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

                                  FORM 10-KSB
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934.
     For the fiscal year ended December 31, 2005.


                                       OR

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

                          Commission File No. 3-52472

                         PINGCHUAN PHARMACEUTICAL, INC,
                ---------------------------------------------
                (Name of Small Business Issuer in its Charter)

      North Carolina                                       58-2258912
 ----------------------------------------------------------------------------
 (State or other jurisdiction                     (I.R.S. Employer ID Number)
  of incorporation or organization)

131 Shizi Street, Nangang District, Harbin Heilongjiang F4, P.R. China   150000
-------------------------------------------------------------------------------
                    (Address of principal executive offices)

      Issuer's Telephone Number, including Area Code: 011-86451-8271-3712

       Securities Registered Pursuant to Section 12(b) of the Act: None
         Securities Registered Pursuant to Section 12(g) of the Act:
                    Common Stock, $.001 par value per share

Check whether the issuer is not required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act.  [ ]

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 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 [ ]

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

<PAGE>

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

State the issuer's revenues for its most recent fiscal year: $ 273,919.

State the aggregate market value of the voting and non-voting common equity
held by non-affiliates, computed by reference to the price at which the
common equity was sold, or the average bid and ask prices of such common
equity, as of a specified date within the past 60 days.

The aggregate market value of the Registrant's common stock, $.001 par
value, held by non-affiliates as of April 11, 2006 was $17,599,353.

As of April 11, 2006 the number of shares outstanding of the Registrant's
common stock was 71,996,407 shares, $.001 par value.

Transitional Small Business Disclosure Format:  Yes [ ] No  [X]

                  DOCUMENTS INCORPORATED BY REFERENCE: None

<PAGE>

               FORWARD-LOOKING STATEMENTS: NO ASSURANCES INTENDED

IN ADDITION TO HISTORICAL INFORMATION, THIS ANNUAL REPORT CONTAINS
FORWARD-LOOKING STATEMENTS, WHICH ARE GENERALLY IDENTIFIABLE BY USE OF THE
WORDS "BELIEVES," "EXPECTS," "INTENDS," "ANTICIPATES," "PLANS TO,"
"ESTIMATES," "PROJECTS," OR SIMILAR EXPRESSIONS. THESE FORWARD-LOOKING
STATEMENTS REPRESENT MANAGEMENT'S BELIEF AS TO THE FUTURE OF PINGCHUAN
PHARMACEUTICAL, INC.  WHETHER THOSE BELIEFS BECOME REALITY WILL DEPEND ON
MANY FACTORS THAT ARE NOT UNDER MANAGEMENT'S CONTROL.  MANY RISKS AND
UNCERTAINTIES EXIST THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM THOSE REFLECTED IN THESE FORWARD-LOOKING STATEMENTS. FACTORS THAT
MIGHT CAUSE SUCH A DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO, THOSE
DISCUSSED IN THE SECTION ENTITLED "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS" RISK FACTORS THAT MAY AFFECT
FUTURE RESULTS." READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE
FORWARD-LOOKING STATEMENTS. WE UNDERTAKE NO OBLIGATION TO REVISE OR
PUBLICLY RELEASE THE RESULTS OF ANY REVISION TO THESE FORWARD-LOOKING
statements.

                                   PART 1

Item 1.  Business

     Our company was incorporated under the laws of the State of North
Carolina on July 26, 1996. On August 11, 2004, we acquired Heilongjiang
Pingchuan Yi Liao Qi Xie You Xian Gong Si ("Heilongjiang Pingchuan"), a
corporation organized under the laws of the People's Republic of China on
December 7, 2001.  Heilongjiang Pingchuan is a management consulting
company located in the Harbin Province in northeast China, approximately
1,000 km northeast of Beijing.  All of our business in 2005 arose from two
consulting contracts, one with  a pharmaceutical company and one with a
computer distributor.

     Harbin Pingchuan

     Before the acquisition, Heilongjiang Pingchuan's operations focused
on sales of medical equipment, such as infusion apparatus and respirator
equipment. Substantially all of Heilongjiang Pingchuan's revenues in 2003
derived from medical equipment sales.  During 2004, however, Heilongjiang
Pingchuan terminated its medical equipment operations.  Instead it began to
focus on deriving revenue from the medical industry by providing operations
management services for a Chinese pharmaceutical manufacturer, Harbin
Pingchuan Yao Ye You Xian Gong Si ("Harbin Pingchuan").  Harbin Pingchuan
is an integrated pharmaceutical company whose main products are
antibiotics, chemical medicine capsules, traditional Chinese medicines,
medical instruments, health care food, and other related products. The
Chairman of Heilongjiang Pingchuan, Mr. Zhanwu Hu, owns more than 50% of
the common stock of Harbin Pingchuan.

     In October 2004, we entered into an agreement with Harbin Pingchuan,
pursuant to which we provide operations management services to Harbin
Pingchuan.  Among the services that we provide to Harbin Pingchuan are
formula control, supplier selection, quality assurance, package design
services, cost analysis, product packaging and tracking, just-in-time and
point-of-use delivery, billing services and post-sales support. Through our

                                    -1-
<PAGE>

management and related services, we are also helping Harbin Pingchuan
to develop a nation-wide sales network for most of their products. We are
seeking opportunities to build strategic partnerships with national chain
drugstores so that Harbin Pingchuan can distribute their products via an
improved national sales network. Our developed, customized information
systems enable Harbin Pingchuan to: (1) significantly reduce the direct and
indirect costs of production by outsourcing internal purchasing, quality
assurance and inventory fulfillment responsibilities; (2) reduce the amount
of working capital invested in inventory and floor space; (3) reduce
production costs through purchasing efficiencies; and (4) receive expertise
in production and package design and marketing.

     Our contract with Harbin Pingchuan provides that it will pay us a
professional services fee of $48,000 per year, plus 15% of its sales
revenue.  During 2005 we derived revenue of $74,028 from Harbin Pingchuan,
with a receivable of $24,786 outstanding at December 31, 2005.  The
contract will terminate on September 30, 2009 unless extended.

     We anticipate that revenue from Harbin Pingchuan will increase in the
coming years due to growth in anticipated growth in Harbin Pingchuan's
revenues.  For several years Harbin Pingchuan has been engaged in research
focused on development of herbal supplements to aid individuals suffering
from diabetes, a disease that is believed to afflict over 40 million
Chinese men and women.  For the past two years Harbin Pingchuan has been
marketing its Kang Da Glycosuria Capsule, which combines cucurbita moschata
duch pulveratum, radix astrangali and radix panacis quinquefolii, among
other ingredients, to help reduce the glucose level in diabetes patients.
Test marketing has met the company's targets, and Harbin Pingchuan is
currently seeking capital to fund nationwide marketing of the product.  At
the same time, Harbin Pingchuan is developing a tea (the "Anti-Thirst Brio
Glycosuria Capsule"), which is rich in flavines and amino acids, and is
intended to reduce blood sugar levels while also alleviating symptoms of
hypertension.  If Harbin Pingchuan can obtain the funding needed to fully
market the Kang Da Glycosuria Capsule and complete development and testing
of the Anti-Thirst Brio Glycosuria Capsule, its revenues should increase
substantially, which will directly result in increased fees to our Company.

     Moscow Sing Sing

     In January 2005, we signed a market research agreement with Moscow
Sing Sing Co. Ltd., a Russian corporation ("Sing Sing"). Sing Sing produces
desktop computers and related supplies, and is also engaged in network
building, software development and international commerce consultation.
Pursuant to our agreement, Sing Sing authorized us to conduct market
research for business projects in China (excluding Hong Kong, Macao and
Taiwan). We agreed to perform commercial market research and deliver
business plans for Sing Sing.  The contract calls for payment by Sing Sing
to us of $50,000 every 90 days.  The initial contract was scheduled to
terminate in January 2006.  The contract has been extended by Sing Sing
through January 2007, when the last payment is due.   During 2005 we
derived revenue of $199,891 from Sing Sing, with a receivable of $80,078
outstanding at December 31, 2005.

                                    -2-
<PAGE>

     Employees

     Pingchuan Pharmaceutical, Inc. has no employees.   Its subsidiary,
Heilongjiang Pingchuan, has 30 employees.  11 are involved in administration
and marketing, 7 are involved in technology implementation, and 12 are
involved in providing services.  None of our employees belongs to a
collective bargaining unit.

Item 2.  Properties

     Our offices are located in the office facility leased by Harbin
Pingchuan Pharmaceutical, Inc.  That company provides us 400 square meters
of office space free of charge, in partial compensation for the services
that we provide to Harbin Pingchuan Pharmaceutical.  Its lease of those
premises expires on December 31, 2006.

Item 3.  Legal Proceedings

     On April 6, 2006 GreenTree Financial Group, Inc. commenced an action
in the General Court of Justice of the State of North Carolina (County of
Mecklenberg) titled "GreenTree Financial Group, Inc. v. Pingchuan
Pharmaceuticals, Inc."  GreenTree Financial Group alleges that it performed
services under contract for Pingchuan Pharmaceutical, Inc., and is owed
$118,500.  Pingchuan Pharmaceutical has not yet answered the complaint but,
when it does so, it will deny that it owes any money to GreenTree Financial
Group.

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

     Not applicable.

                                   PART II

Item 5.  Market for Registrant's Common Equity, Related Stockholder
         Matters and Small Business Issuer Purchases of Equity Securities

     (a) Market Information

     The Company's common stock is quoted on the OTC Bulletin Board under
the symbol "PGCN.OB."  Set forth below are the high and low bid prices for
each of the eight quarters in the past two fiscal years.  The reported bid
quotations reflect inter-dealer prices without retail markup, markdown or
commissions, and may not necessarily represent actual transactions.


                                        Bid
                                 -----------------
Quarter Ending                   High          Low

March 31, 2004                   $  .23     $  .23
June 30, 2004                    $  .18     $  .18
September 30, 2004               $  .25     $  .25
December 31, 2004                $  .20     $  .20

March 31, 2005                   $  .35     $  .15
June 30, 2005                    $ 5.25     $  .15
September 30, 2005               $ 3.50     $  .36
December 31, 2005                $  .80     $  .18

                                    -3-
<PAGE>

     (b) Shareholders

     Our shareholders list contains the names of 1,904 registered
stockholders of record of the Company's Common Stock.

     (c) Dividends

     The Company has never paid or declared any cash dividends on its
Common Stock and does not foresee doing so in the foreseeable future.  The
Company intends to retain any future earnings for the operation and
expansion of the business.  Any decision as to future payment of dividends
will depend on the available earnings, the capital requirements of the
Company, its general financial condition and other factors deemed pertinent
by the Board of Directors

     (d) Sale of Unregistered Securities

     Pingchuan Pharmaceutical did not effect any unregistered sales of
equity securities during the 4th quarter of 2005.

     (e) Repurchase of Equity Securities

     The Company did not repurchase any of its equity securities that were
registered under Section 12 of the Securities Act during the 4th quarter of
2005.

Item 6.  Management's Discussion and Analysis of Results of Operations
         and Financial Condition

Results of Operations

     We recorded revenues of $273,919 in 2005 compared to $38,882 in
revenue in 2004. All of our revenue represented professional service fees
from Harbin Pingchuan and Sing Sing, based on the contracts described in
the Business section of this Report. The Company had no income in the first
nine months of 2004, as we terminated our equipment sales at the beginning
of the year, and its revenue in the 4th quarter of 2004 came entirely from
its contract with Harbin Pingchuan.

     The majority of our revenue in 2005 came from the Sing Sing contract,
which will terminate at the end of this year.  We expect the growth of our
business in 2006 to come primarily from increased business at Harbin
Pingchuan.  Our revenue from that source will increase, however, only if
Harbin Pingchuan is successful in obtaining the funds that it needs in
order to expand the marketing of its herbal supplements for diabetics.

     Because our operations consist entirely of consulting services
performed by our management, we record no cost of sales, so all of our
revenue flows through to become gross profit.  Similarly, we incur
relatively low operating expenses.  Our selling, general and administrative
expenses in 2005 equaled only 27% of our revenue.  In the same period,

                                    -4-
<PAGE>

however, we incurred $241,000 in consulting fees.  We paid these fees
in common stock to persons who are assisting us in pursuing business
opportunities.  Because of our lack of cash resources, it is likely that we
will continue to issue stock to the individuals that are critical to our
efforts at business expansion.

     For 2005 we realized a net loss (before gains from currency
translations) of $136,263, primarily due to the $241,000 in stock-based
compensation that we paid.  At our current level of operations, we expect
to continue to realize profits, albeit modest, except during periods when
we issue stock for services.  Our plan, however, is to expand operations,
which is likely to affect our profitability.

     Liquidity and Capital Resources

     On December 31, 2005 Pingchuan Pharmaceutical had a working capital
deficit of ($9,360).  The Company's current assets primarily consisted of
receivables from Sing Sing.  At the same time, its liabilities primarily
consisted of obligations to the shareholders who have been funding
Pingchuan Pharmaceutical's operations.  We have been collecting the
receivable from Sing Sing, and have not been required to pay the debt to
the shareholders.  So we believe that the working capital deficit will not
prevent us from carrying on operations.

     Pingchuan realized $20,539 in net cash from operations during 2005.
This result was achieved, despite the loss incurred in 2005, because the
principal expense during the year was a non-cash item, namely the issuance
of stock to consultants.  At the same time, however, the low level of
operations currently carried on will not produce sufficient cash to fund an
expansion of operations.  Therefore, unless additional capital is obtained
or the Company's relationship with Harbin Pingchuan provides increased cash
flow to Heilongjiang Pingchuan, the Company will not have the resources
necessary to expand its operations.

     In order to expand operations, the Company will have to invest funds
in marketing, capital equipment and related infrastructure items.
Currently the Company lacks the capital resources necessary to make those
investments.  Accordingly, the Company is currently exploring opportunities
to raise capital.  At present it has secured no commitments from investors.

     Application of Critical Accounting Policies

     In preparing our financial statements we are required to formulate
working policies regarding valuation of our assets and liabilities and to
develop estimates of those values.  In our preparation of the financial
statements for 2005, there was one estimate made which was (a) subject to a
high degree of uncertainty and (b) material to our results.  This was our
determination, detailed in Note 2 to the Financial Statements, that we
should make no provision for doubtful accounts receivable.  The primary
reason for the determination was the fact that all of our accounts
receivable were owed to us by parties that have a good payment history.

     We made no material changes to our critical accounting policies in
connection with the preparation of financial statements for 2005.

                                    -5-
<PAGE>

     Impact of Accounting Pronouncements

     There were no recent accounting pronouncements that have had a
material effect on the Company's financial position or results of
operations.  There was one recent accounting pronouncement that may have a
material effect on the Company's financial position or results of
operations.

     In December 2004, the FASB issued SFAS No. 123R "Share-Based
Payment." This Standard addresses the accounting for transactions in which
a company receives employee services in exchange for (a) equity instruments
of the company or (b) liabilities that are based on the fair value of the
company's equity instruments or that may be settled by the issuance of such
equity instruments. This Standard eliminates the ability to account for
share-based compensation transactions using Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," and requires
that such transactions be accounted for using a fair-value-based method.
The Standard is effective for periods beginning after June 15, 2005. The
Standard may adversely affect the Company's results of operations if the
Company issues a material amount of capital stock for services, as it did
during 2005.

     Off-Balance Sheet Arrangements

     We do not have any off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial
condition or results of operations.

     Risk Factors That May Affect Future Results

     You should carefully consider the risks described below before buying
our common stock.  If any of the risks described below actually occurs,
that event could cause the trading price of our common stock to decline,
and you could lose all or part of your investment.

           I.  RISKS ATTENDANT TO OUR BUSINESS

     WE DEPEND ALMOST ENTIRELY ON THE SUCCESS OF HARBIN PINGCHUAN
PHARMACEUTICAL, INC.

     At present our only business activities consist of (a) providing
consulting services to Sing Sing under a contract that terminates at the
end of this year and (b) providing management services to Harbin Pingchuan.
If Harbin Pingchuan is successful, we will benefit, since we are entitled
to receive 15% of the revenue of Harbin Pingchuan for the remaining 3
years of our contract.  But if it is not successful, we will fail.
Moreover, there is no assurance that our relationship with Harbin Pingchuan
will be extended beyond September 30, 2009, when the contract expires.  So,
unless we develop an alternative business plan, we could lose our only
source of revenue.
                                    -6-
<PAGE>

     WE LACK SUFFICIENT CAPITAL TO FULLY CARRY OUT OUR BUSINESS PLAN.

     In order to make our operations cost-efficient, it is necessary that
we expand our operations.  At the present time, however, our capital
resources are sparse.  In order to expand our operations, we will need an
infusion of capital to fund marketing and implementation of additional
consulting projects.  We are engaged in discussions with potential sources
of capital, but have received no commitments.  It is not clear whether
sufficient capital will become available to us to permit us to expand to an
efficient operating point.

     OUR BUSINESS AND GROWTH WILL SUFFER IF WE ARE UNABLE TO HIRE AND
RETAIN KEY PERSONNEL THAT ARE IN HIGH DEMAND.

     Our future success depends on our ability to attract and retain
highly skilled engineers, technical, marketing and customer service
personnel, especially qualified personnel for our operations in China.
Qualified individuals are in high demand in China, and there are insufficient
experienced personnel to fill the demand.  Therefore we may not be able to
successfully attract or retain the personnel we need to succeed.

     WE MAY SUFFER ADVERSE CONSEQUENCES IF WE FAIL TO COMPLY WITH THE
PHARMACEUTICAL REGULATIONS OF THE CHINESE GOVERNMENT.

     As a pharmaceutical company with its main business in China, we are
subject to extensive regulations by the Chinese government, primarily by
the State Food and Drug Administration (the "SFDA"), the Pharmaceutical
Administrative Law, and other related statutes and regulations. These
regulations govern or influence the testing, manufacture, safety, labeling,
storage, record keeping, approval, pricing, advertising and promotion of
Pingchuan drug products. Failure to comply with the Pharmaceutical
Administrative Law and other governmental requirements can result in a
variety of adverse regulatory actions, including but not limited to the
seizure of company products, demand for a product recall, total or partial
suspension of production, refusal by the SFDA to approve new products and
withdrawal of existing product approvals.

     WE MAY NOT BE ABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY,
WHICH COULD CAUSE US TO BE LESS COMPETITIVE.

     We are continuously working with Harbin Pingchuan to design and
develop new technology. We rely on a combination of copyright and trade
secret laws and restrictions on disclosure to protect our intellectual
property rights. Unauthorized use of our technology could damage our
ability to compete effectively.  In China, monitoring unauthorized use of
our products is difficult and costly.  In addition, intellectual property
law in China is less developed than in the United States and historically
China has not protected intellectual property to the same extent as it is
protected in other jurisdictions, such as the United States. Any resort to
litigation to enforce our intellectual property rights could result in
substantial costs and diversion of our resources, and might be unsuccessful.

                                    -7-
<PAGE>

     WE MAY HAVE DIFFICULTY ESTABLISHING ADEQUATE MANAGEMENT AND FINANCIAL
CONTROLS IN CHINA.

     The People's Republic of China has only recently begun to adopt the
management and financial reporting concepts and practices that investors in
the United States are familiar with.  We may have difficulty in hiring and
retaining employees in China who have the experience necessary to implement
the kind of management and financial controls that are expected of a United
States public company.  If we cannot establish such controls, we may
experience difficulty in collecting financial data and preparing financial
statements, books of account and corporate records and instituting business
practices that meet U.S. standards.

     CAPITAL OUTFLOW POLICIES IN CHINA MAY HAMPER OUR ABILITY TO PAY
DIVIDENDS TO SHAREHOLDERS IN THE UNITED STATES.

     The People's Republic of China has adopted currency and capital
transfer regulations. These regulations require that we comply with complex
regulations for the movement of capital. Although Chinese governmental
policies were introduced in 1996 to allow the convertibility of RMB into
foreign currency for current account items, conversion of RMB into foreign
exchange for capital items, such as foreign direct investment, loans or
securities, requires the approval of the State Administration of Foreign
Exchange. We may be unable to obtain all of the required conversion
approvals for our operations, and Chinese regulatory authorities may impose
greater restrictions on the convertibility of the RMB in the future.
Because most of our future revenues will be in RMB, any inability to obtain
the requisite approvals or any future restrictions on currency exchanges
will limit our ability to fund our business activities outside China or to
pay dividends to our shareholders.

     WE HAVE LIMITED BUSINESS INSURANCE COVERAGE.

     The insurance industry in China is still at an early stage of
development. Insurance companies in China offer limited business insurance
products, and do not, to our knowledge, offer business liability insurance.
As a result, we do not have any business liability insurance coverage for
our operations. Moreover, while business disruption insurance is available,
we have determined that the risks of disruption and cost of the insurance
are such that we do not require it at this time. Any business disruption,
litigation or natural disaster might result in substantial costs and
diversion of resources.

     CURRENCY FLUCTUATIONS MAY ADVERSELY AFFECT OUR BUSINESS.

     We generate revenues and incur expenses and liabilities in Chinese
RMB. However we report our financial results in the United States in U.S.
Dollars.  As a result, we are subject to the effects of exchange rate
fluctuations between these currencies.  Recently, there have been
suggestions made to the Chinese government that it should adjust the
exchange rate and end the linkage that in recent years has held the RMB-
U.S. dollar exchange rate constant. If the RMB exchange rate is adjusted or
is allowed to float freely against the U.S. dollar, our revenues, which are
denominated in RMB, may fluctuate significantly in U.S. dollar terms. We
have not entered into agreements or purchased instruments to hedge our
exchange rate risks.

                                    -8-
<PAGE>

           II.  RISKS ATTENDANT TO OUR MANAGEMENT

     OUR BUSINESS DEVELOPMENT WOULD BE HINDERED IF WE LOST THE SERVICES OF
OUR CHAIRMAN.

     Zhanwu Hu is the Chairman of Pingchuan Pharmaceutical, of its
operating subsidiary, Heilongjiang Pingchuan, and of our affiliate, Harbin
Pingchuan Pharmaceutical.  Mr. Hu is responsible for strategizing not only
our business plan but also the means of financing it.  Mr. Hu has also,
from time to time, provided his personal funds to meet the working capital
needs of Heilongjian Pingchuan.  If Mr. Hu were to leave Pingchuan
Pharmaceutical or become unable to fulfill his responsibilities, our
business would be imperiled.  At the very least, there would be a delay in
the development of Pingchuan Pharmaceutical until a suitable replacement
for Mr. Hu could be retained.

     PINGCHUAN PHARMACEUTICAL IS NOT LIKELY TO HOLD ANNUAL SHAREHOLDER
MEETINGS IN THE NEXT FEW YEARS.

     Since the reverse merger of Heilongjiang Pingchuan into Pingchuan
Pharmaceutical in 2004, Pingchuan Pharmaceutical has never held an annual
meeting of shareholders.  Management does not expect to hold annual
meetings of shareholders in the next few years, due to the expense
involved.  The current members of the Board of Directors were appointed to
that position by the current and previous directors.  If other directors
are added to the Board in the future, it is likely that the current
directors will appoint them.  As a result, the shareholders of Pingchuan
Pharmaceutical will have no effective means of exercising control over the
operations of Pingchuan Pharmaceutical.

     YOUR ABILITY TO BRING AN ACTION AGAINST US OR AGAINST OUR DIRECTORS,
OR TO ENFORCE A JUDGMENT AGAINST US OR THEM, WILL BE LIMITED BECAUSE WE
CONDUCT ALL OF OUR OPERATIONS IN CHINA AND BECAUSE MOST OF OUR DIRECTORS
RESIDE OUTSIDE OF THE UNITED STATES.

     We conduct substantially all of our operations in China through our
wholly-owned subsidiary. All of our directors reside in China and
substantially all of the assets of those persons are located outside of the
United States. As a result, it may be difficult or impossible for you to
bring an action against us or against these individuals in the United
States in the event that you believe that your rights have been infringed
under the securities laws or otherwise. Even if you are successful in
bringing an action of this kind, the laws of the United States and of China
may render you unable to enforce a judgment against our assets or the
assets of our directors.

Item 7.  Financial Statements

     The Company's financial statements, together with notes and the
Independent Auditors' Report, are set forth immediately following Item 14
of this Form 10-KSB.
                                    -9-
<PAGE>

Item 8.  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

     Not Applicable

Item 8A. Controls and Procedures

     (a) Evaluation of disclosure controls and procedures.

     The term "disclosure controls and procedures" (defined in SEC Rule
13a-15(e)) refers to the controls and other procedures of a company that
are designed to ensure that information required to be disclosed by a
company in the reports that it files under the Securities Exchange Act of
1934 (the "Exchange Act") is recorded, processed, summarized and reported
within required time periods. The Company's management, with the
participation of Zhanwu Hu, our Chief Executive Officer, and Chunman Zhang,
our Chief Financial Officer, has evaluated the effectiveness of the
Company's disclosure controls and procedures as of the end of the period
covered by this annual report (the "Evaluation Date"). Based on that
evaluation, Messrs. Hu and Zhang have concluded that, as of the Evaluation
Date, such controls and procedures were effective.

     (b) Changes in internal controls.

     The term "internal control over financial reporting" (defined in SEC
Rule 13a-15(f)) refers to the process of a company that is designed to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles. The Company's
management, with the participation of Zhanwu Hu, our Chief Executive
Officer, and Chunman Zhang, our Chief Financial Officer, has evaluated any
changes in the Company's internal control over financial reporting that
occurred during the fourth quarter of the year covered by this annual
report, and they have concluded that there was no change to the Company's
internal control over financial reporting that has materially affected, or
is reasonably likely to materially affect, the Company's internal control
over financial reporting.

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.

     The officers and directors of the Company are:

                                   -10-
<PAGE>


                                                               Director
Name                   Age     Position with the Company       Since
--------------------------------------------------------------------------
Zhanwu Hu              52      Chairman, President             2004

Qitai Yao              48      Chief Executive Officer,        2004
                                Director

Xichen Gao             38      Vice President, Director        2004

Jundong Zhang          37      Director                        2004

Chunman Zhang          44      Chief Financial Officer           --


     Directors hold office until the annual meeting of the Company's
stockholders and the election and qualification of their successors.
Officers hold office, subject to removal at any time by the Board, until
the meeting of directors immediately following the annual meeting of
stockholders and until their successors are appointed and qualified.

     Zhanwu Hu.  Mr. Hu organized Heilongjiang Pingchuan in 2001 and has
served as its Chairman since that date.  For more than the past five years,
Mr. Hu has been the Chief Executive Officer of Harbin Pingchuan
Pharmaceutical, culminating a career in management of pharmaceutical
enterprises.  Mr. Hu has a degree from the Harbin Pedagogic College.

     Qitai Yao.  Mr. Yao joined Mr. Hu in organizing Heilongjiang
Pingchuan in 2001, and has served as its Chief Executive Officer since that
date.  For more than the past five years, Mr. Yao has been employed by
Harbin Pingchuan Pharmaceutical, with responsibilities for product
manufacturing, marketing, and strategic planning.  Mr. Yao has a degree in
finance from the Harbin Technology University.

     Xichen Gao.  Mr. Gao has been employed since 2004 as Vice General
Manager of Harbin Pingchuan Pharmaceutical, with responsibilities in
research and product development.  Prior to joining Harbin Pingchuan
Pharmaceutical, Mr. Gao was employed for over three years as an
administrator in the Medicine Management Office of the SongHuaJiang
Transportation Bureau of the Harbin Economy and Trading Committee, where he
was responsible for analysis and management in connection with the medical
industry.  Mr. Gao has a degree in engineering from Heilongjiang
University.

     Jundong Zhang.  Mr. Zhang has been employed for over five years by
Heilongjiang Pingchuan as its Production Supply Department Manager.

     Chunman Zhang.  Mr. Zhang has been employed since 2004 as the Chief
Financial Officer of Heilongjiang Pingchuan.  From 2003 to 2004, Mr. Zhang
was the Financial Manager for Harbin Lingfeng Medicine, Inc., a
pharmaceutical company.  From 2001 to 2003, Mr. Zhang was employed as
Financial Manager for the Heilongjiang Supply and Sales Cooperation Foreign
Trade Company.

     Audit Committee

     The Board of Directors has not appointed an Audit Committee.  The
Board of Directors does not have an audit committee financial expert.  The
Board of Directors has not been able to recruit an audit committee
financial expert to join the Board of Directors because the Company's
management is entirely located in China.

                                   -11-
<PAGE>

     Code of Ethics

     The Company does not have a written code of ethics applicable to its
executive officers.  The Board of Directors has not adopted a written code
of ethics because there are so few members of management.

     Section 16(a) Beneficial Ownership Reporting Compliance

     None of the officers, directors or beneficial owners of more than 10%
of the Company's common stock failed to file on a timely basis the reports
required by Section 16(a) of the Exchange Act during the year ended
December 31, 2005.

Item 10.  Executive Compensation

     The following table sets forth all compensation awarded to, earned
by, or paid by Pingchuan Pharmaceutical and its subsidiary to Qitai Yao,
its Chief Executive Officer, for services rendered in all capacities to the
Company during the years ended December 31, 2005, 2004 and 2003.  There
were no other executive officers whose total salary and bonus for the
fiscal year ended December 31, 2005 exceeded $100,000.

                                              Compensation
                                             Year    Salary
--------------------------------------------------------------
Qitai Yao                                    2005    $39,000
                                             2004    $     0
                                             2003    $     0

     Employment Agreements

     All of our employment arrangements with our executives are on an at
will basis.

     Equity Grants

     The following tables set forth certain information regarding the
stock options acquired by the Company's Chief Executive Officer during the
year ended December 31, 2005 and those options held by him on December 31,
2005.
                                   -12-
<PAGE>
         Option Grants in the Last Fiscal Year

                           Percent
                           of total                        Potential realizable
                Number of  options                          value at assumed
                securities granted to                       annual rates of
                underlying employees  Exercise              appreciation of
                option     in fiscal  Price     Expiration  for option term
Name            granted    year       ($/share) Date             5%     10%
-------------------------------------------------------------------------------
Qitai Yao        0          N.A.       N.A.     N.A.              0      0

     Aggregated Fiscal Year-End Option Values

            Number of securities underlying   Value of unexercised in-the-money
            unexercised options at fiscal     options at fiscal year-end ($)
Name        year-end (#) (All exercisable)    (All exercisable)
------------------------------------------------------------------------------
Qitai Yao              0                                  0

     Remuneration of Directors

     None of the members of the Board of Directors receives remuneration
for service on the Board.

Item 11. Security Ownership of Certain Beneficial Owners and Management

     The following table sets forth information known to us with respect
to the beneficial ownership of our common stock as of the date of this
prospectus by the following:

     *   each shareholder known by us to own beneficially more than 5% of
         our common stock;

     *   Qitai Yao, our Chief Executive Officer

     *   each of our directors; and

     *   all directors and executive officers as a group.

     There are 71,996,407 shares of our common stock outstanding on the date
of this report.  Except as otherwise indicated, we believe that the beneficial
owners of the common stock listed below have sole voting power and investment
power with respect to their shares,  subject to community property laws where
applicable.  Beneficial ownership is determined in accordance with the rules
of the Securities and Exchange Commission.

     In computing the number of shares beneficially owned by a person and the
percent ownership of that person, we include shares of common stock subject to
options or warrants held by that person that are currently exercisable or will
become exercisable within 60 days. We do not, however, include these
"issuable" shares in the outstanding shares when we compute the percent
ownership of any other person.

                                   -13-
<PAGE>
                             Amount and
                             Nature of
Name and Address             Beneficial              Percentage
of Beneficial Owner(1)       Ownership               of Class
-------------------------------------------------------------------------
Zhanwu Hu                    36,557,700                 50.8%
Qitai Yao                       160,000                  0.2%
Xichen Gao                       80,000                  0.1%
Jundong Zhang                        --                  0.0%

All officers and directors   ----------                -----
 as A group (5 persons)      36,797,700                 51.1%
                             ==========                =====
_____________________________

(1)  The address of each shareholder, unless otherwise noted, is c/o
     Heilongjiang Pharmaceutical, Inc., 131 Shizi Street, Nangang District,
     Harbin Heilongjiang F4, P.R. China 50000

     Equity Compensation Plan Information

     The information set forth in the table below regarding equity
compensation plans (which include individual compensation arrangements) was
determined as of December 31, 2005.

                                   Number of                       Number of
                                   securities       Weighted       securities
                                   to be issued     average        remaining
                                   upon             exercise       available
                                   exercise of      price of       for future
                                   outstanding      outstanding    issuance
                                   options,         options,       under equity
                                   warrants and     warrants and   compensation
                                   rights           rights         plans
-------------------------------------------------------------------------------
Equity compensation
plans approved by
security
holders..........                         0               --              0


Equity compensation
plans not approved by
security holders*....                     0               --              0
                                    -------            -----      ---------
Total............                         0               --              0
                                    =======            =====      =========


Item 12.  Certain Relationships and Related Transactions

     Heilongjiang Pingchuan is party to a services agreement with Harbin
Pingchuan Pharmaceutical, Inc.  The agreement, which is described in detail in
the Business section of this Report, was the source of 45% of the revenue
reported by Pingchuan Pharmaceutical for 2005.  Zhanwu Hu, our Chairman, owns
over 50% of the capital stock of Harbin Pingchuan Pharmaceutical, Inc.

     During 2004 and 2005 the operations of Heilingjiang Pingchuan were
funded by loans from several of our shareholders.  The loans do not bear

                                   -14-
<PAGE>

interest, and are payable on demand.  The balance due to these shareholders
at December 31, 2005 was $91,200.

     We believe the above transactions were as favorable to us as we could
have obtained from unrelated third parties.

Item 13.  Exhibit List

     (a) Financial Statements

     Report of Independent Registered Public Accounting Firm on 2004 Financials

     Report of Independent Registered Public Accounting Firm on 2005 Financials

     Consolidated Balance Sheets - December 31, 2005

     Consolidated Statements of Operations - Years ended December 31, 2004
      and 2003

     Consolidated Statements of Changes in Shareholders' Equity (Deficiency)
      - Years ended December 31, 2004 and 2003

     Consolidated Statements of Cash Flows - Years ended December 31, 2004
      and 2003

     Notes to Consolidated Financial Statements


                                   -15-
<PAGE>

     (b) Exhibit List

3-a   Articles of Incorporation, as amended - filed as an exhibit to the
      Registration Statement on Form SB-2 (333-52472) filed on December 21,
      2000 and incorporated herein by reference.

3-b   By-laws - filed as an exhibit to the Registration Statement on Form
      SB-2 (333-52472) filed on December 21, 2000 and incorporated herein
      by reference.

31.1  Rule 13a-14(a) Certification - Chief Executive Officer

31.2  Rule 13a-14(a) Certification - Chief Financial Officer

32    Rule 13a-14(b) Certifications

Item 14. Principal Accountant Fees and Services

     Pingchuan Pharmaceutical Kempisty & Company as it principal accountant
on January 23, 2006.  Prior to that date, Kempisty & Company had not performed
any services for Pingchuan Pharmaceutical or its subsidiary.

     Audit Fees

     Kempisty & Company billed $25,000 in connection with the audit of
the Company's financial statements for the year ended December 31, 2005.

     Audit-Related Fees

     Kempisty & Company billed the Company $0 for any Audit-Related fee in
2005.

     Tax Fees

     Kempisty & Company billed $0 to the Company in 2005 for professional
services rendered for tax compliance, tax advice and tax planning.

     All Other Fees

     Kempisty & Company billed the Company $0 for other services in 2005.

     It is the policy of the Company that all services other than audit,
review or attest services must be pre-approved by the Board of Directors.
All of the services described above were approved by the Board of Directors.

                                   -16-
<PAGE>
            REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors


Pingchuan Pharmaceutical, Inc. (Previously Xenicent, Inc.) and Subsidiary


We have audited the accompanying statements of operations, changes in
stockholders' equity (deficiency) and cash flows for the year ended
December 31, 2004 (consolidated) of Pingchuan Pharmaceutical, Inc.
(Previously Xenicent, Inc.) and subsidiary.  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 audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe that our
audits 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 Pingchuan Pharmaceutical,
Inc. (Previously Xenicent, Inc.) and subsidiary, as of December 31, 2004
(consolidated), and  the results of its operations and its cash flows for
the year ended December 31, 2004 (consolidated), in conformity with
accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to
the consolidated financial statements, the Company had a net loss of $195,971,
an accumulated deficit of $195,522 and a working capital deficiency of $71,920
and used cash in operations of $197,236. These factors raise substantial doubt
about its ability to continue as a going concern. Management's plans concerning
this matter are also described in Note 1. The accompanying consolidated
financial statements do not include any adjustments that might result from
the outcome of this uncertainty.



JIMMY C.H. CHEUNG & CO
Certified Public Accountants


Date: April 12, 2005


By:  /S/ JIMMY C.H. CHEUNG
--------------------------
JIMMY C.H. CHEUNG
                                                                F-1


<PAGE>

KEMPISTY & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS, P.C.
15 MAIDEN LANE - SUITE 1003
NEW YORK, NY 10038
TEL (212) 406-7272 - FAX (212) 513-1930


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
Pingchuan Pharmaceutical, Inc. and Subsidiary


We have audited the accompanying consolidated balance sheet of Pingchuan
Pharmaceutical, Inc. and subsidiary as of December 31, 2005 and the related
statements of operations, changes in stockholders' equity and cash flows for
the year then ended.  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 audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe that our
audits 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 Pingchuan Pharmaceutical,
Inc. and subsidiary at December 31, 2005 and the results of its' operations
and cash flows for the year then ended in conformity with U.S. generally
accepted accounting.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to
the consolidated financial statements, the Company had a net loss of $136,263
and an accumulated deficit of $331,785.  Additionally, the Company has only
two customers one of which is a related party.  These factors raise substantial
doubt about its ability to continue as a going concern. Management's plans
concerning these matters are also described in Note 1. The accompanying
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.



Kempisty & Company
Certified Public Accountants PC
New York, New York

March 8, 2006
                                                                F-2

                        PINGCHUAN PHARMACEUTICAL, INC.

                          CONSOLIDATED BALANCE SHEET

                                                        December 31,
                                                           2005
ASSETS                                                ---------------
 Current Assets:
  Cash and cash equivalents                            $   31,615
  Accounts receivable, net                                 80,078
                                                         --------
  Total current assets                                    111,693

Due from related parties (Note 6)                          54,708
                                                         --------
Total Assets                                           $  166,401
                                                         ========
LIABILITIES AND STOCKHOLDERS' EQUITY
 Current Liabilities:
  Accounts payable and accrued expenses                $   29,853
  Loan from shareholders (Note 6)                          91,200
                                                         --------
  Total Current Liabilities                               121,053

Commitments and Contingencies (Note 13)                         -

Stockholders' Equity:
 Preferred stock, $0.001 par value, 5,000,000
  shares authorized; none issued and outstanding
  as of December 31, 2005                                       -
 Common stock, $0.001 par value,
  150,000,000 shares authorized; 71,996,406 shares
  issued and outstanding (Note 5)                          71,996
 Additional Paid-in capital                               299,356
 Accumulated deficiency                                  (331,785)
 Accumulated other comprehensive income                     5,781
                                                         --------
 Stockholders' Equity                                      45,348
                                                         --------
Total Liabilities and Stockholders' Equity             $  166,401
                                                         ========



See Notes to Financial Statements
                                                                F-3

                        PINGCHUAN PHARMACEUTICAL, INC.

                   CONSOLIDATED STATEMENTS OF OPERATIONS


                                                      For the Year Ended
                                                         December 31,
                                                      2005            2004
                                                   ---------       ---------

Revenues
 Service income                                   $  273,919      $   38,882
 Cost of sales                                             -               -
                                                   ---------       ---------
 Gross Profit                                        273,919          38,882

Operating Expenses
 Consulting fees paid with stock                     241,000               -
 Professional fees                                    25,000         215,817
 General and administrative                           74,704           7,876
 Loss on foreign currency transaction                  2,253               -
                                                   ---------       ---------
 Total Operating Expenses                            342,957         223,693

Income (Loss) from Operation and before
 provision for Income Tax                            (69,038)       (184,811)

Provision for Income Tax                              67,225          11,160
                                                   ---------       ---------
Net loss                                            (136,263)       (195,971)

Other Comprehensive Income
 Effects of Foreign Currency Conversion                5,781               -
                                                   ---------       ---------
Comprehensive Income (Loss)                       $ (130,482)     $ (195,971)
                                                   =========       =========

Basic and Fully Diluted Earnings per Share        $    (0.00)     $    (0.01)
                                                   =========       =========

Weighted average shares outstanding               70,905,074      30,728,655
                                                  ==========      ==========



See Notes to Financial Statements.
                                                                F-4

                         PINGCHUAN PHARMACEUTICAL, INC.
     CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY)

                FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004

<TABLE>                                                                              Accumulated
                        Common Stock                          Additional  Retained   Other
                      $0.001  Par Value    Treasury Stock     Paid-in     Earnings   Comprehensive
                     Shares      Amount    Shares  Amount     Capital     (Deficit)  Income        Totals
--------------------------------------------------------------------------------------------------------------
<S>                 <C>        <C>        <C>       <C>       <C>       <C>          <C>          <C>
Balances at
 January 1, 2004    2,112,404  $  2,112           - $       - $ 118,678 $      449   $     -      $ 121,239

Treasury stock
 contributed by
 shareholders              -          -  (1,300,000) (400,000)  400,000          -         -              -

Treasury stock
 cancellation      (1,300,000)   (1,300)  1,300,000   400,000  (398,700)         -         -              -

Shares issued
 due to reverse
 stock split
 rounding                   3         -           -         -         -          -         -              -

Common stock
 issued for
 acquisition of
 Heilongjiang
 Pingchuan         70,000,000    70,000           -         -   (70,000)         -         -              -

Reverse merger
 adjustment           (21,001)      (21)          -         -        21          -         -              -

Contributed rent            -         -           -         -     2,812          -         -          2,812

Net loss                    -         -           -         -         -   (195,971)        -       (195,971)
                    ---------------------------------------------------------------------------------------
Balances at
 December 31, 2004 70,791,406    70,791           -         -    52,811   (195,522)        -        (71,920)

Common stock
 issued for
 services             500,000       500           -         -    99,500          -         -        100,000

Common stock
 issued for
 services             500,000       500           -         -    99,500          -         -        100,000
Common stock
 issued for
 services             200,000       200           -         -    39,800          -         -         40,000

Common stock
 issued for
 services               5,000         5           -         -       995          -         -          1,000

Contributed rent            -         -           -         -     6,750          -         -          6,750

Net income                  -         -           -         -         -   (136,263)        -       (136,263)

Other comprehensive
 income                     -         -           -         -         -          -     5,781          5,781
                   ----------------------------------------------------------------------------------------
Balances at
 December 31, 2005 71,996,406  $ 71,996           - $       - $ 299,356 $ (331,785)  $ 5,781     $   45,348
                   ========================================================================================


</TABLE>

See Notes to Financial Statements
                                                                F-5

                         PINGCHUAN PHARMACEUTICAL, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                         For the Year Ended
                                                             December 31,
                                                        2005            2004
                                                     ---------       ---------
Operating Activities
 Net income (loss)                                  $ (136,263)     $ (195,971)
 Adjustments to reconcile net income (loss) to
  net cash provided (used) by operating activities:
  Contributed rent                                       6,750           2,814
  Stock issued for consulting expense                  241,000               -
  Changes in operating assets and liabilities:
   Accounts receivable                                 (80,078)              -
   Inventory                                                 -             430
   Accounts payable and accrued expenses                 7,862          21,871
   Taxes payable                                       (18,732)         12,933
                                                     ---------       ---------
 Net cash provided (used) by operating activities       20,539        (157,923)
                                                     ---------       ---------
Financing Activities
 Proceeds from notes payable                                 -          70,000
 Repayment of notes payable                            (70,000)              -
 Loan to related parties                               (15,826)              -
 Loan from related parties                                   -          93,984
 Loan to shareholders                                        -          (5,763)
 Loan from shareholders                                 89,690               -
                                                     ---------       ---------
 Net cash provided (used) by financing activities        3,864         158,221
                                                     ---------       ---------
Increase (decrease) in cash                             24,403             298

Effects of exchange rates on cash                        5,781               -

Cash at beginning of period                              1,431           1,133
                                                     ---------       ---------
Cash at end of period                               $   31,615      $    1,431
                                                     =========       =========

Supplemental Disclosures of Cash Flow Information:

 Cash paid (received) during year for:
  Interest                                          $        -      $        -
                                                     =========       =========

  Income taxes                                      $   67,225      $   11,163
                                                     =========       =========

Supplemental Cash Flow Information:

 Issuance of 500,000 shares of common stock
 par value $0.001 per share for consultant service  $  100,000      $        -
                                                     =========       =========
 Issuance of 500,000 shares of common stock
 par value $0.001 per share for consultant service  $  100,000      $        -
                                                     =========       =========
 Issuance of 200,000 shares of common stock
 par value $0.001 per share for consultant service  $   40,000      $        -
                                                     =========       =========
 Issuance of 5,000 shares of common stock
 par value $0.001 per share for laboratory usage    $    1,000      $        -
                                                     =========       =========


See Notes to Financial Statements.
                                                                F-6

                        PINGCHUAN PHARMACEUTICAL, INC.

                        NOTES TO FINANCIAL STATEMENTS


Note 1- ORGANIZATION AND OPERATIONS

     Pingchuan Pharmaceuticals, Inc. ("Pingchuan") was organized under the
laws of the State of North Carolina on July 20, 1996. Xenicent is authorized
to issue 50,000,000 shares of common stock of $0.001 par value and 50,000,000
shares of preferred stock of $0.001 par value. Pingchuan is a non-operative
holding company of Heilongjiang Pingchuan Yi Liao Qi Xie You Xian Gong Si
(Heilongjiang Pingchuan), a corporation organized and existed under the laws
of the Peoples' Republic of China ("PRC") and is primarily engaged in the sale
of medical equipment and the providing of consultation services in the
pharmaceutical business.

     On June 22, 2004, Pingchuan (formerly Xenicent, Inc.) executed a Plan of
Exchange ("the Agreement") with all the shareholders of Heilongjiang Pingchuan
to exchange 70,000,000 shares of common stock of the Company for 100%
of the registered capital of Heilongjiang Pingchuan. On July 28, 2004, Xenicent
changed its name to Pingchuan Pharmaceutical, Inc. ("Pingchuan Pharmaceutical")
and increased its authorized shares of common stock from 50,000,000 to
150,000,000 by filing Articles of Amendment with the Secretary of State in
the State of North Carolina.

     The Agreement was consummated on August 11, 2004. As a result of the
Agreement, the transaction was treated for accounting purposes as a capital
transaction and recapitalization by the accounting acquirer (Heilongjiang
Pingchuan) and as a reorganization of the accounting acquiree (Pingchuan
Pharmaceutical). Accordingly, the financial statements include the following:

     The balance sheet consists of the net assets of the acquirer at historical
cost and the net assets of the acquiree at historical cost; and

     The statements of operations include the operations of the acquirer for
the years presented and the operations of the acquiree from the date of the
merger.

     Pingchuan Pharmaceutical and Heilongjiang Pingchuan Yi Liao Qi Xie You
Xian Gong Si are hereafter referred to as the Company.

                                                                F-7
<PAGE>
                       PINGCHUAN PHARMACEUTICAL, INC.

                       NOTES TO FINANCIAL STATEMENTS

Note 1- ORGANIZATION AND OPERATIONS (continued)

Going Concern

     As reflected in the accompanying consolidated financial statements,
the Company has an accumulated deficit of $331,785 at December 31, 2005 that
includes an operating loss of $136,263 for the year ended December 31, 2005.
Additionally, the Company has only two customers, one of which is a related
party.  The loss of either customer would have a material adverse effect on the
Company's financial position and results of operations.  These factors raise
substantial doubt about its ability to continue as a going concern.  In view oF
the matters described above, recoverability of a major portion of the recorded
asset amounts shown in the accompanying consolidated balance sheet is dependent
upon continued operations of the company, which in turn is dependent upon the
Company's ability to raise additional capital, obtain financing and succeed in
its future operations.  The financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset amounts or
amounts and classification of liabilities that might be necessary should the
Company be unable to continue as a going concern.

     Management has taken the following steps to revise its operating
and financial requirements, which it believes are sufficient to provide the
Company with the ability to continue as a going concern.  The Company is
actively pursuing additional funding and a potential merger or acquisition
candidate and strategic partners, which would enhance stockholders' investment.
Management believes that the above actions will allow the Company to continue
operations through the next fiscal year.

Note 2- SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

     The accompanying consolidated financial statements include the
accounts of the Company and its wholly owned subsidiary, Heilongjiag
Pingchuan.

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.

                                                                F-8
<PAGE>
                      PINGCHUAN PHARMACEUTICAL, INC.

                      NOTES TO FINANCIAL STATEMENTS

Note 2- SIGNIFICANT ACCOUNTING POLICIES (continued)

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.

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. As of
December 31, 2005 and 2004, the Company considers all its accounts receivable
to be collectable and no provision for doubtful accounts has been made in the
financial statements.

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. Trade accounts receivable, accounts
payable, and accrued liabilities are reflected in the financial statements
at fair value because of the short-term maturity of the instruments.

Revenue Recognition

     The Company provides consultation services to a related company and
one other customer based on a negotiated contract basis. The Company recognizeS
service based revenue from it contracts when the service has been performed,
the customer has approved the completion of services and collectibility is
reasonably assured.

     Consulting revenues were derived from two customers.  An unrelated
third party, provided 55% of revenues and has one more year left on its
contract.  The balance of the revenues 45%, were provided by a company owned
by directors of the Company.

                                                                F-9
<PAGE>

                       PINGCHUAN PHARMACEUTICAL, INC.

                       NOTES TO FINANCIAL STATEMENTS

Note 2- SIGNIFICANT ACCOUNTING POLICIES (continued)

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 for 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 includes
the enactment date.

     PRC income tax is computed according to the relevant laws and
regulations in the PRC. The Company"s applicable tax rate has been 33%. The
income tax expense for 2005 and 2004 was $67,225 and $11,160 respectively.

Foreign Currency Translation

     For the Chinese subsidiary the Chinese Renminbi ("RMB") is the
functional currency.  Assets and liabilities denominated in the RMB are
translated into U.S. dollars at end-of-period exchange rates, and the resultant
translation adjustments are reported, net of their related tax effects, as a
component of Accumulated Other Comprehensive Income (Loss) in stockholders'
equity.  Assets and liabilities denominated in other than the local currency
are remeasured into the local currency prior to translation into U.S. dollars,
and the resultant exchange gains or losses are included in income in the period
in which they occur.  Income and expenses are translated into U.S. dollars at
average exchange rates in effect during the period.

                                                                F-10
<PAGE>

                      PINGCHUAN PHARMACEUTICAL, INC.

                      NOTES TO FINANCIAL STATEMENTS

Note 2- SIGNIFICANT ACCOUNTING POLICIES (continued)

Comprehensive income (loss)

     The foreign currency translation gain or loss resulting from
translation of the financial statements expressed in RMB to United States
Dollar is reported as other comprehensive income (loss) in the statements
of operations and stockholders" equity. Cumulative translation adjustment
amounts were insignificant at and for the year ended December 31, 2004.

Earnings Per Share

     Basic earnings per share are computed by dividing income available
to common stockholders by the weighted average number of common shares
outstanding during the year. 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. There are no potentially dilutive securities for 2005 and 2004.

Segments

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

                                                                F-11
<PAGE>
                      PINGCHUAN PHARMACEUTICAL, INC.

                       NOTES TO FINANCIAL STATEMENTS

Note 2- SIGNIFICANT ACCOUNTING POLICIES (continued)

Impact of Accounting Pronouncements

     There were no recent accounting pronouncements that have had a
material effect on the Company's financial position or results of
operations.  There was one recent accounting pronouncement that may have a
material effect on the Company's financial position or results of
operations.

     In December 2004, the FASB issued SFAS No. 123R "Share-Based
Payment." This Standard addresses the accounting for transactions in which
a company receives employee services in exchange for (a) equity instruments
of the company or (b) liabilities that are based on the fair value of the
company's equity instruments or that may be settled by the issuance of such
equity instruments. This Standard eliminates the ability to account for
share-based compensation transactions using Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," and requires
that such transactions be accounted for using a fair-value-based method.
The Standard is effective for periods beginning after June 15, 2005. The
Standard may adversely affect the Company's results of operations if the
Company issues a material amount of capital stock for services, as it did
during 2005.

Recent Accounting Pronouncements

     In May 2005, the Financial Accounting Standards Board ("FASB")
issued FASB Statement No. 154  "Accounting Changes and Error Corrections - a
replacement of APB Opinion No. 20 and FASB Statement No. 3".  This statement
replaces APB Opinion No. 20 "Accounting Changes" and FASB Statement No. 3
"Reporting Accounting Changes in Interim Financial Statements", and changes
the requirements for the accounting for and reporting of a change in accounting
principle.  It applies to all voluntary changes in accounting principle and to
changes required by an accounting pronouncement which does not include specific
transition provisions.  FASB No. 154 requires retrospective application to prior
periods' financial statements of changes in accounting principle, unless it is
impracticable to determine either the period-specific effects or the cumulative
effect of the change.  When it is impracticable to determine the period-specific
effects of an accounting change on one or more individual prior periods
presented, this statements requires that the new accounting principle be applied
to the balances of assets and liabilities as of the beginning of the earliest
period for which retrospective application is practicable and that a
corresponding adjustment be made to the opening balance of retained earnings
for that period rather thAn being reported in an income statement.  When it
is impracticable to determine the cumulative effect of applying a change in
accounting principle to all prior periods, this statement requires that the
new accounting principle be applied as if it were adopted prospectively from
the earliest date applicable.  The adoption of the statement had no impact on
the Company's results of operation or financial position.

     Statement of Financial Accounting Standards ("SFAS") No. 151, "Inventory
Costs - an amendment of ARB No. 43, Chapter 4" SFAS No. 152, "Accounting for
Real Estate Time-Sharing Transactions - an amendment of FASB Statements No.
66 and 67," SFAS No. 153, "Exchanges of Non-monetary Assets - an amendment of
APB Opinion No. 29," and SFAS No. 123 (revised 2004), "Share-Based Payment,"
were recently issued. SFAS No. 151, 152, 153 and 123 (revised 2004) have no
current applicability to the Company and have no effect on the financial
statements.

Note 3- NOTES PAYABLE

     Notes payable consisted of two notes of $40,000 each issued to a third
party, is unsecured and bears interest at a rate of approximately 9% per
annum. The Company scheduled monthly payments, each in the amount of $1,000
starting on July 25, 2004 and ending on June 25, 2005, with the balance of
$28,000 due and payable on June 25, 2005, at the option of the Company, in cash
or in an equivalent amount of free trading common stock of the Company. As of
December 31, 2004, the notes had an outstanding balance of $70,000.

                                                                F-12
<PAGE>

                      PINGCHUAN PHARMACEUTICAL, INC.

                      NOTES TO FINANCIAL STATEMENTS


Note 4- COMMITMENTS AND CONTINGENCIES


Employee benefits

     The full time employees of the Company are entitled to employee
benefits including medical care, welfare subsidies, unemployment insurance and
pension benefits through a Chinese government mandated multi-employer defined
contribution plan. The Company is required to accrue for those benefits based on
certain percentages of the employees" salaries and make contributions to the
plans out of the amounts accrued for medical and pension benefits. The total
provision and contributions made for such employee benefits was $0 and $282 for
December 31, 2005 and 2004, respectively. The Chinese government is responsible
for the medical benefits and the pension liability to be paid to these
employees.

Note 5- SHAREHOLDER EQUITY - STOCK ISSUANCES

     On June 22, 2004, the Company executed a Plan of Exchange pursuant
to which the Company agreed to issue 70,000,000 new shares of common stock to
the shareholders of Heilongjiang Pingchuan in exchange for 100% of registered
capital of Heilongjiang Pingchuan. The Plan of Exchange was consummated on
August 11, 2004 and recorded for accounting purposes as a reverse merger and
recapitalization of the Company.

     Additionally, the new shareholders of the Company paid $400,000 to
purchase and retire 1,300,000 shares  of the Company"s  common  stock.  These
shares were contributed back to the Company as Treasury Stock and the
cancelled.

     During April 2005, the Company issued 200,000 shares of common stock
to a consultant for his website maintenance service. The price of the
Company's common stock on April 8, 2005 was $0.20.  The Management valued the
cost of the service at $40,000.

     During April 2005, the Company issued 5,000 shares of common stock to
a consultant for services. The price of the Company's common stock on April
8, 2005 was $0.20.  The Management valued the cost of the service at $1,000.

     On March 20, 2005, the Company executed a consulting agreement, pursuant
to which the Company agreed to issue 500,000 shares of common stock for
a pharmaceutical consultation service. The agreement was consummated in 2005
when the price of the Company's common stock was $0.20.  The Management valued
the cost of this service at $100,000.

     During January, 2005, the Company issued 500,000 shares of common
stock for marketing consultation services. The price of the Company's common
stock was $0.20.  Management valued the cost of this service at $100,000.

                                                                F-13
<PAGE>

                        PINGCHUAN PHARMACEUTICAL, INC.

                        NOTES TO FINANCIAL STATEMENTS

Note 6- RELATED PARTY TRANSACTIONS

Due From Related Parties

     Due from related parties at December 31,2005 consist of:


     Heilongjiang  consulting fee receivable          $ 24,786
     Beijing Pingchuan loan recevable                   29,922
                                                       -------
                                                      $ 54,708
                                                       =======

     Due from related parties represent loans or receivables that are
unsecured, non-interest bearing and have no fixed terms of repayment, and
therefore are not considered current assets. The related companies are owned
by directors of the Company.

     Loans to shareholders represent loans payable that are unsecured,
non-interest bearing and have no fixed terms of repayment, therefore, deemed
payable on demand. The related company is owned by directors of the Company.

     The Company used office space of approximately 4,000 square feet
provided by a related company at no charge to the Company in 2005 and 2004.
The market value of the annual rent was approximately $6,750 and the Company
recorded the free rent as a contribution to capital of $6,750 in 2005 and
$2,812 in 2004.

     The Company provides consultation services to a related company owned
by the Company's directors, based on a negotiated contract basis.  The
Company earned management fees of $74,028 and $38,882 from this related company
in 2005 and 2004, respectively. As of December 31, 2005, $24,786 was
outstanding as accounts receivable.

Note 7- CONCENTRATIONS AND RISKS

     The Company's business operations exist solely in the PRC and are
subject to significant risks not typically associated with companies in North
America and Western Europe.  These include risks associated with, among others,
the political, economic and legal environments and foreign currency
limitations.

     The Company's results may thus be adversely affected by changes in
the political and social conditions in the PRC, and by changes in governmental
policies, laws, regulations, anti-inflationary measures, currency conversion and
remittance limitation, and rates and methods of taxation, among other things.

     The Company relied on two customers for all of its revenue in 2005
and one customer in 2004.

Note 8-  SUBSEQUENT EVENTS

     On March 6, 2006 Greentree Financial Group, Inc. ("Greentree"), a former
consultant to the Company filed a breach of contract complaint in the Superior
Court in Mecklenberg County, North Carolina for non payment of contractual
obligations for 2004 and 2005 in the amount of $118,500 plus attorney's fees.
Company management believes it has paid Greentree the full amount it is due and
will contest the complaint.  An adverse outcome to this matter would have a
material adverse effect on the Company's financial position and results of
operations.

                                                                F-14

                                  SIGNATURES

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

                                        Pingchuan Pharmaceutical, Inc.

                                        By:/s/ Qitai Yao
                                        ----------------------------------
                                        Qitai Yao, Chief Executive Officer

      In accordance with the Exchange Act, this Report has been signed
below on April 14, 2006 by the following persons, on behalf of the Registrant
and in the capacities and on the dates indicated.

/s/ Qitai Yao
---------------------------------
Qitai Yao, Director,
Chief Executive Officer

/s/ Chunman Zhang
---------------------------------
Chunman Zhang, Chief Financial
and Chief Accounting Officer

/s/ Zhanwu Hu
---------------------------------
Zhanwu Hu, Director

/s/ Xichen Gao
---------------------------------
Xichen Gao, Director

/s/ Jundong Zhang
---------------------------------
Jundong Zhang, Director