UNITED STATES


SECURITIES AND EXCHANGE
COMMISSION


Washington,
D.C. 20549





FORM
10-Q





(Mark One)[X]
            
            QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
              
              For
      the quarterly period ended November 30,
2009





[   ]
            
            TRANSITION
      REPORT UNDER 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 small business issuer as specified in its
  charter)




Nevada
            26-3002371(State
      or other jurisdiction of incorporation or organization)
            (IRS
      Employer identification No.)




8
Zhong Tian Road


Nantong City, Jiangsu
Province, the People’s Republic of China 226009


(Address
of principal executive offices)





011 -
(86) 51-385328336


(Registrant’s
telephone number, including area code)





Copies
to:


Gregory
Sichenzia, Esg.


Sichenzia
Ross Friedman Ference LLP


61
Broadway, 32nd
Floor


New York,
New York 10006


Phone:
(212) 930-9700


Fax:
(212) 930-9725





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 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 has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).   Yes
[   ]  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 company  [X]





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 CORPORATE ISSUERS:





State the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date: 97,520,000 shares of common stock, $.0001 par
value, were outstanding as of January 14, 2010.


1


TABLE
OF CONTENTS





PagePART IItem 1.
            Financial Statements
            3Item 2.
            Management’s Discussion and Analysis of Financial Condition and
      Results of Operation
            19Item 3.
            Quantitative and Qualitative Disclosures About Market
      Risk
            22Item 4.
            Controls and Procedures
            22PART IIItem 1.
            Legal Proceedings
            24Item 1A.
            Risk Factors
            24Item 2.
            Unregistered Sales of Equity Securities and Use of
      Proceeds
            24Item 3.
            Defaults Upon Senior Securities
            24Item 4.
            Submission of Matters to a Vote of Security
      Holders
            24Item 5.
            Other Information
            24Item 6.
            Exhibits
            24SIGNATURES
            25
































2





PART I – FINANCIAL INFORMATION




Item
1.  Financial
Statements





SINOBIOPHARMA,
INC. AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS





November
      30,
              
              
              May
      31,2009
              
              
              2009(Unaudited)ASSETSCURRENT
      ASSETSCash
      and cash equivalents
              
              $
              365,168
              
              
              $
              891,132Notes
      receivable
              
              
              70,910
              
              
              
              5,505Accounts
      receivables, net
              
              
              639,409
              
              
              
              208,673Inventories
              
              
              755,314
              
              
              
              547,317Advance
      payments
              
              
              42,193
              
              
              
              39,825Other
      receivables
              
              
              7,322
              
              
              
              -Total
      Current Assets
              
              
              1,880,316
              
              
              
              1,692,452Advance
      payment for intangible assets to related party
              
              
              986,063
              
              
              
              253,760Property,
      plant and equipment, net
              
              
              2,778,694
              
              
              
              2,691,258Intangible
      assets, net
              
              
              1,282,767
              
              
              
              1,318,973TOTAL
      ASSETS
              
              $
              6,927,840
              
              
              $
              5,956,443LIABILITIES AND STOCKHOLDERS’
      EQUITYCURRENT
      LIABILITIESAccounts
      payables
              
              $
              416,542
              
              
              $
              655,064Short-term
      bank loans
              
              
              732,225
              
              
              
              732,000Loans
      from government
              
              
              1,895,354
              
              
              
              1,844,193Amounts
      due to shareholders
              
              
              508,113
              
              
              
              1,169,032Advance
      from customers
              
              
              146,578
              
              
              
              136,755Amounts
      due to related party
              
              
              256,279
              
              
              
              256,200Other
      payables
              
              
              490,674
              
              
              
              386,368Total
      Current Liabilities
              
              
              4,445,765
              
              
              
              5,179,612Commitments
      and ContigenciesSTOCKHOLDERS'
      EQUITYCommon
      stock; $0.0001 par value; 2,500,000,000 shares
                authorized;
      80,020,000 shares issued and outstanding at
                November
      30,2009 and 79,920,000 shares at May 31, 2009
              
              
              8,002
              
              
              
              7,992Additional
      paid-in capital
              
              
              8,627,970
              
              
              
              8,254,991Accumulated
      deficit
              
              
              (6,400,562
              )
              
              
              (7,711,278
              )Accumulated
      other comprehensive income
              
              
              246,665
              
              
              
              225,126Total
      Stockholders' Equity
              
              
              2,482,075
              
              
              
              776,831TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
              
              $
              6,927,840
              
              
              $
              5,956,443





See accompanying notes to the
consolidated financial statements


3


SINOBIOPHARMA,
INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME


(UNAUDITED)





Three
      Months Ended
              November
      30,
            
            
            Six
      Months Ended
              November
      30,2009
            
            
            2008
            
            
            2009
            
            
            2008SALES
            
            $
            2,137,471
            
            
            $
            971,173
            
            
            $
            3,431,235
            
            
            $
            1,902,376COST
      OF GOODS SOLD
            
            
            417,163
            
            
            
            360,421
            
            
            
            748,004
            
            
            
            679,196GROSS
      MARGIN
            
            
            1,720,308
            
            
            
            610,752
            
            
            
            2,683,231
            
            
            
            1,223,180OPERATING
      EXPENSESSelling
      expenses
            
            
            165,185
            
            
            
            89,323
            
            
            
            249,353
            
            
            
            167,335Research
      and development
            
            
            222,411
            
            
            
            33,015
            
            
            
            286,713
            
            
            
            130,419Depreciation
      and amortization
            
            
            40,516
            
            
            
            28,317
            
            
            
            150,557
            
            
            
            103,973General
      and administrative expenses
            
            
            168,042
            
            
            
            1,444,164
            
            
            
            580,318
            
            
            
            1,587,063596,154
            
            
            
            1,594,819
            
            
            
            1,266,941
            
            
            
            1,988,790INCOME/(LOSS)
      FROM OPERATIONS
            
            
            1,124,154
            
            
            
            (984,067
            )
            
            
            1,416,290
            
            
            
            (765,610
            )OTHER
      INCOME/(EXPENSES)Interest
      income
            
            
            3,322
            
            
            
            631
            
            
            
            5,174
            
            
            
            696Interest
      expense
            
            
            (53,657
            )
            
            
            (56,814
            )
            
            
            (110,085
            )
            
            
            (127,473
            )Other
      expenses
            
            
            (269
            )
            
            
            (4,989
            )
            
            
            (662
            )
            
            
            (4,989
            )(50,604
            )
            
            
            (61,172
            )
            
            
            (105,573
            )
            
            
            (131,766
            )INCOME/(LOSS)
      BEFORE INCOME TAX EXPENSE
            
            
            1,073,550
            
            
            
            (1,045,239
            )
            
            
            1,310,717
            
            
            
            (897,376
            )INCOME
      TAX EXPENSE
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -NET
      INCOME/(LOSS)
            
            
            1,073,550
            
            
            
            (1,045,239
            )
            
            
            1,310,717
            
            
            
            (897,376
            )OTHER
      COMPREHENSIVE INCOMEForeign
      Currency Translation Adjustment
            
            
            4,985
            
            
            
            15,931
            
            
            
            21,540
            
            
            
            7,841COMPREHENSIVE
      INCOME/(LOSS)
            
            $
            1,078,535
            
            
            $
            (1,029,308
            )
            
            $
            1,332,257
            
            
            $
            (889,535
            )Earnings/(loss)
      per share:Basic
      and diluted
            
            $
            0.01
            
            
            $
            (0.01
            )
            
            $
            0.02
            
            
            $
            (0.01
            )Weighted
      average shares used in computation:Basic
      and diluted
            
            
            80,020,000
            
            
            
            79,900,000
            
            
            
            79,998,689
            
            
            
            79,900,000





See
accompanying notes to the  consolidated financial
statements


4


SINOBIOPHARMA,
INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(UNAUDITED)


Six
      Months Ended November 30,2009
              
              
              2008CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      income/(loss)
              
              $
              1,310,717
              
              
              $
              (897,376
              )Adjustments
      to reconcile net income/(loss) to net cash
                provided
      by/(used in) operating activitiesDepreciation
      and amortization
              
              
              204,661
              
              
              
              154,576Loss
      on disposition of property and equipment
              
              
              -
              
              
              
              426Stock-based
      compensation
              
              
              324,125
              
              
              
              972,375Imputed
      interest expense on shareholders' loans
              
              
              15,864
              
              
              
              40,167Amortization
      of discount in interest expense
              
              
              50,509
              
              
              
              72,471Consulting
      fee by issuing stock
              
              
              33,000
              
              
              
              -Loss
      from discount of no-interest loan
              
              
              -
              
              
              
              4,768Changes
      in assets and liabilities:Notes
      receivable
              
              
              (65,405
              )
              
              
              -Accounts
      receivable, net
              
              
              (429,977
              )
              
              
              (152,602
              )Inventories
              
              
              (185,604
              )
              
              
              2,183Advance
      payments
              
              
              (2,599
              )
              
              
              (3,953
              )Other
      receivables
              
              
              (6,405
              )
              
              
              -Accounts
      payable
              
              
              (238,459
              )
              
              
              172,747Advance
      from customers
              
              
              9,749
              
              
              
              (150,711
              )Other
      payables
              
              
              103,933
              
              
              
              104,520Net
      Cash Provided by Operating Activities
              
              
              1,124,109
              
              
              
              319,591CASH
      FLOWS FROM INVESTING ACTIVITIESAcquisition
      of property and equipment
              
              
              (254,582
              )
              
              
              (84,615
              )Advance
      payement for purchase of intangible assets to related
party
              
              
              (731,317
              )
              
              
              (253,760
              )Net
      Cash Used in Investing Activities
              
              
              (985,899
              )
              
              
              (338,375
              )CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds
      from bank loans
              
              
              1,461,408
              
              
              
              -Subscription
      received for issuing stock
              
              
              -
              
              
              
              20,000Repayment
      (proceeds) from shareholder loans
              
              
              (651,694
              )
              
              
              162,694Repayment
      of bank loans
              
              
              (1,462,021
              )
              
              
              (288,000
              )Net
      Cash Used in Financing Activities
              
              
              (652,307
              )
              
              
              (105,306
              )EFFECT
      OF FOREIGN CURRENCY FLUCTUATIONON CASH
              
              
              (11,867
              )
              
              
              3,901NET
      DECREASE IN CASH AND CASH EQUIVALENTS
              
              
              (525,964
              )
              
              
              (120,189
              )CASH
      AND CASH EQUIVALENTS - BEGINNING OF PERIOD
              
              
              891,132
              
              
              
              267,327CASH
      AND CASH EQUIVALENTS - ENDING OF PERIOD
              
              $
              365,168
              
              
              $
              147,138Supplemental
      cash flow information:Cash
      paid for income taxes
              
              $
              -
              
              
              $
              -Cash
      paid for interest expense
              
              $
              54,896
              
              
              $
              -Non-cash
      investing and financing activities100,000
      common shares issued in exchange of consulting service
      received
              
              $
              33,000
              
              
              $
              -





See
accompanying notes to the consolidated financial statements


5





SINOBIOPHARMA,
INC. AND SUBSIDIARIES


Notes
to The Consolidated Financial Statements





1.
            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 was intended to 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 under its original name of Buzz Media, Ltd.
incorporated a subsidiary, “Sinobiopharma, Inc.” with an investment of $0.001
and merged with it 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) 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. The Company’s issued and outstanding share capital increased as a
result of the split 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 figures are presented on a post-split basis as if the split had
been affected 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 approximately 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. The Share Exchange Agreement closed on September 22,
2008.





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 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. The share cancellation
completed the reverse merger with Dongying BVI as a recapitalization of the
Company such that voting control of the Company was obtained by the former
stockholders of Dongying BVI. The net assets of Dongying BVI and the Company
have been brought forward at their historical bases. The costs associated with
the reverse merger were expensed as incurred.


6


Dongying
BVI was incorporated under the laws of the British Virgin Islands on
January 29, 2008. On May 13, 2008 Dongying BVI acquired a 100% interest in
Big Global Limited (“Big Global”) from the sole shareholder of Dongying
BVI for consideration of $1.00. The purpose of the transaction was the
change of domicile to the British Virgin Islands.





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 Big
Global 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.





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.





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 two product lines currently
manufactured and sold as of November 30, 2009 and several other potential
products in various stages of research and development. The product lines
currently sold are Cisatracurium Besylate, a skeletal muscle relaxant, and
Clindamycin Hydrochloride, an antibiotic for penicillin-allergic patients. In
May 2008 the Company discontinued production and sale of its Perphenazine
product, an anti-psychotic drug, due to the cost of manufacturing this product
exceeding the market price. Perphenazine accounted for 14% of sales in the year
ended May 31, 2008. 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.





On August
20, 2008, the Company entered into a share purchase agreement (the “Share
Purchase Agreement”) with the Company’s former majority shareholder, effective
concurrently with the closing of the Share Exchange
Agreement.  Pursuant to the Share Purchase Agreement, the former
majority shareholder acquired 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.





On July
10, 2009, the Company issued 100,000 shares to Emissary Capital Group, LLC in
accordance with the terms of the Financial Advisory and Independent Equity
Research Consulting Agreement, dated June 24, 2009 entered into between the
Company and Emissary Capital Group, LLC for the financial advisory and
independent equity research consultation service the Company received from
Emissary Group, LLC. The total issued and outstanding common shares after this
offering became 80,020,000 shares.





Basis
of presentation – going concern





These
consolidated financial statements of Sinobiopharma, Inc. (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 through December 1, 2010.





For the
six months period ended November 30, 2009, the Company had a net income of
$1,310,717, but had the cumulative losses since commencement of operations of
$6,400,562 and negative working capital of $2,565,449 as of November 30, 2009,
which raises 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.





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.





7


2. 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Change
of Reporting Entity





As a
result of the Share Exchange closed on September 22, 2008, the former Dongying
BVI shareholders owned a majority of the common stock of the Company. The
transaction was regarded as a reverse merger whereby Dongying BVI was considered
to be the accounting acquirer as its shareholders retained control of the
Company after the Share Exchange, although the Company is the legal parent
company. As such, Dongying BVI (and its historical financial statements) is the
continuing entity for financial reporting purpose. Financial Statements have
been prepared as if Dongying BVI had always been the reporting company and then
on the share exchange date, had changed its name and reorganized its capital
stock.





Principles
of Consolidation and Basis of Presentation





The
accompanying  consolidated financial statements of the Company have
been prepared in accordance with accounting principles generally accepted in the
United States of America (“U.S. GAAP”) and include the financial statements of
the Company and its subsidiaries. The accompanying  consolidated
balance sheet as of November 30, 2009, consolidated statements of income and
comprehensive income for the three months and six months ended September 30,
2009 include Sinobiopharma, Inc. and its directly owned subsidiaries, Dongying
BVI, Big Global and Dong Ying China. The accompanying consolidated balance
sheet as of November 30, 2008, consolidated statements of operations and
comprehensive income for the three months and six months ended September 30,
2008 consisted the following: the Company’s consolidated statements of
operations and comprehensive income for the three months ended August 31, 2008
consist of the financial results of Dongying BVI and its directly owned
subsidiaries, Big Global and Dong Ying China;  the Company’s
consolidated statements of operations and comprehensive income for the three
months ended November 30, 2008 consist of the financial results of
Sinobiopharma, Inc. and its directly owned subsidiaries, Dongying BVI, Big
Global and Dong Ying China.




All
significant intercompany transactions and balances are eliminated on
consolidation.





The
accompanying consolidated financial statements as of November 30, 2009 and for
the three months and six months ended November 30, 2009 and 2008 have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 8-03 of
Regulation S-X applicable to smaller reporting companies. In the opinion of
management, all adjustments necessary for a fair statement of the results for
the interim periods have been made, and all adjustments are of a normal
recurring nature (or a description of the nature and amount of any adjustments
other than normal recurring adjustments).  The consolidated interim
financial statements should be read in conjunction with the Company's audited
consolidated financial statements and notes thereto for the year ended May 31,
2009 that are included in the Company’s 2009 annual report on 10-K filed with
the Securities and Exchange Commission.





RECENTLY
ISSUED ACCOUNTING PRONOUNCEMENTS





FASB Establishes Accounting
Standards Codification


In June
2009, the FASB issued Accounting Standards Update No. 2009-01, “Generally
Accepted Accounting Principles” (ASC Topic 105) which establishes the FASB
Accounting Standards Codification (“the Codification” or “ASC”) as the official
single source of authoritative U.S. generally accepted accounting principles
(“GAAP”). All existing accounting standards are superseded. All other accounting
guidance not included in the Codification will be considered non-authoritative.
The Codification also includes all relevant Securities and Exchange Commission
(“SEC”) guidance organized using the same topical structure in separate sections
within the Codification.





Following
the Codification, the Board will not issue new standards in the form of
Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts.
Instead, it will issue Accounting Standards Updates (“ASU”) which will serve to
update the Codification, provide background information about the guidance and
provide the basis for conclusions on the changes to the
Codification.





8





The
Codification is not intended to change GAAP, but it will change the way GAAP is
organized and presented. The Codification is effective for our second-quarter
2010 financial statements and the principal impact on our financial statements
is limited to disclosures as all future references to authoritative accounting
literature will be referenced in accordance with the Codification. In order to
ease the transition to the Codification, we are providing the Codification
cross-reference alongside the references to the standards issued and adopted
prior to the adoption of the Codification.





Fair Value
Accounting


In 2006,
the FASB issued SFAS No. 157, “Fair Value Measurements” (ASC Topic 820)
which defines fair value, establishes a market-based framework or hierarchy for
measuring fair value and expands disclosures about fair value measurements. This
guidance is applicable whenever another accounting pronouncement requires or
permits assets and liabilities to be measured at fair value. It does not expand
or require any new fair value measures; however the application of this
statement may change current practice. We adopted this guidance for financial
assets and liabilities effective January 1, 2008 and for non financial
assets and liabilities effective January 1, 2009. The adoption did not have
a material effect on our financial condition or results of
operations.


In April
2009, the FASB issued the following updates that provide additional application
guidance and enhance disclosures regarding fair value measurements and
impairments of securities:





•
            FSP
      FAS 157-4, “Determining Fair Value When the Volume and Level of Activity
      for the Asset or Liability Have Significantly Decreased and Identifying
      Transactions That Are Not Orderly” (ASC Topic 820-10-65). This update
      relates to determining fair values when there is no active market or where
      the price inputs being used represent distressed sales. It reaffirms the
      need to exercise judgment to ascertain if a formerly active market has
      become inactive and in determining fair values when markets have become
      inactive.





•
            FSP
      FAS 115-2 and FAS 124-2, “Recognition and Presentation of
      Other-Than-Temporary Impairments” (ASC topic 320-10-65). This update
      applies to investments in debt securities for which other-than-temporary
      impairments may be recorded. If an entity’s management asserts that it
      does not have the intent to sell a debt security and it is more likely
      than not that it will not have to sell the security before recovery of its
      cost basis, then an entity may separate other-than-temporary impairments
      into two components: 1) the amount related to credit losses (recorded in
      earnings) and 2) all other amounts (recorded in Other comprehensive
      income).





•
            FSP
      FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial
      Instruments” (ASC Topic 320-10-65). This update requires fair value
      disclosures for financial instruments that are not currently reflected on
      the balance sheet at fair value on a quarterly
  basis.





The
adoption of these updates will not have a material effect on our financial
condition or results of operations.





In August
2009, FASB issued ASU No. 2009-05 which amends Fair Value Measurements and
Disclosures – Overall (ASC Topic 820-10) to provide guidance on the fair value
measurement of liabilities. This update requires clarification for circumstances
in which a quoted price in an active market for the identical liability is not
available, a reporting entity is required to measure fair value using one or
more of the following techniques: 1) a valuation technique that uses either the
quoted price of the identical liability when traded as an asset or quoted prices
for similar liabilities or similar liabilities when traded as an asset; or 2)
another valuation technique that is consistent with the principles in ASC Topic
820 such as the income and market approach to valuation. The amendments in this
update also clarify that when estimating the fair value of a liability, a
reporting entity is not required to include a separate input or adjustment to
other inputs relating to the existence of a restriction that prevents the
transfer of the liability. This update further clarifies that if the fair value
of a liability is determined by reference to a quoted price in an active market
for an identical liability, that price would be considered a Level 1 measurement
in the fair value hierarchy. Similarly, if the identical liability has a quoted
price when traded as an asset in an active market, it is also a Level 1 fair
value measurement if no adjustments to the quoted price of the asset are
required.





Business Combinations and
Noncontrolling Interests


In 2007,
the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (ASC
Topic 805). This guidance requires the acquiring entity in a business
combination to recognize the full fair value of assets acquired and liabilities
assumed in the transaction (whether a full or partial acquisition); establishes
the acquisition date fair value as the measurement objective for all assets
acquired and liabilities assumed; requires expensing of most transaction and
restructuring costs; and requires the acquirer to disclose the information
necessary to evaluate and understand the nature and financial effect of the
business combination. We adopted this guidance effective January 1, 2009
and have applied it to all business combinations prospectively from that date.
The impact of ASC 805 on our consolidated financial statements will depend upon
the nature, terms and size of the acquisitions we consummate in the
future.


9


In April
2009, the FASB issued Staff Position No. FSP FAS 141(R)-1, “Accounting for
Assets Acquired and Liabilities Assumed in a Business Combination That Arise
from Contingencies” (ASC Topic 805-20). This updated guidance amended the
accounting treatment for assets and liabilities arising from contingencies in a
business combination and requires that pre-acquisition contingencies be
recognized at fair value, if fair value can be reasonably determined. If fair
value cannot be reasonably determined, measurement should be based on the best
estimate in accordance with SFAS No. 5, “Accounting for Contingencies” (ASC
Topic 405). This updated guidance was effective January 1,
2009.





In 2007,
the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated
Financial Statements—an amendment of Accounting Research Bulletin No. 51”,
(ASC Topic 810-10-65). This guidance requires companies to present
noncontrolling (minority) interests as equity (as opposed to a liability) and
provided guidance on the accounting for transactions between an entity and
noncontrolling interests. In addition, it requires companies to report a
consolidated net income (loss) measure that includes the amount attributable to
such noncontrolling interests. We adopted this guidance effective
January 1, 2009. The adoption did not have a material effect on our
financial condition or results of operations.





In June
2009, the FASB issued the following standards:





•
            SFAS
      No. 167, “Amendments to FASB Interpretation No. 46(R),
      Consolidation of Variable Interest Entities” (ASC Topic 810-10). This
      updated guidance requires an analysis to determine whether a variable
      interest gives the entity a controlling financial interest in a variable
      interest entity. It also requires an ongoing reassessment and eliminates
      the quantitative approach previously required for determining whether an
      entity is the primary beneficiary. This update is effective for our fiscal
      year beginning January 1, 2010 and we are currently evaluating the
      impact of adopting this update on our consolidated financial
      statements.•
            SFAS
      No. 166, “Accounting for Transfers of Financial Assets”, (ASC Topic
      810). This updated guidance removed the concept of a qualifying
      special-purpose entity and removed the exception from applying
      consolidation guidance to these entities. This update also clarified the
      requirements for isolation and limitations on portions of financial assets
      that are eligible for sale accounting. ASC Topic 810 is effective for our
      fiscal year beginning on January 1, 2010. We are currently evaluating
      the impact of adopting this update on our consolidated financial
      statements.





In May
2009, the FASB issued SFAS No. 165, “Subsequent Events” (ASC Topic 855).
This guidance is intended to establish general standards of accounting for and
disclosures of events that occur after the balance sheet date but before the
financial statements are issued or are available to be issued. It requires
disclosure of the date through which an entity has evaluated subsequent events
and the basis for selecting this date, that is, whether this date represents the
date the financial statements were issued or were available to be issued. This
guidance was effective for our second quarter ended November 30,
2009.





During
2009, the FASB has issued several ASU’s – ASU No. 2009-02 through ASU
No. 2009-15. Except for ASU’s No. 2009-05 discussed above, the ASU’s
entail technical corrections to existing guidance or affect guidance related to
specialized industries or entities and therefore have minimal, if any, impact on
the Company.





3.
NOTES RECEIVALBE





Notes
receivable of $70,910 as of November 30, 2009 and $5,505 as of May 31, 2009
represents bank acceptance notes the Company received from customers for sales
of products. The notes are with maturity duration of 3 months or 6 months, and
are accepted by banks.





4.
ACCOUNTS RECEIVABLE





Accounts
receivable consists of receivable for sales of product on credit. Accounts
receivable as at November 30, 2009 and May 31, 2009 was $639,409 and $208,673
respectively.





November
      30,
              2009
              (Unaudited)
            
            
            May
      31, 2009Accounts
      receivable
            
            $
            639,409
            
            
            $
            241,010Allowance
      for doubtful accounts
            
            
            -
            
            
            
            (32,337
            )$
            639,409
            
            
            $
            208,673





10


Allowance
for doubtful accounts movement for six months ended November 30,
2009:





May
      31, 2009
            
            
            Provision
            
            
            Reverse
            
            
            Write-off
            
            
            November
      30,
              2009Allowance
      for doubtful accounts
            
            
            (32,337
            )
            
            
            -
            
            
            
            16,814
            
            
            
            15,523
            
            
            
            -





5.
INVENTORIES





Inventories
at November 30, 2009 and May 31, 2009 consist of the
following:





November
      30,
              2009
              (Unaudited)
            
            
            May
      31, 2009Raw
      materials
            
            $
            559,028
            
            
            $
            401,782Goods
      in process
            
            
            82,519
            
            
            
            -Finished
      goods
            
            
            113,767
            
            
            
            145,535$
            755,314
            
            
            $
            547,317





6.
ADVANCE PAYMENTS





$42,193
and $39,825 of advance advance payments as of November 30, 2009 and May 31, 2009
is payment in advance to suppliers of the Company’s raw materials.





7.
ADVANCE PAYMENT FOR INTANGIBE ASSETS TO RELATED PARTY





$986,063
and $253,760 due from related party represents the prepayments the Company made
to Meisujining (Manjing) Technology Company Limited, a company 25% owned by the
Company’s CEO and shareholder Mr. Lequn Huang for purchase of two technologies
of new products manufacturing. As of November 30, 2009, the Company has not
obtained the technologies.





8.
PROPERTY, PLANT AND EQUIPMENT





Property,
plant and equipment at November 30, 2009 and May 31, 2009 consist of the
following:





November
      30,
              2009
              (Unaudited)
            
            
            May
      31, 2009Buildings
            
            $
            1,990,207
            
            
            $
            1,990,207Land
      use right
            
            
            405,507
            
            
            
            405,507Manufacturing
      equipment
            
            
            908,674
            
            
            
            769,317Office
      furniture and equipment
            
            
            90,553
            
            
            
            79,391Road
      and grounds
            
            
            212,791
            
            
            
            212,791Vehicles
            
            
            83,349
            
            
            
            10,011Leasehold
      improvement
            
            
            31,147
            
            
            
            -3,722,228
            
            
            
            3,467,224Less:
      Accumulated depreciation
            
            
            943,534
            
            
            
            775,966$
            2,778,694
            
            
            $
            2,691,258





11


The
depreciation expense for six months ended November 30, 2009 and November 30,
2008 was $166,221  and $123,931  respectively. The
depreciation expense for three months ended November 30, 2009 and November 30,
2008 was $76,337 and $68,736 respectively.





The
Company’s land use right, road and grounds and buildings with carrying value of
$2,053,853 are pledged as collateral for the loan from the Agricultural Bank of
China. (See Note 10).





9.
INTANGIBLE ASSETS





Intangible
assets consist of the cost of technology and licenced rights to manufacture and
sell the company’s products. The technology and rights were acquired by the
Company from two companies owned 25% and 30% by a Company’s shareholder. The
technology and rights have an estimated useful life of  20 years. The
amounts related to particular products are as follow:





November
      30,
              2009
              (Unaudited)
            
            
            May
      31, 2009Cisatracurium
      Besylate
            
            $
            732,000
            
            
            $
            732,000Perindopril
      (manufacturing permit pending)
            
            
            732,000
            
            
            
            732,0001,464,000
            
            
            
            1,464,000Less:
      Accumulated amortization
            
            
            181,233
            
            
            
            145,027$
            1,282,767
            
            
            $
            1,318,973





Amortization
for the six months ended November 30, 2009 and November 30, 2008 in the amount
of $38,440  and $30,645 is included in Depreciation and Amortization
expense.


Amortization
for the three months ended November 30, 2009 and November 30, 2008 in the amount
of $18,283 and $10,184 is included in Depreciation and Amortization
expense.





10.
SHORT TERM BANK LOAN





The
RMB5,000,000 ($732, 225) short term bank loan as of  November 30, 2009
represents the loan from the Agricaltural Bank of China. On June 10, 2009 the
Company received a loan in the amount of RMB 10,000,000 (approximately
$1,462,000) from the Agricultural Bank of China. The loan bears interest at the
rate of 5.31% per annum paid monthly. The loan is due for repayment in half May
12, 2010 and June 9, 2010. The Company paid RMB5,000,000 on November 13, 2009.
The Company’s land use right, road and grounds and buildings with carrying value
of $2,053,853 are pledged as collateral for this loan as of November 30,
2009.





As of May
31, 2009, the balance RMB 5,000,000($732,000) represents loan from Bank of
Communications and it has been repaid in full at June 8, 2009. The loan bears
interest at the rate of 6.37% per annum paid monthly.





The
interest expense from bank loan for the three months ended November 30, 2009 and
2008 was $23,355 and $3,252; and for the six months ended November 30, 2009 and
2008 was $43,739 and $14,835.





12


11.
LOANS FROM GOVERNMENT





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 RMB20million ($2,928,900 at the exchange rate applicable at November
30, 2009) and was due for repayment in full in March 2007. During 2007 the
Company repaid RMB3,000,000($439,335 at the exchange rate applicable at November
30, 2009).  In December 2007 the Company was granted an extension of
the due date to December 31, 2008. During the year ended December 31, 2008 the
Company repaid RMB2,000,000 ($292,890 at the exchange rate applicable at
November 30, 2009). On February 1, 2009 the Company repaid another RMB2,000,000
($292,890 at the exchange rate applicable at November 30, 2009) and the Company
was granted an extension to December 31, 2009 over the remainder of the loan
RMB13,000,000 ($1,903,786 at the exchange rate applicable at November 30, 2009).
The Company repaid RMB3,000,000 ($439,335 at the exchange rate applicable at
November 30, 2009) in December 2009, and was granted an extension to December
31, 2010 over the remaining of the loan RMB10,000,000 ($1,464,451 at the
exchange rate applicable at November 30, 2009).





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, 5.6% in February, 2009, applied in respect of the 2009
year). Loan interest expense included in the accounts for the three months ended
as of  November 30, 2009 and 2008 was $25,244 and $33,086; and for the
six months ended November 30, 2009 and 2008 was in the amount of $50,488 and
$72,471 which is determined as the amortization on the interest method basis of
the discount over the remaining period to maturity of the loan.





The
present value of the total government loan was $1,895,354 as of November 31,
2009 and $1,844,193 as of May 31, 2009.





12.
SHAREHOLDER LOANS





Shareholder
loans carry the value of $508,113 and $1,169,032 at November 30, 2009 and May
31, 2009. The loans are $102,553 at November 30, 2009 and $102,521 at May 31,
2009 due to Peter Chen, a shareholder of the company, and $405,560 at November
30, 2009 and $1,066,511 at May 31, 2009 due to Mr. Lequan Huang, the majority
shareholder of the Company. The loans do not bear interest and have no stated
repayment terms.





Imputed
interest has been recorded on the shareholder loans at prevailing Bank of China
one-year rate, (5.6% in 2009 and 7.3% in 2008).  The imputed interest
for three months ended as of November 30, 2009 and 2008 was $5,013 and $20,476,
for six months ended as of November 30, 2009 and 2008 was $15,858 and
$40,167.  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.





13.
DUE TO RELATED PARTY





$256,297
and $256,200 due to related party as of November 30, 2009 and May 31, 2009,
respectively, represents the payable to Meisujining (Manjing) Technology Company
Limited for a technology the Company purchased in October 2007.





The above
amounts are unsecured and non-interest bearing, and has no defined payment
terms.





14.
OTHER PAYABLES





$490,674
and $386,368 other payables as of November 30, 2009 and May 31, 2009,
respectively, represents the deposits received from customers, payroll payables,
accrued professional fees and VAT payables.





13


15.
INCOME TAXES





The
Company’s operating subsidiary Dongying China is not subject to Chinese
enterprise income taxes in 2009 due to a two-year tax holiday for wholly-owned
foreign enterprises. The Company’s Chinese operations will be subject to
enterprise income tax starting from January 1, 2010. The Company is subject to
United States income tax to the extent of its operations in the United States.
The Company had no U.S. income tax expense in 2008 or 2009 due to net
losses.





The
Company has a deferred tax asset on net operating losses of approximately
$310,623 as of November 30, 2009. The ultimate realization of deferred
tax assets depends on the generation of future taxable income during the periods
in which those net operating losses are available. The Company considers
projected future taxable income and tax planning strategies in making its
assessment. At present, the Company does not have a sufficient operation in the
United States to conclude that it is more-likely-than-not that the Company will
be able to realize all of its tax benefits in the near future and therefore a
valuation allowance of $310,623 was established for the full value of the
deferred tax asset.





A
valuation allowance will be maintained until sufficient positive evidence exists
to support the reversal of any portion or all of the valuation allowance. Should
the Company start operation in the United States in future periods with
supportable trend, the valuation allowance will be reversed
accordingly.





16.
COMMON STOCK





On July
10, 2009 the Company issued 100,000 common shares to Emissary Capital Group LLC
in exchange of financial advisory and independent equity research consultation.
The common stock par value is $0.0001 and the market price on July 10, 2009 as
fair value is $0.33. No cash proceed will be paid to the Company for this
issuance.





17.
STOCK-BASED COMPENSATION





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.
The following option awards are part of this plan.





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.  The total vesting period is 9 months.





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. The total
vesting period is 9 months.





On
October 22, 2008, the Company granted to a scientific consultant and advisory
board member of the Company 225,000 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. The total vesting period is 9 months.





14


A summary
of the Company’s stock option activities is presented below:





Number
      of
              options
            
            
            Weighted
              Average
              Exercise
      Price
              Per
      Share
            
            Weighted
              Average
      Grant-
              date
      Fair Value
              Per
      ShareOptions
      Outstanding,June
      1, 2009- November 30, 2009
            
            
            2,525,000
            
            
            $
            1.8
            
            $
            1.28





Compensation
cost related to options was recognized as the related options vest. The
vesting period was the requisite service period for each option holder. The
stock-based compensation cost was $0 and $972,375 for the three months ended
November 30, 2009 and 2008, and $324,125 and $972,801 for the six months ended
November 30, 2009 and 2008. As of November 30, 2009, all the outstanding options
have been vested as follows:





Vested
options are as follows:





Number
              outstanding
            
            
            Total
      fair value
            
            
            Weighted
      average grant-
              date
      fair value per shareOptions vested,June
      1, 2009
            
            
            2,272,500
            
            
            $
            2,917,125
            
            
            $
            1.28Vesting
            
            
            252,500
            
            
            
            324,125
            
            
            
            1.28November
      30, 2009
            
            
            2,525,000
            
            
            $
            3,241,250
            
            
            $
            1.28





If not
previously exercised or canceled, options outstanding at November 30, 2009 will
expire as follows:





Range
      of
              Exercise
      Prices
            
            
            Number
            
            
            Weighted
      averageExpiry
      Date
            
            High
            
            
            Low
            
            
            of
      Shares
            
            
            exercise
      priceSeptember
      29, 2013
            
            $
            1.80
            
            
            $
            1.80
            
            
            
            1,800,000
            
            
            $
            1.80October
      2, 2013
            
            $
            1.80
            
            
            $
            1.80
            
            
            
            500,000
            
            
            $
            1.80October
      22, 2013
            
            $
            1.80
            
            
            $
            1.80
            
            
            
            225,000
            
            
            $
            1.80





The fair
values of the options granted September 29, October 2 and October 22, 2008 were
estimated at values of $1.25 per share, $1.42 per share and $1.25, respectively,
using the Black-Scholes Option Pricing Model with the following weighted average
assumptions:





Volatility:
            
            
            88.3
            %Risk-free
      interest rate:
            
            
            2.30
            %Dividend
      yield:
            
            
            —Expected
      lives      (years):
            
            
            5





Option-pricing
models require the use of highly subjective estimates and assumptions including
the expected stock price volatility.  Changes in the underlying
assumptions can materially affect the fair value estimates and therefore, in
management’s opinion, existing models do not necessarily provide reliable
measure of the fair value of the Company’s stock options.


15





18.  EARNINGS/(LOSS)
PER SHARE





The
following table sets forth the computation of basic and diluted income per share
for the period indicated:





Three months endedNovember
      30,
              2009
            
            
            November
      30,
              2008(Unaudited)
            
            
            (Unaudited)Numerator
      used in basic net income per share:Net
      income/(loss)
            
            $
            1,073,550
            
            
            
            (1,045,239)Shares
      (denominator):Weighted
      average common shares outstanding
            
            
            80,020,000
            
            
            
            79,900,000Weighted
      average common shares outstanding used in computing
      diluted
              earnings/(loss)
      per ordinary share
            
            
            80,020,000
            
            
            
            79,900,000Earnings/(loss)
      per common share-basic
            
            $
            0.01
            
            
            
            (0.01)Earnings/(loss)
      per common share-diluted
            
            $
            0.01
            
            
            
            (0.01)





Six months endedNovember
      30,
              2009
            
            
            November
      30,
              2008(Unaudited)
            
            
            (Unaudited)Numerator
      used in basic net income per share:Net
      income/(loss)
            
            $
            1,310,717
            
            
            
            (897,376)Shares
      (denominator):Weighted
      average common shares outstanding
            
            
            79,998,689
            
            
            
            79,900,000Weighted
      average common shares outstanding used in computing
      diluted
              earnings/(loss)
      per ordinary share
            
            
            79,998,689
            
            
            
            79,900,000Earnings/(loss)
      per common share-basic
            
            $
            0.02
            
            
            
            (0.01)Earnings/(loss)
      per common share-diluted
            
            $
            0.02
            
            
            
            (0.01)





As of
November 30, 2009, the Company had 2,525,000 common share equivalents
outstanding that could potentially dilute basic income per share in the future,
but which were excluded in the computation of diluted income per share in the
periods presented, as their effect would have been anti-dilutive due to the fact
that the weighted average exercise price per share of the stock option is higher
than the weighted average market price per share of the common stock during the
three months and six months ended November 30, 2009.





19.
RELATED PARTY TRANSACTIONS AND BALANCES





The
Company has a right of first refusal to purchase rights to any new product
developed by two companies (Meisujining (Manjing) Technology Company Limited,
25% owned by the Company’s CEO and shareholder Mr. Lequn Huang; and Bio-Medical
Research and Development Limited Company, 30% owned by Mr. Lequn Huang) at
prices to be negotiated at the time. All of the Company’s intangible assets
($1,464,000 at cost) as of  November 30, 2009 have been purchased from
those related companies.





In July
2008, the Company signed a contract to purchase the technology of
L-Alanyl-L-Glutamine from Meisujining (Manjing) Technology Company Limited
for the total price of RMB2,000,000 ($292,346), the company paid RMB1,733,333
($253,838) as prepayment, and recorded as due from replated party as of November
30, 2009.





In July
2009, the Company signed a contract with Meisujining (Nanjing) Technology
Company Limited to purchase the technology of gabexate mesilate for the total
price of RMB5,000,000 ($732,225). The Company has paid RMB 5,000,000 ($732,225)
in August 2009 as prepayment, and booked as due from related party as of
November 30, 2009.


16





In
October 2007, the Company purchased the technology of Perindopril from
Meisujining (Nanjing) Technology Company Limited for RMB5,000,000 ($732,225). As
of November 30, 2009 and May 31, 2009, RMB1,750,000 ($256,279) is unpaid to
Meisujining (Nanjing) Technology Company Limited.





The above
amounts are unsecured and non-interest bearing, and has no defined payment
terms.





Shareholder
loans carry the value of $508,113 and $1,169,032 at November 30, 2009 and May
31, 2009. The loans are $102,553 at November 30, 2009 and $102,521 at May 31,
2009 due to Peter Chen, a shareholder of the company; and $405,560 at November
30, 2009 and $1,066,511 at May 31, 2009 due to Mr. Lequan Huang, the majority
shareholder of the Company. The loans do not bear interest and have no stated
repayment terms.





20.
COMMITMENTS





In August
2009, the Company signed a technical support contract of Perindopril rocuronium
with SUJI Bio-Medical Research and Development Limited Company (30% owned by the
Company’s CEO and shareholder Mr. Lequn Huang) for the total price of
RMB8,000,00 ($1,169,385). As of November 30, 2009, the Company has paid
RMB1,800,000 ($263,112) and is commited to pay the remaining of RMB6,200,000
($906,273) before Jan 2015.





21.
CONCENTRATIONS AND CREDIT RISK





At
November 30, 2009 and May 31, 2009, the Company had a credit risk exposure of
cash in banks of $365,168 and $891,132 respectively that is uninsured by the
government authority. To limit exposure to credit risk relating to deposits, the
Company primarily places cash deposits only with large financial institution in
the PRC with acceptable credit rating.





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





(1)
            Our
      main products include Clindamycin Hydrochloride and Cisatracurium Besylate
      which accounted for 100% of the Company’s total
  sales.





Three
      months ended November 30,2009
              (Unaudited)
            
            
            2008
              (Unaudited)Amount
      of Sales
            
            
            %
      of Total Sales
            
            
            Amount
      of Sales
            
            
            %
      of Total SalesClindamycin
      Hydrochloride 0.75g
            
            $
            17,387
            
            
            
            1
            %
            
            $
            22,927
            
            
            
            2
            %Clindamycin
      Hydrochloride 0.90g
            
            
            62,908
            
            
            
            3
            %
            
            
            48,262
            
            
            
            5
            %Cisatracurium
      Besylate 5mg
            
            
            2,057,176
            
            
            
            96
            %
            
            
            899,984
            
            
            
            93
            %Total
            
            $
            2,137,471
            
            
            
            100
            %
            
            $
            971,173
            
            
            
            100
            %





Six
      months ended November 30,2009
              (Unaudited)
            
            
            2008
              (Unaudited)Amount
      of Sales
            
            
            %
      of Total Sales
            
            
            Amount
      of Sales
            
            
            %
      of Total SalesClindamycin
      Hydrochloride 0.75g
            
            $
            34,729
            
            
            
            1
            %
            
            $
            44,719
            
            
            
            2
            %Clindamycin
      Hydrochloride 0.90g
            
            
            98,933
            
            
            
            3
            %
            
            
            72,478
            
            
            
            4
            %Cisatracurium
      Besylate 5mg
            
            
            3,297,573
            
            
            
            96
            %
            
            
            1,785,179
            
            
            
            94
            %Total
            
            $
            3,431,235
            
            
            
            100
            %
            
            $
            1,902,376
            
            
            
            100
            %





17





(2)
            Customers
      accounted for over 10% of the Company’s total sales are as
      follows:





Three
      months ended November 30,2009
            
            
            2008(Unaudited)
            
            
            (Unaudited)Amount
      of sales
            
            
            %
      of Total Sales
            
            
            Amount
      of sales
            
            
            %
      of Total SalesCustomer
      A
            
            $
            902,108
            
            
            
            42
            %
            
            $
            92,731
            
            
            
            10
            %Customer
      B
            
            
            277,847
            
            
            
            13
            %
            
            
            173,866
            
            
            
            18
            %Total
            
            $
            1,179,955
            
            
            
            55
            %
            
            $
            266,597
            
            
            
            28
            %





Six
      months ended November 30,2009
            
            
            2008(Unaudited)
            
            
            (Unaudited)Amount
      of sales
            
            
            %
      of Total Sales
            
            
            Amount
      of sales
            
            
            %
      of Total SalesCustomer
      A
            
            $
            1,114,724
            
            
            
            32
            %
            
            $
            320,204
            
            
            
            17
            %Customer
      B
            
            
            562,634
            
            
            
            16
            %
            
            
            173,865
            
            
            
            9
            %Total
            
            $
            1,677,358
            
            
            
            48
            %
            
            $
            494,069
            
            
            
            26
            %





(3)   One
supplier accounted for 53% ($536,005) and 37% ($275,165) of the Company’s total
purchase for the six months ended November 30, 2009 and November 30,
2008. The materials that the company is purchasing from that supplier are
Tetrahydropapaverine Hydrocholide, DMPEA and Homoveratric acid which are in the
fully competitive market and can easily be purchased from other
suppliers.





22.
RECLASSIFICATION





$5,505
bank accepted notes hold by the Company, previously included in the balance of
accounts receivable as of May 31, 2009, has been reclassified into notes
receivable.





$253,760
advance payement for purchase of intangible assets, previously included in the
balance of advance payments  as current assets as of May 31, 2009, has
been reclassified into advance payment for purchase of intangible assets as
long-term assets.





$256,200
due to related party, previously included in the balance of other payables as of
May 31, 2009, has been reclassified into due to related party.





23.  SUBSEQUENT
EVENTS





On
December 18, 2009, the Company's wholly-owned subsidiary DongYing China entered
into three intellectual property transfer agreements with Meisu Jining Science
and Technology (Nanjing) Limited Company for transfer of the approval
certificates to engage in clinical trials for the drug Epleronone and its tablet
and capsule forms in China.  As consideration for Intellectual
Property to DongYing, the Company issued an aggregate of 9,500,000 shares of the
Company's common stock to Meisu Jining Science and Technology (Nanjing) Limited
Company.





On
December 22, 2009, the Company's wholly-owned subsidiary DongYing China entered
into a patent transfer agreement with Lei Wang, a third party, and Lequn Huang,
the Company's chief executive officer and director, for the transfer of a
patent, "Composition for Lyophilized Powder of Atracurium," jointly owned by Mr.
Wang and Mr. Huang. As consideration for the patent, the Company issued
8,000,000 shares of the Company's common stock, of which the value is determined
at the market price of the date, to Mr. Wang and further agreed to: (i)
undertake its commercially reasonable best efforts to seek shareholder, board,
and relevant governmental approval to authorize a class of blank check preferred
stock, and (ii) following the effectiveness of the authorization of blank check
preferred stock, designate and issue such number of shares of preferred stock as
to give Mr. Huang approximately 51% of the voting rights and 0% of the equity
rights of the Company. Should the Company fail to obtain sufficient approval to
authorize any preferred stock after having made commercially reasonable best
efforts to do so, Mr. Huang waived his right to redress under the dispute
settlement terms of the agreement.


18


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


Cautionary
Notice Regarding Forward-Looking Statements


In this
quarterly report, references to “Sinobiopharma,” “SNBP,” “the Company,” “we,”
“our,” “us,” and the Company’s wholly-owned subsidiary, “Dong Ying China,”
refer to Sinobiopharma, Inc.





We make
certain forward-looking statements in this report. Statements concerning our
future operations, prospects, strategies, financial condition, future economic
performance (including growth and earnings), demand for our services, and other
statements of our plans, beliefs, or expectations, including the statements
contained under the captions “Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” “Business,” as well as captions elsewhere
in this document, are forward-looking statements. In some cases these statements
are identifiable through the use of words such as “anticipate,” “believe,”
“estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can”, “could,”
“may,” “should,” “will,” “would,” and similar expressions. We intend such
forward-looking statements to be covered by the safe harbor provisions contained
in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”)
and in Section 21E of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). The forward-looking statements we make are not guarantees of
future performance and are subject to various assumptions, risks, and other
factors that could cause actual results to differ materially from those
suggested by these forward-looking statements. Because such statements are
subject to risks and uncertainties, actual results may differ materially from
those expressed or implied by the forward-looking statements. Indeed, it is
likely that some of our assumptions will prove to be incorrect. Our actual
results and financial position will vary from those projected or implied in the
forward-looking statements and the variances may be material. You are cautioned
not to place undue reliance on such forward-looking statements. These risks and
uncertainties, together with the other risks described from time to time in
reports and documents that we file with the SEC should be considered in
evaluating forward-looking statements.




The
nature of our business makes predicting the future trends of our revenue,
expenses, and net income difficult. Thus, our ability to predict results or the
actual effect of our future plans or strategies is inherently uncertain. The
risks and uncertainties involved in our business could affect the matters
referred to in any forward-looking statements and it is possible that our actual
results may differ materially from the anticipated results indicated in these
forward-looking statements. Important factors that could cause actual results to
differ from those in the forward-looking statements include, without limitation,
the following:





·
            the
      effect of political, economic, and market conditions and geopolitical
      events;


·
            legislative
      and regulatory changes that affect our
business;


·
            the
      availability of funds and working
capital;


·
            the
      actions and initiatives of current and potential
    competitors;


·
            investor
      sentiment; and


·
            our
      reputation.


We do not
undertake any responsibility to publicly release any revisions to these
forward-looking statements to take into account events or circumstances that
occur after the date of this report. Additionally, we do not undertake any
responsibility to update you on the occurrence of any unanticipated events which
may cause actual results to differ from those expressed or implied by any
forward-looking statements.




The
following discussion and analysis should be read in conjunction with our
consolidated financial statements and the related notes thereto as filed with
the SEC and other financial information contained elsewhere in this
Report.





Overview





The
Company, through its operating subsidiary Dong Ying China, is involved in the
Chinese biopharmaceutical industry. We are engaged in the research, development,
manufacture and marketing of biopharmaceutical products in China. The company
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. Our current therapeutic focus is on
anesthesia-assisted agents and cardiovascular drugs. Our R&D focus is new,
innovative methods of synthesizing compounds more rapidly at lower cost, and/or
improved drug formulation with enhanced usability. In November 2009, we got the
final approval from all authourities for the production and sales of our new
drug Perindopril with brand name of Yitai. Yitai is a cardiovascular drug used
for the patients with heart disease and high blood pressure. It is covered by
Chinese health insurance.


19





Results
of Operations





The
Company realized a net income of $1,073,550 for the three months ended November
30, 2009, as compared to a net loss of $1,045,239 for the three months ended
November 30, 2008, and a net income of $1,310,717 for the six months ended
November 30, 2009, as compared to a net loss of $897,376 for the six months
ended November 30, 2008.





Sales
and cost of goods sold





Sales
increased 120% to $2,137,471 for the three months ended November 30, 2009, from
$971,173 for the three months ended November 30, 2008.  Gross margin
increased 182% to $1,720,308 (80% of sales) for the three months ended November
30, 2009, from $610,752 (63% of sales) for the three months ended November 30,
2008.





Sales
increased 80% to $3,431,235 for the six months ended November 30, 2009, from
$1,902,376 for the six months ended November 30, 2008.  Gross margin
increased 119% to $2,683,231 (78% of sales) for the six months ended November
30, 2009, from $1,223,180 (64% of sales) for the six months ended November 30,
2008.





The
increase in sales was due to the continuing growth in sales of Cisatracurium
Besylate.  Sales of this product increased to $3,297,573 for the six
months ended November 30, 2009, from $1,785,179 for the six months ended
November 30, 2008, representing 96% of sales and 93% of sales for the six months
ended November 30, 2009, and November 30, 2008, respectively.  The
improvement in gross margin is attributable to that, as volume increased, the
unit cost of manufacturing Cisatracurium Besylate has decreased. The improvement
in gross margin is also attributable to an increase in the price of
Cisatracurium Bestylate for the sales to a certain distributor, because this
distributor only provides potential customer contact information to us, while
all the marketing effort, quantity and delivery term negotiation were conducted
by ourselves. Since this distributor is GSP licenced, the sales has to go
through them first to get to the final customer.





Operating
Expenses





The
operating expenses for the three months ended November 30, 2009 were $596,154,
representing a 63% decrease as compared to $1,594,819 for the three months ended
November 30, 2008.  Operating expenses for the six months ended
November 30, 2009 were $1,266,941, a decrease of 36% as compared to $1,988,790
for the six months ended November 30, 2008.





The
decrease is primarily attributable to the decrease of $648,676 in the
stock-based compensation of $324,125 for the six months ended November 30, 2009,
compared to $972,801 for the six months ended November 30, 2008. The stock
options have been fully vested and expensed as of August 31, 2009. There was no
stock-based compensation expense for the three months ended November 30, 2009,
as compared to $972,375 for the three months ended November 30,
2008.





The
decrease in operating expenses was also due to the reduction of general and
administrative expenses other than stock-based compensation which was $168,042
and $256,193 for the three months and six months ended November 30, 2009
respectively as compared to $471,789 and $614,262 for the three months and six
months ended November 30, 2008 respectively. The reason for the higher general
and administrative expenses for the three and six months ended November 30, 2008
were primarily due to  the reverse takeover activities which required
a substantial amount of legal, accounting and audit work.





Research
and development expenses increased $189,396 from $33,015 for the three months
ended November 30, 2008 to $222,411 for the three months ended November 30,
2009, and increased $156,294 from $130,419 for the six months ended November 30,
2008 to $286,713 for the six months ended November 30, 2009. The increase was
mainly due to the technology consulting expenses related to the new drug that
the Company is ready for production in November 2009 and expenditures related to
the research and development of new drugs during the three month period ended
November 30, 2009.


20





Other
expense decreased $10,568 from $61,172 for the three months ended November 30,
2008 to $50,604 for the three months ended November 30, 2009, and decreased
$26,193 from $131,766 for the six months ended November 30, 2008 to $105,573 for
the six months ended November 30, 2009.  The decrease was due to the
decreased balance of the shareholder loan which resulted in decreased imputed
interest expenses.





Net
income increased $2,118,789 from net loss of $1,045,239 for the three months
ended November 30, 2008 to net income of $1,073,550 for the three months ended
November 30, 2009, and increased $2,208,093from net loss of $897,376 for the six
months ended November 30, 2008 to net profit of $1,310,717 for the six months
ended November 30, 2009. The increase in net income was due to the increase in
sales and decrease of the stock-based compensation expense.





Liquidity
and Capital Resources





The
operations of Dong Ying China have generated profits for the three months ended
November 30, 2009, but not in a sufficient amount to enable Dong Ying China to
pay current debt due for repayment.  The Company had $365,168 in cash
at November 30, 2009.  The Company had a working capital deficiency of
$2,565,449 at November 30, 2009. The Company plans to raise capital through
equity finance to provide cash to pay debt of Dong Ying China, fund further drug
product development and to launch new products. The company is also working
in developing markets for the existing products to increase sales and positive
cash flow. In addition, management has arranged a line of credit of RMB
10,000,000 (approximately $1,464,000) with a Chinese bank and is involved in
negotiations for a possible extension of the due date of the interest-free
loan.





Net cash
provided in the operating activities for the six months ended November 30, 2009
was $1,124,109 compared to the net cash provided in the operating activities of
$319,591 for the six months ended November 30, 2008, an increase of $804,518.
The increase is primarily attributable to the increase in net income of
$2,208,093 which was offset by decrease in stock based compensation of $648,250,
an increase in change in notes receivable and accounts receivable for the amount
of $342,780 due to the increase in sales for the six months ended November 30,
2009 compared to the six months ended November 30, 2008, and a decrease in the
change in accounts payables for the amount of $411,206 due to our faster
payments to suppliers.




Net cash
used in the investment activities for the six months ended November 30, 2009 and
2008 was $985,899 and $338,375, respectively. The increase is primarily
attributable to an increase in amounts in due from related party with respect
to  the deposit for the purchase of the new technologies in the amount
of $477,557. The Company has purchased $169,967 more fixed assets in the six
months period ended November 30, 2009 than in the same period of last
year.





Net cash
used in the financing activities for the six months ended November 30, 2009 was
$652,307 and net cash used in the financing activities for the six months ended
November 30, 2008 was $105,306. During the six months ended November 30, 2009
period, the Company had paid shareholder loans of $651,941 compared to an
increase in shareholder loans of $162,694 in the six months ended November 30,
2008. Tthe company has also reduced the bank loans outstanding by $288,000
during the six months ended November 30, 2008, and has repaid bank loan in the
amount of $1,462,021 for the six months ended November 30, 2009.





Short
Term Loans





On June
10, 2009,  the Company received a loan in the amount of RMB 10,000,000
(approximately $1,462,000) from the Agricultural Bank of China. The loan bears
interest at the rate of 5.31% per annum paid monthly. The loan is due for
repayment in two equal installments on May 12, 2010 and June 9, 2010. The
Company paid RMB5,000,000 on November 13, 2009. The Company’s land use right,
road and grounds and buildings with carrying value of $2,053,853 are pledged as
collateral for this loan as of November 30, 2009.





On
January 19, 2009, the Company received a loan in the amount of RMB5,000,000
(approximately $732,000) from the Bank of Communications.  The loan is
due January 19, 2010 and bears interest at the rate of 6.37% per annum paid
monthly.  This loan was repaid in full at June 8,
2009.


21


The
interest expense from the above-mentioned banks loan for the three months ended
November 30, 2009 and 2008 was $23,355 and $3,252; and for the six months ended
November 30, 2009 and 2008 was $43,739 and $14,835.





Long-Term
Loan





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 RMB20million ($2,928,900 at the exchange rate applicable at November
30, 2009) and was due for repayment in full in March 2007. During 2007 the
Company repaid RMB3,000,000($439,335 at the exchange rate applicable at November
30, 2009).  In December 2007 the Company was granted an extension of
the due date to December 31, 2008. During the year ended December 31, 2008 the
Company repaid RMB2,000,000 ($292,890 at the exchange rate applicable at
November 30, 2009). On February 1, 2009 the Company repaid another RMB2,000,000
($292,890 at the exchange rate applicable at November 30, 2009) and the Company
was granted an extension to December 31, 2009 over the remainder of the loan
RMB13,000,000 ($1,903,786 at the exchange rate applicable at November 30, 2009).
The Company repaid RMB3,000,000 ($439,335 at the exchange rate applicable at
November 30, 2009) in December 2009, and was granted an extension to December
31, 2010 over the remaining of the loan RMB10,000,000 ($1,464,451 at the
exchange rate applicable at November 30, 2009).





Loan
interest expense incurred for this loan during the three months ended as
of  November 30, 2009 and 2008 was $25,244 and $33,086; and for the
six months ended November 30, 2009 and 2008 was in the amount of $50,488 and
$72,471.





The
present value of the total government loan was $1,895,354 as of November 30,
2009 and $1,844,193 as of May 31, 2009.





Shareholder
Loans





Shareholder
loans carry the value of $508,113 and $1,169,032 at November 30, 2009 and May
31, 2009. The loans are $102,553 at November 30, 2009 and $102,521 at May 31,
2009 due to Peter Chen, a shareholder of the company; and $405,560 at November
30, 2009 and $1,066,511 at May 31, 2009 due to Mr. Lequan Huang, the majority
shareholder of the Company. The loans do not bear interest and have no stated
repayment terms.




Off-Balance
Sheet Arrangements





None.




Item 3.
            Quantitative
      and Qualitative Disclosures about Market
Risk.




N/A.




Item 4.
            Controls
      and Procedures.





Our
management is responsible for establishing and maintaining a system of
disclosure controls and procedures (as defined in Rule 13a-15(e)) under the
Exchange Act) that is designed to ensure that information required to be
disclosed by the Company in the reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported, within the time
specified in the Commission's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by an issuer in the reports
that it files or submits under the Exchange Act is accumulated and communicated
to the issuer's management, including its principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, as appropriate to allow timely decisions regarding required
disclosure.





22





Pursuant
to Rule 13a-15(b) under the Exchange Act, the Company carried out an evaluation
with the participation of the Company’s management, including Lequn Huang, the
Company’s Chief Executive Officer (“CEO”), and Xinjie Mu, the Company’s Chief
Financial Officer (“CFO”), of the effectiveness of the Company’s disclosure
controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act)
as of the nine months ended November 30, 2009. Based upon that evaluation, the
Company’s CEO and CFO concluded that the Company’s disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in the reports that the Company files or submits under the Exchange
Act, is recorded, processed, summarized and reported, within the time periods
specified in the SEC’s rules and forms.  The Company’s CEO and CFO
also conluded that the Company’s disclosure controls and procedures are
effective to ensure that information required to be disclosed in the reports
required to to be filed or submitted under the Exchange Act is accumulated and
communicated to the Company’s management, including the Company’s CEO and CFO,
as appropriate, to allow timely decisions regarding required
disclosure.





During
our assessment of the effectiveness of internal control over financial
reporting as of May 31, 2009, management identified significant deficiencies
related to (1) the lack of a functioning audit committee due to a lack of a
majority of independent members and a lack of a majority of outside directors on
our board of directors, resulting in the potential for ineffective oversight in
the establishment and monitoring of required internal controls and procedures;
(2) inadequate segregation of duties consistent with control objectives; and (3)
lack of a formal whistleblower policy.  However, management believes that
these deficiencies do not amount to a material weakness. Therefore, our internal
controls over financial reporting were effective as of May 31,
2009.





Management’s Remediation
Initiatives





In an
effort to remediate the identified material weaknesses and other deficiencies
and enhance our internal controls, we have initiated, or plan to initiate, the
following series of measures:





1.
            We
      plan to create a position to segregate duties consistent with control
      objectives and plan to increase our personnel resources and technical
      accounting expertise within the accounting function when funds are
      available to us; and





2.
            We
      plan to appoint one or more outside directors to our board of directors
      who shall be appointed to an audit committee resulting in a fully
      functioning audit committee who will undertake the oversight in the
      establishment and monitoring of required internal controls and procedures
      such as reviewing and approving estimates and assumptions made by
      management when funds are available to
us.





In
October 2009, we engaged Xinjie Mu as chief financial officer of the Company.
Mr. Mu, a certified public accountant, has extensive experience in internal
control and U.S. GAAP reporting compliance, and, together with our chief
executive officer, oversees and manages our financial reporting process and
required training of the accounting staff.





Management
believes that the appointment of one or more outside directors, who shall be
appointed to a fully functioning audit committee, will remedy the lack of a
functioning audit committee and a lack of a majority of outside directors on our
Board.




We
believe that the foregoing steps will remediate the deficiency identified above,
and we will continue to monitor the effectiveness of these steps and make any
changes that our management deems appropriate.





A
material weakness (within the meaning of PCAOB Auditing Standard No. 5) is a
deficiency, or a combination of deficiencies, in internal control over financial
reporting, such that there is a reasonable possibility that a material
misstatement of our annual or interim financial statements will not be
prevented or detected on a timely basis. A significant deficiency is a
deficiency, or a combination of deficiencies, in internal control over financial
reporting that is less severe than a material weakness, yet important enough to
merit attention by those responsible for oversight of the company's financial
reporting.


23





Our
management is not aware of any material weaknesses in our internal control over
financial reporting, and nothing has come to the attention of management that
causes them to believe that any material inaccuracies or errors exist in our
financial statement as of November 30, 2009.  The reportable
conditions and other areas of our internal control over financial reporting
identified by us as needing improvement have not resulted in a material
restatement of our financial statements. We are not aware of any instance where
such reportable conditions or other identified areas of weakness have resulted
in a material misstatement of omission in any report we have filed with or
submitted to the SEC. Since management has concluded that no errors or
restatements have occurred and believes that controls were in place during the
2008 quarters that would detect or prevent a material misstatement in our
consolidated financial statements, management has concluded that that there was
not a material weakness in controls.




Changes in internal
controls





Our
management, with the participation of our CEO and CFO, performed an evaluation
as to whether any change in our internal controls over financial reporting
occurred during the quarter ended November 30, 2009.  Based on that
evaluation, our CEO and CFO concluded that, other than the appointment of a new
CFO as disclosed above, no change occurred in the Company's internal controls
over financial reporting during the quarter ended November 30, 2009 that has
materially affected, or is reasonably likely to materially affect, the Company's
internal controls over financial reporting.





PART II – OTHER INFORMATION


Item
1.  Legal Proceedings.





To our
knowledge, there is no material litigation pending or threatened against
us.





Item
1A.  Risk Factors.





N/A.





Item 2.  Unregistered Sale of Equity Securities and Use
of Proceeds.





None





Item 3.  Defaults Upon Senior Securities.





To our
knowledge, there are no material defaults upon senior securities.





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





None.





Item 5.  Other Information.





None.





Item 6.  Exhibits.




(a)
            Exhibits





31.1
            
            Certification Required Under Section 302 of
      Sarbanes-Oxley Act of 2002.31.2
            
            Certification Required Under Section 302 of
      Sarbanes-Oxley Act of 2002.32.1
            
            Certification Required Under Section 906 of
      Sarbanes-Oxley Act of 2002.32.2
            
            Certification Required Under Section 906 of
      Sarbanes-Oxley Act of 2002.





24




SIGNATURES


Pursuant
to the requirements 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.








SINOBIOPHARMA,
      INC.Dated:
        January 14, 2010
            By:
            /s/
      Lequn HuangName:
      Lequn HuangTitle: President, CEO, Treasurer and
Director





Dated:
        January 14, 2010
            By:
            /s/
      Xinjie MuName:
      Xinjie MuTitle: Chief Financial Officer and
Director




































25