensate our employees and
directors through equity compensation would be hindered and our business
operations may be adversely affected.

ANY RECURRENCE OF SEVERE ACUTE RESPIRATORY SYNDROME (SARS), AVIAN FLU, OR
ANOTHER WIDESPREAD PUBLIC HEALTH PROBLEM, IN THE PRC COULD ADVERSELY AFFECT OUR
OPERATIONS.

A renewed outbreak of SARS, Avian Flu or another widespread public health
problem in China, where all of our manufacturing facilities are located and
where the substantial portion of our sales occur, could have a negative effect
on our operations. Our business is dependent upon its ability to continue to
manufacture products. Such an outbreak could have an impact on our operations as
a result of:

         o        quarantines or closures of some of our manufacturing
                  facilities, which would severely disrupt our operations,

         o        the sickness or death of our key officers and employees, and

         o        a general slowdown in the Chinese economy.

Any of the foregoing events or other unforeseen consequences of public health
problems could adversely affect our operations.

A DOWNTURN IN THE ECONOMY OF THE PRC MAY SLOW OUR GROWTH AND PROFITABILITY.

The growth of the Chinese economy has been uneven across geographic regions and
economic sectors. There can be no assurance that growth of the Chinese economy
will be steady or that any downturn will not have a negative effect on our
business, especially if it results in either a decreased use of our products or
in pressure on us to lower our prices.


                                       22


<PAGE>

BECAUSE OUR BUSINESS IS LOCATED IN THE PRC, WE MAY HAVE DIFFICULTY ESTABLISHING
ADEQUATE MANAGEMENT, LEGAL AND FINANCIAL CONTROLS, WHICH IT IS REQUIRED TO DO IN
ORDER TO COMPLY WITH U.S. SECURITIES LAWS.

PRC companies have historically not adopted a Western style of management and
financial reporting concepts and practices, which includes strong corporate
governance, internal controls and, computer, financial and other control
systems. Most of our middle and top management staff are not educated and
trained in the Western system, and we may difficulty hiring new employees in the
PRC with such training. In addition, we may have difficulty in hiring and
retaining a sufficient number of qualified employees to work in the PRC. As a
result of these factors, we may experience difficulty in establishing
management, legal and financial controls, collecting financial data and
preparing financial statements, books of account and corporate records and
instituting business practices that meet Western standards. Therefore, we may,
in turn, experience difficulties in implementing and maintaining adequate
internal controls as required under Section 404 of the Sarbanes-Oxley Act of
2002. This may result in significant deficiencies or material weaknesses in our
internal controls which could impact the reliability of its financial statements
and prevent us from complying with SEC rules and regulations and the
requirements of the Sarbanes-Oxley Act of 2002. Any such deficiencies,
weaknesses or lack of compliance could have a materially adverse effect on our
business.

INVESTORS MAY EXPERIENCE DIFFICULTIES IN EFFECTING SERVICE OF LEGAL PROCESS,
ENFORCING FOREIGN JUDGMENTS OR BRINGING ORIGINAL ACTIONS IN CHINA BASED UPON
U.S. LAWS, INCLUDING THE FEDERAL SECURITIES LAWS OR OTHER FOREIGN LAWS AGAINST
US OR OUR MANAGEMENT.

Most of our current operations, including the manufacturing and distribution of
our products, are conducted in China. Moreover, all but one of our directors and
officers are nationals and residents of China or Hong Kong. All or substantially
all of the assets of these persons are located outside the United States and in
the PRC. As a result, it may not be possible to effect service of process within
the United States or elsewhere outside China upon these persons. In addition,
uncertainty exists as to whether the courts of China would recognize or enforce
judgments of U.S. courts obtained against us or such officers and/or directors
predicated upon the civil liability provisions of the securities laws of the
United States or any state thereof, or be competent to hear original actions
brought in China against us or such persons predicated upon the securities laws
of the United States or any state thereof.

RISKS RELATED TO OUR CAPITAL STRUCTURE

IF WE ARE FOUND TO BE IN VIOLATION OF CURRENT OR FUTURE PRC LAWS, RULES OR
REGULATIONS REGARDING THE LEGALITY OF FOREIGN INVESTMENT IN THE PRC WITH RESPECT
TO OUR OWNERSHIP STRUCTURE, WE COULD BE SUBJECT TO SEVERE PENALTIES.

We conduct business operations solely in the PRC through our wholly owned
subsidiary, Yongxin, and our 90% owned subsidiary, Dingjian. We are a Delaware
corporation, most of our direct and indirect subsidiaries are companies
organized under the laws of the PRC. We are considered a foreign person or
foreign invested enterprise under PRC law. As a result, we are subject to PRC
law limitations on foreign ownership of Chinese companies. There are substantial
uncertainties regarding the interpretation and application of PRC laws and
regulations, including, but not limited to, the laws and regulations governing
our pharmaceutical distribution and retail drugstore businesses.

Accordingly, it is possible that the relevant PRC authorities could, at any
time, assert that any portion of our existing or future ownership structure and
businesses violate existing or future PRC laws, regulations or policies. It is
also possible that the new laws or regulations governing our business operations
in the PRC that have been adopted or may be adopted in the future will prohibit
or restrict foreign investment in, or other aspects of, any of our PRC
subsidiaries' and our current or proposed businesses and operations. The
effectiveness of newly enacted laws, regulations or amendments may be delayed,
resulting in detrimental reliance by foreign investors. New laws and regulations
that affect existing and proposed future businesses may also be applied
retroactively.

The PRC government has broad discretion in dealing with violations of laws and
regulations, including:

         o        levying fines;

                                       23


<PAGE>

         o        confiscating our income;
         o        revoking business and other licenses;
         o        requiring us to discontinue any portion or all of our
                  business;
         o        requiring us to restructure our ownership structure or
                  operations; and
         o        requiring actions necessary for compliance.

In particular, licenses and permits issued or granted to us by relevant
governmental bodies may be revoked at a later time by higher regulatory bodies.
We cannot predict the effect of the interpretation of existing or new PRC laws
or regulations on our businesses. We cannot assure you that our current
ownership and operating structure would not be found in violation of any current
or future PRC laws or regulations. As a result, we may be subject to sanctions,
including fines, and could be required to restructure our operations or cease to
provide certain services. Any of these or similar actions could significantly
disrupt our business operations or restrict us from conducting a substantial
portion of our business operations, which could materially and adversely affect
our business, financial condition and results of operations.

WE MAY BE ADVERSELY AFFECTED BY COMPLEXITY, UNCERTAINTIES AND CHANGES IN PRC
REGULATION OF PHARMACEUTICAL BUSINESSES AND DRUGSTORE COMPANIES, INCLUDING
LIMITATIONS ON OUR ABILITY TO OWN KEY ASSETS.

The PRC government regulates the pharmaceutical and drugstore industries
including foreign ownership of, and the licensing and permit requirements
pertaining to, companies operating in these industries. These laws and
regulations are relatively new and evolving, and their interpretation and
enforcement involve significant uncertainty. As a result, in certain
circumstances it may be difficult to determine what actions or omissions may be
deemed to be a violation of applicable laws and regulations. Issues, risks and
uncertainties relating to PRC government regulation of the pharmaceutical
industry include those relating evolving licensing practices. Permits, licenses
or operations at our company may be subject to challenge, which may disrupt our
business, or subject us to sanctions, requirements to increase capital or other
conditions or enforcement, or compromise enforceability of related contractual
arrangements, or have other harmful effects on us. Although we believe we comply
with current PRC regulations, we cannot assure you that our ownership and
operating structure comply with PRC licensing, registration or other regulatory
requirements, with existing policies or with requirements or policies that may
be adopted in the future. If the PRC government determines that we do not comply
with applicable law, it could take other regulatory or enforcement actions
against us that could be harmful to our business.

THERE IS CURRENTLY A LIMITED TRADING MARKET FOR OUR COMMON STOCK, AND THERE IS
NO ASSURANCE OF A MORE ESTABLISHED PUBLIC TRADING MARKET, WHICH WOULD ADVERSELY
AFFECT THE ABILITY OF OUR INVESTORS TO SELL THEIR SECURITIES IN THE PUBLIC
MARKET.

While, our common stock is currently listed on the Over-the-Counter Bulletin
Board ("OTCBB"), there is currently a very limited trading market for our common
stock. The Financial Industry Regulatory Authority has enacted changes that
limit quotations on the OTCBB to securities of issuers that are current in their
reports filed with the Securities and Exchange Commission. The effect on the
OTCBB of these rule changes and other proposed changes cannot be determined at
this time. The OTCBB is an inter-dealer, over-the-counter market that provides
significantly less liquidity than the NASDAQ Global Market (the "NASDAQ Global
Market"). Quotes for stocks included on the OTCBB are not listed in the
financial sections of newspapers as are those for the NASDAQ Global Market.
Therefore, prices for securities traded solely on the OTCBB may be difficult to
obtain and holders of common stock may be unable to resell their securities at
or near their original offering price or at any price.

Market prices for our common stock after the Share Exchange will be influenced
by a number of factors, including:

         o        Our ability to obtain additional financing and, if available,
                  the terms and conditions of the financing;
         o        Our financial position and results of operations;
         o        Concern as to, or other evidence of, the reliability and
                  safety of our products and services or our competitors'
                  products and services;
         o        Announcements of innovations or new products or services by us
                  or our competitors;

                                       24


<PAGE>

         o        U.S. federal and state governmental regulatory actions and the
                  impact of such requirements on our business;
         o        Chinese governmental regulatory actions and the impact of such
                  requirements on our business;
         o        The development of litigation against us;
         o        Period-to-period fluctuations in our operating results;
         o        Changes in estimates of our performance by any securities
                  analysts;
         o        The issuance of new equity securities pursuant to a future
                  offering or acquisition;
         o        Changes in interest rates and/or foreign currency exchange
                  rates;
         o        Competitive developments, including announcements by
                  competitors of new products or services or significant
                  contracts, acquisitions, strategic partnerships, joint
                  ventures or capital commitments;
         o        Investor perceptions of us; and
         o        General economic and other national and international
                  conditions.

SHARES ELIGIBLE FOR FUTURE SALE MAY ADVERSELY AFFECT THE MARKET PRICE OF OUR
COMMON STOCK, AS THE FUTURE SALE OF A SUBSTANTIAL AMOUNT OF OUTSTANDING STOCK IN
THE PUBLIC MARKETPLACE COULD REDUCE THE PRICE OF OUR COMMON STOCK.

We may file a registration statement to register the shares issued to the
Yongxin shareholders pursuant to the Share Exchange. All of the shares included
in an effective registration statement as described above may be freely sold and
transferred except if subject to a lock up agreement.

The shareholders who received shares of our common stock in the Share Exchange
and/or their designees may be eligible to sell all or some of our shares of
common stock by means of ordinary brokerage transactions in the open market
pursuant to Rule 144, promulgated under the Securities Act ("Rule 144"), subject
to certain limitations. In general, pursuant to Rule 144, a non-affiliate
stockholder (or stockholders whose shares are aggregated) who has satisfied a
six-month holding period, and provided that there is current public information
available, may sell all of its securities. Rule 144 also permits the sale of
securities, without any limitations, by a non-affiliate that has satisfied a
one-year holding period. Any substantial sale of common stock pursuant to any
resale prospectus or Rule 144 may have an adverse effect on the market price of
our common stock by creating an excessive supply.

FOLLOWING THE SHARE EXCHANGE, THE FORMER PRINCIPAL SHAREHOLDERS OF YONGXIN HAVE
SIGNIFICANT INFLUENCE OVER US.

The former shareholders of Yongxin and their designees beneficially own or
control a majority of our outstanding shares as of April 15, 2008. If these
stockholders were to act as a group, they would have a controlling influence in
determining the outcome of any corporate transaction or other matters submitted
to our stockholders for approval, including mergers, consolidations and the sale
of all or substantially all of our assets, election of directors, and other
significant corporate actions. Such shareholders may also have the power to
prevent or cause a change in control. In addition, without the consent of the
former Yongxin shareholders, we could be prevented from entering into
transactions that could be beneficial to us. The interests of the former Yongxin
shareholders may differ from the interests of our other stockholders.

IF WE FAIL TO MAINTAIN EFFECTIVE INTERNAL CONTROLS OVER FINANCIAL REPORTING, THE
PRICE OF OUR COMMON STOCK MAY BE ADVERSELY AFFECTED.

We are required to establish and maintain appropriate internal controls over
financial reporting. Failure to establish those controls, or any failure of
those controls once established, could adversely impact our public disclosures
regarding our business, financial condition or results of operations. Any
failure of these controls could also prevent us from maintaining accurate
accounting records and discovering accounting errors and financial frauds. Rules
adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act of 2002
require annual assessment of our internal control over financial reporting, and
attestation of this assessment by our independent registered public accountants.
The SEC extended the compliance dates for non-accelerated filers, as defined by
the SEC. Accordingly, we believe that the annual assessment of our internal
controls requirement will first apply to our annual report for the 2007 fiscal
year and the attestation requirement of management's assessment by our
independent registered public accountants will first apply to our annual report
for the 2008 fiscal year. The standards that must be met for management to
assess the internal control over financial reporting as effective are new and
complex, and require significant documentation, testing and possible remediation
to meet the detailed standards. We may encounter problems or delays in

                                       25


<PAGE>

completing activities necessary to make an assessment of our internal control
over financial reporting. In addition, the attestation process by our
independent registered public accountants is new and we may encounter problems
or delays in completing the implementation of any requested improvements and
receiving an attestation of our assessment by our independent registered public
accountants. If we cannot assess our internal control over financial reporting
as effective, or our independent registered public accountants are unable to
provide an unqualified attestation report on such assessment, investor
confidence and share value may be negatively impacted.

In addition, management's assessment of internal controls over financial
reporting may identify weaknesses and conditions that need to be addressed in
our internal controls over financial reporting or other matters that may raise
concerns for investors. Any actual or perceived weaknesses and conditions that
need to be addressed in our internal control over financial reporting,
disclosure of management's assessment of our internal controls over financial
reporting, or disclosure of our public accounting firm's attestation to or
report on management's assessment of our internal controls over financial
reporting may have an adverse impact on the price of our common stock.

THE FOREIGN CURRENCY EXCHANGE RATE BETWEEN U.S. DOLLARS AND RENMINBI COULD
ADVERSELY AFFECT OUR FINANCIAL CONDITION.

To the extent that we need to convert U.S. Dollars into Renminbi for our
operational needs, our financial position and the price of our common stock may
be adversely affected should the Renminbi appreciate against the U.S. Dollar at
that time. Conversely, if we decide to convert our Renminbi into U.S. Dollars
for our operational needs or paying dividends on our common stock, the U.S.
Dollar equivalent of our earnings from our subsidiaries in China would be
reduced should the U.S. Dollar appreciate against the Renminbi.

Until 1994, the Renminbi experienced a gradual but significant devaluation
against most major currencies, including dollars, and there was a significant
devaluation of the Renminbi on January 1, 1994 in connection with the
replacement of the dual exchange rate system with a unified managed floating
rate foreign exchange system. Since 1994, the value of the Renminbi relative to
the U.S. Dollar has remained stable and has appreciated slightly against the
U.S. Dollar. Countries, including the United States, have argued that the
Renminbi is artificially undervalued due to China's current monetary policies
and have pressured China to allow the Renminbi to float freely in world markets.
In July 2005, the PRC government changed its policy of pegging the value of the
Renminbi to the dollar. Under the new policy the Renminbi is permitted to
fluctuate within a narrow and managed band against a basket of designated
foreign currencies. While the international reaction to the Renminbi revaluation
has generally been positive, there remains significant international pressure on
the PRC government to adopt an even more flexible currency policy, which could
result in further and more significant appreciation of the Renminbi against the
dollar.

WE MAY NOT BE ABLE TO ACHIEVE THE BENEFITS WE EXPECT TO RESULT FROM THE SHARE
EXCHANGE.

On April 12, 2008, we entered into the Second Amendment to the Share Exchange
Agreement with Yongxin, effective November 16, 2007, and all of the shareholders
of Yongxin, pursuant to which we agreed to acquire 80% of the issued and
outstanding equity interest of Yongxin in exchange for shares of our common
stock. On November 16, 2007, the Share Exchange closed, Yongxin became our
80%-owned subsidiary and we assumed the business operations Yongxin. We also
have a new Board of Directors and management consisting of persons from Yongxin
and changed our corporate name from "Digital Learning Management Corporation" to
"Nutradyne Group, Inc."

We may not realize the benefits that we hoped to receive as a result of the
Share Exchange, which include:

         o        access to the capital markets of the United States;
         o        the increased market liquidity expected to result from
                  exchanging stock in a private company for securities of a
                  public company;
         o        the ability to use registered securities to make acquisitions
                  of assets or businesses;
         o        increased visibility in the financial community;
         o        enhanced access to the capital markets;
         o        improved transparency of operations; and
         o        perceived credibility and enhanced corporate image of being a
                  publicly traded company.


                                       26


<PAGE>

There can be no assurance that any of the anticipated benefits of the Share
Exchange will be realized in respect to our new business operations. In
addition, the attention and effort devoted to achieving the benefits of the
Share Exchange and attending to the obligations of being a public company, such
as reporting requirements and securities regulations, could significantly divert
management's attention from other important issues, which could materially and
adversely affect our operating results or stock price in the future.

COMPLIANCE WITH CHANGING REGULATION OF CORPORATE GOVERNANCE AND PUBLIC
DISCLOSURE WILL RESULT IN ADDITIONAL EXPENSES.

Changing laws, regulations and standards relating to corporate governance and
public disclosure, including the Sarbanes-Oxley Act of 2002 and related SEC
regulations, have created uncertainty for public companies and significantly
increased the costs and risks associated with accessing the public markets and
public reporting. Our management team will need to invest significant management
time and financial resources to comply with both existing and evolving standards
for public companies, which will lead to increased general and administrative
expenses and a diversion of management time and attention from revenue
generating activities to compliance activities.

OUR COMMON STOCK IS CONSIDERED A "PENNY STOCK," AND THEREBY IS SUBJECT TO
ADDITIONAL SALE AND TRADING REGULATIONS THAT MAY MAKE IT MORE DIFFICULT TO SELL.

Our common stock is currently considered to be a "penny stock" because it does
not qualify for one of the exemptions from the definition of "penny stock" under
Section 3a51-1 of the Securities Exchange Act for 1934, as amended (the
"Exchange Act"). Our common stock is considered a "penny stock" because it meets
one or more of the following conditions (i) the stock trades at a price less
than $5.00 per share; (ii) it is NOT traded on a "recognized" national exchange;
(iii) it is NOT quoted on the NASDAQ Capital Market, or even if so, has a price
less than $5.00 per share; or (iv) is issued by a company that has been in
business less than three years with net tangible assets less than $5 million.

The principal result or effect of being designated a "penny stock" is that
securities broker-dealers participating in sales of our common stock will be
subject to the "penny stock" regulations set forth in Rules 15-2 through 15g-9
promulgated under the Exchange Act. For example, Rule 15g-2 requires
broker-dealers dealing in penny stocks to provide potential investors with a
document disclosing the risks of penny stocks and to obtain a manually signed
and dated written receipt of the document at least two business days before
effecting any transaction in a penny stock for the investor's account. Moreover,
Rule 15g-9 requires broker-dealers in penny stocks to approve the account of any
investor for transactions in such stocks before selling any penny stock to that
investor. This procedure requires the broker-dealer to (i) obtain from the
investor information concerning his or her financial situation, investment
experience and investment objectives; (ii) reasonably determine, based on that
information, that transactions in penny stocks are suitable for the investor and
that the investor has sufficient knowledge and experience as to be reasonably
capable of evaluating the risks of penny stock transactions; (iii) provide the
investor with a written statement setting forth the basis on which the
broker-dealer made the determination in (ii) above; and (iv) receive a signed
and dated copy of such statement from the investor, confirming that it
accurately reflects the investor's financial situation, investment experience
and investment objectives. Compliance with these requirements may make it more
difficult and time consuming for holders of our common stock to resell their
shares to third parties or to otherwise dispose of them in the market or
otherwise.

WE DO NOT FORESEE PAYING CASH DIVIDENDS IN THE FORESEEABLE FUTURE AND, AS A
RESULT, OUR INVESTORS' SOLE SOURCE OF GAIN, IF ANY, WILL DEPEND ON CAPITAL
APPRECIATION, IF ANY.

We do not plan to declare or pay any cash dividends on our shares of common
stock in the foreseeable future and currently intend to retain any future
earnings for funding growth. As a result, investors should not rely on an
investment in our securities if they require the investment to produce dividend
income. Capital appreciation, if any, of our shares may be investors' sole
source of gain for the foreseeable future. Moreover, investors may not be able
to resell their shares of our common stock at or above the price they paid for
them.

                                       27


<PAGE>

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2.  PROPERTIES

Our corporate headquarters are located in the City of Industry, California in
the United States at 927 Canada Court, City of Industry, CA 91748. We also lease
office space in the in the Jilin Province under a lease that expires on June 30,
2020.

We currently operate one national distribution center located in Changchun that
provides us with 43,000 square meters of storage space. We lease our
distribution center under a long-term lease agreement that expires in 2020 and
do not anticipate any material difficulties in renewing our lease upon its
expiration.

Currently, all of our retail drugstores are located in the Jilin Province in
China. We lease substantially all of our store locations from various
third-parties under a total of 84 leases with terms ranging from 1 to 5 years,
which are renewed upon expiration. The total combined space for our stores
consisted of 10,794 square meters. Twenty-seven (27) of our store leases expire
in 2008, eighteen (18) expire in 2009, three (3) expire in 2010, eighteen (18)
expire in 2011 and thirteen (13) expire in 2012. We must negotiate with the
landlords to extend our leases or enter into new leases upon their expiration,
at which time the landlords may request a rent increase. Under applicable PRC
law, we have priority over other potential lessees with respect to the leased
store space on the same terms. Our retail stores are relatively small in size
and are generally easily movable to new locations. We do not expect our
drugstore operations to be adversely affected by any failure to renew or enter
into new leases.

ITEM 3.  LEGAL PROCEEDINGS

We are currently not a party to any material legal proceedings, and we are not
aware of any threatened material legal proceedings against us. We may from time
to time become a party to various legal or administrative proceedings arising in
the ordinary course of our business.

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

In September 2007, we distributed a Consent Solicitation Statement to our
stockholders of record on June 19, 2007 in connection with the solicitation of
stockholder consents by our board of directors, in lieu of a meeting of
stockholders, with respect to:

         (i)      the approval of a reverse split of our common stock in a ratio
                  of one (1) new share for every 11.97492 existing shares of
                  common stock;

         (ii)     the approval of amendments to our Certificate of Incorporation
                  to: (a) effect the 1-for-11.97492 reverse stock split with
                  respect to our common stock while maintaining the current
                  number of authorized shares of common stock, and (b) change
                  the name of the Company to "Nutradyne Group, Inc." (the
                  "Amendment"); and

         (iii)    the entrance into a Share Exchange Agreement with Yongxin and
                  the shareholders of Yongxin.

On October 16, 2007, we were informed by our transfer agent, Pacific Stock
Transfer that the above three matters were approved by our stockholders by the
following margins:

<TABLE>
<CAPTION>
<S>     <C>

RESOLUTION                                          FOR       AGAINST    ABSTAIN     TOTAL
                                                -----------------------------------------------
(i)   Approval of Reverse Stock Split            38,397,586   17,500        0      38,415,086
(ii)  Amendment of Certificate of Incorporation  38,394,586   17,500      3,000    38,415,086
(iii) Entrance into Share Exchange Agreement     38,402,086   13,000        0      38,415,086
</TABLE>


                                       28


<PAGE>


                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK, RELATED STOCKHOLDER MATTERS AND
        ISSUER PURCHASES OF EQUITY SECURITIES

The shares of our common stock are currently quoted for trading on the
Over-the-Counter Bulletin Board, or OTCBB, under the symbol "NTRG.OB".

On October 25, 2007, we effected a 1-for-11.97492 reverse split of our common
stock. At the time of the reverse stock split, each 11.97492 shares of our
issued and outstanding common stock were combined into one share of our common
stock. The reverse stock split did not change the number of authorized shares of
our common stock. All common share and per share amounts throughout this Report
have been adjusted to give effect to this reverse 1-for-11.97492 stock split.

The following table sets forth the high and low bid prices for our common stock
since for the last two years.

        ------------- --------------------- ------------------- ----------------
            YEAR            QUARTER                HIGH               LOW
        ------------- --------------------- ------------------- ----------------
            2007            First                 $0.07              $0.06
            2007            Second                [___]              [___]
            2007            Third                 [___]              [___]
            2007            Fourth                $1.55              $1.55
            2006            First                 $0.19              $0.02
            2006            Second                $0.70              $0.17
            2006            Third                 $0.25              $0.02
            2006            Fourth                $0.12              $0.01


On April 14, 2008, the last sale price of our common stock as reported on the
OTCBB was $0.56 The price of our common stock will likely fluctuate in the
future. The stock market in general has experienced extreme stock price
fluctuations in the past few years. In some cases, these fluctuations have been
unrelated to the operating performance of the affected companies. Many companies
have experienced dramatic volatility in the market prices of their common stock.
We believe that a number of factors, both within and outside our control, could
cause the price of our common stock to fluctuate, perhaps substantially. Factors
such as the following could have a significant adverse impact on the market
price of our common stock:

         o        Our ability to obtain additional financing and, if available,
                  the terms and conditions of the financing;
         o        Our financial position and results of operations;
         o        Concern as to, or other evidence of, the reliability and
                  safety of our products and services or our competitors'
                  products and services;
         o        Announcements of innovations or new products or services by us
                  or our competitors;
         o        U.S. federal and state governmental regulatory actions and the
                  impact of such requirements on our business;
         o        Chinese governmental regulatory actions and the impact of such
                  requirements on our business;
         o        The development of litigation against us;
         o        Period-to-period fluctuations in our operating results;
         o        Changes in estimates of our performance by any securities
                  analysts;
         o        The issuance of new equity securities pursuant to a future
                  offering or acquisition;
         o        Changes in interest rates;
         o        Competitive developments, including announcements by
                  competitors of new products or services or significant
                  contracts, acquisitions, strategic partnerships, joint
                  ventures or capital commitments;
         o        Investor perceptions of us; and
         o        General economic and other national conditions.

STOCKHOLDERS

As of December 31, 2007, we had 47 stockholders of record of our common stock
and two stockholders of record of our Series A Preferred Stock.


                                       29


<PAGE>

DIVIDENDS

We do not expect to declare or pay any cash dividends on our common stock in the
foreseeable future, and we currently intend to retain future earnings, if any,
to finance the expansion of our business. The decision whether to pay cash
dividends on our common stock will be made by our board of directors, in its
discretion, and will depend on our financial condition, operating results,
capital requirements and other factors that the board of directors considers
significant. We did not pay any cash dividends during the years ended December
31, 2007 or 2006.

TRANSFER AGENT

The transfer agent and registrar for our common stock is Pacific Stock Transfer,
Inc.

ADDITIONAL INFORMATION

Copies of our annual reports, quarterly reports, current reports, and any
amendments to those reports, are available free of charge on the Internet at
www.sec.gov. All statements made in any of our filings, including all
forward-looking statements, are made as of the date of the document in which the
statement is included, and we do not assume or undertake any obligation to
update any of those statements or documents unless we are required to do so by
law.


                                       30


<PAGE>


ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA Not applicable to smaller reporting
companies.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR CONSOLIDATED
FINANCIAL STATEMENTS AND RELATED NOTES INCLUDED ELSEWHERE IN THIS REPORT. THIS
REPORT CONTAINS FORWARD-LOOKING STATEMENTS. THE WORDS "ANTICIPATED," "BELIEVE,"
"EXPECT, "PLAN," "INTEND," "SEEK," "ESTIMATE," "PROJECT," "COULD," "MAY," AND
SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE
STATEMENTS INCLUDE, AMONG OTHERS, INFORMATION REGARDING FUTURE OPERATIONS,
FUTURE CAPITAL EXPENDITURES, AND FUTURE NET CASH FLOW. SUCH STATEMENTS REFLECT
OUR MANAGEMENT'S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL
PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, INCLUDING, WITHOUT LIMITATION,
GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN FOREIGN, POLITICAL, SOCIAL,
AND ECONOMIC CONDITIONS, REGULATORY INITIATIVES AND COMPLIANCE WITH GOVERNMENTAL
REGULATIONS, THE ABILITY TO ACHIEVE FURTHER MARKET PENETRATION AND ADDITIONAL
CUSTOMERS, AND VARIOUS OTHER MATTERS, MANY OF WHICH ARE BEYOND OUR CONTROL.
SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES OCCUR, OR SHOULD UNDERLYING
ASSUMPTIONS PROVE TO BE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY AND
ADVERSELY FROM THOSE ANTICIPATED, BELIEVED, ESTIMATED OR OTHERWISE INDICATED.
CONSEQUENTLY, ALL OF THE FORWARD-LOOKING STATEMENTS MADE IN THIS REPORT ARE
QUALIFIED BY THESE CAUTIONARY STATEMENTS AND THERE CAN BE NO ASSURANCE OF THE
ACTUAL RESULTS OR DEVELOPMENTS.

The following discussion relates to a discussion of the financial condition and
results of operations of Changchun Yongxin Dirui Medical Co., Ltd. (referred to
herein as "Yongxin"). This management's discussion and analysis of financial
condition and results of operations should be read in conjunction with its
financial statements and the related notes, and the other financial information
included in this current report.

OVERVIEW

We were incorporated in the state of Delaware in 1999 under the name
FreePCSQuote.Com, Inc. to offer Internet technology solutions and services to
other businesses. On November 16, 2007, we closed a share exchange transaction,
described below, pursuant to which (i) we became the 80% parent of Yongxin and
its subsidiaries; (ii) assumed the operations of Yongxin and its subsidiaries,
and (iii) changed our name from Digital Learning Management Corporation to
Nutradyne Group, Inc. Our corporate offices are located at 927 Canada Court,
City of Industry, CA 91748.

On December 21, 2006, Digital Learning Management Corporation ("DLMC") entered
into a Share Exchange Agreement with Changchun Yongxin Dirui Medical Co., Ltd.
("Yongxin") and all of its shareholders. On June 15, 2007, DLMC entered into an
Amended Share Exchange Agreement with Yongxin and its shareholders. On April 12,
2008, Nutradyne, Yongxin and the Yongxin shareholders entered into the Second
Amendment to the Share Exchange Agreement, effective November 16, 2007 (the
"Second Amendment"). Pursuant to the agreements, DLMC agreed to issue an
aggregate of 21,000,000 shares of its common stock and 5,000,000 of its Series A
Convertible Preferred Stock in exchange for 80% of the issued and outstanding
equity interest of Yongxin (the "Share Exchange"). On November 16, 2007, the
Share Exchange closed and Yongxin became an 80%-owned subsidiary of DLMC, which
immediately changed its name to "Nutradyne Group, Inc." A total of 21,000,000
share of common stock and 5,000,000 shares of Series A Preferred Stock were
issued to the former shareholders of Yongxin and/or their designees.

For accounting purposes, this transaction is being accounted for as a reverse
merger, since the stockholders of Yongxin own a majority of the issued and
outstanding shares of common stock of Nutradyne, and the directors and executive
officers of Yongxin became the directors and executive officers of Nutradyne.
This acquisition was accounted for at historical cost in a manner similar to
that in pooling of interests method since after the acquisition, the former
shareholders of Yongxin acquired majority of the outstanding shares of the
Company. The financial statements of the legal acquirer are not significant;
therefore, no pro forma financial information is submitted. Thus, the historical
financial statements are still those of "Changchun Yongxin Dirui Medical Co,
Inc. & Subsidiaries".


                                       31


<PAGE>

Yongxin was established in 1993 and is located in Changchun City, Jilin Province
in the PRC. Through Yongxin and its subsidiaries, we engage in the manufacture
and distribution of ginseng-based herbal products and in the wholesale and
retail distribution of pharmaceutical products, medical equipment, over-the
counter medicines and other health-care related items. We have established a
distribution center in the Jilin Province in the PRC that can store over 15,000
types of products and process over 30,000 orders per day for our wholesale
business customers. Our network of retail drugstores in China carry over 10,000
different types of products, including our proprietary brands of ginseng-based
herbal products, service an average of 4,220 customers per day. We currently
manufacture 4 types of our ginseng-based products.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The SEC defines critical accounting policies as those that are, in management's
view, most important to the portrayal of our financial condition and results of
operations and those that require significant judgments and estimates.

The preparation of these consolidated financial statements requires our
management to make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenues and expenses, as well as the disclosure of
contingent assets and liabilities at the date of our financial statements. We
base our estimates on historical experience, actuarial valuations and various
other factors that we believe to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying value of
assets and liabilities that are not readily apparent from other sources. Some of
those judgments can be subjective and complex and, consequently, actual results
may differ from these estimates under different assumptions or conditions. While
for any given estimate or assumption made by our management there may be other
estimates or assumptions that are reasonable, we believe that, given the current
facts and circumstances, it is unlikely that applying any such other reasonable
estimate or assumption would materially impact the financial statements. The
accounting principles we utilized in preparing our consolidated financial
statements conform in all material respects to generally accepted accounting
principles in the United States of America.

USE OF ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles in the United States ("GAAP") requires
management to make certain 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. Significant estimates include collectibility of accounts
receivable, accounts payable, sales returns and recoverability of long-term
assets..

ACCOUNTS RECEIVABLE. The Company maintains reserves for potential credit losses
on accounts receivable. Management reviews the composition of accounts
receivable and analyzes historical bad debts, customer concentrations, customer
credit worthiness, current economic trends and changes in customer payment
patterns to evaluate the adequacy of these reserves. Reserves are recorded
primarily on a specific identification basis.

INVENTORIES. Inventories are valued on a lower of weighted average cost or
market basis. Inventory includes product cost, inbound freight, warehousing
costs and vendor allowances not included as a reduction of advertising expense.
The Management compares the cost of inventories with the market value and
allowance is made for writing down their inventories to market value, if lower.
Work in process inventories include the cost of raw materials and outsource
processing fees.

IMPAIRMENT OF LONG LIVED ASSETS. Effective January 1, 2002, the Company adopted
Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("SFAS 144"), which addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets and supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of," and the accounting and
reporting provisions of APB Opinion No. 30, "Reporting the Results of Operations
for a Disposal of a Segment of a Business." The Company periodically evaluates
the carrying value of long-lived assets to be held and used in accordance with
SFAS 144. SFAS 144 requires impairment losses to be recorded on long-lived
assets used in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less than
the assets' carrying amounts. In that event, a loss is recognized based on the
amount by which the carrying amount exceeds the fair market value of the
long-lived assets. Loss on long-lived assets to be disposed of is determined in
a similar manner, except that fair market values are reduced for the cost of
disposal.


                                       32


<PAGE>

REVENUE RECOGNITION. The Company's revenue recognition policies are in
compliance with Staff accounting bulletin (SAB) 104. Sales revenue is recognized
at the date of shipment to customers when a formal arrangement exists, the price
is fixed or determinable, the delivery is completed, no other significant
obligations of the Company exist and collectibility is reasonably assured. The
Company recognizes revenue net of an allowance for estimated returns, at the
time the merchandise is sold or services performed. The allowance for sales
returns is estimated based on the Company's historical experience. Sales taxes
are presented on a net basis (excluded from revenues and costs). Payments
received before all of the relevant criteria for revenue recognition are
satisfied are recorded as unearned revenue.

INCOME TAXES. The Company utilizes SFAS No. 109, "Accounting for Income Taxes,"
which requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred income taxes
are recognized for the tax consequences in future years of differences between
the tax basis of assets and liabilities and their financial reporting amounts at
each period end based on enacted tax laws and statutory tax rates applicable to
the periods in which the differences are expected to affect taxable income.
Valuation allowances are established, when necessary, to reduce deferred tax
assets to the amount expected to be realized.

The Company accounts for income taxes using an asset and liability approach
which allows for the recognition and measurement of deferred tax assets based
upon the likelihood of realization of tax benefits in future years. Under the
asset and liability approach, deferred taxes are provided for the net tax
effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax
purposes. A valuation allowance is provided for deferred tax assets if it is
more likely than not these items will either expire before the Company is able
to realize their benefits, or that future deductibility is uncertain.

The Company records a valuation allowance for deferred tax assets, if any, based
on its estimates of its future taxable income as well as its tax planning
strategies when it is more likely than not that a portion or all of its deferred
tax assets will not be realized. If the Company is able to utilize more of its
deferred tax assets than the net amount previously recorded when unanticipated
events occur, an adjustment to deferred tax assets would increase the Company
net income when those events occur. The Company does not have any significant
deferred tax asset or liabilities in the PRC tax jurisdiction.

FOREIGN CURRENCY TRANSLATION. The Company uses the United States dollar ("U.S.
dollars") for financial reporting purposes. The Company maintains books and
records in their functional currency, being the primary currency of the economic
environment in which the operations are conducted. In general, the Company
translates the assets and liabilities into U.S. dollars using the applicable
exchange rates prevailing at the balance sheet date, and the statement of income
is translated at average exchange rates during the reporting period. Gain or
loss on foreign currency transactions are reflected on the income statement.
Gain or loss on financial statement translation from foreign currency are
recorded as a separate component in the equity section of the balance sheet, as
component of comprehensive income in accordance with SFAS No. 130, "Reporting
Comprehensive Income" as a component of shareholders' equity.

FAIR VALUE OF FINANCIAL INSTRUMENTS. Statement of financial accounting standard
No. 107, Disclosures about fair value of financial instruments, requires that
the Company disclose estimated fair values of financial instruments. The
carrying amounts reported in the statements of financial position for current
assets and current liabilities qualifying as financial instruments are a
reasonable estimate of fair value.

STOCK BASED COMPENSATION. In December 2004, the FASB issued SFAS No. 123
(revised 2004), "Share-Based Payment" ("SFAS 123R"), which requires the
measurement of all employee share-based payments to employees, including grants
of employee stock options, using a fair-value-based method and the recording of
such expense in the consolidated statements of operations. In March 2005, the
SEC issued Staff Accounting Bulletin No. 107 ("SAB 107") regarding the SEC's
interpretation of SFAS 123R and the valuation of share-based payments for public
companies. The Company has adopted SFAS 123R and related FASB Staff Positions
("FSPs") as of January 01, 2006 and will recognize stock-based compensation
expense using the modified prospective method.


                                       33


<PAGE>

RESULTS OF OPERATIONS

The following table sets forth certain items in our statement of operations and
balance sheets for the periods shown:



                                                 FOR THE YEAR ENDED
                                                    DECEMBER 31,
                                               2007             2006

NET REVENUES                              $ 47,892,833      $ 38,995,103

COST OF SALES                               39,898,004        35,752,308

GROSS PROFIT                                 7,994,830         3,242,795

OPERATING EXPENSES:
     Selling expenses                        2,561,721         1,301,260
     General and administrative              1,314,229         1,658,528
        TOTAL OPERATING EXPENSES             3,875,950         2,959,788

INCOME FROM OPERATIONS                       4,118,879           283,008

OTHER INCOME (EXPENSE):
     Other income                              678,888         1,547,538

     Other expense                            (101,114)          (55,781)
     Interest income (expense)                (190,954)           (2,044)
        TOTAL OTHER INCOME                     386,820         1,489,713

OPERATING INCOME BEFORE TAX
& MINORITY INTEREST                          4,505,700         1,772,721

PROVISION FOR INCOME TAX                       (17,888)               --

NET INCOME BEFORE MINORITY
INTEREST                                     4,487,812         1,772,721

MINORITY INTEREST                                  989                --

NET INCOME BEFORE NON-CONTROLLING INTEREST   4,486,823         1,772,721

NON-CONTROLLING INTEREST                       909,444                --

NET INCOME-NET OF NON-CONTROLLING INTEREST   3,577,379         1,772,721

OTHER COMPREHENSIVE ITEM:

    FOREIGN CURRENCY TRANSLATION GAIN          738,606           221,898

NET COMPREHENSIVE INCOME                  $  5,225,429      $  1,994,619


COMPARISON OF YEAR ENDED DECEMBER 31, 2007 ("FISCAL 2006) WITH THE YEAR ENDED
DECEMBER 31, 2006 ("FISCAL 2006")

NET REVENUES. For the year ended December 31, 2007, our net revenues increased
approximately 22.82% from $38,995,103 to $47,892,833 relative to the same period
ended December 31, 2006. The increase in revenues resulted mainly from the
remodeling of the stores, developing new chain stores and due to stronger
market.

COST OF SALES. Cost of sales to net sales percentage decreased from $35,752,308,
or approximately 92% of net revenues for the year ended December 31, 2006, to
$39,898,004, or approximately 83% of net sales for the year ended December 31,
2007. The approximately 9% decrease in percentage was primarily due to the
economies of scale due to higher purchases with the increase in revenue.


                                       34


<PAGE>

GROSS PROFIT. Gross profit increased approximately 147% from $3,242,795 for the
year ended December 31, 2006 to $7,994,830 for the year ended December 31, 2007.
This increase in gross profit was primarily due to the increase in the revenues
and the reduction in the cost of sales during the period.

OPERATING EXPENSES. For the year ended December 31, 2007, overall operating
expenses increased approximately 31% from $2,959,788 to $3,875,950 relative to
the year ended December 31, 2006. This increase was mainly due to the following:

         SELLING EXPENSES. Selling expenses increased approximately 97% from
         $1,301,260 for the year ended December 31, 2006 to $2,561,721 for the
         same period in 2007. This increase was related to an increase in
         revenues for the period.

         GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
         expenses were $1,658,528 for the year ended December 31, 2006, as
         compared to $1,314,229 for the year ended December 31, 2007, a decrease
         of 21%. This decrease is the result of better cost management and also
         due to reduction in the advisory fee paid during the year 2006 as the
         Company was looking for acquisition candidates.

NET INCOME/(LOSS). Net income increased approximately 102% from a net income of
1,772,721 for the year ended December 31, 2006 to a net income of $4,505,700 for
the year ended December 31, 2007.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2007, we had cash on hand of $ 1,180,029.

At December 31, 2007, we had loans payable to various unrelated parties
amounting to $ 1,349,593.

The Company believes that the existing cash and cash equivalents, and cash
generated from operating activities will be sufficient to meet the needs of its
current operations, including anticipated capital expenditures and scheduled
debt repayments, for the next twelve months and on a long term basis. The
Company may also seek additional financing to meet the needs of its long-term
strategic plan.

We currently have no material commitments for capital expenditures. Other than
working capital and loans, we presently have no other alternative source of
working capital. We may need to raise additional working capital to complete the
projects. We may seek to raise additional capital through the sale of equity
securities. No assurances can be given that we will be successful in obtaining
additional capital, or that such capital will be available in terms acceptable
to our company. At this time, we have no commitments or plans to obtain
additional capital.

The Company will continue its growth from internal resources by modifying/making
it look attractive to get most customer. We will have at least 10% internal
growth from our current resources.

We are planning to raise capital to do acquisition and increase our revenue by
25%.

         CASH FLOWS

Net cash flow used in operating activities was $1.8 million for the year ended
December 31, 2007 and $398,514 for the year ended December 31, 2006. For the
year ended December 31, 2007, decrease in cash flows provided by operating
activities was attributable to an increase in accounts receivables of $3.6
million, an increase in advance to suppliers of $3.4 million,an increase in
inventory of $2.5 million and an increase in account payable of $1.4
millionoffset by our net income of $4.8 million. For the year ended December
31, 2006, cash flows used in operating activities was attributable to our net
income of $1.8 million and a decrease in inventory of $2.6 million offset by an
increase in advance to suppliers of $2.0 million, increase in accounts
receivables of $1.1 million and a decrease in accounts payable of 1.6 million.

The Company incurred a cash outflows of $1.0 million in investing activities
during the year ended December 31, 2007, as compared to $255,000 used in
investing activities for the same period in 2006 for the purchase of property &
equipment.


                                       35


<PAGE>

Net cash flow provided by financing activities was $2.7 million for the year
ended December 31, 2007 and $392,000 for the year ended December 31,2006. We
raised a loan of $1.2 million from unrelated parties and $1.5 million from
related parties during the year ended December 31, 2007. For the same period in
2006, we raised $351,000 from unrelated parties and $41,000 from related party
advances.


CONTRACTUAL OBLIGATIONS

This table summarizes our known contractual obligations and commercial
commitments at December 31, 2007.

<TABLE>
<CAPTION>
<S>     <C>

--------------------------- -----------------------------------------------------------------------------------
Contractual Obligations                                   PAYMENTS DUE BY PERIOD
--------------------------- -----------------------------------------------------------------------------------
                                 TOTAL         LESS THAN 1       1-3 YEARS       3-5 YEARS       MORE THAN 5
                                                  YEAR                                              YEARS
--------------------------- ---------------- ---------------- ---------------- --------------- ----------------
Long-Term Debt                $        -        $        -     $        -        $       -         $     -
Obligations
--------------------------- ---------------- ---------------- ---------------- --------------- ----------------

Capital Lease                 $        -        $        -     $        -        $       -         $     -
Obligations
--------------------------- ---------------- ---------------- ---------------- --------------- ----------------

Operating Lease               $  3,567,083      $   693,257    $  2,151,132      $  2,139,624      $     -
Obligations
--------------------------- ---------------- ---------------- ---------------- --------------- ----------------

Purchase Obligations          $  5,030,339     $  5,030,339    $        -        $      -          $     -
--------------------------- ---------------- ---------------- ---------------- --------------- ----------------

Other Long-Term               $  1,677,273     $  1,677,273    $        -        $      -          $     -
Liabilities Reflected on
the Registrant's Balance
Sheet under GAAP
--------------------------- ---------------- ---------------- ---------------- --------------- ----------------

--------------------------- ---------------- ---------------- ---------------- --------------- ----------------
TOTAL                          $ 10,274,695    $  7,400,869    $  2,151,132      $ 2,139,624       $     -
--------------------------- ---------------- ---------------- ---------------- --------------- ----------------
</TABLE>


INFLATION AND SEASONALITY

Inflation has not had a significant impact on our operations during the last two
fiscal years.

Our business experiences seasonal variations in demand, which affects the sales
of certain of our pharmaceutical and OTC products. Sales of our pharmaceutical
and OTC products are typically stronger from October to March due to the winter
cold and flu season and weaker from April to September of each year when traffic
at our stores decreases. The difference in sales between our busy and
off-seasons is approximately 20%. Additionally, sales of our cosmetic and
personal care products are affected, to some extent, by seasonal purchasing
patterns and product changes. Most of our ginseng customers place orders in the
first and fourth quarter in each year, as ginseng is harvested in the fall, and
after necessary processing procedures, it available for sale to our customers in
the winter.

OFF-BALANCE SHEET ARRANGEMENTS

We have not entered into any other financial guarantees or other commitments to
guarantee the payment obligations of any third parties. We have not entered into
any derivative contracts that are indexed to our shares and classified as
stockholder's equity or that are not reflected in our consolidated financial
statements. Furthermore, we do not have any retained or contingent interest in
assets transferred to an unconsolidated entity that serves as credit, liquidity
or market risk support to such entity. We do not have any variable interest in
any unconsolidated entity that provides financing, liquidity, market risk or
credit support to us or engages in leasing or hedging services with us.

                                       36


<PAGE>

NEW ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB issued SFAS 158 'Employers' Accounting for Defined
Benefit Pension and Other Postretirement Plans--an amendment of FASB Statements
No. 87, 88, 106, and 132(R)' This Statement improves financial reporting by
requiring an employer to recognize the over funded or under funded status of a
defined benefit postretirement plan (other than a multiemployer plan) as an
asset or liability in its statement of financial position and to recognize
changes in that funded status in the year in which the changes occur through
comprehensive income of a business entity or changes in unrestricted net assets
of a not-for-profit organization. This Statement also improves financial
reporting by requiring an employer to measure the funded status of a plan as of
the date of its year-end statement of financial position, with limited
exceptions. An employer with publicly traded equity securities is required to
initially recognize the funded status of a defined benefit postretirement plan
and to provide the required disclosures as of the end of the fiscal year ending
after December 15, 2006. An employer without publicly traded equity securities
is required to recognize the funded status of a defined benefit postretirement
plan and to provide the required disclosures as of the end of the fiscal year
ending after June 15, 2007. However, an employer without publicly traded equity
securities is required to disclose the following information in the notes to
financial statements for a fiscal year ending after December 15, 2006, but
before June 16, 2007, unless it has applied the recognition provisions of this
Statement in preparing those financial statements:

     a. A brief description of the provisions of this
        Statement

     b. The date that adoption is required

     c. The date the employer plans to adopt the recognition provisions of this
        Statement, if earlier.


The requirement to measure plan assets and benefit obligations as of the date of
the employer's fiscal year-end statement of financial position is effective for
fiscal years ending after December 15, 2008. The management is currently
evaluating the effect of this pronouncement on financial statements.

In February 2007, FASB issued FASB Statement No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities. FAS 159 is effective for fiscal
years beginning after November 15, 2007. Early adoption is permitted subject to
specific requirements outlined in the new Statement. Therefore, calendar-year
companies may be able to adopt FAS 159 for their first quarter 2007 financial
statements.

The new Statement allows entities to choose, at specified election dates, to
measure eligible financial assets and liabilities at fair value that are not
otherwise required to be measured at fair value. If a company elects the fair
value option for an eligible item, changes in that item's fair value in
subsequent reporting periods must be recognized in current earnings. FAS 159
also establishes presentation and disclosure requirements designed to draw
comparison between entities that elect different measurement attributes for
similar assets and liabilities. In December 2007, the FASB issued SFAS No. 160,
"Non-controlling Interests in Consolidated Financial Statements". This Statement
amends ARB 51 to establish accounting and reporting standards for the
non-controlling (minority) interest in a subsidiary and for the deconsolidation
of a subsidiary. It clarifies that a non-controlling interest in a subsidiary is
an ownership interest in the consolidated entity that should be reported as
equity in the consolidated financial statements. SFAS No. 160 is effective for
the Company's fiscal year beginning October 1, 2009. Management is currently
evaluating the effect of this pronouncement on financial statements.

In March 2008, the FASB issued FASB Statement No. 161, Disclosures about
Derivative Instruments and Hedging Activities. The new standard is intended to
improve financial reporting about derivative instruments and hedging activities
by requiring enhanced disclosures to enable investors to better understand their
effects on an entity's financial position, financial performance, and cash flows
The new standard also improves transparency about the location and amounts of
derivative instruments in an entity's financial statements; how derivative
instruments and related hedged items are accounted for under Statement 133; and
how derivative instruments and related hedged items affect its financial
position, financial performance, and cash flows. . It is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008, with early application encouraged. Management is currently evaluating
the effect of this pronouncement on financial statements.

                                       37

<PAGE>

In December 2007, the FASB issued SFAS No. 141(R), "Business Combinations". This
Statement replaces SFAS No. 141, Business Combinations. This Statement retains
the fundamental requirements in Statement 141 that the acquisition method of
accounting (which Statement 141 called the purchase method) be used for all
business combinations and for an acquirer to be identified for each business
combination. This Statement also establishes principles and requirements for how
the acquirer: a) recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any non-controlling
interest in the acquiree; b) recognizes and measures the goodwill acquired in
the business combination or a gain from a bargain purchase and c) determines
what information to disclose to enable users of the financial statements to
evaluate the nature and financial effects of the business combination. SFAS No.
141(R) will apply prospectively to business combinations for which the
acquisition date is on or after Company's fiscal year beginning October 1, 2009.
While the Company has not yet evaluated this statement for the impact, if any,
that SFAS No. 141(R) will have on its consolidated financial statements, the
Company will be required to expense costs related to any acquisitions after
September 30, 2009.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting companies.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this Item 8 is incorporated by reference to
information begins on Page F-1 of this Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

ITEM 9A.  CONTROLS AND PROCEDURES

(A) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by the Company in the reports that we file
or submit under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and forms and that
information required to be disclosed by us in the reports that we file or submit
under the Exchange Act is accumulated and communicated to our management,
including our principal executive and financial officers, as appropriate to
allow timely decisions regarding required disclosure.

As of the end of the period covered by this Annual Report, we conducted an
evaluation, under the supervision and with the participation of our Chief
Executive Officer and Chief Financial Officer, of our disclosure controls and
procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange
Act). Based upon this evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that the Company's disclosure controls and
procedures are effective.

(B)  MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial reporting, as
defined in Exchange Act Rule 13a-15(f), is a process designed by, or under the
supervision of, our principal executive and principal financial officers and
effected by our Board of Directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles and includes those policies and
procedures that:

         o        Pertain to the maintenance of records that in reasonable
                  detail accurately and fairly reflect the transactions and
                  dispositions of our assets;


                                       38


<PAGE>

         o        Provide reasonable assurance that transactions are recorded as
                  necessary to permit preparation of financial statements in
                  accordance with generally accepted accounting principles, and
                  that our receipts and expenditures are being made only in
                  accordance with authorizations of our management and
                  directors; and

         o        Provide reasonable assurance regarding prevention or timely
                  detection of unauthorized acquisition, use of disposition of
                  our assets that could have a material effect on the financial
                  statements.

Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate. All internal control systems,
no matter how well designed, have inherent limitations. Therefore, even those
systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation.

Our management assessed the effectiveness of our internal control over financial
reporting as of December 31, 2007. In making this assessment, our management
used the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on
this assessment, management believes that as of December 31, 2007, our internal
control over financial reporting is effective based on those criteria.

This annual report does not include an attestation report of the Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the Company to provide only management's
report in this annual report.

(C) CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

On December 21, 2006, Digital Learning Management Corporation ("DLMC") entered
into a Share Exchange Agreement with Changchun Yongxin Dirui Medical Co., Ltd.
("Yongxin") and all of its shareholders. On June 15, 2007, DLMC entered into an
Amended Share Exchange Agreement with Yongxin and its shareholders. On April 12,
2008, DLMC, Yongxin and the Yongxin shareholders entered into the Second
Amendment to the Share Exchange Agreement, effective November 16, 2007 (the
"Second Amendment"). Pursuant to the share exchange agreement (the "Exchange
Agreement"), we agreed to issue an aggregate of 21 million shares of our common
stock and 5 million shares of our preferred stock in exchange for 80% of the
issued and outstanding equity interest of Yongxin (the "Share Exchange"). The
Share Exchange closed on November 16, 2007. Following the Share Exchange, the
sole business conducted by our company is the business conducted by Yongxin
prior to the Share Exchange, and certain of the officers and directors of
Yongxin became officers and directors of our company. Also, as a result of the
Share Exchange, the internal control over financial reporting utilized by
Yongxin prior to the Share Exchange became the internal control over financial
reporting of our company.

Based on the evaluation of our management as required by paragraph (d) of Rule
13a-15 or 15d-15 of the Exchange Act, we believe that, other than the changes
described above, there were no changes in our internal control over financial
reporting that occurred during our last fiscal quarter that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.

ITEM 9B.  OTHER INFORMATION

None.

                                    PART III

ITEM 10.   DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item 10 is incorporated by reference from our
definitive proxy statement on Schedule 14A which will be filed before the end of
the 120-day period immediately following the end of our 2007 fiscal year, or, if
our definitive proxy statement is not filed within that time, the information
will be filed as part of an amendment to this annual report on Form 10-K/A, not
later than the end of the 120-day period.

                                       39

<PAGE>

ITEM 11.   EXECUTIVE COMPENSATION

The information required by this Item 11 is incorporated by reference from our
definitive proxy statement on Schedule 14A which will be filed before the end of
the 120-day period immediately following the end of our 2007 fiscal year, or, if
our definitive proxy statement is not filed within that time, the information
will be filed as part of an amendment to this annual report on Form 10-K/A, not
later than the end of the 120-day period.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

The information required by this Item 12 is incorporated by reference from our
definitive proxy statement on Schedule 14A which will be filed before the end of
the 120-day period immediately following the end of our 2007 fiscal year, or, if
our definitive proxy statement is not filed within that time, the information
will be filed as part of an amendment to this annual report on Form 10-K/A, not
later than the end of the 120-day period.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE

The information required by this Item 13 is incorporated by reference from our
definitive proxy statement on Schedule 14A which will be filed before the end of
the 120-day period immediately following the end of our 2007 fiscal year, or, if
our definitive proxy statement is not filed within that time, the information
will be filed as part of an amendment to this annual report on Form 10-K/A, not
later than the end of the 120-day period.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this Item 14 is incorporated by reference from our
definitive proxy statement on Schedule 14A which will be filed before the end of
the 120-day period immediately following the end of our 2007 fiscal year, or, if
our definitive proxy statement is not filed within that time, the information
will be filed as part of an amendment to this annual report on Form 10-K/A, not
later than the end of the 120-day period.

                                       40


<PAGE>

                                     PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

1.  Financial Statements: See "Index to Consolidated Financial Statements" in
    Part II, Item 8 of this annual report on Form 10-K.

2.  Financial Statement Schedule: Not applicable.

3.  Exhibits: The exhibits listed in the accompanying "Index to Exhibits" are
    filed or incorporated by reference as part of this Form 10-K.


                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Changchun,
People's Republic of China, on April 15, 2008.


                                              NUTRADYNE GROUP, INC.
                                              (Registrant)



Dated: April 15, 2008                             /s/  Yongxin Liu
                                               --------------------
                                               By:  Yongxin Liu
                                               Chief Executive Officer and
                                               Chairman of the Board
                                               (Principal Executive Officer)

Dated:  April 15, 2008                            /s/  Yongkui Liu
                                               -------------------------
                                               By:  Yongkui Liu
                                               Chief Financial Officer
                                               (Principal Financial Officer)



   Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
<S>     <C>

     SIGNATURE                            CAPACITY                                               DATE
     ---------                            --------                                               ----

     /s/  Yongxin Liu                     Chief Executive Officer and                         April 15, 2008
     ------------------                   Chairman of the Board
     By:  Dang Yu Pan                     (Principal Executive Officer)

     /s/  Yongkiu Liu                     Chief Financial Officer and Director                April 15, 2008
     ------------------                   (Principal Financial and Accounting
     By:  Yongkiu Liu                     Officer)

                                          Director                                            April 15, 2008
     ------------------
     Ning Liu

     /s/  Xinhai Li                       Director                                            April 15, 2008
     -----------------
     Xinhai Li

                                          Director                                            April 15, 2008
     -------------------
     Umesh I. Patel
</TABLE>


                                       41


<PAGE>


                                  EXHIBIT INDEX

Exhibit
Number   Description
------   -----------

2.1      Exchange Agreement by and between Digital Learning Management
         Corporation and Changchun Yongxin Dirui Medical Co., Ltd dated December
         21, 2006 (incorporated by reference to Exhibit 10.1 to the Current
         Report on Form 8-K filed with the Securities and Exchange Commission on
         December 28, 2006).

2.1(a)   First Amendment to Share Exchange Agreement, dated as of June 15, 2007,
         by and among Digital Learning Management Corporation, Chanchun Yongxin
         Dirui Medical Co., Ltd. ("Yongxin") and the shareholders of Yongxin
         (incorporated by reference to Exhibit B to the definitive Proxy
         Statement on Schedule 14A filed with the Securities and Exchange
         Commission on September 14, 2007)

2.1(b)   Second Amendment to the Share Exchange Agreement, dated as of April 12,
         2008,and effective as of November 16, 2007, by and among Nutradyne
         Group, Inc., Chanchun Yongxin Dirui Medical Co., Ltd. ("Yongxin") and
         the shareholders of Yongxin (incorporated by reference to Exhibit 10.1
         to the Current Report on Form 8-K filed with the Securities and
         Exchange on April 15, 2008)

3.1      Certificate of Incorporation (incorporated by reference to Exhibit 3 to
         the Company's General Form For Registration Of Securities Of Small
         Business Issuers on Form 10-SB, filed with the SEC on November 5,
         1999).

3.1(a)   Certificate of Amendment of Articles of Incorporation of the Company
         (incorporated by reference to Exhibit A of the Company's definitive
         information statement on Schedule 14C filed with the SEC on February
         25, 2004).

3.2(b)   Certificate of Amendment of Articles of Incorporation of the Company
         (incorporated by reference to Exhibit A to the definitive Proxy
         Statement on Schedule 14A filed with the Securities and Exchange
         Commission on September 14, 2007).

3.2      Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the
         Company's Current Report on Form 8-K filed with the Securities and
         Exchange Commission on September 27, 2004).

21.1     List of Subsidiaries

31.1     Certification of Chief Executive Officer pursuant to Item 601(b)(31) of
         Regulation S-K, as adopted pursuant to Section 302 of the
         Sarbanes-Oxley Act of 2002.

31.2     Certification of Chief Financial Officer pursuant to Item 601(b)(31) of
         Regulation S-K, as adopted pursuant to Section 302 of the
         Sarbanes-Oxley Act of 2002.

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

----------

*        This exhibit shall not be deemed "filed" for purposes of Section 18 of
         the Securities Exchange Act of 1934 or otherwise subject to the
         liabilities of that section, nor shall it be deemed incorporated by
         reference in any filing under the Securities Act of 1933 or the
         Securities Exchange Act of 1934, whether made before or after the date
         hereof and irrespective of any general incorporation language in any
         filings.



                                       42


<PAGE>

                     NUTRADYNE GROUP, INC. AND SUBSIDIARIES
                        CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2007

                                TABLE OF CONTENTS


Report of Independent Registered Public Accounting Firm          F-2

Consolidated Balance Sheets as of December 31, 2007 and 2006     F-3

Consolidated Statements of Income
     For the years ended December 31, 2007 and 2006              F-4

Consolidated Statements of Cash Flows
     For the years ended December 31, 2007 and 2006              F-5

Consolidated Statements of Stockholders' Equity
     For the years ended December 31, 2007 and 2006              F-6

Notes to Consolidated Financial Statements                       F-7



                                      F-1


<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders
Nutradyne Group, Inc.

We have audited the accompanying consolidated balance sheets of Nutradyne Group,
Inc. (formerly Digital Learning Management Corporation) and its subsidiaries
(the "Company") as of December 31, 2007 and 2006, and the related consolidated
statements of income, stockholders' equity, and cash flows for the years then
ended. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits of these statements in accordance with the standards of
the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

 In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Nutradyne Group, Inc. and its subsidiaries as of December 31, 2007 and 2006, and
the results of its consolidated statements of operations, stockholders' equity,
and its cash flows for the years then ended, in conformity with accounting
principles generally accepted in the United States of America.

 /s/ KABANI & COMPANY, INC.
CERTIFIED PUBLIC ACCOUNTANTS

Los Angeles, California
February 28, 2008


                                      F-2


<PAGE>

<TABLE>
<CAPTION>
<S>     <C>

                      NUTRADYNE GROUP INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        AS OF DECEMBER 31, 2007 AND 2006

                                                                   AS OF DECEMBER 31,
                                                                2007              2006
                                                            -----------        -----------

                                     ASSETS
CURRENT ASSETS:
     Cash and cash equivalents                              $ 1,180,029        $ 1,248,404
     Accounts receivable, net                                 6,586,105          2,668,505
     Other receivable, net                                      207,337            250,725
     Advances to suppliers                                    5,729,235          2,046,404
     Prepaid expenses                                           319,074            206,224
     Inventory                                                6,257,450          3,405,048
                                                            -----------        -----------
             TOTAL CURRENT ASSETS                            20,279,229          9,825,309

PROPERTY AND EQUIPMENT, NET                                   2,038,629          1,096,437

INTANGIBLE ASSETS, NET                                           81,152             77,081

            TOTAL ASSETS                                     22,399,010         10,998,827
                                                            ===========        ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Accounts payable                                         5,030,340          2,221,020
     Accrued expenses and other payable                       1,435,235            387,244
     Advances from customers                                    799,910             21,336
     Deferred income                                            239,937                 --
     Shares to be issued                                         35,000                 --
     Net liabilities of discontinued operations                 628,777                 --
     Tax payable                                                282,899            143,941
     Short-term loans payable                                 1,349,593            358,176
     Loan from related parties                                1,722,557             36,418
                                                            -----------        -----------
             TOTAL CURRENT LIABILITIES                       11,524,247          3,168,136
                                                            -----------        -----------



COMMITMENTS                                                          --                 --

MINORITY INTERESTS                                               16,825                 --

STOCKHOLDERS' EQUITY:
     Preferred  stock,  $0.001 par  value; 5,000,000
     shares authorized;
     5,000,000 shares issued and outstanding                      5,000              5,000
     Common  stock; $ 0.001  par  value; 75,000,000
     shares authorized;
     31,041,845 shares issued and outstanding                    31,042             21,000

     Additional paid in capital                                      --          1,436,244
     Other comprehensive income                                 859,683            268,803
     Statutory reserve                                        1,341,599            775,271
     Retained earnings                                        5,997,306          3,758,235
     Non-controlling interest                                 2,623,303          1,566,138
                                                            -----------        -----------
           Total Stockholders' Equity                        10,857,939          7,830,690
                                                            -----------        -----------
          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY        $22,399,010        $10,998,827
                                                            ===========        ===========


 The accompanying notes are an integral part of these consolidated financials statements



                                      F-3


<PAGE>


                      NUTRADYNE GROUP INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                 FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006


                                                                YEAR ENDED DECEMBER 31,
                                                             2007                 2006
                                                         ------------         ------------
NET REVENUE                                              $ 47,892,833         $ 38,995,103
COST OF REVENUE                                            39,898,004           35,752,308
                                                         ------------         ------------
    GROSS PROFIT                                            7,994,830            3,242,795
                                                         ------------         ------------

OPERATING EXPENSES
   Selling expense                                          2,561,721            1,301,260
   General and administrative expenses                      1,314,229            1,658,528
                                                         ------------         ------------
TOTAL OPERATING EXPENSES                                    3,875,950            2,959,788
                                                         ------------         ------------

INCOME FROM OPERATIONS                                      4,118,879              283,008
                                                         ------------         ------------

OTHER INCOME ( EXPENSE)
   Interest income                                              3,690                2,736
   Interest expense                                          (194,644)              (4,780)
   Other income                                               678,888            1,547,538
   Other expenses                                            (101,114)             (55,781)
                                                         ------------         ------------
TOTAL OTHER INCOME (EXPENSE)                                  386,820            1,489,713
                                                         ------------         ------------

OPERATING INCOME BEFORE TAX AND MINORITY INTEREST           4,505,700            1,772,721

PROVISION FOR INCOME TAX                                      (17,888)                  --
                                                         ------------         ------------

NET INCOME BEFORE MINORITY INTEREST                         4,487,812            1,772,721

MINORITY INTEREST                                                 989                   --
                                                         ------------         ------------

NET INCOME                                                  4,486,823            1,772,721

NON INCOME - NET OF NON-CONTROLLING INTEREST                3,577,379            1,772,721

OTHER COMPREHENSIVE ITEM:

     Foreign Currency Translation Gain                        738,606              221,898
                                                         ------------         ------------
NET COMPREHENSIVE INCOME                                 $  5,225,429         $  1,994,619
                                                         ============         ============

EARNING PER SHARE
      BASIC                                              $       0.20         $       0.08
                                                         ============         ============
      DILUTED                                            $       0.20         $       0.08
                                                         ============         ============
WEIGHTED AVERAGE  NUMBER OF  SHARES OUTSTANDING
      BASIC                                                22,238,036           21,000,000
                                                         ============         ============
      DILUTED                                              22,372,676           21,000,000
                                                         ============         ============


 The accompanying notes are an integral part of these consolidated financials statements


                                      F-4


<PAGE>


                      NUTRADYNE GROUP INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

                                                                        YEAR ENDED DECEMBER 31,
                                                                       2007                  2006
                                                                  -----------         -----------
CASH FLOWS FROM OPERATING ACTIVITIES
       Net Income                                                 $ 4,486,823         $ 1,772,721
       Adjustments to reconcile net income to net cash
           used in operating activities:
       Depreciation and amortization                                  203,909             131,284
       Minority interest                                                  989                  --
       (Increase) / decrease in assets:
          Accounts receivable                                      (3,577,120)         (1,124,212)
          Other receivable                                             59,064            (137,979)
          Advances to suppliers                                    (3,403,984)         (1,971,782)
          Prepaid expenses                                            (94,404)            (97,721)
          Inventory                                                (2,510,863)          2,611,412
       Increase / (decrease) in liabilities:
          Accounts payable                                          1,400,423          (1,556,637)
          Accrued expense and other payable                           625,276             236,517
          Deferred income                                             230,968                  --
          Advances from customers                                     748,000            (262,117)
                                                                  -----------         -----------
       NET CASH USED IN OPERATING ACTIVITIES                       (1,830,919)           (398,514)
                                                                  -----------         -----------

CASH FLOWS FROM INVESTING ACTIVITIES

       Cash acquired on reverse acquisition                             5,334                  --
       Purchase  of  property,  equipment  and  intangible
       assets                                                      (1,029,925)           (255,894)
                                                                  -----------         -----------

           NET CASH USED IN  INVESTING ACTIVITIES                  (1,024,591)           (255,894)
                                                                  -----------         -----------

CASH FLOWS FROM FINANCING ACTIVITIES

       Receipts of loan from non-related parties                    1,187,673             351,204

       Receipts of Loan from related parties                        1,516,067              41,044

       Shareholders cash contributions                                 15,864                  --
                                                                  -----------         -----------
       NET CASH PROVIDED BY FINANCING ACTIVITIES                    2,703,740             392,248
                                                                  -----------         -----------

NET DECREASE IN CASH AND CASH EQUIVALENTS                            (151,771)           (262,160)

EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS                                                   83,396              40,968
                                                                  -----------         -----------


CASH AND CASH EQUIVALENTS, BEGINNING BALANCE                        1,248,404           1,469,595
                                                                  -----------         -----------

CASH AND CASH EQUIVALENTS, ENDING BALANCE                         $ 1,180,029         $ 1,248,404
                                                                  ===========         ===========

SUPPLEMENTAL DISCLOSURES:

        Interest paid                                             $   161,888         $        --
                                                                  ===========         ===========
        Income tax paid                                           $     8,563         $    16,314
                                                                  ===========         ===========


 The accompanying notes are an integral part of these consolidated financials statements



<PAGE>



                      NUTRADYNE GROUP INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

                                                                                              ADDITIONAL          OTHER
                                 COMMON STOCK                   PREFERRED STOCK                PAID-IN         COMPREHENSIVE
                            SHARES           AMOUNT           SHARES           AMOUNT          CAPITAL            INCOME
                         ------------     ------------     ------------     ------------     ------------      ------------


BALANCE AS OF
DECEMBER 31, 2005          21,000,000     $     21,000        5,000,000     $      5,000     $  1,436,244      $     91,285

Foreign exchange
translation gain                   --               --               --              --                --           221,898

Transfer to
statutory reserve                  --               --               --              --                --                --

Net  income  for the
year                               --               --               --              --                --                --

Transfer to non-
controlling interest               --               --               --              --                --           (44,380)
                         ------------     ------------     ------------     ------------     ------------      ------------

BALANCE AS OF
DECEMBER 31, 2006          21,000,000           21,000        5,000,000            5,000        1,436,244           268,803

Recapitalization on
reverse merger             10,041,845           10,042               --              --        (1,436,244)              --

Foreign exchange
translation gain                   --               --               --              --                --           738,606

Dividends declared
by a subsidiary                    --               --               --              --                --                --

Transfer to
statutory reserve                  --               --               --              --                --                --

Net income for the
year                               --               --               --               --               --                --

Transfer to non-
controlling interest                                --               --               --               --         (147,721)
                                          ------------     ------------     ------------     ------------     ------------
BALANCE AS OF
DECEMBER 31, 2007          31,041,845     $     31,042        5,000,000     $      5,000     $       --        $    859,688
                         ============     ============     ============     ============     ============      ============

(continued)

                                                                                   TOTAL
                            STATUTORY        RETAINED         NON-CONTROLLING   STOCKHOLDERS'
                            RESERVE           EARNINGS           INTEREST          EQUITY
                          ------------      ------------      ------------     ------------


BALANCE AS OF
DECEMBER 31, 2005         $    459,672      $  2,655,657      $  1,167,214     $  5,836,072

Foreign exchange
translation gain                    --                --                --          221,898

Transfer to
statutory reserve              315,599          (315,599)              --                --

Net income for the
year                                --         1,772,721                --        1,772,721

Transfer to non-
controlling interest                --          (354,544)          398,924               --
                          ------------      ------------      ------------     ------------

BALANCE AS OF
DECEMBER 31, 2006              775,271         3,758,235         1,566,138        7,830,690

Recapitalization on
reverse merger                      --          (768,206)               --       (2,194,408)

Foreign exchange
translation gain                    --                --                --          738,606

Dividends declared
by a subsidiary                     --            (3,773)               --           (3,773)

Transfer to
statutory reserve              566,329          (566,329)               --               --

Net income for the
year                                --         4,486,823                --        4,486,823

Transfer to non-
controlling interest               --          (909,444)        1,057,165                --
                         ------------      ------------      ------------      ------------
BALANCE AS OF
DECEMBER 31, 2007         $  1,341,599      $  5,997,306      $  2,623,303     $ 10,857,939
                          ============      ============      ============     ============
</TABLE>


                                      F-5


<PAGE>



                      NUTRADYNE GROUP INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION

Nutradyne Group, Inc. (formerly Digital Learning Management Corporation)
("Nutradyne or Company") was incorporated in Delaware on February 18, 1999 under
the name of FreePCSQuote. Nutradyne through its Chinese subsidiaries is engaged
in the pharmaceutical medicines and appliances wholesale distribution, pharmacy
retail drug stores and ginseng product sales.

On December 21, 2006, Changchun Yongxin Dirui Medical Co., Ltd, a Chinese
corporation ("Yongxin") and all of the shareholders of Yongxin entered into a
share exchange agreement with Nutradyne Group Inc. (formerly Digital Learning
Management Corporation) ("Nutradyne"). The agreement was amended on June 15,
2007. On November 16, 2007, Yongxin Medical and Nutradyne closed the Amended
Exchange Agreement. In accordance with the Amended Exchange Agreement, Nutradyne
issued 21,000,000 shares of newly issued common stock and 5 million shares of
Series A Preferred Stock to the Yongxin shareholders or their designees,
representing, immediately following closing, 70% of the total issued and
outstanding shares of common stock of Nutradyne in exchange for 80% shares of
Yongxin. The Series A Convertible Preferred Stock is convertible over a 3 year
period, into up to 30 million shares of common stock.

For accounting purposes, this transaction has been accounted for as a reverse
merger, since the stockholders of Yongxin own a majority of the issued and
outstanding shares of common stock of Nutradyne, and the directors and executive
officers of Yongxin became the directors and executive officers of Nutradyne.
This acquisition was accounted for at historical cost in a manner similar to
that in pooling of interests method since after the acquisition, the former
shareholders of Yongxin Medical acquired majority of the outstanding shares of
the Company. The financial statements of the legal acquirer are not significant;
therefore, no pro forma financial information is submitted. Thus, the historical
financial statements are those of "Changchun Yongxin Dirui Medical Co, Inc. &
Subsidiaries".

Changchun Yongxin Dirui Medical Co, Inc. & subsidiaries ("Yongxin Medical"), was
established in 1993. The company is engaged in medicines wholesale and retail.
The company's operations are based in Changchun City, Jilin Province, China.

In 2004, Yongxin Medical established Jilin Procince Yongxin Chain Drugstore Ltd.
( "Yongxin Drugstore") with an investment of RMB 2,500,000 (equivalent to
$303,000) to develop customer-terminal network market. In July 2005, the company
achieved the franchise right in Jilin Province from American Medicine Shoppe
(Meixin International Medical Chains) and by now has developed 4 chains of
"Meixino Yongxin". As of December 31, 2007, Yongxin Drugstore has developed 11
retail chains drug stores in the name of Yongxin Drugstore which cover a
business area of 13,000 M(2), throughout Changchun city in China. These
drugstores sell over-the counter western and traditional Chinese machines, and
medication treatment appliances and other items.

On, March 16, 2007, Jilin Province Yongxin Chain Drugstore Ltd entered into
various agreements with retail drug stores in Tianjin, established Tianjin
Jingyongxin Chain Drugstore Ltd. ("Jinyongxin Drugstore") with an investment of
$116,868, in which the Company has the 90% ownership of the Jinyongxin
Drugstore. The Company is located in Tianjin City, China. As of December 31,
2007, Jinyongxin Drugstore has developed 8 retail chain drug stores which cover
a business area of 2,462 M(2), throughout Tianjin city in China.

On May 15, 2007, Yongxin Medical established Jilin Dingjian Natural Health
Products Co., Ltd ("Dingjian") with an investment of $116,868 whereby the
shareholders of the company have 90% ownership of Dingjian. Dingjian was formed
under laws of the People's Republic of China and is located in Changchun City,
Jilin Provincial.


                                      F-6


<PAGE>


                      NUTRADYNE GROUP INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION (CONTINUED)

On June 15 2007, Jilin Province Yongxin Chain Drugstore Ltd established "Baishan
Caoantang Chain Drugstore Ltd" (hereinafter referred to "Caoantang Drugstore")
with an investment of $328,430, including $144,509 in cash and $183,921 cash to
purchase the property and equipment from former shareholder. And Yongxin
Drugstore was agreed to pay $80,076 evenly over the next 30 months for this
investment. Caoantang Drugstore is a 100% owned subsidiary of Yongxin Drugstore.
Caoantang Drugstore owns 32 chain retail drugstores and covers a business area
of 3,000 M(2), which sell over-the counter western and traditional Chinese
machines, and medication treatment appliances and other items.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION
The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America. Our
functional currency is the Chinese Renminbi; however the accompanying financial
statements have been translated and presented in United States Dollars ($).

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles in the United States ("GAAP") requires management to make
certain 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.
Significant estimates include collectibility of accounts receivable, accounts
payable, sales returns and recoverability of long-term assets.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Nutradyne Group,
Inc. and its wholly owned subsidiaries collectively referred to within as the
Company. All material inter-company accounts, transactions and profits have been
eliminated in consolidation.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash in hand and cash in time deposits,
certificates of deposit and all highly liquid debt instruments with original
maturities of three months or less.

ACCOUNTS RECEIVABLE

The Company maintains reserves for potential credit losses on accounts
receivable. Management reviews the composition of accounts receivable and
analyzes historical bad debts, customer concentrations, customer credit
worthiness, current economic trends and changes in customer payment patterns to
evaluate the adequacy of these reserves. Reserves are recorded primarily on a
specific identification basis. As of December 31, 2007 and 2006, allowance for
doubtful debts amounted to $331,475 and $216,963, respectively.

ADVANCES TO SUPPLIERS

The Company advances to certain vendors for purchase of its material. The
advances to suppliers are interest free and unsecured. As of December 31, 2007
and 2006, advance to suppliers amounted to $5,729,235 and $2,046,404,
respectively.


                                      F-7


<PAGE>


                      NUTRADYNE GROUP INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INVENTORIES

Inventories are valued on a lower of weighted average cost or market basis.
Inventory includes product cost, inbound freight, warehousing costs and vendor
allowances not included as a reduction of advertising expense. The Management
compares the cost of inventories with the market value and allowance is made for
writing down their inventories to market value, if lower. Work in process
inventories include the cost of raw materials and outsource processing fees.

PROPERTY AND EQUIPMENT

 Property and equipment are recorded at cost. Depreciation is computed using the
straight-line method over useful lives of 5 to 10 years. Expenditures for
maintenance and repairs are charged to earnings as incurred; additions, renewals
and betterments are capitalized. When property and equipment are retired or
otherwise disposed of, the related cost and accumulated depreciation are removed
from the respective accounts, and any gain or loss is included in operations.
Assets held under capital leases are recorded at the lesser of the present value
of the future minimum lease payments or the fair value of the leased property.
Expenditures for maintenance and repairs are charged to operations as incurred.
Depreciation of property and equipment is provided using the straight-line
method for substantially all assets with estimated lives of:

         Buildings                                                     20 years
         Infrastructures and leasehold improvement                     10 years
         Equipment (including electronic facilities, sports,
           education and recreation facilities)                        10 years
         Automobile                                                    10 years
         Furniture and Fixtures                                         5 years
         Computer Hardware and Software                                 5 years

IMPAIRMENT OF LONG-LIVED ASSETS

Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" ("SFAS 144"), which addresses financial accounting and reporting for the
impairment or disposal of long-lived assets and supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," and the accounting and reporting provisions of APB Opinion No.
30, "Reporting the Results of Operations for a Disposal of a Segment of a
Business." The Company periodically evaluates the carrying value of long-lived
assets to be held and used in accordance with SFAS 144. SFAS 144 requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amounts. In
that event, a loss is recognized based on the amount by which the carrying
amount exceeds the fair market value of the long-lived assets. Loss on
long-lived assets to be disposed of is determined in a similar manner, except
that fair market values are reduced for the cost of disposal.

REVENUE RECOGNITION

The Company's revenue recognition policies are in compliance with Staff
accounting bulletin (SAB) 104. Sales revenue is recognized at the date of
shipment to customers when a formal arrangement exists, the price is fixed or
determinable, the delivery is completed, no other significant obligations of the
Company exist and collectibility is reasonably assured. The Company recognizes
revenue net of an allowance for estimated returns, at the time the merchandise
is sold or services performed. The allowance for sales returns is estimated
based on the Company's historical experience. Sales taxes are presented on a net
basis (excluded from revenues and costs). Payments received before all of the
relevant criteria for revenue recognition are satisfied are recorded as unearned
revenue.


                                      F-8


<PAGE>


                      NUTRADYNE GROUP INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

COST OF SALES

Cost of sales is derived based upon point-of-sale scanning information with an
estimate for shrinkage and is adjusted based on periodic inventories. In
addition to merchandise cost, cost of sales includes warehousing costs,
purchasing costs, freight costs, cash discounts and vendor allowances not
included as a reduction of advertising expense.

ADVERTISING

Advertising expenses consist primarily of costs of promotion for corporate image
and product marketing and costs of direct advertising. The Company expenses all
advertising costs as incurred. The advertising expense for the years ended
December 31, 2007 and 2006 was $69,697 and $61,774, respectively.

VENDOR ALLOWANCES

Vendor allowances are principally received as a result of purchase levels, sales
or promotion of vendors' products. Allowances are generally recorded as a
reduction of inventory and are recognized as a reduction of cost of sales when
the related merchandise is sold. Those allowances received for promoting
vendors' products are offset against advertising expense and result in a
reduction of selling, occupancy and administration expenses to the extent of
advertising costs incurred, with the excess treated as a reduction of inventory
costs.

INCOME TAXES

The Company utilizes SFAS No. 109, "Accounting for Income Taxes," which requires
the recognition of deferred tax assets and liabilities for the expected future
tax consequences of events that have been included in the financial statements
or tax returns. Under this method, deferred income taxes are recognized for the
tax consequences in future years of differences between the tax basis of assets
and liabilities and their financial reporting amounts at each period end based
on enacted tax laws and statutory tax rates applicable to the periods in which
the differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized.

The Company accounts for income taxes using an asset and liability approach
which allows for the recognition and measurement of deferred tax assets based
upon the likelihood of realization of tax benefits in future years. Under the
asset and liability approach, deferred taxes are provided for the net tax
effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax
purposes. A valuation allowance is provided for deferred tax assets if it is
more likely than not these items will either expire before the Company is able
to realize their benefits, or that future deductibility is uncertain.

The Company records a valuation allowance for deferred tax assets, if any, based
on its estimates of its future taxable income as well as its tax planning
strategies when it is more likely than not that a portion or all of its deferred
tax assets will not be realized. If the Company is able to utilize more of its
deferred tax assets than the net amount previously recorded when unanticipated
events occur, an adjustment to deferred tax assets would increase the Company
net income when those events occur. The Company does not have any significant
deferred tax asset or liabilities in the PRC tax jurisdiction.


                                      F-9


<PAGE>

                      NUTRADYNE GROUP INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

FOREIGN CURRENCY TRANSLATION

The Company uses the United States dollar ("U.S. dollars") for financial
reporting purposes. The Company maintains books and records in their functional
currency, being the primary currency of the economic environment in which the
operations are conducted. In general, the Company translates the assets and
liabilities into U.S. dollars using the applicable exchange rates prevailing at
the balance sheet date, and the statement of income is translated at average
exchange rates during the reporting period. Gain or loss on foreign currency
transactions are reflected on the income statement. Gain or loss on financial
statement translation from foreign currency are recorded as a separate component
in the equity section of the balance sheet, as component of comprehensive income
in accordance with SFAS No. 130, "Reporting Comprehensive Income" as a component
of shareholders' equity. During the years ended December 31 2007 and 2006 other
comprehensive income includes translation gain of $546,500 and $221,898,
respectively..

FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of financial accounting standard No. 107, Disclosures about fair value
of financial instruments, requires that the Company disclose estimated fair
values of financial instruments. The carrying amounts reported in the statements
of financial position for current assets and current liabilities qualifying as
financial instruments are a reasonable estimate of fair value.

STOCK BASED COMPENSATION

In December 2004, the FASB issued SFAS No. 123 (revised 2004), "Share-Based
Payment" ("SFAS 123R"), which requires the measurement of all employee
share-based payments to employees, including grants of employee stock options,
using a fair-value-based method and the recording of such expense in the
consolidated statements of operations. In March 2005, the SEC issued Staff
Accounting Bulletin No. 107 ("SAB 107") regarding the SEC's interpretation of
SFAS 123R and the valuation of share-based payments for public companies. The
Company has adopted SFAS 123R and related FASB Staff Positions ("FSPs") as of
January 01, 2006 and will recognize stock-based compensation expense using the
modified prospective method.

BASIC AND DILUTED EARNINGS PER SHARE

Earnings per share are calculated in accordance with the Statement of financial
accounting standards No. 128 (SFAS No. 128), "Earnings per share". SFAS No. 128
superseded Accounting Principles Board Opinion No.15 (APB 15). Net income (loss)
per share for all periods presented has been restated to reflect the adoption of
SFAS No. 128. Basic earnings per share are computed by dividing net income by
the weighted average number of common shares outstanding during the period.
Diluted earnings per share are computed by dividing net income by the weighted
average number of common shares and dilutive common equivalent shares
(restricted stock awards and stock options) outstanding during the period.
Weighted average number of common shares was calculated in accordance with the
Statement of financial accounting standards No. 141R (SFAS No. 141R), "Business
combinations". Basic and diluted earnings or loss per share were $0.16 and $0.08
for the years ended December 31, 2007 and 2006 respectively.

STATEMENT OF CASH FLOWS

In accordance with Statement of Financial Accounting Standards No. 95,
"Statement of Cash Flows," cash flows from the Company's operations is
calculated based upon the local currencies. As a result, amounts related to
assets and liabilities reported on the statement of cash flows will not
necessarily agree with changes in the corresponding balances on the balance
sheet.


                                      F-10


<PAGE>

                      NUTRADYNE GROUP INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

SEGMENT REPORTING

Statement of Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosure
about Segments of an Enterprise and Related Information" requires use of the
"management approach" model for segment reporting. The management approach model
is based on the way a company's management organizes segments within the company
for making operating decisions and assessing performance. Reportable segments
are based on products and services, geography, legal structure, management
structure, or any other manner in which management disaggregates a company. The
Company allocates its resources and assesses the performance of its sales
activities based upon its products and services (see Note 19).

RISKS AND UNCERTAINTIES

The Company is subject to substantial risks from, among other things, intense
competition associated with the industry in general, other risks associated with
financing, liquidity requirements, rapidly changing customer requirements,
limited operating history, foreign currency exchange rates and the volatility of
public markets.

The Company's operations are carried out in the PRC. Accordingly, the Company's
business, financial condition and results of operations may be influenced by the
political, economic and legal environments in the PRC, by the general state of
the PRC's economy. The Company's business may be influenced by changes in
governmental policies with respect to laws and regulations, anti-inflationary
measures, currency conversion and remittance abroad, and rates and methods of
taxation, among other things.

CONCENTRATIONS OF CREDIT RISK

Financial instruments that potentially subject the Company to concentrations of
credit risk are cash, accounts receivable and other receivables arising from its
normal business activities. The Company places its cash in what it believes to
be credit-worthy financial institutions. The Company has a diversified customer
base, most of which are in China. The Company controls credit risk related to
accounts receivable through credit approvals, credit limits and monitoring
procedures. The Company routinely assesses the financial strength of its
customers and, based upon factors surrounding the credit risk, establishes an
allowance, if required, for uncollectible accounts and, as a consequence,
believes that its accounts receivable credit risk exposure beyond such allowance
is limited.

CONTINGENCIES

Certain conditions may exist as of the date the financial statements are issued,
which may result in a loss to the Company but which will only be resolved when
one or more future events occur or fail to occur. The Company's management and
legal counsel assess such contingent liabilities, and such assessment inherently
involves an exercise of judgment. In assessing loss contingencies related to
legal proceedings that are pending against the Company or unasserted claims that
may result in such proceedings, the Company's legal counsel evaluates the
perceived merits of any legal proceedings or unasserted claims as well as the
perceived merits of the amount of relief sought or expected to be sought.

If the assessment of a contingency indicates that it is probable that a material
loss has been incurred and the amount of the liability can be estimated, then
the estimated liability would be accrued in the Company's financial statements.
If the assessment indicates that a potential material loss contingency is not
probable but is reasonably possible, or is probable but cannot be estimated,
then the nature of the contingent liability, together with an estimate of the
range of possible loss if determinable and material would be disclosed.


                                      F-11


<PAGE>


                      NUTRADYNE GROUP INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

CONTINGENCIES (continued)
-------------

Loss contingencies considered to be remote by management are generally not
disclosed unless they involve guarantees, in which case the guarantee would be
disclosed.

RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB issued SFAS 158 `Employers' Accounting for Defined
Benefit Pension and Other Postretirement Plans--an amendment of FASB Statements
No. 87, 88, 106, and 132(R)' This Statement improves financial reporting by
requiring an employer to recognize the over funded or under funded status of a
defined benefit postretirement plan (other than a multiemployer plan) as an
asset or liability in its statement of financial position and to recognize
changes in that funded status in the year in which the changes occur through
comprehensive income of a business entity or changes in unrestricted net assets
of a not-for-profit organization. This Statement also improves financial
reporting by requiring an employer to measure the funded status of a plan as of
the date of its year-end statement of financial position, with limited
exceptions. An employer with publicly traded equity securities is required to
initially recognize the funded status of a defined benefit postretirement plan
and to provide the required disclosures as of the end of the fiscal year ending
after December 15, 2006. An employer without publicly traded equity securities
is required to recognize the funded status of a defined benefit postretirement
plan and to provide the required disclosures as of the end of the fiscal year
ending after June 15, 2007. However, an employer without publicly traded equity
securities is required to disclose the following information in the notes to
financial statements for a fiscal year ending after December 15, 2006, but
before June 16, 2007, unless it has applied the recognition provisions of this
Statement in preparing those financial statements:

         a.       A brief description of the provisions of this Statement

         b.       The date that adoption is required

         c.       The date the employer plans to adopt the recognition
                  provisions of this Statement, if earlier.

The requirement to measure plan assets and benefit obligations as of the date of
the employer's fiscal year-end statement of financial position is effective for
fiscal years ending after December 15, 2008. The management is currently
evaluating the effect of this pronouncement on financial statements.

In February 2007, FASB issued FASB Statement No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities. FAS 159 is effective for fiscal
years beginning after November 15, 2007. Early adoption is permitted subject to
specific requirements outlined in the new Statement. Therefore, calendar-year
companies may be able to adopt FAS 159 for their first quarter 2007 financial
statements.

The new Statement allows entities to choose, at specified election dates, to
measure eligible financial assets and liabilities at fair value that are not
otherwise required to be measured at fair value. If a company elects the fair
value option for an eligible item, changes in that item's fair value in
subsequent reporting periods must be recognized in current earnings. FAS 159
also establishes presentation and disclosure requirements designed to draw
comparison between entities that elect different measurement attributes for
similar assets and liabilities.

In December 2007, the FASB issued SFAS No. 160, "Non-controlling Interests in
Consolidated Financial Statements". This Statement amends ARB 51 to establish
accounting and reporting standards for the non-controlling (minority) interest
in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a
non-controlling interest in a subsidiary is an ownership interest in the
consolidated entity that should be reported as equity in the consolidated
financial statements. SFAS No. 160 is effective for the Company's fiscal year
beginning October 1, 2009. Management is currently evaluating the effect of this
pronouncement on financial statements.


                                      F-12


<PAGE>



                      NUTRADYNE GROUP INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


RECENT ACCOUNTING PRONOUNCEMENTS (continued)
--------------------------------

In March 2008, the FASB issued FASB Statement No. 161, Disclosures about
Derivative Instruments and Hedging Activities. The new standard is intended to
improve financial reporting about derivative instruments and hedging activities
by requiring enhanced disclosures to enable investors to better understand their
effects on an entity's financial position, financial performance, and cash flows
The new standard also improves transparency about the location and amounts of
derivative instruments in an entity's financial statements; how derivative
instruments and related hedged items are accounted for under Statement 133; and
how derivative instruments and related hedged items affect its financial
position, financial performance, and cash flows. . It is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008, with early application encouraged. Management is currently evaluating
the effect of this pronouncement on financial statements.

In December 2007, the FASB issued SFAS No. 141(R), "Business Combinations". This
Statement replaces SFAS No. 141, Business Combinations. This Statement retains
the fundamental requirements in Statement 141 that the acquisition method of
accounting (which Statement 141 called the purchase method) be used for all
business combinations and for an acquirer to be identified for each business
combination. This Statement also establishes principles and requirements for how
the acquirer: a) recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any non-controlling
interest in the acquiree; b) recognizes and measures the goodwill acquired in
the business combination or a gain from a bargain purchase and c) determines
what information to disclose to enable users of the financial statements to
evaluate the nature and financial effects of the business combination. SFAS No.
141(R) will apply prospectively to business combinations for which the
acquisition date is on or after Company's fiscal year beginning October 1, 2009.
While the Company has not yet evaluated this statement for the impact, if any,
that SFAS No. 141(R) will have on its consolidated financial statements, the
Company will be required to expense costs related to any acquisitions after
September 30, 2009.

NOTE 3 -OTHER RECEIVABLE

Other receivables as of December 31, 2007 and 2006 are summarized as follows.
The receivable is interest free, unsecured, and due on demand.

                                             2007          2006

           Advance to employees            $ 12,449     $ 28,495

           Advances to store employees      123,313      222,230
                                             33,512           --
           Others                            38,063           --
                                           $207,337     $250,725

          NOTE 4 - PREPAID EXPENSES

The balance of Company prepaid expenses as of December 31, 2007 and 2006
comprised of the following:

                                             2007        2006

          Prepaid heating fees             $ 27,321     $     --
          Prepaid rent                      275,696      206,224
          Other prepaid expenses             16,057           --
                                           $319,074     $206,224


                                      F-13


<PAGE>


                      NUTRADYNE GROUP INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - INVENTORIES

As of December 31, 2007, inventory consisted of the following:

                            2007           2006

      Raw Materials      $   48,902     $       --
     Work-In-Process          5,534             --
      Finished Goods      6,203,014      3,405,048
                         $6,257,450     $3,405,048

NOTE 6 - PROPERTIES AND EQUIPMENT

As of December 31, 2007 the property and equipment of the Company consisted of
the following:

                                                 2007             2006

     Office furniture and fixtures           $   767,958      $   195,767
     Vehicles                                    380,023          206,092
     Buildings                                 1,400,166          973,088
     Total property and equipment              1,548,174        1,374,947
     Less: Accumulated depreciation             (509,518)        (278,510)
     Net value of property and equipment     $ 2,038,629      $ 1,096,437

The Company had depreciation expense of $202,098 for the year ended December 31,
2007. The depreciation expense for the year ended December 31, 2006 was
$122,347.

NOTE 7   INTANGIBLE ASSETS

As of December 31, 2007 and 2006, the intangible assets of the Company consisted
of the following:

                                           2007            2006

     Trade mark                          $  1,097      $     --
     Software                              96,705        91,919
     Total intangible assets               97,801        91,919
     Less: Accumulated amortization       (16,649)      (14,838)
                                         --------      --------
      Net value of intangible assets     $ 81,152      $ 77,081
                                         ========      ========


The amortization expense for the year ended December 31, 2007 and 2006, amounted
to $1,811 and $8,937 respectively.

The amortization expenses for intangible assets for next five years after
December 31, 2007 are as follows:

     December 31, 2008     $17,923
     December 31, 2009      13,336
     December 31, 2010      12,307
     December 31, 2011      11,287
     December 31, 2012       8,551
                           -------
      Total                $63,406
                           -------



                                      F-14


<PAGE>


                      NUTRADYNE GROUP INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8   ACCRUED EXPENSES AND OTHER PAYABLE

The other payable represents the deposits made by the sales representatives and
sales distributors for the right to sale products for the Company. Other
payables and accrued expenses consist of the following as of December 31, 2007
and 2006:

                                                2007           2006
                                            =========================
     Accrued compensation                   $  889,382     $  149,463
     Accrued rent expense                      201,108             --
     Accrued acquisition cost payable           65,802             --
     Accrued interest                           56,737             --
     Accrued payable to other companies         20,920        104,182
     Sales agent deposits                       54,459
     Rent security deposit                      69,842
     Other payable                              76,985        133,599
                                            =========================
      Total                                 $1,435,235     $  387,244
                                            =========================

NOTE 9   ADVANCE FROM CUSTOMERS

The advances from customers amounted to $799,910 and $21,336 as of December 31,
2007 and 2006, represent the deposits made by customers to purchase inventory
from the Company.

NOTE 10   DEFERRED INCOME

A portion of the Company's net revenue is derived directly from
government-sponsored healthcare programs, and the Company is therefore subject
to government regulations on reimbursement on the sales made through the
healthcare programs. The Jilin Province Social Insurance Bureau and Changchun
City Insurance Bureau reimburse 90% of the sales that the Company's pharmacy
retail stores made through the healthcare program networks in the following
month, and retain 10% of the sales until the following year. The amount will be
repaid proportionally based on the level of evaluation made by the Insurance
Bureaus in the following year. The Company classified the 10% of sales that made
through the healthcare program networks as deferred income as the collectablity
of the sales is uncertain. As of December 31, 2007, the Company has deferred
income of $239,937. There was no deferred income as of December 31, 2006.

NOTE 11   SHARES TO BE ISSUED

The Company classifies all amounts, against which shares have not been issued,
as shares to be issued. Once the company issues shares, the amounts are
classified as Common stock. As of December 31, 2007 the Company has total
500,000 shares to be issued with balance of $35,000 pursuant to an agreement
with a software consultant entered into by the Company in 2005.



                                      F-15


<PAGE>


                      NUTRADYNE GROUP INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 12   TAX PAYABLE

Tax payable comprised of the following taxes as of December 31, 2007 and 2006:

                                  2007          2006

     VAT                       $ 20,651     $     --
     Business Tax                88,574           --
     City Construction Tax        6,613           --
     Education Tax                5,229           --
     Income Tax                 160,109      143,941
     Others                       1,723           --
                               --------     --------
           Total               $282,899     $143,941
                               ========     ========

The Company is registered in the State of Delaware and has operations in
primarily two tax jurisdictions - the PRC and the United States. For certain
operations in the US, the Company has incurred net accumulated operating losses
for income tax purposes The Company believes that it is more likely than not
that these net accumulated operating losses will not be utilized in the future.
Therefore, the Company has provided full valuation allowance for the deferred
tax assets arising from the losses at these locations as of December 31, 2007.
Accordingly, the Company has no net deferred tax assets.

The provision for income taxes from continuing operations on income consists of
the following for the years ended December 31, 2007 and 2006:

                                                   2007       2006
      US Current Income Tax Expense(Benefit)
     --------------------------------------------------------------------------
     Federal                                      $    --     $  --
     State                                             --        --
                                                  $    --     $  --

     PRC Current Income Tax Expense               $17,888     $  --

     Total Provision for Income Tax               $17,888     $  --


The following is a reconciliation of the provision for income taxes at the U.S.
federal income tax rate to the income taxes reflected in the Statement of
Operations:


                                                          2007      2006

     Tax expense (credit) at statutory rate - federal      34%        --

     State tax expense net of federal tax                   6%        --

     Changes in valuation allowance                       (40%)       --

     Foreign income tax - PRC                              33%       33%

     Exempt from income tax                               (32.6%)   (33%)

     Tax expense at actual rate                           0.4%        0%


United States of America

Nutradyne has significant income tax net operating losses carried forward from
prior years. Due to the change in ownership of more than fifty percent, the
amount of NOL which may be used in any one year will be subject to a restriction
under section 382 of the Internal Revenue Code. Due to the uncertainty of the
realizability of the related deferred tax assets of $2,470,280, a reserve equal
to the amount of deferred income taxes has been established at December 31,
2007. The Company has provided 100% valuation allowance to the deferred tax
assets as of December 31, 2007.



                                      F-16


<PAGE>


                      NUTRADYNE GROUP INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12   TAX PAYABLE (CONTINUED)

People's Republic of China (PRC)

Pursuant to the PRC Income Tax Laws, the Company's subsidiary is generally
subject to Enterprise Income Taxes ("EIT") at a statutory rate of 33%, which
comprises 30% national income tax and 3% local income tax. The company received
income tax exemption from the People's Republic of China for the three year
period ended December 31, 2006.

As of December 31, 2007, the Company's PRC subsidiary had net taxable income of
$54,206. The Company accrued income taxes @33% on the net taxable income.

The following table sets forth the significant components of the provision for
income taxes for operation in PRC as of December 31, 2007.

                                                   2007             2006

       Net taxable income                        $ 54,206           $   --
       Income tax @33%                           $ 17,888           $   --
-

NOTE 13   SHORT-TERM LOANS PAYABLE

The Company had loans payable amounting to $1,349,593 as of December 31, 2007.
The interest expenses for these loans were totaling $140,028. The loan payable
was $358,176 as of December 31, 2006 and the interest expense for this loan was
$4,780.The loans are secured by personal properties of a main shareholder of the
Companies. The loans payable at December 31, 2007 comprised of the following:

<TABLE>
<CAPTION>
<S>     <C>

                          As of December 31, 2007                                   Loans
----------------------------------------------------------------------------        payable

Loan payable to Changchun Beilong Logistic Trading Co., interest at 12%
annually, due by June 25, 2008                                                      274,176

Loan payable to Runfeng Agriculture Credit Union, interest at 11.02%
annually, due by January 26, 2008                                                   959,616

Loan payable to a non-related party, interest at 12% annually, due by
July 23, 2008                                                                        20,563


Various loans, interest free, unsecured and due on demand                            95,238

                                   Total                                        $ 1,349,593
                                                                                ===========
</TABLE>



                                      F-17


<PAGE>



                      NUTRADYNE GROUP INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14   LOANS FROM RELATED PARTIES

As of December 31, 2007, the loans from related parties were comprised of the
following:

<TABLE>
<CAPTION>
<S>     <C>

                                                                      2007           2006

     Loans payable to a shareholder, interest free, due by         $   41,126     $   36,418
     March 22, 2008

     Loans payable to a shareholder, interest at 12% annually,
     due by February 28, 2008                                         704,811             --

     Loans payable to a shareholder, interest free, due by
     March 22, 2008                                                   791,957             --

     Loans payable to officers, interest free, due by
     March 22, 2008                                                   184,663             --
                                                                   ----------     ----------

                                      Total                        $1,722,557     $   36,418
                                                                   ==========     ==========
</TABLE>

The interest expenses were $54,616 and $0 for the years ended December 31, 2007
and 2006.

NOTE 15   REVERSE ACQUISITION

On November 16, 2007, Nutradyne, Inc. (formerly Digital Learning Management
Corporation) ("Nutradyne") closed the Amended Exchange Agreement with Changchun
Yongxin Dirui Medical Co., Ltd, a China corporation ("Yongxin Medical") and all
of the shareholders of Yongxin Medical.

In accordance with the Amended Exchange Agreement, Nutradyne issued 21,000,000
shares of newly issued common stock and 5 million shares of Series A Preferred
Stock to the Yongxin Medical shareholders or their designees, representing, 70%
of the total issued and outstanding shares of common stock in exchange for 100%
shares of Yongxin. In accordance with the Second Amended Exchange Agreement,
dated April 12, 2008, effective November 16, 2007, only 80% of the shares of
Yongxin, were exchanged for the 21,000,000 shares of newly issued common stock
and 5 million shares of Series A Preferred Stock of Nutradyne, pursuant to the
written approval of the restructuring and a certificate of approval of Yongxin
issued by the People's Government of Jilin Province. For accounting purposes,
this transaction is being accounted for as a reverse merger, since the
stockholders of Yongxin Medical own a majority of the issued and outstanding
shares of common stock of Nutradyne, and the directors and executive officers of
Yongxin Medical became the directors and executive officers of Nutradyne. Thus,
the historical financial statements are still those of "Changchun Yongxin Dirui
Medical Co, Inc. & Subsidiaries".

The remaining 20% shares of Yongxin Medical was recorded as non-controlling
interest in the consolidated financial statements, representing the non
controlling shareholders' proportionate interest in the pre-combination carrying
amounts. The non-controlling parties hold interests only in the results and net
assets of Yongxin Medical and not in the consolidated entity. The non
controlling interests were $2,623,303 and $1,516,138 in the accompanying
financial statements, as of December 31, 2007 and 2006, respectively.

 NOTE 16 - SHAREHOLDERS' EQUITY

In October 2007, the Company enacted a 1-for-12 reverse stock split. All
fractional shares are rounded up and the authorized shares remain the same. The
financial statements have been retroactively restated for the effects of stock
splits.


                                      F-18


<PAGE>


                      NUTRADYNE GROUP INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16 - SHAREHOLDERS' EQUITY (CONTINUED)

Nutradyne issued 3,500,000 shares for the settlement of the convertible notes of
$3,000,000 and the accrued interest on the same, during the year ended December
31, 2007, concurrently with the reverse acquisition. The shares had a fair
market value of $4,655,000.

Nutradyne issued 1,000,000 shares for the settlement of all amounts due and
payable to the ex-CEO, during the year ended December 31, 2007, concurrently
with the reverse acquisition. The shares were recorded at the fair market value
of $ 1,470,000.

Nutradyne issued 21,000,000 shares of newly issued common stock and 5 million
shares of Series A Preferred Stock to the Yongxin shareholders or their
designees, representing, 70% of the total issued and outstanding shares of
common stock.

Subsequent to the reverse stock split and reverse merger, as of December 31,
2007, the Company has 31,041,845 shares of common stock issued and outstanding.

NOTE 17 - WARRANTS

Following is a summary of the warrant activity for the year ended December 31,
2007:

     Outstanding, December 31, 2006       560,923
     Granted during the year            1,250,000
     Forfeited during the year                 --
     Exercised during the year                 --
                                        ---------
     Outstanding, December 31, 2007     1,810,923
                                        =========

Following is a summary of the status of warrants outstanding at December 31,
2007:
<TABLE>
<CAPTION>
<S>     <C>

          Outstanding Warrants                                                      Exercisable Warrants
    ---------------------------------                           ------------------------------------------------------------
       Exercise          Number          Average Remaining      Average Exercise Price         Number       Intrinsic Value
        Price                            Contractual Life

     $0.5-$4.575          1,566,375               3.67                   $0.72               1,566,375      $1,692,724
</TABLE>

The assumptions used in calculating the fair value of options granted using the
Black-Scholes option pricing model are as follows:

The 1,250,000 warrants granted at November 5, 2007:

           Risk-free interest rate                           4.12%
           Expected life of the warrants                 5.00 year
           Expected volatility                                103%
           Expected dividend yield                               0



                                      F-19


<PAGE>



                      NUTRADYNE GROUP INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 18 - LEASES

The Company leases its operating locations. Initial terms are typically 5 to 10
years, followed by additional terms containing priority of renewal options at
the maturity of the lease agreements, and may include rent escalation clauses.
The company recognizes rent expense on a straight-line basis over the term of
the lease.

Minimum rental commitments at December 31, 2007, under all leases having an
initial or remaining non-cancelable term of more than one year are shown:

     2008                            $  693,257
     2009                               734,201
     2010                               723,673
     2011                               723,673
     2012                               692,278
     Total minimum lease payments    $3,567,084

NOTE 19 - SEGMENT INFORMATION

The Company operates in three business segments: retail drug stores,
pharmaceutical medicine wholesales and ginseng product sales. These segments
were identified based on their separate and distinct products and services,
technology, marketing strategies and management reporting. Management evaluates
the segments' operating performance separately and allocates resources based on
their respective financial condition, results of operations and cash flows.
Inter-segment transactions and balances are eliminated in consolidation.

The retail drug store segment is complemented by such core front-end categories
as over-the-counter medications, health and beauty products, and other items. As
of December 31, 2007, the retail drug store segment operated 50 retail stores
with business area of 18,462 M2 in three cities in China primarily.

The pharmaceutical medicine wholesales segment, operated through Yongxin
Medical, provides logistics wholesale distribution of over-the-counter and
prescribed medicines to hospitals, clinics, medical institutions and retail drug
stores.

The ginseng products segment operated through Dingjian, processing and
manufacturing ginseng electuary, pellets and liquid extracts that distributed by
wholesalers and in retail drug stores.

The following table summarizes significant financial information by segment:

                                                 2007              2006
                                               -----------     -----------
     REVENUES FROM UNAFFILIATED CUSTOMERS:
     Retail Drug Stores                        $ 8,496,344     $ 5,520,740
     Pharmaceutical Medicine Wholesales        $39,303,099     $34,461,648
     Unallocated                               $    93,390     $        --
     REVENUES FROM INTER-COMPANY SALES         $ 4,636,799     $ 3,451,042
                                               ===========     ===========

     CONSOLIDATED TOTALS                       $47,892,833     $39,982,388


                                      F-20


<PAGE>



                      NUTRADYNE GROUP INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 19 - SEGMENT INFORMATION (CONTINUED)

                                           2007                2006
                                        ------------      ------------
     NET INCOME:
     Retail Drug Stores                 $    472,328      $    502,450
     Pharmacy Wholesales                   3,264,588         1,270,271
     Unallocated                            (159,537)               --
                                        ============      ============

     Consolidated Totals                $  3,577,379      $  1,772,721

                                             2007              2006
                                        ------------      ------------
     DEPRECIATION AND AMORTIZATION:
     Retail Drug Stores                 $     92,692            12,146
     Pharmacy Wholesales                     110,388           119,138
     Unallocated                                 829                --
                                        ============      ============

     Consolidated Totals                $    203,909      $    131,284


                                            2007              2006
                                        ------------      ------------
     CAPITAL EXPENDITURES:
     Retail Drug Stores                      695,069            34,231
     Pharmacy Wholesales                     330,608           221,663
     Unallocated                               4,249                --
                                         ============      ============

     Consolidated Total                 $  1,029,926      $    255,894

                                             2007              2006
                                        ------------      ------------
     IDENTIFIABLE ASSETS:
     Retail Drug Stores                 $  6,904,424         3,981,038
     Pharmacy Wholesales                  15,292,693         7,017,789
     Unallocated                             201,893                --
                                        ============      ============

     Consolidated Totals                $ 22,399,010      $ 10,998,827


NOTE 20 - CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS

Dingjian had one major vendor that provided over 81% of this company's purchases
for the fiscal year ended December 31, 2007. The accounts payable to this major
vendor amounted to $63,640 as of December 31, 2007. Tianjin Drugstore had one
major vendor that provided over 14% of this company's purchases for the fiscal
year ended December 31, 2007. The accounts payable to this major vendor amounted
to $19,308 as of December 31, 2007.

Yongxin Drugstore had one major customer that provided over 35% of this
company's sales for the fiscal year ended December 31, 2007.The accounts
receivable to this major customer amounted $383,046. Dingjian had three main
customers that provided 47% of this company's sales for the year ended December
31, 2007. The accounts receivable to these three major customers amounted
$45,582. Baishan Drugstore had one major customer that provided over 18% of this
company's sales for the year ended December 31, 2007, The accounts receivable to
this major customer amounted $121,328.

The Company's operations are carried out in the PRC. Accordingly, the Company's
business, financial condition and results of operations may be influenced by the
political, economic and legal environments in the PRC, by the general state of
the PRC's economy. The Company's business may be influenced by changes in
governmental policies with respect to laws and regulations, anti-inflationary
measures, currency conversion and remittance abroad, and rates and methods of
taxation, among other things.


                                      F-21


<PAGE>



                      NUTRADYNE GROUP INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 21 - STATUTORY RESERVE

As stipulated by the Company Law of the People's Republic of China (PRC), net
income after taxation can only be distributed as dividends after appropriation
has been made for the following:

         i.       Making up cumulative prior years' losses, if any;
         ii.      Allocations to the "Statutory surplus reserve" of at least 10%
                  of income after tax, as determined under PRC accounting rules
                  and regulations, until the fund amounts to 50% of the
                  Company's registered capital;
         iii.     Allocations of 5-10% of income after tax, as determined under
                  PRC accounting rules and regulations, to the Company's
                  "Statutory common welfare fund", which is established for the
                  purpose of providing employee facilities and other collective
                  benefits to the Company's employees; and
         iv.      Allocations to the discretionary surplus reserve, if approved
                  in the stockholders' general meeting.

In accordance with the Chinese Company Law, the company has allocated 15% of its
annual net income, amounted to $566,329 as statutory reserve for the year ended
December 31, 2007.

NOTE 22 - BUSINESS ACQUISITIONS

On June 15 2007, Jilin Province Yongxin Chain Drugstore Ltd signed acquisition
agreement with Jilin Province Caoantang Medical Chain Drugstore, Ltd. to acquire
the assets of $183,921, including the lease right and equipment in 29 chain
drugstores (including main chain drugstore and one clinic). Yongxin Chain
Drugstore agrees to inject $144,509 in cash as registered capital and
established the new Baishan Caoantang Chain Drugstore Ltd" (hereinafter referred
to "Caoantang Drugstore. Yongxin Drugstore further agreed to pay $80,076 evenly
over the next 30 months for the previous shareholder of Caoantang Chain
Drugstore, Ltd. After the acquisition, Caoantang Drugstore becomes a 100% owned
subsidiary of Yongxin Drugstore. Caoantang Drugstore owns 27 chain drugstores
which sell western and traditional Chinese medicines and medical equipment in
Baishan city, Jilin Province in China.

The price allocation for this acquisition is as follows:

     Office Equipment and small items               $263,997
                                                    --------
     Total fair market value of assets acquired      263,997
     Total acquisition cost                          263,997
                                                    --------
     Goodwill                                       $     --
                                                    ========

NOTE 23 - DISCONTINUED OPERATIONS

On September 30, 2005, Software Education of America, Inc., subsidiary of
Nutradyne, filed a petition in bankruptcy under Chapter 7 of the U.S. Bankruptcy
Code. The petition was necessitated because SEA was unable to continue to meet
its financial obligations. SEA is presented in the accompanying financial
statements as a discontinued operation.



                                      F-22


<PAGE>


                      NUTRADYNE GROUP INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 23 - DISCONTINUED OPERATIONS (CONTINUED)

Balance Sheet information for the discontinued subsidiaries of Nutradyne, SEA
and Global as of December 31, 2007 is as follows:


     Assets:
           Cash                                     $    106

     Liabilities:
           Accounts payable                         $227,636
           Accrued expenses                          238,581
           Notes payable                             162,666
                                                    --------
     Total liabilities                              $628,883
                                                    --------

     Net liabilities of discontinued operations     $628,777
                                                    ========


Notes payable consist of two unsecured, non-interest bearing notes payable to
two former stockholders of SEA totaling $16,666 due January 15, 2005. No
payments have been made.

Notes payable also include a $146,000 line of credit acquired from SEA and
converted into a term loan payable with interest at the prime rate plus 3.5%
secured by all assets of SEA of approximately $83,000 and guaranteed by the
former stockholders of SEA. This loan is payable in monthly principal payments
of $6,083 plus interest until November 15, 2006, at which time all unpaid
principal and accrued interest is due. A technical event of default occurred
with this note.


                                      F-23



<PAGE>
<TABLE>
<S>     <C>

                                                                                             EXHIBIT 21.1

                                            LIST OF SUBSIDIARIES

Name of Subsidiary                                                                 Place of Incorporation
---------------------------------------------------------------------------------- ----------------------
Digital Learning Institute Inc.                                                    Delaware
Software Education of America, Inc. (1)                                            California
McKinley Educational Services, Inc. (1)                                            California
Digital Knowledge Works, Inc. (1)                                                  Delaware
Coursemate, Inc. (1)                                                               California
Changchun Yongxin Dirui Medical Co., Ltd. (2)                                      China
Jilin Province Yongxin Chain Drugstore Ltd. (3)                                    China
Jilin Dingjian Natural & Health Products Co., Ltd. (4)                             China
Tianjin Jingyongxin Chain Drugstore Ltd. (5)                                       China
Baishan Caoantang Chain Drugstore Ltd. (6)                                         China

   (1) Wholly-owned subsidiary of Digital Learning Institute, Inc.
   (2) 80%-owned subsidiary of Nutradyne Group, Inc.
   (3) Wholly-owned subsidiary of Changchun Yongxin Dirui Medical Co., Ltd.
   (4) 90%-owned subsidiary of Changchun Yongxin Dirui Medical Co., Ltd.
   (5) 90%-owned subsidiary of Jilin Province Yongxin Chain Drugstore Ltd.
   (6) Wholly-owned subsidiary of Jilin Province Yongxin Chain Drugstore Ltd.


</TABLE>