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**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON      D.C. 20549**

**FORM      10-QSB**

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

**March 31, 2006**

**TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934**

**SHINECO,      INC.**

| **Delaware**                                             | **000-50913**                                | **52-2175898**                   |
|----------------------------------------------------------|----------------------------------------------|----------------------------------|
| (State                or other Jurisdiction of Employer) | (Commission                Identification #) | (IRS                file number) |

**Room      3106, Building B,**

**#39      East 3rd Ring Middle Road, Chaoyang District**

**Beijing,      PR      China  100022**

**(0086)      10-58693011**

**Securities      registered under Section 12(b) of the Act:**

**Securities      registered under Section 12(g) of the Act: **

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**APPLICABLE      ONLY TO CORPORATE ISSUERS**

| Class                of Stock                 |   | Outstanding                April 30, 2006 |
|-----------------------------------------------|--------|-------------------------------------------|
| Common                Stock ($.001 par value) |   | 9,298,823                                 |

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**SHINECO,      INC.**

**Table      of Contents**

|                       |                                                                                                                  | **Page                No.** |
|----------------------------|-----------------------------------------------------------------------------------------------------------------------|-----------------------------|
|                       |                                                                                                                  |                        |
|                       | Cautionary                Statement and Risk Factors that May Affect Future Results                                   |                        |
|                       |                                                                                                                  |                        |
| **PART                I**  |                                                                                                                  |                        |
|                       |                                                                                                                  |                        |
| ITEM                1.     | Selected                Financial Statements                                                                          |                        |
|                       | Balance                Sheet – March 31, 2006 (unaudited)                                                       |                        |
|                       | Statements                of Operations – Three Months Ended March 31, 2006 and 2005                (unaudited) |                        |
|                       | Statements                of Cash Flows – Three Months Ended March 31, 2006 and 2005                (unaudited) |                        |
|                       | Notes                to Financial Statements (unaudited)                                                              |                        |
|                       |                                                                                                                  |                        |
| ITEM                2.     | Management’s                Discussion and Analysis and Plan of Operation                                       |                        |
|                       |                                                                                                                  |                        |
| ITEM                3.     | Controls                and Procedures                                                                                |                        |
|                       |                                                                                                                  |                        |
| **PART                II** |                                                                                                                  |                        |
|                       |                                                                                                                  |                        |
| ITEM                1.     | Legal                Proceedings                                                                                      |                        |
|                       |                                                                                                                  |                        |
| ITEM                2.     | Changes                in Securities                                                                                  |                        |
|                       |                                                                                                                  |                        |
| ITEM                3.     | Defaults                Upon Senior Securities                                                                        |                        |
|                       |                                                                                                                  |                        |
| ITEM                4.     | Submission                of Matters to a Vote of Security Holders                                                    |                        |
|                       |                                                                                                                  |                        |
| ITEM                5.     | Other                Information                                                                                      |                        |
|                       |                                                                                                                  |                        |
| ITEM                6.     | Exhibits                and Reports on Form 8-K                                                                       |                        |
|                       |                                                                                                                  |                        |
|                       | Signatures                                                                                                            |                        |

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**CAUTIONARY      STATEMENT REGARDING FORWARD-LOOKING STATEMENTS:**

**RISK      FACTORS:**

| ·   | Shineco’s                success depends heavily upon the continued active participation of                our                President, Yuying Zhang, and our Director Weixing                Yin; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our                stock is subject to the Penny Stock rules, which impose additional                requirements and suitability standards on stock buyers; these rules                may                decrease the market’s interest in our                stock; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | actions                by competitors that negatively affect us—the Chinese herbal remedy market                is extremely competitive, and we face competition from a number of                larger,                better-funded companies; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our                business depends upon continuing product development and technological                change; if we cannot keep up with technological change, we could                suffer                financial losses; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | we                depend heavily on our proprietary technology; if we cannot protect                our                patents and proprietary rights, we may lose                business; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | we                do the large majority of our business in China; if the Chinese economy                slows down, our business could slow down as                well; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                uncertain legal environment in China could limit the legal protections                available to you; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------|

| ·   | the                effects of weather and natural disasters or widespread public health                problems, including the avian flu, could negatively affect our business                and results of operations; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | changes                in China’s political and economic policies could hurt our                business; |
|--------------------|-----------------------------------------------------------------------------------------------------------------|

| ·   | restrictions                on currency exchange may limit our ability to receive or use our                revenues                effectively; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                value of our securities will be affected by the foreign exchange                rate                between U.S. dollars and the Chinese                renminbi; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                market price for our common stock (if one ever develops) will likely                be                very volatile; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------|

| ·   | stockholders                could experience substantial dilution if we issue more stock to raise                more                money; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a                large portion of our common stock is controlled by a small number                of                stockholders who in effect control our business, which means you                will have                little or no influence on our                business; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | there                is no established market for our stock, so you may never be able                to sell                your shares; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | we                have never paid dividends and do not intend to pay dividends for                the                foreseeable future, given our need to retain earnings to finance                the                development and expansion of our                business; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                risk that you will never see a return on your investment, and the                stock                may become worthless; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | other                risks or uncertainties described elsewhere in this report and in                other                reports we have filed and will file with the Securities and Exchange                Commission (SEC). |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**PART      I**

**ITEM      1.                                                      SELECTED      FINANCIAL STATEMENTS**

**SHINECO,      INC.**

|                                                                                                                                                                                                                                                                                                                                          | **March                31,** |      | **December                31,** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------|-----------|---------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                          | **2006**                     |      | **2005**                        |   |
|                                                                                                                                                                                                                                                                                                                                          |                         |      |                            |   |
| **ASSETS**                                                                                                                                                                                                                                                                                                                                    |                         |      |                            |   |
|                                                                                                                                                                                                                                                                                                                                          |                         |      |                            |   |
| Current                assets                                                                                                                                                                                                                                                                                                                 |                         |      |                            |   |
| Cash                and cash equivalents                                                                                                                                                                                                                                                                                                      | $                            | 87,443    |                            | $      | 273,367 |   |
| Trade                receivables, net                                                                                                                                                                                                                                                                                                         |                         | 1,338,571 |                            |   | 1,906,004 |   |
| Other                receivables                                                                                                                                                                                                                                                                                                              |                         | 219,235   |                            |   | 275,138 |   |
| Vendor                deposits                                                                                                                                                                                                                                                                                                                |                         | 821,109   |                            |   | 178,262 |   |
| Prepaid                expenses                                                                                                                                                                                                                                                                                                               |                         | 128,985   |                            |   | 29,813 |   |
| Inventories                                                                                                                                                                                                                                                                                                                                   |                         | 2,013,707 |                            |   | 1,906,756 |   |
|                      Total current assets                                                                                                                                                                                                                                                                            |                         | 4,609,050 |                            |   | 4,569,340 |   |
|                                                                                                                                                                                                                                                                                                                                          |                         |      |                            |   |   |   |
| Property,                plant and equipment, net                                                                                                                                                                                                                                                                                             |                         | 177,082   |                            |   | 120,538 |   |
| Related                party receivables                                                                                                                                                                                                                                                                                                      |                         | 19,367    |                            |   | 41,721 |   |
| Investment                in unconsolidated subsidiaries                                                                                                                                                                                                                                                                                      |                         | 80,286    |                            |   | 78,335 |   |
| Intangibles,                net                                                                                                                                                                                                                                                                                                               |                         | 156,817   |                            |   | 162,674 |   |
|                      Total assets                                                                                                                                                                                                                                                                                    | $                            | 5,042,602 |                            | $      | 4,972,608 |   |
|                                                                                                                                                                                                                                                                                                                                          |                         |      |                            |   |   |   |
| **LIABILITIES                AND STOCKHOLDERS' EQUITY**                                                                                                                                                                                                                                                                                       |                         |      |                            |   |   |   |
|                                                                                                                                                                                                                                                                                                                                          |                         |      |                            |   |   |   |
| Current                liabilities                                                                                                                                                                                                                                                                                                            |                         |      |                            |   |   |   |
| Trade                payables                                                                                                                                                                                                                                                                                                                 |                         | 967,828   |                            | $      | 882,609 |   |
| Related                party payables                                                                                                                                                                                                                                                                                                         |                         | 199,367   |                            |   | 259,788 |   |
| Accrued                liabilities                                                                                                                                                                                                                                                                                                            |                         | 21,242    |                            |   | 41,356 |   |
| Other                payables                                                                                                                                                                                                                                                                                                                 |                         | 78,780    |                            |   | 84,167 |   |
| Notes                payable                                                                                                                                                                                                                                                                                                                  |                         | 663,552   |                            |   | 675,324 |   |
| Taxes                payable                                                                                                                                                                                                                                                                                                                  |                         | 24,438    |                            |   | 41,271 |   |
| Customer                deposits                                                                                                                                                                                                                                                                                                              |                         | 207,228   |                            |   | 202,964 |   |
| Accrued                employee benefits                                                                                                                                                                                                                                                                                                      |                         | 87,902    |                            |   | 49,928 |   |
| Accrued                dividends on preferred stock                                                                                                                                                                                                                                                                                           |                         | 28,000    |                            |   | 7,000 |   |
|                      Total current liabilities                                                                                                                                                                                                                                                                       |                         | 2,278,337 |                            |   | 2,244,407 |   |
|                                                                                                                                                                                                                                                                                                                                          |                         |      |                            |   |   |   |
| Series                A Convertible preferred stock, net of subscription receivable of                $401,065;                                  par value $.001; liquidation preference $.70 per share;                   5,000,000 shares authorized; 2,000,000  shares issued and                outstanding |                         | 998,935   |                            |   | 998,935 |   |
|                      Total liabilities                                                                                                                                                                                                                                                                               |                         | 3,277,272 |                            |   | 3,243,342 |   |
|                                                                                                                                                                                                                                                                                                                                          |                         |      |                            |   |   |   |
| Minority                interest                                                                                                                                                                                                                                                                                                              |                         | 13,285    |                            |   | 12,837 |   |
|                                                                                                                                                                                                                                                                                                                                          |                         |      |                            |   |   |   |
| Stockholders'                equity                                                                                                                                                                                                                                                                                                           |                         |      |                            |   |   |   |
| Common                stock: par value $.001; 25,000,000 shares authorized;                   9,298,823 shares issued and outstanding                                                                                                                                                                                               |                         | 9,299     |                            |   | 9,299 |   |
| Additional                paid in capital                                                                                                                                                                                                                                                                                                     |                         | 1,079,908 |                            |   | 1,079,908 |   |
| Retained                earnings                                                                                                                                                                                                                                                                                                              |                         | 606,504   |                            |   | 573,699 |   |
| Accumulated                other comprehensive income                                                                                                                                                                                                                                                                                         |                         | 56,334    |                            |   | 53,523 |   |
|            Total                stockholders' equity                                                                                                                                                                                                                                   |                         | 1,752,045 |                            |   | 1,716,429 |   |
|                                                                                                                                                                                                                                                                                                                                          |                         |      |                            |   |   |   |
|            Total                liabilities and stockholders' equity                                                                                                                                                                                                                   | $                            | 5,042,602 |                            | $      | 4,972,608 |   |

**See      Notes to Consolidated Financial Statements.**

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**SHINECO,      INC.**

|                                                                             |   | **Three                  months ended** |      |
|----------------------------------------------------------------------------------|--------|-----------------------------------------|-----------|
|                                                                             |   | **March                  31,**          |      |
|                                                                             |   | **2006**                                |      |   | **2005** |   |
|                                                                             |   |                                    |      |   | Restated |   |
|                                                                             |   |                                    |      |   |   |   |
| Revenues                                                                         |   |                                    |      |   |   |   |
| Sales                  revenues                                                  |   | $                                       | 444,048   |   |   | $ | 532,474 |   |
| Cost                  of goods sold                                              |   |                                    | 172,568   |   |   |   | 225,834 |   |
| **Gross                  profit**                                                |   |                                    | 271,480   |   |   |   | 306,640 |   |
|                                                                             |   |                                    |      |   |   |   |   |   |
| Operating                  expenses                                              |   |                                    |      |   |   |   |   |   |
| Other                  selling expenses                                          |   |                                    | 33,026    |   |   |   | 25,609 |   |
| Other                  general and administrative expenses                       |   |                                    | 162,375   |   |   |   | 153,428 |   |
| **Total                  operating expenses**                                    |   |                                    | 195,401   |   |   |   | 179,037 |   |
|                                                                             |   |                                    |      |   |   |   |   |   |
| Net                  operating income                                            |   |                                    | 76,079    |   |   |   | 127,603 |   |
|                                                                             |   |                                    |      |   |   |   |   |   |
| Other                  income (expense)                                          |   |                                    |      |   |   |   |   |   |
| Interest                  expense                                                |   | $                                       | (19,523   | ) |   | $ | (22,461 | ) |
|                      Income(loss)on equity  investments |   |                                    | (2,290    | ) |   |   | -- |   |
| Other                                                                            |   |                                    | (1,619    | ) |   |   | 235 |   |
| **Total                  other income (expense)**                                |   |                                    | (23,432   | ) |   |   | (22,226 | ) |
|                                                                             |   |                                    |      |   |   |   |   |   |
| Income                  before taxes and minority interest                       |   |                                    | 52,647    |   |   |   | 105,377 |   |
|                                                                             |   |                                    |      |   |   |   |   |   |
| Provision                  for income taxes                                      |   |                                    | --        |   |   |   | (1,007 | ) |
|                                                                             |   |                                    |      |   |   |   |   |   |
| Income                  before minority interest                                 |   |                                    | 52,647    |   |   |   | 104,370 |   |
|                                                                             |   |                                    |      |   |   |   |   |   |
| Minority                  interest in loss (income) of subsidiaries              |   |                                    | 1,158     |   |   |   | -- |   |
|                      Income  from continuing operations |   |                                    | 53,805    |   |   |   | 104,370 |   |
|                                                                             |   |                                    |      |   |   |   |   |   |
| Income                  from operations of disposed subsidiaries                 |   |                                    | --        |   |   |   | 75 |   |
|                      Net income from discontinued operations      |   |                                    | --        |   |   |   | 75 |   |
|                                                                             |   |                                    |      |   |   |   |   |   |
| **Net                  income**                                                  |   | $                                       | 53,805    |   |   | $ | 104,445 |   |
|                                                                             |   |                                    |      |   |   |   |   |   |
| Foreign                  currency translation adjustment                         |   |                                    | 2,811     |   |   |   | -- |   |
|                                                                             |   |                                    |      |   |   |   |   |   |
| **Comprehensive                  income**                                        |   | $                                       | 56,616    |   |   | $ | 104,445 |   |
|                                                                             |   |                                    |      |   |   |   |   |   |
| **Basic                  earnings (loss) per common share:**                     |   |                                    |      |   |   |   |   |   |
| From                  continuing operations                                      |   | $                                       | 0.00      |   |   | $ | 0.01 |   |
| From                  discontinued operations                                    |   | $                                       | --        |   |   | $ | -- |   |
| From                  net income                                                 |   | $                                       | 0.00      |   |   | $ | 0.01 |   |
|                                                                             |   |                                    |      |   |   |   |   |   |
| **Diluted                  earnings (loss) per common share:**                   |   |                                    |      |   |   |   |   |   |
| From                  continuing operations                                      |   | $                                       | 0.00      |   |   | $ | 0.01 |   |
| From                  discontinued operations                                    |   | $                                       | --        |   |   | $ | -- |   |
| From                  net income                                                 |   | $                                       | 0.00      |   |   | $ | 0.01 |   |
|                                                                             |   |                                    |      |   |   |   |   |   |
| Denominator                  for basic earnings per share                        |   |                                    | 9,298,823 |   |   |   | 9,298,823 |   |
| Denominator                  for diluted earnings per share                      |   |                                    | 9,298,823 |   |   |   | 9,300,160 |   |

**See      Notes to Consolidated Financial Statements.**

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**SHINECO,      INC.**

|                                                                                                                | **Three                  months ended March 31,** |     |
|---------------------------------------------------------------------------------------------------------------------|---------------------------------------------------|----------|
|                                                                                                                | **2006**                                          |     |   | **2005** |   |
|                                                                                                                |                                              |     |   | Restated |   |
| **Cash                  flows from operating activities:**                                                          |                                              |     |   |   |   |
|                      Net income                                                                      | $                                                 | 53,805   |   |   | $ | 104,445 |   |
| Adjustments                  to reconcile net income to net cash provided by (used in)                  operations: |                                              |     |   |   |   |   |   |
|                      Depreciation and amortization                                                   |                                              | 10,425   |   |   |   | 11333 |   |
|                      Minority interest                                                               |                                              | (1,606   | ) |   |   | (138 | ) |
| Changes                  in operating assets and liabilities:                                                       |                                              |     |   |   |   |   |   |
|                      Trade receivables                                                               |                                              | 550,932  |   |   |   | 44,691 |   |
|                      Other receivables                                                               |                                              | 25,903   |   |   |   | (143,612 | ) |
|                      Vendor deposits                                                                 |                                              | (642,847 | ) |   |   | (69,011 | ) |
|                      Prepaid expenses                                                                |                                              | (99,172  | ) |   |   | 24,275 |   |
|                      Inventories                                                                     |                                              | (106,951 | ) |   |   | (117,289 | ) |
|                      Trade payables                                                                  |                                              | 85,219   |   |   |   | (13,667 | ) |
|                      Accrued liabilities                                                             |                                              | (20,114  | ) |   |   | 64,949 |   |
|                      Other payables                                                                  |                                              | (4,939   | ) |   |   | 1,019,333 |   |
|                      Taxes payable                                                                   |                                              | (16,833  | ) |   |   | (64,651 | ) |
|                      Customer deposits                                                               |                                              | 4,264    |   |   |   | (36,862 | ) |
|                      Accrued employee benefits                                                       |                                              | 37,974   |   |   |   | -- |   |
| **Net                  cash provided by (used in) operations**                                                      |                                              | (123,940 | ) |   |   | 823,796 |   |
|                                                                                                                |                                              |     |   |   |   |   |   |
| **Cash                  flows from investing activities:**                                                          |                                              |     |   |   |   |   |   |
|                      Purchase of property and equipment                                              |                                              | (4,500   | ) |   |   | (5,870 | ) |
|                      Related party receivable                                                        |                                              | 11,898   |   |   |   | -- |   |
| **Net                  cash provided by (used in) investing activities**                                            |                                              | 7,398    |   |   |   | (5,870 | ) |
|                                                                                                                |                                              |     |   |   |   |   |   |
| **Cash                  flows from financing activities:**                                                          |                                              |     |   |   |   |   |   |
|                      Related party payables                                                          |                                              | (60,421  | ) |   |   | 79,046 |   |
|                      Repayments on short-term notes payable                                          |                                              | (11,772  | ) |   |   | (588,201 | ) |
| Proceeds                  from short term loans                                                                     |                                              | --       |   |   |   | (314,009 | ) |
| **Net                  cash provided by (used in) financing activities**                                            |                                              | (72,193  | ) |   |   | (823,164 | ) |
|                                                                                                                |                                              |     |   |   |   |   |   |
| Effect                  of rate changes on cash                                                                     |                                              | 2,811    |   |   |   | -- |   |
|                                                                                                                |                                              |     |   |   |   |   |   |
| Decrease                  in cash and cash equivalents                                                              |                                              | (185,924 | ) |   |   | (5,238 | ) |
|                                                                                                                |                                              |     |   |   |   |   |   |
| Cash                  and cash equivalents, beginning of period                                                     |                                              | 273,367  |   |   |   | 64,272 |   |
| **Cash                  and cash equivalents, end of period**                                                       | $                                                 | 87,443   |   |   | $ | 59,034 |   |
|                                                                                                                |                                              |     |   |   |   |   |   |
| **Supplemental                  disclosures of cash flow information:**                                             |                                              |     |   |   |   |   |   |
|                     Cash paid for interest                                                                | $                                                 | 19,523   |   |   | $ | 22,461 |   |
|                     Cash paid for income taxes                                                            | $                                                 | --       |   |   | $ | 65,658 |   |
|                                                                                                                |                                              |     |   |   |   |   |   |
| **Supplemental                  disclosures of non-cash investing and financing                  activities:**      |                                              |     |   |   |   |   |   |
|                       Preferred stock dividends accrued but not paid                            | $                                                 | 21,000   |   |   | $ | -- |   |
|                       Office furnishings purchased with debt                                    | $                                                 | 56,250   |   |   | $ | -- |   |

**See      notes to consolidated financial statements.**

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**SHINECO,      INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**1.            NATURE      OF OPERATIONS**

**2.           BASIS      OF PRESENTATION**

**3.           SUMMARY      OF SIGNIFICANT ACCOUNTING POLICIES**

----

| Machinery                and equipment | 10                years |
|----------------------------------------|-------------------------|
| Vehicles                               | 7                years  |
| Office                equipment        | 7                years  |
| Office                furnishings      | 5                years  |

----

----

**4.           COMMON      AND PREFERRED STOCK TRANSACTIONS**

**5.           RELATED      PARTY TRANSACTIONS**

----

**6.           PROPERTY,      PLANT AND EQUIPMENT**

|                                                                  |   | **March                31, 2006** |    |   | **December                31, 2005** |   |
|-----------------------------------------------------------------------|--------|-----------------------------------|---------|--------|--------------------------------------|--------|
| Machinery                and equipment                                |   | $                                 | 27,394  |   |                                 | $      | 27,270 |   |
| Vehicles                                                              |   |                              | 52,693  |   |                                 |   | 52,455 |   |
| Office                equipment                                       |   |                              | 78,510  |   |                                 |   | 74,010 |   |
| Office                furnishings                                     |   |                              | 56,250  |   |                                 |   | -- |   |
| Subtotal                                                              |   |                              | 214,847 |   |                                 |   | 153,735 |   |
|     Less:                accumulated depreciation |   |                              | (37,765 | )      |                                 |   | (33,197 | ) |
| Net                property and equipment                             |   | $                                 | 177,082 |   |                                 | $      | 120,538 |   |

**7.           INVESTMENTS**

|                             |   | **Date**     |   |          |   |   | **Initial**    |   |    | **Share                of** |   | **Date**       |    | **03/31/06**   |     |
|----------------------------------|--------|--------------|--------|---------------|--------|--------|----------------|--------|---------|-----------------------------|--------|----------------|---------|----------------|----------|
| **Name**                         |   | **Acquired** |   | **Ownership** |   |   | **Investment** |   |    | **Income/Loss**             |   | **Withdrawal** |    | **Investment** |     |
| Jinan                            |   | 11/25/2005   |   |          | 25.00  | %      |           | $      | 48,825  |                        |   | $              | (10,250 | )              |     |   | $ | 38,575 |   |
| Changchun                        |   | 10/26/2005   |   |          | 25.00  | %      |           |   | 13,567  |                        |   |           | 7,943   |           |     |   |   | 21,510 |   |
| Yantai                           |   | 10/26/2005   |   |          | 25.00  | %      |           |   | 22,091  |                        |   |           | (12,222 | )              |     |   |   | 9,869 |   |
| Liaoyang                         |   | 12/31/2005   |   |          | 25.00  | %      |           |   | 4,707   |                        |   |           | (2,814  | )              |     |   |   | 1,893 |   |
| Xuzhou                           |   | 7/26/2005    |   |          | 15.00  | %      |           |   | 3,609   |                        |   |           | (785    | )              |     |   |   | 2,824 |   |
| Huaian                           |   | 7/26/2005    |   |          | 15.00  | %      |           |   | 3,937   |                        |   |           | (3,937  | )              | 1/4/2006 |   |   | -- |   |
| Shenyang                         |   | 9/26/2005    |   |          | 15.00  | %      |           |   | 263     |                        |   | N/A            |    |           |     |   | 263 |   |
| Shenzhen                         |   | 12/31/2005   |   |          | 15.00  | %      |           |   | 2,491   |                        |   | N/A            |    |           |     |   | 2,491 |   |
| Qiqihaer                         |   | 1/4/2006     |   |          | 19.00  | %      |           |   | 4,241   |                        |   |           | (1,380  | )              |     |   |   | 2,861 |   |
| **                 Totals** |   |         |   |          |   |   |           | $      | 103,731 |                        |   | $              | (23,445 | )              |     |   | $ | 80,286 |   |

**8.           INTANGIBLES**

----

**9.           CUSTOMER      DEPOSITS**

**10.           COMMITMENTS**

| 2006   |   | $      | 44,521  |   |
|--------|--------|--------|---------|--------|
| 2007   |   |   | 59,362  |   |
| 2008   |   |   | 44,521  |   |
| 2009   |   |   | --      |   |
| 2010   |   |   | --      |   |
| Totals |   | $      | 148,404 |   |

**11.           CONTINGENCIES**

**12.      STOCK WARRANTS**

**13.           NEW      ACCOUNTING PRONOUNCEMENTS**

----

**14.           RESTATEMENT**

|                                                                  |   | **Three                months ended March 31,** |      |
|-----------------------------------------------------------------------|--------|-------------------------------------------------|-----------|
|                                                                  |   | Restated                                        |      |   | Original |   |
|                                                                  |   | **2005**                                        |      |   | **2005** |   |
|                                                                  |   |                                            |      |   |   |   |
| Revenues                                                              |   |                                            |      |   |   |   |
| Sales                revenues                                         |   | $                                               | 532,474   |   |   | $ | 797,388 |   |
| Cost                of goods sold                                     |   |                                            | 225,834   |   |   |   | 340,631 |   |
| Gross                profit                                           |   |                                            | 306,640   |   |   |   | 456,757 |   |
|                                                                  |   |                                            |      |   |   |   |   |   |
| Operating                expenses                                     |   |                                            |      |   |   |   |   |   |
| Other                selling expenses                                 |   |                                            | 25,609    |   |   |   | 159,140 |   |
| Other                general and administrative expenses              |   |                                            | 153,428   |   |   |   | 164,607 |   |
| Total                operating expenses                               |   |                                            | 179,037   |   |   |   | 323,747 |   |
| Operating                income                                       |   |                                            | 127,603   |   |   |   | 133,010 |   |
|                                                                  |   |                                            |      |   |   |   |   |   |
| Other                income (expense)                                 |   |                                            |      |   |   |   |   |   |
| Interest                expense                                       |   |                                            | (22,461   | ) |   |   | (22,461 | ) |
| Income                (loss) on equity investments                    |   |                                            | --        |   |   |   | -- |   |
| Other                                                                 |   |                                            | 235       |   |   |   | 235 |   |
| Total                other income (expense)                           |   |                                            | (22,226   | ) |   |   | (22,226 | ) |
| Income                before taxes and minority interest              |   |                                            | 105,377   |   |   |   | 110,784 |   |
|                                                                  |   |                                            |      |   |   |   |   |   |
| Provision                for income taxes                             |   |                                            | 1,007     |   |   |   | 1,007 |   |
| Income                before minority interest                        |   |                                            | 104,370   |   |   |   | 109,777 |   |
|                                                                  |   |                                            |      |   |   |   |   |   |
| Minority                interest in (income)/loss of subsidiaries     |   |                                            | --        |   |   |   | -- |   |
| Income                from continuing operations                      |   |                                            | 104,370   |   |   |   | 109,777 |   |
|                                                                  |   |                                            |      |   |   |   |   |   |
| Income                (loss) from operations of disposed subsidiaries |   |                                            | 75        |   |   |   | 138 |   |
| Loss                (gain) on disposal of subsidiaries                |   |                                            | --        |   |   |   | -- |   |
| Net                income (loss) from discontinued operations         |   |                                            | 75        |   |   |   | 138 |   |
|                                                                  |   |                                            |      |   |   |   |   |   |
| Net                income                                             |   | $                                               | 104,445   |   |   | $ | 109,915 |   |
|                                                                  |   |                                            |      |   |   |   |   |   |
| Foreign                currency translation adjustment                |   |                                            | --        |   |   |   | -- |   |
|                                                                  |   |                                            |      |   |   |   |   |   |
| Comprehensive                income                                   |   | $                                               | 104,445   |   |   | $ | 109,915 |   |
|                                                                  |   |                                            |      |   |   |   |   |   |
| Basic                earnings (loss) per common share:                |   |                                            |      |   |   |   |   |   |
| From                continuing operations                             |   | $                                               | 0.01      |   |   | $ | 0.01 |   |
| From                discontinued operations                           |   | $                                               | 0.00      |   |   | $ | 0.00 |   |
| From                net income                                        |   | $                                               | 0.01      |   |   | $ | 0.01 |   |
|                                                                  |   |                                            |      |   |   |   |   |   |
| Diluted                earnings (loss) per common share:              |   |                                            |      |   |   |   |   |   |
| From                continuing operations                             |   | $                                               | 0.01      |   |   | $ | 0.01 |   |
| From                discontinued operations                           |   | $                                               | 0.00      |   |   | $ | 0.00 |   |
| From                net income                                        |   | $                                               | 0.01      |   |   | $ | 0.01 |   |
|                                                                  |   |                                            |      |   |   |   |   |   |
| Denominator                for basic earnings per share               |   |                                            | 9,298,823 |   |   |   | 9,298,823 |   |
| Denominator                for diluted earnings per share             |   |                                            | 9,300,160 |   |   |   | 9,300,160 |   |

----

|                                                                                                       |   | **Three                months ended****March                31,** |      |
|------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|-----------|
|                                                                                                       |   | Restated                                                          |      |   | Original |   |
|                                                                                                       |   | **2005**                                                          |      |   | **2005** |   |
| **Cash                flows from operating activities:**                                                   |   |                                                              |      |   |   |   |
| Net                income                                                                                  |   | $                                                                 | 104,445   |   |   | $ | 109,915 |   |
|    Adjustments                to reconcile net income to net cash used in operations:       |   |                                                              |      |   |   |   |   |   |
| Depreciation                and amortization                                                               |   |                                                              | 11,333    |   |   |   | 5,863 |   |
| Minority                interest                                                                           |   |                                                              | (138      | ) |   |   | (138 | ) |
|    Changes                in operating assets and liabilities:                              |   |                                                              |      |   |   |   |   |   |
| Trade                receivables                                                                           |   |                                                              | 44,691    |   |   |   | 44,691 |   |
| Other                receivables                                                                           |   |                                                              | (143,612  | ) |   |   | (143,612 | ) |
| Vendor                deposits                                                                             |   |                                                              | (69,011   | ) |   |   | (69,011 | ) |
| Prepaid                expenses                                                                            |   |                                                              | 24,275    |   |   |   | 24,275 |   |
| Inventories                                                                                                |   |                                                              | (117,289  | ) |   |   | (117,289 | ) |
| Trade                payables                                                                              |   |                                                              | (13,667   | ) |   |   | (13,667 | ) |
| Accrued                liabilities                                                                         |   |                                                              | 64,949    |   |   |   | 64,949 |   |
| Other                payables                                                                              |   |                                                              | 1,019,333 |   |   |   | 1,019,333 |   |
| Taxes                payable                                                                               |   |                                                              | (64,651   | ) |   |   | (64,651 | ) |
| Customer                deposits                                                                           |   |                                                              | (36,862   | ) |   |   | (36,862 | ) |
| Accrued                employee benefits                                                                   |   |                                                              | --        |   |   |   | -- |   |
| **   Net                cash used in operations**                                           |   |                                                              | 823,796   |   |   |   | 823,796 |   |
|                                                                                                       |   |                                                              |      |   |   |   |   |   |
| **Cash                flows from investing activities:**                                                   |   |                                                              |      |   |   |   |   |   |
| Related                party receivables                                                                   |   |                                                              | --        |   |   |   | -- |   |
| Purchase                of property and equipment                                                          |   |                                                              | (5,870    | ) |   |   | (5,870 | ) |
| **Net                cash used in investing activities**                                                   |   |                                                              | (5,870    | ) |   |   | (5,870 | ) |
|                                                                                                       |   |                                                              |      |   |   |   |   |   |
| **Cash                flows from financing activities:**                                                   |   |                                                              |      |   |   |   |   |   |
| Related                party payables                                                                      |   |                                                              | 79,046    |   |   |   | 79,046 |   |
| Repayments                on short-term notes payable                                                      |   |                                                              | (588,201  | ) |   |   | (588,201 | ) |
| Proceeds                from short term loans                                                              |   |                                                              | (314,009  | ) |   |   | (314,009 | ) |
| **Net                cash provided by financing activities**                                               |   |                                                              | (823,164  | ) |   |   | (823,164 | ) |
|                                                                                                       |   |                                                              |      |   |   |   |   |   |
| Effect                of rate changes on cash                                                              |   |                                                              | --        |   |   |   | -- |   |
|                                                                                                       |   |                                                              |      |   |   |   |   |   |
| Increase                in cash and cash equivalents                                                       |   |                                                              | (5,238    | ) |   |   | (5,238 | ) |
|                                                                                                       |   |                                                              |      |   |   |   |   |   |
| Cash                and cash equivalents, beginning of period                                              |   |                                                              | 64,272    |   |   |   | 64,272 |   |
| Cash                and cash equivalents, end of period                                                    |   | $                                                                 | 59,034    |   |   | $ | 59,034 |   |
|                                                                                                       |   |                                                              |      |   |   |   |   |   |
| **Supplemental                disclosures of cash flow information:**                                      |   |                                                              |      |   |   |   |   |   |
| Cash                paid for interest                                                                      |   | $                                                                 | 22,461    |   |   | $ | 22,461 |   |
| Cash                paid for income taxes                                                                  |   | $                                                                 | 66,658    |   |   | $ | 66,658 |   |
|                                                                                                       |   |                                                              |      |   |   |
| **Supplemental                disclosures of non-cash investing and financing                activities:** |   |                                                              |      |   |   |
| Stock                issued for services                                                                   |   | $                                                                 | --        |   |   | $ | -- |   |
| Inventory                and intangibles acquired in business combination                                  |   | $                                                                 | --        |   |   | $ | -- |   |

----

**ITEM      2.   MANAGEMENT’S DISCUSSION AND ANALYSIS AND PLAN OF      OPERATION**

**BUSINESS      OVERVIEW**

**Results      of Operations for Quarter Ended March 31, 2006 Compared to March 31,      2005**

----

----

**ITEM      3.   CONTROLS AND PROCEDURES**

*Quarterly      Evaluation of Controls*

*CEO      and CFO Certifications*

*Disclosure      Controls*

*Limitations      on the Effectiveness of Controls*

----

*Scope      of the Evaluation*

*Conclusions.*

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**PART      II**

**ITEM      1.    LEGAL PROCEEDINGS**

**ITEM      2.    CHANGES IN SECURITIES**

**ITEM      3.    DEFAULTS UPON SENIOR SECURITIES**

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

**ITEM      5.    OTHER INFORMATION**

**ITEM      6.    EXHIBITS AND REPORTS ON FORM 8-K**

**Exhibit      No.**

| (b) | We                filed a report on Form 8-K on January 6, 2006 indicating that our                accounting firm had changed its name from Child, Sullivan & Company to                Child, Van Wagoner & Bradshaw, PLLC, and at the same time it changed                its organizational form from a corporation to a professional limited                liability company. As this change in name and organization constituted                a                change in the legal entity conducting the audit of our company, we                disclosed this change in our                accountant. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**SIGNATURES**

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