**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**








**FORM
      10-KSB**




**x**  **ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934**




**For
      the annual period ended December 31, 2007**




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




For
      the
      transition period from _________ to _________




**HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY, INC.**









(Name
      of
      Small Business Issuer in Its Charter)




NEVADA
            
            Commission
                File No:
            
            87-0650264(State
                or other jurisdiction of incorporation or organization)
            
            000-32253
            
            (I.R.S.
                Employer Identification No.)16B/F
                Ruixin Road Bldg. No. 25 Gaoxin Road Xi An 710075 Shaanxi Province,
                China(Address
                of principal executive offices)(86)
                29 8824 6358(Issuer's
                telephone number, including area
                code)





**Securities
      Registered Pursuant to Section 12(b) of the Act: None**




**Securities
      Registered Pursuant to Section 12(g) of the Act:**




**Common
      Stock, Par Value $0.018 Per Share**


**(Title
      of Class)**




Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports); and (2) has been subject
      to such filing requirements for the past 90 days.  Yes x No o




Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant's knowledge, in definite proxy or information statements
      incorporated by reference in Part III of this form 10-KSB or any amendment
      to
      this Form 10-KSB. o




The
      issuer's revenues for the fiscal year ended December 31, 2007 were
      $6,571,531.




The
      aggregate market value of the common stock held by non-affiliates as of March
      19, 2008 was $7,357,148.




State
      the
      number of shares outstanding of each of the issuer's classes of equity
      securities, as of the latest practicable date:




Title
                of Each Class of Equity Securities
            
            Number
                of Shares Outstanding as of March 19, 2008Common
                Stock, $0.018 par value
            
            18,466,169




Transitional
      Small Business Disclosure Format (check one): Yes o No x









TABLE
      OF
      CONTENTS





PagePART
                IITEM
                1.  Description of Business
            
            3ITEM
                2.  Description of Properties
            
            15ITEM
                3.  Legal Proceedings
            
            16ITEM
                4.  Submission of Matters to a Vote of Security
                Holders
            
            16PART
                IIITEM
                5.  Market for Common Equity and Related Stockholder
                Matters
            
            16ITEM
                6.  Management's Discussion and Analysis
            
            17ITEM
                7.  Financial Statements
            
            21ITEM
                8.  Changes in and Disagreements with Accountants on Accounting and
                Financial Disclosures
            
            21ITEM
                8A. Controls and Procedures
            
            21ITEM
                8B. Other Information
            
            22PART
                IIIITEM
                9.  Directors, Executive Officers, Promoters and Control Persons,
                Compliance With Section 16(A) of the Exchange Act
            
            22ITEM
                10. Executive Compensation
            
            23ITEM
                11. Security Ownership of Certain Beneficial Owners and
                Management
            
            23ITEM
                12. Certain Relationships and Related Transactions
            
            24ITEM
                13. Exhibits
            
            24ITEM
                14. Principal Accounting Fees and Services
            
            25





2


**STATEMENT
      REGARDING FORWARD-LOOKING STATEMENTS**




In
      this
      annual report, *the
      terms “Huifeng Bio-Pharmaceutical,” “HFGB,” the “Company,” “we,” “us,” and “our”
refer to Huifeng Bio-Pharmaceutical Technology, Inc., and its subsidiaries,
      Northwest BioTechnic Inc. (“NBTI”) and Huifeng Biochemistry Joint Stock Company
      (“Huifeng”)* .




Except
      for the historical information contained herein, some of the statements in
      this
      Report contain forward-looking statements that involve risks and uncertainties.
      These statements are found in the sections entitled "Business," "Management's
      Discussion and Analysis or Plan of Operation," and "Risk Factors." They include
      statements concerning: our business strategy; expectations of market and
      customer response; liquidity and capital expenditures; future sources of
      revenues; expansion of our proposed product line; and trends in industry
      activity generally. In some cases, you can identify forward-looking statements
      by words such as "may," "will," "should," "expect," "plan," "could,"
      "anticipate," "intend," "believe," "estimate," "predict," "potential," "goal,"
      or "continue" or similar terminology. These statements are only predictions
      and
      involve known and unknown risks, uncertainties and other factors, including,
      but
      not limited to, the risks outlined under "Risk Factors," that may cause our
      or
      our industry's actual results, levels of activity, performance or achievements
      to be materially different from any future results, levels of activity,
      performance or achievements expressed or implied by such forward-looking
      statements. For example, assumptions that could cause actual results to vary
      materially from future results include, but are not limited to: our ability
      to
      successfully develop and market our products to customers; our ability to
      generate customer demand for our products in our target markets; the development
      of our target markets and market opportunities; our ability to manufacture
      suitable products at competitive cost; market pricing for our products and
      for
      competing products; the extent of increasing competition; technological
      developments in our target markets and the development of alternate, competing
      technologies in them; and sales of shares by existing shareholders. Although
      we
      believe that the expectations reflected in the forward-looking statements are
      reasonable, we cannot guarantee future results, levels of activity, performance
      or achievements. Unless we are required to do so under US federal securities
      laws or other applicable laws, we do not intend to update or revise any
      forward-looking statements.





**PART
      I**




**ITEM
      1. DESCRIPTION OF BUSINESS**




**History**





Our
      company, HUIFENG BIO-PHARMACEUTICAL TECHNOLOGY, INC. (“we”, “us”, “our”, “HFGB”,
      the “Company” or “our Company”) was incorporated under the laws of the State of
      Nevada and trades on the Over the Counter ("OTC") Bulletin Board under the
      symbol "HFGB".




HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY, INC. was incorporated in Nevada on March 16,
      2000
      under the name “Enternet, Inc.” On May 23, 2002, the Articles of Incorporation
      were amended to change the name of the Company to “Secured Data, Inc.” On
      October 12, 2005, the Articles of Incorporation were amended to change the
      name
      of the Company to “Huifeng Bio-Pharmaceutical Technology, Inc.”





Since
      October 2002, management's business plan was to seek out a privately held
      business with whom the Company can reorganize so as to take advantage of the
      Company's status as a publicly held corporation.





On
      December 20, 2004, pursuant to the terms of a Stock Purchase Agreement (“Malone
      Agreement”), Art Malone, Jr. sold 7,229,601 shares of the common stock of
      Secured Data, Inc. for $300,000.00 (the “Sale”) to Zhi Lan Wang and Jun Lin,
      individuals. As a result, the 7,229,601 shares of the common stock of the
      Company sold represented approximately 56.18% of the total outstanding stock
      of
      the Company. Immediately thereafter, pursuant to the terms of an Agreement
      and
      Plan of Reorganization dated December 20, 2004 (“Northwest Agreement”), the
      Company initially purchased 30% of the common shares of Northwest BioTechnic
      Inc. (“NBTI”), a British Virgin Islands corporation, in exchange for 80,735,590
      shares of the Company's common stock (“Acquisition”). The purchase price for the
      remaining 70% of NBTI's common shares was $1,900,000.00 payable by the Company's
      issuance of a promissory note (“Promissory Note”) on December 20, 2004. The
      Promissory Note was subsequently converted into 10,465,725 (post a one for
      eighteen reverse split) shares of the Company's common stock. As a result,
      the
      80,735,590 shares of the common stock of the Company sold represented
      approximately 86.3% of the total outstanding stock of the Company.




NBTI
      was
      incorporated in the British Virgin Islands on June 25, 2004. NBTI operates
      through its wholly owned subsidiary, Huifeng Biochemistry Joint Stock Company
      (“Huifeng”), which is a joint venture company established under the laws of the
      PRC and is a company engaging in the production and sales of plant extracts,
      biochemical products and pharmaceutical raw products in the PRC.




3




**Business
      Overview**




HFGB,
      through its wholly owned subsidiary NBTI, owns 100% of Huifeng which produces
      and sells plant extracts, biochemical products and pharmaceutical raw products
      in the PRC. Huifeng was founded on January 18, 2000. With its proprietary
      technology of “Producing Rutin by Eliminating Enzyme and Mucus” together with
      abundant resources of high quality pagoda rice in the Northwest region of China
      as raw material, Huifeng developed and specialized itself as one of the major
      technology based Rutin company in Xian city within two years after
      establishment. Huifeng possesses one of the most advanced and patented
      Rutin-refining technologies in China
      and is a major Rutin supplier for the world market.




Huifeng
      emphasized technology and product innovation and its strategic mission is to
      commercialize Chinese traditional medicine.




**Our
      Products**




Huifeng
      produces a series of Rutin and Rutin related products, listed below by
      category:




Pharmaceutical
                Intermediates
            
            1. NF11
                Rutin (USP standard)
              2. DAB8_DAB9_DAB10_DAB11
                Rutin (German Codex Standard)
              3. Troxerutin
                (farinaceous injection_oral application)
              4. Quercetin,
                L-RhamnonePharmaceutical
                Material
            
            1. Venoruton
                (farinaceous injection_oral application)
              2. Rutin
              3. Berberine
                Hydrochloride
              4. Matrine
              5. Diosmin
              6. L-RhamnosePlant
                Extracts
            
            1. Hesperidin
              2. Naringin
              3. Epimedium
                Extract
              4. Matrine
              5. Puerorin
              6. Siybun
                Marianum P.E




The
      chemical name of Rutin is rue glycoside (Molecular formula: C 27 H 30 O 163 H 2O )
      and it
      is a kind of plant extract. It can inhibit platelet aggregation and prevent
      thrombosis. It can also improve the permeability of capillary vessels, and
      has
      the properties of:




1.
            Anti-
                inflammatory;




2.
            Decreasing
                blood pressure and fat; and




3.
            Mitigating
                cerebral hemorrhage.




Additionally,
      it has positive effect in protecting heart and cerebral hemorrhage and
      ischemia-reperfusion injury. It is widely used as a raw material for the heart
      and cerebral blood vessel medicines as well as an additive for cosmetics and
      functional food. The demand for Rutin increases at an annual rate of
      approximately 30% due to the increased demand for heart and cerebral blood
      vessel medicines as a result of the aging population. Furthermore, the
      improvement in living standards in China also stimulates the growth in the
      demand for functional food and natural cosmetics.




During
      2006, we finished two new products lines, Diosmin and L-Rhamnose.




The
      chemical name of Diosmin is
      7-[[6-o(6-Deoxy-2-L-mannopyranosyl)-β-D-glucopyran-osyl]oxy]-5-hydroxy -2-(3-hydroxy-4-methoxyphenyl)-4H-l-ben-zopyran-4-one).
      Diosmin is a pharmaceutical material, which has comprehensive impact on blood
      vessel feedback system and is suitable for treatment of acute or chronic
      hemorrhoids and chronic insufficiency of vein (lower limbs varicosity, dropsy
      and chronic canker)




4




The
      chemical name of L-Rhamnose is (thymidine-5'-diphosphate-L-rhamnose). Belonging
      to the category of monosackcharide, it is generally applied in manufacturing
      antivirus and anti-tumor raw medicines. In addition, this product can be an
      ingredient for food. It has been used for testing permeation of intestines
      and
      sweet additives. At present, L-Rhamnose is mostly applied in synthetic perfume
      of fruit spice. It is the basic material for fruit spice composition. L-Rhamnose
      has been widely applied in the industrial production and scientific research,
      such as intermediate synthetic perfumes and heart-strength medicines made from
      organic matters. Furthermore, as an ingredient for food, L-Rhamnose can be
      directly added into top-grade coffee, beverage or meat.




**Production
      Facilities**




At
      present, we have two major production facilities that included the following
      equipment resources:




1.
            
            Manufacturing
                plant located at NO 1,Huifeng Rd, Changwu,
                Xianyang:




·
            This
                production site is for refining and manufacturing of new
                products




·
            Has
                a total of eight buildings
                including:




·
            A
                two-level office building·
            A
                four-level staff building





·
            Three
                manufacturing buildings (including extract workshops, refining workshops
                and packaging workshops)·
            One
                raw materials storage building





·
            One
                building for storage of finished products·
            One
                building for dangerous products





·
            Building
                for power and maintenance (including boiler, power distribution and
                maintenance)·
            One
                cafeteria and staff canteen




2.
            
            Manufacturing
                plant located in Fenghui, Changan,
                Xian




·
            This
                production site is for the extraction and supplies of raw materials
                for
                refining




·
            Has
                a total of four buildings
                including:




·
            One
                office building·
            One
                manufacturing building (including extract workshops, crystallization
                workshops, communication workshops and packaging
                workshops),





·
            One
                raw materials building·
            One
                boiler




The
      two
      production facilities together occupy a total area of approximately 300,000
      square feet.  The company has pledged part of its production factilities in
      Changwu factory valued at approximately $1,067,200 to Xi'an Beilin District
      Credit Cooperatives to secure loan facitilies in the amount of $295,320 due
      June
      2008.





In
      2006,
      we introduced 2 new production lines: Diosmin production line for Diosmin,
      L-Rhamnose production line.




We
      currently obtain all of our raw materials from third parties and through various
      farmers located in the Shaanxi province, Gansu province and Shanxi province
      areas of China. Our principal suppliers include Cungui Zhang, Xiaohe Wang and
      Yingwei Xu.  All
      of
      them are the biggest wholesalers in their own areas.





**Target
      Markets And Principal Customers**




In
      2007,
      there was no change in the target customers of our Company. Our products are
      all
      raw materials intermediaries for production of medicines and the users of these
      products are industrial clients. As a result, Huifeng's main target customers
      are pharmaceutical companies and food manufacturers.




5




**Dependence
      on Major Customers**





At
      this
      time we are dependent on  six
      major
      customers for our business. For the fiscal year ended on December 31, 2007
      these
      major customers accounted for approximately 41%  of
      our
      revenues. We are working towards developing a broad base of customers to
      minimize our dependency on any major customers.





**Sales
      And Marketing**




In
      2007,
      there was no change in our target market and the majority of our products are
      still raw materials and intermediaries for production of medicines and
      cosmetics. Our target customers are mostly industrial clients and we continue
      to
      sell our products to pharmaceutical and food manufacturers. Most of our
      customers placed purchase orders directly with our sales and marketing team.
      However, in order to diversify and expand our product sales networks, we began
      using outside distribution channels for some of our export sales in July 2007.
      We accepted purchase orders from professional foreign trade corporations in
      order to expand our international distribution channels and increase sale
      revenues from exports.





Our
      sales
      department was divided into two teams, domestic sales team and export sales
      team.  In 2007, we added two employees in our domestic sales department and
      three new employees in our export sales department. As a result, we increased
      the total number of employees in our sales departments to 23 people, and as
      a
      result strengthened our export sales teams for Europe, West, Eastern and South
      Asia, and America.




We
      did
      not establish any regional representative or sales office in 2007 because our
      products were primarily sold through direct orders from our clients who placed
      orders with our sales department. There was no need for any retail distribution
      of our product.





**Competition**




Huifeng
      engages in Rutin production in China. With its proprietary technology of
“Producing Rutin by Eliminating Enzyme and Mucus” and with abundant resources of
      high quality pagoda rice in the Northwest region of China as raw material,
      Huifeng does not face significant competitions within China.




In
      2007
      our major competitor for Rutin continues to be Sichuan Xieli Pharmaceutical
      Company Limited (“Xieli”). However, we believe that because of Xieli’s lack of
      technology patents and ready access to raw materials, Xieli is gradually fading
      out of the Rutin refining business and is shifting its business from raw
      medicine production to finished medicine production, while retaining a
      relatively small portion of its business in raw medicine
      production.




We
      also
      believe that, in 2007, there were fewer small domestic Rutin manufacturers.
      We
      do not believe that the remaining small manufacturers pose any threat to our
      business. On the contrary, they sometimes become our suppliers and support
      our
      operations.





In
      2007,
      our competitor for Diosmin and L-Rhamnose is Sichuan Huakang Biology Company
      (“Huakang”). However, Huakang has no licenses for drug production and cannot
      sell its products as medicine. The scope of its market is thereby restricted.
      In
      addition, unlike us, they did not have the requisite European Certification
      of
      Suitability (“COS”). Thus they do not pose any threat to us in terms of market
      share and sales, particularly in the export market.





Looking
      forward to 2008, we estimate that there would be some new domestic competitors
      for certain new products that we have started selling, including Resveratrol.
      However, we do not believe that these competitors have mature technologies
      for
      producing Resveratrol at costs lower than ours. Therefore we do not believe
      that
      they pose an immediate threat to our business.




**Principal
      Office**




Our
      principal office is located at 16B/F Ruixin Bldg., No. 25 Gaoxin Road, Xi’an
      710075, Shaanxi Province, China.




**Employees
      And Organization**





As
      of
      December 31, 2007, we had approximately 222 full-time employees. During 2007,
      we
      employed 19 new employees. 10 new employees were allotted to the production
      team; 5 new employees were allotted to the sales team; 1 new employee was
      allotted to the technical team; 1 new employee was allotted to the finance
      team
      and 2 new employees were allotted to the security team. As a result, by the
      end
      of 2007, we had a total of 222 employees. None of our employees are covered
      by a
      collective bargaining agreement and we have never experienced a work stoppage,
      and we consider our labor relations to be excellent.




6




As
      of
      December 31, 2007, our Company organization was as follow:




Department
            
            Employee
                as of end of 2007
            
            Employee
                as of end of 2006Sales
                department:Domestic
                sales department
            
            
            8
            
            
            6Export
                sales department:Export
                section I
            
            
            8
            
            
            7Export
                section II
            
            
            7
            
            
            5Production
                department
            
            
            156
            
            
            146Technical
                department
            
            
            10
            
            
            9Inspection
                department
            
            
            8
            
            
            8Provision
                department
            
            
            5
            
            
            5Personnel
                department
            
            
            5
            
            
            5


Finance
                department
            
            
            7
            
            
            6Security
                department
            
            
            8
            
            
            6TOTAL
            
            
            222
            
            
            203




**Business
      Development And Acquisitions**




In
      2007
      we still focused on new products development and sales channels development.
      We
      successfully commercialized 1 new product and are getting the benefits from
      the
      new export sales channels. Looking forward to 2008, we will focus
      on:




1.
            Commercializing
                an additional one to two new pharmaceutical raw medicines and plant
                extract products and striving to launch these products into the public
                market;




2.
            Obtaining
                American FDA authorization and EU COS authorization so as to increase
                our
                market share in pharmaceutical raw medicines and plant extract products
                in
                both international and domestic
                markets;




3.
            Streamlining
                our organization to ensure smooth operations and
                productions.




**Research
      And Development**




In
      2007
      we continued to focus ourselves on research and development of new products.
      We
      kept the structure of our research and development team.




Looking
      forward to our research and development strategies in 2008, we will focus our
      research and development effort on new products with an aim to develop one
      or
      two new products within 2008. We are striving to launch these products into
      the
      public market in 2008.





The
      amounts we spent on research and development for 2006 and 2007 were $35,186
      and
      $25,547, respectively.




**Patents
      And Intellectual Properties**




Huifeng's
      proprietary technology “Producing Rutin by Eliminating Enzyme and Mucus”
received Chinese national technology patent with a ten-year protection
      period.




Although
      we developed two new products during 2005, we did not obtain any patent for
      our
      new products.




**Government
      Regulations**




The
      Chinese government requires all medicine and medicinal products related
      manufacturers to obtain GMP certification for their pharmaceutical manufacturing
      facilities. Huifeng obtained GMP certification from relevant government
      regulatory bodies in January 1, 2005. Other than GMP certification requirements,
      there was no significant change in the regulatory environment in
      China.




7





**Compliance
      with Environmental Laws**





We
      believe that we are in compliance with environmental laws in the PRC which
      are
      applicable to us. The costs of such compliance do not have a material effect
      on
      our financial condition.





**Regulation
      of Enterprise Income Law**





The
      Enterprise Income Law (“EIT Law’) was promulgated by the National People’s
      Congress on March 16, 2007 to introduce a new uniform taxation regime in the
      PRC. Both resident and non-resident enterprises deriving income from the PRC
      will be subject to this EIT Law from January 1, 2008. It replaces the previous
      two different tax rates applied to foreign-invested enterprises and domestic
      enterprises by only one single income tax rate applied for all enterprises
      in
      the PRC. Under this EIT Law, except for some hi-tech enterprises which are
      subject to EIT rates of 15% and other very limited situation that allows EIT
      rates at 20%, the general applicable EIT rate in the PRC is 25%. Although we
      still enjoy certain tax incentives applicable to foreign-invested enterprises
      prior to the introduction of the EIT Law, the current lower EIT rate will be
      phased up to 25% within a five-year period. Moreover, we may not enjoy further
      tax incentives for our further established companies in the PRC and therefore
      our tax advantages over domestic enterprises may be diminished.




**Risk
      Factors**





**Risks
      Related To Our Business**





***To
      Maximize Our Potential For Future Growth And Achieve Our Expected Revenues,
      We
      Need To Manage Growth In Our Current Operations.***





In
      order
      to maximize potential growth in our current and potential markets, we believe
      that we must expand our manufacturing and marketing operations. This expansion
      will place a significant strain on our management and on our operational,
      accounting, and information systems. We expect that as we continue to grow
      we
      will need to improve our financial controls, operating procedures, and
      management information systems to handle increased operations. We will also
      need
      to effectively train, motivate, and manage our employees. Failure to manage
      our
      growth could disrupt our operations and ultimately prevent us from generating
      the revenues we expect.





***We
      Cannot Guarantee That Our Organic Growth Strategy Will Be
      Successful.***





One
      of
      our growth strategies is to grow organically by increasing the distribution
      and
      sales of our products in new markets outside of China. However, many obstacles
      to entering new markets exist, such as the costs associated with entering into
      new markets, developing and implementing effective marketing efforts abroad
      and
      maintaining attractive foreign exchange ratios. We cannot, therefore, assure
      you
      that we will be able to successfully overcome such obstacles and establish
      our
      products in any additional markets. Our inability to successfully implement
      our
      organic growth strategy may have a negative impact on our growth strategy and
      on
      our future financial condition, results of operations or cash
      flows.




***We
      Cannot Assure You That Our Acquisition Growth Strategy Will Be
      Successful.***





In
      addition to our organic growth strategy we also expect to grow through strategic
      acquisitions. We intend to pursue opportunities to acquire businesses that
      are
      complementary or related to our existing product lines. We may not be able
      to
      locate suitable acquisition candidates at prices that we consider appropriate
      or
      fair. If we do identify an appropriate acquisition candidate, we may not be
      able
      to successfully negotiate the terms of an acquisition, finance the acquisition
      on terms that are satisfactory to us or if the acquisition occurs successfully,
      integrate the acquired business into our existing business. Acquisitions of
      businesses or other material operations may require debt financing or additional
      equity financing, resulting in leverage or dilution of ownership. Integration
      of
      acquired business operations could disrupt our business by diverting management
      away from day-to-day operations. The difficulties of integration may be
      increased by the necessity of coordinating geographically dispersed
      organizations, integrating personnel with disparate business backgrounds and
      combining different corporate cultures. We also may not be able to maintain
      key
      employees or customers of an acquired business or realize cost efficiencies
      or
      synergies or other benefits we anticipated when selecting our acquisition
      candidates. In addition, we may need to record write-downs from future
      impairments of intangible assets, which could reduce our future reported
      earnings. At times, acquisition candidates may have liabilities or adverse
      operating issues that we fail to discover through due diligence prior to the
      acquisition which will be required to comply with laws of the People's Republic
      of China ("PRC"), to the extent applicable. There can be no assurance that
      any
      proposed acquisition will be able to comply with PRC requirements, rules and/or
      regulations, or that we will successfully obtain governmental approvals to
      the
      extent required, which may be necessary to consummate such
      acquisitions.




8





***If
      We Are Not Able To Implement Our Strategies To Achieve Our Business Objectives,
      Our Business Operations And Financial Performance May Be Adversely
      Affected.***





Our
      business plan and growth strategy is based on currently prevailing circumstances
      and the assumption that certain circumstances will or will not occur, as well
      as
      the inherent risks and uncertainties involved in various stages of development.
      However, there is no assurance that we will be successful in implementing our
      strategies or that our strategies, even if implemented, will lead to the
      successful achievement of our objectives. If we are not able to successfully
      implement our strategies, our business operations and financial performance
      may
      be adversely affected.





***If
      We Need Additional Capital To Fund Our Growing Operations, We May Not Be Able
      To
      Obtain Sufficient Capital And May Be Forced To Limit The Scope Of Our
      Operations.***





As
      we
      implement our growth strategies, we may experience increased capital needs
      and
      we may not have enough capital to fund future operations without additional
      capital investments. Our capital needs will depend on numerous factors,
      including (1) our profitability; (2) the release of competitive products by
      our
      competition; (3) the level of our investment in research and development; and
      (4) the amount of our capital expenditures. We cannot assure you that we will
      be
      able to obtain capital in the future to meet our needs.




If
      we
      cannot obtain additional funding, we may be required to:





·
            reduce
                our investments in research and
                development;


·
            limit
                our marketing efforts; and


·
            decrease
                or eliminate capital expenditures.





Such
      reductions could have a material adverse affect our business and our ability
      to
      compete. Even if we do find a source of additional capital, we may not be able
      to negotiate acceptable terms and conditions for receiving the additional
      capital. Any future capital investments could dilute or otherwise materially
      and
      adversely affect the holdings or rights of our existing shareholders. In
      addition, new equity or convertible debt securities issued by us to obtain
      financing could have rights, preferences and privileges senior to our common
      stock. We cannot give you any assurance that any additional financing will
      be
      available to us, or if available, will be on terms favorable to us.





***We
      Depend On Third Parties To Supply Raw Materials, And Any Adverse Changes In
      Such
      Supply Or The Costs Of Raw Materials May Adversely Affect Our
      Operations.***





We
      currently obtain all of our raw materials from third parties and through various
      farms. Due to the nature of the raw materials, mainly plants, the supply of
      these raw materials can be adversely affected by any material change in the
      climate or environmental conditions in China, which may, in turn, result in
      increased costs to purchase these raw materials.





***Intense
      Competition From Existing And New Entities May Adversely Affect Our Revenues
      And
      Profitability.***





We
      compete with other companies, many of whom are developing, or can be expected
      to
      develop, products similar to ours. Some of our competitors are more established
      than we are, and have significantly greater financial, technical, marketing
      and
      other resources than we presently possess. Some of our competitors have greater
      name recognition and a larger customer base. These competitors may be able
      to
      respond more quickly to new or changing opportunities and customer requirements
      and may be able to undertake more extensive promotional activities, offer more
      attractive terms to customers, and adopt more aggressive pricing policies.
      We
      intend to create greater brand awareness for our brand name so that we can
      successfully compete with our competitors. We cannot guarantee that we will
      be
      able to compete effectively with current or future competitors or that the
      competitive pressures we face will not harm our business.





***We
      Depend On Our Key Management Personnel And The Loss Of Their Services Could
      Adversely Affect Our Business.***





We
      place
      substantial reliance upon the efforts and abilities of our executive officers,
      Jingan Wang, our Chairman and Chief Executive Officer; Sanding Tao, our acting
      Chief Financial Officer; and Xinwen Hou, Chief Operations Officer and Secretary.
      The loss of the services of any of our executive officers could have a material
      adverse effect on our business, operations, revenues or prospects. We do not
      maintain key man life insurance on the lives of these individuals.





***We
      May Incur Significant Costs To Ensure Compliance With U.S. Corporate Governance
      And Accounting Requirements.***





We
      may
      incur significant costs associated with our public company reporting
      requirements, costs associated with newly applicable corporate governance
      requirements, including requirements under the Sarbanes-Oxley Act of 2002 and
      other rules implemented by the Securities and Exchange Commission and the NASDAQ
      OTCBB. We expect all of these applicable rules and regulations to increase
      our
      legal and financial compliance costs and to make some activities more
      time-consuming and costly. We also expect that these applicable rules and
      regulations may make it more difficult and more expensive for us to obtain
      director and officer liability insurance and we may be required to accept
      reduced policy limits and coverage or incur substantially higher costs to obtain
      the same or similar coverage. As a result, it may be more difficult for us
      to
      attract and retain qualified individuals to serve on our board of directors
      or
      as executive officers. We are currently evaluating and monitoring developments
      with respect to these newly applicable rules, and we cannot predict or estimate
      the amount of additional costs we may incur or the timing of such
      costs.




9





***We
      May Have Difficulty Raising Necessary Capital To Fund Operations As A Result
      Of
      Market Price Volatility Of Our Shares Of Common
      Stock.***





If
      our
      business development plans are successful, we may require additional financing
      to continue to develop and exploit existing and new technologies and to expand
      into new markets. The exploitation of our technologies may, therefore, be
      dependent upon our ability to obtain equity financing through debt and equity
      or
      other means. In recent years, the securities markets in the United States have
      experienced a high level of price and volume volatility, and the market price
      of
      securities of many companies have experienced wide fluctuations that have not
      necessarily been related to the operations, performance, underlying asset values
      or prospects of such companies.




For
      these
      reasons, our shares of common stock can also be expected to be subject to
      volatility resulting from purely market forces over which we will have no
      control. Such volatility may make it more difficult to find investors willing
      to
      invest in our common stock, or to negotiate equity financing or terms that
      are
      acceptable to us.





**Risks
      Relating To Our Company**





***To
      Maximize Our Potential For Future Growth And Achieve Our Expected Revenues,
      We
      Need To Manage Growth In Our Current Operations.***





In
      order
      to maximize potential growth in our current and potential markets, we believe
      that we must expand our manufacturing and marketing operations. This expansion
      will place a significant strain on our management and on our operational,
      accounting, and information systems. We expect that as we continue to grow
      we
      will need to improve our financial controls, operating procedures, and
      management information systems to handle increased operations. We will also
      need
      to effectively train, motivate, and manage our employees. Our failure to manage
      our growth could disrupt our operations and ultimately prevent us from
      generating the revenues we expect.





***We
      Cannot Assure You That Our Organic Growth Strategy Will Be
      Successful.***





One
      of
      our growth strategies is to grow organically by increasing the distribution
      and
      sales of our products in new markets outside of China. However, many obstacles
      to entering new markets exist, such as the costs associated with entering into
      new markets, developing and implementing effective marketing efforts abroad
      and
      maintaining attractive foreign exchange ratios. We cannot, therefore, assure
      you
      that we will be able to successfully overcome such obstacles and establish
      our
      products in any additional markets. Our inability to successfully implement
      our
      organic growth strategy may have a negative impact on our growth strategy and
      on
      our future financial condition, results of operations or cash
      flows.





***We
      Cannot Assure You That Our Acquisition Growth Strategy Will Be
      Successful.***





In
      addition to our organic growth strategy we also expect to grow through strategic
      acquisitions. We intend to pursue opportunities to acquire businesses that
      are
      complementary or related to our existing product lines. We may not be able
      to
      locate suitable acquisition candidates at prices that we successfully consider
      appropriate. If we do identify an appropriate acquisition candidate, we may
      not
      be able to successfully negotiate the terms of an acquisition, finance the
      acquisition on terms that are satisfactory to us or if the acquisition occurs
      successfully, integrate the acquired business into our existing business.
      Acquisitions of businesses or other material operations may require debt
      financing or additional equity financing, resulting in leverage or dilution
      of
      ownership. Integration of acquired business operations could disrupt our
      business by diverting management away from day-to-day operations. The
      difficulties of integration may be increased by the necessity of coordinating
      geographically dispersed organizations, integrating personnel with disparate
      business backgrounds and combining different corporate cultures. We also may
      not
      be able to maintain key employees or customers of an acquired business or
      realize cost efficiencies or synergies or other benefits we anticipated when
      selecting our acquisition candidates. In addition, we may need to record
      write-downs from future impairments of intangible assets, which could reduce
      our
      future reported earnings. At times, acquisition candidates may have liabilities
      or adverse operating issues that we fail to discover through due diligence
      prior
      to the acquisition which will be required to comply with laws of the People's
      Republic of China ("PRC"), to the extent applicable. There can be no assurance
      that any proposed acquisition will be able to comply with PRC requirements,
      rules and/or regulations, or that we will successfully obtain governmental
      approvals to the extent required, which may be necessary to consummate such
      acquisitions.




10





***If
      We Are Not Able To Implement Our Strategies To Achieve Our Business Objectives,
      Our Business Operations And Financial Performance May Be Adversely
      Affected.***





Our
      business plan and growth strategy is based on currently prevailing circumstances
      and the assumption that certain circumstances will or will not occur, as well
      as
      the inherent risks and uncertainties involved in various stages of development.
      However, there is no assurance that we will be successful in implementing our
      strategies or that our strategies, even if implemented, will lead to the
      successful achievement of our objectives. If we are not able to successfully
      implement our strategies, our business operations and financial performance
      may
      be adversely affected.





***If
      We Need Additional Capital To Fund Our Growing Operations, We May Not Be Able
      To
      Obtain Sufficient Capital And May Be Forced To Limit The Scope Of Our
      Operations.***





As
      we
      implement our growth strategies, we may experience increased capital needs
      and
      we may not have enough capital to fund future operations without additional
      capital investments. Our capital needs will depend on numerous factors,
      including (1) our profitability; (2) the release of competitive products by
      our
      competition; (3) the level of our investment in research and development; and
      (4) the amount of our capital expenditures. We cannot assure you that we will
      be
      able to obtain capital in the future to meet our needs.




If
      we
      cannot obtain additional funding, we may be required to:




·
            reduce
                our investments in research and
                development;


·
            limit
                our marketing efforts; and


·
            decrease
                or eliminate capital expenditures.




Such
      reductions could have a material adverse affect our business and our ability
      to
      compete.




Even
      if
      we do find a source of additional capital, we may not be able to negotiate
      acceptable terms and conditions for receiving the additional capital. Any future
      capital investments could dilute or otherwise materially and adversely affect
      the holdings or rights of our existing shareholders. In addition, new equity
      or
      convertible debt securities issued by us to obtain financing could have rights,
      preferences and privileges senior to our common stock. We cannot give you any
      assurance that any additional financing will be available to us, or if
      available, will be on terms favorable to us.





***We
      Depend On Third Parties To Supply Raw Materials, And Any Adverse Changes In
      Such
      Supply Or The Costs Of Raw Materials May Adversely Affect Our
      Operations.***





We
      currently obtain all of our raw materials from third parties and through various
      farms. Due to the nature of the raw materials, mainly plants, the supply of
      these raw materials can be adversely affected by any material change in the
      climatic or environmental conditions in China, which may, in turn, result in
      increased costs to purchase these raw materials.





***Intense
      Competition From Existing And New Entities May Adversely Affect Our Revenues
      And
      Profitability.***





We
      compete with other companies, many of whom are developing, or can be expected
      to
      develop, products similar to ours. Some of our competitors are more established
      than we are, and have significantly greater financial, technical, marketing
      and
      other resources than we presently possess. Some of our competitors have greater
      name recognition and a larger customer base. These competitors may be able
      to
      respond more quickly to new or changing opportunities and customer requirements
      and may be able to undertake more extensive promotional activities, offer more
      attractive terms to customers, and adopt more aggressive pricing policies.
      We
      intend to create greater brand awareness for our brand name so that we can
      successfully compete with our competitors. We cannot assure you that we will
      be
      able to compete effectively with current or future competitors or that the
      competitive pressures we face will not harm our business.





***We
      Depend On Our Key Management Personnel And The Loss Of Their Services Could
      Adversely Affect Our Business.***





We
      place
      substantial reliance upon the efforts and abilities of our executive officers,
      Jingan Wang, our Chairman and Chief Executive Officer; Sanding Tao our acting
      Chief Financial Officer; Xinwen Hou, Chief Operations Officer and Secretary.
      The
      loss of the services of any of our executive officers could have a material
      adverse effect on our business, operations, revenues or prospects. We do not
      maintain key man life insurance on the lives of these individuals.




11





***We
      May Incur Significant Costs To Ensure Compliance With U.S. Corporate Governance
      And Accounting Requirements.***





We
      may
      incur significant costs associated with our public company reporting
      requirements, costs associated with newly applicable corporate governance
      requirements, including requirements under the Sarbanes-Oxley Act of 2002 and
      other rules implemented by the Securities and Exchange Commission and the NASDAQ
      OTCBB. We expect all of these applicable rules and regulations to increase
      our
      legal and financial compliance costs and to make some activities more
      time-consuming and costly. We also expect that these applicable rules and
      regulations may make it more difficult and more expensive for us to obtain
      director and officer liability insurance and we may be required to accept
      reduced policy limits and coverage or incur substantially higher costs to obtain
      the same or similar coverage. As a result, it may be more difficult for us
      to
      attract and retain qualified individuals to serve on our board of directors
      or
      as executive officers. We are currently evaluating and monitoring developments
      with respect to these newly applicable rules, and we cannot predict or estimate
      the amount of additional costs we may incur or the timing of such
      costs.





***We
      May Have Difficulty Raising Necessary Capital To Fund Operations As A Result
      Of
      Market Price Volatility Of Our Shares Of Common
      Stock.***





If
      our
      business development plans are successful, we may require additional financing
      to continue to develop and exploit existing and new technologies and to expand
      into new markets. The exploitation of our technologies may, therefore, be
      dependent upon our ability to obtain equity financing through debt and equity
      or
      other means. In recent years, the securities markets in the United States have
      experienced a high level of price and volume volatility, and the market price
      of
      securities of many companies have experienced wide fluctuations that have not
      necessarily been related to the operations, performance, underlying asset values
      or prospects of such companies.





For
      these
      reasons, our shares of common stock can also be expected to be subject to
      volatility resulting from purely market forces over which we will have no
      control. Such volatility may make it more difficult to find investors willing
      to
      invest in our common stock, or to negotiate equity financing or terms that
      are
      acceptable to us.





**Risks
      Relating To The People's Republic Of China**





***There
      Could Be Changes In Government Regulations Towards The Pharmaceutical And Health
      Supplement Industries That May Adversely Affect Our
      Business.***





The
      manufacture and sale of pharmaceutical products in the PRC is heavily regulated
      by many state, provincial and local authorities. These regulations significantly
      increase the difficulty and costs involved in obtaining and maintaining
      regulatory approvals for marketing new and existing products. Our future growth
      and profitability depend to a large extent on our ability to obtain regulatory
      approvals. The State Food and Drug Administration of China recently implemented
      new guidelines for licensing of pharmaceutical products. All existing
      manufacturers with licenses, which are currently valid under the previous
      guidelines, are required to apply for the Good Manufacturing Practices ("GMP")
      certifications, and we receive approvals in January 2005. We have received
      our
      certifications. However, should we fail to maintain the GMP certifications
      under
      the new guidelines in the future; our businesses would be materially and
      adversely affected. Moreover, the laws and regulations regarding acquisitions
      of
      the pharmaceutical industry in the PRC may also change and may significantly
      impact our ability to grow through acquisitions.





***Currency
      Conversion And Exchange Rate Volatility Could Adversely Affect Our Financial
      Condition.***





The
      PRC
      government imposes control over the conversion of Renminbi into foreign
      currencies. Under the current unified floating exchange rate system, the
      People's Bank of China publishes an exchange rate, which we refer to as the
      People's Bank of China exchange rate, based on the previous day's dealings
      in
      the inter-bank foreign exchange market. Financial institutions authorized to
      deal in foreign currency may enter into foreign exchange transactions at
      exchange rates within an authorized range above or below the People's Bank
      of
      China exchange rate according to market conditions. Pursuant to the Foreign
      Exchange Control Regulations of the PRC issued by the State Council which came
      into effect on April 1, 1996, and the Regulations on the Administration of
      Foreign Exchange Settlement, Sale and Payment of the PRC which came into effect
      on July 1, 1996, regarding foreign exchange control, conversion of Renminbi
      into
      foreign exchange by Foreign Investment Enterprises, for use on current account
      items, including the distribution of dividends and profits to foreign investors,
      is permissible. Foreign Investment Enterprises are permitted to convert their
      after-tax dividends and profits to foreign exchange and remit such foreign
      exchange to their foreign exchange bank accounts in the PRC. Conversion of
      Renminbi into foreign currencies for capital account items, including direct
      investment, loans, and security investment, is still under certain restrictions.
      On January 14, 1997, the State Council amended the Foreign Exchange Control
      Regulations and added, among other things, an important provision, which
      provides that the PRC government shall not impose restrictions on recurring
      international payments and transfers under current account items.




12




Enterprises
      in the PRC (including Foreign Investment Enterprises) which require foreign
      exchange for transactions relating to current account items, may, without
      approval of the State Administration of Foreign Exchange, or SAFE, effect
      payment from their foreign exchange account or convert and pay at the designated
      foreign exchange banks by providing valid receipts and proofs.





***Most
      Of Our Assets Are Located In China, Any Dividends Of Proceeds From Liquidation
      Is Subject To The Approval Of The Relevant Chinese Government
      Agencies.***





Our
      assets are predominantly located inside China. Under the laws governing foreign
      invested enterprises in China, dividend distribution and liquidation are allowed
      but subject to special procedures under the relevant laws and rules. Any
      dividend payment will be subject to the decision of the board of directors
      and
      subject to foreign exchange rules governing such repatriation. Any liquidation
      is subject to both the relevant government agency's approval and supervision
      as
      well the foreign exchange control. This may generate additional risk for our
      investors in case of dividend payment and liquidation.





***China’s
      economic policies could affect our business.***





Substantially
      all of our assets are located in China and substantially all of our revenue
      is
      derived from our operations in China. Accordingly, our results of operations
      and
      prospects are subject, to a significant extent, to the economic, political
      and
      legal developments in China.





While
      China's economy has experienced a significant growth in the past twenty years,
      growth has been irregular, both geographically and among various sectors of
      the
      economy. The Chinese government has implemented various measures to encourage
      economic growth and guide the allocation of resources. Some of these measures
      benefit the overall economy of China, but may also have a negative effect on
      us.
      For example, our operating results and financial condition may be adversely
      affected by the government control over capital investments or changes in tax
      regulations.





The
      economy of China has been transitioning from a planned economy to a more
      market-oriented economy. In recent years the Chinese government has implemented
      measures emphasizing the utilization of market forces for economic reform and
      the reduction of state ownership of productive assets and the establishment
      of
      corporate governance in business enterprises; however, a substantial portion
      of
      productive assets in China are still owned by the Chinese government. In
      addition, the Chinese government continues to play a significant role in
      regulating industry development by imposing industrial policies. It also
      exercises significant control over China's economic growth through the
      allocation of resources, controlling payment of foreign currency-denominated
      obligations, setting monetary policy and providing preferential treatment to
      particular industries or companies.





***We
      may face obstacles from the communist system in The People's Republic of
      China.***





Foreign
      companies conducting operations in The People's Republic of China face
      significant political, economic and legal risks. The Communist regime in The
      People's Republic of China, including a stifling bureaucracy may hinder Western
      investment.





***We
      may have difficulty establishing adequate management, legal and financial
      controls in The People's Republic of China.***





The
      People's Republic of China historically has been deficient in Western style
      management and financial reporting concepts and practices, as well as in modern
      banking, computer and other control systems. We may have difficulty in hiring
      and retaining a sufficient number of qualified employees to work in The People's
      Republic of China. 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.





***Because
      our assets and operations are located in China, you may have difficulty
      enforcing any civil liabilities against us under the securities and other laws
      of the United States or any state.***





We
      are a
      holding company, and all of our assets are located in the Republic of China.
      In
      addition, our directors and officers are non-residents of the United States,
      and
      all or a substantial portion of the assets of these non-residents are located
      outside the United States. As a result, it may be difficult for investors to
      effect service of process within the United States upon these non-residents,
      or
      to enforce against them judgments obtained in United States courts, including
      judgments based upon the civil liability provisions of the securities laws
      of
      the United States or any state.




13





There
      is
      uncertainty as to whether courts of the Republic of China would
      enforce:





·
            Judgments
                of United States courts obtained against us or these non-residents
                based
                on the civil liability provisions of the securities laws of the United
                States or any state; or





·
            In
                original actions brought in the Republic of China, liabilities against
                us
                or non-residents predicated upon the securities laws of the United
                States
                or any state. Enforcement of a foreign judgment in the Republic of
                China
                also may be limited or otherwise affected by applicable bankruptcy,
                insolvency, liquidation, arrangement, moratorium or similar laws
                relating
                to or affecting creditors' rights generally and will be subject to
                a
                statutory limitation of time within which proceedings may be
                brought.





***The
      PRC legal system embodies uncertainties, which could limit law enforcement
      availability.***





The
      PRC
      legal system is a civil law system based on written statutes. Unlike common
      law
      systems, decided legal cases have little precedence. In 1979, the PRC government
      began to promulgate a comprehensive system of laws and regulations governing
      economic matters in general. The overall effect of legislation over the past
      27
      years has significantly enhanced the protections afforded to various forms
      of
      foreign investment in China. Each of our PRC operating subsidiaries and
      affiliates is subject to PRC laws and regulations. However, these laws and
      regulations change frequently and the interpretation and enforcement involve
      uncertainties. For instance, we may have to resort to administrative and court
      proceedings to enforce the legal protection that we are entitled to by law
      or
      contract. However, since PRC administrative and court authorities have
      significant discretion in interpreting statutory and contractual terms, it
      may
      be difficult to evaluate the outcome of administrative court proceedings and
      the
      level of law enforcement that we would receive in more developed legal systems.
      Such uncertainties, including the inability to enforce our contracts, could
      affect our business and operation. In addition, intellectual property rights
      and
      confidentiality protections in China may not be as effective as in the United
      States or other countries. Accordingly, we cannot predict the effect of future
      developments in the PRC legal system, particularly with regard to the industries
      in which we operate, including the promulgation of new laws. This may include
      changes to existing laws or the interpretation or enforcement thereof, or the
      preemption of local regulations by national laws. These uncertainties could
      limit the availability of law enforcement, including our ability to enforce
      our
      agreements with the government entities and other foreign
      investors.





**Risks
      Related to Corporate and Stock Matters**





***The
      limited trading volume in our stock may cause volatility in the market price
      of
      our common stock.***





Our
      common stock is currently traded on a limited basis on the  OTCBB
      under the symbol, "HFGB.OB"  The
      quotation of our common stock on the OTCBB does not assure that a meaningful,
      consistent and liquid trading market currently exists, and in recent years,
      such
      market has experienced extreme price and volume fluctuations that have
      particularly affected the market prices of many smaller companies like us.
      Our
      common stock is thus subject to volatility. In the absence of an active trading
      market:





·
            investors
                may have difficulty buying and selling or obtaining market
                quotations;





·
            market
                visibility for our common stock may be limited;
                and





·
            a
                lack of visibility for our common stock may have a depressive effect
                on
                the market for our common stock.





***Our
      stock is a penny stock. Trading of our stock may be restricted by the SEC's
      penny stock regulations which may limit a stockholder's ability to buy and
      sell
      our stock.***





Our
      stock
      is a penny stock. The SEC has adopted Rule 15g-9 which generally defines "penny
      stock" to be any equity security that has a market price (as defined) less
      than
      $5.00 per share or an exercise price of less than $5.00 per share, subject
      to
      certain exceptions. Our securities are covered by the penny stock rules, which
      impose additional sales practice requirements on broker-dealers who sell to
      persons other than established customers and "accredited investors". The term
      "accredited investor" refers generally to institutions with assets in excess
      of
      $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual
      income exceeding $200,000 or $300,000 jointly with their spouse. The penny
      stock
      rules require a broker-dealer, prior to a transaction in a penny stock not
      otherwise exempt from the rules, to deliver a standardized risk disclosure
      document in a form prepared by the SEC which provides information about penny
      stocks and the nature and level of risks in the penny stock market. The
      broker-dealer also must provide the customer with current bid and offer
      quotations for the penny stock, the compensation of the broker-dealer and its
      salesperson in the transaction and monthly account statements showing the market
      value of each penny stock held in the customer's account. The bid and offer
      quotations, and the broker-dealer and salesperson compensation information,
      must
      be given to the customer orally or in writing prior to effecting the transaction
      and must be given to the customer in writing before or with the customer's
      confirmation. In addition, the penny stock rules require that prior to a
      transaction in a penny stock not otherwise exempt from these rules, the
      broker-dealer must make a special written determination that the penny stock
      is
      a suitable investment for the purchaser and receive the purchaser's written
      agreement to the transaction. These disclosure requirements may have the effect
      of reducing the level of trading activity in the secondary market for the stock
      that is subject to these penny stock rules. Consequently, these penny stock
      rules may affect the ability of broker-dealers to trade our securities. We
      believe that the penny stock rules discourage investor interest in and limit
      the
      marketability of our common stock.




14




***NASD
      sales practice requirements may also limit a stockholder's ability to buy and
      sell our stock.***





Section
      15(g) of the Securities Exchange Act of 1934, as amended, and Rule 15g-2
      promulgated thereunder by the SEC require 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
      before effecting any transaction in a penny stock for the investor's
      account.





Potential
      investors in our common stock are urged to obtain and read such disclosure
      carefully before purchasing any shares that are deemed to be "penny stock."
      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 for holders of our common stock to resell their shares to third
      parties or to otherwise dispose of them in the market or otherwise.





***Shares
      eligible for future sale may adversely affect the market price of our Common
      stock, as the future sale of a substantial amount of our restricted stock in
      the
      public marketplace could reduce the price of our common
      stock.***





From
      time
      to time, certain of our stockholders may be eligible to sell all or some of
      their 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
      stockholder (or stockholders whose shares are aggregated) who has satisfied
      a
      one-year holding period may, under certain circumstances, sell within any
      three-month period a number of securities which does not exceed the greater
      of
      1% of the then outstanding shares of common stock or the average weekly trading
      -volume of the class during the four calendar weeks prior to such sale. Rule
      144
      also permits, under certain circumstances, the sale of securities, without
      any
      limitations, by a non-affiliate of our company that has satisfied a two-year
      holding period. Any substantial sale of common stock pursuant to Rule 144 or
      pursuant to any resale prospectus may have an adverse effect on the market
      price
      of our securities.




If
      we or
      our independent registered public accountants cannot attest our adequacy in
      the
      internal control measures over our financial reporting, as required by Section
      404 of the U.S. Sarbanes-Oxley Act, for the fiscal year ended December 31,
      2007,
      we may be adversely affected.





As
      a
      public company, we are subject to report our internal control structure and
      procedures for financial reporting in our annual reports on Form 10-KSB, as
      a
      requirement of Section 404 of the U.S. Sarbanes-Oxley Act of 2002 by the U.S.
      Securities and Exchange Commission (the "SEC"). The report must contain an
      assessment by management about the effectiveness of our internal controls over
      financial reporting. Moreover, the independent registered public accountants
      of
      our Company must attest to and report on management's assessment of the same.
      Even if our management attests to our internal control measures to be effective,
      our independent registered public accountants may not be satisfied with our
      internal control structure and procedures. We cannot guarantee the outcome
      of
      the report and it could result in an adverse impact on us in the financial
      marketplace due to the loss of investor confidence in the reliability of our
      financial statements, which could negative influence to our stock market
      price.





**ITEM
      2. DESCRIPTION OF PROPERTY**




See
      “Production Facilities” in “ITEM 1. DESCRIPTION OF BUSINESS”.




15





The
      Company pledged part of its production factilities in Changwu factory valued
      at
      approximately $1,067,200 to Xi'an Beilin District Credit Cooperatives to secure
      loan facitilies in the amount of $295,320 due June 2008.





**ITEM
      3. LEGAL PROCEEDINGS**




We
      are
      currently not involved in any litigation that could have a material adverse
      effect on our financial condition or results of operations. There is no action,
      suit, proceeding, inquiry or investigation before or by any court, public board,
      government agency, self-regulatory organization or body pending or, to the
      knowledge of the executive officers of our company or any of our subsidiaries,
      threatened against or affecting our company, our common stock, any of the
      Company’s subsidiaries or of the Company's subsidiaries' officers or directors
      in their capacities as such, in which an adverse decision could have a material
      adverse effect.





**ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS.**




There
      was
      no submission of matters to a vote of security holders in 2007.




**PART
      II**




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




Our
      common stock is quoted on the Over-the-Counter Bulletin Board (OTCBB) under
      the
      symbol "HFGB.”




Trading
      of our common stock has been limited and sporadic. The following table shows the
      range of high and low bid quotations reported by the OTCBB in each fiscal
      quarter from January 1, 2006 to December 31, 2007. The OTCBB quotations reflect
      inter-dealer prices, without retail mark-up, mark-down or commission, and may
      not represent actual transactions.





**Quarter**
            
            **High**
            
            **Low*****Fiscal
                Year 2007***Fourth
                Quarter
            
            $
            0.78
            
            $
            0.25Third
                Quarter
            
            $
            0.70
            
            $
            0.30Second
                Quarter
            
            $
            0.51
            
            $
            0.25First
                Quarter
            
            $
            0.66
            
            $
            0.27***Fiscal
                Year 2006***Fourth
                Quarter
            
            $
            0.70
            
            $
            0.26Third
                Quarter
            
            $
            0.60
            
            $
            0.30Second
                Quarter
            
            $
            0.60
            
            $
            0.30First
                Quarter
            
            $
            0.70
            
            $
            0.37





**Holders**





As
      of
      March 19, 2008, there were approximately 696 holders of record of our common
      stock. This number does not include an indeterminate number of shareholders
      whose shares are held by brokers in street name.





**Dividends**




We
      presently intend to retain future earnings, if any, to provide funds for use
      in
      the operation and expansion of our business. Accordingly, we have not declared
      or paid any dividends to our common shareholders and do not presently intend
      to
      do so. Any future decision whether to pay dividends will depend on our financial
      condition and any other factors that our Board of Directors deems
      relevant.




**Recent
      Issuances of Unregistered Securities**




None.





**Securities
      authorized for issuance under equity compensation plans**





None.




16





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




**Cautionary
      Statement**




*This
      annual report contains forward-looking statements within the meaning of the
      federal securities laws. These include statements about our expectations,
      beliefs, intentions or strategies for the future, which we indicate by words
      or
      phrases such as "anticipate," "expect," "intend," "plan," "will," "we believe,"
      "HFGB believes," "management believes" and similar language. The forward-looking
      statements are based on the current expectations of HFGB and are subject to
      certain risks, uncertainties and assumptions, including those set forth in
      the
      discussion under "Description of Business" and "Management's Discussion and
      Analysis or Plan of Operation,". The actual results may differ materially from
      results anticipated in these forward-looking statements. We base the
      forward-looking statements on information currently available to us, and we
      assume no obligation to update them.*




**History**





On
      December 20, 2004, pursuant to the Malone Agreement, Art Malone, Jr. ("Selling
      Shareholder") sold 7,229,601 shares of the common stock of the Company for
      $300,000 (the "Sale") to Zhi Lan Wang and Jun Lin, individuals on the closing
      date of December 20, 2004. As a result, the 7,229,601 shares of the common
      stock
      of the Company sold represented approximately 56.18% of the total outstanding
      stock of the Company. Immediately thereafter, On December 20, 2004 HFGB
      completed a Northwest Agreement, of which the Company initially purchased 30%
      of
      the common shares of NBTI in exchange for 80,735,590 shares of the Company's
      common stock ("Acquisition"). The purchase price for the remaining 70% of NBTI's
      common shares was $1,900,000 payable by the Company's issuance of a promissory
      note ("Promissory Note") on December 20, 2004 The Promissory Note may be
      convertible into 10,465,725 (post a one for eighteen reverse split) shares
      of
      the Company's common stock. As a result, the 80,735,590 shares of the common
      stock of the Company sold represented approximately 86.3% of the total
      outstanding stock of the Company. The Exchange resulted in a change of voting
      control of the Company.




NBTI
      was
      incorporated in the British Virgin Islands on June 25, 2004. NBTI operates
      through its wholly owned subsidiary, Huifeng Biochemistry Joint Stock Company
      ("Huifeng"), which is a joint venture company established under the laws of
      China and is engaged in the production and sales of plant extracts, biochemical
      products and pharmaceutical raw products in the PRC.




The
      exchange was treated as a reverse acquisition for accounting purposes. As such,
      the financial information reflected activity subsequent to the acquisition
      for
      HFGB and its subsidiaries and financial activity of NBTI prior to the
      acquisition. We will continue the business operations conducted by
      NBTI.





**Critical
      Accounting Policies**





We
      have
      identified one policy area as critical to the understanding of our consolidated
      financial statements. The preparation of our consolidated financial statements
      requires management to make estimates and assumptions that affect the reported
      amounts of assets and liabilities and disclosure of contingent assets and
      liabilities at the date of the consolidated financial statements and the
      reported amounts of sales and expenses during the reporting periods. With
      respect to net realizable value of the Company's accounts receivable and
      inventories, significant estimation judgments are made and actual results could
      differ materially from these estimates.




The
      Company does not have any reserves against its accounts receivable or
      inventories at December 31, 2007 and 2006. Management's estimation that there
      are no reserves is based on the current facts that there is no significant
      aged
      accounts receivable and the current inventory turnover is sufficient to realize
      the current carrying value of the inventories. In making their judgment,
      management has assumed that there will be continued demand for their products
      in
      the future, thereby maintaining adequate turnover of the inventories.
      Additionally, management has assumed that customers will continue to pay their
      outstanding invoices in a timely manner, and that their customers' financial
      position will not deteriorate significantly in the future, which would result
      in
      their inability to pay their debts to the Company. While the Company's
      management currently believes that there is little likelihood that the actual
      results of their current estimates will differ materially from its current
      estimates, if customer demand for its products decreases significantly in the
      near future, or if the financial position of its customers deteriorates in
      the
      near future, the Company could realize significant write downs for slow moving
      inventories or uncollectible accounts receivable.




17





We
      believe the following is among the most critical accounting policies that impact
      our consolidated financial statements. We suggest that our significant
      accounting policies, as described in our consolidated financial statements
      in
      the Summary of Significant Accounting Policies, be read in conjunction with
      this
      Management's discussion and Analysis of Financial Condition and Results of
      Operations.




We
      recognize revenue in accordance with Staff Accounting Bulletin ("SAB") No.
      104.
      All of the following criteria must exist in order for us to recognize
      revenue:




1.
            Persuasive
                evidence of an arrangement exists;




2.
            Delivery
                has occurred or services have been
                rendered;




3.
            The
                seller's price to the buyer is fixed or determinable
                and




4.
            Collectibility
                is reasonably assured.




The
      majority of the Company's revenue results from sales contracts with distributors
      and revenue is generated upon the shipment of goods. The Company's pricing
      structure is fixed and there are no rebate or discount programs. Management
      conducts credit background checks for new customers as a means to reduce the
      subjectivity of assuring collectability .
      Based
      on these factors, the Company believes that it can apply the provisions of
      SAB
      104 with minimal subjectivity.





**Results
      Of Operations**





The
      following table sets forth selected statement of operations data as a percentage
      of revenues for the periods indicated.




**Year
                Ended**
              **December
                31, 2007**
            
            **Year
                Ended**
              **December
                31, 2006**Revenues
            
            
            100.00
            %
            
            100.00
            %Cost
                of revenues
            
            
            (69.91
            %)
            
            (85.13
            %)Gross
                margin
            
            
            30.09
            %
            
            14.87
            %Selling
                and distribution expenses
            
            
            (1.60
            %)
            
            (3.99
            %)General
                and administrative expenses
            
            
            (5.32
            %)
            
            (9.47
            %)Depreciation
                and amortization
            
            
            (0.73
            %)
            
            (1.49
            %)Interest
                income
            
            
            (0.36
            %
            
            1.90
            %Interest
                expenses
            
            
            (0.46
            %)
            
            (0.31
            %)Other
                income
            
            
            1.67
            %
            
            1.82
            %Other
                expenses
            
            
            (0.74
            %)
            
            0.00
            %Income
                tax expense
            
            
            (4.05
            %)
            
            (0.04
            %)Minority
                interest
            
            
            0.31
            %
            
            0.10
            %Net
                Profit
            
            
            19.53
            %
            
            (4.28
            %)





**Year
      Ended December 31, 2007 Compared To Year Ended December 31,
      2006**




**Revenues,
      Cost of Revenues and Gross Margin**





Revenues
      for the year ended December 31, 2007 were $6,571,531, an increase of
      $ 3,494,752
      or approximately 113.6% from
      $3,076,779 in 2006. Our increase in sales revenues in 2007 was mainly
      attributable to the increase in our sales in pharmaceutical raw materials,
      plant
      extracts and pharmaceutical intermediates in 2007 against 2006. In particular, the
      sales
      volume of our Diosmin and L-Rhamnose products increased rapidly, as a result
      of
      the stable quality of our products and our increased market share for such
      products.




For
                the year ended
              December
                31,Product
            
            2007
            
            2006
            
            Increase/
                (Decrease)Pharmaceutical
                raw materials
            
            $
            3,916,364
            
            $
            2,364,185
            
            $
            1,552,179Plant
                extracts
            
            
            211,723
            
            
            164,877
            
            
            46,846Pharmaceutical
                intermediates
            
            
            2,443,444
            
            
            547,717
            
            
            1,895,727TOTAL
            
            $
            6,571,531
            
            $
            3,076,779
            
            $
            3,494,752




18




Our
      increase in sales of pharmaceutical raw materials in 2007 was mainly due to
      an
      increase in our sales of Diosmin and Troxerutin, two of our major products
      in
      the category of pharmaceutical raw materials. The sales of plant extracts
      increased in 2007 as compared to 2006 due to an increase in our sales of
      Hesperidin Extracts. Our increase in sales of pharmaceutical intermediates
      in
      2007 was mainly due to increase of our sales of L-Rhamnose, our major products
      in the category of pharmaceutical intermediates.





Cost
      of
      revenues for the year ended December 31, 2007 were $4,594,218,
      an increase of $1,974,957 or 75.4% from $2,619,261 as compared to 2006. Compared to 2006, the increase in cost of sales
      of our products was because of the change in costs in the following product
      categories:




For
                the year ended December 31,Product
            
            2007
            
            2006
            
            Increase/ (Decrease)Pharmaceutical
                raw materials
            
            $
            2,936,220
            
            $
            1,969,711
            
            $
            966,509Plant
                extracts
            
            
            153,097
            
            
            137,270
            
            
            15,827Pharmaceutical
                intermediates
            
            
            1,504,901
            
            
            512,280
            
            
            992,621TOTAL
            
            $
            4,594,218
            
            $
            2,619,261
            
            $
            1,974,957




Our
      overall profit margin increased from 15% in 2006 to 30% in 2007. Our profit
      margin for pharmaceutical raw materials increased from 17% in 2006 to 25% in
      2007. The profit margin for Plant extracts increased from 17% in 2006 to 28%
      in
      2007. The profit margin for pharmaceutical intermediates increased from 6%
      in
      2006 to 38% in 2007.  The
      increase in our profit margin for pharmaceutical raw materials was mainly due
      to
      increased sales of Diosmin, whose gross profit margin has increased from 29%
      in
      2006 to 31% in 2007. The increase in our profit margin for pharmaceutical
      intermediates was mainly due to a decrease in the unit cost of L-Rhamnose,
      as we
      are able to utilize a by-product from our Rutin production as raw material
      source for our L-Rhamnose production. As a result the gross profit of our
      L-Rhamnose increased from 41% in 2006 to 45% in 2007.





Gross
      margin for the year ended December 31, 2007 was $1,977,313, an increase of
      $1,519,795 or 332% from $457,518 from the same period in 2006. This was due
      to
      an increase in gross margin for pharmaceutical raw materials by $585,670, of
      which $333,704 or 189% was attributable to the increase in gross margin for
      Diosmin and $251,966 or 115% for other raw materials.





The
      gross
      profit of pharmaceutical intermediates increased by $903,106 or 2,548% for
      the
      year ended December 31, 2007 compared to the same period in 2006. This large
      increase is mainly attributable to an increase in gross profit for L-Rhamnose
      by
      $576,927 or 2,558%, other pharmaceutical intermediates by $326,179 or 2,531%,
      and other plant extracts by $31,019 or 112%. L-Rhamnose and Diosmin were
      launched into the market in November 2006 and did not account for a significant
      portion of the total sales volume of our pharmaceutical intermediates. During
      2007 the sales volume for L-Rhamnose and Dioismin increased dramatically and
      contributed to the significant increase in our gross profit of pharmaceutical
      intermediates.





***General
      and Administrative Expenses***





General
      and Administrative expenses totaled to $349,591 for the year ended December
      31,
      2007, an increase of $58,228 or 20% from $291,363 for the same period in 2006.
      The increase in general and administrative expenses was mainly due to changes
      in
      the following expenses:




1.
                Increase in exchanges losses by daily operations of $73,159 or
                841%
            :
            There
                was an increase of the Renminbi.2.
                Business trip expenses of $17,553 or 464%
            
            Expenses
                for our CEO’s business trip to the United States3.
                Increase in Drug Master File (“DMF”) certification expenses of $13,785 or
                1,723%
            :
            There
                was an increase in our expenses due to DMF certification
                applications.





19




***Selling
      and Distribution Expenses***





Selling
      and distribution expenses amounted to $105,347 for the year ended December
      31,
      2007, a decrease of $17,498 or 14.2% from $122,845 for the same period in 2006.
      The decrease in our selling and distribution expenses in 2007 compared to 2006
      were mainly due to the following:





Decrease
                in meetings expenses of $30,233 or 89%
            :
            In
                2007, our overseas expo fees
                decreased.





***Liquidity
      and Capital Resources***




*Cash*





Our
      cash
      balance amounted to $2,219,694 at December 31, 2007.




During the
      year ended December 31, 2007, our cash used in operating activities amounted
      to
      $43,102, mainly due to the net profit in the current year of $1,283,683. Also,
      in the current year, our accounts receivable increased by $420,855 as a result
      of an increase in our sales. Our inventories increased by $2,074,780 or 356%
      from $582,525 for the fiscal year ended 2006 to $2,657,305 for the same period
      in 2007 as part of our strategy to enhance our production operation. Stocking
      more inventory allows us to reduce seasonal fluctuation in raw material
      availability and cost, and ensures that we have sufficient supply of raw
      materials to meet the increased demand for our products in 2007.





During the
      year ended December 31, 2007, net cash provided by investing activities amounted
      to $128,634.  Loans payments received during the year amounted to
      $459,486.  The Company incurred $330,852 to purchase equipment during 2007.
 Cash flow from financing activities amounted to $1,692,007 from the sale
      of convertible notes and notes payable.




The
      Company is currently funding its operations from and in addition to sales
      revenues.




*Working
      Capital*




Our
      working capital amounted to $6,136,641 at December 31, 2007.




**New
      Accounting Pronouncements**




In
      September 2006, FASB issued Statement 157, “ *Fair
      Value measurements* ”.
      This
      statement defines fair value and establishes a framework for measuring fair
      value in generally accepted accounting principles (“GAAP”). More precisely, this
      statement sets forth a standard definition of fair value as it applies to assets
      or liabilities, the principal market (or most advantageous market) for
      determining fair value (price), the market participants, inputs and the
      application of the derived fair value to those assets and liabilities. The
      effective date of this pronouncement is for all full fiscal and interim periods
      beginning after November 15, 2007. The Company does not expect the adoption
      of
      SFAS 157 to have an impact on the Company’s results of operations or financial
      condition.





In
      February 2007, the FASB issued Statement 159, *“The
      Fair Value Option for Financial Assets and Financial
      Liabilities”* ,
      which
      permits entities to choose to measure many financial instruments and certain
      other items at fair value that are not currently required to be measured at
      fair
      value. SFAS 159 will become effective on January 1, 2008. The Company is
      currently evaluating the impact this new Standard, but believes that it will
      not
      have a material impact on the Company’s financial position.





In
      December 2007, FASB issued Statement 141 (Revised 2007), *“Business
      Combinations”* .
      This
      statement provides guidance on improving the relevance, representational
      faithfulness, and comparability of information that a reporting entity provides
      in its financial reports about a business combination and its effects. This
      Statement will become effective where is the acquisition date is on or after
      the
      beginning of the first annual reporting period beginning on or after December
      15, 2008. The Company is currently evaluating the impact this new Standard,
      but
      believes that it will not have a material impact on the Company’s financial
      position.




20





In
      December 2007, FASB issued Statement 160, *“Noncontrolling
      Interests in Consolidated Financial Statement - an amendment of ARB No.
      51”* ,
      which
      establishes accounting and reporting standards to improve the relevance,
      comparability, and transparency of financial information in its consolidated
      financial statements that include an outstanding noncontrolling interest in
      one
      or more subsidiaries. This effective will effective for all full fiscal and
      interim periods beginning after December 15, 2008. The Company is currently
      evaluating the impact this new Standard, but believes that it will not have
      a
      material impact on the Company’s financial position.





We
      believe that the implementation of this new pronouncement will not have any
      affect on our 2007 consolidated financial statements.




**Inflation**




Inflation
      did not have a material impact on our business in 2007.




**Currency
      Exchange Fluctuations**





All
      of
      Company's revenues and majority of the expenses in 2007 were denominated
      primarily in Renminbi ("RMB"), the currency of China, and was converted into
      US
      dollars using the closing rate method. The balance sheet items are translated
      into US$ using the exchange rates at the respective balance sheet dates. The
      capital and various reserves are translated at historical exchange rates
      prevailing at the time of the transactions while income and expenses items
      are
      translated at the average exchange rate for the year. All exchange differences
      are recorded within equity. As a result of the appreciation of RMB during 2007
      we recognized a foreign currency translation gain of $461,686. There could
      be no
      assurance that RMB-to-U.S. dollar exchange rates will remain stable. The
      appreciation of RMB relative to the U.S. dollar would affect our business,
      financial condition and results of operations. We do not engage in currency
      hedging.





**ITEM
      7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**





The
      financial statements are attached to this Annual Report on Form 10-KSB as
      Appendix A. The report of Company’s Independent Auditor appears at Page F-1
      hereof, the Financial Statements of the Company appear at Pages F-2 through
      F-17
      hereof.




**ITEM
      8.****CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURES**




None.





**ITEM
      8A. CONTROLS AND PROCEDURES**




The
      management of HFGB is responsible for establishing and maintaining adequate
      internal control over financial reporting as such term is defined in Exchange
      Act Rules 13a-15(f) and 15d-15(f). Our internal control over
      financial


reporting
      is designed to provide reasonable assurance regarding the reliability of
      financial reporting and the preparation of financial statements for external
      purposes in accordance with accounting principles generally accepted in the
      United States of America.





Because
      of its inherent limitations, internal control over financial reporting may
      not
      prevent or detect misstatements. Also, 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.





There
      were no significant changes in our internal controls over financial reporting
      identified in connection with this evaluation that occurred during our last
      fiscal quarter that have materially affected, or are reasonably likely to
      materially affect, HFGB's internal controls over financial
      reporting.





Under
      the
      supervision and with the participation of the Chief Executive Officer and acting
      Chief Financial Officer, management conducted an evaluation of the effectiveness
      of its internal control over financial reporting as of December
      31, 2007. The framework on which such evaluation was based is contained in
      the
      report entitled "Internal Control -- Integrated Framework" issued by the
      Committee of Sponsoring Organizations of the Treadway Commission (the "COSO
      Report"). Based on that evaluation and the criteria set forth in the COSO Report,
      management concluded that its internal control over financial reporting was
      effective as of December 31, 2007.




21





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.




**ITEM
      8B. OTHER INFORMATION**




None.




**PART
      III**




**ITEM
      9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
      WITH
      SECTION 16(a) OF THE EXCHANGE ACT.**





**Management
      And Board Of Directors**





The
      following table sets forth the names and ages of our current directors and
      executive officers, their principal offices and positions and the date each
      such
      person became a director or executive officer of our company. Our executive
      officers are elected annually by the Board of Directors. Our directors serve
      one
      year terms until their successors are elected. The executive officers serve
      terms of one year or until their death, resignation or removal by the Board
      of
      Directors. There are no family relationships between any of the directors and
      executive officers. In addition, there were no arrangements or understanding
      between any executive officer and any other person pursuant to which any person
      was selected as an executive officer. Currently, directors are not compensated
      for serving on the Board of Directors. We have not established compensation
      or
      executive committees. Currently, our entire board of directors serves as our
      audit committee. Because of the small size of the Company and the risk attendant
      to a small public company, we are currently unable to attract an audit committee
      financial expert to our Board of Directors.





**Name**
            
            **Position**
            
            **Date
                Of Appointment**Jingan
                Wang
            
            Chief
                Executive Officer
            
            December
                20, 2004Sanding
                Tao
            
            Chief
                Financial Officer
            
            December
                20, 2004Xinwen
                Hou
            
            Director
                and Secretary
            
            December
                20, 2004




**Biographies
      Of Officers And Directors**




***Jingan
      Wang***




Mr.
      Jingan Wang, age 48, Chief Executive Officer of the Company, is the founder
      and
      currently serves as President of Huifeng. Mr. Wang has over fifteen years of
      experience in accounting and financial management area. Mr. Wang has served
      as
      Accounting Supervisors and Chief Financial Officers for various companies during
      his professional career. Before Mr. Wang founded Huifeng in 2000, he was the
      Chief Financial Officer for Wei Xing Enterprises from 1999 to 2000. In 2004,
      he
      was awarded "the Entrepreneur of the Year" by the Xian Hi Tech Development
      Zone.
      Mr. Wang is also a certified public accountant.




***Sanding
      Tao***




Mr.
      Sanding Tao, age 40, Chief Financial Officer of the Company and of Huifeng.
      Mr.
      Tao served as VP of Finance and CFO for various technology and bio-tech firms
      before he joined Huifeng in 2003. From 1998 - 2000, Mr. Tao served as Chief
      Financial Officer for Xian Lan Xi Science & Technology, Inc.; and from 2000
      -2003, Mr. Tao served as Chief Financial Officer for Xian Xing Yi Science &
Technology, Inc. Mr. Tao is a graduate of Chinese Southern Financial
      College.




22




***Xinwen
      Hou***




Mr.
      Xinwen Hou, age 40, Director and Secretary of the Company, currently also serves
      as Assistant to the President and as Company Secretary for Huifeng Biochemistry
      Joint Stock Company ("Huifeng") in Xian, China. Mr. Hou held various leadership
      positions in different public companies in China before he joined Huifeng in
      January 2004. From 1997 - 2003, Mr. Hou served as Company Secretary for De
      Li
      Bang Pharmaceutical Inc., which is listed on China's A share stock exchange.
      He
      is also a reputable economist. He graduated from Xian Transportation University
      with a major in Business Administration.




**Indemnification
      Of Directors And Officers**




Our
      articles of incorporation limit the liability of directors to the maximum extent
      permitted by Nevada law. This limitation of liability is subject to exceptions
      including intentional misconduct, obtaining an improper personal benefit and
      abdication or reckless disregard of director duties. Our articles of
      incorporation and bylaws provide that we may indemnify its directors, officer,
      employees and other agents to the fullest extent permitted by law. Our bylaws
      also permit us to secure insurance on behalf of any officer, director, employee
      or other agent for any liability arising out of his or her actions in such
      capacity, regardless of whether the bylaws would permit indemnification. We
      currently do not have such an insurance policy.




Insofar
      as indemnification for liabilities arising under the Securities Act of 1933
      may
      be permitted for our directors, officers and controlling 1934 persons pursuant
      to the foregoing provisions, or otherwise, we have been advised that in the
      opinion of the Securities and Exchange Commission such indemnification is
      against public policy as expressed in the Securities Act and is, therefore,
      unenforceable.





**Code
      Of Ethics**




We
      have
      adopted a Code of Ethics and Business Conduct authorizing the establishment
      of a
      committee to ensure that our disclosure controls and procedures remain
      effective.  Our Code also defines the standard of conduct expected by our
      officers, directors and employees.




**Compliance
      With Section 16(A) Of The Securities Exchange Act Of 1934**




Section
      16(a) of the Securities Exchange Act of 1934, as amended, requires our executive
      officers and directors and persons who own more than 10% of a registered class
      of our equity securities to file with the Securities and Exchange Commission
      initial statements of beneficial ownership, reports of changes in ownership
      and
      annual reports concerning their ownership of our common stock and other equity
      securities, on Forms 3, 4 and 5 respectively. Executive officers, directors
      and
      greater than 10% shareholders are required by the Securities and Exchange
      Commission regulations to furnish our Company with copies of all Section 16(a)
      reports they file.




To
      the
      Company's knowledge, based solely on a review of the copies of the reports
      furnished to the Company, all executive officers, directors and greater than
      10%
      shareholders filed the required reports in a timely manner.




**Directors
      Compensation**




The
      directors and executives of the Company received no compensation from the
      Company for the fiscal year ended December 31, 2007. The Company currently
      has
      no agreements for compensation of its executives, and has no stock option plan
      or other equity compensation plan for its employees.




**ITEM
      10. EXECUTIVE COMPENSATION**





The
      directors and executives of the Company received no compensation from the
      Company for the fiscal year ended December 31, 2007. The Company currently
      has
      no agreements for compensation of its executives, and has no stock option plan
      or other equity compensation plan for its employees.





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




The
      following table sets forth certain information regarding beneficial ownership
      of
      common stock as of March 19, 2008 by each person known to us to own beneficially
      more than 5% of our common stock, each of our directors, each of our named
      executive officers; and all executive officers and directors as a group. Except
      as otherwise indicated, all persons listed below have (i) sole voting power
      and
      investment power with respect to their shares of Common Stock, except to the
      extent that authority is shared by spouses under applicable law, and (ii) record
      and beneficial ownership with respect to their shares of stock. The percentage
      of beneficial ownership is based upon 18,466,169 shares of Common Stock
      outstanding as of March 19, 2008. Unless otherwise identified, the address
      of
      the directors, officers and 5% beneficial owners of the Company listed above
      is
      16B/F Ruixin Road Bldg. No. 25 Gaoxin Road, Xi’an 710075 Shaanxi Province,
      China.





**Name**
            
            **Position
                Held**
            
            **Shares
                Owned**
            
            **%
                Owned**Jingan
                Wang
            
            
            Chief
                Executive Officer
            
            
            7,305,074
            
            
            39.56
            %Sanding
                Tao
            
            
            Chief
                Financial Officer
            
            
            325,442
            
            
            1.76
            %Xinwen
                Hou
            
            
            Director
                and Secretary
            
            
            325,442
            
            
            1.76
            %**All
                directors and executive officers as a group**
            
            **7,955,958**
            
            
            **43.08**
            **%**




23





**ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE**




There
      were no transactions with related persons during 2007.





All
      directors of the Company are executive officers of the Company. None of the
      directors is independent.




**ITEM
      13. EXHIBITS**




**EXHIBITS**





**Exhibit
                No.**
            
            **Description**3.1
            
            Articles
                of Incorporation(1)3.2
            
            Certificate
                of Amendment to Articles of Incorporation (Incorporated by reference
                to
                the exhibits to the Annual Report on Form 10-K filed on June 20,
                2005.)3.3
            
            Bylaws
                of the Company(1)4.1
            
            Secured
                Convertible Promissory Note due and payable in full on December 30,
                2009(2)4.2
            
            Form
                of Warrant(2)10.1
            
            Purchase
                Agreement made as of October 27, 2006 among Xi’an Huifeng Biochemistry
                Group Co., Ltd. and Shaanxi Pharmaceutical Chemical Facility Co.,
                Ltd.
                (Incorporated by reference to the exhibits to the Form 8-K filed
                on
                October 31, 2006.)10.2
            
            Securities
                Purchase Agreement dated December 31, 2007 by and among Professional
                Offshore Opportunity Fund, Peter Treadway, Janet Wang, Manilal Patel
                Ltd.,
                Ancora Greater China Fund, Strategic Alliance Fund, L.P., and Strategic
                Alliance Fund II, L.P.(2)10.3
            
            Registration
                Rights Agreement dated December 31, 2007 by and among Professional
                Offshore Opportunity Fund, Ltd., Peter Treadway, Janet Wang, Manilal
                Patel, Ancora Greater China Fund, Strategic Alliance Fund, L.P.,
                and
                Strategic Alliance Fund II, L.P.(2)10.4
            
            Pledge
                Agreement dated December 31, 2007 by and among Jing’an Wang, Junchao Wang
                and Zhihua Zhang (collectively, the “Pledgors”),
                Professional Offshore Opportunity Fund, Ltd., Peter Treadway, Janet
                Wang,
                Manilal Patel, Ancora Greater China Fund, Strategic Alliance Fund,
                L.P.,
                and Strategic Alliance Fund II, L.P. (collectively, the “Pledgee”)(2)10.5
            
            Pledge
                Agreement dated as of December 31st, 2007 by and among Jing'an Wang,
                Xinwen Hou, Junqi Zhang, Binjun Wang, Xugang Wang, and Zhilan Wang
                (collectively, the “Pledgor”),
                Professional Offshore Opportunity Fund, Ltd., Peter Treadway, Janet
                Wang,
                Manilal Patel, Ancora Greater China Fund, Strategic Alliance Fund,
                L.P.
                and Strategic Alliance Fund II, L.P. (collectively, The “Pledgee”)
                and Northwest Biotechnic Inc., a British Virgin Islands corporation(2)21.1
            
            List
                of Subsidiaries (Incorporated by reference to the exhibits to the
                Registration Statement on Form SB-2 filed on January 30,
                2008)




24




31.1
            
            Sarbanes
                Oxley Section 302 Certification of Chief Executive
                Officer31.2
            
            Sarbanes
                Oxley Section 302 Certification of Chief Financial
                Officer32.1
            
            Sarbanes
                Oxley Section 906 Certification of Chief Executive
                Officer32.2
            
            Sarbanes
                Oxley Section 906 Certification of Chief Financial
                Officer99.1
            
            Code
                of Ethics(3)





(1)
            Incorporated
                by reference to the exhibits to the Registration Statement on Form
                SB-2
                filed onJuly
                28, 2000.




(2)
            Incorporated
                by reference to the exhibits to the Form 8-K filed on January 3,
                2008.




(3)
            Incorporated
                by reference from the Annual Report on Form 10-K filed on June 20,
                2005.





**ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**





**Audit
      Fees**




The
      aggregate fees billed for each of the last two fiscal years for professional
      services rendered by the principal accountant for our audit of annual financial
      statements and review of financial statements included in our Form 10-KSBs
      and
      10-QSBs for services that are normally provided by the accountant in connection
      with statutory and regulatory filings or engagements for those fiscal years
      were:




2007:
      $74,000 - Jimmy C.H. Cheung & Co.





2006:
      $68,550 - Jimmy C.H. Cheung & Co.




**Audit-Related
      Fees**




For
      fiscal 2007 and 2006, the Company's auditors did not bill any fees for assurance
      and related services that are reasonably related to the performance of the
      audit
      or review of the Company's financial statements and are not reported under
      "Audit Fees" above.





**Tax
      Fees**




No
      fees
      were billed by the Company's auditors for professional services for tax
      compliance, tax advice, and tax planning for fiscal 2007 and 2006, respectively.





**All
      Other Fees**




The
      aggregate fees billed in each of the last two fiscal years for the products
      and
      services provided by the principal accountant, other than the services reported
      in paragraph (1) was:




2007
      and
      2006: $0  - Jimmy C. H. Cheung & Co.




**Audit
      Committee**




The
      Company's Board of Directors acts as its audit committee, and it meets prior
      to
      filing of any Form 10-QSB or 10-KSB to approve those filings. In addition,
      the
      committee meets to discuss audit plans and anticipated fees for audit and tax
      work prior to the commencement of that work. Approximately 100% of all fees
      paid
      to our independent auditors for fiscal 2007 are pre-approved by the audit
      committee.




25


**SIGNATURES**




In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.




Date:
      March 28, 2008




Huifeng
                Bio-Pharmaceutical Technology, Inc.By:
            /s/
                Jing’an WangJing’an
                Wang
              Chief
                Executive Officer




By:
            /
                  s/ Sanding TaoSanding
                  Tao
                Chief
                  Financing Officer
                Principal
                  Financial Officer




In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the registrant and in the capacities and on
      the
      dates indicated.


/s/
                  Jingan Wang
              
              Chairman
                  and Chief Executive Office
              
              March
                  28, 2008(Principal
                  Executive Officer)/s/
                  Sanding Tao
              
              Chief
                  Financing Officer
              
              March
                  28, 2008(Principal
                  Financial Officer)/s/
                  Xinwen Hou
              
              Director
                  and Secretary
              
              March
                  28, 2008




26




HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY INC.


AND
      SUBSIDIARIES





CONSOLIDATED
      FINANCIAL STATEMENTS


AS
      OF
      DECEMBER 31, 2007 AND 2006








HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY INC.


AND
      SUBSIDIARIES





CONTENTS


PagesReport
                  of Independent Registered Public Accounting Firm
              
              F-1Consolidated
                  Balance Sheets as of December 31, 2007 and 2006
              
              F-2Consolidated
                  Statements of Operations and Comprehensive income for the years
                  ended
                  December 31, 2007 and 2006
              
              F-3Consolidated
                  Statements of Stockholders’ Equity for the years ended December 31, 2007
                  and 2006
              
              F-4Consolidated
                  Statements of Cash Flows for the years ended December 31, 2007
                  and
                  2006
              
              F-5Notes
                  to Consolidated Financial Statements as of December 31, 2007 and
                  2006
              
              F-6
                  -F-18


img logo
            **Jimmy
                C.H. Cheung & Co**
              *Certified
                Public Accountants*
              *(A
                member of Kreston International)*
            
            Registered
                with the Public Company Accounting Oversight
                Board




**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** ****





To
      the
      Board of Directors of:


Huifeng
      Bio-pharmaceutical Technology Inc.





We
      have
      audited the accompanying consolidated balance sheets of Huifeng
      Bio-pharmaceutical Technology Inc. and subsidiaries as of December 31, 2007
      and
      2006 and the related consolidated statements of operation s,
      stockholders’ equity
      and cash flows for the years ended December 31, 2007 and 2006. These financial
      statements are the responsibility of the Company’s management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audits 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 of the financial statements provide a reasonable basis for our opinion.





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







**JIMMY
      C.H. CHEUNG & CO**


Certified
      Public Accountants








Hong
      Kong





Date:
      February 1, 2008





1607
                    Dominion Centre, 43 Queen’s Road East, Wanchai, Hong Kong
                  Tel:
                    (852) 25295500 Fax: (852) 28651067 Email:jchc@krestoninternational.com.hk
                  Website:
                    http://www.jimmycheungco.com
              img1 logo
  F-1




HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY INC.


AND
      SUBSIDIARIES


CONSOLIDATED
      BALANCE SHEETS


AS
      OF
      DECEMBER 31, 2007 AND 2006


2007
              
              2006**ASSETS****CURRENT
                  ASSETS**Cash
                  and cash equivalents
              
              $
              2,219,694
              
              $
              463,468Accounts
                  receivable, net of allowances
              
              
              1,660,829
              
              
              1,109,095Inventories,
                  net
              
              
              2,657,305
              
              
              582,525Notes
                  receivable
              
              
              -
              
              
              448,218Due
                  from stockholders
              
              
              -
              
              
              24,162Other
                  assets
              
              
              1,011,985
              
              
              981,657Total
                  Current Assets
              
              
              7,549,813
              
              
              3,609,125**PROPERTY
                  AND EQUIPMENT, NET**
              
              
              3,509,344
              
              
              3,338,082**LAND
                  USE RIGHTS, NET**
              
              
              142,334
              
              
              136,233**TOTAL
                  ASSETS**
              
              $
              11,201,491
              
              $
              7,083,440**LIABILITIES
                  AND STOCKHOLDERS' EQUITY****CURRENT
                  LIABILITIES**Accounts
                  payable
              
              $
              93,126
              
              $
              52,358Other
                  payables and accrued expenses
              
              
              245,568
              
              
              139,092Income
                  tax and other tax payables
              
              
              498,655
              
              
              211,266Notes
                  payable
              
              
              295,320
              
              
              307,349Due
                  to stockholders
              
              
              280,503
              
              
              -Total
                  Current Liabilities
              
              
              1,413,172
              
              
              710,065**LONG-TERM
                  LIABILITIES**Convertible
                  notes payable(net
                  of unamortized discount of $646,186 and due on December 31,
                  2009)
              
              
              1,353,814
              
              
              -**TOTAL
                  LIABILITIES**
              
              
              2,766,986
              
              
              710,065**COMMITMENTS
                  AND CONTINGENCIES**
              
              
              -
              
              
              -**MINORITY
                  INTEREST**
              
              
              461,826
              
              
              452,751**STOCKHOLDERS'
                  EQUITY**Preferred
                  stock ($0.001 par value, 5,000,000 shares authorized, none issued
                  and
                  outstanding)
              
              
              -
              
              
              -Common
                  stock ($0.018 par value, 100,000,000 shares authorized, 18,466,169
                  shares
                  issued and outstanding as of December 31, 2007 and 2006)
              
              
              332,388
              
              
              332,388Additional
                  paid-in capital
              
              
              8,326,752
              
              
              8,020,066Retained
                  earnings (deficit)Unappropriated
              
              
              (1,671,410
              )
              
              (2,818,054
              )Appropriated
              
              
              219,964
              
              
              82,925Accumulated
                  other comprehensive income
              
              
              764,985
              
              
              303,299Total
                  Stockholders' Equity
              
              
              7,972,679
              
              
              5,920,624**TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY**
              
              $
              11,201,491
              
              $
              7,083,440




The
      accompanying notes are an integral part of these financial
      statements




F-2


HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY INC.


AND
      SUBSIDIARIES


CONSOLIDATED
      STATEMENTS OF OPERATIONS


AND
      COMPREHENSIVE INCOME


FOR
      THE YEARS ENDED DECEMBER 31, 2007 AND 2006


2007
              
              2006**NET
                  SALES**
              
              $
              6,571,531
              
              $
              3,076,779**COST
                  OF SALES**
              
              
              (4,594,218
              )
              
              (2,619,261
              )**GROSS
                  PROFIT**
              
              
              1,977,313
              
              
              457,518**OPERATING
                  EXPENSES**Selling
                  expenses and distribution expenses
              
              
              105,347
              
              
              122,845General
                  and administrative expenses
              
              
              349,591
              
              
              291,363Depreciation
                  and amortization
              
              
              47,951
              
              
              45,958Total
                  Operating Expenses
              
              
              502,889
              
              
              460,166**INCOME
                  (LOSS) FROM OPERATIONS**
              
              
              1,474,424
              
              
              (2,648
              )**OTHER
                  INCOME (EXPENSES)**Interest
                  income
              
              
              23,520
              
              
              58,522Interest
                  expenses
              
              
              (30,463
              )
              
              (9,528
              )Other
                  income
              
              
              109,797
              
              
              55,956Other
                  expenses
              
              
              (48,307
              )
              
              -Total
                  Other Income
              
              
              54,547
              
              
              104,950**INCOME
                  FROM OPERATIONS BEFORE TAXES****AND
                  MINORITY INTEREST**
              
              
              1,528,971
              
              
              102,302**INCOME
                  TAX EXPENSE**
              
              
              (265,972
              )
              
              (1,313
              )**MINORITY
                  INTEREST**
              
              
              20,684
              
              
              30,747**NET
                  INCOME**
              
              
              1,283,683
              
              
              131,736**OTHER
                  COMPREHENSIVE INCOME**Foreign
                  currency translation gain
              
              
              461,686
              
              
              227,732**COMPREHENSIVE
                  INCOME**
              
              $
              1,745,369
              
              $
              359,468Net
                  income per share-basic
              
              $
              0.07
              
              $
              0.01Net
                  income per share-diluted
              
              $
              0.07
              
              $
              0.01Weighted
                  average number of shares outstanding during the year-basic
              
              
              18,466,169
              
              
              16,827,812Weighted
                  average number of shares outstanding during the
                  year-diluted
              
              
              18,471,648
              
              
              16,827,812




The
      accompanying notes are an integral part of these financial
      statements





F-3


HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY INC.


AND
      SUBSIDIARIES


CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS’ EQUITY


FOR
      THE YEARS ENDED DECEMBER 31, 2007 AND 2006


Preferred
                  Stock
              
              Common
                  Stock
              
              Additional
                  paid-in
              
              Unappropriated
                  retained
              
              Appropriated
                  retained
              
              Accumulated
                  other comprehensiveShares
              
              Amount
              
              Shares
              
              Amount
              
              capital
              
              deficit
              
              earnings
              
              income
              
              TotalBalance
                  at January 1, 2006
              
              
              
              
              $
              -
              
              
              16,466,169
              
              $
              296,388
              
              $
              7,256,066
              
              $
              (2,890,139
              )
              $
              23,274
              
              $
              75,567
              
              $
              4,761,156Share
                  issued for acquisition of fixed assets
              
              
              
              
              
              -
              
              
              2,000,000
              
              
              36,000
              
              
              764,000
              
              
              -
              
              
              -
              
              
              -
              
              
              800,000Net
                  loss for the year
              
              
              
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              131,736
              
              
              -
              
              
              -
              
              
              131,736Income
                  from comprehensive
              
              
              
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              227,732
              
              
              227,732Comprehensive
                  income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              359,468Transfer
                  to statutory and staff welfare reserves
              
              
              
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (59,651
              )
              
              59,651
              
              
              -
              
              
              -Balance
                  at December 31, 2006
              
              
              -
              
              
              -
              
              
              18,466,169
              
              
              332,388
              
              
              8,020,066
              
              
              (2,818,054
              )
              
              82,925
              
              
              303,299
              
              
              5,920,624Fair
                  value of warrants issued with notes payable
              
              
              
              
              
              -
              
              
              -
              
              
              -
              
              
              306,686
              
              
              -
              
              
              -
              
              
              -
              
              
              306,686Net
                  income for the year
              
              
              
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              1,283,683
              
              
              -
              
              
              -
              
              
              1,283,683Income
                  from comprehensive
              
              
              
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              461,686
              
              
              461,686Comprehensive
                  income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,745,369Transfer
                  to statutory and staff welfare reserves
              
              
              
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (137,039
              )
              
              137,039
              
              
              -
              
              
              -Balance
                  at December 31, 2007
              
              
              -
              
              $
              -
              
              
              18,466,169
              
              $
              332,388
              
              $
              8,326,752
              
              $
              (1,671,410
              )
              $
              219,964
              
              $
              764,985
              
              $
              7,972,679




The
      accompanying notes are an integral part of these financial
      statements





F-4


HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY INC.


AND
      SUBSIDIARIES


CONSOLIDATED
      STATEMENTS OF CASH FLOWS


FOR
      THE YEARS ENDED DECEMBER 31, 2007 AND 2006


2007
              
              2006**CASH
                  FLOWS FROM OPERATING ACTIVITIES**Net
                  income
              
              $
              1,283,683
              
              $
              131,736Adjusted
                  to reconcile net income to cash (used in)provided
                  by operating activities:Allowance
                  for doubtful accounts - accounts receivable
              
              
              (36,909
              )
              
              23,214Depreciation
                  and amortization - cost of sales
              
              
              338,190
              
              
              251,101Depreciation
                  and amortization
              
              
              47,951
              
              
              45,958Minority
                  interest
              
              
              (20,684
              )
              
              (30,747
              )Changes
                  in operating assets and liabilities(Increase)
                  decrease in:Accounts
                  receivable
              
              
              (420,855
              )
              
              2,697Inventories,
                  net
              
              
              (1,954,397
              )
              
              343,256Due
                  from stockholders
              
              
              24,769
              
              
              75,909Other
                  assets
              
              
              34,620
              
              
              (689,846
              )Increase
                  (decrease) in:Accounts
                  payable
              
              
              35,746
              
              
              (111,514
              )Other
                  payables and accrued expenses
              
              
              93,208
              
              
              (17,673
              )Income
                  tax and other taxes payable
              
              
              262,235
              
              
              118,605Due
                  to stockholders
              
              
              269,341
              
              
              (1,239
              )Net
                  cash (used in) provided by operating activities
              
              
              (43,102
              )
              
              141,457**CASH
                  FLOWS FROM INVESTING ACTIVITIES**Decrease
                  in notes receivable
              
              
              459,486
              
              
              -Purchase
                  of property and equipment
              
              
              (330,852
              )
              
              (159,242
              )Net
                  cash provided by (used in) investing activities
              
              
              128,634
              
              
              (159,242
              )**CASH
                  FLOWS FROM FINANCING ACTIVITIES**Proceeds
                  from sales of convertible notes, net
              
              
              1,660,500
              
              
              -Proceeds
                  from notes payable
              
              
              31,507
              
              
              307,349Net
                  cash provided by financing activities
              
              
              1,692,007
              
              
              307,349**EFFECT
                  OF EXCHANGE RATES ON CASH**
              
              
              (21,313
              )
              
              84,796**NET
                  INCREASE IN CASH AND CASH EQUIVALENTS**
              
              
              1,756,226
              
              
              374,360**CASH
                  AND CASH EQUIVALENTS AT BEGINNING OF YEAR**
              
              
              463,468
              
              
              89,108**CASH
                  AND CASH EQUIVALENTS AT END OF YEAR**
              
              $
              2,219,694
              
              $
              463,468**SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW INFORMATION**Cash
                  paid during the year for:Income
                  taxes
              
              $
              11,159
              
              $
              558Interest
                  expenses
              
              $
              30,463
              
              $
              9,505




**SUPPLEMENTAL
      DISCLOSURE OF NON-CASH INVESTING AND FINANCING
      ACTIVITIES:**





On
      November 8, 2006, the Company issued 2,000,000 shares of restricted common
      stock
      having a fair value of $800,000 to a third party for the acquisition of plant
      and machinery.





The
      accompanying notes are an integral part of these financial
      statements




F-5


HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY INC.


AND
      SUBSIDIARIES


NOTES
      TO
      THE CONSOLIDATED FINANCIAL STATEMENTS


AS
      OF
      DECEMBER 31, 2007 AND 2006





1.
            **SUMMARY
                OF SIGNIFICANT ACCOUNTING POLICIES AND
                ORGANIZATION**





(A)
            Organization





Huifeng
      Bio-pharmaceutical Technology Inc. (“Huifeng Bio-pharmaceutical”) is a US listed
      company that was incorporated in Nevada on March 16, 2000 under the name
      Enternet, Inc. On May 23, 2002, the Articles of Incorporation were amended
      to
      change the name of the Company to Secured Data, Inc. On October 12, 2005, the
      Articles of Incorporation were amended to change the name of the Company to
      Huifeng Bio-pharmaceutical Technology Inc.





Northwest
      Bio-Technic Inc. (“Northwest”) was incorporated in the British Virgin Islands
      (“BVI”) on June 25, 2004. Xian Huifeng Biochemistry Group Joint-Stock Company
      Limited (previously Xian Huifeng Biochemistry Joint-Stock Company Limited)
      (“Huifeng Biochemistry”) was incorporated in the People’s Republic of China
      (“PRC”) on January 20, 2000 as a company with limited liabilities and was
      restructured as a joint stock company on September 29, 2002 under the laws
      of
      the PRC. On April 20, 2005, the Articles of Incorporation were amended to change
      the name of Huifeng Biochemistry to Xian Huifeng Biochemistry Group Joint-Stock
      Company Limited.





Huifeng
      Biochemistry produces plant extracts and bio-chemical products used as
      pharmaceutical raw materials in the PRC. Most of its products are distributed
      within the PRC and some European countries.





On
      August
      23, 2001, Huifeng Biochemistry established a 70% owned subsidiary, Xian Huifeng
      Biochemistry Engineering Company Limited (“Huifeng Engineering”) in the PRC with
      a registered capital of $265,778. The subsidiary has no operations since its
      incorporation.





On
      June
      16, 2004 Huifeng Biochemistry acquired an 86.7% interest in Baoji
      Jinsen Pharmaceutical Company Limited, later renamed to Xian Huifeng
      Pharmaceutical Company Limited (“Huifeng Pharmaceutical”), a limited liability
      company in the PRC. On November 10, 2004 Huifeng Pharmaceutical increased its
      registered capital from $181,159 to $603,865. The increased registered capital
      was fully subscribed by a stockholder of the Company, diluting the Company’s
      interest in Huifeng Pharmaceutical from 86.7% to 26%. On May 27, 2005 the PRC
      Government approved Huifeng Biochemistry’s increased investment in Huifeng
      Pharmaceutical from $31,401 to $1,685,990 through an increase in the registered
      capital of Huifeng Pharmaceutical from $603,865 to $2,258,454. The acquisition
      of Huifeng Pharmaceutical by Huifeng Biochemistry was accomplished by increasing
      Huifeng Biochemistry’s interest in Huifeng Pharmaceutical from 26% to 80.2%. On
      April 3, 2007, Huifeng Pharmaceutical was renamed to Shaanxi Huifeng
      Pharmaceutical Company Limited.





During
      2004, Huifeng Biochemistry’s shareholders exchanged 100% of their ownership of
      Huifeng Biochemistry for 500,000 shares of Northwest under a reorganization
      plan. The transfer has been accounted for as a reorganization of entities under
      common control as the companies were beneficially owned by principally identical
      shareholders and share common management.





On
      December 20, 2004, pursuant to a Stock Purchase Agreement, a Huifeng
      Bio-pharmaceutical shareholder sold 401,646 shares in Huifeng Bio-pharmaceutical
      to two Northwest shareholders for $300,000. On the same date, Huifeng
      Bio-pharmaceutical entered into an Agreement and Plan of Reorganization with
      the
      shareholders of Northwest to exchange 30% of Northwest’s outstanding shares for
      4,485,311 shares of Huifeng Bio-pharmaceutical. In addition, the Agreement
      calls
      for Huifeng Bio-pharmaceutical to issue a Convertible Promissory Note for
      $1,900,000 that is convertible into 10,465,725 (post a one for eighteen reverse
      split) shares of Huifeng Bio-pharmaceutical for the remaining 70% of Northwest.
      On October 12, 2005, the Company issued 10,465,725 shares of restricted common
      stock in conversion of the Convertible Promissory Note of
      $1,900,000.





The
      merger of Huifeng Bio-pharmaceutical and Northwest has been recorded as a
      recapitalization by Northwest, with Northwest being treated as the continuing
      entity. The financial statements have been prepared as if the reorganization
      had
      occurred retroactively. Huifeng Bio-pharmaceutical, Northwest, Huifeng
      Biochemistry, Huifeng Engineering and Huifeng Pharmaceutical are hereafter
      referred to as (the “Company”).





F-6




HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY INC.


AND
      SUBSIDIARIES


NOTES
      TO
      THE CONSOLIDATED FINANCIAL STATEMENTS


AS
      OF
      DECEMBER 31, 2007 AND 2006





1.
            **SUMMARY
                OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
                (CONTINUED)**





(A)
            Organization
                (continued)





Accordingly,
      the financial statements include the following:





(1)
            The
                balance sheet consists of the net assets of the acquirer at historical
                cost and the net assets of the acquiree at historical
                cost.





(2)
            The
                statement of operations includes the operations of the acquirer for
                the
                periods presented and the operations of the acquiree from the date
                of the
                merger.





(B)
            Use
                of estimates





The
      preparation of the financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amount 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.





(C)
            Principles
                of consolidation





The
      accompanying 2007 and 2006 consolidated financial statements include the
      financial statements of Huifeng Bio-pharmaceutical and its 100% owned subsidiary
      Northwest, 100% owned subsidiary Huifeng Biochemistry, 70% owned subsidiary
      Huifeng Engineering and 80.2% owned subsidiary Huifeng
      Pharmaceutical.





All
      significant inter-company balances and transactions have been eliminated in
      consolidation.





In
      October 2005, the Company effected a one for eighteen reverse stock split.
      All
      shares and per share information of common stock in the accompanying financial
      statements have been retroactively restated to reflect the effect of this stock
      split.





(D)
            Cash
                and cash equivalents





For
      purpose of the statements of cash flows, cash and cash equivalents include
      cash
      on hand and demand deposits with a bank with a maturity of three months or
      less.





(E)
            Accounts
                receivable





The
      Company extends unsecured credit to its customers in the ordinary course of
      business but mitigates the associated risks by performing credit checks and
      actively pursuing past due accounts. An allowance for doubtful accounts is
      established and recorded based on managements’ assessment of the credit history
      with the customer and current relationships with them. For the years ended
      December 31, 2007 and 2006, the Company recorded recovery of and allowance
      for
      doubtful accounts of ($36,909) and $23,214 respectively.





(F)
            Inventories





Inventories
      are stated at the lower of cost or market value, cost being determined on a
      weighted average method. The Company provides for inventory allowances based
      on
      excess and obsolete inventories determined principally by customer
      demand.




F-7


HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY INC.


AND
      SUBSIDIARIES


NOTES
      TO
      THE CONSOLIDATED FINANCIAL STATEMENTS


AS
      OF
      DECEMBER 31, 2007 AND 2006





1.
            **SUMMARY
                OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
                (CONTINUED)**





(G)
            Property
                and equipment





Property
      and equipment are stated at cost, less accumulated depreciation. Expenditure
      for
      additions, major renewals and betterments are capitalized and expenditures
      for
      maintenance and repairs are charged to expense as incurred.





Depreciation
      is provided on a straight-line basis over the assets’ estimated useful lives.
      The estimated useful lives are as follows:


Factory
                  buildings
              
              20
                  YearsPlant
                  and machinery
              
              10
                  YearsMotor
                  vehicles
              
              10
                  YearsFurniture,
                  fixtures and equipment
              
              5
                  Years





Land
      use
      rights are stated at cost, less accumulated amortization. The land use rights
      are amortized over the term of the relevant rights of 50 years from the date
      of
      acquisition.





(H)
            Long-lived
                assets





The
      Company accounts for long-lived assets under the Statements of Financial
      Accounting Standards Nos. 142 and 144 “Accounting for Goodwill and Other
      Intangible Assets” and “Accounting for Impairment or Disposal of Long-Lived
      Assets” (“SFAS No. 142 and 144”). In accordance with SFAS No. 142 and 144,
      long-lived assets, goodwill and certain identifiable intangible assets held
      and
      used by the Company are reviewed for impairment whenever events or changes
      in
      circumstances indicate that the carrying amount of an asset may not be
      recoverable. For purposes of evaluating the recoverability of long-lived assets,
      when undiscounted future cash flows will not be sufficient to recover an asset’s
      carrying amount, the asset is written down to its fair value.





(I)
            Fair
                value of financial instruments





Statement
      of Financial Accounting Standards No. 107, "Disclosure About Fair Value of
      Financial Instruments," requires certain disclosures regarding the fair value
      of
      financial instruments. Fair
      value of financial instruments is made at a specific point in time, based on
      relevant information about financial markets and specific financial instruments.
      As these estimates are subjective in nature, involving uncertainties and matters
      of significant judgment, they cannot be determined with precision. Changes
      in
      assumptions can significantly affect estimated fair values.





The
      carrying value of cash and cash equivalents, accounts receivable (trade and
      others), accounts payable (trade and related party) and accrued liabilities
      approximate their fair value because of the short-term nature of these
      instruments. The Company places its cash and cash equivalents with what it
      believes to be high credit quality financial institutions. The Company has
      a
      diversified customer base, most of which are in the PRC. The Company controls
      credit risk related to accounts receivable through credit approvals, credit
      limit 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.





The
      Company accounts for non-hedging contracts that are indexed to, and potentially
      settled in, its own common stock in accordance with the provisions of Emerging
      Issues Task Force 00-19, “Accounting for Derivative Financial Instruments
      Indexed to, and Potentially Settled in, a Company’s Own Stock” (“EITF 00-19”).
      These non-hedging contracts accounted for in accordance with EITF00-19 include
      freestanding warrants to purchase the Company’s common stock that have been
      bifurcated from the host contract in accordance with the requirements of SFAS
      133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS
      133”). Under certain circumstances that could require the Company to settle
      these equity items in cash or stock, and the adjustment of that reclassified
      amount to fair value at each reporting period, with such adjustments reflected
      in the line item of change in valuation of derivative as other income (expenses)
      in the statements of operations.





F-8


HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY INC.


AND
      SUBSIDIARIES


NOTES
      TO
      THE CONSOLIDATED FINANCIAL STATEMENTS


AS
      OF
      DECEMBER 31, 2007 AND 2006





1.
              **SUMMARY
                  OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
                  (CONTINUED)**





(I)
            Fair
                value of financial instruments
                (continued)





The
      Company analyzes all financial instruments with features of both liabilities
      and
      equity under SFAS 150, “Accounting for Certain Financial Instruments with
      Characteristics of Both Liabilities and Equity,” SFAS 133, “Accounting for
      Derivative Instruments and Hedging Activities” and EITF 00-19, “Accounting for
      Derivative Financial Instruments Indexed to, and Potentially Settled in, a
      Company’s Own Stock.” On December 31, 2007, the Company issued 10% secured
      convertible notes (the “Notes”) in a face amount of $2,000,000 which are due and
      payable in full in 2 years from their issuance. As fixed prices are set for
      the
      conversion prices of such Notes and the attached warrants, the Company is in
      a
      position to be sure it had adequate authorized shares for the future conversion
      of the Notes and warrants. Therefore, no embedded derivatives and warrants
      are
      required to be recorded at fair value and marked-to-market at each reporting
      period.





(J)
            Discount
                on notes payable





A
      discount with respect to the Notes issued during the year ended December 31,
      2007 was recorded by the Company. The amount of the discount was calculated
      to
      be the fair value of the warrants included among the securities issued pursuant
      to the terms of the subscription agreement discussed in Note 11.





(K)
            Revenue
                recognition





The
      Company recognizes revenue upon delivery or shipment of the products, at which
      time title passes to the customer provided that: there are no uncertainties
      regarding customer acceptance; persuasive evidence of an arrangement exists;
      the
      sales price is fixed or determinable; and collectability is deemed
      probable.





(L)
            Income
                taxes





The
      Company accounts for income taxes under the Statement of Financial Accounting
      Standards No. 109, “Accounting for Income Taxes” (“Statement 109”). Under
      Statement 109, deferred tax assets and liabilities are recognized fort the
      future tax consequences attributable to differences between the financial
      statement carrying amounts of existing assets and liabilities and their
      respective tax bases. Deferred tax assets and liabilities are measured using
      enacted tax rates expected to apply to taxable income in the years in which
      those temporary differences are expected to be recovered or settled. Under
      Statement 109, the effect on deferred tax assets and liabilities of a change
      in
      tax rates is recognized in income in the period that included the enactment
      date.





(M)
            Foreign
                currency translation





Huifeng
      Bio-Pharmaceutical, Northwest, Huifeng Biochemistry, Huifeng Engineering and
      Huifeng Pharmaceutical maintain their accounting records in their functional
      currencies of US$, US$, RMB, RMB and RMB respectively.





Foreign
      currency transactions during the year are translated to the functional currency
      at the approximate rates of exchange on the dates of transactions. Monetary
      assets and liabilities denominated in foreign currencies at the balance sheet
      date are translated at the approximate rates of exchange at that date.
      Non-monetary assets and liabilities are translated at the rates of exchange
      prevailing at the time the asset or liability was acquired. Exchange gains
      or
      losses are recorded in the statement operations.





The
      financial statements of Huifeng Biochemistry, Huifeng Engineering and Huifeng
      Pharmaceutical (whose functional currency is the RMB) are translated into US$
      using the closing rate method. The balance sheet items are translated into
      US$
      using the exchange rates at the respective balance sheet dates. The capital
      and
      various reserves are translated at historical exchange rates prevailing at
      the
      time of the transactions while income and expenses items are translated at
      the
      average exchange rate for the year. All exchange differences are recorded within
      equity.





The
      translation gain recorded for the years ended December 31, 2007 and 2006 was
      $461,686 and $227,732 respectively.





F-9




HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY INC.


AND
      SUBSIDIARIES


NOTES
      TO
      THE CONSOLIDATED FINANCIAL STATEMENTS


AS
      OF
      DECEMBER 31, 2007 AND 2006





1.
            **SUMMARY
                OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
                (CONTINUED)**





(N)
            Comprehensive
                income





The
      foreign currency translation gain or loss resulting from translation of the
      financial statements expressed in RMB to US$ is reported as other comprehensive
      income in the statements of operations and stockholders’ equity. The foreign
      currency translation gain for the years ended December 31, 2007 and 2006 was
      $461,686 and $227,732 respectively.





(O)
            Income
                per share





Basic
      income per share is computed by dividing income available to common stockholders
      by the weighted average number of common shares outstanding during the period.
      Diluted income per share is computed similar to basic income per share except
      that the denominator is increased to include the number of additional common
      shares that would have been outstanding if the potential common shares had
      been
      issued and if the additional common shares were dilutive.





Warrants
      to purchase 500,000 shares of common stock at prices $1.50 per share were
      outstanding as of December 31, 2007, but were excluded from the calculation
      of
      diluted earnings per share because the effect of stock warrants was
      anti-dilutive.





(P)
            Segments





The
      Company operates in only one segment, thereafter segment disclosure is not
      presented.





(Q)
            Reclassification





Certain
      amounts included in prior years’ consolidated balance sheet and cash flows have
      been reclassified to conform to the current year’s presentation. These
      reclassifications had no effect on reported total assets, liabilities,
      shareholders’ equity, or net income.





(R)
            Recent
                Accounting Pronouncements





In
      September 2006, FASB issued Statement 157, “ *Fair
      Value measurements* ”.
      This
      statement defines fair value and establishes a framework for measuring fair
      value in generally accepted accounting principles (“GAAP”). More precisely, this
      statement sets forth a standard definition of fair value as it applies to assets
      or liabilities, the principal market (or most advantageous market) for
      determining fair value (price), the market participants, inputs and the
      application of the derived fair value to those assets and liabilities. The
      effective date of this pronouncement is for all full fiscal and interim periods
      beginning after November 15, 2007. The Company does not expect the adoption
      of
      SFAS 157 to have an impact on the Company’s results of operations or financial
      condition.





In
      February 2007, the FASB issued Statement 159, *“The
      Fair Value Option for Financial Assets and Financial
      Liabilities”* ,
      which
      permits entities to choose to measure many financial instruments and certain
      other items at fair value that are not currently required to be measured at
      fair
      value. SFAS 159 will become effective on January 1, 2008. The Company is
      currently evaluating the impact this new Standard, but believes that it will
      not
      have a material impact on the Company’s financial position.





In
      December 2007, FASB issued Statement 141 (Revised 2007), *“Business
      Combinations”* .
      This
      statement provides guidance on improving the relevance, representational
      faithfulness, and comparability of information that a reporting entity provides
      in its financial reports about a business combination and its effects. This
      Statement will become effective where is the acquisition date is on or after
      the
      beginning of the first annual reporting period beginning on or after December
      15, 2008. The Company is currently evaluating the impact this new Standard,
      but
      believes that it will not have a material impact on the Company’s financial
      position.




F-10




HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY INC.


AND
      SUBSIDIARIES


NOTES
      TO
      THE CONSOLIDATED FINANCIAL STATEMENTS


AS
      OF
      DECEMBER 31, 2007 AND 2006





1.
            **SUMMARY
                OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
                (CONTINUED)**





(R)
            Recent
                Accounting Pronouncements
                (continued)





In
      December 2007, FASB issued Statement 160, *“Noncontrolling
      Interests in Consolidated Financial Statement - an amendment of ARB No.
      51”* ,
      which
      establishes accounting and reporting standards to improve the relevance,
      comparability, and transparency of financial information in its consolidated
      financial statements that include an outstanding noncontrolling interest in
      one
      or more subsidiaries. This effective will effective for all full fiscal and
      interim periods beginning after December 15, 2008. The Company is currently
      evaluating the impact this new Standard, but believes that it will not have
      a
      material impact on the Company’s financial position.





2.
              **ACCOUNTS
                  RECEIVABLE**





Accounts
      receivable at December 31, 2007 and 2006 consisted of the following:


2007
              
              2006Accounts
                  receivable
              
              $
              1,681,411
              
              $
              1,164,377Less:
                  allowance for doubtful accounts
              
              
              (20,582
              )
              
              (55,282
              )Accounts
                  receivable, net
              
              $
              1,660,829
              
              $
              1,109,095




For
      the
      years ended December 31, 2007 and 2006, the Company recorded recovery of and
      allowance for doubtful accounts of ($36,909) and $23,214
      respectively.





3.
            **NOTES
                RECEIVABLE**





Notes
      receivable at December 31, 2007 and 2006 consisted of the
      followings:


2007
                
                2006Note
                    receivable from a third party, interest rate of 12% per annum,
                    non-secured, due September 2007
                
                $
                -
                
                $
                192,093Note
                    receivable from a third party, interest rate of 10%per annum,
                    non-secured,
                    due November 2006
                
                
                -
                
                
                256,125$
                -
                
                $
                448,218




Interest
      income in respect to loans receivable for the years ended December 31, 2007
      and
      2006 were $22,712 and $35,114 respectively.





4.
              **INVENTORIES**





Inventories
      at December 31, 2007 and 2006 consisted of the following:


2007
              
              2006Raw
                  materials
              
              $
              1,050,799
              
              $
              269,887Work-in-progress
              
              
              922,354
              
              
              176,934Finished
                  goods
              
              
              684,152
              
              
              135,7042,657,305
              
              
              582,525Less:
                  provision of obsolescence
              
              
              -
              
              
              -$
              2,657,305
              
              $
              582,525




For
      the
      year ended December 31, 2007 and 2006, the Company did not have any obsolete
      inventories.




F-11


HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY INC.


AND
      SUBSIDIARIES


NOTES
      TO
      THE CONSOLIDATED FINANCIAL STATEMENTS


AS
      OF
      DECEMBER 31, 2007 AND 2006





5.
            **OTHER
                ASSETS**





Other
      assets at December 31, 2007 and 2006 consisted of the following:


2007
              
              2006Short-term
                  note receivable
              
              $
              -
              
              $
              6,403Interest
                  on notes receivable
              
              
              -
              
              
              89,644Advances
                  to staff
              
              
              17,667
              
              
              46,998Other
                  receivables and prepayments
              
              
              14,428
              
              
              272,959Trade
                  deposits paid
              
              
              979,890
              
              
              565,653$
              1,011,985
              
              $
              981,657




6.
            **PROPERTY
                AND EQUIPMENT**





The
      following is a summary of property and equipment at December 31, 2007 and 2006:


2007
              
              2006Factory
                  buildings
              
              $
              612,159
              
              $
              573,385Plant
                  and machinery
              
              
              3,942,330
              
              
              3,325,909Motor
                  vehicles
              
              
              102,784
              
              
              96,273Furniture
                  and office equipment
              
              
              37,536
              
              
              33,484Construction
                  in progress - factory building
              
              
              42,851
              
              
              85,7904,737,660
              
              
              4,114,841Less:
                  accumulated depreciation
              
              
              (1,228,316
              )
              
              (776,759
              )Property
                  and equipment, net
              
              $
              3,509,344
              
              $
              3,338,082


Depreciation
      expenses for the years ended December 31, 2007 and 2006 were $383,153 and
      $294,205 respectively.




7.
            **LAND
                USE RIGHTS**





Land
      use
      rights at December 31, 2007 and 2006 consisted of the following:


2007
              
              2006Land
                  use rights
              
              $
              151,667
              
              $
              142,789Less:
                  accumulated amortization
              
              
              9,333
              
              
              6,556Land
                  use rights, net
              
              $
              142,334
              
              $
              136,233


Amortization
      expenses for the years ended December 31, 2007 and 2006 were $2,988 and $2,854
      respectively.





8.
            **OTHER
                PAYABLES AND ACCRUED EXPENSES**





Other
      payables and accrued liabilities at December 31, 2007 and 2006 consist of the
      following:


2007
              
              2006Other
                  payables
              
              $
              75,590
              
              $
              20,059Accrued
                  expenses
              
              
              113,660
              
              
              97,227Deposits
                  received from customers
              
              
              56,318
              
              
              21,806$
              245,568
              
              $
              139,092
  F-12


HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY INC.


AND
      SUBSIDIARIES


NOTES
      TO
      THE CONSOLIDATED FINANCIAL STATEMENTS


AS
      OF
      DECEMBER 31, 2007 AND 2006





9.
            **INCOME
                TAX**





a.
            Huifeng
                Bio-pharmaceutical was incorporated in the United States and has
                incurred
                net operating loss as for income tax purposes for 2007 and 2006.





Northwest,
      wholly owned subsidiary of the Company, was incorporated in the British Virgin
      Islands and, under current law of the British Virgin Islands, is not subject
      to
      tax on income or on capital gains.





Huifeng
      Biochemistry, wholly owned subsidiary of Northwest, was incorporated in the
      PRC
      being registered as a new and high technology enterprise is entitled to an
      income tax reduction. According to the document of reductions approved by the
      local tax bureau, the income tax rate was reduced from 33% to 15% on a permanent
      basis. The provision for income tax expenses for 2007 and 2006 was $237,506
      and
      $0 respectively.





Huifeng
      Engineering, 70% owned subsidiary of Huifeng Biochemistry, was incorporated
      in
      the PRC and subject to PRC income tax which is computed according to the
      relevant laws and regulations in the PRC. No provision for income tax expenses
      for 2007 and 2006 as Huifeng Engineering has incurred net operating
      loss.





Huifeng
      Pharmaceutical, 80.2% owned subsidiary of Huifeng, was also incorporated in
      the
      PRC and subject to PRC income tax which is computed according to the relevant
      laws and regulations in the PRC. The applicable tax rates for 2007 and 2006
      were
      33% and 27% respectively due to the taxable income was less than $12,541 for
      2006. The provision for income tax expenses for 2007 and 2006 was $28,466 and
      $1,313 respectively.





The
      income tax expenses for 2007 and 2006 are summarized as follows:


2007
              
              2006PRC
                  Income TaxCurrent
              
              $
              265,972
              
              $
              1,313$
              265,972
              
              $
              1,313





b.
            The
                Company’s deferred tax assets at December 31, 2007 and 2006 consist of net
                operating loss carry forwards calculated using statutory effective
                tax
                rates. Due to its history of losses, the Company determined that
                realization of its net deferred tax assets is currently judged to
                be
                unlikely rather than not. Consequently, the Company has provided
                a
                valuation allowance covering 100% of its net deferred tax
                assets.





As
      of in
      December 31, 2007 and 2006, the Company had net operating loss carry forwards
      of
      approximately $985,832 and $861,494 respectively for U.S. income tax purposes
      available for offset against future taxable U.S. income, which expire 2025.
      The
      net changes in the valuation allowance for 2007 and 2006 were $335,183 and
      $292,908 respectively.




F-13


HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY INC.


AND
      SUBSIDIARIES


NOTES
      TO
      THE CONSOLIDATED FINANCIAL STATEMENTS


AS
      OF
      DECEMBER 31, 2007 AND 2006




c.
              The
                  reconciliation of income taxes computed at the statutory income
                  tax rates
                  to total income taxes for the years ended December 31, 2007 and
                  2006 is as
                  follows:
 2007
                
                2006Huifeng
                    Bio-PharmaceuticalIncome
                    tax computed at the federal statutory rate
                
                
                34
                %
                
                34
                %State
                    income taxes, net of federal tax benefit
                
                
                0
                %
                
                0
                %Valuation
                    allowance
                
                
                (34
                %)
                
                (34
                %)Foreign
                    income taxes
                
                
                17.4
                %
                
                1.3
                %Effective
                    income tax rate
                
                
                17.4
                %
                
                1.3
                %Total
                    deferred tax asset
                
                
                0
                %
                
                0
                %




10.
            **NOTES
                PAYABLE**





Notes
      payable as of December 31, 2007 and 2006 consisted of the
      following:


2007
              
              2006Notes
                  payable to a financial institution, interest rate of 9.6768% per
                  annum,
                  secured by a director property and the company's fixed assets,
                  guaranteed
                  by a third party, due August 2007, was extended to June
                  2008
              
              $
              295,320
              
              $
              307,349Current
                  maturities
              
              $
              295,320
              
              $
              307,349






F-14




Interest
      expenses for the year ended December 31, 2007 and 2006 was $27,945 and $0
      respectively.





11.
            **CONVERTIBLE
                NOTES PAYABLE**





On
      December 31, 2007, the Company consummated a private placement of $2,000,000
      principal amount of 10% secured convertible notes (the “Notes”) with a
      three-year common stock warrants to seven accredited investors. Financing cost
      of $339,500 was paid out of the gross proceeds. Financing cost is amortized
      over
      the life of the Notes to interest expense using the effective interest method.
      During 2007, no deferred financing cost was recognized as the Notes were issued
      at the year end date. The Notes are due December 31, 2009 and are convertible
      into 2,000,000 shares of common stock of the Company at a conversion price
      of
      $1.00 per share.





The
      holders of the Notes may convert the unpaid principal amount of the Notes into
      common stock of the Company at any time prior to maturity, at the applicable
      conversion price. The Company may prepay all or any part of the outstanding
      principal amount of the Notes, together with interest, if any, plus a premium,
      if payable prepayment occurs prior to December 31, 2008, the amount paid shall
      be 125% of the principal deemed prepaid, and in the event such prepayment occurs
      after December 31, 2008, the amount paid shall be 140% of the principal deemed
      prepaid. After the occurrence of an Event of Default, 150% of the principal
      amount then outstanding plus all interest occurred to the date of the prepayment
      is payable within three days.





In
      accordance with EITF 98-5, no beneficial conversion feature has been recorded
      on
      the issuance of the Notes as the conversion price of the Notes of $1 is higher
      than the fair market value per share of $0.75 at December 31, 2007.





The
      Company issued warrants to the note holders in the note financing, for the
      purchase of up to a total 500,000 shares of common stock at an exercise price
      of
      $1.50. The warrants are exercisable for a period that extends three years
      beginning from the date that a registration statement covering the underlying
      warrant shares is declared effective.





In
      the
      event that a registration statement covering the Common Stock issuable upon
      exercise of the warrant is not effective on or before December 31, 2008, the
      warrant holders may exercise its right during the exercise period to receive
      warrant shares on a net basis such that, with any payment of funds by the
      warrant holders, the warrant holders receive that number of warrant shares
      otherwise issuable upon exercise of its warrants less the number of warrant
      shares having an aggregate market price at the time of exercise equal to the
      aggregate exercise price per share that would otherwise have been payable by
      the
      holder of all such warrant shares.





The
      Notes
      are secured by 300,000 shares of Northwest’s share capital pursuant to a pledge
      agreement, the Company’s performance of the Notes and other obligations in
      connection with the financing is also secured by a pledge of 5,272,860 shares
      of
      common stock personally held by the current Chief Executive Officer and two
      other stockholders pursuant to another pledge agreement. Upon any event of
      default (as defined in the Notes and pledge agreements), the investors will
      be
      entitled to exercise their respective rights under the pledge agreements.





As
      of
      December 31, 2007, the Note holders have not converted the principal amount
      of
      their notes into shares of common stock of the Company.




F-15




HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY INC.


AND
      SUBSIDIARIES


NOTES
      TO
      THE CONSOLIDATED FINANCIAL STATEMENTS


AS
      OF
      DECEMBER 31, 2007 AND 2006





11.
            **CONVERTIBLE
                NOTES PAYABLE (CONTINUED)**





The
      Company recorded a discount on the Notes in accordance with EITF 98-5 of
      $306,686 for the fair value of the warrants issued. The fair value of warrants
      was calculated using the Bionomial model with the following assumptions: (i)
      risk-free interest rate of 3.07%; (ii) expected life (in years) of 3; (iii)
      expected volatility of 172%; (iv) expected dividend yield of 0.00%; and (v)
      stock market price of $0.75. The discount on Notes is amortized using effective
      interest method over 2 years. For the year ended December 31, 2007, no interest
      expense in the statement of operations as it was issued at the year end date.





The
      Notes
      bear a 10% annual interest rate payable in arrears with a first payment due
      March 1, 2008, and thereafter on each June 1, September 1 and December 1 while
      the Notes are outstanding, with a final payment of interest due on the maturity
      date. For the year ended December 31, 2007, no interest expense was recorded
      as
      the Notes were issued at the year end date.





12.
            **NET
                INCOME PER SHARE**





The
      following is net income per share information at December 31:





2007
            
            2006Net
                income for basic and diluted income per share
            
            $
            1,283,683
            
            $
            131,736Basic
                weighted-average common stock outstanding
            
            
            18,466,169
            
            
            16,827,812Effect
                of dilutive securities Convertible notes
            
            
            5,479
            
            
            -Diluted
                weighted-average common stock outstanding
            
            
            18,471,648
            
            
            16,827,812Net
                income per share - basic
            
            $
            0.07
            
            $
            0.01Net
                income per share - diluted
            
            $
            0.07
            
            $
            0.01




13.
            **COMMITMENTS
                AND CONTINGENCIES**





(A)
            Capital
                commitments





As
      of
      December 31, 2007 and 2006, the Company had capital commitments of $512,954
      and
      $57,628 respectively with suppliers for the purchase of production equipment
      and
      factory construction.





(B)
            Operating
                lease commitments




The
      Company occupies office and storage spaces from a third party under operating
      leases which expires on March 31, 2008 and November 10, 2007 at a quarterly
      rental of $2,803 and $393 respectively. Accordingly, for 2007 and 2006, the
      Company recognized rental expense for these spaces in the amount of $12,277
      and
      $12,355, respectively.





As
      of
      December 31, 2007, the Company has outstanding commitments with respect to
      non-cancelable operating leases of $2,803, which are due on March 31,
      2008.





14.
            **SHAREHOLDERS’
                EQUITY**





**(A)**
            **Stock
                issuances**





On
      April
      27, 2006, the Company issued 800,000 shares of common stock having a fair value
      of $560,000 to four staff as stock bonuses.




F-16




HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY INC.


AND
      SUBSIDIARIES


NOTES
      TO
      THE CONSOLIDATED FINANCIAL STATEMENTS


AS
      OF
      DECEMBER 31, 2007 AND 2006





14.
            **SHAREHOLDERS’
                EQUITY (CONTINUED)**





**(A)**
            **Stock
                issuances (continued)**





On
      October 27, 2006, the Company entered into a material definitive agreement
      with
      a third party to acquire certain plants and machinery from the third party
      for a
      fair value of $800,000 to be satisfied by the issuance of 2,000,000 shares
      of
      the Company’s restricted common stock. The value of the common shares issued was
      determined based on the closing market price of $0.4 per share on October 27,
      2006. These shares have been issued on November 8, 2006.





**(B)**
            **Appropriated
                retained earnings**





The
      Company’s wholly owned subsidiary, Huifeng Biochemistry, 70% owned subsidiary
      Huifeng Engineering and 80.2% owned subsidiary Huifeng Pharmaceutical are
      required to make appropriations to the statutory surplus reserve based on the
      after-tax net income determined in accordance with the laws and regulations
      of
      the PRC. Prior to January 1, 2006 the appropriation to the statutory surplus
      reserve should be at least 10% of the after tax net income determined in
      accordance with the laws and regulations of the PRC until the reserve is equal
      to 50% of the entities’ registered capital. Appropriations to the statutory
      public welfare fund are at 5% to 10% of the after tax net income determined
      by
      the Board of Directors. Effective January 1, 2006, the Company is only required
      to contribute to one statutory reserve fund at 10% of net income after tax
      per
      annum, such contributions not to exceed 50% of the respective company’s
      registered capital.





The
      statutory reserve funds are restricted for use to set off against prior period
      losses, expansion of production and operation or for the increase in the
      registered capital of the Company. These reserves are not transferable to the
      Company in the form of cash dividends, loans or advances. These reserves are
      therefore not available for distribution except in liquidation.





During
      2007 and 2006, the Company’s wholly owned subsidiary Huifeng Biochemistry
      appropriated $137,039 and $59,651, respectively to the reserves funds based
      on
      its net income under PRC GAAP.





15.
            **RELATED
                PARTY TRANSACTIONS**





As
      of
      December 31, 2007 and 2006, the stockholders owed the Company $0 and $24,162
      respectively for advances made on an unsecured basis and repayable on demand.
      Interest is charged at 6% per annum on the amount due. Total interest income
      amounted to $0 and $10,486 for the years ended December 31, 2007 and 2006,
      respectively.





During
      2007 the Company received $280,503 on behalf of two shareholders for shares
      which they have transferred to a new investor.





As
      of
      December 31, 2006, a stockholder and director guaranteed debts owed by a third
      party to the Company totaling $240,117. The amount owed was fully repaid in
      2007.





The
      current Chief Executive Officer and two other stockholders pledged a total
      of
      5,272,860 shares of common stock held by them to secure the Company’s
      performance of the $2,000,000 Convertible Notes issued on December 31,
      2007.





16.
            **CONCENTRATIONS
                AND RISKS**





During
      2007, 86% and 14% of the Company’s assets were located in China and Hong Kong
      respectively, and during 2006, 100% of the Company’s assets were located in
      China.





During
      2007 and 2006, 57% and 61% of the Company’s revenues were derived from companies
      located in China respectively.




F-17




HUIFENG
      BIO-PHARMACEUTICAL TECHNOLOGY INC.


AND
      SUBSIDIARIES


NOTES
      TO
      THE CONSOLIDATED FINANCIAL STATEMENTS


AS
      OF
      DECEMBER 31, 2007 AND 2006





16.
            **CONCENTRATIONS
                AND RISKS (CONTINUED)**





The
      Company relied on one customer for approximately $894,947 representing in
      aggregate 14% of sales for the year ended December 31, 2007, and relied on
      one
      customer for approximately $521,562 representing in aggregate 17% of sales
      for
      the year ended December 31, 2006. At December 31, 2007 and 2006, accounts
      receivable from those customers totaled $99,370 and $126,653
      respectively.





The
      Company relied on two suppliers for approximately $759,628 and $633,974
      representing in aggregate 23% of purchases for the year ended December 31,
      2007,
      and relied on three suppliers for approximately $350,519, $254,318 and $233,638
      representing in aggregate 42% of purchases for the year ended December 31,
      2006.
      At December 31, 2007 and 2006, accounts payable to those suppliers totaled
      $36,423 and $4,367 respectively.




F-18