U.S. Securities and Exchange Commission

                              Washington, Dc 20549


                                  FORM 10-KSB/A



           [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


                   For the fiscal year ended December 31, 2004
                                             -----------------

                        Commission file number 000-27959

                            GFR Pharmaceuticals, Inc.
                            -------------------------
                 (Name of small business issuer in its charter)


             Nevada                                     77-0517964
---------------------------------           ------------------------------------
   (State or other jurisdiction             (I.R.S. Employer Identification No.)
of incorporation or organization)

        Suite 11405 - 201A Street, Maple Ridge, British Columbia V2X 0Y3
            (Address of principal executive office) Zip/Postal Code

         Issuer's telephone number: (604) 460-8440

Securities registered pursuant to Section 12(b) of the Act: None
                                                            ----

Securities registered pursuant to Section 12(g) of the Act:

                                  Common Stock
                                (Title of Class)


         Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the  Exchange  Act during the  preceding 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 ( ).

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

         Issuer's revenues for its most recent fiscal year, were $5,859,763 .
                                                                 -----------



<PAGE>



         Issuer's Common Shares  outstanding at December 31, 2004 was 1,079,940.
The  aggregate  market  value of voting and  non-voting  common  equity  held by
non-affiliates  as of April 5, 2005 was $127,485,  computed based on the average
bid and asked price of such common equity as of April 5, 2005.

         Except for the historical information contained herein, the matters set
forth in this Form 10- KSB are forward looking  statements within the meaning of
the "Safe Harbor" provision of the Private  Securities  Litigation Reform Act of
1995.  These  forward-looking  statements are subject to risk and  uncertainties
that may cause  actual  results  to  differ  materially.  These  forward-looking
statements  speak  only  as of the  date  hereof  and  Laredo  Investment  Corp.
disclaims any intent or obligation to update these forward-looking statements.

Documents Incorporated by Reference:  Certain exhibits



                                Explanatory Note

We are filing this  Amendment  No. 1 to our Annual Report on Form 10-KSB for the
year ended December 31, 2004 to respond to certain comments  received by us from
the Staff of the Securities and Exchange  Commission  ("SEC").  We have restated
our balance sheet at December 31, 2004, and statements of income,  stockholders'
equity and cash flows for the year ended  December  31,  2004.  The  restatement
impacts the year ended  December  31, 2004,  but has no effect on the  financial
statements  issued in prior  fiscal  years.  The  restatement  corrects an error
within the currency  translation  adjustment,  which was expensed in error.  The
impact of the restatement reduced net income by $311,113, net of tax and reduced
earnings per share from $0.38 to $0.10 for the year ended December 31, 2004.

For  convenience  and ease of reference we are filing this Annual  Report in its
entirety with the applicable  changes.  Unless otherwise stated, all information
contained  in this  amendment  is as of April 13,  2005,  the filing date of our
Annual  Report on Form  10-KSB for the  fiscal  year ended  December  31,  2004.
Accordingly,  this Amendment No. 1 to the Annual Report on Form 10-KSB/A  should
be read in conjunction with our subsequent filings with the SEC.




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ITEM 1.           DESCRIPTION OF BUSINESS.

Business Development

GFR  Pharmaceuticals,  Inc.  (Formerly Laredo Investment Corp.) was incorporated
under the laws of the State of Nevada on December 18, 1996. GFR Pharmaceuticals,
Inc. ceased all operating activities during the period from December 18, 1996 to
July 9, 1999 and was considered dormant.  On July 9, 1999, GFR  Pharmaceuticals,
Inc.  obtained a certificate  of renewal from the State of Nevada.  From July 9,
1999 to January 21,  2000,  GFR  Pharmaceuticals,  Inc.  was in the  development
stage.

On January 21, 2000, the Company entered into an Acquisition  Agreement with GFR
Pharm, Ltd. (Formerly GFR Nutritionals,  Ltd.), a British Columbia  corporation,
(GFR), Richard Pierce and Lucretia  Schanfarber (the GFR Majority  Shareholders)
to acquire their shares representing 100% of the outstanding common stock of GFR
in exchange for  19,000,000  newly issued shares of Laredo's  restricted  common
stock.  The  transaction  was  recorded  as  a  reverse  acquisition.   GFR  was
incorporated in March 1997 as Helm  Developments  Ltd. In June 1998, the Company
formally  changed its name to GFR  Nutritionals  Ltd.  GFR was 100% owned by the
President and CEO,  Richard Pierce from inception until January 17, 2000, when a
10% interest was acquired by Lucretia Schanfarber.  Business operations began in
October  1998  after   acquiring   manufacturing   equipment  and  arranging  to
manufacture nutritional supplements under a private label contract.

On June 21,  2000,  the  Company  entered  into an  Acquisition  Agreement  with
Nutritionals (USA) Direct.Com, a Washington corporation,  (NDC), to acquire 100%
of the outstanding  common stock of NDC in exchange for $1,000.  The transaction
has been recorded as a purchase.  NDC operations were wound down in October 2002
and the company became dormant.

On November 1, 2000,  GFR  Pharmaceuticals,  Inc.  entered  into an  Acquisition
Agreement with R & L Health,  Inc., a British  Columbia  corporation,  (R&L), to
acquire 100% of the outstanding  common stock of R&L in exchange for $0.01.  The
transaction was recorded as a purchase.

On April 5, 2004, GFR Nutritionals,  Ltd. and R&L Health,  Inc. changed its name
to GFR Pharma, Inc. and GFR Health, Inc., respectively.

On  August  9,  2004,   Laredo   Investment  Corp.   changed  its  name  to  GFR
Pharmaceuticals, Inc.

Narrative Description of the Business

GFR Pharma, Ltd. (Formerly GFR Nutritionals Ltd.), GFR  Pharmaceuticals,  Inc.'s
wholly owned  subsidiary is an established  manufacturer of quality  nutritional
supplement products. GFR Pharma, Ltd. (Formerly GFR Nutritionals Ltd.), operates
a full service manufacturing facility that produces natural-source  nutritional,
vitamin,  mineral,  herbal  sports  nutrition  products  and  over  the  counter
pharmaceutical products which are sold on a private label basis to wholesale and
retail   clients.   GFR  Health,   Inc.   (Formerly   R&L  Health   Inc.),   GFR
Pharmaceuticals,  Inc.'s wholesale division markets products manufactured by GFR
to mass market retailers.


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Nutritional  supplements  are being  increasingly  recognized by the medical and
scientific communities as an integral component of a healthy lifestyle.  Much of
the growth in this industry is driven by six key factors:

         o        Positive  publicity - For several years,  medical journals and
                  news  reports  have  widely and  consistently  publicized  the
                  positive  effects of  nutritional  supplements.  Many of these
                  reports focus on the correlation  between  consumed  nutrients
                  and the reduced  incidence of certain  diseases.  As a result,
                  the nutritional  supplement  industry has experienced  greater
                  acceptance and popularity.

         o        Increased research - The more the scientific  community learns
                  about the human body, more is proved that an individual's diet
                  and health are  undoubtedly  connected.  Government  agencies,
                  universities,  and  private  companies  are  increasing  their
                  sponsorship of research  assessing the benefits of nutritional
                  supplements and herbs.

         o        Favorable  regulatory  environment - The US Dietary Supplement
                  Health and Education  Act (DSHEA)  created a set of guidelines
                  specific  to  the  supplement   industry  and   established  a
                  regulatory  environment  which  allows  responsible  nutrition
                  companies to thrive and allows the industry to regulate itself
                  with  supervision by the FDA.  Health Canada has followed suit
                  and  defined   Good   Manufacturing   Practices,   with  which
                  compliance in the industry is voluntary.

         o        Mass market distribution - Nutritional supplements,  including
                  all-natural  products,   vitamins,  minerals  and  herbs,  are
                  increasingly  sold in mass volume retail  stores.  Due to this
                  new market channel,  millions of shoppers are exposed to these
                  products as they are introduced into the mainstream.

         o        Ageing of the  population - The largest  demographic  group in
                  the history of North America is now turning 50 years old. Over
                  the  next  15  years,  approximately  80  million  more  "baby
                  boomers" will join this group of individuals who are concerned
                  with preserving their health and fitness,  directly increasing
                  the demand for nutritional supplements.

         o        Trend  toward   preventative  care  -  The  collective  health
                  consciousness  of the population  that began over 20 years ago
                  is gaining  momentum  and,  along with  regular  exercise,  it
                  embraces nutritional supplements.

According to the Nutrition Business Journal,  the US nutrition  industry,  which
includes natural foods, dietary supplements, and natural personal care products,
has grown  14-16%  annually  over the past two years and is  expected to sustain
double digit growth for the near future.  The Nutrition  Business Journal states
that the US nutrition  industry  generated  $28.8  billion of consumer  sales in
2002. Canadian sales tend to approximate 10% of the US market.


                                        4

<PAGE>



Principal  Products:  GFR  Pharmaceuticals,   Inc.  currently  manufactures  300
different products in

capsule, tablet, powder, and liquid form.  GFR specializes in production of:

         -        Vitamin and mineral formulations
         -        Indication and herbal formulas (nutritional and herbal)
         -        Nutritional herbal formulas for women
         -        Nutritional herbal formulas for men
         -        "Boomer nutrition" - nutritional and herbal formulas for 50+
         -        Sports nutrition products
         -        Family fitness products
         -        Weight loss and diet products
         -        Soy and whey protein shakes
         -        Green food powders
         -        Daily nutrient packets

Markets:  Established  market  channels  for  nutritional  products  within  the
industry  include  distribution  through health food retail stores,  mass market
retail through department and grocery stores, multi-level marketing, mail order,
health practitioners, and the Internet.


Currently, GFR Pharmaceuticals,  Inc. manufactures nutritional supplements under
private label contracts with wholesale  distributors.  During 2004 and 2003, one
private label customer,  Prairie Naturals,  Inc. has comprised approximately 41%
and 45%, respectively of GFR Pharmaceuticals, Inc.'s sales.


GFR  Pharmaceuticals,  Inc.'s  primary  goal is to  achieve  a level  of  annual
revenues in excess of $8.0 million by the fiscal year ended 2005  resulting from
expanded  marketing efforts and vertical  integration  through  acquisitions and
expansion  into  new  markets.  GFR   Pharmaceuticals,   Inc.  is  also  pursing
opportunities to market direct sales to consumers through the Internet.

Competition:  The  main  competitors  in the  Canadian  natural  health  product
industry are privately  owned  corporations.  A couple of larger  companies that
manufacture their products for retail distribution are Jamieson Laboratories and
Natural  Factors.  There  are also many  companies  which  manufacture  only for
private  label  sales.  Many  smaller  manufacturers  have their  products  sold
strictly in specialty health food and nutrition stores.

Natural health product manufacturing has significant cost barriers for new start
up companies.  Start up costs include set up of manufacturing facilities through
purchase of equipment,  acquiring skilled labor and research and  implementation
of processes acceptable to government standards.

Regulation:  In both the US and Canada,  the natural health products industry is
self  regulating.  In Canada,  products are not required to be approved prior to
introduction to the market, however Health Canada has defined Good Manufacturing
Practices, with which compliance is voluntary.  Health Canada has indicated that
stricter  regulations  for  natural  health  products  will be enacted in future
years.


                                        5

<PAGE>



In 1996,  US Congress  enacted the Dietary  Supplement  Health and Education Act
(DSHEA) which included a set of guidelines  specific to the supplement  industry
and established a self regulatory environment for the industry.

Employees:  GFR  Pharmaceuticals,  Inc.  currently has 55  employees.  Executive
management and office administration  personnel are comprised of 17 individuals.
Operations personnel is made up of 38 individuals, including the Quality Control
Director and Production  Manager.  Future employees will be hired as dictated by
increases in business volume.


ITEM 2.           DESCRIPTION OF PROPERTY.

GFR  Pharmaceuticals,  Inc.'s operations are located in a building that is owned
by a major  shareholder.  The  lease  agreement  is for a two year  term  ending
December  31,  2005.  Under the terms of the lease  agreement,  the monthly rent
charge is approximately $4,000 ($5,000 Canadian), and GFR Pharmaceuticals,  Inc.
is responsible for paying the property taxes,  utility charges, and any costs of
repair and  maintenance.  Any repairs and  maintenance  expenses paid for by the
landlords  are required to be reimbursed  by GFR  Pharmaceuticals,  Inc. at cost
plus  15%.  All  other  terms  are  consistent  with  those  standard  to  lease
agreements.

Both  GFR  Pharmaceuticals,   Inc.'s  administration  office  and  manufacturing
operations  are located in the same  premises.  The total square  footage of the
building is 10,000. The area used by manufacturing  currently comprises 3,625 of
that total. In management's  opinion,  the space leased is sufficient to support
operational growth for the foreseeable future. Currently, production is only run
on one shift per day for five days each week. Production shifts can be increased
to a  maximum  of three  shifts  per day for  seven  days each week and still be
accommodated  within the  current  space.  The only  potential  requirement  for
additional  space  could  arise due to stock  held on hand as  business  volumes
increase.

During  2002,  GFR  Pharmaceuticals,  Inc.  entered into a lease  agreement  for
warehouse  space.  The  lease  is  month to month  with a six  month  notice  of
termination  clause.  Under the terms of the lease  agreement,  the monthly rent
charge is approximately $4,600 ($5,500 Canadian).


ITEM 3.           LEGAL PROCEEDINGS.

None


ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matters were submitted for a vote of security holders of GFR Pharmaceuticals,
Inc. during the fourth quarter of the fiscal year ended December 31, 2004.



                                        6

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                                     PART II


ITEM 5.           MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTER.

Market Information

GFR Pharmaceuticals, Inc.'s stock has been listed for sale on the OTC Electronic
Bulletin  Board  under the  symbol  "GFRP."  The high and low bid  prices of the
Common Stock of GFR Pharmaceuticals, Inc. have been as follows:


         Period                       High                Low
-----------------------        ------------------  ------------------
      1st Qtr 2004             $        0.100      $        0.060
      2nd Qtr 2004                      0.110               0.040
      3rd Qtr 2004                      1.450               0.020
      4thQtr 2004                       1.300               0.350

      1st Qtr 2003             $        0.160      $        0.020
      2nd Qtr 2003                      0.180               0.040
      3rd Qtr 2003                      0.160               0.050
      4thQtr 2003                       0.170               0.070

The above  quotations  reflect  inter-dealer  prices,  without  retail  mark-up,
markdown, or commission and may not necessarily represent actual transactions.

Holders

There were  approximately  18 holders of GFR  Pharmaceuticals,  Inc.'s 1,079,940
shares of common stock outstanding as of December 31, 2004.

Dividends

GFR  Pharmaceuticals,  Inc. has not declared any dividends since inception,  and
has no present intention of paying any cash dividends on its common stock in the
foreseeable future. The payment by GFR Pharmaceuticals,  Inc., of dividends,  if
any, in the future,  rests within the  discretion  of its Board of Directors and
will depend, among other things, upon GFR Pharmaceuticals,  Inc.'s earnings, its
capital  requirements  and its financial  condition,  as well as other  relevant
factors.


ITEM 6.           MANAGEMENT'S DISCUSSION AND ANALYSIS.


We have  restated  our balance  sheet at December 31, 2004,  and  statements  of
income,  stockholders'  equity and cash flows for the year  ended  December  31,
2004.  The  restatement  impacts the year ended  December 31,  2004,  but has no
effect on the financial statements issued in prior fiscal years. The restatement
corrects an error within the currency translation adjustment, which was expensed


                                        7

<PAGE>




in error. The impact of the restatement  reduced net income by $311,113,  net of
tax and  reduced  earnings  per share  from  $0.38 to $0.10  for the year  ended
December 31, 2004.


Plan of Operations

The  Company  is  currently  working  on  securing   additional   private  label
manufacturing  contracts.  The key target for private  label sales are wholesale
distributors of health food nutrition products.

Liquidity and Capital Resources

GFR Pharmaceuticals,  Inc.'s working capital ratio was 1.35 at December 31, 2004
compared to 1.52 at December 31, 2003. Key contributing  factors for this change
were the  approximate  $212,000  increase  in accounts  payable,  an increase of
approximately  $613,000  in the  bank  line and an  increase  in  shareholder  s
payables of approximately $254,000.

Current  liabilities  include as of  December  31, 2004 and 2003,  $139,159  and
$114,416  promissory  note payable to a party related to the major  shareholder,
which  bears  interest at 12%  annually.  These  funds are  repayable  on demand
however, the request for repayment occurring at this time is not expected.

GFR  Pharmaceuticals,  Inc. has a small business loan outstanding with a balance
of  $26,959  and  $56,455  as of  December  31,  2004 and 2003.  This loan bears
interest  at 10.15% and  matures on March 15,  2004.  The  Company  has a second
business loan with an  outstanding  balance of $37,162 and $0 as of December 31,
2004 and 2003,  respectively.  This loan bears interest at prime plus 1 percent,
maturing August 23, 2009.

GFR  Pharmaceuticals,  Inc.  acquired an  additional  $258,000 of  manufacturing
equipment  in 2004 in order to meet  demands for new  private  label  sales.  An
additional $125,000 of manufacturing equipment is expected to be needed in 2005.
Plant  renovations  costing $9,400 were finished in 2003.  GFR  Pharmaceuticals,
Inc. is also expected to spend $20,000 for plant  renovations to be completed in
2004. GFR  Pharmaceuticals,  Inc. acquired new software during 2004 at a cost of
$20,000.  Increased  sales  volumes  will  also  necessitate  hiring  additional
operations, sales and administrative personnel.

Results of Operations


                                                2004                2003
                                            ---------------  ------------------
Sales                                       $     5,859,763  $        5,042,189
Cost of Sales                                     4,207,405           3,712,178
Gross Profit                                      1,652,358           1,330,011
Gross Profit Margin                                  28.20%              26.38%
Administrative Expenses                           1,490,334             889,320
Administrative Expenses as a % of Sales              25.43%              17.64%



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For the year ended December 31, 2004, sales were  approximately  $818,000 higher
than 2003 and are  expected to continue  to grow  during  2005.  During 2004 and
2003,  41% and 45% of sales,  respectively  were to  Prairie  Naturals  Inc.,  a
wholesale  distributor for which GFR Pharmaceuticals,  Inc. manufactures private
label  products.   GFR  Pharmaceuticals,   Inc.  has  a  verbal  arrangement  to
manufacture,  on an  as-ordered  basis,  private  label  products  that  Prairie
Naturals  Inc.   distributes   under  the  Prairie   Naturals  Inc.   name.  GFR
Pharmaceuticals,  Inc. also has an exclusive written contract to manufacture one
product that Prairie Naturals Inc, distributes for a third party private label.


Operating margins in 2004 were 28.20% of sales revenue,  1.82% higher than 2003.
Cost of  Sales  includes  the  cost  of raw  materials  used  in  manufacturing,
production  labor  costs  and an  applicable  share of  overhead  expenses.  The
increase in margin in 2004 can be attributed  to a decrease in machine  downtime
as compared to 2003. General and administrative expenses were 25.43% of sales in
2004,  7.79%  higher than 2003.  The increase in expense was due to increases in
staffing and an increase in marketing and advertising expenditure.

GFR Pharmaceuticals, Inc. anticipates realizing economies of scale as production
volumes increase.  Selling and marketing  expenses  increased during 2004 due to
GFR Pharmaceuticals, Inc.'s plan to expand marketing efforts.


Income Taxes

The effective tax rate decreased from  approximately  48 percent at December 31,
2003 to  approximately 22 percent at December 31, 2004. This decrease was due to
differences  in the  recognition of income and expenses for income tax reporting
and financial  statement  reporting  purposes.  The primary  difference  are the
result of excess depreciation and capital cost allowance for income tax purposes
over the amount of depreciation expense for financial reporting purposes.

Foreign Currency Gains and Loses

Foreign currency gains and losses are the result of fluctuations in the exchange
rate between Canada and our Foreign customers and vendors.  Our foreign currency
gains and losses result  primarily due to the our purchasing of raw materials in
foreign currencies from both inside and outside Canada. During 2004 we purchased
approximately 43% of our raw materials in U.S. dollars compared to 32% for 2003.
We also have sales to foreign  countries  amounting to  approximately  1% of our
total  sales for 2004 and none in 2003.  Foreign  currency  gains  increased  by
$32,936 to $34,419 in 2004 from $1,483 in 2003. We expect or purchases and sales
in foreign currencies to remain relatively constant over the next twelve months.
Because  exchange  rates are outside our control,  however,  exchange  gains and
losses are unpredictable.








                                        9

<PAGE>



Effect of Inflation

GFR  Pharmaceuticals,  Inc. does not  anticipate any financial  impact,  whether
beneficial or detrimental, as a result of inflation.

Critical Accounting Policies


Our critical  accounting policies are those which we believe require significant
judgements,  often as a result of the need to make estimates about the effect of
matters that are inherently  uncertain.  A discussion of our critical accounting
policies  is set  forth  below.  A  complete  discussion  of all our  accounting
policies can be found in the Notes to our Financial  Statements included as part
of this Report.

Inventories

Raw  materials  inventory  is stated  at a lower of  weighted  average  cost and
replacement  value.  Inventories  of work in  progress is stated at the lower of
weighted average cost and net realizable value.

Revenue recognition

Revenue  is  recognized  from  sales  of  products  at the time of  shipment  to
customers.

Foreign currency translation

The  Company's  functional  currency is the  Canadian  dollar and the  reporting
currency is the U.S. Dollar. All elements of financial statements are translated
using a current exchange rate. For assets and liabilities,  the exchange rate at
the balance sheet date is used.  Stockholders'  Equity is  translated  using the
historical rate. For revenues,  expenses,  gains and losses the weighted average
exchange rate for the period is used.  Translation gains and losses are included
as a separate component of stockholders'  equity. Gain and losses resulting from
foreign currency transactions are included in net income.

Pervasiveness of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles required management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.







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<PAGE>



RECENT ACCOUNTING PRONOUNCEMENTS

In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"), CONSOLIDATION
OF VARIABLE  INTEREST  ENTITIES,  which addresses the  consolidation of business
enterprises  (variable  interest  entities),  to which  the usual  condition  of
consolidation, a controlling financial interest, does not apply. FIN 46 requires
an entity to assess its business relationships to determine if they are variable
interest  entities.  As defined in FIN 46, variable  interests are  contractual,
ownership  or other  interests  in an entity  that  change  with  changes in the
entity's  net  asset  value.  Variable  interests  in an entity  may arise  from
financial   instruments,   service  contracts,   guarantees,   leases  or  other
arrangements  with the variable  interest  entity.  An entity that will absorb a
majority of the variable  interest entity's expected losses or expected residual
returns,  as defined in FIN 46, is  considered  the primary  beneficiary  of the
variable  interest  entity.  The primary  beneficiary  must include the variable
interest  entity's  assets,   liabilities  and  results  of  operations  in  its
consolidated  financial  statements.  FIN 46 is  immediately  effective  for all
variable interest entities created after January 31, 2003. For variable interest
entities  created prior to this date, the  provisions of FIN 46 were  originally
required  to be  applied  no later than our first  quarter  of Fiscal  2004.  On
October 8, 2003, the FASB issued FASB Staff  Position (FSP) FIN 46-6,  EFFECTIVE
DATE OF FASB INTERPRETATION NO. 46, CONSOLIDATION OF VARIABLE INTEREST ENTITIES.
The FSP  provides a limited  deferral  (until  the end of our second  quarter of
2004) of the effective  date of FIN 46 for certain  interests of a public entity
in a variable  interest entity or a potential  variable interest entity. We will
continue  to  evaluate  FIN 46, but due to the  complex  nature of the  analysis
required  by FIN 46,  we have not  determined  the  impact  on our  consolidated
results of operations or financial position.

In April  2003,  the FASB issued SFAS No. 149,  AMENDMENT  OF  STATEMENT  133 ON
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. SFAS No. 149 amends and clarifies
accounting for derivative instruments,  including certain derivative instruments
embedded in other contracts,  and for hedging  activities under SFAS No. 133. In
particular, this Statement clarifies under what circumstances a contract with an
initial net  investment  meets the  characteristic  of a  derivative  and when a
derivative contains a financing component that warrants special reporting in the
statement of cash flows. We adopted this standard for contracts  entered into or
modified  after  June 30,  2003.  The  adoption  of SFAS No.  149 did not have a
material impact on our consolidated results of operations or financial position.

In May 2003,  the FASB  issued SFAS No. 150,  ACCOUNTING  FOR CERTAIN  FINANCIAL
INSTRUMENTS WITH  CHARACTERISTICS OF BOTH LIABILITIES AND EQUITY. This Statement
requires certain financial instruments that embody obligations of the issuer and
have  characteristics  of  both  liabilities  and  equity  to be  classified  as
liabilities.  We adopted this standard for financial instruments entered into or
modified  after  May 31,  2003.  The  adoption  of SFAS  No.  150 did not have a
material impact on our consolidated results of operations or financial position.

In November 2004, the FASB issued SFAS No. 151,  INVENTORY  COSTS - AN AMENDMENT
OF ARB NO. 43,  CHAPTER 4. This  Statement  amends the  guidance  in ARB No. 43,
Chapter 4, "Inventory  Pricing," to clarify the accounting for abnormal  amounts
of  idle  facility  expense,   freight,  handling  costs,  and  wasted  material
(spoilage).  Paragraph 5 of ARB 43,  Chapter 4 previously  stated  that"...under
some  circumstances,  items such as idle facility expense,  excessive  spoilage,
double freight,  and rehandling costs maybe so abnormal as to require  treatment
as current  period  charges..."  This  Statement  requires  that those  items be
recognized as current-period charges regardless of whether they meet

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the  criterion of "so  abnormal."  In addition,  this  Statement  requires  that
allocation of fixed production  overheads to the costs of conversion be based on
the normal  capacity of the production  facilities.  This statement is effective
for inventory  costs incurred  during fiscal years beginning after Jun 15, 2005.
Management  does not  believe  the  adoption  of this  Statement  will  have any
immediate material impact on the Company.

On December 16, 2004, the FASB issued SFAS No. 123 ( R ),  SHARE-BASED  PAYMENT,
which is an amendment to SFAS No. 123, ACCOUNTING FOR STOCK-BASED  COMPENSATION.
This new standard eliminates the ability to account for share-based compensation
transactions   using  Accounting   Principles  Board  ("APB")  Opinion  No.  25,
ACCOUNTING  FOR  STOCK  ISSUED  TO  EMPLOYEES,   and  generally   requires  such
transactions  to be  accounted  for  using a  fair-value  based  method  and the
resulting  cost  recognized  in our financial  statements.  This new standard is
effective  for awards that are  granted,  modified or settled in cash in interim
and annual periods beginning after June 15, 2005. In addition, this new standard
will apply to unvested  options  granted  prior to the  effective  date. We will
adopt this new standard  effective  for the fourth fiscal  quarter of 2005,  and
have not yet  determined  what impact this  standard  will have on our financial
position or results of operations.

In December  2004,  the FASB issued  SFAS No.  152,  ACCOUNTING  FOR REAL ESTATE
TIME-SHARING  TRANSACTIONS,  which amends FASB statement No. 66,  Accounting for
Sales of Real Estate,  to  reference  the  financial  accounting  and  reporting
guidance  for real estate  time-sharing  transactions  that is provided in AICPA
Statement  of Position  (SOP) 04-2,  Accounting  for Real Estate  Time-  Sharing
Transactions.  This statement also amends FASB Statement No. 67,  Accounting for
Costs and Initial Rental  Operations of Real Estate Projects,  to state that the
guidance  for (a)  incidental  operations  and (b) costs  incurred  to sell real
estate  projects does not apply to real estate  time-sharing  transactions.  The
accounting for those operations and costs is subject to the guidance in SOP04-2.
This Statement is effective for financial  statements for fiscal years beginning
after June 15, 2005.  Management  believes the adoption of this  Statement  will
have no impact on the financial statements of the Company.

In December 2004, the FASB issued SFAS No. 153, EXCHANGE OF NONMONETARY  ASSETS.
This Statement addresses the measurement of exchanges of nonmonetary assets. The
guidance in APB Opinion NO. 29,  Accounting  for  Nonmonetary  Transactions,  is
based on the principle that  exchanges of nonmonetary  assets should be measured
based on the fair value of the assets  exchanged.  The guidance in that Opinion,
however,  included certain  exceptions to that principle.  This Statement amends
Opinion 29 to  eliminate  the  exception  for  nonmonetary  exchanges of similar
productive  assets and  replaces it with a general  exception  for  exchanges of
nonmonetary assets that do not have commercial substance. A nonmonetary exchange
has commercial  substance if the future cash flows of the entity are expected to
change  significantly  as a result of the exchange.  This Statement is effective
for financial statements for fiscal years beginning after June 15, 2005. Earlier
applications  is permitted for  nonmonetary  assets  exchanges  incurred  during
fiscal years  beginning  after the date of this statement is issued.  Management
believes the adoption of this  Statement  will have not impact on the  financial
statements fo the Company.






                                       12

<PAGE>



ITEM 7. FINANCIAL STATEMENTS.

The  financial  statements of the Company and  supplementary  data are included,
preceding  the  signature  page to this  report.  See Item 13. for a list of the
financial statements and financial statement schedules included.


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

There have been no  disagreements  with  accountants on accounting and financial
disclosure.


ITEM 8A. CONTROLS AND PROCEDURES


RESTATEMENT

On September 23, 2005, our independent  auditors,  Robison, Hill & Co., informed
our principal  executive  officer and principal  financial officer that they had
discovered and error in our financial statements for the year ended December 31,
2004.

The error relates to the  translation of our financial  statements from Canadian
dollars to U.S. dollars for reporting purposes. The error impacts the year ended
December 31, 2004, but has no effect on the financial statements issued in prior
fiscal years. The restatement  corrects an error within the currency translation
adjustment, which should be reported in the equity section of the balance sheet,
but was reported in error in the income statement. The impact of the restatement
reduced net income by $311,113,  net of tax and reduced  earnings per share from
$0.38 to $0.10 for the year ended December 31, 2004.

Following  our  discussion  with Robison,  Hill & Co., our  principal  executive
officer and principal  financial  officer  determined that the December 31, 2004
financial statements should be restated to reflect the correction of this error.
We have  restated  our balance  sheet at December 31, 2004,  and  statements  of
income,  stockholders'  equity and cash flows for the year  ended  December  31,
2004.

In  connection  with  the  restatement,  the  principal  executive  officer  and
principal  financial officer of GFR  Pharmaceuticals,  Inc. have reevaluated GFR
Pharmaceuticals,  Inc.'s disclosure controls and procedures (as defined in Rules
13a-15(e)  and  15d-15(e)  under  the  Securities  Exchange  Act  of  1934)  and
identified the a material weakness in internal controls over financial reporting
with  respect  to a failure to ensure  correct  reporting  of  foreign  currency
translation adjustments.

The principal  executive officer and principal  financial officer have concluded
that our disclosure  controls and  procedures  were not effective as of December
31, 2004, March 31, 2005, or June 30, 2005.






                                       13

<PAGE>




REMEDIATION OF MATERIAL WEAKNESS IN INTERNAL CONTROL

We are confident that, as of this filing,  we have fully remediated the material
weakness in our  internal  control  over  financial  reporting  with  respect to
accounting for foreign currency  translation  adjustments.  The remedial actions
included changes to our software properly  position the translation  adjustments
in the equity section of the balance  sheet,  improved  training,  education and
accounting  reviews designed to ensure that all relevant  personnel  involved in
foreign currency translation  adjustments  understand and apply proper reporting
of currency translation adjustments.

As   previously   reported,   there   were  no   significant   changes   in  GFR
Pharmaceuticals,  Inc.  internal  control over  financial  reporting  during the
Company's  fourth fiscal  quarter of 2004 that has  materially  affected,  or is
reasonably  likely to materially  affect,  the Company's  internal  control over
financial  reporting.  However,  subsequent  to June 30, 2005,  we took remedial
actions described above.



ITEM 8B.          OTHER INFORMATION

None


                                       14

<PAGE>



                                    PART III


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

Business Experience Of Management


Richard Pierce,  Age 44, President and CEO,  Director,  Chairman of the Board of
Directors.


Mr. Pierce is the President and Chief Executive Officer of GFR  Pharmaceuticals,
Inc.  In his role he  oversees  all aspects of  operations,  administration  and
financing of GFR Pharmaceuticals, Inc.

Mr. Pierce has almost 16 years experience in the natural health  industry.  From
1997 to 1998,  prior to founding GFR  Nutritionals  Ltd., Mr. Pierce worked as a
Business  Development  Coordinator  for  Integrated  Equity  Management.  He was
involved in marketing bridge financing arrangements to private corporations. For
one year spanning 1996 and 1997, Mr. Pierce worked as an Industry Consultant for
Natraceuticals  Inc. He  specialized  in the  development  and  marketing of new
sports nutrition products.

For ten years prior to joining  Natraceuticals Inc, Mr. Pierce founded and acted
as President  and CEO of NHF  (Nutrion  Health and Fitness  Inc.).  This company
researched,   designed,  formulated,   manufactured  and  marketed  four  sports
nutrition product lines throughout Canada.

In 1983, Mr. Pierce founded  Natural Health  Products and acted as President and
CEO. Natural Health Products designed, formulated, manufactured and marketed the
first sports nutrition line in Atlantic Canada.

Marc Casavant, Age 42, Chief Financial Officer

Mr. Casavant  joined GFR  Pharmaceuticals,  Inc. as Chief  Financial  Officer in
April 2000  through  April 2001 and from  October  2002 to  present.  During his
absence he took a leave of abscence.  From March 1998 to April 2000, he was Vice
President of Operations for Basic Sports  Nutrition,  Surrey,  British Columbia.
During  1996 to March 1998 Mr.  Casavant  served as Plant  Manager  for  Nu-Life
Nutrition,  Maple  Ridge,  British  Columbia.  During 1995  through  1997 he was
Controller of Nutrion Health & Fitness,  Maple Ridge,  British Columbia.  During
1993 to 1995, Mr.  Casavant was  Controller of Majestic  Marketing  Ltd.,  White
Rock, British Columbia. From 1989 to 1993, he was the Senior Accountant for Ebco
Industries,  Ltd.,  in  Richmond,  British  Columbia.  Mr.  Casavant  obtained a
Business Administration Diploma in 1985 from Okanagan College,  Kelowna, British
Columbia.

Rose Marie Pierce, Age 55, Director

Ms. Pierce has been owner  operator of  Sunstreams  Health Foods in Calgary ALTA
since 1998,  and from 1995 to 1998 worked as a pharmacist  at various  locations
for Coop Super Markets in Calgary ALTA.

                                       15

<PAGE>



AUDIT COMMITTEE FINANCIAL EXPERT

         The  Company's  board of  directors  does not have an "audit  committee
financial   expert,"  within  the  meaning  of  such  phrase  under   applicable
regulations  of the  Securities  and Exchange  Commission,  serving on its audit
committee.  The  board of  directors  believes  that all  members  of its  audit
committee are financially literate and experienced in business matters, and that
one or more  members of the audit  committee  are  capable of (i)  understanding
generally accepted accounting principles ("GAAP") and financial statements, (ii)
assessing the general  application  of GAAP  principles  in connection  with our
accounting for estimates,  accruals and reserves, (iii) analyzing and evaluating
our  financial   statements,   (iv)  understanding  our  internal  controls  and
procedures  for  financial  reporting;  and (v)  understanding  audit  committee
functions,  all of which are attributes of an audit committee  financial expert.
However,  the board of directors  believes that there is not any audit committee
member who has obtained these attributes through the experience specified in the
SEC's definition of "audit committee financial expert." Further, like many small
companies,  it is difficult  for the Company to attract and retain board members
who qualify as "audit  committee  financial  experts," and competition for these
individuals is significant.  The board believes that its current audit committee
is able to  fulfill  its  role  under  SEC  regulations  despite  not  having  a
designated "audit committee financial expert."


Code of Ethics

We do not currently have a Code of Ethics applicable to our principal executive,
financial and accounting  officers,  however;  the senior financial officer Marc
Casavant  carries  out his  function  under  the  code of  ethics  and  rules of
professional conduct as outlined by the Society of Certified General Accountants
of British Columbia.



ITEM 10.          EXECUTIVE COMPENSATION.

Summary Compensation Table

For the year ended December 31, 2004 and 2003, the President and CEO received in
compensation $80,000 ($96,000Canadian) and $72,000 ($96,000 Canadian) and $8,000
($9,600 Canadian) and $7,200 ($9,600 Canadian) in automobile  allowance pursuant
to an oral agreement.

GFR Pharmaceuticals, Inc. has not granted any options to Directors, Officers, or
Key Personnel.

Compensation Of Directors

The members of GFR Pharmaceuticals, Inc.'s Board of Directors are reimbursed for
actual expenses incurred in attending Board meetings.






                                       16

<PAGE>



ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

Security  Ownership of Management  and Certain  Beneficial  Owners  holding five
percent or greater of the  1,079,940  shares of common stock  outstanding  as of
December 31, 2004.


  Title of         Name and Address            Amount and Nature         % of
   Class         of Beneficial Owner        of Beneficial Ownership     Class
-----------  ---------------------------  --------------------------  --------
Common       Richard Pierce (1)                          570,000     52.78%
             President, CEO, Director

             Lucretia Schanfarber (1)                     63,333      5.86%


             All officers and Directors                  570,000     52.78%
             as a Group (3 persons)

(1) c/o Suite 11405 - 201A Street, Maple Ridge, British Columbia V2X 0Y3


ITEM 12.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.


As at  December  31,  2004 and  2003,  accounts  payable  include  approximately
$253,409  ($305,003  Canadian) and $0 ($0 Canadian) owing to 517255 B.C. Ltd., a
company owned by Richard  Pierce,  who is also the CEO and Chairman of the Board
of GFR Pharmaceuticals, Inc. Mr. Pierce personally borrowed, through 517255 B.C.
Ltd., and provided the funds to GFR, a temporary cash injection  required to pay
for  materials  required to  manufacture  inventory for a sales  promotion  with
Costco Canada.  The funds will be repaid to Mr. Pierce by January 31, 2005 or at
the time that Costco Canada pays for the inventory.

Current  liabilities  include a  $139,159  promissory  note  payable  to a party
related to the major  shareholder,  which bears interest at 12% annually.  These
funds are repayable on demand  however,  the request for repayment  occurring at
this time is not expected.  The major shareholder is Richard Pierce and the note
holders are Francina and George Pierce,  Richard's mother and father.  The funds
were borrowed in October 1998 and used to provide start up and operating capital
to the business.

GFR  Pharmaceuticals,  Inc.'s operations are located in a building that is owned
by a major shareholder,  Richard Pierce, and his parents. The lease agreement is
for a two year  term  ending  December  31,  2005.  Under the terms of the lease
agreement,  the yearly rent charge is approximately  $50,000 ($60,000  Canadian)
per year.  Paid monthly in twelve equal  installments  and GFR  Pharmaceuticals,
Inc. is responsible  for paying the property  taxes,  utility  charges,  and any
costs of repair and maintenance.  Any repairs and maintenance  expenses paid for
by the landlords are required to be reimbursed by GFR  Pharmaceuticals,  Inc. at
cost plus 15%.  All other  terms are  consistent  with those  standard  to lease
agreements.




                                       17

<PAGE>




GFR  Pharmaceuticals,  Inc. has also entered into a lease  agreement for certain
manufacturing  equipment with 517255 B.C. Ltd., a company owned by the Company's
major shareholder  Richard Pierce, who is also the CEO and Chairman of the Board
of GFR  Pharmaceuticals,  Inc.  The rental  charges  are  approximately  $36,276
($43,531  Canadian)  per year.  The equipment  leased  expires June 30, 2005, at
which  time  the  equipment  will be  owned  by GFR  Pharmaceuticals,  Inc.  The
equipment  consisted of a tableting machine and other various items as listed on
the  lease  agreement,  (See  exhibit  10.4).  The  cost  of the  equipment  was
approximately  $126,000 Canadian.  The A.P.R. on this lease is 16% compared to a
quote from a third party leasing company of 18%.


Richard  Pierce,  CEO of GFR  Pharmaceuticals,  Inc. and  Lucretia  Schanfarber,
former  Vice  President  of Sales,  hold  contracts  with GFR  Health,  Inc that
licenses their names and images to GFR Health for use on certain products.  Each
are paid a quarterly  bonus of 10% of GFR Health,  Inc.  profits  before  income
taxes,  depreciation,  and amortization are deducted as expenses. As of December
31,2004 and 2003, $59,783 and $105,192 in bonuses have been paid and $15,486 and
$30,743 have been accrued.

As of April 1, 2004, Ms. Schanfarber is no longer being paid this licence fee as
her name and image has been removed from all products.


ITEM 13.          EXHIBITS AND REPORTS ON FORM 8-K.

The following documents are filed as part of this report under Part II, Item 8:

Exhibits as required by Item 601 of Regulation S-B

Exhibit Number             Description

3.1      Articles of Incorporation as amended (1)

3.2      Bylaws (1)

10.1     Office and  production  space  building  lease  between the Company and
         Richard Pierce dated January 1, 2004.
10.2     Warehouse  space lease between the Company and 648504 B.C.  Ltd.  dated
         August 1, 2002.
10.3     Additional  warehouse  space lease  between the Company and 648504 B.C.
         Ltd. dated February 26, 2003.
10.4     Equipment Lease between the Company and 517255 B.C. Ltd. dated June 14,
         2001.
10.5     Bonus  Agreement  between the Company and Richard Pierce dated April 1,
         2003.
10.6     Loan  Agreement/Promissory  Note 1 between  the  Company and George and
         Francia Pierce dated October 1998.
10.7     Loan  Agreement/Promissory  Note 2 between  the  Company and 517255 B.C
         Ltd. dated October 4, 2004.
14.1     Code of Ethics

31.1     Certification  Pursuant  to Section  302 of the  Sarbanes-Oxley  Act of
         2002.
31.2     Certification  Pursuant  to Section  302 of the  Sarbanes-Oxley  Act of
         2002.

                                       18

<PAGE>



32.1     Certification  Pursuant  to Section  906 of the  Sarbanes-Oxley  Act of
         2002.
32.2     Certification  Pursuant  to Section  906 of the  Sarbanes-Oxley  Act of
         2002.

(1)  Incorporated  by reference to GFR  Pharmaceuticals,  Inc.'s  report on Form
10SB12G dated November 5, 1999


(b) Reports of Form 8-K

         On November 2, 2003,  the Company filed a Current  Report,  to announce
         the  removal  of Mr.  Lucretia  Schanfarber  as  member of the board of
         directors under Item 6.

ITEM 14. PRINCIPAL ACCOUNTANTS FEES AND SERVICES

         The following is a summary of the fees billed to us by Robison,  Hill &
Company for professional services rendered for the years ended December 31, 2003
and 2002:


Service                                    2004                2003
--------------------------------    ------------------   -----------------
Audit Fees                          $           12,600   $          14,550
Audit Related Services                               -                   -
Tax Fees                                           300                 300
All Other Fees                                       -                   -
                                    ------------------   -----------------
Total                               $           12,900   $          14,850
                                    ==================   =================


AUDIT FEES.  Consists of fees billed for professional  services rendered for the
audits  of  our  financial  statements,  reviews  of  our  interim  consolidated
financial  statements  included in  quarterly  reports,  services  performed  in
connection  with filings with the  Securities & Exchange  Commission and related
comfort letters and other services that are normally provided by Robison, Hill &
Company in connection with statutory and regulatory filings or engagements.

TAX FEES. Consists of fees billed for professional  services for tax compliance,
tax  advice  and tax  planning.  These  services  include  assistance  regarding
federal,  state and local tax compliance  and  consultation  in connection  with
various transactions and acquisitions.

Audit  Committee  Pre-Approval of Audit and  Permissible  Non-Audit  Services of
Independent Auditors

The Audit Committee is to pre-approve all audit and non-audit  services provided
by  the  independent  auditors.  These  services  may  include  audit  services,
audit-related  services,  tax services  and other  services as allowed by law or
regulation.  Pre-approval  is  generally  provided  for up to one  year  and any
pre-approval  is detailed as to the  particular  service or category of services
and is generally  subject to a specifically  approved  amount.  The  independent
auditors  and  management  are  required  to  periodically  report  to the Audit
Committee regarding the extent of services provided by the

                                       19

<PAGE>



independent  auditors in accordance with this pre-approval and the fees incurred
to date.  The Audit  Committee  may also  pre-approve  particular  services on a
case-by-case basis.

The  Audit  Committee  pre-approved  100%  of the  Company's  2003  audit  fees,
audit-related  fees,  tax fees,  and all other fees to the  extent the  services
occurred  after May 6, 2003,  the effective  date of the Securities and Exchange
Commission's final pre-approval rules.


                                       20

<PAGE>

                            GFR PHARMACEUTICALS, INC.
                                AND SUBSIDIARIES
                       (FORMERLY LAREDO INVESTMENT CORP.)
                                       -:-

                          INDEPENDENT AUDITOR'S REPORT

                           DECEMBER 31, 2004 AND 2003





<PAGE>






                                    CONTENTS


                                                                        Page

Independent Auditor's Report.............................................F - 1

Consolidated Balance Sheets
  December 31, 2004 and 2003.............................................F - 2

Consolidated Statements of Operations for the
  Years Ended December 31, 2004 and 2003.................................F - 4

Consolidated Statement of Stockholders' Equity for the
  Years Ended December 31, 2004 and 2003.................................F - 5

Consolidated Statements of Cash Flows for the
  Years Ended December 31, 2004 and 2003.................................F - 6

Notes to Consolidated Financial Statements...............................F - 7



<PAGE>












                          INDEPENDENT AUDITOR'S REPORT


GFR Pharmaceuticals, Inc. and Subsidiaries
(Formerly Laredo Investment Corp.)


         We have audited the  accompanying  consolidated  balance  sheets of GFR
Pharmaceuticals,  Inc. and Subsidiaries (Formerly Laredo Investment Corp.) as of
December  31,  2004  and  2003,  and  the  related  consolidated  statements  of
operations,  cash  flows,  and  stockholders'  equity  for the two  years  ended
December 31, 2004.  These  financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

         We conducted our audits in accordance  with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain  reasonable  assurance about whether the
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for our opinion.

         In our opinion,  the  financial  statements  referred to above  present
fairly, in all material respects, the financial position of GFR Pharmaceuticals,
Inc. and Subsidiaries (Formerly Laredo Investment Corp.) as of December 31, 2004
and 2003, and the results of its operations and its cash flows for the two years
ended  December 31, 2004 in  conformity  with  accounting  principles  generally
accepted in the United States of America.


                                      F - 1

<PAGE>





         As Discussed in Note 1 to the financial statements,  the Company's 2004
Consolidated  Statement  of Income  previously  reported  net income as $414,263
should have been $103,081. This discovery was made subsequent to the issuance of
the financial statements. The financial statements have been restated to reflect
this correction.


                                                    Respectfully Submitted,



                                                    /s/ Robison, Hill & Co.
                                                    Certified Public Accountants

Salt Lake City, Utah


April  5,  2005,  except  as to  the  restatement  discussed  in  Note  1 to the
consolidated financial statements which is as of September 23, 2005



                                      F - 2

<PAGE>



                   GFR PHARMACEUTICALS, INC, AND SUBSIDIARIES
                       (Formerly Laredo Investment Corp.)
                           CONSOLIDATED BALANCE SHEETS







                                           December 31,        December 31,
                                               2004                2003
                                        ------------------  ------------------

                                            (Restated)

ASSETS
Current Assets:
Cash and Cash Equivalents               $                -  $                -
Accounts Receivable                              1,537,168             735,323
Inventory                                        1,502,719           1,030,190
Prepaid expense                                          -               4,518
                                        ------------------  ------------------

     Total Current Assets                        3,039,887           1,770,031
                                        ------------------  ------------------

Fixed Assets:
Manufacturing Equipment                            615,409             356,990
Office Equipment                                   262,320             222,503
Furniture & Fixtures                                 4,939               3,525
Leasehold improvements                              67,682              51,443
Property Held Under Capital Lease                  432,928             432,928
                                        ------------------  ------------------
                                                 1,383,278           1,067,389
Less Accumulated Depreciation                     (415,199)           (244,503)
                                        ------------------  ------------------
                                                   968,079             822,886
                                        ------------------  ------------------

     TOTAL ASSETS                       $        4,007,966  $        2,592,917
                                        ==================  ==================



                                      F - 3

<PAGE>



                   GFR PHARMACEUTICALS, INC. AND SUBSIDIARIES
                       (Formerly Laredo Investment Corp.)
                           CONSOLIDATED BALANCE SHEETS
                                   (Continued)



<TABLE>
<CAPTION>
                                                            December 31,        December 31,
                                                                2004                2003
                                                         ------------------  ------------------
<S>                                                      <C>                 <C>

                                                             (Restated)

LIABILITIES
Current Liabilities:
Accounts Payable and Accrued Liabilities                 $        1,093,235  $          881,250
Bank Overdraft                                                       24,306              54,463
Bank Line                                                           643,902              30,800
Related Party Loans                                                 139,159             114,416
Shareholder Payables                                                253,409                   -
Current Portion of Obligations Under Capital Leases                  57,721              62,333
Current Portion Long-Term Debt                                       34,468              24,275
                                                         ------------------  ------------------

     Total Current Liabilities                                    2,246,200           1,167,537

Long-Term Debt                                                       29,653              32,180
Lease Obligations                                                   114,636             159,737
Deferred Tax Liability                                              169,986             157,540
                                                         ------------------  ------------------

     Total Liabilities                                            2,560,475           1,516,994
                                                         ------------------  ------------------

STOCKHOLDERS EQUITY
Common Stock - $0.001 par value, 100,000,000
   shares authorized, 1,079,940 shares issued and
   outstanding at December 31, 2004 and 2003                          1,080               1,080
Additional Paid-in Capital                                          698,961             698,961
Currency Translation Adjustment                                     353,914              85,427
Retained Earnings (Deficit)                                         393,536             290,455
                                                         ------------------  ------------------

     Total Stockholders' Equity                                   1,447,491           1,075,923
                                                         ------------------  ------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY               $        4,007,966  $        2,592,917
                                                         ==================  ==================
</TABLE>



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

                                      F - 4

<PAGE>



                   GFR PHARMACEUTICALS, INC. AND SUBSIDIARIES
                       (Formerly Laredo Investment Corp.)
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                   For The Year Ended
                                                      December 31,
                                         --------------------------------------
                                                2004                2003
                                         ------------------  ------------------


                                             (Restated)

REVENUES
Sales                                    $        5,859,763  $        5,042,189
Cost of Sales                                     4,207,405           3,712,178
                                         ------------------  ------------------
Gross Margin                                      1,652,358           1,330,011
                                         ------------------  ------------------

EXPENSES
   Selling & Marketing                              378,396             113,487
   General & Administrative                         276,934             291,879
   Consulting                                        75,539             100,532
   Depreciation Expense                             170,696              95,356
   Salaries & Wages                                 588,769             288,066
                                         ------------------  ------------------
                                                  1,490,334             889,320
                                         ------------------  ------------------

Net Income from Operations                          162,024             440,691

Other Income (Expense)
   Interest, Net                                    (64,114)            (45,863)
   Currency Exchange, Net                            34,419               1,483
                                         ------------------  ------------------

Net Income (Loss) Before Income Taxes               132,329             396,311
Income Tax (Expense) Benefit                        (29,248)           (191,514)
                                         ------------------  ------------------

NET INCOME (LOSS)                        $          103,081  $          204,797
                                         ==================  ==================

Basic Earnings (Loss) Per Share          $             0.10  $             0.19
                                         ==================  ==================

Weighted Average Shares Outstanding               1,079,940           1,079,940
                                         ==================  ==================





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

                                      F - 5

<PAGE>



                   GFR PHARMACEUTICALS, INC. AND SUBSIDIARIES
                       (Formerly Laredo Investment Corp.)
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                     YEARS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                                  Cumulative          Retained
                                                Common Stock          Paid-In     Translation        Earnings /
                                              Shares     Par Value    Capital     Adjustment         (Deficit)        Total
                                          ------------- ----------- ---------- -----------------  ---------------- ------------
<S>                                       <C>        <C>         <C>        <C>                <C>              <C>
Balance at December 31, 2001                 32,300,000 $    32,300 $  648,050 $          (4,683) $         85,658 $    761,325

February 28, 2003, Shares Issued
to retire note payable.                          98,460          98     19,593                 -                 -       19,691

Net Income                                            -           -          -                 -           204,797      204,797
Currency Translation                                  -           -          -            90,110                 -       90,110
                                          ------------- ----------- ---------- -----------------  ---------------- ------------
Total Comprehensive Income                            -           -          -            90,110           204,797      294,907
                                          ------------- ----------- ---------- -----------------  ---------------- ------------

Balance at December 31, 2003                 32,398,460      32,398    667,643            85,427           290,455    1,075,923

Retroactive Adjustment for 1:30
Reverse Stock Split August 9, 2004          (31,318,520)    (31,318)    31,318                 -                 -            -
                                          ------------- ----------- ---------- -----------------  ---------------- ------------

Restated Balance at December 31, 2003         1,079,940       1,080    698,961            85,427           290,455    1,075,923

Net Income                                            -           -          -                 -           103,081      103,081
Currency Translation                                  -           -          -           268,487                 -      268,487
                                          ------------- ----------- ---------- -----------------  ---------------- ------------
Total Comprehensive Income                            -           -          -           268,487           103,081      371,568
                                          ------------- ----------- ---------- -----------------  ---------------- ------------


Balance at December 31, 2004 (Restated)       1,079,940 $     1,080 $  698,961 $         353,914  $        393,536 $  1,447,491

                                          ============= =========== ========== =================  ================ ============
</TABLE>

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

                                      F - 6

<PAGE>



                   GFR PHARMACEUTICALS, INC. AND SUBSIDIARIES
                       (Formerly Laredo Investment Corp.)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                       For The Year Ended
                                                                                          December 31,
                                                                              -------------------------------------
                                                                                     2004               2003
                                                                              ------------------ ------------------
<S>                                                                           <C>                <C>

                                                                                  (Restated)

Cash Flows From Operating Activities
   Net income (loss) for the period                                           $          103,081 $          204,797
Adjustments to reconcile net loss to net cash
   Provided by operating activities
     Currency Translation Adjustment                                                     268,487             90,110
     Depreciation and Amortization                                                       170,696             95,356
     Decrease (Increase) in Receivables                                                 (801,830)           (52,336)
     Decrease (Increase) in Inventory                                                   (472,545)          (465,814)
     Decrease (Increase) in Prepaid Expense                                                4,518             20,652
     Increase in Accounts Payable & Accrued Liabilities                                  211,984            265,753
     Increase (Decrease) in Bank Overdraft                                               (30,157)           (26,813)
     Increase in Deferred Tax Liability                                                   12,446             73,596
                                                                              ------------------ ------------------
Net Cash Provided by (Used in) Operating Activities                                     (533,320)           205,301
                                                                              ------------------ ------------------

Cash Flows From Investing Activities
   Purchase of Property and Equipment                                                   (315,889)          (252,221)
                                                                              ------------------ ------------------
Net Cash Used by Investing Activities                                                   (315,889)          (252,221)
                                                                              ------------------ ------------------

Cash Flows From Financing Activities
   Proceeds/Payments on Bank Line                                                        613,102             30,800
   Proceeds (Payments) Shareholder Payables                                              253,409            (26,658)
   Proceeds (Payments) Long-term Debt/Capital Lease Obligations                          (17,302)            42,778
                                                                              ------------------ ------------------
Net Cash Provided by (Used in) Financing Activities                                      849,209             46,920
                                                                              ------------------ ------------------

Increase (Decrease) in Cash                                                                    -                  -
Cash at beginning of period                                                                    -                  -
                                                                              ------------------ ------------------
Cash at End of Period                                                         $                - $                -
                                                                              ================== ==================


Supplemental Disclosure of Interest and Income Taxes Paid
   Interest paid during the period                                            $           64,114 $           29,058
                                                                              ================== ==================
   Income taxes paid during the period                                        $          138,527 $           28,651
                                                                              ================== ==================

Supplemental Disclosure of Non-cash Investing and Financing Activities:
   Equipment acquired through Capital Lease                                   $           23,220 $           73,140
                                                                              ================== ==================
   Stock issued as payment on short-term notes payable                        $                - $           19,691
                                                                              ================== ==================
</TABLE>

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

                                      F - 7

<PAGE>



                   GFR PHARMACEUTICALS, INC. AND SUBSIDIARIES
                       (Formerly Laredo Investment Corp.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   THE YEARS ENDED DECEMBER 31, 2004 AND 2003


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         This summary of accounting policies for GFR  Pharmaceuticals,  Inc. and
Subsidiaries  (Formerly  Laredo  Investment  Corp.)  is  presented  to assist in
understanding  the  Company's  financial  statements.  The  accounting  policies
conform to generally accepted  accounting  principles and have been consistently
applied in the preparation of the financial statements.


Restatment of Previously Issued Financial Statements for the Year Ended December
31, 2004

         We have restated our balance sheet at December 31, 2004, and statements
of income,  stockholders'  equity and cash flows for the year ended December 31,
2004.  The  restatement  impacts the year ended  December 31,  2004,  but has no
effect on the financial statements issued in prior fiscal years. The restatement
corrects  an  error  within  the  currency  translation  adjustment,  which  was
erroneously  expensed.  The  impact of the  restatement  reduced  net  income by
$311,113,  net of tax and reduced earnings per share from $0.38 to $0.10 for the
year ended December 31, 2004.


Organization and Basis of Presentation

         The Company was  incorporated  under the laws of the State of Nevada on
December 18, 1996. The Company ceased all operating activities during the period
from December 18, 1996 to July 9, 1999 and was  considered  dormant.  On July 9,
1999,  the Company  obtained a Certificate  of renewal from the State of Nevada.
From July 9, 1999 to January 21, 2000, the Company was in the development stage.

         On January 21, 2000, Laredo entered into an Acquisition  Agreement with
GFR  Pharm,  Ltd.   (Formerly  GFR  Nutritionals,   Ltd.),  a  British  Columbia
corporation,  (GFR),  Richard Pierce and Lucretia  Schanfarber (the GFR Majority
Shareholders)  to acquire  their  shares  representing  100% of the  outstanding
common stock of GFR in exchange for  19,000,000  newly issued shares of Laredo's
restricted common stock. The transaction was recorded as a reverse  acquisition.
GFR was incorporated in March 1997 as Helm  Developments  Ltd. In June 1998, the
Company formally changed its name to GFR Nutritionals Ltd. GFR was 100% owned by
the President and CEO,  Richard  Pierce from  inception  until January 17, 2000,
when a 10% interest was acquired by Lucretia  Schanfarber.  Business  operations
began in October 1998 after acquiring  manufacturing  equipment and arranging to
manufacture nutritional supplements under a private label contract.

         On June 21, 2000,  the Company  entered into an  Acquisition  Agreement
with Nutritionals (USA) Direct.Com, a Washington corporation,  (NDC), to acquire
100%  of the  outstanding  common  stock  of NDC in  exchange  for  $1,000.  The
transaction  has been recorded as a purchase.  NDC operations were wound down in
October 2002 and the company became dormant.

                                      F - 8

<PAGE>



                   GFR PHARMACEUTICALS, INC. AND SUBSIDIARIES
                       (Formerly Laredo Investment Corp.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                                   (Continued)

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

         On November 1, 2000, the Company entered into an Acquisition  Agreement
with  GFR  Health,   Inc.  (Formerly  R&L  Health,   Inc.,  a  British  Columbia
corporation,  R&L),  to acquire 100% of the  outstanding  common stock of R&L in
exchange for $0.01. The transaction was recorded as a purchase.

         On April 5, 2004, GFR Nutritionals,  Ltd. and R&L Health,  Inc. changed
its name to GFR Pharma, Inc. and GFR Health, Inc., respectively.

         On August 9, 2004,  Laredo  Investment  Corp.  changed  its name to GFR
Pharmaceuticals, Inc.

Principles of Consolidation

         The  consolidated  financial  statements  for December 31, 2004 and the
year ended include the accounts of GFR  Pharmaceuticals,  Inc. and the following
wholly owned subsidiaries:

*        GFR Pharma, Ltd. (Formerly GFR Nutritionals,  Ltd.), a British Columbia
         corporation
*        Nutritionals(USA) Direct.com, a Washington corporation
*        GFR Health,  Inc.  (Formerly  R&L  Health,  Inc.),  a British  Columbia
         corporation

         All  significant  inter-company  accounts  and  transactions  have been
eliminated.

Nature of Business

                  The   Company    specializes   in    formulating,    blending,
encapsulating  and packing  nutritional  products.  The Company also distributes
products through its GFR Health Inc.  subsidiary.  The Company's  operations are
located in the province of British Columbia, Canada.

Cash and Cash Equivalents

         For purposes of the statement of cash flows, the Company  considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.


                                      F - 9

<PAGE>



                   GFR PHARMACEUTICALS, INC. AND SUBSIDIARIES
                       (Formerly Laredo Investment Corp.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                                   (Continued)

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Inventories

         Raw materials  inventory is stated at a lower of weighted  average cost
and replacement value. Inventories of work in progress is stated at the lower of
weighted average cost and net realizable value.

Depreciation

         Fixed  assets  are stated at cost.  Depreciation  and  amortization  is
calculated  on a  straight-line  basis over the  estimated  useful  lives of the
assets as follows:


                     Asset                              Rate
------------------------------------------------  -----------------

Manufacturing equipment                                 10-20 years
Furniture and fixtures                                    5-7 years
Office equipment                                          3-5 years
Leasehold improvements                                Term of lease

         Maintenance  and  repairs are charged to  operations;  betterments  are
capitalized.  The  cost  of  property  sold  or  otherwise  disposed  of and the
accumulated  depreciation  thereon are eliminated  from the property and related
accumulated depreciation accounts, and any resulting gain or loss is credited or
charged to income.

         The Company has adopted the Financial  Accounting  Standards Board SFAS
No., 121,  "Accounting  for the  Impairment of Long-lived  Assets." SFAS No. 121
addresses  the  accounting  for (i)  impairment of  long-lived  assets,  certain
identified  intangibles and goodwill  related to assets to be held and used, and
(ii) long-live lived assets and certain identifiable  intangibles to be disposed
of.  SFAS No. 121  requires  that  long-lived  assets and  certain  identifiable
intangibles  be held and used by an entity be reviewed for  impairment  whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be  recoverable.  If the sum of the expected  future cash flows from the
used of the  asset  and its  eventual  disposition  (un-discounted  and  without
interest  charges) is less than the carrying  amount of the asset, an impairment
loss is recognized.

Revenue recognition

         Revenue is recognized from sales of products at the time of shipment to
customers.

                                     F - 10

<PAGE>



                   GFR PHARMACEUTICALS, INC. AND SUBSIDIARIES
                       (Formerly Laredo Investment Corp.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                                   (Continued)


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Advertising Costs

         Advertising is expensed as incurred.

Foreign currency translation

         The  Company's  functional  currency  is the  Canadian  dollar  and the
reporting currency is the U.S. Dollar. All elements of financial  statements are
translated  using a current  exchange  rate.  For  assets and  liabilities,  the
exchange  rate at the  balance  sheet  date is  used.  Stockholders'  Equity  is
translated using the historical rate. For revenues,  expenses,  gains and losses
the weighted average exchange rate for the period is used. Translation gains and
losses are included as a separate  component of stockholders'  equity.  Gain and
losses resulting from foreign currency transactions are included in net income.

Pervasiveness of Estimates

         The  preparation of financial  statements in conformity  with generally
accepted  accounting  principles  required  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

Concentrations of Credit Risk

         The  Company has no  significant  off-balance-sheet  concentrations  of
credit  risk such as foreign  exchange  contracts,  options  contracts  or other
foreign hedging arrangements.

Income Taxes

         The Company  accounts for income taxes under the provisions of SFAS No.
109, "Accounting for Income Taxes." SFAS No.109 requires recognition of deferred
income  tax  assets  and   liabilities   for  the  expected  future  income  tax
consequences,  based on enacted tax laws, of temporary  differences  between the
financial reporting and tax basis of assets and liabilities.



                                     F - 11

<PAGE>



                   GFR PHARMACEUTICALS, INC. AND SUBSIDIARIES
                       (Formerly Laredo Investment Corp.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                                   (Continued)

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Reclassifications

         Certain   reclassifications  have  been  made  in  the  2003  financial
statements to conform with the 2004 presentation.

Earnings (Loss) per Share

         Basic loss per share has been  computed  by  dividing  the loss for the
year  applicable to the common  stockholders  by the weighted  average number of
common  shares  outstanding  during the years.  There were no common  equivalent
shares outstanding at December 31, 2004 and 2003.

Stock Compensation for Non-Employees

         The  Company  accounts  for the fair  value of its  stock  compensation
grants for  non-employees  in accordance with FASB Statement 123. The fair value
of each grant is equal to the market price of the Company's stock on the date of
grant if an active  market  exists or at a value  determined  in an arms  length
negotiation between the Company and the non-employee.

NOTE 2 - ACCOUNTS RECEIVABLE

         As of December 31, 2004 and 2003, accounts receivable  consisted of the
following:

<TABLE>
<CAPTION>
                                                          2004               2003
                                                   ------------------  -----------------
<S>                                                <C>                 <C>
Accounts Receivable                                $        1,630,830  $         817,480
Less: Allowance for Doubtful Accounts                         (93,662)           (82,157)
                                                   ------------------  -----------------

Total Accounts Receivable                          $        1,537,168  $         735,323
                                                   ==================  =================
</TABLE>

         The allowance for doubtful accounts is based on management  estimate of
75% of receivables over 120 days outstanding.





                                     F - 12

<PAGE>



                   GFR PHARMACEUTICALS, INC. AND SUBSIDIARIES
                       (Formerly Laredo Investment Corp.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                                   (Continued)

NOTE 3 - INVENTORY

         Inventory is valued at lower of cost or market. As of December 31, 2004
and, 2003, inventory consists of the following:


                                          2004                2003
                                   ------------------  ------------------
Raw materials                      $          937,864  $          861,276
Work in process                               229,032             168,914
Finished Goods                                335,823                   -
                                   ------------------  ------------------

Total Inventory                    $        1,502,719  $        1,030,190
                                   ==================  ==================

NOTE 4 - INCOME TAXES

         The  provision  for income  taxes  consists  of  Canadian  federal  and
provincial and territorial income tax. The provision consists of the following:


Current:                                    2004                 2003
                                      -----------------   ------------------

   Canadian Income Tax                $          16,802   $          117,918
   Deferred Tax Liability                        12,446               73,596
                                      -----------------   ------------------

   Income tax expense                 $          29,248   $          191,514
                                      =================   ==================

         Deferred taxes result from temporary  differences in the recognition of
income and expenses for income tax reporting and financial  statement  reporting
purposes.  The Company had deferred tax liability of $169,986 and $157,540 as of
December 31, 2004 and 2003.  The deferred tax  liability is the result of excess
depreciation  for income tax purposes  over the amount for  financial  reporting
purposes.

         The  difference  between the effective  income tax rate and the federal
statutory  income tax rate on the income (loss) from  continuing  operations are
presented below:


<TABLE>
<CAPTION>
                                                                                    2004                2003
                                                                             ------------------  ------------------
<S>                                                                          <C>                 <C>
Expense at the federal statutory rate of 37.62%                              $           49,782  $          149,092
Deferred Tax Liability                                                                   12,446              73,596
Benefits from Temporary Differences in Depreciation and other                           (32,980)            (31,174)
                                                                             ------------------  ------------------

Effective Tax Expense                                                        $           29,248  $          191,514
                                                                             ==================  ==================
</TABLE>

                                     F - 13

<PAGE>


                   GFR PHARMACEUTICALS, INC. AND SUBSIDIARIES
                       (Formerly Laredo Investment Corp.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                                   (Continued)


NOTE 5 - RELATED PARTY TRANSACTIONS

         As  at  December  31,  2004  and  2003,  shareholder  payables  include
approximately $253,409 ($305,000 Canadian) owing to a major shareholder.

         Richard  Pierce,  CEO  of  GFR   Pharmaceuticals,   Inc.  and  Lucretia
Schanfarber, former Vice President of Sales, hold contracts with R&L Health Inc.
that licenses their names and images to R&L for use on certain  products.  He is
paid a quarterly  bonus of 10% of R&L Health Inc.  profits  before income taxes,
depreciation, and amortization are deducted as expenses. As of December 31, 2004
and 2003, $59,783 and $105,192 in bonuses have been paid and $15,846 and $30,743
have been accrued.

         As of April 1, 2004, Lucretia  Schanfarber is no longer being paid this
licence fee as her name and image has been removed from all products.

NOTE 6 - SHORT-TERM OBLIGATIONS


<TABLE>
<CAPTION>
                                                          December 31,        December 31,
                                                              2004                2003
                                                       ------------------  ------------------
<S>                                                    <C>                 <C>
Promissory note, repayable to related parties upon
   demand, including interest at 12%                   $          139,159  $          114,416
                                                       ------------------  ------------------

Total                                                  $          139,159  $          114,416
                                                       ==================  ==================
</TABLE>

         The Company has a line of credit with a bank with a total  amount owing
of $643,902  and $30,800 as of December  31, 2004 and 2003,  respectively.  This
line carries an interest rate of prime plus 1.5 and a total available  credit of
$706,350  ($850,000  Canadian)  at  December  31,  2004 and  $192,500  ($250,000
Canadian) as of December 31, 2003. The line is secured by certain  manufacturing
equipment of the Company.









                                     F - 14

<PAGE>


                   GFR PHARMACEUTICALS, INC. AND SUBSIDIARIES
                       (Formerly Laredo Investment Corp.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                                   (Continued)

NOTE 7 - LONG-TERM DEBT


<TABLE>
<CAPTION>
                                                                                December 31,        December 31,
                                                                                    2004                2003
                                                                             ------------------  ------------------
<S>                                                                          <C>                 <C>
TDBank Small  Business  loan,  repayable in monthly  instalments  $2,515 ($3,973
  Canadian),  including interest at 10.15%, maturing September 15, 2005, secured
  by certain
  manufacturing equipment of the Company                                     $           26,959  $           56,455

Business Development Bank of Canada Loan, repayable in
  monthly installment $657 ($830 Canadian), including interest
  at prime plus 1%, maturing August 23, 2009                                             37,162                   -

Less current portion of long-term debt                                                  (34,468)            (24,275)
                                                                             ------------------  ------------------

                                                                             $           29,653  $           32,180
                                                                             ==================  ==================
</TABLE>

         Principal  payments  due on  long-term  debt for each of the five years
subsequent to December 31, 2004 and thereafter are as follows:


       Year ending:                Amount
---------------------------  ------------------
           2005              $           34,468
           2006                           7,936
           2007                           8,468
           2008                           9,035
           2009                           4,214
                             ------------------
        Thereafter
           Total             $           64,121
                             ==================


NOTE 8 - ECONOMIC DEPENDENCE


         The Company sells a substantial  portion of its product to one customer
Prairie Naturals,  Inc. During 2004 and 2003, sales to that customer  aggregated
41% and 45%,  respectively.  As of December 31, 2004 and 2003,  amounts due from
that customer  included in accounts  receivable were 17% and 68%,  respectively.
Future  operations of the Company depend on  continuation  of the  manufacturing
arrangement with that customer.



                                     F - 15

<PAGE>



                   GFR PHARMACEUTICALS, INC. AND SUBSIDIARIES
                       (Formerly Laredo Investment Corp.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                                   (Continued)

NOTE 9 - COMMITMENTS

         The Company has entered into a lease  agreements for its  manufacturing
and office  facilities  and certain  manufacturing  equipment with the Company's
major  shareholder  and other  parties.  The rental  charges  are  approximately
$86,250  ($115,000  Canadian) per year for real  property and $81,675  ($108,900
Canadian) per year for equipment.  The real property lease expires  December 31,
2004, and the equipment lease expires June 2005 through December 2008.

         The assets and  liabilities  under  capital  leases are recorded at the
fair value of the asset.  The  assets  are  depreciated  over the lower of their
estimated  productive  lives.  Depreciation  of assets under  capital  leases is
included in depreciation expense for 2004 and 2003.

         Following is a summary of property held under capital leases:


                                               2004                2003
                                        ------------------  ------------------
Manufacturing Equipment                 $          432,928  $          432,928
Less: Accumulated Depreciation                     (57,640)            (34,339)
                                        ------------------  ------------------

Net Assets Held Under Capital Lease     $          375,288  $          398,589
                                        ==================  ==================

         The minimum  future lease payments under these leases for the next five
years are:

<TABLE>
<CAPTION>
    Ending December 31:                              Real Property         Equipment
----------------------------                       ------------------  -----------------
<S>   <C>                                          <C>                 <C>
      2005                                         $                -  $          67,097
      2006                                                          -             50,338
      2007                                                          -             50,338
      2008                                                          -             19,508
      2009                                                          -                  -
                                                   ------------------  -----------------
      Net Minimum Lease Payments                                    -            187,281
      Less: Amount Representing Interest                            -            (97,404)
                                                   ------------------  -----------------
      Present Value of Net Minimum Lease Payment   $                -  $          89,877
                                                   ==================  =================
</TABLE>

         The leases  generally  provides  that  insurance,  maintenance  and tax
expenses  are  obligations  of the  Company.  It is expected  that in the normal
course of business,  leases that expire will be renewed or replaced by leases on
other properties.





                                     F - 16

<PAGE>


                   GFR PHARMACEUTICALS, INC. AND SUBSIDIARIES
                       (Formerly Laredo Investment Corp.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   THE YEARS ENDED DECEMBER 31, 2004 AND 2003
                                   (Continued)

NOTE 9 - COMMITMENTS (Continued)

         During 2002, the Company  entered into a lease  agreement for warehouse
spaces.  The  lease is month to month  with a six month  notice  of  termination
clause.  Under the terms of the lease  agreement,  the  monthly  rent  charge is
approximately $4,600 ($5,500 Canadian).

NOTE 10 - STOCK INCENTIVE PLAN

         The Board of Directors has authorized  and the Company has  established
the 2000  Incentive  and  Non-qualified  Stock Option  Plan.  Under the plan the
Company is authorized to issued up to 6,000,000  shares of the Company's  common
stock with such  exercise  price and vesting  periods as the Board of  Directors
deems to be in the best  interest of the Company.  As of December  31, 2004,  no
options have been granted.

NOTE 11 - COMMON STOCK TRANSACTIONS

         On August 9, 2004, the Company changed its name from Laredo  Investment
Corp. to GFR Pharmaceuticals, Inc. In addition, a retroactive 30:1 reverse stock
split was approved by shareholders.  All references to stock in the accompanying
financial statements reflect this stock split.


NOTE 12 - GEOGRAPHIC INFORMATION

         The Company's revenues were generated  primarily from Canadian sources.
During 2004 99% of the Company's revenues were from customers inside Canada, and
only two orders,  approximately  1%, were shipped to foreign  countries.  During
2003 all the Company's  revenues were from Canadian customers and no orders were
shipped to foreign countries.




                                     F - 17

<PAGE>



                                   SIGNATURES

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

GFR Pharmaceuticals, Inc.



Dated: December 28, 2005




/s/ RICHARD PIERCE

Richard Pierce, President and C.E.O., Director
(Principal Executive Officer)


/s/ MARC CASAVANT

Marc Casavant, Chief Financial Officer
(Principal Accounting Officer)


/s/ ROSEMARIE PIERCE
RoseMarie Pierce, Director


                                       21