| NEVADA                          | 88-0409159          |
|---------------------------------|---------------------|
| (State or other jurisdiction of | (I.R.S. Employer    |
| incorporation or organization)  | Identification No.) |

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

----

----

| Consolidated Financial Statements-                                                |   |
|-----------------------------------------------------------------------------------|--------|
|                                                                              |   |
| Consolidated Balance Sheets as of December 31 2009 and 2008 (Unaudited)           | F-3    |
|                                                                              |   |
| Consolidated Statements of Operations and Comprehensive Income                    |   |
|   for the Years Ended December 31, 2009 and 2008(Unaudited)                  | F-4    |
|                                                                              |   |
| Consolidated Statements of Stockholders’ Equity for the Years Ended         |   |
|   December 31, 2009 and 2008(Unaudited)                                      | F-5    |
|                                                                              |   |
| Consolidated Statements of Cash Flows for Years Ended December 31, 2009           |   |
|   and 2008(Unaudited)                                                        | F-6    |
|                                                                              |   |
| Notes to Consolidated Financial Statements December 31, 2009 and 2008 (Unaudited) | F-7    |

----

|                                                                                                                                                                              |   | 2009      |       |   | 2008      |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|------------|--------|-----------|--------|
| ASSETS                                                                                                                                                                            |   | Unaudited |       |   | Unaudited |   |
|                                                                                                                                                                              |   |      |       |   |      |   |
| Current Assets:                                                                                                                                                                   |   |      |       |   |      |   |
| Cash and cash equivalents                                                                                                                                                         |   | $         | 11,066,671 |   |      | $      | 5,869,607 |   |
| Accounts receivable-                                                                                                                                                              |   |      |       |   |      |   |   |   |
| Trade                                                                                                                                                                             |   |      | 18,716,094 |   |      |   | 15,354,103 |   |
| Employees and other                                                                                                                                                               |   |      | 1,538,783  |   |      |   | 855,271 |   |
| Related parties                                                                                                                                                                   |   |      | 1,339,828  |   |      |   | 4,129,531 |   |
| Less - Allowance for doubtful accounts                                                                                                                                            |   |      | (514,011   | )      |      |   | (719,224 | ) |
| Total accounts receivable                                                                                                                                                         |   |      | 21,080,694 |   |      |   | 19,619,681 |   |
| Inventories                                                                                                                                                                       |   |      | 14,057,699 |   |      |   | 7,908,494 |   |
| Advances to suppliers                                                                                                                                                             |   |      | 196,722    |   |      |   | 108,146 |   |
| Total current assets                                                                                                                                                              |   |      | 46,401,786 |   |      |   | 33,505,928 |   |
|                                                                                                                                                                              |   |      |       |   |      |   |   |   |
| Property and Equipment:                                                                                                                                                           |   |      |       |   |      |   |   |   |
| Buildings                                                                                                                                                                         |   |      | 4,928,544  |   |      |   | 4,923,929 |   |
| Biological assets                                                                                                                                                                 |   |      | 6,247,016  |   |      |   | 3,706,031 |   |
| Machinery and equipment                                                                                                                                                           |   |      | 1,745,432  |   |      |   | 1,727,293 |   |
| Vehicles                                                                                                                                                                          |   |      | 376,467    |   |      |   | 344,686 |   |
| Leasehold improvements                                                                                                                                                            |   |      | 2,682,284  |   |      |   | - |   |
|                                                                                                                                                                              |   |      | 15,979,743 |   |      |   | 10,701,939 |   |
| Less - Accumulated depreciation and amortization                                                                                                                                  |   |      | (4,178,211 | )      |      |   | (3,293,973 | ) |
|                                                                                                                                                                              |   |      | 11,801,532 |   |      |   | 7,407,966 |   |
| Construction work in progress                                                                                                                                                     |   |      | 1,077,846  |   |      |   | - |   |
| Net property and equipment                                                                                                                                                        |   |      | 12,879,378 |   |      |   | 7,407,966 |   |
|                                                                                                                                                                              |   |      |       |   |      |   |   |   |
| Other Assets:                                                                                                                                                                     |   |      |       |   |      |   |   |   |
| Intangible assets, net                                                                                                                                                            |   |      | 193,524    |   |      |   | 250,807 |   |
| Deferred lease payments                                                                                                                                                           |   |      | 1,845,289  |   |      |   | 819,360 |   |
| Total other assets                                                                                                                                                                |   |      | 2,038,813  |   |      |   | 1,070,167 |   |
|                                                                                                                                                                              |   |      |       |   |      |   |   |   |
| Total Assets                                                                                                                                                                      |   | $         | 61,319,977 |   |      | $      | 41,984,061 |   |
|                                                                                                                                                                              |   |      |       |   |      |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                              |   |      |       |   |      |   |   |   |
|                                                                                                                                                                              |   |      |       |   |      |   |   |   |
| Current Liabilities:                                                                                                                                                              |   |      |       |   |      |   |   |   |
| Short-term loans                                                                                                                                                                  |   | $         | 4,891,479  |   |      | $      | 5,185,840 |   |
| Accounts payable and accrued liabilities                                                                                                                                          |   |      | 15,333,980 |   |      |   | 5,187,915 |   |
| Advances from customers                                                                                                                                                           |   |      | 143,751    |   |      |   | 315,885 |   |
| Taxes payable                                                                                                                                                                     |   |      | 3,892,749  |   |      |   | 2,825,457 |   |
| Other payables                                                                                                                                                                    |   |      | 4,202,238  |   |      |   | 937,434 |   |
| Due to related parties                                                                                                                                                            |   |      | 304,758    |   |      |   | 777,810 |   |
| Total current liabilities                                                                                                                                                         |   |      | 28,768,955 |   |      |   | 15,230,341 |   |
| Total liabilities                                                                                                                                                                 |   |      | 28,768,955 |   |      |   | 15,230,341 |   |
|                                                                                                                                                                              |   |      |       |   |      |   |   |   |
| Commitments and Contingencies                                                                                                                                                     |   |      |       |   |      |   |   |   |
|                                                                                                                                                                              |   |      |       |   |      |   |   |   |
| Stockholders' Equity:                                                                                                                                                             |   |      |       |   |      |   |   |   |
| Preferred stock, $0.001 par value, 20,000,000 shares authorized;155,000 and nil shares of Series A Convertible Preferred Stock subscribed for in 2009 and 2008, respectively |   |      | 310,000    |   |      |   | - |   |
| Receivable related to preferred stock subscriptions                                                                                                                               |   |      | (310,000   | )      |      |   | - |   |
| Common stock, $0.001 par value, 150,000,000 shares authorized;50,000,000 shares issued and outstanding in 2009 and 2008, respectively                                             |   |      | 50,000     |   |      |   | 50,000 |   |
| Additional paid-in capital - Common stock                                                                                                                                         |   |      | 8,066,293  |   |      |   | 8,066,293 |   |
| Statutory surplus reserves                                                                                                                                                        |   |      | 2,678,094  |   |      |   | 2,117,010 |   |
| Retained earnings                                                                                                                                                                 |   |      | 19,601,804 |   |      |   | 14,393,409 |   |
| Accumulated other comprehensive income                                                                                                                                            |   |      | 2,154,831  |   |      |   | 2,127,008 |   |
| Total Stockholders' Equity                                                                                                                                                        |   |      | 32,551,022 |   |      |   | 26,753,720 |   |
|                                                                                                                                                                              |   |      |       |   |      |   |   |   |
| Total Liabilities and Stockholders' Equity                                                                                                                                        |   | $         | 61,319,977 |   |      | $      | 41,984,061 |   |

----

|                                                                    |   | 2009      |        |    | 2008      |   |
|-------------------------------------------------------------------------|--------|-----------|-------------|---------|-----------|--------|
|                                                                    |   | Unaudited |        |    | Unaudited |   |
|  Revenues                                                          |   | $         | 123,918,423 |    |      | $      | 90,855,824 |   |
|                                                                    |   |      |        |    |      |   |   |   |
| Cost of Goods Sold                                                      |   |      | 85,490,929  |    |      |   | 63,736,807 |   |
|                                                                    |   |      |        |    |      |   |   |   |
| Gross Profit                                                            |   |      | 38,427,494  |    |      |   | 27,119,017 |   |
|                                                                    |   |      |        |    |      |   |   |   |
| Expenses:                                                               |   |      |        |    |      |   |   |   |
| Sales and marketing                                                     |   |      | 8,090,078   |    |      |   | 6,509,078 |   |
| General and administrative                                              |   |      | 2,599,329   |    |      |   | 1,678,119 |   |
| Total operating expenses                                                |   |      | 10,689,407  |    |      |   | 8,187,197 |   |
|                                                                    |   |      |        |    |      |   |   |   |
| Income from Operations                                                  |   |      | 27,738,087  |    |      |   | 18,931,820 |   |
|                                                                    |   |      |        |    |      |   |   |   |
| Interest Expense                                                        |   |      | (455,706    | )  |      |   | (441,036 | )  |
|                                                                    |   |      |        |    |      |   |   |   |
| Income before Income Taxes                                              |   |      | 27,282,381  |    |      |   | 18,490,784 |   |
|                                                                    |   |      |        |    |      |   |   |   |
| Provision for Income Taxes                                              |   |      | (6,633,916  | )       |      |   | (4,063,027 | ) |
|                                                                    |   |      |        |    |      |   |   |   |
| Net Income                                                              |   | $         | 20,648,465  |    |      | $      | 14,427,757 |   |
|                                                                    |   |      |        |    |      |   |   |   |
| Other Comprehensive Income:                                             |   |      |        |    |      |   |   |   |
| Foreign currency translation adjustment                                 |   |      | 27,823      |    |      |   | 1,251,323 |   |
| Total Comprehensive Income                                              |   | $         | 20,676,288  |    |      | $      | 15,679,080 |   |
|                                                                    |   |      |        |    |      |   |   |   |
| Earnings Per Common Share:                                              |   |      |        |    |      |   |   |   |
| Earnings per common share - Basic and Diluted                           |   | $         | 0.41        |    |      | $      | 0.29 |   |
|                                                                    |   |      |        |    |      |   |   |   |
| Weighted Average Number of Common SharesOutstanding - Basic and Diluted |   |      | 50,000,000  |    |      |   | 50,000,000 |   |

----

|                                        |   | Subscribed      |    |   | Receivable on Preferred |   |    |         |   |   |     |   |   | Additional |       |   | Statutory |   |   |          |   |   | Accumulated Other |   |   |   |      |
|---------------------------------------------|--------|-----------------|---------|--------|-------------------------|--------|---------|--------------|--------|--------|----------|--------|--------|------------|------------|--------|-----------|--------|--------|---------------|--------|--------|-------------------|--------|--------|--------|-----------|
|                                        |   | Preferred Stock |    |   | Stock                   |   |    | Common Stock |   |   | Paid-in  |   |   | Surplus    |       |   | Retained  |   |   | Comprehensive |   |   |              |   |
| Description                                 |   | Shares          |    |   | Amount                  |   |    | Subscribed   |   |   | Shares   |   |   | Amount     |       |   | Capital   |   |   | Reserves      |   |   | Earnings          |   |   | Income |      |   | Total |   |
|                                        |   |            |    |   |                    |   |    |         |   |   |     |   |   |       |       |   |      |   |   |          |   |   |              |   |   |   |      |   |   |   |
| Balance - December 31, 2007                 |   |            | -       |   |                    | $      | -       |         |   | $      | -        |   |   |       | 50,000,000 |   |      | $      | 50,000 |          |   | $      | 7,846,728         |   |   | $      | 1,210,920 |   |   | $ | 6,939,506 |   |   | $ | 875,685 |   |   | $ | 16,922,839 |   |
|                                        |   |            |    |   |                    |   |    |         |   |   |     |   |   |       |       |   |      |   |   |          |   |   |              |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reverse merger recapitalization             |   |            | -       |   |                    |   | -       |         |   |   | -        |   |   |       | -          |   |      |   | -      |          |   |   | (168,168          | )      |   |   | -         |   |   |   | 168,168 |   |   |   | - |   |   |   | - |   |
|                                        |   |            |    |   |                    |   |    |         |   |   |     |   |   |       |       |   |      |   |   |          |   |   |              |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital contribution                        |   |            | -       |   |                    |   | -       |         |   |   | -        |   |   |       | -          |   |      |   | -      |          |   |   | 387,733           |   |   |   | -         |   |   |   | - |   |   |   | - |   |   |   | 387,733 |   |
|                                        |   |            |    |   |                    |   |    |         |   |   |     |   |   |       |       |   |      |   |   |          |   |   |              |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends paid                              |   |            | -       |   |                    |   | -       |         |   |   | -        |   |   |       | -          |   |      |   | -      |          |   |   | -                 |   |   |   | -         |   |   |   | (6,235,932 | ) |   |   | - |   |   |   | (6,235,932 | ) |
|                                        |   |            |    |   |                    |   |    |         |   |   |     |   |   |       |       |   |      |   |   |          |   |   |              |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Appropriation to statutory surplus reserves |   |            | -       |   |                    |   | -       |         |   |   | -        |   |   |       | -          |   |      |   | -      |          |   |   | -                 |   |   |   | 906,090   |   |   |   | (906,090 | ) |   |   | - |   |   |   | - |   |
|                                        |   |            |    |   |                    |   |    |         |   |   |     |   |   |       |       |   |      |   |   |          |   |   |              |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency translation adjustment     |   |            | -       |   |                    |   | -       |         |   |   | -        |   |   |       | -          |   |      |   | -      |          |   |   | -                 |   |   |   | -         |   |   |   | - |   |   |   | 1,251,323 |   |   |   | 1,251,323 |   |
|                                        |   |            |    |   |                    |   |    |         |   |   |     |   |   |       |       |   |      |   |   |          |   |   |              |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income for the period                   |   |            | -       |   |                    |   | -       |         |   |   | -        |   |   |       | -          |   |      |   | -      |          |   |   | -                 |   |   |   | -         |   |   |   | 14,427,757 |   |   |   | - |   |   |   | 14,427,757 |   |
|                                        |   |            |    |   |                    |   |    |         |   |   |     |   |   |       |       |   |      |   |   |          |   |   |              |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance - December 31, 2008                 |   |            | -       |   |                    |   | -       |         |   |   | -        |   |   |       | 50,000,000 |   |      |   | 50,000 |          |   |   | 8,066,293         |   |   |   | 2,117,010 |   |   |   | 14,393,409 |   |   |   | 2,127,008 |   |   |   | 26,753,720 |   |
|                                        |   |            |    |   |                    |   |    |         |   |   |     |   |   |       |       |   |      |   |   |          |   |   |              |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issurance of preferred stock                |   |            | 155,000 |   |                    |   | 310,000 |         |   |   | (310,000 | )      |   |       | -          |   |      |   | -      |          |   |   | -                 |   |   |   | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                        |   |            |    |   |                    |   |    |         |   |   |     |   |   |       |       |   |      |   |   |          |   |   |              |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends paid                              |   |            | -       |   |                    |   | -       |         |   |   | -        |   |   |       | -          |   |      |   | -      |          |   |   | -                 |   |   |   | -         |   |   |   | (14,878,986 | ) |   |   | - |   |   |   | (14,878,986 | ) |
|                                        |   |            |    |   |                    |   |    |         |   |   |     |   |   |       |       |   |      |   |   |          |   |   |              |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Appropriation to statutory surplus reserves |   |            | -       |   |                    |   | -       |         |   |   | -        |   |   |       | -          |   |      |   | -      |          |   |   | -                 |   |   |   | 561,084   |   |   |   | (561,084 | ) |   |   | - |   |   |   | - |   |
|                                        |   |            |    |   |                    |   |    |         |   |   |     |   |   |       |       |   |      |   |   |          |   |   |              |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency translation adjustment     |   |            | -       |   |                    |   | -       |         |   |   | -        |   |   |       | -          |   |      |   | -      |          |   |   | -                 |   |   |   | -         |   |   |   | - |   |   |   | 27,823 |   |   |   | 27,823 |   |
|                                        |   |            |    |   |                    |   |    |         |   |   |     |   |   |       |       |   |      |   |   |          |   |   |              |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income for the period                   |   |            | -       |   |                    |   | -       |         |   |   | -        |   |   |       | -          |   |      |   | -      |          |   |   | -                 |   |   |   | -         |   |   |   | 20,648,465 |   |   |   | - |   |   |   | 20,648,465 |   |
|                                        |   |            |    |   |                    |   |    |         |   |   |     |   |   |       |       |   |      |   |   |          |   |   |              |   |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance -December 31, 2009             |   |            | 155,000 |   |                    | $      | 310,000 |         |   | $      | (310,000 | )      |   |       | 50,000,000 |   |      | $      | 50,000 |          |   | $      | 8,066,293         |   |   | $      | 2,678,094 |   |   | $ | 19,601,804 |   |   | $ | 2,154,831 |   |   | $ | 32,551,022 |   |

----

|                                                                                   |   | 2009      |        |   | 2008      |   |
|----------------------------------------------------------------------------------------|--------|-----------|-------------|--------|-----------|--------|
|                                                                                   |   | Unaudited |        |   | Unaudited |   |
| Net Cash Provided by Operating Activities:                                             |   |      |        |   |      |   |
| Net income                                                                             |   | $         | 20,648,465  |   |      | $      | 14,427,757 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |      |        |   |      |   |   |   |
| Depreciation and amortization                                                          |   |      | 941,521     |   |      |   | 890,780 |   |
| Allowance for doubtful accounts                                                        |   |      | 57,287      |   |      |   | - |   |
| Recovery of allowance for doubtful accounts                                            |   |      | (265,296    | )      |      |   | - |   |
| Changes in Operating Assets and Liabilities-                                           |   |      |        |   |      |   |   |   |
| Accounts receivable                                                                    |   |      | (3,419,011  | )      |      |   | (1,613,528 | ) |
| Other receivables                                                                      |   |      | (623,696    | )      |      |   | (49,749 | ) |
| Advances to suppliers                                                                  |   |      | (88,576     | )      |      |   | 370,346 |   |
| Inventories                                                                            |   |      | (6,149,205  | )      |      |   | (1,460,458 | ) |
| Accounts payable and accrued liabilities                                               |   |      | 10,146,065  |   |      |   | (373,592 | ) |
| Other payables                                                                         |   |      | 3,264,804   |   |      |   | (1,060,587 | ) |
| Advances from customers                                                                |   |      | (172,134    | )      |      |   | (171,460 | ) |
| Taxes payable                                                                          |   |      | 1,067,292   |   |      |   | 1,532,033 |   |
| Net Cash Provided by Operating Activities                                              |   |      | 25,407,516  |   |      |   | 12,491,542 |   |
|                                                                                   |   |      |        |   |      |   |   |   |
| Investing Activities:                                                                  |   |      |        |   |      |   |   |   |
| Deferred lease payments                                                                |   |      | (1,025,929  | )      |      |   | 330,600 |   |
| Disposal of property and equipment                                                     |   |      | -           |   |      |   | 45,886 |   |
| Purchases of property and equipment                                                    |   |      | (6,355,650  | )      |      |   | (722,447 | ) |
| Net Cash (Used in) Investing Activities                                                |   |      | (7,381,579  | )      |      |   | (345,961 | ) |
|                                                                                   |   |      |        |   |      |   |   |   |
| Financing Activities:                                                                  |   |      |        |   |      |   |   |   |
| Capital contribution                                                                   |   |      | -           |   |      |   | 1,165,712 |   |
| Dividends paid                                                                         |   |      | (14,878,986 | )      |      |   | (6,235,932 | ) |
| Proceeds from short-term loans                                                         |   |      | 3,768,196   |   |      |   | 4,515,989 |   |
| Payments on short-term loans                                                           |   |      | (4,062,557  | )      |      |   | (3,974,652 | ) |
| Payments on long-term loans                                                            |   |      | -           |   |      |   | (205,350 | ) |
| Proceeds from related parties                                                          |   |      | 2,789,703   |   |      |   | - |   |
| Payments to related parties                                                            |   |      | (473,052    | )      |      |   | (3,082,645 | ) |
| Repayment from related parties                                                         |   |      | -           |   |      |   | (3,924,181 | ) |
| Net Cash (Used in) Financing Activities                                                |   |      | (12,856,696 | )      |      |   | (11,741,059 | ) |
|                                                                                   |   |      |        |   |      |   |   |   |
| Net Increase in Cash                                                                   |   |      | 5,169,241   |   |      |   | 404,522 |   |
|                                                                                   |   |      |        |   |      |   |   |   |
| Effect of Exchange Rate Changes on Cash and Cash Equivalents                           |   |      | 27,823      |   |      |   | 1,251,323 |   |
|                                                                                   |   |      |        |   |      |   |   |   |
| Cash and Cash Equivalents - Beginning of Period                                        |   |      | 5,869,607   |   |      |   | 4,213,762 |   |
|                                                                                   |   |      |        |   |      |   |   |   |
| Cash and Cash Equivalents - End of Period                                              |   | $         | 11,066,671  |   |      | $      | 5,869,607 |   |
|                                                                                   |   |      |        |   |      |   |   |   |
| Supplemental Disclosure of Cash Flow Information:                                      |   |      |        |   |      |   |   |   |
| Cash paid during the period for:                                                       |   |      |        |   |      |   |   |   |
| Interest                                                                               |   | $         | 466,369     |   |      | $      | 451,791 |   |
| Income taxes                                                                           |   | $         | 6,416,335   |   |      | $      | 4,146,299 |   |
|                                                                                   |   |      |        |   |      |   |   |   |
| Supplemental Disclosure of significant non-cash transactions:                          |   |      |        |   |      |   |   |   |
| Reclassification of construction in progress to property                               |   | $         | -           |   |      | $      | 18,626 |   |
| Adjustment to statutory surplus reserves                                               |   | $         | -           |   |      | $      | 906,090 |   |
| Subscriptions to purchase 155,000 shares of Series A Preferred Stock to 13 investors   |   | $         | 310,000     |   |      | $      | - |   |

----

----

----

|                                        |   | 2009   |     |   | 2008   |   |
|---------------------------------------------|--------|--------|----------|--------|--------|--------|
| Beginning Balance - January 1               |   | $      | 719,224  |   |   | $      | 751,540 |   |
| Increase in allowance for doubtful accounts |   |   | 57,287   |   |   |   | - |   |
| Write-off of doubtful accounts              |   |   | -        |   |   |   | (168,770 | ) |
| Recovery of amounts written-off             |   |   | (265,296 | )      |   |   | - |   |
| Foreign currency translation adjustment     |   |   | 2,796    |   |   |   | 136,454 |   |
| Ending Balance - December 31                |   | $      | 514,011  |   |   | $      | 719,224 |   |

----

| Buildings               | 20 years |
|-------------------------|----------|
| Biological assets       | 27 years |
| Machinery and equipment | 10 years |
| Vehicles                | 5 years  |
| Leasehold improvements  | 5 years  |

----

|   | Level 1: | Observable inputs such as quoted market prices in active markets for identical assets or liabilities                                    |
|--------|----------|-----------------------------------------------------------------------------------------------------------------------------------------|
|   |     |                                                                                                                                    |
|   | Level 2: | Observable market-based inputs or unobservable inputs that are corroborated by market data                                              |
|   |     |                                                                                                                                    |
|   | Level 3: | Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions. |

----

----

----

|   | · | disclosure of the objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|

|   | · | disclosure of the fair values of derivative instruments and their gains and losses in a tabular format; |
|--------|--------|---------------------------------------------------------------------------------------------------------|

|   | · | disclosure of information about credit-risk-related contingent features; |
|--------|--------|--------------------------------------------------------------------------|

|   | · | and cross-reference from the derivative footnote to other footnotes in which derivative-related information is disclosed. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------|

|   | · | FASB Statements of Financial Accounting Standards and Interpretations, FASB Statement 133 Implementation Issues, FASB Staff Positions, and American Institute of Certified Public Accountants (AICPA) Accounting Research Bulletins and Accounting Principles Board Opinions that are not superseded by actions of the FASB. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | FASB Technical Bulletins and, if cleared by the FASB, AICPA Industry Audit and Accounting Guides and Statements of Position. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------|

|   | · | AICPA Accounting Standards Executive Committee Practice Bulletins that have been cleared by the FASB, consensus positions of the FASB Emerging Issues Task Force (EITF), and the Topics discussed in Appendix D of EITF Abstracts (EITF D-Topics). |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Implementation guides (Q&As) published by the FASB staff, AICPA Accounting Interpretations, AICPA Industry Audit and Accounting Guides and Statements of Position not cleared by the FASB, and practices that are widely recognized and prevalent either generally or in the industry. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | a. | Determines whether a combination is a merger or an acquisition. |
|--------|----|-----------------------------------------------------------------|

|   | b. | Applies the carryover method in accounting for a merger. |
|--------|----|----------------------------------------------------------|

|   | c. | Applies the acquisition method in accounting for an acquisition, including determining which of the combining entities is the acquirer. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | d. | Determines what information to disclose to enable users of financial statements to evaluate the nature and financial effects of a merger or an acquisition. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 1. | The period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | The circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | The disclosures that an entity should make about events or transactions that occurred after the balance sheet date. |
|--------|----|---------------------------------------------------------------------------------------------------------------------|

----

----

|                                                    |   | 2009   |       |   | 2008   |   |
|---------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Trade accounts                                          |   | $      | 18,716,094 |   |   | $      | 15,354,103 |   |
| Employees and other                                     |   |   | 1,538,783  |   |   |   | 855,271 |   |
| Related parties                                         |   |   | 1,339,828  |   |   |   | 4,129,531 |   |
|                                                    |   |   | 21,594,705 |   |   |   | 20,338,905 |   |
| Less - Allowance for doubtful accounts                  |   |   | (514,011   | )      |   |   | (719,224 | ) |
|      Total accounts receivable |   | $      | 21,080,694 |   |   | $      | 19,619,681 |   |

|                                |   | 2009   |      |   | 2008   |   |
|-------------------------------------|--------|--------|-----------|--------|--------|--------|
| Advances to employees               |   | $      | 1,538,783 |   |   | $      | 493,927 |   |
| Security deposits                   |   |   | -         |   |   |   | 361,344 |   |
|      Total |   | $      | 1,538,783 |   |   | $      | 855,271 |   |

----

|                                |   | 2009   |       |   | 2008   |   |
|-------------------------------------|--------|--------|------------|--------|--------|--------|
| Raw materials                       |   | $      | 967,608    |   |   | $      | 357,392 |   |
| Work in progress                    |   |   | 1,531,613  |   |   |   | 1,246,482 |   |
| Finished goods                      |   |   | 11,558,478 |   |   |   | 6,304,620 |   |
|      Total |   | $      | 14,057,699 |   |   | $      | 7,908,494 |   |

|                                                            |   | 2009   |     |   | 2008   |   |
|-----------------------------------------------------------------|--------|--------|----------|--------|--------|--------|
| Manufacturing right (China Pharmaceutical Manufacturing Permit) |   | $      | 410,064  |   |   | $      | 409,680 |   |
| License fees (Medicine Patent)                                  |   |   | 162,924  |   |   |   | 162,772 |   |
| Software (Accounting System)                                    |   |   | 4,394    |   |   |   | 4,389 |   |
| Total                                                           |   |   | 577,382  |   |   |   | 576,841 |   |
| Less - Accumulated amortization                                 |   |   | (383,858 | )      |   |   | (326,034 | ) |
| Intangible assets, net                                          |   | $      | 193,524  |   |   | $      | 250,807 |   |

|  Year ending December 31, |   |
|--------------------------------|--------|
|                           |   |
| 2010                           | $      | 57,519 |
| 2011                           |   | 50,510 |
| 2012                           |   | 41,006 |
| 2013                           |   | 41,006 |
| 2014                           |   | 3,483 |
|                           | $      | 193,524 |

----

| June 30, 2011 |   | $      | 3,278,737  |   |
|---------------|--------|--------|------------|--------|
| June 30, 2017 |   |   | 1,639,800  |   |
| June 30, 2019 |   |   | 3,278,737  |   |
| June 30, 2025 |   |   | 1,639,800  |   |
| June 30, 2027 |   |   | 2,459,051  |   |
| Total         |   | $      | 12,296,125 |   |

----

|                                                                                                                                                       |   | 2009   |      |   | 2008   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
| Loan payable to City Credit Union (Construction Road) due on November 10, 2009,with annual interest rate of 11.02% and secured by buildings and equipment. |   | $      | -         |   |   | $      | 292,630 |   |
| Loan payable to City Credit Union (Construction Road) due on June 21, 2009,with annual interest rate of 10.5% and secured by buildings and equipment.      |   |   | -         |   |   |   | 2,959,939 |   |
| Loan payable to City Credit Union (Construction Road) due on December 20, 2009,with annual interest rate of 10.5% and secured by buildings and equipment.  |   |   | -         |   |   |   | 804,728 |   |
| Loan Payable to City Credit Union (Construction Road) due on December 19, 2010,with annual interest rate of 10.5% and secured by buildings and equipment.  |   |   | 758,619   |   |   |   | 757,909 |   |
| Loan payable to City Credit Union (Construction Road) due on July 21, 2010,with annual interest rate of 10.5% and secured by building and equipment        |   |   | 144,987   |   |   |   | 151,162 |   |
| Loan payable to Agriculture Finance Bureau of TongHua government,due on December 6, 2010, non-interest bearing and secured by buildings.                   |   |   | 219,677   |   |   |   | 219,472 |   |
| Loan payable to City Credit Union (Construction Road) due on April 20, 2010,with annual interest rate of 5.94% and secured by buildings and equipment.     |   |   | 805,483   |   |   |   | - |   |
| Loan payable to City Credit Union (Construction Road) due on June 20, 2010,with annual interest rate of 5.94%, secured by buildings and equipment.         |   |   | 2,962,713 |   |   |   | - |   |
| Total short-term loans                                                                                                                                     |   | $      | 4,891,479 |   |   | $      | 5,185,840 |   |

----

|                          |   | 2009   |       |   | 2008   |   |
|-------------------------------|--------|--------|------------|--------|--------|--------|
| Accounts payable - Trade |   | $      | 12,722,407 |   |   | $      | 4,966,343 |   |
| Accrued liabilities           |   |   | 2,466,568  |   |   |   | 7,603 |   |
| Payroll and welfare payables  |   |   | 145,005    |   |   |   | 213,969 |   |
| Total                         |   | $      | 15,333,980 |   |   | $      | 5,187,915 |   |

|                    |   | 2009   |      |   | 2008   |   |
|-------------------------|--------|--------|-----------|--------|--------|--------|
| Income taxes payable    |   | $      | 1,536,184 |   |   | $      | 1,318,603 |   |
| Value added tax payable |   |   | 2,164,731 |   |   |   | 1,211,905 |   |
| Other taxes payable     |   |   | 191,834   |   |   |   | 294,949 |   |
| Total                   |   | $      | 3,892,749 |   |   | $      | 2,825,457 |   |

----

|                                |   | 2009   |      |   | 2008   |   |
|-------------------------------------|--------|--------|-----------|--------|--------|--------|
| Security deposits from salesmen     |   | $      | 426,066   |   |   | $      | 458,339 |   |
| Union fees payable                  |   |   | 19,013    |   |   |   | 2,302 |   |
| Employee benefits payable           |   |   | 41,510    |   |   |   | 33,895 |   |
| Payables to employees               |   |   | 3,715,649 |   |   |   | 442,898 |   |
|      Total |   | $      | 4,202,238 |   |   | $      | 937,434 |   |

----

----

| For the year ended December 31, 2009 |
|--------------------------------------|
|                                 |
|                                 |   | Herbal Planting |   |   | Drug Manufacturing |   |   | Distribution |   |   | Retailing |   |   | Corporate |   |   | Total |   |
| Revenues                             |   | $ | 21,373,619 |   |   | $ | 33,252,296 |   |   | $ | 47,212,958 |   |   | $ | 22,079,550 |   |   | $ | - |   |   | $ | 123,918,423 |   |
|                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and Amortization        |   | $ | 603,633 |   |   | $ | 316,500 |   |   | $ | 21,388 |   |   | $ | - |   |   | $ | - |   |   | $ | 941,521 |   |
|                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Segment Profit (Loss)                |   | $ | 4,859,495 |   |   | $ | 5,710,449 |   |   | $ | 8,740,773 |   |   | $ | 1,966,710 |   |   | $ | (628,962 | ) |   | $ | 20,648,465 |   |
|                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Segment Assets                       |   | $ | 18,191,696 |   |   | $ | 15,959,773 |   |   | $ | 16,521,210 |   |   | $ | 10,647,298 |   |   | $ | - |   |   | $ | 61,319,977 |   |
|                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Expenditures for Segment Assets      |   | $ | 3,252,914 |   |   | $ | - |   |   | $ | 1,758,361 |   |   | $ | 1,344,375 |   |   | $ | - |   |   | $ | 6,355,650 |   |

| For the year ended December 31, 2008 |
|--------------------------------------|
|                                 |
|                                 |   | Herbal Planting |   |   | Drug Manufacturing |   |   | Distribution |   |   | Retailing |   |   | Corporate |   |   | Total |   |
| Revenues                             |   | $ | 20,215,933 |   |   | $ | 28,330,394 |   |   | $ | 42,309,497 |   |   | $ | - |   |   | $ | - |   |   | $ | 90,855,824 |   |
|                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and Amortization        |   | $ | 609,923 |   |   | $ | 269,905 |   |   | $ | 10,952 |   |   | $ | - |   |   | $ | - |   |   | $ | 890,780 |   |
|                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Segment Profit                       |   | $ | 3,977,998 |   |   | $ | 4,520,842 |   |   | $ | 5,928,917 |   |   | $ | - |   |   | $ | - |   |   | $ | 14,427,757 |   |
|                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Segment Assets                       |   | $ | 14,826,069 |   |   | $ | 15,763,664 |   |   | $ | 11,394,328 |   |   | $ | - |   |   | $ | - |   |   | $ | 41,984,061 |   |
|                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Expenditures for Segment Assets      |   | $ | 622,138 |   |   | $ | 61,678 |   |   | $ | 38,631 |   |   | $ | - |   |   | $ | - |   |   | $ | 722,447 |   |

----

| Related Parties    |   |  Relationship                                |
|--------------------|--------|---------------------------------------------------|
| Yanhua Han         |   |  Stockholder, Chairman of Board of Directors |
| Hong Lin           |   |  Stockholder                                 |
| Xiandong Meng      |   |  Senior Manager                              |
| Xueye Jing         |   |  Senior Manager                              |
| Baoyou Han         |   |  Senior Manager                              |
| Giant Fortune Ltd. |   |  Stockholder                                 |

| Related Party                |   | 2009   |    |   | 2008   |   |
|------------------------------|--------|--------|---------|--------|--------|--------|
| Hong Lin                     |   | $      | 52,368  |   |   | $      | 334,912 |   |
| YanHua Han                   |   |   | 9,885   |   |   |   | - |   |
| Xueye Jing                   |   |   | -       |   |   |   | 442,898 |   |
| Kean Yuan                    |   |   | 155,132 |   |   |   | - |   |
| Stockholders                 |   |   | 87,373  |   |   |   | - |   |
| Total due to related parties |   | $      | 304,758 |   |   | $      | 777,810 |   |

| Related Party                  |   | 2009   |      |   | 2008   |   |
|--------------------------------|--------|--------|-----------|--------|--------|--------|
| Yanhua Han                     |   | $      | 890,074   |   |   | $      | 544,830 |   |
| Hong Lin                       |   |   | 449,754   |   |   |   | - |   |
| Xiandong Meng                  |   |   | -         |   |   |   | 3,584,701 |   |
| Total due from related parties |   | $      | 1,339,828 |   |   | $      | 4,129,531 |   |

----

----

|                  | BIOPHARM ASIA, INC. |                                                            |
|-----------------------|---------------------|-----------------------------------------------------------------|
|                  |                |                                                            |   |
| Dated: March 29, 2011 | By:            | /s/  Xia Yang Hu                                      |   |
|                  |                | Xia Yang HuChief Executive Officer(principal executive officer) |   |