**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON, D.C.
      20549**





**FORM
      10-Q**




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


For
      the
      quarterly period ended August 31, 2008




**OR**




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


For
      the
      transition period
      from                to




Commission
      File Number 333-144910







**SINOBIOPHARMA,
      INC.**




(Exact
      Name of Registrant as Specified in its Charter)




**Nevada**
            
            **26-3002371****(State
                or other Jurisdiction of Incorporation or**
              **Organization)**
            
            **(IRS
                Employer**
              **Identification
                Number)****8
                Zhong Tian Road**
              **Nantong
                City, Jiangsu Province, China**
            
            **226009****(Address
                of Principal Executive Offices)**
            
            **(Zip
                Code)****011-86-51-385328336**
              **(Registrant's
                Telephone Number, Including Area Code)****2820
                W. Charleston Blvd., Suite 22**
              **Las
                Vegas, NV 89102**
              **(Former
                name, former address and former fiscal year, if changed since last
                report)**










Indicate
      by check mark whether the issuer (1) filed all reports required to be filed
      by
      Section 13 or 15(d) of the Exchange Act of 1934 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  ̈








Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company.
      See
      the definitions of “large accelerated filer,” “accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act.





Large
                accelerated filer ̈
            
            Accelerated
                filer ̈Non-accelerated
                filer ̈(Do
                not check if a smaller reporting company)
            Smaller
                reporting companyx




Indicate
      by check mark whether the registrant is a shell company (as defined in rule
      12b-2 of the Exchange Act).




Yes  ̈ No x





**Applicable
      only to issuers involved in bankruptcy proceedings during the preceding five
      years:**





Check
      whether the registrant filed all documents and reports required to be filed
      by
      Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
      under a plan confirmed by a court.





Yes  ̈ No  ̈





**Applicable
      only to corporate issuers:**





Indicate
      the number of shares outstanding of each of the issuer’s classes of common
      equity, as of the latest practicable date.





Class
            
            Outstanding
                as of September 30, 2008Common
                Stock, $0.0001 par value
            
            79,900,000









**TABLE
      OF CONTENTS**




**Page**FORWARD-LOOKING
                STATEMENTS
            
            1USE
                OF NAMES
            
            1**PART
                I – FINANCIAL INFORMATION**
            
            1ITEM
                1. FINANCIAL STATEMENTS
            
            1ITEM
                2. MANAGEMENT’S DISCUSSION AND ANALYSIS AND RESULTS OF
                OPERATIONS
            
            3ITEM
                3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
                RISK
            
            5ITEM
                4. CONTROLS AND PROCEDURES
            
            5**PART
                II – OTHER INFORMATION**
            
            7ITEM
                1. LEGAL PROCEEDINGS
            
            7ITEM
                1A. RISK FACTORS
            
            7ITEM
                2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
                PROCEEDS
            
            22ITEM
                3. DEFAULTS UPON SENIOR SECUTIRIES
            
            22ITEM
                4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
            
            22ITEM
                5. OTHER INFORMATION
            
            22ITEM
                6. EXHIBITS
            
            23SIGNATURES
            
            45





ii




**Forward
      Looking Statements**




This
      quarterly report on Form 10-Q and other reports that we file with the SEC
      contain statements that are considered forward-looking statements.
      Forward-looking statements give the Company’s current expectations, plans,
      objectives, assumptions or forecasts of future events. All statements other
      than
      statements of current or historical fact contained in this annual report,
      including statements regarding the Company’s future financial position, business
      strategy, budgets, projected costs and plans and objectives of management for
      future operations, are forward-looking statements. In some cases, you can
      identify forward-looking statements by terminology such as “anticipate,”
“estimate,” “plans,” “potential,” “projects,” “ongoing,” “expects,” “management
      believes,” “we believe,” “we intend,” and similar expressions. These statements
      are based on the Company’s current plans and are subject to risks and
      uncertainties, and as such the Company’s actual future activities and results of
      operations may be materially different from those set forth in the forward
      looking statements. Any or all of the forward-looking statements in this
      periodic report may turn out to be inaccurate and as such, you should not place
      undue reliance on these forward-looking statements. The Company has based these
      forward-looking statements largely on its current expectations and projections
      about future events and financial trends that it believes may affect its
      financial condition, results of operations, business strategy and financial
      needs. The forward-looking statements can be affected by inaccurate assumptions
      or by known or unknown risks, uncertainties and assumptions due to a number
      of
      factors, including:




·
            dependence
                on key personnel;




·
            competitive
                factors;




·
            degree
                of success of research and development
                programs




·
            the
                operation of our business; and




·
            general
                economic conditions in the United States and
                China




These
      forward-looking statements speak only as of the date on which they are made,
      and
      except to the extent required by federal securities laws, we undertake no
      obligation to update any forward-looking statements to reflect events or
      circumstances after the date on which the statement is made or to reflect the
      occurrence of unanticipated events. In addition, we cannot assess the impact
      of
      each factor on our business or the extent to which any factor, or combination
      of
      factors, may cause actual results to differ materially from those contained
      in
      any forward-looking statements. All subsequent written and oral forward-looking
      statements attributable to the Company or persons acting on its behalf are
      expressly qualified in their entirety by the cautionary statements contained
      in
      this annual report.




**Use
      of Names**




In
      this
      quarterly report, the terms “Sinobiopharma”, “Company”, “we”, or “our”, unless
      the context otherwise requires, mean Sinobiopharma, Inc. and its
      subsidiaries.




1




**PART
      1. FINANCIAL INFORMATION**




**Item
      1. Financial Statements**




**SINOBIOPHARMA,
      INC**


**AND
      CONSOLIDATED SUBSIDIARY**





**INDEX
      TO CONSOLIDATED FINANCIAL STATEMENTS**





PageConsolidated
                Balance Sheet
            
            
            F-1Consolidated
                Statement of Operations
            
            
            F-2Consolidated
                Statement of Cash Flows
            
            
            F-3Consolidated
                Statement of Stockholders' Equity
            
            
            F-4Notes
                to Consolidated Financial Statements
            
            
            F-5




2





**SINOBIOPHARMA,
      INC**


**AND
      CONSOLIDATED SUBSIDIARY**


***(A
      Development Stage Company)***


***Consolidated
      Balance Sheets***


***(Expressed
      in US Dollars)***


***UNAUDITED
      - Prepared by Management***





Note
      2 -
      Basis of Presentation - going concern


**August 31**
              
              **May 31****2008**
              
              **2008**ASSETSCURRENT
                  ASSETSCash
                  - unrestricted
              
              $
              1,978
              
              $
              4,359Cash
                  - restricted (Note 3)
              
              
              20,000
              
              
              -Total
                  current assets
              
              
              21,978
              
              
              4,359Fixed
                  Assets, net of accumulated depreciation (Note 4)
              
              
              -
              
              
              426Total
                  assets
              
              $
              21,978
              
              $
              4,785LIABILITIES
                  AND STOCKHOLDERS' EQUITYCURRENT
                  LIABILITIESAccounts
                  payable
              
              $
              1,779
              
              $
              7,121Accrued
                  liabilities
              
              
              33,500
              
              
              17,445Loan
                  from shareholder
              
              
              8,698
              
              
              -Total
                  current liabilities
              
              
              43,977
              
              
              24,566COMMITMENTS
                  AND CONTINGENCIES (Notes 1, 2, 3, 5 and 6)STOCKHOLDERS'
                  EQUITYCommon
                  stock (Notes 1 and 6)Authorized
                  2,500,000,000 shares at par value of $0.0001 eachIssued
                  and outstanding 100,000,500
              
              
              10,000
              
              
              10,000Subscription
                  received
              
              
              20,000
              
              
              -Additional
                  paid-in capital
              
              
              65,030
              
              
              65,000Accumulated
                  other comprehensive income
              
              
              368
              
              
              415Accumulated
                  (deficit) during development stage
              
              
              (117,397
              )
              
              (95,196
              )Total
                  stockholders' equity
              
              
              (21,999
              )
              
              (19,781
              )Total
                  liabilities and stockholder's equity
              
              $
              21,978
              
              $
              4,785





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


F-1





**SINOBIOPHARMA,
      INC**


**AND
      CONSOLIDATED SUBSIDIARY**


***(A
      Development Stage Company)***


***Consolidated
      Statements of Operations***


***(Expressed
      in US Dollars)***


***UNAUDITED
      - Prepared by Management***


**Cumulative from**
                **date of inception****Three months ended**
              
              **October 26, 2006****August 31**
              
              **August 31**
              
              **to August 31,****2008**
              
              **2007**
              
              **2008**EXPENSESProfessional
                  fees
              
              $
              17,834
              
              $
              12,500
              
              $
              90,380Advertising
                  and Promotion
              
              
              -
              
              
              481
              
              
              3,012Depreciation
              
              
              -
              
              
              -
              
              
              66General
                  and administrative
              
              
              4,367
              
              
              5,797
              
              
              22,111Travel
              
              
              -
              
              
              -
              
              
              1,828Total
                  expenses
              
              
              22,201
              
              
              18,778
              
              
              117,397Net
                  (loss) for the period
              
              $
              (22,201
              )
              $
              (18,778
              )
              $
              (117,397
              )Other
                  comprehensive income (loss)Foreign
                  currency translation
              
              
              (47
              )
              
              (27
              )
              
              368Comprehensive
                  income (loss)
              
              $
              (22,248
              )
              $
              (18,805
              )
              $
              (117,029
              )Net
                  loss per common share, basic and fully diluted for the
                  period
              
              $
              nil
              
              $
              nil
              
              $
              nilWeighted
                  average number of common stock outstanding
              
              
              100,000,500
              
              
              100,000,500
              
              
              83,259,752





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


F-2





**SINOBIOPHARMA,
      INC**


**AND
      CONSOLIDATED SUBSIDIARY**


***(A
      Development Stage Company)***


***Consolidated
      Statements of Cash Flows***


***(Expressed
      in US Dollars)***


***UNAUDITED
      - Prepared by Management***


**Three months ended August,****31**
              
              **Cumulative from**
                **date of inception**
                **October 26, 2006**
                **to August 31,****2008**
              
              **2007**
              
              **2008**Cash
                  (used in) operating activities:Net
                  (loss)
              
              $
              (22,201
              )
              $
              (18,778
              )
              $
              (117,397
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Depreciation
              
              
              -
              
              
              -
              
              
              66Write-down
                  of fixed assets
              
              
              426
              
              
              -
              
              
              426Imputed
                  interest on shareholder loan
              
              
              30
              
              
              -
              
              
              30Net
                  change in operating assets and liabilities:Prepaid
                  expense
              
              
              -
              
              
              -
              
              
              -Accounts
                  payable
              
              
              (5,342
              )
              
              (2,202
              )
              
              1,779Accrued
                  liabilities
              
              
              16,055
              
              
              (960
              )
              
              33,500Net
                  cash (used in) operating activities
              
              
              (11,032
              )
              
              (21,940
              )
              
              (81,596
              )Investing
                  Activities:Purchase
                  of fixed assets
              
              
              -
              
              
              -
              
              
              (492
              )Net
                  cash (used in) investing activities
              
              
              -
              
              
              -
              
              
              (492
              )Cash
                  from financing activities:Loan
                  received from shareholder
              
              
              8,698
              
              
              -
              
              
              8,698Issue
                  of shares
              
              
              -
              
              
              -
              
              
              75,000Subscription
                  received for shares
              
              
              20,000
              
              
              -
              
              
              20,000Net
                  cash provided by financing activities
              
              
              28,698
              
              
              -
              
              
              103,698Effect
                  of exchange rate changes on cash
              
              
              (47
              )
              
              (27
              )
              
              368Increase
                  (decrease) in cash
              
              
              17,619
              
              
              (21,967
              )
              
              21,978Cash,
                  beginning of period
              
              
              4,359
              
              
              69,527
              
              
              -Cash,
                  end of period
              
              $
              21,978
              
              $
              47,560
              
              $
              21,978





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


F-3




**SINOBIOPHARMA,
      INC**


**AND
      CONSOLIDATED SUBSIDIARY**


***(A
      Development Stage Company)***


***Consolidated
      Statement of Stockholders' Equity (Deficit)***


***(Expressed
      in US Dollars)***


***UNAUDITED
      - Prepared by Management***





**Common**
              **Stock**
            
            **Amount**
            
            **Accumulated**
              **Other**
              **Comprehensive**
              **Income (loss)**
            
            **Subscription**
              **received**
            
            **Additional**
              **Paid in**
              **Capital**
            
            **(Deficit)**
              **Accumulated**
              **During**
              **Development**
              **Stage from**
              **Date of**
              **Inception**
              **October 26,**
              **2006 to August**
              **31, 2008**
            
            **Stockholders’**
              **Equity**
              **(Deficit)**Balance
                at inception, October 26, 2006
            
            
            -
            
            $
            -
            
            $
            -
            
            
            
            
            $
            -
            
            $
            -
            
            $
            -Shares
                issued at $0.0001 per share for acquisition of subsidiary November
                8,
                2006
            
            
            500
            
            
            -
            
            
            -
            
            
            
            
            
            -
            
            
            -
            
            
            -Shares
                issued at $0.0004 per share pursuant to subscription February 01,
                2007
            
            
            62,500,000
            
            
            6,250
            
            
            -
            
            
            
            
            
            18,750
            
            
            -
            
            
            25,000Shares
                issued at $0.0008 per share pursuant to subscription February 28,
                2007
            
            
            31,250,000
            
            
            3,125
            
            
            -
            
            
            
            
            
            21,875
            
            
            -
            
            
            25,000Shares
                issued at $0.004 per share pursuant to subscriptions April 30,
                2007
            
            
            6,250,000
            
            
            625
            
            
            -
            
            
            
            
            
            24,375
            
            
            -
            
            
            25,000Net
                income (loss) for the year
            
            
            -
            
            
            -
            
            
            457
            
            
            
            
            
            -
            
            
            (27,771
            )
            
            (27,314
            )Balance
                May 31, 2007
            
            
            100,000,500
            
            $
            10,000
            
            $
            457
            
            
            
            
            $
            65,000
            
            $
            (27,771
            )
            $
            47,686Net
                (loss) for the year
            
            
            -
            
            
            -
            
            
            (42
            )
            
            
            
            
            -
            
            
            (67,425
            )
            
            (67,467
            )Balance
                May 31, 2008
            
            
            100,000,500
            
            $
            10,000
            
            $
            415
            
            $
            -
            
            $
            65,000
            
            $
            (95,196
            )
            $
            (19,781
            )Subscription
                received for shares pursaunt to private placement
            
            
            
            
            
            
            
            
            
            
            
            20,000
            
            
            
            
            
            
            
            
            20,000Net
                (loss) for the three months ended August 31, 2008
            
            
            
            
            
            
            
            
            (47
            )
            
            
            
            
            
            
            
            (22,201
            )
            
            (22,248
            )Balance
                August 31, 2008
            
            
            100,000,500
            
            $
            10,000
            
            $
            368
            
            $
            20,000
            
            $
            65,000
            
            $
            (117,397
            )
            $
            (22,029
            )





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


F-4




**SINOBIOPHARMA,
      INC. (formerly BUZZ MEDIA LTD.)**


**AND
      CONSOLIDATED SUBSIDIARY**


***(A
      Development Stage Company)***


***Notes
      to Consolidated Financial Statements***


***August
      31, 2008***


***(Expressed
      in US Dollars)***


***UNAUDITED-
      Prepared by Management***





**1.
      BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES**





**Organization
      and Description of Business**




Sinobiopharma,
      Inc. (the “Company”) was incorporated in the State of Nevada under the name of
      Buzz Media Ltd. on October 26, 2006. On November 8, 2006 the Company acquired
      all the issued and outstanding shares of Buzz Media Ltd. (“Buzz Nova Scotia”), a
      corporation incorporated in the province of Nova Scotia, Canada on October
      26,
      2006. The transaction was treated as an acquisition for accounting purposes.
      The
      consideration for the acquisition of Buzz Nova Scotia was 500 shares (on a
      post-forward stock split basis) of the Company valued at $0.10, the book value
      of the net assets of Buzz Nova Scotia, since the acquisition was from a related
      party.





The
      Company’s business plan through the year ended May 31, 2008 was design,
      publishing, and distribution of a magazine called “Buzz” through Buzz Nova
      Scotia. Buzz is a student lifestyle magazine, which features stories, articles,
      and photographs submitted by current college and university students from across
      the country. The magazine will be distributed free of charge via direct mail,
      via physical distribution boxes at specified locations, via email, and via
      the
      internet at www.ReadBuzzMagazine.com. On May 18, 2007 the Company filed a
      trademark application with the United States Patent and Trademark Office,
      seeking a trademark on "Buzz Magazine" used as the name, or title, of a
      magazine.





On
      July
      14, 2008 the Company’s President and majority shareholder sold all of her shares
      in the company, representing a 62.5% interest in the Company, to an unrelated
      individual. On the same day, she resigned from all of her positions as officer
      and director of the Company and the purchaser was appointed the sole director
      and officer of the Company.





Effective
      July 29, 2008, the Company incorporated a subsidiary, “Sinobiopharma, Inc.” with
      an investment of $0.001 and completed a merger with Sinobiopharma, Inc. for
      the
      sole purpose of changing the name of the Company. As a result, the Company
      changed its name from “Buzz Media Ltd.” to “Sinobiopharma, Inc.”.





Effective
      July 29, 2008, the Company effected a fifty (50) for one (1) forward stock
      split
      of its authorized, issued and outstanding common stock. As a result, the
      Company’s authorized capital has increased from 50,000,000 shares of common
      stock with a par value of $0.0001 to 2,500,000,000 shares of common stock with
      a
      par value of $0.0001. The Company’s issued and outstanding share capital has
      increased from 2,000,010 shares of common stock to 100,000,500 shares of common
      stock. Share capital figures are presented in these financial statements giving
      retroactive effect to the stock split and accordingly all share capital figure
      are presented on a post-split basis as if the split had been effected upon
      inception.





On
      August
      19, 2008, the Company entered into a share exchange agreement (the “Share
      Exchange Agreement”) with Dongying Pharmaceutical Co, Limited (“Dongying BVI”), a
      company
      organized under the laws of the Territory of the British Virgin
      Islands, and all
      the shareholders of Dongying BVI, whereby the Company agreed to acquire 100%
      of
      the issued and outstanding shares in the capital of Dongying BVI
      through the issuance of 40,000,000 shares of common stock of the Company in
      aggregate to the shareholders of Dongying BVI on a pro rata basis in accordance
      with each Dongying BVI shareholders’ percentage of ownership in Dongying
      BVI.





Dongying
      BVI is
      the
      registered owner of 100% of the capital of Big Global Limited, a company
      organized under the laws of Hong Kong, and Big Global Limited is the registered
      owner of 100% of the capital of Dong Ying (Jiangsu) Pharmaceuticals Co., Ltd.
      (“Dong Ying China”), a company organized under the laws of the People’s Republic
      of China (“China”). Dong Ying China’s business is research,
      development, manufacture and sale of biopharmaceutical products in
      China .
      Accordingly, upon closing of the Share Exchange Agreement, the Company will
      be
      in the biopharmaceutical business
      in China. The Share Exchange Agreement closed on September 22,
      2008.




F-5


**SINOBIOPHARMA,
        INC. (formerly BUZZ MEDIA LTD.)**
 **AND
        CONSOLIDATED SUBSIDIARY**
 ***(A
        Development Stage Company)***
 ***Notes
        to Consolidated Financial Statements***
 ***August
        31, 2008***
 ***(Expressed
        in US Dollars)***
 ***UNAUDITED-
        Prepared by Management***


Concurrently
      with the closing of the Share Exchange Agreement, by a letter agreement entered
      into on September 8, 2008 between Dongying BVI and the Company’s majority
      shareholder, that shareholder has agreed to cancel 60,100,500 shares of the
      62,500,500 shares of common stock of the Company registered in his name within
      ten (10) days of the closing of the Share Exchange Agreement. The 60,100,500
      shares were cancelled on September 26, 2008.





On
      August
      20, 2008, the Company entered a share purchase agreement (the “Share Purchase
      Agreement”) with the Company’s former majority shareholder, to be effective
      concurrently with the closing of the Share Exchange Agreement. Pursuant to
      the
      Share Purchase Agreement, the former majority shareholder will acquire all
      of
      the capital of Buzz Media, Ltd. (“Buzz Nova Scotia”), the wholly-owned
      subsidiary of the Company incorporated in the Province of Nova Scotia, Canada,
      in exchange for the payment of $10.00.





**Principles
      of Consolidation**





The
      consolidated financial statements include accounts of the Company and its
      wholly-owned subsidiary Buzz Nova Scotia. All significant inter-company balances
      and transactions are eliminated.





**Cash
      and Cash Equivalents**




Cash
      equivalents comprise certain highly liquid instruments with a maturity of three
      months or less when purchased. As at August 31, 2008 the Company did not have
      any cash equivalents.




**Asset
      Retirement Obligations**




The
      Company has adopted SFAS No. 143, *Accounting
      for Asset Retirement Obligations* which
      requires that the fair value of a liability for an asset retirement obligation
      be recognized in the period in which it is incurred. The Company has not
      incurred any asset retirement obligations as at August 31, 2008.





**Fixed
      Assets**




Office
      furniture and equipment is carried at cost less a provision for depreciation
      on
      a straight-line basis over its estimated useful life of five years, or such
      lower amount as indicated through impairment analysis.





**Foreign
      Currency**





The
      Company maintains both U.S. Dollar and Canadian Dollar bank accounts. The
      functional currency is the Canadian Dollar. Transactions in foreign currencies
      other than the functional currency, if any, are remeasured into the functional
      currency at the rate in effect at the time of the transaction.





**Use
      of Estimates**





The
      preparation of the Company’s consolidated financial statements in conformity
      with generally accepted accounting principles of the United States of America
      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 financial statements and the reported amounts
      of
      revenues and expenses during the reporting period. Management makes its best
      estimate of the ultimate outcome for these items based on historical trends
      and
      other information available when the financial statements are prepared. Actual
      results could differ from those estimates.




F-6


**SINOBIOPHARMA,
        INC. (formerly BUZZ MEDIA LTD.)**
 **AND
        CONSOLIDATED SUBSIDIARY**
 ***(A
        Development Stage Company)***
 ***Notes
        to Consolidated Financial Statements***
 ***August
        31, 2008***
 ***(Expressed
        in US Dollars)***
 ***UNAUDITED-
        Prepared by Management***
  **Loss
      Per Share**




Basic
      earnings (loss) per share of common stock are computed by dividing the net
      earnings (loss) by the weighted average number of (post-split) common shares
      outstanding during the period. Diluted earnings (loss) per share are equal
      to
      the basic loss per share for the three month periods ended August 31, 2008
      and
      2007 because there are no common stock equivalents outstanding.





**Fair
      Value of Financial Instruments**




The
      carrying value of cash and accounts payable at August 31, 2008 and May 31,
      2008
      reflected in these financial statements, approximates their fair value due
      to
      the short-term maturity of the instruments.





**Advertising
      Expenses**




Advertising
      expenses are expensed as incurred.





**Segment
      information**





All
      of
      the Company’s operations are carried out in a single geographical segment,
      Canada. The Company operates in a single operating segment, the magazine
      publishing business.





**Comprehensive
      Income**




The
      Company has adopted Statement of Financial Accounting Standards (SFAS) No.
      130,
“Reporting Comprehensive Income”. Comprehensive income includes net income and
      all changes in equity during a period that arises from non-owner sources, such
      as foreign currency items and unrealized gains and losses on certain investments
      in equity securities.





**Income
      taxes**




The
      Company records deferred taxes in accordance with Statement of Financial
      Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." The
      statement requires recognition of deferred tax assets and liabilities for
      temporary differences between the tax bases of assets and liabilities and the
      amounts at which they are carried in the financial statements, based upon the
      enacted tax rates in effect for the year in which the differences are expected
      to reverse. A valuation allowance is established when necessary to reduce
      deferred tax assets to the amount expected to be realized.





**Development
      Stage**





The
      Company entered the development stage upon its inception. All losses accumulated
      since the inception of the Company have been considered as part of the Company’s
      development stage activities.




**Impairment
      of Long-Lived Assets**




The
      Company periodically analyzes its long-lived assets for potential impairment,
      assessing the appropriateness of lives and recoverability of unamortized
      balances through measurement of undiscounted operation cash flows in accordance
      with SFAS No. 144, *Accounting
      for the Impairment or Disposal of Long-lived Assets.* If
      impairment is deemed to exist, the asset will be written down to its fair value.
      Fair value is generally determined using a discounted cash flow analysis. As
      at
      August 31, 2008 the Company has written down its fixed assets to
      $nil..




F-7


**SINOBIOPHARMA,
        INC. (formerly BUZZ MEDIA LTD.)**
 **AND
        CONSOLIDATED SUBSIDIARY**
 ***(A
        Development Stage Company)***
 ***Notes
        to Consolidated Financial Statements***
 ***August
        31, 2008***
 ***(Expressed
        in US Dollars)***
 ***UNAUDITED-
        Prepared by Management***


**Concentrations**





The
      Company has only a limited operating history, and its growth strategy is
      dependent upon its ability to obtain distribution agreements with colleges
      and
      universities. To date the Company’s success has depended largely upon the
      efforts, abilities, and decision-making of its sole officer and director, who
      has acted as editor-in-chief for the magazine, organizing volunteers from
      colleges and universities across Canada to contribute articles, photographs
      and
      artwork, which are assembled into issues of Buzz Magazine with the assistance
      of
      professional graphic artists.





**2.
      BASIS OF PRESENTATION - GOING CONCERN**




These
      consolidated financial statements have been prepared on a going-concern basis
      which assumes that the Company will be able to realize assets and discharge
      liabilities in the normal course of business for the foreseeable
      future.




The
      Company has experienced losses since the inception of the development stage
      amounting to $117,397 as of August 31, 2008. As of August 31, 2008 the Company
      had a total of $1,978 in unrestricted cash; however, this amount will be
      insufficient to sustain operations over the course of the following months.
      These factors raise substantial doubt about the Company's ability to continue
      as
      a going concern.





Subsequent
      to August 31, 2008, in September, 2008 the Company and its majority
      shareholder closed several agreements to effect a reverse merger with Dongying
      Pharmaceutical Co, Limited and the disposition of Buzz Nova Scotia as further
      explained in Note 1. After the closing of these agreements, the ability of
      the
      Company to meet its commitments as they become payable is dependent on the
      ability of the Company to achieve a consistently profitable level of operations
      in its pharmaceuticals business or to raise sufficient financing through sales
      of shares. There are no assurances that the Company will be successful in
      achieving these goals.




These
      financial statements do not give effect to adjustments to the amounts and
      classifications to assets and liabilities that would be necessary should the
      Company be unable to continue as a going concern.





**3.
      CASH - RESTRICTED**





The
      Company has received $20,000 for a subscription for shares of the Company.
      At
      August 31, 2008 the subscription was conditional on the Company closing
      the **** Share
      Exchange Agreement described in Note 1, which was closed on September 22,
      2008. ****





**4.
      FIXED ASSETS**





Fixed
      assets consisting of office furniture and equipment located in Nova Scotia,
      Canada have been written down at August 31, 2008 to $nil due to impairment
      analysis.


F-8


**SINOBIOPHARMA,
        INC. (formerly BUZZ MEDIA LTD.)**
 **AND
        CONSOLIDATED SUBSIDIARY**
 ***(A
        Development Stage Company)***
 ***Notes
        to Consolidated Financial Statements***
 ***August
        31, 2008***
 ***(Expressed
        in US Dollars)***
 ***UNAUDITED-
        Prepared by Management***


**5.**  **INCOME
      TAXES**





The
      Company is subject to United States income taxes and Canadian income taxes
      (to
      the extent of its operations in Canada). The company has had no income tax
      expense to date due to net operating losses.





A
      reconciliation of income tax expense to the amount computed at the statutory
      rates is as follows:




August 31, 2008
            
            August 31, 2007Loss
                for the period
            
            $
            (22,201
            )
            $
            (18,778
            )Average
                statutory tax rate
            
            
            35
            %
            
            35
            %Expected
                income tax provision
            
            
            (7,770
            )
            
            (6,572
            )Unrecognized
                tax losses
            
            
            7,770
            
            
            6,572Income
                tax expense
            
            $
            -
            
            $
            -





Significant
      components of deferred income tax assets at May 31, 2008 are as
      follows:




Net
                operating losses carried forward in United States
            
            $
            41,089Valuation
                allowance
            
            
            (41,089
            )Net
                deferred income tax assets
            
            $
            -





The
      Company has net operating losses carried forward of $117,397 for United States
      tax purposes which will expire in 2028 if not utilized.





**6.
       COMMON STOCK**




On
      July
      2, 2008, the Company received $20,000 for a subscription for shares of the
      Company, conditional on the Company closing the **** Share
      Exchange Agreement described in Note 1, which was closed on September 22,
      2008.





Effective
      July 29, 2008, the Company effected a fifty (50) for one (1) forward stock
      split
      of its authorized, issued and outstanding common stock. As a result, the
      Company’s authorized capital has increased from 50,000,000 shares of common
      stock with a par value of $0.0001 to 2,500,000,000 shares of common stock with
      a
      par value of $0.0001. The Company’s issued and outstanding share capital has
      increased from 2,000,010 shares of common stock to 100,000,500 shares of common
      stock. Share capital figures are presented in these financial statements giving
      retroactive effect to the stock split and accordingly all share capital figure
      are presented on a post-split basis as if the split had been effected upon
      inception.





**7** . **SHAREHOLDER
      LOAN**





The
      loan
      from the shareholder in the aggregate amount of $8,698 (May 31, 2008 - $nil)
      does not bear interest and has no stated repayment terms. Imputed interest
      has
      been recorded on the shareholder loan at an annual interest rate of 4%. The
      net
      interest calculated is included in interest expense and has been recorded as
      additional paid-in capital since the imputed interest is not payable .




F-9


**SINOBIOPHARMA,
        INC. (formerly BUZZ MEDIA LTD.)**
 **AND
        CONSOLIDATED SUBSIDIARY**
 ***(A
        Development Stage Company)***
 ***Notes
        to Consolidated Financial Statements***
 ***August
        31, 2008***
 ***(Expressed
        in US Dollars)***
 ***UNAUDITED-
        Prepared by Management***




**8.
      SUBSEQUENT EVENTS**





Effective
      September 1, 2008 the company engaged the services of a consultant at the rate
      of $8,000 per month, to be paid semi-annually in March and
      September.





On
      September 29, 2008, the Company adopted a stock option and incentive plan (the
      “2008 Stock Option and Incentive Plan”). The 2008 Stock Option and Incentive
      Plan provides authorization to the Board of Directors to grant Stock Options
      and
      Incentives to a total number of shares of the Company’s common stock, not to
      exceed ten million (10,000,000) (post forward stock split) shares.





On
      September 29, 2008, the Company granted to certain directors, officers and
      consultants of the Company in aggregate 1,800,000 stock options having an
      exercise price of $1.80 per share and an expiry date of five years from the
      date
      of grant. These stock options have vesting provisions of 10% on the date of
      grant and 10% on the last day of each month thereafter beginning on October
      31,
      2008.





On
      October 2, 2008, the Company granted to certain mid-level managers of Dong
      Ying
      China in aggregate 500,000 stock options having an exercise price of $1.80
      per
      share and an expiry date of five years from the date of grant. These stock
      options have vesting provisions of 10% on the date of grant and 10% on the
      last
      day of each month thereafter beginning on October 31, 2008.




F-10




**Item
      2. Management’s Discussion and Analysis or Plan of
      Operation**




You
      should read the following plan of operation together with our financial
      statements and related notes appearing elsewhere in this quarterly report.
      This
      plan of operation contains forward-looking statements that involve risks,
      uncertainties, and assumptions. The actual results may differ materially from
      those anticipated in these forward-looking statements as a result of certain
      factors, including, but not limited to, those presented under “Risk Factors” in
      the Form 10-KSB filed with the SEC on EDGAR on September 15, 2008 as well as
      those presented under “Risk Factors” in the Form 8-K/A-2 filed with the SEC on
      EDGAR on September 26, 2008.





**Corporate
      History**





The
      Company was incorporated October 26, 2006, as Buzz Media Ltd., under the laws
      of
      the state of Nevada.  On November 8, 2006, we purchased all the issued and
      outstanding shares of Buzz Media Ltd., a Nova Scotia company (“Buzz Nova
      Scotia”) from our officer and director Tiffany Walsh for 10 shares of our common
      stock.  As a result of the transaction, Buzz Nova Scotia became a
      wholly-owned subsidiary of ours.  On July 2, 2008, Ms. Walsh agreed to sell
      her 1,250,010 shares of our issued and outstanding common stock to Mr. Jianguo
      Wang for an aggregate price of CDN$300,000. In connection with that transaction,
      Ms. Walsh also agreed to resign as a director and officer of the Company and
      Mr.
      Wang agreed to join the Company as a director and officer. On July 14, 2008,
      Ms.
      Walsh appointed Mr. Wang as President, Chief Executive Officer, Chief Financial
      Officer, Secretary, Treasurer and a director of the Company and subsequently
      resigned as an officer and a director.





Effective
      July 29, 2008, we completed a merger with our wholly-owned subsidiary,
      Sinobiopharma, Inc. As a result of the merger, the Company’s name was changed
      from “Buzz Media Ltd.” to “Sinobiopharma, Inc.” to better reflect the Company’s
      direction and business.





In
      addition, effective July 29, 2008, the Company effected a fifty (50) for one
      (1)
      forward stock split of its authorized, issued and outstanding common stock.
      As a
      result, the Company’s authorized capital increased from 50,000,000 shares of
      common stock with a par value of $0.0001 to 2,500,000,000 shares of common
      stock
      with a par value of $0.0001. Our issued and outstanding share capital increased
      from 2,000,010 shares of common stock to 100,000,500 shares of common stock.





As
      a
      result of the closing of the Share Exchange Agreement between the Company and
      Dongying BVI on September 22, 2008, as discussed below, the total issued and
      outstanding share capital increased to 140,000,500 shares of common stock.
      However, on September 24, 2008, 60,100,500 shares of the 62,500,500 shares
      registered to Mr. Jianguo Wang were cancelled in accordance with the Amended
      Letter Agreement entered into on September 8, 2008 by Dongying BVI and Mr.
      Jianguo Wang, resulting in a total issued and outstanding share capital of
      79,900,000 shares of common stock. A copy of the Amended Letter Agreement is
      attached to the Form 8-K/A-2 filed with the SEC on EDGAR on September 26,
      2008.





**Overview**





As
      from
      the inception of the Company and up to May 31, 2008 we were in business of
      designing, publishing, and distributing the magazine, Buzz. Buzz was expected
      to
      be a student lifestyle magazine, which featured stories, articles, and
      photographs submitted by current college and university students from across
      Canada. We intended to distribute the publication free of charge via direct
      mail, physical distribution boxes at specified locations, email, and the
      internet at www.ReadBuzzMagazine.com .





However,
      we determined to change our business plan from the designing, publishing and
      distributing the Magazine, Buzz and began focusing around the Chinese
      biopharmaceutical industry. On September 22, 2008, the Company completed the
      reverse acquisition of Dongying Pharmaceutical Co, Limited (“Dongying BVI”), a
      company organized under the laws of the Territory of the British Virgin Islands,
      and all the subsidiaries of Dongying BVI in accordance with the Share Exchange
      Agreement, whereby the Company acquired 100% of the issued and outstanding
      shares in the capital of Dongying BVI (the “Dongying BVI Capital”), in exchange
      for the issuance of 40,000,000 (post forward stock split) shares of common
      stock
      of the Company in aggregate to the shareholders of Dongying BVI on a pro rata
      basis.




3




Dongying
      BVI is the registered owner of 100% of the capital of Big Global Limited, a
      company organized under the laws of Hong Kong, and Big Global Limited is the
      registered owner of 100% of the capital of Dong Ying (Jiangsu) Pharmaceutical
      Co., Ltd. (“Dong Ying China”), a company organized under the laws of the
      People’s Republic of China (“China”). Dong Ying China is in the business of the
      research, production and development of biopharmaceutical products.





The
      business of the Company will be conducted through its subsidiary, Dongying
      BVI,
      which, in turn, will conduct its business through it subsidiary, Big Global
      Limited, which, in turn will conduct its business through Dong Ying
      China.





Dong
      Ying
      China has developed new methods for synthesis of active pharmaceutical
      ingredient (API) and innovative drug delivery (new formulation) that
      dramatically reduces the time and cost of drug development. Dong Ying China’s
      current therapeutic focus is on anesthesia-assisted agents and cardiovascular
      drugs. Dong Ying China’s R&D focus is new, innovative methods of
      synthesizing compounds more rapidly at lower cost, and/or improved drug
      formulation with enhanced usability.





Currently
      the product line of Dong Ying China includes Cisatracurium Besylate - a skeletal
      muscle relaxant, Clindamycin Hydrochloride - an antibiotic for
      penicillin-allergic patients, and Perphenazine - an anti-psychotic drug.
      However, Dong Ying China has recently discontinued producing and selling
      Perphenazine as it is no longer considered a profitable product.





**Results
      of Operations**





The
      Company realized a net loss from operations of $22,201 for the three months
      ended August 31, 2008, as compared to $18,778 for the three months ended August
      31, 2007. The Company had no revenues, so the entire loss in each period was
      due
      to expenses.





**Operating
      Expenses**





The
      Company incurred $22,201 in operating expenses **** for
      the
      three months ended August 31, 2008, as compared to $18,778 for the three months
      ended August 31, 2007. The most significant category of expenses was
      professional fees of $17,834 in the three months ended August 31, 2008, as
      compared to $12,500 for the three months ended August 31, 2007. The increase
      was
      primarily due to additional accounting and legal services required due to the
      merger transactions undertaken subsequent to August 31, 2008.





The
      Company incurred $4,367 in general and administrative expenses in
      the **** in
      the
      three months ended August 31, 2008, a decrease from $5,797 for the three months
      ended August 31, 2007. The decrease was due to reduced activity resulting in
      reduced office expenses of the Buzz magazine business as the Company abandoned
      the magazine business to focus on the move into the pharmaceuticals business.





**Liquidity
      and Capital Resources**





The
      Company had $21,978 in cash at August 31, 2008, though only $1,978 was
      unrestricted cash available for use. The Company had a working capital
      deficiency of $21,999 at August 31, 2008. The Company has insufficient cash
      available to sustain operations. The operations of Dong Ying China have
      generated profits for the eight months ended August 31, 2008, but not in a
      sufficient amount to enable Dong Ying China to pay the RMB 15,000,000 debt
      due
      for repayment by the end of December 2008. The Company plans to raise capital
      through sales of shares to provide cash to pay debt of Dong Ying China and
      fund
      further drug product development.




4




**ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK**




Market
      risk represents the risk of loss that may impact our financial position, results
      of operations or cash flows due to adverse change in foreign currency and
      interest rates.





**Exchange
      Rate**





Our
      reporting currency is United States Dollars (“USD”).





On
      a
      going forward basis from September 22, 2008, the Chinese Renminbi yuan (“RMB”)
      is the functional currency of Sinobiopharma and its operating subsidiary, Dong
      Ying (‘Jiangsu) Pharmaceutical Co., Ltd.; and therefore, the fluctuation of
      exchange rates of RMB may have positive or negative impacts on the results
      of
      operations of the Company.





The
      value
      of the Renminbi yuan, against the U.S. dollar and other currencies may fluctuate
      and is affected by, among other things, changes in China’s political and
      economic conditions. The conversion of Renminbi yuan into foreign currencies,
      including U.S. dollars, has historically been set by the People’s Bank of China.
      On July 21, 2005, the PRC government changed its policy of pegging the value
      of
      the Renminbi yuan to the U.S. dollar. Under the new policy, the Renminbi yuan
      is
      permitted to fluctuate within a band against a basket of certain foreign
      currencies. This change in policy resulted initially in an approximately 2.0%
      appreciation in the value of the Renminbi yuan against the U.S. dollar. Since
      the adoption of this new policy, the value of Renminbi yuan against the U.S.
      dollar has fluctuated on a daily basis within narrow ranges, but overall has
      continued to strengthen against the U.S. dollar. There remains significant
      international pressure on the PRC government to further liberalize its currency
      policy, which could result in a further and more significant appreciation or
      depreciation in the value of the Renminbi yuan against the U.S. dollar.





Since
      all
      sales revenue and expenses of the operating subsidiary company are denominated
      in RMB, the net income effect of appreciation and devaluation of the currency
      against the US Dollar will be limited to the net operating results of the
      subsidiary company attributable to the Company.





**Interest
      rate**





The
      Company currently has no interest-bearing debt and has no plans to take on
      interest-bearing debt, so it is not currently exposed to interest rate
      risk.




**ITEM
      4. CONTROLS AND PROCEDURES**




**Evaluation
      of Disclosure Controls and Procedures**





Our
      management, with the participation of our President, evaluated the effectiveness
      of our disclosure controls and procedures as of the end of the period covered
      by
      this report. Based on that evaluation, our President concluded that our
      disclosure controls and procedures as of the end of the period covered by this
      report were effective such that the information required to be disclosed by
      us
      in reports filed under the Securities Exchange Act of 1934 is (i) recorded,
      processed, summarized and reported within the time periods specified in the
      SEC's rules and forms and (ii) accumulated and communicated to our management,
      including our President, as appropriate to allow timely decisions regarding
      disclosure. A controls system cannot provide absolute assurance, however, that
      the objectives of the controls system are met, and no evaluation of controls
      can
      provide absolute assurance that all control issues and instances of fraud,
      if
      any, within a company have been detected.


5


**Internal
      Control Over Financial Reporting**





Our
      management is responsible for establishing and maintaining adequate internal
      control over financial reporting (as defined in Rule 13a-15(f) under the
      Exchange Act). Our internal control over financial reporting is a process
      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.





Because
      of its inherent limitations, internal control over financial reporting may
      not
      prevent or detect misstatements. Therefore, even those systems determined to
      be
      effective can provide only reasonable assurance of achieving their control
      objectives. Furthermore, smaller reporting companies face additional
      limitations. Smaller reporting companies employ fewer individuals and find
      it
      difficult to properly segregate duties. Often, one or two individuals control
      every aspect of our operation and are in a position to override any system
      of
      internal control. Additionally, smaller reporting companies tend to utilize
      general accounting software packages that lack a rigorous set of software
      controls.





Our
      management, with the participation of the President, evaluated the effectiveness
      of our internal control over financial reporting as of August 31, 2008. In
      making this assessment, our management used the criteria set forth by the
      Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
      Internal Control -- Integrated Framework. Based on this evaluation, our
      management, with the participation of the President, concluded that, as of
      August 31, 2008, our internal control over financial reporting was not effective
      due to material weaknesses in the system of internal control.





Specifically,
      management identified the following control deficiencies:





(1)
      We
      have not properly segregated duties as one individual initiates, authorizes,
      and
      completes all transactions. We have not implemented measures that would prevent
      the individual from overriding the internal control system. We do not believe
      that this control deficiency has resulted in deficient financial reporting
      because the Chief Financial Officer is aware of his responsibilities under
      the
      SEC's reporting requirements and personally certifies the financial reports;
      and





(2)
      We
      have installed accounting software that does not prevent erroneous or
      unauthorized changes to previous reporting periods and does not provide an
      adequate audit trail of entries made in the accounting software. We do not
      think
      that this control deficiency has resulted in deficient financial reporting
      because we have implemented a series of manual checks and balances to verify
      that previous reporting periods have not been improperly modified and that
      no
      unauthorized entries have been made in the current reporting
      period.





Accordingly,
      while we have identified certain material weaknesses in our system of internal
      control over financial reporting, we believe that we have taken reasonable
      steps
      to ascertain that the financial information contained in this Quarterly Report
      is in accordance with generally accepted accounting principles. Management
      has
      determined that current resources would be appropriately applied elsewhere
      and
      when resources permit, they will alleviate material weaknesses through various
      steps.





**Changes
      in Internal Control Over Financial Reporting**





There
      have been no changes in our internal controls over financial reporting that
      occurred during our the fiscal quarter of the period covered by this Quarterly
      Report on Form 10-Q that have materially affected, or are reasonably likely
      to
      materially affect, our internal controls over financial
      reporting.


6


**PART
      II - OTHER INFORMATION**




**Item
      1. Legal Proceedings**




None.




**Item
      1A. Risk Factors**




Risks
      Related to the Company





*We
      have a history of operating losses and may never be
      profitable.*





Biopharmaceutical
      product development is a highly speculative undertaking and involves a
      substantial degree of risk. Dong Ying China has incurred substantial losses
      since its inception, and it expects to continue to incur losses only in the
      short term future. Dong Ying China incurred net losses of $559,343 and
      $3,444,090 in 2007 and 2006. As of December 31, 2007, the accumulated deficit
      amounted to $5,434,789. The losses have resulted principally from write-downs
      of
      impaired intangible assets related to product rights acquired, research and
      development costs, sales costs and general and administrative expenses. Dong
      Ying China has realized a profit of $211,211 for the eight months ended August
      31, 2008 We cannot assure you that the Company or Dong Ying China will be able
      to sustain or increase its profitability.





*We
      will need additional capital to expand the production capacity for our existing
      products, to continue development of our product pipeline and to market existing
      and future products on a large scale, and we cannot guarantee that we will
      find
      adequate sources of capital in the future.*





We
      will
      need to raise further funds from the capital markets to finance expenditures
      for
      equipment, intellectual property asset acquisitions, to expand the production
      capacity for our existing products, to continue the development and
      commercialization of our product candidates and for other corporate purposes.
      As
      of August 31, 2008, Dong Ying China had $160,914 in unrestricted cash. We will
      need to undertake significant future financings for the following reasons:





·
            To
                proceed with the research and development of other products, including
                clinical testing relating to new
                products;


·
            To
                develop or acquire other product candidates, technologies or other
                lines
                of business;


·
            To
                establish and expand manufacturing
                capabilities;


·
            To
                commercialize our products, including the marketing and distribution
                of
                new and existing products;


·
            To
                protect our intellectual property;


·
            To
                seek and obtain regulatory approvals;
                and


·
            To
                finance general and administrative and research activities that are
                not
                related to specific products under
                development.





In
      the
      past, Dong Ying China funded most of its product rights acquisitions, fixed
      asset acquisitions, research and development and other expenditures through
      investment of shareholder, grants and debt financing. We intend to raise
      additional funds in the near future because our current operating and capital
      resources are expected to be insufficient to meet future requirements.





If
      we
      raise additional funds by issuing equity securities, it will result in further
      dilution to our existing shareholders, because the shares may be sold at a
      time
      when the market price is low, and because shares issued in equity financing
      will
      normally be sold at a discount to the current market price. Unforeseen problems,
      including materially negative developments relating to, among other things,
      product sales, new product rollouts, clinical trials, research and development
      programs, our strategic relationships, our intellectual property, litigation,
      regulatory issues in our industry, the Chinese market generally or in general
      economic conditions, could interfere with our ability to raise additional equity
      capital or materially adversely affect the terms upon which such funding is
      available. If we raise additional funds by issuing debt securities, these debt
      securities would have rights, preferences and privileges senior to those of
      holders of our common shares, and the terms of the debt securities issued could
      impose significant restrictions on our operations. If we raise additional funds
      through collaborations and licensing arrangements, we might be required to
      relinquish significant rights to certain of our technologies, marketing
      territories, product candidates or products that we would otherwise seek to
      develop or commercialize ourselves, or be required to grant licenses on terms
      that are not favorable to us.




7




We
      do not
      know whether additional financing will be available to us on commercially
      acceptable terms when needed. If adequate funds are not available or are not
      available on commercially acceptable terms, we may need to downsize or suspend
      some or all of our operations and may be unable to continue developing our
      products. In any such event, our ability to bring a product to market and obtain
      revenues could be delayed, competitors could develop products sooner than us,
      and we could be forced to relinquish rights to technologies, products or
      potential products.





*Our
      current business is primarily based on a single product, and we may not be
      able
      to generate significant revenue if this product fails.*





We
      generate a significant portion of our revenues from sales of Dong Ying China’s
      Cisatracurium Besylate. 67% of Dong Ying China’s product sales in 2007, and 87%
      of Dong Ying China’s product sales recognized to August 31, 2008, were
      attributable to Cisatracurium Besylate. Dong Ying China generated revenues
      of
      $1,950, $781,400 and $1,568,197 in sales of Cisatracurium Besylate in 2006,
      2007
      and the eight months ended August 31, 2008, respectively. We expect that sales
      of Cisatracurium Besylate will continue to comprise a substantial portion of
      our
      revenues in the near future. A decrease in Cisatracurium Besylate sales would
      most likely have an adverse affect on our financial results.





*If
      we
      are unable to successfully compete in the highly competitive biotechnology
      industry, our business could be harmed.*





We
      operate in a highly competitive environment, and the competition is expected
      to
      increase. Competitors include large pharmaceutical and biotechnology companies
      and academic research institutions, in each case both within and outside China.
      Some of these competitors, particularly large pharmaceutical and biotechnology
      companies, have greater resources than us. New competitors may also enter into
      the markets where we currently compete. Accordingly, even if we are successful
      in launching a product, we may find that a competitive product dominates the
      market for any number of reasons, including:





·
            The
                possibility that the competitor may have launched its product
                first;


·
            The
                competitor may have greater access to certain raw
                materials;


·
            The
                competitor may have more efficient manufacturing
                processes;


·
            The
                competitor may have greater marketing capabilities; or


·
            The
                competitive product may have therapeutic or other
                advantages.





The
      technologies applied by our competitors and us are rapidly evolving, and new
      developments frequently result in price competition and product obsolescence.
      In
      addition, we may be impacted by competition from generic forms of our products,
      substitute products or imports of products from lower priced markets.





*Competitors
      may develop and market bio-pharmaceutical products that are less expensive,
      more
      effective or safer, making our products obsolete or
      uncompetitive.*





Some
      of
      our competitors and potential competitors have greater product development
      capabilities and financial, scientific, marketing and human resources than
      we
      do. Technological competition from biopharmaceutical companies and biotechnology
      companies is intense and is expected to increase. Other companies have developed
      technologies that could be the basis for competitive products. Some of these
      products have an entirely different approach or means of accomplishing the
      desired curative effect than products we are developing. Alternative products
      may be developed that are more effective, work faster and are less costly than
      our products. Competitors may succeed in developing products earlier than us,
      obtaining approvals and clearances for such products more rapidly than us,
      or
      developing products that are more effective than ours. In addition, other forms
      of treatment may be competitive with our products. Over time, our technology
      or
      products may become obsolete or uncompetitive.




8




*We
      are controlled by a small number of shareholders and their affiliated entities
      and their interests may not be aligned with the interests of our other
      shareholders.*





Our
      directors and executive officers and their affiliates collectively control
      approximately 25.9% of our outstanding common shares as of September 22 2008
      and
      after the cancellation of the 60,100,500 shares by Mr. Jianguo Wang. These
      stockholders, if they act together, may be able to influence our management
      and
      affairs and all matters requiring stockholder approval, including the election
      of directors and approval of significant corporate transactions. The
      concentration of ownership of these shareholders may discourage, delay or
      prevent a change in control of the Company, which could deprive our shareholders
      of an opportunity to receive a premium for their shares as part of a sale of
      the
      Company and might reduce the price of our common shares. These actions may
      be
      taken even if they are opposed by our other shareholders. In cases where the
      interests of our significant shareholders are aligned and they vote together,
      these shareholders may also have the power to prevent or cause a change in
      control. In addition, these shareholders could divert business opportunities
      from us to themselves or others.





*If
      we
      are unable to obtain the regulatory approvals or clearances that are necessary
      to commercialize our products, we will have less revenue than
      expected.*





China
      and
      other countries impose significant statutory and regulatory obligations upon
      the
      manufacture and sale of bio-pharmaceutical products. Each regulatory authority
      typically has a lengthy approval process in which it examines pre-clinical
      and
      clinical data and the facilities in which the product is manufactured.
      Regulatory submissions must meet complex criteria to demonstrate the safety
      and
      efficacy of the ultimate products. Addressing these criteria requires
      considerable data collection, verification and analysis. We may spend time
      and
      money preparing regulatory submissions or applications without assurances as
      to
      whether they will be approved on a timely basis or at all.





Our
      product candidates, some of which are currently in the early stages of
      development, will require significant additional development and pre-clinical
      and clinical testing prior to their commercialization. These steps and the
      process of obtaining required approvals and clearances can be costly and
      time-consuming. If our potential products are not successfully developed, cannot
      be proven to be safe and effective through clinical trials, or do not receive
      applicable regulatory approvals and clearances, or if there are delays in the
      process:





·
            the
                commercialization of our products could be adversely
                affected;


·
            any
                competitive advantages of the products could be diminished;
                and


·
            revenues
                or collaborative milestones from the products could be reduced or
                delayed.





Governmental
      and regulatory authorities may approve a product candidate for fewer indications
      or narrower circumstances than requested or may condition approval on the
      performance of post-marketing studies for a product candidate. Even if a product
      receives regulatory approval and clearance, it may later exhibit adverse side
      effects that limit or prevent its widespread use or that force us to withdraw
      the product from the market. Any marketed product and its manufacturer,
      including us, will continue to be subject to strict regulation after approval.
      Results of post-marketing programs may limit or expand the further marketing
      of
      products. Unforeseen problems with an approved product or any violation of
      regulations could result in restrictions on the product, including its
      withdrawal from the market and possible civil actions.





*Establishing
      and expanding international operations requires significant management
      attention.*





Substantially
      all of Dong Ying China’s revenues are derived from China. We intend to expand
      our operations internationally into Southeast Asia and the United States, which,
      if not planned and managed properly, could materially adversely affect our
      business, financial condition and operating results. Expanding internationally
      exposes us to legal uncertainties, new regulatory requirements, liability,
      export and import restrictions, tariffs and other trade barriers, difficulties
      in managing operations across disparate geographic areas, foreign currency
      fluctuations, dependence on local distributors and potential disruptions in
      sales or manufacturing. We may also face challenges in protecting our
      intellectual property or avoiding infringement of others’ rights, and in
      complying with potentially uncertain or adverse tax laws.




9




*We
      rely on vendors to supply ingredients for our products.*





Regulatory
      authorities also periodically inspect manufacturing facilities, including third
      parties who provide ingredients to us, and may challenge their quality,
      qualifications or competence. Pharmaceutical manufacturing facilities must
      comply with applicable good manufacturing practice standards, and manufacturers
      usually must invest substantial funds, time and effort to ensure full compliance
      with these standards and make quality products. We do not have control over
      our
      vendors’ compliance with these requirements. Failure to comply with regulatory
      requirements can result in sanctions, fines, delays, suspension of approvals,
      seizures or recalls of products, operating restrictions, manufacturing
      interruptions, costly corrective actions, injunctions, adverse publicity against
      us and our products and criminal prosecutions.





If
      we are
      unable to obtain sufficient supplies of ingredients, if climatic or
      environmental conditions adversely affect them or if they increase significantly
      in price, our business would be seriously harmed. If any of our current or
      future third-party suppliers cease to supply products in the quantity and
      quality we need to produce our products, or if they are unable to comply with
      applicable regulations, the qualification of other suppliers could be a lengthy
      process, and there may not be adequate alternatives to meet our needs. As a
      result, we may not be able to obtain the necessary ingredients used in our
      products in the future on a timely basis, if at all. This would negatively
      affect our business.





*Our
      drug-development program depends upon third-party research scientists who are
      out of our control.*





We
      depend
      upon independent investigators and collaborators, such as universities and
      medical institutions, to conduct our pre-clinical and clinical trials under
      agreements with us. These collaborators are not our employees and we cannot
      control the amount or timing of resources that they devote to our programs.
      These investigators may not assign as great a priority to our programs or pursue
      them as diligently as we would if we were undertaking such programs ourselves.
      If outside collaborators fail to devote sufficient time and resources to our
      drug-development programs, or if their performance is substandard, the approval
      of our applications, if any, and our introduction of new drugs, if any, will
      be
      delayed. These collaborators may also have relationships with other commercial
      entities, some of whom may compete with us. If our collaborators assist our
      competitors at our expense, our competitive position would be
      harmed.





*We
      could be subject to costly and time-consuming product liability actions for
      the
      sale of our products in countries other than China.*





Dong
      Ying
      China’s product line includes skeletal muscular relaxants and antibiotics. If
      Dong Ying China markets its products in countries other than China and the
      products fail to function as anticipated, whether as a result of the design
      of
      these products, unanticipated health consequences or side effects, or misuse
      or
      mishandling by third parties of such products or because of faulty or
      contaminated supplies, we could be subject to product liability lawsuits in
      countries other than in China. Any product liability claim brought against
      us,
      with or without merit, could have a material adverse effect on us. Even a
      meritless or unsuccessful product liability claim could be time consuming,
      expensive to defend, and could result in the diversion of management’s attention
      from managing our core business or result in associated negative publicity.





If
      we
      expand our business activities outside of China, we may be exposed to potential
      product liability risks that are inherent in the testing, manufacturing and
      marketing of biopharmaceutical products. We cannot be certain that we will
      be
      able to obtain and maintain adequate product liability insurance at a reasonable
      cost for potential business activities outside of China. We currently do not
      have any clinical trial insurance for our clinical trials because such coverage
      is not available in mainland China. Any insurance coverage that we may obtain
      for any business activities outside of China may not be sufficient to satisfy
      any liability resulting from product liability claims. A successful product
      liability claim or series of claims for business activities outside of China
      could have a material adverse impact on our business, financial condition and
      results of operations.




10




*If
      we
      market and sell our products outside of China, then we may incur substantial
      liabilities and be required to limit commercialization of our products in
      response to product liability lawsuits.*





The
      marketing and sale of our products in countries other than China entails
      inherent risks of product liability. As a manufacturer of products designed
      for
      human application, we may be subject to product liability claims that use of
      our
      products has resulted in injury in countries other than China. Previously
      unknown adverse reactions resulting from human use of our products could occur.
      We may be held liable if serious adverse reactions result from the use of our
      products. If we cannot successfully defend ourselves against product liability
      claims, we may incur substantial liabilities and damage to our commercial
      reputation, or be required to limit commercialization of our products. Our
      inability to obtain sufficient product liability insurance outside China at
      acceptable cost against claims could prevent or inhibit commercialization of
      our
      products outside China. We may not be able to obtain insurance at reasonable
      cost, if at all. If we obtain insurance in the future, it may not adequately
      compensate us for all losses that we may incur, which could have a material
      adverse effect on our business.





*We
      depend on our key personnel, the loss of whom would adversely affect our
      operations. If we fail to attract and retain the talent required for our
      business, our business will be materially harmed.*





We
      are a
      small company with over 80 full-time employees as of August 31, 2008, and we
      depend to a great extent on principal members of our management and scientific
      staff. If we lose the services of any key personnel, in particular, Dr. Huang,
      our President and Chief Executive Officer, it could significantly impede the
      achievement of our research and development objectives and delay our product
      development programs and the approval and commercialization of our product
      candidates. We do not currently have any key man life insurance policies. In
      addition, recruiting and retaining qualified scientific, technical and
      managerial personnel and research partners will be critical to our success.
      Competition among biopharmaceutical and biotechnology companies for qualified
      employees in China is intense and turnover rates are high. There is currently
      a
      shortage of employees in China with expertise in our areas of research and
      clinical and regulatory affairs, and this shortage is likely to continue. We
      may
      not be able to retain existing personnel or attract and retain qualified staff
      in the future. If we fail to hire and retain personnel in key positions, we
      may
      be unable to develop or commercialize our product candidates in a timely manner.





*We
      may encounter difficulties in managing our growth, which could adversely affect
      our results of operations.*





Dong
      Ying
      China has experienced a period of rapid and substantial growth that has taken
      place and, if such growth continues, it will continue to place a strain on
      our
      administrative and operational infrastructure. If we are unable to manage this
      growth effectively, our business, results of operations or financial condition
      may be materially and adversely affected. Our ability to manage our operations
      and growth effectively requires us to continue to improve our operational,
      financial and management controls, reporting systems and procedures and hiring
      programs. We may not be able to successfully implement these required
      improvements.





*We
      may face difficulties in achieving and maintaining widespread market acceptance
      for our pharmaceutical products and any future pharmaceutical product
      candidates.*





If
      any of
      our products or product candidates for which we receive regulatory approval
      do
      not achieve broad market acceptance, the revenues that we generate from their
      sales will be limited.





The
      commercial success of any of our products or product candidates for which we
      obtain marketing approval from regulatory authorities will depend upon the
      acceptance of these products by the medical community, including physicians,
      patients and healthcare payors. The degree of market acceptance of any of our
      approved products will depend on a number of factors, including:




11





·
            demonstration
                of clinical safety and efficacy compared to other
                products;


·
            the
                relative convenience and ease of
                administration;


·
            the
                prevalence and severity of any adverse side
                effects;


·
            limitations
                or warnings contained in a product’s approved
                labelling;


·
            availability
                of alternative treatments, including, a number of competitive products
                already approved or expected to be commercially launched in the near
                future;


·
            pricing
                and cost effectiveness;


·
            the
                effectiveness of our or any future collaborators’ sales and marketing
                strategies;


·
            our
                ability to obtain sufficient third-party coverage or reimbursement;
                and


·
            the
                willingness of patients to pay out of pocket in the absence of third-party
                coverage.





If
      any of
      our products or approved product candidates do not achieve an adequate level
      of
      acceptance by physicians, healthcare payors and patients, we may not generate
      sufficient revenue from these products, and we may not become or remain
      profitable. In addition, our efforts to educate the medical community and
      third-party payors on the benefits of our product candidates may require
      significant resources and may never be successful.





Moreover,
      even if any of our products or product candidates receive marketing approval,
      we
      or others may later identify undesirable side effects caused by the product,
      and
      in that event a number of potentially significant negative consequences could
      result, including but not limited to:





·
            regulatory
                authorities may withdraw their approval of the
                product;


·
            regulatory
                authorities may require the addition of labelling statements, such
                as
                warnings or contraindications;


·
            we
                may be required to change the way the product is administered, conduct
                additional clinical trials or change the labelling of the product;
                and


·
            our
                reputation may suffer.





Any
      of
      these events could prevent us from achieving or maintaining market acceptance
      of
      the affected product or product candidate and could substantially increase
      the
      costs of commercializing our other products or product candidates.





*We
      may have difficulties in developing future pharmaceutical
      products.*





Our
      product candidates are prone to the risks of failure inherent in drug
      development. Before obtaining regulatory approvals for the commercial sale
      of
      any product candidate for a target indication we must demonstrate with
      substantial evidence gathered in well-controlled clinical trials and to the
      satisfaction of regulatory authorities that the product candidate is safe and
      effective for use for that target indication.





Despite
      our efforts, our product candidates may not:





·
            offer
                therapeutic or other improvement over existing, comparable
                drugs;


·
            be
                proven safe and effective in clinical
                trials;


·
            meet
                applicable regulatory standards;


·
            be
                capable of being produced in commercial quantities at acceptable
                costs;
                or


·
            be
                successfully commercialized.





Positive
      results in preclinical studies of a product candidate may not be predictive
      of
      similar results in humans during clinical trials, and promising results from
      early clinical trials of a product candidate may not be replicated in later
      clinical trials. Interim results of a clinical trial do not necessarily predict
      final results. A number of companies in the pharmaceutical and biotechnology
      industries have suffered significant setbacks in late-stage clinical trials
      even
      after achieving promising results in early-stage development. Accordingly,
      the
      results from completed preclinical studies and clinical trials may not be
      predictive of the results we may obtain in later stage trials. Our preclinical
      studies or clinical trials may produce negative or inclusive results, and we
      may
      decide, or regulators may require us, to conduct additional preclinical studies
      or clinical trials.




12




Undesirable
      side effects caused by our product candidates could cause us, regulatory
      authorities or institutional review boards to interrupt, delay or halt clinical
      trials and could result in the denial of regulatory approval.





*Management
      is inexperienced in running a U.S. public company.*





We
      are
      managed by a management team that is relatively unfamiliar with the capital
      market and the processes by which a U.S. public company should be managed and
      operated. Management is currently making efforts to familiarize itself with
      the
      relevant laws, rules and regulations and market practice, but there can be
      no
      assurance that it can master the relevant knowledge and skills and set up the
      required systems in time to prevent mistakes and to meet shareholder and market
      expectations.





*We
      may have difficulty establishing adequate management, legal and financial
      controls in the PRC.*





PRC
      companies historically have not adopted a Western style of management and
      financial reporting concepts and practices, which includes strong corporate
      governance, internal controls and computer, financial and other control systems.
      As a result, 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 standards required of U.S. public companies. Therefore,
      we
      may, in turn, experience difficulties in implementing and maintaining adequate
      internal controls as required under Section 404 of the Sarbanes-Oxley Act.
      This
      may result in significant deficiencies or material weaknesses in our internal
      controls which could impact the reliability of our financial statements and
      prevent us from complying with SEC rules and regulations and the requirements
      of
      the Sarbanes-Oxley Act. Any such deficiencies, weaknesses or lack of compliance
      could have a material adverse effect on our business.





*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. As a result,
      we do
      not have any property or casualty insurance coverage for our facilities or
      business liability insurance coverage for our operations. If we incur any
      losses, we will have to bear those losses without any assistance. As a result,
      we may not have sufficient capital to cover material damage to, or the loss
      of,
      our manufacturing facilities due to fire, severe weather, flood or other causes,
      and such damage or loss would have a material adverse effect on our financial
      condition, business and prospects.





*We
      do
      not plan to declare or pay any dividends to our shareholders in the near
      future.*





Neither
      the Company nor Dongying BVI declared any dividends for their respective fiscal
      year ends. The combined company does not intend to distribute dividends in
      the
      near future. The declaration, payment and amount of any future dividends will
      be
      made at the discretion of the board of directors, and will depend upon, among
      other things, the results of operations, cash flows and financial condition,
      operating and capital requirements, and other factors as the board of directors
      considers relevant. There is no assurance that future dividends will be paid,
      and if dividends are paid, there is no assurance with respect to the amount
      of
      any such dividend.





*We
      are a holding company and rely on the receipt of dividends from our operating
      subsidiaries. We may encounter limitations on the ability of our subsidiaries
      to
      pay dividends to us.*





As
      a
      holding company, we have no direct business operations other than the ownership
      of our operating subsidiaries. Our ability to pay dividends and meet other
      obligations depends upon the receipt of dividends or other payments from our
      operating subsidiaries. In addition, our operating subsidiaries, from time
      to
      time, may be subject to restrictions on their ability to make distributions
      to
      us, including as a result of restrictive covenants in loan agreements,
      restrictions on the conversion of local currency into U.S. dollars or other
      hard
      currency and other regulatory restrictions relating to doing business in China.
      If future dividends are paid in Renminbi, fluctuations in the exchange rate
      for
      the conversion of Renminbi into U.S. dollars may reduce the amount received
      by
      U.S. stockholders upon conversion of the dividend payment into U.S.
      dollars.




13





*We
      may not be able to achieve the benefits we expect to result from the Share
      Exchange.*





We
      may
      not realize the benefits that we hoped to derive as a result of the September
      2008 share exchange, which include:





·
            access
                to the capital markets of the United
                States;


·
            the
                increased market liquidity expected to result from exchanging stock
                in a
                private company for securities of a public company that are publicly
                traded;


·
            the
                ability to use securities to make acquisition of assets or
                businesses;


·
            increased
                visibility in the financial
                community;


·
            enhanced
                access to the capital markets;


·
            improved
                transparency of operations; and


·
            perceived
                credibility and enhanced corporate image of being a publicly traded
                company.





In
      addition, the attention and effort devoted to achieving the benefits of the
      share exchange and attending to the obligations of being a public company,
      such
      as reporting requirements and securities regulations, could significantly divert
      management’s attention from operational issues, which could materially and
      adversely affect our operating results or stock price in the
      future.





*There
      are substantial risks of lack of liquidity and volatility
      risks.*





Currently,
      the Company’s common stock is quoted in the OTC Bulletin Board (the
“ **OTCBB** ”)
      market
      under the symbol “SNBP”. The liquidity of our common stock may be very limited
      and affected by its limited trading market. The OTCBB market is an inter-dealer
      market much less regulated than the major exchanges, and is subject to abuses
      and volatilities and shorting. There is currently no broadly followed and
      established trading market for our common stock. An established trading market
      may never develop or be maintained. Active trading markets generally result
      in
      lower price volatility and more efficient execution of buy and sell orders.
       Absence of an active trading market reduces the liquidity of the shares
      traded there.





The
      trading volume of our common stock may be limited and sporadic.  As a
      result of such trading activity, the quoted price for our common stock on the
      OTCBB may not necessarily be a reliable indicator of its fair market value.
       In addition, if our shares of common stock cease to be quoted, holders
      would find it more difficult to dispose of or to obtain accurate quotations
      as
      to the market value of, our common stock and as a result, the market value
      of
      our common stock likely would decline.





*We
      may be subject to the risks inherent in a penny stock.*





The
      Company’s common stock may be subject to regulations prescribed by the SEC
      relating to “penny stock.”  The SEC has adopted regulations that generally
      define a penny stock to be any equity security that has a market price (as
      defined in such regulations) of less than $5.00 per share, subject to certain
      exceptions.  If the Company’s common stock meets the definition of a penny
      stock, it will be subject to these regulations, which impose additional sales
      practice requirements on broker-dealers who sell such securities to persons
      other than established customers and accredited investors - generally
      institutions with assets in excess of $5,000,000 and individuals with a net
      worth in excess of $1,000,000 or annual income exceeding $200,000 (individually)
      or $300,000 (jointly with their spouse).




14





Risks
      Related To Government Regulation





*We
      can only sell products that have received regulatory approval and many factors
      affect our ability to obtain such approvals.*





Pre-clinical
      and clinical trials of our products, and the manufacturing and marketing of
      our
      technologies, are subject to extensive, costly and rigorous regulation by
      governmental authorities in China and in other countries. Even if we complete
      preclinical and clinical trials successfully, we may not be able to obtain
      applicable regulatory approvals. We cannot market any product candidate until
      we
      have both completed our clinical trials and obtained the necessary regulatory
      approvals for that product candidate.





Conducting
      clinical trials and obtaining regulatory approvals are uncertain, time consuming
      and expensive processes. The process of obtaining required regulatory approvals
      from the SFDA, and other regulatory authorities often takes many years to
      complete and can vary significantly based on the type, complexity and novelty
      of
      the product candidates.





There
      can
      be no assurance that all of the clinical trials pertaining to our products
      in
      development will be completed within the time frames anticipated by us. We
      could
      encounter difficulties in enrolling such drugs for trials or encounter setbacks
      during the conduct of trials that result in delays or trial cancellation. Data
      obtained from preclinical and clinical studies are subject to varying
      interpretations that could delay, limit or prevent regulatory approval, and
      failure to observe regulatory requirements or inadequate manufacturing processes
      are examples of other problems that could prevent approval. In addition, we
      may
      encounter delays or rejections in the event of additional government regulations
      from future legislation, administrative action or changes in the SFDA’s policies
      or if unforeseen health risks become an issue with the participants of clinical
      trials. Clinical trials may also fail at any stage of testing. Results of early
      trials frequently do not predict results of later trials, and acceptable results
      in early trials may not be repeated. For these reasons, we do not know whether
      regulatory authorities will grant approval for any of our product candidates
      in
      the future.





Delays
      in
      obtaining the SFDA’s or foreign approval of our products could result in
      substantial additional costs and adversely affect our ability to compete with
      other companies. Even if regulatory approval is ultimately granted, there can
      be
      no assurance that we can maintain the approval or that the approval will not
      be
      withdrawn. Any approval received may also restrict the intended use and
      marketing of the product we want to commercialize.





Outside
      China, our ability to market any of our potential products is contingent upon
      receiving marketing authorizations from the appropriate regulatory authorities.
      These foreign regulatory approval processes include all of the risks associated
      with the SFDA approval process described above and may include additional
      risks.





*We
      may not be able to comply with applicable GMP requirements and other regulatory
      requirements, which could have a material adverse affect on our business,
      financial condition and results of operations.*





We
      are
      required to comply with applicable GMP regulations, which include requirements
      relating to quality control and quality assurance as well as corresponding
      maintenance, record-keeping and documentation standards. Manufacturing
      facilities must be approved by governmental authorities before we can use them
      to commercially manufacture our products and are subject to inspection by
      regulatory agencies.





If
      we
      fail to comply with applicable regulatory requirements, including following
      any
      product approval, we may be subject to sanctions, including:





·
            Fines;


·
            Product
                recalls or seizure;


·
            Injunctions;


·
            Refusal
                of regulatory agencies to review pending market approval applications
                or
                supplements to approval
                applications;






15




·
            Total
                or partial suspension of
                production;


·
            Civil
                penalties;


·
            Withdrawals
                of previously approved marketing applications;
                or


·
            Criminal
                prosecution.





*Failure
      to comply with the U.S. Foreign Corrupt Practices Act could subject us to
      penalties and other adverse consequences.*





We
      are
      subject to the U.S. Foreign Corrupt Practices Act, which generally prohibits
      U.S. companies from engaging in bribery or other prohibited payments to foreign
      officials for the purpose of obtaining or retaining business. In addition,
      we
      are required to maintain records that accurately and fairly represent our
      transactions and have an adequate system of internal accounting controls.
      Chinese companies and some other foreign companies, including some that may
      compete with us, are not subject to these prohibitions, and therefore may have
      a
      competitive advantage over us. Corruption, extortion, bribery, pay-offs, theft
      and other fraudulent practices occur from time-to-time in the PRC, and our
      executive officers and employees have not been subject to the U.S. Foreign
      Corrupt Practices Act prior to the completion of the share exchange in September
      2008. We can make no assurance that our employees or other agents will not
      engage in such conduct for which we might be held responsible. If our employees
      or other agents are found to have engaged in such practices, we could suffer
      severe penalties and other consequences that may have a material adverse effect
      on our business, financial condition and results of operations.





*A
      recent campaign imposed by the Chinese government against the export of unsafe
      and substandard products, could hinder our ability to export our products
      internationally.*





In
      August
      2007, China’s Administration of Quality Supervision, Inspection and Quarantine
      (“AQSIQ”) announced an ongoing national campaign in China against unsafe food
      and substandard products. The special campaign against poor product quality
      was
      launched in response to a series of safety scares involving Chinese products
      worldwide. The campaign set 20 detailed goals, including twelve “100 percents”.
      The campaign, which was originally scheduled to finish at the end of 2007,
      is
      currently scheduled to continue throughout 2008.





As
      a
      result of this campaign by the AQSIQ, there has been a general slow-down and
      backlog of export clearances for certain Chinese consumer products. If we seek
      to export our products in the future, we may experience significant delays
      in
      obtaining export clearances.





*Compliance
      with changing regulation of corporate governance and public disclosure will
      result in additional expenses and pose challenges for our new management
      team.*





Changing
      laws, regulations and standards relating to corporate governance and public
      disclosure, including the Sarbanes-Oxley Act and SEC regulations, have
      created uncertainty for public companies and significantly increased the costs
      and risks associated with accessing the public markets and public reporting.
      Our
      new management team, which has no prior experience operating a U.S. public
      company, will need to devote significant time and financial resources to comply
      with both existing and evolving standards for public companies, which will
      lead
      to increased general and administrative expenses and a diversion of
      management time and attention from revenue generating activities to compliance
      activities.





*Standards
      for compliance with Section 404 of the Sarbanes-Oxley Act are uncertain, and
      if
      we fail to comply in a timely manner, our business could be harmed and our
      stock
      price could decline.*





Rules
      adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act require
      an
      annual assessment of a public company’s internal control over financial
      reporting, and attestation of this assessment by the public company’s
      independent registered public accountants.  We believe that the annual
      assessment of our internal controls requirement will first apply to our annual
      report for the 2008 fiscal year and the attestation requirement of management’s
      assessment by our independent registered public accountants will first apply
      to
      our annual report for the 2009 fiscal year. The standards that must be met
      for
      management to assess the internal control over financial reporting are new
      and
      complex, and require significant documentation, testing and possible remediation
      to meet the detailed standards. We may encounter problems or delays in
      completing activities necessary to make an assessment of our internal control
      over financial reporting. In addition, the attestation process by our
      independent registered public accountants is new and we may encounter problems
      or delays in completing the implementation of any requested improvements and
      receiving an attestation of our assessment by our independent registered public
      accountants. If we cannot assess our internal control over financial reporting
      as effective, or our independent registered public accountants are unable to
      provide an unqualified attestation report on such assessment, investor
      confidence and share value may be negatively impacted.




16





Risks
      Related To Our Intellectual Property





*If
      we
      are unable to protect our intellectual property, we may not be able to operate
      our business profitably.*





Our
      success depends, in part, on our ability to protect our proprietary
      technologies. We try to protect the technology that we consider important to
      our
      business by filing Chinese patent applications and relying on trade secret
      and
      pharmaceutical regulatory protection.





In
      addition to patents, we rely on trade secrets and proprietary know-how to
      protect our intellectual property. We have entered into confidentiality
      agreements (which include, in the case of employees, non-competition provisions)
      with the majority of our employees and all our advisors. These agreements
      provide that all confidential information developed or made known to the
      individual during the course of the individual’s relationship with us is to be
      kept confidential and not disclosed to third parties except in specific
      circumstances. In the case of our employees, the agreements provide that all
      of
      the technology which is conceived by the individual during the course of
      employment is our exclusive property. These agreements may not provide
      meaningful protection or adequate remedies in the event of unauthorized use
      or
      disclosure of our proprietary information. In addition, it is possible that
      third parties could independently develop proprietary information and techniques
      substantially similar to ours or otherwise gain access to our trade secrets.





We
      cannot
      assure you that our current or potential competitors, many of which have
      substantial resources and may have made substantive investments in competing
      technologies, do not have and will not develop products that compete directly
      with our products despite our intellectual property rights.





Intellectual
      property rights and confidentiality protections in China may not be as effective
      as in the United States or other countries. For example, implementation and
      enforcement of Chinese intellectual property-related laws have historically
      been
      deficient and ineffective and may be hampered by corruption and local
      protectionism. Policing unauthorized use of proprietary technology is difficult
      and expensive, and we might need to resort to litigation to enforce or defend
      patents issued to us or to determine the enforceability, scope and validity
      of
      our proprietary rights or those of others. The experience and capabilities
      of
      Chinese courts in handling intellectual property litigation varies, and outcomes
      are unpredictable. Further, such litigation may require significant expenditure
      of cash and management efforts and could harm our business, financial condition
      and results of operations. An adverse determination in any such litigation
      could
      materially impair our intellectual property rights and may harm our business,
      prospects and reputation.





*We
      may depend on market exclusivity for certain of our products, which will afford
      us less protection than patents.*





Assuming
      regulatory approvals are obtained, our ability to successfully commercialize
      certain drugs may depend on the availability of market exclusivity under Chinese
      law, which provides protection for certain new products. Under China’s former *Regulation
      on the Protection of New Pharmaceuticals and Technology
      Transfer* ,
      new
      drugs were afforded exclusivity protection of six, eight or twelve years,
      depending on the category of the drug in question. During the protection period,
      the SFDA would not accept third parties’ applications for manufacturing the drug
      under protection.




17


After
      China joined the WTO in 2001, the Chinese government amended and implemented
      many laws and regulations in the area of pharmaceuticals. Currently, the *Drug
      Administration Law* , *Implementing
      Regulations on Drug Administration* and *Drug
      Registration Regulation* are
      the
      primary laws and regulations governing the exclusive protection regime for
      new
      drugs.





The *Implementing
      Regulations on Drug Administration* provide
      that the SFDA may establish a monitoring period for up to five years for certain
      new drugs to monitor the safety of these products. During the monitoring period,
      the SFDA will not accept third parties’ applications for manufacturing or
      importing the same drug. The SFDA’s regulations provide that the monitoring
      period shall be 3, 4 or 5 years. The SFDA determines the availability and length
      of the monitoring period depending on the approval conditions of the same or
      similar drugs in China and in overseas markets. According to the *Regulations
      on the Drug Registration* promulgated by the SFDA in 2005, in case there is more than one application
      for
      the same new drug pending, after the issuance of the first production license
      afforded with a monitoring period, the other co-pending applications should
      be
      rejected unless a clinical trial application has been approved.





*If
      our products infringe the intellectual property rights of third parties, we
      may
      incur substantial liabilities, and we may be unable to sell these products.*





Our
      commercial success depends significantly on our ability to operate without
      infringing the patents and other proprietary rights of third parties. Patent
      applications are maintained incognito until their publication 18 months from
      the
      filing date. The publication of discoveries in the scientific or patent
      literature frequently occurs substantially later than the date on which the
      underlying discoveries were made and patent applications are filed. China,
      similar to many other countries, adopts the first-to-file system under which
      whoever first files a patent application (instead of the one who makes first
      actual discoveries) will be awarded patent. Even after reasonable investigation
      we may not know with certainty whether we have infringed upon a third-party’s
      patent because such third-party may have filed a patent application without
      our
      knowledge while we are still developing that product. If a third-party claims
      that we infringe upon its proprietary rights, any of the following may occur:





·
            We
                may become involved in time-consuming and expensive litigation, even
                if
                the claim is without merit;


·
            We
                may become liable for substantial damages for past infringement if
                a court
                decides that our technology infringes upon a competitor’s
                patent;


·
            A
                court may prohibit us from selling or licensing our product without
                a
                license from the patent holder, which may not be available on commercially
                acceptable terms, if at all, or which may require us to pay substantial
                royalties or grant cross licenses to our patents,
                and


·
            We
                may have to reformulate our product so that it does not infringe
                upon
                others’ patent rights, which may not be possible or could be very
                expensive and time-consuming.





If
      any of
      these events occurs, our business will suffer and the market price of our common
      shares could decline.





*Our
      products will be adversely affected if we are unable to protect proprietary
      rights or operate without infringing the proprietary rights of
      others.*





The
      profitability of our products will depend in part on our ability to obtain
      and
      maintain protection for our intellectual property rights, such as patents,
      licenses and trade secrets, and the period our intellectual property remains
      exclusive. We must also operate without infringing on the proprietary rights
      of
      third parties and without third parties circumventing our rights. The
      proprietary rights of enterprises such as ours are uncertain and involve complex
      legal and factual questions for which important legal principles are largely
      unresolved. In addition, the scope of the originally claimed subject matter
      in a
      patent application can be significantly reduced before a patent is issued.
      The
      biotechnology patent situation outside the U.S. is even more uncertain, is
      currently undergoing review and revision in many countries, and may not protect
      our intellectual property rights to the same extent as the laws of the U.S.
      Because patent applications are maintained in secrecy in some cases, we cannot
      be certain that we or our licensors are the first creators of inventions
      described in our pending patent applications or patents or the first to file
      patent applications for such inventions. Other companies may independently
      develop similar products and design around any patented or proprietary products
      we develop. We cannot assure you that:




18




·
            any
                of our applications for patent or exclusivity will result in their
                issuance;


·
            we
                will develop additional patentable or proprietary
                products;


·
            the
                patents or exclusive rights we have been issued will provide us with
                any
                competitive advantages;


·
            the
                patents of others will not impede our ability to do business;
                or


·
            third
                parties will not be able to circumvent our patents or proprietary
                rights.




Risks
      Related To Doing Business in China





*Adverse
      changes in political, economic and other policies of the Chinese government
      could have a material adverse effect on the overall economic growth of China,
      which could reduce the demand for our products and materially and adversely
      affect our competitive position.*





All
      of
      our business operations are conducted in China, and all of our sales are
      currently made in China. Accordingly, our business, financial condition, results
      of operations and prospects are affected significantly by economic, political
      and legal developments in China. The Chinese economy differs from the economies
      of most developed countries in many respects, including:





·
            The
                extent of government involvement;


·
            The
                level of development;


·
            The
                growth rate;


·
            The
                control of foreign exchange;


·
            The
                allocation of resources;


·
            An
                evolving regulatory system; and


·
            Lack
                of sufficient transparency in the regulatory
                process.





While
      the
      Chinese economy has experienced significant growth in the past 20 years, growth
      has been uneven, 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 Chinese economy, but may also have a negative effect on us. For example,
      our financial condition and results of operations may be adversely affected
      by
      government control over capital investments or changes in tax regulations that
      are applicable to us.





The
      Chinese economy has been transitioning from a planned economy to a more
      market-oriented economy. Although in recent years the Chinese government has
      implemented measures emphasizing the utilization of market forces for economic
      reform, the reduction of state ownership of productive assets and the
      establishment of sound corporate governance in business enterprises, a
      substantial portion of the productive assets in China are still owned by the
      Chinese government. The continued control of these assets and other aspects
      of
      the national economy by the Chinese government could materially and adversely
      affect our business. The Chinese government also exercises significant control
      over Chinese 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. Efforts
      by the Chinese government to slow the pace of growth of the Chinese economy
      could result in decreased expenditures by hospitals and other users of our
      products, which in turn could reduce demand for our products.





Moreover,
      the political relationship between the United States, Europe, or other Asian
      nations and China is subject to sudden fluctuation and periodic tension. Changes
      in political conditions in China and changes in the state of foreign relations
      are difficult to predict and could adversely affect our operations or cause
      our
      products to become less attractive. This could lead to a decline in our
      profitability.




19




Any
      adverse change in the economic conditions or government policies in China could
      have a material adverse effect on overall economic growth and the level of
      healthcare investments and expenditures in China, which in turn could lead
      to a
      reduction in demand for our products and consequently have a material adverse
      effect on our businesses.





*Future
      changes in laws, regulations or enforcement policies in China could adversely
      affect our business.*





Laws,
      regulations and enforcement policies in China, including those regulating our
      business, are evolving and subject to future change. Future changes in laws,
      regulations or administrative interpretations, or stricter enforcement policies
      by the Chinese government, could impose more stringent requirements on us,
      including fines or other penalties. Changes in applicable laws and regulations
      may also increase our operating costs. Compliance with such requirements could
      impose substantial additional costs or otherwise have a material adverse effect
      on our business, financial condition and results of operations. These changes
      may relax some requirements, which could be beneficial to our competitors or
      could lower market entry barriers and increase competition. Further, regulatory
      agencies in China may periodically, and sometimes abruptly, change their
      enforcement practice. Therefore, prior enforcement activity, or lack of
      enforcement activity, is not necessarily predictive of future actions. Any
      enforcement actions against us could have a material and adverse effect on
      us
      and the market price of our common shares. In addition, any litigation or
      governmental investigation or enforcement proceedings in China may be protracted
      and may result in substantial cost and diversion of resources and management
      attention, negative publicity, damage to our reputation and decline in the
      price
      of our common shares.





*The
      Chinese government exerts substantial influence over the manner in which we
      must
      conduct our business activities.*





In
      the
      last 20 years, despite a process of devolution of regulatory control to
      provincial and local levels and resulting economic autonomy and private economic
      activities, the Chinese central government has exercised and continues to
      exercise substantial control over virtually every sector of the Chinese economy
      through regulation and state ownership. Our ability to operate in China may
      be
      harmed by changes in its laws and regulations, including those relating to
      taxation, import and export tariffs, environmental regulations, land use rights,
      property and other matters. We believe that our operations in China are in
      material compliance with all applicable legal and regulatory requirements.
      However, the central or local governments of the jurisdictions in which we
      operate may impose new, stricter regulations or interpretations of existing
      regulations that would require additional expenditures and efforts on our part
      to ensure our compliance with such regulations or interpretations.





Accordingly,
      government actions in the future, including any decision to adjust
      economic policies or even to return to a more centrally planned
      economy or regional or local variations in the implementation of economic
      policies, could have a significant effect on economic conditions in China or
      particular regions thereof, and could require us to divest ourselves of any
      interest we then hold in Chinese properties or joint ventures.





*Fluctuation
      in the value of the Renminbi yuan may have a material adverse effect on your
      investment.*





The
      value
      of the Renminbi yuan (“Renminbi”) against the U.S. dollar and other currencies
      may fluctuate and is affected by, among other things, changes in China’s
      political and economic conditions. The conversion of Renminbi into foreign
      currencies, including U.S. dollars, has historically been set by the People’s
      Bank of China. On July 21, 2005, the Chinese government changed its policy
      of
      pegging the value of the Renminbi to the U.S. dollar. Under the new policy,
      the
      Renminbi is permitted to fluctuate within a band against a basket of certain
      foreign currencies. This change in policy resulted initially in an approximately
      2.0% appreciation in the value of the Renminbi against the U.S. dollar. Since
      the adoption of this new policy, the value of Renminbi against the U.S. dollar
      has fluctuated on a daily basis within narrow ranges, but overall has continued
      to strengthen against the U.S. dollar. There remains significant international
      pressure on the Chinese government to further liberalize its currency policy,
      which could result in a further and more significant appreciation or
      depreciation in the value of the Renminbi against the U.S. dollar. Any
      significant revaluation of the Renminbi may have a material adverse effect
      on
      our revenues and financial condition, and the value of, and any dividends
      payable on, our common shares in foreign currency terms. For example, to the
      extent that we need to convert U.S. dollars into Renminbi for our operations,
      appreciation of the Renminbi against the U.S. dollar would reduce the Renminbi
      amount we receive from the conversion. Conversely, if we decide to convert
      our
      Renminbi into U.S. dollars for the purpose of making dividend payments on our
      common shares or for other business purposes, appreciation of the U.S. dollar
      against the Renminbi would reduce the U.S. dollar amount available to
      us.




20





*Under
      the new EIT Law, we may be classified a “resident enterprise” for PRC tax
      purposes, which may subject us to PRC enterprise income tax for any dividends
      we
      receive from our Chinese subsidiaries and to PRC income tax withholding for
      any
      dividends we pay to our non-PRC shareholders.*





On
      March
      16, 2007, the National People’s Congress promulgated the Law of the People’s
      Republic of China on Enterprise Income Tax, or the new EIT Law,
      which became effective on January 1, 2008. In accordance with the new EIT
      Law, the corporate income tax rate is set at 25% for all enterprises. However,
      certain industries and projects, such as enterprises with foreign investors,
      may
      enjoy favorable tax treatment pursuant to the new EIT Law and its implementing
      rules.





Under
      the
      new EIT Law, an enterprise established outside of China whose “de facto
      management bodies” are located in China is considered a “resident enterprise”
and is subject to the 25% enterprise income tax rate on its worldwide income.
      The new EIT Law and its implementing rules are relatively new, and currently,
      no
      official interpretation or application of this new “resident enterprise”
classification is available. Therefore, it is unclear how tax authorities will
      determine the tax residency of enterprises established outside of
      China.





Most
      of
      our management is currently based in China. If the PRC tax authorities determine
      that our U.S. holding company is a “resident enterprise” for PRC enterprise
      income tax purposes, we may be subject to an enterprise income tax rate of
      25%
      on our worldwide taxable income. The “resident enterprise” classification also
      could subject us to a 10% withholding tax on any dividends we pay to our non-PRC
      shareholders if the relevant PRC authorities determine that such income is
      PRC-sourced income. In addition to the uncertainties regarding the
      interpretation and application of the new “resident enterprise” classification,
      the new EIT Law may change in the future, possibly with retroactive effect.
      If
      we are classified as a “resident enterprise” and we incur these tax liabilities,
      our net income will decrease accordingly.





*It
      may be difficult to effect service of process and enforcement of legal judgments
      upon Dongying BVI and some of our officers and directors because they reside
      outside the United States.*





As
      Dongying BVI’s operations are presently based in China and some of our directors
      and officers reside in China, service of process on Dongying BVI and such
      directors and officers may be difficult to effect within the United States.
       Also, substantially all of Dongying BVI’s assets are located in China and
      any judgment obtained in the United States against Dongying BVI may not be
      enforceable outside the United States.





*Since
      all of Dongying BVI’s assets are located in China, any dividends of proceeds
      from liquidation is subject to the approval of the relevant Chinese government
      agencies.*





Dongying
      BVI’s assets are 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 as the
      foreign exchange control. This may generate additional risk for investors in
      case of dividend payment and liquidation.





*The
      Company is required to be in compliance with the registered capital requirements
      of China.*





Under
      the
      company law of China, the combined company will be required to contribute a
      certain amount of “registered capital” to its wholly owned subsidiary. By law,
      Dongying BVI and its subsidiaries are required to contribute at least 10% of
      after tax net income (as determined in accordance with Chinese GAAP) into a
      statutory surplus reserve until the reserve is equal to 50% of Dongying BVI
      and
      its subsidiaries’ registered capital, and between 5% and 10% of its after tax
      net income, as determined by Dongying BVI’s board of directors, into a public
      welfare fund. These reserve funds are recorded as part of shareholders' equity
      but are not available for distribution to shareholders other than
      in
      the case of liquidation. As a result of this requirement, the amount of net
      income available for distribution to shareholders will be limited.




21




**Item
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds**




On
      July
      2, 2008, we received gross proceeds of $20,000 from one investor for the
      subscription of 20,000 (post forward split) shares of our common stock at a
      price of $1.00 per share. We believe that the securities when issued will be
      exempt from registration under Regulation S promulgated under the Securities
      Act
      as the securities will be issued to the individual through an offshore
      transaction which was negotiated and consummated outside of the United
      States.




**Item
      3. Defaults Upon Senior Securities**




N/A




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




N/A




**Item
      5. Other Information**




On
      September 25, 2008, we entered into a consulting agreement (the “Consulting
      Agreement”) with Mr. Michael Tan to be effective as of September 1, 2008,
      whereby Mr. Tan will provide consulting services in the area of corporate
      finance and development strategy designed to assist us in our business
      development for a period of three years in exchange for compensation of $8,000
      per month to be paid semi-annually in March and September with the first payment
      being due on March 25, 2009.





The
      foregoing description of the Consulting Agreement does not purport to be
      complete and is qualified in its entirety by reference to the Consulting
      Agreement, a copy of which is attached hereto as Exhibit 99.1.





On
      September 29, 2008, our Board of Directors unanimously approved and adopted
      a
      stock option and incentive plan (the “2008 Stock Option and Incentive Plan”).
      The purpose of the 2008 Stock Option and Incentive Plan is to advance our
      interests and our shareholders’ interests by affording our key personnel an
      opportunity for investment in the Company and the incentive advantages inherent
      in stock ownership in the Company. Pursuant to the provisions of the Stock
      Option Plan, stock options, stock awards, cash awards or other incentives (the
      “Stock Options and Incentives”) will be granted only to our key personnel,
      generally defined as a person designated by the Board of Directors upon whose
      judgment, initiative and efforts we may rely including any director, officer,
      employee, consultant or advisor of the Company.





The
      2008
      Stock Option and Incentive Plan is to be administered by our Board of Directors,
      which shall determine (i) the persons to be granted Stock Options and
      Incentives; (ii) the Fair Market Value of our shares; (iii) the exercise price
      per share of options to be granted; (iv) the number of shares to be represented
      by each option or incentive award; (v) the time or times at which options and
      incentive awards shall be granted; (vi) the interpretation of the 2008 Stock
      Option and Incentive Plan; (vii) whether to prescribe, amend and rescind rules
      and regulations relating to the 2008 Stock Option and Incentive Plan; (viii)
      the
      term and provisions or each option and incentive award granted (which need
      not
      be identical) and, with the consent of the grantee thereof, modify or amend
      such
      option or incentive award; (ix) whether to accelerate or defer (with the consent
      of the grantee) of the exercise date of any option or incentive award; (x)
      the
      person to execute on our behalf any instrument required to effectuate the grant
      of an option or incentive award previously granted by the Board; (xi) whether
      to
      accept or reject the election made by a grantee pursuant to Section 7.5 of
      the
      2008 Stock Option and Incentive Plan; and (xii) all other determinations deemed
      necessary or advisable for the administration of the 2008 Stock Option and
      Incentive Plan. The 2008 Stock Option and Incentive Plan provides authorization
      to the Board of Directors to grant Stock Options and Incentives to a total
      number of shares of our common stock, not to exceed ten million (10,000,000)
      (post forward stock split) shares of our common stock as at the date of adoption
      by the Board of Directors of the 2008 Stock Option and Incentive
      Plan.




22





The
      foregoing description of the 2008 Stock Option and Incentive Plan does not
      purport to be complete and is qualified in its entirety by reference to the
      2008
      Stock Option and Incentive Plan which is attached hereto as Exhibit
      99.2.





In
      addition, on September 29, 2008, our Board of Directors unanimously approved
      and
      granted in aggregate 1,800,000 stock options to certain directors, officers
      and
      consultants of the Company having an exercise price of $1.80 per share and
      an
      expiry date of five years from the date of grant. These stock options have
      vesting provisions of 10% on the date of grant and 10% on the last day of each
      month thereafter beginning on October 31, 2008.





Furthermore,
      on October 2, 2008, our Board of Directors unanimously approved and granted
      in
      aggregate 500,000 stock options to certain mid-level managers of Dong Ying
      China
      having an exercise price of $1.80 per share and an expiry date of five years
      from the date of grant. These stock options have vesting provisions of 10%
      on
      the date of grant and 10% on the last day of each month thereafter beginning
      on
      October 31, 2008.




**Item
      6. Exhibits**




(a)
            Financial
                Statements




***Unaudited
      Financial Statements of Dongying BVI and Consolidated Subsidiaries, as at August
      31, 2008***





Consolidated
      Balance Sheet as at August 31, 2008





Consolidated
      Statement of Operations for the three months and eight months periods ended
      August 31, 2008 and 2007





Consolidated
      Statement of Cash Flows for the three months and eight months periods ended
      August 31, 2008 and 2007





Consolidated
      Statement of Shareholders’ Equity (Deficit) for the eight months period ended
      August 31, 2008 and the years ended Dec. 31, 2007 and 2006





Notes
      to
      the Financial Statements





***Sinobiopharma,
      Inc. and Consolidated Subsidiaries Pro Forma Consolidated Financial
      Information***





Introduction
      to Pro Forma Consolidated Financial Information





Pro
      Forma
      Consolidated Balance Sheet as at August 31, 2008





Pro
      Forma
      Consolidated Statement of Operations for the three months period ended August
      31, 2008





Notes
      to
      the Pro Forma Consolidated Financial Statements


23




**DONGYING
      PHARMACEUTICAL CO, LIMITED**


**AND
      CONSOLIDATED SUBSIDIARIES**


***Consolidated
      Balance Sheets***


***(Expressed
      in US Dollars)***


***UNAUDITED
      - Prepared by Management***





**August
                31**
              **2008**
            
            **December
                31**
              **2007**ASSETSCURRENT
                ASSETSCash
            
            $
            160,914
            
            $
            150,518Accounts
                receivable (Note 3)
            
            
            175,438
            
            
            44,928Loan
                to related party (Note 11)
            
            
            -
            
            
            5,476Inventory
                (Note 4)
            
            
            383,038
            
            
            287,448Other
                current assets (Note 5)
            
            
            109,839
            
            
            93,089Total
                current assets
            
            
            829,229
            
            
            581,459Fixed
                assets (Note 6)
            
            
            2,731,324
            
            
            2,600,817Intangible
                assets (Notes 7 and 11)
            
            
            1,363,333
            
            
            1,313,384Total
                assets
            
            $
            4,923,886
            
            $
            4,495,660LIABILITIES
                AND STOCKHOLDER'S EQUITYCURRENT
                LIABILITIESLoans
                payable (Note 8)
            
            $
            2,244,740
            
            $
            2,187,312Accounts
                payable
            
            
            667,820
            
            
            574,639Accrued
                liabilities
            
            
            353,412
            
            
            258,931Customer
                deposits (Note 9)
            
            
            289,236
            
            
            596,157Shareholder
                loans (Note 10)
            
            
            1,103,732
            
            
            882,131Total
                current liabilities
            
            
            4,658,940
            
            
            4,499,170COMMITMENTS
                AND CONTINGENCIES (Notes 1, 2, 3, 7, 8, 11 and 12 )STOCKHOLDER'S
                EQUITY (DEFICIT)Common
                stock (Note 13)
              Authorized
                20,000,000 shares at par value of $ 0.0025 each Issued and outstanding
                400
                shares
            
            
            1
            
            
            1Additional
                paid-in capital
            
            
            5,269,207
            
            
            5,219,551Accumulated
                (deficit)
            
            
            (5,223,578
            )
            
            (5,434,789
            )Accumulated
                other comprehensive income
            
            
            219,316
            
            
            211,727Total
                stockholder's equity (deficit)
            
            
            264,946
            
            
            (3,510
            )Total
                liabilities and stockholder's equity
            
            $
            4,923,886
            
            $
            4,495,660





*The
      accompanying notes to the consolidated financial statements are an integral
      part
      of these statements.*


24





**DONGYING
      PHARMACEUTICAL CO, LIMITED**


**AND
      CONSOLIDATED SUBSIDIARIES**


***Consolidated
      Statements of Operations***


***(Expressed
      in US Dollars)***


***UNAUDITED
      - Prepared by Management***


**Three Months Ended August 31**
              
              **Eight Months Ended August 31****2008**
              
              **2007**
              
              **2008**
              
              **2007**REVENUESales
              
              $
              931,203
              
              $
              291,874
              
              $
              1,811,094
              
              $
              778,330Cost
                  of goods sold
              
              
              318,775
              
              
              233,869
              
              
              753,096
              
              
              623,651Gross
                  profit
              
              
              612,428
              
              
              58,005
              
              
              1,057,998
              
              
              154,679Gain
                  from discount of no-interest loan
              
              
              65
              
              
              -
              
              
              5,147
              
              
              -Other
                  income
              
              
              699
              
              
              676
              
              
              1,083
              
              
              1,802613,192
              
              
              58,681
              
              
              1,064,228
              
              
              156,481EXPENSESAdvertising
                  and promotion
              
              
              3,821
              
              
              -
              
              
              4,410
              
              
              -Depreciation
                  and amortization
              
              
              23,574
              
              
              31,728
              
              
              61,251
              
              
              84,608General
                  and administration
              
              
              143,101
              
              
              70,340
              
              
              264,018
              
              
              187,574Interest
                  (Notes 8 and 10)
              
              
              59,046
              
              
              36,702
              
              
              150,246
              
              
              97,872Research
                  and development
              
              
              97,404
              
              
              6,230
              
              
              146,565
              
              
              16,613Salaries
                  and benefits
              
              
              41,991
              
              
              9,179
              
              
              95,687
              
              
              24,474Travel
              
              
              74,191
              
              
              9,933
              
              
              130,840
              
              
              26,488Total
                  expenses
              
              
              443,128
              
              
              164,112
              
              
              853,017
              
              
              437,629Net
                  income (loss) for the period
              
              
              170,064
              
              
              (105,431
              )
              
              211,211
              
              
              (281,148
              )Other
                  comprehensive income (loss)Foreign
                  currency translation
              
              
              8,089
              
              
              12,830
              
              
              7,589
              
              
              34,214Comprehensive
                  income (loss)
              
              
              178,153
              
              $
              (92,601
              )
              $
              218,800
              
              $
              (246,934
              )Net
                  loss per common share, basic and fully diluted for the
                  year$
              425
              
              
              (264
              )
              $
              528
              
              
              (703
              )Weighted
                  average number of common stock outstanding
              
              
              400
              
              
              400
              
              
              400
              
              
              400


*The
      accompanying notes to the consolidated financial statements are an integral
      part
      of these statements.*


25





**DONGYING
      PHARMACEUTICAL CO, LIMITED**


**AND
      CONSOLIDATED SUBSIDIARIES**


***Consolidated
      Statements of Cash Flows***


***(Expressed
      in US Dollars)***


***UNAUDITED
      - Prepared by Management***





**Three Months Ended August 31**
            
            **Eight Months Ended August 31****2008**
            
            **2007**
            
            **2008**
            
            **2007**Cash
                from (used in) operating activities:Net
                income (loss)
            
            $
            170,064
            
            $
            (105,431
            )
            $
            211,211
            
            $
            (281,148
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Depreciation
                of fixed assets
            
            
            60,173
            
            
            50,690
            
            
            155,252
            
            
            135,173Amortization
                of intangible assets
            
            
            15,483
            
            
            10,205
            
            
            40,233
            
            
            27,213Loss
                on disposition of fixed assets
            
            
            -
            
            
            274
            
            
            -
            
            
            731Imputed
                interest on shareholder's loan
            
            
            19,661
            
            
            316
            
            
            49,656
            
            
            843Amortization
                of discount in interest expense
            
            
            39,385
            
            
            36,234
            
            
            100,590
            
            
            96,624Gain
                from discount of no-interest loan
            
            
            (65
            )
            
            -
            
            
            (5,147
            )
            
            -Net
                change in operating assets and liabilities:Accounts
                receivable
            
            
            (94,828
            )
            
            (5,623
            )
            
            (130,510
            )
            
            (14,995
            )Inventory
            
            
            37,920
            
            
            (13,951
            )
            
            (95,590
            )
            
            (37,203
            )Other
                current assets
            
            
            7,833
            
            
            38,432
            
            
            (16,750
            )
            
            102,486Accounts
                payable
            
            
            75,991
            
            
            58,713
            
            
            93,181
            
            
            156,568Customer
                deposits
            
            
            (153,036
            )
            
            53,569
            
            
            (306,921
            )
            
            142,851Accrued
                liabilities
            
            
            15,036
            
            
            54,785
            
            
            94,481
            
            
            146,093Net
                cash provided by (used in) operating activities
            
            
            193,617
            
            
            178,213
            
            
            189,686
            
            
            475,236Cash
                (used in) investing activities:Purchases
                of fixed assets
            
            
            (6,120
            )
            
            (137,270
            )
            
            (107,179
            )
            
            (366,053
            )Purchases
                of intangible assets
            
            
            -
            
            
            (171,125
            )
            
            -
            
            
            (456,333
            )Net
                cash (used in) investing activities
            
            
            (6,120
            )
            
            (308,395
            )
            
            (107,179
            )
            
            (822,386
            )Cash
                from (used in) financing activities:Repayments
                of loans by unrelated parties
            
            
            -
            
            
            14,864
            
            
            -
            
            
            39,636Loan
                received from unrelated party
            
            
            -
            
            
            -
            
            
            100,000
            
            
            -Repayments
                of loans by related parties
            
            
            5,712
            
            
            666
            
            
            5,712
            
            
            1,776Repayments
                of short-term loans
            
            
            (285,600
            )
            
            -
            
            
            (285,600
            )
            
            (164,375
            )Loans
                received from shareholder
            
            
            -
            
            
            -
            
            
            158,499
            
            
            367,555Net
                cash provided by financing activities
            
            
            (279,888
            )
            
            15,530
            
            
            (21,389
            )
            
            244,592Effect
                of other comprehensive income (loss) on cash
            
            
            (9,663
            )
            
            12,831
            
            
            (50,722
            )
            
            34,215Increase
                (decrease) in cash
            
            
            (102,054
            )
            
            (101,821
            )
            
            10,396
            
            
            (68,343
            )Cash,
                beginning of period
            
            
            262,968
            
            
            157,540
            
            
            150,518
            
            
            124,062Cash,
                end of period
            
            $
            160,914
            
            $
            55,719
            
            $
            160,914
            
            $
            55,719





*The
      accompanying notes to the consolidated financial statements are an integral
      part
      of these statements.*


26





**DONGYING
      PHARMACEUTICAL CO, LIMITED**


**AND
      CONSOLIDATED SUBSIDIARIES**


***Consolidated
      Statement of Stockholder's Equity (Deficit)***


***(Expressed
      in US Dollars)***


***UNAUDITED
      - Prepared by Management***





Common Stock
            
            Amount
            
            Additional
              paid-in capital
            
            Accumulated
              Other
              Comprehensive
              Income
            
            Accumulated
              (Deficit)
            
            Stockholders'
              Equity  (Deficit)Balance
                December 31, 2005
            
            
            -
            
            
            -
            
            $
            5,218,286
            
            $
            105,063
            
            $
            (1,431,356
            )
            $
            3,891,993Net
                income (loss) for the year ended December 31, 2006
            
            
            -
            
            
            -
            
            
            -
            
            
            55,342
            
            
            (3,444,090
            )
            
            (3,388,748
            )Balance
                December 31, 2006
            
            
            -
            
            $
            -
            
            $
            5,218,286
            
            $
            160,405
            
            $
            (4,875,446
            )
            $
            503,245Shares
                issued pursuant to private placements
            
            
            400
            
            
            1
            
            
            -
            
            
            -
            
            
            -
            
            
            1Imputed
                interest on shareholder's loans
            
            
            -
            
            
            -
            
            
            1,265
            
            
            -
            
            
            -
            
            
            1,265Net
                income (loss) for the year ended December 31, 2007
            
            
            -
            
            
            -
            
            
            -
            
            
            51,322
            
            
            (559,343
            )
            
            (508,021
            )Balance
                December 31, 2007
            
            
            400
            
            $
            1
            
            $
            5,219,551
            
            $
            211,727
            
            $
            (5,434,789
            )
            $
            (3,510
            )Imputed
                interest on shareholder's loans
            
            
            -
            
            
            -
            
            
            49,656
            
            
            -
            
            
            -
            
            
            49,656Net
                income for the eight months ended August 31, 2008
            
            
            -
            
            
            -
            
            
            -
            
            
            7,589
            
            
            211,211
            
            
            218,800Balance
                August 31, 2008
            
            
            400
            
            $
            1
            
            $
            5,269,207
            
            $
            219,316
            
            $
            (5,223,578
            )
            $
            264,946





*The
      accompanying notes to the consolidated financial statements are an integral
      part
      of these statements.*




27




**DONGYING
      PHARMACEUTICAL CO, LIMITED**


**AND
      CONSOLIDATED SUBSIDIARIES**


***Notes
      to Consolidated Financial Statements***


***August
      31, 2008***


***(Expressed
      in US Dollars)***


***UNAUDITED
      – Prepared by Management***




**1.
      BASIS OF PRESENTATION – GOING CONCERN**




These
      consolidated financial statements of Dongying Pharmaceutical Co, Limited (the
      “Company”) have been prepared on a going-concern basis which assumes that the
      Company will be able to realize assets and discharge liabilities in the normal
      course of business for the foreseeable future.




The
      Company has experienced losses since commencement of operations amounting to
      $5,223,578 and has negative working capital as of May 31, 2008, which raise
      substantial doubt about the Company's ability to continue as a going concern.
      The ability of the Company to meet its commitments as they become payable is
      dependent on the ability of the Company to obtain necessary financing or achieve
      a consistently profitable level of operations. There are no assurances that
      the
      Company will be successful in achieving these goals. The Company has achieved
      a
      profit for the eight months ended August 31, 2008.




The
      Company is in the process of developing markets for its existing products and
      researching, developing, testing and evaluating proposed new pharmaceutical
      products, and has not yet determined whether these products are technically
      or
      economically feasible. The underlying value of the company is dependent on
      the
      successful implementation of one or more of these products, the ability of
      the
      Company to obtain the necessary financing to complete development and upon
      future profitable production or sufficient proceeds from the disposition of
      manufacturing rights. Management’s plan is to actively search for new sources of
      capital through equity investment.




These
      financial statements do not give effect to adjustments to the amounts and
      classifications to assets and liabilities that would be necessary should the
      Company be unable to continue as a going concern.





**2.
      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





**Organization
      and Description of Business**




The
      Company was incorporated under the laws of the British Virgin Islands on January
      29, 2008. On May 13, 2008 the Company acquired
      a 100% interest in Big Global Limited (“Big Global”) from the sole shareholder
      of the Company for consideration of $1.00. The purpose of the transaction was
      the change of domicile to the British
      Virgin Islands. Accordingly,
      these financial statements include balance sheets for two years presented as
      if
      the transaction had occurred on January 1, 2007.





Big
      Global was
      incorporated under the laws of Hong Kong on
      November 26, 2007. On December 10, 2007 Big Global acquired a 100% interest
      in
      Dong Ying (Jiangsu) Pharmaceuticals Co., Ltd. (“Dong Ying China”) from the sole
      shareholder of the Company for consideration of $1.00. The purpose of the
      transaction was the change of domicile to Hong Kong. The acquisition was
      approved by the Chinese government in May 2008.


28


**DONGYING
      PHARMACEUTICAL CO, LIMITED**


**AND
      CONSOLIDATED SUBSIDIARIES**


***Notes
      to Consolidated Financial Statements***


***August
      31, 2008***


***(Expressed
      in US Dollars)***


***UNAUDITED
      – Prepared by Management***





During
      2007 the shareholder of Dong Ying China commenced a plan to sell some of his
      interest in Dong Ying China. Funds were received by Dong Ying China on behalf
      of
      the shareholder from potential purchasers, then refunded when a new plan was
      commenced aimed at getting shares listed for trading in the US over-the-counter
      market. See also Note 15.





Dong
      Ying
      China was incorporated under
      the
      laws of the People’s Republic of China in
      2003.
      Dong Ying China’s business is the development, manufacture and sale of
      pharmaceutical products in China. There are three product lines currently
      manufactured and sold as at August 31, 2008 and several other potential products
      in various stages of research and development. The product lines sold to date
      are Cisatracurium Besylate, a skeletal muscle relaxant, Clindamycin
      Hydrochloride, an antibiotic for penicillin-allergic patients, and Perphenazine,
      an anti-psychotic drug. In May 2008 the Company discontinued production and
      sale
      of its Perphenazine product due to the cost of manufacturing this product
      exceeding the market price. Perphenazine accounted for 11% of sales revenue
      in
      the five months ended May 31, 2008 (18% in 2007). Dong Ying China’s offices and
      manufacturing facility are in owned premises located on land used under license
      in Nantong, China and its research and development is carried out in Nanjing,
      China.





**Principles
      of Consolidation**





The
      consolidated financial statements include accounts of the Company and its
      subsidiaries, Big Global and Dong Ying China . All
      significant inter-company balances and transactions are eliminated.





**Cash
      and Cash Equivalents**




Cash
      equivalents comprise certain highly liquid instruments with a maturity of three
      months or less when purchased. As at August 31, 2008 and December 31, 2007,
      the
      Company did not have any cash equivalents.




**Inventory**





Inventory
      is carried at the lower of cost and estimated net realizable value. Raw
      materials cost is determined on a moving average basis. Manufacturing costs
      are
      applied to goods in process on a full cost basis. Cost of finished goods on
      hand
      at the balance sheet date is determined on a moving average basis.





**Revenue
      recognition**





Revenues
      are recognized in accordance with SEC Staff Accounting Bulletin (SAB) No. 104,
      "Revenue Recognition." Under SAB 104, product revenues (or service revenues)
      are
      recognized when persuasive evidence of an arrangement exists, delivery has
      occurred (or service has been performed), the sales price is fixed and
      determinable and collectibility is reasonably assured.


29


**DONGYING
      PHARMACEUTICAL CO, LIMITED**


**AND
      CONSOLIDATED SUBSIDIARIES**


***Notes
      to Consolidated Financial Statements***


***August
      31, 2008***


***(Expressed
      in US Dollars)***


***UNAUDITED
      – Prepared by Management***





**Concentrations**





The
      Company’s operations are located in the People’s Republic of China.





The
      Company’s largest two customers account for 25% of sales revenue and the largest
      five customers account for 40% of sales revenue.





At
      August
      31, 2008, the Company had only one product that sells at a positive gross
      profit, the Cisatracurium
      Besylate product. In 2006 the Company had no products that sold at a positive
      gross profit.





At
      August
      31, 2008 the Company had only one product that has patent protection, the Cisatracurium
      Besylate product, for which a patent has been applied but not yet granted.





**Research
      and Development Expenditures**




Expenditures
      on research and development activities, including assets acquired for use in
      research and development activities, are charged to operations as incurred.




**Asset
      Retirement Obligations**




The
      Company has adopted SFAS No. 143, *Accounting
      for Asset Retirement Obligations* which
      requires that the fair value of a liability for an asset retirement obligation
      be recognized in the period in which it is incurred. The Company has no asset
      retirement obligations.




**Fixed
      Assets**




Fixed
      assets are carried at cost less a provision for depreciation on a straight-line
      basis over their estimated useful lives. Each asset is estimated to have a
      residual value of 10% of cost at the end of its useful life. Estimated useful
      lives are as follows:





Buildings
                and building equipment
            
            10-20
                yearsLand
                license
            
            40
                yearsManufacturing
                equipment
            
            5
                -
                10 yearsOffice
                furniture and equipment
            
            5
                yearsRoad
            
            20
                yearsVehicles
            
            8
                years


30


**DONGYING
      PHARMACEUTICAL CO, LIMITED**


**AND
      CONSOLIDATED SUBSIDIARIES**


***Notes
      to Consolidated Financial Statements***


***August
      31, 2008***


***(Expressed
      in US Dollars)***


***UNAUDITED
      – Prepared by Management***





**Intangible
      Assets**





Intangible
      assets are carried at cost less a provision for amortization on a straight-line
      basis over their estimated useful lives of 20 years.




**Advertising
      Expenses**




Advertising
      expenses are expensed as incurred.





**Foreign
      Currency**




The
      parent company is located in the
      British Virgin Islands .
      It
      maintains no bank balances. The functional currency is the U.S. Dollar.
      Transactions in foreign currencies, if any, are remeasured into the functional
      currency at the rate in effect at the time of the transaction. Remeasurement
      gains and losses that arise from exchange rate fluctuations are included in
      income or loss from operations. Monetary assets and liabilities denominated
      in
      foreign currencies are presented in the balance sheet at the rate in effect
      at
      the balance sheet date.





Big
      Global is located in Hong Kong. It maintains no bank balances. The functional
      currency is the U.S. Dollar. Transactions in foreign currencies, if any, are
      remeasured into the functional currency at the rate in effect at the time of
      the
      transaction. Remeasurement gains and losses that arise from exchange rate
      fluctuations are included in income or loss from operations. Monetary assets
      and
      liabilities denominated in foreign currencies are presented in the balance
      sheet
      at the rate in effect at the balance sheet date.





The
      operations of Dong Ying China are located in China, and its accounting records
      are maintained in Chinese Renminbi Yuan (symbol “¥”). The functional currency is
      the Chinese Renminbi Yuan. Transactions in foreign currencies other than the
      functional currency, if any, are remeasured into the functional currency at
      the
      rate in effect at the time of the transaction. Remeasurement gains and losses
      that arise from exchange rate fluctuations are included in income or loss from
      operations. Monetary assets and liabilities denominated in the functional
      currency are translated into U.S. Dollars at the rate in effect at the balance
      sheet date. Revenue and expenses denominated in the functional currency are
      translated at the average exchange rate. Other comprehensive income (loss)
      includes the foreign exchange gains that arise from translating from the
      functional currency into U.S. Dollars.




**Use
      of Estimates**




The
      preparation of the Company’s consolidated financial statements in conformity
      with generally accepted accounting principles of the United States of America
      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 financial statements and the reported amounts
      of
      revenues and expenses during the reporting period. Management makes its best
      estimate of the ultimate outcome for these items based on historical trends
      and
      other information available when the financial statements are prepared. Actual
      results could differ from those estimates.


31


**DONGYING
      PHARMACEUTICAL CO, LIMITED**


**AND
      CONSOLIDATED SUBSIDIARIES**


***Notes
      to Consolidated Financial Statements***


***August
      31, 2008***


***(Expressed
      in US Dollars)***


***UNAUDITED
      – Prepared by Management***





**Loss
      Per Share**





Basic
      earnings (loss) per share of common stock are computed by dividing the net
      earnings (loss) by the weighted average number of (post-split) common shares
      outstanding during the period. Diluted earnings (loss) per share are equal
      to
      the basic earnings (loss) per share for the eight month periods ended August
      31,
      2008 and 2007 because there are no common stock equivalents
      outstanding.





**Fair
      Value of Financial Instruments**




The
      Company’s financial instruments consist of cash, accounts receivable, loans
      payable and accounts payable at August 31, 2008 and December 31, 2007, and
      loans
      receivable at December 31, 2007. Accounts receivable and loans receivable are
      carried at estimated net realizable values net of provisions for uncollectible
      amounts. Uncollectible accounts are charged off when determined to be
      unrecoverable. The loan payable is carried at discounted present value – see
      Note 9. The carrying values of the remaining financial instruments reflected
      in
      these financial statements approximate their fair values due to the short-term
      maturity of the instruments.





**Comprehensive
      Income**




The
      Company has adopted Statement of Financial Accounting Standards (SFAS) No.
      130,
“Reporting Comprehensive Income”. Comprehensive income includes net income and
      all changes in equity during a period that arise from non-owner sources, such
      as
      foreign currency items and unrealized gains and losses on certain investments
      in
      equity securities.





**Income
      taxes**




The
      Company records deferred taxes in accordance with Statement of Financial
      Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." The
      statement requires recognition of deferred tax assets and liabilities for
      temporary differences between the tax bases of assets and liabilities and the
      amounts at which they are carried in the financial statements, based upon the
      enacted tax rates in effect for the year in which the differences are expected
      to reverse. A valuation allowance is established when necessary to reduce
      deferred tax assets to the amount expected to be realized.





**Product
      liability**





These
      financial statements do not include a provision for product liability as the
      Company is not directly liable to consumers for its products under the laws
      of
      China.





**Environmental
      remediation**





The
      Company has no obligations for environmental remediation.


32


**DONGYING
      PHARMACEUTICAL CO, LIMITED**


**AND
      CONSOLIDATED SUBSIDIARIES**


***Notes
      to Consolidated Financial Statements***


***August
      31, 2008***


***(Expressed
      in US Dollars)***


***UNAUDITED
      – Prepared by Management***





**Impairment
      of Long-Lived Assets**





The
      Company periodically analyzes its long-lived assets for potential impairment,
      assessing the appropriateness of lives and recoverability of unamortized
      balances through measurement of undiscounted operation cash flows in accordance
      with SFAS No. 144, *Accounting
      for the Impairment or Disposal of Long-lived Assets.* If
      impairment is deemed to exist, the asset will be written down to its fair value.
      Fair value is generally determined using a discounted cash flow analysis.





**New
      Accounting Pronouncements**





In
      March
      2006, the FASB issued SFAS No. 156, *“Accounting
      for Servicing of Financial Assets,”* (“SFAS
      No. 156”), which amends SFAS No. 140, *”
      Accounting for Transfers and Servicing of Financial Assets and Extinguishments
      of Liabilities.* ”
In
      a
      significant change to current guidance, SFAS No. 156 permits an entity to choose
      either of the following subsequent measurement methods for each class of
      separately recognized servicing assets and servicing liabilities: (1)
      Amortization Method or (2) Fair Value Measurement Method. SFAS No. 156 is
      effective as of the beginning of an entity’s first fiscal year that begins after
      September 15, 2006. The
      adoption of SFAS No. 156 does not have any impact on the Company’s consolidated
      financial statements.




In
      June
      2006, the FASB issued SFAS Board Interpretation No. 48, “ *Accounting
      for Uncertainty in Income Taxes – an Interpretation of FASB statement No.
      109* ”
(“FIN
      48”), which clarifies the accounting for uncertainty in income taxes recognized
      in an enterprise’s financial statements in accordance with FASB No. 109. The
      interpretation prescribes a recognition threshold and measurement attribute
      for
      the financial statement recognition and measurement of a tax position taken
      or
      expected to be taken in a tax return. This interpretation also provides guidance
      on derecognition, classification, interest and penalties, accounting in interim
      periods, disclosure, and transition. FIN 48 is effective for fiscal years
      beginning after December 15, 2006. Earlier application of the provisions of
      FIN
      48 is encouraged if the enterprise has not yet issued financial statements,
      including interim financial statements, in the period this Interpretation is
      adopted. The
      adoption of FIN 48 does not have any impact on the Company’s consolidated
      financial statements.





In
      September 2006, the FASB issued SFAS No. 157, “ *Fair
      Value Measurements* .”
This
      statement defines fair value, establishes a framework for measuring fair value
      in generally accepted accounting principles, and expands disclosure about fair
      value measurements. This statement applies under other accounting pronouncements
      that require or permit fair value measurement, the FASB having previously
      concluded in those accounting pronouncements that fair value is the relevant
      measurement attribute. This statement does not require any new fair value
      measurements. However, for some entities, the application of the statement
      will
      change current practice. This statement is effective for financial statements
      issued for fiscal years beginning after November 15, 2007, and interim periods
      within those fiscal years. The Company does not expect the adoption of this
      pronouncement to have a material impact on its financial
      statements.


33


**DONGYING
      PHARMACEUTICAL CO, LIMITED**


**AND
      CONSOLIDATED SUBSIDIARIES**


***Notes
      to Consolidated Financial Statements***


***August
      31, 2008***


***(Expressed
      in US Dollars)***


***UNAUDITED
      – Prepared by Management***





In
      September 2006, the FASB issued SFAS No. 158, “ *Employers’
      Accounting for Defined Benefit Pension and Other Postretirement Plans – an
      amendment of FASB Statements No. 87, 88, 106 and 123(R)* .”
This
      statement improves financial reporting by requiring an employer to recognize
      the
      overfunded or underfunded status of a defined benefit postretirement plan (other
      than a multi-employer plan) as an asset or liability in its statement of
      financial position and to recognize changes in that funded status in the year
      in
      which the changes occur through comprehensive income of a business entity or
      changes in unrestricted net assets for a not-for-profit organization. This
      statement also improves financial reporting by requiring an employer to measure
      the funded status of a plan as of the date of its year-end statement of
      financial position, with limited exceptions. The
      adoption of FIN 48 does not have any impact on the Company’s consolidated
      financial statements.





There
      were various other accounting standards and interpretations recently issued,
      none of which is expected to have a material impact on the Company's financial
      position, operations or cash flows.





**3.
      ACCOUNTS RECEIVABLE**





Trade
      accounts receivable consists of receivable for sales of product on credit.
      Accounts receivable as at August 31, 2008 are net of allowance for doubtful
      accounts in the amount of $29,813 (December 31, 2007 - $18,959).





**4.
      INVENTORY**





Inventory
      consists of the following:





August 31, 2008
            
            December 31, 2007Raw
                materials
            
            **$**
            199,728
            
            **$**
            34,302Goods
                in process
            
            
            67,045
            
            
            81,778Finished
                goods
            
            
            116,265
            
            
            171,368**$**
            383,038
            
            **$**
            287,448





Finished
      goods inventory is net of a provision for impairment in the amount of $15,304
      (December 31, 2007 - $29,000) in respect of the Clindamycin Hydrochloride
      product.





**5.
      OTHER CURRENT ASSETS**





The
      Company has loans receivable from other companies and from employees totaling
      $96,592 (December 31, 2007 - $83,060) which have a carrying value of $52,702
      (December 31, 2007 - $nil) after allowance for doubtful debts. The loans do
      not
      bear interest and have no specified terms of repayment.


34


**DONGYING
      PHARMACEUTICAL CO, LIMITED**


**AND
      CONSOLIDATED SUBSIDIARIES**


***Notes
      to Consolidated Financial Statements***


***August
      31, 2008***


***(Expressed
      in US Dollars)***


***UNAUDITED
      – Prepared by Management***





The
      reminder of other current assets consists primarily of deposits paid in advance
      to suppliers in respect of purchases yet to be received.





**6.
      FIXED ASSETS**





Fixed
      assets consist of the following:





August 31, 2008
            
            December 31, 2007Buildings
            
            **$**
            1,990,310
            
            **$**
            1,862,430Land
                license
            
            
            405,229
            
            
            379,193Manufacturing
                equipment
            
            
            684,307
            
            
            546,446Office
                furniture and equipment
            
            
            21,073
            
            
            13,319Road
                and grounds
            
            
            212,646
            
            
            198,983Vehicles
            
            
            10,005
            
            
            9,3623,323,570
            
            
            3,009,733Less:
                Accumulated depreciation
            
            
            592,246
            
            
            408,916**$**
            2,731,324
            
            **$**
            2,600,817





The
      land
      license is for the use of the land on which the Company’s buildings are
      situated, and is for a term expiring June 1, 2054. At the end of the license,
      the Company expects to have an option to renew the license.





**7.
      INTANGIBLE ASSETS**





Intangible
      assets consist of the cost of purchased rights to manufacture and sell the
      company’s products. The rights were acquired by the Company from two companies
      owned 25% and 30% by the Company’s shareholder. The rights have unlimited
      duration. The amounts related to particular products are as follow:




August 31,2008
            
            December 31,2007Clindamycin
                Hydrochloride
            
            **$**
            -
            
            **$**
            -Cisatracurium
                Besylate
            
            
            731,500
            
            
            684,500Perindopril
                (manufacturing permit pending)
            
            
            731,500
            
            
            684,5001,463,000
            
            
            1,369,000Less:
                Accumulated amortization
            
            
            99,667
            
            
            55,616**$**
            1,363,333
            
            **$**
            1,313,384


35


**DONGYING
      PHARMACEUTICAL CO, LIMITED**


**AND
      CONSOLIDATED SUBSIDIARIES**


***Notes
      to Consolidated Financial Statements***


***August
      31, 2008***


***(Expressed
      in US Dollars)***


***UNAUDITED
      – Prepared by Management***





Amortization
      for the Eight months ended August 31, 2008 in the amount of $40,233 (2007 -
      $27,213) is included in Depreciation and Amortization expense.





Intangible
      assets consisting of rights to manufacture and sell the following products
      were
      acquired by the Company in 2004 from two companies owned 25% and 30% by the
      Company’s shareholder and have been subsequently deemed not realizable through
      impairment analysis:





Product
            
            Purchase
              price
            
            Year
              impaired
            
            Impaired amount
              (net of accumulated
              amortization)Prulifloxacin
            
            $
            967,004
            
            
            2006
            
            $
            836,522Lansoprazole
            
            
            966,400
            
            
            2006
            
            
            894,520Azithromycin
            
            
            326,160
            
            
            2006
            
            
            301,900Ganciclovir
            
            
            331,898
            
            
            2006
            
            
            307,212Clarithromycin
            
            
            81,812
            
            
            2006
            
            
            75,727Olmesartan
            
            
            314,080
            
            
            2006
            
            
            290,719Eplerenone
            
            
            362,400
            
            
            2006
            
            
            335,445Total
                2006 impairment
            
            $
            3,349,754
            
            
            
            
            $
            3,042,045Clindamycin
                hydrochloride
            
            
            362,400
            
            
            2007
            
            
            376,972$
            3,712,154
            
            
            
            
            $
            3,419,017





**8.
      LOANS PAYABLE**





The
      Company has a loan from the Nantong Economic and Technology Development Zone
      Administration. The loan bears no interest. The original principal amount of
      the
      loan was ¥20 Million ($2,926,000 at the exchange rate applicable at August 31,
      2008) and was due for repayment in full in March 2007. During 2007 the Company
      repaid ¥3,000,000. In December 2007 the Company was granted an extension of the
      due date to December 31, 2008. During the eight months ended August 31 ,2008
      the
      Company repaid ¥2,000,000. Since the loan bears no interest, the obligation is
      carried at its net present value using interest rates equal to the prevailing
      Bank of China one-year rate at the time the loan was received (5.6% in 2004,
      applied in respect of the 2006 year) or the date the extension was effective
      (6.4% in March 2007, applied in respect of the 2007 and 2008 years). Loan
      interest expense included in the accounts for the eight months ended August
      31,
      2008 in the amount of $97,347 (2007 - $96,624) is determined as the amortization
      on the straight-line basis of the discount over the remaining period to maturity
      of the loan.





On
      March
      31, 2008 the Company received a loan of $100,000 from an unrelated party. The
      loan has no interest or fixed repayment terms. It is the Company’s intention to
      repay the loan by the end of 2008. Since the loan bears no interest, the
      obligation is carried at its net present value using interest rates equal to
      the
      prevailing Bank of China one-year rate at the time the loan was received (7.3%).
      Loan interest expense included in the accounts for the eight months ended August
      31, 2008 in the amount of $3,243 is determined as the amortization on the
      straight-line basis of the discount over the remaining period to maturity of
      the
      loan. Gain from discount of no-interest loan represents the difference between
      the principal balance of the loan and the present value of the loan on the
      date
      of the loan.


36


**DONGYING
      PHARMACEUTICAL CO, LIMITED**


**AND
      CONSOLIDATED SUBSIDIARIES**


***Notes
      to Consolidated Financial Statements***


***August
      31, 2008***


***(Expressed
      in US Dollars)***


***UNAUDITED
      – Prepared by Management***





**9.
      CUSTOMER DEPOSITS**





Customer
      deposits consist of deposits received in advance from customers in respect
      of
      sales yet to be delivered and recognized.





**10.
      SHAREHOLDER LOANS**





The
      loan
      from the shareholder in the aggregate amount of $1,103,732 (December 31, 2007
      -
      $882,131) does not bear interest and has no stated repayment terms. Imputed
      interest has been recorded on the shareholder loan at an interest rate of 7.3%.
      The net interest calculated is included in interest expense and has been
      recorded as additional paid-in capital since the imputed interest is not
      payable.





**11.**  **RELATED
      PARTY TRANSACTIONS**





The
      Company has a right of first refusal to purchase rights to any new products
      developed by two companies owned 25% and 30% by the Company’s shareholder, at
      prices to be negotiated at the time. All of the Company’s past and present
      intangible assets have been purchased from those related companies. The Company
      has written down intangible assets with carrying values totaling $3,419,017
      as
      they were deemed not realizable through impairment analysis. See Note
      7.





**12.
      INCOME TAXES**





The
      Company is subject to Chinese income taxes. The Company had no income tax
      expense during the reported periods due to net operating losses.





A
      reconciliation of income tax expense to the amount computed at the statutory
      rates is as follows:





2008
            
            2007Income
                (loss) for the eight months ended August 31
            
            $
            211,211
            
            $
            (281,148
            )Average
                statutory tax rate in China
            
            
            33
            %
            
            33
            %Expected
                income tax provision
            
            $
            69,700
            
            $
            (92,779
            )Tax
                basis of deferred expenses in excess of book cost
            
            
            (19,745
            )
            
            52,482Non-deductible
                interest expense
            
            
            49,581
            
            
            32,164Unrecognized
                tax losses
            
            
            (99,536
            )
            
            8,133Income
                tax expense
            
            $
            —
            
            $
            —




37


**DONGYING
        PHARMACEUTICAL CO, LIMITED**
 **AND
        CONSOLIDATED SUBSIDIARIES**
 ***Notes
        to Consolidated Financial Statements***
 ***August
        31, 2008***
 ***(Expressed
        in US Dollars)***
 ***UNAUDITED
        – Prepared by Management***
  Significant
        components of deferred income tax assets are as follows:




August 31,2008
            
            December 31,2007Operating
                losses carried forward
            
            $
            761,970
            
            $
            861,506Excess
                of tax basis over book cost of deferred expenses in China
            
            
            760,550
            
            
            780,295Valuation
                allowance
            
            
            (1,552,520
            )
            
            (1,641,801
            )Net
                deferred income tax assets
            
            **$**
            **-**
            
            $
            **-**




The
      Company has tax losses carried forward for Chinese tax purposes of approximately
      $2,300,000 which will expire in 2012 if not utilized.





**13.
      COMMON STOCK**





Upon
      incorporation on January 29, 2008 the Company issued 1 share of common stock
      for
      $1.





**14.
      OTHER INCOME**





Other
      income includes $1,083 (2007 - $1,802) in interest income on short-term bank
      deposits.





**15.
      SUBSEQUENT EVENTS**





On
      August
      18, 2008 the Company amended its authorized share capital to subdivide from
      a
      maximum of 50,000 shares of a single class each with a par value of US$1.00
      to a
      maximum of 20,000,000 shares of a single class each with a par value of
      US$0.0025. As a result, the issued share capital was subdivided from one (1)
      share to 400 shares. On the same day, the sole shareholder of the company sold
      298 of his 400 shares to other parties.


38


**DONGYING
      PHARMACEUTICAL CO, LIMITED**


**AND
      CONSOLIDATED SUBSIDIARIES**


***Notes
      to Consolidated Financial Statements***


***August
      31, 2008***


***(Expressed
      in US Dollars)***


***UNAUDITED
      – Prepared by Management***





On
      August
      19, 2008, the Company and all of its shareholders entered into a share exchange
      agreement (the “Share Exchange Agreement”) with Sinobiopharma, Inc.
      (“Sinobiopharma”), a
      company
      organized under the laws of the State of Nevada, whereby
      the Sinobiopharma agreed to acquire 100% of the issued and outstanding shares
      in
      the capital of the Company through
      the issuance of 40,000,000 shares of common stock of Sinobiopharma in
      aggregate to the shareholders of the
      Company on
      a pro
      rata basis in accordance with each shareholders’ percentage of ownership in the
      Company .
      As a
      result of the Share
      Exchange Agreement the previous shareholders of the Company will acquire control
      of Sinobiopharma and the transaction will be accounted for as a reverse merger.
      The Share Exchange Agreement closed on September 22, 2008 and as a result,
      the
      Company became a wholly-owned subsidiary of Sinobiopharma.


39




**SINOBIOPHARMA,
      INC.**


***Proforma
      Consolidated Financial Information***


***August
      31, 2008***


***(Expressed
      in US Dollars)***


***Unaudited –
      Prepared by Management***





**INTRODUCTION
      TO PRO-FORMA CONSOLIDATED FINANCIAL INFORMATION**




The
      following pro-forma consolidated balance sheet, pro-forma consolidated
      statements of operations and explanatory notes give effect to the acquisition
      of
      Dongying Pharmaceutical Co, Limited (“Dongying”) and by Sinobiopharma, Inc.
      (“Sinobiopharma”).




The
      pro-forma consolidated balance sheet, pro-forma consolidated statement of
      operations and explanatory notes are based on the estimates and assumptions
      set
      forth in the explanatory notes. The pro-forma consolidated balance sheet and
      the
      pro-forma consolidated statement of operations have been prepared utilizing
      the
      historical financial statements of Dongying and Sinobiopharma and should be
      read
      in conjunction with the historical financial statements and notes thereto
      included elsewhere in this filing.





The
      transaction giving rise to the consolidated entity is a purchase (the
“Acquisition”) by Sinobiopharma of all the shares of Dongying in consideration
      for 40,000,000 post-split common shares of Sinobiopharma on September 22,
      2008.




The
      pro-forma consolidated statement of operations has been prepared as if the
      Acquisition had been consummated on June 1, 2008 and accounted for as a reverse
      takeover and carried through to August 31, 2008. The pro-forma consolidated
      balance sheet has been prepared as if the Acquisition was consummated on August
      31, 2008.




This
      pro-forma consolidated financial data is provided for comparative purposes
      only,
      and does not purport to be indicative of the actual financial position or
      results of operations had the Acquisition occurred at the beginning of the
      fiscal period presented, nor are they necessarily indicative of the results
      of
      future operations. The pro-forma consolidated financial information is presented
      for illustrative purposes only.


40




**SINOBIOPHARMA,
      INC.**


**AND
      CONSOLIDATED SUBSIDIARIES**


***Pro
      forma Consolidated Balance Sheets***


***August
      31, 2008***


***(Expressed
      in US Dollars)***


***UNAUDITED
      - Prepared by Management***





**Pro
                forma****Sinobiopharma**
            
            **Dongying**
            
            **adjustments**
            
            **Pro
                forma**ASSETSCURRENT
                ASSETSCash
            
            $
            21,978
            
            $
            160,914
            
            $
            -
            
            $
            182,892Accounts
                receivable
            
            
            -
            
            
            175,438
            
            
            10
            
            
            175,448Inventory
            
            
            -
            
            
            383,038
            
            
            -
            
            
            383,038Other
                current assets
            
            
            -
            
            
            109,839
            
            
            -
            
            
            109,839Total
                current assets
            
            
            21,978
            
            
            829,229
            
            
            10
            
            
            851,217Fixed
                assets
            
            
            -
            
            
            2,731,324
            
            
            -
            
            
            2,731,324Intangible
                assets
            
            
            -
            
            
            1,363,333
            
            
            -
            
            
            1,363,333Total
                assets
            
            $
            21,978
            
            $
            4,923,886
            
            $
            10
            
            $
            4,945,874LIABILITIES
                AND STOCKHOLDER'S EQUITYCURRENT
                LIABILITIESLoan
                payable
            
            $
            -
            
            $
            2,244,740
            
            $
            -
            
            $
            2,244,740Accounts
                payable
            
            
            1,779
            
            
            667,820
            
            
            -
            
            
            669,599Accrued
                liabilities
            
            
            33,500
            
            
            353,412
            
            
            300,000
            
            
            686,912Customer
                deposits
            
            
            -
            
            
            289,236
            
            
            -
            
            
            289,236Shareholder
                loans
            
            
            8,698
            
            
            1,103,732
            
            
            -
            
            
            1,112,430Total
                current liabilities
            
            
            43,977
            
            
            4,658,940
            
            
            300,000
            
            
            5,002,917STOCKHOLDER'S
                EQUITY (DEFICIT)Common
                stockAuthorized
                      2,500,000,000 shares at par value of $ 0.0001 each Issued and
                      outstanding
                      79,900,000 shares
            
            
            10,000
            
            
            1
            
            
            (2,011
            )
            
            7,990Additional
                paid-in capital
            
            
            65,030
            
            
            5,269,207
            
            
            (93,185
            )
            
            5,241,052Subscription
                received
            
            
            20,000
            
            
            -
            
            
            -
            
            
            20,000Accumulated
                (deficit)
            
            
            (117,397
            )
            
            (5,223,578
            )
            
            (204,794
            )
            
            (5,545,769
            )Accumulated
                other comprehensive income
            
            
            368
            
            
            219,316
            
            
            -
            
            
            219,684Total
                stockholder's equity (deficit)
            
            
            (21,999
            )
            
            264,946
            
            
            (299,990
            )
            
            (57,043
            )Total
                liabilities and stockholder's equity (deficit)
            
            $
            21,978
            
            $
            4,923,886
            
            $
            10
            
            $
            4,945,874




41





**SINOBIOPHARMA,
      INC.**


**AND
      CONSOLIDATED SUBSIDIARIES**


***Pro
      forma Consolidated Statements of Operations***


***For
      the Three Months Ended August 31, 2008***


***(Expressed
      in US Dollars)***


***UNAUDITED
      - Prepared by Management***


**Sinobiopharma**
              
              **Dongying**
              
              **Adjustments**
              
              **Pro
                  forma**REVENUESales
              
              $
              -
              
              $
              931,203
              
              $
              -
              
              $
              931,203Cost
                  of goods sold
              
              
              -
              
              
              318,775
              
              
              -
              
              
              318,775Gross
                  profit
              
              
              -
              
              
              612,428
              
              
              -
              
              
              612,428Other
                  income
              
              
              -
              
              
              764
              
              
              10
              
              
              774-
              
              
              613,192
              
              
              10
              
              
              613,202EXPENSESAdvertising
                  and promotion
              
              
              -
              
              
              3,821
              
              
              -
              
              
              3,821Depreciation
                  and amortization
              
              
              -
              
              
              23,574
              
              
              -
              
              
              23,574General
                  and administration
              
              
              22,201
              
              
              143,101
              
              
              90,000
              
              
              255,302Interest
              
              
              -
              
              
              59,046
              
              
              -
              
              
              59,046Research
                  and development
              
              
              -
              
              
              97,404
              
              
              -
              
              
              97,404Salaries
                  and benefits
              
              
              -
              
              
              41,991
              
              
              -
              
              
              41,991Travel
              
              
              -
              
              
              74,191
              
              
              -
              
              
              74,191Total
                  expenses
              
              
              22,201
              
              
              443,128
              
              
              90,000
              
              
              555,329Net
                  (loss) for the period
              
              
              (22,201
              )
              
              170,064
              
              
              (89,990
              )
              
              57,873Other
                  comprehensive income (loss)Foreign
                  currency translation
              
              
              (47
              )
              
              8,089
              
              
              -
              
              
              8,042Comprehensive
                  (loss)
              
              $
              (22,248
              )
              $
              178,153
              
              $
              (89,990
              )
              $
              65,915Net
                  loss per common share - basic and fully diluted:Net
                  (loss) for the period
              
              $
              nil
              
              $
              425
              
              $
              nil
              
              $
              nilWeighted
                  average number of common stock outstanding
              
              
              100,000,500
              
              
              400
              
              
              (20,100,900
              )
              
              79,900,000


42




**SINOBIOPHARMA,
      INC.**


***Proforma
      Consolidated Financial Information***


***August
      31, 2008***


***(Expressed
      in US Dollars)***


***Unaudited
      – Prepared by Management***





**EXPLANATORY
      NOTES**





**Pro-forma
      adjustments**




1.
      The
      addition of $10 to cash and recognition of $10 gain on sale of the shares of
      the
      Nova Scotia subsidiary of Sinobiopharma, Buzz Media Ltd., to the previous
      majority shareholder of Sinobiopharma for $10.


2.
      The
      net effect of the recognition of the cost of Sinobiopharma’s investment in
      Dongying and the elimination of share capital of the subsidiaries upon
      consolidation with Sinobiopharma results in an increase in common stock and
      a
      decrease in additional paid-in capital both in the amount of
      $3,999.


3.
      The
      elimination of the deficit of Sinobiopharma consistent with accounting treatment
      generally accepted for reverse takeover transactions results in a decrease
      in
      deficit and increase in additional paid-in capital both in the amount of
      $95,196.


4.
      The
      cancellation of 60,100,500 shares of Sinobiopharma as part of the series of
      transactions making up the Acquisition results in an increase in common stock
      and an increase in additional paid in capital, both in the amount of
      $6,010.


5.
      The
      proforma consolidated balance sheet includes an accrual for estimated
      non-recurring professional fees of $300,000 attributable to the Acquisition
      transaction.


6.
      The
      pro forma consolidated statement of operations includes an estimate of $90,000
      in additional professional fees expense for accounting, auditing, legal and
      filing fees due to the operating entity becoming a public company.





**Assumptions**




The
      number of shares used in the pro-forma net loss per share is based on the
      weighted average number of shares of Sinobiopharma that
      would have been outstanding in the year had the Acquisition and all the
      preceding transactions occurred on June 1, 2008.


43




(b)  Exhibit
      List




31.1  Certificate
      pursuant to Rule 13a-14(a)




31.2  Certificate
      pursuant to Rule 13a-14(a)




32.1  Certificate
      pursuant to 18 U.S.C. §1350




32.2  Certificate
      pursuant to 18 U.S.C. §1350




99.1 Consulting
          Agreement between Sinobiopharma, Inc. and Michael Tan, dated September
          25,
          2008




99.2  2008
      Stock Option and Incentive Plan




99.3  Sample
      Stock Option Agreement


44





**SIGNATURES**




Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the Registrant has duly caused this report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized on this 15 th day of
      October, 2008




**SINOBIOPHARMA,
                INC.**
              (Registrant)By:
            /s/
                Lequn Lee HuangLequn
                Lee HuangPresident
                and Chief Executive Officer




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




**Signature**
            
            **Title**
            
            **Date**/s/
                Lequn Lee Huang
            
            President,
                CEO,
              CFO, Treasurer
                and
            
            October
                15, 2008Lequn
                Lee Huang
            
            Director/s/
                Jianguo Wang
            
            Secretary
                and
            
            October
                15, 2008Jianguo
                Wang
            
            Director




45